Document:

exv4w4

 

Exhibit 4.4

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 December 16, 2005

 

DISCOVER CARD MASTER TRUST I

SERIES
2005-4, SUBSERIES 2

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	Page
	SECTION 1.

	 	Defined Terms
	 	 	1	 
	 
	 	 	 	 	 	 
	SECTION 2.

	 	Loan.
	 	 	2	 
	 
	 	 	 	 	 	 
	SECTION 3.

	 	Calculation of Amount of Interest Payable on the Loan
	 	 	2	 
	 
	 	 	 	 	 	 
	SECTION 4.

	 	Payment of Interest on the Loan
	 	 	3	 
	 
	 	 	 	 	 	 
	SECTION 5.

	 	Repayment of Principal of the Loan
	 	 	3	 
	 
	 	 	 	 	 	 
	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
	 	 	4	 
	 
	 	 	 	 	 	 
	SECTION 8.

	 	Certain Additional Loans
	 	 	5	 
	 
	 	 	 	 	 	 
	SECTION 9.

	 	Limited Obligation; Waiver of Setoff; Obligations Absolute
	 	 	6	 
	 
	 	 	 	 	 	 
	SECTION 10.

	 	Investments and Information
	 	 	6	 
	 
	 	 	 	 	 	 
	SECTION 11.

	 	Servicing Transfer
	 	 	6	 
	 
	 	 	 	 	 	 
	SECTION 12.

	 	Representations and Warranties
	 	 	7	 
	 
	 	 	 	 	 	 
	SECTION 13.

	 	Covenants
	 	 	8	 
	 
	 	 	 	 	 	 
	SECTION 14.

	 	Governing Law
	 	 	8	 
	 
	 	 	 	 	 	 
	SECTION 15.

	 	Termination
	 	 	8	 
	 
	 	 	 	 	 	 
	SECTION 16.

	 	Notices
	 	 	9	 
	 
	 	 	 	 	 	 
	SECTION 17.

	 	Bankruptcy
	 	 	9	 
	 
	 	 	 	 	 	 
	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 December 16, 2005, 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”), 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 December 16, 2005 (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 $736,843,000 in aggregate principal amount of Investor Certificates of Discover Card
Master Trust I, Series 2005-4, Subseries 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 $55,263,225 (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
Subseries 1 of Series 2005-4.

     (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.

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          “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%.

          “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
$55,263,225, 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

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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 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.

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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
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

4

 

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, 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 31 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.

5

 

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 (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.

6

 

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:

          (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.

7

 

          (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 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 THAT WOULD RESULT IN THE APPLICATION OF
THE LAW OF ANY STATE OTHER THAN NEW YORK, 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.

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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

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.

9

 

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.

     (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.

10

 

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.

11

 

     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

12exv10w1

 

EXHIBIT 11.1

			
	 	 	 
	
	 	RBC Capital Markets Corporation

One Liberty Plaza –
2nd Floor

165 Broadway

New York, NY 10006-1404

Telephone: (212) 858-7000

	 	 	 	 	 
	DATE

	 	:
	 	December 14, 2005
	 
	 	 	 	 
	TO

	 	:
	 	Wintrust Financial Corporation (“Party B”)
	 

	 	 	 	727 North Bank Lane
	 

	 	 	 	Lake Forest, IL 60045
	 
	 	 	 	 
	ATTN

	 	:
	 	David A. Dykstra, Sr. Executive V.P. & COO
	 
	 	 	 	 
	FAX

	 	:
	 	(847) 615-4034
	 
	 	 	 	 
	TEL

	 	:
	 	(847) 615-4096
	 
	 	 	 	 
	FROM

	 	:
	 	RBC CAPITAL MARKETS CORPORATION
	 

	 	 	 	as agent for
	 

	 	 	 	ROYAL BANK OF CANADA (“Party A”)
	 
	 	 	 	 
	FAX

	 	:
	 	(212) 428-3053
	 
	 	 	 	 
	RBCCM REF

	 	:
	 	NY — 5189 (Amended & Restated)
	 
	 	 	 	 
	RE

	 	:
	 	Confirmation of Forward Stock Sale on the Common Stock of Wintrust Financial Corporation

Disclosure of Agency Relationship

     Royal Bank of Canada (“RBC” or the “Bank”) has appointed as its agent, its indirect wholly-owned
subsidiary, RBC Capital Markets Corporation (“RBCCM”), for purposes of conducting on the Bank’s
behalf, a business in privately negotiated transactions in options and other derivatives. You
hereby are advised that RBC, the principal and stated counterparty in such transactions, duly has
authorized RBCCM to market, structure, negotiate, document, price, execute and hedge transactions
in over-the-counter derivative products. RBCCM has full, complete and unconditional authority to
undertake such activities on behalf of RBC. RBCCM acts solely as agent and has no obligation, by
way of issuance, endorsement, guarantee or otherwise with respect to the performance of either
party under this transaction. This transaction is not insured or guaranteed by RBCCM.

CONFIRMATION

     The purpose of this letter agreement is to confirm the terms and conditions of the transaction
entered into between us on the Trade Date specified below (the “Transaction”), which are hereby
amended and restated in their entirety effective as of December 14, 2005 (The Amended and Restated
Confirmation Effective Date), as memorialized in this amended and restated confirmation dated
December 14, 2005 (the “Amended and Restated

 

 

RBCCM Ref: NY-5189 (Amended & Restated)

Confirmation”). This Amended and Restated Confirmation constitutes a “Confirmation” as referred to
in the Master Agreement specified below.

1. The definitions and provisions contained in the 2000 ISDA Definitions (the “Swap Definitions”)
as published by the International Swaps and Derivatives Association, Inc. (“ISDA”) and in the 2002
ISDA Equity Derivatives Definitions (the “Equity Definitions” and, together with the Swap
Definitions, the “Definitions”), as published by ISDA, are incorporated into this Confirmation. In
the event of any inconsistency between either set of definitions and provisions and this
Confirmation, this Confirmation will govern.

This Confirmation evidences a complete and binding agreement between Party A and Party B as to the
terms of the Transaction to which this Confirmation relates. This Confirmation shall supplement,
form a part of, and be subject to an agreement in the form of the 2002 ISDA Master Agreement (the
“Agreement”) as if Party A and Party B had executed an agreement in such form with a Schedule
thereto with the elections and variables set forth in Parts 4 and 5 of this Confirmation. In the
event of any inconsistency between provisions of that Agreement and this Confirmation, this
Confirmation will prevail for the purpose of the Transaction to which this Confirmation relates.
The parties hereby agree that no Transaction other than the Transaction to which this Confirmation
relates shall be governed by the Agreement.

Party A and Party B each represents to the other that it has entered into the Transaction in
reliance upon such tax, accounting, regulatory, legal and financial advice as it deems necessary
and not upon any view expressed by the other.

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

General Terms:

	 	 	 	 	 
	 

	 	Trade Date:
	 	December 14, 2004
	 
	 	 	 	 
	 

	 	Effective Date:
	 	December 17, 2004
	 
	 	 	 	 
	 

	 	Base Amount:
	 	Initially, 1,200,000 Shares, subject
to increase pursuant to the
Overallotment Option. On each
Settlement Date, the Base Amount
shall be reduced by the number of
Settlement Shares for such Settlement
Date. Effective as of March 30,
2005, Base Amount shall be 200,000
Shares.
	 
