Document:

exv4w1

 

Exhibit 4.1

DISCOVER BANK

Master Servicer, Servicer and Seller

and

U.S. BANK NATIONAL ASSOCIATION

Trustee

on behalf of the Certificateholders

SERIES SUPPLEMENT

Dated as of November 3, 2004

to

AMENDED AND RESTATED POOLING AND SERVICING AGREEMENT

Dated as of November 3, 2004

$1,250,000,000 Class A Certificates

$65,790,000 Class B Certificates

DISCOVER CARD MASTER TRUST I

SERIES 2004-1 CERTIFICATES

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page
	SERIES TERM SHEET
	 	 	1	 
	ANNEX
	 	 	1	 
	SECTION 1. Definitions
	 	 	1	 
	SECTION 2. Subordination
	 	 	28	 
	SECTION 3. Representations and Warranties of the Sellers
	 	 	29	 
	SECTION 4. Representations and Warranties of Discover Bank as Master Servicer and Servicer
	 	 	30	 
	SECTION 5. Representations and Warranties of Other Servicers
	 	 	30	 
	SECTION 6. Representations and Warranties of the Trustee
	 	 	30	 
	SECTION 7. Authentication of Certificates
	 	 	31	 
	SECTION 8. Establishment and Administration of Investor Accounts and the Credit Enhancement Account
	 	 	31	 
	SECTION 9. Allocations of Collections
	 	 	35	 
	SECTION 10. Payments
	 	 	51	 
	SECTION 11. Credit Enhancement
	 	 	54	 
	SECTION 12. Alternative Credit Support Election
	 	 	56	 
	SECTION 13. Calculation of Investor Losses
	 	 	57	 
	SECTION 14. Servicing Compensation
	 	 	57	 
	SECTION 15. Class Interest Rate Caps
	 	 	57	 
	SECTION 16. Class Interest Rate Swaps
	 	 	59	 
	SECTION 17. Investor Certificateholders’ Monthly Statement
	 	 	59	 
	SECTION 18. Master Servicer’s Monthly Certificate
	 	 	59	 
	SECTION 19. Notices
	 	 	60	 
	SECTION 20. Additional Amortization Events
	 	 	60	 
	SECTION 21. Early Accumulation Events; Additional Amortization Events
	 	 	60	 
	SECTION 22. Purchase of Investor Certificates and Series Termination
	 	 	61	 
	SECTION 23. Variable Accumulation Period
	 	 	62	 
	SECTION 24. Optional Accumulation Period Commencement
	 	 	62	 
	SECTION 25. Series Yield Factor
	 	 	63	 
	SECTION 26. Ratification of Pooling and Servicing Agreement
	 	 	63	 
	SECTION 27. Counterparts
	 	 	63	 
	SECTION 28. Governing Law
	 	 	63	 
	SECTION 29. Intention of Parties
	 	 	63	 
	SECTION 30. Amendment for Sale Accounting Purposes
	 	 	64	 

i

 

	 	 	 	 	 
	 	 	Page
	SECTION 31. Election Under Delaware Asset-Backed Securities Facilitation Act
	 	 	64	 
	SECTION 32. Issuance of Additional Certificates
	 	 	64	 

ii

 

EXHIBITS

	 	 	 
	EXHIBIT A:

	 	Form of Investor Certificates
	 
	 	 
	EXHIBIT B:

	 	Form of Certificateholders’ Monthly Statement
	 
	 	 
	EXHIBIT C:

	 	Form of Master Servicer’s Monthly Certificate

iii

 

DISCOVER CARD MASTER TRUST I

SERIES 2004-1 CERTIFICATES

     This Series of Master Trust Certificates is established pursuant to
Section 6.06 of that certain Amended and Restated Pooling and Servicing
Agreement, dated as of November 3, 2004, by and between DISCOVER BANK (formerly
Greenwood Trust Company), a Delaware banking corporation (“Discover Bank”), as
Master Servicer, Servicer and Seller and U.S. BANK NATIONAL ASSOCIATION
(formerly First Bank National Association, successor trustee to Bank of erica
Illinois, formerly Continental Bank, National Association) (the “Trustee”), as
Trustee (the “Pooling and Servicing Agreement”). This SERIES TERM SHEET and
the ANNEX attached hereto, by and among the Master Servicer, the Servicers, the
Sellers and the Trustee, constitute the SERIES SUPPLEMENT (the “Series
Supplement”). The Pooling and Servicing Agreement and this Series Supplement
together establish the Series of Master Trust Certificates to be known as the
DISCOVER CARD MASTER TRUST I, SERIES 2004-1 CERTIFICATES.

SERIES TERM SHEET

	 	 	 
	Date of Series Term Sheet

	 	November 3, 2004
	 
	 	 
	Group

	 	One.
	 
	 	 
	Interchange Series

	 	Yes.
	 
	 	 
	Series Initial Investor Interest

	 	$1,315,790,000.
	 
	 	 
	Class Initial Investor Interest of each Class
of Investor Certificates

	 	Class A - $1,250,000,000; plus the
face amount of any Class A
Certificates issued in an increase of
the Series Investor Interest pursuant
to Section 32.
	 
	 	 
	

	 	Class B - $65,790,000; plus the face
amount of any Class B Certificates
issued in an increase of the Series
Investor Interest pursuant to Section
32.
	 
	 	 
	Class A Expected Final Payment Date

	 	The Distribution Date in October 2007.
	 
	 	 
	Class B Expected Final Payment Date

	 	The Distribution Date in November 2007.
	 
	 	 
	Type of Structure

	 	Bullet Maturity.
	 
	 	 
	Certificate Rates

	 	Class A – LIBOR + 0.03% per annum,
calculated on the basis of the actual
number of days elapsed and a 360-day
year.

1

 

	 	 	 
	

	 	Class B – LIBOR + 0.18% per annum,
calculated on the basis of the actual
number of days elapsed and a 360-day
year.
	 
	 	 
	Subseries

Monthly Amortization Rate

	 	Not applicable.

Not applicable.
	 
	 	 
	Prepayment Calculation Table

	 	Not applicable.
	 
	 	 
	Prepayment Determination Date

	 	Not applicable.
	 
	 	 
	Class Cap Rate

	 	Not applicable.
	 
	 	 
	Class Maximum Rate

	 	Not applicable.
	 
	 	 
	Class Interest Rate Swap

	 	Not applicable.
	 
	 	 
	Interest Rate Swap Counterparty

	 	Not applicable.
	 
	 	 
	Swap Trust Rate

	 	Not applicable.
	 
	 	 
	Swap Counterparty Rate

	 	Not applicable.
	 
	 	 
	Monthly Swap Deposit

	 	Not applicable.
	 
	 	 
	LIBOR Determination Date

	 	The second LIBOR Business Day
immediately preceding the commencement
of an Interest Accrual Period.
	 
	 	 
	Series Yield Factor

	 	Initially zero, but may be increased
pursuant to Section 25.
	 
	 	 
	Series Cut-Off Date

	 	November 1, 2004.
	 
	 	 
	Series Closing Date

	 	November 3, 2004.
	 
	 	 
	Date from which Interest for first Interest

Payment Date Shall Accrue

	 	Series Closing Date.
	 
	 	 
	Distribution Dates

	 	December 15, 2004 and the
15th day of
each calendar month thereafter (or, if
such day is not a Business Day, the
next succeeding Business Day).
	 
	 	 
	Interest Payment Dates

	 	Class A - The 15th day of each
calendar month (or, if such day is not
a Business Day, the next succeeding
Business Day), commencing in December
2004
	 
	 	 
	

	 	Class B — The
15th day of each
calendar

2

 

	 	 	 
	

	 	month (or, if such day is not
a Business Day, the next succeeding
Business Day), commencing in December
2004.
	 
	 	 
	Statement Dates

	 	Each Distribution Date, commencing in
December 2004.
	 
	 	 
	Principal Payment Date

	 	Not applicable.
	 
	 	 
	Interest Calculation Dates

	 	Not applicable.
	 
	 	 
	Accumulation Commencement Date

	 	Not applicable.
	 
	 	 
	Accumulation Period

	 	Unless an Amortization Event shall
have occurred prior thereto, the
period commencing on the Principal
Commencement Date and ending on the
earliest to occur of (x) the payment
in full of the Series Invested Amount,
(y) the Amortization Commencement
Date, and (z) the Series Termination
Date.
	 
	 	 
	Accumulation Amount

	 	(a) Through the Class A Expected Final
Payment Date, (i) $104,166,666.67 or
(ii) if the Master Servicer elects to
delay commencement of the Accumulation
Period in accordance with Section 23
or if an increase in the Series
Investor Interest pursuant to Section
32 has occurred, the Class A Initial
Investor Interest divided by the
number of Distribution Dates from the
commencement of the Accumulation
Period through and including the Class
A Expected Final Payment Date, and (b)
thereafter, (i) $65,790,000 or (ii) if
an increase in the Series Investor
Interest pursuant to Section 32 has
occurred, the Class B Initial Investor
Interest.

3

 

	 	 	 
	Principal Commencement Date

	 	The first day of the Due Period
related to the November 2006
Distribution Date (or such later
Distribution Date as the Master
Servicer may elect in accordance with
Section 23).
	 
	 	 
	Revolving Period

	 	From the Series Cut-Off Date to but
excluding the earlier to occur of (i)
the Principal Commencement Date, and
(ii) the Amortization Commencement
Date.
	 
	 	 
	Controlled Liquidation Period

	 	Not applicable.
	 
	 	 
	Early Accumulation Period

	 	Not applicable.
	 
	 	 
	Type of Credit Enhancement

	 	Cash collateral account.

	 
	 	 
	Stated Shared Credit Enhancement Amount

	 	There shall be no Shared Credit
Enhancement.
	 
	 	 
	Stated Class A Credit Enhancement Amount

	 	There shall be no Class A Cash Collateral Credit Enhancement.
	 
	 	 
	Stated Class B Credit Enhancement Amount

	 	$98,684,250.
	 
	 	 
	Credit Enhancement Provider

	 	Collectively, the one or more lenders
making a loan in order to provide the
initial funds on deposit in the Credit
Enhancement Account, or any successor
provider of the Credit Enhancement.

	 
	 	 
	Maximum Shared Credit Enhancement Amount

	 	There shall be no Shared Credit
Enhancement.
	 
	 	 
	Maximum Class A Credit Enhancement Amount

	 	There shall be no Class A Cash Collateral Credit Enhancement.
	 
	 	 
	Maximum Class B Credit Enhancement Amount

	 	On any Distribution Date (a) prior to
the making of an Effective Alternative
Credit Support Election, the greatest
of (i) $13,157,900, (ii) an amount
equal to 1% of the Series Initial
Investor Interest, and (iii) (x) if a
Supplemental Credit Enhancement Event
has not occurred, an amount equal to
7.5% of the Series Investor Interest
as of the last day of the related Due
Period, or (y) if a Supplemental
Credit Enhancement Event has occurred,
an amount equal to 8.0% of the Series
Investor Interest as of the last day
of the related Due

4

 

	 	 	 
	

	 	Period or (b)
subsequent to the making of an
Effective Alternative Credit Support
Election, the greatest of (i)
$13,157,900, (ii) an amount equal to
1% of the Series Initial Investor
Interest, and (iii) an amount equal to
12.5% of the Series Investor Interest
as of the last day of the related Due
Period; provided, however, that if an
Amortization Event with respect to the
Series established hereby occurs, the
Maximum Class B Credit Enhancement
Amount for each Distribution Date
thereafter shall equal the Maximum
Class B Credit Enhancement Amount for
the Distribution Date immediately
preceding the occurrence of the
Amortization Event; and provided,
further, that if a Credit Enhancement
Drawing has been made, until such time
as the Available Class B Credit
Enhancement Amount has been reinstated
in an amount at least equal to the
amount of such Credit Enhancement
Drawing, the Maximum Class B Credit
Enhancement Amount shall be the
Maximum Class B Credit Enhancement
Amount as of the date of such Credit
Enhancement Drawing.
	 
	 	 
	Total Maximum Credit Enhancement Amount

	 	On any Distribution Date, the Maximum
Class B Credit Enhancement Amount for
such Distribution Date.
	 
	 	 
	Additional Credit Support Amount

	 	The lesser of (x)(i) prior to the
occurrence of a Supplemental Credit
Enhancement Event, 5% of the Series
Initial Investor Interest or (ii)
following the occurrence of a
Supplemental Credit Enhancement Event,
4.5% of the Series Initial Investor
Interest and (y) the difference
between the Maximum Class B Credit
Enhancement Amount (after giving
effect to an Alternative Credit
Support Election) and the Available
Class B Credit Enhancement Amount
(immediately before giving effect to
the Alternative Credit Support
Election).
	 
	 	 
	Supplemental Credit Enhancement Amount

	 	The lesser of (x)(i) prior to the
occurrence of an Alternative Credit
Support Election, 0.5% of the Series
Initial Investor Interest or (ii) zero
following the occurrence of an

5

 

	 	 	 
	

	 	Alternative Credit Support Election
and (y) the difference between the
Maximum Class B Credit Enhancement
Amount (after giving effect to the
occurrence of a Supplemental Credit
Enhancement Event) and the Available
Class B Credit Enhancement Amount
(immediately before giving effect to
the occurrence of a Supplemental
Credit Enhancement Event).
	 
	 	 
	Initial Subordinated Amount

	 	$164,473,750.
	 
	 	 
	Additional Subordinated Amount

	 	Prior to the occurrence of a
Supplemental Credit Enhancement Event,
5% of the Series Initial Investor
Interest and following the occurrence
of a Supplemental Credit Enhancement
Event, 4.5% of the Series Initial
Investor Interest.
	 
	 	 
	Supplemental Subordinated Amount

	 	Prior to the effectiveness of an
Alternative Credit Support Election,
0.5% of the Series Initial Investor
Interest and zero following the
effectiveness of an Alternative Credit
Support Election.
	 
	 	 
	Series Buffer Amount

	 	Zero.
	 
	 	 
	Interchange Subgroup Buffer Amount

	 	Zero.
	 
	 	 
	Group Buffer Amount

	 	Zero.
	 
	 	 
	Investor Servicing Fee Percentage

	 	2.0% per annum calculated on the basis
of a 360-day year of twelve 30-day
months.
	 
	 	 
	Supplemental Servicing Fee Percentage

	 	Zero.
	 
	 	 
	Amount of Additional Funds

	 	Initially, zero.
	 
	 	 
	Eligible for Reallocations to and from Other
Series in Group

	 	Yes.
	 
	 	 
	Series Termination Date

	 	The first Business Day following the
Distribution Date in April 2010.
	 
	 	 
	Estimated Investment Shortfall

	 	On any date of determination, the
positive difference, if any, between
(i) the Certificate Rate for the Class
for whose benefit the amounts on
deposit in the Series Principal
Funding Account are held as of such
date of determination and (ii) the

6

 

	 	 	 
	

	 	weighted average yield (expressed as a
Money Market Yield) on the investments
in the Series Principal Funding
Account as of such date of
determination.
	 
	 	 
	Estimated Yield

	 	On any date of determination, the
Portfolio Yield for the immediately
preceding Due Period less 2.00%.
	 
	 	 
	Classes, if any, subject to Regulation S
restrictions

	 	Not applicable.
	 
	 	 
	Classes, if any, subject to ERISA restrictions

	 	Class B.
	 
	 	 
	Bearer Certificates

	 	Not applicable.
	 
	 	 
	Registered Certificates

	 	Class A and Class B Certificates.
	 
	 	 
	Class A Certificate

	 	Each certificate executed by the
Sellers and authenticated by or on
behalf of the Trustee, substantially
in the form of Exhibit A-1.
	 
	 	 
	Class B Certificate

	 	Each certificate executed by the
Sellers and authenticated by or on
behalf of the Trustee, substantially
in the form of Exhibit A-2.
	 
	 	 
	Principal Paying Agent

	 	Class A – Not applicable.
	 
	 	 
	

	 	Class B – Not applicable.
	 
	 	 
	Paying Agents

	 	Class A and Class B – the Corporate
Trust Office of the Trustee.

7

 

     IN WITNESS WHEREOF, the Sellers, the Master Servicer, the Servicers and
the Trustee have caused this Series Supplement to be duly executed by their
respective officers thereunto duly authorized as of the date and year first
above written.

	 	 	 
	

	 	DISCOVER BANK,
	

	 	  as Seller, Master Servicer and Servicer
	 
	

	 	
 
	

	 	Michael F. Rickert
	

	 	Vice President, Chief Accounting
	

	 	Officer and Treasurer
	 
	 	 
	

	 	U.S. BANK NATIONAL ASSOCIATION,
  as
Trustee
	 
	 	 
	

	 	
 
	

	 	Patricia M. Child
	

	 	Vice President

 

 

ANNEX

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

     SECTION 1. Definitions

     (a) Capitalized terms not otherwise defined in this Series Supplement
(including the Series Term Sheet) shall have the meanings ascribed to them in
the Pooling and Servicing Agreement. Capitalized terms that refer to a Series
refer to the Series established hereby or a Subseries, if any, established in
the Series Term Sheet of this Series Supplement specifying that such Subseries
is to be treated as a separate Series herein and under the Pooling and
Servicing Agreement and all of the other Series Supplements of Discover Card
Master Trust I. Capitalized terms that refer to a Class refer to a Class of
the Series or Subseries, if any, established hereby, as applicable, unless the
context otherwise clearly requires.

     (b) The following terms have the definitions set forth below with respect
to the Series established hereby, unless the context otherwise clearly
requires:

     “Accumulation Amount,” if applicable, shall have the meaning set forth in
the Series Term Sheet; provided, however, that such amount may be adjusted
pursuant to Section 23 or 24.

     “Accumulation Commencement Date,” if applicable, shall have the meaning
set forth in the Series Term Sheet.

     “Accumulation Period,” if applicable, shall have the meaning set forth in
the Series Term Sheet.

     “Additional Credit Support Amount” shall have the meaning set forth in the
Series Term Sheet.

     “Additional Subordinated Amount” shall have the meaning set forth in the
Series Term Sheet.

     “Alternative Credit Support Election” shall mean an election made by the
Sellers pursuant to Section 12.

     “Amortization Commencement Date” shall mean the date on which an
Amortization Event is deemed to occur pursuant to Section 20 hereof.

     “Amortization Event” shall mean any event specified in Section 9.01 of the
Pooling and Servicing Agreement or in Section 20 hereof.

     “Amortization Period” shall mean the period from, and including, the
Amortization Commencement Date to, and including, the earlier of (i) the date
of the final distribution to Investor Certificateholders of the Series
established hereby and (ii) the Series Termination Date.

 

 

The first
Distribution Date of the Amortization Period shall be the Distribution Date in
the calendar month following the Amortization Commencement Date.

     “Available Class A Credit Enhancement Amount,” if applicable, shall have
the meaning set forth in the Series Term Sheet. Notwithstanding the foregoing,
the Available Class A Credit Enhancement Amount for any Distribution Date shall
not exceed the Maximum Class A Credit Enhancement Amount for such Distribution
Date.

     “Available Class B Credit Enhancement Amount” shall mean, with respect to
the first Distribution Date, the Stated Class B Credit Enhancement Amount, and,
thereafter, shall mean the amount available to be drawn under the Credit
Enhancement with respect to the Available Class B Credit Enhancement Amount
from time to time, which on any date of determination shall be equal to the
Available Class B Credit Enhancement Amount for the immediately preceding
Distribution Date minus the amount of all Credit Enhancement Drawings with
respect to the Available Class B Credit Enhancement Amount on or since such
immediately preceding Distribution Date, plus the amount of all payments made
to the Trustee as administrator of the Credit Enhancement with respect to the
Available Class B Credit Enhancement Amount pursuant to Section 9 plus,
following an Effective Alternative Credit Support Election, the Additional
Credit Support Amount and, plus, following a Supplemental Credit Enhancement
Event, the Supplemental Credit Enhancement Amount plus following an increase in
the Series Investor Interest pursuant to Section 32, the Increased Credit
Enhancement Amount; provided, however, that from and after the Fully Funded
Date, if any, the Available Class B Credit Enhancement Amount shall equal zero.
Notwithstanding the foregoing, the Available Class B Credit Enhancement Amount
for any Distribution Date shall not exceed the Maximum Class B Credit
Enhancement Amount for such Distribution Date.

     “Available Shared Credit Enhancement Amount,” if applicable, shall mean,
with respect to the first Distribution Date, the Stated Shared Credit
Enhancement Amount, and, thereafter, shall mean the amount available to be
drawn under the Credit Enhancement with respect to the Available Shared Credit
Enhancement Amount from time to time, which on any date of determination shall
be equal to the Available Shared Credit Enhancement Amount for the immediately
preceding Distribution Date minus the amount of all Credit Enhancement Drawings
with respect to the Available Shared Credit Enhancement Amount on or since such
immediately preceding Distribution Date, and plus the amounts of all payments
made to the Trustee as administrator of the Credit Enhancement with respect to
the Available Shared Credit Enhancement Amount pursuant to Section 9.
Notwithstanding the foregoing, the Available Shared Credit Enhancement Amount
for any Distribution Date shall not exceed the Maximum Shared Credit
Enhancement Amount for such Distribution Date.

     “Available Subordinated Amount,” if there is a Subordinate Class with
respect to Class A, shall mean, on a Distribution Date, the sum of

     (a) (i) with respect to the first Distribution Date, the Initial
Subordinated Amount or (ii) with respect to any other Distribution Date,
the Available Subordinated Amount after giving effect to all adjustments
on the prior Distribution Date; and

2

 

     (b) the amount of Series Excess Servicing;

as such amount may be (x) reduced pursuant to the provisions of Section 9 to
take into account (i) the amount of Class A and Class B Excess Servicing used
to reimburse the Class A Cumulative Investor Charged-Off Amount, (ii) the
amount of Class B Excess Servicing used to reduce the Class A Required Amount
Shortfall, (iii) the amount of the Class B Subordinated Payment and (iv) the
amount of any reduction in the Class B Investor Interest resulting from the
reimbursement of the Class A Cumulative Investor Charged-Off Amount, in each
case for such Distribution Date, and (y) increased pursuant to the provisions
of Section 9 to take into account the application of amounts on deposit in the
Group Finance Charge Collections Reallocation Account and Group Interchange
Reallocation Account (i) to reduce the Class B Required Amount Shortfall, (ii)
to reduce the Class B Cumulative Investor Charged-Off Amount and (iii) to
increase the Available Class B Credit Enhancement Amount, in each case for such
Distribution Date; provided, however, that from and after the Fully Funded
Date, if any, the Available Subordinated Amount will equal zero.

Upon the occurrence of a Supplemental Credit Enhancement Event, the Available
Subordinated Amount will be increased by the Supplemental Subordinated Amount.
In addition, on the first Distribution Date following an Effective Alternative
Credit Support Election, the Available Subordinated Amount shall be increased
by the Additional Subordinated Amount. On the date of an increase in the
Series Investor Interest pursuant to Section 32, the Available Subordinated
Amount shall be increased by the Increased Issuance Subordinated Amount. In no
event, however, shall the Available Subordinated Amount exceed (i) through the
last Distribution Date preceding an Effective Alternative Credit Support
Election, the Initial Subordinated Amount plus the Supplemental Subordinated
Amount and the Increased Issuance Subordinated Amount and (ii) thereafter, the
sum of the Initial Subordinated Amount, the Supplemental Subordinated Amount,
the Increased Issuance Subordinated Amount and the Additional Subordinated
Amount.

     “Calculation Period,” if applicable, shall have the meaning specified in
the applicable interest rate cap agreement.

     “Cedel” shall mean Clearstream Banking.

     “Certificate Interest” shall mean, for any Class for any Interest Payment
Date, the product of (a) the Class Invested Amount for such Class for such
Interest Payment Date and (b) a fraction the numerator of which is (1) with
respect to each Class that has no Subclasses, the Certificate Rate for such
Class or (2) with respect to each Class that has two or more Subclasses, the
Class Weighted Average Certificate Rate, and the denominator of which is (x) if
the relevant Certificate Rate is to be calculated on the basis of the actual
number of days elapsed and a 360-day year, 360 divided by the actual number of
days from and including the immediately preceding Interest Payment Date (or, in
the case of the first Interest Payment Date, from and including the Series
Closing Date) to but excluding the current Interest Payment Date or (y) if the
relevant Certificate Rate is to be calculated on the basis of a 360-day year of
twelve 30-day months, twelve divided by the number of Distribution Dates from
and including the preceding Interest Payment Date to but excluding the current
Interest Payment Date (or, in the case of the first Interest Payment Date, 360
divided by the number of days from and including the Series

3

 

Closing Date to but
excluding the 15th day of the month in which current Interest Payment Date
occurs, assuming 30-day months); provided, that, if an increase in the Series
Investor Interest has
been made pursuant to Section 32 on or prior to such Interest Payment Date
but during the calendar month in which such Interest Payment Date occurred, the
Class Invested Amount for each Class for such Interest Payment Date shall be
deemed to exclude the portion of the Class Invested Amount represented by
Investor Certificates issued in connection with such increase and such Investor
Certificates shall only bear interest from such Interest Payment Date; and
provided, further, that if an increase in the Series Investor Interest has been
made pursuant to Section 32 during the related Interest Accrual Period but
prior to the calendar month in which such Interest Payment Date occurred, any
Investor Certificates so issued shall bear interest from the prior Interest
Payment Date (or, in the case of the first Interest Payment Date, from the
Series Closing Date).

     “Certificate Principal” shall mean, with respect to each Class, the
principal payable in respect of such Class of Investor Certificates.

     “Certificate Rate,” with respect to any Class or Subclass, shall mean the
certificate rate set forth in the Series Term Sheet with respect to such Class
or Subclass, as such rate may be adjusted as of the beginning of each Interest
Accrual Period, if applicable; provided, however, that the Certificate Rate for
any Class or Subclass that does not have a fixed Certificate Rate shall not
exceed the Class Cap Rate or Class Maximum Rate, as applicable, for such Class
or Subclass; and provided, further, that any interest on the Investor
Certificates (including any interest accrued with respect to any Class
Deficiency Amount) shall be payable or distributed to the Investor
Certificateholders only to the extent permitted by applicable law.

     “Class A Cash Collateral Credit Enhancement” shall mean Credit Enhancement
available in the Credit Enhancement Account for the benefit of the Class A
Investor Certificates.

     “Class Additional Funds,” if applicable, shall mean, with respect to any
Class for any Distribution Date, an amount equal to the product of (i) a
fraction the numerator of which is the Class Investor Interest and the
denominator of which is the sum of the Class Investor Interests for each Class
of the Series established hereby and (ii) the amount of Series Additional
Investor Funds, in each case for such Distribution Date.

     “Class Alternative Deficiency Amount” shall mean, with respect to each
Class, on any Payment Date, the Class Deficiency Amount that would have been
calculated for such Class on such Payment Date if the aggregate unreimbursed
Investor Losses on such Payment Date equaled zero.

     “Class B Available Collections” shall mean, if there is a Subordinated
Class with respect to Class A, with respect to any Distribution Date, an amount
equal to the sum of (i) Class B Available Finance Charge Collections for such
Distribution Date and (ii) Class B Principal Collections for such Distribution
Date.

     “Class B Available Finance Charge Collections” shall mean, if there is a
Subordinate Class with respect to Class A, with respect to any Distribution
Date, an amount equal to the sum

4

 

of Class B Finance Charge Collections, Class B
Yield Collections, if any, Class B Investment
Income, if applicable, Class B Interchange in each case for the related
Due Period and Class B Additional Funds for such Distribution Date (less Class
B Excess Servicing).

     “Class Cap Rate,” if applicable, shall mean, with respect to a Class or
Subclass that does not have a fixed or maximum Certificate Rate, the rate that
is specified as such in the Series Term Sheet and in the Class Interest Rate
Cap with respect to such Class or Subclass.

     “Class Charge-Off Reimbursement Amount” shall mean, with respect to any
Class with respect to any Distribution Date, the total amount by which the
Class Cumulative Investor Charged-Off Amount for such Class is reduced on such
Distribution Date pursuant to Section 9.

     “Class Cumulative Investor Charged-Off Amount” with respect to each Class
for any Distribution Date, shall mean the sum of the Class Investor Charged-Off
Amounts for such Class for all preceding Due Periods that have not been
reimbursed pursuant to Section 9 prior to such Distribution Date, plus the
Class Investor Charged-Off Amount for such Class for the Due Period related to
such Distribution Date, as adjusted pursuant to Section 9 on such Distribution
Date. The Class Cumulative Investor Charged-Off Amount with respect to each
Class initially shall be zero.

     “Class Deficiency Amount” shall mean, with respect to each Class, on any
Payment Date, the amount, if any, by which (a) the sum of (i) Certificate
Interest for such Class accrued since the immediately preceding Payment Date,
(ii) if, since the immediately preceding Payment Date and prior to the current
Payment Date, a Reimbursed Loss Event has occurred, the sum of (A) the
Reimbursed Loss Interest for each previous Distribution Date since the last
Distribution Date on which Investor Losses for such Class equaled zero and (B)
the Reimbursed Loss Interest Gross-up Amount for each previous Distribution
Date since the last Distribution Date on which the aggregate amount of
unreimbursed Investor Losses for such Class equaled zero, (iii) the Class
Deficiency Amount on the immediately preceding Payment Date, and (iv) the Class
Deficiency Amount on the immediately preceding Payment Date multiplied by the
product of (A) a fraction the numerator of which is the weighted average of the
Certificate Rates or of the Class Weighted Average Certificate Rates, as
applicable, for such Class for the relevant Due Periods and the denominator of
which is (x) if the relevant Certificate Rate is to be calculated on the basis
of the actual number of days elapsed and a 360-day year, 360 divided by the
actual number of days from and including the immediately preceding Distribution
Date to but excluding the current Distribution Date or (y) if the relevant
Certificate Rate is to be calculated on the basis of a 360-day year of twelve
30-day months, twelve and (B) the number of Distribution Dates from and
including the preceding Payment Date to but excluding the current Payment Date
exceeds (b) the amount deposited since the immediately preceding Payment Date
into the Series Interest Funding Account pursuant to Section 10(a)(2)(A).

     “Class Excess Servicing” shall mean, with respect to each Class, on any
Distribution Date, the positive difference, if any, between (i) the sum of
Class Finance Charge Collections for the related Due Period, Class Yield
Collections for the related Due Period, if any, Class Investment Income for the
related Due Period, if any, Class Interchange for the related Due

5

 

Period, if
any, and Class Additional Funds for such Distribution Date, if any, and (ii)
the Class Required Amount.

     “Class Expected Final Payment Date” with respect to each Class, if
applicable, shall mean the date designated as such in the Series Term Sheet.

     “Class Final Maturity Date” with respect to each Class, if applicable,
shall mean the date designated as such in the Series Term Sheet.

     “Class Finance Charge Collections” shall mean, with respect to any Class,
with respect to any day or any Distribution Date or Trust Distribution Date, as
applicable, an amount equal to the product of (x) the Class Percentage with
respect to Finance Charge Collections for the related Distribution Date and (y)
the amount of Finance Charge Collections for such day or for the related Due
Period, as applicable; provided, however, that Class Finance Charge Collections
for each Class shall be increased by the lesser of (i) the amount of Class
Investment Shortfall for such Class and (ii) an amount equal to the product of
the total amount of Finance Charge Collections otherwise allocable to Discover
Bank on behalf of the Holder of the Seller Certificate for the related Due
Period and a fraction the numerator of which is the Class Invested Amount for
such Class and the denominator of which is the Aggregate Invested Amount; and
provided, further, that notwithstanding the foregoing, Class Finance Charge
Collections for each Class shall not, with respect to any such day,
Distribution Date or Trust Distribution Date during the Accumulation Period or
the Early Accumulation Period, as applicable, exceed the amount that would be
available if the Class Percentage with respect thereto were the percentage
equivalent of a fraction the numerator of which is the amount of the Class
Investor Interest on the last day of the Due Period prior to the commencement
of the Accumulation Period or the Early Accumulation Period, and the
denominator of which is the greater of (i) the amount of Principal Receivables
in the Trust on the first day of the related Due Period and (ii) the sum of the
numerators used in calculating the components of the Series Percentage with
respect to Finance Charge Collections for each Series then outstanding
(including the Series established hereby) as of such day, Distribution Date or
Trust Distribution Date, as applicable.

     “Class Initial Investor Interest” shall mean, with respect to each Class,
the aggregate face amount of Investor Certificates of such Class as specified
in the Series Term Sheet.

     “Class Interchange” shall mean, with respect to any Class, with respect to
any Distribution Date or Trust Distribution Date, as applicable, an amount
equal to the product of (x) the Class Percentage with respect to Interchange
for the related Distribution Date and (y) Interchange for the related Due
Period.

     “Class Interest Rate Cap,” if applicable, shall mean, with respect to a
Class or Subclass that does not have a fixed or maximum Certificate Rate, the
interest rate cap agreement or other interest rate protection for the benefit
of the Investor Certificateholders of such Class or Subclass, dated on or
before the Series Closing Date, between the Trustee, acting on behalf of the
Trust, and the Interest Rate Cap Provider, or any Replacement Interest Rate Cap
or Qualified Substitute Cap Arrangement.

6

 

     “Class Interest Rate Cap Payment” shall mean, with respect to a Class or
Subclass that does not have a fixed or maximum Certificate Rate, with respect
to any Interest Payment Date,
any payment required to be made on such Interest Payment Date by the
Interest Rate Cap Provider with respect to the Class Interest Rate Cap for such
Class or Subclass.

     “Class Interest Rate Swap,” if applicable, shall mean, with respect to a
Class or Subclass, the interest rate swap agreement or other interest rate
protection agreement with respect to any Class or Subclass, dated on the Series
Closing Date, between the Trust and the Interest Rate Swap Counterparty, and
any replacement or successor interest rate swap agreement or interest rate
protection agreement.

     “Class Invested Amount” shall mean, with respect to any Class for any
Distribution Date, an amount equal to the Class Initial Investor Interest minus
the sum of (a) the aggregate amount of payments of Certificate Principal paid
to such Class of Investor Certificateholders, in each case prior to such
Distribution Date, (b) the aggregate amount of Investor Losses of such Class
not reimbursed prior to such Distribution Date and (c) the aggregate amount of
losses of principal on investments of funds on deposit for the benefit of such
Class in the Series Principal Funding Account, if applicable.

     “Class Investment Income” shall mean, with respect to any Class, income
from the investment of funds on deposit in the Series Principal Funding Account
for the benefit of such Class less Excess Income.

     “Class Investment Shortfall” with respect to each Class with respect to
any Distribution Date during the Accumulation Period or the Early Accumulation
Period, if applicable, shall mean an amount equal to the positive difference,
if any, between (i) one-twelfth of the product of (a) (x) with respect to each
Class that has no Subclasses, the Certificate Rate, or (y) with respect to each
Class that has two or more Subclasses, the Class Weighted Average Certificate
Rate, in each case for the related Due Period, and (b) the amount on deposit in
the Series Principal Funding Account for the benefit of such Class as of the
end of the previous Distribution Date and (ii) Class Investment Income for the
related Due Period.

     “Class Investor Charged-Off Amount” shall mean, with respect to each Class
for any Distribution Date, an amount equal to the sum of (i) the product of (a)
the Charged-Off Amount for such Distribution Date and (b) the Class Percentage
with respect to the Charged-Off Amount and (ii) if there is a Subordinate Class
with respect to Class A, with respect to Class B only, the sum of (a) the
positive difference, if any, between (x) the Class B Subordinated Payment and
(y) the amount of Class B Available Finance Charge Collections for the related
Due Period and (b) the amount by which the Class A Cumulative Investor
Charged-Off Amount is reduced by way of a reallocation of Class B Investor
Interest pursuant to Section 9.

     “Class Investor Interest” shall mean, with respect to any Class for any
Distribution Date, an amount equal to the Class Invested Amount for such Class
for such Distribution Date minus, if applicable, the aggregate amount on
deposit in the Series Principal Funding Account for the benefit of such Class
in respect of Principal Collections.

7

 

     “Class Maximum Rate,” if applicable, shall have the meaning set forth in
the Series Term Sheet with respect to any Class or Subclass.

     “Class Modified Required Amount” with respect to any Class on any
Distribution Date, shall mean the Class Required Amount for such Distribution
Date minus the sum of all accrued but unpaid Class Monthly Servicing Fees.

     “Class Monthly Deficiency Amount” with respect to any Class on any
Distribution Date, shall have the meaning set forth in Section 10(a)(2)(A).
The Class Monthly Deficiency Amount for each Class initially shall be zero.

     “Class Monthly Servicing Fee” with respect to any Class for any
Distribution Date, shall mean an amount equal to the product of (x) a fraction
the numerator of which shall be the Class Investor Interest and the denominator
of which shall be the Series Investor Interest, in each case on the first day
of the related Due Period and (y) the amount of the Investor Servicing Fee for
the related Due Period. For purposes of this definition, the Class Investor
Interest on the first day of any Due Period in which the Series Closing Date or
an increase in the Series Investor Interest pursuant to Section 32 has occurred
shall include the Class Investor Interest of all Investor Certificates issued
during such Due Period.

     “Class Percentage” shall mean, with respect to any Class with respect to
any Distribution Date or any Trust Distribution Date, as applicable:

     (a) when used with respect to the Charged-Off Amount, the
percentage equivalent of a fraction the numerator of which shall
be the amount of the Class Investor Interest and the denominator
of which shall be the greater of (i) the amount of Principal
Receivables in the Trust and (ii) the Aggregate Investor Interest,
in each case on the first day of the related Due Period; or

     (b) when used with respect to Principal Collections prior to
the occurrence of a Fixed Principal Allocation Event, the
percentage equivalent of a fraction the numerator of which shall
be the amount of the Class Investor Interest on the first day of
the related Due Period and the denominator of which shall be the
greater of (i) the amount of Principal Receivables in the Trust on
the first day of the related Due Period and (ii) the sum of the
numerators used in calculating the components of the Series
Percentage with respect to Principal Collections for each Series
then outstanding (including the Series established hereby) as of
such Distribution Date or Trust Distribution Date, as applicable;
or

     (c) when used with respect to Principal Collections on and
after the occurrence of a Fixed Principal Allocation Event, the
percentage equivalent of a fraction, the numerator of which shall
be the amount of the Class Investor Interest on the last day of
the Due Period prior to the occurrence of a Fixed Principal
Allocation Event and the denominator of which shall be the greater
of (i) the amount of Principal Receivables in the Trust on the
first day of the related Due Period and (ii) the sum of the
numerators used in calculating the components of

8

 

the Series
Percentage with respect to Principal Collections for each Series
then outstanding (including the Series established hereby) as of
such Distribution Date or Trust Distribution Date, as applicable;
provided, however, that from and after
the Fully Funded Date, if any, the Class Percentage with
respect to Principal Collections will equal zero; or

     (d) when used with respect to Finance Charge Collections
during the Revolving Period and the Accumulation Period or the
Controlled Liquidation Period, as applicable, and provided that an
Effective Alternative Credit Support Election has been made,
during the Early Accumulation Period or the Amortization Period,
the percentage equivalent of a fraction the numerator of which
shall be the amount of the Class Investor Interest on the first
day of the related Due Period and the denominator of which shall
be the greater of (i) the amount of Principal Receivables in the
Trust on the first day of the related Due Period and (ii) the sum
of the numerators used in calculating the components of the Series
Percentage with respect to Finance Charge Collections for each
Series then outstanding (including the Series established hereby)
as of such Distribution Date or Trust Distribution Date, as
applicable; provided, however, that from and after the Fully
Funded Date, if any, the Class Percentage with respect to Finance
Charge Collections will equal zero; or

     (e) when used with respect to Finance Charge Collections
during the Early Accumulation Period or the Amortization Period,
provided that an Effective Alternative Credit Support Election has
not been made, the percentage equivalent of a fraction the
numerator of which shall be the amount of the Class Investor
Interest on the last day of the Due Period prior to the occurrence
of an Early Accumulation Event or an Amortization Event, and the
denominator of which shall be the greater of (i) the amount of
Principal Receivables in the Trust on the first day of the related
Due Period and (ii) the sum of the numerators used in calculating
the components of the Series Percentage with respect to Finance
Charge Collections for each Series then outstanding (including the
Series established hereby) as of such Distribution Date or Trust
Distribution Date, as applicable; provided, however, that from and
after the Fully Funded Date, if any, the Class Percentage with
respect to Finance Charge Collections will equal zero; or

     (f) when used with respect to Interchange, the percentage
equivalent of a fraction the numerator of which shall be the
amount of Class Investor Interest and the denominator of which
shall be the greater of (i) the amount of Principal Receivables in
the Trust and (ii) the Aggregate Investor Interest, in each case
on the first day of the related Due Period.

     For purposes of this definition, the Class Investor Interest as of the
first day of any Due Period in which the Series Closing Date has occurred or an
increase in the Series Investor Interest has been made pursuant to Section 32
shall include the Class Investor Interest of all Investor Certificates issued
during or prior to such Due Period.

9

 

     “Class Principal Collections” shall mean, with respect to any Class with
respect to any day or any Distribution Date or Trust Distribution Date, as
applicable, an amount equal to the
product of (x) the Class Percentage with respect to Principal Collections
for the related Distribution Date and (y) the amount of Principal Collections
for such day or for the related Due Period, as applicable.

     “Class Required Amount” with respect to any Class on any Distribution
Date, shall mean the sum of (i) the product of (a) the Class Invested Amount
with respect to such Class for such Distribution Date and (b) a fraction, the
numerator of which is the Certificate Rate for such Class, and the denominator
of which is (x) if the relevant Certificate Rate is to be calculated on the
basis of the actual number of days elapsed and a 360-day year, 360 divided by
the actual number of days from and including the immediately preceding
Distribution Date (or in the case of the first Distribution Date, from and
including the Series Closing Date) to but excluding the current Distribution
Date or (y) if the relevant Certificate Rate is to be calculated on the basis
of a 360-day year of twelve 30-day months, twelve (or in the case of the first
Distribution Date, 360 divided by the number of days from and including the
Series Closing Date to but excluding the 15th day of the month in which the
current Interest Payment Date occurs, assuming each month has 30 days), (ii)
the Class Monthly Deficiency Amount on the immediately preceding Distribution
Date, (iii) the Class Deficiency Amount on the immediately preceding Payment
Date multiplied by a fraction the numerator of which is the weighted average of
the Certificate Rates or of the Class Weighted Average Certificate Rates, as
applicable, for such Class for each Due Period subsequent to the immediately
preceding Payment Date plus 2.00% per annum and the denominator of which is (x)
if the relevant Certificate Rate is to be calculated on the basis of the actual
number of days elapsed and a 360-day year, 360 divided by the actual number of
days from and including the immediately preceding Distribution Date to but
excluding the current Distribution Date or (y) if the relevant Certificate Rate
is to be calculated on the basis of a 360-day year of twelve 30-day months,
twelve, (iv) if on the immediately preceding Distribution Date a Reimbursed
Loss Event occurred, the sum of (A) the Reimbursed Loss Interest for each
previous Distribution Date since the last Distribution Date on which the
aggregate amount of unreimbursed Investor Losses for such Class equaled zero,
(B) the Reimbursed Loss Interest Gross-up Amount for each previous Distribution
Date since the last Distribution Date on which the aggregate amount of
unreimbursed Investor Losses for such Class equaled zero and (C) for any
Distribution Date following the Distribution Date immediately following the
Reimbursed Loss Event to and including the next Payment Date, the Reimbursed
Loss Interest Gross-up Amount for such Distribution Date and (v) the sum of all
accrued but unpaid Class Monthly Servicing Fees; provided, that, if an increase
in the Series Investor Interest has been made pursuant to Section 32 on or
prior to such Distribution Date but during the calendar month in which such
Distribution Date occurred, the Class Invested Amount for each Class for such
Distribution Date shall be deemed to exclude the portion of the Class Invested
Amount represented by Investor Certificates issued in connection with such
increase; and provided, further, that if an increase in the Series Investor
Interest has been made pursuant to Section 32 during the prior calendar month,
the amount in clause (i) above shall be deemed to include the portion of the
Class Invested Amount represented by Investor Certificates issued as part of
such increase as if such increase had taken effect on such prior Distribution
Date (or, in the case of the first Distribution Date, on the Series Closing
Date).

10

 

     “Class Required Amount Shortfall” with respect to any Class on any
Distribution Date, shall have the meaning set forth in Section 9.

     “Class Subordinated Payment” shall mean, if there is a Subordinate Class
with respect to Class A, with respect to any Distribution Date, the amount, if
any, withheld from Class B Available Collections and paid to or for the benefit
of the Class A Certificateholders pursuant to Section 9 on such Distribution
Date.

     “Class Weighted Average Certificate Rate,” if applicable, shall mean, for
any Class composed of two or more Subclasses, for any Distribution Date, the
percentage equivalent of a fraction the numerator of which is the sum of, for
each Subclass of such Class, the product of the Class Invested Amount for such
Subclass and the Certificate Rate for such Subclass for such Distribution Date,
and the denominator of which is the Class Invested Amount for such Class.

     “Class Yield Collections” shall mean, with respect to any Class, with
respect to any day or any Distribution Date, as applicable, an amount equal to
the product of the Class Yield Percentage for such Class and the amount of
Series Yield Collections for such day or the related Due Period, as applicable.

     “Class Yield Percentage” shall mean, with respect to any Class on any
Distribution Date (i) during the Revolving Period and the Accumulation Period
or the Controlled Liquidation Period, as applicable, and, provided that an
Effective Alternative Credit Support Election has been made, during the Early
Accumulation Period or the Amortization Period, the percentage equivalent of a
fraction the numerator of which shall be the Class Investor Interest for such
Class and the denominator of which shall be the Series Investor Interest, in
each case as of the first day of the related Due Period; or (ii) during the
Early Accumulation Period or the Amortization Period, provided that an
Effective Alternative Credit Support Election has not been made, the percentage
equivalent of a fraction the numerator of which shall be the amount of the
Class Investor Interest on the last day of the Due Period prior to the
occurrence of an Early Accumulation Event or Amortization Event and the
denominator of which shall be the amount of the Series Investor Interest on the
last day of the Due Period prior to the occurrence of an Early Accumulation
Event or Amortization Event.

     “Commercial Paper Determination Date,” if applicable, shall have the
meaning set forth in the Series Term Sheet.

     “Commercial Paper Rate,” if applicable, shall mean, with respect to any
Commercial Paper Determination Date, the rate equal to the Money Market Yield
on such Commercial Paper Determination Date of the rate for commercial paper
having a maturity of 30 days as published by the Board of Governors of the
Federal Reserve System in “Statistical Release H.15 (519), Selected Interest
Rates,” or any successor publication, under the heading “Commercial Paper.” In
the event that such rate is not published on such date, then the Commercial
Paper Rate will be the Money Market Yield on such date of the rate for
Commercial Paper having a maturity of 30 days as published by the Federal
Reserve Bank of New York in the daily statistical release “Composite 3:30 p.m.
Quotations for U.S. Government Securities” (“Composite Quotations”) under the
heading “Commercial Paper.” If on such date the rate for commercial paper is
not yet

11

 

published in either H.15 (519) or Composite Quotations, the Commercial
Paper Rate for such date shall be calculated by the Trustee and shall be the
Money Market Yield of the arithmetic mean (rounded to the nearest one-hundredth
of a percent, with five hundred one-thousandths of a
percent rounded upward) of the offered rates, as of 11:00 a.m., New York
City time, of three leading dealers of commercial paper in New York City
selected by the Trustee on such date, for commercial paper having a maturity of
30 days placed for an industrial issuer whose bond rating is “AA” or the
equivalent, from either Rating Agency. In the event that such rates are not
available on such date, then the Commercial Paper Rate shall be the Money
Market Yield of the rate for commercial paper so provided in a comparable
source. The Commercial Paper Rate shall be determined by the Trustee.

     “Controlled Accumulation Amount,” if applicable, with respect to any
Distribution Date related to the Accumulation Period shall mean an amount equal
to the sum of the Accumulation Amount and any existing Deficit Accumulation
Amount; provided, however, that the Controlled Accumulation Amount shall not be
less than zero and through the Class Expected Final Payment Date or Class Final
Maturity Date, as applicable, with respect to each Class in turn, beginning
with Class A, shall not exceed an amount equal to the Class Investor Interest
for such Class.

     “Controlled Liquidation Amount,” if applicable, with respect to any
Distribution Date related to the Controlled Liquidation Period, the
Accumulation Period or the Early Accumulation Period shall mean, if applicable,
an amount equal to the sum of the Liquidation Amount and any existing Deficit
Liquidation Amount; provided, however, that the Controlled Liquidation Amount
shall not be less than zero and shall not exceed an amount equal to the Series
Invested Amount.

     “Controlled Liquidation Period,” if applicable, shall have the meaning set
forth in the Series Term Sheet.

     “Credit Enhancement” shall mean any credit enhancement obtained by the
Master Servicer in accordance with Section 11.

     “Credit Enhancement Account,” if applicable, shall have the meaning set
forth in Section 8.

     “Credit Enhancement Agreement” shall mean the Agreement among the Sellers,
the Master Servicer, the Trustee and the Credit Enhancement Provider with
respect to the Credit Enhancement.

     “Credit Enhancement Drawing” shall mean any drawing made under the Credit
Enhancement.

     “Credit Enhancement Fee” shall mean, on any Distribution Date, the sum of
all fees and interest payable to the Credit Enhancement Provider or the Trustee
as administrator of the Credit Enhancement for the related Due Period pursuant
to the Credit Enhancement Agreement.

     “Credit Enhancement Provider” shall have the meaning set forth in the
Series Term Sheet.

12

 

     “Deficit Accumulation Amount” shall mean, with respect to the first
Distribution Date of the Accumulation Period, zero, and with respect to any
other Distribution Date of the
Accumulation Period, the amount, if any, by which the amount deposited
into the Series Principal Funding Account on the preceding Distribution Date is
less than the Controlled Accumulation Amount for such preceding Distribution
Date.

     “Deficit Liquidation Amount” shall mean, with respect to the first
Distribution Date relating to the Due Period commencing on the Principal
Commencement Date, zero, and with respect to any subsequent Distribution Date,
the amount, if any, by which the amount of Certificate Principal paid to the
Investor Certificateholders on the preceding Distribution Date is less than the
Controlled Liquidation Amount for such preceding Distribution Date.

     “Distribution Date” shall have the meaning set forth in the Series Term
Sheet.

     “Dollars” or “U.S. $” or “$” shall mean the lawful currency of the United
States of America.

     “Drawing Date” shall mean the first Business Day preceding each
Distribution Date.

     “Early Accumulation Commencement Date,” if applicable, shall mean the date
on which an Early Accumulation Event is deemed to occur.

     “Early Accumulation Event,” if applicable, shall mean any event specified
in Section 21 hereof.

     “Early Accumulation Period,” if applicable, shall have the meaning set
forth in the Series Term Sheet.

     “Effective Alternative Credit Support Election” shall have the meaning
specified in Section 12.

     “Estimated Investment Shortfall,” if applicable, shall have the meaning
set forth in the Series Term Sheet.

     “Estimated Principal Distribution Amount,” if applicable, shall mean, with
respect to any date of determination during the Early Accumulation Period, an
amount equal to the Series Principal Collections for the prior Distribution
Date; provided, however, that such amount shall not exceed the Series Investor
Interest as of such prior Distribution Date.

     “Estimated Yield,” if applicable, shall have the meaning specified in the
Series Term Sheet.

     “Excess Income” on any Distribution Date shall mean an amount equal to the
excess, if any, of (a) interest and other income (net of investment expenses)
on such Distribution Date with respect to the funds on deposit in the Series
Principal Funding Account during the related Interest Period over (b) the
amount on deposit in the Series Principal Funding Account in respect of
Certificate Principal during such Interest Period multiplied by a fraction, the
numerator of

13

 

which is the Certificate Rate or the Class Weighted Average
Certificate Rate, as applicable, for the Class for whose benefit the amounts on
deposit in the Series Principal Funding Account are
held during such Interest Period and the denominator of which is (x) if
the relevant Certificate Rate is to be calculated on the basis of the actual
number of days elapsed and a 360-day year, 360 divided by the actual number of
days from and including the immediately preceding Distribution Date to but
excluding the current Distribution Date or (y) if the relevant Certificate Rate
is to be calculated on the basis of a 360-day year of twelve 30-day months,
twelve.

     “Fixed Principal Allocation Event” shall mean the earliest of (a) the
beginning of the Due Period immediately following the Due Period related to the
first Distribution Date during the Controlled Liquidation Period or the
Accumulation Period, as applicable, with respect to the Series established
hereby on which the Series Available Principal Amount is less than zero; (b)
the date on which an Early Accumulation Event or an Amortization Event with
respect to the Series established hereby occurs; and (c) a date selected by the
Master Servicer, if any. If the Master Servicer establishes a date for a Fixed
Principal Allocation Event pursuant to clause (c) of the preceding sentence,
the Master Servicer shall provide notification of such date to Discover Bank on
behalf of the Holder of the Seller Certificate, the Trustee, the Credit
Enhancement Provider and the Rating Agencies no later than two Business Days
prior to such date.

     “Fully Funded Date,” if applicable, shall mean the first Distribution Date
on which the amount of funds on deposit in the Series Principal Funding Account
(after giving effect to all deposits made on such date pursuant to Section 9)
equals the Series Invested Amount for such Distribution Date (prior to any
payments of principal on such date pursuant to Section 10); provided, however,
that the Fully Funded Date shall only occur during the Early Accumulation
Period.

     “Funded Credit Enhancement” shall mean any Credit Enhancement that
consists of funds on deposit in one or more segregated trust accounts in the
corporate trust department of an office or branch of the Trustee or a Qualified
Institution for the benefit of the Investor Certificateholders of the Series
established hereby, including, without limitation, a reserve account or a cash
collateral account.

     “Group Available Principal Amount” shall mean, with respect to each
Distribution Date, the amount remaining on deposit in the Group Principal
Collections Reallocation Account on such Distribution Date after all
withdrawals have been made from such account for the benefit of any Series in
the same Group as the Series established hereby (including the Series
established hereby), but before such amount is withdrawn from the Group
Principal Collections Reallocation Account and deposited into the Collections
Account pursuant to Section 9(b)(39)).

     “Group Buffer Amount,” if applicable, shall have the meaning set forth in
the Series Term Sheet.

     “Group Excess Spread” shall mean, for any Distribution Date, the sum of
the Series Excess Spreads for each Series (including the Series established
hereby) that is a member of the same Group as the Series established hereby, in
each case for such Distribution Date.

14

 

     “Group Interchange Reallocation Account” shall have the meaning specified
in Section 8.

     “Group Finance Charge Collections Reallocation Account” shall have the
meaning specified in Section 8.

     “Group Principal Allocation Event” shall mean the first Distribution Date,
if any, on which (i) the sum of the amount of Series Principal Collections less
the amount of Series Yield Collections for each Series that is a member of the
same Group as the Series established hereby (including the Series established
hereby) that is not in its Early Accumulation Period or its Amortization Period
is less than (ii) the Group Required Principal Amount for such Distribution
Date.

     “Group Principal Collections Reallocation Account” shall have the meaning
specified in Section 8.

     “Group Required Principal Amount” shall mean, with respect to the Group of
which the Series established hereby is a member, for any Distribution Date, the
Series Required Principal Amount for such Distribution Date plus, for each
Series that is a member of such Group, the Series Required Principal Amount for
such Series for such Distribution Date.

     “Increased Credit Enhancement Amount” shall have the meaning specified in
Section 32.

     “Increased Issuance Subordinated Amount” shall mean an amount equal to the
product of (x) the face amount of Investor Certificates being issued in an
increase in the Series Investor Interest pursuant to Section 32 and (y) the
Initial Subordinated Amount (plus, following a Supplemental Credit Enhancement
Event, the Supplemental Subordinated Amount, plus, following an Effective
Alternative Credit Support Election, the Additional Subordinated Amount, as
applicable) divided by the Series Initial Investor Interest (without giving
effect to such increase).

     “Initial Credit Enhancement” shall mean the Credit Enhancement first
obtained by the Master Servicer pursuant to Section 11.

     “Initial Subordinated Amount,” if applicable, shall have the meaning set
forth in the Series Term Sheet.

     “Interchange Series” shall mean each Series that indicates in its
applicable Series Term Sheet that it is an Interchange Series.

     “Interchange Series Shortfall” shall mean, for any Interchange Series, the
sum of (i) the Class Required Amount Shortfall for each Class, (ii) the Class
Cumulative Investor Charged-Off Amount for each Class and (iii) the amount by
which the Total Available Credit Enhancement Amount is less than the Total
Maximum Credit Enhancement Amount, in each case after giving effect to all
withdrawals from the Group Finance Charge Collections Reallocation Account
pursuant to Section 9 hereof.

15

 

     “Interchange Subgroup Allocable Group Excess Spread” shall mean, if the
Group Excess Spread is greater than or equal to zero, the product of the Group
Excess Spread and the Interchange Subgroup Excess Allocation Percentage; and if
the Group Excess Spread is less than
zero, the product of the Group Excess Spread and the Interchange Subgroup
Shortfall Allocation Percentage.

     “Interchange Subgroup Buffer Amount” if applicable, shall have the meaning
set forth in the Series Term Sheet.

     “Interchange Subgroup Excess Allocation Percentage” shall mean a ratio,
the numerator of which is the sum of the Series Investor Interest for each
Interchange Series that is a member of the same Group as the Series established
hereby (including the Series established hereby); and the denominator of which
is the sum of the Series Investor Interests for each Series that is a member of
the same Group as the Series established hereby (including each Interchange
Series and the Series established hereby).

     “Interchange Subgroup Excess Spread” shall mean, for any Distribution
Date, the sum of (x) all amounts deposited into the Group Interchange
Reallocation Account for all Interchange Series and (y) the Interchange
Subgroup Allocable Group Excess Spread.

     “Interchange Subgroup Shortfall Allocation Percentage” shall mean a ratio,
the numerator of which is the sum of the Series Excess Spread for each
Interchange Series that is a member of the same Group as the Series established
hereby (including, if applicable, the Series established hereby) for which the
Series Excess Spread is less than zero; and the denominator of which is the sum
of the Series Excess Spread for each Series that is a member of the same Group
as the Series established hereby (including, if applicable, each Interchange
Series and the Series established hereby) for which the Series Excess Spread is
less than zero.

     “Interest Accrual Period” shall mean, with respect to any Interest Payment
Date, the period from and including the Interest Payment Date immediately
preceding such Interest Payment Date (or, in the case of the first Interest
Payment Date, from and including the Series Closing Date) to but excluding such
Interest Payment Date.

     “Interest Calculation Date,” if applicable, shall have the meaning set
forth in the Series Term Sheet.

     “Interest Payment Date” shall mean each date designated as such in the
Series Term Sheet.

     “Interest Period” shall mean each period from and including a given
Distribution Date to but excluding the next following Distribution Date
commencing with the earlier to occur of (i) the first Distribution Date of the
Early Accumulation Period or (ii) the first Distribution Date of the
Accumulation Period.

     “Interest Rate Cap Provider,” if any, shall mean the entity listed as the
Interest Rate Cap Provider in the Series Term Sheet, in its capacity as obligor
under the Class Interest Rate Caps, or if any Replacement Class Interest Rate
Caps or Qualified Substitute Cap Arrangements are

16

 

obtained pursuant to Section
15, the obligor with respect to such Replacement Class Interest Rate Caps or
Qualified Substitute Cap Arrangements.

     “Interest Rate Swap Account” shall have the meaning specified in Section
8.

     “Interest Rate Swap Counterparty,” if applicable, shall have the meaning
set forth in the Series Term Sheet.

     “Investor Accounts” shall mean, in addition to Investor Accounts
established pursuant to the Pooling and Servicing Agreement, the Series
Collections Account, the Series Principal Collections Account, the Series
Principal Funding Account, the Series Interest Funding Account, the Series
Distribution Account, the Group Finance Charge Collections Reallocation
Account, the Group Principal Collections Reallocation Account and the Group
Interchange Reallocation Account.

     “Investor Charge-Off Loss” shall have the meaning set forth in Section
13(b).

     “Investor Loss” with respect to each Class, shall mean (i) the amount of
any reduction in the Class Invested Amount with respect to such Class pursuant
to Section 13(b), (ii) in the event the Receivables are sold pursuant to
Section 12.01(b) of the Pooling and Servicing Agreement, the amount, if any, by
which the Class Investor Interest (determined immediately prior to such sale)
exceeds the product of (x) a fraction, the numerator of which is the Class
Investor Interest and the denominator of which is the Aggregate Investor
Interest and (y) the net proceeds of such sale and (iii) in the event
Receivables are sold pursuant to Section 12.02(c) of the Pooling and Servicing
Agreement, the amount, if any, by which the Class Investor Interest (determined
immediately prior to such sale) exceeds the product of (x) a fraction, the
numerator of which is the Class Investor Interest and the denominator of which
is the Series Investor Interest and (y) the net proceeds of such sale.

     “Investor Servicing Fee” shall mean, with respect to any Distribution
Date, an amount equal to the product of the Investor Servicing Fee Percentage
and the Series Investor Interest on the first day of the Due Period related to
such Distribution Date (or in the case of the first Distribution Date for the
Series established hereby, the Series Initial Investor Interest). For purposes
of this definition, the Series Investor Interest on the first day of any Due
Period in which an increase in the Series Investor Interest pursuant to Section
32 has occurred shall include the Series Investor Interest of all Investor
Certificates issued during such Due Period.

     “Investor Servicing Fee Percentage” shall mean the percentage identified
as such in the Series Term Sheet.

     “LIBOR,” if applicable, shall mean, with respect to any LIBOR
Determination Date, the rate for deposits in United States dollars with a
duration comparable to the relevant Interest Accrual Period which appears on
Telerate Page 3750 as of 11:00 a.m., London time, on such day. If such rate
does not appear on Telerate Page 3750, the rate will be determined by the
Trustee on the basis of the rates at which deposits in United States dollars
are offered by major banks in the London interbank market, selected by the
Trustee, at approximately 11:00 a.m., London time, on such day to prime banks
in the London interbank market with a duration

17

 

comparable to the relevant
Interest Accrual Period commencing on that day. The Trustee will request the
principal London office of at least four banks to provide a quotation of its
rate. If at
least two such quotations are provided, the rate will be the arithmetic
mean of the quotations. If fewer than two quotations are provided as
requested, the rate for that day will be the arithmetic mean of the rates
quoted by four major banks in New York City, selected by the Trustee, at
approximately 11:00 a.m., New York City time, on that day for loans in United
States dollars to leading European banks with a duration comparable to the
relevant Interest Accrual Period commencing on that day.

     “LIBOR Business Day,” if applicable, shall mean a day other than a
Saturday or a Sunday on which banking institutions in the City of London,
England and in New York, New York are not required or authorized by law to be
closed.

     “LIBOR Determination Date,” if applicable, shall have the meaning set
forth in the Series Term Sheet.

     “Liquidation Amount,” if applicable, shall have the meaning set forth in
the Series Term Sheet.

     “Maximum Class A Credit Enhancement Amount,” if applicable, shall have the
meaning set forth in the Series Term Sheet.

     “Maximum Class B Credit Enhancement Amount,” if applicable, shall have the
meaning set forth in the Series Term Sheet.

     “Maximum Shared Credit Enhancement Amount,” if applicable, shall have the
meaning set forth in the Series Term Sheet.

     “Money Market Yield” shall mean a yield (expressed as a percentage rounded
to the nearest one-hundredth of a percent, with five hundred one-thousandths of
a percent rounded upwards) calculated in accordance with the following formula:

	 	 	 	 	 	 	 	 	 	 	 
	Money Market Yield

	 	=
	 	D x 360
	 	x
	 	 	100	 
	

	 	 	 	
 	 	 	 	 	 	 
	

	 	 	 	360 – (D x M)	 	 	 	 	 	 

where “D” refers to the per annum rate for commercial paper quoted on a bank
discount basis and expressed as a decimal, and “M” refers to the actual number
of days in the related Interest Accrual Period.

     “Monthly Amortization Rate,” if applicable, shall have the meaning set
forth in the Series Term Sheet.

     “Monthly Swap Deposit,” if applicable, shall have the meaning set forth in
the Series Term Sheet.

     “Net Swap Payment,” if applicable, shall mean, with respect to any Class
that is subject to a Class Interest Rate Swap, (x) on any Interest Payment Date
prior to the early termination of the

18

 

Class Interest Rate Swap, the positive
difference, if any, between (i) the amount owed by the Trust to the Interest
Rate Swap Counterparty under the Class Interest Rate Swap on such Interest
Payment Date and (ii) the amount owed by the Interest Rate Swap
Counterparty to the Trust under the Class Interest Rate Swap on such Interest
Payment Date, and (y) on any Distribution Date in any calendar month following
the calendar month in which an early termination of the Class Interest Rate
Swap occurred, the unpaid portion of any termination payment owed by the Trust
to the Interest Rate Swap Counterparty in accordance with the terms of the
Class Interest Rate Swap.

     “Net Swap Receipt,” if applicable, shall mean, with respect to any Class
that is subject to a Class Interest Rate Swap, (x) on any Interest Payment Date
prior to the early termination of the Class Interest Rate Swap, the positive
difference, if any, between (i) the amount owed by the Interest Rate Swap
Counterparty to the Trust under the Class Interest Rate Swap on such Interest
Payment Date and (ii) the amount owed by the Trust to the Interest Rate Swap
Counterparty under the Class Interest Rate Swap on such Interest Payment Date,
and (y) on any Distribution Date following an early termination of the Class
Interest Rate Swap, the amount of any termination payment paid by the Interest
Rate Swap Counterparty on or prior to such Distribution Date and after the
previous Distribution Date.

     “Non-U.S. Holder,” shall mean any person who, as to the United States, is
a non-resident alien individual, a foreign corporation, a foreign estate, a
foreign trust or a foreign partnership, as such terms are defined in the
Internal Revenue Code of 1986, as amended.

