<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 15, 1999
Discover Card Master Trust I
------------------------------------------------
(Exact name of registrant as specified in charter)
Delaware 0-23108 51-0020270
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(State of (Commission (IRS Employer
Organization) File Number) Identification No.)
c/o Greenwood Trust Company
12 Read's Way
New Castle, Delaware 19720
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(Address of principal executive offices)
(Zip Code)
Registrant's Telephone Number, including area code: (302) 323-7184
--------------
Former name or former address, if changed since last report: Not Applicable
Page 1
The Exhibit Index appears on Page 7
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Item 5. Other Events
Amendments to Credit Enhancement Agreements. On April 15,
1999, Greenwood Trust Company as Master Servicer, Servicer and Seller, U.S. Bank
National Association, as Trustee and Discover Receivables Financing Corporation
as Credit Enhancement Provider, entered into amended and restated credit
enhancement agreements, each dated as of April 15, 1999, thereby amending and
restating the credit enhancement agreements for each series currently
outstanding under the Discover Card Master Trust I. A copy of each of the
amended and restated credit enhancement agreements is filed herewith as an
exhibit.
Item 7. Exhibits
Exhibit No. Description
- ----------- -----------
4.1 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, with respect to Series
1993-1.
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, with respect to Series
1993-2.
4.3 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, with respect to Series
1993-3.
4.4 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, with respect to Series
1994-2.
4.5 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, with respect to Series
1994-3.
4.6 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, with respect to Series
1994-A.
Page 2
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4.7 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, with respect to Series
1995-1.
4.8 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, with respect to Series
1995-2.
4.9 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, with respect to Series
1995-3.
4.10 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, with respect to Series
1996-1.
4.11 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, with respect to Series
1996-2.
4.12 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, with respect to Series
1996-3.
4.13 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, with respect to Series
1996-4.
4.14 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, with respect to Series
1996-5.
4.15 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, with respect to Series
1997-1.
Page 3
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4.16 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, with respect to Series
1997-2.
4.17 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, with respect to Series
1997-3.
4.18 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, with respect to Series
1997-4.
4.19 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, with respect to Series
1998-1.
4.20 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, with respect to Series
1998-2.
4.21 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, with respect to Series
1998-3.
4.22 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, with respect to Series
1998-4.
4.23 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, with respect to Series
1998-5.
4.24 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, with respect to Series
1998-6.
Page 4
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4.25 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, with respect to Series
1998-7.
4.26 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, with respect to Series
1999-1.
4.27 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, with respect to Series
1999-2.
4.28 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, with respect to Series
1999-3.
Page 5
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Discover Card Master Trust I
(Registrant)
By: Greenwood Trust Company
(Originator of the Trust)
Date: April 15, 1999 By: /s/ John J. Coane
----------------------------------------------
John J. Coane
Vice President, Chief Accounting Officer
and Treasurer
Page 6
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INDEX TO EXHIBITS
Exhibit No. Description Page
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4.1 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 Card Receivables Financing Corporation as
Credit Enhancement Provider, dated as of April 15, 1999,
with respect to Series 1993-1.
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, with
respect to Series 1993-2.
4.3 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, with
respect to Series 1993-3.
4.4 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, with
respect to Series 1994-2.
4.5 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, with
respect to Series 1994-3.
4.6 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, with
respect to Series 1994-A.
4.7 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, with
respect to Series 1995-1.
Page 7
<PAGE> 8
4.8 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, with
respect to Series 1995-2.
4.9 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, with
respect to Series 1995-3.
4.10 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, with
respect to Series 1996-1.
4.11 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, with
respect to Series 1996-2.
4.12 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, with
respect to Series 1996-3.
4.13 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, with
respect to Series 1996-4.
4.14 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, with
respect to Series 1996-5.
Page 8
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4.15 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, with
respect to Series 1997-1.
4.16 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, with
respect to Series 1997-2.
4.17 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, with
respect to Series 1997-3.
4.18 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, with
respect to Series 1997-4.
4.19 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, with
respect to Series 1998-1.
4.20 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, with
respect to Series 1998-2.
4.21 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, with
respect to Series 1998-3.
Page 9
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4.22 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, with
respect to Series 1998-4.
4.23 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, with
respect to Series 1998-5.
4.24 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, with
respect to Series 1998-6.
4.25 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, with
respect to Series 1998-7.
4.26 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, with
respect to Series 1999-1.
4.27 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, with
respect to Series 1999-2.
4.28 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, with
respect to Series 1999-3.
Page 10
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EXHIBIT 4.1
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 1993-1
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Section 1. Defined Terms.........................................................................................2
Section 2. New Loan..............................................................................................3
Section 3. Calculation of Amount of Interest Payable on the Loan.................................................4
Section 4. Payment of Interest on the Loan.......................................................................4
Section 5. Repayment of Principal of the Loan....................................................................5
Section 6. Payments to the Holder of the Seller Certificate and the Master Servicer..............................6
Section 7. Deposits to and Withdrawals from the Credit Enhancement Account.......................................7
Section 8. Alternative Credit Support Election...................................................................7
Section 9. Limited Obligation; Waiver of Setoff; Obligations Absolute............................................8
Section 10. Investments and Information...........................................................................8
Section 11. Servicing Transfer....................................................................................9
Section 12. Representations and Warranties........................................................................9
Section 13. Covenants............................................................................................10
Section 14. Governing Law........................................................................................11
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...........................................................................................13
Section 21. Successors and Assigns; Replacement of Credit Enhancement Provider...................................13
Section 22. Participation........................................................................................14
</TABLE>
i
<PAGE> 3
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, 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 Trust Company 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 a
Series Supplement dated as of October 27, 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 $797,873,000 in aggregate principal
amount of Investor Certificates of Discover Card Master Trust I, Series 1993-1
(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 October 27, 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 Series, of $35,904,285 (4.5% 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 $23,936,190 (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
<PAGE> 4
make the New Loan to the Trust, for the benefit of the Investor
Certificateholders of the Series, for deposit in the Credit Enhancement Account.
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
2
<PAGE> 5
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 0.350%.
"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 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 $23,936,190, 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.
3
<PAGE> 6
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, 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.
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<PAGE> 7
(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 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
5
<PAGE> 8
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 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.
6
<PAGE> 9
(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 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 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, 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. 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
7
<PAGE> 10
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). The Credit
Enhancement Provider shall give prior written notice to Moody's of the making of
any loan by the Credit Enhancement Provider other than the additional loan
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 the obligation to pay application of funds
pursuant to person acting on behalf of any of them, and 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.
8
<PAGE> 11
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 contained herein applicable to
the Master Servicer and conditions 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
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<PAGE> 12
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,
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 Trust Company, 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
Trust Company in its sole reasonable judgment to maintain its credit card
business on a competitive basis. For purposes of this Section 13(a), "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
10
<PAGE> 13
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 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
12 Read's Way
New Castle, Delaware 19720
Attn: Executive Vice President and Secretary
Phone: (302) 323-7167
Fax: (302) 323-7393
or, if to the Seller or the Master Servicer, addressed to:
Greenwood Trust Company
12 Read's Way
New Castle, Delaware 19720
Attn: John J. Coane
Phone: (302) 323-7184
Fax: (302) 323-7393
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<PAGE> 14
or, if to the Trustee, addressed to:
U.S. Bank, National Association
One Illinois Center
111 East Wacker Drive, Suite 3000
Chicago, Illinois 60601
Attn: Martha Sanders
Phone: (312) 228-9452
Fax: (312) 228-9459
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 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 Trust Company 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
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<PAGE> 15
investor certificates issued by any trust with respect to which Discover
Receivables Financing Corporation or Greenwood Trust Company 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 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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<PAGE> 16
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/ Richard W. York
--------------------------------------
Name: Richard W. York
Title: Vice President
GREENWOOD TRUST COMPANY,
as Master Servicer, Servicer and Seller
By: /s/ John J. Coane
--------------------------------------
Name: John J. Coane
Title: Vice President, Chief Accounting
Officer and Treasurer
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By: /s/ Martha Sanders
--------------------------------------
Name: Martha Sanders
Title: Vice President
14
<PAGE> 1
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
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
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
</TABLE>
i
<PAGE> 3
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.
<PAGE> 4
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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<PAGE> 6
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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<PAGE> 7
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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<PAGE> 8
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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<PAGE> 9
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 Moody's 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
12 Read's Way
New Castle, Delaware 19720
Attn: Executive Vice President and Secretary
Phone: (302) 323-7167
Fax: (302) 323-7393
or, if to the Seller or the Master Servicer, addressed to:
Greenwood Trust Company
12 Read's Way
New Castle, Delaware 19720
Attn: John J. Coane
Phone: (302) 323-7184
Fax: (302) 323-7393
or, if to the Trustee, addressed to:
U.S. Bank National Association
One Illinois Center
111 East Wacker Drive, Suite 3000
Chicago, Illinois 60601
Attn: Martha Sanders
Phone: (312) 228-9452
Fax: (312) 228-9459
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
12
<PAGE> 15
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.
13
<PAGE> 16
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/ Richard W. York
----------------------------------------
Name: Richard W. York
Title: Vice President
GREENWOOD TRUST COMPANY,
as Master Servicer, Servicer and Seller
By /s/ John J. Coane
----------------------------------------
Name: John J. Coane
Title: Vice President, Chief Accounting
Officer and Treasurer
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By /s/ Martha Sanders
----------------------------------------
Name: Martha Sanders
Title: Vice President
14
<PAGE> 1
EXHIBIT 4.3
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 1993-3
<PAGE> 2
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.............................5
Section 6. Payments to the Holder of the Seller Certificate and
the Master Servicer..........................................6
Section 7. Deposits to and Withdrawals from the Credit
Enhancement Account..........................................7
Section 8. Certain Additional Loans.......................................7
Section 9. Limited Obligation; Waiver of Setoff; Obligations Absolute.....8
Section 10. Investments and Information....................................9
Section 11. Servicing Transfer.............................................9
Section 12. Representations and Warranties.................................9
Section 13. Covenants.....................................................11
Section 14. Governing Law.................................................11
Section 15. Termination...................................................11
Section 16. Notices.......................................................11
Section 17. Bankruptcy....................................................12
<PAGE> 3
Section 18. Limitation of Remedies........................................13
Section 19. No Petition...................................................13
Section 20. Amendments....................................................13
Section 21. Successors and Assigns; Replacement of Credit
Enhancement Provider........................................13
Section 22. Participation.................................................14
ii
<PAGE> 4
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, 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 Trust Company 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 a
Series Supplement dated as of November 23, 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 $366,493,000 in aggregate principal
amount of Investor Certificates of Discover Card Master Trust I, Series 1993-3
(the "Series"), which will entitle the holders thereof to interest during the
Revolving Period, principal on the Class A and Class B Expected Final Payment
Dates and interest and principal during the 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 November 23, 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 $14,659,720 (4.0% 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 $14,659,720 (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
<PAGE> 5
make the New Loan to the Trust, for the benefit of the Investor
Certificateholders of the Series, for deposit in the Credit Enhancement Account.
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
2
<PAGE> 6
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 0.650%.
"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 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 $14,659,720, 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.
3
<PAGE> 7
(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, 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
4
<PAGE> 8
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 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
5
<PAGE> 9
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 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.
6
<PAGE> 10
(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 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 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
7
<PAGE> 11
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 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 Moody's 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.
8
<PAGE> 12
(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 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.
9
<PAGE> 13
(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,
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 Trust Company, as Master
Servicer and
10
<PAGE> 14
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 Trust Company in
its sole reasonable judgment to maintain its credit card business on a
competitive basis. For purposes of this Section 13(a), "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 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
12 Read's Way
New Castle, Delaware 19720
Attn: Executive Vice President and Secretary
11
<PAGE> 15
Phone: (302) 323-7167
Fax: (302) 323-7393
or, if to the Seller or the Master Servicer, addressed to:
Greenwood Trust Company
12 Read's Way
New Castle, Delaware 19720
Attn: John J. Coane
Phone: (302) 323-7184
Fax: (302) 323-7393
or, if to the Trustee, addressed to:
U.S. Bank National Association
One Illinois Center
111 East Wacker Drive - Suite 3000
Chicago, Illinois 60601
Attn: Martha Sanders
Phone: (312) 228-9452
Fax: (312) 228-9459
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 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,
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<PAGE> 16
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 Trust Company 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 Trust Company 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 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
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<PAGE> 17
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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<PAGE> 18
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/ Richard W. York
--------------------------------------------
Name: Richard W. York
Title: Vice President
GREENWOOD TRUST COMPANY,
as Master Servicer, Servicer
and Seller
By /s/ John J. Coane
--------------------------------------------
Name: John J. Coane
Title: Vice President, Chief Accounting
Officer and Treasurer
U.S. BANK NATIONAL ASSOCIATION, as Trustee
By /s/ Martha Sanders
--------------------------------------------
Name: Martha Sanders
Title: Vice President
15
<PAGE> 1
EXHIBIT 4.4
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 1994-2
<PAGE> 2
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..............................................5
Section 7. Deposits to and Withdrawals from the Credit
Enhancement Account..........................................5
Section 8. Certain Additional Loans.......................................6
Section 9. Limited Obligation; Waiver of Setoff; Obligations Absolute.....7
Section 10. Investments and Information....................................7
Section 11. Servicing Transfer.............................................7
Section 12. Representations and Warranties.................................8
Section 13. Covenants......................................................9
Section 14. Governing Law.................................................10
Section 15. Termination...................................................10
Section 16. Notices.......................................................10
Section 17. Bankruptcy....................................................11
Section 18. Limitation of Remedies........................................11
Section 19. No Petition...................................................11
Section 20. Amendments....................................................12
Section 21. Successors and Assigns; Replacement of Credit
Enhancement Provider........................................12
Section 22. Participation.................................................12
i
<PAGE> 3
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 October 14, 1994 (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 $894,737,000 in aggregate principal
amount of Investor Certificates of Discover Card Master Trust I, Series 1994-2
(the "Series"), which will entitle the holders thereof to interest during the
Revolving Period, and interest and principal during the 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 October 14, 1994 (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 $44,736,850 (5.0% 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 $44,736,850 (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
<PAGE> 4
make the New Loan to the Trust, for the benefit of the Investor
Certificateholders of the Series, for deposit in the Credit Enhancement Account.
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:
"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 immediately 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 0.40%.
"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 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.
2
<PAGE> 5
"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, 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)
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 $44,736,850, 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, the rate for such Interest Period on
such principal portion shall be the Lender Rate.
(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.
3
<PAGE> 6
(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. On each
Distribution Date, 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:
(a) interest and earnings (net of losses and investment
expenses) accrued since the preceding Distribution Date on the Provider Amount;
and
(b) 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.
SECTION 5. REPAYMENT OF PRINCIPAL OF THE LOAN. 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 funds described below, and only to the extent such funds are
available.
(a) If, as of any Distribution Date, after giving effect to
all other deposits to and withdrawals from the Credit Enhancement Account as of
such Distribution Date, 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(a), 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.
(b) 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, 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.
4
<PAGE> 7
SECTION 6. PAYMENTS TO THE HOLDER OF THE SELLER CERTIFICATE
AND THE MASTER SERVICER.
(a) On each Distribution Date, 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 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).
(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)(26) of the Series Supplement shall be paid to Greenwood on
behalf of the Holder of the Seller Certificate.
(c) 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(b) hereof shall be withdrawn from such account
and paid to Greenwood on behalf of the Holder of the Seller Certificate.
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
or the Available Class 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
5
<PAGE> 8
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 Available Class B 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 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 Available Class B 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.
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<PAGE> 9
(c) NOTICE. The Credit Enhancement Provider shall give prior
written notice to Moody's 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.
(c) The Master Servicer shall obtain the consent of the Credit
Enhancement Provider prior to the investment in any Permitted Investments with a
stated maturity, the maturity of which is longer than as would cause them to
mature on or prior to the following Distribution Date as provided in Section
8(e) of the Series Supplement.
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 (a) be responsible for the performance of
all servicing functions to be performed from and after such date, (b) agree to
be bound by the terms, covenants and conditions contained herein applicable to
the Master Servicer
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<PAGE> 10
and be subject to the duties and obligations of the Master Servicer hereunder,
and (c) 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.
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<PAGE> 11
(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,
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 State of Illinois.
(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
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<PAGE> 12
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 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
12 Read's Way
New Castle, Delaware 19720
Attn: Executive Vice President and Secretary
Phone: (302) 323-7167
Fax: (302) 323-7393
or, if to the Seller or the Master Servicer, addressed to:
Greenwood Trust Company
12 Read's Way
New Castle, Delaware 19720
Attn: John J. Coane
Phone: (302) 323-7184
Fax: (302) 323-7393
or, if to the Trustee, addressed to:
U.S. Bank National Association
One Illinois Center
111 East Wacker Drive, Suite 3000
Chicago, Illinois 60601
Attn: Martha Sanders
Phone: (312) 228-9452
Fax: (312) 228-9459
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<PAGE> 13
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 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 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 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.
