Document:

exv10w2

 

Exhibit 10.2

SIXTH AMENDMENT TO

CERTAIN OPERATIVE AGREEMENTS

     THIS SIXTH AMENDMENT TO CERTAIN OPERATIVE AGREEMENTS (this “Amendment”), dated as of
March 30, 2006, is by and among WEST FACILITIES CORPORATION, a Delaware corporation (the
“Lessee”); WEST CORPORATION, a Delaware corporation (“West Corp.”), and the various
entities which are parties to the Participation Agreement (hereinafter defined) from time to time
as guarantors (individually, a “Guarantor” and collectively, the “Guarantors”);
WACHOVIA DEVELOPMENT CORPORATION, a North Carolina corporation (the “Borrower” or the
“Lessor”); the various banks and other lending institutions which are parties to the
Participation Agreement from time to time as lenders (subject to the definition of Lenders in
Appendix A to the Participation Agreement, individually, a “Lender” and
collectively, the “Lenders”); and WACHOVIA BANK, NATIONAL ASSOCIATION, a national banking
association, as the agent for the Primary Financing Parties and respecting the Security Documents,
as the agent for the Secured Parties (in such capacity, the “Agent”). Capitalized terms
used but not otherwise defined in this Amendment shall have the meanings set forth in Appendix
A to the Participation Agreement, and the rules of usage set forth in Appendix A to the
Participation Agreement shall apply herein.

W I T N E S S E T H

     WHEREAS, the parties to this Amendment are parties to that certain Participation Agreement
dated as of May 9, 2003, as amended by the First Amendment to Certain Operative Agreements and
Waiver dated as of October 31, 2003, as further amended by the Second Amendment to Certain
Operative Agreements dated as of January 22, 2004, as further amended by the Fourth Amendment to
Certain Operative Agreements dated as of November 15, 2004 and as further amended by the Fifth
Amendment to Certain Operative Agreements dated as of September 23, 2005 (as amended, modified,
supplemented or restated from time to time, the “Participation Agreement”).

     WHEREAS, the parties to this Amendment have agreed to the amendments set forth herein, subject
to terms and conditions set forth herein.

 

 

     NOW, THEREFORE, in consideration of the agreements hereinafter set forth, and for other good
and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties
hereto agree as follows:

ARTICLE I

AMENDMENTS TO PARTICIPATION AGREEMENT

     1.1 Amendment to Section 6.3 of the Participation Agreement. Sections 6.3(e) and
6.3(t) of the Participation Agreement are hereby deleted in their entirety and replaced by the
following:

     (e) Neither the Parent nor any other Credit Party is an “investment company”, or a
company “controlled” by an “investment company”, within the meaning of the Investment
Company Act of 1940, as amended. Neither the Parent nor any other Credit Party is subject
to regulation under the Federal Power Act, the Interstate Commerce Act, or any federal or
state statute or regulation limiting its ability to incur the Credit Party obligations or
the obligations of any Credit Party under the Operative Agreements;

     (t) [Reserved];

     1.2 Amendment to Section 8A.1 of the Participation Agreement. Section 8A.1 of the
Participation Agreement is hereby deleted in its entirety and replaced by the following:

8A.1. Financial Statements.

Furnish to the Agent and each of the Primary Financing Parties:

          (a) As soon as available, and in any event no later than the earlier of (i)
five (5) days following the date the Parent is required by the SEC to deliver its
Form 10-K for any fiscal year of the Parent (taking into account any extension of
the time to file by the SEC) and (ii) ninety (90) days after the end of each fiscal
year of the Parent, a copy of the consolidated balance sheet of the Parent and its
Consolidated Subsidiaries as at the end of such fiscal year and the related
consolidated and consolidating statements of income and retained earnings and of
consolidated cash flows of the Parent and its Consolidated Subsidiaries for such
year which, other than in the case

 

 

of the consolidating statements, shall be audited
by a firm of independent certified public accountants of nationally recognized
standing reasonably acceptable to the Primary Financing Parties, setting forth in
each case in comparative form the figures for the previous year, reported on without
a “going concern” or like qualification or exception, or qualification indicating
that the scope of the audit was inadequate to permit such independent certified
public accountants to certify such financial statements without such qualification;
and

          (b) As soon as available, and in any event no later than the earlier of (i)
five (5) days following the date the Borrower is required by the SEC to deliver its
Form 10-Q for any fiscal quarter of the Borrower (taking into account any extension
of the time to file by the SEC) and (ii) forty-five (45) days after the end of each
of the first three fiscal quarters of the Parent, a copy of the unaudited
consolidated balance sheet of the Parent and its Consolidated Subsidiaries as at the
end of such period and related consolidated and consolidating statements of income
and retained earnings and of consolidated cash flows for the Parent and its
Consolidated Subsidiaries for such quarterly period and for the portion of the
fiscal year ending with such period, in each case setting forth in comparative form
consolidated figures for the corresponding period or periods of the preceding fiscal
year (subject to normal recurring year-end audit adjustments);

all such financial statements to be complete and correct in all material respects (subject,
in the case of interim statements, to normal recurring year-end audit adjustments) and to be
prepared in reasonable detail and, in the case of the annual and quarterly financial
statements provided in accordance with subsections (a) and (b) above, in accordance with
GAAP applied consistently throughout the periods reflected therein and further accompanied
by a description of, and an estimation of the effect on the financial statements on account
of, a change, if any, in the application of accounting principles as provided in Section (n)
of the rules of usage in Appendix A hereto.

     1.3 Amendment to Section 8A.9 of the Participation Agreement. Section 8A.9(a) of the
Participation Agreement is hereby deleted in its entirety and replaced by the following:

 

 

     (a) The Consolidated Leverage Ratio, as of the last day of each fiscal quarter of the
Consolidated Group shall be less than or equal to 3.0 to 1.0.

     1.4 Amendment to Section 8B.1 of the Participation Agreement. Sections 8B.1(d),
8B.1(g), 8B.1(l) and 8B.1(m) of the Participation Agreement are hereby deleted in their entirety
and replaced by the following:

     (d) Unsecured intercompany Indebtedness (i) among the GCA Credit Parties, (ii) among
Foreign GCA Subsidiaries, (iii) owing from Domestic GCA Subsidiaries of the Parent that are
not guarantors under the Guarantor Credit Agreement to Credit Parties, which Indebtedness is
solely for the purpose of purchasing third party debt obligations; provided that the
aggregate principal amount of Indebtedness incurred pursuant to this clause (iii), together
with the aggregate amount of Investments and loans made pursuant to clause (iv) of the
definition of Permitted Investments, shall not exceed $100,000,000 at any time outstanding,
and (iv) owing from GCA Subsidiaries of the Parent that are not guarantors under the
Guarantor Credit Agreement to Credit Parties (other than Indebtedness incurred pursuant to
clause (iii) above); provided that the aggregate principal amount of Indebtedness
incurred pursuant to this clause (iv), together with the aggregate amount of Investments and
loans made pursuant to
clause (v) of the definition of Permitted Investments, shall not exceed $100,000,000 at any
time outstanding;

     (g) Indebtedness and obligations of GCA Credit Parties owing under documentary letters
of credit for the purchase of goods or other merchandise (but not under standby, direct pay
or other letters of credit except for the letters of credit under the Guarantor Credit
Agreement) generally in an aggregate principal amount not to exceed $50,000,000 at any time
outstanding;

     (l) Indebtedness of the Parent and the GCA Subsidiaries relating to any accounts
receivable securitization transaction or transactions; provided that the principal
amount of such Indebtedness does not exceed $200,000,000 in the aggregate at any time
outstanding; and

     (m) other Indebtedness of the Parent and the GCA Subsidiaries; provided that
such Indebtedness is non-recourse to the Parent or any of the

 

 

GCA Subsidiaries and the
principal amount of such Indebtedness does not exceed $200,000,000 in the aggregate at any
time outstanding.

