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Delaware (State of other jurisdiction of incorporation or organization) | 51-0020270 (IRS Employer Identification Number) |
MICHAEL D. LEVIN, Esq. ELLEN L. MARKS, Esq. Latham & Watkins LLP Sears Tower, Suite 5800 Chicago, Illinois 60606 (312) 876-7700 Counsel to Registrants | RICHARD M. SCHETMAN, Esq. Cadwalader, Wickersham & Taft LLP One World Financial Center New York, New York 10281 (212) 504-6000 Counsel to Underwriters |
Amount to be | Proposed Maximum | Proposed Maximum | Amount of | |||||
Registered(1) | Offering Price Per | Aggregate Offering | Registration Fee(2) | |||||
Title of Securities to be | Unit(2) | Price(1) | ||||||
Registered | ||||||||
Credit Card Pass-Through Certificates of Discover Card Master Trust I | $15,263,164,000 | 100% | $15,263,164,000 | $1,633,158.55 |
(1) | Estimated solely for purpose of calculating the registration fee. |
(2) | Calculated pursuant to Rule 457(o) under the Securities Act of 1933, as amended. Previously paid. |
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• | the initial offering of Credit Card Pass-Through Certificates of Discover Card Master Trust I by the Registrants; and | |
• | offers and sales in connection with the proportionate share of underwriters’ stabilization activities, if any, by Morgan Stanley & Co. Incorporated, Morgan Stanley International Limited and Morgan Stanley DW Inc., affiliates of the Registrants, with respect to the Credit Card Pass-Through Certificates. |
• | a Prospectus relating to the Credit Card Pass-Through Certificates; and | |
• | a representative form of Prospectus Supplement relating to particular series of Credit Card Pass-Through Certificates to be issued by the Trust. |
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Class A Certificates | Class B Certificates | |||
Interest rate | [LIBOR +] [ ]% | [LIBOR +] [ ]% | ||
Expected interest payment dates | Monthly, beginning | Monthly, beginning | ||
Expected maturity date | ||||
Initial credit enhancement | [$ — %] of series | [$ — %] of series | ||
Form of credit enhancement | Subordination of Class B Certificates | [Cash collateral account] | ||
Credit enhancement provider | N/A | Discover Receivables Financing Corporation | ||
Expected ratings — Moody’s/ S&P/ Fitch | [Aaa/AAA/AAA] | [A2/A/A+] | ||
Price to public | % | % | ||
Underwriting discounts and commissions | % | % | ||
Proceeds to Discover Bank | $ | $ |
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• | this prospectus supplement, which describes the specific terms of your certificates, and | |
• | the prospectus, which provides detailed information, some of which may not apply to your certificates, about the trust and the certificates issued by the trust. |
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• | are outside the United Kingdom; or | |
• | have professional experience in matters relating to investments within the meaning of the Financial Services and markets Act 2000 (Financial Promotion) Order 2005 (the “Order”); or | |
• | are persons falling within Article 49(2)(a) to (d) (“high net worth companies, unincorporated associations etc”) of the Order; or | |
• | have professional experience of participating in unregulated collective investment schemes; or | |
• | are persons falling within Article 22(2)(a) to (d) (“high net worth companies, unincorporated associations etc”) of the Financial Services and Markets Act 2000 (Promotion of Collective Investment Schemes) (Exemptions) Order 2001, |
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Participants | ||
Sponsor/ Depositor | Discover Bank. References in this prospectus supplement and the accompanying prospectus to Discover Bank as the “seller” shall also refer to the “depositor.” Through [ ], Discover Bank has sponsored the issuance of [ ] series from the trust, the certificates of [ ] of which were paid in full on their applicable expected final payments dates or by liquidation in accordance with their liquidation schedules or indices. The remaining [ ] series of certificates were still outstanding as of [ ]. | |
Master Servicer and Servicer | Discover Bank. Discover Bank has outsourced certain servicing functions to its affiliate Discover Financial Services LLC (“DFS”), but Discover Bank is ultimately responsible for the overall servicing function. | |
Issuing Entity | Discover Card Master Trust I. | |
Trustee | U.S. Bank National Association. The parent of U.S. Bank National Association, U.S. Bancorp, is currently ranked as the [ ] largest bank holding company in the United States with total assets exceeding $[ ] billion as of [ ]. As of [ ], U.S. Bancorp serves approximately [ ] million customers, operates [ ] branch offices in [ ] states and has over [ ] employees. As of [ ], U.S. Bank was acting as trustee with respect to approximately [ ] issuances of securities with an aggregate outstanding principal balance of over $[ ] trillion. This portfolio includes [corporate and municipal bonds, mortgage-backed and asset-backed securities and collateralized debt obligations]. As of [ ], U.S. Bank (and its affiliate U.S. Bank Trust National Association) was acting as trustee on [ ] issuances of credit card receivables-backed securities with an outstanding aggregate principal balance of approximately $[ ]. See “The Trust — The Trustee” in the accompanying prospectus. | |
[Derivative Counterparty] | [ ] |
Pool Assets |
Formation of the Trust; Trust Assets | Discover Bank and the trustee formed the trust in October 1993. Discover Bank originates and has transferred to the trust the credit card receivables generated under certain designated Discover® Card accounts. The Class A Certificates and the Class B Certificates represent an interest in the aggregate pool of receivables in the trust, not an interest in any specific receivable or subset of the receivables. For |
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information on the trust’s assets, see“The Trust”in the accompanying prospectus. | ||
The Receivables | The receivables in the trust as of [ ] totaled $[ ]. |
Terms of Series 20[ ]- [ ] Certificates | ||
The Certificates | Discover Card Master Trust I, Series 20[ ]-[ ] [Floating Rate][%] Class A Credit Card Pass-Through Certificates and Series 20[ ]-[ ] [Floating Rate][%] Class B Credit Card Pass-Through Certificates. | |
The Series | Together, the Class A Certificates and the Class B Certificates make up the securities in this series that we are offering pursuant to this prospectus supplement and accompanying prospectus. The series supplement for this series will permit the trust to increase this series by issuing additional certificates. Discover Bank and the trust will not request your consent to issue additional certificates for this series. Discover Bank owns a residual interest in the assets of the trust that are not represented by these certificates or the certificates of any other currently outstanding series. We are not offering any rights to this residual interest in the trust. | |
Principal | Class A Certificates: $[ ]. | |
Class B Certificates: $[ ]. | ||
Interest Rate | Class A Certificates: [ ] per year. | |
Class B Certificates: [ ] per year. |
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[“LIBOR” will mean the London interbank offered rate for one-month United States dollar deposits, determined two business days before the start of each interest accrual period.] | ||
[The trustee will calculate floating rate interest rates based on LIBOR for the certificates monthly.] Interest will be calculated on the certificates monthly on the basis of [the actual number of days elapsed] [twelve thirty-day months] and a360-day year. | ||
Interest Payment Dates | The 15th day of each month, or the next business day, beginning in [ ]. | |
The trust will pay your interest on each interest payment date from the funds deposited into the series interest funding account on that date. | ||
Expected Maturity Dates | Class A Certificates: [ ], or the next business day. If an amortization event occurs, the trust will pay principal monthly and the final principal payment may be made before or after [ ]. Assuming (i) closing occurs on [ ], (ii) no amortization event occurs and (iii) payment will be made in full on the expected maturity date and adjusting for weekends and holidays, the average life is expected to be [ ] years. | |
Class B Certificates: [ ], or the next business day. If an amortization event occurs, the trust will pay principal monthly and the final principal payment may be made before or after [ ]. The trust must generally pay all Class A principal before it pays any Class B principal. Assuming (i) closing occurs on [ ], (ii) no amortization event occurs and (iii) payment will be made in full on the expected maturity date and adjusting for weekends and holidays, the average life is expected to be [ ] years. |
The average life calculations for each class of certificates are based on a360-day year of twelve30-day months. | ||
Amortization Events | Amortization events are designed to help protect investors from certain developments that may adversely affect the trust and your investment in the certificates. An amortization event for this series can occur when: | |
• Discover Bank, or any additional seller, fails to make any payment or deposit within five business days after the required date; | ||
• Discover Bank, or any additional seller, breaches certain representations, warranties or material covenants; | ||
• certain events of insolvency or receivership occur with respect to Discover Bank or any additional seller; | ||
• Discover Bank, or any additional seller, becomes unable to continue to transfer receivables to the trust; | ||
• the trust becomes an “investment company” within the meaning of the Investment Company Act of 1940, as amended; |
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• an event occurs, such as a breach of certain covenants or an insolvency event, that allows investors to terminate the responsibilities of the master servicer or the servicer; | ||
• Discover Bank fails to maintain the required amount of principal receivables in the trust at the end of any month or on any distribution date and Discover Bank fails to assign receivables in additional accounts or interests in other credit card receivables pools to the trust in at least the amount of the deficiency within ten days; | ||
• the trust does not pay all outstanding principal of a class on the applicable maturity date; | ||
• certain measures of excess cash flow for the series, the group of series and the interchange subgroup of the series are less than zero on a three-month rolling average basis; | ||
• if additional credit enhancement is required by the series supplement and Discover Bank fails to arrange for such additional credit enhancement; and | ||
• [ ] | ||
For some of these events to become amortization events, the trustee or a specified percentage of certificateholders must declare them to be amortization events; others become amortization events automatically when they occur. If an amortization event occurs with respect to this series, the trust becomes obligated to apply principal collections allocated to this series on a monthly basis to repay the remaining principal amount of the certificates. We note, however, that the FDIC has taken the position, in connection with a credit card securitization not involving Discover Bank, that an amortization event related solely to the appointment of a receiver for the sponsoring bank is unenforceable. Additionally, in a footnote to an interagency advisory, the FDIC and other federal regulatory agencies indicated that this type of amortization event may be void or voidable under the Federal Deposit Insurance Act. | ||
Series Closing Date | [ ]. The series closing date is the date on which the trust issues the certificates. | |
Series Cut-off Date | [ ]. The series cut-off date is the date from which collections on the trust’s receivables are allocated to the certificates of this series. Because the trust is a master trust with an already established pool of receivables, the series cut-off date is not the date on which receivables are treated as belonging to the trust, but is used solely to determine investor allocations. The trust is entitled to all receivables arising on accounts from the dates on which such accounts were designated as trust accounts, which includes such designations at the formation of the trust in 1993 and on numerous additional dates thereafter. | |
Accumulation Period | The trust will begin to accumulate cash in the series principal funding account on [ ], or the next business day, using collections it receives on or after [ ], to pay principal at maturity, unless |
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Discover Bank elects to delay this process or an amortization event has occurred. The trust is scheduled to accumulate principal collections in the series principal funding account over several months, so that it will have collections available to make the final payment. | ||
Discover Bank may elect to shorten the accumulation period only if: | ||
• it determines that enough principal collections from this or other series will be available to make larger deposits into the series principal funding account, and | ||
• the required rating agencies have approved the election to shorten the accumulation period. | ||
Amortization Period | The amortization period begins when an amortization event occurs and continues until the trust has fully paid the principal of this series or until the series termination date. | |
Series Termination Date | The first business day following [ ], or the second business day following [ ], if [ ] is not a business day. The series termination date is the last day on which the trust will pay principal to investors in this series. If the trust owes principal in the month before the series termination date, the trustee will sell receivables, proportionate to this series’ remaining interest in the trust, to repay the principal. After the series termination date, the trust will not allocate collections or interchange to this series. | |
Classes, Allocations and Reallocations | This series has two classes; the Class B Certificates rank junior to the Class A Certificates. | |
The trust allocates collections and interchange among the series based on each series’ investor interest in receivables. The trust also allocates receivables related to accounts that Discover Bank has charged off as uncollectible to series based on the investor interest in receivables. For series comprised of subseries, each subseries is treated as a separate series for purposes of these allocations. The series supplement to the pooling and servicing agreement will specify the percentages of these collections, interchange and charged-off receivables that are allocated to each class of this series at each point in time. These percentages vary based on a number of factors, including whether the trust has started to pay principal to investors in this series and whether Discover Bank has made certain choices regarding credit enhancement. The class percentages also differ for finance charge collections, principal collections, interchange and charged-off amounts. The pooling and servicing agreement determines whether collections are finance charge collections or principal collections, with recoveries on charged-off accounts included in finance charge collections. Once this determination is made, finance charge collections and principal collections are generally not interchangeable; each can only be used to fund certain payments, deposits and reimbursements. When Discover Bank charges off a receivable as uncollectible, it reduces the amount of principal receivables in the trust, and allocates a portion of the amount charged off against your interest |
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in principal receivables based on your class percentage. However, the trust typically uses finance charge collections (which includes recoveries oncharged-off accounts), interchange and investment income from certain trust accounts, to pay interest and to reimburse you for charged-off receivables that have been allocated to you, reinstating your interest in principal receivables. The trust typically uses principal collections to repay your principal. | ||
In general, the trust will use this series’ share of collections and other income to make required payments, to pay its share of servicing fees and to reimburse its share of charged-off amounts. If this series has more collections and other income than it needs in any month, the trust may make the excess collections and other income available to other series so those series may make their payments and reimbursements, except that series issued before November 3, 2004 will not be eligible to receive reallocated interchange. You will not be entitled to receive these excess collections or other income. If this series does not have enough collections and other income in any month, the trust may use excess collections and other income, including interchange, from other series to make payments and reimbursements for this series. | ||
Cash Flows | We have summarized, first, the manner in which the trust prioritizes the allocation of series finance charge collections and other income and second, the manner in which the trust prioritizes series principal collections and the amounts it uses to reimburse charge-offs. You should review the numbered steps listed in“The Certificates — Cash Flows”for more detailed information about these cash flows. | |
In general, the trust uses series finance charge collections and other income for this series in the following order of priority on each distribution date, to the extent funds are available: | ||
• First, to pay Class A interest and servicing fees; | ||
• Second, to reimburse Class A charge-offs, including any unreimbursed charge-offs carried forward from prior months; | ||
• Third, to pay Class B interest and servicing fees; | ||
• Fourth, to reimburse Class B charge-offs, including any unreimbursed charge-offs carried forward from prior months; | ||
• Fifth, to increase the credit enhancement available for the Class B Certificates to the maximum amount as specified in the series supplement; | ||
• Sixth, to pay fees and interest to the credit enhancement provider; | ||