	 	 	 	 
	 

	 	Maturity Date:
	 	Initially, December 17, 2005 but
effective as of the Amended and
Restated Confirmation Effective Date,
Maturity Date shall be December 17,
2006 (or, if such date is not a
Scheduled Trading Day, the next
following Scheduled Trading Day);
provided that if the Maturity Date is
a Disrupted Day, then the Maturity
Date shall be the first succeeding
Scheduled Trading Day that is not a
Disrupted Day.

 

 

RBCCM Ref: NY-5189 (Amended & Restated)

	 	 	 	 	 
	 

	 	Initial Forward Price:
	 	USD55.93 per Share, (an amount which
is equal to the public offering price
less the underwriting discount).
	 
	 	 	 	 
	 

	 	Forward Price:
	 	On the Effective Date, the Initial
Forward Price, and, on any other day,
the Forward Price as of the
immediately preceding calendar day
multiplied by the sum of (i) 1 plus
(ii) the Daily Rate for such day;
provided that on each Forward Price
Reduction Date, the Forward Price in
effect on such date shall be the
Forward Price otherwise in effect on
such date minus the Forward Price
Reduction Amount for such Forward
Price Reduction Date.
	 
	 	 	 	 
	 

	 	Daily Rate:
	 	For any day, (i)(A) USD-Federal Funds
Rate for such day minus (B) the
Spread divided by (ii) 360. 
	 
	 	 	 	 
	 

	 	USD-Federal Funds Rate:
	 	For any calendar day from and
including the Effective Date through
to and including the Maturity Date,
the rate set forth for such day
opposite the caption “Federal funds”,
as such rate is displayed on the page
“FedsOpen <Index> <GO>”
on the BLOOMBERG Professional
Service, or any successor page;
provided that if no rate appears for
any day on such page, the rate for
the immediately preceding day for
which a rate does so appear shall be
used for such day.
	 
	 	 	 	 
	 

	 	Spread:
	 	0.75%. 
	 
	 	 	 	 
	 

	 	Forward Price Reduction Date(s):
	 	February 1, 2005, August 1, 2005,
February 1, 2006 and August 1, 2006.
	 
	 	 	 	 
	 

	 	Forward Price Reduction Amount:
	 	For each Forward Price Reduction
Date, the Forward Price Reduction
Amount set forth opposite such date
on Schedule I.
	 
	 	 	 	 
	 

	 	Shares:
	 	Common Stock, no par value per share,
of Wintrust Financial Corporation
(the “Issuer”) (Exchange identifier:
	 

	 	 	 	“WTFC”).
	 
	 	 	 	 
	 

	 	Exchange:
	 	NASDAQ National Market.
	 
	 	 	 	 
	 

	 	Related Exchange(s):
	 	All Exchanges.
	 
	 	 	 	 
	 

	 	Clearance System:
	 	DTCC. (formerly DTC)
	 
	 	 	 	 
	 

	 	Calculation Agent:
	 	RBCCM, which is an affiliate of RBC
shall be the Calculation Agent, or
any successor calculation agent
thereto appointed by RBCCM. All
determinations and calculations of
the Calculation Agent shall be
binding on the parties hereto in the
absence of material manifest error.

 

 

RBCCM Ref: NY-5189 (Amended & Restated)

Settlement Terms:

	 	 	 	 	 
	 

	 	Settlement Date:
	 	Any Scheduled Trading Day following
the Effective Date and up to and
including the Maturity Date, as
designated by Party B in a written
notice (a “Settlement Notice”)
delivered to Party A at least (i)
ten Scheduled Trading Days prior to
such Settlement Date (Party A shall
use reasonable efforts to
accommodate a shorter Settlement
Period), which may be the Maturity
Date, if Physical Settlement
applies, and (ii) 15 Scheduled
Trading Days prior to such
Settlement Date, which may be the
Maturity Date, if Cash Settlement or
Net Stock Settlement applies (the
period from the giving of any such
notice to the Settlement Date being
the “Cash/Net Stock Notice Period”);
provided that the Maturity Date
shall be a Settlement Date if on
such date the Base Amount is greater
than zero.
	 
	 	 	 	 
	 

	 	Settlement Shares:
	 	With respect to any Settlement Date,
a number of Shares, not to exceed
the Base Amount, designated as such
by Party B in the related Settlement
Notice; provided that (i) Party B
must designate as the Settlement
Shares for each Settlement Date
other than the Maturity Date a
number of Shares equal to at least
the lesser of (x) 100,000 and (y)
the Base Amount on such date, and
(ii) on the Maturity Date the number
of Settlement Shares shall be equal
to the Base Amount on such date.
	 
	 	 	 	 
	 

	 	Settlement:
	 	Physical Settlement, Cash Settlement
or Net Stock Settlement, at the
election of Party B as set forth in
the Settlement Notice; provided that
Physical Settlement shall apply (i)
if no settlement method is selected,
(ii) a Suspension Period exists
during the Cash/Net Stock Notice
Period, but only to the extent that
Party A has been unable as a result
thereof to purchase Shares in an
amount equal to the Settlement
Shares prior to the Settlement Date
and has provided notice to such
effect to Party B, or (iii) a Stock
Borrow Event or any of the events
specified in paragraphs (b), (c) or
(f) under “Acceleration Events” in
this Confirmation has occurred.

 

 

RBCCM Ref: NY-5189 (Amended & Restated)

	 	 	 	 	 
	 

	 	Physical Settlement:
	 	On any Settlement Date in respect of
which Party B has elected, or is
deemed to have elected in whole or
in part, Physical Settlement, Party
B shall deliver to Party A a number
of Shares equal to the Settlement
Shares for which Physical Settlement
applies on such Settlement Date, and
Party A shall deliver to Party B, by
wire transfer of immediately
available funds to an account
designated by Party B, an amount in
cash equal to the Physical
Settlement Amount for such
Settlement Date, on a delivery
versus payment basis.
	 
	 	 	 	 
	 

	 	Physical Settlement Amount:
	 	For any Settlement Date in respect
of which Party B has elected, or is
deemed to have elected, Physical
Settlement, an amount in cash equal
to the product of (i) the Forward
Price on such Settlement Date, as
the case may be, and (ii) the number
of Settlement Shares for which
Physical Settlement applies on such
Settlement Date.
	 
	 	 	 	 
	 

	 	Cash Settlement:
	 	On any Settlement Date in respect of
which Party B has elected Cash
Settlement, if the Cash Settlement
Amount is a positive number, Party A
will pay the Cash Settlement Amount
to Party B. If the Cash Settlement
Amount is a negative number, Party B
will pay the absolute value of the
Cash Settlement Amount to Party A.
Such amounts shall be paid on the
Settlement Date.
	 
	 	 	 	 
	 

	 	Cash Settlement Amount:
	 	An amount determined by the
Calculation Agent equal to: (i)(A)
the Forward Price on such Settlement
Date, as the case may be, minus (B)
the average price of the Shares
purchased by Party A in order to
close-out its trading activities
pursuant to the Transaction (the
“Close-out Shares”), plus $0.02,
multiplied by (ii) the Settlement
Shares for which Cash Settlement or
Net Stock Settlement applies on such
Settlement Date.
	 