     “Payment Date” shall mean any Interest Payment Date and any Class Expected
Final Payment Date.

     “Portfolio Yield” shall mean, 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, (iii) the amount of Series Interchange for
each Series then outstanding for such Due Period and (iv) 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.

     “Prepayment Calculation Table,” if applicable, shall have the meaning set
forth in the Series Term Sheet.

     “Prepayment Determination Date,” if applicable, shall have the meaning set
forth in the Series Term Sheet.

     “Principal Commencement Date” shall mean the date designated as such in
the Series Term Sheet.

     “Principal Distribution Amount” shall mean, with respect to any
Distribution Date occurring in (i) the Accumulation Period, the Controlled
Accumulation Amount, (ii) the Controlled Liquidation Period, the Controlled
Liquidation Amount, (iii) the Early Accumulation

19

 

Period, the Series Investor
Interest, or (iv) in the Amortization Period, the Series Investor Interest.

     “Principal Distribution Amount Shortfall” with respect to any Distribution
Date in the Accumulation Period, the Controlled Liquidation Period, the Early
Accumulation Period or the Amortization Period, as applicable, shall have the
meaning set forth in Section 9.

     “Principal Payment Date” shall mean, if applicable, each date designated
as such in the Series Term Sheet.

     “Qualified Credit Enhancement Provider” shall mean, (i) if the Credit
Enhancement is not Funded Credit Enhancement, an institution that meets the
Qualified Credit Enhancement Provider Rating Requirements established by each
Rating Agency, which requirements are set forth in the Series Term Sheet if the
Initial Credit Enhancement is not Funded Credit Enhancement, or (ii) if the
Initial Credit Enhancement is Funded Credit Enhancement, an institution that
meets the Qualified Credit Enhancement Provider Rating Requirements established
by each Rating Agency, which requirements will be established by the Rating
Agencies at the time, if any, that the Master Servicer elects to replace the
Initial Credit Enhancement with Credit Enhancement that is not Funded Credit
Enhancement (or, in either case, such lesser requirements as the applicable
Rating Agency shall allow); provided, however, that in the event the Master
Servicer elects to obtain Credit Enhancement that is not Funded Credit
Enhancement and is unable after the exercise of its best efforts to obtain from
a Qualified Credit Enhancement Provider as so defined such Credit Enhancement
with respect to which the representations set forth in Section 11(a) shall be
true, the term “Qualified Credit Enhancement Provider” shall mean a Person who
satisfies such requirements except that its long-term unsecured debt rating by
any nationally recognized rating agency may be lower than that set forth in
such requirements, but shall not be lower than the highest credit rating of any
Person who otherwise satisfies said requirements and from whom the Master
Servicer is able to obtain such a Credit Enhancement.

     “Qualified Substitute Cap Arrangement,” if any, shall have the meaning
specified in Section 15.

     “Reimbursed Loss Event” shall mean, with respect to each Class for any
Distribution Date, the occurrence of the reimbursement of Investor Losses
pursuant to Section 13(c) with respect to such Class on such Distribution Date
such that the aggregate amount of unreimbursed Investor Losses for such Class
is reduced to zero.

     “Reimbursed Loss Interest” shall mean, for any Class for any Distribution
Date, an amount equal to the product of (i) the aggregate amount of Investor
Losses that have not been reimbursed pursuant to Section 13(c) prior to the
commencement of the related Due Period and (ii) a fraction the numerator of
which is the Certificate Rate or the Class Weighted Average Certificate Rate,
as applicable, for such Class for the related Due Period and the denominator of
which is (x) if the relevant Certificate Rate is to be calculated on the basis
of the actual number of days elapsed and a 360-day year, (A) if each Interest
Payment Date is also a Distribution Date, 360 divided by the actual number of
days from and including the immediately preceding

20

 

Distribution Date to but
excluding the current Distribution Date or (B) if each Interest Payment Date is
not also a Distribution Date, 360 divided by the actual number of days from and
including the Interest Calculation Date in the preceding calendar month to but
excluding the
Interest Calculation Date following the current Distribution Date or (y)
if the relevant Certificate Rate is to be calculated on the basis of a 360-day
year of twelve 30-day months, twelve.

     “Reimbursed Loss Interest Gross-up Amount” shall mean, for any Class for
any Distribution Date, an amount equal to the product of (i) the positive
difference, if any, between the Class Alternative Deficiency Amount for the
immediately preceding Payment Date and the actual Class Deficiency Amount for
the immediately preceding Payment Date and (ii) a fraction the numerator of
which is the Certificate Rate or the Class Weighted Average Certificate Rate,
as applicable, for such Class for the related Due Period and the denominator of
which is (x) if the relevant Certificate Rate is to be calculated on the basis
of the actual number of days elapsed and a 360-day year, (A) if each Interest
Payment Date is also a Distribution Date, 360 divided by the actual number of
days from and including the immediately preceding Distribution Date to but
excluding the current Distribution Date or (B) if each Interest Payment Date is
not also a Distribution Date, 360 divided by the actual number of days from and
including the Interest Calculation Date in the preceding calendar month to but
excluding the Interest Calculation Date following the current Distribution Date
or (y) if the relevant Certificate Rate is to be calculated on the basis of a
360-day year of twelve 30-day months, twelve.

     “Replacement Class Interest Rate Cap,” if any, shall mean an interest rate
cap agreement or other interest rate protection having substantially the same
terms and conditions as the Class Interest Rate Cap that it replaces, and
otherwise satisfying the conditions set forth in Section 15.

     “Required Daily Deposit” shall mean, if applicable, with respect to each
Servicer, an amount equal to:

	 	(a)	 	during the Revolving Period and the Accumulation
Period or the Controlled Liquidation Period, as applicable,
the sum of
	 
	 	 	 	(x)(1) during the Revolving Period, an amount equal to the
sum of (i) the sum of the Class Finance Charge Collections
and the Class Yield Collections for each Class for such day
and (ii) the amount of Class B Principal Collections for such
day; minus the sum of the Class B Yield Collections for such
day and all accrued but unfunded Class A Monthly Servicing
Fees; or
	 
	 	 	 	(2) during the Accumulation Period or the Controlled
Liquidation Period, as applicable, an amount equal to the sum
of (i) the amount set forth in clause (1) above and (ii)(A)
until the aggregate amount deposited during such Due Period
pursuant to this clause (ii) equals the Controlled
Accumulation Amount or the Controlled Liquidation Amount, as
applicable, for the related Distribution Date, the amount of
Class A Principal Collections for such day less the amount of
Class A Yield Collections for such day and (B) thereafter,
zero provided, however, that

21

 

	 	 	 	with respect to any day on which
the Controlled Accumulation Amount or the Controlled
Liquidation Amount, as applicable, for the related
Distribution Date can not be determined, the aggregate amount
to be
deposited for such Due Period shall be the Controlled
Accumulation Amount or the Controlled Liquidation Amount, as
applicable, for the Distribution Date preceding the related
Distribution Date; plus
	 
	 	 	 	(y) the positive difference, if any, between

     (1) the product of the Class A Percentage for the
related Distribution Date with respect to Principal
Collections and the amount of Principal Collections received
during the Due Period through and including such day, less
the product of the Class A Yield Percentage and the amount of
Series Yield Collections received during the Due Period
through and including such day, and less any amounts
deposited into the Collections Account during the Due Period
through and including such day pursuant to clause
(x)(2)(ii)(A) above or previously deposited during such Due
Period pursuant to this clause (y) and

     (2) the positive difference, if any, between (i) an
amount equal to (A) the aggregate amount of Principal
Receivables in the Trust as of such day multiplied by a
fraction the numerator of which shall be the Series Initial
Investor Interest and the denominator of which shall be sum
of the Series Initial Investor Interest for each Series then
outstanding minus (B) the Series Investor Interest as of the
end of the immediately preceding Due Period (after giving
effect to payments of principal made or to be made on the
related Distribution Date) and (ii) an amount equal to the
positive difference between the Series Minimum Principal
Receivables Balance and the Series Investor Interest;
provided, however, that any calculation under this paragraph
(y) that results in a number less than zero shall be treated
as zero; or

	 	(b)	 	during the Early Accumulation Period and the
Amortization Period, an amount equal to the sum of the Series
Finance Charge Collections and the Series Principal
Collections for the Series established hereby for such day
minus all accrued but unfunded Class A Monthly Servicing Fees;
and

multiplied, in each case, by a fraction the numerator of which shall be the
aggregate amount of Principal Receivables in the Trust that are serviced by
such Servicer and the denominator of which shall be the aggregate amount of
Principal Receivables in the Trust; provided, however, that if any Servicer is
unable to make the calculations set forth above on any day, the Required Daily
Deposit for such Servicer for such day shall be equal to all the Collections
received by such Servicer on such day.

     Notwithstanding the foregoing, (i) upon the occurrence of any circumstance
described in Section 10.02(d), (e) or (f) of the Pooling and Servicing
Agreement with respect to any Servicer,

22

 

the Required Daily Deposit for any
Series then outstanding shall equal the amount described in paragraph (b) above
for such Servicer and (ii) a Servicer may use Collections received by it for
its own account prior to the applicable Distribution Date as permitted by
Sections 3.03(b) and 4.03(b) of the Pooling and Servicing Agreement.

     “Revolving Period” shall have the meaning set forth in the Series Term
Sheet.

     “Series Additional Funds,” if applicable, shall mean, for any Distribution
Date, the Additional Funds deposited into the Series Collections Account for
the Series established hereby on such Distribution Date.

     “Series Additional Investor Funds,” if applicable, shall mean, for any
Distribution Date, the Series Additional Funds, if any, that are not applied to
payment of the Supplemental Servicing Fee pursuant to Section 14.

     “Series Available Principal Amount” shall mean, for any Distribution Date,
if a Group Principal Allocation Event has occurred, an amount calculated as
follows: For each Series that is a member of the same Group as the Series
established hereby (including the Series established hereby), seriatim,
beginning with the Series with the largest Series Investor Interest for such
Distribution Date (and if more than one Series has the same Series Investor
Interest on such Distribution Date, beginning with whichever of such Series has
the longest time remaining until its latest Class Expected Final Payment Date
or, if none, the last scheduled day of its Accumulation Period (assuming that
no Early Accumulation Event or Amortization Event occurs with respect to such
Series)), an amount equal to (x) the Group Available Principal Amount less (y)
the difference between the Series Required Principal Amount, if any, and the
Principal Distribution Amount for such Series for such Distribution Date, if
any, that was funded on such Distribution Date (including any portion of such
amount that was funded by amounts withdrawn from the Group Principal
Collections Reallocation Account pursuant to Section 9(b)(21), Section
9(b)(38), 9(b)(39) or a substantially similar provision). For purposes of
calculating the Series Available Principal Amount for each other such Series,
the Group Available Principal Amount shall be reduced by the amount calculated
in clause (y) for the prior Series for which the Series Available Principal
Amount was calculated.

     “Series Buffer Amount,” if applicable, shall have the meaning set forth in
the Series Term Sheet.

     “Series Closing Date” shall mean the date designated as such in the Series
Term Sheet.

     “Series Collections Account” shall have the meaning specified in Section
8.

     “Series Cut-Off Date” shall mean the date designated as such in the Series
Term Sheet.

     “Series Distribution Account” shall have the meaning specified in Section
8.

     “Series Excess Servicing” shall mean, as of any Distribution Date, the sum
of the amounts of Class Excess Servicing for each Class of the Series
established hereby, as such amount is modified pursuant to Section 9.

23

 

     “Series Excess Spread” shall mean, for any Distribution Date, an amount
equal to (a) the sum of Series Finance Charge Collections, Series Yield
Collections, Series Additional Investor Funds, Series Interchange and any Class
Investment Income for any Class of the Series established hereby minus (b) the
sum of (i) with respect to each Class, the product of (A) the Class Invested
Amount for such Class for such Distribution Date and (B) a fraction, the
numerator of which is the Certificate Rate for that Class, and the denominator
of which is (x) if the relevant Certificate Rate is to be calculated on the
basis of the actual number of days elapsed and a 360-day year, 360 divided by
the actual number of days from and including the immediately preceding
Distribution Date (or in the case of the first Distribution Date, from and
including the Series Closing Date) to but excluding the current Distribution
Date or (y) if the relevant Certificate Rate is to be calculated on the basis
of a 360-day year of twelve 30-day months, twelve (or in the case of the first
Distribution Date, 360 divided by the number of days from and including the
Series Closing Date to but excluding the current Distribution Date, assuming
30-day months), (ii) the Investor Servicing Fee, (iii) the product of the
Series Percentage with respect to the Charged-Off Amount and the Charged-Off
Amount, and (iv) the Credit Enhancement Fee, in each case for such Distribution
Date; provided, however, that solely for purposes of determining the Group
Excess Spread and the Interchange Subgroup Shortfall Allocation Percentage for
this Series or any other Series, Series Excess Spread shall be the amount
determined as set forth above minus (i) any amount paid or deposited on such
date by the Trust under the Class Interest Rate Swap and (ii) for so long as
any Series that is not an Interchange Series is outstanding and the Series
Excess Spread for such series is positive without giving effect to clause (ii)
of this proviso, the lesser of Series Interchange or the amount determined as
the Series Excess Spread without giving effect to this proviso; provided, that
Series Excess Spread, for purposes of determining the Group Excess Spread and
the Interchange Subgroup Shortfall Allocation Percentage, shall not be reduced
below zero as a result of this proviso, if any, for such Distribution Date; and
provided, that if an increase in the Series Investor Interest has been made
pursuant to Section 32 on or prior to such Distribution Date but during the
calendar month in which such Distribution Date occurred, the Class Invested
Amount for each Class for such Distribution Date shall be deemed to exclude the
portion of the Class Invested Amount represented by Investor Certificates
issued in connection with such increase; and provided, further, that if an
increase in the Series Investor Interest has been made pursuant to Section 32
during the prior calendar month on a day other than the Distribution Date in
such prior calendar month, the amount in clause (i) above shall be deemed to
include the portion of the Class Invested Amount represented by Investor
Certificates issued as part of such increase as if such increase had taken
effect on such prior Distribution Date.

     “Series Finance Charge Collections” shall mean, with respect to any day or
any Distribution Date or Trust Distribution Date, as applicable, the sum of the
amount of Class Finance Charge Collections for each Class for such day or for
the related Due Period, as applicable.

     “Series Initial Investor Interest” shall mean the aggregate face amount of
Investor Certificates authenticated and delivered pursuant to Section 7 and, if
applicable, pursuant to Section 32, as specified in the Series Term Sheet.

24

 

     “Series Interchange” shall mean, with respect to any Distribution Date or
Trust Distribution Date, as applicable, the sum of the amount of Class
Interchange for each Class of this Series for the related Due Period.

     “Series Interest Funding Account” shall have the meaning specified in
Section 8.

     “Series Invested Amount” with respect to any Distribution Date, shall mean
the sum of the Class Invested Amounts for each Class of the Series established
hereby on such Distribution Date.

     “Series Investor Interest” with respect to any Distribution Date, shall
mean the sum of the Class Investor Interests for each Class of the Series
established hereby on such Distribution Date.

     “Series Minimum Principal Receivables Balance” shall mean, with respect to
the Series established hereby, on any date of determination the sum of (A) (i)
if a Fixed Principal Allocation Event has not occurred, the Series Investor
Interest on such date of determination, divided by 0.93, (ii) if a Fixed
Principal Allocation Event has occurred but the Fully Funded Date has not
occurred, the Series Investor Interest as of the date of the occurrence of the
Fixed Principal Allocation Event, divided by 0.93 or (iii) on and after the
Fully Funded Date, if any, zero, and (B) (x) the product of (i) the sum of (1)
the amount on deposit in the Series Principal Funding Account on such date of
determination and (2) for any date of determination during (x) the Early
Accumulation Period, if any, the Estimated Principal Distribution Amount for
the next Distribution Date and (y) for any date of determination during the
Accumulation Period, the amount specified in the Master Servicer’s notice of
its election to commence the Accumulation Period as the Controlled Accumulation
Amount for such Distribution Date, and (ii) a fraction the numerator of which
is the Estimated Investment Shortfall and the denominator of which is the
Estimated Yield, in each case on such date of determination, divided by (y)
0.93; provided, however, that Discover Bank on behalf of the Holder of the
Seller Certificate may, upon 30 days’ prior notice to the Trustee, the Rating
Agencies and the Credit Enhancement Provider, reduce the Series Minimum
Principal Receivables Balance by increasing the divisors set forth above,
subject to the condition that Discover Bank on behalf of the Holder of the
Seller Certificate shall have been notified by the Rating Agencies that such
reduction would not result in the lowering or withdrawal of the rating of any
Class of any Series then outstanding, and provided, further, that the divisors
set forth above may not be increased to more than 0.98.

     “Series Percentage” shall mean, with respect to any specified category,
with respect to any Distribution Date or Trust Distribution Date, as
applicable, the sum of the Class Percentages with respect to such category for
each Class of the Series established hereby on such Distribution Date or Trust
Distribution Date, as applicable.

     “Series Principal Collections” shall mean, with respect to any day or any
Distribution Date or Trust Distribution Date, as applicable, the sum of the
amount of Class Principal Collections for each Class for such day or for the
related Due Period, as applicable.

     “Series Principal Collections Account” shall have the meaning specified in
Section 8.

25

 

     “Series Principal Funding Account” shall mean the Series Principal Funding
Account established pursuant to Section 8. Amounts “on deposit in” the Series
Principal Funding Account shall be deemed to be on deposit for the benefit of
(i) the Class A Certificateholders for the period up to and including the Class
A Expected Final Payment Date or Class A Final Maturity Date, as applicable,
and (ii) if there is a Subordinate Class with respect to Class A, the Class B
Certificateholders for the period beginning immediately after the Class A
Expected Final Payment Date or Class A Final Maturity Date, as applicable, and
ending on the Class B Expected Final Payment Date or Class B Final Maturity
Date, as applicable. Amounts “on deposit in” the Series Principal Funding
Account shall be deemed to include amounts invested in Permitted Investments
pursuant to Section 8 unless the context clearly requires otherwise.

     “Series Required Principal Amount” shall mean, for this Series, with
respect to each Distribution Date of the Controlled Liquidation Period or the
Accumulation Period, as applicable, the product of (x) (i) if the related Due
Period does not occur in February, 1.25 or (ii) if the related Due Period
occurs in February, 1.05, and (y) the Controlled Liquidation Amount or the
Controlled Accumulation Amount, as applicable, for such Distribution Date, and
with respect to each other Series that is a member of the same Group as the
Series established hereby, the amount specified in the Series Supplement for
such Series for such Distribution Date.

     “Series Term Sheet” shall mean the Series Term Sheet setting forth the
terms of the Series of Investor Certificates issued hereby, to which this Annex
is attached.

     “Series Termination Date” shall mean the date designated as such in the
Series Term Sheet.

     “Series Yield Collections” shall mean, with respect to any day or any
Distribution Date, as applicable, an amount equal to the product of the Series
Yield Factor and the amount of Series Principal Collections for such day or the
related Due Period, as applicable.

     “Series Yield Factor” shall mean the number identified as such in the
Series Term Sheet, as such number may be changed from time to time pursuant to
Section 25.

     “Shared Credit Enhancement” shall mean Credit Enhancement available for
the benefit of both the Class A Investor Certificates and the Class B Investor
Certificates.

     “Special Payment Date” shall mean each Distribution Date with respect to
the Amortization Period and the Distribution Date related to each Class
Expected Final Payment Date or Class Final Maturity Date, as applicable.

     “Stated Class A Credit Enhancement Amount” shall mean the “stated amount”
with respect to the Class A Cash Collateral Credit Enhancement, as set forth in
the Series Term Sheet.

     “Stated Class B Credit Enhancement Amount” shall mean the “stated amount”
with respect to the Credit Enhancement that is available solely for the benefit
of the Class B Investor Certificates, as set forth in the Series Term Sheet.

26

 

     “Stated Shared Credit Enhancement Amount,” if applicable, shall mean the
“stated amount” with respect to the shared portion of the Credit Enhancement,
as set forth in the Series Term Sheet.

     “Statement Date” shall mean each date designated as such in the Series
Term Sheet.

     “Subclass” with respect to any Class shall mean, if applicable, each
portion of such Class that has a different Certificate Rate or method of
calculating its Certificate Rate.

     “Subordinate Class” shall mean, with respect to any Class, the Class, if
any, identified by the letter of the alphabet next succeeding the letter
designating such Class (e.g., the Subordinate Class with respect to Class A is
Class B).

     “Subordinate Series” shall mean any Series which is subordinated in right
of payment, in whole or in part, pursuant to the Series Supplement with respect
to such Series, to the Series established hereby.

     “Subseries” shall mean Investor Certificates of a Series that are
identified in the Series Term Sheet as constituting a “Subseries.” If a
Series consists of two or more Subseries, then each provision of the Annex to
this Series Supplement shall be interpreted and applied separately for each
Subseries as if such Subseries were an independent Series, and each reference
to a “Series” and each term beginning with “Series” (except as used in this
definition of Subseries) shall be deemed to be a reference to the applicable
Subseries or the provisions of the applicable Subseries (e.g., as applied in
relation to a specific Subseries, the term “Series Termination Date” shall
refer solely to the Series Termination Date identified in the Series Term Sheet
with respect to that Subseries and the term “Series Principal Funding Account”
shall refer solely to the Series Principal Funding Account established with
respect to that Subseries ), except where the context clearly requires that
such term refers to multiple or other Series of the Trust, in which case such
term shall be interpreted to treat each Subseries as a separate Series of the
Trust. Each Subseries shall be treated as a separate Series for all purposes
of the Pooling and Servicing Agreement and each other Series Supplement issued
with respect to the Discover Card Master Trust I.

     “Supplemental Credit Enhancement Amount,” if applicable, shall have the
meaning set forth in the Series Term Sheet.

     “Supplemental Credit Enhancement Event” shall occur the first time the
long-term debt or deposit rating of Discover Bank or any Additional Seller is
withdrawn or reduced below BBB- by Standard & Poor’s.

     “Supplemental Servicing Fee” shall mean, if applicable, with respect to
any Distribution Date, an amount equal to the product of the Supplemental
Servicing Fee Percentage and the Series Investor Interest on the first day of
the Due Period related to such Distribution Date (or in the case of the first
Distribution Date for the Series established hereby, the Series Investor
Interest on the Series Cut-Off Date).

27

 

     “Supplemental Servicing Fee Percentage,” if applicable, shall mean the
percentage identified as such in the Series Term Sheet.

     “Supplemental Subordinated Amount,” if applicable, shall have the meaning
set forth in the Series Term Sheet.

     “Swap Counterparty Rate,” if applicable, with respect to any Class
Interest Rate Swap, shall have the meaning specified in the Series Term Sheet.

     “Swap Trust Rate,” if applicable, with respect to any Class Interest Rate
Swap, shall have the meaning specified in the Series Term Sheet.

     “Telerate Page 3750,” if applicable, shall mean the display page so
designated on the Bridge Telerate, Inc. (or such other rate as may replace that
page on that service for the purpose of displaying comparable rates or prices).

     “Total Available Credit Enhancement Amount” shall mean, with respect to
the first Distribution Date, the Stated Class B Credit Enhancement Amount plus,
if applicable, the Stated Shared Credit Enhancement Amount, and, on each
Distribution Date thereafter, shall mean the Available Class B Credit
Enhancement Amount plus, if applicable, the Available Shared Credit Enhancement
Amount, in each case after all adjustments thereto on the immediately preceding
Distribution Date, and, in each case, as adjusted pursuant to Section 9 on such
Distribution Date.

     “Total Maximum Credit Enhancement Amount” shall have the meaning set forth
in the Series Term Sheet.

     “United States” or “U.S.” shall mean the United States of America, its
territories and possessions, any State of the United States and the District of
Columbia.

     SECTION 2. Subordination.

     (a) Subordination of Certain Classes. If there is a Subordinate Class
with respect to Class A, the Holders of each Class B Investor Certificate, by
their acceptance of such Investor Certificate, hereby subordinate, for the
benefit of the Holders of Class A Investor Certificates, to the extent and in
the manner set forth in Section 9, all of such Investor Certificateholders’
right, title and interest in and to future distributions due on such Holders’
Investor Certificates, but only to the extent of the Available Subordinated
Amount.

     (b) No Subordination of Series. The Investor Certificates of the Series
established hereby shall not be subordinated in right of payment to any other
Series, whether currently outstanding or to be issued in the future. One or
more other Series, however, may be subordinated in right of payment to the
Series established hereby, although the Sellers shall have no obligation to
issue such a Subordinate Series. If any Subordinate Series is issued, such
Subordinate Series shall be subordinate in right of payment to the Series
established hereby only to the extent set forth in the Series Supplement with
respect to such Subordinate Series.

28

 

     SECTION 3. Representations and Warranties of the Sellers. The
representations and warranties of the Sellers contained in Section 2.04 of the
Pooling and Servicing Agreement and the corresponding sections of any
Assignment are true on and as of the date hereof and/or the date set forth in
the Pooling and Servicing Agreement, as applicable. Each Seller also
represents and warrants to the Trust as of the date hereof that:

     (a) The execution, delivery and performance of this Series Supplement by
such Seller have been duly authorized by all necessary corporate action, do not
require any approval or consent of any governmental agency or authority, do not
and will not conflict with any material provision of the Certificate of
Incorporation or By-Laws of such Seller, do not and will not conflict with, or
result in a breach which would constitute a material default under, any
agreement for borrowed money binding upon or applicable to it or such of its
property which is material to it, or, to the best of such Seller’s knowledge,
any law or governmental regulation or court decree applicable to it or such
material property, and this Series Supplement is the valid, binding and
enforceable obligation of such Seller, except as the same may be limited by
receivership, insolvency, reorganization, moratorium or other laws relating to
the enforcement of creditors’ rights generally or by general equity principles.

     (b) The Pooling and Servicing Agreement creates a valid and enforceable
security interest (as defined in the applicable UCC) which security interest is
prior to all other Liens and is enforceable as such against creditors of and
purchasers from Seller, except as the same may be limited by receivership,
insolvency, reorganization, moratorium or other laws relating to the
enforcement of creditors’ rights generally or by general equity principles.

     (c) The Receivables constitute “accounts” within the meaning of Article 9
of the applicable UCC.

     (d) Each Seller has caused or will have caused, within ten days of the
date of this Series Supplement, the filing of all appropriate financing
statements in the proper filing office in the appropriate jurisdictions under
applicable law in order to perfect the security interest (as defined in the
applicable UCC) in the Receivables conveyed to the Trustee under the Pooling
and Servicing Agreement.

     (e) Other than the sale, transfer, assignment and conveyance of the
Receivables to the Trust and the grant of a security interest therein pursuant
to the Pooling and Servicing Agreement, the Seller has not pledged, assigned,
sold, granted a security interest in or otherwise conveyed any of the
Receivables.

     (f) The Seller has not authorized the filing of and is not aware of any
financing statements against the Seller that include a description of
collateral covering the Receivables, other than any financing statement (i)
relating to the interest of the Trust in the Receivables under the Pooling and
Servicing Agreement or (ii) that has been terminated.

     (g) The Seller is not aware of any judgment or tax lien filings against
it.

29

 

     The representations and warranties set forth in this Section 3 shall
survive the transfer and assignment to the Trust of the Receivables transferred
to the Trust by the Sellers. None of (i) compliance with the representations
and warranties set forth in this Section 3, (ii) compliance with the
representations and warranties set forth in Sections 2.04(d) and (e) of the
Pooling and Servicing Agreement or (iii) compliance with the provisions of
Section 13.02 of the Pooling and Servicing Agreement can be waived by the
Trustee without the prior written consent of Standard & Poor’s.

     SECTION 4. Representations and Warranties of Discover Bank as Master
Servicer and Servicer. The representations and warranties of Discover Bank as
the Master Servicer and as a Servicer contained in Section 3.04 of the Pooling
and Servicing Agreement are true on and as of the date hereof. Discover Bank
as Master Servicer and Servicer also represents and warrants to the Trust as of
the date hereof that the execution, delivery and performance of this Series
Supplement by Discover Bank have been duly authorized by all necessary
corporate action, do not require any approval or consent of any governmental
agency or authority, do not and will not conflict with any material provision
of the Certificate of Incorporation or By-Laws of Discover Bank, do not and
will not conflict with, or result in a breach which would constitute a material
default under, any agreement for borrowed money binding upon or applicable to
it or such of its property which is material to it, or, to the best of Discover
Bank’s knowledge, any law or governmental regulation or court decree applicable
to it or such material property, and this Series Supplement is the valid,
binding and enforceable obligation of Discover Bank, except as the same may be
limited by receivership, insolvency, reorganization, moratorium or other laws
relating to the enforcement of creditors’ rights generally or by general equity
principles.

     SECTION 5. Representations and Warranties of Other Servicers. The
representations and warranties of each Servicer (other than Discover Bank), if
any, contained in Section 3.05 of the Pooling and Servicing Agreement are true
and correct on and as of the date hereof. Each such Servicer also represents
and warrants to the Trust as of the date hereof that the execution, delivery
and performance of this Series Supplement by such Servicer have been duly
authorized by all necessary corporate action, do not require any approval or
consent of any governmental agency or authority, do not and will not conflict
with any material provision of the Certificate of Incorporation or By-Laws of
such Servicer, do not and will not conflict with, or result in a breach which
would constitute a material default under, any agreement for borrowed money
binding upon or applicable to it or such of its property which is material to
it, or, to the best of such Servicer’s knowledge, any law or governmental
regulation or court decree applicable to it or such material property, and this
Series Supplement is the valid, binding and enforceable obligation of such
Servicer, except as the same may be limited by receivership, insolvency,
reorganization, moratorium or other laws relating to the enforcement of
creditors’ rights generally or by general equity principles.

     SECTION 6. Representations and Warranties of the Trustee. The representations and warranties of the Trustee contained in Section
11.16 of the Pooling and Servicing Agreement are true on and as of the date
hereof. The Trustee also represents and warrants as of the date hereof that
the Trustee has full power, authority and right to execute, deliver and perform
this Series Supplement, and has taken all necessary action to authorize the
execution, delivery and

30

 

performance by it of this Series Supplement, and this
Series Supplement has been duly executed and delivered by the Trustee.

     SECTION 7. Authentication of Certificates. Pursuant to the request of the
Sellers, the Trustee shall cause Investor Certificates in authorized
denominations evidencing the Series established hereby to be duly authenticated
and delivered as of the Series Closing Date to or upon the order of the Sellers
pursuant to Section 6.06 of the Pooling and Servicing Agreement.

     SECTION 8. Establishment and Administration of Investor Accounts and the
Credit Enhancement Account.

     (a) The Series Distribution Account, Series Collections Account and Series
Principal Collections Account. The Trustee, for the benefit of the
Certificateholders, shall cause to be established and maintained in the name of
the Trust, with the corporate trust department of an office or branch of either
the Trustee or a Qualified Institution, three non-interest bearing segregated
demand deposit accounts (the “Series Distribution Account”; for Collections,
the “Series Collections Account”; and for Series Principal Collections and
certain other amounts deposited therein pursuant to Section 9, the “Series
Principal Collections Account”) bearing a designation clearly indicating that
the funds deposited therein are held for the benefit of the Certificateholders.
The Trust shall possess all right, title and interest in all funds on deposit
in the Series Distribution Account, the Series Collections Account and the
Series Principal Collections Account; provided, however, that all interest and
earnings (less investment expenses) on funds on deposit in any such account
shall be paid to the Holder of the Seller Certificate in accordance with
Section 4.02(c) of the Pooling and Servicing Agreement. Pursuant to authority
granted to it pursuant to Section 3.01(b) of the Pooling and Servicing
Agreement, the Master Servicer shall have the revocable power to instruct the
Trustee to withdraw funds from the Series Distribution Account, the Series
Collections Account and the Series Principal Collections Account for the
purpose of carrying out the duties of the Master Servicer hereunder. The
Master Servicer at all times shall maintain accurate records reflecting each
transaction in the Series Distribution Account, the Series Collections Account
and the Series Principal Collections Account. The Paying Agent also shall have
the revocable authority to make withdrawals from the Series Distribution
Account.

     (b) Reallocation Accounts. The Trustee, for the benefit of the
Certificateholders, shall cause to be established and maintained in the name of
the Trust, with the corporate trust department of an office or branch of either
the Trustee or a Qualified Institution, three non-interest bearing segregated
trust accounts for the Group of which the Series established hereby is a member
(for reallocated Series Finance Charge Collections, Series Yield Collections,
Class A
Investment Income and Series Additional Funds, the “Group Finance Charge
Collections Reallocation Account,” for reallocated Series Principal Collections
and other amounts deposited into the Series Principal Collections Account
pursuant to Section 9, the “Group Principal Collections Reallocation Account”
and for reallocated Series Interchange, the “Group Interchange Reallocation
Account”) bearing a designation clearly indicating that the funds deposited
therein are held for the benefit of the Certificateholders. The Trust shall
possess all right, title and interest in all funds on deposit from time to time
in the Group Finance Charge Collections Reallocation Account, the Group
Principal Collections Reallocation Account and the

31

 

Group Interchange
Reallocation Account in all proceeds thereof. Pursuant to authority granted to
it pursuant to Section 3.01(b) of the Pooling and Servicing Agreement, the
Master Servicer shall have the revocable power to instruct the Trustee to
withdraw funds from the Group Finance Charge Collections Reallocation Account,
the Group Principal Collections Reallocation Account and the Group Interchange
Reallocation Account for the purpose of carrying out the duties of the Master
Servicer hereunder. The Master Servicer at all times shall maintain accurate
records reflecting each transaction in the Group Finance Charge Collections
Reallocation Account, the Group Principal Collections Reallocation Account and
the Group Interchange Reallocation Account.

     (c) The Series Principal Funding Account. The Trustee, for the benefit of
the Certificateholders, shall establish and maintain or cause to be established
and maintained in the name of the Trust, with the corporate trust department of
an office or branch of either the Trustee or a Qualified Institution, a
non-interest bearing segregated trust account (for principal to be paid to
Investor Certificateholders of this Series, the “Series Principal Funding
Account”) bearing a designation clearly indicating that the funds deposited
therein are held for the benefit of the Certificateholders. The Trust shall
possess all right, title and interest in all funds on deposit from time to time
in the Series Principal Funding Account and in all proceeds thereof. The
Series Principal Funding Account shall be under the sole dominion and control
of the Trustee for the benefit of the Certificateholders. Pursuant to
authority granted to it pursuant to Section 3.01(b) of the Pooling and
Servicing Agreement, the Master Servicer shall have the revocable power to
withdraw funds from the Series Principal Funding Account for the purpose of
carrying out the duties of the Master Servicer hereunder. The Master Servicer
at all times shall maintain accurate records reflecting each transaction in the
Series Principal Funding Account. The Paying Agent also shall have the
revocable authority to make withdrawals from the Series Principal Funding
Account.

     Funds on deposit in the Series Principal Funding Account shall be invested
in Permitted Investments by the Trustee (or, at the direction of the Trustee,
by the Master Servicer on behalf of the Trustee) at the direction of Discover
Bank on behalf of the Holder of the Seller Certificate, as set forth below.
Any Permitted Investment with a stated maturity shall mature on or prior to the
following Distribution Date. On or before the occurrence of the first
Distribution Date with respect to the Accumulation Period or Controlled
Liquidation Period, as applicable (and on or before any subsequent Distribution
Date in which the notice previously given is no longer correct or valid), the
Master Servicer shall notify the Trustee of the amount of Certificate Principal
to be deposited into the Series Principal Funding Account on such Distribution
Date, and Discover Bank on behalf of the Holder of the Seller Certificate shall
direct the Trustee in writing to invest the funds that will be on deposit in
the Series Principal Funding Account on such Distribution
Date (including any funds previously invested in Permitted Investments
that will be available for reinvestment on such Distribution Date) in Permitted
Investments. Discover Bank’s notice to the Trustee shall specifically identify
each such Permitted Investment (including its principal amount and maturity).
In addition, Discover Bank on behalf of the Holder of the Seller Certificate
shall from time to time provide written notice to the Trustee directing the
Trustee to reinvest funds representing principal, interest or other investment
income received by it with respect to such Permitted Investments (whether upon
maturity or otherwise) in additional Permitted Investments. In the event that
Discover Bank on behalf of the Holder of the Seller Certificate fails to direct
the

32

 

Trustee to invest or reinvest any funds that are deposited in the Series
Principal Funding Account or that are received by it with respect to Permitted
Investments by 2:00 p.m. on the date such funds are available for investment,
the Trustee shall use reasonable efforts to invest such funds overnight in
securities represented by instruments in bearer or registered form which
evidence obligations issued or fully guaranteed, as to timely payment, by the
United States of America or any instrumentality or agency thereof when such
obligations are backed by the full faith and credit of the United States of
America until such time as the Trustee receives the required notice from
Discover Bank; provided, however, that the Trustee shall have no liability for
the failure to invest such funds if the Trustee has employed reasonable efforts
to make such investment.

     (d) The Series Interest Funding Account. The Trustee, for the benefit of
the Certificateholders, shall establish and maintain or cause to be established
and maintained in the name of the Trust, in the corporate trust department of
an office or branch of either the Trustee or a Qualified Institution, a
non-interest bearing segregated trust account (for payment of Certificate
Interest, the “Series Interest Funding Account”) bearing a designation clearly
indicating that the funds deposited therein are held for the benefit of the
Certificateholders. The Trust shall possess all right, title and interest in
all funds on deposit from time to time in the Series Interest Funding Account
and in all proceeds thereof. Pursuant to authority granted to it pursuant to
Section 3.01(b) of the Pooling and Servicing Agreement, the Master Servicer
shall have the revocable power to instruct the Trustee to withdraw funds from
the Series Interest Funding Account for the purpose of carrying out the duties
of the Master Servicer hereunder. Any funds on deposit in the Series Interest
Funding Account for more than one Business Day shall be invested in Permitted
Investments pursuant to Section 4.02(c) of the Pooling and Servicing Agreement.
The Master Servicer at all times shall maintain accurate records reflecting
each transaction in the Series Interest Funding Account. The Paying Agent
shall also have the revocable authority to make withdrawals from the Series
Interest Funding Account.

     (e) The Credit Enhancement Account. If the Credit Enhancement is Funded
Credit Enhancement, the Master Servicer, for the benefit of the
Certificateholders and the Credit Enhancement Provider, shall establish and
maintain or cause to be established and maintained in the name of the Trust,
with the corporate trust department of an office or branch of either the
Trustee or a Qualified Institution, a non-interest bearing segregated trust
account (the “Credit Enhancement Account”) bearing a designation clearly
indicating that the funds deposited therein are held for the benefit of the
Certificateholders and the Credit Enhancement Provider. The Trust shall
possess all right, title and interest in all funds on deposit from time to time
in the Credit Enhancement Account and in all proceeds thereof. The Credit
Enhancement Account shall be under the sole dominion and control of the Trustee
as the administrator of the Credit Enhancement for the benefit of the
Certificateholders and the Credit Enhancement Provider;
provided, however, the Master Servicer may make Credit Enhancement
Drawings pursuant to, and for the purposes set forth in, Section 9. The
interest of the Credit Enhancement Provider in the Credit Enhancement Account
shall be subordinated to the interests of the Certificateholders to the extent
provided herein and in the Credit Enhancement Agreement. The Trustee, at the
direction of the Master Servicer, shall (i) on the Series Closing Date, deposit
into the Credit Enhancement Account an amount equal to the sum of the Stated
Class A Credit Enhancement Amount, the Stated Shared Credit Enhancement Amount,
and the Stated Class B Credit Enhancement Amount, as applicable (such amounts
to be funded by the Credit Enhancement

33

 

Provider pursuant to the Credit
Enhancement Agreement) and (ii) make withdrawals from, and deposits to, the
Credit Enhancement Account from time to time in the amounts and for the
purposes set forth in this Series Supplement. The Credit Enhancement Provider
shall not be entitled to reimbursement from the assets of the Trust for any
withdrawals from the Credit Enhancement Account except as specifically provided
in this Series Supplement. The Master Servicer at all times shall maintain
accurate records reflecting each transaction in the Credit Enhancement Account.

     Funds on deposit in the Credit Enhancement Account shall be invested in
Permitted Investments by the Trustee as administrator of the Credit Enhancement
at the direction of the Master Servicer, as set forth below. Any Permitted
Investment with a stated maturity shall mature on or prior to the following
Distribution Date and any funds received with respect to the maturity of a
Permitted Investment shall be available in sufficient time to allow for any
payments to be made to the Investor Certificateholders on such Distribution
Date. The Master Servicer’s notice to the Trustee shall specifically identify
each such Permitted Investment (including its principal amount and maturity).
In addition, the Master Servicer shall from time to time provide written notice
to the Trustee directing the Trustee to reinvest funds representing principal,
interest or other investment income received by it with respect to such
Permitted Investments (whether upon maturity or otherwise) in additional
Permitted Investments. In the event that the Master Servicer fails to direct
the Trustee to invest or reinvest any funds that are deposited in the Credit
Enhancement Account or that are received by it with respect to Permitted
Investments by 2:00 p.m. on the date such funds are available for investment,
the Trustee shall use reasonable efforts to invest such funds overnight in
securities represented by instruments in bearer or registered form which
evidence obligations issued or fully guaranteed, as to timely payment, by the
United States of America or any instrumentality or agency thereof when such
obligations are backed by the full faith and credit of the United States of
America until such time as the Trustee receives the required notice from the
Master Servicer; provided, however, that the Trustee shall have no liability
for the failure to invest such funds if the Trustee has employed reasonable
efforts to make such investment.

     On each Distribution Date, all interest and earnings (net of losses and
investment expenses) accrued since the preceding Distribution Date on funds on
deposit in the Credit Enhancement Account shall be paid to the Trustee as
administrator of the Credit Enhancement for application in accordance with the
provisions of the Credit Enhancement Agreement. For purposes of determining
the availability of funds or the balances in the Credit Enhancement Account,
all investment earnings on such funds shall be deemed not to be available or on
deposit. If, on 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 is greater than the Total Maximum Credit Enhancement
Amount, then the excess of the amount on deposit over the Total Maximum Credit
Enhancement Amount shall be withdrawn from the Credit Enhancement Account and
paid to the Trustee as administrator of the Credit Enhancement for application
in accordance with the provisions of the Credit Enhancement Agreement.

     Upon the earliest to occur of (i) the termination of the Trust, (ii) the
Series Termination Date and (iii) the day on which the Class Invested Amount
for each Class of the Series

34

 

established hereby is paid in full, and after
payment of all amounts to be paid on such day from the Credit Enhancement
Account to or for the benefit of Investor Certificateholders of the Series
established hereby, all amounts remaining on deposit in the Credit Enhancement
Account shall be withdrawn from such account and paid to the Trustee as
administrator of the Credit Enhancement for application in accordance with the
provisions of the Credit Enhancement Agreement.

     (f) The Interest Rate Swap Account. The Trustee shall establish and
maintain or cause to be established and maintained in the name of the Trust, in
the corporate trust department of an office or branch of either the Trustee or
a Qualified Institution, a non-interest bearing segregated trust account (for
payment of Net Swap Payments, the “Interest Rate Swap Account”). The Trust
shall possess all right, title and interest in all funds on deposit from time
to time in the Interest Rate Swap Account and in all proceeds thereof.
Pursuant to authority granted to it pursuant to Section 3.01(b) of the Pooling
and Servicing Agreement, the Master Servicer shall have the revocable power to
instruct the Trustee to withdraw funds from the Interest Rate Swap Account for
the purpose of carrying out the duties of the Master Servicer hereunder. Any
funds on deposit in the Interest Rate Swap Account for more than one Business
Day shall be invested in Permitted Investments pursuant to Section 4.02(c) of
the Pooling and Servicing Agreement. The Master Servicer at all times shall
maintain accurate records reflecting each transaction in the Interest Rate Swap
Account. The Paying Agent shall also have the revocable authority to make
withdrawals from the Interest Rate Swap Account.

     (g) Transfer of Investor Accounts. If at any time any of the Investor
Accounts established in Sections 8(a) through 8(f) is not being held by the
Trustee and the institution holding such Investor Account ceases to be a
Qualified Institution, the Master Servicer shall within 10 Business Days
establish a new Investor Account (meeting any conditions specified in this
Series Supplement with respect to such Investor Account) with a Qualified
Institution and transfer any cash and/or any investments to such new Investor
Account.

     SECTION 9. Allocations of Collections.

     (a) Deposits to Series Collections Account. On or before each
Distribution Date, the Master Servicer shall direct the Trustee in writing to
withdraw from the Group Collections Account and deposit into the Series
Collections Account an amount equal to the sum of the Series Finance Charge
Collections, the Series Principal Collections and the Series Interchange for
the related Due Period. On or before each Distribution Date, the Class
Additional Funds for
each Class of the Series established hereby shall also have been deposited
into the Series Collections Account pursuant to Section 4.03(e) of the Pooling
and Servicing Agreement.

     (b) Deposits During the Revolving Period, Early Accumulation Period,
Accumulation Period, Controlled Liquidation Period or Amortization Period, as
Applicable. The Master Servicer shall, on or before each Distribution Date
during the Revolving Period, the Early Accumulation Period, the Accumulation
Period, the Controlled Liquidation Period or any Amortization Period, as
applicable, direct the Trustee in writing that funds be paid or deposited in
the following amounts, to the extent such funds are available and in the order
of priority specified, to the account or Person indicated, in each case as set
forth below; provided, however,

35

 

that if the Credit Enhancement is not Funded Credit Enhancement, then no amounts
(other than any Credit Enhancement Fees or any amounts paid to the Trustee as
Administrator of the Credit Enhancement in respect of the Total Available
Credit Enhancement Amount) that are measured or determined by reference to
Class Excess Servicing for any Class, Series Excess Servicing or the amount on
deposit at any time in the Group Finance Charge Collections Reallocation
Account or Group Interchange Reallocation Account shall be paid or deposited
if, on the related Drawing Date, the Credit Enhancement Provider is unable to
pay its debts as they become due.

          (1) During the Accumulation Period or the Early Accumulation Period, if
any, or on the first Distribution Date of the Amortization Period, if
applicable, an amount equal to the amount of Class Investment Income for the
related Due Period for any Class shall be withdrawn from the Series Principal
Funding Account and deposited into the Series Collections Account.

          (2) With respect to Class A, an amount equal to the lesser of

	(x)	 	the Class A Required Amount and
	 
	(y)	 	the sum of (1) Class A Finance Charge
Collections, (2) Class A Yield Collections, if any, (3)
Class A Investment Income, if applicable, (4) Class A
Interchange and (5) Class A Additional Funds

shall be withdrawn from the Series Collections Account and deposited into the
Series Distribution Account. The amount by which the Class A Required Amount
exceeds the amount of such deposit shall be the “Class A Required Amount
Shortfall.”

          (3) With respect to Class A, an amount equal to the lesser of

	(x)	 	the Class A Required Amount Shortfall
and
	 
	(y)	 	funds, if any, available to pay such
Class A Required Amount Shortfall from funds initially
allocated to any Subordinate Series

shall be deposited into the Series Distribution Account. The Class A Required
Amount Shortfall shall be reduced by the amount of such deposit.

          (4) With respect to Class A, an amount equal to the lesser of

	(x)	 	the Class A Cumulative Investor
Charged-Off Amount and
	 
	(y)	 	Class A Excess Servicing

shall be withdrawn from the Series Collections Account and deposited into the
Series Principal Collections Account. The Class A Cumulative Investor
Charged-Off Amount, Series Excess Servicing and the Available Subordinated
Amount shall be reduced by the amount of such deposit.

36

 

          (5) An amount equal to the lesser of

	(x)	 	the Class A Cumulative Investor
Charged-Off Amount and
	 
	(y)	 	funds, if any, available to pay such
Class A Cumulative Investor Charged-Off Amount from
funds initially allocated to any Subordinate Series

shall be deposited into the Series Principal Collections Account. The Class A
Cumulative Investor Charged-Off Amount shall be reduced by the amount of such
deposit.

          (6) If there is a Subordinate Class with respect to Class A, an amount
equal to the least of

	(x)	 	the Class A Required Amount
Shortfall,
	 
	(y)	 	the Available Subordinated Amount,
and
	 
	(z)	 	Class B Available Collections

shall be withdrawn from the Series Collections Account and deposited into the
Series Distribution Account. The Class B Subordinated Payment shall be
increased by, and the Class A Required Amount Shortfall, the Available
Subordinated Amount and Class B Available Collections shall be decreased by,
the amount of such deposit.

          (7) If there is a Subordinate Class with respect to Class A, an amount
equal to the least of

	(x)	 	the Class A Cumulative Investor
Charged-Off Amount,
	 
	(y)	 	the Available Subordinated Amount,
and
	 
	(z)	 	Class B Available Collections

shall be withdrawn from the Series Collections Account and deposited into the
Series Principal Collections Account. The Class B Subordinated Payment shall
be increased by, and the Class A Cumulative Investor Charged-Off Amount, the
Available Subordinated Amount and Class B Available Collections shall be
reduced by, the amount of such deposit.

          (8) If there is a Subordinate Class with respect to Class A, an amount
equal to the lesser of

	(x)	 	the Class B Required Amount and
	 
	(y)	 	the positive difference, if any,
between

	(1)	 	the amount of Class B
Available Finance Charge Collections, and

37

 

	(2)	 	the Class B Subordinated
Payment

shall be withdrawn from the Series Collections Account and deposited into the
Series Distribution Account. The amount by which the Class B Required Amount
exceeds the amount of such deposit shall be the “Class B Required Amount
Shortfall.”

          (9) If there is a Subordinate Class with respect to Class A, an amount
equal to the lesser of

	(x)	 	the Class B Required Amount Shortfall
and
	 
	(y)	 	funds, if any, available to pay such
Class B Required Amount Shortfall from funds initially
allocated to any Subordinate Series

shall be deposited into the Series Distribution Account. The Class B Required
Amount Shortfall shall be reduced by the amount of such deposit.

          (10) If there is a Subordinate Class with respect to Class A, an amount
equal to the lesser of

	(x)	 	the Class B Cumulative Investor
Charged-Off Amount and
	 
	(y)	 	funds, if any, available to pay such
Class B Cumulative Investor Charged-Off Amount from
funds initially allocated to any Subordinate Series

shall be deposited into the Series Principal Collections Account. The Class B
Cumulative Investor Charged-Off Amount shall be reduced by the amount of such
deposit.

          (11) If there is a Subordinate Class with respect to Class A, an amount
equal to the least of

	(x)	 	the Class A Required Amount
Shortfall,
	 
	(y)	 	the Available Subordinated Amount,
and
	 
	(z)	 	Series Excess Servicing

shall be withdrawn from the Series Collections Account and deposited into the
Series Distribution Account. The Class A Required Amount Shortfall, the
Available Subordinated Amount and the amount of Series Excess Servicing shall
be reduced by the amount of such deposit.

          (12) If there is a Subordinate Class with respect to Class A, an amount
equal to the least of

	(x)	 	the Class A Cumulative Investor
Charged-Off Amount,

38

 

	(y)	 	the Available Subordinated Amount,
and
	 
	(z)	 	Series Excess Servicing

shall be withdrawn from the Series Collections Account and deposited into the
Series Principal Collections Account. The Class A Cumulative Investor
Charged-Off Amount, the Available Subordinated Amount and the amount of Series
Excess Servicing shall be reduced by the amount of such deposit. If the Class
A Cumulative Investor Charged-Off Amount is greater than zero after such
reduction, the Class A Cumulative Investor Charged-Off Amount shall be further
reduced by an amount equal to the least of

	(x)	 	the Class A Cumulative Investor
Charged-Off Amount,
	 
	(y)	 	the Available Subordinated Amount,
and
	 
	(z)	 	the Class B Investor Interest.

The Class A Cumulative Investor Charged-Off Amount, the Available Subordinated
Amount and the Class B Investor Interest shall each be reduced by such least
amount, and the Class B Cumulative Investor Charged-Off Amount shall be
increased by such amount.

          (13) If there is a Subordinate Class with respect to Class A, an amount
equal to the lesser of

	(x)	 	the Class B Required Amount Shortfall
and
	 
	(y)	 	Series Excess Servicing

shall be withdrawn from the Series Collections Account and deposited into the
Series Distribution Account. The Class B Required Amount Shortfall and the
amount of Series Excess Servicing shall be reduced by the amount of such
deposit.

          (14) If there is a Subordinate Class with respect to Class A, an amount
equal to the lesser of

	(x)	 	the Class B Cumulative Investor
Charged-Off Amount and
	 
	(y)	 	Series Excess Servicing

shall be withdrawn from the Series Collections Account and deposited into the
Series Principal Collections Account. The Class B Cumulative Investor
Charged-Off Amount and the amount of Series Excess Servicing shall be reduced
by the amount of such deposit.

          (15) On each Distribution Date prior to the Fully Funded Date, if any, an
amount equal to the lesser of

39

 

	(x)	 	the amount by which the Total
Available Credit Enhancement Amount is less than the
Total Maximum Credit Enhancement Amount and
	 
	(y)	 	Series Excess Servicing

shall be withdrawn from the Series Collections Account and paid to the Trustee
as administrator of the Credit Enhancement for application in accordance with
the provisions of the Credit Enhancement Agreement. If there is Shared Credit
Enhancement or Class A Cash Collateral Credit Enhancement, such deposit shall
increase the Available Shared Credit Enhancement Amount or Available Class A
Credit Enhancement Amount, until the Available Shared Credit Enhancement Amount
or Available Class A Credit Enhancement Amount, as applicable, equals the
Maximum Shared Credit Enhancement Amount or the Maximum Class A Credit
Enhancement Amount, as applicable. If there is a Subordinate Class with
respect to Class A, any remaining portion of such deposit shall increase the
Available Class B Credit Enhancement Amount until the Available Class B Credit
Enhancement Amount equals the Maximum Class B Credit Enhancement Amount. The
Total Available Credit Enhancement Amount shall be increased by, and the amount
of Series Excess Servicing shall be decreased by, the amount of such deposit.

          (16) If there is Shared Credit Enhancement or Class A Cash Collateral
Credit Enhancement, and if the Class A Required Amount Shortfall is greater
than zero, the Master Servicer, on the related Drawing Date, shall make a
Credit Enhancement Drawing in an amount equal to the lesser of

	(x)	 	the Class A Required Amount Shortfall
and
	 
	(y)	 	the Available Shared Credit
Enhancement Amount or the Available Class A Credit
Enhancement Amount, as applicable,

and such amount shall be deposited into the Series Distribution Account. The
Class A Required Amount Shortfall and the Available Shared Credit Enhancement
Amount or Available Class A Credit Enhancement Amount, as applicable, shall be
reduced by the amount of such deposit.

          (17) If there is Shared Credit Enhancement or Class A Cash Collateral
Credit Enhancement, and if the Class A Cumulative Investor Charged-Off Amount
is greater than zero, the Master Servicer, on the related Drawing Date, shall
make a Credit Enhancement Drawing in an amount equal to the lesser of

	(x)	 	the Class A Cumulative Investor
Charged-Off Amount and
	 
	(y)	 	the Available Shared Credit
Enhancement Amount or the Available Class A Credit
Enhancement Amount, as applicable,

and such amount shall be deposited into the Series Principal Collections
Account. The Class A Cumulative Investor Charged-Off Amount and the Available
Shared Credit Enhancement

40

 

Amount or Available Class A Credit Enhancement
Amount, as applicable, shall be reduced by the amount of such deposit.

          (18) If there is Shared Credit Enhancement, and if there is a Subordinate
Class with respect to Class A, and if the Class B Required Amount Shortfall is
greater than zero, the Master Servicer, on the related Drawing Date, shall make
a Credit Enhancement Drawing in an amount equal to the lesser of

	(x)	 	the Class B Required Amount Shortfall
and
	 
	(y)	 	the Available Shared Credit
Enhancement Amount

and such amount shall be deposited into the Series Distribution Account. The
Class B Required Amount Shortfall and the Available Shared Credit Enhancement
Amount shall be reduced by the amount of such deposit.

          (19) If there is Shared Credit Enhancement, and if there is a Subordinate
Class with respect to Class A, and if the Class B Cumulative Investor
Charged-Off Amount is greater than zero, the Master Servicer, on the related
Drawing Date, shall make a Credit Enhancement Drawing in an amount equal to the
lesser of

	(x)	 	the Class B Cumulative Investor
Charged-Off Amount and
	 
	(y)	 	the Available Shared Credit
Enhancement Amount

and such amount shall be deposited into the Series Principal Collections
Account. The Class B Cumulative Investor Charged-Off Amount and the Available
Shared Credit Enhancement Amount shall be reduced by the amount of such
deposit.

          (20) If there is Subordinate Class with respect to Class A, and if the
Class B Required Amount Shortfall is greater than zero, the Master Servicer, on
the related Drawing Date, shall make a Credit Enhancement Drawing in an amount
equal to the lesser of

	(x)	 	the Class B Required Amount Shortfall
and
	 
	(y)	 	the Available Class B Credit
Enhancement Amount

and such amount shall be deposited into the Series Distribution Account. The
Class B Required Amount Shortfall and the Available Class B Credit Enhancement
Amount shall be reduced by the amount of such deposit.

          (21) If there is a Subordinate Class with respect to Class A, and if the
Class B Cumulative Investor Charged-Off Amount is greater than zero, the Master
Servicer, on the related Drawing Date, shall make a Credit Enhancement Drawing
in an amount equal to the lesser of

	(x)	 	the Class B Cumulative Investor
Charged-Off Amount and

41

 

	(y)	 	the Available Class B Credit
Enhancement Amount

and such amount shall be deposited into the Series Principal Collections
Account. The Class B Cumulative Investor Charged-Off Amount and the Available
Class B Credit Enhancement Amount shall be reduced by the amount of such
deposit.

          (22) An amount equal to the lesser of

	(x)	 	the Credit Enhancement Fee and
	 
	(y)	 	Series Excess Servicing

shall be withdrawn from the Series Collections Account and paid to the Trustee
as the administrator of the Credit Enhancement for application in accordance
with the provisions of the Credit Enhancement Agreement. The amount of Series
Excess Servicing shall be reduced by the amount of such payment.

          (23) An amount equal to the Monthly Swap Deposit, if any, up to the
remaining amount of Series Excess Servicing, shall be withdrawn from the Series
Collections Account and deposited into the Interest Rate Swap Account. The
amount of Series Excess Servicing shall be reduced by the amount of such
deposit.

          (24) The positive difference, if any, of the amount of Series Excess
Servicing minus, for so long as any Series that is not an Interchange Series is
outstanding, the amount of Series Interchange, shall be withdrawn from the
Series Collections Account and deposited into the Group Finance Charge
Collections Reallocation Account.

          (25) The allocations set forth in clauses (25)(A) and (25)(B) shall be
made, first, with respect to Class A, and then, if there is a Subordinate Class
with respect to Class A, the allocations set forth in clauses (25)(A) and
(25)(B) shall be made with respect to Class B, to the extent that funds are
available pursuant to this clause (25):

          (A) An amount equal to the lesser of

	(x)	 	the Class Required Amount Shortfall
and
	 
	(y)	 	the product of

	(1)	 	a fraction the numerator
of which is the Class Required Amount Shortfall
and the denominator of which is the sum of the
Class Required Amount Shortfalls for all Classes
designated by the same letter of the alphabet of
all Series in the Group to which the Series
established hereby belongs (after giving effect to
provisions in the applicable Series Supplements
substantially similar to the clauses preceding
this clause (25)) and

42

 

	(2)	 	the amount on deposit in
the Group Finance Charge Collections Reallocation
Account before any withdrawals therefrom with
respect to any other Series pursuant to a
comparable clause in the applicable Series
Supplements,

shall be withdrawn from the Group Finance Charge Collections Reallocation
Account and deposited into the Series Distribution Account. The Class Required
Amount Shortfall shall be reduced by the amount of such deposit. The Available
Subordinated Amount shall be increased by the amount of any such deposit that
reduces the Class B Required Amount Shortfall.

          (B) An amount equal to the lesser of

	(x)	 	the Class Cumulative Investor
Charged-Off Amount and
	 
	(y)	 	the product of

	(1)	 	a fraction the numerator
of which is the Class Cumulative Investor
Charged-Off Amount and the denominator of which is
the sum of the Class Cumulative Investor
Charged-Off Amounts for all Classes designated by
the same letter of the alphabet of all Series in
the Group to which the Series established hereby
belongs (after giving effect to provisions in the
applicable Series Supplements substantially
similar to the clauses preceding this clause (25))
and
	 
	(2)	 	the amount on deposit in
the Group Finance Charge Collections Reallocation
Account before any withdrawals therefrom with
respect to any other Series pursuant to a
comparable clause in the applicable Series
Supplements,

shall be withdrawn from the Group Finance Charge Collections Reallocation
Account and deposited into the Series Principal Collections Account. The Class
Cumulative Investor Charged-Off Amount shall be reduced by the amount of such
deposit. The Available Subordinated Amount shall be increased by the amount of
any such deposit that reduces the Class B Cumulative Investor Charged-Off
Amount.

          (C) After the allocations set forth in clauses (25)(A) and (25)(B) are
made with respect to Class A and Class B, then, if there are one or more
Subordinate Classes other than Class B, the allocations set forth in clauses
(25)(A) and (25)(B) shall be made with respect to each other such Class, in
alphabetical order, to the extent that funds are available pursuant to this
clause (25).

          (26) The allocations set forth in clauses (26)(A) and (26)(B) shall be
made, to the extent that funds are available pursuant to this clause (26):

43

 

          (A) If there is Shared Credit Enhancement or Class A Cash Collateral
Credit Enhancement, an amount equal to the lesser of

	(x)	 	the amount by which the Available
Shared Credit Enhancement Amount or the Available Class
A Credit Enhancement Amount, as applicable, is less than
the Maximum Shared Credit Enhancement Amount or the
Maximum Class A Credit Enhancement Amount, as applicable
and
	 
	(y)	 	the product of

	(1)	 	a fraction, the numerator
of which is the amount by which the Available
Shared Credit Enhancement Amount or the Available
Class A Credit Enhancement Amount, as
applicable, is less than the Maximum Shared
Credit Enhancement Amount or the Maximum Class A
Credit Enhancement Amount, as applicable, and the
denominator of which is the sum of, for each
Series in the Group of which the Series
established hereby is a member, the amount by
which the Available Shared Credit Enhancement
Amount or the Available Class A Credit
Enhancement Amount, as applicable, for such
Series is less than the Maximum Shared Credit
Enhancement Amount or the Maximum Class A Credit
Enhancement Amount, as applicable, for such
Series (after giving effect to provisions in the
applicable Series Supplements substantially
similar to the clauses preceding this clause
(26)) and
	 
	(2)	 	the amount on deposit in
the Group Finance Charge Collections Reallocation
Account before any withdrawals therefrom with
respect to any other Series pursuant to a
comparable clause in the applicable Series
Supplements,

shall be withdrawn from the Group Finance Charge Collections Reallocation
Account and paid to the Trustee as administrator of the Credit Enhancement for
application in accordance with the provisions of the Credit Enhancement
Agreement. Such deposit shall increase the Available Shared Credit Enhancement
Amount or the Available Class A Credit Enhancement Amount, as applicable.

          (B) If there is a Subordinate Class with respect to Class A, an amount
equal to the lesser of

	(x)	 	the amount by which the Available
Class B Credit Enhancement Amount is less than the
Maximum Class B Credit Enhancement Amount and
	 
	(y)	 	the product of

44

 

	(1)	 	a fraction, the numerator
of which is the amount by which the Available
Class B Credit Enhancement Amount is less than the
Maximum Class B Credit Enhancement Amount and the
denominator of which is the sum of, for each
Series in the Group of which the Series
established hereby is a member, the amount by
which the Available Class B Credit Enhancement
Amount for such Series is less than the Maximum
Class B Credit Enhancement Amount for such Series
(after giving effect to provisions in the
applicable Series Supplements substantially
similar to the clauses preceding this clause (26))
and
	 
	(2)	 	the amount on deposit in
the Group Finance Charge Collections Reallocation
Account before any withdrawals therefrom with
respect to any other Series pursuant to a
comparable clause in the applicable Series
Supplements,

shall be withdrawn from the Group Finance Charge Collections Reallocation
Account and paid to the Trustee as administrator of the Credit Enhancement for
application in accordance with the provisions of the Credit Enhancement
Agreement. Each of the Available Class B Credit Enhancement Amount and the
Available Subordinated Amount shall be increased by the amount of such deposit.

          (27) After all allocations from the Group Finance Charge Collections
Reallocation Account to be made pursuant to any other Series Supplement for any
Series that is a member of the same Group of which the Series established
hereby is a member have been made, an amount equal to the product of (x) a
fraction the numerator of which shall be the Series Investor Interest and the
denominator of which shall be the sum of the Series Investor Interests for each
Series that is a member of the same Group as the Series established hereby
(including the Series established hereby) and (y) the amount remaining on
deposit in the Group Finance Charge Collections Reallocation Account shall be
withdrawn from the Group Finance Charge Collections Reallocation Account and
paid to the Trustee as administrator of the Credit Enhancement for application
in accordance with the provisions of the Credit Enhancement Agreement. Amounts
remaining on deposit in the Group Finance Charge Collections Reallocation
Account shall be withdrawn from such account and allocated pursuant to the
provisions of the Series Supplements for each other Series that is a member of
the same Group as the Series established hereby.

          (28) For so long as any Series that is not an
Interchange Series is outstanding, an amount equal to the
lesser of:

	(x)	 	Series Excess Servicing and
	 
	(y)	 	Series Interchange

45

 

shall be withdrawn from the Series Collections Account and deposited into the
Group Interchange Reallocation Account.

          (29) Any amounts remaining on deposit in the Series Collections Account
shall be withdrawn from the Series Collections Account and deposited into the
Series Principal Collections Account.