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<PAGE> 14
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 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 (a) the Credit Enhancement Provider's obligations under this
Agreement shall remain unchanged, (b) the Credit Enhancement Provider shall
remain solely responsible to the other parties hereto for the performance of
such obligations, (c) 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 (d) 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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<PAGE> 15
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/ Richard W. York
--------------------------------------------
Name: Richard W. York
Title: Vice President
GREENWOOD TRUST COMPANY,
as Master Servicer, Servicer and Seller
By /s/ John J. Coane
--------------------------------------------
Name: John J. Coane
Title: Vice President, Chief Accounting
Officer and Treasurer
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By /s/ Martha Sanders
--------------------------------------------
Name: Martha Sanders
Title: Vice President
13
<PAGE> 1
EXHIBIT 4.5
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 1994-3
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
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..............................5
Section 7. Deposits to and Withdrawals from the Credit Enhancement Account.......................................5
Section 8. Certain Additional Loans..............................................................................6
Section 9. Limited Obligation; Waiver of Setoff; Obligations Absolute............................................7
Section 10. Investments and Information...........................................................................7
Section 11. Servicing Transfer....................................................................................8
Section 12. Representations and Warranties........................................................................8
Section 13. Covenants.............................................................................................9
Section 14. Governing Law........................................................................................10
Section 15. Termination..........................................................................................10
Section 16. Notices..............................................................................................10
Section 17. Bankruptcy...........................................................................................11
Section 18. Limitation of Remedies...............................................................................11
Section 19. No Petition..........................................................................................12
Section 20. Amendments...........................................................................................12
Section 21. Successors and Assigns; Replacement of Credit Enhancement Provider...................................12
Section 22. Participation........................................................................................13
</TABLE>
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<PAGE> 3
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 October 20, 1994 (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 $789,474,000 in aggregate principal
amount of Investor Certificates of Discover Card Master Trust I, Series 1994-3
(the "Series"), which will entitle the holders thereof to interest during the
Revolving Period, principal on the Class A and Class B Expected Final Payment
Date and interest and principal during the 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 October 20, 1994 (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 Series, of $39,473,700 (5.0% 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 $39,473,700 (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
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<PAGE> 4
make the New Loan to the Trust, for the benefit of the Investor
Certificateholders of the Series, for deposit in the Credit Enhancement Account.
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:
"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 immediately 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 0.350%.
"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 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.
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<PAGE> 5
"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, 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)
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 of the Series
Supplement 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 $39,473,700 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, the rate for such Interest Period on
such principal portion shall be the Lender Rate.
(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.
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<PAGE> 6
(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. On each
Distribution Date, 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:
(a) interest and earnings (net of losses and investment
expenses) accrued since the preceding Distribution Date on the Provider Amount;
and
(b) 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.
SECTION 5. REPAYMENT OF PRINCIPAL OF THE LOAN. 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 funds described below, and only to the extent such funds are
available.
(a) If, as of any Distribution Date, after giving effect to
all other deposits to and withdrawals from the Credit Enhancement Account as of
such Distribution Date, 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(a), 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.
(b) 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, 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.
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<PAGE> 7
SECTION 6. PAYMENTS TO THE HOLDER OF THE SELLER
CERTIFICATE AND THE MASTER SERVICER.
(a) On each Distribution Date, 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 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).
(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)(26) of the Series Supplement shall be paid to Greenwood on
behalf of the Holder of the Seller Certificate.
(c) 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(b) hereof shall be withdrawn from such account
and paid to Greenwood on behalf of the Holder of the Seller Certificate.
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
or the Available Class 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
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<PAGE> 8
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 Available Class B 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 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 Available Class B 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 unpaid principal amount of the Loan.
(c) NOTICE. The Credit Enhancement Provider shall give prior
written notice
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<PAGE> 9
to Moody's 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. NVESTMENTS 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.
(c) The Master Servicer shall obtain the consent of the Credit
Enhancement Provider prior to the investment in any Permitted Investments with a
stated maturity, the maturity of which is longer than as would cause them to
mature on or prior to the following Distribution Date as provided in Section
8(e) of the Series Supplement.
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 (a) be responsible for the performance of
all servicing functions to be performed from and after such date, (b) agree to
be bound by the terms, covenants and conditions contained herein applicable to
the Master Servicer and be subject to the duties and obligations of the Master
Servicer hereunder, and (c) agree to
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<PAGE> 10
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 (3) 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
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<PAGE> 11
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, 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 State of Illinois.
(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 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) 10i 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
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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 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
12 Read's Way
New Castle, Delaware 19720
Attn: Executive Vice President and Secretary
Phone: (302) 323-7167
Fax: (302) 323-7393
or, if to the Seller or the Master Servicer, addressed to:
Greenwood Trust Company
12 Read's Way
New Castle, Delaware 19720
Attn: John J. Coane
Phone: (302) 323-7184
Fax: (302) 323-7393
or, if to the Trustee, addressed to:
U.S. Bank National Association
One Illinois Center
111 East Wacker Drive, Suite 3000
Chicago, Illinois 60601
Attn: Martha Sanders
Phone: (312) 228-9452
Fax: (312) 228-9459
or as to any party at such other address as shall be designated by such party in
a written notice to the other parties.
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<PAGE> 13
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 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 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 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
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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 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 (a) the Credit Enhancement Provider's obligations under this
Agreement shall remain unchanged, (b) the Credit Enhancement Provider shall
remain solely responsible to the other parties hereto for the performance of
such obligations, (c) 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 (d) 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/ Richard W. York
-----------------------------------------
Name: Richard W. York
Title: Vice President
GREENWOOD TRUST COMPANY,
as Master Servicer, Servicer
and Seller
By /s/ John J. Coane
-----------------------------------------
Name: John J. Coane
Title: Vice President, Chief Accounting
Officer and Treasurer
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By /s/ Martha Sanders
-----------------------------------------
Name: Martha Sanders
Title: Vice President
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<PAGE> 1
EXHIBIT 4.6
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 1994-A
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
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...............................5
Section 7. Deposits to and Withdrawals from the Credit Enhancement Account........................................5
Section 8. Certain Additional Loans...............................................................................6
Section 9. Limited Obligation; Waiver of Setoff; Obligations Absolute.............................................7
Section 10. Investments and Information...........................................................................7
Section 11. Servicing Transfer....................................................................................8
Section 12. Representations and Warranties........................................................................8
Section 13. Covenants.............................................................................................9
Section 14. Governing Law........................................................................................10
Section 15. Termination..........................................................................................10
Section 16. Notices..............................................................................................10
Section 17. Bankruptcy...........................................................................................11
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...................................12
Section 22. Participation........................................................................................13
</TABLE>
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<PAGE> 3
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 20, 1994 (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 an Investor Certificate in the
initial aggregate principal amount of $500,000,000 constituting Series 1994-A
(the "Series") of Discover Card Master Trust I, which will entitle the holders
thereof to interest during the Revolving Period, and interest and principal
during the Controlled Liquidation Period and Amortization Period, if any, and
which has been increased in accordance with its terms to an aggregate principal
amount of $2,550,000,000;
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 October 15, 1997 (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 such loan, together with additional loans made from time to
time in connection with increases of the Investor Certificate, (the "Original
Loan") to the Trust, for the benefit of the Investor Certificateholders of the
Series, of $40,000,000 (8.0% 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 $204,000,000 (the "New Loan");
and
<PAGE> 4
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.
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:
"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 immediately 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 0.350%.
"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 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.
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<PAGE> 5
"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, 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)
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 $204,000,000, 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, the rate for such Interest Period on
such principal portion shall be the Lender Rate.
(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.
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<PAGE> 6
(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. On each
Distribution Date, 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:
(a) interest and earnings (net of losses and investment
expenses) accrued since the preceding Distribution Date on the Provider Amount;
and
(b) 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.
SECTION 5. REPAYMENT OF PRINCIPAL OF THE LOAN. 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 funds described below, and only to the extent such funds are
available.
(a) If, as of any Distribution Date, after giving effect to
all other deposits to and withdrawals from the Credit Enhancement Account as of
such Distribution Date, 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(a), 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.
(b) 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, 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.
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<PAGE> 7
SECTION 6. PAYMENTS TO THE HOLDER OF THE SELLER
CERTIFICATE AND THE MASTER SERVICER.
(a) On each Distribution Date, 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 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).
(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) of the Series Supplement shall be paid to Greenwood on
behalf of the Holder of the Seller Certificate.
(c) 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(b) hereof shall be withdrawn from such account
and paid to Greenwood on behalf of the Holder of the Seller Certificate.
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
or the Available Shared 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
5
<PAGE> 8
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 Available Shared 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 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 Available Shared 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.
6
<PAGE> 9
(c) INCREASE IN THE CLASS INVESTOR INTEREST. In the event that
the Seller elects to increase the Class Investor Interest pursuant to Section 22
of the Series Supplement, Greenwood as Servicer may cause the Increased 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
Available Shared Credit Enhancement Amount, or may request that the Credit
Enhancement Provider make an additional loan in the amount of the Increased
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 Increased Credit Enhancement Amount and shall be
added to the unpaid principal amount of the Loan.
(d) NOTICE. The Credit Enhancement Provider shall give prior
written notice to Moody's 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.
7
<PAGE> 10
(c) The Master Servicer shall obtain the consent of the Credit
Enhancement Provider prior to the investment in any Permitted Investments with a
stated maturity, the maturity of which is longer than as would cause them to
mature on or prior to the following Distribution Date as provided in Section
8(e) of the Series Supplement.
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 (a) be responsible for the performance of
all servicing functions to be performed from and after such date, (b) agree to
be bound by the terms, covenants and conditions contained herein applicable to
the Master Servicer and be subject to the duties and obligations of the Master
Servicer hereunder, and (c) 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:
8
<PAGE> 11
(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,
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 State of Illinois.
(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
9
<PAGE> 12
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 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
12 Read's Way
New Castle, Delaware 19720
Attn: Executive Vice President and Secretary
Phone: (302) 323-7167
Fax: (302) 323-7393
or, if to the Seller or the Master Servicer, addressed to:
Greenwood Trust Company
12 Read's Way
New Castle, Delaware 19720
Attn: John J. Coane
Phone: (302) 323-7184
Fax: (302) 323-7393
10
<PAGE> 13
or, if to the Trustee, addressed to:
U.S. Bank National Association
One Illinois Center
111 East Wacker Drive, Suite 3000
Chicago, Illinois 60601
Attn: Martha Sanders
Phone: (312) 228-9452
Fax: (312) 228-9459
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 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 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 Greenwood is the seller.
11
<PAGE> 14
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 and the
Agent Bank.
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 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 (a) the Credit Enhancement Provider's obligations under this
Agreement shall remain unchanged, (b) the Credit Enhancement Provider shall
remain solely responsible to the other parties hereto for the performance of
such obligations, (c) 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 (d) 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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<PAGE> 15
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/ Richard W. York
---------------------------------------------
Name: Richard W. York
Title: Vice President
GREENWOOD TRUST COMPANY,
as Master Servicer, Servicer
and Seller
By /s/ John J. Coane
---------------------------------------------
Name: John J. Coane
Title: Vice President, Chief Accounting Officer
and Treasurer
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By /s/ Martha Sanders
---------------------------------------------
Name: Martha Sanders
Title: Vice President
13
<PAGE> 1
EXHIBIT 4.7
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 1995-1
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
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...............................5
Section 7. Deposits to and Withdrawals from the Credit Enhancement Account........................................5
Section 8. Certain Additional Loans...............................................................................6
Section 9. Limited Obligation; Waiver of Setoff; Obligations Absolute.............................................7
Section 10. Investments and Information...........................................................................7
Section 11. Servicing Transfer....................................................................................8
Section 12. Representations and Warranties........................................................................8
Section 13. Covenants............................................................................................10
Section 14. Governing Law........................................................................................10
Section 15. Termination..........................................................................................10
Section 16. Notices..............................................................................................11
Section 17. Bankruptcy...........................................................................................11
Section 18. Limitation of Remedies...............................................................................12
Section 19. No Petition..........................................................................................12
Section 20. Amendments...........................................................................................12
</TABLE>
i
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<TABLE>
<S> <C>
Section 21. Successors and Assigns; Replacement of Credit Enhancement Provider...................................12
Section 22. Participation........................................................................................13
</TABLE>
ii
<PAGE> 4
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 April 19, 1995 (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 $631,579,000 in aggregate principal
amount of Investor Certificates of Discover Card Master Trust I, Series 1995-1
(the "Series"), which will entitle the holders thereof to interest during the
Revolving Period and the Amortization Period, if any, and principal on the Class
A Expected Final Payment Date, and Class B Expected Final Payment Date and
during the 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 April 19, 1995 (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 $37,894,740 (6.0% 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 $37,894,740 (the "New Loan"); and
<PAGE> 5
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.
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:
"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 immediately 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 0.80%.
"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 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
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<PAGE> 6
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, 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)
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 $37,894,740, 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, the rate for such Interest Period on
such principal portion shall be the Lender Rate.
(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.
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<PAGE> 7
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. On each
Distribution Date, 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:
(a) interest and earnings (net of losses and investment
expenses) accrued since the preceding Distribution Date on the Provider Amount;
and
(b) 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.
SECTION 5. REPAYMENT OF PRINCIPAL OF THE LOAN. 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 funds described below, and only to the extent such funds are
available.
(a) If, as of any Distribution Date, after giving effect to
all other deposits to and withdrawals from the Credit Enhancement Account as of
such Distribution Date, 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(a), shall be withdrawn from the Credit Enhancement Account and paid to the
Credit Enhancement Provider for application toward the
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<PAGE> 8
unpaid principal amount of the Loan.
(b) 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, 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, 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 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).
(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)(26) of the Series Supplement shall be paid to Greenwood on
behalf of the Holder of the Seller Certificate.
(c) 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(b) hereof shall be withdrawn from such account
and paid to Greenwood on behalf of the Holder of the Seller Certificate.
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
or the Available Class B Credit Enhancement Amount pursuant to the
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<PAGE> 9
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 Available Class B 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
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<PAGE> 10
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 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 Available Class B 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 Moody's 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.
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<PAGE> 11
(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.
(c) The Master Servicer shall obtain the consent of the Credit
Enhancement Provider prior to the investment in any Permitted Investments with a
stated maturity, the maturity of which is longer than as would cause them to
mature on or prior to the following Distribution Date as provided in Section
8(e) of the Series Supplement.
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 (a) be responsible for the performance of
all servicing functions to be performed from and after such date, (b) agree to
be bound by the terms, covenants and conditions contained herein applicable to
the Master Servicer and be subject to the duties and obligations of the Master
Servicer hereunder, and (c) 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
8
<PAGE> 12
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,
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 State of Illinois.
(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
9
<PAGE> 13
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 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
12 Read's Way
New Castle, Delaware 19720
Attn: Executive Vice President and Secretary
Phone: (302) 323-7167
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<PAGE> 14
Fax: (302) 323-7393
or, if to the Seller or the Master Servicer, addressed to:
Greenwood Trust Company
12 Read's Way
New Castle, Delaware 19720
Attn: John J. Coane
Phone: (302) 323-7184
Fax: (302) 323-7393
or, if to the Trustee, addressed to:
U.S. Bank National Association
One Illinois Center
111 East Wacker Drive, Suite 3000
Chicago, Illinois 60601
Attn: Martha Sanders
Phone: (312) 228-9452
Fax: (312) 228-9459
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 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.
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(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 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 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 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
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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 (a)
the Credit Enhancement Provider's obligations under this Agreement shall remain
unchanged, (b) the Credit Enhancement Provider shall remain solely responsible
to the other parties hereto for the performance of such obligations, (c) 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
(d) 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/ Richard W. York
------------------------------------------
Name: Richard W. York
Title: Vice President
GREENWOOD TRUST COMPANY,
as Master Servicer, Servicer and Seller
By /s/ John J. Coane
------------------------------------------
Name: John J. Coane
Title: Vice President, Chief Accounting
Officer and Treasurer
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By /s/ Martha Sanders
------------------------------------------
Name: Martha Sanders
Title: Vice President
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<PAGE> 1
EXHIBIT 4.8
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 1995-2
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
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...............................................................................5
Section 7. Deposits To And Withdrawals From The Credit
Enhancement Account...............................................................................5
Section 8. Certain Additional Loans..............................................................................6
Section 9. Limited Obligation; Waiver Of Setoff; Obligations
Absolute..........................................................................................7
Section 10. Investments And Information...........................................................................7
Section 11. Servicing Transfer....................................................................................8
Section 12. Representations And Warranties........................................................................8
Section 13. Covenants............................................................................................10
Section 14. Governing Law........................................................................................10
Section 15. Termination..........................................................................................10
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
Section 16. Notices..............................................................................................10
Section 17. Bankruptcy...........................................................................................11
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..............................................................................12
Section 22. Participation........................................................................................13
</TABLE>
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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 August 1, 1995 (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 $526,316,000 in aggregate principal
amount of Investor Certificates of Discover Card Master Trust I, Series 1995-2
(the "Series"), which will entitle the holders thereof to interest during the
Revolving Period, the Accumulation Period and the Amortization Period, if any,
and principal on the Class A Expected Final Payment Date, the Class B Expected
Final Payment Date and during the 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 August 1, 1995 (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 $15,789,480 (3.0% 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 $15,789,480 (the "New Loan"); and
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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.