	 	 	 	 
	 

	 	Net Stock Settlement:
	 	On any Settlement Date in respect of
which Party B has elected Net Stock
Settlement, if the Cash Settlement
Amount is a (i) positive number,
Party A shall deliver a number of
Shares to Party B equal to the Net
Stock Settlement Shares, and (ii)
negative number, Party B shall
deliver a number of Shares to Party
A equal to the Net Stock Settlement
Shares.
	 
	 	 	 	 
	 

	 	Net Stock Settlement Shares:
	 	With respect to a Settlement Date,
the absolute value of the Cash
Settlement Amount divided by the
fair market value per share of the
Shares as determined by the
Calculation Agent, with the number
of Shares rounded up in the event
such calculation results in a
fractional number.
	 
	 	 	 	 
	 

	 	Settlement Currency:
	 	USD.

 

 

RBCCM Ref: NY-5189 (Amended & Restated)

	 	 	 	 	 
	 

	 	Failure to Deliver:
	 	Applicable.

Suspension of Cash or

Net Stock Settlement:

	 	 	 	 	 
	 

	 	Suspension Period:
	 	Any day on which Party A determines based on the advice
of counsel that Cash or Net Stock Settlement may
violate Rules 10b-5 or 10b-18 of the Securities
Exchange Act of 1934 (the “Exchange Act”), any
applicable securities laws hereinafter enacted or a
change in the interpretation of any existing applicable
securities laws. Party A shall notify Party B if it
receives such advice from its counsel. Notwithstanding
any provision in this Agreement to the contrary,
Physical Settlement shall apply if a Suspension Period
exists during the Cash/Net Stock Notice Period, but
only to the extent that Party A has been unable as a
result thereof to purchase Shares in an amount equal to
the Settlement Shares prior to the Settlement Date and
has provided notice to such effect to Party B.

Adjustments:

	 	 	 	 	 
	 

	 	Method of Adjustment:
	 	Calculation Agent Adjustment.
Notwithstanding anything in the
Equity Definitions to the contrary,
the Calculation Agent may make an
adjustment pursuant to Calculation
Agent Adjustment to any one or more
of the Base Amount, the Forward
Price and any other variable
relevant to the settlement or
payment terms of the Transaction.
	 
	 	 	 	 
	 

	 	Additional Adjustment:
	 	If, in Party A’s sole judgment, the
actual cost to Party A, over any one
month period, of borrowing a number
of Shares equal to the Base Amount
to hedge its exposure to the
Transaction exceeds a weighted
average rate equal to 75 basis
points per annum, the Calculation
Agent shall reduce the Forward Price
in order to compensate Party A for
the amount by which such cost
exceeded a weighted average rate
equal to 75 basis points per annum
during such period. The Calculation
Agent shall notify Party B prior to
making any such adjustment to the
Forward Price and, upon the request
of Party B, Party A shall provide an
itemized list of its stock loan
costs for the applicable one month
period.

 

 

RBCCM Ref: NY-5189 (Amended & Restated)

Extraordinary Events:

	 	 	 	 	 
	 

	 	(a) Consequences of Merger Events:	 	 
	 
	 	 	 	 
	 

	 	Share-for-Share:
	 	Cancellation and Payment.
	 

	 	Share-for-Other:
	 	Cancellation and Payment.
	 

	 	Share-for-Combined:
	 	Cancellation and Payment.
	 
	 	 	 	 
	 

	 	(b) Nationalization, Insolvency or Delisting:
	 	Cancellation and Payment.

	 	 	 	 	 
	 

	 	Delisting:
	 	The definition of “Delisting” in Section 12.6 of the
Equity Definitions shall be deleted in its entirety and
replaced with the following: “Delisting” means that the
Exchange announces that pursuant to the rules of such
Exchange, the Shares cease (or will cease) to be listed,
traded or publicly quoted on the Exchange for any reason
(other than a Merger Event or Tender Offer) and are not
immediately re-listed, re-traded or re-quoted on the New
York Stock Exchange, the American Stock Exchange or the
NASDAQ NMS.

	 	 	 	 	 
	 

	 	(c) Tender Offer:
	 	Applicable.

Consequences of Tender Offer:

	 	 	 	 	 
	 

	 	Share-for-Share:
	 	Cancellation and Payment.
	 
	 	 	 	 
	 

	 	Share-for-Other:
	 	Cancellation and Payment.
	 
	 	 	 	 
	 

	 	Share-for-Combined:
	 	Cancellation and Payment.
	 
	 	 	 	 
	 

	 	New Shares:
	 	The definition of “New Shares” in
Section 12.1 of the Equity
Definitions shall be amended by
deleting subsection (i) in its
entirety and replacing it with the
following: “(i) publicly quoted,
traded or listed on the New York
Stock Exchange, the American Stock
Exchange or the NASDAQ NMS and”.

Party A shall be the determining party in connection with all Extraordinary Events.

As provided hereinafter under “Acceleration Events,” upon the occurrence of the events specified in
(d) and (e) thereof, Party B shall elect whether payment of the Cancellation Amount is to be
effected by Physical Settlement, Net Share Settlement or Cash Settlement, provided that if Party B
fails to do so, Physical Settlement shall apply.

 

 

RBCCM Ref: NY-5189 (Amended & Restated)

Additional Provisions:

If a Merger Date or Tender Offer Date is scheduled to be after the Settlement Date, the Calculation
Agent will determine the economic effect on the theoretical value of the Transaction of the
announcement of a potential Merger Event or Tender Offer Event (including without limitation any
change in stock loan rate or liquidity relevant to the Shares or to the Transaction) from the
Announcement Date to the Settlement Date. If such economic effect is material, the Calculation
Agent will adjust the terms of the Transaction to reflect such economic effect.

Account Details:

	 	 	 	 	 
	 

	 	Payments to Party A:
	 	To be advised under separate cover or
telephone confirmed prior to each Payment
Date.
	 
	 	 	 	 
	 

	 	Payments to Party B:
	 	To be advised under separate cover or
telephone confirmed prior to each Payment
Date.
	 
	 	 	 	 
	 

	 	Delivery of Shares to Party A:
	 	To be advised.

3. Other Provisions:

Conditions to Effectiveness:

The effectiveness of this Confirmation on the Effective Date shall be subject to (i) the condition
that the representations and warranties of Party B contained in the Underwriting Agreement, dated
the date hereof (the “Underwriting Agreement”), among Party B, Party A and RBCCM, as agent to Party
A and as representative of the several underwriters named therein, and any certificate delivered
pursuant thereto by Party B be true and correct on the Effective Date as if made as of the
Effective Date, (ii) the condition that Party B have performed all of the obligations required to
be performed by it under the Underwriting Agreement on or prior to the Effective Date, (iii) the
satisfaction of all of the conditions set forth in Section 7 of the Underwriting Agreement
and (iv) the condition that the following has not occurred: Party A is unable to borrow and deliver
for sale a number of Shares equal to the Base Amount or, in Party A’s sole judgment, either it is
impracticable to do so or Party A would incur a stock loan cost of more than a rate equal to 75
basis points per annum to do so (in which event this Confirmation shall be effective but the Base
Amount for the Transaction shall be reduced to the number of Shares Party A is required to deliver
in accordance with Section 3 of the Underwriting Agreement).