     1.5 Amendment to Section 8B.10 of the Participation Agreement. Section 8B.10 of the
Participation Agreement is hereby deleted in its entirety and replaced by the following:

     8B.10 Restricted Payments.

     Each of the GCA Credit Parties will not, nor will it permit any GCA Subsidiary to,
directly or indirectly, declare, order, make or set apart any sum for or pay any Restricted
Payment, except (a) to make dividends payable solely in the common stock or equivalent
equity interests of such Person, (b) to make dividends or other distributions payable to the
Parent or any wholly owned GCA Subsidiary of the Parent that is a Credit Party (directly or
indirectly through GCA Subsidiaries), (c) to make dividends or other distributions payable
to any minority equity owner of a GCA Subsidiary in an aggregate amount not to exceed such
minority equity owner’s equity interest in earnings for the current fiscal year and
undistributed earnings from prior fiscal years and (d) to make other Restricted Payments so
long as, in the case of this subsection (d), (i) no Default or Event of Default exists
either immediately before or after giving effect to any such Restricted Payment and (ii) the
GCA Credit Parties shall be in compliance with each of the financial covenants set forth in
Section 8A.9 after giving effect to any such Restricted Payment on a pro forma basis.

     1.6 Replacement of Certain Existing Definitions. The following definitions are hereby
deleted in their entirety from Appendix A of the Participation Agreement and replaced by
the following:

     “Consolidated EBITDA” shall mean, as of any date for the four fiscal quarter
period ending on such date with respect to the Consolidated Group on a consolidated basis,
the sum of (a) Consolidated Net Income, plus (b) an amount which, in the determination of
Consolidated Net Income, has been deducted for (i) Consolidated Interest Expense, (ii) total
federal, state, local and foreign income, value added and similar taxes, (iii) depreciation
and amortization expense, all as determined in accordance with GAAP, (iv) non-cash charges
relating to equity and other performance-related compensation,

 

 

including stock options and
(v) minority equity interests in an amount not to exceed $25,000,000 during any such period.

     “Consolidated Fixed Charge Coverage Ratio” shall mean, as of the end of each
fiscal quarter of the Consolidated Group for the four fiscal quarter period ending on such
date with respect to the Consolidated Group on a consolidated basis, the ratio of (i)
Consolidated EBITDA for the applicable period minus Consolidated Capital
Expenditures for the applicable period to (ii) the sum of, without duplication, Consolidated
Interest Expense for the applicable period plus Scheduled Funded Debt Payments for
the applicable period plus payments made in connection with earnout obligations for
the applicable period to the extent permitted hereunder plus cash taxes paid during
the applicable period plus Restricted Payments made in accordance with the terms of
Section 8B.10(d) during the applicable period.

     “Excluded Subsidiaries” shall mean Attention Funding Corporation, Attention
Funding Trust, Vertical Alliance, Inc. and West Education Foundation.

     “Guarantor Credit Agreement” shall mean that certain Amended and Restated
Credit Agreement dated as of March 30, 2006 among West Corporation, as the borrower; certain
domestic subsidiaries of West Corporation party thereto from time to time as guarantors; the
lenders party thereto from time to time; Wachovia Bank, National Association, as the
administrative agent; Wachovia Securities, Inc., as lead arranger and sole book runner; and
certain parties thereto from time to time as syndication agents and documentation agents.

     “Permitted Acquisition” shall mean an acquisition or any series of related
acquisitions by a GCA Credit Party of the assets or all of the Capital Stock of a Person or
any division, line of business or other business unit of a Person (such Person or such
division, line of business or other business unit of such Person referred to herein as the
“Target”), in each case that is in the same line of business (or assets used in the
same line of business) as the GCA Credit Parties and the GCA Subsidiaries or whereby a
substantial portion of the acquired business relies upon automated transactions, telephone
representatives or telephony technology, so long as (a) no Default or Event of Default shall
then exist or would exist after giving effect thereto; (b) the Credit Parties shall
demonstrate to the reasonable satisfaction of the Agent that the Credit Parties will be in
compliance on a pro forma basis with

 

 

all of the terms and provisions of the financial
covenants set forth in Section 8A.9; (c) the Target, if a Person and if after the
acquisition the Target would be a Material Domestic GCA Subsidiary, shall have executed and
delivered to the Agent a Joinder Agreement in accordance with the terms of Section 8A.10;
(d) such acquisition is not a “hostile” public company acquisition and has been approved by
the Board of Directors and/or shareholders of the applicable GCA Credit Party and the public
company Target; and (e) with respect to any acquisition where the total consideration shall
be greater than $200,000,000, the Parent shall have delivered to the Agent and each of the
Primary Financing Parties not less than five (5) Business Days prior to the consummation of
such acquisition (A) a reasonably detailed description of the material terms of such
acquisition (including, without limitation, the purchase price and method and structure of
payment) and of each Target, (B) audited financial statements of the Target, or
company-prepared financial statements that have been certified by the Target, for the
Target’s two (2) most recent fiscal years and unaudited fiscal year-to-date statements for
the most recent interim periods, which financial statements shall be consistent with any
financial statements filed with the Securities and Exchange Commission in connection with
such acquisition and (C) a certificate, in form and substance reasonably satisfactory to the
Agent, executed by a Responsible Officer of the Parent (1) certifying that such Permitted
Acquisition complies with the requirements of this Agreement and (2) demonstrating
compliance with subsections (b) and (e) of this definition; provided,
however, that an acquisition of a Target that is not incorporated, formed or
organized in the United States (a “Foreign Target”) shall only qualify as a
Permitted Acquisition if each of the other requirements set forth in this definition shall
have been satisfied and the total consideration for all such Foreign Targets does not exceed
$100,000,000 in any calendar year during the term of this Agreement.

“Permitted Investments” shall mean:

     (i) cash and Cash Equivalents;

     (ii) receivables owing to the Parent or any of the GCA Subsidiaries or any
receivables and advances to suppliers or customers, in each case if created,
acquired or made in the ordinary course of business and payable or dischargeable in
accordance with customary trade terms;

 

 

     (iii) Investments in and loans to any GCA Credit Parties;

     (iv) Investments in and loans to Domestic GCA Subsidiaries of the Parent that
are not guarantors under the Guarantor Credit Agreement solely for the purpose of
purchasing third party debt obligations; provided that the aggregate amount
of Investments and loans made pursuant to this clause (iv), together with the
aggregate amount of Indebtedness incurred pursuant to Section 8B.1(d)(iii), shall
not exceed $100,000,000 at any time outstanding;

     (v) Investments in and loans to Subsidiaries of the Parent that are not
guarantors under the Guarantor Credit Agreement (other than Investments and loans
pursuant to clause (iv) above); provided that the aggregate amount of such
Investments and loans, together with the aggregate amount of Indebtedness incurred
pursuant to Section 8B.1(d)(iv), shall not exceed $100,000,000 at any time
outstanding;

     (vi) loans and advances to employees (other than any officer or director) of
the Parent or the GCA Subsidiaries in an aggregate amount not to exceed $1,000,000
at any time outstanding;

     (vii) Investments (including debt obligations) received in connection with the
bankruptcy or reorganization of suppliers and customers and in settlement of
delinquent obligations of, and other disputes with, customers and suppliers arising
in the ordinary course of business;

     (viii) Investments, acquisitions or transactions permitted under Section
8B.4(b);

     (ix) the Parent may enter into Hedging Agreements to the extent permitted
pursuant to Section 8B.1;

     (x) loans, advances and/or Investments, in a aggregate amount not to exceed
$25,000,000 at any time outstanding, by Asset Direct Mortgage, LLC or any other GCA
Credit Party in connection with a mortgage loan program consisting of the purchase,
origination and/or pooling of mortgage loans;

 

 

     (xi) Permitted Acquisitions; and

     (xii) additional loans, advances and/or Investments of a nature not
contemplated by the foregoing clauses hereof, provided that such loans,
advances and/or Investments made pursuant to this clause (xii) shall not exceed an
aggregate amount of $50,000,000 at any time outstanding.