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:
"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 immediately 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 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
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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, 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)
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 $15,789,480, 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, the rate for such Interest Period on
such principal portion shall be the Lender Rate.
(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.
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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. On each
Distribution Date, 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:
(a) interest and earnings (net of losses and investment
expenses) accrued since the preceding Distribution Date on the Provider Amount;
and
(b) 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.
SECTION 5. REPAYMENT OF PRINCIPAL OF THE LOAN. 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 funds described below, and only to the extent such funds are
available.
(a) If, as of any Distribution Date, after giving effect to
all other deposits to and withdrawals from the Credit Enhancement Account as of
such Distribution Date, 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(a), 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.
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(b) 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, 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, 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 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).
(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)(26) of the Series Supplement shall be paid to Greenwood on
behalf of the Holder of the Seller Certificate.
(c) 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(b) hereof shall be withdrawn from such account
and paid to Greenwood on behalf of the Holder of the Seller Certificate.
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
or the Available Class 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.
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(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 Available Class B 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).
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(b) SUPPLEMENTAL CREDIT ENHANCEMENT EVENT. In the event that a
Supplemental Credit Enhancement Event occurs, Greenwood as Servicer may cause
the 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 Available Class B 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 Moody's 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.
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(c) The Master Servicer shall obtain the consent of the Credit
Enhancement Provider prior to the investment in any Permitted Investments with a
stated maturity, the maturity of which is longer than as would cause them to
mature on or prior to the following Distribution Date as provided in Section
8(e) of the Series Supplement.
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 (a) be responsible for the performance of
all servicing functions to be performed from and after such date, (b) agree to
be bound by the terms, covenants and conditions contained herein applicable to
the Master Servicer and be subject to the duties and obligations of the Master
Servicer hereunder, and (c) 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.
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(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,
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 State of Illinois.
(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
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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 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
12 Read's Way
New Castle, Delaware 19720
Attn: Executive Vice President and Secretary
Phone: (302) 323-7167
Fax: (302) 323-7393
or, if to the Seller or the Master Servicer, addressed to:
Greenwood Trust Company
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12 Read's Way
New Castle, Delaware 19720
Attn: John J. Coane
Phone: (302) 323-7184
Fax: (302) 323-7393
or, if to the Trustee, addressed to:
U.S. Bank National Association
One Illinois Center
111 East Wacker Drive, Suite 3000
Chicago, Illinois 60601
Attn: Martha Sanders
Phone: (312) 228-9452
Fax: (312) 228-9459
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 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
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of all investor certificates issued by any trust with respect to which 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 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 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 (a) the Credit Enhancement Provider's obligations under this
Agreement shall remain unchanged, (b)
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<PAGE> 16
the Credit Enhancement Provider shall remain solely responsible to the other
parties hereto for the performance of such obligations, (c) 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 (d) 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.
13
<PAGE> 17
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/ Richard W. York
----------------------------------------------
Name: Richard W. York
Title: Vice President
GREENWOOD TRUST COMPANY,
as Master Servicer, Servicer and Seller
By /s/ John J. Coane
----------------------------------------------
Name: John J. Coane
Title: Vice President, Chief Accounting Officer
and Treasurer
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By /s/ Martha Sanders
----------------------------------------------
Name: Martha Sanders
Title: Vice President
14
<PAGE> 1
EXHIBIT 4.9
AMENDED AND RESTATED CREDIT ENHANCEMENT AGREEMENT
among
U.S. BANK NATIONAL ASSOCIATION
as Trustee,
GREENWOOD TRUST COMPANY
as Master Servicer, Servicer and Seller
and
DISCOVERY RECEIVABLES FINANCING CORPORATION
as Credit Enhancement Provider
-------------------------------
Dated as of April 15, 1999
-------------------------------
DISCOVER CARD MASTER TRUST I
SERIES 1995-3
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
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...............................5
Section 7. Deposits to and Withdrawals from the Credit Enhancement Account........................................5
Section 8. Certain Additional Loans...............................................................................6
Section 9. Limited Obligation; Waiver of Setoff; Obligations Absolute.............................................7
Section 10. Investments and Information...........................................................................7
Section 11. Servicing Transfer....................................................................................8
Section 12. Representations and Warranties........................................................................8
Section 13. Covenants............................................................................................10
Section 14. Governing Law........................................................................................10
Section 15. Termination..........................................................................................10
Section 16. Notices..............................................................................................10
Section 17. Bankruptcy...........................................................................................11
Section 18. Limitation of Remedies...............................................................................12
Section 19. No Petition..........................................................................................12
Section 20. Amendments...........................................................................................12
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
Section 21. Successors and Assigns; Replacement of Credit Enhancement Provider...................................12
Section 22. Participation........................................................................................13
</TABLE>
ii
<PAGE> 4
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 September 28, 1995 (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 $526,316,000 in aggregate principal
amount of Investor Certificates of Discover Card Master Trust I, Series 1995-3
(the "Series"), which will entitle the holders thereof to interest during the
Revolving Period, the Accumulation Period and the Amortization Period, if any,
and principal on the Class A Expected Final Payment Date, the Class B Expected
Final Payment Date and during the 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 September 28, 1995 (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 $31,578,960 (6.0% 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 $31,578,960 (the "New Loan"); and
<PAGE> 5
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.
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:
"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 immediately 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 0.525%.
"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 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
2
<PAGE> 6
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, 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)
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 $31,578,960, 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, the rate for such Interest Period on
such principal portion shall be the Lender Rate.
(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.
3
<PAGE> 7
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. On each
Distribution Date, 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:
(a) interest and earnings (net of losses and investment
expenses) accrued since the preceding Distribution Date on the Provider Amount;
and
(b) 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.
SECTION 5. REPAYMENT OF PRINCIPAL OF THE LOAN. 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 funds described below, and only to the extent such funds are
available.
(a) If, as of any Distribution Date, after giving effect to
all other deposits to and withdrawals from the Credit Enhancement Account as of
such Distribution Date, 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(a), 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.
4
<PAGE> 8
(b) 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, 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, 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 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).
(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)(26) of the Series Supplement shall be paid to Greenwood on
behalf of the Holder of the Seller Certificate.
(c) 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(b) hereof shall be withdrawn from such account
and paid to Greenwood on behalf of the Holder of the Seller Certificate.
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
or the Available Class 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.
5
<PAGE> 9
(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 Available Class B 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).
6
<PAGE> 10
(b) SUPPLEMENTAL CREDIT ENHANCEMENT EVENT. In the event that a
Supplemental Credit Enhancement Event occurs, Greenwood as Servicer may cause
the 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 Available Class B 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 Moody's 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.
7
<PAGE> 11
(c) The Master Servicer shall obtain the consent of the Credit
Enhancement Provider prior to the investment in any Permitted Investments with a
stated maturity, the maturity of which is longer than as would cause them to
mature on or prior to the following Distribution Date as provided in Section
8(e) of the Series Supplement.
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 (a) be responsible for the performance of
all servicing functions to be performed from and after such date, (b) agree to
be bound by the terms, covenants and conditions contained herein applicable to
the Master Servicer and be subject to the duties and obligations of the Master
Servicer hereunder, and (c) 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.
8
<PAGE> 12
(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,
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 State of Illinois.
(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
9
<PAGE> 13
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 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
12 Read's Way
New Castle, Delaware 19720
Attn: Executive Vice President and Secretary
Phone: (302) 323-7167
Fax: (302) 323-7393
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<PAGE> 14
or, if to the Seller or the Master Servicer, addressed to:
Greenwood Trust Company
12 Read's Way
New Castle, Delaware 19720
Attn: John J. Coane
Phone: (302) 323-7184
Fax: (302) 323-7393
or, if to the Trustee, addressed to:
U.S. Bank National Association
One Illinois Center
111 East Wacker Drive, Suite 3000
Chicago, Illinois 60601
Attn: Martha Sanders
Phone: (312) 228-9452
Fax: (312) 228-9459
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 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
11
<PAGE> 15
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 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 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 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
12
<PAGE> 16
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 (a) the Credit Enhancement Provider's obligations
under this Agreement shall remain unchanged, (b) the Credit Enhancement Provider
shall remain solely responsible to the other parties hereto for the performance
of such obligations, (c) 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 (d) 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.
13
<PAGE> 17
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/ Richard W. York
---------------------------------------
Name: Richard W. York
Title: Vice President
GREENWOOD TRUST COMPANY,
as Master Servicer, Servicer
and Seller
By /s/ John J. Coane
---------------------------------------
Name: John J. Coane
Title: Vice President, Chief Accounting
Officer and Treasurer
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By /s/ Martha Sanders
---------------------------------------
Name: Martha Sanders
Title: Vice President
14
<PAGE> 1
EXHIBIT 4.10
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 1996-1
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
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...............................................................................................5
Section 7. Deposits to and Withdrawals from the Credit Enhancement Account........................................5
Section 8. Certain Additional Loans...............................................................................6
Section 9. Limited Obligation; Waiver of Setoff; Obligations Absolute.............................................7
Section 10. Investments and Information...........................................................................7
Section 11. Servicing Transfer....................................................................................7
Section 12. Representations and Warranties........................................................................8
Section 13. Covenants.............................................................................................9
Section 14. Governing Law........................................................................................10
Section 15. Termination..........................................................................................10
Section 16. Notices..............................................................................................10
Section 17. Bankruptcy...........................................................................................11
Section 18. Limitation of Remedies...............................................................................11
Section 19. No Petition..........................................................................................12
Section 20. Amendments...........................................................................................12
Section 21. Successors and Assigns; Replacement of Credit Enhancement
Provider.............................................................................................12
Section 22. Participation........................................................................................13
</TABLE>
i
<PAGE> 3
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 January 18, 1996 (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 $1,052,632,000 in aggregate
principal amount of Investor Certificates of Discover Card Master Trust I,
Series 1996-1 (the "Series"), which will entitle the holders thereof to interest
during the Revolving Period, the Accumulation Period and the Amortization
Period, if any, and principal on the Class A Expected Final Payment Date, the
Class B Expected Final Payment Date and during the 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 January 18, 1996 (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 $57,894,760 (5.5% 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 $57,894,760 (the "New Loan"); and
<PAGE> 4
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.
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. 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.
(a) The following terms have the definitions set forth below:
"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 immediately 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 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.
2
<PAGE> 5
"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, 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)
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 $57,894,760, 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, the rate for such Interest Period on
such principal portion shall be the Lender Rate.
(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.
3
<PAGE> 6
(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. On each
Distribution Date, 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:
(a) interest and earnings (net of losses and investment
expenses) accrued since the preceding Distribution Date on the Provider Amount;
and
(b) 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.
SECTION 5. REPAYMENT OF PRINCIPAL OF THE LOAN. 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 funds described below, and only to the extent such funds are
available.
(a) If, as of any Distribution Date, after giving effect to
all other deposits to and withdrawals from the Credit Enhancement Account as of
such Distribution Date, 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(a), 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.
(b) 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, 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.
4
<PAGE> 7
SECTION 6. PAYMENTS TO THE HOLDER OF THE SELLER CERTIFICATE
AND THE MASTER SERVICER.
(a) On each Distribution Date, 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 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).
(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)(26) of the Series Supplement shall be paid to Greenwood on
behalf of the Holder of the Seller Certificate.
(c) 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(b) hereof shall be withdrawn from such account
and paid to Greenwood on behalf of the Holder of the Seller Certificate.
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
or the Available Class 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
5
<PAGE> 8
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 Available Class B 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 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 Available Class B 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.
6
<PAGE> 9
(c) NOTICE. The Credit Enhancement Provider shall give prior
written notice to Moody's 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.
(c) The Master Servicer shall obtain the consent of the Credit
Enhancement Provider prior to the investment in any Permitted Investments with a
stated maturity, the maturity of which is longer than as would cause them to
mature on or prior to the following Distribution Date as provided in Section
8(e) of the Series Supplement.
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 (a) be responsible for the performance of
all servicing functions to be performed from and after such date, (b) agree to
be bound by the terms, covenants and conditions contained herein applicable to
the Master Servicer
7
<PAGE> 10
and be subject to the duties and obligations of the Master Servicer hereunder,
and (c) 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.
8
<PAGE> 11
(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,
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 State of Illinois.
(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
9
<PAGE> 12
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 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
12 Read's Way
New Castle, Delaware 19720
Attn: Executive Vice President and Secretary
Phone: (302) 323-7167
Fax: (302) 323-7393
or, if to the Seller or the Master Servicer, addressed to:
Greenwood Trust Company
12 Read's Way
New Castle, Delaware 19720
Attn: John J. Coane
Phone: (302) 323-7184
Fax: (302) 323-7393
or, if to the Trustee, addressed to:
U.S. Bank National Association
One Illinois Center
111 East Wacker Drive, Suite 3000
Chicago, Illinois 60601
Attn: Martha Sanders
Phone: (312) 228-9452
Fax: (312) 228-9459
10
<PAGE> 13
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 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 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 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.
11
<PAGE> 14
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 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 (a) the Credit Enhancement Provider's obligations under this
Agreement shall remain unchanged, (b) the Credit Enhancement Provider shall
remain solely responsible to the other parties hereto for the performance of
such obligations, (c) 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 (d) 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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<PAGE> 15
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/ Richard W. York
-------------------------------------------
Name: Richard W. York
Title: Vice President
GREENWOOD TRUST COMPANY,
as Master Servicer, Servicer
and Seller
By /s/ John J. Coane
-------------------------------------------
Name: John J. Coane
Title: Vice President, Chief Accounting
Officer and Treasurer
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By /s/ Martha Sanders
-------------------------------------------
Name: Martha Sanders
Title: Vice President
13
<PAGE> 1
EXHIBIT 4.11
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 1996-2
<PAGE> 2
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.....................................5
Section 7. Deposits to and Withdrawals from the Credit
Enhancement Account.........................................5
Section 8. Certain Additional Loans.......................................6
Section 9. Limited Obligation; Waiver of Setoff; Obligations Absolute.....7
Section 10. Investments and Information....................................7
Section 11. Servicing Transfer.............................................7
Section 12. Representations and Warranties.................................8
Section 13. Covenants......................................................9
Section 14. Governing Law.................................................10
Section 15. Termination...................................................10
Section 16. Notices.......................................................10
Section 17. Bankruptcy....................................................11
Section 18. Limitation of Remedies........................................11
Section 19. No Petition...................................................12
Section 20. Amendments....................................................12
Section 21. Successors and Assigns; Replacement of Credit
Enhancement Provider.......................................12
Section 22. Participation.................................................13
i
<PAGE> 3
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 January 29, 1996 (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 $947,369,000 in aggregate principal
amount of Investor Certificates of Discover Card Master Trust I, Series 1996-2
(the "Series"), which will entitle the holders thereof to interest during the
Revolving Period, the Accumulation Period and the Amortization Period, if any,
and principal on the Class A Expected Final Payment Date, the Class B Expected
Final Payment Date and during the 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 January 29, 1996 (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 $56,842,140 (6.0% 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 $56,842,140 (the "New Loan"); and
<PAGE> 4
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.
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. 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.
(a) The following terms have the definitions set forth below:
"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 immediately 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 0.575%.
"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 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.
2
<PAGE> 5
"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, 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)
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 $56,842,140, 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, the rate for such Interest Period on
such principal portion shall be the Lender Rate.
(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.
3
<PAGE> 6
(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. On each
Distribution Date, 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:
(a) interest and earnings (net of losses and investment
expenses) accrued since the preceding Distribution Date on the Provider Amount;
and
(b) 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.
SECTION 5. REPAYMENT OF PRINCIPAL OF THE LOAN. 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 funds described below, and only to the extent such funds are
available.
(a) If, as of any Distribution Date, after giving effect to
all other deposits to and withdrawals from the Credit Enhancement Account as of
such Distribution Date, 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 Accounts 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(a), 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.
(b) 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, 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.
4
<PAGE> 7
SECTION 6. PAYMENTS TO THE HOLDER OF THE SELLER CERTIFICATE
AND THE MASTER SERVICER.
(a) On each Distribution Date, 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 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).
(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)(26) of the Series Supplement shall be paid to Greenwood on
behalf of the Holder of the Seller Certificate.
(c) 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(b) hereof shall be withdrawn from such account
and paid to Greenwood on behalf of the Holder of the Seller Certificate.
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
or the Available Class 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
5
<PAGE> 8
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 Available Class B 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 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 Available Class B 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.
6
<PAGE> 9
(c) NOTICE. The Credit Enhancement Provider shall give prior
written notice to Moody's 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.
(c) The Master Servicer shall obtain the consent of the Credit
Enhancement Provider prior to the investment in any Permitted Investments with a
stated maturity, the maturity of which is longer than as would cause them to
mature on or prior to the following Distribution Date as provided in Section
8(e) of the Series Supplement.