          (30) For so long as any Series that is not an Interchange Series is
outstanding, the allocations set forth in clauses (30)(A) and (30)(B) shall be
made, first, with respect to Class A, and then, if there is a Subordinate Class
with respect to Class A, the allocations set forth in clauses (30)(A) and
(30)(B) shall be made with respect to Class B, to the extent that funds are
available pursuant to this clause (30):

          (A) An amount equal to the lesser of

	(x)	 	the Class Required Amount Shortfall
and
	 
	(y)	 	the product of

	(1)	 	a fraction the numerator
of which is the Class Required Amount Shortfall
and the denominator of which is the sum of the
Class Required Amount Shortfalls for all Classes
designated by the same letter of the alphabet of
all Interchange Series in the Group to which the
Series established hereby belongs (after giving
effect to provisions in the applicable Series
Supplements substantially similar to the clauses
preceding this clause (30)) and
	 
	(2)	 	the amount on deposit in
the Group Interchange Reallocation Account before
any withdrawals therefrom with respect to any
other Series pursuant to a comparable clause in
the applicable Series Supplements,

shall be withdrawn from the Group Interchange Reallocation Account and
deposited into the Series Distribution Account. The Class Required Amount
Shortfall shall be reduced by the amount of such deposit. The Available
Subordinated Amount shall be increased by the amount of any such deposit that
reduces the Class B Required Amount Shortfall.

          (B) An amount equal to the lesser of

	(x)	 	the Class Cumulative Investor
Charged-Off Amount and
	 
	(y)	 	the product of

	(1)	 	a fraction the numerator
of which is the Class Cumulative Investor
Charged-Off Amount and the denominator of which is
the sum of the Class Cumulative Investor

46

 

	 	 	Charged-Off Amounts for all Classes designated by
the same letter of the alphabet of all Interchange
Series in the Group to which the Series
established hereby belongs (after giving effect to
provisions in the applicable Series Supplements
substantially similar to the clauses preceding
this clause (30)) and
	 
	(2)	 	the amount on deposit in
the Group Interchange Reallocation Account before
any withdrawals therefrom with respect to any
other Series pursuant to a comparable clause in
the applicable Series Supplements,

shall be withdrawn from the Group Interchange Reallocation Account and
deposited into the Series Principal Collections Account. The Class Cumulative
Investor Charged-Off Amount shall be reduced by the amount of such deposit. The
Available Subordinated Amount shall be
increased by the amount of any such deposit that reduces the Class B Cumulative
Investor Charged-Off Amount.

          (C) After the allocations set forth in clauses (30)(A) and (30)(B) are
made with respect to Class A and Class B, then, if there are one or more
Subordinate Classes other than Class B, the allocations set forth in clauses
(30)(A) and (30)(B) shall be made with respect to each other such Class, in
alphabetical order, to the extent that funds are available pursuant to this
clause (30).

          (31) For so long as any Series that is not an Interchange Series is
outstanding, the allocations set forth in clauses (31)(A) and (31)(B) shall be
made, to the extent that funds are available pursuant to this clause (31):

          (A) If there is Shared Credit Enhancement or Class A Cash Collateral
Credit Enhancement, an amount equal to the lesser of

	(x)	 	the amount by which the Available
Shared Credit Enhancement Amount or the Available Class
A Credit Enhancement Amount, as applicable, is less than
the Maximum Shared Credit Enhancement Amount or the
Maximum Class A Credit Enhancement Amount, as applicable
and
	 
	(y)	 	the product of

	(1)	 	a fraction, the numerator
of which is the amount by which the Available
Shared Credit Enhancement Amount or the Available
Class A Credit Enhancement Amount, as applicable,
is less than the Maximum Shared Credit Enhancement
Amount or the Maximum Class A Credit Enhancement
Amount, as applicable, and the denominator of
which is the sum of, for each Interchange Series
in the Group to which the Series established
hereby belongs, the

47

 

	 	 	amount by which the Available
Shared Credit Enhancement Amount or the Available
Class A Credit Enhancement Amount, as applicable,
for such Series is less than the Maximum Shared
Credit Enhancement Amount or the Maximum Class A
Credit Enhancement Amount, as applicable, for such
Series (after giving effect to provisions in the
applicable Series Supplements substantially
similar to the clauses preceding this clause (31))
and
	 	 	
	(2)	 	the amount on deposit in
the Group Interchange Reallocation Account before
any withdrawals therefrom with respect to any
other Series pursuant to a comparable clause in
the applicable Series Supplements,

shall be withdrawn from the Group Interchange Reallocation Account and paid to
the Trustee as administrator of the Credit Enhancement for application in
accordance with the provisions of the
Credit Enhancement Agreement. Such deposit shall increase the Available Shared
Credit Enhancement Amount or the Available Class A Credit Enhancement Amount,
as applicable.

          (B) If there is a Subordinate Class with respect to Class A, an amount
equal to the lesser of

	(x)	 	the amount by which the Available
Class B Credit Enhancement Amount is less than the
Maximum Class B Credit Enhancement Amount and
	 
	(y)	 	the product of

	(1)	 	a fraction, the numerator
of which is the amount by which the Available
Class B Credit Enhancement Amount is less than the
Maximum Class B Credit Enhancement Amount and the
denominator of which is the sum of, for each
Interchange Series in the Group to which the
Series established hereby belongs, the amount by
which the Available Class B Credit Enhancement
Amount for such Series is less than the Maximum
Class B Credit Enhancement Amount for such Series
(after giving effect to provisions in the
applicable Series Supplements substantially
similar to the clauses preceding this clause (31))
and
	 
	(2)	 	the amount on deposit in
the Group Interchange Reallocation Account before
any withdrawals therefrom with respect to any
other Series pursuant to a comparable clause in
the applicable Series Supplements,

48

 

shall be withdrawn from the Group Interchange Reallocation Account and paid to
the Trustee as administrator of the Credit Enhancement for application in
accordance with the provisions of the Credit Enhancement Agreement. Each of
the Available Class B Credit Enhancement Amount and the Available Subordinated
Amount shall be increased by the amount of such deposit.

          (32) After all allocations from the Group Interchange Reallocation Account
to be made pursuant to any other Series Supplement for any Interchange Series
that is a member of the same Group of which the Series established hereby is a
member have been made, an amount equal to the product of (x) a fraction the
numerator of which shall be the Series Investor Interest and the denominator of
which shall be the sum of the Series Investor Interests for each Interchange
Series in the Group to which the Series established hereby belongs (including
the Series established hereby) and (y) the amount remaining on deposit in the
Group Interchange Reallocation Account shall be withdrawn from the Group
Interchange Reallocation Account and paid to the Trustee as administrator of
the Credit Enhancement for application in accordance with the provisions of the
Credit Enhancement Agreement. Amounts remaining on deposit in the Group
Interchange Reallocation Account shall be withdrawn from such account and
allocated
pursuant to the provisions of the Series Supplements for each other
Interchange Series in the Group to which the Series established hereby belongs.

          (33) The Net Swap Receipt, to the extent paid to the Trustee by the
Interest Rate Swap Counterparty pursuant to the Class Interest Rate Swap, shall
be deposited in the Series Collections Account.

          (34) Any amount remaining on deposit in the Series Collections Account
will be withdrawn from the Series Collections Account and paid to the Holder of
the Seller Certificate.

          (35) Unless the Distribution Date is a Distribution Date in the Revolving
Period, the lesser of

	(x)	 	the Principal Distribution Amount and
	 
	(y)	 	the amount on deposit in the Series
Principal Collections Account

shall be withdrawn from the Series Principal Collections Account and deposited
into the Series Principal Funding Account. The amount by which the Principal
Distribution Amount exceeds the amount of such deposit shall be the “Principal
Distribution Amount Shortfall.”

          (36) Unless the Distribution Date is a Distribution Date in the Revolving
Period, the lesser of

	(x)	 	the Principal Distribution Amount
Shortfall and
	 
	(y)	 	funds, if any, available to pay such
Principal Distribution Amount Shortfall from funds
initially allocated to any Subordinate Series

49

 

shall be deposited into the Series Principal Funding Account. The Principal
Distribution Amount Shortfall shall be reduced by the amount of such deposit.

          (37) Any amounts remaining on deposit in the Series Principal Collections
Account shall be withdrawn from the Series Principal Collections Account and be
deposited into the Group Principal Collections Reallocation Account.

          (38) During the Accumulation Period or the Controlled Liquidation Period,
as applicable, the allocation set forth below shall be made with respect to
each Class, beginning with Class A and continuing, seriatim, for each Class, to
the extent that funds are available pursuant to this clause (38):

     An amount equal to the lesser of

	(x)	 	the portion of the Principal Distribution Amount
Shortfall that is allocable to such Class and
	 
	(y)	 	the product of

	(1)	 	a fraction the numerator of which is
the portion of the Principal Distribution Amount
Shortfall that is allocable to such Class and the
denominator of which is the sum of the portions of the
Principal Distribution Amount Shortfalls allocable to
all Classes designated by the same letter of the
alphabet of all Series in the Group to which the Series
established hereby belongs that are in their
Accumulation Periods or Controlled Liquidation Periods,
as applicable (after giving effect to provisions in the
applicable Series Supplements substantially similar to
the clauses preceding this clause (38) and
	 
	(2)	 	the amount on deposit in the Group
Principal Collections Reallocation Account before any
withdrawals therefrom with respect to any other Series

shall be withdrawn from the Group Principal Collections Reallocation Account
and deposited into the Series Principal Funding Account. The Principal
Distribution Amount Shortfall shall be reduced by the amount of such deposit.

          (39) After all allocations from the Group Principal Collections
Reallocation Account to be made pursuant to any other Series Supplement for any
Series that is a member of the same Group of which the Series established
hereby is a member have been made, the amount remaining on deposit in the Group
Principal Collections Reallocation Account shall be withdrawn from the Group
Principal Collections Reallocation Account and deposited into the Collections
Account.

50

 

          (40) After all other allocations have been provided for with respect to
each Series then outstanding (whether or not such Series is a member of the
same Group as the Series established hereby), the lesser of

	(x)	 	the amount of the Seller Interest and
	 
	(y)	 	the amount on deposit in the Collections Account

shall be paid to the Holder of the Seller Certificate. If, after such payment,
any amounts remain on deposit in the Collections Account, such amounts shall
remain in the Collections Account for allocation as Principal Collections on
the next Trust Distribution Date.

     SECTION 10. Payments.

     (a) Payments.

          (1) On each Distribution Date related to a Due Period in the Accumulation
Period or the Early Accumulation Period, and on the first Distribution Date of
the Amortization Period, the Master Servicer shall direct the Trustee in
writing to withdraw the amount of Excess
Income, if any, on deposit in the Series Principal Funding Account from
the Series Principal Funding Account and pay such amount to the Holder of the
Seller Certificate.

          (2) On each Distribution Date, after giving effect to payments made
pursuant to Section 9 and the calculation of Investor Losses and adjustment of
the Class Investor Interest and Class Invested Amount with respect to each
Class pursuant to Section 13, the Master Servicer shall direct the Trustee in
writing to withdraw and cause the Paying Agent to pay funds from the applicable
Investor Account to or for the benefit of each Class of Investor
Certificateholders, seriatim, with respect to each Class, beginning with Class
A, until such payments have been made with respect to each Class, as set forth
below:

          (A) First, an amount equal to the lesser of

	(x)	 	the Class Modified Required Amount
and
	 
	(y)	 	the amount on deposit in the Series
Distribution Account

shall be withdrawn from the Series Distribution Account and deposited into the
Series Interest Funding Account. The amount by which the Class Modified
Required Amount exceeds the amount so deposited into the Series Interest
Funding Account shall be the “Class Monthly Deficiency Amount” with respect to
such Distribution Date.

          (B) Second, an amount equal to the lesser of

	(x)	 	the sum of the Class Monthly
Servicing Fee for such Distribution Date and all accrued
but unpaid Class Monthly Servicing Fees from prior
months and

51

 

	(y)	 	the amount deposited into the Series
Distribution Account with respect to such Class on such
Distribution Date pursuant to Section 9 less the amount
deposited into the Series Interest Funding Account with
respect to such Class pursuant to clause (A) above

shall be withdrawn from the Series Distribution Account and paid to the Master
Servicer.

          (3) On each Interest Payment Date, the Master Servicer shall direct the
Trustee in writing to deposit into the Series Interest Funding Account any
Class Interest Rate Cap Payment made by any Interest Rate Cap Provider for any
Class or Subclass pursuant to the Class Interest Rate Cap for such Class or
Subclass.

          (4) On each Interest Payment Date, after giving effect to the payments
described above on such day, the Master Servicer shall direct the Trustee in
writing to withdraw the amount deposited into the Series Interest Funding
Account with respect to each Class or Subclass since the preceding Interest
Payment Date. The Master Servicer shall cause the Paying Agent to pay such
amount on each Interest Payment Date to the Investor Certificateholders of such
Class or Subclass in accordance with Section 5.01 of the Pooling and Servicing
Agreement.

          (5) On each Interest Payment Date (or, following the early termination of
the Class Interest Rate Swap, on each Distribution Date), the Master Servicer
shall direct the Trustee in writing to withdraw any Net Swap Payment from the
Interest Rate Swap Account and pay such amount to the Interest Rate Swap
Counterparty in accordance with the provisions of the Class Interest Rate Swap.

          (6) Reserved.

          (7) On each Principal Payment Date, after giving effect to the payments
described above on such day, an amount equal to the lesser of

	(x)	 	the Controlled Liquidation Amount and
	 
	(y)	 	the amount deposited into the Series
Principal Funding Account on any Distribution Date
pursuant to Section 9

shall be withdrawn from the Series Principal Funding Account. The Master
Servicer shall cause the Paying Agent to pay such amount to the Investor
Certificateholders of such Class or Subclass in accordance with Section 5.01 of
the Pooling and Servicing Agreement. Except as set forth in the following
sentence, all such amounts shall be paid to or with respect to the Class A
Investor Certificateholders until the Class A Invested Amount is reduced to
zero; and, thereafter, if there is a Subordinate Class with respect to Class A,
such amounts shall be paid to or with respect to the Class B Investor
Certificateholders until the Class B Invested Amount is reduced to zero, unless
the Series Termination Date occurs prior to such date; provided, however, that
on the Fully Funded Date, if any, the Class B Invested Amount shall be
withdrawn from the Series Principal Funding Account and paid to the Class B
Investor Certificateholders. In no event shall any amounts be paid with
respect to any Class of Investor Certificates pursuant to this clause (7)

52

 

in
excess of the Class Invested Amount for such Class. Any amounts remaining on
deposit in the Series Principal Funding Account after the Class Invested Amount
for each Class has been reduced to zero shall be paid to the Holder of the
Seller Certificate.

          (8) On each Special Payment Date during the Amortization Period, after
giving effect to the payments described above on such day, an amount equal to
the lesser of

	(x)	 	the Principal Distribution Amount and
	 
	(y)	 	the amount deposited into the Series
Principal Funding Account on such Special Payment Date
pursuant to Section 9

shall be withdrawn from the Series Principal Funding Account. The Master
Servicer shall cause the Paying Agent to pay such amount to the Investor
Certificateholders of such Class or Subclass in accordance with Section 5.01 of
the Pooling and Servicing Agreement. Except as set forth in the following
sentence, all such amounts shall be paid to or with respect to the Class A
Investor Certificateholders until the Class A Invested Amount is reduced to
zero; and, thereafter, if there is a Subordinate Class with respect to Class A,
such amounts shall be paid to or with respect to the Class B Investor
Certificateholders until the Class B Invested Amount is reduced to zero, unless
the Series Termination Date occurs prior to such date. In no event shall any
amounts be paid with respect to any Class of Investor Certificates pursuant to
this clause (8) in excess of the Class Invested Amount for such Class. Any amounts remaining on deposit in the
Series Principal Funding Account after the Class Invested Amount for each Class
has been reduced to zero shall be paid to the Holder of the Seller Certificate.

          (9) On the first Distribution Date of the Amortization Period, if any,
after giving effect to the payments and withdrawals and conversions described
above on such day, an amount equal to the lesser of

	(x)	 	the Series Invested Amount and
	 
	(y)	 	the amount on deposit in the Series
Principal Funding Account

shall be withdrawn from the Series Principal Funding Account. The Master
Servicer shall cause the Paying Agent to pay such amount to the Investor
Certificateholders of such Class or Subclass in accordance with Section 5.01 of
the Pooling and Servicing Agreement. Except as set forth in the following
sentence, all such amounts shall be paid to or with respect to the Class A
Investor Certificateholders until the Class A Invested Amount is reduced to
zero; and, thereafter, if there is a Subordinate Class with respect to Class A,
such amounts shall be paid to or with respect to the Class B Investor
Certificateholders until the Class B Invested Amount is reduced to zero, unless
the Series Termination Date occurs prior to such date. In no event shall any
amounts be paid with respect to any Class of Investor Certificates pursuant to
this clause (9) in excess of the Class Invested Amount for such Class. Any
amounts remaining on deposit in the Series Principal Funding Account after the
Class Invested Amount for each Class has been reduced to zero shall be paid to
the Holder of the Seller Certificate.

53

 

          (10) On the Class Expected Final Payment Date or the Class Final Maturity
Date, if applicable (or, if such Class Expected Final Payment Date or Class
Final Maturity Date is not also a Distribution Date, on the Distribution Date
occurring in the same calendar month as the Class Expected Final Payment Date
or the Class Final Maturity Date, if applicable), the Master Servicer shall
direct the Trustee in writing to withdraw the amount on deposit in the Series
Principal Funding Account with respect to each Class; provided that (i) such
amount shall be no greater than the Class Invested Amount and (ii) funds, if
any, remaining on deposit in the Series Principal Funding Account after the
payment in full of the Class Invested Amount with respect to each Class shall
be withdrawn and paid to the Holder of the Seller Certificate. The Master
Servicer shall cause the Paying Agent to pay such amount to the Investor
Certificateholders of such Class or Subclass in accordance with Section 5.01 of
the Pooling and Servicing Agreement.

     (b) Payments to the Sellers and/or the Master Servicer. Notwithstanding
the other provisions in Section 9 and this Section 10, any amounts payable to
Discover Bank on behalf of the Holder of the Seller Certificate or to the
Master Servicer on any Distribution Date pursuant to Section 9 and this Section
10 may be paid prior to such Distribution Date pursuant to Section 4.03(d) of
the Pooling and Servicing Agreement.

     SECTION 11. Credit Enhancement.

     (a) Initial Credit Enhancement. The Master Servicer hereby represents
with respect to the Initial Credit Enhancement and shall be deemed to represent
with respect to any successor Credit Enhancement that (i) the Master Servicer
has provided for the Credit Enhancement for the account of the Trustee and for
the benefit of the Investor Certificateholders, (ii) the Master Servicer has
entered into a Credit Enhancement Agreement, (iii) the Credit Enhancement
permits the Trustee or the Master Servicer, acting as the Trustee’s
attorney-in-fact or otherwise, to make Credit Enhancement Drawings from time to
time in an amount up to the Total Available Credit Enhancement Amount at such
time, for the purposes set forth in this Agreement and (iv) the Credit
Enhancement and the respective Credit Enhancement Agreement may be terminated
by the Trustee without penalty if (x) the Master Servicer elects to obtain a
successor Credit Enhancement and such successor Credit Enhancement does not
cause the ratings of the Investor Certificates of the Series established hereby
to be withdrawn or lowered by either of the Rating Agencies from the respective
ratings of such Investor Certificates immediately prior to such election or (y)
if the Credit Enhancement is not Funded Credit Enhancement, the Credit
Enhancement Provider ceases to be a Qualified Credit Enhancement Provider.

     (b) Successor Credit Enhancement.

          (i) If the Credit Enhancement is not Funded Credit Enhancement and
if, at any time, the provider of such Credit Enhancement ceases to be a
Qualified Credit Enhancement Provider, the Master Servicer shall obtain a
successor Credit Enhancement within 30 days or such longer period as will
not result in the lowering or withdrawal of the rating of any Class of
any Series then outstanding by the Rating Agencies (a) which, if such
successor Credit Enhancement is not to be Funded Credit Enhancement, will
be issued by a Qualified Credit Enhancement Provider and (b) with respect
to which the

54

 

representations set forth in Section 11(a) will be
satisfied; provided, however, that the Master Servicer shall not be
required to continue efforts to obtain a successor Credit Enhancement if
the then existing Credit Enhancement Provider again becomes a Qualified
Credit Enhancement Provider and remains such; and, provided, further,
that unless otherwise agreed to by the Rating Agencies, the Credit
Enhancement and Credit Enhancement Agreement will not be terminated and
no successor Credit Enhancement Provider shall be selected if the
successor Credit Enhancement, the successor Credit Enhancement Agreement,
or the selection of such successor Credit Enhancement Provider would
cause the ratings of the Investor Certificates of the Series established
hereby to be withdrawn or lowered by either Rating Agency from the
respective ratings of such Investor Certificates immediately prior to
such selection. The Master Servicer, the Trustee and the Sellers shall
promptly enter into any such successor Credit Enhancement Agreement, and
the Master Servicer shall use its best efforts to secure the signature of
any other required party to such agreement.

          (ii) Regardless of whether the Credit Enhancement is Funded Credit
Enhancement, the Master Servicer may elect, at any time, to obtain a
successor Credit Enhancement, provided that such successor Credit
Enhancement does not cause the ratings of the Investor Certificates of
the Series established hereby to be withdrawn or lowered by either of the
Rating Agencies from the respective ratings of such Investor Certificates
immediately prior to such election.

          (iii) In any case, subject to the foregoing, any successor Credit
Enhancement obtained by the Master Servicer need not consist of the same
type of Credit Enhancement as the Initial Credit Enhancement, but may
consist of a different type of facility, including, but not limited to, a
reserve account, a cash collateral account, an irrevocable standby letter
of credit, a surety bond or a combination of any of the above. Upon
issuance of, or other provision for, any such successor Credit
Enhancement, the Trustee shall terminate the prior Credit Enhancement and
Credit Enhancement Agreement.

     (c) Supplemental Credit Enhancement Event. Upon the occurrence of a
Supplemental Credit Enhancement Event, Discover Bank as Servicer shall, within
60 days of notice from Standard & Poor’s of the withdrawal or downgrade (or
such longer period as may be agreed to by Standard & Poor’s), arrange for the
payment of the Supplemental Credit Enhancement Amount, if any, by a Person
other than Discover Bank to the Trustee as administrator of the Credit
Enhancement for application in accordance with the provisions of the Credit
Enhancement Agreement. Both the form and the provider of the Supplemental
Credit Enhancement Amount, if any, shall be determined at the time it is to be
paid; provided, that the Master Servicer shall have received confirmation from
Standard & Poor’s that the arrangements with respect to the Supplemental Credit
Enhancement Amount, if any, will not result in the rating of the Investor
Certificates of the Series established hereby being withdrawn or lowered. In
addition to the foregoing, the Master Servicer shall notify Moody’s of the
occurrence of a Supplemental Credit Enhancement Event as soon as practicable
after such occurrence, and shall notify Moody’s in advance of its
implementation of the form and provider of the Supplemental Credit Enhancement
Amount, if any.

55

 

     SECTION 12. Alternative Credit Support Election.

     (a) The Sellers may elect to effect a change in the calculation of the
Class Percentage with respect to Finance Charge Collections during the Early
Accumulation Period or the Amortization Period, as set forth in the definition
of “Class Percentage,” and increase the Available Class B Credit Enhancement
Amount, by making an Alternative Credit Support Election. An Alternative
Credit Support Election may be made as follows:

          (i) at any time during the Revolving Period, Discover Bank on behalf
of the Holder of the Seller Certificate shall deliver written notice of
such Alternative Credit Support Election to the Rating Agencies, the
Trustee and the Credit Enhancement Provider;

          (ii) prior to the last day of the Revolving Period, the Additional
Credit Support Amount shall be paid to the Trustee as administrator of
the Credit Enhancement for application in accordance with the provisions
of the Credit Enhancement Agreement; provided, however, that following an
Early Accumulation Event or an Amortization Event, the Additional Credit
Support Amount may be paid to the Trustee as administrator of the Credit
Enhancement at any time on or prior to the last day of the Due Period in
which the Early Accumulation Event or the Amortization Event occurs;

          (iii) prior to the last day of the Revolving Period (or, following
an Early Accumulation Event or an Amortization Event during the Revolving
Period, on or prior to the last day of the Due Period in which the Early
Accumulation Event or the Amortization Event occurs), the Rating Agencies
shall have confirmed that the Alternative Credit Support Election shall
not cause a reduction in or withdrawal of the rating of any Class of
Investor Certificates of the Series established hereby; and

          (iv) prior to the last day of the Revolving Period (or, following an
Early Accumulation Event or an Amortization Event during the Revolving
Period, on or prior to the last day of the Due Period in which the Early
Accumulation Event or the Amortization Event occurs), Discover Bank on
behalf of the Holder of the Seller Certificate shall have delivered to
the Rating Agencies written confirmation that the conclusions reached in
the legal opinions delivered on the Initial Closing Date regarding the
absolute transfer of the Receivables and the security interest of the
Trust in the Receivables are not affected by the Alternative Credit
Support Election.

     (b) If each of the actions set forth in Section 12(a) above has been taken
or satisfied as required, the Alternative Credit Support Election shall become
effective on the last day of the Due Period in which the Additional Credit
Support Amount has been paid to the Trustee as administrator of the Credit
Enhancement (an “Effective Alternative Credit Support Election”).

     (c) At any time until the Alternative Credit Support Election becomes
effective, such Alternative Credit Support Election may be cancelled upon
notice to the Rating Agencies, the Trustee and the Credit Enhancement Provider.
Thereafter, the Additional Credit Support

56

 

Amount, if any, shall be returned by
the Trustee as administrator of the Credit Enhancement in accordance with the
Credit Enhancement Agreement.

     SECTION 13. Calculation of Investor Losses.

     (a) For each Distribution Date, the Master Servicer shall calculate the
Class Investor Charged-Off Amount and the Class Cumulative Investor Charged-Off
Amount with respect to each Class, in each case as of the end of the related
Due Period.

     (b) If on any Distribution Date, the Class Investor Charged-Off Amount
with respect to any Class exceeds the Class Charge-Off Reimbursement Amount
with respect to such Class, the Class Investor Interest and the Class Invested
Amount for such Class shall each be reduced by the amount of such excess (an
“Investor Charge-Off Loss” with respect to such Class).

     (c) On each Distribution Date the Class Investor Interest and the Class
Invested Amount for each Class shall be increased by, and the amount of
aggregate unreimbursed Investor Losses for each such Class shall be decreased
by, the positive difference, if any, between the Class Charge-Off Reimbursement
Amount on such Distribution Date and the Class Investor Charged-Off Amount for
such Distribution Date; provided, however, that neither the Class Invested
Amount nor the Class Investor Interest shall exceed the Class Initial Investor
Interest (after giving effect to any increase therein pursuant to Section 32)
for such Class minus the sum of (x) the aggregate amount of payments of
Certificate Principal paid to the Investor Certificateholders of such Class prior to such Distribution Date, (y) in
the case of the Class Investor Interest, the amount on deposit in the Series
Principal Funding Account for the benefit of such Class in respect of
Certificate Principal and (z) the aggregate amount of losses, if any, on
investments of principal of funds on deposit in the Series Principal Funding
Account for the benefit of such Class; and provided, further, that the amount
of Investor Losses with respect to any Class shall not be reduced to an amount
less than zero.

     SECTION 14. Servicing Compensation. As compensation for its servicing
activities hereunder and under the Pooling and Servicing Agreement and
reimbursement of its expenses as set forth in Section 3.03 of the Pooling and
Servicing Agreement, the Master Servicer shall be entitled to receive a monthly
servicing fee with respect to the Series established hereby in respect of any
Due Period (or portion thereof) prior to the earlier of the date on which the
Series Investor Interest is reduced to zero and the Series Termination Date.
Such monthly servicing fees shall be composed of the Class Monthly Servicing
Fees and the Supplemental Servicing Fees, if any. The Class Monthly Servicing
Fees shall be paid to the Master Servicer on behalf of each Class on each
Distribution Date pursuant to Section 10. The Supplemental Servicing Fee, if
any, shall be paid to the Master Servicer on or before each Distribution Date
from the Series Additional Funds for such Distribution Date. In no event shall
the Trustee or the Investor Certificateholders be liable for the Supplemental
Servicing Fee.

     SECTION 15. Class Interest Rate Caps.

     (a) In the event that the Master Servicer has obtained a Class Interest
Rate Cap in favor of the Trustee for the benefit of a Class or Subclass that
does not have a fixed or maximum

57

 

Certificate Rate, the Master Servicer hereby
represents that such Class Interest Rate Cap provides that (i) the Trust shall
not be required to make any payments thereunder and (ii) the Trust shall be
entitled to receive payments (determined in accordance with the Class Interest
Rate Cap) from the Interest Rate Cap Provider on an Interest Payment Date if
LIBOR or the Commercial Paper Rate, as applicable, for the related Calculation
Period exceeds the Class Cap Rate for the applicable Class or Subclass. Any
Class Interest Rate Cap Payment shall be deposited into the Series Interest
Funding Account.

     (b) In the event that the commercial paper or certificate of deposit
rating of the Interest Rate Cap Provider is withdrawn or reduced below the
ratings specified in the Series Term Sheet (or, in either case, such lower
rating as the applicable Rating Agency shall allow), then within 30 days after
receiving notice of such decline in the creditworthiness of the Interest Rate
Cap Provider as determined by either Rating Agency, either (x) the Interest
Rate Cap Provider, with the prior confirmation of the Rating Agencies that such
arrangement will not result in the reduction or withdrawal of the rating of any
Investor Certificates of the Series established hereby, will enter into an
arrangement the purpose of which shall be to assure performance by the Interest
Rate Cap Provider of its obligations under the Class Interest Rate Caps; or (y)
the Master Servicer shall at its option either (i) with the prior confirmation
of the Rating Agencies that such action will not result in a reduction or
withdrawal of the rating of any Investor Certificates of the Series established hereby, cause the Interest
Rate Cap Provider to pledge securities in the manner provided by applicable
law, which shall be held by the Trustee or its agent free and clear of the Lien
of any third party, in a manner conferring on the Trustee a perfected first
Lien in such securities securing the Interest Rate Cap Provider’s performance
of its obligations under the Class Interest Rate Caps, or (ii) provided that
Replacement Class Interest Rate Caps or Qualified Substitute Cap Arrangements
meeting the requirements of Section 15(c) have been obtained, direct the
Trustee (A) to provide written notice to the Interest Rate Cap Provider of its
intention to terminate the Class Interest Rate Caps within such 30-day period
and (B) to terminate the Class Interest Rate Caps within such 30-day period, to
request the payment to it of all amounts due to the Trust under the Class
Interest Rate Caps through the termination date and to deposit any such amounts
so received, on the day of receipt, to the Series Interest Funding Account, or
(iii) establish any other arrangement (including an arrangement or arrangements
in addition to or in substitution for any prior arrangement made in accordance
with the provisions of this Section 15(b)) satisfactory to the Rating Agencies
such that the Rating Agencies will not reduce or withdraw the rating of any
Investor Certificates of the Series established hereby (a “Qualified Substitute
Cap Arrangement”); provided, however, that in the event at any time any
alternative arrangement established pursuant to clause (x) or (y)(i) or
(y)(iii) above shall cease to be satisfactory to the Rating Agencies then the
provisions of this Section 15(b) shall again be applied and in connection
therewith the 30-day period referred to above shall commence on the date the
Master Servicer receives notice of such cessation.

     (c) Unless an alternative arrangement pursuant to clause (x) or (y)(i) of
Section 15(b) is being established, the Master Servicer shall use its best
efforts to obtain Replacement Class Interest Rate Caps or Qualified Substitute
Cap Arrangements meeting the requirements of this Section 15(c) during the
30-day period referred to in Section 15(b). The Trustee shall not terminate
the Class Interest Rate Caps unless, prior to the expiration of the 30-day
period referred to in Section 15(b), the Master Servicer delivers to the
Trustee (i) Replacement Class

58

 

Interest Rate Caps or Qualified Substitute Cap
Arrangements, (ii) to the extent applicable, an Opinion of Counsel as to the
due authorization, execution and delivery and validity and enforceability of
each such Replacement Class Interest Rate Cap or Qualified Substitute Cap
Arrangement, as the case may be, and (iii) confirmation from each Rating Agency
that the termination of the Class Interest Rate Caps and their replacement with
such Replacement Class Interest Rate Caps or Qualified Substitute Cap
Arrangements will not adversely affect its rating of the Investor Certificates
of the Series established hereby.

     (d) Master Servicer shall notify the Trustee, the Rating Agencies and the
Credit Enhancement Provider within five Business Days after obtaining knowledge
that the commercial paper or certificate of deposit rating of the Interest Rate
Cap Provider has been withdrawn or reduced by either Rating Agency.

     (e) Notwithstanding the foregoing, the Master Servicer may at any time
obtain Replacement Class Interest Rate Caps, provided that the Master Servicer
delivers to the Trustee (i) an Opinion of Counsel as to the due authorization,
execution and delivery and validity and enforceability of such Replacement
Class Interest Rate Caps and (ii) confirmation from the Rating Agencies that
the termination of the then current Class Interest Rate Caps and their
replacement with such Replacement Class Interest Rate Caps will not adversely
affect the rating of the Investor Certificates of the Series established
hereby.

     (f) The Trustee hereby appoints the Master Servicer to perform the duties
of the calculation agent under the Class Interest Rate Caps and the Master
Servicer accepts such appointment.

     SECTION 16. Class Interest Rate Swaps. In the event that the Investor
Certificates of any Class are subject to a Class Interest Rate Swap, the Trust
will enter into a Class Interest Rate Swap in a form approved by the Master
Servicer. Pursuant to the terms of the Class Interest Rate Swap, the Interest
Rate Swap Counterparty shall pay to the Trust the Net Swap Receipt or the Trust
shall pay to the Interest Rate Swap Counterparty the Net Swap Payment, as
applicable. If the Trust does not receive payment from the Interest Rate Swap
Counterparty on each Interest Payment Date (if due), the Trustee, on behalf of
the Trust, shall attempt to determine from the Interest Rate Swap Counterparty
the reasons therefore and whether such payment is to be made by the Interest
Rate Swap Counterparty on such Interest Payment Date. If the Class Interest
Rate Swap has not been terminated and the Trust has not received any payment
due from the Interest Rate Swap Counterparty on the related Interest Payment
Date, the Trustee shall notify the Master Servicer of such fact prior to 1:00
p.m. Chicago time on such Interest Payment Date.

     SECTION 17. Investor Certificateholders’ Monthly Statement. On each
Statement Date, a statement substantially in the form of Exhibit B and each as
prepared by the Trustee (based on information provided by the Master Servicer)
setting forth the information listed thereon shall be available from the
Trustee, each Paying Agent and, if applicable, the Listing Agent.

     SECTION 18. Master Servicer’s Monthly Certificate. On or before the
second Business Day preceding each Statement Date, the Master Servicer shall
forward to Discover Bank on behalf of the Holder of the Seller Certificate, the
Trustee and each Paying Agent a certificate of a

59

 

Servicing Officer
substantially in the form of Exhibit C and each setting forth the information
listed thereon.

     SECTION 19. Notices. Any notices to holders of Investor Certificates
issued in bearer form shall be given as described in the Series Term Sheet.

     SECTION 20. Additional Amortization Events. If any one of the following
events shall occur:

     (a) after giving effect to payments and distributions on the Class
Expected Final Payment Date or the Class Final Maturity Date, as applicable,
with respect to any Class, the Class Invested Amount for such Class is not
reduced to zero;

     (b) if applicable, following either (i) the withdrawal or reduction of the
commercial paper or certificate of deposit rating of any Interest Rate Cap
Provider to below the ratings specified in the Series Term Sheet (or, in either case, such lower rating
as the applicable Rating Agency has allowed) or (ii) notice from either Rating
Agency that any Qualified Substitute Cap Arrangement or any other arrangement
established pursuant to Section 15 is no longer satisfactory to such Rating
Agency, the Master Servicer shall fail, within the applicable time period
specified in Section 15, to (x) obtain Replacement Class Interest Rate Caps or
Qualified Substitute Cap Arrangements or (y) cause the Interest Rate Cap
Provider to pledge securities as collateral securing the obligations of the
Interest Rate Cap Provider or establish any other arrangement as provided in
Section 15, in each case in a manner satisfactory to the Trustee and the Rating
Agencies (such that neither Rating Agency will reduce or withdraw the ratings
of the Investor Certificates of the Series established hereby); or

     (c) if the amount of Principal Receivables in the Trust at the end of any
Due Period for three consecutive Due Periods of the Early Accumulation Period
shall be less than the Minimum Principal Receivables Balance and Discover Bank
shall have failed to assign Receivables in Additional Accounts or Participation
Interests to the Trust in at least the amount of the deficiency by the tenth
day of the calendar month of the following Due Period;

an Amortization Event shall occur with respect to the Investor Certificates of
the Series established hereby, immediately upon the occurrence of such event.
If an Amortization Event described in this Section 20 shall occur, this Section
20 constitutes written notice by the Trustee and not less than 51% of the Class
Invested Amount of each Class of the Series established hereby to the Master
Servicer and the Sellers that such Amortization Event has occurred. No
additional notice of any kind, which is hereby waived by the Sellers and the
Master Servicer, shall be required as a condition of the occurrence of any
Amortization Event described in this Section 20. In addition, the events set
forth in Section 21 shall constitute either Early Accumulation Events or
additional Amortization Events with respect to the Series established hereby.

     SECTION 21. Early Accumulation Events; Additional Amortization Events. If
the Series established hereby is eligible to have an Early Accumulation Period,
each of the events described in clause (a), (b), (g), (i) or (j) of Section
9.01 of the Pooling and Servicing Agreement

60

 

shall not be Amortization Events
but shall instead be Early Accumulation Events. In addition, for purposes of
this Series Supplement, each of the following events shall be (i) Early
Accumulation Events, if the Series established hereby is eligible to have an
Early Accumulation Period, or (ii) Amortization Events, if the Series
established hereby is not eligible to have an Early Accumulation Period:

     (a) on any Distribution Date, the three month rolling average Series
Excess Spread is less than the Series Buffer Amount, the three month rolling
average Group Excess Spread is less than the Group Buffer Amount and for so
long as any Series that is not an Interchange Series is outstanding, the three
month rolling average Interchange Subgroup Excess Spread is less than the
Interchange Subgroup Buffer Amount;

     (b) if a Supplemental Credit Enhancement Event shall have occurred and
Discover Bank as Servicer shall have failed to arrange for the Supplemental
Credit Enhancement in accordance with the requirements of Section 11(c) hereof (including,
without limitation, receipt of the confirmation from Standard & Poor’s required
thereby).

     If any event described in clause (a), (b), (g), (i) or (j) of Section 9.01 of
the Pooling and Servicing Agreement occurs, an Early Accumulation Event shall
occur with respect to the Investor Certificates of such Class only if the event
has a material adverse effect on the Investor Certificateholders of such Class
and if, after the applicable grace period described in those clauses, either
the Trustee declares or the Investor Certificateholders of such Class
evidencing Fractional Undivided Interests aggregating not less than 51% of the
Class Invested Amount for either Class declare by written notice to Discover
Bank and the Master Servicer (and to the Trustee if given by the Investor
Certificateholders) that an Early Accumulation Event has occurred as of the
date of the notice. In the case of any event described in clause (a) or (b) of
this Section 21, an Early Accumulation Event shall occur with respect to the
Investor Certificates of such Class immediately upon the occurrence of the
event without any notice or other action on the part of the Trustee or the
Investor Certificateholders of such Class. On the date on which an Early
Accumulation Event is deemed to have occurred the Early Accumulation Period
will commence.

     SECTION 22. Purchase of Investor Certificates and Series Termination.

     (a) If as of any Distribution Date during the Amortization Period (after
giving effect to any payments calculated pursuant to Section 9 made on such
Distribution Date) the Series Investor Interest of the Series established
hereby is less than or equal to 5% of the Series Initial Investor Interest,
Discover Bank on behalf of the Holder of the Seller Certificate may purchase
and cancel the Investor Certificates of the Series established hereby by
depositing into the Series Distribution Account, on the immediately succeeding
Distribution Date, an amount equal to the Series Investor Interest as of the
last day of the Due Period related to such immediately succeeding Distribution
Date. The Master Servicer shall direct the Trustee in writing to withdraw the
amount allocable to such Class from the Series Distribution Account and pay
such amount to the Investor Certificateholders of such Class pursuant to
Section 12.02 of the Pooling and Servicing Agreement. All Investor
Certificates of the Series established hereby that are purchased by Discover
Bank on behalf of the Holder of the Seller Certificate pursuant to this

61

 

Section
22(a) shall be delivered by Discover Bank on behalf of the Holder of the Seller
Certificate upon such purchase to, and be cancelled by, the Transfer Agent and
be disposed of in a manner satisfactory to the Trustee and Discover Bank on
behalf of the Holder of the Seller Certificate.

     (b) If as of any Distribution Date during the Accumulation Period, the
Early Accumulation Period or the Controlled Liquidation Period, as applicable
(after giving effect to any payments calculated pursuant to Section 9 made on
such Distribution Date), the Series Investor Interest of the Series established
hereby is less than or equal to 5% of the Series Initial Investor Interest
(before giving effect to any reduction in the Series Initial Investor Interest
pursuant to Section 6.14 of the Pooling and Servicing Agreement), Discover Bank
on behalf of the Holder of the Seller Certificate may, but shall not be
obligated to, purchase the Investor Certificates of the Series established
hereby by depositing into the Series Principal Funding Account, on such Distribution Date, an amount equal to such Series
Investor Interest. After giving effect to such deposit, such Series Investor
Interest shall be reduced to zero, and the Seller Interest shall be increased
by the amount of such deposit.

     (c) Following the sale of Receivables pursuant to Section 12.02 of the
Pooling and Servicing Agreement, the Master Servicer shall direct the Trustee
in writing to withdraw the amount allocable to each Class from the Series
Distribution Account and pay such amount to the Investor Certificateholders of
such Class pursuant to Section 12.02 of the Pooling and Servicing Agreement.

     SECTION 23. Variable Accumulation Period. If the Series Term Sheet for
the Series established hereby so provides, the Master Servicer may elect, by
written notice to the Trustee, Discover Bank on behalf of the Holder of the
Seller Certificate and the Credit Enhancement Provider, to delay the
commencement of the Accumulation Period, and extend the length of the Revolving
Period, subject to the conditions set forth in this Section 23; provided,
however, that the Accumulation Period shall commence no later than the first
day of the Due Period related to the Class A Expected Final Payment Date. Any
such election by the Master Servicer shall be made no later than the first day
of the last scheduled Due Period of the Revolving Period (including any prior
extension of the Revolving Period pursuant to this Section 23).

     The Master Servicer may make such election only if the following
conditions are satisfied: (i) the Master Servicer shall have delivered to the
Trustee a certificate to the effect that the Master Servicer reasonably
believes that the delay in the commencement of the Accumulation Period would
not result in the Class Invested Amount with respect to any Class of the Series
established hereby not being paid in full on the relevant Class Expected Final
Payment Date; (ii) the Rating Agencies shall have advised the Master Servicer
and Discover Bank on behalf of the Holder of the Seller Certificate that such
election to delay the commencement of the Accumulation Period would not cause
the rating of any Class of any Series then outstanding to be lowered or
withdrawn; and (iii) the amount to be deposited in the Series Principal Funding
Account in respect of the Accumulation Amount shall have been adjusted.

     SECTION 24. Optional Accumulation Period Commencement. If the Series Term
Sheet for the Series established hereby so provides, unless the Amortization
Period or the Early

62

 

Accumulation Period shall have commenced prior thereto, the
Master Servicer may elect to commence the Accumulation Period by delivering
written notice to the Trustee, Discover Bank, on behalf of the Holder of the
Seller Certificate and the Credit Enhancement Provider at least 5 Business Days
prior to the Accumulation Commencement Date subject to the conditions set forth
in this Section 24; provided, however, that the Accumulation Period shall
commence no later than the first day of the following Due Period. Such written
notice shall set forth the Accumulation Amount for each Distribution Date
relating to the Accumulation Period.

     SECTION
25. Series Yield Factor. The Series Yield Factor for the Series established hereby shall
initially be the Series Yield Factor set forth in the Series Term Sheet. The
Master Servicer may change the Series Yield Factor upon 20 days prior written
notice to the Trustee, Discover Bank on behalf of the Holder of the Seller
Certificate, the Credit Enhancement Provider and the Rating Agencies, provided
that the following conditions are satisfied: (i) the Series Yield Factor may
not be reduced below the initial Series Yield Factor or increased to more than
a total of 0.05; (ii) the Master Servicer shall have delivered to the Trustee a
certificate to the effect that the Master Servicer reasonably believes that the
change in the Series Yield Factor would not (x) result in any delay in the
payment of principal to the Investor Certificateholders of any Series then
outstanding, or (y) cause an Amortization Event or an Early Accumulation Event
to occur with respect to any Series then outstanding; and (iii) Standard &
Poor’s shall have advised the Master Servicer and Discover Bank on behalf of
the Holder of the Seller Certificate that such change in the Series Yield
Factor would not cause the rating of any Class of any Series then outstanding
to be lowered or withdrawn. Any such change shall be effective as of the first
day of the Due Period specified in the notice of the Master Servicer.

     SECTION 26. Ratification of Pooling and Servicing Agreement. As
supplemented and amended by this Series Supplement, the Pooling and Servicing
Agreement is in all respects ratified and confirmed and the Pooling and
Servicing Agreement as so supplemented by this Series Supplement shall be read,
taken, and construed as one and the same instrument.

     SECTION 27. Counterparts. This Series Supplement may be executed in any
number of counterparts, each of which so executed shall be deemed to be an
original, but all of such counterparts shall together constitute but one and
the same instrument.

     SECTION 28. Governing Law. This Series Supplement shall be construed in
accordance with the internal laws of the State of New York, without reference
to its conflict of law provisions, and the obligations, rights and remedies of
the parties hereunder shall be determined in accordance with such laws.

     SECTION 29. Intention of Parties. The parties intend the sale, transfer,
assignment or conveyance of Receivables, Interchange and all proceeds thereof
in connection herewith to be a sale of financial assets in connection with a
securitization and an absolute transfer for all purposes (other than for
federal, state and local income and franchise tax purposes). The parties
intend the sale, transfer, assignment or conveyance of Receivables in
connection herewith to be treated as a sale for accounting purposes.

63

 

     SECTION 30. Amendment for Sale Accounting Purposes. If any Seller
determines that (i) an amendment to this Agreement or the Pooling and Servicing
Agreement is necessary or desirable for such Seller to maintain or establish
sale accounting treatment under then-applicable financial accounting standards,
and (ii) such Seller cannot enter into such amendment pursuant to Section 13.01
of the Pooling and Servicing Agreement without obtaining the consent of a
specified percentage of Investor Certificateholders, then the Master Servicer,
the Sellers, the Trustee and the Servicers may nonetheless enter into such
amendment without obtaining the consent of any Certificateholder of any
Investor Certificates of this Series so long as the Trustee shall have been
advised by the Rating Agencies that such amendment will not result in the
downgrading or withdrawal of the rating assigned to any Class of any Series
then outstanding.

     Any such amendment may include, without limitation, any changes necessary
to convert the Trust from a “one-tier” securitization structure to a “two-tier”
securitization structure. Notwithstanding the foregoing, any Investor
Certificateholder that acquires an Investor Certificate of this Series will be
deemed to have consented to any such amendment for all purposes, including for
purposes of calculating whether the requisite consent percentage, if any, under
Section 13.01 of the Pooling and Servicing Agreement has been received for any
amendment that requires such consent because of the lack of provisions
comparable to this Section 30 in the Series Supplements for other Series then
outstanding (except that Investor Certificates beneficially owned by any Seller
or any affiliate or agent of any Seller will not be included in any such
calculation).

     SECTION 31. Election Under Delaware Asset-Backed Securities Facilitation
Act. Without limiting any other provisions of the Pooling and Servicing
Agreement or this Series Supplement, the parties hereto agree that (a) the
transactions contemplated hereby constitute a “securitization transaction” and
(b) to the fullest extent permitted under applicable law, including without
limitation, the Asset-Backed Securities Facilitation Act Delaware Code Ann.
tit. 6, § 2703A et seq: (1) all right, title and interest to the Receivables,
whether now existing or hereafter acquired, all monies due or to become due
with respect thereto, all proceeds of such Receivables and all Interchange (the
“Transferred Assets”), which have been transferred to the Trust in connection
with the securitization transactions contemplated herein, shall be deemed to no
longer be the property, assets or rights of the Seller; (2) the Seller, its
creditors or, in any insolvency proceeding with respect to the Seller or the
Seller’s property, a bankruptcy trustee, receiver, debtor, debtor in possession
or similar person, shall have no rights, legal or equitable, whatsoever to
reacquire, reclaim, recover, repudiate, disaffirm, redeem or recharacterize as
property of the Seller any of the Transferred Assets; and (3) in the event of a
bankruptcy, receivership or other insolvency proceeding with respect to the
Seller or the Seller’s property, such Transferred Assets shall not be deemed to
be part of the Seller’s property, assets, rights or estate.

     SECTION 32. Issuance of Additional Certificates. The Sellers may direct
the Trustee to issue, at any time and from time to time when this Series is
outstanding, additional Investor Certificates of this Series to increase the
Series Investor Interest, subject to the satisfaction of the conditions
described below:

64

 

     (a) The additional Investor Certificates shall increase the Class Invested
Amounts of the Class A Certificates and the Class B Certificates, if
applicable, and all amounts related to the Credit Enhancement for this Series
proportionately from their initial levels.

     (b) The Sellers shall have notified the Trustee, in writing, at least
three days in advance of the date upon which the Series Investor Interest is to
be increased, which notice shall state the designation of the Series under
which the additional Investor Certificates are to be issued and shall include:
(i) the amount of Investor Certificates being offered and the resulting Class
Initial Investor Interests and Series Initial Investor Interest; (ii) the date
from which interest on the additional Investor Certificates will accrue (which
may be a date prior to the date of issuance thereof); (iii) the first Interest
Payment Date on which interest will be paid on such new Investor Certificates;
(iv) the Increased Credit Enhancement Amount and the Increased Issuance
Subordinated Amount for such increase; and (v) any other terms that the Sellers
set forth in such notice of such increase in the Series Investor Interest to
clarify the rights of holders of such new Investor Certificates or the effect
of such new Investor Certificates on any calculations to be made with respect
to this Series, the Group of which this Series is a member, or the Trust. All
such terms shall be incorporated into and form a part of this Series Supplement
on and after the effective date of such increase in the Series Investor
Interest. The notice shall also include a revised Series Term Sheet that
specifies the terms of this Series after giving effect to the increase.

     (c) The Sellers shall have delivered to the Trustee written confirmation
from the Rating Agencies that they will not, as a result of the increase,
change the rating of any class of any series outstanding at the time of the
increase and that they will rate the additional Investor Certificates the same
as those Investor Certificates currently outstanding in this Series.

     (d) Discover Bank as Servicer shall have arranged for the payment of an
additional amount related to the Credit Enhancement required to increase the
amount on deposit in the Credit Enhancement Account so that such amount, after
giving effect to such increase and the issuance of the additional Investor
Certificates, represents the same percentage of the Series Investor Interest
that the original amount on deposit in the Credit Enhancement Account, plus any
amounts deposited in the Credit Enhancement Account as a result of a
Supplemental Credit Enhancement Event or an Effective Alternative Credit
Support Election, represented of the original Series Investor Interest (such
additional amount, the “Increased Credit Enhancement Amount”). Such payment
shall be made by a Person other than Discover Bank to the Trustee as
administrator of the Credit Enhancement for application in accordance with the
provisions of the Credit Enhancement Agreement. Both the form and the provider
of the Increased Credit Enhancement Amount shall be determined at the time it
is to be paid.

     (e) Discover Bank on behalf of the Holder of the Seller Certificate shall
not be required to designate Additional Accounts or convey Participation
Interests to the Trust pursuant to Section 2.10(a) of the Pooling and Servicing
Agreement as a result of the increase in Series Investor Interest.

     (f) No Amortization Event shall have occurred for this Series.

65

 

     (g) No such additional Investor Certificates shall be issued with more
than de minimis original issue discount.

     Upon any increase in the Series Investor Interest, Discover Bank on behalf
of the Holder of the Seller Certificate shall execute and deliver to the
Trustee, and the Trustee shall authenticate and deliver, upon the order of
Discover Bank on behalf of the Holder of the Seller Certificate, new Investor
Certificates in the amount of the increase, each of which shall bear, upon its
face, the designation for this Series.

66

 

EXHIBIT A-1

FORM OF CLASS A CERTIFICATE

[FORM OF THE FACE OF THE CLASS A CERTIFICATES]

     UNLESS THIS CLASS A CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CLASS A CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT
IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF,
CEDE & CO., HAS AN INTEREST HEREIN.

	 	 	 	 	 
	     NO.

	 	$	 	

CUSIP NO.____________

DISCOVER CARD MASTER TRUST I, SERIES 2004-1

FLOATING RATE CLASS A CREDIT CARD PASS-THROUGH CERTIFICATE

DISCOVER BANK

MASTER SERVICER, SERVICER AND SELLER

(NOT AN INTEREST IN OR OBLIGATION OF DISCOVER BANK AND NOT INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENTAL AGENCY.)

     This certifies that Cede & Co. (the “Class A Certificateholder”) is the
registered owner of a Fractional Undivided Interest in the Discover Card Master
Trust I (the “Trust”), the corpus of which consists of a portfolio of
receivables (the “Receivables”) existing as of the Cut-Off Date (or, with
respect to Receivables in Additional Accounts, as of the applicable Additional
Account Cut-Off Date) or thereafter created under certain open end credit card
accounts for specified Persons (the “Accounts”) originated by Discover Bank
(formerly Greenwood Trust Company), a Delaware banking corporation (“Discover
Bank”), or an affiliate of Discover Bank, and transferred to the Trust by
Discover Bank or one or more Additional Sellers, all monies due or to become
due with respect thereto, all proceeds (as defined in Section 9-102(a)(64) of
the Uniform Commercial Code as in effect in the Applicable State or any
successor provision thereto) of such Receivables and interchange pursuant to an
Amended and Restated Pooling and Servicing Agreement, dated as of November 3,
2004 by and between U.S. Bank National Association (formerly First Bank
National Association, successor trustee to Bank of America Illinois,

A-1-1

 

formerly Continental Bank, National Association) as Trustee (the
“Trustee”) and Discover Bank as Master Servicer, Servicer and Seller (the
“Pooling and Servicing Agreement”), a summary of certain of the pertinent
provisions of which is set forth herein below, and benefits under any Credit
Enhancement with respect to any Series of investor certificates issued from
time to time pursuant to the Pooling and Servicing Agreement, to the extent
applicable. Reference is hereby made to the further provisions of this Class A
Certificate set forth on the reverse hereof, and such further provisions shall
for all purposes have the same effect as if set forth at this place.

     This Class A Certificate shall not be entitled to any benefit under the
Pooling and Servicing Agreement or any amendment thereto, or the Series
Supplement, dated as of November 3, 2004 (the “Series Supplement”), by and
between the Trustee and Discover Bank or any amendment thereto, or become
vested or obligatory for any purpose until the certificate of authentication
hereon shall have been signed by or on behalf of the Trustee under the Pooling
and Servicing Agreement.

A-1-2

 

     IN WITNESS WHEREOF, Discover Bank has caused this Class A Certificate to
be duly executed and authenticated.

	 	 	 	 	 
	 	 	DISCOVER BANK
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	

A-1-3

 

[FORM OF THE REVERSE OF THE CLASS A CERTIFICATES]

     It is the intent of the Sellers and the Investor Certificateholders that,
for federal, state and local income and franchise tax purposes only, the
Investor Certificates will be evidence of indebtedness of the Sellers. The
Sellers and the Class A Certificateholder, by the acceptance of this Class A
Certificate, agree to treat this Class A Certificate for federal, state and
local income and franchise tax purposes as indebtedness of the Sellers secured
by the Receivables and other assets held in the Trust.

     To the extent not defined herein, the capitalized terms used herein have
the meanings assigned in the Pooling and Servicing Agreement or the Series
Supplement. This Class A Certificate is issued under and is subject to the
terms, provisions and conditions of the Pooling and Servicing Agreement and the
Series Supplement, to which Pooling and Servicing Agreement and Series
Supplement, as each may be amended from time to time, the Class A
Certificateholder by virtue of the acceptance hereof assents and by which the
Class A Certificateholder is bound.

     This Class A Certificate is one of a series of Certificates entitled
“Discover Card Master Trust I, Series 2004-1 Floating Rate Class A Credit Card
Pass-Through Certificates” (the “Class A Certificates”), each of which
represents a Fractional Undivided Interest in the Trust including the right to
receive the Collections and other amounts at the times and in the amounts
specified in the Pooling and Servicing Agreement and the Series Supplement to
be deposited in the Investor Accounts with respect to Discover Card Master
Trust I, Series 2004-1 or paid to the Class A Certificateholders. Also issued
under the Pooling and Servicing Agreement and the Series Supplement are
Investor Certificates designated as “Discover Card Master Trust I, Series
2004-1 Floating Rate Class B Credit Card Pass-Through Certificates” (the “Class
B Certificates”). The Class A Certificates and the Class B Certificates are
collectively referred to herein as the Investor Certificates.

     The aggregate interest represented by the Class A Certificates at any time
in the assets of the Trust shall not exceed an amount equal to the Class A
Investor Interest at such time, plus accrued but unpaid Certificate Interest
for the Class A Certificates and any interest thereon. The Class Initial
Investor Interest of the Class A Certificates is $1,250,000,000; plus the face
amount of any Class A Certificates issued in an increase of the Series Investor
Interest pursuant to Section 32 of the Series Supplement. The Class A Invested
Amount on any Distribution Date will be an amount equal to the Class A Initial
Investor Interest minus the sum of (a) the aggregate amount of payments of
Certificate Principal paid to the Class A Certificateholders prior to such
Distribution Date, (b) the aggregate amount of Investor Losses for such Class
not reimbursed prior to such Distribution Date and (c) the aggregate amount of
losses of principal on investments in funds on deposit for the benefit of such
Class in the Series Principal Funding Account. In addition to the Investor
Certificates, a Seller Certificate has been issued pursuant to the Pooling and
Servicing Agreement which represents, at any time, the undivided interest in
the Trust not represented by the Investor Certificates or the investor
certificates of any other Series of investor certificates then outstanding.
Subject to the terms and conditions of the Pooling and Servicing Agreement, the
Sellers may from time to time direct the Trustee, on behalf of the Trust, to
issue one or more new Series of investor certificates, which will represent
Fractional Undivided Interests in the Trust.

A-1-4

 

     During the Revolving Period, which begins on the Series Cut-Off Date, and
during the Accumulation Period, Certificate Interest will be distributed on the
15th day of each calendar month with respect to interest accrued during the
preceding Interest Accrual Period, commencing in December 2004, or if such 15th
day is not a Business Day, on the next succeeding Business Day (an “Interest
Payment Date”), to the Class A Certificateholders of record as of the last day
of the month preceding the related Interest Payment Date. Principal on the
Class A Certificates is scheduled to be paid in a single payment on the
Distribution Date in October 2007 (the “Class A Expected Final Payment Date”),
but may be paid sooner or later and in installments if an Amortization Event
occurs. During the Amortization Period, if any, Certificate Interest and
Certificate Principal collected by the Master Servicer will be distributed to
the Class A Certificateholders on the Distribution Date of each calendar month,
commencing in the month following the commencement of the Amortization Period.
In any event, the final payment of principal of either class will be made no
later than the first Business Day following the Distribution Date in April,
2010 (the “Series Termination Date”).

     The amount to be distributed on each Principal Payment Date to the holder
of this Class A Certificate will be equal to the product of (a) the percentage
equivalent of a fraction, the numerator of which is the portion of the Class A
Initial Investor Interest evidenced by this Class A Certificate and the
denominator of which is the Class A Initial Investor Interest and (b) the
aggregate of all payments to be made to the Class A Certificateholders on such
Distribution Date. Distributions with respect to this Class A Certificate will
be made by the Paying Agent by check mailed to the address of the Class A
Certificateholder of record appearing in the Certificate Register (except for
the final distribution in respect of this Class A Certificate) without the
presentation or surrender of this Class A Certificate or the making of any
notation thereon, except that with respect to Class A Certificates registered
in the name of Cede & Co., the nominee registrant for The Depository Trust
Company, distributions will be made in the form of immediately available funds.

     This Class A Certificate does not represent an obligation of, or an
interest in, the Master Servicer. This Class A Certificate is limited in right
of payment to certain Collections respecting the Receivables and certain other
assets of the Trust, all as more specifically set forth hereinabove and in the
Pooling and Servicing Agreement and the Series Supplement.

     The Pooling and Servicing Agreement permits, with certain exceptions, the
amendment and modification of the rights and obligations of the Master
Servicer, and the rights of Investor Certificateholders under the Pooling and
Servicing Agreement and Series Supplement, at any time by the Master Servicer,
the Sellers and the Trustee in certain cases (some of which require
confirmation from the Rating Agencies that such amendment will not result in
the downgrading or withdrawal of the rating assigned to the Investor
Certificates) without the consent of the Investor Certificateholders, and in
all other cases with the consent of the Investor Certificateholders owning
Fractional Undivided Interests aggregating not less than 66-2/3% of the Class
Invested Amount of each such affected Class (and with confirmation from the
Rating Agencies that such amendment will not result in the downgrading or
withdrawal of the rating assigned to the Investor Certificates); provided,
however, that no such amendment shall (a) have a material adverse effect on any
Class of Investor Certificateholders by reducing in any manner the amount of,
or delaying the timing of, distributions which are required to be made on any
Investor Certificate without the consent of the affected Investor
Certificateholders or (b) reduce

A-1-5

 

the aforesaid percentage required to consent to any such amendment,
without the consent of each Investor Certificateholder of each affected Class
then of record; and provided, further, that the permitted activities of the
Trust may be significantly changed only with the consent of the Holders of
Investor Certificates evidencing Fractional Undivided Interests aggregating not
less than 51% of the Aggregate Invested Amount. Any such amendment and any
such consent by the Class A Certificateholder, including the deemed consent
described in the following sentence, shall be conclusive and binding on such
Class A Certificateholder and upon all future Holders of this Class A
Certificate and of any Class A Certificate issued in exchange hereof or in lieu
hereof whether or not notation thereof is made upon this Class A Certificate.
The Class A Certificateholder, by acceptance of this Class A Certificate, will
be deemed to have consented for all purposes to any amendment that any Seller
determines is necessary or desirable for such Seller to maintain or establish
sale accounting treatment under then-applicable financial accounting standards.

     The transfer of this Class A Certificate shall be registered in the
Certificate Register upon surrender of this Investor Certificate for
registration of transfer at any office or agency maintained by the Transfer
Agent and Registrar accompanied by a written instrument of transfer in a form
satisfactory to the Trustee and the Transfer Agent and Registrar duly executed
by the Class A Certificateholder or such Class A Certificateholder’s attorney
duly authorized in writing, and thereupon one or more new Class A Certificates
of authorized denominations and for the same aggregate Fractional Undivided
Interest will be issued to the designated transferee or transferees.

     As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class A Certificates are exchangeable for new
Class A Certificates evidencing like aggregate Fractional Undivided Interests,
as requested by the Class A Certificateholder surrendering such Class A
Certificates. No service charge may be imposed for any such exchange but the
Master Servicer or Transfer Agent and Registrar may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection therewith.

     The Master Servicer, the Trustee, the Paying Agent and the Transfer Agent,
and any agent of any of them, may treat the person in whose name this Class A
Certificate is registered as the owner hereof for all purposes, and neither the
Master Servicer, the Trust nor the Trustee, the Paying Agent, the Transfer
Agent, nor any agent of any of them or any such agent shall be affected by
notice to the contrary except in certain circumstances described in the Pooling
and Servicing Agreement.

     Subject to certain conditions in the Pooling and Servicing Agreement and
the Series Supplement, if the principal of the Investor Certificates has not
been paid in full prior to the Series Termination Date, the obligations created
by the Pooling and Servicing Agreement and the Series Supplement with respect
to the Investor Certificates shall terminate on the Series Termination Date.

A-1-6

 

[FORM OF TRUSTEE’S CERTIFICATE OF AUTHENTICATION]

     This is one of the Class A Certificates referred to in the within
mentioned Pooling and Servicing Agreement and Series Supplement.

	 	 	 	 	 
	 	 	U.S. BANK NATIONAL ASSOCIATION, as

Trustee
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	

	

	 	 	 	Authorized Officer

A-1-7

 

EXHIBIT A-2

FORM OF CLASS B CERTIFICATE

[FORM OF THE FACE OF THE CLASS B CERTIFICATES]

     UNLESS THIS CLASS B CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CLASS B CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT
IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF,
CEDE & CO., HAS AN INTEREST HEREIN.

	 	 	 	 	 
	NO.

	 	$	 	

CUSIP NO.____________

     THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A
CERTIFICATES AND TO THE RIGHTS OF THE MASTER SERVICER AS DESCRIBED IN THE
POOLING AND SERVICING AGREEMENT AND SERIES SUPPLEMENT REFERRED TO HEREIN.

DISCOVER CARD MASTER TRUST I, SERIES 2004-1

FLOATING RATE CLASS B CREDIT CARD PASS-THROUGH CERTIFICATE

DISCOVER BANK

MASTER SERVICER, SERVICER AND SELLER

(NOT AN INTEREST IN OR OBLIGATION OF DISCOVER BANK AND NOT INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENTAL AGENCY.)

     THIS INVESTOR CERTIFICATE MAY NOT BE ACQUIRED BY OR FOR THE ACCOUNT OF ANY
EMPLOYEE BENEFIT PLAN (AS DEFINED BELOW).