     “Purchase Paper Facility” shall mean any financing arrangement involving the
purchase by the GCA Credit Parties of commercial or consumer debt (including, without
limitation, that certain Amended and Restated Credit Agreement dated as of September 30,
2004 by and between Worldwide Asset Purchasing, LLC and CFSC Capital Corp. XXXIV and that
certain Financing Facility and Security Agreement, originally dated as of December 19, 2003,
and currently by and among Arrow Funding, LLC, West Asset Management, Inc., Attention
Funding Corporation, Attention Funding Trust and Arrow Financial Services, LLC), as each
such agreement may be amended, modified supplemented or replaced from time to time.

     1.7 Addition of New Definitions. The following definitions are hereby added in the
appropriate alphabetical order to Appendix A of the Participation Agreement:

     “Letters of Credit” shall mean any standby letter of credit issued by the
issuing lender under the Guarantor Credit Agreement pursuant to the terms thereof, as such
Letters of Credit may be amended, modified, extended, renewed or replaced from time to time.

     “SEC” shall mean the Securities and Exchange Commission or any successor
Governmental Authority.

     1.8 Deletion of Certain Existing Definitions. The terms “Call Options” and
“Convertible Senior Notes” are hereby deleted in their entirety from Appendix A to the
Participation Agreement.

 

 

ARTICLE II

CONDITIONS TO EFFECTIVENESS

     2.1 Closing Conditions. This Amendment shall become effective as of the date hereof
(the “Sixth Amendment Effective Date”) upon satisfaction of the following conditions (in
form and substance reasonably acceptable to the Agent):

     (a) Executed Amendment. The Agent shall have received a copy of this Amendment
duly executed by the Borrower, the Agent, the Majority Secured Parties and the Credit
Parties.

     (b) Other. The Agent shall have received such other documents, agreements or
information which it may reasonably request relating to the Credit Parties and the
transactions contemplated by this Amendment and any other matters relevant hereto and
thereto, all in form and substance satisfactory to the Agent in its sole good faith
discretion.

ARTICLE III

MISCELLANEOUS

     3.1 Amended Terms. All references to the Participation Agreement in each of the
Operative Agreements shall hereafter mean the Participation Agreement as amended by this Amendment.
Except as specifically amended hereby or otherwise agreed, the Operative Agreements are hereby
ratified and confirmed and shall remain in full force and effect according to their respective
terms.

     3.2 Representations and Warranties of Credit Parties. Each of the Credit Parties
represents and warrants as follows as of the date hereof:

     (a) It has taken all necessary action to authorize the execution, delivery and
performance of this Amendment.

     (b) This Amendment has been duly executed and delivered by such Person and constitutes
such Person’s valid and legally binding obligation, enforceable in accordance with its
terms, except as such enforceability may be subject to (i) bankruptcy, insolvency,
reorganization, fraudulent conveyance or transfer, moratorium or similar laws affecting
creditors’

 

 

rights generally and (ii) general principles of equity (regardless of whether
such enforceability is considered in a proceeding at law or in equity).

     (c) No consent, approval, authorization or order of, or filing, registration or
qualification with, any Governmental Authority or third party is required in connection with
the execution, delivery or performance by such Person of this Amendment, except any filing
required to be made by the Parent pursuant to the Securities Exchange Act of 1934, as
amended, as a result of this Amendment.

     (d) The representations and warranties set forth in Section 6.2 and 6.3 of the
Participation Agreement are true and correct in all material respects as of the date hereof
(except for those which expressly relate to an earlier date).

     3.3 Acknowledgment of Guarantors. The Guarantors acknowledge and consent to all of
the terms and conditions of this Amendment and agree that this Amendment and all documents executed
in connection herewith do not operate to reduce or discharge the Guarantors’ obligations under the
Operative Agreements.

     3.4 Operative Agreement. This Amendment shall constitute an Operative Agreement under
the terms of the Participation Agreement.

     3.5 Entirety. This Amendment and the other Operative Agreements embody the entire
agreement between the parties hereto and supersede all prior agreements and understandings, oral or
written, if any, relating to the subject matter hereof.

     3.6 Counterparts; Telecopy. This Amendment may be executed in any number of
counterparts, each of which when so executed and delivered shall be an original, but all of which
shall constitute one and the same instrument. Delivery of an executed counterpart to this
Amendment by telecopy shall be effective as an original and shall constitute a representation that
an original will be delivered.

     3.7 GOVERNING LAW. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER
THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF
THE STATE OF NORTH CAROLINA.

 

 

     3.8 Submission to Jurisdiction; Service of Process; Waiver of Jury Trial; Venue, Etc.
The jurisdiction, service of process, waiver of jury trial, venue and other provisions set forth in
Section 12.7 of the Participation Agreement are hereby incorporated by reference, mutatis mutandis.

     3.9 Fees. The Lessee agrees to pay all fees and expenses of the Agent in connection
with the preparation, execution and delivery of this Amendment, including, without limitation, the
fees and expenses of Moore & Van Allen PLLC.

[remainder of page intentionally left blank]

 

 

     IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed on the
date first above written.

	 	 	 	 	 	 	 
	LESSEE:
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	WEST FACILITIES CORPORATION,

a Delaware corporation	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Paul M. Mendlik	 	 
	 

	 	 	 	 	 	 
	 	 	Name:          Paul M. Mendlik

Title: Chief Financial Officer	 	 

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Sixth Amendment to Certain Operative Agreements

 

 

	 	 	 	 	 	 	 
	PARENT:
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	WEST CORPORATION,

a Delaware corporation	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Paul M. Mendlik	 	 
	 

	 	 	 	 	 	 
	 	 	Name:           Paul M. Mendlik

Title: Chief Financial Officer	 	 

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	GUARANTORS:
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	WEST CORPORATION, a Delaware corporation	 	 
	 
	 	 	 	 	 	 
	 	 	WEST TELEMARKETING

CORPORATION II, a Delaware corporation	 	 
	 
	 	 	 	 	 	 
	 	 	WEST INTERACTIVE CORPORATION, a

Delaware corporation	 	 
	 
	 	 	 	 	 	 
	 	 	NORTHERN CONTACT, INC., a Delaware
corporation	 	 
	 
	 	 	 	 	 	 
	 	 	INTERCALL, INC., a Delaware corporation	 	 
	 
	 	 	 	 	 	 
	 	 	INTERCALL TELECOM VENTURES,

LLC, a Delaware limited liability company	 	 
	 
	 	 	 	 	 	 
	 	 	WEST RECEIVABLE SERVICES, INC., a
Delaware corporation	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Paul M. Mendlik	 	 
	 

	 	 	 	 	 	 
	 	 	Name:           Paul M. Mendlik

Title: Chief Financial Officer	 	 

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	 	 	WEST INTERNATIONAL ASSET