• Seventh, to pay interest, accreted discount and monthly servicing fees and to reimburse charge-offs for other series in this group (generally in the order listed above), provided that interchange will only be used to make such payments and reimbursements for series that are otherwise eligible for allocations of interchange; and | ||
• Eighth, to pay the credit enhancement provider and then Discover Bank, as the holder of the residual interest in the trust, in accordance with the terms of the credit enhancement agreement. |
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In general, the trust uses principal collections and amounts used to reimburse charge-offs in the following order of priority on each distribution date: | ||
• First, to pay shortfalls in Class A interest and servicing fees after finance charge collections and other income have been used (in this step, the trust uses Class B principal collections only); | ||
• Second, to reimburse Class A charge-offs after finance charge collections and other income have been used (in this step, the trust uses Class B principal collections only); | ||
• Third, to make the scheduled principal deposit into the series principal funding account, during the accumulation period, or to pay the series investor interest, during the amortization period; | ||
• Fourth, to pay the scheduled principal payments or make the scheduled principal deposits for other series in this group of series; | ||
• Fifth, to pay unscheduled principal payments or make unscheduled principal deposits for other series in this group of series, except for series or, if applicable, subseries in their amortization periods; and | ||
• Sixth, to pay Discover Bank, up to the amount of the residual interest, with remaining amounts to be allocated as principal collections in the following month. | ||
In addition, finance charge collections, interchange, principal collections and reimbursements received for charged-off amounts can be reallocated from other series to make payments, deposits and reimbursements for this series. Such reallocations are described in detail and summarized under“The Certificates — Cash Flows”. | ||
Investor Interest and Invested Amount | The trust generally allocates collections, interchange and charged-off amounts to you based on your investor interest, which is your interest in the receivables. The trust makes payments to you based on your invested amount, which generally is the principal balance of your certificates. Your investor interest in receivables may decrease over time as principal is paid to you or as principal collections are deposited into the series principal funding account to be paid to you at a later time. | |
Although your investor interest in receivables and your invested amount are related, they diverge under certain circumstances; for instance, as the trustee accumulates principal in the series principal funding account, your investor interest in receivables will decline but your invested amount will not be affected. During this accumulation period, your invested amount will shift from an interest entirely in the receivables to an interest in the cash in the series principal funding account and a smaller interest in the receivables. | ||
Distribution Dates | The distribution date is the date in each month, typically the 15th, on which the trust allocates collections from the preceding calendar month to investors and the trustee deposits them into appropriate accounts. |
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Clean-up Call | Discover Bank may purchase the remaining investor interest of this series from the trust on any distribution date during the accumulation period or the amortization period if such remaining investor interest is less than or equal to 5.0% of the initial investor interest and any additional investor interest related to a further issuance of certificates of this series, after giving effect to required payments, deposits and reimbursements on that distribution date. See“The Certificates —Clean-up Call; Termination of Series”. | |
Subordination of Class B Certificates — Class A Credit Enhancement | The Class B Certificates are subordinated to the Class A Certificates up to a specified dollar amount that is the available subordinated amount. This means that the trust may reallocate collections and other assets that it initially allocated to the Class B Certificates to instead make payments, deposits and reimbursements for the Class A Certificates. The available subordinated amount decreases to the extent that the trust reallocates subordinated amounts such as Class B collections and other income and the Class B investor interest in receivables in the trust to the Class A Certificates. As long as the available subordinated amount is greater than zero, the trust will generally make payments, deposits and reimbursements for the Class B Certificates only after it has satisfied the requirements of the Class A Certificates. | |
The initial available subordinated amount is $[ ]. If the trust uses part of the available subordinated amount in any month, it may increase the available subordinated amount up to its initial level, to the extent that this series has excess finance charge collections and other income allocated or reallocated to it in any subsequent month. Discover Bank may also cause the available subordinated amount to increase if it elects to change the way in which the trust allocates finance charge collections during an amortization period. The available subordinated amount may increase if Standard & Poor’s withdraws or significantly downgrades Discover Bank’s long-term debt or deposit rating. You should review the information under“The Certificates — Subordination of Class B Certificates” for more information about this amount. If the available subordinated amount declines to zero, the Class A Certificates will lack credit enhancement and will have to rely solely on their own allocations of collections. | ||
Cash Collateral Account — Class B Credit Enhancement | Discover Bank will arrange to have a cash collateral account funded with $[ ]. The cash collateral account shall be funded by Discover Receivables Financing Corporation, a special purpose entity and affiliate of Discover Bank, whose purpose is to make loans into the cash collateral account to fund the trust for the benefit of the Class B certificateholders. | |
The trustee may withdraw funds from this account |
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• to pay interest or servicing fees for the Class B Certificates, and | ||
• to reimburse the Class B investors for amounts that would otherwise reduce the Class B investor interest in receivables. | ||
The trustee may not withdraw funds from this account to pay any amounts on the Class A Certificates, but the Class A investors benefit indirectly from this account because the trustee can withdraw funds to protect the Class B investor interest in receivables, and the Class A investors can then use the Class B investor interest in receivables in subsequent months as part of the available subordinated amount. | ||
The maximum amount that will be on deposit in this account on any distribution date will initially be $[ ], but it may increase under certain circumstances. It will generally decrease during the accumulation period as the series investor interest in receivables declines. If an amortization event occurs, the maximum amount of the account will be the maximum amount immediately before the amortization event occurred. If the trustee withdraws funds from the account, then until those funds have been replaced, the maximum amount of the account will be the maximum amount at the time of the withdrawal. You should review the“Maximum Class B Credit Enhancement Amount” table in“The Certificates — The Credit Enhancement Account” for more information about this amount. If the cash collateral account declines to zero, the Class B certificateholders will bear directly the credit and other risks associated with their investment in the trust. | ||
[Derivative Agreement | The trust will enter into [an interest rate] [a currency] swap agreement in connection with the issuance of this series. For information regarding how the swap agreement will affect cash flows, see“The Certificates — Cash Flows.” For a description of the [interest rate] [currency] swap agreement, see“The Certificates — Derivative Instruments.”] | |
Other Series | ||
Currently Outstanding Series | Each series belongs to a group of series for purposes of reallocating collections among series. The trust currently has outstanding [ ] series or subseries of certificates in Group One. The section entitled“Outstanding Series of Certificates” summarizes the terms of these series. Series 20[ ]-[ ] is in the subgroup of series eligible for allocations and reallocations of interchange. | |
No Subordination of Series | The collections and other income for this series will not be available to other series in any month until the trust has made all payments, deposits and reimbursements for this series. |
Revolving Period |
Revolving Period | The revolving period for this series began on [ ]. The revolving period is the period from the first day of the calendar month in which |
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the trust issues a series until it begins using principal collections to make principal payments to investors or to accumulate the cash to be used to make later principal payments. In general, during the revolving period, the trust pays principal collections to Discover Bank in exchange for new receivables that cardmembers have generated on the accounts designated as part of the trust. The trust may also use principal collections to pay the principal of other series. The revolving period for this series ends when the accumulation period begins, or when an amortization event occurs. Credit card receivables are by their nature revolving assets, by which we mean that receivables are continually generated and repaid in the accounts designated as part of the trust. Even when the revolving period for this series ends, new receivables generated in the accounts designated as part of the trust continue to be treated as trust assets. |
Addition and Removal of Accounts During the Revolving Period | During the revolving period, subject to the satisfaction of certain conditions, Discover Bank may designate additional accounts to and remove accounts from the trust. See“The Trust — Addition of Accounts; Removal of Accounts” in the related prospectus. There is no limitation on the number of additional accounts that may be designated to the trust. At all times while certificates are outstanding, including during the revolving period, all new receivables generated on accounts designated to the trust become assets of the trust. The receivables under additional accounts must be “Eligible Receivables”, which generally means that they must (i) be payable in U.S. dollars, (ii) be created in compliance with applicable law and pursuant to a credit agreement that complies with applicable law, (iii) be capable of being owned by the trust free and clear of liens and (iv) constitute an “account” under Article 9 of the UCC. All of the accounts originated by Discover Bank for the Discover Card portfolio, including those designated to the trust, must meet Discover Bank’s credit granting criteria, as described in“The Discover Card Business —Credit-Granting Procedures” at the time of origination. | |
Rating Requirements | ||
Ratings | The trust will only issue the certificates if Standard & Poor’s has rated the Class A Certificates [“AAA”] and the Class B Certificates at least [“A”] and Moody’s Investors Service, Inc. has rated the Class A Certificates [“Aaa”] and the Class B Certificates at least [“A2.”] [These ratings reflect the rating agencies’ views as to how likely it is that the trust will pay interest on a timely basis and will ultimately repay principal.] See“Risk Factors — Rating of the Certificates.” |
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Other Information | ||
Potential Changes Relating to Financial Accounting Standards | The Financial Accounting Standards Board’s current project to amend and clarify Statement of Financial Accounting Standards No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, may make it more difficult for banks and others to maintain or establish sale accounting treatment in connection with their transfers of financial assets in securitization transactions. See“Risk Factors — Potential Changes Relating to Financial Accounting Standards.” | |
By accepting a certificate, you will be deemed to have consented to any changes necessary to establish or maintain sale accounting treatment. Discover Bank may not make any changes that would have required your consent if not for the preceding sentence, unless the rating agencies confirm in writing that the changes will not cause them to lower or withdraw their ratings on any class of any series of certificates then outstanding of the trust. |
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• | bank-issued credit cards, including co-branded cards issued by banks in cooperation with industrial, retail or other companies, and affinity cards issued by banks in cooperation with organizations such as universities and professional groups, and | |
• | charge cards issued by travel and entertainment companies. |
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• | it has not complied in all material respects with the legal requirements that applied to its creation of a receivable included in the trust, | |
• | it does not cure its noncompliance in a specified period of time, and | |
• | the noncompliance has a material adverse effect on the trust’s interest in all of the receivables in the trust, |
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• | you may receive payments of principal earlier than you expected; | |
• | you may not receive all principal payments by the expected maturity date for your certificates; | |
• | we cannot predict how much principal the trust will pay you in any month or how long it will take to pay your invested amount in full; and | |
• | the risk that you will not receive full interest payments or that you will not receive an aggregate amount of principal equal to the face amount of your certificates will increase. |
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• | may contain a higher proportion of newly originated accounts; | |
• | may include accounts originated using criteria different from the criteria Discover Bank used in the accounts already in the trust; | |
• | may not be of the same credit quality as the accounts already included in the trust; | |
• | may have different terms than the accounts already included in the trust, including lower periodic finance charges, which may reduce the average yield on the receivables in the trust; | |
• | may have lower transaction volume or, for accounts that are not Discover Card accounts, have lower rates of interchange fees associated with them, in each case leading to lower levels of related interchange; | |
• | may include accounts for which the cardmembers pay receivables at a slower rate, which could delay principal payments to you; and | |
• | may initially have lower levels of recoveries than accounts already in the trust because Discover Bank will not add charged-off accounts to the trust. |
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State | Percentage of Total Receivables | |||
[ ] | % | |||
[ ] | % | |||
[ ] | % | |||
[ ] | % | |||
[ ] | % | |||
[ ] | % | |||
[ ] | % | |||
[ ] | % | |||
[ ] | % | |||
[ ] | % | |||
[Other States] | % |
Receivables | Percentage | Percentage | |||||||||||||||
Outstanding | of Total | Number of | of Total | ||||||||||||||
Credit Limit | ($000’s) | Receivables | Accounts | Accounts | |||||||||||||
Less than or equal to $5,000.00 | $ | % | % | ||||||||||||||
$5,000.01 to $10,000.00 | $ | % | % | ||||||||||||||
$10,000.01 to $15,000.00 | $ | % | % | ||||||||||||||
Over $15,000.00 | $ | % | % | ||||||||||||||
Total | $ | 100.0% | 100.0% | ||||||||||||||
Receivables | Percentage of | Percentage | |||||||||||||||
Outstanding | Total | Number of | of Total | ||||||||||||||
($000’s) | Receivables | Accounts | Accounts | ||||||||||||||
Credit Balance | $ | % | % | ||||||||||||||
No Balance | $ | % | % | ||||||||||||||
$0.01 to $5,000.00 | $ | % | % | ||||||||||||||
$5,000.01 to $10,000.00 | $ | % | % | ||||||||||||||
Over $10,000.00 | $ | % | % | ||||||||||||||
TOTAL | $ | 100.0% | 100.0% | ||||||||||||||
Percentage of | Percentage of Total | |||||||
Age of Accounts | Total Accounts | Receivables | ||||||
Less than 12 Months | % | % | ||||||
12 to 23 Months | % | % | ||||||
24 to 35 Months | % | % | ||||||
36 to 47 Months | % | % | ||||||
48 to 59 Months | % | % | ||||||
60 Months and Greater | % | % | ||||||
100.0% | 100.0% | |||||||
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As of [ ], 20[ ] | As of December 31, 20[ ] | As of December 31, 20[ ] | ||||||||||||||||||||||
Receivables | Percentage | Receivables | Percentage | Receivables | Percentage | |||||||||||||||||||
Outstanding | of Total | Outstanding | of Total | Outstanding | of Total | |||||||||||||||||||
Delinquency Status | ($000’s) | Receivables | ($000’s) | Receivables | ($000’s) | Receivables | ||||||||||||||||||
Total Receivables | $ | % | $ | % | $ | % | ||||||||||||||||||
Receivables Delinquent: | ||||||||||||||||||||||||
30 to 59 Days | $ | % | $ | % | $ | % | ||||||||||||||||||
60 to 89 Days | $ | % | $ | % | $ | % | ||||||||||||||||||
90 to 119 Days | $ | % | $ | % | $ | % | ||||||||||||||||||
120 to 149 Days | $ | % | $ | % | $ | % | ||||||||||||||||||
150 to 179 Days | $ | % | $ | % | $ | % | ||||||||||||||||||
Over 180 Days | $ | % | $ | % | $ | % | ||||||||||||||||||
Total Delinquent | $ | % | $ | % | $ | % | ||||||||||||||||||
As of December 31, 20[ ] | As of December 31, 20[ ] | |||||||||||||||
Receivables | Percentage | Receivables | Percentage | |||||||||||||
Outstanding | of Total | Outstanding | of Total | |||||||||||||
Delinquency Status | ($000’s) | Receivables | ($000’s) | Receivables | ||||||||||||
Total Receivables | $ | % | $ | % | ||||||||||||
Receivables Delinquent: | ||||||||||||||||
30 to 59 Days | $ | % | $ | % | ||||||||||||
60 to 89 Days | $ | % | $ | % | ||||||||||||
90 to 119 Days | $ | % | $ | % | ||||||||||||
120 to 149 Days | $ | % | $ | % | ||||||||||||
150 to 179 Days | $ | % | $ | % | ||||||||||||
Over 180 Days | $ | % | $ | % | ||||||||||||
Total Delinquent | $ | % | $ | % | ||||||||||||