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 (a) be responsible for the performance of
all servicing functions to be performed from and after such date, (b) agree to
be bound by the terms, covenants and conditions contained herein applicable to
the Master Servicer
7
<PAGE> 10
and be subject to the duties and obligations of the Master Servicer hereunder,
and (c) 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.
8
<PAGE> 11
(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,
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 State of Illinois.
(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
9
<PAGE> 12
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 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
12 Read's Way
New Castle, Delaware 19720
Attn: Executive Vice President and Secretary
Phone: (302) 323-7167
Fax: (302) 323-7393
or, if to the Seller or the Master Servicer, addressed to:
Greenwood Trust Company
12 Read's Way
New Castle, Delaware 19720
Attn: John J. Coane
Phone: (302) 323-7184
Fax: (302) 323-7393
or, if to the Trustee, addressed to:
U.S. Bank National Association
One Illinois Center
111 East Wacker Drive, Suite 3000
Chicago, Illinois 60601
Attn: Martha Sanders
Phone: (312) 228-9452
Fax: (312) 228-9459
10
<PAGE> 13
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 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 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 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.
11
<PAGE> 14
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 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 (a) the Credit Enhancement Provider's obligations under this
Agreement shall remain unchanged, (b) the Credit Enhancement Provider shall
remain solely responsible to the other parties hereto for the performance of
such obligations, (c) 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 (d) 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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<PAGE> 15
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
ORPORATION,
as Credit Enhancement Provider
By /s/ Richard W. York
--------------------------------------------
Name: Richard W. York
Title: Vice President
GREENWOOD TRUST COMPANY,
as Master Servicer, Servicer
and Seller
By /s/ John J. Coane
--------------------------------------------
Name: John J. Coane
Title: Vice President, Chief Accounting
Officer and Treasurer
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By /s/ Martha Sanders
--------------------------------------------
Name: Martha Sanders
Title: Vice President
13
<PAGE> 1
EXHIBIT 4.12
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 1996-3
<PAGE> 2
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.........................................5
Section 7. Deposits to and Withdrawals from the Credit
Enhancement Account.........................................5
Section 8. Certain Additional Loans......................................6
Section 9. Limited Obligation; Waiver of Setoff; Obligations Absolute....7
Section 10. Investments and Information...................................7
Section 11. Servicing Transfer............................................7
Section 12. Representations and Warranties................................8
Section 13. Covenants.....................................................9
Section 14. Governing Law................................................10
Section 15. Termination..................................................10
Section 16. Notices......................................................10
Section 17. Bankruptcy...................................................11
Section 18. Limitation of Remedies.......................................11
Section 19. No Petition..................................................12
Section 20. Amendments...................................................12
Section 21. Successors and Assigns; Replacement of Credit
Enhancement Provider.......................................12
Section 22. Participation................................................13
i
<PAGE> 3
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 February 21, 1996 (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 $631,579,000 in aggregate principal
amount of Investor Certificates of Discover Card Master Trust I, Series 1996-3
(the "Series"), which will entitle the holders thereof to interest during the
Revolving Period, the Accumulation Period and the Amortization Period, if any,
and principal on the Class A Expected Final Payment Date, the Class B Expected
Final Payment Date and during the 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 February 21, 1996 (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 $18,947,370 (3.0% 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 $18,947,370 (the "New Loan"); and
<PAGE> 4
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.
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:
"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 immediately 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 0.90%.
"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 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.
2
<PAGE> 5
"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, 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)
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 $18,947,370, 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, the rate for such Interest Period on
such principal portion shall be the Lender Rate.
(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.
3
<PAGE> 6
(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. On each
Distribution Date, 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:
(a) interest and earnings (net of losses and investment
expenses) accrued since the preceding Distribution Date on the Provider Amount;
and
(b) 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.
SECTION 5. REPAYMENT OF PRINCIPAL OF THE LOAN. 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 funds described below, and only to the extent such funds are
available.
(a) If, as of any Distribution Date, after giving effect to
all other deposits to and withdrawals from the Credit Enhancement Account as of
such Distribution Date, 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(a), 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.
(b) 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, 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.
4
<PAGE> 7
SECTION 6. PAYMENTS TO THE HOLDER OF THE SELLER CERTIFICATE
AND THE MASTER SERVICER.
(a) On each Distribution Date, 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 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).
(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)(26) of the Series Supplement shall be paid to Greenwood on
behalf of the Holder of the Seller Certificate.
(c) 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(b) hereof shall be withdrawn from such account
and paid to Greenwood on behalf of the Holder of the Seller Certificate.
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
or the Available Class 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
5
<PAGE> 8
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 Available Class B 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 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 Available Class B 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.
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<PAGE> 9
(c) NOTICE. The Credit Enhancement Provider shall give prior
written notice to Moody's 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.
(c) The Master Servicer shall obtain the consent of the Credit
Enhancement Provider prior to the investment in any Permitted Investments with a
stated maturity, the maturity of which is longer than as would cause them to
mature on or prior to the following Distribution Date as provided in Section
8(e) of the Series Supplement.
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 (a) be responsible for the performance of
all servicing functions to be performed from and after such date, (b) agree to
be bound by the terms, covenants and conditions contained herein applicable to
the Master Servicer
7
<PAGE> 10
and be subject to the duties and obligations of the Master Servicer hereunder,
and (c) 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.
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<PAGE> 11
(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,
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
9
<PAGE> 12
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 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
12 Read's Way
New Castle, Delaware 19720
Attn: Executive Vice President and Secretary
Phone: (302) 323-7167
Fax: (302) 323-7393
or, if to the Seller or the Master Servicer, addressed to:
Greenwood Trust Company
12 Read's Way
New Castle, Delaware 19720
Attn: John J. Coane
Phone: (302) 323-7184
Fax: (302) 323-7393
or, if to the Trustee, addressed to:
U.S. Bank National Association
One Illinois Center
111 East Wacker Drive, Suite 3000
Chicago, Illinois 60601
Attn: Martha Sanders
Phone: (312) 228-9452
Fax: (312) 228-9459
10
<PAGE> 13
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 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 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 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.
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<PAGE> 14
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 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 (a) the Credit Enhancement Provider's obligations under this
Agreement shall remain unchanged, (b) the Credit Enhancement Provider shall
remain solely responsible to the other parties hereto for the performance of
such obligations, (c) 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 (d) 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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<PAGE> 15
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/ Richard W. York
-----------------------------------------
Name: Richard W. York
Title: Vice President
GREENWOOD TRUST COMPANY,
as Master Servicer, Servicer and Seller
By /s/ John J. Coane
-----------------------------------------
Name: John J. Coane
Title: Vice President, Chief Accounting
Officer and Treasurer
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By /s/ Martha Sanders
-----------------------------------------
Name: Martha Sanders
Title: Vice President
<PAGE> 1
EXHIBIT 4.13
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 1996-4
<PAGE> 2
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...............................................5
Section 7. Deposits to and Withdrawals from the Credit Enhancement
Account.......................................................5
Section 8. Certain Additional Loans........................................6
Section 9. Limited Obligation; Waiver of Setoff; Obligations Absolute......7
Section 10. Investments and Information.....................................7
Section 11. Servicing Transfer..............................................8
Section 12. Representations and Warranties..................................8
Section 13. Covenants......................................................10
Section 14. Governing Law..................................................10
Section 15. Termination....................................................10
Section 16. Notices........................................................11
Section 17. Bankruptcy.....................................................11
Section 18. Limitation of Remedies.........................................12
Section 19. No Petition....................................................12
i
<PAGE> 3
Section 20. Amendments.....................................................12
Section 21. Successors and Assigns; Replacement of Credit
Enhancement Provider.........................................12
Section 22. Participation..................................................13
ii
<PAGE> 4
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 April 30, 1996 (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 $1,052,632,000 in aggregate
principal amount of Investor Certificates of Discover Card Master Trust I,
Series 1996-4 (the "Series"), which will entitle the holders thereof to interest
during the Revolving Period, the Accumulation Period and the Amortization
Period, if any, and principal on the Class A Expected Final Payment Date, the
Class B Expected Final Payment Date and during the 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 April 30, 1996 (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 $63,157,920 (6.0% 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 $63,157,920 (the "New Loan"); and
<PAGE> 5
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.
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:
"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 immediately 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 0.95%.
"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 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
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<PAGE> 6
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, 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)
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 $63,157,920, 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, the rate for such Interest Period on
such principal portion shall be the Lender Rate.
(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.
3
<PAGE> 7
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. On each
Distribution Date, 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:
(a) interest and earnings (net of losses and investment
expenses) accrued since the preceding Distribution Date on the Provider Amount;
and
(b) 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.
SECTION 5. REPAYMENT OF PRINCIPAL OF THE LOAN. 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 funds described below, and only to the extent such funds are
available.
(a) If, as of any Distribution Date, after giving effect to
all other deposits to and withdrawals from the Credit Enhancement Account as of
such Distribution Date, 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(a), shall be withdrawn from the Credit Enhancement Account and paid to the
Credit Enhancement Provider for application toward the
4
<PAGE> 8
unpaid principal amount of the Loan.
(b) 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, 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, 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 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).
(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)(26) of the Series Supplement shall be paid to Greenwood on
behalf of the Holder of the Seller Certificate.
(c) 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(b) hereof shall be withdrawn from such account
and paid to Greenwood on behalf of the Holder of the Seller Certificate.
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
or the Available Class B Credit Enhancement Amount pursuant to the
5
<PAGE> 9
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 Available Class B 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
6
<PAGE> 10
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 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 Available Class B 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 Moody's 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.
7
<PAGE> 11
(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.
(c) The Master Servicer shall obtain the consent of the Credit
Enhancement Provider prior to the investment in any Permitted Investments with a
stated maturity, the maturity of which is longer than as would cause them to
mature on or prior to the following Distribution Date as provided in Section
8(e) of the Series Supplement.
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 (a) be responsible for the performance of
all servicing functions to be performed from and after such date, (b) agree to
be bound by the terms, covenants and conditions contained herein applicable to
the Master Servicer and be subject to the duties and obligations of the Master
Servicer hereunder, and (c) 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
8
<PAGE> 12
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,
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
9
<PAGE> 13
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 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
12 Read's Way
New Castle, Delaware 19720
Attn: Executive Vice President and Secretary
Phone: (302) 323-7167
10
<PAGE> 14
Fax: (302) 323-7393
or, if to the Seller or the Master Servicer, addressed to:
Greenwood Trust Company
12 Read's Way
New Castle, Delaware 19720
Attn: John J. Coane
Phone: (302) 323-7184
Fax: (302) 323-7393
or, if to the Trustee, addressed to:
U.S. Bank National Association
One Illinois Center
111 East Wacker Drive, Suite 3000
Chicago, Illinois 60601
Attn: Martha Sanders
Phone: (312) 228-9452
Fax: (312) 228-9459
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 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.
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<PAGE> 15
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 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 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 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
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<PAGE> 16
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 (a) the Credit Enhancement Provider's obligations under this
Agreement shall remain unchanged, (b) the Credit Enhancement Provider shall
remain solely responsible to the other parties hereto for the performance of
such obligations, (c) 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 (d) 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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<PAGE> 17
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/ Richard W. York
------------------------------------------
Name: Richard W. York
Title: Vice President
GREENWOOD TRUST COMPANY,
as Master Servicer, Servicer
and Seller
By /s/ John J. Coane
------------------------------------------
Name: John J. Coane
Title: Vice President, Chief Accounting
Officer and Treasurer
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By /s/ Martha Sanders
------------------------------------------
Name: Martha Sanders
Title: Vice President
14
<PAGE> 1
EXHIBIT 4.14
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 1996-5
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
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...............................5
Section 7. Deposits to and Withdrawals from the Credit Enhancement Account........................................5
Section 8. Certain Additional Loans...............................................................................6
Section 9. Limited Obligation; Waiver of Setoff; Obligations Absolute.............................................7
Section 10. Investments and Information...........................................................................7
Section 11. Servicing Transfer....................................................................................8
Section 12. Representations and Warranties........................................................................8
Section 13. Covenants............................................................................................10
Section 14. Governing Law........................................................................................10
Section 15. Termination..........................................................................................10
Section 16. Notices..............................................................................................11
Section 17. Bankruptcy...........................................................................................11
Section 18. Limitation of Remedies...............................................................................12
Section 19. No Petition..........................................................................................12
Section 20. Amendments...........................................................................................12
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
Section 21. Successors and Assigns; Replacement of Credit Enhancement Provider...................................12
Section 22. Participation........................................................................................13
</TABLE>
<PAGE> 4
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 July 24, 1996 (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 $862,304,676 in aggregate principal
amount of Investor Certificates of Discover Card Master Trust I, Series 1996-5
(the "Series"), which will entitle the holders thereof to interest during the
Revolving Period, the Accumulation Period and the Amortization Period, if any,
and principal on the Class A Expected Final Payment Date, the Class B Expected
Final Payment Date and during the 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 July 24, 1996 (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 $47,426,758 (5.5% 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 $47,426,758 (the "New Loan");
<PAGE> 5
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.
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:
"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 immediately 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 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
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<PAGE> 6
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, 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)
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 $47,426,758, 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, the rate for such Interest Period on
such principal portion shall be the Lender Rate.
(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.
3
<PAGE> 7
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. On each
Distribution Date, 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:
(a) interest and earnings (net of losses and investment
expenses) accrued since the preceding Distribution Date on the Provider Amount;
and
(b) 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.
SECTION 5. REPAYMENT OF PRINCIPAL OF THE LOAN. 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 funds described below, and only to the extent such funds are
available.
(a) If, as of any Distribution Date, after giving effect to
all other deposits to and withdrawals from the Credit Enhancement Account as of
such Distribution Date, 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(a), shall be withdrawn from the Credit Enhancement Account and paid to the
Credit Enhancement Provider for application toward the
4
<PAGE> 8
unpaid principal amount of the Loan.
(b) 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, 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, 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 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).
(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)(26) of the Series Supplement shall be paid to Greenwood on
behalf of the Holder of the Seller Certificate.
(c) 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(b) hereof shall be withdrawn from such account
and paid to Greenwood on behalf of the Holder of the Seller Certificate.
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
or the Available Class B Credit Enhancement Amount pursuant to the
5
<PAGE> 9
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 Available Class B 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
6
<PAGE> 10
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 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 Available Class B 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 Moody's 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.
7
<PAGE> 11
(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.
(c) The Master Servicer shall obtain the consent of the Credit
Enhancement Provider prior to the investment in any Permitted Investments with a
stated maturity, the maturity of which is longer than as would cause them to
mature on or prior to the following Distribution Date as provided in Section
8(e) of the Series Supplement.
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 (a) be responsible for the performance of
all servicing functions to be performed from and after such date, (b) agree to
be bound by the terms, covenants and conditions contained herein applicable to
the Master Servicer and be subject to the duties and obligations of the Master
Servicer hereunder, and (c) 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
8
<PAGE> 12
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,
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
9
<PAGE> 13
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 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
12 Read's Way
New Castle, Delaware 19720
Attn: Executive Vice President and Secretary
Phone: (302) 323-7167
10
<PAGE> 14
Fax: (302) 323-7393
or, if to the Seller or the Master Servicer, addressed to:
Greenwood Trust Company
12 Read's Way
New Castle, Delaware 19720
Attn: John J. Coane
Phone: (302) 323-7184
Fax: (302) 323-7393
or, if to the Trustee, addressed to:
U.S. Bank National Association
One Illinois Center
111 East Wacker Drive, Suite 3000
Chicago, Illinois 60601
Attn: Martha Sanders
Phone: (312) 228-9452
Fax: (312) 228-9459
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 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.
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<PAGE> 15
(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 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 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 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
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<PAGE> 16
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 (a)
the Credit Enhancement Provider's obligations under this Agreement shall remain
unchanged, (b) the Credit Enhancement Provider shall remain solely responsible
to the other parties hereto for the performance of such obligations, (c) 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
(d) 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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<PAGE> 17
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/ Richard W. York
-------------------------------------------
Name: Richard W. York
Title: Vice President
GREENWOOD TRUST COMPANY,
as Master Servicer, Servicer and Seller
By /s/ John J. Coane
-------------------------------------------
Name: John J. Coane
Title: Vice President, Chief Accounting Officer
and Treasurer
U.S. BANK NATIONAL ASSOCIATION, as Trustee
By /s/ Martha Sanders
-------------------------------------------
Name: Martha Sanders
Title: Vice President
<PAGE> 1
EXHIBIT 4.15
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 1997-1
<PAGE> 2
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
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...................................5
Section 7. Deposits to and Withdrawals from the Credit Enhancement Account............................................5
Section 8. Certain Additional Loans...................................................................................6
Section 9. Limited Obligation; Waiver of Setoff; Obligations Absolute.................................................7
Section 10. Investments and Information...............................................................................7
Section 11. Servicing Transfer........................................................................................8
Section 12. Representations and Warranties............................................................................8
Section 13. Covenants.................................................................................................9
Section 14. Governing Law............................................................................................10
Section 15. Termination..............................................................................................10
Section 16. Notices..................................................................................................10
Section 17. Bankruptcy...............................................................................................11
Section 18. Limitation of Remedies...................................................................................11
Section 19. No Petition..............................................................................................12
Section 20. Amendments...............................................................................................12
Section 21. Successors and Assigns; Replacement of Credit Enhancement Provider.......................................12
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
Section 22. Participation............................................................................................13
</TABLE>
ii
<PAGE> 4
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 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 August 26, 1997 (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 $789,474,000 in aggregate principal
amount of Investor Certificates of Discover Card Master Trust I, Series 1997-1
(the "Series"), which will entitle the holders thereof to interest during the
Revolving Period, the Accumulation Period and the Amortization Period, if any,
and principal on the Class A Expected Final Payment Date, the Class B Expected
Final Payment Date and during the 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 August 26, 1997 (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 $59,210,550 (7.5% 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 $7,264,012.96;
WHEREAS, the parties hereto desire that the Credit Enhancement
Provider make a new term loan in the amount of $51,946,537.04 (the "New Loan");
and
<PAGE> 5
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.