MANAGEMENT, LLC, a Nevada limited

liability company	 	 
	 
	 	 	 	 	 	 
	 	 	BUYDEBTCO, LLC, a Nevada limited

liability company	 	 
	 
	 	 	 	 	 	 
	 	 	THE DEBT DEPOT, LLC, a Delaware

limited liability company	 	 
	 
	 	 	 	 	 	 
	 	 	ASSET DIRECT MORTGAGE, LLC, a

Delaware limited liability company	 	 
	 
	 	 	 	 	 	 
	 	 	WEST TELEMARKETING, LP, a

Delaware limited partnership	 	 
	 

	 	By:
	 	West Transaction Services, LLC,

its General Partner	 	 
	 
	 	 	 	 	 	 
	 	 	WEST TRANSACTION SERVICES, LLC,

a Delaware limited liability company	 	 
	 
	 	 	 	 	 	 
	 	 	WEST BUSINESS SERVICES, LP, a

Delaware limited partnership	 	 
	 

	 	By:
	 	West Transaction Services, LLC,

its General Partner	 	 
	 
	 	 	 	 	 	 
	 	 	WEST ASSET PURCHASING,
LLC, a 

Nevada limited liability company	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Paul M. Mendlik	 	 
	 

	 	 	 	 	 	 
	 	 	Name:          Paul M. Mendlik	 	 
	 

	 	Title:
	 	Manager	 	 

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	 	 	WEST DIRECT, INC., a Delaware

corporation	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Paul M. Mendlik	 	 
	 

	 	 	 	 	 	 
	 	 	Name:           Paul M. Mendlik

Title: Treasurer	 	 

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	 	 	WEST ASSET MANAGEMENT, INC., a

Delaware corporation	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Jon R. Hanson	 	 
	 

	 	 	 	 	 	 
	 	 	Name:          Jon R. Hanson

Title: Chief Administrative Officer	 	 
	 
	 	 	 	 	 	 
	 	 	WEST TRANSACTION SERVICES II,

LLC, a Delaware limited liability company	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Jon R. Hanson	 	 
	 

	 	 	 	 	 	 
	 	 	Name:          Jon R. Hanson

Title: Manager	 	 

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	BORROWER AND LESSOR:

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	WACHOVIA DEVELOPMENT

CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Evander S. Jones, Jr.	 	 
	 

	 	 	 	 	 	 
	 	 	Name: Evander S. Jones, Jr.

Title: Director	 	 

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	AGENT:

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	WACHOVIA BANK, NATIONAL

ASSOCIATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Evander S. Jones, Jr.	 	 
	 

	 	 	 	 	 	 
	 	 	Name: Evander S. Jones, Jr.

Title: Director	 	 

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	LENDERS:

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	WACHOVIA CAPITAL INVESTMENTS,
INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Alan Ma	 	 
	 

	 	 	 	 	 	 
	 	 	Name: Alan Ma

Title: Vice President	 	 

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	 	 	COMMERCEBANK, N.A.	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 

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Exhibit 4.1

 

DISCOVER BANK

Master Servicer, Servicer and Seller

and

U.S. BANK NATIONAL ASSOCIATION

Trustee

on behalf of the Certificateholders

SECOND AMENDMENT TO AMENDED AND RESTATED

POOLING AND SERVICING AGREEMENT

dated as of November 3, 2004

 

DISCOVER CARD MASTER TRUST I

 

Dated as of

March 30, 2006

 

 

          This SECOND AMENDMENT TO AMENDED AND RESTATED POOLING AND SERVICING AGREEMENT (this
“Amendment”), dated as of March 30, 2006, is entered into by and between DISCOVER BANK, a
Delaware banking corporation (formerly Greenwood Trust Company), as Master Servicer, Servicer and
Seller (“Discover Bank”) and U.S. BANK NATIONAL ASSOCIATION, a national banking association
organized and existing under the laws of the United States of America (formerly First Bank National
Association, successor trustee to Bank of America Illinois, formerly Continental Bank, National
Association), as Trustee (the “Trustee”).

          WHEREAS, Discover Bank and the Trustee entered into that certain Pooling and Servicing
Agreement dated as of October 1, 1993, as amended, which was restated in its entirety by that
certain Amended and Restated Pooling and Servicing Agreement, dated as of November 3, 2004, by and
between Discover Bank and the Trustee, relating to Discover Card Master Trust I, as amended by that
certain First Amendment to Amended and Restated Pooling and Servicing Agreement and Global
Amendment to Certain Series Supplements thereto, dated as of January 4, 2006 (as amended, the
“Agreement”); and

          WHEREAS, pursuant to Sections 13.01(a)(i) and (ii) of the Agreement, Discover Bank and the
Trustee desire to amend Sections 1.01, 3.02, 3.07 and 3.08 of the Agreement and to add a new
Article XIV to the Agreement, in a manner that shall not adversely affect in any material respect
the interests of the Holders of any Class of any Series currently outstanding, in order to (a)
clarify the authority of Discover Bank, as Servicer, to commence collections actions on behalf of
the Trust in its own name and (b) establish internal mechanisms to support the Trust’s compliance
with Regulation AB (defined below).

          NOW, THEREFORE, in consideration of the foregoing and the mutual agreements herein contained,
each party agrees as follows for the benefit of the other parties and for the benefit of the
Certificateholders:

          1. Definitions. Unless otherwise specified, capitalized terms used in this Amendment
shall have the same meanings ascribed to them in the Agreement.

          2. Amendments to the Agreement. Effective as of the date hereof:

     (A) Article I, Section 1.01 (“Definitions”) of the Agreement is amended by adding the
following terms, in alphabetical order therein:

          "Commission” shall mean the United States Securities and Exchange Commission.

          "Exchange Act” shall mean the Securities Act of 1934, as amended.

          "Regulation AB” shall mean Subpart 229.1100 — Asset Backed Securities (Regulation AB), 17
C.F.R. §§229.1100-229.1123, as such may be amended from time to time, and subject to such
clarification and interpretation as have been provided by the Commission in the adopting release
(Asset-Backed Securities, Securities Act Release No. 33-8518, 70 Fed. Reg. 1,506, 1,531 (January 7,
2005)) or by the staff of the Commission, or as may be provided by the Commission or its staff from
time to time.

1

 

          "Sarbanes Certification” shall have the meaning specified in Section 14.04(c).

          "Securities Act” shall mean the Securities Act of 1933, as amended.

          "Securitization Transaction” shall mean any New Issuance, whether publicly offered or
privately placed, rated or unrated.

          "Servicing Criteria” shall mean the “servicing criteria” set forth in Item 1122(d) of
Regulation AB, as such may be amended from time to time.

          "Servicing Participant” shall mean any Person who is responsible for any Servicing Criteria
and who is required pursuant to Item 1122(d) of Regulation AB to provide an assessment of
compliance therefore. For the avoidance of doubt, the term “Servicing Participant” shall not
include the Trustee, the Master Servicer or Discover Bank, as Servicer, as Regulation AB compliance
matters with respect to such entities are independently addressed in this Agreement.

     (B) Article III, Section 3.02 (“Acceptance of Appointment and Other Matters Relating to
Servicers”) of the Agreement is amended by adding to clause (ii) of the penultimate sentence of
subsection 3.02(b), immediately following the phrase “to commence collection proceedings with
respect to such Receivables”, the following: “on behalf of the Trust for the benefit of the
Certificateholders but in its own name, without reference to the fact that it is acting for the
Trust”.