     This certifies that Cede & Co. (the “Class B Certificateholder”) is the
registered owner of a Fractional Undivided Interest in the Discover Card Master
Trust I (the “Trust”), the corpus of which consists of a portfolio of
receivables (the “Receivables”) existing as of the Cut-Off Date (or, with
respect to Receivables in Additional Accounts, as of the applicable Additional
Account Cut-Off Date) or thereafter created under certain open end credit card
accounts for specified Persons (the “Accounts”) originated by Discover Bank
(formerly Greenwood Trust Company), a Delaware banking corporation (“Discover
Bank”), or an affiliate of Discover Bank, and

A-2-1

 

transferred to the Trust by
Discover Bank or one or more Additional Sellers, all monies due or to
become due with respect thereto, all proceeds (as defined in Section
9-102(a)(64) of the Uniform Commercial Code as in effect in the Applicable
State or any successor provision thereto) of such Receivables and interchange
pursuant to an Amended and Restated Pooling and Servicing Agreement, dated as
of November 3, 2004, by and between U.S. Bank National Association (formerly
First Bank National Association, successor trustee to Bank of America Illinois,
formerly Continental Bank, National Association) as Trustee (the “Trustee”) and
Discover Bank as Master Servicer, Servicer and Seller (the “Pooling and
Servicing Agreement”), a summary of certain of the pertinent provisions of
which is set forth herein below, and benefits under any Credit Enhancement with
respect to any Series of investor certificates issued from time to time
pursuant to the Pooling and Servicing Agreement, to the extent applicable.
Reference is hereby made to the further provisions of this Class B Certificate
set forth on the reverse hereof, and such further provisions shall for all
purposes have the same effect as if set forth at this place.

     This Class B Certificate shall not be entitled to any benefit under the
Pooling and Servicing Agreement or any amendment thereto, or the Series
Supplement, dated as of November 3, 2004 (the “Series Supplement”), by and
between the Trustee and Discover Bank or any amendment thereto, or become
vested or obligatory for any purpose until the certificate of authentication
hereon shall have been signed by or on behalf of the Trustee under the Pooling
and Servicing Agreement.

A-2-2

 

     IN WITNESS WHEREOF, Discover Bank has caused this Class B Certificate to
be duly executed and authenticated.

	 	 	 	 	 
	 	 	DISCOVER BANK
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	

A-2-3

 

[FORM OF THE REVERSE OF THE CLASS B CERTIFICATES]

     It is the intent of the Sellers and the Investor Certificateholders that,
for federal, state and local income and franchise tax purposes only, the
Investor Certificates will be evidence of indebtedness of the Sellers. The
Sellers and the Class B Certificateholder, by the acceptance of this Class B
Certificate, agree to treat this Class B Certificate for federal, state and
local income and franchise tax purposes as indebtedness of the Sellers secured
by the Receivables and other assets held in the Trust.

     To the extent not defined herein, the capitalized terms used herein have
the meanings assigned in the Pooling and Servicing Agreement or the Series
Supplement. This Class B Certificate is issued under and is subject to the
terms, provisions and conditions of the Pooling and Servicing Agreement and the
Series Supplement, to which Pooling and Servicing Agreement and Series
Supplement, as each may be amended from time to time, the Class B
Certificateholder by virtue of the acceptance hereof assents and by which the
Class B Certificateholder is bound.

     This Class B Certificate is one of a class of Certificates entitled
“Discover Card Master Trust I, Series 2004-1 Floating Rate Class B Credit Card
Pass-Through Certificates” (the “Class B Certificates”), each of which
represents a Fractional Undivided Interest in the Trust including the right to
receive the Collections and other amounts at the times and in the amounts
specified in the Pooling and Servicing Agreement and the Series Supplement to
be deposited in the Investor Accounts with respect to Discover Card Master
Trust I, Series 2004-1 or paid to the Class B Certificateholders. Also issued
under the Pooling and Servicing Agreement and the Series Supplement are
Investor Certificates designated as “Discover Card Master Trust I, Series
2004-1 Floating Rate Class A Credit Card Pass-Through Certificates” (the “Class
A Certificates”). The Class A Certificates and the Class B Certificates are
collectively referred to herein as the Investor Certificates.

     The aggregate interest represented by the Class B Certificates at any time
in the assets of the Trust shall not exceed an amount equal to the Class
Investor Interest of the Class B Certificates at such time, plus accrued but
unpaid Certificate Interest for the Class B Certificates and any interest
thereon. The Class B Certificateholders are also entitled to the benefit of
the Credit Enhancement, to the extent provided in the Series Supplement. The
Class Initial Investor Interest of the Class B Certificates is $65,790,000;
plus the face amount of any Class B Certificates issued in an increase of the
Series Investor Interest pursuant to Section 32 of the Series Supplement. The
Class B Invested Amount on any Distribution Date will be an amount equal to the
Class B Initial Investor Interest minus the sum of (a) the aggregate amount of
payments of Certificate Principal paid to the Class B Certificateholders prior
to such Distribution Date, (b) the aggregate amount of Investor Losses for such
Class not reimbursed prior to such Distribution Date and (c) the aggregate
amount of losses of principal on investments in funds on deposit for the
benefit of such Class in the Series Principal Funding Account. In addition to
the Investor Certificates, a Seller Certificate has been issued pursuant to the
Pooling and Servicing Agreement which represents, at any time, the undivided
interest in the Trust not represented by the Investor Certificates or the
investor certificates of any other Series of investor certificates then
outstanding. Subject to the terms and conditions of the Pooling and Servicing
Agreement,
the Sellers may from time to time direct the Trustee, on behalf of the
Trust, to issue one or more

A-2-4

 

new Series of investor certificates, which will
represent Fractional Undivided Interests in the Trust.

     During the Revolving Period, which begins on the Series Cut-Off Date, and
during the Accumulation Period, Certificate Interest will be distributed on the
15th day of each calendar month with respect to interest accrued during the
preceding Interest Accrual Period, commencing in December 2004, or if such 15th
day is not a Business Day, on the next succeeding Business Day (each, an
“Interest Payment Date”), to the Class B Certificateholders of record as of the
last day of the month preceding the related Interest Payment Date. Principal
on the Class B Certificates is scheduled to be paid in a single payment on the
Distribution Date in November 2007 (the “Class B Expected Final Payment Date”),
but may be paid sooner or later or in installments under certain circumstances.
During the Amortization Period, if any, Certificate Interest and Certificate
Principal collected by the Master Servicer will be distributed to the Class B
Certificateholders on the Distribution Date of each calendar month, commencing
in the month following the commencement of the Amortization Period; provided,
however, that no Certificate Principal will be distributed to the Class B
Certificateholders until the Class A Investor Interest has been reduced to
zero. The rights of the Class B Certificateholders to receive the
distributions to which they would otherwise be entitled on the Receivables will
be subordinated to the rights of the Class A Certificateholders and the Master
Servicer to the extent described in the Pooling and Servicing Agreement and
Series Supplement. In any event, the final payment of principal of either
Class will be made no later than the first Business Day following the
Distribution Date in April 2010 (the “Series Termination Date”).

     The amount to be distributed on each Distribution Date to the holder of
this Class B Certificate will be equal to the product of (a) the percentage
equivalent of a fraction, the numerator of which is the portion of the Class B
Initial Investor Interest evidenced by this Class B Certificate and the
denominator of which is the Class B Initial Investor Interest and (b) the
aggregate of all payments to be made to the Class B Certificateholders on such
Distribution Date. Distributions with respect to this Class B Certificate will
be made by the Paying Agent by check mailed to the address of the Class B
Certificateholder of record appearing in the Certificate Register (except for
the final distribution in respect of this Class B Certificate) without the
presentation or surrender of this Class B Certificate or the making of any
notation thereon, except that with respect to Class B Certificates registered
in the name of Cede & Co., the nominee registrant for The Depository Trust
Company, distributions will be made in the form of immediately available funds.

     This Class B Certificate does not represent an obligation of, or an
interest in, the Master Servicer. This Class B Certificate is limited in right
of payment to certain Collections respecting the Receivables and certain other
assets of the Trust, all as more specifically set forth hereinabove and in the
Pooling and Servicing Agreement and the Series Supplement.

     The Pooling and Servicing Agreement permits, with certain exceptions, the
amendment and modification of the rights and obligations of the Master
Servicer, and the rights of Investor Certificateholders under the Pooling and
Servicing Agreement and Series Supplement, at any
time by the Master Servicer, the Sellers and the Trustee in certain cases
(some of which require confirmation from the Rating Agencies that such
amendment will not result in the downgrading

A-2-5

 

or withdrawal of the rating
assigned to the Investor Certificates) without the consent of the Investor
Certificateholders, and in all other cases with the consent of the Investor
Certificateholders owning Fractional Undivided Interests aggregating not less
than 66-2/3% of the Class Invested Amount of each such affected Class (and with
confirmation from the Rating Agencies that such amendment will not result in
the downgrading or withdrawal of the rating assigned to the Investor
Certificates); provided, however, that no such amendment shall (a) have a
material adverse effect on any Class of Investor Certificateholders by reducing
in any manner the amount of, or delaying the timing of, distributions which are
required to be made on any Investor Certificate without the consent of the
affected Investor Certificateholders or (b) reduce the aforesaid percentage
required to consent to any such amendment, without the consent of each Investor
Certificateholder of each affected Class then of record; and, provided,
further, that the permitted activities of the Trust may be significantly
changed only with the consent of the Holders of Investor Certificates
evidencing Fractional Undivided Interests aggregating not less than 51% of the
Aggregate Invested Amount. Any such amendment and any such consent by the
Class B Certificateholder, including the deemed consent described in the
following sentence, shall be conclusive and binding on such Class B
Certificateholder and upon all future Holders of this Class B Certificate and
of any Class B Certificate issued in exchange hereof or in lieu hereof whether
or not notation thereof is made upon this Class B Certificate. The Class B
Certificateholder, by acceptance of this Class B Certificate, will be deemed to
have consented for all purposes to any amendment that any Seller determines is
necessary or desirable for such Seller to maintain or establish sale accounting
treatment under then-applicable financial accounting standards.

     The transfer of this Class B Certificate shall be registered in the
Certificate Register upon surrender of this Investor Certificate for
registration of transfer at any office or agency maintained by the Transfer
Agent and Registrar accompanied by a written instrument of transfer in a form
satisfactory to the Trustee and the Transfer Agent and Registrar duly executed
by the Class B Certificateholder or such Class B Certificateholder’s attorney
duly authorized in writing, and thereupon one or more new Class B Certificates
of authorized denominations and for the same aggregate Fractional Undivided
Interest will be issued to the designated transferee or transferees.

     The transfer of this Investor Certificate is subject to certain
restrictions set forth in the Pooling and Servicing Agreement. In no event
shall this Investor Certificate, or any interest therein, be transferred to an
employee benefit plan, trust or account subject to the Employee Retirement
Income Security Act of 1974, as amended (“ERISA”), or described in Section
4975(e)(1) of the Internal Revenue Code of 1986, as amended (the “Code”), and
not excepted under Section 4975(g). Any Holder of this Investor Certificate,
by its acceptance hereof, shall be deemed to represent and warrant that it is
not (i) an employee benefit plan (as defined in Section 3(3) of ERISA), that is
subject to Title I of ERISA, (ii) a plan described in Section 4975(e)(l) of the
Code, and not excepted under Section 4975(g), or (iii) an entity using assets
to purchase such Certificates which constitute plan assets by reason of a
plan’s investment in such Holder.

     As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class B Certificates are exchangeable for new
Class B Certificates evidencing like aggregate Fractional Undivided Interests,
as requested by the Class B Certificateholder

A-2-6

 

surrendering such Class B
Certificates. No service charge may be imposed for any such exchange but the
Master Servicer or Transfer Agent and Registrar may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection therewith.

     The Master Servicer, the Trustee, the Paying Agent and the Transfer Agent,
and any agent of any of them, may treat the person in whose name this Class B
Certificate is registered as the owner hereof for all purposes, and neither the
Master Servicer, the Trust nor the Trustee, the Paying Agent, the Transfer
Agent, nor any agent of any of them or any such agent shall be affected by
notice to the contrary except in certain circumstances described in the Pooling
and Servicing Agreement.

     Subject to certain conditions in the Pooling and Servicing Agreement and
the Series Supplement, if the principal of the Investor Certificates has not
been paid in full prior to the Series Termination Date, the obligations created
by the Pooling and Servicing Agreement and the Series Supplement with respect
to the Investor Certificates shall terminate on the Series Termination Date.

A-2-7

 

[FORM OF TRUSTEE’S CERTIFICATE OF AUTHENTICATION]

     This is one of the Class B Certificates referred to in the within
mentioned Pooling and Servicing Agreement and Series Supplement.

	 	 	 	 	 
	 	 	U.S. BANK NATIONAL ASSOCIATION, as

Trustee
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	

	

	 	 	 	Authorized Officer

A-2-8

 

Exhibit B

Form of Investor Certificateholders’ Monthly Statement

Discover Card Master Trust I

Series 2004-1 Monthly Statement

	 	 	 
	Distribution Date:                               ,                    

	 	Month Ending:                                        ,                    

Pursuant to the Series Supplement dated as of November 3, 2004 relating to the
Amended and Restated Pooling and Servicing Agreement dated as of November 3,
2004 by and between Discover Bank and U.S. Bank National Association as
Trustee, the Trustee is required to prepare certain information each month
regarding current distributions to investors and the performance of the Trust.
We have set forth below this information for the Distribution Date listed
above, as well as for the calendar month ended on the date listed above.

	1.	 	Payments to investors in Series 2004-1 on this Distribution Date (per $1,000 of Class Initial Investor Interest)

	 	 	 	 	 	 	 
	 	 	Total	 	Interest	 	Principal
	Series 2004-1
	 	 	 	 	 	 
	Class A

	 	$                   
	 	$                   
	 	$                   
	 
	 	 	 	 	 	 
	Class B

	 	$                   
	 	$                   
	 	$                   

	2.	 	Principal Receivables at the end of [Month][Year]

	 	 	 	 	 	 	 	 	 
	(a)

	 	Aggregate Investor Interest
	 	 	 	 	 	$                   
	 
	 	 	 	 	 	 	 	 
	

	 	Seller Interest
	 	 	 	 	 	$                   
	 
	 	 	 	 	 	 	 	 
	

	 	TOTAL MASTER TRUST
	 	 	 	 	 	$                   
	 
	 	 	 	 	 	 	 	 
	(b)

	 	Group One Investor Interest
	 	 	 	 	 	$                   
	 
	 	 	 	 	 	 	 	 
	(c)

	 	Group One Investor Interest for Interchange Series
	 	 	 	 	 	$                   
	 
	 	 	 	 	 	 	 	 
	(d)

	 	Series 2004-1 Investor Interest
	 	 	 	 	 	$                   
	 
	 	 	 	 	 	 	 	 
	(e)

	 	Class A Investor Interest
	 	 	 	 	 	$                   
	 
	 	 	 	 	 	 	 	 
	

	 	Class B Investor Interest
	 	 	 	 	 	$                   

	3.	 	Allocation of Receivables and other amounts collected during [Month][Year]

	 	 	 	 	 	 	 	 	 
	 	 	 	 	Finance Charge	 	Principal	 	 
	 	 	 	 	Collections	 	Collections	 	Interchange
	(a)

	 	Allocation of Collections between
Investors and Seller	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	

	 	Aggregate Investor Allocation
	 	$                   
	 	$                   
	 	$                   
	 
	 	 	 	 	 	 	 	 
	

	 	Seller Allocation
	 	$                   
	 	$                   
	 	$                   
	 
	 	 	 	 	 	 	 	 
	(b)

	 	Group One Allocation
	 	$                   
	 	$                   
	 	$                   
	 
	 	 	 	 	 	 	 	 
	(c)

	 	Series 2004-1 Allocations
	 	$                   
	 	$                   
	 	$                   
	 
	 	 	 	 	 	 	 	 
	(d)

	 	Class A Allocations
	 	$                   
	 	$                   
	 	$                   
	 
	 	 	 	 	 	 	 	 
	

	 	Class B Allocations
	 	$                   
	 	$                   
	 	$                   
	 
	 	 	 	 	 	 	 	 
	(e) Principal Collections as a monthly percentage of Master Trust Receivables
at the beginning of [Month][Year]	 	                    %

B-1

 

	 	 	 	 	 	 	 	 	 
	(f) Finance Charge Collections as a monthly percentage of Master Trust
Receivables at the beginning of
[Month][Year]
	 	                    %
	 
	 	 	 	 	 	 	 	 
	(g) Total Collections as a monthly percentage of Master Trust Receivables
at the beginning of [Month][Year]
	 	                    %
	 
	 	 	 	 	 	 	 	 
	
(h) Interchange as a monthly percentage of Master Trust Receivables
at the beginning of the [Month][Year]
	 	                    %
	 
	 	 	 	 	 	 	 	 
	
(i) Total Collections and Interchange as a monthly percentage of Master
Trust Receivables at the beginning of
[Month][Year]
	 	                    %

	4.	 	Information concerning the Series Principal Funding Account (“SPFA”)

	 	 	 	 	 	 	 	 	 
	 	 	Deposits into the SPFA on	 	Deficit Amount on	 	 	 	 
	 	 	this Distribution Date	 	this Distribution Date	 	SPFA Balance	 	Investment Income
	Series 2004-1

	 	$                   
	 	$                   
	 	               
	 	$                   

	5.	 	Information concerning amount of Controlled Liquidation Payments

	 	 	 	 	 	 	 
	 	 	Amount paid on this	 	Deficit Amount on this	 	Total Payments through this
	 	 	Distribution Date	 	Distribution Date	 	Distribution Date
	Series 2004-1
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Class A

	 	N/A
	 	N/A
	 	N/A
	 
	 	 	 	 	 	 
	Class B

	 	N/A
	 	N/A
	 	N/A

	6.	 	Information concerning the Series Interest Funding Accounts (“SIFA”)

	 	 	 	 	 
	 	 	Deposits into the SIFA	 	 
	 	 	on this Distribution Date	 	SIFA Balance
	Series 2004-1

	 	$                   
	 	               

	7.	 	Investor Charged-Off Amount

	 	 	 	 	 	 	 
	 	 	 	 	 	 	Cumulative Investor
	 	 	 	 	[Month][Year]	 	Charged-Off Amount
	(a) 

	 	Group One
	 	$                   
	 	$                   
	 
	 	 	 	 	 	 
	(b)

	 	Series 2004-1
	 	$                   
	 	$                   
	 
	 	 	 	 	 	 
	(c)

	 	Class A
	 	$                   
	 	$                   
	 
	 	 	 	 	 	 
	 

	 	Class B
	 	$                   
	 	$                   
	 
	 	 	 	 	 	 
	(d)

	 	As an annualized
percentage of
Principal
Receivables at the
beginning of [Month]
[Year]
	 	$                    %
	 	N/A

	8.	 	Investor Losses for [Month][Year]

	 	 	 	 	 	 	 
	 	 	 	 	 	 	per $1,000 of initial
	 	 	 	 	Total	 	Investor Interest
	(a)

	 	Group One
	 	$                   
	 	$                   
	 
	 	 	 	 	 	 
	(b)

	 	Series 2004-1
	 	$                   
	 	$                   

B-2

 

	 	 	 	 	 	 	 
	 	 	 	 	 	 	per $1,000 of initial
	 	 	 	 	Total	 	Investor Interest
	(c)

	 	Class A
	$	                   
	$	                   
	 

	 	Class B
	$	                   
	$	                   

	9.	 	Reimbursement of Investor Losses for [Month][Year]

	 	 	 	 	 	 	 
	 	 	 	 	 	 	per $1,000 of initial
	 	 	 	 	Total	 	Investor Interest
	(a)

	 	Group One
	$	                   
	$	                   
	 
	 	 	 	 	 	 
	(b)

	 	Series 2004-1
	$	                   
	$	                   
	 
	 	 	 	 	 	 
	(c)

	 	Class A
	$	                   
	$	                   
	 
	 	 	 	 	 	 
	

	 	Class B
	$	                   
	$	                   

	10.	 	Aggregate amount of Unreimbursed Investor Losses for [Month][Year]

	 	 	 	 	 	 	 
	 	 	 	 	 	 	per $1,000 of initial
	 	 	 	 	Total	 	Investor Interest
	(a)

	 	Group One
	$	                   
	$	                   
	 
	 	 	 	 	 	 
	(b)

	 	Series 2004-1
	$	                   
	$	                   
	 
	 	 	 	 	 	 
	(c)

	 	Class A
	$	                   
	$	                   
	 
	 	 	 	 	 	 
	

	 	Class B
	$	                   
	$	                   

	11.	 	Investor Monthly Servicing Fee payable on this Distribution Date

	 	 	 	 	 	 	 
	(a)

	 	Group One
	 	 	$	                   
	 
	 	 	 	 	 	 
	(b)

	 	Series 2004-1
	 	 	$	                   
	 
	 	 	 	 	 	 
	(c)

	 	Class A
	 	 	$	                   
	 
	 	 	 	 	 	 
	

	 	Class B

	 	 	$	                   

	12.	 	Class Available Subordinated Amount at the end of the Distribution Date

	 	 	 	 	 
	 	 	 	 	as a percentage of
	 	 	Total	 	Class A Invested Amount
	Series 2004-1 Class B

	$	                   
	$	                   

	13.	 	Total Available Credit Enhancement Amounts

	 	 	 	 	 	 	 
	 	 	 	 	Shared Amount	 	Class B Amount
	(a)

	 	Maximum Amount on this Distribution

Date
	 	N/A
	$	                   
	 
	 	 	 	 	 	 
	(b)

	 	Available Amount on this Distribution

Date
	 	N/A
	$	                   
	 
	(c) 

	 	Amount of Unreimbursed drawings on Credit
Enhancement on this Distribution Date
	 	N/A
	$	                   
	 
	(d)

	 	Credit Enhancement Fee on this

Distribution Date
	 	N/A
	$	                   

B-3

 

	14.	 	Delinquency Summary

	 	 	 
	Master Trust Receivables Outstanding at the end of [Month][Year]

	 	$                   

	 	 	 	 	 	 	 
	 	 	 	 	Delinquent Amount	 	Percentage of ending
	Payment Status	 	 	 	ending balance	 	Receivables outstanding
	30 — 59 days

	 	 	 	$                   
	 	                    %
	 
	 	 	 	 	 	 
	60 — 179 days

	 	 	 	$                   
	 	                    %

	15.	 	Excess Spread Percentages on this Distribution
Date1

	 	 	 	 	 
	(a)

	 	Group One2
	 	                    %
	 
	 	 	 	 
	(b)

	 	Interchange Subgroup3
	 	                    %
	 
	 	 	 	 
	(c)

	 	Series 2004-1 4
	 	                    %

	16.	 	Net Charge-Offs on this Distribution Date5

	 	 	 
	Charges-offs net of recoveries as an annualized percentage of Principal
Receivables at the beginning of [Month][Year]

	 	                    %

	 	 	 	 	 	 	 
	 	 	U.S. BANK NATIONAL ASSOCIATION,
	 	 	as Trustee	 	 
	

	 	 	 	By:

	1	 	Investors should refer only to the highest of the Group Excess Spread
Percentage (Item 15(a)), the Interchange Subgroup Excess Spread Percentage
(Item 15(b)) and the Series Excess Spread Percentage (Item 15(c)) in assessing
the current performance of the Trust and the Receivables. If necessary, the
Trust will use funds available from series or subseries with positive Series
Excess Spreads to cover expenses (as detailed in note 4 below) for series or
subseries, if any, with negative Series Excess Spreads, except that any such
funds consisting of Interchange will only be used to cover expenses for
Interchange Series.
	 
	2	 	Group Excess Spread is the sum of the Series Excess Spreads (as described
below) for each series, including each subseries, in the Group. The Group
Excess Spread Percentage is equal to the Group Excess Spread, multiplied by
twelve, divided by the Series Investor Interests at the beginning of the period
for each series, including each subseries, in the Group.
	 
	3	 	The Interchange Subgroup Excess Spread Percentage is the sum of (i) all
amounts deposited into the Group Interchange Reallocation Account for all
Interchange Series and (ii) the Interchange Subgroup Allocable Group Excess
Spread (as such term is defined in the Series Supplement between Discover Bank
and U.S. Bank National Association, as Trustee, for each series), multiplied by
twelve, divided by the Series Investor Interest for all Interchange Series at
the beginning of each period.
	 
	4	 	Series Excess Spread is the difference between (a) the sum of Finance Charge
Collections, Yield Collections, Investment Income, Series Interchange and
Additional Funds for any Class of this Series (see Item 3(c)), and (b) the sum
of (i) the monthly interest for this Series (see #Deposits into the SIFA on
this Distribution Date# in Item 6), (ii) the monthly servicing fee for this
Series (see Item 11(b)), (iii) the Investor Charged-Off Amount (see Item 7(b)),
and (iv) the Credit Enhancement Fee (see Item 13(d)), in each case for this
Distribution Date. For purposes of determining Group Excess Spread and the
Interchange Subgroup Shortfall Allocation Percentage, Series Excess Spread is
the amount calculated as described above minus (i) the amount of any payment by
the Trust under the Trust#s subordinated interest rate swap for this series and
(ii) if the Series Excess Spread for such series is positive without giving
effect to clause (ii) of this sentence, the lesser of Series Interchange or the
amount determined as the Series Excess Spread without giving effect to this
sentence; provided that Series Excess Spread, for purposes of determining the
Group Excess Spread and the Interchange Subgroup Shortfall Allocation
Percentage, shall not be reduced below zero as a result of this sentence. The
Series Excess Spread Percentage is equal to the Series Excess Spread,
multiplied by twelve, divided by the Series Investor Interest for this Series
at the beginning of the period.
	 
	5	 	For purposes of allocations to investors, recoveries are treated as Finance
Charge Collections and are included as such in Item 3 above.

B-4

 

Exhibit C

Form of Master Servicer’s Monthly Certificate

Discover Card Master Trust I, Series 2004-1

CREDIT CARD

PASS-THROUGH CERTIFICATES

The undersigned, a duly authorized representative of Discover Bank, formerly
Greenwood Trust Company, as Master Servicer pursuant to the Amended and
Restated Pooling and Servicing Agreement dated as of November 3, 2004 (the
“Pooling and Servicing Agreement”), and the Series Supplement, dated as of
November 3, 2004 (the “Series Supplement”) by and between Discover Bank and
U.S. Bank National Association as Trustee, does hereby certify as follows with
respect to the Series Supplement for the Discover Card Master Trust I, Series
2004-1 Certificates for the Distribution Date occurring on                    :

	 	 	 	 	 	 	 
	1.	 	Discover Bank is Master Servicer under the Pooling and Servicing
Agreement.	 	 
	 
	 	 	 	 	 	 
	2.	 	The undersigned is a Servicing Officer of Discover Bank as Master
Servicer.	 	 
	 
	 	 	 	 	 	 
	3	 	The aggregate amount of Collections processed during [month] [year]
is equal to 	$	                   
	 
	 	 	 	 	 	 
	4.	 	The aggregate amount of Class A Principal Collections processed
during [month] [year] is equal to	$	                   
	 
	 	 	 	 	 	 
	5.	 	The aggregate amount of Class A Finance Charge Collections processed
during [month] [year] is equal to	$	                   
	 
	 	 	 	 	 	 
	6.	 	The aggregate amount of Class A Interchange processed during
[month] [year] is equal to	$	                   
	 
	 	 	 	 	 	 
	7a.	 	The aggregate amount of Class A Principal Collections
recharacterized as Series Yield Collections during [month] [year] is
equal to	$	                   
	 
	 	 	 	 	 	 
	7b.	 	The aggregate amount of Class A Additional Funds for this
Distribution Date is equal to	$	                   
	 
	 	 	 	 	 	 
	8.	 	The sum of all amounts
payable to the Class A Certificateholders on the current Distribution
Date is equal to	$	                   

C-1

 

	 	 	 	 	 	 	 
	9.	 	The aggregate amount of Class B Principal Collections processed
during [month] [year] is equal to	$	                   
	 
	 	 	 	 	 	 
	10.	 	The aggregate amount of Class B Finance Charge Collections
processed during [month] [year] is equal to	$	                   
	 
	 	 	 	 	 	 
	11.	 	The aggregate amount of Class B Interchange processed during
[month][year] is equal to	$	                   
	 
	 	 	 	 	 	 
	12a.	 	The aggregate amount of Class B Principal Collections
recharacterized as Series Yield Collections during [month] [year] is
equal to	$	                   
	 
	 	 	 	 	 	 
	12b.	 	The aggregate amount of Class B Additional Funds for this
Distribution Date is equal to	$	                   
	 
	 	 	 	 	 	 
	13.	 	The amount of drawings under the Credit Enhancement required to be
made and not immediately reimbursed on the related Drawing Date
pursuant to the Series Supplement:	 	 
	 
	 	 	 	 	 	 
	

	 	(a)
	 	with respect to the Class B Required Amount Shortfall
is equal to
	$	                   
	 
	 	 	 	 	 	 
	

	 	(b)
	 	with respect to the Class B Cumulative Investor
Charged-Off Amount is equal to
	$	                   
	 
	 	 	 	 	 	 
	

	 	(c)
	 	with respect to the Class B Investor Interest is equal
to
	$	                   
	 
	 	 	 	 	 	 
	14.	 	The sum of all amounts payable to the Class B Certificateholders on
the current Distribution Date is equal to	$	                   
	 
	 	 	 	 	 	 
	15.	 	Attached hereto is a true copy of the statement required to be
delivered by the Master Servicer on the date of this Certificate to the
Trustee pursuant to the section entitled Master Servicer’s Monthly
Certificate of the Series Supplement	 	 

 

     IN WITNESS WHEREOF, the undersigned has duly executed and delivered this
certificate this                     day of                    ,                    .

	 	 	 	 	 
	 	 	DISCOVER BANK,
	 	 	as Master Servicer
	

	 	By:
	

	 
	

	 	 	Title:	 

C-3exv4w2

 

Exhibit 4.2

DISCOVER BANK

Master Servicer, Servicer and Seller

and

U.S. BANK NATIONAL ASSOCIATION

Trustee

on behalf of the Certificateholders

AMENDED AND RESTATED POOLING AND SERVICING AGREEMENT

Dated as of November 3, 2004

DISCOVER CARD MASTER TRUST I

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	Page

	ARTICLE I. - DEFINITIONS	 	 	1	 
	SECTION 1.01

	 	Definitions
	 	 	1	 
	SECTION 1.02

	 	Other Definitional Provisions
	 	 	18	 
	ARTICLE II. - CONVEYANCE OF RECEIVABLES; ISSUANCE OF INVESTOR CERTIFICATES	 	 	19	 
	SECTION 2.01

	 	Conveyance of Receivables
	 	 	19	 
	SECTION 2.02

	 	Authentication of Certificates
	 	 	19	 
	SECTION 2.03

	 	Acceptance by the Trustee
	 	 	19	 
	SECTION 2.04

	 	Representations and Warranties of Discover Bank
	 	 	20	 
	SECTION 2.05

	 	Trust Portfolio Repurchase Obligations of the Sellers
	 	 	22	 
	SECTION 2.06

	 	Series Repurchase Obligations of the Sellers
	 	 	24	 
	SECTION 2.07

	 	Repurchase Obligations of the Sellers Relating to Receivables
	 	 	25	 
	SECTION 2.08

	 	Intention of Parties
	 	 	26	 
	SECTION 2.09

	 	Covenants of the Sellers
	 	 	26	 
	SECTION 2.10

	 	Addition of Accounts
	 	 	27	 
	SECTION 2.11

	 	Removal of Accounts
	 	 	30	 
	ARTICLE III. - ADMINISTRATION AND SERVICING OF RECEIVABLES	 	 	32	 
	SECTION 3.01

	 	Acceptance of Appointment and Other Matters Relating to the
Master Servicer
	 	 	32	 
	SECTION 3.02

	 	Acceptance of Appointment and Other Matters Relating to Servicers
	 	 	34	 
	SECTION 3.03

	 	Servicing Compensation
	 	 	35	 
	SECTION 3.04

	 	Representations and Warranties of Discover Bank, as Master Servicer and Servicer
	 	 	36	 
	SECTION 3.05

	 	Representations and Warranties of Other Servicers
	 	 	36	 
	SECTION 3.06

	 	Reports and Records for the Trustee
	 	 	37	 
	SECTION 3.07

	 	Master Servicer’s and Servicers’ Annual Certificates
	 	 	37	 
	SECTION 3.08

	 	Independent Public Accountants’ Annual Servicing Report
	 	 	38	 
	SECTION 3.09

	 	Tax Treatment
	 	 	39	 
	SECTION 3.10

	 	Notices by the Master Servicer and the Servicers
	 	 	39	 
	ARTICLE
IV. - RIGHTS OF INVESTOR CERTIFICATEHOLDERS AND ALLOCATION AND
APPLICATION OF COLLECTIONS
	 	 	39	 
	SECTION 4.01

	 	Rights of Investor Certificateholders
	 	 	39	 
	SECTION 4.02

	 	Establishment and Administration of Investor Accounts
	 	 	40	 
	SECTION 4.03

	 	Collections and Allocations
	 	 	41	 
	SECTION 4.04

	 	Sellers’ or Master Servicer’s Failure to Make a Deposit or Payment
	 	 	43	 
	SECTION 4.05

	 	Adjustments For Miscellaneous Debits and Credits and Fraudulent Charges
	 	 	44	 
	SECTION 4.06

	 	Reallocation of Series Among Groups
	 	 	44	 

i

 

	 	 	 	 	 	 	 
	ARTICLE V. - DISTRIBUTIONS AND REPORTS TO INVESTOR CERTIFICATEHOLDERS	 	 	45	 
	SECTION 5.01

	 	Distributions
	 	 	45	 
	SECTION 5.02

	 	Investor Certificateholders’ Monthly Statement
	 	 	45	 
	SECTION 5.03

	 	Certificateholders’ Annual Tax Statement
	 	 	45	 
	ARTICLE VI. - THE INVESTOR CERTIFICATES	 	 	46	 
	SECTION 6.01

	 	The Certificates
	 	 	46	 
	SECTION 6.02

	 	Book-Entry Certificates
	 	 	47	 
	SECTION 6.03

	 	Authentication of Certificates
	 	 	48	 
	SECTION 6.04

	 	Registration of Transfer and Exchange of Certificates
	 	 	49	 
	SECTION 6.05

	 	Mutilated, Destroyed, Lost or Stolen Certificates
	 	 	51	 
	SECTION 6.06

	 	Issuances of New Series
	 	 	52	 
	SECTION 6.07

	 	Persons Deemed Owners
	 	 	53	 
	SECTION 6.08

	 	Appointment and Duties of Paying Agent
	 	 	53	 
	SECTION 6.09

	 	Access to List of Names and Addresses of Holders of Registered
Certificates
	 	 	54	 
	SECTION 6.10

	 	Authenticating Agent
	 	 	54	 
	SECTION 6.11

	 	Global Certificate; Exchange Date
	 	 	55	 
	SECTION 6.12

	 	Meetings of Certificateholders
	 	 	57	 
	SECTION 6.13

	 	Special Provisions for Certain Series
	 	 	59	 
	SECTION 6.14

	 	Exchange of Investor Certificates for Seller Interest
	 	 	59	 
	ARTICLE VII. - OTHER MATTERS RELATING TO THE SELLERS	 	 	59	 
	SECTION 7.01

	 	Liability of Sellers
	 	 	59	 
	SECTION 7.02

	 	Merger or Consolidation of, or Assumption of the Obligations of, Discover Bank, or
any Additional Seller
	 	 	59	 
	SECTION 7.03

	 	Limitation on Liability of Certain Persons
	 	 	60	 
	SECTION 7.04

	 	Seller Indemnification of the Trust and the Trustee
	 	 	61	 
	SECTION 7.05

	 	Transfer or Conveyance of Seller Certificate
	 	 	61	 
	SECTION 7.06

	 	Corporate Actions
	 	 	62	 
	SECTION 7.07

	 	Bankruptcy Against Any Additional Seller
	 	 	62	 
	ARTICLE VIII. - OTHER MATTERS RELATING TO THE MASTER SERVICER AND THE SERVICERS	 	 	62	 
	SECTION 8.01

	 	Master Servicer and Servicer Liability
	 	 	63	 
	SECTION 8.02

	 	Merger or Consolidation of, or Assumption of the Obligations of, the Master
Servicer or any Servicer
	 	 	63	 
	SECTION 8.03

	 	Limitation on Liability of the Master Servicer and each Servicer and Others
	 	 	63	 
	SECTION 8.04

	 	Master Servicer or Servicer Resignation
	 	 	64	 
	SECTION 8.05

	 	Access to Certain Documentation and Information Regarding the Receivables and
Interchange
	 	 	64	 
	SECTION 8.06

	 	Delegation of Duties
	 	 	64	 
	SECTION 8.07

	 	Examination of Records
	 	 	65	 

ii

 

	 	 	 	 	 	 	 
	SECTION 8.08

	 	Seller or Master Servicer to File Reports Pursuant to Securities Exchange Act
	 	 	65	 
	ARTICLE IX. - AMORTIZATION AND CERTAIN OTHER EVENTS	 	 	65	 
	SECTION 9.01

	 	Amortization Events
	 	 	65	 
	ARTICLE X. - MASTER SERVICER AND SERVICER TERMINATION EVENTS	 	 	67	 
	SECTION 10.01

	 	Master Servicer Termination Events
	 	 	68	 
	SECTION 10.02

	 	Servicer Termination Events
	 	 	69	 
	SECTION 10.03

	 	Trustee to Act; Appointment of Successor Master Servicer and/or Successor
Servicer
	 	 	71	 
	SECTION 10.04

	 	Notification to Investor Certificateholders
	 	 	73	 
	SECTION 10.05

	 	Waiver of Past Breaches
	 	 	73	 
	ARTICLE XI. - THE TRUSTEE	 	 	73	 
	SECTION 11.01

	 	Duties of Trustee
	 	 	74	 
	SECTION 11.02

	 	Certain Matters Affecting the Trustee
	 	 	76	 
	SECTION 11.03

	 	Trustee Not Liable for Recitals in Certificates
	 	 	77	 
	SECTION 11.04

	 	Trustee May Own Investor Certificates
	 	 	77	 
	SECTION 11.05

	 	The Master Servicer to Pay Trustee’s Fees and Expenses
	 	 	77	 
	SECTION 11.06

	 	Master Servicer and Servicer Indemnification of Trustee
	 	 	78	 
	SECTION 11.07

	 	Eligibility Requirements for Trustee
	 	 	78	 
	SECTION 11.08

	 	Resignation or Removal of Trustee
	 	 	78	 
	SECTION 11.09

	 	Successor Trustee
	 	 	79	 
	SECTION 11.10

	 	Merger or Consolidation of Trustee
	 	 	79	 
	SECTION 11.11

	 	Appointment of Co-Trustee or Separate Trustee
	 	 	80	 
	SECTION 11.12

	 	Tax Returns
	 	 	81	 
	SECTION 11.13

	 	Trustee May Enforce Claims Without Possession of Certificates
	 	 	81	 
	SECTION 11.14

	 	Suits for Enforcement
	 	 	81	 
	SECTION 11.15

	 	Rights of Investor Certificateholders to Direct Trustee
	 	 	82	 
	SECTION 11.16

	 	Representations and Warranties of Trustee
	 	 	82	 
	SECTION 11.17

	 	Maintenance of Office or Agency
	 	 	82	 
	SECTION 11.18

	 	Requests for Agreement
	 	 	83	 
	ARTICLE XII. - TERMINATION	 	 	83	 
	SECTION 12.01

	 	Termination of Sellers’ Obligations; Termination of Trust
	 	 	83	 
	SECTION 12.02

	 	Final Distribution with Respect to any Series
	 	 	84	 
	SECTION 12.03

	 	Sellers’ Termination Rights
	 	 	85	 
	ARTICLE XIII. - MISCELLANEOUS PROVISIONS	 	 	85	 
	SECTION 13.01

	 	Amendment
	 	 	85	 
	SECTION 13.02

	 	Protection of Right, Title and Interest to Trust
	 	 	88	 
	SECTION 13.03

	 	Limitations on Rights of Investor Certificateholders
	 	 	89	 
	SECTION 13.04

	 	Governing Law
	 	 	89	 
	SECTION 13.05

	 	Notices
	 	 	90	 
	SECTION 13.06

	 	Rule 144A Information
	 	 	90	 

iii

 

	 	 	 	 	 	 	 
	SECTION 13.07

	 	Severability of Provisions
	 	 	90	 
	SECTION 13.08

	 	Assignment
	 	 	91	 
	SECTION 13.09

	 	Investor Certificates Nonassessable and Fully Paid
	 	 	91	 
	SECTION 13.10

	 	Further Assurances
	 	 	91	 
	SECTION 13.11

	 	No Waiver; Cumulative Remedies
	 	 	91	 
	SECTION 13.12

	 	Counterparts
	 	 	91	 
	SECTION 13.13

	 	Third-Party Beneficiaries
	 	 	91	 
	SECTION 13.14

	 	Actions by Investor Certificateholders
	 	 	91	 
	SECTION 13.15

	 	Merger and Integration
	 	 	92	 
	SECTION 13.16

	 	Headings
	 	 	92	 

iv

 

EXHIBITS

	 	 	 	 	 
	Exhibit A

	 	-
	 	Form of Assignment
	Exhibit B

	 	-
	 	DISCOVER Service Mark
	Exhibit C

	 	-
	 	Form of Reassignment
	Exhibit D

	 	-
	 	Form of Seller Certificate
	Exhibit E

	 	-
	 	Form of Initial Report
	Exhibit F

	 	-
	 	Form of Master Servicer’s Annual Certificate
	Exhibit G

	 	-
	 	Form of Servicer’s Annual Certificate
	Exhibit H-1

	 	-
	 	Form of Clearstream Banking or Euroclear Statement
	Exhibit H-2

	 	-
	 	Form of Certificate with respect to U.S. Institutional Investors
	Exhibit H-3

	 	-
	 	Form of Certificate regarding Beneficial Ownership
	Exhibit I

	 	-
	 	Form of Opinion of Counsel

SCHEDULE

Schedule 1 - List of Accounts(Omitted)

v

 

          This AMENDED AND RESTATED POOLING AND SERVICING AGREEMENT, dated as of
November 3, 2004 (the “Agreement”), 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.

RECITALS

          WHEREAS, Discover Bank and the Trustee are parties to that certain Pooling
and Servicing Agreement dated as of October 1, 1993, relating to the Discover
Card Master Trust I (the “Original Pooling and Servicing Agreement”), as
amended by that certain First Amendment to the Pooling and Servicing Agreement,
dated as of August 15, 1994, between Discover Bank and the Trustee (the “First
Amendment”), as further amended by that certain Second Amendment to the Pooling
and Servicing Agreement, dated as of February 29, 1996, between Discover Bank
and the Trustee (the “Second Amendment”), as further amended by that certain
Third Amendment to the Pooling and Servicing Agreement, dated as of March 30,
1998, between Discover Bank and the Trustee (the “Third Amendment”), as further
amended by that certain Fourth Amendment to the Pooling and Servicing
Agreement, dated as of November 30, 1998, between Discover Bank and the Trustee
(the “Fourth Amendment”), and as further amended by that certain Fifth
Amendment to the Pooling and Servicing Agreement, dated as of March 30, 2001,
between Discover Bank and Trustee (the “Fifth Amendment” and, together with the
First Amendment, the Second Amendment, the Third Amendment and the Fourth
Amendment, the “Amendments”); and

          WHEREAS, Discover Bank and the Trustee wish to restate the Original
Pooling and Servicing Agreement in its entirety to reflect the Amendments; and

          WHEREAS, pursuant to subsection 13.01(a) of the Original Pooling and
Servicing Agreement, Discover Bank and the Trustee also desire to amend certain
references to the Uniform Commercial Code to reflect amendments thereto that
became effective on July 1, 2001, in the States of Delaware and New York and to
make other changes in a manner that shall not adversely affect in any material
respect the interests of the Holders of any Class of any Series then
outstanding.

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

ARTICLE I.

DEFINITIONS

          SECTION 1.01 Definitions.
Unless, with respect to a particular Series, a word or phrase is otherwise
defined in the applicable Series Supplement, the following words and phrases
shall have the following meanings:

 

 

          “Account” shall mean (i) a Discover Card account established pursuant to a
Credit Agreement between Discover Bank and any Person, receivables under which
are transferred to the Trust pursuant to this Agreement or pursuant to an
Assignment of Additional Accounts (a “Discover Card Account”); (ii) a Discover
Card account established pursuant to a Credit Agreement between an Additional
Seller and any Person, receivables under which are transferred to the Trust
pursuant to an Assignment of Additional Accounts; and (iii) a credit account
(which is not a Discover Card account) established pursuant to a Credit
Agreement between Discover Bank or an Additional Seller and any Person,
receivables under which are transferred to the Trust pursuant to an Assignment
of Additional Accounts. No Account shall be a Charged-Off Account as of (i)
the Account Selection Date, with respect to Accounts the Receivables of which
are transferred to the Trust on the Initial Closing Date or (ii) the date an
Account is selected for addition to the Trust, with respect to Accounts the
Receivables under which are transferred to the Trust pursuant to an Assignment
of Additional Accounts. Each Account shall be identified by account number on
Schedule 1 hereto. The definition of an Account shall include a surviving
credit account (a “Surviving Account”) in the event that (i) an Account or
another credit account is combined with an Account pursuant to the Credit
Guidelines for such Account (an “Account Combination”) and (ii) the Surviving
Account of such Account Combination was an Account prior to such combination.
The term “Account” shall be deemed to refer to an Additional Account only from
and after the Addition Date with respect thereto. The definition of Account
shall not include any Account removed from the Trust pursuant to Section 2.11
hereof after it has been reassigned to the Holder of the Seller Certificate.

          “Account Combination” shall have the meaning set forth in the definition
of “Account.”

          “Account Selection Date” shall mean, for any Account transferred to the
Trust on the Initial Closing Date, January 22, 1993, July 14, 1993 or September
22, 1993.

          “Addition Date” shall mean each date as of which Additional Accounts are
included as Accounts or Participation Interests are conveyed to the Trust
pursuant to Section 2.10.

          “Additional Account Cut-Off Date” shall mean, for any Additional Account,
the date specified as such in the Assignment of Additional Accounts for such
Additional Account.

          “Additional Accounts” shall have the meaning set forth in Section 2.10.

          “Additional Funds” shall have the meaning set forth in Section 4.03(e).
The amount of Additional Funds shall initially be zero.

          “Additional Seller” shall mean an affiliate of Discover Bank that is
included in the same “affiliated group” as Discover Bank for United States
federal tax purposes and that transfers Receivables in Additional Accounts to
the Trust pursuant to Section 2.10(d).

          “Adjustment” shall have the meaning set forth in Section 4.05.

          “Aggregate Initial Investor Interest” shall mean at any time the sum of
the Series Initial Investor Interests of all Series of Investor Certificates
then issued and outstanding.

2

 

          “Aggregate Invested Amount” shall mean at any time the sum of the Series
Invested Amounts of all Series of Investor Certificates then issued and
outstanding.

          “Aggregate Investor Interest” shall mean at any time the sum of the Series
Investor Interests of all Series of Investor Certificates then issued and
outstanding.

          “Aggregate Investor Percentage” shall mean at any time the sum of the
applicable Series Percentages of all Series of Investor Certificates then
issued and outstanding.

          “Agreement” shall mean this Pooling and Servicing Agreement and all
amendments hereof and Series Supplements hereto, including, with respect to any
Series or Class, the related Series Supplement.

          “Amortization Event” with respect to any Series shall mean any
Amortization Event specified in Section 9.01 hereof or in the applicable Series
Supplement.

          “Applicable State” shall mean, (i) with respect to any Receivable, the
state in which the Seller or any Additional Seller with respect to such
Receivable is located, (ii) with respect to any Seller, Additional Seller or
Trustee, the state in which such Seller, Additional Seller or Trustee is
located, (iii) with respect to any Receivable being reassigned by the Trustee,
the State in which the Trustee is located and (iv) with respect to Interchange,
the state in which the Seller or the Additional Seller of such Interchange is
located, as applicable. Location of an entity with respect to the foregoing
shall be determined in accordance with Section 9-307 of the UCC (or a
comparable or successor provision thereto, however numbered) as in effect in
the State of New York.

          “Applicants” shall have the meaning set forth in Section 6.09.

          “Assignment” shall mean any and all documents necessary to assign an
interest in Additional Accounts, including an assignment substantially in the
form of Exhibit A hereto.

          “Authorized Newspaper” shall mean any newspaper or newspapers of general
circulation in London, England printed in the English language (and, with
respect to any Class or Series, if and so long as the Investor Certificates of
such Class or Series are listed on the Luxembourg Stock Exchange and such
exchange shall so require, in Luxembourg, printed in any language satisfying
the requirements of such exchange) and customarily published on each business
day at such place, whether or not published on Saturdays, Sundays or holidays.

          “Bearer Certificate” shall have the meaning specified in Section 6.01.

          “Book-Entry Certificates” with respect to any Series shall mean
certificates evidencing a beneficial interest in the Investor Certificates of
such Series, ownership and transfers of which shall be made through book
entries by a Clearing Agency as described in
Section 6.02; provided, that after the occurrence of a condition whereupon
book-entry registration and transfer are no longer permitted and Definitive
Certificates are to be issued to the Certificate Owners of such Series, such
Certificates shall no longer be “Book-Entry Certificates.”

3

 

          “Business Day” shall mean any day other than a Saturday, a Sunday or a day
on which banking institutions in (v) New York, New York, (w) the County of New
Castle, Delaware, (x) the city in which the Corporate Trust Office is located,
(y) the city in which the principal executive offices of any Additional Seller
is located or (z) the city in which the principal banking or executive offices
of any Credit Enhancement Provider is located are authorized or obligated by
law or executive order to be closed.

          “Certificate” shall mean any certificated Seller Certificate or any one of
the Class A Certificates or the Class B Certificates.

          “Certificate Interest” with respect to any Class of any Series shall have
the meaning specified in the applicable Series Supplement.

          “Certificate Owner” shall mean, with respect to a Book-Entry Certificate,
the Person who is the owner of such Book-Entry Certificate, as reflected on the
books of the Clearing Agency, or on the books of a Person maintaining an
account with such Clearing Agency (directly or as an indirect participant, in
accordance with the rules of such Clearing Agency).

          “Certificate Principal” with respect to any Class of any Series shall have
the meaning specified in the applicable Series Supplement.

          “Certificate Rate” with respect to any Class of any Series shall have the
meaning specified in the applicable Series Supplement.

          “Certificate Register” shall mean the register maintained pursuant to
Section 6.04, providing for the registration of Registered Certificates and
transfers and exchanges thereof.

          “Certificateholder” or “Holder” shall mean an Investor Certificateholder,
a Person in whose name a Certificate is registered in the Certificate Register
or a Person in whose name ownership of the uncertificated Seller Certificate is
recorded in the books and records of the Trustee.

          “Charged-Off Account” shall mean each Account with respect to which the
Servicer has charged-off the Receivables in such Account as uncollectible.

          “Charged-Off Amount” shall mean, with respect to any Trust Distribution
Date, the aggregate amount of Receivables in Accounts that became Charged-Off
Accounts in the related Due Period, less (i) the cumulative, uncollected amount
previously billed by the Servicers to Accounts that became Charged-Off Accounts
during the related Due Period with respect to finance charges, cash advance
fees, annual membership fees, fees for transactions that exceed the credit
limit on the Account, late payment charges and any other type of charges that
the Servicer has designated as “Finance Charge Receivables” with respect to
Accounts that are not Charged-Off Accounts and (ii) the full amount of any such
Receivables that have been repurchased under Section 2.07(b).

          “Class” shall mean with respect to any Series, all the Investor
Certificates of such Series that are designated by the same letter of the
alphabet, pursuant to the Series Supplement

4

 

for such Series. Any Series of
Investor Certificates may contain one or more Classes of Investor Certificates,
as set forth in the relevant Series Supplement.

          “Class Finance Charge Collections” with respect to any Class of any Series
shall have the meaning specified in the applicable Series Supplement.

          “Class Invested Amount” with respect to any Class of any Series shall have
the meaning specified in the applicable Series Supplement.

          “Class Investor Charged-Off Amount” with respect to any Class of any
Series shall have the meaning specified in the applicable Series Supplement.

          “Class Investor Interest” with respect to any Class of any Series shall
have the meaning specified in the applicable Series Supplement.

          “Class Percentage” with respect to any Class of any Series shall have the
meaning specified in the applicable Series Supplement.

          “Class Principal Collections” with respect to any Class of any Series
shall have the meaning specified in the applicable Series Supplement.

          “Clearing Agency” shall mean an organization registered as a “clearing
agency” pursuant to Section 17A of the Securities Exchange Act of 1934, as
amended.

          “Clearing Agency Participant” shall mean a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with
the Clearing Agency.

          “Clearstream Banking” shall mean Clearstream International, an
international clearing and settlement agency, and its divisions and successors.

          “Collections” shall mean (i) all payments by or on behalf of an Obligor
received by a Servicer in respect of Receivables in the form of cash, checks,
wire transfers or other forms of payment in accordance with the relevant Credit
Agreement in effect from time to time and (ii) amounts treated as Collections
pursuant to Sections 2.07(b), 2.09(c), 3.01(c) and 4.05(b) of this Agreement
and any amounts treated as Collections pursuant to the terms of any Series
Supplement. A Collection processed on an Account in excess of the aggregate
amount of Receivables in such Account shall be credited to such Account or
refunded to the Obligor by the Servicer in accordance with its normal practice
pursuant to Section 4.05(a). A Collection shall be deemed to have been
received at the end of the day on the Date of Processing of such Collection.

          “Collections Account” shall have the meaning specified in Section 4.02(a).

          “Common Depositary” with respect to any Series, if applicable, shall mean
the Person specified in the applicable Series Supplement, in its capacity as
common depositary for the respective accounts of Clearstream Banking and
Euroclear.

5

 

          “Corporate Trust Office” shall mean the principal office of the Trustee at
which at any particular time its corporate trust business shall be
administered, which office at the date of the execution of this Agreement is
located at 209 S. LaSalle Street, Suite 300, Chicago, Illinois 60604,
Attention: Corporate Trust Department.

          “Coupon” shall have the meaning set forth in Section 6.01.

          “Credit Agreement” shall mean, with respect to an Account, the contract
governing such Account.

          “Credit Enhancement” with respect to any Series shall have the meaning
specified in the applicable Series Supplement.

          “Credit Enhancement Provider” with respect to any Series shall have the
meaning specified in the applicable Series Supplement.

          “Credit Guidelines” shall mean, with respect to any Account, the policies
and procedures relating to the operation of such Account and similar accounts
administered by the Servicer of such Account, including, without limitation,
the written policies and procedures and the exercise of judgment by employees
of the Servicer with respect to such accounts in accordance with such
Servicer’s normal practice for determining the creditworthiness of customers
holding such accounts, the extension of credit to customers, and relating to
the maintenance of such accounts and the collection of receivables with respect
to such accounts, as such policies and procedures may be amended from time to
time by the Servicer of such accounts, as such policies and procedures may be
implemented by any Person to whom such Servicer has delegated any of its duties
pursuant to Section 8.06.

          “Cut-Off Date” shall mean October 1, 1993.

          “Date of Processing” with respect to any transaction shall mean the date
on which such transaction is first recorded on the cardmember master file of
the accounts maintained by or on behalf of the relevant Servicer (without
regard to the effective date of such recordation).

          “Deficit Accumulation Amount” with respect to any Series, if applicable,
shall have the meaning specified in the Series Supplement for such Series.

          “Deficit Liquidation Amount” with respect to any Series, if applicable,
shall have the meaning specified in the Series Supplement for such Series.

          “Definitive Certificates” shall have the meaning specified in Section
6.02.

          “Definitive Euro-Certificates” shall have the meaning specified in Section
6.11.

          “Depository Agreement” with respect to any Series, if applicable, shall
mean the agreement, dated the Series Closing Date for such Series, among the
Sellers, the Trustee and the initial Clearing Agency providing for the delivery
and transfer of Book-Entry Certificates for such Series.

6

 

          “Discover Bank” shall mean Discover Bank and its successors and assigns.

          “Discover Card,” when used to modify the term “account,” shall mean that
access to such account is afforded by, among other means, a card bearing on its
face the DISCOVER service mark (a copy of which is attached hereto as Exhibit B
or, if the use of such service mark is suspended and another service mark is
substituted therefor, a card bearing such substitute service mark).

          “Discover Card Account” shall have the meaning set forth in the definition
of “Account.”

          “Distribution Date” with respect to any Series shall have the meaning
specified in the Series Supplement for such Series.

          “Due Period” shall mean, with respect to any Trust Distribution Date or
Distribution Date, the calendar month next preceding the calendar month in
which such Trust Distribution Date or Distribution Date occurs.

          “Eligible Receivable” shall mean each Receivable:

     (a) which is payable in United States dollars;

     (b) which was created in compliance, in all material respects,
with all Requirements of Law applicable to the Seller and the
Servicer with respect to such Receivable, and pursuant to a Credit
Agreement that complies, in all material respects, with all
Requirements of Law applicable to such Seller and Servicer;

     (c) as to which, if such Receivable was created before the
Initial Closing Date or the relevant Addition Date, as applicable,
(i) at the time of the creation of such Receivable, the Seller with
respect to such Receivable had good and marketable title thereto
free and clear of all Liens arising under or through such Seller,
and (ii) at the time of the conveyance of such Receivable to the
Trust, such Seller had, or the Trust will have, good and marketable
title thereto free and clear of all Liens arising under or through
such Seller;

     (d) as to which, if such Receivable was created on or after
the Initial Closing Date or the relevant Addition Date, as
applicable, at the time of the creation of such Receivable, the
Trust will have good and marketable title thereto free and clear of
all Liens arising under or through the Seller with respect to such
Receivable; and

     (e) which constitutes an “account” under and as defined in
Article 9 of the UCC as then in effect in the Applicable State with
respect to such Receivable.

          “Euroclear” shall mean Morgan Guaranty Trust Company of New York, Brussels
Office, as operator of the Euroclear System, and any successor thereto.

7

 

          “Exchange Date,” with respect to any Series or Class, the Investor
Certificates of which are represented upon initial issuance by a Global
Certificate, shall mean the first day following the expiration of 40 days after
the later of (i) the Series Closing Date or (ii) the first date on which such
Investor Certificates are offered to persons other than any underwriter, dealer
or other person who participates, pursuant to a contractual arrangement, in the
distribution of such Investor Certificates, as determined by the Manager.

          “FDIC” shall mean the Federal Deposit Insurance Corporation acting through
either the Savings Association Insurance Fund or the Bank Insurance Fund.

          “Final Trust Termination Date” shall mean the expiration of 21 years from
the death of the last survivor of Queen Elizabeth II of the United Kingdom of
Great Britain and her descendants living on October 1, 1993.

          “Finance Charge Collections” with respect to any Due Period shall mean the
sum of (a) the lesser of the aggregate amount of Finance Charge Receivables for
the preceding Due Period or Collections actually received in such Due Period
and (b) all Recovered Amounts received during such Due Period.

          “Finance Charge Receivables” with respect to any Account for any Due
Period shall mean the net amount billed by the Servicer during such Due Period
as finance charges on such Account and cash advance fees, annual membership
fees, fees for transactions that exceed the credit limit on such Account, late
payment charges billed during such Due Period to such Account and any other
charges that the Servicer may designate as “Finance Charge Receivables” from
time to time (provided that the Servicer shall not designate amounts owing for
the payment of goods and services or cash advances as “Finance Charge
Receivables”), less, in the event that such Account becomes a Charged-Off
Account during such Due Period, the cumulative, uncollected amount previously
billed by the Servicer to such Account as finance charges, cash advance fees,
annual membership fees, if any, fees for transactions that exceed the credit
limit on such Account, late payment charges and any other type of charges that
the Servicer has designated as “Finance Charge Receivables” with respect to
Accounts that are not Charged-Off Accounts; provided, however, that in the
event any Account that is included in the Accounts as of the Cut-Off Date is
not selected before the beginning of the Due Period preceding the Due Period
related to the first Trust Distribution Date, the Servicer may utilize a
reasonable method of estimation to determine the amount of the Finance Charge
Receivables with respect to such Account for the period beginning on the first
day of such preceding Due Period and ending on the date on which such Account
is selected.

          “Fixed Principal Allocation Event” with respect to any Series shall have
the meaning specified in the Series Supplement for such Series.

          “Fractional Undivided Interest” shall mean the fractional undivided
interest in the Trust evidenced by an Investor Certificate expressed as a
portion of the Aggregate Invested Amount.

          “Global Certificate” shall have the meaning specified in Section 6.11.

8

 

          “Governmental Authority” shall mean the United States of America, any
state or other political subdivision thereof.

          “Group” shall mean, collectively, at any time, the one or more Series of
Investor Certificates designated as part of the same Group at such time,
whether by the Series Supplements establishing such Series or pursuant to
Section 4.06. The Trustee shall designate a related Group Collections Account
pursuant to Section 4.02(a) for each Group so established.

          “Group Collections Account” shall have the meaning specified in Section
4.02(a).

          “Holder of the Seller Certificate” shall mean, at any specified time, the
holder or owner of the Seller Certificate, each of which, if there is more than
one such holder or owner, shall be a party to the Seller Certificate Ownership
Agreement, with the respective interests granted to each of such parties
pursuant to the Seller Certificate Ownership Agreement. The initial Holder of
the Seller Certificate shall be Discover Bank.

          “Ineligible Receivable” shall have the meaning specified in Section
2.07(b).

          “Initial Closing Date” shall mean October 27, 1993.

          “Interchange” for any Distribution Date shall mean the Interchange Fees
paid or payable to Discover Bank for the related Due Period multiplied by a
fraction, the numerator of which shall be the Net Merchant Sales for Accounts
originated by Discover Bank processed for the related Due Period and the
denominator of which shall be Net Merchant Sales processed for all Discover
Card accounts pursuant to a Credit Agreement between Discover Bank and any
Person for the related Due Period. In the event there are Additional Sellers,
Interchange shall include for each such Additional Seller a portion of its
Interchange Fees proportionate to the Net Merchant Sales for such Additional
Seller’s Accounts as a percentage of the Additional Seller’s Net Merchant Sales
for its entire portfolio of accounts of the same type as its Accounts,
determined as set forth above. In each instance, Interchange will include all
contracts, contract rights, rights to payment, general intangibles and payment
intangibles associated with such Interchange Fees, and all proceeds thereof.
For the avoidance of doubt, the amount of Interchange to be allocated pursuant
to Section 4.03 of this Agreement and each Series Supplement shall only include
amounts actually paid to the Trust by Discover Bank or the applicable
Additional Seller on the related Distribution Date.

          “Interchange Fees” shall mean interchange fees (i.e. fees related to
purchase transactions of goods and/or services) paid or payable by or through
merchant acceptance networks, including Discover Financial Services, Inc., to
Discover Bank or an Additional Seller in connection with transactions on
Discover Card accounts or, in the case of any Additional Seller, other accounts
of a type included in the Trust, at rates to be agreed on from time to time
between Discover Bank or such Additional Seller and such merchant acceptance
networks.

          “Interchange Series” shall mean all Series that indicate in the Series
Term Sheet of their applicable Series Supplement that they are Interchange
Series. No series issued prior to November 3, 2004 shall be designated as an
Interchange Series.

9

 

          “Interest Payment Date” with respect to any Series shall mean the dates
specified as such in the applicable Series Supplement.

          “Internal Revenue Code” shall mean the United States Internal Revenue Code
of 1986, as amended from time to time.

          “Investor Accounts” shall mean the Collections Account, the Group
Collections Accounts and any other segregated trust accounts specified as
Investor Accounts in any Series Supplement.

          “Investor Certificateholder” shall mean the Person in whose name a
Registered Certificate is registered in the Certificate Register or the bearer
of any Bearer Certificate (or a Global Certificate, as the case may be) or
Coupon.

          “Investor Certificates” shall mean any one of the certificates (including
Bearer Certificates, Registered Certificates or any Global Certificate, as
applicable) executed by Discover Bank on behalf of the Holder of the Seller
Certificate and authenticated by or on behalf of the Trustee, other than the
Seller Certificate.

          “Lien” shall mean any mortgage, deed of trust, pledge, hypothecation,
encumbrance, lien or other security agreement, including, without limitation,
any conditional sale or other title retention agreement, and any financing
lease having substantially the same economic effect as any of the foregoing.

          “Manager” shall mean the lead manager, manager or co-manager or Person
performing a similar function with respect to an offering of Definitive
Euro-Certificates.

          “Master Servicer” shall mean initially Discover Bank and thereafter any
Person appointed as the successor Master Servicer as herein provided.

          “Master Servicer Termination Event” shall have the meaning set forth in
Section 10.01.

          “Master Servicing Agreement” shall mean, if applicable, the agreement
entered into by Discover Bank, as Master Servicer and Servicer, and any
additional or successor Servicer or Servicers pursuant to Section 3.02(d)
hereof, as such agreement may be amended or supplemented from time to time.

          “Minimum Principal Receivables Balance” shall mean, on any date of
determination, an amount equal to the sum of the Series Minimum Principal
Receivables Balances for each Series then outstanding.

          “Monthly Servicing Fee” shall have the meaning set forth in Section 3.03.

          “Moody’s” shall mean Moody’s Investors Service Inc., and any successor
thereto.

          “Net Merchant Sales” shall mean the total dollar amount, calculated daily,
of all cardmember charges on Discover Cards for merchandise and services made
at service

10

 

establishments that have contracted to accept the Discover Card as a form
of payment with Discover Financial Services, Inc. or another merchant
acceptance network, as applicable. In the event that there is an Additional
Seller, Net Merchant Sales with respect to such Additional Seller shall be
determined by reference to cardmember charges to the credit accounts of such
Additional Seller.

          “New Issuance” shall have the meaning set forth in Section 6.06.

          “Obligations” shall have the meaning specified in Section 2.08.