As of [ ], 20[ ] | As of December 31, 20[ ] | As of December 31, 20[ ] | ||||||||||||||||||||||
Number of | Percentage of | Number of | Percentage of | Number of | Percentage of | |||||||||||||||||||
Delinquency Status | Accounts | Total Accounts | Accounts | Total Accounts | Accounts | Total Accounts | ||||||||||||||||||
Total Accounts | % | % | % | |||||||||||||||||||||
Accounts Delinquent: | ||||||||||||||||||||||||
30 to 59 Days | % | % | % | |||||||||||||||||||||
60 to 89 Days | % | % | % | |||||||||||||||||||||
90 to 119 Days | % | % | % | |||||||||||||||||||||
120 to 149 Days | % | % | % | |||||||||||||||||||||
150 to 179 Days | % | % | % | |||||||||||||||||||||
Over 180 Days | % | % | % | |||||||||||||||||||||
Total Delinquent | % | % | % | |||||||||||||||||||||
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As December 31, 20[ ] | As of December 31, 20[ ] | |||||||||||||||
Number of | Percentage of | Number of | Percentage of | |||||||||||||
Delinquency Status | Accounts | Total Accounts | Accounts | Total Accounts | ||||||||||||
Total Accounts | % | % | ||||||||||||||
Accounts Delinquent: | ||||||||||||||||
30 to 59 Days | % | % | ||||||||||||||
60 to 89 Days | % | % | ||||||||||||||
90 to 119 Days | % | % | ||||||||||||||
120 to 149 Days | % | % | ||||||||||||||
150 to 179 Days | % | % | ||||||||||||||
Over 180 Days | % | % | ||||||||||||||
Total Delinquent | % | % | ||||||||||||||
Receivables | |||||||||
Outstanding | Percentage of | ||||||||
FICO Credit Score Range | ($000) | Total Receivables | |||||||
No Score | $ | % | |||||||
Less than 600 | $ | % | |||||||
600 to 659 | $ | % | |||||||
660 to 719 | $ | % | |||||||
720 and above | $ | % | |||||||
Total | 100.0% | ||||||||
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[ ] Months | Twelve Months Ended December 31, | |||||||||||||||||||
Ended [ ], | ||||||||||||||||||||
Aggregate Yields | 20[ ] | 20[ ] | 20[ ] | 20[ ] | 20[ ] | |||||||||||||||
Finance Charges and Fees (Excluding Recoveries and Interchange)($000) | $ | $ | $ | $ | $ | |||||||||||||||
Yield Excluding Recoveries and Interchange | % | % | % | % | % | |||||||||||||||
Yield Excluding Recoveries and Including Interchange | % | % | % | % | % | |||||||||||||||
Gross Yield Including Recoveries and Interchange | % | % | % | % | % |
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[ ] | ||||||||||||||||||||
Months | Twelve Months Ended December 31, | |||||||||||||||||||
Ended | ||||||||||||||||||||
[ ] 20[ ] | 20[ ] | 20[ ] | 20[ ] | 20[ ] | ||||||||||||||||
Gross Principal Charge-offs ($000) | $ | $ | $ | $ | $ | |||||||||||||||
Net Principal Charge-offs ($000) | $ | $ | $ | $ | ||||||||||||||||
Gross Principal Charge-off Rates | % | % | % | % | % | |||||||||||||||
Net Principal Charge-off Rates | % | % | % | % | % |
[ ] | Twelve Months Ended December 31, | |||||||||||||||||||
Months Ended | ||||||||||||||||||||
[ ], 20[ ] | 20[ ] | 20[ ] | 20[ ] | 20[ ] | ||||||||||||||||
Lowest Monthly Payment Rate | % | % | % | % | % | |||||||||||||||
Highest Monthly Payment Rate | % | % | % | % | % | |||||||||||||||
Average Monthly Payment Rate | % | % | % | % | % |
[ ] | ||||
Months Ended | ||||
[ ], 20[ ] | ||||
Minimum Monthly Payment Rate | % | |||
Full Balance Payment Rate | % |
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• | a yield of [ ]% per year, which is the annualized aggregate yield for the Accounts in the trust, excluding recoveries and interchange, for the [twelve] months ended [ ], 20[ ], as shown in the chart“Summary Yield Information” above; | |
• | a net charge-off rate of [ ]% per year, which is net charge-offs on the Accounts as an annualized percentage of average receivables outstanding for the [twelve] months ended [ ], 20[ ], as shown in the chart“Summary Charge-Off Information” above; | |
• | that the level of Principal Receivables in the trust remains above the minimum levels required by the Pooling and Servicing Agreement; | |
• | that this series is not receiving collections and other income that were originally allocated to another series; | |
• | that no Amortization Event occurs; and | |
• | that the master servicer does not elect to defer the start of the Accumulation Period. |
• | the three-month rolling average Series Excess Spread is less than zero; | |
• | the three-month rolling average Interchange Subgroup Excess Spread is less than zero; and | |
• | the three-month rolling average Group Excess Spread is less than zero. |
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• | the sum of the Class A and Class B Finance Charge Collections, interchange and Investment Income,minus | |
• | the sum of — |
• | Class A and Class B monthly interest; | |
• | Class A and Class B monthly servicing fees; | |
• | Class A and Class B monthly charge-offs; and | |
• | the Credit Enhancement Fee, |
• | for any series that has a subordinated [interest rate] [currency] swap, any payment made by the trust pursuant to that [interest rate] [currency] swap; andminus | |
• | for so long as not all outstanding series are eligible for allocations of interchange, the amount of interchange allocated to such series if the Series Excess Spread for such series is otherwise positive; provided that if deducting interchange would make Series Excess Spread for such series negative, then the Series Excess Spread will be deemed to be zero. |
• | all amounts deposited into the Group Interchange Reallocation Account for all series to which interchange is allocated, which reflects the maximum amount of Series Excess Spread for such series that is related to interchange; and | |
• | the Interchange Subgroup Allocable Group Excess Spread, which represents the portion of the Group Excess Spread attributed to all series to which interchange is allocated. |
• | the Group Excess Spread;multiplied by | |
• | the sum of the Series Investor Interests for all series in Group One to which interchange is allocated;divided by | |
• | the sum of the Series Investor Interests for all series in Group One. |
• | the Group Excess Spread;multiplied by | |
• | the sum of the Series Excess Spreads for each series allocated interchange in Group One for which the Series Excess Spread was negative;divided by | |
• | the sum of the Series Excess Spreads for each series in Group One for which the Series Excess Spread was negative. |
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• | the Group Excess Spread,multiplied bytwelve;divided by | |
• | the sum of the Series Investor Interests for all series, including any subseries, in Group One. |
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Percentage of | ||||
State | Total Receivables | |||
[ ] | % | |||
[ ] | % | |||
[ ] | % | |||
[ ] | % | |||
[ ] | % | |||
[ ] | % | |||
[ ] | % | |||
[ ] | % | |||
[ ] | % | |||
[ ] | % | |||
[Other States] | % |
Receivables | Percentage | ||||||||||||||||
Outstanding | of Total | Number of | Percentage of | ||||||||||||||
Credit Limit | ($000’s) | Receivables | Accounts | Total Accounts | |||||||||||||
Less than or equal to $5,000.00 | $ | % | % | ||||||||||||||
$5,000.01 to $10,000.00 | $ | % | % | ||||||||||||||
$10,000.01 to $15,000.00 | $ | % | % | ||||||||||||||
Over $15,000.00 | $ | % | % | ||||||||||||||
Total | 100.0% | 100.0% | |||||||||||||||
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Percentage of | Percentage of | |||||||
Age of Accounts | Total Accounts | Total Receivables | ||||||
Less than 12 Months | % | % | ||||||
12 to 23 Months | % | % | ||||||
24 to 35 Months | % | % | ||||||
36 to 47 Months | % | % | ||||||
48 to 59 Months | % | % | ||||||
60 Months and Greater | % | % | ||||||
100.0 | % | 100.0 | % | |||||
Receivables | ||||||||
Outstanding | Percentage of Total | |||||||
Delinquency Status | ($000’s) | Receivables | ||||||
30 to 59 Days | $ | % | ||||||
60 to 89 Days | $ | % | ||||||
90 to 119 Days | $ | % | ||||||
120 to 149 Days | $ | % | ||||||
150 to 179 Days | $ | % | ||||||
Over 180 Days | $ | % | ||||||
$ | % | |||||||
As of November 30, | ||||||||||||||||
As of [ ], 20[ ] | 20[ ] | 20[ ] | 20[ ] | |||||||||||||
($000) | ||||||||||||||||
Total Receivables Balance of the Discover Card Portfolio | $ | $ | $ | $ |
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[ ] | Twelve Months Ended [ ], | |||||||||||||||
Months Ended | ||||||||||||||||
Aggregate Yields | [ ], 20[ ] | 20[ ] | 20[ ] | 20[ ] | ||||||||||||
Yield Excluding Recoveries and Interchange | % | % | % | % | ||||||||||||
Yield Including Recoveries and Excluding Interchange | % | % | % | % | ||||||||||||
Yield from Interchange | % | % | % | % |
Twelve Months Ended [ ], | ||||||||||||||||
[ ] Months Ended | ||||||||||||||||
[ ], 20[ ] | 20[ ] | 20[ ] | 20[ ] | |||||||||||||
Gross Principal Charge-offs ($000) | $ | $ | $ | $ | ||||||||||||
Net Principal Charge-offs ($000) | $ | $ | $ | $ | ||||||||||||
Gross Principal Charge-off Rates | % | % | % | % | ||||||||||||
Net Principal Charge-off Rates | % | % | % | % |
Twelve Months Ended [ ] | ||||||||||||||||||||
[ ] Months Ended | ||||||||||||||||||||
[ ], 20[ ] | 20[ ] | 20[ ] | 20[ ] | 20[ ] | ||||||||||||||||
Lowest Monthly Payment Rate | % | % | % | % | % | |||||||||||||||
Highest Monthly Payment Rate | % | % | % | % | % | |||||||||||||||
Average Monthly Payment Rate | % | % | % | % | % |
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• | the amount of principal the trust pays you, | |
• | the amount of any investor loss you suffer if the trust cannot fully reimburse the charge-offs allocated to your certificate, including, if you own a Class B Certificate, increased charge-offs because of the way the trust applies the subordination provisions of this series, | |
• | the amount of any investor loss you suffer if the trust sells Receivables to make its final payment to you and the proceeds from that sale are not sufficient to pay your outstanding principal and interest in full, and | |
• | the amount of losses of principal on investments of funds on deposit in the Series Principal Funding Account for the benefit of your certificate. |
• | The Class Invested Amounts of the Class A Certificates and Class B Certificates will each be increased proportionately from their initial levels. | |
• | Discover Bank will notify the trustee, in writing, at least three days in advance of the proposed increase. | |
• | Discover Bank will obtain, and deliver 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 certificates the same as those then outstanding in this series. | |
• | Discover Bank will arrange for the payment of an additional amount to increase the credit enhancement for this series so that the amount on deposit in the Credit Enhancement Account, after giving effect to the increase, 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. | |
• | The Available Subordinated Amount will be increased proportionally from its initial level (or, if a Supplemental Credit Enhancement Event has occurred or an Effective Alternative Credit Support Election has been made, from its initial level plus the Supplemental Subordinated Amount or Additional Subordinated Amount, as applicable). |
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• | Discover Bank will not be required to designate additional accounts as trust accounts as a result of the increase in the principal amount of certificates of this series. | |
• | No Amortization Event will have occurred for this series. | |
• | No additional certificates will be issued with more thande minimisoriginal issue discount. |
• | the Class A Investor Interest equals the Class A Invested Amount minus funds on deposit in the Series Principal Funding Account to pay Class A principal; | |
• | the Class B Investor Interest equals the Class B Invested Amountminusfunds on deposit in the Series Principal Funding Account to pay Class B principal; and | |
• | the Series Investor Interest equals the sum of the Class A Investor Interest and the Class B Investor Interest. |
• | the Class Invested Amount by; | |
• | the interest rate for the class — [LIBOR plus] [ ]% for Class A and [LIBOR plus] [ ]% for Class B — for the related interest accrual period and dividing this amount by; | |
• | [360 divided by the actual number of days in the related interest accrual period] [360 divided by 12]. |
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• | if the trust could not make your full interest payment on the prior interest payment date; or | |
• | if you suffered an investor loss that caused the trust to pay interest to you based on an invested amount that was reduced by the amount of that loss, and the trust subsequently reimbursed that loss. |
• | Series Principal Collections,minus |
• | Class B Principal Collections used to pay Class A interest and servicing fees in step (6) of the cash flows for this series; and | |
• | Class B Principal Collections used to reimburse Class A charge-offs in step (7) of the cash flows for this series; |
• | all amounts the trust uses to reimburse Class A and Class B charge-offs in steps (4), (5), (7), (12), (13), (15), (18), (22), (24), (32) and (34) of the cash flows for this series; | |
• | similar funds from other series; and | |
• | any similar funds retained in the Collections Account on the previous distribution date in step (47) of the cash flows for this series. |
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• | Series Principal Collections,minus |
• | Class B Principal Collections used to pay Class A interest and servicing fees in step (6) of the cash flows for this series and | |
• | Class B Principal Collections used to reimburse Class A charge-offs in step (7) of the cash flows for this series; |
• | all amounts the trust uses to reimburse Class A and Class B charge-offs in steps (4), (5), (7), (12), (13), (15), (18), (22), (24), (32) and (34) of the cash flows for this series; and | |
• | any similar funds retained in the Collections Account on the previous distribution date in step (38) of the cash flows for this series. |
• | the master servicer has delivered to the trustee a certificate to the effect that the master servicer reasonably believes that delaying the start of the Accumulation Period will not delay payments of Class A principal and Class B principal to investors; | |
• | Standard & Poor’s and Moody’s have advised the master servicer that they will not lower or withdraw their ratings on the trust’s outstanding certificates because of the delay; | |
• | the master servicer increases the amount of principal that the trustee will deposit into the Series Principal Funding Account each month, so that the sum of all deposits made during the shortened Accumulation Period will equal the principal amount due to Class A investors on the distribution date in [ ], 20[ ]; | |
• | the Accumulation Period will start no later than [ ], 20[ ]; and | |
• | the master servicer makes this election no later than the first day of the last month of the Revolving Period, including extensions of the Revolving Period. |
• | the Collections Account; | |
• | the Group One Collections Account; | |
• | the Group One Principal Collections Reallocation Account; |
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• | the Group One Finance Charge Collections Reallocation Account; | |
• | the Group One Interchange Reallocation Account; | |
• | the Series Collections Account; | |
• | the Series Principal Collections Account; | |
• | the Series Distribution Account; | |
• | the Series Interest Funding Account; | |
• | the Series Principal Funding Account [and]; | |
• | [the [Interest Rate] [Currency] Swap Account and]; | |
• | the [ ] Account. |
• | in the Revolving Period, in the Accumulation Period and, if Discover Bank has made an Effective Alternative Credit Support Election, in the Amortization Period, the Class Investor Interest as of the first day of the prior calendar month; or | |
• | in the Amortization Period, if Discover Bank has not made an Effective Alternative Credit Support Election, the Class Investor Interest as of the end of the last business day in the calendar month preceding the month in which an Amortization Event occurred, |
• | its declining interest in the Receivables in the trust; | |
• | its correspondingly smaller allocation of charge-offs; and | |
• | the availability of investment income from the Series Principal Funding Account, which the trust will use to pay interest on this series. |
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• | interchange for the distribution date; by | |
• | the Class Percentage with respect to interchange for that class. |
• | the Class Investor Interest on the first day of the calendar month preceding the distribution date, during the Revolving Period and, before a Fixed Principal Allocation Event occurs, during the Accumulation Period; or | |
• | if a Fixed Principal Allocation Event has occurred, the Class Investor Interest as of the end of the last business day in the calendar month before the Fixed Principal Allocation Event occurred, during the Accumulation Period and the Amortization Period. |
• | if this series would not be able to make its principal deposits on time even using the amounts from other series that would be available to it; |
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• | if the master servicer elects to cause a Fixed Principal Allocation Event to occur; or | |
• | if an Amortization Event occurs. |
• | the amount of Receivables in the trust that the servicer charged off as uncollectible during the previous calendar month;minus |
• | the cumulative, uncollected amount of these Receivables that related to finance charges, cash advance fees, annual membership fees, overlimit fees, late payment charges and other miscellaneous fees; and | |
• | the amount of these Receivables repurchased by Discover Bank during that month because they were in accounts that contained Receivables that were not Eligible Receivables; by |
• | the Class Percentage with respect to the Charged-Off Amount for that class. |
• | the amount of Class B Principal Collections that the trust uses to pay Class A interest and reimburse Class A charge-offs in steps (6) and (7) of the cash flows for this series; and | |
• | the amount of the Class B Investor Interest used to reimburse Class A charge-offs in step (13) of the cash flows for this series. |
• | the aggregate amount of principal paid to investors in that class before the distribution date; | |
• | in the case of the Class Investor Interest, the amount on deposit in the Series Principal Funding Account for that class; and | |