Additional Representations, Warranties and Agreements of Party B: Party B hereby
represents and warrants to, and agrees with, Party A as of the date hereof that:

	 	(a)	 	Any Shares, when issued and delivered in accordance with the terms of the
Transaction, will be duly authorized and validly issued, fully paid and nonassessable,
and the issuance thereof will not be subject to any preemptive or similar rights.

 

 

RBCCM Ref: NY-5189 (Amended & Restated)

	 	(b)	 	Party B has reserved and will keep available, free from preemptive rights, out
of its authorized but unissued Shares, solely for the purpose of issuance upon
settlement of the Transaction as herein provided, the full number of Shares as shall
then be issuable upon Physical Settlement of the Transaction. All Shares so issuable
shall, upon such issuance, be accepted for listing on the Exchange.
	 
	 	(c)	 	Party B is not insolvent, nor will Party B be rendered insolvent as a result of
the Transaction.
	 
	 	(d)	 	After giving notice of its intent to elect Cash Settlement or Net Stock
Settlement, neither Party B nor any of its affiliates shall take any action that would
cause any purchases of Shares in connection with any such Cash Settlement or Net Stock
Settlement of the Transaction not to comply with Rule 10b-18 under the Exchange Act.
	 
	 	(e)	 	Party B is an “eligible contract participant” (as such term is defined in
Section 1(a)(12) of the Commodity Exchange Act, as amended).
	 
	 	(f)	 	Party B agrees not to repurchase any Shares if, immediately following such
repurchase, the Base Amount would be equal to or greater than 8% of the number of
then-outstanding Shares.
	 
	 	(g)	 	Party B agrees to provide Party A at least 30 days’ written notice (an “Issuer
Repurchase Notice”) prior to executing any repurchase of Shares by Party B or any of
its subsidiaries, whether out of profits or capital or whether the consideration for
such repurchase is cash, securities or otherwise (an “Issuer Repurchase”), that alone
or in the aggregate would result in the Base Amount Percentage (as defined below) being
(i) equal to or greater than 7% of the outstanding Shares and (ii) greater by 0.5% or
more than the Base Amount Percentage at the time of the immediately preceding Issuer
Repurchase Notice (or in the case of the first such Issuer Repurchase Notice, greater
than the Base Amount Percentage as of the date hereof). The “Base Amount Percentage”
as of any day is the fraction (1) the numerator of which is the Base Amount and (2) the
denominator of which is the number of Shares outstanding on such day.
	 
	 	(h)	 	No filing with, or approval, authorization, consent, license registration,
qualification, order or decree of, any court or governmental authority or agency,
domestic or foreign, is necessary or required for the execution, delivery and
performance by Party B of this Confirmation and the consummation of the Transaction
(including, without limitation, the issuance and delivery of Shares on any Settlement
Date) except (i) such as have been obtained under the Securities Act, and (ii) as may
be required to be obtained under state securities laws.
	 
	 	(i)	 	In addition to any other requirements set forth herein, Party B agrees not to
elect Cash Settlement or Net Stock Settlement if such settlement would result in a
violation of the U.S. federal securities laws or any other federal or state law or
regulation applicable to Party B.

 

 

RBCCM Ref: NY-5189 (Amended & Restated)

	 	(j)	 	Party B is not entering into the Transaction on behalf of or for the accounts
of any other person or entity, and will not transfer or assign its obligations under
the Transaction or any portion of such obligations to any other person or entity except
in compliance with applicable laws and the terms of the Transaction.
	 
	 	(k)	 	Party B represents that any Registration Statement (as defined below), for
purposes of facilitating Party A’s hedging of the Transaction, at the time the same
becomes effective, will not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the statements
therein not misleading. Party B represents that any prospectus delivered to Party A in
connection with sales made under the Registration Statement (as such prospectus may be
supplemented from time to time) will not include an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were made,
not misleading.
	 
	 	(l)	 	Neither Party A nor any of its affiliates has advised Party B with respect to
any legal, regulatory, tax, accounting or economic consequences arising from the
Transaction, and neither Party A nor any of its affiliates is acting as agent (other
than RBCCM as dual agent if specified above), or advisor for Party B in connection with
the Transaction.
	 
	 	(m)	 	Each of Party B’s required filings under all applicable securities laws have
been filed and that, as of the respective dates thereof, such filings did not include
any untrue statement of a material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein not misleading.
	 
	 	(n)	 	Party B is not entering into the Transaction to create actual or apparent
trading activity in the Shares (or any security convertible into or exchangeable for
Shares), to manipulate the price of the Shares (or any security convertible into or
exchangeable for Shares).
	 
	 	(o)	 	Party B has not entered into any obligation that would contractually limit it
from effecting Physical Settlement, Net Share Settlement or Cash Settlement under the
Transaction and it agrees not to enter into any such obligation during the term of the
Transaction.

Additional Provisions:

	 	(a)	 	A registration statement (“Registration Statement”), which may be a shelf
registration statement filed pursuant to Rule 415 under the Securities Act of 1933 (the
“Securities Act”), covering public resale of at least the number of Shares to be
purchased by Party A shall have been filed with, and declared effective by, the
Securities and Exchange Commission no later than one Scheduled Trading Day prior to the
Trade Date and such Registration Statement shall continue to be in effect at all times
to and including the date that Party A or its affiliate(s) has fully and completely
established its hedge.

 

 

RBCCM Ref: NY-5189 (Amended & Restated)

	 	(b)	 	The contents of such Registration Statement and of any prospectus supplement to
the prospectus included therein (including, without limitation, any sections describing
the plan of distribution) shall be reasonably satisfactory to Party A.
	 
	 	(c)	 	Party A shall have been afforded a reasonable opportunity to conduct a due
diligence investigation with respect to Party B customary in scope for transactions
pursuant to which Party A acts as an underwriter of equity securities and the results
of such investigation are satisfactory to Party A, in its discretion, and
	 
	 	(d)	 	As of the Trade Date, the Underwriting Agreement shall have been entered into
with Party A in connection with the public resale by Party A of the Shares comprising
Party A’s hedge.

Compliance with Securities Laws:

Party A represents and warrants as follows:

	 	(a)	 	in connection with bids and purchases of Shares in connection with the
Transaction, Party A shall comply, or cause compliance, with the timing and volume
provisions of Rule 10b-18(b)(2) and (4) under the Exchange Act as if such provisions
were applicable to such bids and purchases;
	 
	 	(b)	 	in connection with bids and purchases of Shares in connection with the
Transaction, Party A shall use its best efforts to comply, or cause compliance, with
the price provisions of Rule 10b-18(b)(3) under the Exchange Act; provided, however,
that Party A shall not be obligated to comply with clauses (a) and (b) above in the
event and only to the extent that Party A is required to purchase any Shares as a
result of an Acceleration Event (as hereinafter defined).

Covenant of Party B:

The parties acknowledge and agree that any Shares delivered by Party B to Party A on any Settlement
Date and returned by Party A to securities lenders from whom Party A borrowed Shares in connection
with hedging its exposure to the Transaction will be freely saleable without further registration
or other restrictions under the Securities Act in the hands of those securities lenders.
Accordingly, Party B agrees that the Settlement Shares that it delivers to Party A on each
Settlement Date will not bear a restrictive legend and that such Settlement Shares will be
deposited in, and the delivery thereof shall be effected through the facilities of, the Clearance
System.