          “Obligor” shall mean with respect to any Account, the Person or Persons
obligated to make payments with respect to such Account, including any
guarantor thereof.

          “Officer’s Certificate” shall mean a certificate signed by a Vice
President (or an officer holding an office with equivalent or more senior
responsibilities or, in the case of each Master Servicer or any Servicer, a
Servicing Officer and, in the case of each Seller, any executive of such Seller
designated in writing by a Vice President of such Seller for this purpose) of
any Seller, the Master Servicer or any Servicer or any Successor Master
Servicer or Successor Servicer, as the case may be, and delivered to the
Trustee.

          “Opinion of Counsel” shall mean a written opinion of counsel, who may be
counsel for or an employee of any Seller or Discover Bank or any of their
affiliates.

          “Participation Interests” shall have the meaning specified in Section
2.10(a).

          “Paying Agent” shall mean any paying agent appointed pursuant to Section
6.08 and shall initially be the Corporate Trust Office of the Trustee.

          “Payment Date” shall mean any Interest Payment Date, any Principal Payment
Date, if applicable, and any Special Payment Date.

          “Permitted Investments” shall mean

          (a) negotiable instruments or securities represented by instruments in
bearer or registered form which evidence: (i) obligations issued or fully
guaranteed, as to timely payment, by the United States of America or any
instrumentality or agency thereof when such obligations are backed by the full
faith and credit of the United States of America; (ii) time deposits in, or
bankers’ acceptances issued by, any depository institution or trust company
incorporated under the laws of the United States of America or any state
thereof (or any domestic branch of a foreign bank) and subject to supervision
and examination by federal or state banking or depository institution
authorities; provided, however, that at the time of the Trust’s investment or
contractual commitment to invest therein, the short-term deposits or commercial
paper or, in the absence of a rating on the short-term deposits or commercial
paper of such depository institution or trust company, the long-term unsecured
debt obligations of such depository institution or trust company shall have the
Highest Rating; (iii) commercial paper or other short-term obligations having,
at the time of the Trust’s investment or contractual commitment to invest
therein, the Highest Rating; or (iv) investments in money market funds having
the Highest Rating;

11

 

          (b) demand deposits in the name of the Trust or the Trustee in any
depository institution or trust company referred to in clause (a) (ii) above;

          (c) securities not represented by an instrument, which are registered in
the name of the Trustee upon books maintained for that purpose by or on behalf
of the issuer thereof and identified on books maintained for that purpose by
the Trustee as held for the benefit of the Trust or the Certificateholders, and
consisting of shares of an open end diversified investment company which is
registered under the Investment Company Act of 1940, as amended, and which (i)
invests its assets exclusively in obligations of or guaranteed by the United
States of America or any instrumentality or agency thereof having in each
instance a final maturity date of less than one year from their date of
purchase or other Permitted Investments, (ii) seeks to maintain a constant net
asset value per share and (iii) has aggregate net assets of not less than
$100,000,000 on the date of purchase of such shares, and which will not result
in a reduction or withdrawal of the rating of any Class of any Series then
outstanding as confirmed in writing by the Rating Agencies;

          (d) a guaranteed investment contract (guaranteed as to timely payment),
the terms of which meet the criteria of the Rating Agencies and with an entity
whose credit standards meet the criteria of the Rating Agencies necessary to
preserve the rating of each Class of each Series then outstanding; and

          (e) repurchase agreements transacted with either

     (i) an entity subject to the United States federal bankruptcy
code, provided that (A) the term of the repurchase agreement is
consistent with the requirements set forth in Section 4.02(c) with
regard to the maturity of Permitted Investments or is due on
demand, (B) the Trustee or a third party acting solely as agent for
the Trustee has possession of the collateral, (C) as evidenced by a
certificate of a Servicing Officer of the Master Servicer delivered
to the Trustee, the Trustee on behalf of the Trust has a perfected
first priority security interest in the collateral, (D) the market
value of the collateral is maintained at the requisite collateral
percentage of the obligation in accordance with the standards of
the Rating Agencies, (E) the failure to maintain the requisite
collateral level will obligate the Trustee to liquidate the
collateral immediately, (F) the securities subject to the
repurchase agreement are either obligations of, or fully guaranteed
as to principal and interest by, the United States of America or an
agency thereof, certificates of deposit or bankers acceptances and
(G) as evidenced by a certificate of a Servicing Officer of the
Master Servicer delivered to the Trustee, the securities subject to
the repurchase agreement are free and clear of any third party lien
or claim; or

     (ii) a financial institution insured by the FDIC, or any
broker-dealer with “retail customers” that is under the
jurisdiction of the Securities Investors Protection Corp. (“SIPC”),
provided that (A) the market value of the collateral is maintained
at the requisite collateral percentage of the obligation in
accordance with the standards of the Rating Agencies, (B) the
Trustee or a third party acting solely as agent for the Trustee has
possession of the collateral, (C) as evidenced

12

 

by a certificate of a Servicing Officer of the Master Servicer
delivered to the Trustee, the Trustee on behalf of the Trust has a
perfected first priority security interest in the collateral, (D)
as evidenced by a certificate of a Servicing Officer of the Master
Servicer delivered to the Trustee, the collateral is free and clear
of third party liens; and, in the case of an SIPC broker, was not
acquired pursuant to a repurchase or reverse repurchase agreement
and (E) failure to maintain the requisite collateral percentage
will obligate the Trustee to liquidate the collateral;

provided, however, that at the time of the Trust’s investment or contractual
commitment to invest in any such repurchase agreement, the short-term deposits
or commercial paper rating or, in the absence of a rating on the short-term
deposits or commercial paper of such entity or institution, the long-term
unsecured debt obligations of such entity or institution shall have a credit
rating not lower than the Highest Rating. Permitted Investments shall include,
without limitation, securities of Discover Bank or any of its affiliates which
otherwise qualify as a Permitted Investment under clause (a), (b), (c), (d) or
(e) above. For purposes of this definition of Permitted Investments, “Highest
Rating” shall mean, with respect to Moody’s, P-1 or Aaa, and, with respect to
Standard & Poor’s, A-1 + or AAA, or with respect to either Standard & Poor’s or
Moody’s, any rating category which will not cause a reduction in or withdrawal
of the rating of any Class of any Series then outstanding, as confirmed in
writing by the applicable Rating Agency.

          “Person” shall mean an individual, a partnership or a Corporation. The
term “Corporation” for the purposes of the preceding sentence only shall mean a
corporation, joint stock company, business trust or other similar association.

          “Principal Collections” shall mean, with respect to any Due Period, all
Collections other than Finance Charge Collections.

          “Principal Payment Date” with respect to any Series shall mean, if
applicable, the dates specified as such in the applicable Series Supplement.

          “Principal Receivable” shall mean each Receivable other than Finance
Charge Receivables. Any Principal Receivables that the relevant Seller is
unable to convey to the Trust as provided in Section 2.09(c) shall not be
included in calculating the aggregate amount of Principal Receivables.

          “Qualified Institution” shall mean a depository institution organized
under the laws of the United States of America or any one of the states thereof
which at all times has a short-term certificate of deposit rating of A-1/P-1 or
better by both Rating Agencies and whose deposits are insured by the FDIC;
provided, however, if such depository institution is expected to hold deposits
for more than 30 days, such depository institution shall also at all times have
a long-term unsecured debt rating of AA- by Standard & Poor’s. If any
institution holding trust accounts shall cease be a Qualified Institution, each
such account shall promptly (and in any case within not more than 10 calendar
days) be moved to a Qualified Institution or to one or more segregated trust
accounts in the trust department of such institution, if permitted. Trust
accounts shall not be evidenced by certificates of deposit, passbooks, or other
instruments.

13

 

          “Rating Agency” shall mean Moody’s or Standard & Poor’s, and “Rating
Agencies” shall mean Moody’s and Standard & Poor’s.

          “Reassignment” shall mean any and all documents necessary to reassign an
interest in specified Accounts, including a reassignment substantially in the
form of Exhibit C hereto.

          “Receivable” shall mean any amount owing by the Obligor under an Account
from time to time, including, without limitation, amounts owing for the payment
of goods and services, cash advances, finance charges and other charges, if
any, and shall include, to the extent necessary to collect such amount or
enforce the related obligation, the contract under which the obligation to pay
such amount arose. A Receivable shall be deemed to have been created at the
end of the day on the Date of Processing of such Receivable. A Receivable shall
not include any amount owing under a Charged-Off Account or an Account in which
the Receivables have been repurchased pursuant to Section 2.07(b). Reference
herein to a “receivable” shall include any amount owing by an Obligor under a
Charged-Off Account or an Account in which the Receivables have been
repurchased pursuant to Section 2.07(b).

          “Receivable Repurchase Event” shall have the meaning specified in Section
2.07(a).

          “Record Date” for any Distribution Date shall mean the last day of the
preceding calendar month.

          “Recovered Amounts” shall mean all amounts received with respect to
receivables in Charged-Off Accounts including without limitation all proceeds
from sales of such receivables pursuant to Section 3.02(b).

          “Registered Certificateholder” shall mean the Holder of a Registered
Certificate.

          “Registered Certificate” shall have the meaning specified in Section 6.01.

          “Regulatory Requirements” shall have the meaning set forth in Section
7.05.

          “Removal Date” shall have the meaning set forth in Section 2.11.

          “Removal Notice Date” shall mean a date on or prior to the fifth Business
Day prior to a Removal Date.

          “Removed Accounts” shall have the meaning set forth in Section 2.11.

          “Removed Interchange” shall have the meaning set forth in Section 2.11(a).

          “Required Daily Deposit” with respect to each Servicer with respect to any
day for any Series then outstanding shall have the meaning set forth in the applicable Series Supplement.

14

 

          “Requirements of Law” for any Person shall mean the certificate of
incorporation and by-laws or other organizational or governing documents of
such Person, and any requirement of any law, rule or regulation or Governmental
Authority, in each case applicable to or binding upon such Person or to which
such Person is subject, whether federal, state or local (including, without
limitation, usury laws, the Federal Truth in Lending Act and Regulation Z and
Regulation B of the Board of Governors of the Federal Reserve System);
provided, however, that any such requirement shall not be deemed a Requirement
of Law if the enforcement of such requirement would not have a material adverse
effect upon the collectibility of the Receivables taken as a whole.

          “Responsible Officer” shall mean the Chairman or any Vice Chairman of the
Board of Directors or Trustees of the Trustee, the Chairman or Vice Chairman of
the Executive or Standing Committee of the Board of Directors or Trustees of
the Trustee, the President, any Executive Vice President, Senior Vice
President, Vice President, the Secretary, any Assistant Secretary, the
Treasurer, any Assistant Treasurer, the Cashier, any Assistant or Deputy
Cashier, any Trust Officer or Assistant Trust Officer, the Controller and any
Assistant Controller or any other officer of the Trustee customarily performing
functions similar to those performed by any of the above designated officers
and also, with respect to a particular matter, any other officer to whom such
matter is referred because of such officer’s knowledge of and familiarity with
the particular subject.

          “Schedule 1” shall mean the computer file, hard copy or microfiche list
delivered to the Trustee pursuant to Section 2.01(b) hereof (as such computer
file, hard copy or microfiche list may be amended from time to time) which
shall contain a true and complete list of all Accounts conveyed to the Trust
identified by account number and shall identify the originator of each Account
and the amount of Finance Charge Receivables and Principal Receivables in such
Account as of the Cut-Off Date or the Additional Account Cut-Off Date, as
applicable.

          “Seller,” when used with reference to specific Receivables, shall mean the
Person or Persons conveying such Receivables to the Trust.

          “Seller Certificate” shall mean (i) if a Seller elects to evidence its
fractional undivided interest in the Trust in certificated form pursuant to
Section 6.01 hereof, the certificate executed by Discover Bank on behalf of the
Holder of the Seller Certificate and authenticated by the Trustee,
substantially in the form of Exhibit D hereto, or (ii) an uncertificated
fractional undivided interest in the Trust as evidenced by a recording in the
books and records of the Trustee including the right to receive the Collections
and other amounts to be paid to the Holder of the Seller Certificate at the
times and in the amounts specified herein and in any series supplement hereto
which may be in effect from time to time.

          “Seller Certificate Ownership Agreement” shall mean, if applicable, the
agreement entered into by Discover Bank, as Seller, and any Additional Seller
regarding the parties’ joint ownership of the Seller Certificate, as such
agreement may be amended or supplemented from time to time.

          “Seller Interest” shall mean, with respect to any Trust Distribution Date
or Distribution Date, the aggregate amount of Principal Receivables in the
Trust at the end of the

15

 

related Due Period minus the Aggregate Investor Interest at the end of
such day; provided, however, that, except for purposes of determining whether
Discover Bank on behalf of the Holder of the Seller Certificate shall make a
deposit pursuant to the fourth sentence of Section 2.07(b), the Seller Interest
shall in no event be less than zero.

          “Seller Percentage” shall mean, on any date of determination, with respect
to any specified category, an amount equal to 100% of such category minus the
applicable Aggregate Investor Percentage.

          “Seller Servicing Fee” shall have the meaning set forth in Section 3.03.

          “Sellers” shall mean Discover Bank and any Additional Sellers.

          “Series” shall mean any of the Series of Investor Certificates created
pursuant to Section 6.06.

          “Series Closing Date” with respect to any Series shall mean the day the
Investor Certificates of such Series are initially issued, including the day
the Global Certificate is issued, if applicable.

          “Series Cut-Off Date” with respect to any Series of Investor Certificates
shall mean the last day of the Due Period occurring in the month specified in
the applicable Series Supplement.

          “Series Distribution Account” with respect to any Series shall have the
meaning specified in the applicable Series Supplement.

          “Series Finance Charge Collections” with respect to any Series for any
specified period of time shall have the meaning set forth in the applicable
Series Supplement.

          “Series Initial Investor Interest” with respect to any Series shall mean
the amount specified as the Series Initial Investor Interest in the applicable
Series Supplement.

          “Series Interchange” shall have the meaning set forth in the applicable
Series Supplement for each Interchange Series.

          “Series Interest Funding Account” with respect to any Series shall have
the meaning specified in the applicable Series Supplement.

          “Series Invested Amount” with respect to any Series, with respect to any
Distribution Date with respect to such Series, shall have the meaning set forth
in the applicable Series Supplement.

          “Series Investor Interest” with respect to any Series, with respect to any
Distribution Date with respect to such Series, shall have the meaning set forth
in the applicable Series Supplement.

16

 

          “Series Minimum Principal Receivables Balance” with respect to any Series
shall have the meaning specified in the applicable Series Supplement.

          “Series Percentage” with respect to any Series shall have the meaning
specified in the applicable Series Supplement.

          “Series Principal Collections” with respect to any Series for any
specified period of time shall have the meaning set forth in the applicable
Series Supplement.

          “Series Principal Funding Account” with respect to any Series shall have
the meaning specified in the applicable Series Supplement.

          “Series Repurchase Event” shall have the meaning specified in Section
2.06(a).

          “Series Supplement” shall mean a supplement to this Agreement complying
with the terms of Section 6.06.

          “Series Termination Date” with respect to any Series shall mean the date
specified as such in the applicable Series Supplement.

          “Series Termination Proceeds” shall have the meaning set forth in Section
12.02(c).

          “Servicer” shall mean initially (i) with respect to Discover Card
Accounts, Discover Bank and (ii) with respect to any other Accounts, the Person
who is designated as the Servicer with respect to such Accounts in the
Assignment of Additional Accounts relating to such Accounts; and thereafter any
Person appointed as a Successor Servicer to any such Servicer, as provided in
Section 10.03. The term “Servicer” when used in this Agreement or any Series
Supplement to refer to actions to be taken with respect to any Accounts, shall
refer to one or more Servicers, as applicable, and to any particular Servicer
only with respect to Accounts serviced by such Servicer.

          “Servicer Termination Event” shall have the meaning specified in Section
10.02.

          “Servicing Officer” shall mean any employee of the Master Servicer or of
any Servicer, as applicable, involved in, or responsible for, the
administration and servicing of the Receivables whose name appears on a list of
servicing officers furnished to the Trustee by the Master Servicer and each
Servicer, as such lists may from time to time be amended.

          “Special Payment Date” with respect to any Series shall have the meaning
specified in the applicable Series Supplement.

          “Standard & Poor’s” shall mean Standard & Poor’s Ratings Service, a
division of McGraw-Hill, Inc., and any successor thereto.

          “Successor Master Servicer” shall have the meaning specified in Section
10.03.

          “Successor Servicer” shall have the meaning specified in Section 10.03.

17

 

          “Termination Notice” shall have the meaning specified in Sections 10.01
and 10.02.

          “Transfer Agent” shall have the meaning specified in Section 6.04(a) and
initially shall be the Trustee and any co-transfer agent chosen by the Transfer
Agent and acceptable to the Trustee and the Sellers, including, if and so long
as any Class of any Series is listed on the Luxembourg Stock Exchange and such
exchange shall so require, a co-transfer agent in Luxembourg. Any reference in
this Agreement or a Series Supplement to the Transfer Agent shall include any
co-transfer agent unless the context requires otherwise.

          “Trust” shall mean the trust created by this Agreement, the corpus of
which shall consist of the Receivables existing as of the Cut-Off Date or
thereafter created and all monies due or to become due with respect thereto,
Interchange arising on or after November 1, 2004, all proceeds (as defined in
Section 9-102(64) of the UCC or a comparable or successor provision thereto,
however numbered, as in effect in the Applicable State with respect to each
such Receivable or such Interchange) of the Receivables and Interchange, such
funds as from time to time are deposited in the Investor Accounts and the
benefits of any Credit Enhancement with respect to any Series then outstanding.

          “Trust’s Annual Report Date” shall have the meaning specified in Section
3.07(a).

          “Trustee” shall mean the institution executing this Agreement as Trustee,
or its successor in interest, or any successor trustee appointed as herein
provided.

          “Trust Distribution Date” shall mean November 10, 1993 and the tenth day
of each calendar month thereafter, or, if such tenth day is not a Business Day,
the next succeeding Business Day.

          “Trust Portfolio Repurchase Event” shall have the meaning specified in
Section 2.05(a).

          “UCC” shall mean the Uniform Commercial Code, as amended from time to
time, as in effect in any specified jurisdiction.

          SECTION 1.02 Other Definitional Provisions.

          (a) All terms defined in this Agreement shall have the defined meanings
when used in any certificate or other document made or delivered pursuant
hereto unless otherwise defined therein.

          (b) As used herein and in any certificate or other document made or
delivered pursuant hereto or thereto, accounting terms not defined in Section
1.01, and accounting terms partly defined in Section 1.01 to the extent not
defined, shall have the respective meanings given to them under generally
accepted accounting principles in effect on the date hereof. To the extent
that the definitions of accounting terms herein are inconsistent with the
meanings of such terms under generally accepted accounting principles, the
definitions contained herein shall control.

18

 

ARTICLE II.

CONVEYANCE OF RECEIVABLES; ISSUANCE OF INVESTOR CERTIFICATES

          SECTION 2.01 Conveyance of Receivables.

          (a) Effective on the Initial Closing Date, Discover Bank hereby sells,
transfers, assigns and otherwise conveys to the Trust for the benefit of the
Certificateholders, without recourse, all right, title and interest of Discover
Bank in and to the Receivables existing as of the Cut-Off Date and thereafter
created (which become the property of the Trust on a daily basis as they
arise), all monies due or to become due with respect thereto, and all proceeds
(as defined in Section 9-102(a)(64) of the UCC or a comparable or successor
provision thereto, however numbered, as in effect in the State of Delaware) of
such Receivables. Additionally, effective as of November 1, 2004, Discover
Bank hereby sells, transfers, assigns and otherwise conveys to the Trust for
the benefit of the Certificateholders, without recourse, all right title and
interest of Discover Bank in and to the Interchange for each Distribution Date
and all proceeds (as defined in Section 9-102(a)(64) of the UCC as in effect in
the State of Delaware or a comparable or successor provision thereto, however
numbered) of such Interchange. Discover Bank intends such sale, transfer,
assignment and conveyance to be an absolute transfer of such property.
However, because, and only because, of the possibility that such sale,
transfer, assignment or conveyance may be deemed to be a pledge of such
property, Discover Bank does hereby grant to the Trust, for the benefit of the
Certificateholders, a security interest in such property.

          (b) In connection with such sale, Discover Bank further agrees, at its own
expense, on or prior to the Initial Closing Date to (i) indicate in its
computer files that Receivables created in connection with the Accounts have
been sold to the Trust pursuant to this Agreement for the benefit of the
Certificateholders by identifying the Accounts in its computer files with a
“41” or “42” in field captioned “SECURED_POOL_NBR” and (ii) deliver Schedule 1
to the Trustee.

          SECTION 2.02 Authentication of Certificates. The Trustee shall, as of the
Initial Closing Date, cause a Seller Certificate evidencing the entire
ownership of the Trust to be duly authenticated and delivered to or upon the
order of Discover Bank pursuant to Section 6.03; provided, however, that such
Seller Certificate need not evidence the entire ownership of the Trust if one
or more Series is issued as of the Initial Closing Date.

          SECTION 2.03 Acceptance by the Trustee.

          (a) The Trustee hereby undertakes to perform its obligations as set forth
herein. Subject to Section 4.03(b), the Trustee on behalf of the Trust, with
the consent of Discover Bank on behalf of the Holder of the Seller Certificate,
hereby agrees to allow (without further action by the Trustee) each Servicer to
use all Collections in respect of Receivables serviced by such Servicer until
the funds are transferred to, or at the direction of, the Master Servicer for
disbursement in accordance with the terms of Article IV hereof. The Trustee
hereby acknowledges its acceptance on behalf of the Trust of all right, title
and interest previously held
by Discover Bank in and to the Receivables existing as of the Cut-Off Date
and thereafter created and Interchange conveyed by Discover Bank pursuant to
Section 2.01 hereof, and

19

 

declares that it shall maintain such right, title and
interest, upon the trust herein set forth, for the benefit of all
Certificateholders. The Trustee further acknowledges that on or prior to the
Initial Closing Date, Discover Bank delivered to the Trustee Schedule 1 hereto
pursuant to Section 2.01 hereof.

          (b) The obligation of the Trustee to accept the Receivables shall be
subject to the condition that each Seller record and file, at its own expense,
one or more financing statements, with respect to the Receivables then existing
and thereafter created, for the sale of “accounts” (as defined in Section
9-102(a)(2) of the UCC or a comparable or successor provision thereto, however
numbered, as in effect in the Applicable State with respect to such Seller) and
meeting the requirements of law of such Applicable State, in such manner as is
necessary to perfect the sale and assignment of such Receivables to the Trust,
and to deliver a file-stamped copy of such financing statement or other
evidence of such filing to the Trustee on or prior to the Initial Closing Date.

          (c) The Trustee hereby agrees not to disclose to any Person any
information contained in Schedule 1 or delivered to the Trustee by any Seller
pursuant to Sections 2.01 or 2.10, except (i) as is required in connection with
the performance of its duties hereunder; (ii) as is required in connection with
enforcing the rights of the Certificateholders or to a Successor Master
Servicer appointed pursuant to Section 10.03 or (iii) as is required to comply
with Requirements of Law or any court order applicable to the Trustee. The
Trustee shall, through the Sellers as provided in Section 2.09(a), make all
necessary disclosures in order to comply with the UCC as in effect in any
Applicable State. The Trustee agrees to protect and maintain the security and
confidentiality of such information, and, in connection therewith, shall allow
the Sellers to inspect the Trustee’s security and confidentiality arrangements
from time to time during normal business hours. The Trustee shall provide the
Sellers with written notice five days prior to any disclosure pursuant to this
Section 2.03(c), unless such disclosure is required sooner by law or by any
court order applicable to the Trustee.

          (d) The Trustee shall have no power to create, assume or incur
indebtedness or other liabilities in the name of the Certificateholders or the
Trust other than as contemplated in this Agreement.

          SECTION 2.04 Representations and Warranties of Discover Bank. Discover
Bank hereby represents and warrants to the Trust, in the case of subsections
(a), (b), (f) and (g) below, as of the date of this Agreement [Note to draft:
the amendment will essentially cause these reps to be brought down, but this is
done for every Series Supplement already] and the Initial Closing Date, and, in
the case of subsections (c), (d) and (e) below, as of the dates specified
therein, that:

          (a) Organization, etc. Discover Bank has been duly incorporated and is
validly existing as a Delaware banking corporation, and has full corporate
power and authority to execute and deliver this Agreement and each Assignment
of Receivables to be delivered by it and to perform the terms and provisions
hereof and thereof.

          (b) Due Authorization. The execution, delivery and performance of this
Agreement by Discover Bank have been, and each Assignment of Receivables to be
delivered by

20

 

it at the time of delivery will have been, duly authorized by all
necessary corporate action, do not require any approval or consent of any
governmental agency or authority, do not and will not conflict with any
material provision of the Certificate of Incorporation or By-Laws of Discover
Bank, and do not and will not conflict with or result in a breach which would
constitute a material default under, any agreement for borrowed money binding
upon or applicable to it or such of its property that is material to it, or to
the best of Discover Bank’s knowledge, any law or governmental regulation or
court decree applicable to it or such material property, and this Agreement and
any Assignment of Receivables delivered by Discover Bank on such Initial
Closing Date are the valid, binding and enforceable obligations of Discover
Bank, except as the same may be limited by receivership, insolvency,
reorganization, moratorium or other laws relating to the enforcement of
creditors’ rights generally or by general equity principles.

          (c) Accuracy of Information. All information heretofore furnished by
Discover Bank in writing to the Trustee for purposes of or in connection with
this Agreement or any transaction contemplated hereby is, and all such
information hereafter furnished by Discover Bank in writing to the Trustee will
be, true and accurate in every material respect or based on reasonable
estimates on the date as of which such information is stated or certified.

          (d) Transfer of Receivables. As of the Initial Closing Date, each
Receivable conveyed by Discover Bank to the Trust then existing on such date is
an Eligible Receivable, except that Discover Bank makes no representation or
warranty with respect to the existence of any statutory or other non-consensual
Liens with respect to the Receivables. In the case of Additional Accounts, as
of any applicable Addition Date, each Receivable conveyed by Discover Bank to
the Trust then existing under such Additional Accounts is an Eligible
Receivable, except that Discover Bank makes no representation or warranty with
respect to the existence of any statutory or other non-consensual Liens with
respect to the Receivables.

          (e) Creation of Receivables. As of the date of the creation of any
Receivable transferred to the Trust by Discover Bank subsequent to the Cut-Off
Date, such Receivable is an Eligible Receivable, except that Discover Bank
makes no representation or warranty with respect to the existence of any
statutory or other non-consensual Liens with respect to the Receivables.

          (f) Selection of Accounts. The Accounts were not selected on any basis
indicative of creditworthiness, except that charged-off accounts were not
included.

          (g) Adverse Proceedings. To the best knowledge of Discover Bank, there
are no proceedings or investigations pending against Discover Bank before any
court, regulatory body, administrative agency, or other tribunal or
governmental instrumentality having jurisdiction over Discover Bank (A)
asserting the invalidity of this Agreement, (B) seeking to prevent the
consummation of any of the transactions contemplated by this Agreement or (C)
seeking any determination or ruling which in Discover Bank’s judgment would
materially and adversely affect the performance by Discover Bank of its
obligations under this Agreement or the validity or enforceability of this
Agreement.

          (h) Interchange.
Neither Discover Bank nor Discover Financial Services, Inc. has or
will have any right to reclaim Interchange from the Trust after it
has been transferred to the Trust by Discover Bank on the applicable
Distribution Date.

          The representations and warranties set forth in this Section 2.04 shall
survive the transfer and assignment to the Trust of the Receivables transferred
to the Trust by Discover Bank.

21

 

          SECTION 2.05 Trust Portfolio Repurchase Obligations of the Sellers.

          (a) Trust Portfolio Repurchase Events. If as of the Initial Closing Date
or, with respect to any Additional Accounts, as of any date on which there is
an assignment of such Additional Accounts:

     (i) this Agreement or the appropriate Assignment, as the case
may be, does not constitute a legal, valid and binding obligation
of each Seller enforceable against each Seller in accordance with
its terms, except as such enforceability may be limited by
insolvency, bankruptcy, reorganization or other laws relating to
the enforcement of creditors’ rights or by general equity
principles; or

     (ii) this Agreement or the appropriate Assignment, as the case
may be, constitutes a sale of the Receivables existing as of the
Cut-Off Date (or the Additional Account Cut-Off Date, as
applicable) and thereafter created, and of all proceeds (as defined
in the UCC as in effect in the Applicable State with respect to
such Receivables) of such Receivables, but does not constitute a
valid transfer and assignment to the Trust of all right, title and
interest of each Seller in and to such property, or such property
will not be owned by the Trust free and clear of any Lien of any
Person claiming through or under any Seller; or

     (iii) this Agreement or the appropriate Assignment, as the
case may be, does not constitute a sale of such property, and it
further does not constitute a grant of a security interest (as
defined in the UCC as in effect in the Applicable State with
respect to any Receivable) in such property to the Trust which is
enforceable with respect to existing Receivables and the proceeds
thereof upon execution and delivery of the Agreement or Assignment,
and which will be enforceable with respect to such Receivables
hereafter or thereafter created and the proceeds thereof upon such
creation; or

     (iv) this Agreement or the appropriate Assignment, as the case
may be, constitutes the grant of a security interest to the Trust
in such property, upon the filing of the financing statements
described in Section 2.03(b) or the appropriate Assignment, as the
case may be, and in the case of the Receivables hereafter created
and proceeds thereof, upon such creation, and the Trust does not
then have a first priority perfected security interest in such
property except for statutory or other non-consensual liens; or

     (v) any Seller or a Person claiming through or under any
Seller has any claim to or interest in any of the Investor
Accounts, other than (A) the interest of the Certificateholders and
(B) if the Agreement or appropriate Assignment, as the case may be,
constitutes the grant of a security interest in such property, the
interest of any Seller in such property as a debtor for
purposes of the UCC as in effect in the Applicable State with
respect to any Receivable; or

     (vi) any of the representations and warranties set forth in
Section 2.04(a), (b) or (c) (or, in the case of any Additional
Sellers, the corresponding

22

 

representations and warranties of any
such Additional Seller contained in the applicable Assignment) are
not true and correct and such breach is not cured within 60 days of
the earlier of (A) actual knowledge of such breach by the relevant
Seller or (B) receipt by such Seller and the Master Servicer of
written notice of such breach by either the Trustee or the Holders
of Investor Certificates evidencing Fractional Undivided Interests
aggregating not less than 51% of the Aggregate Invested Amount (and
to the Trustee if given by the Investor Certificateholders)

then a Trust Portfolio Repurchase Event shall have occurred. The Trustee shall
have no duty to conduct any affirmative investigation for purposes of this
Section 2.05(a).

          (b) Repurchase of Trust Portfolio. If at any time a Trust Portfolio
Repurchase Event shall have occurred and be continuing, either the Trustee or
the Holders of Investor Certificates evidencing Fractional Undivided Interests
aggregating not less than 51% of the Aggregate Invested Amount, by notice then
given in writing to the Sellers and the Master Servicer (and to the Trustee if
given by the Investor Certificateholders), may direct Discover Bank on behalf
of the Holder of the Seller Certificate to purchase an amount of Principal
Receivables (as specified below) within 60 days of such notice, or within such
longer period as may be specified in such notice, and Discover Bank on behalf
of the Holder of the Seller Certificate shall be obligated to purchase such
Receivables with respect to each Series then outstanding on or before the
Distribution Date with respect to each such Series occurring within such period
subject to the provisions of Section 2.08, on the terms and conditions set
forth below; provided, however, that no such purchase shall be required to be
made if, at any time during such period, such Trust Portfolio Repurchase Event
shall not adversely affect in any material respect the interests of the
Investor Certificateholders as a whole. In such case, (i) Discover Bank on
behalf of the Holder of the Seller Certificate shall deposit into each Series
Distribution Account for each Series then outstanding on or before the
Distribution Date with respect to such Series an amount equal to the purchase
price for such Series, as set forth in the next sentence, and (ii) the Trustee
shall, except in the case of a Trust Portfolio Repurchase Event caused by an
Assignment of Additional Accounts, pay the amount on deposit in each Series
Principal Funding Account with respect to Series Principal Collections to the
Series Distribution Account with respect to each such Series on such
Distribution Date, and the total amount deposited into the Series Distribution
Account pursuant to clauses (i) and (ii) shall be distributed to the Investor
Certificateholders pursuant to Section 12.02.

          The purchase price with respect to each Series will be equal to (i) the
Series Investor Interest on the Distribution Date with respect to such Series
immediately preceding the date such deposit is made (after giving effect to any
distributions made on such Distribution Date) plus (ii) all accrued but unpaid
Certificate Interest on the outstanding amount of Investor Certificates of such
Series to be so purchased through the date set for such purchase; provided,
however, that if an assignment of Additional Accounts results in a Trust
Portfolio Repurchase
Event, only the Receivables of such Additional Accounts shall be
repurchased at a price with respect to each Series equal to the product of (i)
the Series Percentage with respect to Principal Receivables for the next
following Distribution Date with respect to such Series and (ii) the amount of
Receivables attributable to the Additional Accounts, and such purchase price
shall be applied as Collections in respect of such Receivables in accordance
with each applicable Series

23

 

Supplement and deposited in the Group Collections
Account relating to each Series. Payment of the purchase price and the amounts
on deposit in the Collections Account with respect to the preceding Due Period
shall be considered a prepayment in full of such Receivables. On each
Distribution Date on which such amount is scheduled to be deposited, the
Receivables to be so purchased and all the monies due or to become due with
respect thereto and all proceeds of such Receivables (including, if applicable,
all amounts on deposit in the Series Interest Funding Account for each Series)
shall be released to Discover Bank on behalf of the Holder of the Seller
Certificate, and the Trustee shall execute and deliver such instruments of
transfer or assignment including, without limitation, any document necessary to
release the Trust’s security interest in such Receivables and to release any
filing evidencing or perfecting such security interest, in each case without
recourse, representation or warranty (except for the warranty that since the
date of transfer by any Seller under this Agreement the Trustee has not sold,
transferred or encumbered any such Receivables or interest therein), as shall
be reasonably requested by Discover Bank on behalf of the Holder of the Seller
Certificate to vest in Discover Bank on behalf of the Holder of the Seller
Certificate, or its designee or assignee, all right, title and interest of the
Trust in and to such Receivables, all monies due or to become due with respect
thereto and all proceeds of such Receivables.

          SECTION 2.06 Series Repurchase Obligations of the Sellers.

          (a) Series Repurchase Event. If, as of the Series Closing Date with
respect to any Series, the Series Supplement for such Series does not
constitute a legal, valid and binding obligation of each Seller enforceable
against each Seller in accordance with its terms, except as such enforceability
may be limited by insolvency, bankruptcy, reorganization or other laws relating
to the enforcement of creditors’ rights or by general equity principles, then a
Series Repurchase Event shall have occurred. The Trustee shall have no duty to
conduct any affirmative investigation for purposes of this Section 2.06(a).

          (b) Repurchase of Series. If at any time a Series Repurchase Event shall
have occurred and be continuing, either the Trustee or the Holders of Investor
Certificates evidencing Fractional Undivided Interests aggregating not less
than 51% of the Series Invested Amount with respect to such Series, by notice
then given in writing to the Sellers and the Master Servicer (and to the
Trustee if given by the Investor Certificateholders of such Series), may direct
Discover Bank on behalf of the Holder of the Seller Certificate to purchase the
Investor Certificates of such Series within 60 days of such notice, or within
such longer period as may be specified in such notice, and Discover Bank on
behalf of the Holder of the Seller Certificate shall be obligated to purchase
such Investor Certificates on a Distribution Date with respect to such Series
occurring within such period, subject to the provisions of Section 2.08, on the
terms and conditions set forth below; provided, however, that no such purchase
shall be required to be made if, at any time during such period, such Series
Repurchase Event shall not adversely affect in any material respect the
interests of the Investor Certificateholders of such Series as a whole. In
such case, on such Distribution Date, (i) Discover Bank on behalf of the Holder
of the Seller
Certificate shall deposit into the Series Distribution Account an amount
equal to the sum of (x) the Series Investor Interest on the Distribution Date
with respect to such Series immediately preceding the date such deposit is made
(after giving effect to any distributions made on such Distribution Date) and
(y) all accrued but unpaid Certificate Interest on the outstanding amount of
Investor Certificates to be so purchased through the date set for such
purchase, and (ii) the

24

 

Trustee shall pay the amount on deposit in the Series
Principal Funding Account with respect to such Series to the Series
Distribution Account with respect to such Series, and the total amount
deposited into the Series Distribution Account pursuant to clauses (i) and (ii)
shall be distributed to the Investor Certificateholders of such Series pursuant
to Section 12.02.

          SECTION 2.07 Repurchase Obligations of the Sellers Relating to
Receivables.

          (a) Receivable Repurchase Events. In the event that each Receivable that
is transferred to the Trust is not, as of the time of such transfer, an
Eligible Receivable and such event has a material adverse effect on the
Certificateholders’ interest in the Receivables as a whole and is not cured
within 60 days of the earlier of (i) actual knowledge of such event by the
relevant Seller or (ii) receipt by such Seller of written notice of any such
event given by the Trustee, then a Receivable Repurchase Event shall have
occurred. Upon receipt of actual knowledge of any such event, such Seller
shall deliver a written notice to such effect to the Rating Agencies and the
Trustee. The determination of materiality pursuant to this Section 2.07(a)
shall be made by an officer of the Master Servicer in his sole reasonable
judgment. Notwithstanding the foregoing, if (a) the amount of Principal
Receivables in the Trust at the end of the Due Period in which the relevant
Seller obtained (i) actual knowledge of the transfer of a Receivable that is
not an Eligible Receivable, or (ii) written notice of such a transfer from the
Trustee, would be less than the Minimum Principal Receivables Balance if such
Receivables were excluded from the amount of Principal Receivables used in
such determination, and (b) the relevant Seller’s short term debt rating from
Standard & Poor’s is less than A-1, then a Receivables Repurchase Event shall
automatically occur with respect to each such Receivable that was not an
Eligible Receivable upon transfer and the Receivables in each Account to which
such event relates shall be removed from the Trust in accordance with Section
2.07(b). The Trustee shall have no duty to conduct any affirmative
investigation as to the eligibility of any Receivable for purposes of this
Section 2.07(a).

          (b) Purchase of Ineligible Receivables. If at any time a Receivable
Repurchase Event shall have occurred and be continuing, Discover Bank on behalf
of the Holder of the Seller Certificate shall purchase all the Receivables in
each Account in which there is any Receivable as to which such event relates
(an “Ineligible Receivable”), subject to the provisions of Section 2.08, on the
terms and conditions set forth below. Discover Bank on behalf of the Holder of
the Seller Certificate shall purchase all the Receivables in each Account with
an Ineligible Receivable on the Trust Distribution Date related to the then
current Due Period by directing the Master Servicer to deduct the amount of
such Receivables which are Principal Receivables from the aggregate amount of
Principal Receivables in the Trust. On and after the date of such repurchase,
Receivables so purchased shall not be included in the calculation of any Series
Percentage, the Seller Percentage or the Seller Interest. In the event that
such an exclusion of Receivables from the calculation of the Seller Interest
would cause such Seller Interest to be a negative number on the date of
purchase of such Receivables, Discover Bank on behalf of the Holder of the
Seller Certificate shall make a deposit in the Collections Account in
immediately
available funds in an amount equal to the amount by which the Seller
Interest would be reduced below zero. Such deposit shall be considered a
payment in full of such Receivables and shall be applied as Collections in
respect of such Receivables in accordance with Section 4.03. Upon each such
purchase of Receivables by Discover Bank on behalf of the Holder of the Seller
Certificate, the Trust shall automatically and without further action be deemed
to sell, transfer,

25

 

assign and otherwise convey to Discover Bank on behalf of
the Holder of the Seller Certificate without recourse, representation or
warranty (except for the warranty that since the date of transfer by any Seller
under this Agreement the Trustee has not sold, transferred or encumbered any
such Receivable or interest therein), all the right, title and interest of the
Trust in and to such Receivables, all monies due or to become due with respect
thereto, all proceeds thereof and all Receivables thereafter created in such
Account. The Trustee shall execute such documents and instruments of transfer
or assignment including, without limitation, any document necessary to release
the Trust’s security interest in such Receivables and to release any filings
evidencing or perfecting such security interest and take such other actions as
shall reasonably be requested by Discover Bank on behalf of the Holder of the
Seller Certificate to effect the conveyance of such Receivables pursuant to
this section. The obligation of Discover Bank on behalf of the Holder of the
Seller Certificate to purchase any Ineligible Receivables, and to make the
deposits, if any, required to be made to the Collections Account as provided in
this Section 2.07(b), shall constitute the sole remedy respecting the event
giving rise to such obligation available to the Certificateholders (or the
Trustee on behalf of the Certificateholders).

          SECTION 2.08 Intention of Parties. In the event that the covenants and
obligations of Discover Bank under Sections 2.05, 2.06 and 2.07, or the
obligation of Discover Bank on behalf of the Holder of the Seller Certificate
to deposit certain late payment charges and cash advance fees with respect to
the Accounts into the Collections Account or to pay servicing fees to the
Master Servicer pursuant to Section 3.03 or the applicable provisions of any
Series Supplements (collectively, the “Obligations”) are at any time the
subject of concurrent Obligations of one or more other parties to the Seller
Certificate Ownership Agreement, it is the intention of the parties to this
Agreement that such obligations of Discover Bank shall be conditioned on
Discover Bank’s ability to enforce such concurrent Obligations against such
other parties.

          SECTION 2.09 Covenants of the Sellers. The Sellers hereby covenant that:

          (a) Security Interests. Except for the conveyances hereunder, no Seller
will sell, pledge, assign or transfer to any other Person, or grant, create,
incur, assume or suffer to exist any Lien on any Receivable or any Interchange
transferred to the Trust by such Seller, whether existing as of the Cut-Off
Date or thereafter created, or any interest therein, and each Seller shall
defend the right, title, and interest of the Trust in, to and under such
Receivables and such Interchange, whether now existing or hereafter created,
against all claims of third parties claiming through or under such Seller.
Each Seller shall, if so requested by the Trustee, as agent for the Sellers,
provide information to third parties (which information may be provided by the
Sellers directly or through the Trustee) concerning the Accounts, the
Receivables and the Interchange sufficient to comply with the UCC as in effect
in the Applicable State.

          (b) Credit Agreements. Each Seller shall cause the respective Servicer,
as its agent, to service and administer the Accounts, the Receivables under
which have been transferred to the Trust by such Seller, and which are serviced
by such Servicer, in a particular state or similar jurisdiction in accordance
with policies identical to those used in servicing and administering other of
such Seller’s credit card accounts in such jurisdiction. The terms and
provisions of a Credit Agreement may be changed in any respect (including,
without limitation, the calculation of the amount, or the timing, of
charge-offs) only if such change is made

26

 

applicable to such Seller’s entire
portfolio of accounts of that general type, obligors of which are resident in a
particular affected state or similar jurisdiction, and not only to such
Accounts.

          (c) Account Allocations. In the event that any Seller is unable for any
reason to transfer Receivables to the Trust in accordance with the provisions
of this Agreement (including, without limitation, by reason of any governmental
agency having regulatory authority over any Seller or any court of competent
jurisdiction ordering that any Seller not convey any additional Principal
Receivables to the Trust) then, in any such event, such Seller agrees to
allocate and pay to the Trust, after the date of such inability, all
Collections with respect to Receivables that would have been Principal
Receivables but for the inability to transfer such Receivables (up to an
aggregate amount equal to the amount of Principal Receivables in the Trust on
such date with respect to Principal Receivables transferred to the Trust by
such Seller); and such Seller agrees to have such amounts applied as
Collections in accordance with Section 4.03. If such Seller is unable pursuant
to any Requirement of Law to allocate payments on the Accounts as described
above, such Seller agrees that it shall, in any such event, allocate after such
date payments on each Account with respect to the principal balance of such
Account first to the oldest principal balance of such Account and to have such
payments applied as Collections in accordance with Section 4.03. The parties
hereto agree that Finance Charge Receivables, whenever created, accrued in
respect of Principal Receivables that have been conveyed to the Trust by any
Seller shall continue to be a part of the Trust notwithstanding any cessation
of the transfer of additional Principal Receivables to the Trust, and
Collections with respect thereto shall continue to be allocated and paid in
accordance with Section 4.03.

          (d) Receivables and Interchange Not to be Evidenced by Promissory Notes.
No Seller will take any action to cause any Receivable or any Interchange to be
evidenced by any instrument (as defined in the UCC as in effect in the
Applicable State with respect to such Seller) except in connection with its
enforcement or collection of an Account.

          (e) Notice to Trustee. Promptly upon receipt of notice by any officer of
any Seller that any liens (other than those contemplated by this Agreement or
any Assignment) have been placed on the Receivables, such Seller shall notify
the Trustee in writing of such liens.

          SECTION 2.10 Addition of Accounts.

          (a) Required Additions. (i) In the event that the amount of Principal
Receivables in the Trust at the end of any Due Period is less than the Minimum
Principal Receivables Balance, Discover Bank on behalf of the Holder of the
Seller Certificate shall designate, effective no later than the commencement of
the following Due Period, additional credit accounts (“Additional Accounts”) to
be included as Accounts, which may be credit accounts originated by Discover
Bank or affiliates of Discover Bank, whether or not such
accounts are Discover Card accounts, and shall transfer to the Trust (A)
all receivables existing in such Additional Accounts on the date of
designation, to be included as Receivables and (B) all receivables created in
such Additional Accounts on and after the effective date of designation, and
the corresponding portion of Interchange arising on and after the effective
date of such designation, in each case subject to the conditions set forth in
Section 2.10(b) or (c), as applicable, in a sufficient amount such that, after
giving effect to such additions, the amount of

27

 

Principal Receivables in the
Trust is at least equal to the Minimum Principal Receivables Balance.

          (ii) In lieu of, or in addition to, designating Additional Accounts
pursuant to paragraph (i) above, Discover Bank on behalf of the Holder of the
Seller Certificate may, subject to the applicable conditions set forth in
Section 2.10(d), convey to the Trust participations representing undivided
interests in a pool of assets primarily consisting of receivables in revolving
credit card accounts and collections thereon (“Participation Interests”). The
addition of Participation Interests to the Trust pursuant to this Section 2.10
shall be effected by an amendment to this Agreement, dated the applicable
Addition Date, pursuant to Section 13.01(a).

          (b) Conditions to the Designation of Discover Card Accounts Originated by
Discover Bank as Additional Accounts. Discover Bank on behalf of the Holder of
the Seller Certificate shall be permitted to designate Discover Card accounts
originated by Discover Bank as “Additional Accounts” if the following
conditions are satisfied on or prior to the Addition Date (except with respect
to Section 2.10(b)(i), which shall be satisfied on or prior to the fifth
Business Day following the Addition Date):

     (i) the Seller or Sellers with respect to such Additional
Accounts shall have delivered to the Trustee a written assignment
(including an acceptance by the Trustee on behalf of the Trust for
the benefit of the Certificateholders) in substantially the form of
Exhibit A and a computer file, hard copy or microfiche list
containing a true and complete list of all such Additional Accounts
identified by account number, which computer file, hard copy or
microfiche list shall be deemed to be an amendment to Schedule 1
hereto as of the date of such Assignment;

     (ii) the Servicer with respect to such Additional Accounts
shall have delivered a certificate of a Servicing Officer
confirming that the Additional Accounts were not selected on the
basis of any selection criteria believed by such Servicer to be
materially adverse to the interests of the Holders of any Class of
any Series then outstanding or any Credit Enhancement Provider;

     (iii) Discover Bank on behalf of the Holder of the Seller
Certificate shall have delivered to the Trustee an Opinion or
Opinions of Counsel concerning the perfection of the Trust’s
security interest in the Receivables in such Additional Accounts,
and concerning insolvency and related matters with respect to such
Receivables, that will not cause the rating of any Class of any
Series then outstanding to be withdrawn or lowered by either Rating
Agency; and

     (iv) Discover Bank on behalf of the Holder of the Seller
Certificate shall have delivered notice of such proposed assignment
of Additional Accounts to the Rating Agencies, and Standard &
Poor’s (and, in the event that the proposed assignment of
Additional Accounts is not required pursuant to Section 2.10(a),
Moody’s) shall have advised Discover Bank on behalf of the Holder
of the Seller Certificate that such assignment of Additional
Accounts would not

28

 

cause the rating of any Class of any Series then
outstanding to be lowered or withdrawn.

          (c) Conditions to Designation of Additional Accounts, other than Discover
Card Accounts Originated by Discover Bank. In addition to designations of
Additional Accounts as described in Section 2.10(b), subject to the conditions
set forth below, Discover Bank on behalf of the Holder of the Seller
Certificate shall be permitted to designate as Additional Accounts (x) credit
accounts originated by Discover Bank which are not Discover Card accounts
and/or (y) credit accounts originated by an affiliate of Discover Bank (an
“Additional Seller”), which may or may not be Discover Card accounts. Discover
Bank on behalf of the Holder of the Seller Certificate shall be permitted to
designate such accounts as Additional Accounts if the following conditions are
satisfied on or prior to the Addition Date (except with respect to Section
2.10(c)(i), which shall be satisfied on or prior to the fifth Business Day
following the Addition Date):

     (i) the Seller or Sellers with respect to such Additional
Accounts shall have delivered to the Trustee a written assignment
(including an acceptance by the Trustee on behalf of the Trust for
the benefit of the Certificateholders) in substantially the form of
Exhibit A and a computer file, hard copy or microfiche list
containing a true and complete list of all such Additional
Accounts, identified by originator and account number, which
computer file, hard copy or microfiche list shall be deemed to be
an amendment to Schedule 1 hereto as of the date of such
Assignment;

     (ii) the Servicer with respect to such Additional Accounts
shall have delivered a certificate of a Servicing Officer
confirming that such Additional Accounts were not selected on the
basis of any selection criteria believed by such Servicer to be
materially adverse to the interests of the Holders of any Class of
any Series then outstanding or any Credit Enhancement Provider;

     (iii) Discover Bank on behalf of the Holder of the Seller
Certificate shall have delivered to the Trustee an Opinion or
Opinions of Counsel concerning the perfection of the Trust’s
security interest in the Receivables in such Additional Accounts,
and concerning insolvency and related matters with respect to such
Receivables, that will not cause the rating of any Class of any
Series then outstanding to be withdrawn or lowered by either Rating
Agency; and

     (iv) Discover Bank on behalf of the Holder of the Seller
Certificate shall have delivered notice of such proposed assignment
of Additional Accounts to the Rating Agencies and the Rating
Agencies shall have advised Discover Bank on behalf of the Holder
of the Seller Certificate that such assignment of
Additional Accounts would not cause the rating of any Class of
any Series then outstanding to be lowered or withdrawn.

          (d) Conditions to Designation of Participation Interests. In addition to
designations of Additional Accounts as described in Sections 2.10(b) and
2.10(c), subject to the conditions set forth below, Discover Bank on behalf of
the Holder of the Seller Certificate shall

29

 

be permitted to convey to the Trust
Participation Interests. Discover Bank on behalf of the Holder of the Seller
Certificate shall be permitted to convey such Participation Interests to the
Trust if, on or prior to the Addition Date, the following conditions are
satisfied:

     (i) Discover Bank on behalf of the Holder of the Seller
Certificate shall have delivered a certificate stating that
Discover Bank on behalf of the Holder of the Seller Certificate
reasonably believes that the addition of the Participation
Interests will not be materially adverse to the interests of the
Holders of any Class of any Series then outstanding or any Credit
Enhancement Provider;

     (ii) Discover Bank on behalf of the Holder of the Seller
Certificate shall have delivered to the Trustee an Opinion or
Opinions of Counsel concerning the perfection of the Trust’s
security interest in the Participation Interests and concerning
insolvency and related matters with respect to such Participation
Interests, that will not cause the rating of any Class of any
Series then outstanding to be withdrawn or lowered by either Rating
Agency; and

     (iii) Discover Bank on behalf of the Holder of the Seller
Certificate shall have delivered notice of such proposed conveyance
of Participation Interests to the Rating Agencies and the Rating
Agencies shall have advised Discover Bank on behalf of the Holder
of the Seller Certificate that such conveyance of Participation
Interests would not cause the rating of any Class of any Series
then outstanding to be lowered or withdrawn.

          (e) Calculation of Finance Charge Receivables. The Servicer with respect
to any Additional Accounts shall prepare a reasonable estimate of the amount of
Finance Charge Receivables billed in such Additional Accounts in the Due Period
in which such Receivables are first included in the Trust, which estimate shall
be deemed to be the amount of Finance Charge Receivables billed in such
Additional Accounts in such Due Period, absent manifest error. Such Servicer
shall provide to the Trustee, upon request, a certificate of a Servicing
Officer setting forth in reasonable detail its calculation of such estimate.

          SECTION 2.11 Removal of Accounts.

          (a) Optional Removals. From time to time, Discover Bank on behalf of the
Holder of the Seller Certificate may, but shall not be obligated to, (i)
designate Accounts for deletion and removal from the Trust (“Removed Accounts”)
and (ii) cause the Trust to transfer to the Holder of the Seller Certificate
(A) all receivables existing in such Removed Accounts on the date of
designation and (B) all receivables created in such Removed Accounts on and
after the effective date of designation, and the corresponding portion of
Interchange arising on and after the effective date of such designation (the
“Removed Interchange”). Such deletion and removal
shall be effective as of the day specified in the notice referred to in
the following sentence, which (i) may be any day with respect to removals of
Accounts (but shall be effective as of the last day of any Due Period with
respect to the Removed Interchange) covered by Section 2.11(b)(vi)(A), and (ii)
shall be the last day of any Due Period with respect to removals of Accounts
(and the Removed Interchange) covered by Section 2.11(b)(vi)(B) or (C) (any
such effective date, the “Removal Date”), subject to the notice requirement and
other conditions set forth below. On or

30

 

before the fifth Business Day prior to
the Removal Date (the “Removal Notice Date”), Discover Bank on behalf of the
Holder of the Seller Certificate shall give the Trustee, the Master Servicer
and any Credit Enhancement Provider written notice that the receivables from
such Removed Accounts and the Removed Interchange are to be reassigned by the
Trustee to Discover Bank on behalf of the Holder of the Seller Certificate
effective as of the Removal Date.

          (b) Conditions to the Designation of Removed Accounts. Discover Bank on
behalf of the Holder of the Seller Certificate shall be permitted to designate
and require reassignment to the Holder of the Seller Certificate of the
Receivables from Removed Accounts and the Removed Interchange only upon
satisfaction of the following conditions:

     (i) As of the Removal Date, the aggregate amount of Principal
Receivables in the Trust, less the aggregate amount of Principal
Receivables in such Removed Accounts, shall not be less than the
Minimum Principal Receivables Balance;

     (ii) The removal of the Removed Accounts on any Removal Date
shall not, in the reasonable belief of Discover Bank cause either
(A) an Amortization Event to occur or (B) the Deficit Accumulation
Amount or Deficit Liquidation Amount, as applicable, with respect
to any Series then outstanding on any Distribution Date to be
greater than zero;

     (iii) On or prior to the fifth Business Day following the
Removal Date, the Seller or Sellers with respect to such Removed
Accounts and Removed Interchange shall have delivered to the
Trustee (A) for execution a written assignment substantially in the
form of Exhibit C hereto, which shall include a warranty of the
Trustee that since the date of transfer by such Seller or Sellers
under this Agreement the Trustee has not sold, transferred or
encumbered any such Receivable, the Removed Interchange or interest
in either and (B) a computer file, microfiche list or hard copy
containing a true and complete list of all such Removed Accounts
identified by originator and account number and containing the
amount of Principal Receivables in such Removed Accounts as of the
Removal Date, which computer file or microfiche list shall as of
the Removal Date modify and amend Schedule 1 hereto by deleting
therefrom information with respect to any Removed Account and be
made a part of this Agreement;

     (iv) Discover Bank on behalf of the Holder of the Seller
Certificate shall represent and warrant that no selection
procedures believed by Discover Bank to be materially adverse to
the interests of the Holders of any Class of any Series then
outstanding, or any Credit Enhancement Provider, were utilized in
selecting the Removed Accounts;

     (v) Discover Bank on behalf of the Holder of the Seller
Certificate shall have delivered notice of such proposed
reassignment to the Rating Agencies and the Rating Agencies shall
have advised Discover Bank that such reassignment would not cause
the rating of any Class of any Series then outstanding to be
lowered or withdrawn;

31

 

     (vi) The Removed Accounts shall meet one of the following
criteria:

     (A) Each of such Accounts is a Charged-Off Account;
provided that Discover Bank shall transfer to the Trust all
proceeds received with respect to any Removed Account that is
a Charged-Off Account, such amounts to constitute Recovered
Amounts under the terms of this Agreement;

     (B) Such Accounts were randomly selected from the
Accounts; provided that such random selection process need
not include selection of Charged-Off Accounts; or

     (C) Such Accounts were originated or maintained in
connection with an affinity or private-label arrangement, and
such affinity or private-label arrangement has been cancelled
by a third party or has expired; provided, however, that
Accounts originated or maintained pursuant to an affinity or
private-label arrangement shall only be removed pursuant to
this Section 2.11(b)(vi)(C) if, prior to the cancellation or
expiration of such arrangement, the Master Servicer
designated such arrangement in writing to the Trustee as an
arrangement with respect to which these provisions apply; and

     (vii) Discover Bank on behalf of the Holder of the Seller
Certificate shall have delivered to the Trustee an Officer’s
Certificate confirming the items set forth in (i), (ii), (iv), (v)
and (vi) above. The Trustee may conclusively rely on such
Officer’s Certificate, shall have no duty to make inquiries with
regard to the matters set forth therein and shall incur no
liability in so relying.

     Upon satisfaction of the above conditions, the Trustee shall execute and
deliver the reassignment to Discover Bank on behalf of the Holder of the Seller
Certificate, and the Receivables from the Removed Accounts and the Removed
Interchange shall no longer constitute a part of the Trust.

          (c) Calculation of Finance Charge Receivables. The Servicer with respect
to any Removed Accounts shall prepare a reasonable estimate of the amount of
Finance Charge Receivables billed in such Removed Accounts in the Due Period in
which such Receivables are removed from the Trust, which estimate shall be
deemed to be the amount of Finance Charge Receivables billed in such Removed
Accounts in such Due Period, absent manifest error. Such Servicer shall
provide the Trustee, upon request, a certificate of a Servicing Officer setting
forth in reasonable detail its calculation of such estimate.

ARTICLE III.

ADMINISTRATION AND SERVICING OF RECEIVABLES

          SECTION 3.01 Acceptance of Appointment and Other Matters Relating to the
Master Servicer.

32

 

          (a) In connection with and in consideration for the conveyance of the
Receivables to the Trust by the Sellers, and the issuance of the Seller
Certificate to the Sellers, Discover Bank on behalf of the Holder of the Seller
Certificate and the Trustee agree to cause Discover Bank to act as Master
Servicer under this Agreement and Discover Bank agrees to act as Master
Servicer under this Agreement.

          (b) Subject to Section 10.01, the Master Servicer is hereby authorized and
empowered (i) unless such power and authority is revoked by the Trustee, to
instruct the Trustee to make withdrawals and payments from the Investor
Accounts in accordance with the instructions set forth in this Agreement and in
the Series Supplements, (ii) to make drawings on any Credit Enhancement as set
forth in the Series Supplements, (iii) to make any filings or registrations
with, and seek any consents or authorizations from, the Securities and Exchange
Commission and any securities authority of any jurisdiction on behalf of the
Trust as may be necessary or advisable to comply with the securities or
reporting requirements laws of the United States or any state or other
jurisdiction and (iv) to take any other action and exercise any other power
permitted to be taken or exercised by the Master Servicer pursuant to the terms
of this Agreement or any Series Supplement. The Trustee agrees that it shall
promptly follow the written instructions of the Master Servicer to withdraw
funds from the Investor Accounts and make drawings under any Credit Enhancement
as required by this Agreement or any applicable Series Supplement. The Trustee
shall furnish the Master Servicer with any powers of attorney and other
documents necessary or appropriate under the laws of any jurisdiction with
authority over the Receivables to enable the Master Servicer to carry out its
servicing and administrative duties hereunder.

          (c) In the event that any Seller is unable for any reason to transfer
Receivables to the Trust in accordance with the provisions of this Agreement
(including, without limitation, by reason of the application of the provisions
of Section 9.01 or any governmental agency having regulatory authority over any
Seller or any court of competent jurisdiction ordering that any Seller not
convey any additional Principal Receivables to the Trust) then, in any such
event, the Master Servicer agrees to allocate, after the date of such
inability, all Collections with respect to Principal Receivables, and all
amounts that would have constituted Collections with respect to Receivables
that would have been Principal Receivables but for such Seller’s inability to
transfer such Receivables (up to an aggregate amount equal to the amount of the
Principal Receivables in the Trust as of such date that were transferred to the
Trust by such Seller) in accordance with Section 2.09(c) and to apply such
amounts as Collections in accordance with Section 4.03; provided, however, that
if the Master Servicer is unable pursuant to any Requirement of Law or
otherwise to allocate payments on the Accounts as described above, the Master
Servicer agrees that it shall, in any such event, after such date allocate
payments on the Accounts with respect to the principal balance of such Accounts
first to the oldest principal balance of such Accounts.

          (d) The Master Servicer agrees that upon a request by the Sellers or the
Trustee it will use its best efforts to obtain and maintain the listing of the
Investor Certificates of any Class of any Series on any specified securities
exchange. If any such request is made, the Master Servicer shall give notice
to the Sellers and the Trustee of the date on which such Investor Certificates
are approved for such listing and within three Business Days following receipt
of notice by the Master Servicer of any actual, proposed or contemplated
delisting of such Investor Certificates by any such securities exchange. The
Trustee or the Master Servicer, each

33

 

in its sole discretion, may terminate any
listing on any such securities exchange at any time subject to the notice
requirements set forth in the preceding sentence.

          SECTION 3.02 Acceptance of Appointment and Other Matters Relating to
Servicers.

          (a) In connection with and in consideration for the conveyance of the
Receivables to the Trust by the Sellers, and the issuance of the Seller
Certificate to the Sellers, Discover Bank on behalf of the Holder of the Seller
Certificate and the Trustee agree to cause (i) Discover Bank to act as Servicer
with respect to Discover Card Accounts under this Agreement and Discover Bank
agrees to act as such Servicer under this Agreement and (ii) Discover Bank or
an affiliate of Discover Bank to act as Servicer with respect to each type of
account, other than Discover Card Accounts, which are designated as Additional
Accounts pursuant to Section 2.10 and Discover Bank or such affiliate of
Discover Bank shall agree to act as such Servicer under this Agreement,
pursuant to the Assignment of Additional Accounts with respect to such
Accounts.

          (b) Each Servicer is hereby authorized in the name and on behalf of the
Trustee and the Holder of the Seller Certificate, and agrees, to service and
administer the Receivables with respect to which it is acting as Servicer, and
collect payments due under such Receivables in accordance with its customary
and usual servicing procedures for servicing credit receivables comparable to
the Receivables and in accordance with its Credit Guidelines, and acting alone
or through any party designated by it pursuant to Section 8.06, shall do any
and all things in connection with such servicing and administration that it may
deem necessary or desirable. Without limiting the generality of the foregoing
and subject to Section 10.02, each Servicer is hereby authorized and empowered
(i) to execute and deliver, 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, any and all instruments of satisfaction or
cancellation, or of partial or full release or discharge, and all other
comparable instruments, with respect to the Receivables with respect to which
it is acting as Servicer, (ii) after the delinquency of any such Receivable and
to the extent permitted under and in compliance with applicable law and
regulations, to commence collection proceedings with respect to such
Receivables and (iii) subject to Section 3.02(e), to sell the receivables in
any Charged-Off Account. The Trustee shall furnish each Servicer with any
powers of attorney and other documents necessary or appropriate under the laws
of any jurisdiction with authority over the Receivables to enable such Servicer
to carry out its servicing and administrative duties hereunder.

          (c) No Servicer shall under any circumstances be obligated to use separate
servicing procedures, offices, employees or accounts for servicing Accounts
from the
procedures, offices, employees and accounts used by such Servicer in
connection with servicing its other accounts.

          (d) Until such time as an additional Servicer shall be appointed in
conjunction with the addition to the Trust of Additional Accounts that are not
Greenwood Discover Card Accounts, Greenwood shall act as Master Servicer and as
the sole Servicer hereunder. Upon the appointment of any Servicer in addition
to Greenwood (or any Successor Master Servicer, as applicable), Greenwood (or
such Successor Master Servicer, as applicable) and any such

34

 

additional Servicer
shall enter into a Master Servicing Agreement, which agreement shall set forth
the respective rights and duties of the Master Servicer and each Servicer.

          (e) No Servicer may sell receivables in Charged-Off Accounts pursuant to
Section 3.02(b)(iii) after March 31, 2001; provided, however, that to the
extent that the Trustee, on behalf of the Trust, entered into agreements with
third parties on or before March 31, 2001 that permit the Trust to require, or
obligate the Trust to accept, reassignment of receivables in Charged-Off
Accounts sold prior to March 31, 2001 pursuant to such agreements, and to
substitute receivables in Charged-Off Accounts for such reassigned receivables,
then the Trust shall be entitled to act under such agreements and to substitute
receivables for such reassigned receivables, such substitute receivables to be
identified by the Master Servicer as meeting the requirements of such
agreements; provided, further, however, that the Master Servicer shall use its
best efforts to identify an amount of substitute receivables that closely
approximates the amount of reassigned receivables and that will satisfy the
substitution requirements of any such agreement.

          SECTION 3.03 Servicing Compensation.