• | the aggregate amount of losses on investments of principal funds on deposit in the Series Principal Funding Account for that class. |
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• | the trust uses Class B Finance Charge Collections, interchange allocated to Class B and Class B Principal Collections to pay Class A interest and servicing fees in steps (6) and (11) and to reimburse Class A charge-offs in steps (7) and (12) of the cash flows for this series; and | |
• | the trust reallocates Class B Investor Interest to reimburse Class A charge-offs in step (13) of the cash flows for this series. |
• | the amount by which |
• | Class A Finance Charge Collections and other Class A income exceed Class A interest and servicing fees; and | |
• | Class B Finance Charge Collections and interchange allocated to Class B exceed Class B interest and servicing fees; |
• | the amount of funds from the Group One Finance Charge Collections Reallocation Account that the trust uses |
• | to pay Class B interest and servicing fees in step (23) of the cash flows for this series; | |
• | to reimburse Class B charge-offs in step (24) of the cash flows for this series; and | |
• | to increase the Available Class B Credit Enhancement Amount in step (27) of the cash flows for this series; |
• | the amount of funds from the Group One Interchange Reallocation Account that the trust uses |
• | to pay Class B interest and servicing fees in step (33) of the cash flows for this series; | |
• | to reimburse Class B charge-offs in step (34) of the cash flows for this series; and | |
• | to increase the Available Class B Credit Enhancement Amount in step (37) of the cash flows for this series; |
• | if the trust issues additional certificates in this series, an amount equal to: |
• | the face amount of such additional certificatesmultiplied by | |
• | the initial Available Subordinated Amountdivided by | |
• | the initial Series Investor Interest determined without including the additional certificates. |
• | [ ]% of the initial Series Investor Interest after a Supplemental Credit Enhancement Event, if Discover Bank has not made an Effective Alternative Credit Support Election; | |
• | [ ]% of the initial Series Investor Interest after an Effective Alternative Credit Support Election, if a Supplemental Credit Enhancement Event has occurred; and | |
• | [ ]% of the initial Series Investor Interest after an Effective Alternative Credit Support Election, if a Supplemental Credit Enhancement Event has not occurred. |
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• | [ ]% of the initial Series Investor Interest before Discover Bank has made an Effective Alternative Credit Support Election and before a Supplemental Credit Enhancement Event occurs; | |
• | [ ]% of the initial Series Investor Interest after a Supplemental Credit Enhancement Event occurs but before Discover Bank has made an Effective Alternative Credit Support Election; or | |
• | [ ]% of the initial Series Investor Interest after Discover Bank has made an Effective Alternative Credit Support Election. |
• | Discover Bank makes an Effective Alternative Credit Support Election; | |
• | a Supplemental Credit Enhancement Event occurs; or | |
• | the trust issues additional certificates of this series. |
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Series Closing Date | $[ ] | ||
Revolving Period — | |||
Before an Effective Alternative Credit Support Election or a Supplemental Credit Enhancement Event | [ ]% of the initial Series Investor Interest | ||
After a Supplemental Credit Enhancement Event but before an Effective Alternative Credit Support Election | [ ]% of the initial Series Investor Interest | ||
After an Effective Alternative Credit Support Election | [ ]% of the initial Series Investor Interest | ||
Accumulation Period — | |||
Before an Effective Alternative Credit Support Election or a Supplemental Credit Enhancement Event | [ ]% of the Series Investor Interest as of the end of the preceding month, but not less than [ ]% of the initial Series Investor Interest | ||
After a Supplemental Credit Enhancement Event but before an Effective Alternative Credit Support Election | [ ]% of the Series Investor Interest as of the end of the preceding month, but not less than [ ]% of the initial Series Investor Interest | ||
After an Effective Alternative Credit Support Election | [ ]% of the Series Investor Interest as of the end of the preceding month, but not less than [ ]% of the initial Series Investor Interest | ||
Amortization Period — | The Maximum Class B Credit Enhancement Amount for the distribution date immediately preceding the Amortization Event |
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• | the master servicer elects to replace this credit enhancement, and | |
• | the Rating Agencies agree that they will not lower or withdraw the ratings on the certificates if the master servicer replaces the credit enhancement. |
• | Class Finance Charge Collections and other income that exceed the required payments and reimbursements for that class, | |
• | Series Finance Charge Collections and other income that exceed the required payments and reimbursements for this series, or | |
• | the amount on deposit at any time in the Group One Finance Charge Collections Reallocation Account or the Group One Interchange Reallocation Account. |
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Expense/Fee | Payee | Payment Source | Amount | Priority of Payment | ||||
Class A servicing fee | Master Servicer | Series Finance Charge Collections, Series Interchange, Class A Investment Income, Class B Principal Collections, funds reallocated from the Group One Finance Charge Collections Reallocation Account and funds reallocated from the Group One Interchange Reallocation Account (in all cases, if available and in accordance with applicable subordination provisions) | 2% per annum of the Class A Investor Interest | See steps (2), (3), (6), (11), (21) and (31) under“The Certificates — Cash Flows‘ | ||||
Class B servicing fee | Master Servicer | Series Finance Charge Collections, Series Interchange, Available Class B Credit Enhancement Amount, funds reallocated from the Group One Finance Charge Collections Reallocation Account and funds reallocated from the Group One Interchange Reallocation Account (in all cases, if available and in accordance with applicable subordination provisions) | 2% per annum of the Class B Investor Interest | See steps (8), (9), (14), (17), (23) and (33) under“The Certificates — Cash Flows‘ | ||||
Credit Enhancement Fee | Credit Enhancement Provider | Series Finance Charge Collections, Series Interchange, funds reallocated from the Group One Finance Charge Collections Reallocation Account and funds reallocated from the Group One Interchange Reallocation Account (in all cases, if available and in accordance with applicable subordination provisions) | The positive difference between (1) the interest payable to the Credit Enhancement Provider on such Distribution Date and (2) the interest and earnings (net of losses and investment expenses) accrued from investing the amount on deposit | See step (19), (28), (38) under“The Certificates — Cash Flows‘ | ||||
[Net Swap Payment] | [Swap Counterparty] | [Series Finance Charge Collections and Series Interchange] | [Net swap payment as defined in the applicable agreement] | [See step (#) under“The Certificates — Cash Flows‘] | ||||
[Net Swap Receipt] | [Discover Bank] | [Payments received by the Trustee from the derivative counterparty] | [Net swap receipt as defined under the applicable agreement] | [See step (#) under“The Certificates — Cash Flows‘] |
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• | Series Finance Charge Collections for the preceding month; | |
• | Series Principal Collections for the preceding month; and | |
• | interchange allocated to this series on the distribution date. |
(1) Interest Deposit. If the trust has earned interest on the Series Principal Funding Account in the prior month, the trustee will deposit the investors’ share of this interest into the Series Collections Account. | |
(2) Class A Interest and Servicing Fees. The trust will use |
• | Class A Finance Charge Collections and | |
• | other Class A income, if any, including interchange allocated to Class A and interest on the Series Principal Funding Account |
to deposit Class A interest and servicing fees.(To the Series Distribution Account.) | |
(3) Class A Interest and Servicing Fees. If the trust cannot deposit Class A interest and servicing fees in full in step (2), it will also use |
• | funds available from a subordinate series, if any, to pay the shortfall |
to deposit Class A interest and servicing fees.(To the Series Distribution Account.) | |
(4) Class A Charge-offs. The trust will use |
• | Class A Finance Charge Collections remaining after step (2), and | |
• | other Class A income, if any, remaining after step (2) |
to reimburse Class A charge-offs.(To the Series Principal Collections Account.) | |
(5) Class A Charge-offs. If the trust cannot reimburse Class A charge-offs in full in step (4), it also will use |
• | funds available to reimburse the shortfall from a subordinate series, if any, |
to reimburse Class A charge-offs.(To the Series Principal Collections Account.) | |
(6) Class A Interest and Servicing Fees. If the trust cannot deposit Class A interest and servicing fees in full in steps (2) and (3), it will also use |
• | Class B Finance Charge Collections, | |
• | other Class B income, including interchange allocated to Class B and | |
• | Class B Principal Collections |
to deposit Class A interest and servicing fees. In this step, the trust will only use Class B Finance Charge Collections and other Class B income up to the amount of monthly Class B interest and servicing fees, |
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and the trust will only use these Class B amounts, including Class B Principal Collections, up to the Available Subordinated Amount. The Available Subordinated Amount will decline by the amount used in this step.(To the Series Distribution Account.) | |
(7) Class A Charge-offs. If the trust cannot reimburse Class A charge-offs in full in steps (4) and (5), it will also use |
• | Class B Finance Charge Collections remaining after step (6), | |
• | other Class B income remaining after step (6), and | |
• | Class B Principal Collections remaining after step (6) |
to reimburse Class A charge-offs. In this step, the trust will only use Class B Finance Charge Collections and other Class B income up to the amount of monthly Class B interest and servicing feesminusthe amount used in step (6), and the trust will only use Class B amounts, including Class B Principal Collections, up to the Available Subordinated Amount. The Available Subordinated Amount will decline by the amount used in this step.(To the Series Principal Collections Account.) | |
(8) Class B Interest and Servicing Fees. The trust will use |
• | Class B Finance Charge Collections remaining after steps (6) and (7), and | |
• | other Class B income remaining after steps (6) and (7) |
to deposit Class B interest and servicing fees. In this step, the trust will only use Class B Finance Charge Collections and other Class B income up to the amount equal to: |
• | the Class B interest and servicing fees,minus | |
• | the amount used in steps (6) and (7). |
(9) Class B Interest and Servicing Fees. If the trust cannot deposit Class B interest and servicing fees in full in step (8), it will also use |
• | funds remaining available after steps (3) and (5) to pay the shortfall from a subordinate series, if any |
to deposit Class B interest and servicing fees.(To the Series Distribution Account.) | |
(10) Class B Charge-offs. The trust will use |
• | funds remaining available to reimburse charge-offs after steps (3), (5) and (9) from a subordinate series, if any, |
to reimburse Class B charge-offs. (To the Series Principal Collections Account.) | |
(11) Class A Interest and Servicing Fees. If the trust cannot deposit Class A interest and servicing fees in full in steps (2), (3), and (6), it will also use |
• | Class B Finance Charge Collections remaining after step (8), and | |
• | other Class B income remaining after step (8) |
to deposit Class A interest and servicing fees. The trust will only use these Class B amounts up to the Available Subordinated Amount; the Available Subordinated Amount will decline by the amount used in this step.(To the Series Distribution Account.) | |
(12) Class A Charge-offs. If the trust cannot reimburse Class A charge-offs in full in steps (4), (5) and (7), it will also use |
• | Class B Finance Charge Collections remaining after step (11), and | |
• | other Class B income remaining after step (11) |
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to reimburse Class A charge-offs. The trust will only use these Class B amounts up to the Available Subordinated Amount; the Available Subordinated Amount will decline by the amount used in this step.(To the Series Principal Collections Account.) | |
(13) Class A Charge-offs. If the trust cannot reimburse Class A charge-offs in full in steps (4), (5), (7) and (12), it will reallocate |
• | the Class B Investor Interest |
to reimburse Class A charge-offs. The trust will only reallocate the Class B Investor Interest up to the Available Subordinated Amount; the Available Subordinated Amount and the Class B Investor Interest will decline and Class B charge-offs will increase by the amount used in this step.(To the Series Principal Collections Account.) | |
(14) Class B Interest and Servicing Fees. If the trust cannot deposit Class B interest and servicing fees in full in steps (8) and (9), it will also use |
• | Class A Finance Charge Collections remaining after step (4), | |
• | other Class A income remaining after step (4), | |
• | Class B Finance Charge collections remaining after step (12), and | |
• | other Class B income remaining after step (12) |
to deposit Class B interest and servicing fees.(To the Series Distribution Account.) | |
(15) Class B Charge-offs. If the trust cannot reimburse Class B charge-offs in full in step (10), it will also use |
• | Class A Finance Charge Collections remaining after step (14), | |
• | other Class A income remaining after step (14), | |
• | Class B Finance Charge Collections remaining after step (14), and | |
• | other Class B income remaining after step (14) |
to reimburse Class B charge-offs.(To the Series Principal Collections Account.) | |
(16) Credit Enhancement. The trust will use |
• | Class A Finance Charge Collections remaining after step (15), | |
• | other Class A income remaining after step (15), | |
• | Class B Finance Charge Collections remaining after step (15), and | |
• | other Class B income remaining after step (15) |
to increase the Available Class B Credit Enhancement Amount to the Maximum Class B Credit Enhancement Amount. The Available Subordinated Amount will increase by the amount deposited in this step.(To the Credit Enhancement Account.) | |
(17) Class B Interest and Servicing Fees. If the trust cannot deposit Class B interest and servicing fees in full in steps (8), (9) and (14), it will also use |
• | the Available Class B Credit Enhancement Amount |
to deposit Class B interest and servicing fees.(To the Series Distribution Account.) |
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(18) Class B Charge-offs. If the trust cannot reimburse Class B charge-offs in full in steps (10) and (15), it will also use |
• | the Available Class B Credit Enhancement Amount remaining after step (17) |
to reimburse Class B charge-offs.(To the Series Principal Collections Account.) | |
(19) Credit Enhancement Fee. The trust will use |
• | Class A Finance Charge Collections remaining after step (16), | |
• | other Class A income remaining after step (16), | |
• | Class B Finance Charge Collections remaining after step (16), and | |
• | other Class B income remaining after step (16) |
to pay fees and interest to the Credit Enhancement Provider.(To the trustee; to be applied in accordance with the Credit Enhancement Agreement.) | |
[(#) Monthly Swap Deposit. The trust will use |
• | Class A Finance Charge Collections remaining after step [ ], | |
• | other Class A income remaining after step [ ], | |
• | Class B Finance Charge Collections remaining after step [ ], and | |
• | other Class B income remaining after step [ ] |
to make any required monthly deposit under the [interest rate] [currency] swap.(To the [Interest Rate] [Currency] Swap Account)] | |
(20) Reallocation to Other Series. The trust will reallocate |
• | Class A Finance Charge Collections remaining after step (19), | |
• | other Class A income remaining after step (19), | |
• | Class B Finance Charge Collections remaining after step (19), and | |
• | other Class B income remaining after step (19) |
minus,for so long as any series that is not eligible for allocations of interchange is outstanding, the amount of interchange allocated to this series (provided that the amount available in this step (20) shall not be reduced below zero), to pay or deposit interest and servicing fees and to reimburse charge-offs for other series in Group One.(To the Group One Finance Charge Collections Reallocation Account.) | |
(21) Class A Interest and Servicing Fees. If the trust cannot deposit Class A interest and servicing fees in full in steps (2), (3), (6) and (11), it will also use |
• | apro ratashare of funds from other series in the Group One Finance Charge Collections Reallocation Account |
to deposit Class A interest and servicing fees.(To the Series Distribution Account.)Thepro ratashare equals: |
• | the amount of Class A interest and servicing fees not deposited after step (11),divided by | |
• | the amount of Class A interest, servicing fees and similar amounts not deposited for all series in Group One after step (11) of the cash flows for each series, or an equivalent step. |
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(22) Class A Charge-offs. If the trust cannot reimburse Class A charge-offs in full in steps (4), (5), (7), (12) and (13), it will also use |
• | apro ratashare of funds from other series remaining in the Group One Finance Charge Collections Reallocation Account after step (21) of the cash flows for each series, or an equivalent step, |
to reimburse Class A charge-offs.(To the Series Principal Collections Account.)Thepro ratashare equals: |
• | the amount of Class A charge-offs unreimbursed after step (13),divided by | |