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:
"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 immediately 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 0.575%.
"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 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
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<PAGE> 6
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, 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)
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 $51,946,537.04, 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, the rate for such Interest Period on
such principal portion shall be the Lender Rate.
(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.
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<PAGE> 7
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. On each
Distribution Date, 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:
(a) interest and earnings (net of losses and investment
expenses) accrued since the preceding Distribution Date on the Provider Amount;
and
(b) 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.
SECTION 5. REPAYMENT OF PRINCIPAL OF THE LOAN. 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 funds described below, and only to the extent such funds are
available.
(a) If, as of any Distribution Date, after giving effect to
all other deposits to and withdrawals from the Credit Enhancement Account as of
such Distribution Date, 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(a), 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.
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<PAGE> 8
(b) 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, 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, 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 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).
(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)(26) of the Series Supplement shall be paid to Greenwood on
behalf of the Holder of the Seller Certificate.
(c) 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(b) hereof shall be withdrawn from such account
and paid to Greenwood on behalf of the Holder of the Seller Certificate.
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
or the Available Class 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.
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<PAGE> 9
(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, 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 Available Class B 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) NOTICE. The Credit Enhancement Provider shall give prior
written notice
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to Moody's 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.
(c) The Master Servicer shall obtain the consent of the Credit
Enhancement Provider prior to the investment in any Permitted Investments with a
stated maturity, the maturity of which is longer than as would cause them to
mature on or prior to the following Distribution Date as provided in Section
8(e) of the Series Supplement.
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 (a) be responsible for the performance of
all servicing functions to be performed from and after such date, (b) agree to
be
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bound by the terms, covenants and conditions contained herein applicable to
the Master Servicer and be subject to the duties and obligations of the Master
Servicer hereunder, and (c) 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
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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,
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
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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 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
12 Read's Way
New Castle, Delaware 19720
Attn: Executive Vice President and
Secretary
Phone: (302) 323-7167
Fax: (302) 323-7393
or, if to the Seller or the Master Servicer, addressed to:
Greenwood Trust Company
12 Read's Way
New Castle, Delaware 19720
Attn: John J. Coane
Phone: (302) 323-7184
Fax: (302) 323-7393
or, if to the Trustee, addressed to:
U.S. Bank National Association
One Illinois Center
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111 East Wacker Drive - Suite 3000
Chicago, Illinois 60601
Attn: Martha Sanders
Phone: (312) 228-9452
Fax: (312) 228-9459
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 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 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 Greenwood is the seller.
SECTION 20. AMENDMENTS. This Agreement shall not be amended or
modified
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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 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 (a) the Credit Enhancement Provider's obligations under this
Agreement shall remain unchanged, (b) the Credit Enhancement Provider shall
remain solely responsible to the other parties hereto for the performance of
such obligations, (c) 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 (d) 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/ Richard W. York
-------------------
Name: Richard W. York
Title: Vice President
GREENWOOD TRUST COMPANY,
as Master Servicer, Servicer
and Seller
By: /s/ John J. Coane
-----------------
Name: John J. Coane
Title: Vice President, Chief Accounting Officer
and Treasurer
U.S. BANK NATIONAL ASSOCIATION, as Trustee
By: /s/ Martha Sanders
------------------
Name: Martha Sanders
Title: Vice President
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EXHIBIT 4.16
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 1997-2
<PAGE> 2
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...................................................5
Section 7. Deposits to and Withdrawals from the Credit Enhancement
Account...........................................................5
Section 8. Certain Additional Loans............................................6
Section 9. Limited Obligation; Waiver of Setoff; Obligations Absolute..........7
Section 10. Investments and Information........................................7
Section 11. Servicing Transfer.................................................8
Section 12. Representations and Warranties.....................................8
Section 13. Covenants..........................................................9
Section 14. Governing Law.....................................................10
Section 15. Termination.......................................................10
Section 16. Notices...........................................................10
Section 17. Bankruptcy........................................................11
Section 18. Limitation of Remedies............................................11
Section 19. No Petition.......................................................11
Section 20. Amendments........................................................12
i
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Section 21. Successors and Assigns; Replacement of Credit Enhancement
Provider........................................................12
Section 22. Participation.....................................................13
ii
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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 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 October 15, 1997 (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 $526,316,000 in aggregate principal
amount of Investor Certificates of Discover Card Master Trust I, Series 1997-2
(the "Series"), which will entitle the holders thereof to interest during the
Revolving Period, the Controlled Liquidation Period, the Accumulation Period,
the Early Accumulation Period and the Amortization Period, if any, and principal
commencing on the April 2000 Distribution Date;
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 October 15, 1997 (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 $21,052,640 (4.0% 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 $21,052,640 (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
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to the Trust, for the benefit of the Investor Certificateholders of the Series,
for deposit in the Credit Enhancement Account.
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:
"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 immediately 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 0.95%.
"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 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
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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, 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)
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 $21,052,640, 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, the rate for such Interest Period on
such principal portion shall be the Lender Rate.
(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
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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. On each
Distribution Date, 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:
(a) interest and earnings (net of losses and investment
expenses) accrued since the preceding Distribution Date on the Provider Amount;
and
(b) 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.
SECTION 5. REPAYMENT OF PRINCIPAL OF THE LOAN. 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 funds described below, and only to the extent such
funds are available.
(a) If, as of any Distribution Date, after giving effect to
all other deposits to and withdrawals from the Credit Enhancement Account as of
such Distribution Date, 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(a), 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.
(b) On the earliest to occur of (i) the Series Termination
Date, (ii) the day on which the Class Invested Amount with respect to each Class
of the Series is paid in full and (iii) the Fully Funded Date, if any, 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, 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
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Certificate (i) the interest and earnings (net of losses and investment
expenses) accrued since the 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).
(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) of the Series Supplement shall be paid to Greenwood on
behalf of the Holder of the Seller Certificate.
(c) On the earliest to occur of (i) the Series Termination
Date, (ii) the day on which the Class Invested Amount with respect to each Class
of the Series is paid in full and (iii) the Fully Funded Date, if any, 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(b) hereof shall be
withdrawn from such account and paid to Greenwood on behalf of the Holder of the
Seller Certificate.
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
or the Available Class 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
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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 Available Class B 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 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 Available Class B 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 Moody's 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
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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.
(c) The Master Servicer shall obtain the consent of the Credit
Enhancement Provider prior to the investment in any Permitted Investments with a
stated maturity, the maturity of which is longer than as would cause them to
mature on or prior to the following Distribution Date as provided in Section
8(e) of the Series Supplement.
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 (a) be responsible for the
performance of all servicing functions to be performed from and after such
date, (b) agree to be bound by the terms, covenants and conditions contained
herein applicable to the Master Servicer and be subject to the duties and
obligations of the Master Servicer hereunder, and (c) 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.
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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,
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:
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(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 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
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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
12 Read's Way
New Castle, Delaware 19720
Attn: Executive Vice President and Secretary
Phone: (302) 323-7167
Fax: (302) 323-7393
or, if to the Seller or the Master Servicer, addressed to:
Greenwood Trust Company
12 Read's Way
New Castle, Delaware 19720
Attn: John J. Coane
Phone: (302) 323-7184
Fax: (302) 323-7393
or, if to the Trustee, addressed to:
U.S. Bank National Association
One Illinois Center
111 East Wacker Drive - Suite 3000
Chicago, Illinois 60601
Attn: Martha Sanders
Phone: (312) 228-9452
Fax: (312) 228-9459
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 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
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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 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 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 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.
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(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 (a) the Credit Enhancement Provider's
obligations under this Agreement shall remain unchanged, (b) the Credit
Enhancement Provider shall remain solely responsible to the other parties
hereto for the performance of such obligations, (c) 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 (d) 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.
12
<PAGE> 16
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/ Richard W. York
--------------------------------------
Name: Richard W. York
Title: Vice President
GREENWOOD TRUST COMPANY,
as Master Servicer, Servicer and Seller
By /s/ John J. Coane
--------------------------------------
Name: John J. Coane
Title: Vice President, Chief Accounting Officer
and Treasurer
U.S. BANK NATIONAL ASSOCIATION, as Trustee
By /s/ Martha Sanders
--------------------------------------
Name: Martha Sanders
Title: Vice President
13
<PAGE> 1
EXHIBIT 4.17
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 1997-3
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
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..................................5
Section 7. Deposits to and Withdrawals from the Credit Enhancement Account...........................................5
Section 8. Certain Additional Loans..................................................................................6
Section 9. Limited Obligation; Waiver of Setoff; Obligations Absolute................................................7
Section 10. Investments and Information...............................................................................7
Section 11. Servicing Transfer........................................................................................8
Section 12. Representations and Warranties............................................................................8
Section 13. Covenants.................................................................................................9
Section 14. Governing Law............................................................................................10
Section 15. Termination..............................................................................................10
Section 16. Notices..................................................................................................10
Section 17. Bankruptcy...............................................................................................11
Section 18. Limitation of Remedies...................................................................................11
Section 19. No Petition..............................................................................................12
Section 20. Amendments...............................................................................................12
Section 21. Successors and Assigns; Replacement of Credit Enhancement Provider.......................................12
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
Section 22. Participation............................................................................................13
</TABLE>
ii
<PAGE> 4
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 October 23, 1997 (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 $684,211,000 in aggregate principal
amount of Investor Certificates of Discover Card Master Trust I, Series 1997-3
(the "Series"), which will entitle the holders thereof to interest during the
Revolving Period, the Accumulation Period, and the Amortization Period, if any,
and principal on the Class A Expected Final Payment Date, the Class B Expected
Final Payment Date and during the 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 October 23, 1997 (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 $51,315,825 (7.5% 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 $11,240,361.87;
WHEREAS, the parties hereto desire that the Credit Enhancement
Provider make a new term loan in the amount of $40,075,463.13 (the "New Loan");
and
<PAGE> 5
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.
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:
"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 immediately 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 0.80%.
"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 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
2
<PAGE> 6
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, 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)
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 $40,075,463.13,
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, the rate for such Interest Period on
such principal portion shall be the Lender Rate.
(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.
3
<PAGE> 7
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. On each
Distribution Date, 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:
(a) interest and earnings (net of losses and investment
expenses) accrued since the preceding Distribution Date on the Provider Amount;
and
(b) 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.
SECTION 5. REPAYMENT OF PRINCIPAL OF THE LOAN. 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 funds described below, and only to the extent such funds
are available.
(a) If, as of any Distribution Date, after giving effect to
all other deposits to and withdrawals from the Credit Enhancement Account as of
such Distribution Date, 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(a), 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.
4
<PAGE> 8
(b) 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, 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, 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 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).
(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) of the Series Supplement shall be paid to Greenwood
on behalf of the Holder of the Seller Certificate.
(c) 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(b) hereof shall be withdrawn from such account
and paid to Greenwood on behalf of the Holder of the Seller Certificate.
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
or the Available Class 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.
5
<PAGE> 9
(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 Available Class B 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).
6
<PAGE> 10
(b) NOTICE. The Credit Enhancement Provider shall give prior
written notice to Moody's 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.
(c) The Master Servicer shall obtain the consent of the
Credit Enhancement Provider prior to the investment in any Permitted Investments
with a stated maturity, the maturity of which is longer than as would cause them
to mature on or prior to the following Distribution Date as provided in Section
8(e) of the Series Supplement.
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 (a) be responsible for the
7
<PAGE> 11
performance of all servicing functions to be performed from and after such date,
(b) agree to be bound by the terms, covenants and conditions contained herein
applicable to the Master Servicer and be subject to the duties and obligations
of the Master Servicer hereunder, and (c) 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.
8
<PAGE> 12
(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,
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
9
<PAGE> 13
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 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
12 Read's Way
New Castle, Delaware 19720
Attn: Executive Vice President and Secretary
Phone: (302) 323-7167
Fax: (302) 323-7393
or, if to the Seller or the Master Servicer, addressed to:
Greenwood Trust Company
12 Read's Way
New Castle, Delaware 19720
Attn: John J. Coane
Phone: (302) 323-7184
Fax: (302) 323-7393
or, if to the Trustee, addressed to:
U.S. Bank National Association
10
<PAGE> 14
One Illinois Center
111 East Wacker Drive - Suite 3000
Chicago, Illinois 60601
Attn: Martha Sanders
Phone: (312) 228-9452
Fax: (312) 228-9459
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 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 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 Greenwood is the seller.
11
<PAGE> 15
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 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 (a) the Credit Enhancement Provider's obligations
under this Agreement shall remain unchanged, (b) the Credit Enhancement Provider
shall remain solely responsible to the other parties hereto for the performance
of such obligations, (c) 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 (d) 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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<PAGE> 16
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/ Richard W. York
------------------------------------------
Name: Richard W. York
Title: Vice President
GREENWOOD TRUST COMPANY,
as Master Servicer, Servicer and Seller
By /s/ John J. Coane
------------------------------------------
Name: John J. Coane
Title: Vice President, Chief Accounting
Officer and Treasurer
U.S. BANK NATIONAL ASSOCIATION, as Trustee
By /s/ Martha Sanders
------------------------------------------
Name: Martha Sanders
Title: Vice President
13
<PAGE> 1
EXHIBIT 4.18
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 1997-4
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
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...................5
Section 7. Deposits to and Withdrawals from the Credit Enhancement Account............................5
Section 8. Certain Additional Loans...................................................................6
Section 9. Limited Obligation; Waiver of Setoff; Obligations Absolute.................................7
Section 10. Investments and Information...............................................................7
Section 11. Servicing Transfer........................................................................8
Section 12. Representations and Warranties............................................................8
Section 13. Covenants.................................................................................9
Section 14. Governing Law............................................................................10
Section 15. Termination..............................................................................10
Section 16. Notices..................................................................................10
Section 17. Bankruptcy...............................................................................11
Section 18. Limitation of Remedies...................................................................11
Section 19. No Petition..............................................................................12
Section 20. Amendments...............................................................................12
Section 21. Successors and Assigns; Replacement of Credit Enhancement Provider.......................12
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
Section 22. Participation............................................................................13
</TABLE>
ii
<PAGE> 4
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 October 31, 1997 (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 $789,474,000 in aggregate principal
amount of Investor Certificates of Discover Card Master Trust I, Series 1997-4
(the "Series"), which will entitle the holders thereof to interest during the
Revolving Period, the Accumulation Period, and the Amortization Period, if any,
and principal on the Class A Expected Final Payment Date, the Class B Expected
Final Payment Date and during the 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 October 31, 1997 (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 $59,210,550 (7.5% 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 $12,969,644.53;
WHEREAS, the parties hereto desire that the Credit Enhancement
Provider make a new term loan in the amount of $46,240,905.47 (the "New Loan");
and
<PAGE> 5
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.
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:
"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 immediately 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 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
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<PAGE> 6
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, 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)
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 $46,240,905.47, 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, the rate for such Interest Period on
such principal portion shall be the Lender Rate.
(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.
3
<PAGE> 7
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. On each
Distribution Date, 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:
(a) interest and earnings (net of losses and investment
expenses) accrued since the preceding Distribution Date on the Provider Amount;
and
(b) 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.
SECTION 5. REPAYMENT OF PRINCIPAL OF THE LOAN. 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 funds described below, and only to the extent such funds are
available.
(a) If, as of any Distribution Date, after giving effect to
all other deposits to and withdrawals from the Credit Enhancement Account as of
such Distribution Date, 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(a), 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.
4
<PAGE> 8
(b) 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, 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, 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 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).
(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) of the Series Supplement shall be paid to Greenwood on
behalf of the Holder of the Seller Certificate.
(c) 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(b) hereof shall be withdrawn from such account
and paid to Greenwood on behalf of the Holder of the Seller Certificate.
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
or the Available Class 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.
5
<PAGE> 9
(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 Available Class B 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).
6
<PAGE> 10
(b) NOTICE. The Credit Enhancement Provider shall give prior
written notice to Moody's 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.
