exv4w3



 





EXHIBIT 4.3




CREDIT ENHANCEMENT AGREEMENT




among




U.S. BANK NATIONAL ASSOCIATION




as Trustee,




DISCOVER BANK




as Master Servicer, Servicer and Seller




and




DISCOVER RECEIVABLES FINANCING CORPORATION




as Credit Enhancement Provider










Dated as of November 3, 2004










DISCOVER CARD MASTER TRUST I




SERIES 2004-1




 









 








TABLE OF CONTENTS




	 	 	 	 	 	 	 
	 	 	 	 	Page

	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
	 	 	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
	 	 	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
	 	 	8	 
	SECTION 14.

	 	Governing Law
	 	 	9	 
	SECTION 15.

	 	Termination
	 	 	9	 
	SECTION 16.

	 	Notices
	 	 	9	 
	SECTION 17.

	 	Bankruptcy
	 	 	10	 
	SECTION 18.

	 	Limitation of Remedies
	 	 	10	 
	SECTION 19.

	 	No Petition
	 	 	10	 
	SECTION 20.

	 	Amendments
	 	 	10	 
	SECTION 21.

	 	Successors and Assigns; Replacement of Credit Enhancement Provider
	 	 	10	 
	SECTION 22.

	 	Participation
	 	 	11	 







     CREDIT ENHANCEMENT AGREEMENT, dated as of November 3, 2004, among U.S.
BANK NATIONAL ASSOCIATION (formerly First Bank National Association, successor
trustee to



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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”), DISCOVER BANK (formerly
Greenwood Trust Company) (“Discover Bank”) 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, Discover Bank as Master Servicer, Servicer and Seller and the
Trustee have entered into an Amended and Restated Pooling and Servicing
Agreement, dated as of November 3, 2004 (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 November 3, 2004
(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, is issuing $1,315,790,000 in aggregate principal amount
of Investor Certificates of Discover Card Master Trust I, Series 2004-1 (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 and other Trust income; and



     WHEREAS, it is a condition to the issuance of the Investor Certificates
that at the closing on the date hereof, the Credit Enhancement Provider make a
term loan (the “Loan”) to the Trust, for the benefit of the Investor
Certificateholders of the Series, of $98,684,250 (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.



     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 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; provided, however, that such defined
terms shall only have the meanings applicable to Series 2004-1.



     (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.



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     “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 0.55%.



     “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 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 Credit Enhancement Provider hereby makes a term loan
to the Trust, for the benefit of the Investor Certificateholders of the Series,
on the Series Closing Date in an amount equal to $98,684,250, receipt of which
is hereby acknowledged by the Trustee. The amount of such 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.



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     (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 Discover Bank 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 Discover Bank
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 Discover Bank on behalf of the
Holder of the Seller Certificate (i) the interest and earnings (net of losses
and investment expenses) accrued since the



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preceding Distribution Date on an
amount equal to the positive difference, if any, between (x) the amount on
deposit in the Credit Enhancement Account and (y) the Provider Amount and (ii)
the positive difference, if any, between (x) the amount of interest and
earnings (net of losses and investment expenses) accrued since the preceding
Distribution Date on the Provider Amount and (y) the amount paid to the Credit
Enhancement Provider on such Distribution Date pursuant to Section 4(a).




     (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) and 9(b)(32) of the Series Supplement, shall be paid to Discover Bank
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 Discover Bank 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 pursuant to Section 2 hereof, 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 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 Discover Bank 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 Discover Bank, 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.



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     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, Discover Bank on behalf of the Holder of the Seller Certificate may
request that the Credit Enhancement Provider make an additional loan in the
amount of the Additional Credit Support Amount. If Discover Bank 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 Discover Bank 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) Increased Credit Enhancement Amount. In the event the Series Investor
Interest is increased pursuant to Section 32 of the Series Supplement,
requiring an Increased Credit Enhancement Amount, Discover Bank on behalf of
the Holder of the Seller Certificate may request that the Credit Enhancement
Provider make an additional loan in the amount of the Increased Credit
Enhancement Amount. If Discover Bank 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.



     (c) Supplemental Credit Enhancement Event. In the event that a
Supplemental Credit Enhancement Event occurs, Discover Bank as Servicer may
request that the Credit Enhancement Provider make an additional loan in the
amount of the Supplemental Credit Enhancement Amount. If Discover Bank 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.



     (d) Notice. The Credit Enhancement Provider shall give prior written
notice to Moody’s and Standard & Poor’s of the making of any loan by the Credit
Enhancement Provider other than the additional loans described in this Section
8.



     (e) Interest Rate. At the time of any additional loan described in this
Section 8, Discover Bank as Servicer and the Credit Enhancement Provider may
agree in writing that the Supplemental Credit Enhancement Amount, the Increased
Credit Enhancement Amount or the Additional Credit Support Amount, as
applicable, shall bear interest at a different LIBOR-Based Rate, which rate
shall reflect prevailing market conditions and the expected duration of such
additional loan.



     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



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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 (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



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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. Discover Bank, 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 Discover Bank 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 Discover Bank 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



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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, Discover Bank 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:




Discover Bank

12 Read’s Way

New Castle, Delaware 19720

Attn: Michael F. Rickert

Phone: (302) 323-7434

Fax: (302) 323-7393




or, if to the Trustee, addressed to:




U.S. Bank National Association

209 South LaSalle Street

Suite 300

Chicago, Illinois 60604

Attn: Patricia M. Child

Phone: (312) 836-6713

Fax: (312) 836-6701




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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 Discover Bank 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
Bank is the seller.



     (b) Each of Discover Bank 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
Bank 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.



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     (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 Discover Bank 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 Discover Bank 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/ Jai
Sooklal	 
	 	 	Name:  	Jai Sooklal 	 
	 	 	Title:  	Vice President 	 
	 



	 	 	 	 	 
	 	DISCOVER BANK,

as Master Servicer, Servicer and Seller

 	 
	 	By:  	/s/
Michael F. Rickert	 
	 	 	Name:  	Michael F. Rickert 	 
	 	 	Title:  	Vice President, Chief Accounting
Officer and Treasurer 	 
	 



	 	 	 	 	 
	 	U.S. BANK NATIONAL ASSOCIATION,

as Trustee

 	 
	 	By:  	/s/
Patricia M. Child	 
	 	 	Name:  	Patricia M. Child 	 
	 	 	Title:  	Vice President 	 
	 





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