• | the amount of Class A charge-offs unreimbursed for all series in Group One after step (13) of the cash flows for each series, or an equivalent step. |
(23) Class B Interest and Servicing Fees. If the trust cannot deposit Class B interest and servicing fees in full in steps (8), (9), (14) and (17), it will also use: |
• | apro ratashare of funds from other series remaining in the Group One Finance Charge Collections Reallocation Account after step (22) of the cash flows for each series, or an equivalent step, |
to deposit Class B interest and servicing fees.(To the Series Distribution Account.)Thepro ratashare equals: |
• | the amount of Class B interest, servicing fees and similar amounts, if any, not deposited after step (17),divided by | |
• | the amount of Class B interest and servicing fees not deposited for all series in Group One after step (17) of the cash flows for each series, or an equivalent step. |
The Available Subordinated Amount will be increased by the amount deposited in this step. | |
(24) Class B Charge-offs. If the trust cannot reimburse Class B charge-offs in full in steps (10), (15), and (18), it will also use |
• | apro ratashare of funds from other series remaining in the Group One Finance Charge Collections Reallocation Account after step (23) of the cash flows for each series, or an equivalent step, |
to reimburse Class B charge-offs.(To the Series Principal Collections Account.)Thepro ratashare equals: |
• | the amount of Class B charge-offs unreimbursed after step (18),divided by | |
• | the amount of Class B charge-offs unreimbursed for all series in Group One after step (18) of the cash flows for each series, or an equivalent step. |
The Available Subordinated Amount will be increased by the amount deposited in this step. | |
(25) Interest, Servicing Fees and Charge-offs for Other Series. If the trust cannot deposit the interest, servicing fees and similar amounts, or reimburse the charge-offs, for junior classes — such as Class C, if any — of all other series in Group One in accordance with earlier cash flows steps for those series, the trust will use |
• | funds remaining in the Group One Finance Charge Collections Reallocation Account after step (24) of the cash flows for each series, or an equivalent step, |
to deposit the interest and servicing fees, and reimburse the charge-offs, for those junior classes in accordance with the cash flow provisions for those series. | |
(26) Credit Enhancement for Other Series. If the available Class A credit enhancement amount is less than the maximum Class A credit enhancement amount, or the available shared credit enhancement |
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amount is less than the maximum shared credit enhancement amount for any other series in Group One, the trust will use funds remaining in the Group One Finance Charge Collections Reallocation Account after step (25) of the cash flows for each series, or an equivalent step, to increase the available Class A credit enhancement amount or the available shared credit enhancement amount, as applicable, to the maximum Class A credit enhancement or the maximum shared credit enhancement amount, as applicable, for each such series in accordance with the cash flow provisions for those series. | |
(27) Credit Enhancement. If the Available Class B Credit Enhancement Amount is less than the Maximum Class B Credit Enhancement Amount after steps (16), (17) and (18), the trust will use |
• | apro ratashare of funds from other series remaining in the Group One Finance Charge Collections Reallocation Account after step (26) of the cash flows for each series, or an equivalent step, |
to increase the Available Class B Credit Enhancement Amount to the Maximum Class B Credit Enhancement Amount.(To the Credit Enhancement Account.)Thepro ratashare equals: |
• | the difference between the Maximum Class B Credit Enhancement Amount and the Available Class B Credit Enhancement Amount after step (18),divided by | |
• | the sum of this difference for all series in Group One after step (18) of the cash flows for each series, or an equivalent step. |
The Available Subordinated Amount will increase by the amount deposited in this step. | |
(28) Payments to Discover Bank and the Credit Enhancement Provider. The trust will use |
• | apro ratashare of funds from this series and other series remaining in the Group One Finance Charge Collections Reallocation Account after step (27) for each series, or an equivalent step, |
to pay Discover Bank and the Credit Enhancement Provider in accordance with the Credit Enhancement Agreement.(To the trustee; to be applied in accordance with the Credit Enhancement Agreement.)Thepro ratashare equals: |
• | the Series Investor Interest,divided by | |
• | the series investor interests for all series in Group One. |
(29) Reallocation to other Interchange Series. The trust will reallocate |
• | Class A Finance Charge Collections remaining after step (20), | |
• | other Class A income remaining after step (20), | |
• | Class B Finance Charge Collections remaining after step (20), and | |
• | other Class B income remaining after step (20), |
but not more than the amount of interchange allocated to this series on this distribution date, to pay or deposit interest and servicing fees and to reimburse charge-offs for other series in Group One that are eligible for allocations of interchange.(To the Group One Interchange Reallocation Account.) | |
(30) Principal Collections. The trustee will deposit |
• | funds remaining in the Series Collections Account after step (29) |
into the Series Principal Collections Account.(To the Series Principal Collections Account.) | |
(31) Class A Interest and Servicing Fees. For so long as any series that is not eligible for allocations of interchange is outstanding, if the trust cannot deposit Class A interest and servicing fees in full in steps (2), (3), (6), (11) and (21), it will also use |
• | apro ratashare of funds from other series in the Group One Interchange Reallocation Account |
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to deposit Class A interest and servicing fees.(To the Series Distribution Account.)Thepro ratashare equals: |
• | the amount of Class A interest and servicing fees not deposited after step (21),divided by | |
• | the amount of Class A interest, servicing fees and similar amounts not deposited for all series that are eligible for allocations of interchange in Group One after step (21) of the cash flows for each series, or an equivalent step. |
(32) Class A Charge-offs. For so long as any series that is not eligible for allocations of interchange is outstanding, if the trust cannot reimburse Class A charge-offs in full in steps (4), (5), (7), (12) (13) and (22), it will also use |
• | apro ratashare of funds from other series in the Group One Interchange Reallocation Account after step (31) of the cash flows for each series, or an equivalent step, |
to reimburse Class A charge-offs.(To the Series Principal Collections Account.)Thepro ratashare equals: |
• | the amount of Class A charge-offs unreimbursed after step (22),divided by | |
• | the amount of Class A charge-offs unreimbursed for all series that are eligible for allocations of interchange in Group One after step (22) of the cash flows for each series, or an equivalent step. |
(33) Class B Interest and Servicing Fees. For so long as any series that is not eligible for allocations of interchange is outstanding, if the trust cannot deposit Class B interest and servicing fees in full in steps (8), (9), (14), (17) and (23), it will also use: |
• | apro ratashare of funds from other series in the Group One Interchange Reallocation Account after step (32) of the cash flows for each series, or an equivalent step, |
to deposit Class B interest and servicing fees.(To the Series Distribution Account.)Thepro ratashare equals: |
• | the amount of Class B interest, servicing fees and similar amounts, if any, not deposited after step (23),divided by | |
• | the amount of Class B interest and servicing fees not deposited for all series that are eligible for allocations of interchange in Group One after step (23) of the cash flows for each series, or an equivalent step. |
The Available Subordinated Amount will be increased by the amount deposited in this step. | |
(34) Class B Charge-offs. For so long as any series that is not eligible for allocations of interchange is outstanding, if the trust cannot reimburse Class B charge-offs in full in steps (10), (15), (18) and (24), it will also use |
• | apro ratashare of funds from the other series remaining in the Group One Interchange Reallocation Account after step (33) of the cash flows for each series, or an equivalent step, |
to reimburse Class B charge-offs.(To the Series Principal Collections Account.)Thepro ratashare equals: |
• | the amount of Class B charge-offs unreimbursed after step (24),divided by | |
• | the amount of Class B charge-offs unreimbursed for all series that are eligible for allocations of interchange in Group One after step (24) of the cash flows for each series, or an equivalent step. |
The Available Subordinated Amount will be increased by the amount deposited in this step. | |
(35) Interest, Servicing Fees and Charge-offs for Other Series. For so long as any series that is not eligible for allocations of interchange is outstanding, if the trust cannot deposit the interest, servicing fees and similar amounts, or reimburse the charge-offs, for junior classes — such as Class C, if any — of all |
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other series that are eligible for allocations of interchange in Group One in accordance with earlier cash flows steps for those series, the trust will use |
• | funds remaining in the Group One Interchange Reallocation Account after step (34) of the cash flows for each series, or an equivalent step, |
to deposit the interest and servicing fees, and reimburse the charge-offs, for those junior classes in accordance with the cash flow provisions for those series. | |
(36) Credit Enhancement for Other Series. For so long as any series that is not eligible for allocations of interchange is outstanding, if the available Class A credit enhancement amount is less than the maximum Class A credit enhancement amount, or the available shared credit enhancement amount is less than the maximum shared credit enhancement amount for any series that is eligible for allocations of interchange in Group One, the trust will use funds remaining in the Group One Interchange Reallocation Account after step (35) of the cash flows for each series, or an equivalent step, to increase the available Class��A credit enhancement amount or the available shared credit enhancement amount, as applicable, to the maximum Class A credit enhancement or the maximum shared credit enhancement amount, as applicable, for each such series in accordance with the cash flow provisions for those series. | |
(37) Credit Enhancement. For so long as any series that is not eligible for allocations of interchange is outstanding, if the Available Class B Credit Enhancement Amount is less than the Maximum Class B Credit Enhancement Amount after steps (16), (17), (18) and (27), the trust will use |
• | apro ratashare of funds from other series remaining in the Group One Interchange Reallocation Account after step (36) of the cash flows for each series, or an equivalent step, |
to increase the Available Class B Credit Enhancement Amount to the Maximum Class B Credit Enhancement Amount.(To the Credit Enhancement Account.)Thepro ratashare equals: |
• | the difference between the Maximum Class B Credit Enhancement Amount and the Available Class B Credit Enhancement Amount after step (27),divided by | |
• | the sum of this difference for each series that is eligible for allocations of interchange in Group One after step (27) of the cash flows for each series, or an equivalent step. |
The Available Subordinated Amount will increase by the amount deposited in this step. | |
(38) Payments to Discover Bank and the Credit Enhancement Provider. For so long as any series that is not eligible for allocations of interchange is outstanding, the trust will use |
• | apro ratashare of funds from this series and any other series that is eligible for allocations of interchange remaining in the Group One Interchange Reallocation Account after step (37) for each series, or an equivalent step, |
to pay Discover Bank and the Credit Enhancement Provider in accordance with the Credit Enhancement Agreement.(To the trustee; to be applied in accordance with the Credit Enhancement Agreement.)Thepro ratashare equals: |
• | the Series Investor Interest,divided by | |
• | the series investor interests for this series and any series that is eligible for allocations of interchange in Group One. |
[(#) Net Swap Receipt. The trustee will deposit any payment made to the trust by the [interest rate] [currency] swap counterparty into the Series Collection Account, and then will pay this amount from the Series Collection Account to Discover Bank as holder of the Seller Certificate.(To the Series Collection Account and to Discover Bank.)] | |
(39) Principal. The trust will use |
• | funds in the Series Principal Collections Account |
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to make the scheduled principal deposit during the Accumulation Period or, in the Amortization Period, to pay the Series Investor Interest.(To the Series Principal Funding Account.) | |
(40) Principal. If the trust cannot make the scheduled principal deposit during the Accumulation Period or, in the Amortization Period, pay the Series Investor Interest in full in step (39), it will also use |
• | funds available to pay the shortfall from a subordinate series, if any |
to make the scheduled principal deposit or pay the Series Investor Interest.(To the Series Principal Funding Account.) | |
(41) Reallocation to Other Series. The trust will reallocate |
• | funds remaining in the Series Principal Collections Account |
to pay the scheduled principal payment or make the scheduled principal deposit for other series in Group One.(To the Group One Principal Collections Reallocation Account.) | |
(42) Class A Principal. During the Accumulation Period only, if the trust cannot make the scheduled principal deposit for Class A in full in steps (39) and (40), it will also use |
• | apro ratashare of funds from other series in the Group One Principal Collections Reallocation Account |
to make the scheduled principal deposit for Class A.(To the Series Principal Funding Account.)Thepro ratashare equals: |
• | the amount of the scheduled principal deposit for Class A that the trust did not deposit in steps (39) and (40),divided by | |
• | the amount of the scheduled principal deposits or payments for Class A of all series in Group One in their accumulation periods or controlled liquidation periods, or in any period treated as an accumulation period or controlled liquidation period for purposes of an equivalent step of the cash flow provisions of the applicable other series, that the trust did not pay or deposit in steps (39) and (40) of the cash flows for each series in Group One, or equivalent steps. |
(43) Class B Principal. During the Accumulation Period only, if the trust cannot make the scheduled principal deposit for Class B in full in steps (39) and (40), it will also use |
• | apro ratashare of funds from other series remaining in the Group One Principal Collections Reallocation Account after step (42) for each series in Group One, or an equivalent step, |
to make the scheduled principal deposit for Class B.(To the Series Principal Funding Account.)Thepro ratashare equals |
• | the amount of the scheduled principal deposit for Class B that the trust did not deposit in steps (39) and (40),divided by | |
• | the amount of the scheduled principal deposits or payments for Class B of all series in Group One in their accumulation periods or controlled liquidation periods, or in any period treated as an accumulation period or controlled liquidation period for purposes of an equivalent step of the cash flow provisions of the applicable other series, that the trust did not pay or deposit in steps (39) and (40) of the cash flows for each series in Group One, or equivalent steps. |
(44) Principal for Other Series. If the trust cannot pay or deposit the scheduled principal payment or deposit for junior classes — such as Class C, if any — of all other series in Group One in their accumulation periods or controlled liquidation periods in accordance with earlier cash flow steps for those series, the trust will use |
• | funds remaining in the Group One Principal Collections Reallocation Account after step (43), or an equivalent step, |
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to pay or deposit the scheduled principal payment or deposit for those junior classes in accordance with the cash flow provisions for those series. | |
(45) Principal for Other Series. If the cash flow provisions for any other series in Group One permit those series to use funds in the Group One Principal Collections Reallocation Account to make unscheduled principal payments or deposits, the trust will use funds remaining in the Group One Principal Collections Reallocation Account after step (44), or an equivalent step, to pay or deposit the unscheduled principal payment or deposit for each of those series in accordance with the cash flow provisions of those series. | |
(46) Deposit to the Collections Account. The trustee will deposit |
• | funds remaining in the Group One Principal Collections Reallocation Account after step (45) of the cash flows for each series in Group One, or the steps described in step (45), or an equivalent step, into the Collections Account.(To the Collections Account.) |
(47) Payment to the Holder of the Seller Certificate. After the trust has made all allocations for all of its series, it will use |
• | funds on deposit in the Collections Account to pay Discover Bank, as the holder of the Seller Certificate, the amount of the Seller Interest. |
Any funds that remain in the Collections Account after this payment will remain there until the next Trust Distribution Date, when the trust will allocate them as Principal Collections. |
• | First, to pay Class A interest and servicing fees; | |
• | Second, to reimburse Class A charge-offs, including any unreimbursed charge-offs carried forward from prior months; | |
• | Third, to pay Class B interest and servicing fees; | |