(c) The Master Servicer shall obtain the consent of the Credit
Enhancement Provider prior to the investment in any Permitted Investments with a
stated maturity, the maturity of which is longer than as would cause them to
mature on or prior to the following Distribution Date as provided in Section
8(e) of the Series Supplement.
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 (a) be responsible for the
7
<PAGE> 11
performance of all servicing functions to be performed from and after such date,
(b) agree to be bound by the terms, covenants and conditions contained herein
applicable to the Master Servicer and be subject to the duties and obligations
of the Master Servicer hereunder, and (c) 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.
8
<PAGE> 12
(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,
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
9
<PAGE> 13
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 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
12 Read's Way
New Castle, Delaware 19720
Attn: Executive Vice President and Secretary
Phone: (302) 323-7167
Fax: (302) 323-7393
or, if to the Seller or the Master Servicer, addressed to:
Greenwood Trust Company
12 Read's Way
New Castle, Delaware 19720
Attn: John J. Coane
Phone: (302) 323-7184
Fax: (302) 323-7393
or, if to the Trustee, addressed to:
U.S. Bank National Association
10
<PAGE> 14
One Illinois Center
111 East Wacker Drive - Suite 3000
Chicago, Illinois 60601
Attn: Martha Sanders
Phone: (312) 228-9452
Fax: (312) 228-9459
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 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 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 Greenwood is the seller.
11
<PAGE> 15
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 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 (a) the Credit Enhancement Provider's obligations under this
Agreement shall remain unchanged, (b) the Credit Enhancement Provider shall
remain solely responsible to the other parties hereto for the performance of
such obligations, (c) 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 (d) 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.
12
<PAGE> 16
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/ Richard W. York
--------------------------------------
Name: Richard W. York
Title: Vice President
GREENWOOD TRUST COMPANY,
as Master Servicer, Servicer and Seller
By /s/ John J. Coane
--------------------------------------
Name: John J. Coane
Title: Vice President, Chief Accounting Officer
and Treasurer
U.S. BANK NATIONAL ASSOCIATION, as Trustee
By /s/ Martha Sanders
--------------------------------------
Name: Martha Sanders
Title: Vice President
13
<PAGE> 1
EXHIBIT 4.19
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 1998-1
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
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...................................5
Section 7. Deposits to and Withdrawals from the Credit Enhancement Account............................................6
Section 8. Certain Additional Loans...................................................................................6
Section 9. Limited Obligation; Waiver of Setoff; Obligations Absolute.................................................7
Section 10. Investments and Information...............................................................................7
Section 11. Servicing Transfer........................................................................................8
Section 12. Representations and Warranties............................................................................8
Section 13. Covenants................................................................................................10
Section 14. Governing Law............................................................................................10
Section 15. Termination..............................................................................................10
Section 16. Notices..................................................................................................11
Section 17. Bankruptcy...............................................................................................12
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
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
</TABLE>
ii
<PAGE> 4
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 January 14, 1998 (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 $368,422,000 in aggregate principal
amount of Investor Certificates of Discover Card Master Trust I, Series 1998-1
(the "Series"), which will entitle the holders thereof to interest during the
Revolving Period, the Accumulation Period, and the Amortization Period, if any,
and principal on the Class A Expected Final Payment Date, the Class B Expected
Final Payment Date and during the 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 January 14, 1998 (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 $27,631,650 (7.5% 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 $8,566,892.95;
WHEREAS, the parties hereto desire that the Credit Enhancement
Provider make a new term loan in the amount of $19,064,757.05 (the "New Loan");
and
<PAGE> 5
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.
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:
"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 immediately 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 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
2
<PAGE> 6
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, 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)
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 $19,064,757.05, 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, the rate for such Interest Period on
such principal portion shall be the Lender Rate.
(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.
3
<PAGE> 7
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. On each
Distribution Date, 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:
(a) interest and earnings (net of losses and investment
expenses) accrued since the preceding Distribution Date on the Provider Amount;
and
(b) 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.
SECTION 5. REPAYMENT OF PRINCIPAL OF THE LOAN. 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 funds described below, and only to the extent such funds are
available.
(a) If, as of any Distribution Date, after giving effect to
all other deposits to and withdrawals from the Credit Enhancement Account as of
such Distribution Date, 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(a), 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.
4
<PAGE> 8
(b) 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, 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, 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 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).
(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) of the Series Supplement shall be paid to Greenwood on
behalf of the Holder of the Seller Certificate.
(c) 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(b) hereof shall be withdrawn from such account
and paid to Greenwood on behalf of the Holder of the Seller Certificate.
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
or the Available Class 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.
5
<PAGE> 9
(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 Available Class B 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).
6
<PAGE> 10
(b) NOTICE. The Credit Enhancement Provider shall give prior
written notice to Moody's 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.
(c) The Master Servicer shall obtain the consent of the Credit
Enhancement Provider prior to the investment in any Permitted Investments with a
stated maturity, the maturity of which is longer than as would cause them to
mature on or prior to the following Distribution Date as provided in Section
8(e) of the Series Supplement.
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 (a) be responsible for the
7
<PAGE> 11
performance of all servicing functions to be performed from and after such date,
(b) agree to be bound by the terms, covenants and conditions contained herein
applicable to the Master Servicer and be subject to the duties and obligations
of the Master Servicer hereunder, and (c) 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.
8
<PAGE> 12
(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,
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
9
<PAGE> 13
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 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
12 Read's Way
New Castle, Delaware 19720
Attn: Executive Vice President and Secretary
Phone: (302) 323-7167
Fax: (302) 323-7393
or, if to the Seller or the Master Servicer, addressed to:
Greenwood Trust Company
12 Read's Way
New Castle, Delaware 19720
Attn: John J. Coane
Phone: (302) 323-7184
Fax: (302) 323-7393
or, if to the Trustee, addressed to:
U.S. Bank National Association
10
<PAGE> 14
One Illinois Center
111 East Wacker Drive - Suite 3000
Chicago, Illinois 60601
Attn: Martha Sanders
Phone: (312) 228-9452
Fax: (312) 228-9459
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 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 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 Greenwood is the seller.
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<PAGE> 15
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 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 (a) the Credit Enhancement Provider's obligations under this
Agreement shall remain unchanged, (b) the Credit Enhancement Provider shall
remain solely responsible to the other parties hereto for the performance of
such obligations, (c) 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 (d) 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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<PAGE> 16
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/ Richard W. York
------------------------------
Name: Richard W. York
Title: Vice President
GREENWOOD TRUST COMPANY,
as Master Servicer, Servicer and Seller
By /s/ John J. Coane
------------------------------
Name: John J. Coane
Title: Vice President, Chief Accounting
Officer and Treasurer
U.S. BANK NATIONAL ASSOCIATION, as Trustee
By /s/ Martha Sanders
------------------------------
Name: Martha Sanders
Title: Vice President
13
<PAGE> 1
EXHIBIT 4.20
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 1998-2
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
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...................................5
Section 7. Deposits to and Withdrawals from the Credit Enhancement Account............................................5
Section 8. Certain Additional Loans...................................................................................6
Section 9. Limited Obligation; Waiver of Setoff; Obligations Absolute.................................................7
Section 10. Investments and Information...............................................................................7
Section 11. Servicing Transfer........................................................................................8
Section 12. Representations and Warranties............................................................................8
Section 13. Covenants................................................................................................10
Section 14. Governing Law............................................................................................10
Section 15. Termination..............................................................................................10
Section 16. Notices..................................................................................................10
Section 17. Bankruptcy...............................................................................................11
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
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.......................................12
Section 22. Participation............................................................................................13
</TABLE>
ii
<PAGE> 4
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 March 4, 1998 (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 $526,316,000 in aggregate principal
amount of Investor Certificates of Discover Card Master Trust I, Series 1998-2
(the "Series"), which will entitle the holders thereof to interest during the
Revolving Period, the Accumulation Period, and the Amortization Period, if any,
and principal on the Class A Expected Final Payment Date, the Class B Expected
Final Payment Date and during the 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 March 4, 1998 (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 $21,052,640 (4.0% 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 $21,052,640 (the "New Loan"); and
<PAGE> 5
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.
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:
"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 immediately 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 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
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<PAGE> 6
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, 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)
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 $21,052,640, 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, the rate for such Interest Period on
such principal portion shall be the Lender Rate.
(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.
3
<PAGE> 7
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. On each
Distribution Date, 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:
(a) interest and earnings (net of losses and investment
expenses) accrued since the preceding Distribution Date on the Provider Amount;
and
(b) 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.
SECTION 5. REPAYMENT OF PRINCIPAL OF THE LOAN. 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 funds described below, and only to the extent such funds
are available.
(a) If, as of any Distribution Date, after giving effect to
all other deposits to and withdrawals from the Credit Enhancement Account as of
such Distribution Date, 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(a), 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.
4
<PAGE> 8
(b) 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, 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, 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 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).
(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) of the Series Supplement shall be paid to Greenwood on
behalf of the Holder of the Seller Certificate.
(c) 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(b) hereof shall be withdrawn from such account
and paid to Greenwood on behalf of the Holder of the Seller Certificate.
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
or the Available Class 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.
5
<PAGE> 9
(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 Available Class B 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).
6
<PAGE> 10
(b) SUPPLEMENTAL CREDIT ENHANCEMENT EVENT. In the event that a
Supplemental Credit Enhancement Event occurs, Greenwood as Servicer may cause
the 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 Available Class B 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 Moody's 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.
7
<PAGE> 11
(c) The Master Servicer shall obtain the consent of the Credit
Enhancement Provider prior to the investment in any Permitted Investments with a
stated maturity, the maturity of which is longer than as would cause them to
mature on or prior to the following Distribution Date as provided in Section
8(e) of the Series Supplement.
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 (a) be responsible for the
performance of all servicing functions to be performed from and after such date,
(b) agree to be bound by the terms, covenants and conditions contained herein
applicable to the Master Servicer and be subject to the duties and obligations
of the Master Servicer hereunder, and (c) 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.
8
<PAGE> 12
(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,
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
9
<PAGE> 13
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 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
12 Read's Way
New Castle, Delaware 19720
Attn: Executive Vice President and Secretary
Phone: (302) 323-7167
Fax: (302) 323-7393
or, if to the Seller or the Master Servicer, addressed to:
Greenwood Trust Company
12 Read's Way
10
<PAGE> 14
New Castle, Delaware 19720
Attn: John J. Coane
Phone: (302) 323-7184
Fax: (302) 323-7393
or, if to the Trustee, addressed to:
U.S. Bank National Association
One Illinois Center
111 East Wacker Drive - Suite 3000
Chicago, Illinois 60601
Attn: Martha Sanders
Phone: (312) 228-9452
Fax: (312) 228-9459
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 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 Greenwood is the
seller.
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<PAGE> 15
(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 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 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 (a) the Credit Enhancement Provider's obligations
under this Agreement shall remain unchanged, (b) the Credit Enhancement Provider
shall remain solely responsible to the other parties hereto for the performance
of such obligations, (c) the Trustee, the Trust, the Sellers and the Master
Servicer
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<PAGE> 16
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 (d) 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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<PAGE> 17
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/ Richard W. York
-------------------------------------
Name: Richard W. York
Title: Vice President
GREENWOOD TRUST COMPANY,
as Master Servicer, Servicer and Seller
By /s/ John J. Coane
-------------------------------------
Name: John J. Coane
Title: Vice President, Chief Accounting
Officer and Treasurer
U.S. BANK NATIONAL ASSOCIATION, as Trustee
By /s/ Martha Sanders
-------------------------------------
Name: Martha Sanders
Title: Vice President
14
<PAGE> 1
EXHIBIT 4.21
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 1998-3
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
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...................................5
Section 7. Deposits to and Withdrawals from the Credit Enhancement Account............................................6
Section 8. Certain Additional Loans...................................................................................6
Section 9. Limited Obligation; Waiver of Setoff; Obligations Absolute.................................................7
Section 10. Investments and Information...............................................................................7
Section 11. Servicing Transfer........................................................................................8
Section 12. Representations and Warranties............................................................................8
Section 13. Covenants................................................................................................10
Section 14. Governing Law............................................................................................10
Section 15. Termination..............................................................................................10
Section 16. Notices..................................................................................................11
Section 17. Bankruptcy...............................................................................................12
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
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
</TABLE>
ii
<PAGE> 4
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 March 25, 1998 (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 $789,474,000 in aggregate principal
amount of Investor Certificates of Discover Card Master Trust I, Series 1998-3
(the "Series"), which will entitle the holders thereof to interest during the
Revolving Period, the Accumulation Period, and the Amortization Period, if any,
and principal on the Class A Expected Final Payment Date, the Class B Expected
Final Payment Date and during the 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 March 25, 1998 (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 $59,210,550 (7.5% 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 $22,554,443.00;
WHEREAS, the parties hereto desire that the Credit Enhancement
Provider make a new term loan in the amount of $36,656,107.00 (the "New Loan");
and
<PAGE> 5
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.
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:
"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 immediately 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 0.575%.
"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 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
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<PAGE> 6
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, 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)
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 $36,656,107.00, 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, the rate for such Interest Period on
such principal portion shall be the Lender Rate.
(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.
3
<PAGE> 7
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. On each
Distribution Date, 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:
(a) interest and earnings (net of losses and investment
expenses) accrued since the preceding Distribution Date on the Provider Amount;
and
(b) 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.
SECTION 5. REPAYMENT OF PRINCIPAL OF THE LOAN. 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 funds described below, and only to the extent such funds are
available.
(a) If, as of any Distribution Date, after giving effect to
all other deposits to and withdrawals from the Credit Enhancement Account as of
such Distribution Date, 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(a), 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.
4
<PAGE> 8
(b) 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, 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, 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 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).
(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) of the Series Supplement shall be paid to Greenwood on
behalf of the Holder of the Seller Certificate.
(c) 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(b) hereof shall be withdrawn from such account
and paid to Greenwood on behalf of the Holder of the Seller Certificate.
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
or the Available Class 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.
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<PAGE> 9
(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, 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 Available Class B 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).
6
<PAGE> 10
(b) NOTICE. The Credit Enhancement Provider shall give prior
written notice to Moody's 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.
(c) The Master Servicer shall obtain the consent of the Credit
Enhancement Provider prior to the investment in any Permitted Investments with a
stated maturity, the maturity of which is longer than as would cause them to
mature on or prior to the following Distribution Date as provided in Section
8(e) of the Series Supplement.
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 (a) be responsible for the
7
<PAGE> 11
performance of all servicing functions to be performed from and after such date,
(b) agree to be bound by the terms, covenants and conditions contained herein
applicable to the Master Servicer and be subject to the duties and obligations
of the Master Servicer hereunder, and (c) 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.
8
<PAGE> 12
(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,
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
9
<PAGE> 13
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 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
12 Read's Way
New Castle, Delaware 19720
Attn: Executive Vice President and Secretary
Phone: (302) 323-7167
Fax: (302) 323-7393
or, if to the Seller or the Master Servicer, addressed to:
Greenwood Trust Company
12 Read's Way
New Castle, Delaware 19720
Attn: John J. Coane
Phone: (302) 323-7184
Fax: (302) 323-7393
or, if to the Trustee, addressed to:
U.S. Bank National Association
10
<PAGE> 14
One Illinois Center
111 East Wacker Drive - Suite 3000
Chicago, Illinois 60601
Attn: Martha Sanders
Phone: (312) 228-9452
Fax: (312) 228-9459
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 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 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 Greenwood is the seller.
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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 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 (a) the Credit Enhancement Provider's obligations under this
Agreement shall remain unchanged, (b) the Credit Enhancement Provider shall
remain solely responsible to the other parties hereto for the performance of
such obligations, (c) 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 (d) 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/ Richard W. York
--------------------------------
Name: Richard W. York
Title: Vice President
GREENWOOD TRUST COMPANY,
as Master Servicer, Servicer and Seller
By /s/ John J. Coane
--------------------------------
Name: John J. Coane
Title: Vice President, Chief Accounting
Officer and Treasurer
U.S. BANK NATIONAL ASSOCIATION, as Trustee
By /s/ Martha Sanders
--------------------------------
Name: Martha Sanders
Title: Vice President
13
<PAGE> 1
EXHIBIT 4.22
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 1998-4
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
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..................................5
Section 7. Deposits to and Withdrawals from the Credit Enhancement Account...........................................5
Section 8. Certain Additional Loans..................................................................................6
Section 9. Limited Obligation; Waiver of Setoff; Obligations Absolute................................................7
Section 10. Investments and Information...............................................................................7
Section 11. Servicing Transfer........................................................................................8
Section 12. Representations and Warranties............................................................................8
Section 13. Covenants................................................................................................10
Section 14. Governing Law............................................................................................10
Section 15. Termination..............................................................................................10
Section 16. Notices..................................................................................................10
Section 17. Bankruptcy...............................................................................................11
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.......................................12
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
Section 22. Participation............................................................................................13
</TABLE>
ii
<PAGE> 4
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 April 9, 1998 (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 $526,316,000 in aggregate principal
amount of Investor Certificates of Discover Card Master Trust I, Series 1998-4
(the "Series"), which will entitle the holders thereof to interest during the
Revolving Period, the Accumulation Period, and the Amortization Period, if any,
and principal on the Class A Expected Final Payment Date, the Class B Expected
Final Payment Date and during the 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 April 9, 1998 (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 $21,052,640 (4.0% 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 $21,052,640 (the "New Loan"); and
<PAGE> 5
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.