Covenant of Party A:

Unless the provisions set forth below under “Private Placement Procedures” shall be applicable,
Party A shall use any Shares delivered by Party B to Party A on any Settlement Date to return to
securities lenders to close out open stock loans, if any, with respect to Shares.

 

 

RBCCM Ref: NY-5189 (Amended & Restated)

Acceleration Events: An Acceleration Event shall occur if:

	 	(a)	 	Stock Borrow Event. Notwithstanding any other provision hereof, if, in
the judgment of the Calculation Agent, Party A is unable to hedge its exposure to the
Transaction because (i) of the lack of sufficient Shares being made available for Share
borrowing by lenders or (ii) it is otherwise commercially impracticable or economically
unfeasible, including, without limitation, in connection with Merger Events, Tender
Offers, partial tender offers or similar transactions (each of (i) and (ii), a “Stock
Borrow Event”), then Party A shall have the right to designate any Scheduled Trading
Day to be a Settlement Date on at least two Scheduled Trading Days’ notice, and to
select the number of Settlement Shares for such Settlement Date; provided that the
number of Settlement Shares for any Settlement Date so designated by Party A shall not
exceed the number of Shares as to which such inability exists, and provided further
that Physical Settlement shall apply at the Forward Price.
	 
	 	(b)	 	Stock Price. Notwithstanding any other provision hereof, if the
closing sale price per Share on the Exchange for the regular trading session on any
Exchange Business Day occurring after the Trade Date is less than or equal to $30.00,
Party A shall have the right to designate any Scheduled Trading Day to be a Settlement
Date on at least three Scheduled Trading Days’ notice, and to select the number of
Settlement Shares for such Settlement Date. Upon the designation of such Settlement
Date, Physical Settlement shall apply.
	 
	 	(c)	 	Dividends and Other Distributions. Notwithstanding anything to the
contrary herein contained, in the Agreement or in the Definitions, if on any day after
the Trade Date, Party B declares a distribution, issue or dividend to existing holders
of the Shares of (i) an extraordinary cash dividend (which shall include any cash
dividend other than regular semi-annual cash dividends of $0.12 or less in 2005 per
Share payable in February 2005 and August 2005 and $0.14 or less in 2006 per Share
payable in February 2006 and August 2006), (ii) a regular semi-annual dividend in an
amount greater than $0.12 in 2005 per Share per semi-annual period and greater than
$0.14 in 2006 per Share per semi-annual periodor (iii) any other type of securities
(other than Shares, which may constitute a Potential Adjustment Event), rights or
warrants or other assets, in any case for payment (cash or other consideration) at less
than the prevailing market price as determined by Party A, then Party A shall have the
right to designate any Scheduled Trading Day to be a Settlement Date for the entire
Transaction on at least one Scheduled Trading Day’s notice. Upon the designation of
such Settlement Date, Physical Settlement shall apply.
	 
	 	(d)	 	Board Approval of Merger. Notwithstanding any other provision hereof,
if on any day occurring after the Trade Date the board of directors of Party B votes to
approve any action that, if consummated, would constitute a Merger Event (as defined in
the Equity Definitions), then Party A shall have the right to designate any Scheduled
Trading Day to be a Settlement Date for the entire Transaction on at least three
Scheduled Trading Days’ notice. Party B shall notify Party A of any

 

 

RBCCM Ref: NY-5189 (Amended & Restated)

	 	 	 	such vote within one Scheduled Trading Day and upon the designation of such
Settlement Date, Party B shall promptly notify Party A of the settlement method,
provided that if Party B fails to do so, Physical Settlement shall apply.
	 
	 	(e)	 	Agreement Early Termination Date. Notwithstanding anything to the
contrary herein, in the Agreement or in the Definitions, if either Party A or Party B
has the right to designate an Early Termination Date pursuant to Section 6 of
the Agreement, such party shall have the right to designate any Scheduled Trading Day
to be a Settlement Date for the entire Transaction on at least three Scheduled Trading
Days’ notice. Upon the designation of such Settlement Date, Party B shall promptly
notify Party A of the settlement method, provided that if Party B fails to do so,
Physical Settlement shall apply.
	 
	 	(f)	 	Other Events. Notwithstanding anything to the contrary herein, in the
Agreement or in the Definitions, if a Nationalization, Insolvency, Insolvency Filing,
Delisting or Change in Law occurs, Party A shall have the right to designate any
Scheduled Trading Day to be a Settlement Date for the entire Transaction on at least
three Scheduled Trading Days’ notice, and Party A shall be the Determining Party. Upon
the designation of such Settlement Date, Physical Settlement shall apply.

Private Placement Procedures

If Party B is unable to comply with the provisions of “Covenant of Party B” above because of a
change in law, or Party A otherwise determines that in its reasonable opinion any Shares to be
delivered to Party A by Party B pursuant to Physical Settlement or Net Share Settlement may not be
freely returned by Party A to securities lenders as described under “Covenant of Party B” above,
then delivery of any such Shares (the “Restricted Shares”) shall be effected pursuant to this
provision, unless waived by Party A.

If Party B delivers the Restricted Shares pursuant to this provision (a “Private Placement
Settlement”), then delivery of Restricted Shares by Party B shall be effected in customary private
placement procedures with respect to such Restricted Shares reasonably acceptable to Party A;
provided that Party B may not elect a Private Placement Settlement if, on the date of its election,
it has taken, or caused to be taken, any action that would make unavailable either the exemption
pursuant to Section 4(2) of the Securities Act for the sale by Party B to Party A (or any affiliate
designated by Party A) of the Restricted Shares or the exemption pursuant to Section 4(1) or
Section 4(3) of the Securities Act for resales of the Restricted Shares by Party A (or any such
affiliate of Party A). The Private Placement Settlement of such Restricted Shares shall include
customary representations, covenants, blue sky and other governmental filings and/or registrations,
indemnities to Party A, due diligence rights (for Party A or any designated buyer of the Restricted
Shares by Party A), opinions and certificates, and such other documentation as is customary for
private placement agreements, all reasonably acceptable to Party A. In the case of a Private
Placement Settlement, Party A shall, in its sole discretion, adjust the amount of Restricted Shares
to be delivered to Party A hereunder in a commercially reasonable manner to reflect the fact that
such Restricted Shares may not be freely returned to securities lenders by Party A and may only be
saleable by Party A at a discount to reflect the lack of liquidity in Restricted Shares.
Notwithstanding the Agreement or this Confirmation, the date of delivery of

 

 

RBCCM Ref: NY-5189 (Amended & Restated)

such Restricted Shares shall be the Scheduled Trading Day following notice by Party A to Party B of
the number of Restricted Shares to be delivered pursuant to this provision. For the avoidance of
doubt, delivery of Restricted Shares shall be due as set forth in the previous sentence and not be
due on the Settlement Date that would otherwise be applicable.

Transfer and Assignment:

Neither the Transaction, any interest or obligation in or under the Transaction may be transferred
or assigned (whether by way of security or otherwise) by either party without the prior written
consent of the other party, except that a party may make such a transfer of the Transaction
pursuant to a consolidation or amalgamation with, or merger with or into, or transfer of all or
substantially all of its assets to, another entity. Any purported transfer or assignment that is
not in compliance with this paragraph shall be void.