     (C) Article III, Section 3.07 (“Master Servicer’s and Servicers’ Annual Certificates”) of the
Agreement is amended by adding the following paragraph as a new subsection (c) of Section 3.07:

          "(c) Master Servicer’s and Servicers’ Annual Compliance Statement. On or before the Trust’s
Annual Report Date of each calendar year (and relating to the preceding fiscal year ending on
November 30), the Master Servicer and each Servicer will deliver, and the Master Servicer or the
applicable Servicer shall cause each affiliated Servicing Participant and each unaffiliated
Servicing Participant that services 10% or more of the Receivables to deliver, to the Trustee,
Discover Bank on behalf of the Holder of the Seller Certificate and the Rating Agencies, an
Officer’s Certificate necessary to comply with Item 1123 of Regulation AB in substantially the form
(with appropriate insertions) of Exhibit J hereto; provided, however, that with respect to the
fiscal year ending November 30, 2006, such certificate may exclude the period of December 1, 2005
through and including December 31, 2005. A copy of such certificate may be obtained by any Investor
Certificateholder by a request in writing to the Trustee addressed to the Corporate Trust Office.”

     (D) Article III, Section 3.08 (“Independent Public Accountants’ Annual Servicing Report”) is
amended by deleting the last two sentences of the paragraph under subsection (a) and by adding the
following paragraph as a new subsection (c) of Section 3.08:

          "(c) On or before the Trust’s Annual Report Date of each calendar year (and relating to the
preceding fiscal year ending on November 30), the Master Servicer shall cause a firm of nationally
recognized independent public accountants (who may also render other

2

 

services to the Master Servicer, any Servicer or any Seller) to furnish to the Trustee, the
Master Servicer and the Rating Agencies each attestation report on assessments of compliance with
the Servicing Criteria furnished by such accountants pursuant to Sections 14.04 and 14.05 of this
Agreement.”

     (E) The Pooling and Servicing Agreement is hereby amended by adding the following new Article
XIV after Article XIII of the Pooling and Servicing Agreement:

ARTICLE XIV

COMPLIANCE WITH REGULATION AB

          SECTION 14.01 Intent of the Parties; Reasonableness. Discover Bank on behalf of the Holder of
the Seller Certificate, the Master Servicer, the Servicer and the Trustee acknowledge and agree
that the purpose of this Article XIV is to facilitate compliance by the Seller with the provisions
of Regulation AB and related rules and regulations of the Commission. Neither the Master Servicer
nor any Seller shall exercise its right to request delivery of information or other performance
under these provisions other than in good faith, or for purposes other than such Master Servicer or
Seller’s compliance with the Securities Act, the Exchange Act and the rules and regulations of the
Commission thereunder (or the provision in a private offering of disclosure comparable to that
required under the Securities Act). The Trustee agrees to cooperate in good faith with any
reasonable request by the Master Servicer or any Seller for information regarding the Trustee which
is required in order to enable such Master Servicer or Seller to comply with the provisions of
Regulation AB as it relates to the Trustee or to the Trustee’s obligations under this Agreement or
any Series Supplement, provided that such information is available to the Trustee without
unreasonable expense or effort and within the timeframe as is reasonably requested. The Master
Servicer and each Servicer agrees to cooperate in good faith with any reasonable request by the
Master Servicer or any Seller for information regarding the Master Servicer or such Servicer (or
any Servicing Participant that it engages) which is required in order to enable such Master
Servicer or Seller to comply with the provisions of Regulation AB as it relates to the Master
Servicer or such Servicer or to the Master Servicer or such Servicer’s obligations under this
Agreement or any Series Supplement or the obligations of any Servicing Participant that it engages
under any servicing or subservicing agreement to the extent related to servicing the Receivables,
provided that such information is available to the Master Servicer and each Servicer without
unreasonable expense or effort and within the timeframe as is reasonably requested. Terms used in
this Article XIV that are defined in Regulation AB but are not defined in Section 1.01 of this
Agreement shall have the meanings ascribed to them in Regulation AB.

          SECTION 14.02 Additional Representations and Warranties of the Trustee. The Trustee shall be
deemed to represent to the Master Servicer and Discover Bank on behalf of the Holder of the Seller
Certificate, as of the date on which information is provided under Section 14.03 that, except as
disclosed in writing to the Master Servicer and Discover Bank on behalf of the Holder of the Seller
Certificate prior to such date to the best of its knowledge: (i) neither the execution, delivery
and performance by the Trustee of this Agreement or any Series Supplement, the performance by the
Trustee of its obligations under this Agreement or any Series Supplement nor the consummation of
any of the transactions by the Trustee contemplated thereby, is in violation of any indenture,
mortgage, bank credit agreement, note or

3

 

 bond purchase agreement, long-term lease, license or other agreement or instrument to which the Trustee is a party or
by which it is bound, which violation would have a material adverse effect on the Trustee’s ability
to perform its obligations under this Agreement or any Series Supplement, or of any judgment or
order applicable to the Trustee; and (ii) there are no proceedings pending or threatened against
the Trustee in any court or before any governmental authority, agency or arbitration board or
tribunal which, individually or in the aggregate, would have a material adverse effect on the
right, power and authority of the Trustee to enter into this Agreement or any Series Supplement or
to perform its obligations under this Agreement or any Series Supplement.

          SECTION 14.03 Information to be Provided by the Trustee.

          (a) The Trustee shall (i) on or before the fifth Business Day of each month, provide to the
Master Servicer and Discover Bank on behalf of the Holder of the Seller Certificate, in writing,
such information regarding the Trustee as is requested for the purpose of compliance with Item 1117
of Regulation AB, including but not limited to a letter addressed to Discover Bank in substantially
the form (with appropriate insertions) of Exhibit K hereto, and (ii) as promptly as practicable
following notice to or discovery by the Trustee of any changes to such information, provide to the
Master Servicer and Discover Bank on behalf of the Holder of the Seller Certificate, in writing,
such updated information.

          (b) The Trustee shall (i) in connection with any Securitization Transaction which requires a
prospectus, prospectus supplement, offering memorandum or related documents, provide to the Master
Servicer and Discover Bank on behalf of the Holder of the Seller Certificate such information
regarding the Trustee as is requested and within the timeframe as is reasonably requested for the
purpose of compliance with Items 1103(a)(1), 1109(a), 1109(b), 1118 and 1119 of Regulation AB, and
(ii) as promptly as practicable following notice to or discovery by the Trustee of any material
changes to such previously provided information or to the business operations of the Trustee,
provide to the Master Servicer and Discover Bank on behalf of the Holder of the Seller Certificate,
in writing, such updated information, and such other information as may be reasonably requested for
purposes of satisfying Exchange Act reporting obligations of the Trust. Such information to be
provided under clause (i) of this paragraph shall include, at a minimum:

          (i) the Trustee’s name and form of organization;

          (ii) a description of the extent to which the Trustee has had prior experience
serving as a trustee for asset-backed securities transactions involving credit card
receivables;

          (iii) a description of any affiliation between the Trustee and any of the following
parties to such Securitization Transaction, as such parties are identified to the
Trustee by the Sellers in writing in advance of such Securitization Transaction:

4

 

(A) the sponsor;

(B) any depositor;

(C) the issuing entity;

(D) any servicer;

(E) any trustee;

(F) any originator;

(G) any significant obligor;

(H) any enhancement or support provider; and

(I) any other material transaction party.

In connection with the above-listed parties, a description of whether there is, and if so the
general character of, any business relationship, agreement, arrangement, transaction or
understanding that is entered into outside the ordinary course of business or is on terms other
than would be obtained in an arm’s length transaction with an unrelated third party, apart from
such Securitization Transaction, the Agreement and any Series Supplement that currently exists or
that existed during the past two years, and that is material to an investor’s understanding of the
Investor Certificates.