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:
"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 immediately 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 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
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<PAGE> 6
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, 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)
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 $21,052,640, 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, the rate for such Interest Period on
such principal portion shall be the Lender Rate.
(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.
3
<PAGE> 7
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. On each
Distribution Date, 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:
(a) interest and earnings (net of losses and investment
expenses) accrued since the preceding Distribution Date on the Provider Amount;
and
(b) 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.
SECTION 5. REPAYMENT OF PRINCIPAL OF THE LOAN. 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 funds described below, and only to the extent such funds
are available.
(a) If, as of any Distribution Date, after giving effect to
all other deposits to and withdrawals from the Credit Enhancement Account as of
such Distribution Date, 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(a), 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.
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<PAGE> 8
(b) 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, 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, 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 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).
(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) of the Series Supplement shall be paid to Greenwood
on behalf of the Holder of the Seller Certificate.
(c) 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(b) hereof shall be withdrawn from such account
and paid to Greenwood on behalf of the Holder of the Seller Certificate.
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
or the Available Class 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.
5
<PAGE> 9
(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 Available Class B 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).
6
<PAGE> 10
(b) SUPPLEMENTAL CREDIT ENHANCEMENT EVENT. In the event that
a Supplemental Credit Enhancement Event occurs, Greenwood as Servicer may cause
the 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 Available Class B 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 Moody's 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.
7
<PAGE> 11
(c) The Master Servicer shall obtain the consent of the
Credit Enhancement Provider prior to the investment in any Permitted Investments
with a stated maturity, the maturity of which is longer than as would cause them
to mature on or prior to the following Distribution Date as provided in Section
8(e) of the Series Supplement.
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 (a) be responsible for the
performance of all servicing functions to be performed from and after such date,
(b) agree to be bound by the terms, covenants and conditions contained herein
applicable to the Master Servicer and be subject to the duties and obligations
of the Master Servicer hereunder, and (c) 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.
8
<PAGE> 12
(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,
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
9
<PAGE> 13
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 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
12 Read's Way
New Castle, Delaware 19720
Attn: Executive Vice President and Secretary
Phone: (302) 323-7167
Fax: (302) 323-7393
or, if to the Seller or the Master Servicer, addressed to:
Greenwood Trust Company
12 Read's Way
10
<PAGE> 14
New Castle, Delaware 19720
Attn: John J. Coane
Phone: (302) 323-7184
Fax: (302) 323-7393
or, if to the Trustee, addressed to:
U.S. Bank National Association
One Illinois Center
111 East Wacker Drive - Suite 3000
Chicago, Illinois 60601
Attn: Martha Sanders
Phone: (312) 228-9452
Fax: (312) 228-9459
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 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 Greenwood is the
seller.
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<PAGE> 15
(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 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 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 (a) the Credit Enhancement Provider's obligations
under this Agreement shall remain unchanged, (b) the Credit Enhancement Provider
shall remain solely responsible to the other parties hereto for the performance
of such obligations, (c) the Trustee, the Trust, the Sellers and the Master
Servicer
12
<PAGE> 16
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 (d) 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.
13
<PAGE> 17
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/ Richard W. York
------------------------------------------------
Name: Richard W. York
Title: Vice President
GREENWOOD TRUST COMPANY,
as Master Servicer, Servicer and Seller
By /s/ John J. Coane
------------------------------------------------
Name: John J. Coane
Title: Vice President, Chief Accounting Officer
and Treasurer
U.S. BANK NATIONAL ASSOCIATION, as Trustee
By /s/ Martha Sanders
------------------------------------------------
Name: Martha Sanders
Title: Vice President
14
<PAGE> 1
EXHIBIT 4.23
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 1998-5
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
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.....................5
Section 7. Deposits to and Withdrawals from the Credit Enhancement Account..............................6
Section 8. Certain Additional Loans.....................................................................6
Section 9. Limited Obligation; Waiver of Setoff; Obligations Absolute...................................7
Section 10. Investments and Information.................................................................7
Section 11. Servicing Transfer..........................................................................8
Section 12. Representations and Warranties..............................................................8
Section 13. Covenants..................................................................................10
Section 14. Governing Law..............................................................................10
Section 15. Termination................................................................................10
Section 16. Notices....................................................................................11
Section 17. Bankruptcy.................................................................................12
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C>
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
</TABLE>
ii
<PAGE> 4
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 June 12, 1998 (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 $707,348,000 in aggregate principal
amount of Investor Certificates of Discover Card Master Trust I, Series 1998-5
(the "Series"), which will entitle the holders thereof to interest during the
Revolving Period, the Accumulation Period, and the Amortization Period, if any,
and principal on the Class A Expected Final Payment Date, the Class B Expected
Final Payment Date and during the 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 June 12, 1998 (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 $53,051,100 (7.5% 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 $27,299,867.99;
WHEREAS, the parties hereto desire that the Credit Enhancement
Provider make a new term loan in the amount of $25,751,232.01 (the "New Loan");
and
<PAGE> 5
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.
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:
"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 immediately 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 0.95%.
"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 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
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<PAGE> 6
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, 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)
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 $25,751,232.01, 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, the rate for such Interest Period on
such principal portion shall be the Lender Rate.
(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.
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<PAGE> 7
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. On each
Distribution Date, 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:
(a) interest and earnings (net of losses and investment
expenses) accrued since the preceding Distribution Date on the Provider Amount;
and
(b) 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.
SECTION 5. REPAYMENT OF PRINCIPAL OF THE LOAN. 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 funds described below, and only to the extent such funds are
available.
(a) If, as of any Distribution Date, after giving effect to
all other deposits to and withdrawals from the Credit Enhancement Account as of
such Distribution Date, 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(a), 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.
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<PAGE> 8
(b) 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, 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, 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 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).
(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) of the Series Supplement shall be paid to Greenwood on
behalf of the Holder of the Seller Certificate.
(c) 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(b) hereof shall be withdrawn from such account
and paid to Greenwood on behalf of the Holder of the Seller Certificate.
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
or the Available Class 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.
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<PAGE> 9
(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, 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 Available Class B 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).
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<PAGE> 10
(b) NOTICE. The Credit Enhancement Provider shall give prior
written notice to Moody's 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.
(c) The Master Servicer shall obtain the consent of the Credit
Enhancement Provider prior to the investment in any Permitted Investments with a
stated maturity, the maturity of which is longer than as would cause them to
mature on or prior to the following Distribution Date as provided in Section
8(e) of the Series Supplement.
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 (a) be responsible for the
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<PAGE> 11
performance of all servicing functions to be performed from and after such date,
(b) agree to be bound by the terms, covenants and conditions contained herein
applicable to the Master Servicer and be subject to the duties and obligations
of the Master Servicer hereunder, and (c) 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.
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<PAGE> 12
(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,
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
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<PAGE> 13
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 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
12 Read's Way
New Castle, Delaware 19720
Attn: Executive Vice President and Secretary
Phone: (302) 323-7167
Fax: (302) 323-7393
or, if to the Seller or the Master Servicer, addressed to:
Greenwood Trust Company
12 Read's Way
New Castle, Delaware 19720
Attn: John J. Coane
Phone: (302) 323-7184
Fax: (302) 323-7393
or, if to the Trustee, addressed to:
U.S. Bank National Association
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<PAGE> 14
One Illinois Center
111 East Wacker Drive - Suite 3000
Chicago, Illinois 60601
Attn: Martha Sanders
Phone: (312) 228-9452
Fax: (312) 228-9459
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 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 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 Greenwood is the seller.
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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 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 (a) the Credit Enhancement Provider's obligations under this
Agreement shall remain unchanged, (b) the Credit Enhancement Provider shall
remain solely responsible to the other parties hereto for the performance of
such obligations, (c) 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 (d) 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/ Richard W. York
-----------------------------------------
Name: Richard W. York
Title: Vice President
GREENWOOD TRUST COMPANY,
as Master Servicer, Servicer and Seller
By: /s/ John J. Coane
-----------------------------------------
Name: John J. Coane
Title: Vice President, Chief Accounting Officer
and Treasurer
U.S. BANK NATIONAL ASSOCIATION, as Trustee
By: /s/ Martha Sanders
-----------------------------------------
Name: Martha Sanders
Title: Vice President
13
<PAGE> 1
EXHIBIT 4.24
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 1998-6
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
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...................................5
Section 7. Deposits to and Withdrawals from the Credit Enhancement Account............................................5
Section 8. Certain Additional Loans...................................................................................6
Section 9. Limited Obligation; Waiver of Setoff; Obligations Absolute.................................................7
Section 10. Investments and Information...............................................................................7
Section 11. Servicing Transfer........................................................................................8
Section 12. Representations and Warranties............................................................................8
Section 13. Covenants................................................................................................10
Section 14. Governing Law............................................................................................10
Section 15. Termination..............................................................................................10
Section 16. Notices..................................................................................................10
Section 17. Bankruptcy...............................................................................................11
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.......................................12
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
Section 22. Participation............................................................................................13
</TABLE>
ii
<PAGE> 4
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 July 30, 1998 (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 $526,316,000 in aggregate principal
amount of Investor Certificates of Discover Card Master Trust I, Series 1998-6
(the "Series"), which will entitle the holders thereof to interest during the
Revolving Period, the Accumulation Period, and the Amortization Period, if any,
and principal on the Class A Expected Final Payment Date, the Class B Expected
Final Payment Date and during the 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 July 30, 1998 (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 $21,052,640 (4.0% 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 $3,100,899.55;
WHEREAS, the parties hereto desire that the Credit Enhancement
Provider make a new term loan in the amount of $17,951,740.45 (the "New Loan");
and
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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.
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:
"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 immediately 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 0.575%.
"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 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
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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, 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)
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 $17,951,740.45, 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, the rate for such Interest Period on
such principal portion shall be the Lender Rate.
(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.
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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. On each
Distribution Date, 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:
(a) interest and earnings (net of losses and investment
expenses) accrued since the preceding Distribution Date on the Provider Amount;
and
(b) 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.
SECTION 5. REPAYMENT OF PRINCIPAL OF THE LOAN. 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 funds described below, and only to the extent such funds are
available.
(a) If, as of any Distribution Date, after giving effect to
all other deposits to and withdrawals from the Credit Enhancement Account as of
such Distribution Date, 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(a), 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.
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(b) 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, 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, 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 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).
(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) of the Series Supplement shall be paid to Greenwood on
behalf of the Holder of the Seller Certificate.
(c) 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(b) hereof shall be withdrawn from such account
and paid to Greenwood on behalf of the Holder of the Seller Certificate.
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
or the Available Class 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.
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<PAGE> 9
(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 Available Class B 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).
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(b) SUPPLEMENTAL CREDIT ENHANCEMENT EVENT. In the event that a
Supplemental Credit Enhancement Event occurs, Greenwood as Servicer may cause
the 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 Available Class B 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 Moody's 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.
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(c) The Master Servicer shall obtain the consent of the Credit
Enhancement Provider prior to the investment in any Permitted Investments with a
stated maturity, the maturity of which is longer than as would cause them to
mature on or prior to the following Distribution Date as provided in Section
8(e) of the Series Supplement.
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 (a) be responsible for the performance of
all servicing functions to be performed from and after such date, (b) agree to
be bound by the terms, covenants and conditions contained herein applicable to
the Master Servicer and be subject to the duties and obligations of the Master
Servicer hereunder, and (c) 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.
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(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,
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
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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 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
12 Read's Way
New Castle, Delaware 19720
Attn: Executive Vice President and Secretary
Phone: (302) 323-7167
Fax: (302) 323-7393
or, if to the Seller or the Master Servicer, addressed to:
Greenwood Trust Company
12 Read's Way
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New Castle, Delaware 19720
Attn: John J. Coane
Phone: (302) 323-7184
Fax: (302) 323-7393
or, if to the Trustee, addressed to:
U.S. Bank National Association
One Illinois Center
111 East Wacker Drive - Suite 3000
Chicago, Illinois 60601
Attn: Martha Sanders
Phone: (312) 228-9452
Fax: (312) 228-9459
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 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 Greenwood is the
seller.
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(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 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 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 (a) the Credit Enhancement Provider's obligations under this
Agreement shall remain unchanged, (b) the Credit Enhancement Provider shall
remain solely responsible to the other parties hereto for the performance of
such obligations, (c) the Trustee, the Trust, the Sellers and the Master
Servicer
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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 (d) 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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<PAGE> 17
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/ Richard W. York
--------------------------------
Name: Richard W. York
Title: Vice President
GREENWOOD TRUST COMPANY,
as Master Servicer, Servicer and Seller
By /s/ John J. Coane
--------------------------------
Name: John J. Coane
Title: Vice President, Chief Accounting
Officer and Treasurer
U.S. BANK NATIONAL ASSOCIATION, as Trustee
By /s/ Martha Sanders
--------------------------------
Name: Martha Sanders
Title: Vice President
14
<PAGE> 1
EXHIBIT 4.25
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 1998-7
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
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..............................5
Section 7. Deposits to and Withdrawals from the Credit Enhancement Account.......................................6
Section 8. Certain Additional Loans..............................................................................6
Section 9. Limited Obligation; Waiver of Setoff; Obligations Absolute............................................7
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
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
Section 18. Limitation of Remedies...............................................................................12
Section 19. No Petition..........................................................................................12
Section 20. Amendments...........................................................................................13
Section 21. Successors and Assigns; Replacement of Credit Enhancement Provider...................................13
Section 22. Participation........................................................................................13
</TABLE>
2
<PAGE> 4
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 November 12, 1998 (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 $1,052,632,000 in aggregate
principal amount of Investor Certificates of Discover Card Master Trust I,
Series 1998-7 (the "Series"), which will entitle the holders thereof to interest
during the Revolving Period, the Accumulation Period, and the Amortization
Period, if any, and principal on the Class A Expected Final Payment Date, the
Class B Expected Final Payment Date and during the 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 November 12, 1998 (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 $42,105,280 (4.0% 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 $22,456,811.16;
WHEREAS, the parties hereto desire that the Credit Enhancement
Provider make a new term loan in the amount of $19,648,468.84 (the "New Loan");
and
<PAGE> 5
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.
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:
"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 immediately 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 in 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 0.70%.
"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 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
2
<PAGE> 6
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, 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)
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 $19,648,468.84,
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, the rate for such Interest Period on
such principal portion shall be the Lender Rate.
(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.
3
<PAGE> 7
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. On each
Distribution Date, 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:
(a) interest and earnings (net of losses and investment
expenses) accrued since the preceding Distribution Date on the Provider Amount;
and
(b) 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.
SECTION 5. REPAYMENT OF PRINCIPAL OF THE LOAN. 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 funds described below, and only to the extent such funds
are available.
(a) If, as of any Distribution Date, after giving effect to
all other deposits to and withdrawals from the Credit Enhancement Account as of
such Distribution Date, 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(a), 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.
(b) 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, 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.
4
<PAGE> 8
SECTION 6. PAYMENTS TO THE HOLDER OF THE SELLER
CERTIFICATE AND THE MASTER SERVICER.
(a) On each Distribution Date, 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 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).
(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) of the Series Supplement shall be paid to Greenwood
on behalf of the Holder of the Seller Certificate.
(c) 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(b) hereof shall be withdrawn from such account
and paid to Greenwood on behalf of the Holder of the Seller Certificate.
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
or the Available Class 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.
5
<PAGE> 9
(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 Available Class B 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).
6
<PAGE> 10
(b) SUPPLEMENTAL CREDIT ENHANCEMENT EVENT. In the event that
a Supplemental Credit Enhancement Event occurs, Greenwood as Servicer may cause
the 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 Available Class B 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 Moody's 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.
7
<PAGE> 11
(c) The Master Servicer shall obtain the consent of the
Credit Enhancement Provider prior to the investment in any Permitted Investments
with a stated maturity, the maturity of which is longer than as would cause them
to mature on or prior to the following Distribution Date as provided in Section
8(e) of the Series Supplement.
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 (a) be responsible for the
performance of all servicing functions to be performed from and after such date,
(b) agree to be bound by the terms, covenants and conditions contained herein
applicable to the Master Servicer and be subject to the duties and obligations
of the Master Servicer hereunder, and (c) 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.
8
<PAGE> 12
(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,
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
9
<PAGE> 13
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 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
12 Read's Way
New Castle, Delaware 19720
Attn: Executive Vice President and Secretary
Phone: (302) 323-7167
Fax: (302) 323-7393
or, if to the Seller or the Master Servicer, addressed to:
Greenwood Trust Company
12 Read's Way
10
<PAGE> 14
New Castle, Delaware 19720
Attn: John J. Coane
Phone: (302) 323-7184
Fax: (302) 323-7393
or, if to the Trustee, addressed to:
U.S. Bank National Association
One Illinois Center
111 East Wacker Drive - Suite 3000
Chicago, Illinois 60601
Attn: Martha L. Sanders
Phone: (312) 228-9452
Fax: (312) 228-9459
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 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 Greenwood is the
seller.