• | Fourth, to reimburse Class B charge-offs, including any unreimbursed charge-offs carried forward from prior months; | |
• | Fifth, to increase the Available Class B Credit Enhancement Amount to the Maximum Class B Credit Enhancement Amount; | |
• | Sixth, to pay fees and interest to the Credit Enhancement Provider; | |
• | Seventh, to pay interest, accreted discount and monthly servicing fees and to reimburse charge-offs for other series in Group One, provided that interchange will only be used to make such payments and reimbursements for series that are otherwise eligible for allocations of interchange; and | |
• | Eighth, to pay the Credit Enhancement Provider and then Discover Bank, as the holder of the Seller Certificate, in accordance with the terms of the Credit Enhancement Agreement. |
• | First, to pay shortfalls in Class A interest and servicing fees after Series Finance Charge Collections and other income have been used. In this step, the trust uses Class B Principal Collections only; |
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• | Second, to reimburse Class A charge-offs after Series Finance Charge Collections and other income have been used. In this step, the trust uses Class B Principal Collections only; | |
• | Third, to make the scheduled principal deposit into the Series Principal Funding Account, during the Accumulation Period, or to pay the Series Investor Interest, during the Amortization Period; | |
• | Fourth, to pay the scheduled principal payments or make the scheduled principal deposits for other series in Group One; | |
• | Fifth, to pay unscheduled principal payments or make unscheduled principal deposits for other series in Group One, except for series or, if applicable, subseries in their amortization periods; and | |
• | Sixth, to pay Discover Bank, up to the amount of the Seller Interest, with remaining amounts to be allocated as Principal Collections in the following month. |
• | First, to pay Class A interest, accreted discount and servicing fees for this series and other series in Group One; | |
• | Second, to reimburse Class A charge-offs, including any unreimbursed charge-offs carried forward from prior months, for this series and other series in Group One; | |
• | Third, to pay Class B interest and servicing fees for this series and other series in Group One; | |
• | Fourth, to reimburse Class B charge-offs, including any unreimbursed charge-offs carried forward from prior months, for this series and other series in Group One; | |
• | Fifth, to increase the available credit enhancement for other series in Group One that have Class A cash collateral credit enhancement or shared credit enhancement; | |
• | Sixth, to increase the Available Class B Credit Enhancement Amount to the Maximum Class B Credit Enhancement Amount for this series and to increase each available Class B credit enhancement amount to the applicable maximum Class B credit enhancement amount for other series in Group One that have Class B credit enhancement; and | |
• | Seventh, to pay the Credit Enhancement Provider and then Discover Bank, as the holder of the Seller Certificate, in accordance with the terms of the Credit Enhancement Agreement. |
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• | reallocate the Class B Investor Interest to reimburse Class A charge-offs; | |
• | use the Available Class B Credit Enhancement Amount to pay Class B interest and servicing fees; or | |
• | use the Available Class B Credit Enhancement Amount to reimburse Class B charge-offs, including any unreimbursed charge-offs carried forward from prior months and any increases in Class B charge-offs from allocations of Class B Principal Collections and the Class B Investor Interest to benefit the Class A Certificates. |
(1) Class A Interest. The trust will use: |
• | funds deposited into the Series Distribution Account for Class A |
to deposit Class A interest.(To the Series Interest Funding Account.) | |
(2) Class A Servicing Fees. The trust will use: |
• | funds remaining in the Series Distribution Account for Class A after step (1) |
to pay Class A servicing fees.(To the master servicer.) | |
(3) Class B Interest. The trust will use: |
• | funds deposited into the Series Distribution Account for Class B |
to deposit Class B interest.(To the Series Interest Funding Account.) | |
(4) Class B Servicing Fees. The trust will use: |
• | funds remaining in the Series Distribution Account for Class B after step (3) |
to pay Class B servicing fees.(To the master servicer.) |
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• | on [ ], 20[ ], or, if not a business day, the next business day, the trustee will withdraw all amounts on deposit in the Series Principal Funding Account, up to the Class A Invested Amount, and pay them to the Class A investors; and | |
• | on [ ], 20[ ], or, if not a business day, the next business day, the trustee will withdraw all funds remaining on deposit in the Series Principal Funding Account, up to the Class B Invested Amount, and pay them to the Class B investors. |
If an Amortization Event has occurred, on each distribution date the trustee will withdraw all funds from the Series Principal Funding Account and pay them: |
• | first, to the Class A investors until the Class A Invested Amount is reduced to zero; and then | |
• | to the Class B investors until the Class B Invested Amount is reduced to zero. |
(a) | any seller fails to make any payment or deposit on the date required under the Pooling and Servicing Agreement or the Series Supplement, or within five business days after that date; | |
(b) | any seller fails to perform in any material respect any other material covenant of that seller under the Pooling and Servicing Agreement or the Series Supplement, and does not remedy that failure for 60 days after: | |
• written notice to that seller by the trustee; or | ||
• written notice to that seller and the trustee by holders of certificates that represent at least 25% of the Class Invested Amount of any class materially adversely affected by that seller’s failure; | ||
(c) | any representation or warranty made by any seller under the Pooling and Servicing Agreement or the Series Supplement, or any information required to be given to the trustee for identifying the Accounts, proves to have been materially inaccurate when made and remains inaccurate for 60 days after written notice of its inaccuracy to that seller by the trustee or to that seller and the trustee by holders of certificates that represent at least 25% of the Class Invested Amount of any class materially adversely affected by the inaccuracy; | |
(d) | certain events of bankruptcy, insolvency or receivership relating to any seller; | |
(e) | Discover Bank as seller becomes unable to transfer Receivables to the trust in accordance with the Pooling and Servicing Agreement and that inability continues for five business days; | |
(f) | any seller other than Discover Bank becomes unable to transfer Receivables to the trust in accordance with the Pooling and Servicing Agreement and that inability continues for five business days; | |
(g) | the trust becomes an “investment company” within the meaning of the Investment Company Act of 1940, as amended; | |
(h) | any Master Servicer Termination Event or any Servicer Termination Event occurs; | |
(i) | the amount of Principal Receivables in the trust at the end of any month or on any distribution date is less than the Minimum Principal Receivables Balance, and Discover Bank fails to assign Receivables in |
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additional Accounts or interests in other credit card receivables pools to the trust in at least the amount of the deficiency within ten days; | ||
(j) | on any distribution date, the three-month rolling average Series Excess Spread is less than zero, the three-month rolling average Group Excess Spread is less than zero and, for so long as any series that is not entitled to allocations of interchange is outstanding, the three-month rolling average Interchange Subgroup Excess Spread is less than zero; | |
(k) | the trust does not pay all Class A principal on the Class A expected maturity date or all Class B principal on the Class B expected maturity date; or | |
(l) | if a Supplemental Credit Enhancement Event occurs, Discover Bank as servicer fails to arrange for the Supplemental Credit Enhancement Amount as required by the Series Supplement. |
• | the event has a material adverse effect on the certificateholders; and | |
• | after the applicable grace period described in those clauses, either |
• | the trustee declares by written notice to Discover Bank and the master servicer that an Amortization Event has occurred; or | |
• | certificateholders holding certificates that represent at least 51% of the Class Invested Amount for either class, declare by written notice to Discover Bank, the master servicer and the trustee that an Amortization Event has occurred as of the date of the notice. |
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• | All information furnished in writing to the Trustee in connection with issuance of this series is true and accurate in every material respect or based on reasonable estimates on the date as of which such information is stated or certified. | |
• | The Pooling and Servicing Agreement creates a valid and enforceable security interest which security interest is prior to all other Liens and is enforceable as such against creditors of and purchasers from 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. | |
• | The Receivables constitute “accounts” within the meaning of Article 9 of the applicable UCC. | |
• | Discover Bank will have caused, within ten days of the date of the Series Supplement, the filing of all appropriate financing statements in the proper filing office in the appropriate jurisdictions under applicable laws in order to perfect the security interest in the Receivables conveyed to the Trustee under the Pooling and Servicing Agreement. | |
• | 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, Discover Bank has not pledged, assigned, sold, granted a security interest in or otherwise conveyed any of the receivables. | |
• | Discover Bank has not authorized the filing of and is not aware of any financing statements against it 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. | |
• | Discover Bank has not had any judgment or tax liens filed against it. |
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• | the amount of interest and principal paid to holders of each class of this series on that date per $1,000 of initial Class Investor Interest, the interest accrual period and the LIBOR determination date, if applicable; | |
• | the Series Investor Interest and the Class Investor Interest for each class of this series, as of the beginning and end of the prior calendar month; | |
• | the Aggregate Investor Interest, the Seller Interest, the Principal Receivables, the sum of the Series Investor Interests for each series in the same group as this series, and, if different, the sum of the Series Investor Interests for each such series that is eligible for allocations of interchange as of the beginning and end of the prior calendar month; | |
• | the total number of Accounts in the trust as of the beginning and end of the prior calendar month; | |
• | the Minimum Principal Receivables Balance at the end of the prior calendar month and the amount by which the Principal Receivables in the Trust exceeds the Minimum Principal Receivables Balance; | |
• | the amount of Finance Charge Collections, Principal Collections, and interchange from the prior calendar month allocated to this series, to each class of this series, to the group of which this series is a member, and to the seller; | |
• | the annualized portfolio yield from finance charge collections (excluding principal recoveries) and from interchange; | |
• | the amount of Principal Collections, Finance Charge Collections, total collections, interchange, and total collections plus interchange from the prior calendar month, each as a monthly percentage of Receivables in the trust at the beginning of that month; | |
• | the amount deposited into the Series Principal Funding Account on that date, the amount of any shortfall in the scheduled principal deposit, and the total amount on deposit in the Series Principal Funding Account as of the beginning and end of the prior calendar month, and the amount of any Series Investment Income, if any; | |
• | the amount of controlled liquidation payments, shortfall in the liquidation payments, and total payments through the related distribution date, if any; | |
• | the amount deposited into the Series Interest Funding Account through the related distribution date, the amount of any interest shortfall, and the total amount on deposit in the Series Interest Funding Account as of the beginning and end of the prior calendar month; | |
• | the amount of charge-offs allocated to each class of this series, to the series, and to the group of which this series is a member for the prior calendar month, the total amount of unreimbursed charge-offs for each class of this series, for this series, and for the group of which this series is a member, including unreimbursed increases in Class B charge-offs relating to the Class B subordination, and the total investor charged-off amount as an annualized percentage of principal receivables as of the beginning of the prior calendar month; | |
• | the total amount of investor losses for the prior calendar month and the amount of these losses per $1,000 of initial investor interest, the amount of reimbursements of investor losses for the prior calendar month and the amount of these reimbursements per $1,000 of initial investor interest and the aggregate amount of unreimbursed investor losses as of the end of the prior calendar month and the amount of such unreimbursed investor losses per $1,000 of initial investor interest, in each case for each class of this series, and the sum of those amounts for this series and for the group of which this series is a member; |
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• | the monthly servicing fee for each class of this series and the sum of those fees for this series and for the group of which this series is a member for the prior calendar month; | |
• | the Available Subordinated Amount as of the end of the current and prior distribution date, and the Available Subordinated Amount as a percentage of the Class A Invested Amount; | |
• | the amounts of any unreimbursed credit enhancement drawings, the amount of the Credit Enhancement Fee payable on the distribution date, the amount of the Credit Enhancement Fee paid as of the related distribution date, and the Maximum Class B Credit Enhancement Amount and Available Class B Credit Enhancement Amount, in each case as of the end of the current and prior distribution date; | |
• | total delinquency information with respect to the Receivables, and delinquency information as a percentage of outstanding Receivables; | |
• | the Series Excess Spread Percentage and amount for this series (including three-month rolling average), the Group Excess Spread Percentage and amount for the group of which this series is a member (including three-month rolling average) and, for so long as any series not entitled to allocations of interchange is outstanding, the Interchange Subgroup Excess Spread Percentage and amount for the group of which this series is a member (including three-month rolling average); and | |
• | the total amount of principal charge-offs, principal recoveries, and the amount of charge-offs net of principal recoveries in the prior calendar month, each as an annualized percentage of Principal Receivables at the beginning of that month. |
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Principal Amount | Principal Amount | ||||||||
of Class A | of Class B | ||||||||
Underwriters | Certificates | Certificates | |||||||
Morgan Stanley & Co. Incorporated | $ | [ ] | $ | [ ] | |||||
Total | $ | [ ] | $ | [ ] | |||||
• | to the public, initially at the offering price and on the terms set forth on the cover page of this prospectus supplement; and | |
• | to certain dealers, at the initial public offering price less a concession of up to [ ]% of the aggregate principal amount of the Class A Certificates. |
• | to the public, initially at the offering price and on the terms set forth on the cover page of this prospectus supplement; and | |
• | to certain dealers, at the initial public offering price less a concession of up to [ ]% of the aggregate principal amount of the Class B Certificates. |
• | (a) it is a person whose ordinary activities involve it in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of its business and (b) it has not offered or sold |
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and will not offer or sell any certificates other than to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their businesses or who it is reasonable to expect will acquire, hold, manage or dispose of investments (as principal or agent) for the purposes of their business where the issue of the certificates would otherwise constitute a contravention of Section 19 of the Financial Services and Markets Act 2000 (the “FSMA”) by the issuer; | ||
• | it has only communicated or caused to be communicated and will only communicate or cause to be communicated any invitation or inducement (a) to engage in investment activity (within the meaning of section 21 of the FSMA) received by it in connection with the issue or sale of any certificates in circumstances in which section 21(1) of the FSMA does not apply to the issuer or (b) to participate in a collective investment scheme (within the meaning of section 238 of the FSMA) in circumstances in which section 238(1) of the FSMA does not apply; and | |
• | it has complied with and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the certificates in, from or otherwise involving the United Kingdom. |
• | the underwriters may overallot in connection with any offering of certificates, creating a short position in the certificates for their own accounts; | |
• | the underwriters may bid for, and purchase, the certificates in the open market to cover overallotments or to stabilize the price of the certificates; and | |