          SECTION 14.04 Trustee’s Report on Assessment of Compliance and Attestation. On or before the
date that is fifteen days prior to the Trust’s Annual Report Date, or such other date that is
mutually agreed upon in writing by the parties hereto, of each calendar year (and relating to the
preceding fiscal year ending on November 30), the Trustee shall:

          (a) deliver to the Master Servicer and Discover Bank on behalf of the Holder of the Seller
Certificate a report regarding the Trustee’s assessment of compliance with the Servicing Criteria
during the immediately preceding fiscal year, as required under Rules 13a-18 and 15d-18 of the
Exchange Act and Item 1122 of Regulation AB. Such report shall be addressed to the Master Servicer
and Discover Bank on behalf of the Holder of the Seller Certificate and signed by an authorized
officer of the Trustee, and shall address each of the Servicing Criteria applicable to it as
specified in Exhibit L or such criteria as mutually agreed upon by the Master Servicer, Discover
Bank on behalf of the Holder of the Seller Certificate and the Trustee;

          (b) deliver to the Master Servicer and Discover Bank on behalf of the Holder of the Seller
Certificate a report of a “Big Four” accounting firm, or upon the consent of the Master Servicer
and Sellers, which consent shall not be unreasonably withheld, such other nationally recognized
registered public accounting firm that satisfies the requirements of Rule 2-01 of Regulation S-X
under the Securities Act and the Exchange Act (who may also render services to the Master Servicer,
any Servicer or any Seller), that pursuant to Rules 13a-18 and 15d-18 of the Exchange Act and Item
1122(b) of Regulation AB attests to, and reports on, the assessment of compliance made by the
Trustee and delivered pursuant to the preceding paragraph; such attestation shall be in accordance
with Rules 1-02(a)(3) and 2-02(g) of Regulation S-X under the Securities Act and the Exchange Act;
and

5

 

          (c) deliver to the Master Servicer, Discover Bank on behalf of the Holder of the Seller
Certificate or any other Person that will be responsible for signing the certification (a “Sarbanes
Certification”) required by Rules 13a-14(d) and 15d-14(d) under the Exchange Act (pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002) on behalf of the Trust, the Master Servicer or
Discover Bank on behalf of the Holder of the Seller Certificate with respect to a publicly offered
Securitization Transaction, a certification substantially in the form (with appropriate insertions)
attached as Exhibit M hereto.

          The Trustee acknowledges that the parties identified in clause (c) above may rely on the
certification provided by the Trustee pursuant to such clause in signing a Sarbanes Certification
and filing such with the Commission. Notwithstanding anything to the contrary in this Section
14.04, for the fiscal year ending November 30, 2006, the documents delivered pursuant to paragraphs
(a) through (c) of this Section 14.04 may exclude reference to the period of December 1, 2005
through and including December 31, 2005.

          SECTION 14.05 Master Servicer, Servicer and Servicing Participant Reports on Assessment of
Compliance and Attestation. On or before the date that is fifteen days prior to the Trust’s Annual
Report Date, or such other date that is mutually agreed upon in writing by the parties hereto, of
each calendar year (and relating to the preceding fiscal year ending on November 30), the Master
Servicer and each Servicer shall:

          (a) deliver to the Master Servicer and Discover Bank on behalf of the Holder of the Seller
Certificate a report regarding its assessment of compliance with the Servicing Criteria during the
immediately preceding fiscal year, as required under Rules 13a-18 and 15d-18 of the Exchange Act
and Item 1122 of Regulation AB. Such report shall be addressed to the Master Servicer and Discover
Bank on behalf of the Holder of the Seller Certificate and signed by an authorized officer of the
Servicer, and shall address each of the Servicing Criteria applicable to it as specified in Exhibit
L or such criteria as mutually agreed upon by the Master Servicer, Discover Bank on behalf of the
Holder of the Seller Certificate and such Servicer;

          (b) deliver to the Master Servicer and Discover Bank on behalf of the Holder of the Seller
Certificate a report of a “Big Four” accounting firm or, upon the consent of the Masters Servicer
and Sellers, which consent shall not be unreasonably withheld, such other nationally recognized
registered public accounting firm that satisfies the requirements of Rule 2-01 of Regulation S-X
under the Securities Act and the Exchange Act (who may also render services to the Trustee, the
Master Servicer, any Servicer or any Seller) that pursuant to Rules 13a-18 and 15d-18 of the
Exchange Act and Item 1122(b) of Regulation AB attests to, and reports on, the assessment of
compliance made by it and delivered pursuant to the preceding paragraph; such attestation shall be
in accordance with Rules 1-02(a)(3) and 2-02(g) of Regulation S-X under the Securities Act and the
Exchange Act;

          (c) cause each Servicing Participant that it has engaged during such period to deliver to the
Master Servicer and Discover Bank on behalf of the Holder of the Seller Certificate an assessment
of compliance and accountants’ attestation as and when provided in accordance

6

 

 with paragraphs (a)
and (b) of this Section; provided, however, that the assessment of compliance of such Servicing
Participant need not address any elements of the Servicing Criteria for which such Servicing Participant is not responsible under the applicable servicing or
subservicing agreement; and

          (d) deliver, or the Master Servicer or such Servicer shall cause to be delivered by any
Servicing Participant that it has engaged during such period, to the Master Servicer, Discover Bank
on behalf of the Holder of the Seller Certificate or any other Person that will be responsible for
signing the Sarbanes Certification on behalf of the Trust, the Master Servicer or Discover Bank on
behalf of the Holder of the Seller Certificate with respect to a publicly offered Securitization
Transaction, a certification substantially in the form (with appropriate insertions) attached as
Exhibit M hereto.

Each of the Master Servicer and each Servicer acknowledges that the parties identified in clause
(d) above may rely on the certifications provided pursuant to such clause in signing a Sarbanes
Certification and filing such with the Commission. Notwithstanding anything to contrary in this
Section 14.04, for the fiscal year ending November 30, 2006, the documents delivered pursuant to
paragraphs (a) through (d) of this Section 14.04 may exclude reference to the period of December 1,
2005 through and including December 31, 2005.

          SECTION 14.06 Use of Servicing Participants. Each of the Master Servicer and each Servicer
shall use its best efforts to hire or otherwise utilize only the services of Servicing Participants
that agree to comply with the provisions of this Section. Except as may otherwise be required
pursuant to Section 8.06, it shall not be necessary for the Master Servicer or any Servicer to
obtain the consent of any Person prior to engaging any Servicing Participant. The Master Servicer
or any Servicer, as applicable, shall use its best efforts to cause any Servicing Participant used
by it (directly or indirectly) for the benefit of the Sellers to comply with the provisions of this
Section 14.06 and with Sections 3.07(c) and 14.05 of this Agreement to the same extent as if such
Servicing Participant were the Master Servicer or the Servicer. The Master Servicer and each
Servicer, as applicable, shall be responsible for obtaining from each Servicing Participant and
delivering, or causing to be delivered, to the Master Servicer and Sellers any servicer compliance
statement required to be delivered under Section 3.07(c), any assessment of compliance and
attestation required to be delivered under Section 14.05 and any certification required to be
delivered to the Person that will be responsible for signing the Sarbanes Certification under
Section 14.05 as and when required to be delivered.

          3. Effect Upon the Agreement. Except as specifically set forth herein, the Agreement
shall remain in full force and effect and is hereby ratified and confirmed.

          4. Incorporation by Reference. The provisions of Sections 13.04 (Governing Law),
13.07 (Severability of Provisions), 13.10 (Further Assurances), 13.12 (Counterparts) and 13.13
(Third Party Beneficiaries) of the Agreement shall be incorporated into this Amendment, mutatis
mutandis, as if references to “this Agreement” in the Agreement were references to this Amendment.

7

 

     IN WITNESS WHEREOF, Discover Bank and the Trustee have caused this Amendment to be duly
executed by their respective officers as of the day and year first above written.