11
<PAGE> 15
(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 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 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 (a) the Credit Enhancement Provider's obligations
under this Agreement shall remain unchanged, (b) the Credit Enhancement Provider
shall remain solely responsible to the other parties hereto for the performance
of such obligations, (c) the Trustee, the Trust, the Sellers and the Master
Servicer
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<PAGE> 16
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 (d) 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.
13
<PAGE> 17
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/ Richard W. York
--------------------------------------------
Name: Richard W. York
Title: Vice President
GREENWOOD TRUST COMPANY,
as Master Servicer, Servicer and Seller
By /s/ John J. Coane
--------------------------------------------
Name: John J. Coane
Title: Vice President, Chief Accounting
Officer and Treasurer
U.S. BANK NATIONAL ASSOCIATION, as Trustee
By /s/ Martha L. Sanders
-------------------------------------------
Name: Martha L. Sanders
Title: Vice President
14
<PAGE> 1
EXHIBIT 4.26
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 1999-1
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
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...............................5
Section 7. Deposits to and Withdrawals from the Credit Enhancement Account........................................5
Section 8. Certain Additional Loans...............................................................................6
Section 9. Limited Obligation; Waiver of Setoff; Obligations Absolute.............................................7
Section 10. Investments and Information...........................................................................7
Section 11. Servicing Transfer....................................................................................8
Section 12. Representations and Warranties........................................................................8
Section 13. Covenants.............................................................................................9
Section 14. Governing Law........................................................................................10
Section 15. Termination..........................................................................................10
Section 16. Notices..............................................................................................10
Section 17. Bankruptcy...........................................................................................11
Section 18. Limitation of Remedies...............................................................................11
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
Section 19. No Petition..........................................................................................12
Section 20. Amendments...........................................................................................12
Section 21. Successors and Assigns; Replacement of Credit Enhancement Provider...................................12
Section 22. Participation........................................................................................13
</TABLE>
ii
<PAGE> 4
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 February 9, 1999 (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 $526,316,000 in aggregate principal
amount of Investor Certificates of Discover Card Master Trust I, Series 1999-1
(the "Series"), which will entitle the holders thereof to interest during the
Revolving Period, the Accumulation Period, and the Amortization Period, if any,
and principal on the Class A Expected Final Payment Date, the Class B Expected
Final Payment Date and during the 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 February 9, 1999 (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 $21,052,640 (4.0% 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 $16,347,133.78;
WHEREAS, the parties hereto desire that the Credit Enhancement
Provider make a new term loan in the amount of $4,705,506.22 (the "New Loan");
and
<PAGE> 5
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.
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:
"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 immediately 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 0.50%.
"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 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.
2
<PAGE> 6
"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, 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)
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 $4,705,506.22, 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, the rate for such Interest Period on
such principal portion shall be the Lender Rate.
(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
3
<PAGE> 7
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. On each
Distribution Date, 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:
(a) interest and earnings (net of losses and investment
expenses) accrued since the preceding Distribution Date on the Provider Amount;
and
(b) 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.
SECTION 5. REPAYMENT OF PRINCIPAL OF THE LOAN. 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 funds described below, and only to the extent such funds
are available.
(a) If, as of any Distribution Date, after giving effect to
all other deposits to and withdrawals from the Credit Enhancement Account as of
such Distribution Date, 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(a), 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.
(b) 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
4
<PAGE> 8
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, 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 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).
(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) of the Series Supplement shall be paid to Greenwood on
behalf of the Holder of the Seller Certificate.
(c) 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(b) hereof shall be withdrawn from such account
and paid to Greenwood on behalf of the Holder of the Seller Certificate.
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
or the Available Class 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
5
<PAGE> 9
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 Available Class B 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 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 Available Class B Credit Enhancement Amount, or may
request that the Credit Enhancement Provider
6
<PAGE> 10
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 Moody's 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.
(c) The Master Servicer shall obtain the consent of the Credit
Enhancement Provider prior to the investment in any Permitted Investments with a
stated maturity, the maturity of which is longer than as would cause them to
mature on or prior to the following Distribution Date as provided in Section
8(e) of the Series Supplement.
7
<PAGE> 11
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 (a) be responsible for the
performance of all servicing functions to be performed from and after such date,
(b) agree to be bound by the terms, covenants and conditions contained herein
applicable to the Master Servicer and be subject to the duties and obligations
of the Master Servicer hereunder, and (c) 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
8
<PAGE> 12
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,
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
9
<PAGE> 13
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 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
12 Read's Way
New Castle, Delaware 19720
Attn: Executive Vice President and Secretary
Phone: (302) 323-7167
Fax: (302) 323-7393
or, if to the Seller or the Master Servicer, addressed to:
Greenwood Trust Company
12 Read's Way
New Castle, Delaware 19720
Attn: John J. Coane
Phone: (302) 323-7184
Fax: (302) 323-7393
or, if to the Trustee, addressed to:
U.S. Bank National Association
10
<PAGE> 14
One Illinois Center
111 East Wacker Drive - Suite 3000
Chicago, Illinois 60601
Attn: Martha L. Sanders
Phone: (312) 228-9452
Fax: (312) 228-9459
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 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 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 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
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<PAGE> 15
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 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 (a) the Credit Enhancement Provider's obligations
under this Agreement shall remain unchanged, (b) the Credit Enhancement Provider
shall remain solely responsible to the other parties hereto for the performance
of such obligations, (c) 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 (d) 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.
12
<PAGE> 16
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/ Richard W. York
------------------------------------
Name: Richard W. York
Title: Vice President
GREENWOOD TRUST COMPANY,
as Master Servicer, Servicer and Seller
By /s/ John J. Coane
------------------------------------
Name: John J. Coane
Title: Vice President, Chief Accounting
Officer and Treasurer
U.S. BANK NATIONAL ASSOCIATION, as Trustee
By /s/ Martha L. Sanders
------------------------------------
Name: Martha L. Sanders
Title: Vice President
13
<PAGE> 1
EXHIBIT 4.27
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 1999-2
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
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..............................5
Section 7. Deposits to and Withdrawals from the Credit Enhancement Account.......................................5
Section 8. Certain Additional Loans..............................................................................6
Section 9. Limited Obligation; Waiver of Setoff; Obligations Absolute............................................7
Section 10. Investments and Information...........................................................................7
Section 11. Servicing Transfer....................................................................................8
Section 12. Representations and Warranties........................................................................8
Section 13. Covenants.............................................................................................9
Section 14. Governing Law........................................................................................10
Section 15. Termination..........................................................................................10
Section 16. Notices..............................................................................................10
Section 17. Bankruptcy...........................................................................................11
Section 18. Limitation of Remedies...............................................................................11
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
Section 19. No Petition..........................................................................................12
Section 20. Amendments...........................................................................................12
Section 21. Successors and Assigns; Replacement of Credit Enhancement Provider...................................12
Section 22. Participation........................................................................................13
</TABLE>
ii
<PAGE> 4
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 March 10, 1999 (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 $526,316,000 in aggregate principal
amount of Investor Certificates of Discover Card Master Trust I, Series 1999-2
(the "Series"), which will entitle the holders thereof to interest during the
Revolving Period, the Accumulation Period, and the Amortization Period, if any,
and principal on the Class A Expected Final Payment Date, the Class B Expected
Final Payment Date and during the 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 March 10, 1999 (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 $21,052,640 (4.0% 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 $18,765,431.29;
WHEREAS, the parties hereto desire that the Credit Enhancement
Provider make a new term loan in the amount of $2,287,208.71 (the "New Loan");
and
<PAGE> 5
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.
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:
"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 immediately 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 0.50%.
"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 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.
2
<PAGE> 6
"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, 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)
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 $2,287,208.71
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, the rate for such Interest Period on
such principal portion shall be the Lender Rate.
(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
3
<PAGE> 7
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. On each
Distribution Date, 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:
(a) interest and earnings (net of losses and investment
expenses) accrued since the preceding Distribution Date on the Provider Amount;
and
(b) 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.
SECTION 5. REPAYMENT OF PRINCIPAL OF THE LOAN. 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 funds described below, and only to the extent such funds
are available.
(a) If, as of any Distribution Date, after giving effect to
all other deposits to and withdrawals from the Credit Enhancement Account as of
such Distribution Date, 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(a), 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.
(b) 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
4
<PAGE> 8
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, 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 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).
(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) of the Series Supplement shall be paid to Greenwood
on behalf of the Holder of the Seller Certificate.
(c) 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(b) hereof shall be withdrawn from such account
and paid to Greenwood on behalf of the Holder of the Seller Certificate.
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
or the Available Class 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
5
<PAGE> 9
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 Available Class B 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 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 Available Class B Credit Enhancement Amount, or may
request that the Credit Enhancement Provider
6
<PAGE> 10
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 Moody's 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.
(c) The Master Servicer shall obtain the consent of the
Credit Enhancement Provider prior to the investment in any Permitted Investments
with a stated maturity, the maturity of which is longer than as would cause them
to mature on or prior to the following Distribution Date as provided in Section
8(e) of the Series Supplement.
7
<PAGE> 11
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 (a) be responsible for the
performance of all servicing functions to be performed from and after such date,
(b) agree to be bound by the terms, covenants and conditions contained herein
applicable to the Master Servicer and be subject to the duties and obligations
of the Master Servicer hereunder, and (c) 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
8
<PAGE> 12
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,
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
9
<PAGE> 13
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 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
12 Read's Way
New Castle, Delaware 19720
Attn: Executive Vice President and Secretary
Phone: (302) 323-7167
Fax: (302) 323-7393
or, if to the Seller or the Master Servicer, addressed to:
Greenwood Trust Company
12 Read's Way
New Castle, Delaware 19720
Attn: John J. Coane
Phone: (302) 323-7184
Fax: (302) 323-7393
10
<PAGE> 14
or, if to the Trustee, addressed to:
U.S. Bank National Association
One Illinois Center
111 East Wacker Drive - Suite 3000
Chicago, Illinois 60601
Attn: Martha L. Sanders
Phone: (312) 228-9452
Fax: (312) 228-9459
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 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 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 Greenwood is the seller.
11
<PAGE> 15
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 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 (a) the Credit Enhancement Provider's obligations
under this Agreement shall remain unchanged, (b) the Credit Enhancement Provider
shall remain solely responsible to the other parties hereto for the performance
of such obligations, (c) 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 (d) 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.
12
<PAGE> 16
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/ Richard W. York
-----------------------------------------
Name: Richard W. York
Title: Vice President
GREENWOOD TRUST COMPANY,
as Master Servicer, Servicer and Seller
By /s/ John J. Coane
-----------------------------------------
Name: John J. Coane
Title: Vice President, Chief Accounting
Officer and Treasurer
U.S. BANK NATIONAL ASSOCIATION, as Trustee
By /s/ Martha L. Sanders
-----------------------------------------
Name: Martha L. Sanders
Title: Vice President
13
<PAGE> 1
EXHIBIT 4.28
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 1999-3
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Section 1. Defined Terms..........................................................................................2
Section 2. Loan...................................................................................................3
Section 3. Calculation of Amount of Interest Payable on the Loan..................................................3
Section 4. Payment of Interest on the Loan........................................................................3
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........................................5
Section 8. Certain Additional Loans...............................................................................6
Section 9. Limited Obligation; Waiver of Setoff; Obligations Absolute.............................................6
Section 10. Investments and Information...........................................................................7
Section 11. Servicing Transfer....................................................................................7
Section 12. Representations and Warranties........................................................................7
Section 13. Covenants.............................................................................................9
Section 14. Governing Law.........................................................................................9
Section 15. Termination...........................................................................................9
Section 16. Notices...............................................................................................9
Section 17. Bankruptcy...........................................................................................10
Section 18. Limitation of Remedies...............................................................................11
Section 19. No Petition..........................................................................................11
Section 20. Amendments...........................................................................................11
Section 21. Successors and Assigns; Replacement of Credit Enhancement Provider...................................11
Section 22. Participation........................................................................................12
</TABLE>
<PAGE> 3
AMENDED AND RESTATED CREDIT ENHANCEMENT 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 April 6, 1999 (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 $526,316,000 in aggregate principal
amount of Investor Certificates of Discover Card Master Trust I, Series 1999-3
(the "Series"), which will entitle the holders thereof to interest during the
Revolving Period, the Accumulation Period, and the Amortization Period, if any,
and principal on the Class A Expected Final Payment Date, the Class B Expected
Final Payment Date and during the 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 April 6, 1999 (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 "Loan") to the Trust, for the benefit of the Investor
Certificateholders of the Series, of $39,473,700 (7.5% 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, the Credit Enhancement Provider made such loan on such date and
the initial principal amount of the Loan is still outstanding; and
WHEREAS, the parties hereto desire to amend and restate the
Credit Enhancement Agreement.
NOW, THEREFORE, in consideration of the mutual covenants
herein contained, and other good and valuable consideration, the receipt and
adequacy of which are hereby
<PAGE> 4
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:
"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 immediately 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 0.50%.
"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, 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)
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
2
<PAGE> 5
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. LOAN. The amount of the Loan shall be increased by
the amount of any additional loan made by the Credit Enhancement Provider
pursuant to Section 8 hereof
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, the rate for such Interest Period on
such principal portion shall be the Lender Rate.
(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. On each
Distribution Date, 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:
(a) interest and earnings (net of losses and investment
expenses) accrued since the preceding Distribution Date on the Provider Amount;
and
(b) 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.
3
<PAGE> 6
SECTION 5. REPAYMENT OF PRINCIPAL OF THE LOAN. 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 funds described below, and only to the extent such funds are
available.
(a) If, as of any Distribution Date, after giving effect to
all other deposits to and withdrawals from the Credit Enhancement Account as of
such Distribution Date, 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(a), 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.
(b) 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, 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, 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 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).
(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) of the Series Supplement, shall be paid to Greenwood on
behalf of the Holder of the Seller Certificate.
4
<PAGE> 7
(c) 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(b) hereof shall be withdrawn from such account
and paid to Greenwood on behalf of the Holder of the Seller Certificate.
SECTION 7. DEPOSITS TO AND WITHDRAWALS FROM THE CREDIT
ENHANCEMENT ACCOUNT.
(a) The proceeds of the Loan made by the Credit Enhancement
Provider to the Trust, for the benefit of the Investor Certificateholders of the
Series, on the Series Closing Date 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 or the Available
Class 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, 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.
5
<PAGE> 8
(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 Available Class B 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) NOTICE. The Credit Enhancement Provider shall give prior
written notice to Moody's of the making of any loan by the Credit Enhancement
Provider other than the additional loan 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
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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.
(c) The Master Servicer shall obtain the consent of the Credit
Enhancement Provider prior to the investment in any Permitted Investments with a
stated maturity, the maturity of which is longer than as would cause them to
mature on or prior to the following Distribution Date as provided in Section
8(e) of the Series Supplement.
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 (a) be responsible for the performance of
all servicing functions to be performed from and after such date, (b) agree to
be bound by the terms, covenants and conditions contained herein applicable to
the Master Servicer and be subject to the duties and obligations of the Master
Servicer hereunder, and (c) 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
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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,
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
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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 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
12 Read's Way
New Castle, Delaware 19720
Attn: Executive Vice President and Secretary
Phone: (302) 323-7167
Fax: (302) 323-7393
or, if to the Seller or the Master Servicer, addressed to:
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Greenwood Trust Company
12 Read's Way
New Castle, Delaware 19720
Attn: John J. Coane
Phone: (302) 323-7184
Fax: (302) 323-7393
or, if to the Trustee, addressed to:
U.S. Bank National Association
One Illinois Center
111 East Wacker Drive - Suite 3000
Chicago, Illinois 60601
Attn: Martha L. Sanders
Phone: (312) 228-9452
Fax: (312) 228-9459
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 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 Greenwood is the
seller.
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(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 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 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 (a) the Credit Enhancement Provider's obligations under this
Agreement shall remain unchanged, (b) the Credit Enhancement Provider shall
remain solely responsible to the other parties hereto for the performance of
such obligations, (c) the Trustee, the Trust, the Sellers and the Master
Servicer shall continue to deal solely and directly with the Credit Enhancement
Provider in connection
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with the Credit Enhancement Provider's rights and obligations under this
Agreement, and (d) 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/ Richard W. York
------------------------------------
Name: Richard W. York
Title: Vice President
GREENWOOD TRUST COMPANY,
as Master Servicer, Servicer and Seller
By /s/ John J. Coane
------------------------------------
Name: John J. Coane
Title: Vice President, Chief Accounting Officer
and Treasurer
U.S. BANK NATIONAL ASSOCIATION, as Trustee
By /s/ Martha Sanders
------------------------------------
Name: Martha Sanders
Title: Vice President
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