Matters relating to Agent:

	 	(a)	 	As a broker-dealer registered with the U.S. Securities and Exchange Commission,
RBCCM, in its capacity as agent (the “Agent”), will be responsible for (i) effecting
the Transaction, (ii) issuing all required confirmations and statements to Party A and
Party B and (iii) maintaining books and records relating to the Transaction.
	 
	 	(b)	 	RBCCM shall act as “agent” for Party A and Party B within the meaning of Rule
15a-6 under the Exchange Act in connection with the Transaction.
	 
	 	(c)	 	The Agent, in its capacity as such, shall have no responsibility or liability
(including, without limitation, by way of guarantee, endorsement or otherwise) to Party
A or Party B or otherwise in respect of the Transaction, including, without limitation,
in respect of the failure of Party A or Party B to pay or perform under this
Confirmation, except for its gross negligence or willful misconduct in performing its
duties as Agent hereunder.
	 
	 	(d)	 	Each of Party A and Party B agree to proceed solely against the other to
collect or recover any securities or monies owing to Party A or Party B, as the case
may be, in connection with or as a result of the Transaction.
	 
	 	(e)	 	The Agent will be Party A’s agent for service of process for the purpose of
Section 13(c) of the Agreement.

Maximum Share Delivery:

Notwithstanding any other provision of this Confirmation, in no event will Party B be required to
deliver on any Settlement Date, whether pursuant to Physical Settlement, Net Stock Settlement, Cash
Settlement or any Private Placement Settlement, more than 2,600,000 Shares to Party A.

 

 

RBCCM Ref: NY-5189 (Amended & Restated)

Limit on Beneficial Ownership:

Notwithstanding any other provisions hereof, Party A shall not be entitled to receive Shares
hereunder (whether in connection with the purchase of Shares on any Settlement Date or otherwise)
to the extent (but only to the extent) that such receipt would result in RBC directly or indirectly
beneficially owning (as such term is defined for purposes of Section 13(d) of the Exchange
Act) at any time in excess of 9.5% of the outstanding Shares. Any purported delivery hereunder
shall be void and have no effect to the extent (but only to the extent) that such delivery would
result RBC directly or indirectly so beneficially owning in excess of 9.5% of the outstanding
Shares. If any delivery owed to Party A hereunder is not made, in whole or in part, as a result of
this provision, Party B’s obligation to make such delivery shall not be extinguished and Party B
shall make such delivery as promptly as practicable after, but in no event later than one Scheduled
Trading Day after, Party A gives notice to Party B that such delivery would not result in RBC
directly or indirectly so beneficially owning in excess of 9.5% of the outstanding Shares.

Miscellaneous:

			
	 	 	 
	          Non-Reliance:
	 	Applicable
	          Additional Acknowledgements:
	 	Applicable

4. Agreement is further supplemented by the following provisions:

Share Settlement upon Certain Events:

Notwithstanding anything to the contrary herein, in the Agreement or in the Definitions, if at any
time (i) an Early Termination Date occurs and Party B would be required to make a payment pursuant
to Sections 6(d) and 6(e) of the Agreement, or (ii) a Merger Event occurs and Party B would
be required to make a payment pursuant to Sections 12.2 and 12.7 of the Equity Definitions,
then in lieu of any such payment, Party B at its election, may deliver to Party A, at the time such
payment would have been due and in the manner provided under “Physical Settlement” in the Equity
Definitions, a number of Shares (or, in the case of a Merger Event, common equity securities of the
surviving entity) equal to the quotient obtained by dividing (A) the amount that would have been so
payable by (B) the fair market value per Share (or per unit of such common equity security) of the
Shares (or units) so delivered at the time of such delivery, as determined by the Calculation Agent
(which fair market value shall take into account whether the Shares so delivered are freely
tradeable). Upon Party B’s election to deliver Shares, the Transaction will not be considered for
purposes of determining any Early Termination Amount under Section 6(e) of the Agreement.

Agreement Regarding Set-off:

Notwithstanding Section 6(f) or any other provision of the Agreement or any other agreement
between the parties to the contrary, the obligations of Party B hereunder are not secured by any
collateral. Obligations under the Transaction shall not be set off against any other obligations
of

 

 

RBCCM Ref: NY-5189 (Amended & Restated)

the parties, whether arising under the Agreement, this Confirmation, under any other agreement
between the parties hereto, by operation of law or otherwise, and no other obligations of the
parties shall be set off against obligations under the Transaction, whether arising under the
Agreement, this Confirmation, under any other agreement between the parties hereto, by operation of
law or otherwise, and each party hereby waives any such right of set off. The last sentence of the
first paragraph of Section 6(e) of the Agreement shall not apply with respect to the
Transaction to the extent that any of the events described in Section 5(a)(vii) of the
Agreement occurs with respect to Party B.

Bankruptcy Rights:

In the event of Party B’s bankruptcy, Party A acknowledges and agrees that this Confirmation is not
intended to convey to it rights with respect to the Transaction that are senior to the claims of
common stockholders; provided, however, that nothing herein shall limit or shall be deemed to limit
Party A’s right to pursue remedies in the event of a breach by Party B of its obligations and
agreements with respect to this Confirmation and the Agreement; and provided further, that nothing
herein shall limit or be deemed to limit Party A’s rights in respect of any transaction other than
the Transaction. For the avoidance of doubt, the parties acknowledge and agree that Party A’s
rights with respect to any other claim arising from the Transaction prior to Party B’s bankruptcy
shall remain in full force and effect and shall not be otherwise abridged or modified in connection
herewith.

Account Information:

	 	 	 
	Account Details for Party A:

	 	Chase Manhattan Bank, New York
	 

	 	ABA 021-000-021
	 

	 	A/C# 920-1-033363
	 

	 	Ref: US Transit 1267 A/C 204-1499
	 

	 	RBCCM REF: NY-5189 Amended & Restated
	 
	 	 
	Account Details for Party B:

	 	Lake Forest Bank & Trust
	 

	 	Lake Forest, Illinois
	 

	 	ABA No. 0719-25334
	 

	 	Acct. No. 180130
	 

	 	Ref: Wintrust Financial Corporation

Party A address, telephone and facsimile number for purposes of giving notice:

Any notice or other communication required or permitted to be given to Party A (for matters other
than operational matters) with respect to this Confirmation shall be delivered in person or given
by facsimile transmission to Party A at the following address:

 

 

RBCCM Ref: NY-5189 (Amended & Restated)

RBC Capital Markets Corporation

Attention: Director, Independent Middle Office

One Liberty Plaza — 2nd Floor

165 Broadway

New York, New York 10006-1404 U.S.A.

Facsimile No.: (212) 658-6153

Any notice or other communication concerning operational matters should be sent by facsimile to RBC
Capital Markets Corporation, at: Attention: Michael Borenstein; Phone: (212) 858-7270;
Fax: (212) 858-7033.

Any notice or other communication required or permitted to be given Party B with respect to this
Confirmation shall be delivered in person or given by facsimile transmission to Party B at the
following address:

Wintrust Financial Corporation

Attention: David A. Dykstra, Sr. Executive V.P. & COO

727 North Bank Lane

Lake Forest, Illinois 60045 U.S.A.