	 	 	 	 	 
	 	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 
	 

8

 

Exhibit J

FORM OF COMPLIANCE CERTIFICATE

DISCOVER CARD MASTER TRUST I

          The undersigned, a duly authorized representative of [Name of Master Servicer, Servicer or
Servicing Participant] (“[Name]”), pursuant to [Section 3.07(c) of the Amended and Restated Pooling
and Servicing Agreement dated as of November 3, 2004, as amended on or prior to the date hereof
(the “Pooling and Servicing Agreement”), by and among [Name], Discover Bank and U.S. Bank National
Association, as Trustee,] [INSERT DESCRIPTION OF APPLICABLE SERVICING OR SUBSERVICING AGREEMENT TO
WHICH SERVICING PARTICIPANT IS A PARTY (the “Agreement”)], hereby certifies that:

          (a) a review of the activities of [Name], during the fiscal year ended November 30, [___],
and of its performance under the [Pooling and Servicing] Agreement was made under my supervision;
and

          (b) to the best of my knowledge, based on such review, [except as provided below] [Name] has
fulfilled all its obligations in all material respects under the [Pooling and Servicing] Agreement
throughout the fiscal year ended November 30, [___].

          [(c) If there has been a failure to fulfill any such obligation in any material respect,
specify each such failure known to the certifying officer and the nature and status thereof.]

          IN WITNESS WHEREOF, the undersigned has duly executed this certificate this [___] day of
[                    ], [___].

By:                                                                                      

Name:                                                                                 

Title:                                                                                   

J-1

 

Exhibit K

FORM OF TRUSTEE’S LITIGATION CERTIFICATE

DISCOVER CARD MASTER TRUST I

          The undersigned, a [                                        ] of [                                                            ] (the “Trustee”), a national
banking association organized under the laws of the United States, DOES HEREBY CERTIFY as follows:

          To my knowledge, during the calendar month preceding the calendar month of the date hereof[,
except as set forth on Exhibit A hereto,] no legal proceeding (including proceedings of
governmental authorities) against the Trustee or against the property of the Trustee that is
material to security holders of any series of Credit Card Pass-Through Certificates issued by
Discover Card Master Trust I, was initiated, terminated or experienced any developments that are
material to such security holders.

          IN WITNESS WHEREOF, the undersigned has caused this Certificate to be duly executed this [___]
day of [____________], [___].

By:                                                                                      

Name:                                                                                 

Title:                                                                                   

K-1

 

Exhibit L

SERVICING CRITERIA TO BE ADDRESSED IN ASSESSMENT OF COMPLIANCE

     The assessments of compliance to be delivered by the Trustee, the Master Servicer and
each Servicer shall address, at a minimum, the criteria identified in the chart below as
“Applicable Servicing Criteria.” Servicing criteria that are not identified with a checkmark under
the columns entitled “Master Servicer”, “Servicer” and “Trustee” are criteria that are not
applicable to the respective entities.

	 	 	 	 	 	 	 	 	 
	 	 	 	 	Applicable Servicing Criteria
	Item 1122(d)	 	 	 	Master	 	 	 	 
	Reference	 	Servicing Criteria	 	Servicer	 	Servicer	 	Trustee
	 
	General Servicing Criteria
	 
	 	 	 	 	 	 	 	 
	1122(d)(1)(i)

	 	Policies and procedures are instituted to monitor any performance or
other triggers and events of default in accordance with the
transaction agreements.
	 	ü
	 	ü
	 	 
	 
	 	 	 	 	 	 	 	 
	1122(d)(1)(ii)

	 	If any material servicing activities are outsourced to third
parties, policies and procedures are instituted to monitor the third
party’s performance and compliance with such servicing activities.
	 	ü
	 	ü
	 	 
	 
	 	 	 	 	 	 	 	 
	1122(d)(1)(iii)

	 	Any requirements in the transaction agreements to maintain a back-up
servicer for the credit card accounts or accounts are maintained.
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 
	1122(d)(1)(iv)

	 	A fidelity bond and errors and omissions policy is in effect on the
party participating in the servicing function throughout the
reporting period in the amount of coverage required by and otherwise
in accordance with the terms of the transaction agreements.
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 
	Cash Collection and Administration

	 
	 	 	 	 	 	 	 	 
	1122(d)(2)(i)

	 	Payments on credit card accounts are deposited into the appropriate
custodial bank accounts and related bank clearing accounts no more
than two business days following receipt, or such other number of
days specified in the transaction agreements.
	 	 
	 	ü
	 	ü
	 
	 	 	 	 	 	 	 	 
	1122(d)(2)(ii)

	 	Disbursements made via wire transfer on behalf of an obligor or to
an investor are made only by authorized personnel.
	 	 
	 	ü
	 	ü
	 
	 	 	 	 	 	 	 	 
	1122(d)(2)(iii)

	 	Advances of funds or guarantees regarding collections, cash flows or
distributions, and any interest or other fees charged for such
advances, are made, reviewed and approved as specified in the
transaction agreements.
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 
	1122(d)(2)(iv)

	 	The related accounts for the transaction, such as cash reserve
accounts or accounts established as a form of overcollateralization,
are separately maintained (e.g., with respect to commingling of
cash) as set forth in the transaction agreements.
	 	 
	 	 
	 	ü

L-1

 

	 	 	 	 	 	 	 	 	 
	 	 	 	 	Applicable Servicing Criteria
	Item 1122(d)	 	 	 	Master	 	 	 	 
	Reference	 	Servicing Criteria	 	Servicer	 	Servicer	 	Trustee
	 
	1122(d)(2)(v)

	 	Each custodial account is maintained at a federally insured
depository institution as set forth in the transaction agreements.
For purposes of this criterion, “federally insured depository
institution” with respect to a foreign financial institution means a
foreign financial institution that meets the requirements of Rule
13k-1(b)(1) of the Securities Exchange Act.
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 
	1122(d)(2)(vi)

	 	Unissued checks are safeguarded so as to prevent unauthorized access.
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 
	1122(d)(2)(vii)

	 	Reconciliations are prepared on a monthly basis for all asset-backed
securities related bank accounts, including custodial accounts and
related bank clearing accounts. These reconciliations are (A)
mathematically accurate; (B) prepared within 30 calendar days after
the bank statement cutoff date, or such other number of days
specified in the transaction agreements; (C) reviewed and approved
by someone other than the person who prepared the reconciliation;
and (D) contain explanations for reconciling items. These
reconciling items are resolved within 90 calendar days of their
original identification, or such other number of days specified in
the transaction agreements.
	 	ü
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 
	Investor Remittances and Reporting

	 
	 	 	 	 	 	 	 	 
	1122(d)(3)(i)

	 	Reports to investors, including those to be filed with the
Commission, are maintained in accordance with the transaction
agreements and applicable Commission requirements. Specifically,
such reports (A) are prepared in accordance with timeframes and
other terms set forth in the transaction agreements; (B) provide
information calculated in accordance with the terms specified in the
transaction agreements; (C) are filed with the Commission as
required by its rules and regulations; and (D) agree with investors’
or the trustee’s records as to the total unpaid principal balance
and number of credit card accounts serviced by the Servicer.
	 	ü
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 
	1122(d)(3)(ii)

	 	Amounts due to investors are allocated and remitted in accordance
with timeframes, distribution priority and other terms set forth in
the transaction agreements.
	 	ü
	 	 
	 	ü
	 
	 	 	 	 	 	 	 	 
	1122(d)(3)(iii)

	 	Disbursements made to an investor are posted within two business
days to the Servicer’s investor records, or such other number of
days specified in the transaction agreements.
	 	 
	 	 
	 	ü
	 
	 	 	 	 	 	 	 	 
	1122(d)(3)(iv)

	 	Amounts remitted to investors per the investor reports agree with
cancelled checks, or other form of payment, or custodial bank
statements.
	 	 