• | in any offering of the certificates through a syndicate of underwriters, the underwriting syndicate may reclaim selling concessions allowed to an underwriter or a dealer for distributing the certificates in the offering if the syndicate repurchases previously distributed certificates in transactions to cover syndicate short positions, in stabilization transactions or otherwise. |
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• | a Discover Card account established pursuant to a credit agreement between Discover Bank and any person, receivables under which are transferred to the trust by Discover Bank pursuant to either the Pooling and Servicing Agreement or an Assignment of Additional Accounts; | |
• | 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 by the Additional Seller pursuant to an Assignment of Additional Accounts; and | |
• | a credit account that 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 by Discover Bank or the Additional Seller pursuant to an Assignment of Additional Accounts. |
• | an Account or another credit account is combined with an Account pursuant to the credit guidelines for the Account; and | |
• | the surviving credit account was an Account before the accounts were combined. |
• | [ ], 20[ ]or the next business day, and | |
• | the date on which an Amortization Period begins, |
• | [ ]% of the initial Series Investor Interest, before a Supplemental Credit Enhancement Event occurs; | |
• | [ ]% of the initial Series Investor Interest, after a Supplemental Credit Enhancement Event occurs; and |
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• | the difference between the Maximum Class B Credit Enhancement Amount, after giving effect to the Alternative Credit Support Election, and the Available Class B Credit Enhancement Amount, immediately before giving effect to the Alternative Credit Support Election. |
• | [ ]% of the initial Series Investor Interest, before a Supplemental Credit Enhancement Event occurs; or | |
• | [ ]% of the initial Series Investor Interest, after a Supplemental Credit Enhancement Event occurs. |
• | Discover Bank has notified the Rating Agencies, the trustee and the Credit Enhancement Provider of its election, | |
• | Discover Bank has arranged for payment of the Additional Credit Support Amount to the trustee as administrator of the credit enhancement, and | |
• | upon satisfaction of certain other requirements. |
• | 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 that immediately preceding distribution date,plus |
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• | 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 the Series Supplement,plus | |
• | following an Effective Alternative Credit Support Election, the Additional Credit Support Amount,plus | |
• | following a Supplemental Credit Enhancement Event, the Supplemental Credit Enhancement Amount,plus | |
• | following an increase in the Series Investor Interest due to the issuance of additional certificates in this series, the additional amount required to increase the credit enhancement for this series as described under“The Certificates — Issuance of Additional Certificates.” |
• | with respect to the first distribution date, $[ ], or with respect to any other distribution date, the Available Subordinated Amount after giving effect to all adjustments on the prior distribution date; and | |
• | the amount of Series Finance Charge Collections, series interchange and Series Investment Income, as this amount may be: |
• | reduced pursuant to the provisions of the Series Supplement to take into account: |
• | the amount of these funds used to deposit interest and servicing fees and to reimburse the Class A charge-offs; | |
• | the amount of the Class B Principal Collections used to deposit Class A interest and servicing fees and to reimburse Class A charge-offs; and | |
• | the amount of any reduction in the Class B Investor Interest resulting from reimbursement of the Class A charge-offs, |
in each case on that distribution date; and |
• | increased pursuant to the provisions of the Series Supplement to take into account the application of amounts on deposit in the Group One Finance Charge Collections Reallocation Account and the Group One Interchange Reallocation Account: |
• | to deposit Class B interest and servicing fees; | |
• | to reimburse Class B charge-offs; and | |
• | to increase the Available Class B Credit Enhancement Amount, |
in each case for that distribution date. |
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• | the face amount of such additional certificatesmultiplied by | |
• | the initial Available Subordinated Amountdivided by | |
• | the initial Series Investor Interest determined without including the additional certificates. |
• | through the last distribution date before an Effective Alternative Credit Support Election, [ ]% of the initial Series Investor Interest if a Supplemental Credit Enhancement Event has not occurred; | |
• | through the last distribution date before an Effective Alternative Credit Support Election, [ ]% of the initial Series Investor Interest if a Supplemental Credit Enhancement Event has occurred; and | |
• | after the distribution date immediately after an Effective Alternative Credit Support Election, [ ]% of the initial Series Investor Interest. |
• | the cumulative, uncollected amount previously billed by the servicers to Accounts that became Charged-Off Accounts during the prior calendar month with respect to finance charges, cash advance fees, annual membership fees, if any, 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” for Accounts that are not Charged-Off Accounts, and | |
• | the full amount of any Receivables in these Charged-Off Accounts that Discover Bank repurchased. |
• | the Class Percentage with respect to Finance Charge Collections for the related distribution date; and | |
• | the amount of Finance Charge Collections for such day or for the prior calendar month, as applicable; |
• | the amount of Class Investment Shortfall for that class; and | |
• | an amount equal to the product of the total amount of Finance Charge Collections otherwise allocable to Discover Bank for the prior calendar month and a fraction the numerator of which is the Class Invested Amount for that class and the denominator of which is the Aggregate Invested Amount; |
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• | the amount of Principal Receivables in the trust on the first day of the prior calendar month; and | |
• | 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 this series, as of that day, distribution date or Trust Distribution Date, as applicable. |
• | the aggregate amount of principal paid to investors in that class before that distribution date; | |
• | the aggregate amount of investor losses of that class not reimbursed before that distribution date; and | |
• | the aggregate amount of losses of principal on investments of funds on deposit for the benefit of that class in the Series Principal Funding Account, if applicable. |
• | one-twelfth of the product of: |
• | the interest rate for the class; and | |
• | the amount on deposit in the Series Principal Funding Account for the benefit of that class as of the end of the previous distribution date; and |
• | Class Investment Income for the prior calendar month. |
• | the amount of Principal Receivables in the trust; and | |
• | the Aggregate Investor Interest, |
(ii) | when used with respect to Principal Collections before a Fixed Principal Allocation Event has occurred, the percentage equivalent of a fraction the numerator of which will be the amount of the Class Investor Interest on the first day of the prior calendar month and the denominator of which will be the greater of: |
• | the amount of Principal Receivables in the trust on the first day of the prior calendar month; and | |
• | the sum of the numerators used in calculating the components of the Series Percentage with respect to Principal Collections for each series then outstanding as of such distribution date or Trust Distribution Date, as applicable; or |
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(iii) | when used with respect to Principal Collections on and after the date a Fixed Principal Allocation Event has occurred, the percentage equivalent of a fraction, the numerator of which will be the amount of the Class Investor Interest on the last day of the calendar month before the Fixed Principal Allocation Event occurred, and the denominator of which will be the greater of: |
• | the amount of Principal Receivables in the trust on the first day of the calendar month preceding the distribution date, and | |
• | the sum of the numerators used in calculating the components of the Series Percentage with respect to Principal Collections for each series then outstanding as of such distribution date or Trust Distribution Date, as applicable; or |
(iv) | when used with respect to Finance Charge Collections during the Revolving Period, the Accumulation Period and, provided that an Effective Alternative Credit Support Election has been made, the Amortization Period, the percentage equivalent of a fraction the numerator of which will be the amount of the Class Investor Interest on the first day of the prior calendar month and the denominator of which will be the greater of: |
• | the amount of Principal Receivables in the trust on the first day of the prior calendar month; and | |
• | 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 as of such distribution date or Trust Distribution Date, as applicable; |
(v) | when used with respect to Finance Charge Collections during 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 will be the amount of the Class Investor Interest on the last day of the calendar month before the Amortization Event occurred, and the denominator of which will be the greater of: |
• | the amount of Principal Receivables in the trust on the first day of the calendar month preceding the distribution date; and | |
• | 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 as of such distribution date or Trust Distribution Date, as applicable; or |
(vi) | when used with respect to interchange, the percentage equivalent of a fraction, the numerator of which will be the amount of Class Investor Interest on the first day of the prior calendar month, and the denominator of which will be the greater of: |
• | the amount of Principal Receivables in the trust; and | |
• | the Aggregate Investor Interest, |
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• | the Class Percentage with respect to Principal Collections for the related distribution date; and | |
• | the amount of Principal Collections for that day or for the prior calendar month, as applicable. |
• | which is payable in United States dollars; | |
• | which was created in compliance, in all material respects, with all requirements of law applicable to the seller and the servicer with respect to that Receivable, and pursuant to a credit agreement that complies, in all material respects, with all requirements of law applicable to that seller and servicer; | |
• | as to which, if the Receivable was created before October 27, 1993, or the relevant addition date if the Account was added to the trust after October 27, 1993, | |
• | at the time the Receivable was created, the seller of the Receivable had good and marketable title to the Receivable free and clear of all liens arising under or through the seller, and |
• | at the time the Seller conveyed the Receivable to the trust, the seller had, or the trust will have, good and marketable title to the Receivable free and clear of all liens arising under or through the seller; |
• | as to which, if the Receivable was created on or after October 27, 1993 or after the relevant addition date, if the Account was added to the trust after October 27, 1993, at the time the Receivable was created, the trust will have good and marketable title to the Receivable free and clear of all liens arising under or through the seller with respect to the Receivable; and | |
• | which constitutes an “account” under and as defined in Article 9 of the UCC as then in effect in the state in which the chief executive office of the seller of that Receivable is located. |
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• | the interest rate for the class for whose benefit the amounts on deposit in the Series Principal Funding Account are held as of the date of determination; and | |
• | the weighted average yield, expressed as a Money Market Yield, on the investments in the Series Principal Funding Account as of the date of determination. |
• | the aggregate amount of Finance Charge Receivables for the preceding calendar month and | |
• | collections actually received in the applicable calendar month; and |
• | the net amount billed by the servicer during that month as periodic finance charges on the Account and cash advance fees, annual membership fees, if any, fees for transactions that exceed the credit limit on the Account, late payment charges billed during that month to the Account and any other charges that the servicer may designate as “Finance Charge Receivables” from time to time, provided that the servicer will not designate amounts owing for the payment of goods and services or cash advances as “Finance Charge Receivables,”minus | |
• | if the Account becomes a Charged-Off Account during that month, the cumulative, uncollected amount previously billed by the servicer to the Account as periodic finance charges, cash advance fees, annual membership fees, if any, 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. |
• | if the Series Available Principal Amount is less than zero on any distribution date during the Accumulation Period, the first day of the month in which that distribution date occurred; | |
• | the date on which an Amortization Event occurs; and | |
• | a date selected by the master servicer, if any. |
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• | the Group Excess Spread,multiplied bytwelve,divided by | |
• | the sum of the series investor interests for all series, including each subseries, in Group One as of the first day of the prior calendar month. |
• | the amount of Series Principal Collections for each series, including each subseries, that is a member of Group One that is not in its amortization period or its early accumulation period, if applicable,is less than | |
• | the Group Required Principal Amount for that distribution date. |
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• | the sum of the Series Investor Interests for each series in the group that is allocated interchange;divided by | |
• | the sum of the Series Investor Interests for each series in the group. |
• | the sum of the Series Excess Spreads for each series allocated interchange in Group One for which the Series Excess Spread was negative,divided by | |
• | the sum of the Series Excess Spreads for each series in Group One for which the Series Excess Spread was negative |
• | If a rate for [one-month] deposits in United States dollars appears on Telerate Page 3750 as of 11:00 a.m., London time, on that day, then LIBOR will be the applicable rate that appears on that page. | |
• | If no rate appears on Telerate Page 3750 as described above on that day, the trustee will request the principal London office of four major banks in the London interbank market to provide a quotation of the rate, at approximately 11:00 a.m., London time, on that day, at which it would offer [one-month] dollar deposits in U.S. dollars to prime banks in the London interbank market. | |
• | If at least two banks provide the requested quotations, then LIBOR will be the arithmetic mean of the quotations. | |
• | If fewer than two banks provide the requested quotations as described above, the trustee will request four major banks in New York City to provide a quotation of the rate, at approximately 11:00 a.m., New York City time, on that day, at which it would offer one-month loans in U.S. dollars to leading European banks, and LIBOR will be the arithmetic mean of those quotations. |
• | terminate the master servicer’s rights and obligations under the Pooling and Servicing Agreement and any series supplement then outstanding, and | |
• | cause the trustee to appoint a successor master servicer. |
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• | on any distribution date before the master servicer makes an Effective Alternative Credit Support Election, the greater of: |
• | [ ]% of the initial Series Investor Interest; | |
• | if a Supplemental Credit Enhancement Event has not occurred, an amount equal to [ ]% of the Series Investor Interest as of the last day of the prior calendar month; and | |
• | if a Supplemental Credit Enhancement Event has occurred, an amount equal to [ ]% of the Series Investor Interest as of the last day of the prior calendar month; or |
• | on any distribution date after the master servicer has made an Effective Alternative Credit Support Election, the greater of: |
• | [ ]% of the initial Series Investor Interest; and | |
• | an amount equal to [ ]% of the Series Investor Interest as of the last day of the prior calendar month; |
Money Market Yield | = | D x 360 x 100 360 - (D x M) |
(i) | negotiable instruments or securities represented by instruments in bearer or registered form which evidence: |
(a) | obligations issued or fully guaranteed, as to timely payment, by the United States of America or any instrumentality or agency of the United States of America, when those obligations are backed by the full faith and credit of the United States of America; | |
(b) | 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 of the United States, or which is a domestic branch of a foreign bank, | |
• | subject to supervision and examination by federal or state banking or depository institution authorities; and |
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• | that has, at the time the trust invests or contractually commits to invest in its time deposits or bankers’ acceptances, the Highest Rating on its short-term deposits or commercial paper or, if its short-term deposits or commercial paper are unrated, the Highest Rating on its long-term unsecured debt obligations; |
(c) | commercial paper or other short-term obligations having the Highest Rating at the time the trust invests or contractually commits to invest in that commercial paper or other short-term obligations; or | |
(d) | investments in money market funds having the Highest Rating; |
(ii) | demand deposits in the name of the trust or the trustee in any depository institution or trust company referred to in clause (i)(b) above; |