Facsimile No.: (847) 615-4091

Waiver of Right to Trial by Jury. Each party waives, to the fullest extent permitted by applicable
law, any right it may have to a trial by jury in respect of any suit, action or proceeding relating
to this Confirmation or any Credit Support Document. Each party (i) certifies that no
representative, agent or attorney of the other party has represented, expressly or otherwise, that
such other party would not, in the event of such a suit action or proceeding, seek to enforce the
foregoing waiver and (ii) acknowledges that it and the other party have been induced to enter into
this Confirmation by, among other things, the mutual waivers and certifications in this Section.

5. ISDA Master Agreement

With respect to the Agreement, Party A and Party B each agree as follows:

Specified Entities:

     (a) in relation to Party A, for the purposes of:

	 	 	 
	          Section 5(a)(v):

	 	None
	          Section 5(a)(vi):

	 	None
	          Section 5(a)(vii):

	 	None
	          Section 5(b)(iv):

	 	None

and (b) in relation to Party B, for the purposes of:

			
	 	 	 
	          Section 5(a)(v):
	 	any Affiliate of Party B
	          Section 5(a)(vi):
	 	any Affiliate of Party B

 

 

RBCCM Ref: NY-5189 (Amended & Restated)

			
	 	 	 
	          Section 5(a)(vii):
	 	any Affiliate of Party B
	          Section 5(b)(iv):
	 	any Affiliate of Party B

“Specified Transaction” will have the meaning specified in Section 14 of the Agreement.

The “Cross Default” provisions of Section 5(a)(vi) of the Agreement will apply to Party A
and to Party B.

“Specified Indebtedness” will have the meaning specified in Section 14 of the Agreement.
If such provisions apply:- The “.” at the end of the definition of “Specified Indebtedness” in
Section 14 of this Agreement shall be deleted and replaced by the following: “, except that
such term shall not include obligations in respect of deposits received in the ordinary course of
either party’s banking business, if any.”

“Threshold Amount” with respect to Party A means USD 50,000,000 (or the U.S. dollar equivalent in
any other currency or currencies) and with respect to Party B means USD 10,000,000.

The “Credit Event Upon Merger” provisions of Section 5(b)(v) of the Agreement will apply to
Party A and to Party B.

The “Automatic Early Termination” provision of Section 6(a) of the Agreement will not apply
to Party A and to Party B.

“Termination Currency” means USD.

Additional Termination Event. The following shall constitute an Additional Termination Event:
None

Tax Representations:

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

 

 

RBCCM Ref: NY-5189 (Amended & Restated)

	 	(II)	 	For the purpose of Section 3(f) of the Agreement, each party makes the
following representations to the other party:

	 	(i)	 	Party A represents that (i) it a bank organized under the laws
of Canada and (ii) it is a foreign corporation for U.S. federal tax purposes.
	 
	 	 	 	In respect of a Transaction the income from which is attributable to its New
York office, each payment received or to be received by it in connection
with this Agreement will be effectively connected with its conduct of a
trade or business in the United States.
	 
	 	(ii)	 	Party B represents that it is a corporation incorporated under
the laws of Illinois and (ii) it is a U.S. person for U.S. federal tax
purposes.

Tax Forms: For the purpose of Sections 3(d), 4(a)(i) and (ii) of the Agreement, each party
agrees to deliver the following documents:

Tax forms, documents or certificates to be delivered are:

Each party agrees to complete (accurately and in a manner reasonably satisfactory to the other
party), execute, and deliver to the other party, United States Internal Revenue Service Form W-9 or
W-8 BEN, or any successor of such form(s): (i) before the first payment date under this agreement;
(ii) promptly upon reasonable demand by the other party; and (iii) promptly upon learning that any
such form(s) previously provided by the other party has become obsolete or incorrect.

Other documents to be delivered:

	 	 	 	 	 	 	 
	Party Required to	 	Document Required	 	 	 	Covered by Section
	Deliver Document	 	to be Delivered	 	When Required	 	3(d) Representation
	Party A and Party B

	 	Evidence of the
authority and true
signatures of each
official or
representative
signing this
Confirmation
	 	Upon or before
execution and
delivery of this
Confirmation
	 	Yes
	 
	 	 	 	 	 	 
	Party B

	 	Certified copy of
the resolution of
the Board of
Directors or
equivalent document
authorizing the
Transaction
	 	Upon or before
execution and
delivery of this
Confirmation
	 	Yes

 

 

RBCCM Ref: NY-5189 (Amended & Restated)

	 	 	 	 	 	 	 
	Party Required to	 	Document Required	 	 	 	Covered by Section
	Deliver Document	 	to be Delivered	 	When Required	 	3(d) Representation
	Party A

	 	With respect to any
payments described
in this
Confirmation, U.S.
Internal Revenue
Service Form W-8ECI
(or any successor
of such Form),
completed
accurately and in a
manner reasonably
acceptable to party
B
	 	(1) Before the
first payment date
under this
Agreement (2)
before December 31
of each third
succeeding calendar
year, (3) promptly
upon the earlier of
reasonable demand
by Party B and
learning that any
such Form is
required, (4) prior
to the expiration
or obsolescence of
any previously
delivered Form, and
(5) promptly upon
the information on
any such previously
delivered Form
becoming inaccurate
or incorrect
	 	Yes
	 
	 	 	 	 	 	 
	Party B

	 	U.S. Internal
Revenue Service
Form W-9 (or any
successor of such
Form), completed
accurately and in a
manner reasonably
acceptable to Party
A
	 	(1) Before the
first payment date
under this
Agreement (2)
promptly upon the
earlier of
reasonable demand
by Party A and
learning that any
such Form is
required, (3) prior
to the expiration
or obsolescence of
any previously
delivered Form, and
(4) promptly upon
the information on
any such previously
delivered Form
becoming inaccurate
or incorrect
	 	Yes

 

 

RBCCM Ref: NY-5189 (Amended & Restated)

Process Agent: For the purpose of Section 13(c) of the Agreement, Party A appoints as its
process agent:

RBC Capital Markets Corporation

Attention: General Counsel, Law Department

One Liberty Plaza — 5th Floor

165 Broadway

New York, New York 10006-1404 U.S.A.

Telephone No.: 212 858 7111

Party B does not appoint a Process Agent.

Multibranch Party. For the purpose of Section 10(c) of the Agreement, neither Party A nor
Party B is a Multibranch Party.

Credit Support Document.

Party A: None

Party B: None

Credit Support Provider.

With respect to Party A: Not Applicable, and with respect to Party B: Not Applicable.

Governing Law. This Confirmation will be governed by, and construed in accordance with, the laws
of the State of New York.

Netting of Payments. The provisions of Section 2(c) of the Agreement shall not be
applicable to the Transaction; provided, however, that with respect to this Agreement or any other
ISDA Master Agreement between the parties, any Share delivery obligations on any day of Party B, on
the one hand, and Party A, on the other hand, shall be netted. The resulting Share delivery
obligation of a party upon such netting shall be rounded down to the nearest number of whole Common
Shares, such that neither party shall be required to deliver any fractional Common Shares.

Accuracy of Specified Information. Section 3(d) of the Agreement is hereby amended by
adding in the third line thereof after the word “respect” and before the period the words “or, in
the case of audited or unaudited financial statements or balance sheets, a fair presentation of the
financial condition of the relevant person.”