          (a) Monthly Servicing Fee. As compensation for its servicing activities
hereunder and reimbursement for its expenses, the Master Servicer shall be
entitled to receive a monthly servicing fee in respect of any Due Period (or
portion thereof) prior to the termination of the Trust pursuant to Section
12.01 (the “Monthly Servicing Fee”), payable in arrears on each Trust
Distribution Date with respect to the Seller Servicing Fee (as defined below)
and payable in accordance with the terms of the applicable Series Supplement
with respect to the share of the Monthly Servicing Fee allocable to each Series
then outstanding. The Monthly Servicing Fee shall in no event be less than an
amount equal to the product of (A) 2.0% per annum calculated on the basis of a
360-day year of twelve 30-day months and (B) the amount of Principal
Receivables in the Trust as of the first day of the Due Period related to such
Trust Distribution Date (or in the case of the first Trust Distribution Date,
the amount of Principal Receivables in the Trust on the Cut-Off Date). The
share of each Monthly Servicing Fee allocable to each Series on each
Distribution Date with respect to each such Series shall be set forth in the
Series Supplement with respect to each Series, and shall be paid to the Master
Servicer in accordance with the terms of the applicable Series Supplement by
the Person or Persons specified in the applicable Series Supplement. The share
of each Monthly Servicing Fee allocable to the Holder of the Seller Certificate
(the “Seller Servicing Fee”) on any Trust Distribution Date shall be equal to
the product of (A) the product of (x) 2.0% per annum calculated on the basis of
a 360-day year of twelve 30-day months and (y) and the amount of Principal
Receivables in the Trust as of the first day of the Due Period related to such
Trust Distribution Date (or in the case of the first Trust Distribution Date,
the amount of Principal Receivables in the Trust on the Cut-Off
Date) and (B) a fraction the numerator of which shall be the amount of the
Seller Interest and the denominator of which shall be the greater of (x) the
amount of Principal Receivables in the Trust and (y) the Aggregate Investor
Interest, and shall be paid to the Master Servicer by Discover Bank on behalf
of the Holder of the Seller Certificate on or before each Trust Distribution
Date. In no event shall the Trustee or the Investor Certificateholders be
liable for the Seller Servicing Fee. The Master Servicer’s expenses include
the amounts due to the Trustee pursuant to Section 11.05, the reasonable fees
and disbursements of independent accountants, the fees of each Servicer other
than Discover Bank (which shall be set forth in the Master Servicing Agreement)

35

 

and all other expenses incurred by the Master Servicer in connection with its
activities hereunder, and including all other fees and expenses of the Trust
not expressly stated herein or in any Series Supplement to be for the account
of the Certificateholders; provided, that in no event shall the Master Servicer
(or any Servicer) be liable for any federal, state or local income or franchise
tax, or any interest or penalties with respect thereto, assessed on the Trust,
the Trustee or the Certificateholders. The Master Servicer shall be required
to pay such expenses for its own account, and shall not be entitled to any
payment therefor other than the Monthly Servicing Fee.

          (b) Use of Collections. Subject to Section 4.03(b), the Trustee on behalf
of the Trust, with the consent of Discover Bank on behalf of the Holder of the
Seller Certificate, hereby agrees to allow (without further action by the
Trustee) each Servicer to use Collections in respect of Receivables collected
by such Servicer until such Collections are to be disbursed by the Master
Servicer in accordance with the terms of Article IV hereof or the terms of any
applicable Series Supplement.

          SECTION 3.04 Representations and Warranties of Discover Bank, as Master
Servicer and Servicer. Discover Bank, as Master Servicer and Servicer, hereby
represents and warrants to the Trust as of the date of this Agreement and the
Initial Closing Date that:

          (a) Organization, etc. Discover Bank has been duly incorporated and is
validly existing as a Delaware banking corporation, and has full corporate
power and authority to execute and deliver this Agreement and to perform the
terms and provisions hereof.

          (b) Due Authorization. The execution, delivery and performance of this
Agreement by Discover Bank, as Master Servicer and Servicer, have been duly
authorized by all necessary corporate action, do not require any approval or
consent of any governmental agency or authority, do not and will not conflict
with any material provision of the Certificate of Incorporation or By-Laws of
Discover Bank, and do not and will not conflict with, or result in a breach
which would constitute a material default under, any agreement for borrowed
money binding upon or applicable to it or such of its property that is material
to it or its subsidiaries (whether or not consolidated) taken as a whole, or to
Discover Bank’s knowledge, any law or governmental regulation or court decree
applicable to it or such material property, and this Agreement is the valid,
binding and enforceable obligation of Discover Bank, except as the same may be
limited by receivership, insolvency, reorganization, moratorium or other laws
relating to the enforcement of creditors’ rights generally or by general equity
principles.

          (c) Accuracy of Information. All information heretofore furnished by
Discover Bank, as Master Servicer and Servicer, in writing to the Trustee for
purposes of or in connection with this Agreement or any transaction
contemplated hereby is, and all such information hereafter furnished by
Discover Bank in writing to the Trustee will be, true and accurate in every
material respect or based on reasonable estimates on the date as of which such
information is stated or certified.

          SECTION 3.05 Representations and Warranties of Other Servicers. Each
Servicer, other than Discover Bank, shall represent and warrant to the Trust as
of the date of the Assignment of Additional Accounts with respect to such
Servicer that:

36

 

          (a) Organization, etc. Such Servicer has been duly incorporated and is
validly existing as a banking, industrial loan or other similar corporation, or
as a trust company, savings and loan association, savings bank or other similar
entity in its state of incorporation or as a national banking association,
savings and loan association or savings bank organized and existing under the
laws of the United States of America, and has full corporate power and
authority to execute and deliver the Assignment of Additional Accounts and this
Agreement and to perform the terms and provisions thereof and hereof.

          (b) Due Authorization. The execution, delivery and performance of the
Assignment of Additional Accounts and this Agreement by such Servicer have been
duly authorized by all necessary corporate action, do not require any approval
or consent of any governmental agency or authority, do not and will not
conflict with any material provision of the Certificate of Incorporation or
By-Laws of such Servicer, and do not or will not conflict with, or result in a
breach which would constitute a material default under, any agreement for
borrowed money binding upon or applicable to it or such of its property that is
material to it or its subsidiaries (whether or not consolidated) taken as a
whole, or to such Servicer’s knowledge, any law or governmental regulation or
court decree applicable to it or such material property, and the Assignment of
Additional Accounts and this Agreement are the valid, binding and enforceable
obligations of such Servicer, except as may be limited by receivership,
insolvency, reorganization, moratorium or other laws relating to the
enforcement of creditors’ rights generally or by general equity principles.

          (c) Accuracy of Information. All information furnished by such Servicer
in writing to the Trustee for purposes of or in connection with the Assignment
of Additional Accounts or this Agreement or any transaction contemplated
thereby or hereby is, and all such information hereafter furnished by such
Servicer in writing to the Trustee will be, true and accurate in every material
respect or based on reasonable estimates on the date as of which such
information is stated or certified.

          SECTION 3.06 Reports and Records for the Trustee.

          (a) Initial Report. On the Initial Closing Date, the Master Servicer
shall prepare and deliver to Discover Bank as Seller and the Trustee an
Officer’s Certificate substantially in the form of Exhibit E hereto setting
forth (i) the aggregate amount of Principal Receivables as of the Cut-Off Date
and (ii) the aggregate amount of Finance Charge Receivables
billed during the Due Period next preceding the month in which the Cut-Off
Date occurs, which amount may be based partially or entirely on the reasonable
estimate of the Master Servicer.

          (b) Servicer’s Monthly Certificates. On the seventh Business Day of the
month in which each Trust Distribution Date occurs, the Master Servicer shall
forward to Discover Bank on behalf of the Holder of the Seller Certificate, the
Trustee, the Paying Agent and any other Person specified in the Series
Supplement for any then outstanding Series, a certificate substantially in the
form specified in the applicable Series Supplement. Each Servicer shall
provide the Master Servicer with such information as the Master Servicer may
reasonably request to allow the Master Servicer to prepare such certificates.

          SECTION 3.07 Master Servicer’s and Servicers’ Annual Certificates.

37

 

          (a) Master Servicer’s Annual Certificate. The Master Servicer will
deliver to the Trustee, Discover Bank on behalf of the Holder of the Seller
Certificate and the Rating Agencies, on or before the date on which the Trust
is required to file its Annual Report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 on Form 10-K with the Securities and Exchange
Commission (the “Trust’s Annual Report Date”) of each calendar year, beginning
in 2005 (and relating to the preceding fiscal year ending on November 30), an
Officer’s Certificate substantially in the form of Exhibit F hereto stating
that (a) in the course of the performance by the signer of his duties as an
officer of the Master Servicer he would normally obtain knowledge of any Master
Servicer Termination Event, and (b) whether or not he has obtained knowledge of
any such Master Servicer Termination Event during the preceding fiscal year
ended November 30 and, if so, specifying each such Master Servicer Termination
Event of which the signer has knowledge and the nature thereof. 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.

          (b) Servicers’ Annual Certificates. Each Servicer will deliver to the
Trustee, Discover Bank on behalf of the Holder of the Seller Certificate and
the Rating Agencies, on or before the Trust’s Annual Report Date of each
calendar year, beginning in 2005 (and relating to the preceding fiscal year
ending on November 30) with respect to Discover Bank as Servicer, and, for any
other Servicer, beginning in the fiscal year following the fiscal year in which
Receivables in Accounts serviced by such Servicer are first added to the Trust,
an Officer’s Certificate substantially in the form of Exhibit G hereto stating
that (a) in the course of the performance by the signer of his or her duties as
an officer of such Servicer he or she would normally obtain knowledge of any
Servicer Termination Event, and (b) whether or not he or she has obtained
knowledge of any such Servicer Termination Event during the preceding fiscal
year ended November 30 and, if so, specifying each such Servicer Termination
Event of which the signer has knowledge and the nature thereof. A copy of any
such certificate may be obtained by any Investor Certificateholder by a request
in writing to the Trustee addressed to the Corporate Trust Office.

          SECTION 3.08 Independent Public Accountants’ Annual Servicing Report.

          (a) On or before the Trust’s Annual Report Date of each calendar year,
beginning in 2005 (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 services to the Master Servicer, any
Servicer or any Seller) to furnish a report to the Trustee, the Master
Servicer, each Servicer and the Rating Agencies to the effect that such firm is
of the opinion that the system of internal accounting controls in effect on the
date of such statement relating to the servicing procedures performed by the
Master Servicer and each Servicer under this Agreement, taken as a whole, was
sufficient for the prevention and detection of errors and irregularities which
would be material to the assets of the Trust during the preceding fiscal year
ended November 30, as applicable, that nothing has come to their attention that
would cause them to believe that such servicing has not been conducted in
compliance with Sections 3.03, 4.03, 4.04, 4.05 and 8.07 of this Agreement and
the provisions relating to servicing or the allocation and payment of
Collections in any Series Supplements, except for such exceptions as they
believe to be immaterial and such other exceptions as shall be set forth in
such report. A copy of such report may be obtained by any Investor
Certificateholder by a

38

 

request in writing to the Trustee addressed to the
Corporate Trust Office. The Securities and Exchange Commission on May 3, 2004
proposed regulations that, if adopted, would modify the reporting requirements
for the Trust, including the requirements with respect to the accountant’s
report described above. If and when such proposed regulations are adopted, the
Master Servicer, in consultation with such accountants and the Master
Servicer’s counsel, shall identify whether additional matters must be addressed
in such report to satisfy such reporting requirements and shall cause such
accountants to address such additional matters in their report.

          (b) On or before the Trust’s Annual Report Date of each calendar year,
beginning in 2005 (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 services to the
Master Servicer, any Servicer or any Seller) to furnish a report to the
Trustee, the Master Servicer, each Servicer and the Rating Agencies, to the
effect that they have compared the mathematical calculations of each amount set
forth in the monthly certificates forwarded by the Master Servicer pursuant to
the applicable Series Supplements during the preceding fiscal year ended
November 30, as applicable, with the computer reports of the Master Servicer
and each Servicer and such accountants are of the opinion that such amounts are
in agreement, except for such exceptions as they believe to be immaterial and
such other exceptions as shall be set forth in such report. A copy of such
report may be obtained by any Investor Certificateholder by a request in
writing to the Trustee addressed to the Corporate Trust Office.

          SECTION 3.09 Tax Treatment. It is the intent of the Sellers and the
Investor Certificateholders that, for United States federal, state and local
income and franchise tax purposes only, the Investor Certificates will be
treated as evidence of indebtedness of the Sellers and the Sellers and each
Investor Certificateholder, by the acceptance of its Certificate, agree to
treat the Investor Certificates for United States federal, state and local
income and franchise tax purposes as indebtedness of the Sellers secured by the
Receivables and other assets held in the Trust.

          SECTION 3.10 Notices by the Master Servicer and the Servicers. In the
event that Discover Bank is no longer acting as Master Servicer or Servicer, or
any other Servicer shall cease to act as a Servicer, any Successor Master
Servicer or
Successor Servicer, as applicable, appointed pursuant to Section 10.03
shall deliver or make available to Discover Bank on behalf of the Holder of the
Seller Certificate each certificate and report required to be prepared,
forwarded or delivered thereafter pursuant to this Agreement.

ARTICLE IV.

RIGHTS OF INVESTOR CERTIFICATEHOLDERS AND

ALLOCATION AND APPLICATION OF COLLECTIONS

          SECTION 4.01 Rights of Investor Certificateholders. Each Investor
Certificate shall represent a Fractional Undivided Interest in the Trust,
including the right to receive the Collections and other amounts at the times
and in the amounts specified herein and in the Series Supplements to be
deposited in Investor Accounts or paid to the Investor Certificateholders and,
with respect to any particular Series, any additional rights set forth in the
applicable Series Supplement; provided, however, that the aggregate interest
represented by all Investor Certificates outstanding at any one time in the
assets of the Trust shall not exceed an amount

39

 

equal to the Aggregate Invested
Amount plus all accrued but unpaid Certificate Interest and any interest
thereon. The Seller Certificate shall represent a fractional undivided
interest in the Trust, including the right to receive the Collections and other
amounts at the times and in the amounts specified herein and in the Series
Supplements to be paid to the Holder of the Seller Certificate.

          SECTION 4.02 Establishment and Administration of Investor Accounts.

          (a) Establishment of the Collections Account and the Group Collections
Accounts. The Trustee, for the benefit of the Certificateholders, shall cause
to be established and maintained in the name of the Trust, with the corporate
trust department of an office or branch of either the Trustee or a Qualified
Institution, one non-interest bearing segregated trust account designated the
“Collections Account” and one additional non-interest bearing segregated trust
account for each Group (each, a “Group Collections Account”), in each case
marked to indicate clearly that the funds deposited therein are held for the
benefit of the Certificateholders. Subject to subsection (c) below, the Trust
shall possess all right, title and interest in all funds on deposit from time
to time in the Collections Account and each Group Collections Account and in
all proceeds thereof. Pursuant to authority granted to it pursuant to Section
3.01(b), the Master Servicer shall have the revocable power to instruct the
Trustee to withdraw funds from the Collections Account and the Group
Collections Accounts for the purpose of carrying out the duties of the Master
Servicer hereunder. The Master Servicer at all times shall maintain accurate
records reflecting each transaction in the Collections Account and the
Group Collections Accounts.

          (b) Establishment of Other Investor Accounts. The Trustee shall, from
time to time, establish additional Investor Accounts as provided in applicable
Series Supplements.

          (c) Administration of the Investor Accounts. Unless otherwise specified
in a relevant Series Supplement, any funds on deposit in any Investor Account
for more than one Business Day shall at all times be invested in Permitted
Investments at the written direction of the Master Servicer or its agent,
subject to the restrictions set forth below. The Trustee shall maintain, or
cause to be maintained, for the benefit of the Certificateholders possession of
the negotiable instruments or securities evidencing the Permitted Investments
described in clause (a) of the definition thereof from the time of purchase
thereof until the time of sale or maturity. Any Permitted Investment with a
stated maturity shall mature on or prior to the Distribution Date applicable to
the Investor Account for which the Permitted Investments are held related to
the earliest Due Period in which Collections or Interchange invested in such
Permitted Investments were received and any funds received with respect to the
maturity of a Permitted Investment shall be available in sufficient time to
allow for any payments to be made to Investor Certificateholders on such
Distribution Date. For purposes of the preceding sentence, withdrawals from
the Collections Account pursuant to Section 4.03(c) shall be deemed to be made
from Collections and/or Interchange in the order in which such Collections
and/or Interchange, as applicable, were deposited into the Collections Account.

          On each applicable Distribution Date, all interest and earnings (less
investment expenses) on funds on deposit in any Investor Account (other than
any Series Principal Funding Accounts), if any, shall be deposited by the
Trustee in a separate deposit account in the name of the Holder of the Seller
Certificate, which account shall not constitute a part of the Trust, or such

40

 

interest and earnings shall otherwise be turned over by the Trustee to the
Holder of the Seller Certificate not less frequently than monthly. For
purposes of determining the availability of funds or the balances in such
Investor Accounts for any reason under this Agreement or any Series Supplement,
all investment earnings on such funds shall be deemed not to be available or on
deposit.

          SECTION 4.03 Collections and Allocations.

          (a) Collections and Interchange. The Master Servicer shall apply all
Collections received during and Interchange for each Due Period as described in
this Section 4.03 and any applicable Series Supplements.

          (b) Daily Collections. If, at any time, either (i) with respect to any
Accounts, the then current Servicer with respect to such Accounts does not have
a short-term debt rating of at least A-1 by Standard & Poor’s and P-1 by
Moody’s (if the then current Servicer is the original Servicer with respect to
such Accounts or an affiliate of the original Servicer) or a short-term debt
rating of at least A-1+ by Standard & Poor’s and P-1 by Moody’s (if the then
current Servicer with respect to such Accounts is not the original Servicer or
an affiliate of the original Servicer) or (ii) the conditions specified in
clause (i) or pursuant to this clause (ii) are superseded by any conditions
subsequently agreed to in writing by Discover Bank on behalf of the Holder of
the Seller Certificate and either Rating Agency, and any of such subsequently
agreed to
conditions occurs; then, as promptly as possible after each Date of
Processing with respect to the Receivables serviced by the applicable Servicer
occurring on and after such event, but in no event later than two Business Days
following such Date of Processing, such Servicer shall pay to, or at the
direction of, the Master Servicer, for deposit into the Collections Account,
from the Collections received by such Servicer on or after the date of such
event and recorded on such Date of Processing, an amount equal to the sum of
the Required Daily Deposits with respect to such Servicer for each Series then
outstanding with respect to such Date of Processing; provided, that if the
first such deposit occurs following a period during which such Servicer has
been using Collections in accordance with Section 3.03(b), then, on the sixth
Business Day following the event giving rise to the making of Required Daily
Deposits by such Servicer, in addition to the Required Daily Deposits for that
day, such Servicer shall pay to, or at the direction of, the Master Servicer,
the amount that would have been on deposit in the Collections Account with
respect to such Servicer had such Servicer been making the Required Daily
Deposits since the beginning of the Due Period, less any amounts previously so
paid or deposited. Amounts made available to any Servicer pursuant to Section
3.03 shall be repayable upon the occurrence of the conditions in this Section
4.03(b) in the manner and to the extent set forth herein.

          (c) Deposits with Respect to Each Distribution Date.

     (i) On or before each Distribution Date, the Master Servicer
shall deposit into the Collections Account that portion of
Collections, Interchange and Recovered Amounts with respect to the
related Due Period that are to be allocated on such Distribution
Date and that have not previously been deposited into the
Collections Account.

41

 

     (ii) On or before each Distribution Date, the Master Servicer
shall direct the Trustee in writing to withdraw from the
Collections Account and pay to Discover Bank on behalf of the
Holder of the Seller Certificate an amount equal to that portion of
the sum of (x) the total amount of Finance Charge Collections for
the related Due Period less the sum of the amount of Series Finance
Charge Collections for each Series then outstanding for the related
Due Period, (y) the amount of Principal Collections for the related
Due Period less the sum of the amount of Series Principal
Collections for each Series then outstanding for the related Due
Period and (z) the total amount of Interchange for the related Due
Period less the sum of the amount of Series Interchange for each
Interchange Series then outstanding for the related Due Period,
that is to be allocated to the Holder of the Seller Certificate on
such Distribution Date.

     (iii) On or before each Distribution Date, after giving effect
to the payments made pursuant to clause (ii) above with respect to
such Distribution Date, the Master Servicer shall direct the
Trustee in writing to withdraw from the Collections Account and pay
to each Group Collections Account an amount equal to the sum of (x)
the sum of Series Finance Charge Collections for each Series that
is a member of such Group, (y) the sum of the Series Principal
Collections for each Series that is a member of such Group and (z)
the sum of the Series Interchange for each Interchange Series that
is a member of such Group.

     (iv) Amounts on deposit in each Group Collections Account
shall be distributed on or before each Distribution Date with
respect to each such Group in accordance with the terms of the
Series Supplements for each Series then outstanding.

          (d) Aggregate and Net Payments. All payments made pursuant to this
Agreement or any Series Supplement on or before any Trust Distribution Date or
Distribution Date on which Discover Bank is the Master Servicer, between the
Master Servicer or the Holder of the Seller Certificate and the Investor
Accounts, may be aggregated for such Trust Distribution Date or 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 each applicable
account in satisfaction of all payments of the Holder of the Seller Certificate
and the Master Servicer pursuant to this Agreement and all Series Supplements
for Series then outstanding, to the extent that all payment obligations of the
Master Servicer and of the Holder of the Seller Certificate to each applicable
account on such Trust Distribution Date or Distribution Date exceed all payment
obligations of each such account to the Master Servicer and the Holder of the
Seller Certificate on such Trust Distribution Date or Distribution Date. Any
amounts payable on a given Trust Distribution Date to the Holder of the Seller
Certificate pursuant to Section 4.03(c)(ii) hereof, or on a Distribution Date
to the Master Servicer with respect to Monthly Servicing Fees pursuant to the
provisions of any Series Supplement then outstanding, shall be deemed to have
been paid if, and to the extent, Discover Bank (as Servicer) already is in
possession of such amounts on such Distribution Date (or was in possession of
such amounts for more than two Business Days during the related Due Period) as
a result of its permitted use of Collections and Interchange during the prior
Due Period pursuant to Section 3.03(b) and in accordance with the definition of
“Required Daily Deposit” (as defined in the relevant Series

42

 

Supplement), except
to the extent Discover Bank has deposited such amounts into the Collections
Account.

          Notwithstanding the other provisions of this Section 4.03 and the
applicable provisions of any Series Supplement then outstanding, the
allocations of Collections and Interchange pursuant to Section 4.03(c) and the
applicable provisions of any Series Supplements then outstanding shall be
deemed to be made on the date on which the Master Servicer delivers the
Servicer’s Monthly Statement and the information required to be included in the
Investor Certificateholders’ Monthly Statement with respect to each Series then
outstanding to the Trustee. The Trustee is hereby authorized, upon receipt of
the Servicer’s Monthly Statement and the information required to be included in
the Investor Certificateholders’ Monthly Statement with respect to each Series
then outstanding, together with written instructions from the Master Servicer,
to immediately transfer to Discover Bank on behalf of the Holder of the Seller
Certificate or the Master Servicer, as applicable, any funds in any Investor
Account that would otherwise be paid to Discover Bank on behalf of the Holder
of the Seller Certificate or the Master Servicer, as applicable, on the Trust
Distribution Date or any Distribution Date related to such Due Period.

          (e) Additional Funds. Discover Bank on behalf of the Holder of the Seller
Certificate may, from time to time, elect to add certain funds to the Trust
(any such funds, “Additional Funds”) by delivering a written notice of such
election to the Trustee, the Master Servicer and the Rating Agencies, which
notice shall specify the method of calculating the amount of such funds to be
added to the Trust as of any Distribution Date and the source of such
funds. No such election shall become effective until Standard & Poor’s
has advised the Master Servicer and Discover Bank on behalf of the Holder of
the Seller Certificate that such election would not cause the rating of any
Class of any Series then outstanding to be lowered or withdrawn. During any
time that Additional Funds are being added to the Trust, with respect to each
Series then outstanding, on or before each Distribution Date with respect to
each such Series, the Master Servicer shall cause an amount equal to the
product of (i) a fraction the numerator of which shall be the Series Investor
Interest and the denominator of which shall be the Aggregate Investor Interest
and (ii) the amount of Additional Funds for the preceding Due Period, to be
deposited into the Series Collections Account for each such Series. Such
amounts shall then be allocated in accordance with the provisions of the
applicable Series Supplement.

          SECTION 4.04 Sellers’ or Master Servicer’s Failure to Make a Deposit or
Payment.

          (a) If the Master Servicer or any Seller fails to make, or give
instructions to make, any payment or deposit (other than as required by Section
2.05(b), 2.06(b) or 2.07(b) or in connection with Section 12.02) required to be
made or given by the Master Servicer or such Seller, respectively, at the time
specified in this Agreement (including applicable grace periods), the Trustee
shall make such payment or deposit from the applicable Investor Account without
instruction from the Master Servicer or such Seller (or, to the extent that
sufficient funds are not available in the applicable Investor Account to make
such payment and the relevant Series Supplement provides for Credit Enhancement
for such purpose, shall make a drawing from the available Credit Enhancement,
if any); provided, that the Trustee shall be required to make such payment,
deposit or draw only to the extent it has sufficient information to allow it to
determine

43

 

the amount thereof, which information the Trustee shall be deemed to
have with respect to the amount of Certificate Interest payable on each
Distribution Date. The Master Servicer shall, upon request of the Trustee,
promptly provide the Trustee with all information necessary to allow the
Trustee to make such a payment, deposit or draw. Such funds or the proceeds of
such drawing shall be applied by the Trustee in the same manner in which such
payment or deposit should have been made by such Seller or the Master Servicer,
as the case may be.

          (b) If a drawing from a Credit Enhancement is made pursuant to this
Section 4.04 in lieu of a deposit or payment from the applicable Investor
Account, the Master Servicer or the Sellers, as the case may be, shall, as
promptly as practicable and from the appropriate source, make the required
payment, deposit or transfer or give the Trustee instructions to transfer the
required payment or deposit in respect of which such drawing was made to
reinstate the Credit Enhancement, as set forth in any applicable Series
Supplement.

          SECTION 4.05 Adjustments For Miscellaneous Debits and Credits and
Fraudulent Charges.

          (a) With respect to any Receivable to which any adjustment without payment
by or on behalf of an Obligor has been made (an “Adjustment”) including, but
not limited to, any Receivable that (1) was created as a result of a fraudulent
or counterfeit charge, (2) the Servicer with respect to such Receivable
otherwise adjusts, increases, reduces, modifies or cancels in accordance with
the applicable Credit Guidelines without receiving cash or other payment
therefor by the Obligor with respect to such Receivable, (3) was created in
respect of merchandise returned by the Obligor thereunder, or (4) was created
or cancelled through an
Account Combination, Discover Bank on behalf of the Holder of the Seller
Certificate shall increase or reduce, as the case may be, the aggregate amount
of Receivables.

          (b) In the event that the exclusion of the amount of an Adjustment from
the calculation of the Seller Interest would cause the Seller Interest to be an
amount less than zero, Discover Bank on behalf of the Holder of the Seller
Certificate shall, no later than the Business Day following the last day of the
Due Period during which such Adjustment is made, make a deposit into the
Collections Account in immediately available funds in an amount equal to the
amount by which such Adjustment causes the Seller Interest to be less than
zero. Such deposit shall be applied as a Collection in accordance with Section
4.03.

          SECTION 4.06 Reallocation of Series Among Groups. The Master Servicer may
elect, at any time, by written notice to the Trustee and to Discover Bank on
behalf of the Holder of the Seller Certificate, and subject to the conditions
set forth below, to move any Series from the Group of which it is then a member
to any other Group, including without limitation to a new Group established at
such time of which the Series to be moved is the only Series. Any such
election by the Master Servicer shall become effective on the day specified in
the notice of such election.

          The Master Servicer may make such election only if the following
conditions are satisfied: (i) a Series may only be moved from one Group to
another Group if the Series in both Groups have the same Distribution Date;
(ii) the Master Servicer shall have delivered to the Trustee a certificate to
the effect that the Master Servicer reasonably believes that the movement

44

 

of
the applicable Series would not (x) result in any delay in the payment of
principal to the Investor Certificateholders of any Series then outstanding, or
(y) cause an Amortization Event to occur with respect to any Series then
outstanding; and (iii) the Rating Agencies shall have advised the Master
Servicer and Discover Bank on behalf of the Holder of the Seller Certificate
that the movement of the applicable Series would not cause the rating of any
Class of any Series then outstanding to be lowered or withdrawn.

ARTICLE V.

DISTRIBUTIONS AND REPORTS TO

INVESTOR CERTIFICATEHOLDERS

          SECTION 5.01 Distributions. On each Payment Date, with respect to each
Series then outstanding, the Paying Agent shall distribute to each Investor
Certificateholder of record on the close of business of the preceding Record
Date, in accordance with the certificate delivered by the Master Servicer to
the Trustee pursuant to the applicable Series Supplement (other than as
provided in Section 2.05 or in Section 2.06 or Section 12.02 hereof respecting
a final distribution) such Certificateholder’s share of amounts on deposit in
the applicable Series Distribution Account, Series Principal Funding Account
and/or Series Interest Funding Account, pursuant to the applicable Series
Supplement, by check mailed to each Certificateholder (unless otherwise
provided in the applicable Series Supplement), except that with respect to
Investor Certificates registered in the name of CEDE & Co., the nominee
registration for The Depository Trust Company or any successor nominee
designated by The Depository Trust Company, or any successor Clearing
Agency, such distribution shall be made in immediately available funds by
wire transfer to such account as CEDE & Co. or such successor nominee shall
direct in writing. If such wire transfer cannot be made for any reason,
payment shall be made by check.

          SECTION 5.02 Investor Certificateholders’ Monthly Statement. On each
Distribution Date, the Paying Agent shall forward to each Certificateholder of
each Series then outstanding to which such Distribution Date is applicable, a
statement substantially in the form specified in the applicable Series
Supplement prepared by the Master Servicer and executed by the Trustee. The
Paying Agent shall also forward a copy of each such statement to the Rating
Agencies.

          SECTION 5.03 Certificateholders’ Annual Tax Statement. On or before
January 31 of each calendar year, beginning with calendar year 1994, the
Transfer Agent shall furnish to the Master Servicer and Paying Agent a list of
each Person who at any time during the preceding calendar year was an Investor
Certificateholder and received any payment thereon and the dates such Person
held an Investor Certificate. The Paying Agent shall furnish to each such
Investor Certificateholder a statement prepared by the Master Servicer setting
forth, with respect to the Series of which such Investor Certificate is a part,
(i) the total amount paid in respect of each Class of such Series, (ii) the
amount of such payments allocable to Certificate Principal with respect to each
Class of such Series and (iii) the amount of such payments allocable to
Certificate Interest with respect to each Class of such Series, in each case
stated on the basis of an original principal amount of $1,000 per Investor
Certificate, aggregated for such calendar year or the applicable portion
thereof during which such Person was an Investor Certificateholder, together
with such other customary information as the Trustee or the Master Servicer
deems necessary or desirable to enable the Investor Certificateholders to
prepare their tax returns. Such

45

 

obligation of the Paying Agent shall be deemed
to have been satisfied to the extent that substantially comparable information
shall be provided by the Master Servicer on behalf of the Trustee pursuant to
any requirements of the Internal Revenue Code.

ARTICLE VI.

THE INVESTOR CERTIFICATES

          SECTION 6.01 The Certificates.

          (a) The Investor Certificates of any Series or Class may be issued,
subject to applicable laws and regulations, in bearer form (“Bearer
Certificates”) with attached interest coupons and a special coupon
(collectively, the “Coupons”), or in fully registered form (“Registered
Certificates”) and shall be substantially in the form of the exhibits with
respect thereto attached to the applicable Series Supplement. A Seller may
elect at any time, by written notice to the Trustee, to have its fractional
undivided interest in the Trust be (i) evidenced by a certificate or (ii) an
uncertificated interest. If a Seller elects to have its fractional undivided
interest in the Trust be uncertificated, it shall deliver to the Trustee for
cancellation any certificate previously issued. If a Seller elects to have its
fractional undivided interest in the Trust be evidenced by a certificate, such
certificate shall be issued pursuant hereto, substantially in the form of
Exhibit D, and shall upon issue be executed and delivered by a Seller to the
Trustee for authentication and redelivery as provided in Sections 2.02 and
6.03. Except as otherwise provided in any Series Supplement or in Section
6.11, Bearer Certificates shall be issued in denominations of $5,000, $50,000
and $100,000 and Registered Certificates shall be issued in minimum
denominations of $1,000 Fractional Undivided Interests and in integral
multiples of $1,000 in excess thereof. If specified in any Series Supplement,
the Investor Certificates of any Series or Class shall be issued upon initial
issuance as a single certificate evidencing the Series Initial Investor
Interest or Class Initial Investor Interest, as applicable, as described in
Section 6.11. The Seller Certificate shall represent the entire Seller
Interest. The Certificates shall be executed on behalf of the Trust by
Discover Bank on behalf of the Holder of the Seller Certificate by any of its
Chairman of the Board of Directors, its President or one of its Vice
Presidents. The signature of any of these officers on the Certificates may be
manual or facsimile.

          (b) Certificates bearing the manual or facsimile signatures of individuals
who were at any time the proper officers of Discover Bank shall not become
invalid, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the authentication and delivery of such Certificates
or did not hold such offices at the date of such Certificates.

          (c) No Certificate shall be entitled to any benefit under this Agreement
(or any Series Supplement), or be valid or obligatory for any purpose unless
there appears on such Certificate a certificate of authentication substantially
in the form attached to Exhibit D hereto (in the case of any certificated
Seller Certificate) or attached to the appropriate exhibits to a Series
Supplement, as applicable, executed by the Trustee by manual signature, and
such certificate upon any Certificate shall be conclusive evidence, and the
only evidence, that such Certificate has been duly authenticated and delivered
hereunder and is entitled to the benefits of this Agreement and the relevant
Series Supplement. Bearer Certificates shall be dated the Series

46

 

Closing Date.
All Registered Certificates and any certificated Seller Certificate shall be
dated the date of their authentication.

          SECTION 6.02 Book-Entry Certificates.

          (a) Unless otherwise provided in the applicable Series Supplement, the
Investor Certificates, upon original issuance, shall be issued in fully
registered form, in the form of one or more typewritten Certificates
representing the Book-Entry Certificates, to be delivered to The Depository
Trust Company, the initial Clearing Agency, by, or on the behalf of, the
Sellers. The Investor Certificates shall initially be registered in the
Certificate Register in the name of CEDE & Co., the nominee of the initial
Clearing Agency, or any successor nominee designated by The Depository Trust
Company or any successor Clearing Agency, and no Certificate Owner will receive
a definitive certificate representing such Certificate Owner’s interest in the
Investor Certificates, except as provided in Section 6.02(c). Unless and until
definitive, fully registered Investor Certificates (“Definitive Certificates”)
have been issued to the beneficial owners of the Investor Certificates pursuant
to Section 6.02(c):

     (i) the provisions of this Section 6.02(a) shall be in full
force and effect;

     (ii) any Seller, the Master Servicer and the Trustee may deal
with the Clearing Agency and the Clearing Agency Participants for
all purposes (including
the making of distributions on the Investor Certificates) as
the authorized representatives of the Certificate Owners;

     (iii) to the extent that the provisions of this Section
6.02(a) conflict with any other provisions of this Agreement, the
provisions of this Section 6.02(a) shall control; and

     (iv) the rights of Certificate Owners shall be exercised only
through the Clearing Agency and the Clearing Agency Participants
and shall be limited to those established by law and agreements
between such Certificate Owners and the Clearing Agency and/or the
Clearing Agency Participants. Pursuant to the Depository
Agreement, unless and until Definitive Certificates are issued
pursuant to Section 6.02(c), the initial Clearing Agency will make
book-entry transfers among the Clearing Agency Participants and
receive and transmit distributions of principal and interest on the
Investor Certificates to such Clearing Agency Participants.

          For purposes of any provision of this Agreement or any applicable Series
Supplement requiring or permitting actions with the consent of, or at the
direction of, Investor Certificateholders evidencing a specified percentage of
the Class Invested Amount of any Class, such direction or consent may be given
by Certificate Owners (acting through the Clearing Agency and the Clearing
Agency Participants).

          (b) Whenever notice or other communication is required to be given to
Investor Certificateholders of any Class with respect to which Book-Entry
Certificates have been

47

 

issued, unless and until Definitive Certificates shall
have been issued to the related Certificate Owners pursuant to Section 6.02(c),
the Trustee shall give all such notices and communications specified herein to
be given to such Investor Certificateholders to the Clearing Agency.

          (c) If, with respect to any Series the Investor Certificates of which are
originally issued in the form of Book-Entry Certificates:

     (i) (A) the Master Servicer advises the Trustee in writing
that the Clearing Agency is no longer willing or able to properly
discharge its responsibilities under the Depository Agreement, and
(B) the Trustee or the Master Servicer is unable to locate a
qualified successor,

     (ii) the Master Servicer, at its option, advises the Trustee
in writing that it elects to terminate the book-entry system with
respect to such Series through the Clearing Agency, or

     (iii) after the occurrence of a Master Servicer Termination
Event, Certificate Owners representing beneficial interests
aggregating not less than 51% of the Invested Amount of any Class
of such Series advise the Trustee and the Clearing Agency through
the Clearing Agency Participants in writing that the continuation
of a book-entry system through the Clearing Agency is no longer in
the best interests of the Certificate Owners of such Class,

then the Trustee shall notify all Certificate Owners of each Class of such
Series upon the occurrence of an event described in clauses (i) and (ii) above
or all Certificate Owners of the applicable Class upon the occurrence of the
event described in clause (iii) above, through the Clearing Agency, of the
occurrence of any such event and of the availability of Definitive Certificates
to Certificate Owners of such Class of such Series requesting the same. Upon
surrender to the Trustee of the applicable Investor Certificates by the
Clearing Agency, accompanied by registration instructions from the Clearing
Agency for registration, the Trustee shall issue the Definitive Certificates
for the applicable Class. Neither any Seller nor the Trustee shall be liable
for any delay in delivery of such instructions and may conclusively rely on,
and shall be protected in relying on, such instructions. Upon the issuance of
Definitive Certificates all references herein to obligations imposed upon or to
be performed by the Clearing Agency with respect to the applicable Class of the
applicable Series of Investor Certificates shall be deemed to be imposed upon
and performed by the Trustee, to the extent applicable with respect to such
Definitive Certificates, and the Trustee shall recognize the Holders of such
Definitive Certificates as Certificateholders hereunder.

          SECTION 6.03 Authentication of Certificates. On or about the Initial
Closing Date, the Trustee shall authenticate and deliver the Seller Certificate
to the Holder of the Seller Certificate. The Trustee also shall authenticate
and deliver, upon the order of Discover Bank on behalf of the Holder of the
Seller Certificate, the Investor Certificates of each Series, if any, to be
issued as of the Initial Closing Date. From time to time after the Initial
Closing Date, pursuant to Section 6.06 hereof and the terms of the applicable
Series Supplement, the Trustee shall authenticate and deliver the Investor
Certificates of additional Series (with the designation provided in the
applicable Series Supplement), upon the order of Discover Bank on behalf of the

48

 

Holder of the Seller Certificate, to the persons designated in such Series
Supplement. If specified in the related Series Supplement, the Trustee shall
authenticate and deliver outside the United States a Global Certificate
representing the Series Initial Investor Interest for such Series or the Class
Initial Investor Interest for a specified Class of such Series. The Investor
Certificates of each Series shall be duly authenticated by or on behalf of the
Trustee as provided herein and in the applicable Series Supplement, in
authorized denominations equal to (in the aggregate) the Series Initial
Investor Interest of each Series. At any time, the Investor Certificates
outstanding at such time, together with the Seller Certificate, shall evidence
the entire ownership of the Trust.

          SECTION 6.04 Registration of Transfer and Exchange of Certificates.

          (a) (i) Discover Bank on behalf of the Holder of the Seller Certificate
shall keep or cause to be kept by a transfer agent (“Transfer Agent”) a
register for the Registered Certificates issued pursuant to this Agreement and
the Series Supplements for all Series then outstanding (the “Certificate
Register”) at any office or agency of the Sellers to be maintained in
accordance with the provisions of Section 6.04(c) in which, subject to such
reasonable regulations as it may prescribe, the Sellers shall provide for the
registration and transfer of Registered Certificates. The Certificate Register
shall be in written form or capable of being converted into written form within
a reasonable time. Unless otherwise specifically designated by Discover Bank
on behalf of the Holder of the Seller Certificate in a written notice to the
Trustee, the Certificate Register shall be maintained at the Corporate Trust
Office.

          (ii) Investor Certificates of certain Classes of certain Series may be
ineligible for purchase by an employee benefit plan, trust or account subject
to the Employee Retirement Income Security Act of 1974, as amended (“ERISA”),
or described in Section 4975(e)(l) of the Code, and not excepted under Section
4975(g) (a “Plan”). No transfer of such an Investor Certificate shall be made
nor shall any interest therein be transferred to a Plan. Each Holder of such a
Certificate, by its acceptance thereof, shall be deemed to represent and
warrant that it is not (i) an employee benefit plan (as defined in Section 3(3)
of ERISA) that is subject to the provisions of Title I of ERISA, (ii) a plan
described in Section 4975(e)(l) of the Code, and not excepted under Section
4975(g) or (iii) an entity that is using assets to purchase such Certificates
that constitute plan assets by reason of a plan’s investment in such entity.
The Series Supplement with respect to each Series shall set forth which Class
or Classes of such Series, if any, shall be subject to the restrictions set
forth in this Section 6.04(a)(ii).

          (iii) Upon surrender for registration of transfer of any Registered
Certificate at any office or agency to be maintained in accordance with the
provisions of Section 6.04(c), Discover Bank on behalf of the Holder of the
Seller Certificate shall execute, and the Trustee shall authenticate and
deliver, in the name of the designated transferee or transferees, one or more
Registered Certificates of the same Class and Series, of a like Fractional
Undivided Interest and bearing a number not contemporaneously outstanding.

          (iv) At the option of a Holder of a Registered Certificate, such Holder’s
Registered Certificates may be exchanged for other Registered Certificates of
the same Class and Series, of a like Fractional Undivided Interest and bearing
a number not contemporaneously outstanding upon surrender of the Registered
Certificates to be exchanged at any such office or

49

 

agency. Whenever any
Registered Certificates are so surrendered for exchange, Discover Bank on
behalf of the Holder of the Seller Certificate shall execute, and the Trustee
shall authenticate and deliver the Registered Certificates which the Holder
making the exchange is entitled to receive. Registered Certificates, including
Registered Certificates received in exchange for Bearer Certificates, may not
be exchanged for Bearer Certificates.

          (v) At the option of the Holder of a Bearer Certificate, subject to
applicable laws and regulations, Bearer Certificates may be exchanged for other
Bearer Certificates, in denominations smaller than those of the Bearer
Certificates being exchanged, or for Registered Certificates, in either case of
the same Class and Series, of a like Fractional Undivided Interest and bearing
a number not contemporaneously outstanding, upon surrender of the Bearer
Certificates to be exchanged at an office or agency of the Transfer Agent
located outside the United States. Each Bearer Certificate surrendered
pursuant to this Section shall have attached thereto all unmatured Coupons;
provided that any Bearer Certificate so surrendered after the close of business
on the Record Date preceding the relevant Payment Date need not have attached
the Coupon relating to such Payment Date (as specified in the applicable Series
Supplement).

          (vi) The preceding provisions of this Section notwithstanding, the
Transfer Agent shall not be required to register the transfer of or exchange
any Certificate for a period of 15 days preceding any Payment Date with respect
to the Certificate.

          (vii) Every Registered Certificate presented or surrendered for
registration of transfer or for exchange shall be duly endorsed, or be
accompanied by a written instrument of
transfer in form satisfactory to the Sellers and the Trustee duly
executed, by the Certificateholder thereof or his attorney duly authorized in
writing.

          (viii) No service charge shall be made for any registration of transfer or
exchange of Certificates, but the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Certificates.

          (ix) All Investor Certificates (together with any Coupons) surrendered for
registration of transfer and exchange or for payment shall be canceled and
disposed of in a manner satisfactory to the Trustee. The Trustee shall cancel
and destroy any Global Certificate upon its exchange in full for Definitive
Euro-Certificates and shall deliver a certificate of destruction to the
Sellers. Such certificate shall also state that a certificate or certificates
of Clearstream Banking or Euroclear to the effect referred to in Section 6.11
was received with respect to each portion of the Global Certificate exchanged
for Definitive Euro-Certificates.

          (x) Discover Bank on behalf of the Holder of the Seller Certificate shall
execute and deliver to the Trustee Bearer Certificates and Registered
Certificates in such amounts and at such times as are necessary to enable the
Trustee to fulfill its responsibilities under this Agreement, each Series
Supplement and the Certificates.

          (b) It is the understanding of the parties to this Agreement that Discover
Bank has particular expertise in performing the functions given by this
Agreement to the Master

50

 

Servicer and that the Investor Certificateholders will
be purchasing the Investor Certificates relying on Discover Bank exercising
such expertise in performing such functions. Except as provided in Sections
8.04 and 8.06, the Master Servicer is not permitted to resign and the parties
understand that the Master Servicer’s performance of its functions and the
quality of the Receivables will best be ensured if Discover Bank, together with
any Additional Sellers, retains the Seller Certificate. Accordingly (subject
to the condition that Discover Bank shall at all times retain sole control over
its properties and except as provided in Section 7.02), the Seller Certificate
shall not be transferred, assigned, exchanged, or otherwise conveyed except as
provided in Section 7.05.

          (c) The Sellers will maintain at their expense in the Borough of
Manhattan, The City of New York, and, if and so long as any Class of any Series
is listed on the Luxembourg Stock Exchange and such exchange shall so require,
in Luxembourg, an office or offices or agency or agencies where Investor
Certificates may be surrendered for registration of transfer or exchange
(except that Bearer Certificates may not be surrendered for exchange at any
such office or agency in the United States).

          SECTION 6.05 Mutilated, Destroyed, Lost or Stolen Certificates.

          (a) If any mutilated Certificate (together, in the case of a Bearer
Certificate, with all unmatured Coupons appertaining thereto) is surrendered to
the Trustee, Discover Bank on behalf of the Holder of the Seller Certificate
shall execute and the Trustee shall authenticate and deliver (in the case of a
Bearer Certificate, outside the United States) in exchange therefor a
Certificate of the same Class and Series, of a like fractional undivided
interest and bearing a number not contemporaneously outstanding.

          (b) If there shall be delivered to Discover Bank on behalf of the Holder
of the Seller Certificate and the Trustee (i) evidence to their satisfaction of
the destruction, loss or theft of any Certificate and (ii) such security or
indemnity as may be required by them to save each of them and any agent of
either of them harmless, then, in the absence of notice to Discover Bank on
behalf of the Holder of the Seller Certificate or the Trustee that such
Certificate has been acquired by a bona fide purchaser, Discover Bank on behalf
of the Holder of the Seller Certificate shall execute and, upon its request,
the Trustee shall authenticate and deliver (in the case of a Bearer
Certificate, outside the United States), in lieu of any such destroyed, lost or
stolen Certificate, a Certificate of the same Class and Series, of a like
fractional undivided interest and bearing a number not contemporaneously
outstanding.

          (c) Upon the issuance of any Certificate pursuant to this Section, the
Sellers may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses, including counsel fees, of the Sellers and the Trustee, and any
Paying Agent or Transfer Agent connected therewith, and in addition a further
sum not exceeding two dollars for each Certificate so issued in substitution.

          (d) Every Certificate and Coupon issued pursuant to this Section in lieu
of any destroyed, lost or stolen Certificate or Coupon shall constitute an
original additional contractual obligation of the Trust, whether or not the
destroyed, lost or stolen Certificate or Coupon shall be at any time
enforceable by anyone, and shall be entitled to all the benefits of this
Agreement and

51

 

the applicable Series Supplement equally and proportionately with
any and all other Certificates or Coupons of the same Class and Series duly
issued hereunder.

          SECTION 6.06 Issuances of New Series.

          (a) The Sellers may direct the Trustee to issue, from time to time, one or
more Series subject to the conditions described below (each such issuance, a
“New Issuance”). The Sellers may effect a New Issuance by notifying the
Trustee, in writing, at least three days in advance of the date upon which the
New Issuance is to occur. Any notice of the New Issuance shall state the
designation of any Series to be issued on the date of the New Issuance and,
with respect to each such Series: (i) its Series Initial Investor Interest,
(ii) the Certificate Rate of each Class or Subclass, if applicable, of such
Series; (iii) its Payment Dates and the date from which interest shall accrue;
(iv) its Series Termination Date and (v) any other terms that the Sellers set
forth in such notice of a New Issuance. On the date of the New Issuance, the
Trustee shall authenticate and deliver any such Series only upon satisfaction
of the following conditions: (a) Discover Bank on behalf of the Holder of the
Seller Certificate shall have delivered to the Trustee a Series Supplement
executed by the Sellers, the Master Servicer, the Servicers and the Trustee
that specifies the terms of such Series, including, without limitation, the
Series Initial Investor Interest, the Certificate Rate for each Class of such
Series, the terms for the allocation of Collections available to such New
Issuance and the assignment of such Series to a Group and such other terms the
Sellers may deem appropriate, (b) the Sellers shall have delivered to the
Trustee written confirmation from the Rating Agencies that the New Issuance
will not result in the reduction or withdrawal of the ratings of any Class of
any Series then outstanding rated by each Rating Agency, (c) the Sellers shall
have delivered to the Trustee and the Rating Agencies (A) with respect to each
New Issuance, an opinion of counsel dated as of the date of such New Issuance
to the effect that, although not free from doubt, the Investor Certificates of
such New Issuance will be treated as indebtedness of the Sellers for federal
income and Delaware (and any
other state where substantial servicing activities are conducted by an
Additional Seller with respect to Accounts serviced by such Additional Seller,
or by Discover Bank if there is a substantial change from Discover Bank’s
present servicing activity, if any, in such state) state income or franchise
tax purposes and (B) with respect to each New Issuance other than the New
Issuance related to the first Series issued by the Trust, an opinion of counsel
dated as of the date of such New Issuance to the effect that such New Issuance
will not adversely affect the conclusion set forth in any prior opinion of
counsel delivered pursuant to this clause (c) as to the treatment of the
Investor Certificates of any such prior Series as indebtedness of the Sellers
or as to the treatment of the Trust as a mere security device and (d) Discover
Bank on behalf of the Holder of the Seller Certificate shall not be required to
designate Additional Accounts or convey Participation Interests to the Trust
pursuant to Section 2.10(a) as a result of such New Issuance. The Series
Supplement with respect to any New Issuance may modify or amend the terms of
this Agreement, provided, that such modifications or amendments shall apply
solely with respect to such Series. Upon satisfaction of such conditions, the
Trustee shall issue, as provided in Section 6.06(d), such Series of Investor
Certificates dated as of the date of the New Issuance.

          (b) The Sellers may direct the Trustee to issue one or more Series which
is subordinate in right of payment, in whole or in part, to one or more other
Series, whether or not any such Series are issued contemporaneously. The
manner and extent to which any Series shall

52

 

be subordinated to any other Series
shall be set forth in the Series Supplement for the subordinated Series.

          (c) The Sellers may designate that one or more Groups be subordinate in
right of payment, in whole or in part, to one or more other Groups, whether or
not the Series in any such subordinate Group are issued contemporaneously with
the Series in any non-subordinate Group. The manner and extent to which any
Group shall be subordinated to any other Group shall be set forth in the Series
Supplements for each Series which is a member of such subordinate Group.

          (d) Upon any New Issuance, Discover Bank on behalf of the Holder of the
Seller Certificate shall execute and deliver to the Trustee, and the Trustee
shall authenticate pursuant to Section 6.03, one or more Series of Investor
Certificates. The Investor Certificates of any such Series shall be
substantially in the form specified in the applicable Series Supplement and
shall each bear, upon its face, the designation for such Series.

          SECTION 6.07 Persons Deemed Owners. Prior to due presentation of a
Certificate for registration of transfer or exchange, the Trustee, the Paying
Agent, the Transfer Agent and any agent of any of them may (a) treat the person
in whose name any Registered Certificate is registered as the owner of such
Registered Certificate for the purpose of receiving distributions pursuant to
Section 5.01 and for all other purposes whatsoever and (b) treat the bearer of
a Bearer Certificate or Coupon as the owner of such Bearer Certificate or
Coupon for the purpose of receiving distributions pursuant to Section 5.01 and
for all other purposes whatsoever; and, in either case, neither the Trustee,
the Paying Agent, the Transfer Agent nor any agent of any of them shall be
affected by any notice to the contrary.

          SECTION 6.08 Appointment and Duties of Paying Agent.

          (a) The Paying Agent shall make distributions to Investor
Certificateholders from the Series Distribution Accounts, the Series Interest
Funding Accounts and the Series Principal Funding Accounts pursuant to Section
5.01 and the relevant provisions of the applicable Series Supplement. Any
Paying Agent shall have the revocable power to withdraw funds from the Series
Distribution Accounts, the Series Interest Funding Accounts and the Series
Principal Funding Accounts for the purpose of making the distributions referred
to above. The Trustee may revoke such power and remove the Paying Agent if the
Trustee determines in its sole discretion that the Paying Agent shall have
failed to perform its obligations under this Agreement or any Series Supplement
in any material respect. The Paying Agent shall initially be the Trustee and
any co-paying agent or paying agencies chosen by the Paying Agent and
acceptable to the Trustee and the Sellers, including, if and for so long as any
Class of any Series is represented by Bearer Certificates or is listed on the
Luxembourg Stock Exchange and such exchange so requires, a co-paying agent or
paying agency in Luxembourg or another city in western Europe. The Trustee
shall be permitted to resign as Paying Agent upon 30 days’ written notice to
the Sellers and upon the appointment of a successor to act as Paying Agent.
For so long as the Trustee shall act as Paying Agent, the provisions of
Sections 11.01, 11.02 and 11.03 shall apply to the Trustee in its role as
Paying Agent.

53

 

          (b) The Trustee shall cause any Paying Agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee that such Paying Agent will hold all sums held by
it for payment to the Investor Certificateholders in trust for the benefit of
the Investor Certificateholders entitled thereto until such sums shall be paid
to such Investor Certificateholders.

          SECTION 6.09 Access to List of Names and Addresses of Holders of
Registered Certificates. The Trustee will furnish or cause to be furnished by
the Transfer Agent to the Master Servicer or the Paying Agent, within five
Business Days after receipt by the Trustee of a request therefor from the
Master Servicer or the Paying Agent, respectively, in writing, a list in such
form as the Master Servicer or the Paying Agent may reasonably require, of the
names and addresses of the Holders of Registered Certificates of any Class or
Series as of the most recent Record Date for payment of distributions to such
Holders of Registered Certificates. If three or more Holders of Registered
Certificates of any Class of any Series (the “Applicants”) representing
Fractional Undivided Interests aggregating not less than 5% of the Series
Invested Amount of any Series apply in writing to the Trustee, and such
application states that the Applicants desire to communicate with other Holders
of Registered Certificates of such Class of such Series, or such Series, with
respect to their rights under this Agreement, the relevant Series Supplement or
the Investor Certificates and is accompanied by a copy of the communication
which such Applicants propose to transmit, then the Trustee, after having been
adequately indemnified by such Applicants for its costs and expenses, shall
afford or shall cause the Transfer Agent to afford such Applicants access
during normal business hours to the most recent list of Holders of Registered
Certificates of such Class of such Series, or such Series, held by the Trustee,
within five Business Days after the receipt of such application. Such list
shall be as of a date no more than 45 days prior to the date of receipt of such
Applicants’ request. Every Holder of a Registered Certificate, by receiving
and holding such Certificate, agrees with the Trustee that neither the Trustee,
the Transfer Agent, nor any of their respective agents shall be held
accountable by reason of the disclosure of any such information as to the names
and addresses of
such Certificateholders hereunder, regardless of the source from which
such information was derived.

          SECTION 6.10 Authenticating Agent.

          (a) The Trustee may appoint one or more authenticating agents with respect
to one or more Series which shall be authorized to act on behalf of the Trustee
in authenticating the Certificates of such Series in connection with the
issuance, delivery, registration of transfer, exchange or repayment of such
Certificates. Wherever reference is made in this Agreement to the
authentication of Certificates by the Trustee or the Trustee’s certificate of
authentication, such reference shall be deemed to include authentication on
behalf of the Trustee by an authenticating agent and a certificate of
authentication executed on behalf of the Trustee by an authenticating agent.
Each authenticating agent must be acceptable to the Sellers.

          (b) Any institution succeeding to the corporate agency business of an
authenticating agent shall continue to be an authenticating agent without the
execution or filing of any paper or any further act on the part of the Trustee
or such authenticating agent.

54

 

          (c) An authenticating agent may at any time resign by giving written
notice of resignation to the Trustee and to the Sellers. The Trustee may at
any time terminate the agency of an authenticating agent by giving notice of
termination to such authenticating agent and to the Sellers. Upon receiving
such a notice of resignation or upon such a termination, or in case at any time
an authenticating agent shall cease to be acceptable to the Trustee or the
Sellers, the Trustee promptly may appoint a successor authenticating agent.
Any successor authenticating agent upon acceptance of its appointment hereunder
shall become vested with all the rights, powers and duties of its predecessor
hereunder, with like effect as if originally named as an authenticating agent.
No successor authenticating agent shall be appointed unless acceptable to the
Trustee and the Sellers.

          (d) The Trustee agrees to pay to each authenticating agent from time to
time reasonable compensation for its services under this Section 6.10, and the
Trustee shall be entitled to be reimbursed and the Master Servicer shall
reimburse the Trustee for such payments, subject to the provisions of Section
11.05.

          (e) The provisions of Sections 11.01, 11.02 and 11.03 shall be applicable
to any authenticating agent.

          (f) Pursuant to an appointment made under this Section 6.10, the
Certificates of an applicable Series may have endorsed thereon, in lieu of the
Trustee’s certificate of authentication, an alternate certificate of
authentication in substantially the following form:

          “This is one of the Certificates described in the Pooling and
Servicing Agreement and Series Supplement.

	 	 	 	 	 
	 	 	
 
	 
	 	 	 	 
	 	 	
 
	 	 	as Authenticating Agent for the Trustee,

	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	
 
	

	 	 	 	Authorized Officer”

          SECTION 6.11 Global Certificate; Exchange Date.

          (a) If specified in the related Series Supplement for any Series or Class,
the Investor Certificates of such Series or Class, as applicable, will
initially be issued as a single temporary global certificate (the “Global
Certificate”) in bearer form, without Coupons, in the denomination of the
Series Initial Investor Interest or the Class Initial Investor Interest, as
applicable, and substantially in the form set forth in the exhibit with respect
thereto attached to the related Series Supplement. The Global Certificate will
be authenticated by the Trustee upon the same conditions, in substantially the
same manner and with the same effect as the Definitive Certificates. The
Global Certificate may be exchanged as described below for Bearer Certificates
or Registered Certificates in definitive form (the “Definitive
Euro-Certificates”).

55

 

          (b) The Manager shall advise the Trustee, the Sellers, the Common
Depositary, Clearstream Banking and Euroclear of the Exchange Date. Not later
than the Exchange Date, Discover Bank on behalf of the Holder of the Seller
Certificate will execute and deliver to the Trustee or its designated agent, in
either case, outside the United States, definitive Bearer Certificates in an
aggregate principal amount equal to the Series Initial Investor Interest or the
Class Initial Investor Interest, as applicable, less, in either case, the
aggregate principal amount of the Global Certificate expected to be issued to
United States institutional investors, as described below. All Bearer
Certificates so issued and delivered will have Coupons attached. The Global
Certificate may be exchanged for Definitive Euro-Certificates only on or after
the Exchange Date. A United States institutional investor may exchange the
portion of the Global Certificate beneficially owned by it only for an equal
aggregate principal amount of Registered Certificates bearing the applicable
legend set forth in the form of Registered Certificate attached to the related
Series Supplement and having a minimum denomination of $500,000. The Sellers
may waive the $500,000 minimum denomination requirement if they so elect. Upon
any demand for exchange for Definitive Euro-Certificates in accordance with
this paragraph, the Sellers shall cause the Trustee to authenticate and deliver
the Definitive Euro-Certificates to the Holder (x) outside the United States,
in the case of Bearer Certificates, and (y) according to the instructions of
the Holder, in the case of Registered Certificates, but in either case only
upon presentation to the Trustee of a written statement substantially in the
form of Exhibit H-1 with respect to the Global Certificate or portion thereof
being exchanged signed by Clearstream Banking or Euroclear and dated on or
after the Exchange Date, to the effect that it has received in writing or by
tested telex a certification substantially in the form of (i) in the case of
beneficial ownership of the Global Certificate or a portion thereof being
exchanged by a United States institutional investor pursuant to the second
preceding sentence, the certificate in the form of Exhibit H-2 signed by the
Manager which sold the relevant Certificates or (ii) in all other cases, the
certificate in the form of Exhibit H-3, the certificate referred to in this
clause (ii) being dated on or after the 15th day before the Exchange Date.
Upon receipt of such certification, the Trustee shall cause the Global
Certificate to be endorsed in accordance with paragraph (d) below. Any
exchange as provided in this Section shall be made free of charge to the
holders and the beneficial owners of the Global Certificate and to the
beneficial owners of the Definitive Euro-Certificates issued in exchange,
except that a person receiving Definitive Euro-Certificates must bear the cost
of insurance, postage, transportation and the like in the event that such
person does
not receive such Definitive Euro-Certificates in person at the offices of
Clearstream Banking or Euroclear.

          (c) The delivery to the Trustee by Clearstream Banking or Euroclear of any
written statement referred to above may be relied upon by the Sellers and the
Trustee as conclusive evidence that a corresponding certification or
certifications has or have been delivered to Clearstream Banking or Euroclear,
as applicable, pursuant to the terms of this Agreement. The Trustee,
Clearstream Banking and Euroclear, as the case may be, shall retain each
certificate delivered pursuant to Section 6.11 for a period of four calendar
years following the year in which such certificate is received.

          (d) Upon any such exchange of all or a portion of the Global Certificate
for a Definitive Euro-Certificate or Certificates, such Global Certificate
shall be endorsed by or on behalf of the Trustee to reflect the reduction of
its principal amount by an amount equal to the aggregate principal amount of
such Definitive Euro-Certificate or Certificates. Until so

56

 

exchanged in full,
such Global Certificate shall in all respects be entitled to the same benefits
under this Agreement as Definitive Euro-Certificates authenticated and
delivered hereunder except that the beneficial owners of such Global
Certificate shall not be entitled to receive payments of interest on the
Certificates until they have exchanged their beneficial interests in such
Global Certificate for Definitive Euro-Certificates.

          SECTION 6.12 Meetings of Certificateholders. (a) If, with respect to any
Series then outstanding, any Bearer Certificates are issued and outstanding
with respect to any Class of such Series, the Master Servicer or the Trustee
may at any time call a meeting of Investor Certificateholders of any such
Series or Class or of all such Series, to be held at such time and at such
place as the Master Servicer or the Trustee, as the case may be, shall
determine for the purpose of approving a modification of or amendment to, or
obtaining a waiver of any covenant or condition set forth in, this Agreement,
any applicable Series Supplement or the Investor Certificates or of taking any
other action permitted to be taken by Investor Certificateholders hereunder or
under any Series Supplement. Notice of any meeting of Investor
Certificateholders, setting forth the time and place of such meeting and in
general terms the action proposed to be taken at such meeting, shall be given
in accordance with Section 13.05, the first mailing and publication to be not
less than 20 nor more than 180 days prior to the date fixed for the meeting.
To be entitled to vote at any meeting of Investor Certificateholders a person
shall be (i) a Holder of one or more Bearer Certificates of the applicable
Series or Class, as described in Section 6.12(d), or (ii) the Holder of or a
person appointed by an instrument in writing as proxy by the Holder of one or
more Registered Certificates. The only persons who shall be entitled to be
present or to speak at any meeting of Investor Certificateholders shall be the
persons entitled to vote at such meeting and their counsel and any
representatives of the Sellers, the Master Servicer and the Trustee and their
respective counsel.

          (b) At a meeting of Investor Certificateholders, persons entitled to vote
Investor Certificates evidencing a majority of the Series Invested Amount or
the Class Invested Amount, as applicable, of the applicable Series or Class or
the sum of the Series Invested Amounts for all applicable Series, as the case
may be, shall constitute a quorum. For purposes of determining whether a
quorum is present, the applicable Class Invested Amount and Series
Invested Amount shall be calculated without taking into account the Class
Investor Interest represented by any Investor Certificates beneficially owned
by any Seller or any affiliate of any Seller. No business shall be transacted
in the absence of a quorum, unless a quorum is present when the meeting is
called to order. In the absence of a quorum at any such meeting, the meeting
may be adjourned for a period of not less than 10 days; in the absence of a
quorum at any such adjourned meeting, such adjourned meeting may be further
adjourned for a period of not less than 10 days; at the reconvening of any
meeting further adjourned for lack of a quorum, the persons entitled to vote
Investor Certificates evidencing at least 25% of the Series Invested Amount or
the Class Invested Amount, as applicable, of the applicable Series or Class or
the sum of the Series Invested Amounts for all applicable Series, as the case
may be, shall constitute a quorum for the taking of any action set forth in the
notice of the original meeting. Notice of the reconvening of any adjourned
meeting shall be given as provided above except that such notice must be given
not less than five days prior to the date on which the meeting is scheduled to
be reconvened. Notice of the reconvening of an adjourned meeting shall state
expressly the percentage of the Series Invested Amount or the Class Invested
Amount, as applicable, or of the

57

 

sum of the Series Invested Amounts for all
applicable Series, as the case may be, which shall constitute a quorum.