	 	 
	 	ü
	 
	 	 	 	 	 	 	 	 
	Pool Asset Administration

	 
	 	 	 	 	 	 	 	 
	1122(d)(4)(i)

	 	Collateral or security on credit
card receivables designated to the trust is maintained as
required by the transaction agreements or related asset pool
documents.
	 	ü
	 	ü
	 	ü

L-2

 

	 	 	 	 	 	 	 	 	 
	 	 	 	 	Applicable Servicing Criteria
	Item 1122(d)	 	 	 	Master	 	 	 	 
	Reference	 	Servicing Criteria	 	Servicer	 	Servicer	 	Trustee
	 
	1122(d)(4)(ii)

	 	Account and related documents are safeguarded as required by the
transaction agreements.
	 	ü
	 	ü
	 	 
	 
	 	 	 	 	 	 	 	 
	1122(d)(4)(iii)

	 	Any additions, removals or substitutions to the asset pool are made,
reviewed and approved in accordance with any conditions or
requirements in the transaction agreements.
	 	 
	 	ü
	 	ü
	 
	 	 	 	 	 	 	 	 
	1122(d)(4)(iv)

	 	Payments on credit card accounts, including any payoffs, made in
accordance with the related credit card accounts documents are
posted to the Servicer’s obligor records maintained no more than two
business days after receipt, or such other number of days specified
in the transaction agreements, and allocated to principal, interest
or other items (e.g., escrow) in accordance with the related asset
pool documents.
	 	 
	 	ü
	 	 
	 
	 	 	 	 	 	 	 	 
	1122(d)(4)(v)

	 	The Servicer’s records regarding the accounts and the accounts agree
with the Servicer’s records with respect to an obligor’s unpaid
principal balance.
	 	 
	 	ü
	 	 
	 
	 	 	 	 	 	 	 	 
	1122(d)(4)(vi)

	 	Changes with respect to the terms or status of an obligor’s account
(e.g., loan modifications or re-agings) are made, reviewed and
approved by authorized personnel in accordance with the transaction
agreements and related pool asset documents.
	 	 
	 	ü
	 	 
	 
	 	 	 	 	 	 	 	 
	1122(d)(4)(vii)

	 	Loss mitigation or recovery actions (e.g., forbearance plans,
modifications and deeds in lieu of foreclosure, foreclosures and
repossessions, as applicable) are initiated, conducted and concluded
in accordance with the timeframes or other requirements established
by the transaction agreements.
	 	 
	 	ü
	 	 
	 
	 	 	 	 	 	 	 	 
	1122(d)(4)(viii)

	 	Records documenting collection efforts are maintained during the
period an Account is delinquent in accordance with the transaction
agreements. Such records are maintained on at least a monthly basis,
or such other period specified in the transaction agreements, and
describe the entity’s activities in monitoring delinquent Accounts
including, for example, phone calls, letters and payment
rescheduling plans in cases where delinquency is deemed temporary
(e.g., illness or unemployment).
	 	 
	 	ü
	 	 
	 
	 	 	 	 	 	 	 	 
	1122(d)(4)(ix)

	 	Adjustments to interest rates or rates of return for Accounts with
variable rates are computed based on the related Account documents.
	 	 
	 	ü
	 	 

L-3

 

	 	 	 	 	 	 	 	 	 
	 	 	 	 	Applicable Servicing Criteria
	Item 1122(d)	 	 	 	Master	 	 	 	 
	Reference	 	Servicing Criteria	 	Servicer	 	Servicer	 	Trustee
	 
	1122(d)(4)(x)

	 	Regarding any funds held in trust for an obligor (such as escrow
accounts): (A) such funds are analyzed, in accordance with the
obligor’s Account documents, on at least an annual basis, or such
other period specified in the transaction agreements; (B) interest
on such funds is paid, or credited, to obligors in accordance with
applicable Account documents and state laws; and (C) such funds are
returned to the obligor within 30 calendar days of full repayment of
the related Accounts, or such other number of days specified in the
transaction agreements.
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 
	1122(d)(4)(xi)

	 	Payments made on behalf of an obligor (such as tax or insurance
payments) are made on or before the related penalty or expiration
dates, as indicated on the appropriate bills or notices for such
payments, provided that such support has been received by the
servicer at least 30 calendar days prior to these dates, or such
other number of days specified in the transaction agreements.
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 
	1122(d)(4)(xii)

	 	Any late payment penalties in connection with any payment to be made
on behalf of an obligor are paid from the servicer’s funds and not
charged to the obligor, unless the late payment was due to the
obligor’s error or omission.
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 
	1122(d)(4)(xiii)

	 	Disbursements made on behalf of an obligor are posted within two
business days to the obligor’s records maintained by the servicer,
or such other number of days specified in the transaction
agreements.
	 	 
	 	ü
	 	 
	 
	 	 	 	 	 	 	 	 
	1122(d)(4)(xiv)

	 	Delinquencies, charge-offs and uncollectible accounts are recognized
and recorded in accordance with the transaction agreements.
	 	 
	 	ü
	 	 
	 
	 	 	 	 	 	 	 	 
	1122(d)(4)(xv)

	 	Any external enhancement or other support, identified in Item
1114(a)(1) through (3) or Item 1115 of Regulation AB, is maintained
as set forth in the transaction agreements.
	 	 
	 	 
	 	ü*

 

			
	*	 	Only if applicable for any outstanding Securitization Transaction.

L-4

 

Exhibit M

FORM OF ANNUAL CERTIFICATION

     Re: [Amended and Restated Pooling and Servicing Agreement, dated as of November 3, 2004,
by and between Discover Bank, as Master Servicer, Servicer and Seller and U.S. Bank National
Association, as Trustee, as amended on or prior to the date hereof] [INSERT DESCRIPTION OF
APPLICABLE SERVICING OR SUBSERVICING AGREEMENT TO WHICH SERVICING PARTICIPANT IS A PARTY] [ (the
“Agreement”).

I,                                         , the                                                              of [NAME OF COMPANY] (the “Company”),
certify to the Master Servicer and Discover Bank on behalf of the Holder of the Seller Certificate
and each or their officers, with the knowledge and intent that they will rely upon this
certification, that:

(1) I have reviewed [the Company’s servicer compliance statement provided in accordance with Item
1123 of Regulation AB (the “Compliance Statement”),] the report on assessment of the Company’s
compliance provided in accordance with Rules 13a-18 and 15d-18 under the Securities Exchange Act of
1934, as amended (the “Exchange Act”) and Item 1122 of Regulation AB (the “Servicing Assessment”)
and the registered public accounting firm’s attestation report provided in accordance with Rules
13a-18 and 15d-18 under the Exchange Act and Item 1122(b) of Regulation AB (the “Attestation
Report”) that were delivered by the Company to the Master Servicer and Discover Bank on behalf of
the Holder of the Seller Certificate pursuant to the Agreement (collectively, the “Company
Information”);

(2) To the best of my knowledge, the Company Information, taken as a whole, does not contain any
untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in the light of the circumstances under which such statements were made, not
misleading with respect to the period of time covered by the Company Information;

(3) To the best of my knowledge, all of the Company Information required to be provided by the
Company under the Agreement has been provided to the Master Servicer and Discover Bank on behalf of
the Holder of the Seller Certificate; and

(4) To the best of my knowledge, except as disclosed in [the Compliance Statement,] the Servicing
Assessment or the Attestation Report, the Company has fulfilled its obligations under the
Agreement.

Dated:

By:                                                                                      

Name:                                                                                 

Title:                                                                                   

M-1

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