Basic Representations. Section 3(a) of the Agreement is hereby amended by the deletion of
“and” at the end of Section 3(a)(iv); the substitution of a semicolon for the period at the
end of Section 3(a)(v) and the addition of Sections 3(a)(vi), as follows:

Eligible Contract Participant; Line of Business. It is an “eligible contract participant”
as defined in the Commodity Futures Modernization Act of 2000 and it has entered into

 

 

 RBCCM Ref: NY-5189 (Amended & Restated)

this Confirmation and the Transaction in connection with its business or a line of business
(including financial intermediation), or the financing of its business.

Amendment of Section 3(a)(iii). Section 3(a)(iii) of the Agreement is modified to read as
follows:

 

No Violation or Conflict. Such execution, delivery and performance do not materially
violate or conflict with any law known by it to be applicable to it, any provision of its
constitutional documents, any order or judgment of any court or agency of government
applicable to it or any of its assets or any material contractual restriction relating to
Specified Indebtedness binding on or affecting it or any of its assets.

Amendment of Section 3(a)(iv). Section 3(a)(iv) of the Agreement is modified by inserting
the following at the beginning thereof:

 

“To such party’s best knowledge,”

Additional Representations:

Party B Representations. Party B (i) has such knowledge and experience in financial and business
affairs as to be capable of evaluating the merits and risks of entering into the Transaction; (ii)
has consulted with its own legal, financial, accounting and tax advisors in connection with the
Transaction; and (iii) is entering into the Transaction for a bona fide business purpose to hedge
an existing position.

Party B is not and has not been the subject of any civil proceeding of a judicial or administrative
body of competent jurisdiction that could reasonably be expected to impair materially Party B’s
ability to perform its obligations hereunder.

Party B will by the next succeeding Business Day notify Party A upon obtaining knowledge of the
occurrence of any event that would constitute an Event of Default or a Potential Adjustment Event.

FDICIA Representation. Each party represents that it is a “financial institution” for purposes of
Section 402 of the Federal Deposit Insurance Corporation Improvement Act of 1991, as
amended (the “Statute”), and the regulations promulgated pursuant thereto because either (A) it is
a broker or dealer, a depository institution or a futures commission merchant (as such terms are
defined in the Statute) or (B) it will engage in financial contracts (as so defined) as a
counterparty on both sides of one or more financial markets (as so defined) and either (I) had one
or more financial contracts of a total gross dollar value of at least $1 billion in notional
principal amount outstanding on any day during the previous 15-month period with counterparties
that are not its affiliates or (II) had total gross mark-to-market positions of at least
$100,000,000 (aggregated across counterparties) in one or more financial contracts on any day
during the previous 15-month period with counterparties that are not its affiliates.

 

 

RBCCM Ref: NY-5189 (Amended & Restated)

Acknowledgements:

(1) The parties acknowledge and agree that there are no other representations, agreements or other
undertakings of the parties in relation to the Transaction, except as set forth in this
Confirmation.

(2) The parties hereto intend for:

	 	(a)	 	the Transaction to be a “securities contract” as defined in Section
741(7) of Title 11 of the United States Code (the “Bankruptcy Code”), qualifying
for the protections under Section 555 of the Bankruptcy Code;
	 
	 	(b)	 	a party’s right to liquidate the Transaction and to exercise any other remedies
upon the occurrence of any Event of Default under the Agreement with respect to the
other party to constitute a “contractual right” as defined in Section 560 of the
Bankruptcy Code;
	 
	 	(c)	 	any cash, securities or other property provided as performance assurance,
credit, support or collateral with respect to the Transaction to constitute “margin
payments” as defined in the Bankruptcy Code; and
	 
	 	(d)	 	all payments for, under or in connection with the Transaction, all payments for
the Shares and the transfer of such Shares to constitute “settlement payments” as
defined in the Bankruptcy Code.

Amendment of Section 6(d)(ii). Section 6(d)(ii) of the Agreement is modified by deleting
the words “on the day” in the second line thereof and substituting therefor “on the day that is
three Local Business Days after the day”. Section 6(d)(ii) is further modified by deleting
the words “two Local Business Days” in the fourth line thereof and substituting therefor “three
Local Business Days.”

Consent to Recording. Each party consents to the recording of the telephone conversations of
trading and marketing personnel of the parties and their Affiliates in connection with this
Confirmation.

Severability. If any term, provision, covenant or condition of this Confirmation, or the
application thereof to any party or circumstance, shall be held to be invalid or unenforceable in
whole or in part for any reason, the remaining terms, provisions, covenants, and conditions hereof
shall continue in full force and effect as if this Confirmation had been executed with the invalid
or unenforceable provision eliminated, so long as this Confirmation as so modified continues to
express, without material change, the original intentions of the parties as to the subject matter
of this Confirmation and the deletion of such portion of this Confirmation will not substantially
impair the respective benefits or expectations of parties to this Agreement; provided, however,
that this severability provision shall not be applicable if any provision of Section 2, 5, 6 or
13 of the Agreement (or any definition or provision in Section 14 to the extent that it
relates to, or is used in or in connection with any such Section) shall be so held to be invalid or
unenforceable. If any term, provision, covenant or condition of this Confirmation shall be held to
be invalid or unenforceable in whole or in part for any reason and the deletion of

 

 

RBCCM Ref: NY-5189 (Amended & Restated)

such portion of this Confirmation would substantially impair the respective benefits or
expectations of parties to this Agreement, Party A and Party B shall negotiate in good faith to
make any changes to the Confirmation necessary to best preserve the validity and enforceability of
this Confirmation and the economic terms of the Transaction to both parties to the fullest extent
possible.

Affected Parties. For purposes of Section 6(e) of the Agreement, each party shall be
deemed to be an Affected Party in connection with Illegality and any Tax Event.

[signature page follows]

 

 

RBCCM Ref: NY-5189 (Amended & Restated)

Please confirm that the foregoing correctly sets forth the terms of our agreement by executing the
copy of this Confirmation enclosed for that purpose and returning it to us or by sending to us a
letter or telex substantially similar to this letter, which letter or telex sets forth the material
terms of the Transaction to which this Confirmation relates and indicates agreement to those terms.

	 	 	 	 	 
	Sincerely yours,	 	 
	 
	 	 	 	 
	ROYAL BANK OF CANADA	 	 
	by its agent	 	 
	RBC Capital Markets Corporation	 	 
	 
	 	 	 	 
	By:

	 	/s/ Dawn T. Laabs	 	 
	 

	 	 	 	 
	 

	 	Name: Dawn T. Laabs	 	 
	 

	 	Title: Vice President	 	 
	 
	 	 	 	 
	Accepted and confirmed as of	 	 
	the date first above written:	 	 
	 
	 	 	 	 
	WINTRUST FINANCIAL CORPORATION
	 
	By:

	 	/s/ David A. Dykstra	 	 
	 

	 	 	 	 
	 

	 	Authorized Signatory	 	 
	 

	 	Name: David A. Dykstra	 	 
	 	 	Title: Senior Executive Vice President and Chief Operating Officer

 

 

RBCCM Ref: NY-5189 (Amended & Restated)

SCHEDULE I

	 	 	 	 	 
	 	 	Forward Price
	 	 	Reduction Amount
	Date	 	in USD
	Trade Date
	 	$	0.00	 
	February 1, 2005
	 	$	0.12	 
	August 1, 2005
	 	$	0.12	 
	February 1, 2006
	 	$	0.14	 
	August 1, 2006
	 	$	0.14	 
	Maturity Date
	 	$	0.00

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