          (c) Any Holder of a Registered Certificate who has executed an instrument
in writing appointing a person as proxy shall be deemed to be present for the
purposes of determining a quorum and be deemed to have voted; provided that
such Holder of a Registered Certificate shall be considered as present or
voting only with respect to the matters covered by such instrument in writing.
Subject to the provisions of Section 13.01(b), any resolution passed or
decision taken at any meeting of Certificateholders duly held in accordance
with this Section shall be binding on all Investor Certificateholders of the
applicable Class or Series, whether or not present or represented at the
meeting.

          (d) The holding of Bearer Certificates for purposes of this Section 6.11
shall be proved by the production of such Bearer Certificates or by a
certificate, satisfactory to the Master Servicer, executed by any bank, trust
company or recognized securities dealer, wherever situated, satisfactory to the
Master Servicer. Each such certificate shall be dated and shall state that on
the date thereof a Bearer Certificate bearing a specified serial number was
deposited with or exhibited to such bank, trust company or recognized
securities dealer by the person named in such certificate. Any such
certificate may be issued in respect of one or more Bearer Certificates
specified therein. The holding by the person named in any such certificate of
any Bearer Certificate specified therein shall be presumed to continue for a
period of one year from the date of such certificate unless at the time of any
determination of such holding (i) another certificate bearing a later date
issued in respect of the same Bearer Certificate shall be produced, (ii) the
Bearer Certificate specified in such certificate shall be produced by some
other person or (iii) the Bearer Certificate specified in such certificate
shall have ceased to be outstanding. The holding of Registered Certificates
shall be proved by the Certificate Register. The appointment of any proxy with
respect to a Registered Certificate shall be proved by having the signature of
the person executing the proxy guaranteed by any bank, trust company or
recognized securities dealer satisfactory to the Master Servicer.

          (e) The Trustee shall appoint a temporary chairman of the meeting. A
permanent chairman and a permanent secretary of the meeting shall be elected by
vote of persons entitled to vote evidencing a majority of the Series Invested
Amount or the Class Invested
Amount, as applicable, of the applicable Series or Class or the sum of the
Series Invested Amounts for all applicable outstanding Series, as the case may
be, represented at the meeting. No vote shall be cast or counted at any
meeting in respect of any Investor Certificate challenged as not outstanding
and ruled by the chairman of the meeting to be not outstanding. The chairman
of the meeting shall have no right to vote except as an Investor
Certificateholder or proxy. Any meeting of Investor Certificateholders duly
called at which a quorum is present may be adjourned from time to time, and the
meeting may be held as so adjourned without further notice.

          (f) The vote upon any resolution submitted to any meeting of Investor
Certificateholders shall be by written ballot on which shall be subscribed the
signatures of Investor Certificateholders or proxies and on which shall be
inscribed the serial number or numbers of the Investor Certificates held or
represented by them. The permanent chairman of the meeting shall appoint two
inspectors of votes who shall count all votes cast at the meeting for or
against any resolution and who shall make and file with the secretary of the
meeting their

58

 

verified written reports in duplicate of all votes cast at the
meeting. A record in duplicate of the proceedings of each meeting of Investor
Certificateholders shall be prepared by the secretary of the meeting and there
shall be attached to said record the original reports of the inspectors of
votes on any vote by ballot taken thereat and affidavits by one or more persons
having knowledge of the facts setting forth a copy of the notice of the meeting
and showing that said notice was published as provided above. The record shall
be signed and verified by the permanent chairman and secretary of the meeting
and one of the duplicates shall be delivered to the Master Servicer and the
other to the Trustee to be preserved by the Trustee, the latter to have
attached thereto the ballots voted at the meeting. Any record so signed and
verified shall be conclusive evidence of the matters therein stated.

          SECTION 6.13 Special Provisions for Certain Series. Except with respect
to the provisions of Sections 6.03, 6.04(b) and 6.06 and provisions relating
specifically to the Seller Certificate, the foregoing provisions of this
Article VI may be modified with respect to any Series to the extent provided in
the applicable Series Supplement.

          SECTION 6.14 Exchange of Investor Certificates for Seller Interest. In
the event that any Seller becomes a Certificate Owner or an Investor
Certificateholder (in the event that Definitive Certificates are issued
pursuant to Section 6.02), Discover Bank on behalf of the Holder of the Seller
Certificate may cancel such Investor Certificates on a Distribution Date with
respect to such Investor Certificates by providing notice to the Trustee of
such cancellation; provided, however, that no Investor Certificates, except
Class A Certificates, may be cancelled unless Discover Bank on behalf of the
Holder of the Seller Certificate shall have been advised by the Rating Agencies
that such cancellation would not cause the rating of any Class of any Series
then outstanding to be lowered or withdrawn. Such cancellation shall be deemed
to occur after giving effect to all allocations and payments pursuant to
Article IV hereof and the applicable provisions of the Series Supplements for
each Series then outstanding as of such Distribution Date and the related Trust
Distribution Date. Simultaneously with such cancellation, the Class Investor
Interest of the applicable Class and the Series Investor Interest of the Series
under which such Investor Certificates were issued shall be reduced, and the
Seller Interest shall be increased, by the aggregate Class Investor Interest
represented by such
cancelled Investor Certificates, in each case as of the end of the related
Due Period. Such reduction in the Class Investor Interest will not result in
any change in any numerator for purposes of determining any Class Percentage
with respect to such Class if a Fixed Principal Allocation Event with respect
to such Series has previously occurred. Discover Bank on behalf of the Holder
of the Seller Certificate shall promptly notify the Rating Agencies of any
exchange of Investor Certificates for Seller Interest pursuant to this Section
6.14.

ARTICLE VII.

OTHER MATTERS RELATING TO THE SELLERS

          SECTION 7.01 Liability of Sellers. Each Seller shall be liable in
accordance herewith only to the extent of the obligations specifically
undertaken by such Seller in such capacity herein.

          SECTION 7.02 Merger or Consolidation of, or Assumption of the Obligations
of, Discover Bank, or any Additional Seller.

59

 

          (a) Nothing in this Agreement shall prevent any consolidation or merger of
Discover Bank or any Additional Seller with or into any other corporation, or
any consolidation or merger of any other corporation with or into Discover Bank
or any such Additional Seller, or any sale or transfer of all or substantially
all of the property and assets of Discover Bank or any such Additional Seller
to any other corporation lawfully entitled to acquire the same; provided,
however, that

     (i) if Discover Bank or such Additional Seller, as applicable,
is not the surviving entity, such successor corporation shall be
organized and existing under the laws of the United States of
America or any state or the District of Columbia and shall be a
banking corporation or other entity that is not subject to the
bankruptcy laws of the United States of America, provided that such
entity shall not be an insurance company; or

     (ii) Discover Bank or such Additional Seller, as applicable,
shall have been advised by the Rating Agency that the rating of any
Investor Certificates of any Class of any Series then outstanding
would not be lowered or withdrawn as a result of such transaction;
and

provided, further, that, so long as Certificates are outstanding hereunder,
Discover Bank or such Additional Seller, as applicable, covenants and agrees
that any such consolidation, merger, sale or transfer shall be upon the
condition that the due and punctual performance and observance of all the
terms, covenants and conditions of this Agreement to be kept or performed by
Discover Bank or such Additional Seller, as applicable, shall, by an agreement
supplemental hereto, executed and delivered to the Trustee, be assumed by the
corporation (if other than Discover Bank or such Additional Seller, as
applicable) formed by or resulting from any such consolidation or merger, or
which shall have received the transfer of all or substantially all of the
property and assets of Discover Bank, just as fully and effectually as if such
successor corporation had been the original party of the first part hereto; and
in the event of any such sale
or transfer Discover Bank or such Additional Seller, as applicable, may be
dissolved, wound up and liquidated at any time thereafter.

          (b) The obligations of Discover Bank or any Additional Seller hereunder
shall not be assignable, nor shall any Person succeed to the obligations of
Discover Bank or any Additional Seller hereunder, except in each case in
accordance with the provisions of the foregoing subsection (a).

          (c) Discover Bank or such Additional Seller, as applicable, shall notify
the Rating Agencies on or before the date of any consolidation, merger or
transfer of all or substantially all of its property and assets pursuant to
subsection (a) of this Section 7.02.

          SECTION 7.03 Limitation on Liability of Certain Persons. No recourse
under or upon any obligation or covenant of this Agreement or any Series
Supplement, or of any Certificate, or for any claim based thereon or otherwise
in respect thereof, shall be had against any incorporator, stockholder, officer
or director, as such, past, present or future, of any Seller or of any
successor corporation, either directly or through such Seller, whether by
virtue of any constitution, statute or rule of law, or by the enforcement of
any assessment or penalty or

60

 

otherwise; it being expressly understood that this
Agreement and any Series Supplement and the obligations incurred hereunder and
thereunder are solely corporate obligations, and that no such personal
liability whatever shall attach to, or is or shall be incurred by the
incorporators, stockholders, officers or directors, as such, of any Seller or
of any successor corporation to such Seller, or any of them, because of the
creation of the indebtedness hereby authorized, or under or by reason of the
obligations or covenants contained in this Agreement, any Series Supplement or
in any of the Certificates or implied therefrom; and that any and all such
personal liability, either at common law or in equity or by constitution or
statute, of, and any and all such rights and claims against, every such
incorporator, stockholder, officer or director, as such, because of the
creation of the indebtedness hereby authorized, or under or by reason of the
obligations, covenants or agreements contained in this Agreement or any Series
Supplement or in any of the Certificates or implied therefrom, are hereby
expressly waived and released as a condition of, and as a consideration for,
the execution of this Agreement and any Series Supplement and the issuance of
such Certificates. Any Seller and any director or officer or employee or agent
of any Seller may rely in good faith on any document of any kind prima facie
properly executed and submitted by any Person respecting any matters arising
hereunder.

          SECTION 7.04 Seller Indemnification of the Trust and the Trustee.
Discover Bank on behalf of the Holder of the Seller Certificate shall indemnify
and hold harmless the Trust and the Trustee from and against any loss,
liability, expense, damage or injury suffered or sustained by reason of any
acts, omissions or alleged acts or omissions arising out of activities of the
Sellers with respect to the Trust, the Trust or the Trustee pursuant to this
Agreement or any Series Supplement, including but not limited to any judgment,
award, settlement, reasonable attorneys’ fees and other costs or expenses
incurred in connection with the defense of any actual or threatened action,
proceeding or claim; provided, however, that Discover Bank on behalf of the
Holder of the Seller Certificate shall not indemnify the Trustee if such acts,
omissions or alleged acts or omissions constitute fraud, negligence, breach of
fiduciary duty or misconduct by the Trustee; and provided, further, that
Discover Bank on behalf of the Holder
of the Seller Certificate shall not indemnify the Trust or the Investor
Certificateholders for any liabilities, costs or expenses of the Trust with
respect to any action taken by the Trustee at the request of the Investor
Certificateholders; and provided, further, that Discover Bank on behalf of the
Holder of the Seller Certificate shall not indemnify the Trust or the Investor
Certificateholders with respect to any federal, state or local income or
franchise taxes (or any interest or penalties with respect thereto) required to
be paid by the Trust or the Investor Certificateholders in connection herewith
to any taxing authority, which taxes shall be the sole obligation of the Trust
or the Investor Certificateholders. Any such indemnification shall only be
from assets of the Sellers, shall be subordinate to the security interest of
the Trust in the Receivables and Interchange and shall not constitute a claim
against any Seller in excess of the lesser of (i) such Seller’s assets
available to pay such claim or (ii) the amount of such claim multiplied by a
fraction the numerator of which is the aggregate amount of Principal
Receivables in the Trust which were originated by such Seller and the
denominator of which is the aggregate amount of Principal Receivables in the
Trust. The obligations under this Section shall survive the termination of the
Trust and the resignation or removal of the Trustee.

          SECTION 7.05 Transfer or Conveyance of Seller Certificate. It is the
understanding of the parties that the Seller Certificate will be issued
initially to Discover Bank, and that any Additional Sellers will enter into the
Seller Certificate Ownership Agreement with

61

 

Discover Bank and, thereafter, hold
the Seller Certificate, together with Discover Bank, as tenants-in-common.
Except with respect to any such transfer of a portion of their interest in the
Seller Certificate to any Additional Seller pursuant to the terms of this
Agreement, or the transfer of all or part of any Seller’s interest in the
Seller Certificate to an affiliate of Discover Bank that is included in the
same “affiliated group” as Discover Bank for United States federal income tax
purposes, no Seller may transfer, assign, sell or otherwise convey, pledge or
hypothecate or otherwise grant a security interest in (each, for purposes of
this Section 7.05, a “transfer”) any portion of the Seller Interest represented
by the Seller Certificate; provided, however, that a Seller may transfer a
portion of the Seller Interest so long as the agreements and other
documentation relating thereto are consistent with, and subject to, the terms
hereof and do not require any action prohibited or prohibit any action required
on the part of the Master Servicer, the Sellers or the Trustee by the terms of
this Agreement or any Series Supplement, or as necessary to protect the
interests of the Investor Certificateholders; and, provided that such Seller
shall have been advised by the Rating Agencies that such transfer would not
cause the ratings of any Class of any Series then outstanding to be lowered or
withdrawn. Notwithstanding the foregoing, such advice shall not be required if
the principal objective of such conveyance or transfer is compliance with
Regulatory Requirements, provided that Discover Bank shall notify the Rating
Agencies of such conveyance or transfer. For purposes of the foregoing
sentence, Regulatory Requirements shall mean Requirements of Law applicable to
any Seller or any of its affiliates as a result of the affiliation of any
Seller or any of its affiliates with a depository institution or applicable to
any Seller or any of its affiliates as a depository institution, including,
without limitation, any condition under such Requirements of Law that must be
satisfied in order for any affiliate of any Seller to avoid being treated as a
bank holding company (or any similar designation under the Bank Holding Company
Act of 1956, as said act may be amended from time to time) under the Bank
Holding Company Act of 1956, as amended, notwithstanding such affiliation, or
to avoid limitations under said act upon the activities in which affiliates of
any Seller may engage.

          SECTION 7.06 Corporate Actions. So long as any Investor Certificates are
outstanding, each Seller’s board of directors will hold appropriate meetings or
will take appropriate action by written consent in accordance with applicable
state law to authorize all of such Seller’s corporate actions.

          SECTION 7.07 Bankruptcy Against Any Additional Seller. Each of the Master
Servicer, each Servicer, each Seller, the Trustee and the Paying Agent hereby
covenants and agrees that, prior to the date which is one year and one day
after the payment in full of all Series of Investor Certificates, it will not
institute against, or join with any other Person in instituting against, any
Additional Seller that is subject to the bankruptcy laws of the United States
of America, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings, or other proceedings under any federal or state
bankruptcy or similar law.

62

 

ARTICLE VIII.

OTHER MATTERS RELATING TO THE MASTER

SERVICER AND THE SERVICERS

          SECTION 8.01 Master Servicer and Servicer Liability. The Master Servicer
and each Servicer shall be liable in accordance herewith only to the extent of
the obligations specifically undertaken by the Master Servicer or such Servicer
in such capacity herein.

          SECTION 8.02 Merger or Consolidation of, or Assumption of the Obligations
of, the Master Servicer or any Servicer. Nothing in this Agreement shall
prevent any consolidation or merger of the Master Servicer or any Servicer with
or into any other corporation, or any consolidation or merger of any other
corporation with or into the Master Servicer or any Servicer, or any sale or
transfer of all or substantially all of the property and assets of the Master
Servicer or any Servicer to any other corporation lawfully entitled to acquire
the same; provided, however, that, so long as Certificates are outstanding
hereunder, the Master Servicer and each Servicer covenants and agrees that any
such consolidation, merger, sale or transfer shall be upon the condition that
the due and punctual performance and observance of all the terms, covenants and
conditions of this Agreement to be kept or performed by the Master Servicer or
such Servicer, as applicable, shall, by an agreement supplemental hereto,
executed and delivered to the Trustee, be assumed by the corporation (if other
than the Master Servicer or such Servicer) formed by or resulting from any such
consolidation or merger, or which shall have received the transfer of all or
substantially all of the property and assets of the Master Servicer or such
Servicer, just as fully and effectually as if such successor corporation had
been the original party of the first part hereto; and in the event of any such
sale or transfer the predecessor Master Servicer or such predecessor Servicer
may be dissolved, wound up and liquidated at any time thereafter. The Master
Servicer shall notify Moody’s and Standard & Poor’s of any consolidation,
merger or transfer of all or substantially all of its property or assets or of
the property or assets of any Servicer pursuant to this Section 8.02.

          SECTION 8.03 Limitation on Liability of the Master Servicer and each
Servicer and Others. No recourse under or upon any obligation or covenant of
this Agreement or any Series Supplement, or of any Certificate, or for any
claim based thereon or otherwise in respect thereof, shall be had against any
incorporator, shareholder, officer or director, as such, past, present or
future, of the Master Servicer or any Servicer or of any successor corporation,
either directly or through the Master Servicer or any Servicer, whether by
virtue of any constitution, statute or rule of law, or by the enforcement of
any assessment or penalty or otherwise; it being expressly understood that this
Agreement and any Series Supplement and the obligations incurred hereunder are
solely corporate obligations, and that no such personal liability whatever
shall attach to, or is or shall be incurred by the incorporators, shareholders,
officers or directors, as such, of the Master Servicer or any Servicer or of
any successor corporation, or any of them, because of the creation of any
indebtedness hereby authorized, or under or by reason of the obligations,
covenants or agreements contained in this Agreement or any Series Supplement or
in any of the Certificates or implied therefrom; and that any and all such
personal liability, either at common law or in equity or by constitution or
statute, of, and any and all such rights and claims against, every such
incorporator, shareholder, officer or director, as such, because of the
creation of the indebtedness hereby authorized, or under or by reason of the
obligations or covenants contained in this Agreement or any Series Supplement
or in any of the Certificates or implied therefrom, are hereby expressly waived
and released as a condition of, and as a consideration for, the execution of
this Agreement and any Series Supplement and the issue of such Certificates.
The Master Servicer and each Servicer and any director or officer or employee
or agent of the Master Servicer and each Servicer may rely in

63

 

good faith on any
document of any kind prima facie properly executed and submitted by any Person
respecting any matters arising hereunder. Neither the Master Servicer nor any
Servicer shall be under any obligation to appear in, prosecute or defend any
legal action which is not incidental to its duties to service the Receivables
in accordance with this Agreement or any Series Supplement which in its
reasonable opinion may involve it in any expense or liability.

          SECTION 8.04 Master Servicer or Servicer Resignation. Neither the Master
Servicer nor any Servicer shall resign from the obligations and duties hereby
imposed on it except upon determination that (i) the performance of its duties
hereunder is no longer permissible under applicable law and (ii) there is no
reasonable action which the Master Servicer or such Servicer could take to make
the performance of its duties hereunder permissible under applicable law. For
purposes of the foregoing sentence, applicable law shall include, without
limitation, any condition that relates to the activities of the Master Servicer
under any Requirements of Law and that, in the Master Servicer’s reasonable
judgment, must be satisfied in order for any affiliate of the Master Servicer
not otherwise treated as a bank holding company (or any similar designation
under the Bank Holding Company Act of 1956, as said act may be amended from
time to time) to avoid being treated as a bank holding company under the Bank
Holding Company Act of 1956, as amended, or to avoid limitations under said act
upon the activities in which the Master Servicer or any affiliate of the Master
Servicer may engage. Any such determination permitting the resignation of the
Master Servicer or such Servicer shall be evidenced as to clause (i) above by
an Opinion of Counsel to such effect delivered to the Trustee. No such
resignation shall become effective until the Trustee or a Successor Master
Servicer or Successor Servicer, as applicable, shall have assumed the
responsibilities and obligations of the Master Servicer or such Servicer
in accordance with Section 10.03 hereof. The Master Servicer shall notify
Standard & Poor’s of any resignation of any Servicer or the Master Servicer
pursuant to this Section 8.04.

          SECTION 8.05 Access to Certain Documentation and Information Regarding the
Receivables and Interchange. The Master Servicer and each Servicer shall
provide to the Trustee access to its documentation regarding the Accounts, the
Receivables and Interchange in such cases where the Trustee is required in
connection with the enforcement of the rights of the Investor
Certificateholders, or by applicable statutes or regulations, to review such
documentation, such access being afforded without charge but only (i) upon
reasonable request, (ii) during normal business hours, (iii) subject to the
Master Servicer’s or the Servicer’s normal security and confidentiality
procedures and (iv) at offices designated by the Master Servicer or the
Servicer, as applicable. Nothing in this Section 8.05 shall derogate from the
obligation of the Sellers, the Trustee, the Master Servicer and each Servicer
to observe any applicable law prohibiting disclosure of information regarding
the Obligors. The failure of the Master Servicer or the Servicer, as
applicable, to provide access as provided in this Section 8.05 as a result of
such obligation shall not constitute a breach of this Section 8.05.

          SECTION 8.06 Delegation of Duties. In the ordinary course of business,
the Master Servicer and each Servicer may at any time delegate any of its
duties hereunder to any Person who agrees to conduct such duties in accordance
with the applicable Credit Guidelines. Such delegation shall not relieve the
Master Servicer or any Servicer of its liabilities and responsibilities with
respect to such duties, and shall not constitute a resignation within the
meaning of Section 8.04 hereof. Discover Bank shall provide the Rating
Agencies and the

64

 

Trustee with written notice prior to the delegation of any of
its duties as Master Servicer or Servicer to any Person other than Discover
Bank or its affiliates or their respective successors and assigns. The Master
Servicer shall provide the Rating Agencies with written notice prior to the
delegation by any other Servicer of any of the duties of such Servicer to any
other Person, other than such Servicer’s affiliates or their respective
successors and assigns.

          SECTION 8.07 Examination of Records. Each Servicer shall clearly and
unambiguously identify each Account with respect to which it is the Servicer
(including any Additional Account designated pursuant to Section 2.10) in its
computer records to reflect that the Receivables arising in such Account and
the corresponding portion of Interchange arising on and after the effective
date of designation of such Account have been conveyed to the Trust pursuant to
this Agreement or an Assignment. Each Servicer shall, prior to the sale or
transfer to a third party of any receivable held in its custody, examine its
computer and other records to determine that such receivable is not a
Receivable.

          SECTION 8.08 Seller or Master Servicer to File Reports Pursuant to
Securities Exchange Act.
Each Seller and the Master Servicer are hereby authorized by the Trustee
to file on behalf of the Trust all reports required to be filed with the
Securities and Exchange Commission or any exchange or association of securities
dealers pursuant to the Securities Exchange Act of 1934, as amended, or any
rules or regulations thereunder. The Trustee shall not be obligated to file on
behalf of the Trust any such reports described in the preceding sentence.

ARTICLE IX.

AMORTIZATION AND CERTAIN OTHER EVENTS

          SECTION 9.01 Amortization Events. If any one of the following events
shall occur with respect to any Series of Investor Certificates:

          (a) failure on the part of any Seller (i) to make any payment or deposit
required by the terms of this Agreement or a related Series Supplement on or
before the date occurring five Business Days after the date such payment or
deposit is required to be made herein or (ii) duly to observe or perform in any
material respect any other material covenants or agreements of such Seller set
forth in this Agreement or a Series Supplement, which continues unremedied for
a period of 60 days after the date on which written notice of such failure,
requiring the same to be remedied, shall have been given to such Seller by the
Trustee, or to such Seller and the Trustee by the Investor Certificateholders
evidencing Fractional Undivided Interests aggregating not less than 25% of the
Class Invested Amount of any Class of any Series materially adversely affected
thereby;

          (b) any representation or warranty made by any Seller in this Agreement or
a Series Supplement or any information contained in Schedule 1 hereto shall
prove to have been incorrect in any material respect when made or when
delivered, which representation, warranty or Schedule 1 continues to be
incorrect in any material respect for a period of 60 days after the date on
which written notice of such failure, requiring the same to be remedied, shall
have been given to the applicable Seller by the Trustee, or to such Seller and
the Trustee by the Holders of

65

 

Investor Certificates evidencing Fractional
Undivided Interests aggregating not less than 25% of the Class Invested Amount
of any Class of any Series materially adversely affected thereby;

          (c) any Additional Seller that is subject to the bankruptcy laws of the
United States of America shall file a petition commencing a voluntary case
under any chapter of the federal bankruptcy laws; any such Additional Seller
shall file a petition or answer or consent seeking reorganization, arrangement,
adjustment, or composition under any other similar applicable federal law, or
shall consent to the filing of any such petition, answer, or consent; or any
such Additional Seller shall appoint, or consent to the appointment of, a
custodian, receiver, liquidator, trustee, assignee, sequestrator or other
similar official in bankruptcy or insolvency of it or of any substantial part
of its property; or shall make an assignment for the benefit of creditors, or
shall admit in writing its inability to pay its debts generally as they become
due;

          (d) Discover Bank, or any Additional Seller that is not subject to the
bankruptcy laws of the United States of America, shall consent to the
appointment of a conservator or receiver or liquidator in any insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings of or relating to all or substantially all of its property,
or a decree or order of a court or agency or supervisory authority having
jurisdiction in the premises for the appointment of a conservator or receiver
or liquidator in any insolvency, readjustment of debt, marshalling of assets
and liabilities or similar proceedings, or for the winding-up or liquidation of
its affairs, shall have been entered against Discover Bank or any such
Additional Seller; or Discover Bank or any such Additional Seller shall admit
in writing its inability to pay its debts generally as they become due, file a
petition to take advantage of any applicable insolvency or reorganization
statute, make an assignment for the benefit of its creditors or voluntarily
suspend payment of its obligations;

          (e) any order for relief against any Additional Seller that is subject to
the bankruptcy laws of the United States of America shall have been entered by
a court having jurisdiction in the premises under any chapter of the federal
bankruptcy laws, and such order shall have continued undischarged or unstayed
for a period of 120 days; or a decree or order by a court having jurisdiction
in the premises shall have been entered approving as properly filed a petition
seeking reorganization, arrangement, adjustment, or composition of any such
Additional Seller under any other similar applicable federal law, and such
decree or order shall have continued undischarged or unstayed for a period of
120 days; or a decree or order of a court having jurisdiction in the premises
for the appointment of a custodian, receiver, liquidator, trustee, assignee,
sequestrator, or other similar official in bankruptcy or insolvency of any such
Additional Seller, or of any substantial part of the property of any such
Additional Seller, or for the winding up or liquidation of its affairs, shall
have been entered, and such decree or order shall have remained in force
undischarged or unstayed for a period of 120 days;

          (f) Discover Bank as Seller shall become unable for any reason to transfer
Receivables to the Trust in accordance with the provisions of this Agreement
and such inability shall continue for five Business Days;

          (g) any Seller other than Discover Bank shall become unable for any reason
to transfer Receivables to the Trust in accordance with the provisions of this
Agreement and such inability shall continue for five Business Days;

66

 

          (h) the Trust shall become an “investment company” within the meaning of
the Investment Company Act of 1940, as amended;

          (i) any Master Servicer Termination Event or any Servicer Termination
Event shall occur;

          (j) the amount of Principal Receivables in the Trust at the end of any Due
Period shall be less than the Minimum Principal Receivables Balance and
Discover Bank shall have failed to assign Receivables in Additional Accounts or
Participation Interests to the Trust on behalf of the Holder of the Seller
Certificate in at least the amount of such deficiency by the tenth day of the
calendar month of the following due Period (for purposes of this clause (i) the
amount of Receivables in Additional Accounts shall be determined as of the last
day of the Due Period preceding the assignment of such Receivables to the
Trust); or

          (k) any other event specified as an Amortization Event in the Series
Supplement for such Series shall occur;

then

          (w) in the case of any event described in subparagraph (a), (b), (g) or
(i), after any applicable grace period set forth in such subparagraphs, either
the Trustee or the Holders of Investor Certificates of any Class materially
adversely affected thereby evidencing Fractional Undivided Interests
aggregating not less than 51% of the Class Invested Amount of such Class by
notice then given in writing to Discover Bank on behalf of the Holder of the
Seller Certificate and the Master Servicer (and to the Trustee if given by the
Investor Certificateholders) may declare that an amortization event (an
“Amortization Event”) has occurred with respect to such Series as of the date
of such notice;

          (x) in the case of any event described in subparagraphs (c), (d), (e),
(f), (h) or (j) an Amortization Event shall occur immediately upon the
occurrence of such event; and

          (y) in the case of any event described in subparagraph (k), an
Amortization Event shall occur with respect to such Series pursuant to the
terms of such Series Supplement.

If an Amortization Event described in subparagraphs (c), (d), (e), (f), (h) or
(j) shall occur, this Section 9.01 constitutes written notice by the Trustee
and not less than 51% of the Class Invested Amount of each Class of each Series
then outstanding to the Master Servicer and Sellers that such Amortization
Event has occurred. No additional notice of any kind, which is hereby waived
by the Sellers and the Master Servicer, shall be required as a condition of the
occurrence of any Amortization Event described in subparagraphs (c), (d), (e),
(f), (h) or (j). Discover Bank on behalf of the Holder of the Seller
Certificate (or the Master Servicer with respect to an Amortization Event that
relates to the Master Servicer or any Servicer) shall give prompt notice to the
Rating Agencies of the occurrence of any Amortization Event.

67

 

ARTICLE X.

MASTER SERVICER AND SERVICER TERMINATION EVENTS

          SECTION 10.01 Master Servicer Termination Events. If any one of the
following events (a “Master Servicer Termination Event”) shall occur and be
continuing:

          (a) any failure by the Master Servicer to make any payment, transfer or
deposit or to give instructions to the Trustee to make any withdrawal on or
before the date occurring five Business Days after the date such payment,
transfer or deposit or instruction is required to be made or given as the case
may be, under the terms of this Agreement, any Series Supplement or the Master
Servicing Agreement;

          (b) failure on the part of the Master Servicer duly to observe or perform
in any respect any other covenants or material agreements of the Master
Servicer set forth in this Agreement, any Series Supplement or the Master
Servicing Agreement, which continues unremedied for a period of 60 days after
the date on which written notice of such failure, requiring the same to be
remedied, shall have been given to the Master Servicer by the Trustee, or to
the Master Servicer and the Trustee by the Holders of Investor Certificates
evidencing Fractional Undivided Interests aggregating not less than 25% of the
Class Invested Amount of any Class of any Series materially adversely affected
thereby; or

          (c) any representation, warranty or certification made by the Master
Servicer in this Agreement, any Series Supplement, the Master Servicing
Agreement or in any certificate delivered pursuant to this Agreement, any
Series Supplement or the Master Servicing Agreement shall prove to have been
incorrect when made, which has a material adverse effect on the rights of the
Certificateholders of any Class of any Series and which continues to be
incorrect in any material respect for a period of 60 days after the date on
which written notice of such failure, requiring the same to be remedied, shall
have been given to the Master Servicer by the Trustee, or to the Master
Servicer and the Trustee by the Holders of Investor Certificates evidencing
Fractional Undivided Interests aggregating not less than 25% of the Class
Invested Amount of any Class of any Series materially adversely affected
thereby; or

          (d) the Master Servicer shall consent to the appointment of a conservator
or receiver or liquidator in any insolvency, readjustment of debt, marshalling
of assets and liabilities or similar proceedings of or relating to the Master
Servicer or of or relating to all or substantially all its property, or a
decree or order of a court or agency or supervisory authority having
jurisdiction in the premises for the appointment of a conservator or receiver
or liquidator in any insolvency, readjustment of debt, marshalling of assets
and liabilities or similar proceedings, or the winding-up or liquidation of its
affairs, shall have been entered against the Master Servicer and such decree or
order shall have remained in force undischarged or unstayed for a period of 120
days; or the Master Servicer shall admit in writing its inability to pay its
debts generally as they become due, file a petition to take advantage of any
applicable insolvency or reorganization statute, make any assignment for the
benefit of its creditors or voluntarily suspend payment of its obligations;

then, in the event of any such Master Servicer Termination Event, so long as
the Master Servicer Termination Event shall not have been remedied, either the
Trustee, or the Holders of Investor Certificates evidencing Fractional
Undivided Interests aggregating not less than 51% of the Class Invested Amount
of any Class materially adversely affected thereby, by notice then given in
writing to the Master Servicer (and to the Trustee if given by the Investor
Certificateholders) (a

68

 

“Termination Notice”), may terminate all of the rights
and obligations of the Master Servicer under this Agreement and any Series
Supplements then outstanding. After receipt by the Master Servicer of such
Termination Notice, and on the date that a Successor Master Servicer shall have
been appointed by the Trustee pursuant to Section 10.03, all authority and
power of the Master Servicer under this Agreement shall pass to and be vested
in a Successor Master Servicer; and, without limitation, the Trustee is hereby
authorized and empowered to execute and deliver, on behalf of the Master
Servicer, as attorney-in-fact or otherwise, all documents and other instruments
upon the failure of the Master Servicer to execute or deliver such documents or
instruments, and to do and accomplish all other acts or things necessary or
appropriate to effect the purposes of such transfer of servicing rights. The
Master Servicer agrees to cooperate with the Trustee and such Successor Master
Servicer in effecting the termination of the responsibilities and rights of the
Master Servicer to conduct servicing hereunder, including, without limitation,
the transfer to such Successor Master Servicer of all authority of the Master
Servicer to service the Receivables provided for under this Agreement,
including, without limitation, all authority over all Collections which shall
on the date of transfer be held by the Master Servicer for deposit, or which
have been deposited by the Master Servicer in any Investor Account, or which
shall thereafter be received with respect to the Receivables, and in assisting
the Successor Master Servicer. The terminated Master Servicer shall promptly
make available its electronic records relating to the Receivables and
Interchange to the Successor Master
Servicer in such electronic form as the Successor Master Servicer may
reasonably request and shall promptly make available to the Successor Master
Servicer all other records, correspondence and documents necessary for the
continued servicing of the Receivables and the determining and reporting of
Interchange in the manner and at such times as the Successor Master Servicer
shall reasonably request. To the extent that compliance with this Section
10.01 shall require the terminated Master Servicer to disclose to the Successor
Master Servicer information of any kind which the Master Servicer reasonably
deems to be confidential, the Successor Master Servicer shall be required to
enter into such customary licensing and confidentiality agreements as the
Master Servicer shall deem necessary to protect its interests.

          SECTION 10.02 Servicer Termination Events. If any one of the following
events (a “Servicer Termination Event”) shall occur and be continuing with
respect to any Servicer:

          (a) any failure by any Servicer to make any payment, transfer or deposit
on or before the date occurring five Business Days after the date such payment,
transfer or deposit is required to be made under the terms of this Agreement,
any Series Supplement or the Master Servicing Agreement; or

          (b) failure on the part of any Servicer duly to observe or perform in any
respect any covenants or material agreements of such Servicer set forth in this
Agreement, any Series Supplement or the Master Servicing Agreement, which
continues unremedied for a period of 60 days after the date on which written
notice of such failure, requiring the same to be remedied, shall have been
given to such Servicer by the Trustee, or to such Servicer and the Trustee by
the Holders of Investor Certificates evidencing Fractional Undivided Interests
aggregating not less than 25% of the Class Invested Amount of any Class of any
Series materially adversely affected thereby; or

69

 

          (c) any representation, warranty or certification made by any Servicer in
this Agreement, any Series Supplement, the Master Servicing Agreement or in any
certificate delivered pursuant to this Agreement, any Series Supplement or the
Master Servicing Agreement shall prove to have been incorrect when made, which
has a material adverse effect on the rights of the Certificateholders of any
Class of any Series and which continues to be incorrect in any material respect
for a period of 60 days after the date on which written notice of such failure,
requiring the same to be remedied, shall have been given to such Servicer by
the Trustee, or to such Servicer and the Trustee by the Holders of Investor
Certificates evidencing Fractional Undivided Interests aggregating not less
than 25% of the Class Invested Amount of any Class of any Series materially
adversely affected thereby; or

          (d) any Servicer that is not subject to the bankruptcy laws of the United
States of America shall consent to the appointment of a conservator or receiver
or liquidator in any insolvency, readjustment of debt, marshalling of assets
and liabilities or similar proceedings of or relating to such Servicer or of or
relating to all or substantially all of its property, or a decree or order of a
court or agency or supervisory authority having jurisdiction in the premises
for the appointment of a conservator or receiver or liquidator in any
insolvency, readjustment of debt, marshalling of assets and liabilities or
similar proceedings, or the winding-up or liquidation of its affairs, shall
have been entered against any Servicer and such decree or order shall have
remained in force undischarged or unstayed for a period of 120 days; or
any Servicer shall admit in writing its inability to pay its debts generally as
they become due, file a petition to take advantage of any applicable insolvency
or reorganization statute, make any assignment for the benefit of its creditors
or voluntarily suspend payment of its obligations; or

          (e) any Servicer that is subject to the bankruptcy laws of the United
States of America shall file a petition commencing a voluntary case under any
chapter of the federal bankruptcy laws; or any such Servicer shall file a
petition or answer or consent seeking reorganization, arrangement, adjustment
or composition under any other similar applicable federal law, or shall consent
to the filing of any such petition, answer or consent; or any such Servicer
shall appoint, or consent to the appointment of, a custodian, receiver,
liquidator, trustee, assignee, sequestrator or other similar official in
bankruptcy or insolvency of it or of any substantial part of its property; or
shall make an assignment for the benefit of creditors, or shall admit in
writing its inability to pay its debts generally as they become due; or

          (f) any order for relief against any Servicer that is subject to the
bankruptcy laws of the United States of America shall have been entered by a
court having jurisdiction in the premises under any chapter of the federal
bankruptcy laws, and such order shall have continued undischarged or unstayed
for a period of 120 days; or a decree or order by a court having jurisdiction
in the premises shall have been entered approving as properly filed a petition
seeking reorganization, arrangement, adjustment, or composition of any such
Servicer under any other similar applicable federal law, and such decree or
order shall have continued undischarged or unstayed for a period of 120 days;
or a decree or order of a court having jurisdiction in the premises for the
appointment of a custodian, receiver, liquidator, trustee, assignee,
sequestrator, or other similar official in bankruptcy or insolvency of any such
Servicer, or of any substantial part of the property of any such Servicer, or
for the winding up or liquidation of its affairs, shall have been entered, and
such decree or order shall have remained in force undischarged or unstayed for
a period of 120 days;

70

 

then, in the event of any Servicer Termination Event, so long as the Servicer
Termination Event shall not have been remedied, either the Trustee, or the
Holders of Investor Certificates evidencing Fractional Undivided Interests
aggregating not less than 51% of the Class Invested Amount of any Class
materially adversely affected thereby, by notice then given in writing to the
Master Servicer and to the Servicer to which any such Servicer Termination
Event relates (and to the Trustee if given by the Investor Certificateholders)
(a “Termination Notice”), may terminate all of the rights and obligations of
such Servicer under this Agreement, any Series Supplements then outstanding and
the Master Servicing Agreement. After receipt by such Servicer of such
Termination Notice, and on the date that a Successor Servicer shall have been
appointed by the Trustee pursuant to Section 10.03 with respect to such
Servicer, all authority and power of such Servicer under this Agreement, any
Series Supplements then outstanding and the Master Servicing Agreement shall
pass to and be vested in such Successor Servicer; and, without limitation, the
Trustee is hereby authorized and empowered to execute and deliver, on behalf of
such Servicer, as attorney-in-fact or otherwise, all documents and other
instruments upon the failure of such Servicer to execute or deliver such
documents or instruments, and to do and accomplish all other acts or things
necessary or appropriate to effect the purposes of such transfer of servicing
rights. Such Servicer agrees to cooperate with the Trustee and such Successor
Servicer in effecting the termination of the responsibilities and rights of
such Servicer to conduct servicing hereunder, including, without limitation,
the transfer to such Successor
Servicer of all authority of such Servicer to service such Servicer’s
Receivables provided for under this Agreement, including, without limitation,
all authority over all Collections which shall on the date of transfer be held
by such Servicer for deposit, or which have been deposited by such Servicer in
any Investor Account, or which shall thereafter be received with respect to
such Receivables, and in assisting the Successor Servicer. The terminated
Servicer shall promptly make available its electronic records relating to the
Receivables and Interchange to the Successor Servicer in such electronic form
as the Successor Servicer may reasonably request and shall promptly make
available to the Successor Servicer all other records, correspondence and
documents necessary for the continued servicing of the Receivables and the
determining and reporting of Interchange in the manner and at such times as the
Successor Servicer shall reasonably request. To the extent that compliance
with this Section 10.02 shall require the terminated Servicer to disclose to
the Successor Servicer information of any kind which such Servicer reasonably
deems to be confidential, such Successor Servicer shall be required to enter
into such customary licensing and confidentiality agreements as such Servicer
shall deem necessary to protect its interest.

          SECTION 10.03 Trustee to Act; Appointment of Successor Master Servicer
and/or Successor Servicer.

          (a) On and after the receipt by the Master Servicer or any Servicer of a
Termination Notice pursuant to Section 10.01 or 10.02, the Master Servicer or
such Servicer, as applicable, shall continue to perform all servicing functions
performed by it under this Agreement until the date specified in the
Termination Notice or otherwise specified by the Trustee in writing or, if no
such date is specified in such Termination Notice, or otherwise specified by
the Trustee, until a date mutually agreed upon by Master Servicer or such
Servicer, as applicable, and the Trustee. The Trustee shall as promptly as
possible appoint a successor master servicer or servicer, as applicable, (the
“Successor Master Servicer” or “Successor Servicer,” as applicable) and such
Successor Master Servicer or Successor Servicer shall accept

71

 

its appointment by
a written assumption in a form acceptable to the Trustee. In the event that a
Successor Master Servicer or Successor Servicer has not been appointed or has
not accepted its appointment at the time when the Master Servicer or such
Servicer, as applicable, ceases to act as such, the Trustee without further
action shall automatically be appointed the Successor Master Servicer or
Successor Servicer, as applicable. Notwithstanding the above, the Trustee
shall, if it is legally unable so to act, petition a court of competent
jurisdiction to appoint any bank or other corporation having a net worth of not
less than $100,000,000 and whose regular business includes the servicing of
credit card receivables as the Successor Master Servicer or Successor Servicer,
as applicable, hereunder. The Trustee shall deliver notice to Standard &
Poor’s of the proposed appointment of any Successor Master Servicer or
Successor Servicer, and any such appointment of a Successor Master Servicer
shall become effective only if Standard & Poor’s shall have advised the Trustee
that such appointment would not cause the rating of any Class of any Series
then outstanding to be lowered or withdrawn; provided, however, that no such
advice shall be necessary if such appointment is made by a court of competent
jurisdiction.

          (b) Upon its appointment, the Successor Master Servicer or Successor
Servicer, as applicable, shall be the successor in all respects to the
terminated Master Servicer or Servicer, as applicable, with respect to
servicing functions under this Agreement and shall be subject to all the
responsibilities, duties, liabilities and protections relating thereto placed
on or provided to the Master Servicer or Servicer by the terms and provisions
hereof and the Successor
Master Servicer or Successor Servicer, as applicable, shall be deemed to
have made the representations and warranties set forth in Section 3.05 hereof,
and all references in this Agreement to the Master Servicer or such Servicer,
as applicable, shall be deemed to refer to the Successor Master Servicer or
Successor Servicer, as applicable, except, if agreed upon by Discover Bank and
any Successor Master Servicer or Successor Servicer, for the references in
Section 11.05, which shall continue to refer to Discover Bank; provided,
however, that Discover Bank shall not pay or reimburse the Trustee pursuant to
Section 11.05 for any expense, disbursement or advance of the Trustee related
to or arising as a result of the negligence or bad faith of the Successor
Master Servicer or Successor Servicer. Any Successor Master Servicer or
Successor Servicer, as applicable, shall expressly be authorized, subject to
Section 8.06, to delegate any of its duties hereunder to Discover Bank on and
after the date of any transfer of servicing pursuant to this Section 10.03.

          (c) Upon its appointment, any Successor Master Servicer or Successor
Servicer shall enter into the Master Servicing Agreement, and the former Master
Servicer or Servicer, as applicable, shall cease to be a party to the Master
Servicing Agreement.

          (d) In connection with the appointment of a Successor Master Servicer, the
Trustee may make such arrangements for the compensation of any Successor Master
Servicer out of Collections and Interchange as it and such Successor Master
Servicer shall agree; provided, however, that no such compensation shall be in
excess of the Monthly Servicing Fee set forth in Section 3.03. The Holder of
the Seller Certificate agrees that if the Master Servicer or any Servicer is
terminated hereunder, it will, at the request of the Trustee or any Successor
Master Servicer or Successor Servicer, deposit a portion of the Finance Charge
Collections and Interchange that it is entitled to receive pursuant to Section
4.03(c)(ii) to pay its share of the compensation of such Successor Master
Servicer or Successor Servicer.

72

 

          (e) All authority and power granted to any Successor Master Servicer or
Successor Servicer under this Agreement shall automatically cease and terminate
upon termination of the Trust pursuant to Section 12.01, and shall pass to and
be vested in the Holder of the Seller Certificate and, without limitation,
Discover Bank on behalf of the Holder of the Seller Certificate is hereby
authorized and empowered to execute and deliver, on behalf of any Successor
Master Servicer or Successor Servicer, as attorney-in-fact or otherwise, all
documents and other instruments, and to do and accomplish all other acts or
things necessary or appropriate to effect the purposes of such transfer of
servicing rights. Any Successor Master Servicer or Successor Servicer agrees
to cooperate with the Holder of the Seller Certificate in effecting the
termination of the responsibilities and rights of such Successor Master
Servicer or Successor Servicer to conduct servicing on the Receivables. Any
Successor Master Servicer or Successor Servicer shall transfer its electronic
records relating to the Receivables to Discover Bank on behalf of the Holder of
the Seller Certificate in such electronic form as Discover Bank may reasonably
request and shall transfer all other records, correspondence and documents to
Discover Bank on behalf of the Holder of the Seller Certificate in the manner
and at such times as Discover Bank shall reasonably request. To the extent
that compliance with this Section 10.03 shall require any Successor Master
Servicer or Successor Servicer to disclose to any Seller information of any
kind which such Successor Master Servicer or Successor Servicer deems to be
confidential, such Seller shall be required to enter into such customary
licensing and confidentiality agreements as such Successor Master Servicer or
Successor Servicer shall deem necessary to protect its interests.

          SECTION 10.04 Notification to Investor Certificateholders. Upon the
occurrence of any Master Servicer Termination Event or any Servicer Termination
Event, the Master Servicer or Servicer, as applicable, shall give prompt
written notice thereof to the Trustee and the Trustee shall give notice to the
Investor Certificateholders. Upon any termination or appointment of a
Successor Master Servicer or a Successor Servicer pursuant to this Article X,
the Trustee shall give prompt written notice thereof to the Rating Agencies and
to the Investor Certificateholders.

          SECTION 10.05 Waiver of Past Breaches. The Holders of Investor
Certificates evidencing Fractional Undivided Interests aggregating not less
than 51% of the Class Invested Amount of any Class of any Series affected by
any default by the Master Servicer, any Servicer or the Sellers may, on behalf
of all Holders of Certificates of such affected Class, waive the effect of any
Master Servicer Termination Event or Servicer Termination Event or breach by
any Seller in the performance of its obligations hereunder and its
consequences, except a failure to make any required deposits or payments in
accordance with Section 4.03 or the applicable Series Supplement and except any
Amortization Event arising under Sections 9.01(c), (d) or (e). Upon any such
waiver of a past breach, such breach shall cease to exist with respect to such
Class of such Series, and any breach arising therefrom shall be deemed to have
been remedied for every purpose of this Agreement with respect to such Class of
such Series. No such waiver shall extend to any subsequent or other breach or
impair any right consequent thereon except to the extent expressly so waived.

73

 

ARTICLE XI.

THE TRUSTEE

          SECTION 11.01 Duties of Trustee.

          (a) The Trustee, prior to the occurrence of any Master Servicer
Termination Event or any Servicer Termination Event of which it has knowledge
and after the curing of all Master Servicer Termination Events and all Servicer
Termination Events that may have occurred, undertakes to perform such duties
and only such duties as are specifically set forth in this Agreement or any
Series Supplement. If any Master Servicer Termination Event or any Servicer
Termination Event of which the Trustee has knowledge has occurred (which has
not been cured or waived), the Trustee shall exercise such of the rights and
powers vested in it by this Agreement or any Series Supplement, and use the
same degree of care and skill in their exercise, as a prudent person would
exercise or use under the circumstances in the conduct of such person’s own
affairs.

          (b) The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustee that are specifically required to be furnished pursuant to any
provision of this Agreement or any Series Supplement, shall examine them to
determine whether they conform to the requirements of this Agreement or such
Series Supplement. The Trustee shall give prompt written notice to the
Certificateholders of any lack of conformity of any such instrument to the
applicable requirements of this Agreement or any Series Supplement discovered
by the Trustee that would
entitle a specified percentage of the Certificateholders of any Class of
any Series to take any action pursuant to this Agreement or any Series
Supplement.

          (c) Subject to Section 11.01(a) no provision of this Agreement or any
Series Supplement shall be construed to relieve the Trustee from liability for
its own negligent action, its own negligent failure to act or its own
misconduct; provided, however, that:

     (i) The Trustee shall not be liable for an error of judgment
made in good faith by a Responsible Officer or Responsible Officers
of the Trustee, unless it shall be proved that the Trustee was
negligent in ascertaining the pertinent facts;

     (ii) The Trustee shall not be personally liable with respect
to any action taken, suffered or omitted to be taken by it in good
faith in accordance with the direction of the Holders of Investor
Certificates evidencing Fractional Undivided Interests aggregating
not less than 51% of the Class Invested Amount of any Class of any
Series materially adversely affected thereby relating to the time,
method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power
conferred upon the Trustee, under this Agreement;

     (iii) The Trustee shall not be charged with knowledge of any
Master Servicer Termination Event referred to in Section 10.01(d)
or any Servicer Termination Event referred to in Section 10.02(c)
or with knowledge of any Amortization Event described in Sections
9.01(b), (c), (d), (e), (f), (g), (i) or (j) (but only, in the case
of Section 9.01(i), if such Amortization Event relates to either a
Master Servicer Termination Event described in Section 10.01(d) or
a Servicer Termination Event described in Section 10.02(c)) unless
a Responsible

74

 

Officer of the Trustee obtains actual knowledge of
such failure or the Trustee receives written notice of such failure
from the Master Servicer, any Servicer or any Holders of Investor
Certificates evidencing Fractional Undivided Interests aggregating
not less than 10% of the Class Invested Amount of any Class of any
Series materially adversely affected thereby; and

     (iv) The Trustee shall not be liable for any loss attributable
to the investment of funds in any Permitted Investment pursuant to
this Agreement or any Series Supplement nor shall the Trustee be
liable for the default or misconduct of the Master Servicer with
regard to its obligations in respect of funds on deposit in any
Series Principal Funding Account (as set forth in each applicable
Series Supplement). In no event shall the Trustee be liable for
the payment of interest on any funds in its possession, except as
expressly provided in this Agreement.

          (d) The Trustee shall not be required to expend or risk its own funds or
otherwise incur financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if there is
reasonable ground for believing that the repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it, and
none of the provisions contained in this Agreement or any Series Supplement
shall in any event require the Trustee to perform, or be responsible for the
manner of
performance of, any of the obligations of the Master Servicer or any
Servicer under this Agreement or any Series Supplement except during such time,
if any, as the Trustee shall be the successor to, and be vested with the
rights, duties, powers and privileges of, the Master Servicer or any Servicer
in accordance with the terms of this Agreement or any Series Supplement.

          (e) Except for actions expressly authorized by this Agreement or any
Series Supplement, the Trustee shall take no action reasonably likely to impair
the interests of the Trust in any Receivable existing as of the Cut-Off Date or
thereafter created or to impair the value of any Receivable now existing or
hereafter created.

          (f) Except as provided in Section 2.10 or an applicable Series Supplement,
the Trustee shall have no power to vary the corpus of the Trust including,
without limitation, the power to (i) accept any substitute obligation for a
Receivable initially assigned to the Trust under Section 2.01 or 2.10 hereof,
(ii) add any other investment, obligation or security to the Trust, or (iii)
withdraw from the Trust any (a) Receivables or (b) receivables in Charged-Off
Accounts, except for a withdrawal permitted under Sections 2.05(b), 2.07(b),
2.11 (including the removal of Interchange), 3.02(b), 3.02(e), 12.01 or 12.02.

          (g) In the event that the Paying Agent or the Transfer Agent shall fail to
perform any obligation, duty or agreement in the manner or on the day required
to be performed by the Paying Agent or the Transfer Agent, as the case may be,
under this Agreement, the Trustee shall be obligated promptly to perform such
obligation, duty or agreement in the manner so required.

          (h) If any Seller has agreed to transfer any of its credit receivables
(other than the Receivables) to another Person, upon the written request of
such Seller, the Trustee will enter

75

 

into such agreements with the transferee of
such receivables as are necessary and desirable to separately identify the
rights of the Trust and such other Person in such Seller’s receivables;
provided, however, that the Trustee shall not be required to enter into any
agreement which could adversely affect the interests of the Certificateholders;
and provided, further, that such Seller shall provide the Rating Agencies with
notice of any written agreement entered into pursuant to this Section 11.01(h).

          (i) Any action, suit or proceeding brought in respect of one or more
particular Class or Series shall have no effect on the Trustee’s rights, duties
and obligations hereunder with respect to any Classes or Series not the subject
of such action, suit or proceeding.

          SECTION 11.02 Certain Matters Affecting the Trustee. Except as otherwise
provided in Section 11.01:

          (a) The Trustee may rely on and shall be protected in acting on, or in
refraining from acting in accord with, any resolution, Officer’s Certificate,
certificate of auditors or any other certificate, statement, instrument,
opinion, report, notice, request, consent, order, appraisal, bond or other
paper or document believed by it to be genuine and to have been signed or
presented to it pursuant to this Agreement by the proper party or parties;

          (b) The Trustee may consult with counsel and any Opinion of Counsel shall
be full and complete authorization and protection in respect of any action
taken or suffered or omitted by it hereunder in good faith and in accordance
with such Opinion of Counsel;

          (c) The Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Agreement or any Series Supplement, or to
institute, conduct or defend any litigation hereunder or in relation hereto, at
the request, order or direction of any of the Certificateholders, pursuant to
the provisions of this Agreement or any Series Supplement, unless such
Certificateholders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which may be incurred
therein or thereby; provided, however, that nothing contained herein shall
relieve the Trustee of the obligations, upon the occurrence of any Master
Servicer Termination Event or any Servicer Termination Event (which has not
been cured), to exercise such of the rights and powers vested in it by this
Agreement or any Series Supplement, and to use the same degree of care and
skill in their exercise as a prudent person would exercise or use under the
circumstances in the conduct of such person’s own affairs;

          (d) The Trustee shall not be personally liable for any action taken,
suffered or omitted by it in good faith and believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this Agreement
or any Series Supplement;

          (e) The Trustee shall not be bound to make any investigation into the
facts of matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, approval, bond or other paper
or document, unless requested in writing so to do by Holders of Investor
Certificates evidencing Fractional Undivided Interests aggregating not less
than 51% of the Class Invested Amount of any Class of any Series which could be
materially adversely affected if the Trustee does not make such investigation;

76

 

          (f) The Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys or a custodian, and the Trustee shall not be responsible for any
misconduct or negligence on the part of any such agent, attorney or custodian
appointed with due care by it hereunder; and

          (g) Except as may be required by Section 11.01(a) hereof, the Trustee
shall not be required to make any initial or periodic examination of any
documents or records related to the Receivables or the Accounts for the purpose
of establishing the presence or absence of defects, the compliance by the
Sellers with their respective representations and warranties or for any other
purpose.

          SECTION 11.03 Trustee Not Liable for Recitals in Certificates. The
Trustee assumes no responsibility for the correctness of the recitals contained
herein and in the Certificates (other than the certificate of authentication on
the Certificates). Except as set forth in Section 11.16, the Trustee makes no
representations as to the validity or sufficiency of this Agreement or any
Series Supplement or of the Certificates (other than the certificate of
authentication on the Certificates) or of any Receivable or related document.
The Trustee shall not be accountable for the use or application by the Sellers
of any of the Certificates or of the proceeds of such Certificates, or for the
use or application of any
funds paid to the Holder of the Seller Certificate in respect of the
Receivables or any deficiency in amounts deposited in any Investor Accounts by
the Master Servicer.

          SECTION 11.04 Trustee May Own Investor Certificates. The Trustee in its
individual or any other capacity may become the owner or pledgee of Investor
Certificates with the same rights with respect to such Investor Certificates as
it would have if it were not the Trustee.

          SECTION 11.05 The Master Servicer to Pay Trustee’s Fees and Expenses. The
Master Servicer covenants and agrees to pay to the Trustee from time to time,
and the Trustee shall be entitled to receive, reasonable compensation (which
shall not be limited by any provision of law in regard to the compensation of a
trustee of an express trust) for all services rendered by it in the execution
of the trust hereby created and in the exercise and performance of any of the
powers and duties hereunder of the Trustee, and the Master Servicer will pay or
reimburse the Trustee (without reimbursement from any Investor Account or
otherwise) upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any of the
provisions of this Agreement or any Series Supplement (including the reasonable
fees and expenses of its agents and counsel) except any such expense,
disbursement or advance as may arise from its negligence or bad faith and
except as provided in the following sentence. If the Trustee is appointed
Successor Master Servicer or Successor Servicer pursuant to Section 10.03, the
provision of this Section 11.05 shall not apply to expenses, disbursements and
advances made or incurred by the Trustee in its capacity as Successor Master
Servicer or Successor Servicer, as applicable, and the compensation of the
Trustee as Successor Master Servicer or Successor Servicer shall be determined
in accordance with Section 10.03 or the relevant provisions of the Master
Servicing Agreement, as applicable. The Master Servicer’s obligations under
this Section shall survive the termination of the Trust and the resignation or
removal of the Trustee.

77

 

          SECTION 11.06 Master Servicer and Servicer Indemnification of Trustee.
The Master Servicer and each Servicer shall indemnify and hold harmless the
Trustee from and against any loss, liability, expense, damage or injury
(including but not limited to any judgment, award, settlement, reasonable
attorneys’ fees and other costs or other expenses incurred in connection with
the defense of any actual or threatened action, proceeding or claim) that may
be imposed on, incurred by or asserted at any time against the Trustee (whether
or not indemnified against by other parties) arising out of any acts or
omissions of the Master Servicer or such Servicer, as applicable, hereunder
including, without limitation, acts or omissions of the Master Servicer or such
Servicer relating to the administration of the Trust, the servicing and
administration of the Receivables, the collection of payments due under the
Receivables, the preparation of reports and other information with respect to
the Receivables or the Trust, the execution and delivery of any documents
relating to the Receivables or the Trust, and the registration or filing of any
document with the Securities and Exchange Commission, the Internal Revenue
Service or any other securities or tax authority of any jurisdiction with
respect to the Receivables or the Trust; provided, however, that neither the
Master Servicer nor any Servicer shall indemnify the Trustee to the extent any
such loss, liability, expense, damage or injury results from fraud, negligence,
breach of fiduciary duty or misconduct by the Trustee or from
action taken by the Trustee at the request of the Investor
Certificateholders. The Master Servicer’s and each Servicer’s obligations
under this Section shall survive the termination of the Trust and the
resignation or removal of the Trustee.

          SECTION 11.07 Eligibility Requirements for Trustee. The Trustee hereunder
shall at all times be a bank or trust company in good standing, organized and
doing business under the laws of the United States of America or any state
thereof authorized under such laws to exercise corporate trust powers, having a
combined capital and surplus of at least $50,000,000 and a long-term debt
rating from Moody’s of at least Baa3 and from Standard & Poor’s of at least
BBB- and subject to supervision or examination by federal or state banking
authority. If such corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of the aforesaid supervising
or examining authority, then for the purpose of this Section 11.07, the
combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of
condition so published. In case at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section 11.07, the Trustee
shall resign immediately in the manner and with the effect specified in Section
11.08.

          SECTION 11.08 Resignation or Removal of Trustee.

          (a) The Trustee may, upon the giving of written notice to the Sellers and
the Master Servicer and the appointment of a successor trustee, resign and be
discharged from the trust hereby created. Upon receiving such notice of
resignation, the Master Servicer shall promptly appoint a successor trustee by
written instrument, in duplicate, one copy of which instrument shall be
delivered to the resigning Trustee and one copy to the successor trustee. If
no successor trustee shall have been so appointed and have accepted appointment
within 30 days after the giving of such notice of resignation, the resigning
Trustee may petition any court of competent jurisdiction for the appointment of
a successor trustee.

78

 

          (b) If at any time the Trustee shall cease to be eligible in accordance
with the provisions of Section 11.07 hereof and shall fail to resign after
written request therefor by the Sellers, or if at any time the Trustee shall be
legally unable to act, or shall be adjudged a bankrupt or insolvent, or a
receiver of the Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then
the Master Servicer may remove the Trustee and promptly appoint a successor
trustee by written instrument, in duplicate, one copy of which instrument shall
be delivered to the Trustee so removed and one copy to the successor trustee.

          (c) Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section 11.08 shall
not become effective until acceptance of appointment by the successor trustee
as provided in Section 11.09 hereof. The Master Servicer shall provide written
notice to the Rating Agencies of any resignation or removal of the Trustee and
the appointment of any successor trustee.

          SECTION 11.09 Successor Trustee.

          (a) Any successor trustee appointed as provided in Section 11.08 hereof
shall execute, acknowledge and deliver to the Sellers and to its predecessor
Trustee an instrument accepting such appointment hereunder, and thereupon the
resignation or removal of the predecessor Trustee shall become effective and
such successor trustee, without any further act, deed or conveyance, shall
become fully vested with all the rights, powers, duties and obligations of its
predecessor hereunder and under any Series Supplement, with like effect as if
originally named as Trustee herein. The predecessor Trustee shall deliver to
the successor trustee all documents and statements held by it hereunder; and
the Sellers and the predecessor Trustee shall execute and deliver such
instruments and do such other things as may reasonably be required for fully
and certainly vesting and confirming in the successor trustee all such rights,
power, duties and obligations.

          (b) No successor trustee shall accept appointment as provided in this
Section 11.09 unless at the time of such acceptance (i) such successor trustee
shall be eligible under the provisions of Section 11.07 hereof and (ii) such
successor trustee shall have a long-term debt rating of Baa3 (or a rating
comparable thereto) or higher from Moody’s and of BBB- (or a rating comparable
thereto) or higher from Standard & Poor’s; provided that, in the case of a bank
or trust company which is the principal subsidiary in a holding company system,
the rating referred to above shall be the rating of the bank or trust company
in such system.

          (c) Upon acceptance of appointment by a successor trustee as provided in
this Section 11.09, such successor trustee shall notify all Certificateholders
of such succession hereunder.

          SECTION 11.10 Merger or Consolidation of Trustee. Any Person into which
the Trustee may be merged or converted or with which it may be consolidated, or
any Person resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any Person succeeding to the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be eligible under the provisions of Section

79

 

11.07 hereof, without the execution or filing of any paper or any further act
on the part of any of the parties hereto, anything herein to the contrary
notwithstanding. The Trustee shall promptly notify Moody’s and Standard &
Poor’s of the occurrence of any such event.

          SECTION 11.11 Appointment of Co-Trustee or Separate Trustee.

          (a) Notwithstanding any other provisions of this Agreement or any Series
Supplement, at any time, for the purpose of meeting any legal requirements of
any jurisdiction in which any part of the Trust may at the time be located, the
Trustee shall have the power and may execute and deliver all instruments to
appoint one or more Persons to act as a co-trustee or co-trustees, or separate
trustee or separate trustees, of all or any part of the Trust, and to vest in
such Person or Persons, in such capacity and for the benefit of the
Certificateholders, such title to the Trust, or any part thereof, and, subject
to the other provisions of this Section 11.11, such powers, duties,
obligations, rights and trusts as the Trustee may consider necessary or
desirable. No co-trustee or separate trustee hereunder shall be required to
meet the terms of eligibility as a successor trustee under Section 11.07 and no
notice to Certificateholders of the appointment of any co-trustee or separate
trustee shall be required under Section 11.09 hereof.

          (b) Every separate trustee and co-trustee shall, to the extent permitted
by law, be appointed and act subject to the following provisions and
conditions:

     (i) All rights, powers, duties and obligations conferred or
imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee or
co-trustee jointly (it being understood that such separate trustee
or co-trustee is not authorized to act separately without the
Trustee joining in such act), except to the extent that under any
applicable law of any jurisdiction in which any particular act or
acts are to be performed (whether as Trustee hereunder or as
successor to the Master Servicer or any Servicer hereunder), the
Trustee shall be incompetent or unqualified to perform such act or
acts, in which event such rights, powers, duties and obligations
(including the holding of title to the Trust or any portion thereof
in any such jurisdiction) shall be exercised and performed singly
by such separate trustee or co-trustee, but solely at the direction
of the Trustee;

     (ii) No trustee hereunder shall be liable by reason of any act
or omission of any other trustee hereunder; and

     (iii) The Trustee may at any time accept the resignation of or
remove any separate trustee or co-trustee.

          (c) Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Section 11.11. Each separate trustee and co-trustee,
upon its acceptance of the trusts conferred, shall be vested with the estates
or property specified in its instrument of appointment, either jointly with the

Trustee or separately, as may be provided therein, subject to all the
provisions of this Agreement and any Series Supplement, specifically

80

 

including
every provision of this Agreement or any Series Supplement relating to the
conduct of, affecting the liability of, or affording protection to, the
Trustee. Every such instrument shall be filed with the Trustee and a copy
thereof given to the Master Servicer and the Rating Agencies.

          (d) Any separate trustee or co-trustee may at any time constitute the
Trustee as its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect to this
Agreement or any Series Supplement on its behalf and in its name. If any
separate trustee or co-trustee shall die, become incapable of acting, resign or
be removed, all of its estates, properties, rights, remedies and trusts shall
vest in and be exercised by the Trustee, to the extent permitted by law,
without the appointment of a new or successor trustee.

          SECTION 11.12 Tax Returns. In the event the Trust shall be required to
file tax returns, the Master Servicer shall cause a firm of nationally
recognized independent public accountants to prepare any tax returns required
to be filed by the Trust and shall remit such returns to the Trustee for
signature at least five days before such returns are due to be filed. The
Master Servicer shall also prepare or shall cause to be prepared all tax
information required by law to be distributed to
Certificateholders and shall deliver such information to the Trustee at
least five days prior to the date it is required by law to be distributed to
Certificateholders. The Trustee, upon request, will furnish the Master
Servicer with all such information known to the Trustee as may be reasonably
required in connection with the preparation of all tax returns of the Trust,
and shall, upon request, execute such returns. In no event shall the Trustee
or the Master Servicer be liable for any liabilities, costs or expenses of the
Trust or the Investor Certificateholders arising under any tax law, including,
without limitation, federal, state, local or foreign income or excise taxes or
any other tax imposed on or measured by income (or any interest or penalty with
respect thereto or arising from a failure to comply therewith).

          SECTION 11.13 Trustee May Enforce Claims Without Possession of
Certificates. All rights of action and claims under this Agreement or any
Series Supplement or the Certificates may be prosecuted and enforced by the
Trustee without the possession of any of the Certificates or the production
thereof in any proceeding relating thereto, and any such proceeding instituted
by the Trustee shall be brought in its own name as trustee. Any recovery of
judgment shall, after provision for the payment of the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, be
for the ratable benefit of the Certificateholders in respect of which such
judgment has been obtained.

          SECTION 11.14 Suits for Enforcement.

          (a) If a Master Servicer Termination Event or any Servicer Termination
Event with respect to any Servicer shall occur and be continuing, the Trustee,
in its discretion may, subject to the provisions of Sections 10.01 and 10.02,
proceed to protect and enforce its rights and the rights of the
Certificateholders under this Agreement or any Series Supplement by a suit,
action or proceeding in equity or at law or otherwise, whether for the specific
performance of any covenant or agreement contained in this Agreement or any
Series Supplement or in aid of the execution of any power granted in this
Agreement or any Series Supplement or for the enforcement of any other, legal,
equitable or other remedy as the Trustee, being advised by

81

 

counsel, shall deem
most effectual to protect and enforce any of the rights of the Trustee or the
Certificateholders.

          (b) Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Certificateholder
any plan of reorganization, arrangement, adjustment or composition affecting
the Certificates or the rights of any Certificateholder thereof or to authorize
the Trustee to vote in respect of the claim of any Certificateholder in any
such proceeding.

          SECTION 11.15 Rights of Investor Certificateholders to Direct Trustee.
Holders of Investor Certificates evidencing Fractional Undivided Interests
aggregating not less than 51% of the Class Invested Amount of any Class of any
Series affected by the conduct of any proceeding or the exercise of any right
conferred by the Trustee shall have the right to direct the time, method, and
place of conducting any proceeding for any remedy available to the Trustee;
provided, however, that, subject to Section 11.01, the Trustee shall have the
right to decline to follow any such direction if the Trustee, being advised by
counsel,
determines that the action so directed may not lawfully be taken, or if
the Trustee in good faith shall, by a Responsible Officer or Responsible
Officers of the Trustee, determine that the proceedings so directed would be
illegal or involve it in personal liability or be unduly prejudicial to the
rights of Certificateholders not parties to such direction; and provided,
further, that nothing in this Agreement or any Series Supplement shall impair
the right of the Trustee to take any action deemed proper by the Trustee and
which is not inconsistent with such direction by the Certificateholders.

          SECTION 11.16 Representations and Warranties of Trustee. The Trustee
represents and warrants and any successor trustee shall represent and warrant
that:

          (a) The Trustee is organized, existing and in good standing under the laws
of the United States of America;

          (b) The Trustee has full power, authority and right to execute, deliver
and perform this Agreement, and has taken all necessary action to authorize the
execution, delivery and performance by it of this Agreement; and

          (c) This Agreement has been duly executed and delivered by the Trustee.

          SECTION 11.17 Maintenance of Office or Agency. The Holder of the Seller
Certificate will maintain at its expense (a) in the Borough of Manhattan, The
City of New York and in Chicago, Illinois in the case of Registered
Certificates and (b) in the case of Bearer Certificates, in London, if and for
so long as any Bearer Certificates are outstanding, and in Luxembourg, if and
for so long as any Bearer Certificates are outstanding and are listed on the
Luxembourg Stock Exchange, and such exchange shall so require, an office or
offices or agency or agencies where notices and demands to or upon the Trustee
in respect of the Certificates, this Agreement and any Series Supplement may be
served. The Holder of the Seller Certificate initially appoints the Corporate
Trust Office of the Trustee as the office for such purposes in Chicago,
Illinois and the New York office of the Trustee is located at 100 Wall Street,
Suite 1600, New York, New York 10005 for such purposes in New York. The
Trustee will give

82

 

prompt written notice to the Master Servicer and each
Servicer and to Certificateholders of any change in the location of the
Certificate Register or any such office or agency.

          SECTION 11.18 Requests for Agreement. A copy of the Agreement or any
Series Supplement may be obtained by any Investor Certificateholder by a
request in writing to the Trustee addressed to the Corporate Trust Office and
will be provided at the expense of the Master Servicer.

ARTICLE XII.

TERMINATION

          SECTION 12.01 Termination of Sellers’ Obligations; Termination of Trust.

          (a) The respective obligations and responsibilities of the Sellers, the
Master Servicer, each Servicer and the Trustee created hereby shall terminate
(other than the obligation of the Trustee to make payments to
Certificateholders as hereafter set forth), except with respect to the duties
described in Sections 7.04, 11.06 and Section 12.02(b), upon the Final Trust
Termination Date or, if earlier, at the option of the Sellers, on the day after
the Distribution Date on which funds shall have been deposited in the Series
Distribution Accounts sufficient to pay in full the Aggregate Investor Interest
plus accrued and unpaid Certificate Interest at the applicable Certificate
Rates on all Series then outstanding.

          (b) If as of the Distribution Date with respect to each Series then
outstanding in the month immediately preceding the month in which the Final
Trust Termination Date occurs the Aggregate Investor Interest would be greater
than zero (after giving effect to all transfers, withdrawals and deposits to
occur on such date pursuant to applicable Series Supplements), Receivables (or
interests therein), which shall be selected at random from the Receivables, in
an amount sufficient to yield proceeds equal to the Aggregate Investor Interest
plus any accrued and unpaid Certificate Interest with respect to each
outstanding Series and any amounts owing to any Credit Enhancement Provider
with respect to any outstanding Series pursuant to the applicable Series
Supplement (after giving effect to such transfers, withdrawals and deposits)
shall be sold on behalf of the Trust before the Final Trust Termination Date by
an institution acceptable to the Trustee and the Master Servicer that is either
(i) a nationally recognized investment bank, (ii) a nationally recognized
commercial bank or (iii) any other institution whose regular business includes
the sale of receivables or trust certificates similar to the Investor
Certificates, and the proceeds therefor shall be paid to the Trust on or prior
to the last Distribution Date with respect to each Series then outstanding. No
Seller and no affiliate or agent of any Seller shall be permitted to bid for or
purchase Receivables pursuant to this Section 12.01(b); provided, however, that
an affiliate or agent of any Seller may act as selling institution for the sale
as specified in the preceding sentence, so long as such affiliate or agent does
not act as principal in connection with such sale. The proceeds of such sale
shall be treated as Collections on the Receivables and shall be allocated among
outstanding Series and deposited in accordance with Section 4.03 and the
applicable Series Supplements; provided, however, that any such proceeds
received after the end of the Due Period related to the last Distribution Date
before the Final Trust Termination Date shall nevertheless be deemed to have
been received during such Due Period. During such period ending on such
Distribution Date, the Master Servicer and the Servicers shall continue to
process Collections on the Receivables and deposit such Collections

83

 

in
accordance with the provisions of Section 4.03. Section 12.03 will apply with
respect to any Receivables not sold pursuant to this Section 12.01(b).

          SECTION 12.02 Final Distribution with Respect to any Series.

          (a) Written notice of the termination of any Series, specifying the
Distribution Date upon which the Investor Certificateholders of such Series may
surrender their Certificates for payment of the final distribution and
cancellation, shall be given (subject to at least two days’ prior notice from
the Master Servicer to the Trustee) by the Trustee to Investor
Certificateholders of such Series not later than the 10th day of the month of
such final distribution specifying (i) the Distribution Date (which shall be
the Distribution Date upon which the deposit is made pursuant to Section
2.05(b), 12.01(b) or 12.02(a)) upon which final payment for such Investor
Certificates will be made upon presentation and surrender of such Investor
Certificates at the office or offices therein designated (which in the case of
Bearer Certificates shall be outside the United States),
(ii) the amount of any such final payment and (iii) that the Record Date
otherwise applicable to such Distribution Date is not applicable, payments
being made only upon presentation and surrender of the Investor Certificates at
the office or offices therein specified. The Master Servicer’s notice to the
Trustee in accordance with the preceding sentence shall be accompanied by an
Officer’s Certificate setting forth the information specified in Sections
3.07(a) and 3.07(b) covering the period during the transition period from
January 1, 1998 through November 30, 1998, or the then-current fiscal year
ended November 30, as applicable, through the date of such notice. The Trustee
shall give such notice to the Transfer Agent, the Paying Agent and Moody’s at
the time such notice is given to such Investor Certificateholders.

          (b) Notwithstanding the termination of the Trust pursuant to Section
12.01(a) or the occurrence of the Series Termination Date with respect to any
Series pursuant to Section 12.02(a) and the applicable Series Supplement, all
funds then on deposit in the Series Distribution Account shall continue to be
held in trust for the benefit of the Certificateholders of such Series and the
Paying Agent or the Trustee shall pay such funds to such Certificateholders
upon surrender of their Certificates. In the event that all of the Investor
Certificateholders of such Series shall not surrender their Certificates for
cancellation within six months after the date specified in the above-mentioned
written notice, the Trustee shall give a second written notice to the remaining
Investor Certificateholders of such Series to surrender their Certificates for
cancellation and receive the final distribution with respect thereto (which
surrender and payment, in the case of Bearer Certificates, shall be outside the
United States). If within one year after the second notice all the Investor
Certificates of such Series shall not have been surrendered for cancellation,
the Trustee may take appropriate steps, or may appoint an agent to take
appropriate steps, to contact the remaining Investor Certificateholders of such
Series concerning surrender of their Certificates, and the cost thereof shall
be paid out of the funds in the Series Distribution Account held for the
benefit of such Investor Certificateholders.

          (c) If as of the Distribution Date in the month immediately preceding the
month in which a Series Termination Date occurs, the Series Investor Interest
with respect to such Series is greater than zero (after giving effect to all
transfers, withdrawals and deposits to occur on such date), Receivables (or
interests therein) in an amount sufficient to yield proceeds equal to the
Series Investor Interest plus any accrued and unpaid Certificate Interest with
respect to such Series and any amounts owing to the Credit Enhancement Provider
with respect to such

84

 

Series pursuant to the Series Supplement for such Series,
if applicable, on such Series Termination Date (after giving effect to such
transfers, withdrawals and deposits) shall be sold on behalf of the Trust by an
institution acceptable to the Trustee and the Master Servicer that is either
(i) a nationally recognized investment bank, (ii) a nationally recognized
commercial bank or (iii) any other institution whose regular business includes
the sale of receivables or of trust certificates similar to the Investor
Certificates; provided, however, that in no event shall the amount of
Receivables sold hereunder with respect to any Series exceed the product of (A)
the aggregate amount of Receivables in the Trust and (B) a fraction the
numerator of which is the Series Investor Interest of such Series and the
denominator of which is the Aggregate Investor Interest, in each case, on such
Distribution Date in the month immediately preceding the month in which such
Series Termination Date occurs; and provided, further, the Receivables selected
to be sold hereunder shall not be materially different from the Receivables
remaining in the Trust as of such Distribution Date and shall be selected at
random from the Receivables. The proceeds (the “Series Termination Proceeds”)
therefrom shall be paid to the Trust and immediately deposited into the Series
Distribution Account with respect to such Series and paid to the
Investor Certificateholders of such Series and to the Credit Enhancement
Provider or otherwise, if applicable, pursuant to the terms of the Series
Supplement, on the Distribution Date with respect to such Series immediately
following such deposit. Such payment shall be deemed to be the final
distribution with respect to such Series. No Seller and no affiliate or agent
of any Seller shall be permitted to bid for or purchase Receivables pursuant to
this Section 12.02(c); provided, however, that an affiliate or agent may act as
selling institution for the sale as specified in the first sentence of this
Section 12.02(c), so long as such affiliate or agent does not act as principal
in connection with such sale.

          SECTION 12.03 Sellers’ Termination Rights. Upon the termination of the
Sellers’ obligations and responsibilities with respect to the Trust pursuant to
Section 12.01 and the surrender, if applicable, of any certificated Seller
Certificate, the Trustee shall distribute to each Holder of the Seller
Certificate such Holder’s pro rata share of any Receivables and Interchange and
cash remaining in the Trust in respect of the Seller Interest. Such
distribution will be made without recourse, representation or warranty except
for the warranty that since the date of transfer by any Seller under this
Agreement, the Trustee has not sold, transferred or encumbered any such
Receivables, Interchange or interests in either. Such distribution shall
transfer all right, title and interest of the Trust in the Receivables and
Interchange, whether then existing or thereafter created, and all proceeds of
either except, if applicable, for amounts held by the Trustee pursuant to
Section 12.02(b). The Trustee shall execute and deliver such instruments of
transfer and assignment including, without limitation, any document necessary
to release the Trust’s security interest in such Receivables and Interchange
and to release any filing evidencing or perfecting such security interest, in
each case without recourse, as shall be reasonably requested by the Holder of
the Seller Certificate to vest in the Holder of the Seller Certificate all
right, title and interest which the Trust had in such Receivables and
Interchange.

85

 

ARTICLE XIII.

MISCELLANEOUS PROVISIONS

          SECTION 13.01 Amendment.

          (a) This Agreement and any Series Supplement may be amended from time to
time by the Master Servicer, the Sellers, the Trustee and the Servicers,
without the consent of any of the Certificateholders, for one or more of the
following purposes:

     (i) to add to the covenants and agreements of this Agreement
or any Series Supplement for the benefit of the Investor
Certificateholders of all or any Classes of all or any Series (and
if such covenants and agreements are for the benefit of less than
all Classes of all Series, stating that such covenants and
agreements are expressly being included solely for the benefit of
such Class of such Series), or to surrender any right or power
herein reserved to or conferred upon the Sellers, the Master
Servicer or any Servicer; provided, however, that such action shall
not adversely affect in any material respect the interests of the
Holders of any Class of any Series then outstanding; and provided,
further, that the permitted activities of the Trust may be
significantly changed pursuant to this Section 13.01(a) only with
the consent of the Holders of Investor Certificates
evidencing Fractional Undivided Interests aggregating not less
than 51% of the Aggregate Invested Amount (such percentage to be
calculated without taking into account the Class Invested Amount
represented by any Investor Certificates beneficially owned by any
Seller or any affiliate or agent of any Seller);

     (ii) to add provisions to or change or eliminate any of the
provisions of this Agreement or any Series Supplement, provided
that any such addition, change or elimination shall not adversely
affect in any material respect the interests of the Holders of any
Class of any Series then outstanding; and provided, further, that
the permitted activities of the Trust may be significantly changed
pursuant to this Section 13.01(a) only with the consent of the
Holders of Investor Certificates evidencing Fractional Undivided
Interests aggregating not less than 51% of the Aggregate Invested
Amount (such percentage to be calculated without taking into
account the Class Invested Amount represented by any Investor
Certificates beneficially owned by any Seller or any affiliate or
agent of any Seller);

     (iii) to add provisions to or change any of the provisions of
this Agreement or any Series Supplement for the purpose of
accommodating the addition of Participation Interests to the Trust
pursuant to Section 2.10; or

     (iv) to cure any ambiguity or to correct or supplement any
defective or inconsistent provision contained in this Agreement,
any Series Supplement or in any amendment to this Agreement or any
Series Supplement.

          The Trustee is hereby authorized to join with the Sellers, the Master
Servicer and the Servicers in the execution of any amendment authorized or
permitted by the terms of this Agreement, and to make any further appropriate
agreements and stipulations which may be therein contained, but the Trustee
shall not be obligated to enter into any such amendment which affects the
Trustee’s rights, duties or immunities under this Agreement or otherwise. A
copy of each amendment adopted pursuant to this Section 13.01(a) shall be sent
to the Rating Agencies.

86

 

          (b) This Agreement and any Series Supplement may also be amended from time
to time by the Master Servicer, the Sellers, the Trustee and the Servicers with
the consent of the Holders of Investor Certificates evidencing Fractional
Undivided Interests aggregating not less than 66-2/3% of the Class Invested
Amount of each Class adversely affected or, with respect to any Class the
Investor Certificates of which are, in whole or in part, represented by Bearer
Certificates, by vote of persons entitled to vote Fractional Undivided
Interests evidencing not less than 66-2/3% of the Class Invested Amount with
respect to such Class represented and voting at a meeting of the Investor
Certificateholders of such Class at which a quorum is present, as described in
Section 6.12, for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of this Agreement or any Series
Supplement or of modifying in any manner the rights of the Investor
Certificateholders of any Class then outstanding; provided, however, that the
Trustee shall have been advised by the Rating Agencies that such amendment will
not result in the downgrading or withdrawal of the rating assigned to any Class
of any Series then outstanding by each Rating Agency and provided, further that
no such amendment shall materially and adversely affect the interests of the
Investor Certificateholders of any Class then outstanding by reducing in any
manner the amount of, or
delaying the timing of, distributions which are required to be made on any
Investor Certificate of any Class without the consent of the affected Investor
Certificateholders or reducing the aforesaid percentage required to consent to
any such amendment, without the consent of each Investor Certificateholder of
each affected Class. For purposes of calculating whether a 66- 2/3% consent
has been achieved pursuant to this Section 13.01(b), the applicable Class
Invested Amount or Series Invested Amount shall be calculated without taking
into account the Class Invested Amount represented by any Investor Certificates
beneficially owned by any Seller or any affiliate or agent of any Seller, and
no Seller or affiliate or agent of a Seller shall be entitled to vote on any
amendment pursuant to this Section 13.01(b). Notwithstanding the foregoing,
the permitted activities of the Trust may be significantly changed pursuant to
this Section 13.01(b) only with the consent of the Holders of Investor
Certificates evidencing Fractional Undivided Interests aggregating not less
than 51% of the Aggregate Invested Amount (such percentage to be calculated
without taking into account the Class Invested Amount represented by any
Investor Certificates beneficially owned by any Seller or any affiliate or
agent of any Seller). The Trustee shall give prompt notice to the Rating
Agencies of the solicitation of any consents for the purpose of amending this
Agreement or any Series Supplement pursuant to this Section 13.01(b).

          (c) Promptly after the execution of any such amendment or consent pursuant
to Section 13.01(b), the Trustee shall notify the Investor Certificateholders
of the substance of such amendment. No notice will be given to the Investor
Certificateholders with regard to any amendment made pursuant to Section
13.01(a).

          (d) It shall not be necessary for the consent of Investor
Certificateholders under this Section 13.01 to approve the particular form of
any proposed amendment, but it shall be sufficient if such consent shall
approve the substance thereof. The manner of obtaining such consents and of
evidencing the authorization of the execution thereof by Investor
Certificateholders shall be subject to such reasonable requirements as the
Trustee may prescribe.

          (e) Notwithstanding the foregoing provisions of this Section 13.01, none
of (i) the execution and delivery of any Series Supplement pursuant to Section
6.06, (ii) the addition of Receivables and Interchange to the Trust pursuant to
Section 2.10, (iii) the removal from the

87

 

Trust of Receivables and Interchange
pursuant to Section 2.11 or of receivables in Charged-Off Accounts pursuant to
Sections 3.02(b) and 3.02(e), (iv) the addition or removal of any Seller or
Servicer in connection with an addition to or removal from the Trust of
Receivables and Interchange, or (v) the replacement of any Servicer, Master
Servicer or Trustee pursuant to the terms hereof, shall constitute an amendment
for purposes of this Section 13.01.

          (f) For purposes of Sections 2.05, 2.06, 2.07 and 13.01(a) of this
Agreement, any material adverse effect on any Credit Enhancement Provider of
any Series shall be deemed to constitute a material adverse effect on the
interests of the Investor Certificateholders of such Series.

          SECTION 13.02 Protection of Right, Title and Interest to Trust.

          (a) The Master Servicer shall cause all financing statements and
continuation statements and any other necessary documents covering the
Certificateholders and the Trustee’s right, title and interest to the
Receivables and Interchange to be promptly filed, and at all times to be kept
recorded, registered and filed, all in such manner and in such places as may be
required
by law fully to preserve and protect the right, title and interest of the
Trustee hereunder to all property comprising the Trust. The Master Servicer
shall deliver to the Trustee file-stamped copies of, or filing receipts for,
any document recorded, registered or filed as provided above, as soon as
available following such recording, registration or filing. The Sellers shall
cooperate fully with the Master Servicer in connection with the obligations set
forth above and will execute any and all documents reasonably required to
fulfill the intent of this Section 13.02(a). The Trustee shall not bear
responsibility for filing status.

          (b) Within fifteen days after any Seller makes any change in its name,
identity or corporate structure which would make any financing statement or
continuation statement filed in accordance with paragraph (a) above seriously
misleading within the meaning of Sections 9-506 or 9-507 of the UCC or a
comparable or successor provision thereto, however numbered, as in effect in
the Applicable State with respect to such Seller, such Seller shall give the
Trustee notice of any such change and shall file such financing statements or
amendments as may be necessary to continue the perfection of the Trust’s
security interest in the Receivables and Interchange and the proceeds thereof.

          (c) Each of the Sellers, the Master Servicer and each Servicer will give
the Trustee prompt written notice of any change in the State under the laws of
which such entity is organized, any change in the form of such organization
(e.g., corporation to LLC) or any other change that under the applicable
provisions of the UCC would require the filing of any amendment of any
previously filed financing or continuation statement or of any new financing
statement to continue the perfection of the Trust’s security interest in the
Receivables or Interchange and the proceeds of either, and shall file any such
financing statements or amendments as may be necessary to continue such
perfection. Each of the Sellers, the Master Servicer and each Servicer will at
all times maintain its location (determined in accordance with Section 9-307 of
the UCC or any comparable or successor provision, however numbered) within the
United States of America.

88

 

          (d) The Master Servicer will deliver to the Trustee on or before the
Trust’s Annual Report Date of each year beginning in 2005 an opinion of counsel
containing substantially the provisions set forth in Exhibit I hereto. A copy
of such opinion of counsel shall also be sent to the Rating Agencies.

          SECTION 13.03 Limitations on Rights of Investor Certificateholders.

          (a) The death or incapacity of any Certificateholder shall not operate to
terminate this Agreement, any Series or the Trust, nor shall such death or
incapacity entitle such Certificateholder’s legal representatives or heirs to
claim an accounting or to take any action or commence any proceeding in any
court for a partition or winding-up of the Trust, nor otherwise affect the
rights, obligations and liabilities of the parties hereto or any of them.

          (b) No Certificateholder shall have any right to vote (except with respect
to the Investor Certificateholders as provided in Section 13.01 hereof) or in
any manner otherwise control the operation and management of the Trust, or the
obligations of the parties hereto, nor shall anything herein set forth, or
contained in the terms of the Certificates, be construed so as to constitute
the Certificateholders from time to time as partners or members of an
association; nor,
except as required by law, shall any Certificateholder be under any
liability to any third person by reason of any action taken by the parties to
this Agreement pursuant to any provision hereof.

          (c) No Certificateholder shall have any right by virtue of any provisions
of this Agreement or any Series Supplement to institute any suit, action or
proceeding in equity or at law upon or under or with respect to this Agreement
or any Series Supplement, unless such Certificateholder previously shall have
given to the Trustee, and unless the Holders of Investor Certificates
evidencing Fractional Undivided Interests aggregating not less than 51% of the
Class Invested Amount of any Class of any Series which may be materially
adversely affected but for the institution of such action or proceeding shall
have made, written request upon the Trustee to institute such action, suit or
proceeding in its own name as Trustee hereunder and shall have offered to the
Trustee such reasonable indemnity as it may require against the costs, expenses
and liabilities to be incurred therein or thereby, and the Trustee, for 60 days
after its receipt of such notice, request and offer of indemnity, shall have
neglected or refused to institute any such action, suit or proceeding; it being
understood and intended, and being expressly covenanted by each
Certificateholder with every other Certificateholder and the Trustee, that no
one or more Certificateholders shall have any right in any manner whatever by
virtue or by availing itself or themselves of any provisions of this Agreement
or any Series Supplement to affect, disturb or prejudice the rights of the
Certificateholders of any other of the Certificates, or to obtain or seek to
obtain priority over or preference to any other such Certificateholder, or to
enforce any right under this Agreement or any Series Supplement, except in the
manner herein provided and for the equal, ratable and common benefit of all
Certificateholders. For the protection and enforcement of the provisions of
this Section 13.03, each and every Certificateholder and the Trustee shall be
entitled to such relief as can be given either at law or in equity.

          SECTION 13.04 Governing Law. Except as otherwise specifically provided
herein, this Agreement and the Certificates shall be construed in accordance
with the internal laws of the State of New York without reference to its
conflict of law provisions,

89

 

and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws.

          SECTION 13.05 Notices. All demands, notices and communications hereunder
shall be in writing and shall be deemed to have been duly given if personally
delivered at or mailed by registered mail, return receipt requested, or by
overnight courier, or telecopied, to (a) in the case of Discover Bank as
Seller, Master Servicer or Servicer, 12 Read’s Way, New Castle, Delaware 19720,
Attention: Secretary, telecopy (302) 323-7393, (b) in the case of the Trustee,
U.S. Bank National Association, c/o U.S. Bank Corporate Trust Servicers, Attn:
Patricia M. Child, 209 S. LaSalle Street, Suite 300, Chicago, Illinois, 60604,
telecopy (312)-325-8905, and (c) in the case of any other Seller or any other
Servicer, at such address as such party shall designate in the Assignment of
Additional Accounts with respect to such Seller or Servicer; or, as to each
party, at such other address as shall be designated by such party in a written
notice to each other party. Unless otherwise specified in the relevant Series
Supplement, any notice required or permitted to be mailed to a Holder of a
Registered Certificate shall be given by first class mail, postage prepaid, at
the address of such Certificateholder as shown in the Certificate Register.
Any notice
so mailed within the time prescribed in this Agreement shall be
conclusively presumed to have been duly given, whether or not such
Certificateholder receives such notice.

          No Notice shall be required to be mailed to a Holder of Bearer
Certificates or Coupons but shall be given as provided below. If and so long
as any Series or Class is listed on the Luxembourg Stock Exchange and such
exchange shall so require, any notice to Holders of Bearer Certificates shall
be published in an Authorized Newspaper within the time period prescribed in
this Agreement or the relevant Series Supplement and, in the case of any Series
or Class with respect to which any Bearer Certificates are outstanding, any
notice required or permitted to be given to Investor Certificateholders of such
Series or Class shall be published in an Authorized Newspaper within the time
period prescribed in this Agreement or the relevant Series Supplement.

          SECTION 13.06 Rule 144A Information. For so long as any of the Investor
Certificates of any Series or Class are “restricted securities” within the
meaning of Rule 144(a)(3) under the Securities Act of 1933, as amended, each of
the Sellers, the Trustee, the Master Servicer, each Servicer and any Credit
Enhancement Provider agree to cooperate with each other to provide to any
Investor Certificateholders of such Series or Class and to any prospective
purchaser of Certificates designated by such an Investor Certificateholder,
upon the request of such Investor Certificateholder or prospective purchaser,
any information required to be provided to such holder or prospective purchaser
to satisfy the condition set forth in Rule 144A(d)(4) under the Securities Act
of 1933, as amended.

          SECTION 13.07 Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement or of any Series
Supplement shall for any reason whatsoever be held invalid, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement or of
such Series Supplement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of such Series
Supplement or of the Certificates or rights of the Certificateholders thereof.

90

 

          SECTION 13.08 Assignment. Notwithstanding anything to the contrary
contained herein, except as provided in Sections 8.02 and 8.04, this Agreement,
including any Series Supplement, may not be assigned by the Master Servicer or
any Servicer without the prior consent of Holders of Investor Certificates
evidencing Fractional Undivided Interests aggregating not less than 51% of the
Class Invested Amount of each Class of each Series of Investor Certificates on
a Class-by-Class basis.

          SECTION 13.09 Investor Certificates Nonassessable and Fully Paid. It is
the intention of the parties to this Agreement that, to the extent permitted by
law, the Certificateholders shall not be personally liable for obligations of
the Trust, that the Fractional Undivided Interests represented by the
Certificates shall be nonassessable for any losses or expenses of the Trust or
for any reason whatsoever, and that Certificates upon
authentication thereof by the Trustee pursuant to Sections 2.02 and 6.03
and payment therefor at time of issuance are and shall be deemed fully paid.

          SECTION 13.10 Further Assurances. The Sellers, the Master Servicer and
each Servicer agree to do and perform, from time to time, any and all acts and
to execute any and all further instruments required or reasonably requested by
the Trustee more fully to effect the purposes of this Agreement, including,
without limitation, the execution of any financing statements or continuation
statements relating to the Receivables for filing under the provisions of the
UCC of any applicable jurisdiction.

          SECTION 13.11 No Waiver; Cumulative Remedies. No failure to exercise and
no delay in exercising, on the part of the Trustee or the Investor
Certificateholders, any right, remedy, power or privilege hereunder, shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges therein provided are
cumulative and not exhaustive of any rights, remedies, powers and privileges
provided by law.

          SECTION 13.12 Counterparts. This Agreement and any Series Supplement may
be executed in two or more counterparts (and by different parties on separate
counterparts), each of which shall be an original, but all of which together
shall constitute one and the same instrument.

          SECTION 13.13 Third-Party Beneficiaries. This Agreement and any Series
Supplement will inure to the benefit of and be binding upon the parties hereto
and thereto, any Credit Enhancement Providers, the Certificateholders and their
respective successors and permitted assigns. Except as otherwise provided in
this Section 13.13, no other person will have any right or obligation
hereunder.

          SECTION 13.14 Actions by Investor Certificateholders.

          (a) Wherever in this Agreement a provision is made that an action may be
taken or a notice, demand or instruction given by Investor Certificateholders,
such action, notice or instruction may be taken or given by any Investor
Certificateholder of any Class of any Series,

91

 

unless such provision requires a
specific percentage of Investor Certificateholders of a certain Class of a
certain Series of all Classes of all Series.

          (b) Any request, demand, authorization, direction, notice, consent, waiver
or other act by a Certificateholder shall bind such Certificateholder and every
subsequent holder of such Certificate issued upon the registration of transfer
thereof or in exchange therefor or in lieu thereof in respect of anything done
or omitted to be done by the Trustee or the Master Servicer in reliance
thereon, whether or not notation of such action is made upon such Certificate.

          SECTION 13.15 Merger and Integration.
Except as specifically stated otherwise herein, this Agreement, together
with the Series Supplements executed pursuant to this Agreement from time to
time, set forth the entire understanding of the parties relating to the subject
matter hereof, and all prior understandings, written or oral, are superseded by
this Agreement, together with such Series Supplements. This Agreement and the
Series Supplements may not be modified, amended, waived or supplemented except
as provided herein or therein.

          SECTION 13.16 Headings. The headings herein are for purposes of reference
only and shall not otherwise affect the meaning or interpretation of any
provision hereof.

92

 

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

	 	 	 	 	 	 	 
	 	 	DISCOVER BANK,

  as Seller, Master Servicer and Servicer
	 
	 	 	 	 	 	 
	

	 	By:	 	 	 	 
	 	 	 	 	
 
	

	 	 	 	Name:	 	 
	

	 	 	 	 	 	
 
	

	 	 	 	Title:	 	 
	

	 	 	 	 	 	
 
	 
	 	 	 	 	 	 
	 	 	U.S. BANK NATIONAL ASSOCIATION,

  as Trustee
	 
	 	 	 	 	 	 
	

	 	By:	 	 	 	 
	 	 	 	 	
 
	

	 	 	 	Name:	 	 
	

	 	 	 	 	 	
 
	

	 	 	 	Title:	 	 
	

	 	 	 	 	 	
 

93

 

EXHIBIT A

FORM OF ASSIGNMENT OF ADDITIONAL ACCOUNTS

          This ASSIGNMENT NO.     OF ADDITIONAL ACCOUNTS (the “Assignment”), dated as
of               ,      by [name of Seller] (the “Seller”) to U.S. Bank National
Association (formerly First Bank National Association, successor trustee to
Bank of America, Illinois, formerly Continental Bank, National Association), as
Trustee (the “Trustee”) is made pursuant to the Pooling and Servicing Agreement
referred to below.

WITNESSETH

          WHEREAS, Discover Bank, a Delaware banking corporation (“Discover Bank”),
and the Trustee are parties to the Amended and Restated Pooling and Servicing
Agreement, dated as of November 3, 2004 (hereinafter as such agreement may have
been, or may from time to time be, amended, supplemented or otherwise modified,
the “Pooling and Servicing Agreement”);

          WHEREAS, pursuant to Section 2.10(c) of the Pooling and Servicing
Agreement, the Seller wishes (i) to designate Additional Accounts of the Seller
to be included as Accounts, and (ii) to convey the Receivables existing in such
Additional Accounts on the date of such designation and all Receivables created
in such Additional Accounts on and after the effective date of such
designation, and the corresponding portion of Interchange arising on and after
the effective date of designation (“Additional Interchange”), in each case, now
existing and hereafter created, to the Trustee as part of the corpus of the
Trust; and

          WHEREAS, the Trustee is willing to accept such designation and conveyance
subject to the terms and conditions hereof.

          NOW, THEREFORE, the Seller and the Trustee hereby agree as follows:

     1. Defined Terms. All capitalized terms defined in the Pooling and
Servicing Agreement and used herein shall have such defined meanings when used
herein, unless otherwise defined herein.

          “Addition Date” shall mean, with respect to the Additional Accounts
designated hereby,                ,      .

          “Additional Account Cut-Off Date” shall mean, with respect to the
Additional Accounts designated hereby,                ,     .

     2. Designation of Additional Accounts. The Seller shall on or prior to
the fifth Business Day following the Addition Date deliver a computer file,
hard copy or microfiche list containing a true and complete list of each
credit account which as of the Addition Date shall be deemed to be an
Additional Account, such accounts being identified by account number. Such

A-1

 

list shall be marked as Schedule 1 to this Assignment and is hereby
incorporated into and made a part of this Assignment and Schedule 1 attached to
the Pooling and Servicing Agreement.

     3. Conveyance of Receivables and Interchange. (a) The Seller hereby
sells, transfers, assigns and otherwise conveys to the Trust for the benefit of
the Certificateholders, without recourse, on and after the Additional Account
Cut-Off Date, all right, title and interest of the Seller in and to the
Receivables then existing and thereafter created in the Additional Accounts
designated hereby, all monies due or to become due with respect thereto, and
the corresponding Additional Interchange, and all proceeds (as defined in
Section 9-102(a)(64) of the UCC or any successor provision thereto as in effect
in the State of Delaware) of such Receivables and Additional Interchange
(collectively, the “Transferred Assets.”) In the event such sale, transfer,
assignment, or conveyance is deemed not to constitute a valid transfer and
assignment to the Trust for the benefit of the Certificateholders of all right,
title and interest of Seller in and to such property or is deemed to constitute
a security interest, the Seller does hereby grant to the Trust a security
interest therein, and this Assignment shall constitute a security agreement
under applicable law.

          (b) In connection with such sale, the Seller further agrees, at its own
expense, on or prior to the date of this Assignment to indicate, or to cause to
be indicated, in the computer files of the Servicer with respect to the
Additional Accounts designated hereby, that Receivables created in connection
with the Additional Accounts designated hereby and Additional Interchange
related to such Additional Accounts have been sold to the Trustee pursuant to
this Assignment for the benefit of the Certificateholders.

     4. Acceptance by Trustee. Subject to the satisfaction of the conditions
set forth in Section 6, the Trustee hereby acknowledges its acceptance on
behalf of the Trust of all right, title and interest previously held by the
Seller in and to the Receivables now existing and hereafter created in the
Additional Accounts designated hereby and the corresponding portion of
Additional Interchange on such Additional Accounts, and declares that it shall
maintain such right, title and interest, upon the trust herein set forth, for
the benefit of all Certificateholders. The Trustee further acknowledges that,
on or prior to the fifth Business Day following the Addition Date, the Seller
shall deliver to the Trustee the computer file described in Section 2 of this
Assignment.

     5. Representations and Warranties of Seller. The Seller represents and
warrants that the Additional Accounts were not selected on the basis of any
selection criteria believed by the Seller to be materially adverse to the
interests of the Holders of any Class of any Series outstanding on the date
hereof or any Credit Enhancement Provider.

     6. Conditions Precedent. The acceptance of the Trustee set forth in
Section 4 and the amendment of the Pooling and Servicing Agreement set forth in
Section 7 is subject to the conditions that (a) the Seller shall have delivered
to the Trustee a certificate of a Vice President or more senior officer,
certifying that all requirements set forth in Section 2.10(c) of the Pooling
and Servicing Agreement for designating Additional Accounts and conveying the
Principal Receivables of such Accounts and Additional Interchange, whether now
existing or hereafter created, to the Trust have been satisfied, (b) if the
Seller is not Discover Bank, such Seller shall

A-2

 

have entered into an amendment
to, and become a party to, the Pooling and Servicing Agreement, the Seller
Certificate Ownership Agreement and each Series Supplement outstanding on the
date hereof, together with each other party to each such agreement or
supplement and (c)
if the Servicer with respect to the Additional Accounts is not Discover
Bank, such Servicer shall have entered into an amendment to, and become a party
to, the Pooling and Servicing Agreement and each Series Supplement outstanding
on the date hereof, together with each other party to such agreement or
supplement, and such Servicer shall have entered into a Master Servicing
Agreement, or an amendment thereto, with Discover Bank and each other Servicer,
if any.

     7. Amendment of the Pooling and Servicing Agreement. The Pooling and
Servicing Agreement is hereby amended by providing that all references to the
“Pooling and Servicing Agreement,” “this Agreement” and “herein” shall be
deemed from and after the Addition Date to be a dual reference to the Pooling
and Servicing Agreement as supplemented by this Assignment. Except as
expressly amended hereby, all of the representations, warranties, terms,
covenants and conditions of the Pooling and Servicing Agreement shall remain
unamended and the Pooling and Servicing Agreement shall continue to be, and
shall remain, in full force and effect in accordance with its terms and except
as expressly provided herein, this Assignment of Additional Accounts shall not
constitute or be deemed to constitute a waiver of compliance with or consent to
noncompliance with any term or provision of the Pooling and Servicing
Agreement.

     8. Intention of Parties. The parties intend the sale, transfer,
assignment or conveyance of Receivables and Additional Interchange in
connection herewith to be a sale of financial assets in connection with a
securitization, an absolute transfer for all purposes (other than for federal,
state and local income and franchise tax purposes) and to be treated as a sale
for accounting purposes.

     9. Counterparts. This Assignment may be executed in any number of
counterparts all of which taken together shall constitute one and the same
instrument.

     10. Election Under Delaware Asset-Backed Securities Facilitation Act.
Without limiting any other provisions of the Pooling and Servicing Agreement,
the parties hereto agree that (a) the transactions contemplated hereby
constitute a “securitization transaction” and (b) to the fullest extent
permitted under applicable law, including without limitation, the Asset-Backed
Securities Facilitation Act Delaware Code Ann. tit. 6, § 2703A et seq: (1) all
right, title and interest to the Transferred Assets, which have been
transferred to the Trust in connection with the securitization transactions
contemplated herein, shall be deemed to no longer be the property, assets or
rights of the Seller; (2) the Seller, its creditors or, in any insolvency
proceeding with respect to the Seller or the Seller’s property, a bankruptcy
trustee, receiver, debtor, debtor in possession or similar person, shall have
no rights, legal or equitable, whatsoever to reacquire, reclaim, recover,
repudiate, disaffirm, redeem or recharacterize as property of the Seller any of
the Transferred Assets; and (3) in the event of a bankruptcy, receivership or
other insolvency proceeding with respect to the Seller or the Seller’s
property, such Transferred Assets shall not be deemed to be part of the
Seller’s property, assets, rights or estate.

A-3

 

     IN WITNESS WHEREOF, the undersigned have caused this Assignment of
Additional Accounts to be duly executed and delivered by their respective duly
authorized officers on the day and year first above written.

	 	 	 	 	 
	 	 	DISCOVER BANK,

  as Master Servicer, Servicer and Seller
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	

	

	 	 	 	Title:
	 
	 	 	 	 
	 	 	U.S. BANK NATIONAL ASSOCIATION,

  as Trustee
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	

	

	 	 	 	Title:

A-4

 

EXHIBIT B

DISCOVER SERVICE MARK

B-1

 

EXHIBIT C

FORM OF REASSIGNMENT OF RECEIVABLES

          Reassignment of Receivables, dated as of          ,     , by and between
[name of Seller] (the “Seller”), and U.S. Bank National Association (formerly
First Bank National Association, successor trustee to Bank of America Illinois,
formerly Continental Bank, National Association) (the “Trustee”), pursuant to
the Pooling and Servicing Agreement referred to below.

W I T N E S S E T H:

          WHEREAS, the Seller and the Trustee are parties to the Amended and
Restated Pooling and Servicing Agreement, dated as of November 3, 2004
(hereinafter as such agreement may have been, or may from time to time be,
amended, supplemented or otherwise modified, the “Pooling and Servicing
Agreement”);

          WHEREAS, pursuant to the Pooling and Servicing Agreement, the Seller
wishes (i) to remove all Receivables existing in certain designated Accounts of
the Seller as of the date hereof and all Receivables created in such Accounts
after the date hereof (the “Removed Accounts”), (ii) to remove the
corresponding portion of Interchange arising on and after the date hereof
(“Removed Interchange”) and (iii) to cause the Trustee to reconvey the
Receivables of such Removed Accounts and the Removed Interchange, whether now
existing or hereafter created, from the Trust to the Holder of the Seller
Certificate (as each such term is defined in the Pooling and Servicing
Agreement); and

          WHEREAS, the Trustee is willing to accept such designation and to reconvey
the Receivables in the Removed Accounts and the Removed Interchange subject to
the terms and conditions hereof;

          NOW, THEREFORE, the Seller and the Trustee hereby agree as follows:

          1. Defined Terms. All terms defined in the Pooling and Servicing
Agreement and used herein shall have such defined meanings when used herein,
unless otherwise defined herein.

          ”Finance Charge Receivables” with respect to any Account for any Due
Period shall mean the net amount billed by the Servicer during such Due Period
as finance charges on such Account and cash advance fees, annual membership
fees, fees for transactions that exceed the credit limit on such Account, late
payment charges billed during such Due Period to such Account and any other
charges that the Servicer has designated as “Finance Charge Receivables” in
accordance with the Pooling and Servicing Agreement on or prior to the Removal
Date; provided, however, that in the event any Account that is included in the
Accounts as of the Cut-Off Date is not selected before the beginning of the Due
Period preceding the Due Period related to the first Trust Distribution Date,
the Servicer may utilize a reasonable method of estimation to determine the
amount of the Finance Charge Receivables with respect to such Account for the

C-1

 

period beginning on the first day of such preceding Due Period and ending
on the date on which such Account is selected.

          ”Receivable” shall mean any amount owing by the Obligor under an Account
from time to time, including, without limitation, amounts owing for the payment
of goods and services, cash advances, finance charges and other charges, if
any. A Receivable shall be deemed to have been created at the end of the day on
the Date of Processing of such Receivable.

          ”Removal Date” shall mean, with respect to the Removed Accounts and
Removed Interchange designated hereby,               ,     .

          2. Designation of Removed Accounts. The Seller shall deliver to the
Trustee, not later than five Business Days after the Removal Date, a computer
file, hard copy or microfiche list containing a true and complete list of each
Account which as of the Removal Date shall be deemed to be a Removed Account,
such Accounts being identified by account number and containing the amount of
Principal Receivables in such Removed Accounts as of the Removal Date. Such
list shall be marked as Schedule 1 to this Reassignment as of the Removal Date
and shall be incorporated into and made a part of this Reassignment and shall
amend Schedule 1 attached to the Pooling and Servicing Agreement.

          3. Conveyance of Receivables and Interchange.

          (a) The Trustee does hereby transfer, assign, set-over and otherwise
convey to the Holder of the Seller Certificate, without recourse on and after
the Removal Date, all right, title and interest of the Trust in and to the
Receivables now existing and hereafter created in the Removed Accounts
designated hereby, all monies due or to become due with respect thereto
(including all Finance Charge Receivables), all Removed Interchange, all
proceeds (as defined in Section 9-306 or Section 9-102(a)(64)of the UCC, as
applicable, as in effect in the Applicable State as of the date hereof) of such
Receivables, Removed Interchange and Insurance Proceeds relating to either.

          (b) In connection with such transfer, the Trustee agrees to execute and
deliver to the Holder of the Seller Certificate on or prior to the date of this
Reassignment, all documents necessary to effect the transfer of the Receivables
now and hereafter existing in the Removed Accounts and Removed Interchange,
including but not limited to a termination statement or financing statement, if
requested, with respect to such Receivables and Removed Interchange (which may
be a single termination statement or financing statement with respect to all
such Receivables and Removed Interchange) evidencing the release by the Trust
of its lien on the Receivables in the Removed Accounts and Removed Interchange,
and meeting the requirements of applicable state law, in such manner and such
jurisdictions as are necessary to remove such lien.

          4. Acceptance by Trustee. The Trustee hereby acknowledges that, on or
prior to the fifth Business Day following the Removal Date, the Seller shall
deliver to the Trustee the computer file, hard copy or microfiche list
described in Section 2 of this Reassignment.

C-2

 

          5. Representations and Warranties of the Seller. This Reassignment
constitutes a legal, valid and binding obligation of the Seller enforceable
against the Seller in
accordance with its terms, except as the foregoing may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect affecting the enforcement of creditors’ rights
and remedies in general or the rights and remedies of creditors of national
banking associations, state banking corporations or similar financial
institutions and except as such enforceability may be limited by general
principles of equity, whether considered in a suit at law or in equity, and by
the discretion of the court before which any proceeding therefor may be
brought.

          6. Representations and Warranties of the Trustee. Since the date of
transfer by the Seller under the Pooling and Servicing Agreement, the Trustee
has not sold, transferred or encumbered any Receivable in any Removed Account,
the Removed Interchange or any interest in either.

          7. Conditions Precedent. The amendment of the Pooling and Servicing
Agreement set forth in Section 8 hereof is subject to the satisfaction of the
following conditions precedent:

          (a) the Seller shall have delivered to the Trustee an Officers’
Certificate certifying that (i) as of the Removal Date, all requirements set
forth in Section 2.11 of the Pooling and Servicing Agreement for designating
Removed Accounts and Removed Interchange and reconveying the Receivables of
such Removed Accounts and Removed Interchange, whether now existing or
hereafter created, have been satisfied, and (ii) the representations and
warranties made by the Seller in Section 5 hereof are true and correct as of
the Removal Date. The Trustee may conclusively rely on such Officers’
Certificate, shall have no duty to make inquiries with regard to the matters
set forth therein and shall incur no liability in so relying.

          8. Amendment of the Pooling and Servicing Agreement. The Pooling and
Servicing Agreement is hereby amended to provide that all references therein to
the “Pooling and Servicing Agreement,” “this Agreement” and “herein” shall be
deemed from and after the Removal Date to be a dual reference to the Pooling
and Servicing Agreement as supplemented by this Reassignment. Except as
expressly amended hereby, all of the representations, warranties, terms,
covenants and conditions of the Pooling and Servicing Agreement shall remain
unamended and shall continue to be, and shall remain, in full force and effect
in accordance with its terms and except as expressly provided herein shall not
constitute or be deemed to constitute a waiver of compliance with or a consent
to non-compliance with any term or provision of the Pooling and Servicing
Agreement.

          9. Counterparts. This Reassignment may be executed in two or more
counterparts (and by different parties on separate counterparts), each of which
shall be an original, but all of which together shall constitute one and the
same instrument.

C-3

 

          IN WITNESS WHEREOF, the undersigned have caused this Reassignment of
Receivables to be duly executed and delivered by their respective duly
authorized officers on the day and year first above written.

	 	 	 	 	 
	 	 	DISCOVER BANK,

  as Master Servicer, Servicer and Seller
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	

	

	 	 	 	Title:
	 
	 	 	 	 
	 	 	U.S. BANK NATIONAL ASSOCIATION,

  as Trustee
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	

	

	 	 	 	Title:

C-4

 

EXHIBIT D

FORM OF SELLER CERTIFICATE

     NO. 1

DISCOVER CARD MASTER TRUST I

PASS-THROUGH CERTIFICATE

(NOT AN INTEREST IN OR OBLIGATION OF DISCOVER BANK AND NOT INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENTAL AGENCY.)

          THE SECURITIES REPRESENTED BY THIS SELLER CERTIFICATE HAVE NOT BEEN
REGISTERED PURSUANT TO THE SECURITIES ACT OF 1933 AND MAY NOT BE TRANSFERRED OR
SOLD UNLESS PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR AN OPINION OF
COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED AND THE SATISFACTION OF CERTAIN
OTHER REQUIREMENTS SPECIFIED IN THE AGREEMENT.

          This certifies that Discover Bank, a Delaware banking corporation
(“Discover”), which in its capacity as the registered holder of this Seller
Certificate is hereinafter referred to as the “Holder”, is the registered owner
of a fractional undivided interest in Discover Card Master Trust I (the
“Trust”), the corpus of which consists of a portfolio of receivables (the
“Receivables”) existing as of the Initial Cut-Off Date or thereafter created
under certain open end credit card accounts for specified Persons (the
“Accounts”) originated by Discover or an affiliate of Discover and transferred
to the Trust by Discover or one or more Additional Sellers, all monies due or
to become due with respect thereto, all proceeds (as defined in 9-102(64) of
the Uniform Commercial Code as in effect in the Applicable State) of such
Receivables pursuant to an Amended and Restated Pooling and Servicing
Agreement, dated as of November 3, 2004 (the “Pooling and Servicing Agreement”)
by and between U.S. Bank National Association (formerly First Bank National
Association, successor trustee to Bank of America Illinois, formerly
Continental Bank, National Association), a national banking association
organized and existing under the laws of the United States of America, as
trustee (the “Trustee”) and Discover as Master Servicer, Servicer and Seller, a
summary of certain of the pertinent provisions of which is set forth herein
below, benefits under any Credit Enhancement with respect to any series of
Investor Certificates issued from time to time pursuant to the Pooling and
Servicing Agreement, to the extent applicable, Interchange and all other assets
and interests constituting the Trust.

          To the extent not defined herein, the capitalized terms used herein have
the meanings assigned in the Pooling and Servicing Agreement. This Certificate
is issued under and is subject to the terms, provisions and conditions of the
Pooling and Servicing Agreement, to which Pooling and Servicing Agreement, as
amended from time to time, the Holder by virtue of the acceptance hereof
assents and by which the Holder is bound.

D-1

 

          This Certificate is not permitted to be transferred, assigned, exchanged
or otherwise conveyed except as expressly permitted in the Pooling and
Servicing Agreement.

          This Certificate is the Seller Certificate (the “Seller Certificate”),
which represents a fractional undivided interest in the Trust including the
right to receive the Collections and other amounts at the times and in the
amounts specified in the Pooling and Servicing Agreement, including any series
supplements thereto which may be in effect from time to time, to be paid to the
Holder of the Seller Certificate. In addition to this Seller Certificate,
Investor Certificates, each of which will represent a Fractional Undivided
Interest in the Trust, will be issued to investors from time to time pursuant
to the Pooling and Servicing Agreement and one or more series supplements
thereto. The Seller Interest on any date of determination will be an amount
equal to the aggregate amount of Principal Receivables at the end of the day
immediately prior to such day of determination minus the Aggregate Investor
Interest with respect to such Receivables at the end of such day.

          This Certificate does not represent an obligation of, or an interest in,
Discover, any Additional Seller or any Servicer. This Certificate is limited
in right of payment to certain collections respecting the Receivables and
Interchange, all as more specifically set forth hereinabove and in the Pooling
and Servicing Agreement, including any series supplements thereto.

          Subject to certain conditions in the Pooling and Servicing Agreement, if
the principal of all Investor Certificates then outstanding has not been paid
in full prior to the Final Trust Termination Date, the obligations created by
the Pooling and Servicing Agreement and the Trust created thereby shall
terminate on the Final Trust Termination Date.

          Upon the termination of the Trust pursuant to Section 12.01 of the Pooling
and Servicing Agreement and the surrender of this Seller Certificate, the
Trustee shall distribute to the Holder of this Certificate such Holder’s pro
rata share of any Receivables, Interchange and cash remaining in the Trust in
respect of the Seller Interest (without recourse, representation or warranty
except for the warranty that since the date of transfer by the Seller under the
Pooling and Servicing Agreement the Trustee has not sold, transferred or
encumbered any such Receivable or interest therein). Such distribution shall
transfer all right, title and interest of the Trust in the Receivables and
Interchange, whether such Receivables and Interchange are then existing or
thereafter created, and all proceeds of either. The Trustee shall execute and
deliver such instruments of transfer and assignment, in each case without
recourse, as shall be reasonably requested by the Holder to vest in the Holder
all right, title and interest which the Trustee had in the Receivables and
Interchange.

          Unless the certificate of authentication hereon has been executed by or on
behalf of the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Pooling and Servicing Agreement, or be valid
for any purpose.

D-2

 

          IN WITNESS WHEREOF, Discover has caused this Certificate to be duly
executed.

	 	 	 	 	 
	 	 	DISCOVER BANK
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	

[FORM OF TRUSTEE’S CERTIFICATE OF AUTHENTICATION]

          This is the Seller Certificate referred to in the within mentioned Pooling
and Servicing Agreement.

	 	 	 	 	 
	 	 	U.S. BANK NATIONAL ASSOCIATION

  as Trustee
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	

	

	 	 	 	Authorized Officer

D-3

 

EXHIBIT E

FORM OF INITIAL REPORT

DISCOVER CARD MASTER TRUST I

CREDIT CARD

PASS-THROUGH CERTIFICATES

          The undersigned, a duly authorized representative of Discover Bank
(“Discover Bank”), as Master Servicer pursuant to the Amended and Restated
Pooling and Servicing Agreement dated as of November 3, 2004 (the “Pooling and
Servicing Agreement”) by and between Discover Bank as Master Servicer, Servicer
and Seller and U.S. Bank National Association, as Trustee, hereby certifies as
follows:

	1.	 	Capitalized terms used in this Certificate
have their respective meanings set forth in the Pooling
and Servicing Agreement.
	 
	2.	 	The undersigned is duly authorized
pursuant to the Pooling and Servicing Agreement to
execute and to deliver this Officer’s Certificate to
the Trustee and the Sellers.
	 
	3.	 	Discover Bank is Master Servicer under the
Pooling and Servicing Agreement.
	 
	4.	 	The aggregate amount of Principal
Receivables as of the Cut-Off Date was $     .
	 
	5.	 	The aggregate amount of Finance Charge
Receivables billed during the month prior to the month
in which the Cut-Off Date occurred was $     .

         IN WITNESS WHEREOF, the undersigned has duly executed this certificate
this       day of           , 200  .

	 	 	 	 	 
	 	 	
DISCOVER BANK,

as Master Servicer

	

	 	By:	 	 
	

	 	 	 	

	

	 	 	 	Title:

E-1

 

EXHIBIT F

FORM OF MASTER SERVICER’S ANNUAL CERTIFICATE

DISCOVER CARD MASTER TRUST I

CREDIT CARD

PASS-THROUGH CERTIFICATES

          The undersigned, a duly authorized representative of Discover Bank
(“Discover Bank”) as Master Servicer pursuant to the Amended and Restated
Pooling and Servicing Agreement dated as of November 3, 2004, by and between
Discover Bank and U.S. Bank National Association, as Trustee hereby certifies
that:

          1. Discover Bank is Master Servicer under the Pooling and Servicing
Agreement.

          2. The undersigned is duly authorized pursuant to the Pooling and
Servicing Agreement to execute and deliver this Certificate to the Trustee.

          3. During the fiscal year ended November 30,      in the course of my
duties as an officer of the Master Servicer, I would normally obtain knowledge
of any Master Servicer Termination Event.

          4. To the best of my knowledge, no Master Servicer Termination Event has
occurred.

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

	 	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	

	

	 	Name:	 	 
	

	 	 	 	

	

	 	Title:	 	 
	

	 	 	 	

F-1

 

EXHIBIT G

FORM OF SERVICER’S ANNUAL CERTIFICATE

DISCOVER CARD MASTER TRUST I

CREDIT CARD

PASS-THROUGH CERTIFICATES

          The undersigned, a duly authorized representative of [NAME OF SERVICER]
(“[Name]”) as a Servicer pursuant to the Amended and Restated Pooling and
Servicing Agreement dated as of November 3, 2004 (the “Pooling and Servicing
Agreement”), by and among [Name], Discover Bank and U.S. Bank National
Association, as Trustee hereby certifies that:

          1. [Name] is a Servicer under the Pooling and Servicing Agreement.

          2. The undersigned is duly authorized pursuant to the Pooling and
Servicing Agreement to execute and deliver this Certificate to the Trustee.

          3. During the fiscal year ended November 30,      in the course of my
duties as an officer of [Name], I would normally obtain knowledge of any
Servicer Termination Event relating to [Name].

          4. To the best of my knowledge, no such Servicer Termination Event has
occurred.

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

	 	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	

	

	 	Name:	 	 
	

	 	 	 	

	

	 	Title:	 	 
	

	 	 	 	

G-1

 

EXHIBIT H-1

FORM OF CLEARSTREAM BANKING OR EUROCLEAR STATEMENT

U.S. $               

Discover Card Master Trust I

Series      -     

   % Credit Account Pass-Through Certificates

          This is to certify that, with respect to U.S. $                aggregate
principal amount of the above-captioned issue (the “Investor Certificates”), we
have received a writing or tested telex or certification or certifications,
dated not earlier than 15 days prior to [the Exchange Date], from each of the
persons appearing on our records as being entitled to a portion of such
aggregate principal amount of the Investor Certificates, substantially in the
form attached hereto. Accordingly, we hereby certify that on this date:

          (a) The obligation is owned by a person that is not a U.S.
person, as such term is defined in Rule 902(o) under the United
States Securities Act of 1933, as amended; and

          (b) the obligation is owned by (1) a person that is not a
United States person; (2) a United States person as described in
U.S. Treas. Reg. § 1.163-5(c)(2)(i)(D)(6) (and accordingly the
financial institution described in such regulation provides the
certificate described therein); or (3) a financial institution
described in U.S. Treas. Reg. § 1.165-12(c)(1)(v) for purposes of
resale during the restricted period, and such financial institution
certifies in addition that it has not acquired the obligation for
purposes of resale directly or indirectly to a United States person
or to a person within the United States or its possessions.

            A certificate described in subsection (b)(1) or (b)(2) of the preceding
sentence may not be given with respect to an Investor Certificate that is owned
by a financial institution for purposes of resale during the restricted period.
Terms used in the foregoing subsection (b) have the meanings given to them by
the U.S. Internal Revenue Code of 1986, as amended, and the regulations
thereunder.

            We further certify that we have been directed to request U.S. $           in
aggregate principal amount in U.S. $               denominations, U.S. $               in
aggregate principal amount in U.S. $                denominations and U.S.
$                in aggregate principal amount in U.S. $               denominations.
We understand that if we have failed to make the direction in the preceding
sentence, such Definitive Euro-Certificates will be issued in denominations of
U.S. $                to the extent possible.

            This is further to certify that, with respect to U.S. $                aggregate
principal amount of the above-captioned issue, we have received a writing or
tested telex or certificate or certification from [name of Manager], copies of
which are attached hereto.

H-1-1

 

          Accordingly, we direct that U.S. $                aggregate principal amount of
the above-captioned Investor Certificates be issued in registered form in
accordance with the directions set forth on the attached certificates from
[name of Manager].

          We understand that this certificate is required in connection with certain
securities and tax laws of the United States of America. If an administrative
or legal proceeding or official inquiry is commenced or threatened in
connection with which this certificate is or would be relevant, we irrevocably
authorize you to produce this certificate or a copy thereof to any interested
party in such proceeding.

          The foregoing reflects any telexed advice received subsequent to the date
of any writing, telex, certification or certifications referred to stating that
the statements contained in such certification or certifications are no longer
correct.

	 	 	 	 	 
	*Dated:	 	(Morgan Guaranty Trust Company of New York,
	 	 	Brussels Office, as operator of the Euroclear
	 	 	System)
	

	 	(or)	 	 
	 	 	(Clearstream Banking)
	 	 	 
	

	 	By:	 	 
	

	 	 	 	

* To be dated as of the date of delivery of the definitive Bearer Investor
Certificates and/or Registered Certificates, as applicable, and, in any event,
no earlier than the Exchange Date.

H-1-2

 

EXHIBIT H-2

FORM OF CERTIFICATE WITH RESPECT TO U.S. INSTITUTIONAL INVESTORS

U.S. $               

Discover Card Master Trust I

Series      -     

   % Credit Account Pass-Through Certificates

          In connection with the initial issuance and placement of the
above-captioned Investor Certificates, an institutional investor in the United
States is purchasing U.S. $               aggregate principal amount of such
Investor Certificates held in our account at [Morgan Guaranty Trust Company of
New York, Brussels office, as operator of the Euroclear System] [Clearstream
Banking] on behalf of such investor.

          We reasonably believe that such institutional investor is a “qualified
institutional buyer” as such term is defined under Rule 144A of the Securities
Act of 1933, as amended.

          We understand that this certificate is required in connection with certain
securities laws of the United States of America. If an administrative or legal
proceeding or official inquiry is commenced or threatened in connection with
which this certificate is or would be relevant, we irrevocably authorize you to
produce this certificate or a copy thereof to any interested party in such
proceeding.

          On behalf of such institutional investor, we direct that U.S.
$               in aggregate principal amount of the above-captioned Investor
Certificates be issued in registered form to [delivery instructions].

	 	 	 
	*Dated:

	 	

	

	 	[signature]

* To be dated as of the date of delivery of the Definitive Euro-Certificates in
registered form, and, in any event, no earlier than the Exchange Date.

H-2-1

 

EXHIBIT H-3

FORM OF CERTIFICATE REGARDING BENEFICIAL OWNERSHIP

U.S. $               

Discover Card Master Trust I

Series      -      

   % Credit Account Pass-Through Certificates

          This is to certify that as of the date hereof and except as provided in
the fourth paragraph hereof, none of the above-captioned Investor Certificates
credited to you for our account are beneficially owned by a U.S. person. For
purposes of the foregoing, the undersigned understands that the term “U.S.
person” shall have the meaning set forth in Rule 902(o) under the United States
Securities Act of 1933, as amended.

          In addition, we hereby certify that as of the date hereof and except as
provided in the fourth paragraph hereof, the above-captioned Investor
Certificates credited to you for our account are:

          (1) owned by a person that is not a United States person;

    (2) owned by a United States person as described in U.S.
Treas. Reg. § 1.163-5(c)(2)(i)(D)(6) (and accordingly the
financial institution described in such regulation provides the
certificate described therein); or

    (3) owned by a financial institution described in U.S. Treas.
Reg. § 1.165-12(c)(1)(v) for purposes of resale during the
restricted period, and such financial institution certifies in
addition that it has not acquired the obligation for purposes of
resale directly or indirectly to a United States person or to a
person within the United States or its possessions.

          A certificate described in clause (1) or (2) of the preceding sentence may
not be given with respect to an Investor Certificate that is owned by a
financial institution for purposes of resale during the restricted period.
Terms used in this paragraph have the meanings given to them by the U.S.
Internal Revenue Code of 1986, as amended, and the regulations thereunder.

          We undertake to advise you by telex if the above statement as to
beneficial ownership is not correct on or prior to [the Exchange Date] as to
any of the above-captioned Investor Certificates then appearing in your books
as being credited to our account.

          This certificate excepts and does not relate to U.S. $               
principal amount as to which we are not yet able to certify and as to which we
understand exchange and delivery of Definitive Euro-Certificates cannot be made
until we are able so to certify.

          We understand that this certificate is required in connection with certain
securities and tax laws of the United States of America. If an administrative
or legal proceeding or official

H-3-1

 

inquiry is commenced or threatened in
connection with which this certificate is or would be
relevant, we irrevocably authorize you to produce this certificate or a
copy thereof to any interested party in such proceeding.

          We direct that U.S. $               in aggregate principal amount of the
above-captioned Investor Certificates be issued in U.S. $               
denominations, U.S. $               in aggregate principal amount of the
Investor Certificates be issued in U.S. $               denominations and U.S.
$               in aggregate principal amount of the Investor Certificates be
issued in U.S. $                denominations. We understand that if we have failed
to make the direction in the preceding sentence, such Definitive
Euro-Certificates will be issued in denominations of U.S. $           to the
extent possible.

	 	 	 
	

	 	

	

	 	[signature]

*Dated:

*To be dated on or after the 15th day before the Exchange Date.

H-3-2

 

EXHIBIT I

PROVISIONS TO BE INCLUDED IN ANNUAL OPINION OF COUNSEL

          The opinion set forth below, which is to be delivered pursuant to Section
13.02(d) of the Pooling and Servicing Agreement, may be subject to certain
customary qualifications, assumptions and limitations.

          With the filing of financing statements covering the Receivables in the
offices of the Secretaries of State of the State of                 and the
State of                , the interest of the Trustee in the Receivables has
been duly perfected. No other action is required to continue such perfection
prior to the six month period preceding the fifth anniversary of the filing of
such financing statements.

I-1

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00073-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00073-of-00352.parquet"}]]