(iii) | shares of an open end diversified investment company that is registered under the Investment Company Act of 1940, as amended, and that: |
(a) | invests its assets exclusively in obligations of or guaranteed by the United States of America or any instrumentality or agency of the United States of America, having in each instance a final maturity date of less than one year from their date of purchase, or other Permitted Investments; | |
(b) | seeks to maintain a constant net asset value per share; and | |
(c) | has aggregate net assets of not less than $100,000,000 on the date the trust purchases those shares. |
(iv) | 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 |
(v) | repurchase agreements transacted with either |
(a) | an entity subject to the United States federal bankruptcy code, provided that: |
(1) | the term of the repurchase agreement is consistent with the requirements set forth in Section 4.02(c) of the Pooling and Servicing Agreement with regard to the maturity of Permitted Investments or is due on demand, | |
(2) | the trustee or a third party acting solely as agent for the trustee has possession of the collateral, | |
(3) | 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, | |
(4) | 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, | |
(5) | the failure to maintain the requisite collateral level will obligate the trustee to liquidate the collateral immediately, | |
(6) | the securities subject to the repurchase agreement are certificates of deposit, bankers acceptances or obligations of, or fully guaranteed as to principal and interest by, the United States of America or an agency of the United States of America, |
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(7) | 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 |
(b) | 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., or SIPC, provided that: |
(1) | 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, | |
(2) | the trustee or a third party acting solely as agent for the trustee has possession of the collateral, | |
(3) | 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, | |
(4) | 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 | |
(5) | failure to maintain the requisite collateral percentage will obligate the trustee to liquidate the collateral. |
• | the amount of Finance Charge Collections received during that month; and | |
• | the amount of interchange allocated to each series then outstanding, including each subseries and including this series, for that month; |
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• | the beginning of the Accumulation Period; or | |
• | the date an Amortization Event occurs. |
• | if a seller elects to evidence its interest in the trust in certificated form pursuant to the Pooling and Servicing Agreement, the certificate executed by Discover Bank and authenticated by the trustee, or | |
• | an uncertificated interest in the trust as evidenced by a recording in the books and records of the trustee, |
• | the Group Available Principal Amount;less | |
• | the Series Required Principal Amount for such series or subseries less the amount of such series’ or subseries’ scheduled principal payment or deposit, plus prior shortfalls, as applicable, that was funded on that distribution date, including any portion of that amount that was funded by amounts withdrawn from the Group One Principal Collections Reallocation Account pursuant to the Series Supplement for that series or subseries. |
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• | the sum of Series Finance Charge Collections, interchange allocated to the series, and any Class Investment Income for any class of this series;minus | |
• | the sum of: |
• | the monthly interest for each class of this series; | |
• | the monthly servicing fee for each class of this series; | |
• | the product of the Series Percentage with respect to the Charged-Off Amount and the Charged-Off Amount; and | |
• | the Credit Enhancement Fee; |
• | the Series Excess Spread,multiplied bytwelve;divided by | |
• | the Series Investor Interest as of the first day of the prior calendar month. |
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• | if a Fixed Principal Allocation Event has not occurred, the Series Investor Interest on such date of determination, divided by 0.93; or |
• | if a Fixed Principal Allocation Event has occurred, the Series Investor Interest as of the date of the Fixed Principal Allocation Event, divided by 0.93; and | |
• | the product of: |
• | the sum of (1) the amount on deposit in the Series Principal Funding Account on the date of determination and (2) for any date of determination during the Accumulation Period, the scheduled principal deposit, and any shortfalls from prior months, for the next distribution date; and | |
• | 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 0.93; |
• | if the distribution date is not in March, 125%; or | |
• | if the distribution date is in March, 105%, |
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• | terminate the servicer’s rights and obligations under the Pooling and Servicing Agreement and any series supplement then outstanding, and | |
• | cause the trustee to appoint a successor servicer. |
• | [ ]% of the initial Series Investor Interest before an Effective Alternative Credit Support Election; or | |
• | zero after an Effective Alternative Credit Support Election; and | |
• | 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. |
• | [ ]% of the initial Series Investor Interest before an Effective Alternative Credit Support Election; or | |
• | zero after an Effective Alternative Credit Support Election. |
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Series | 1996-4 | 1998-5 | 2000-4 | 2000-7(3) | |||||
Initial Investor Interest | |||||||||
Class A | $1,000,000,000 | $671,980,000 | $650,000,000 | $850,000,000 | |||||
Class B | $52,632,000 | $35,368,000 | $34,211,000 | $44,737,000 | |||||
Interest Rate | |||||||||
Class A | LIBOR + 0.375% | LIBOR — 0.125% | LIBOR + 0.21% | LIBOR + 0.1725% | |||||
Class B | LIBOR + 0.55% | LIBOR + 0.33% | LIBOR + 0.45% | LIBOR + 0.4125% | |||||
Initial Credit Enhancement(1) | |||||||||
Class A | 11.00% | 12.50% | 12.50% | 12.50% | |||||
Class B | 6.00% | 7.50% | 7.50% | 7.50% | |||||
Interchange Allocations | No | No | No | No | |||||
Closing Date | April 30, 1996 | June 12, 1998 | May 10, 2000 | June 20, 2000 | |||||
Expected Maturity Date | |||||||||
Class A | April 15, 2011 | June 16, 2008 | May 15, 2007 | June 15, 2007 | |||||
Class B | May 16, 2011 | July 15, 2008 | June 15, 2007 | June 15, 2007 | |||||
Type of Principal Payment(2) | |||||||||
Class A | Bullet | Bullet | Bullet | Bullet | |||||
Class B | Bullet | Bullet | Bullet | Bullet | |||||
Series Termination Date | October 16, 2013 | December 16, 2010 | November 17, 2009 | December 16, 2009 |
Series | 2001-1 | 2001-3 | 2001-6 | 2002-2 | |||||
Initial Investor Interest | |||||||||
Class A | $1,200,000,000 | $750,000,000 | $500,000,000 | $750,000,000 | |||||
Class B | $63,158,000 | $39,474,000 | $26,316,000 | $39,474,000 | |||||
Interest Rate | |||||||||
Class A | LIBOR + 0.22% | LIBOR + 0.15% | 5.75% | 5.15% | |||||
Class B | LIBOR + 0.55% | LIBOR + 0.42% | LIBOR + 0.43% | 5.45% | |||||
Initial Credit Enhancement(1) | |||||||||
Class A | 12.50% | 12.50% | 9.00% | 8.50% | |||||
Class B | 7.50% | 7.50% | 5.50% | 4.00% | |||||
Interchange Allocations | No | No | No | No | |||||
Closing Date | January 4, 2001 | March 15, 2001 | July 24, 2001 | April 25, 2002 | |||||
Expected Maturity Date | |||||||||
Class A | January 15, 2008 | March 15, 2006 | June 15, 2006 | April 16, 2007 | |||||
Class B | February 15, 2008 | April 17, 2006 | July 17, 2006 | May 15, 2007 | |||||
Type of Principal Payment(2) | |||||||||
Class A | Bullet | Bullet | Bullet | Bullet | |||||
Class B | Bullet | Bullet | Bullet | Bullet | |||||
Series Termination Date | July 16, 2010 | September 16, 2008 | December 16, 2008 | October 16, 2009 |
(1) | Expressed as a percentage of the initial series investor interest. |
(2) | “Bullet” means that the trust is scheduled to repay principal in one payment. “Liquidating” means that the trust will repay principal over a period of time in a number of payment installments. |
(3) | For Series 2000-7, “LIBOR” means the London interbank offered rate for three-month dollar deposits, determined two business days before the start of each interest accrual period. |
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2003-1, Subseries | 2003-1, | ||||||||
Series | 2002-3 | 2 | Subseries 3 | 2003-2 | |||||
Initial Investor Interest | |||||||||
Class A | $900,000,000 | $500,000,000 | $500,000,000 | $1,000,000,000 | |||||
Class B | $47,369,000 | $26,316,000 | $26,316,000 | $52,632,000 | |||||
Interest Rate | |||||||||
Class A | LIBOR + 0.11% | LIBOR + 0.10% | LIBOR + 0.14% | LIBOR + 0.13% | |||||
Class B | LIBOR + 0.41% | 3.45% | LIBOR + 0.48% | 3.85% | |||||
Initial Credit Enhancement(1) | |||||||||
Class A | 12.50% | 12.50% | 12.50% | 12.50% | |||||
Class B | 7.50% | 7.50% | 7.50% | 7.50% | |||||
Interchange Allocations | No | No | No | No | |||||
Closing Date | May 29, 2002 | January 22, 2003 | January 22, 2003 | February 18, 2003 | |||||
Expected Maturity Date | |||||||||
Class A | May 15, 2007 | October 16, 2006 | October 15, 2007 | February 15, 2008 | |||||
Class B | June 15, 2007 | November 15, 2006 | November 15, 2007 | March 17, 2008 | |||||
Type of Principal Payment(2) | |||||||||
Class A | Bullet | Bullet | Bullet | Bullet | |||||
Class B | Bullet | Bullet | Bullet | Bullet | |||||
Series Termination Date | November 17, 2009 | April 16, 2009 | April 16, 2010 | August 17, 2010 |
2003-4, Subseries | 2003-4, | ||||||||
Series | 2003-3 | 1 | Subseries 2 | 2004-1 | |||||
Initial Investor Interest | |||||||||
Class A | $900,000,000 | $1,100,000,000 | $750,000,000 | $1,250,000,000 | |||||
Class B | $47,369,000 | $57,895,000 | $39,474,000 | $65,790,000 | |||||
Interest Rate | |||||||||
Class A | LIBOR + 0.20% | LIBOR + 0.11% | LIBOR + 0.18% | LIBOR + 0.03% | |||||
Class B | LIBOR + 0.65% | LIBOR + 0.33% | LIBOR + 0.43% | LIBOR + 0.18% | |||||
Initial Credit Enhancement(1) | |||||||||
Class A | 12.50% | 12.50% | 12.50% | 12.50% | |||||
Class B | 7.50% | 7.50% | 7.50% | 7.50% | |||||
Interchange Allocations | No | No | No | Yes | |||||
Closing Date | March 25, 2003 | December 30, 2003 | December 30, 2003 | November 3, 2004 | |||||
Expected Maturity Date | |||||||||
Class A | March 15, 2010 | November 17, 2008 | November 15, 2010 | October 15, 2007 | |||||
Class B | April 15, 2010 | December 15, 2008 | December 15, 2010 | November 15, 2007 | |||||
Type of Principal Payment(2) | |||||||||
Class A | Bullet | Bullet | Bullet | Bullet | |||||
Class B | Bullet | Bullet | Bullet | Bullet | |||||
Series Termination Date | September 18, 2012 | May 17, 2011 | May 16, 2013 | April 16, 2010 |
2004-2, Subseries | 2004-2, | ||||||||
Series | 1 | Subseries 2 | 2005-1 | 2005-2 | |||||
Initial Investor Interest | |||||||||
Class A | $1,250,000,000 | $500,000,000 | $1,500,000,000 | $800,000,000 | |||||
Class B | $65,790,000 | $26,316,000 | $78,948,000 | $42,106,000 | |||||
Interest Rate | |||||||||
Class A | LIBOR + 0.02% | LIBOR + 0.07% | LIBOR + 0.01% | LIBOR + 0.03% | |||||
Class B | LIBOR + 0.16% | LIBOR + 0.24% | LIBOR + 0.15% | LIBOR + 0.16% | |||||
Initial Credit Enhancement(1) | |||||||||
Class A | 12.50% | 12.50% | 12.50% | 12.50% | |||||
Class B | 7.50% | 7.50% | 7.50% | 7.50% | |||||
Interchange Allocations | Yes | Yes | Yes | Yes | |||||
Closing Date | December 2, 2004 | December 2, 2004 | January 18, 2005 | October 13, 2005 | |||||
Expected Maturity Date | |||||||||
Class A | November 15, 2007 | November 16, 2009 | March 17, 2008 | October 15, 2009 | |||||
Class B | December 17, 2007 | December 15, 2009 | April 15, 2008 | November 16, 2009 | |||||
Type of Principal Payment(2) | |||||||||
Class A | Bullet | Bullet | Bullet | Bullet | |||||
Class B | Bullet | Bullet | Bullet | Bullet | |||||
Series Termination Date | May 18, 2010 | May 16, 2012 | September 16, 2010 | April 17, 2012 |
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2005-4, Subseries | 2005-4, Subseries | ||||||||
Series | 2005-A(4) | 2005-3 | 1 | 2 | |||||
Initial Investor Interest | |||||||||
Class A | $1,400,000,000 | $1,500,000,000 | $700,000,000 | $800,000,000 | |||||
Class B | N/A | $78,948,000 | $36,843,000 | $42,106,000 | |||||
Interest Rate | |||||||||
Class A | Variable | LIBOR + 0.02% | LIBOR + 0.06% | LIBOR + 0.09% | |||||
Class B | N/A | LIBOR + 0.19% | LIBOR + 0.25% | LIBOR + 0.33% | |||||
Initial Credit Enhancement(1) | |||||||||
Class A | 7.50% | 12.50% | 12.50% | 12.50% | |||||
Class B | N/A | 7.50% | 7.50% | 7.50% | |||||
Interchange Allocations | Yes | Yes | Yes | Yes | |||||
Closing Date | November 29, 2005 | November 30, 2005 | December 16, 2005 | December 16, 2005 | |||||
Expected Maturity Date | |||||||||
Class A | November 17, 2008 | November 17, 2008 | December 15, 2010 | December 17, 2012 | |||||
Class B | N/A | December 15, 2008 | January 18, 2011 | January 15, 2013 | |||||
Type of Principal Payment(2) | |||||||||
Class A | Liquidating | Bullet | Bullet | Bullet | |||||
Class B | N/A | Bullet | Bullet | Bullet | |||||
Series Termination Date | May 17, 2011 | May 17, 2011 | June 18, 2013 | June 16, 2015 |
2006-1, Subseries | 2006-1, Subseries | ||||||||
Series | 2006-A(5) | 2006-B(6) | 1 | 2 | |||||
Initial Investor Interest | |||||||||
Class A | $1,700,000,000 | $700,000,000 | $750,000,000 | $750,000,000 | |||||
Class B | N/A | N/A | $39,474,000 | $39,474,000 | |||||
Interest Rate | |||||||||
Class A | Variable | Variable | LIBOR + 0.01% | LIBOR + 0.05% | |||||
Class B | N/A | N/A | LIBOR + 0.15% | LIBOR + 0.21% | |||||
Initial Credit Enhancement(1) | |||||||||
Class A | 7.50% | 7.50% | 12.50% | 12.50% | |||||
Class B | N/A | N/A | 7.50% | 7.50% | |||||
Interchange Allocations | Yes | Yes | Yes | Yes | |||||
Closing Date | January 27, 2006 | January 27, 2006 | February 28, 2006 | February 28, 2006 | |||||
Expected Maturity Date | |||||||||
Class A | January 15, 2009 | January 15, 2009 | February 17, 2009 | February 15, 2011 | |||||
Class B | N/A | N/A | March 16, 2009 | March 15, 2011 | |||||
Type of Principal Payment(2) | |||||||||
Class A | Liquidating | Liquidating | Bullet | Bullet | |||||
Class B | N/A | N/A | Bullet | Bullet | |||||
Series Termination Date | July 18, 2011 | July 18, 2011 | August 16, 2011 | August 16, 2013 |
(4) | Series 2005-A consists of certificates which were issued only to accredited investors, and are not publicly available. Immediately upon issuance, the series investor interest increased by $650,000,000 (for a total of $1,400,000,000 of investor interest), which additional amount matures on the distribution date in May 2006. The interest rate is a variable interest rate which is tied to a commercial paper rate. |
(5) | Series 2006-A consists of certificates which were issued only to accredited investors, and are not publicly available. Immediately upon issuance, the series investor interest increased by $1,300,000,000 (for a total of $1,700,000,000 of investor interest), which additional amount matures on the distribution date in July 2006. The interest rate is a variable interest rate which is tied to a commercial paper rate. |
(6) | Series 2006-B consists of certificates which were issued only to accredited investors, and are not publicly available. Immediately upon issuance, the series investor interest increased by $420,000,000 (for a total of $700,000,000 of investor interest), which additional amount matures on the distribution date in August 2006. The interest rate is a variable interest rate which is tied to a commercial paper rate. |
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• | this prospectus, which provides detailed information, some of which may not apply to your certificates, about the trust and the certificates issued by the trust, and | |
• | the prospectus supplement, which describes the specific terms of your certificates. |
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(1) | the trust’s Annual Report filed on Form 10-K for the year ended November 30, 2004; | |
(2) | the trust’s distribution reports filed on Form 10-D; and | |
(3) | Current Reports filed on Form 8-K filed since November 30, 2004. |
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Sponsor/ Depositor | Discover Bank. Discover Bank’s executive office is located at 12 Read’s Way, New Castle, Delaware 19720. Discover Bank was formerly known as Greenwood Trust Company. In its role as sponsor, Discover Bank has arranged for the trust to issue this series of certificates. | |
In its role as the depositor, Discover Bank transfers credit card receivables generated under specified Discover® Card accounts to the trust and retains: (i) the residual interest in the trust, which we refer to as the “seller interest,” (ii) the right to direct the issuance of new series from the trust and (iii) the proceeds from those issuances. Although we refer to Discover Bank in this role as the “seller” for purposes of the trust’s documentation, this role is equivalent to the role of the “depositor” as used in SEC regulations relating to asset-backed securities. References in this prospectus to Discover Bank as the “seller” shall also refer to the “depositor.” | ||
Master Servicer and Servicer | Discover Bank. As master servicer for the trust, Discover Bank is responsible for various administrative actions for the trust, including causing collections to be deposited in trust accounts and trust reporting. As servicer for the trust, Discover Bank is also responsible for invoicing cardholders, processing payments, maintaining records relating to the receivables and otherwise handling collections and other functions with respect to the receivables. Discover Bank has outsourced certain servicing functions to its affiliate Discover Financial Services LLC (“DFS”), but Discover Bank is ultimately responsible for the overall servicing function. | |
Issuing Entity | Discover Card Master Trust I. | |
Trustee | U.S. Bank National Association. |
Formation of the Trust; Trust Assets | Discover Bank and the trustee formed the trust in October 1993. Discover Bank originates and has transferred to the trust the credit card receivables generated under certain designated Discover Card accounts. Those credit card receivables, which are generally unsecured, included principal receivables (that is, amounts owed by cardmembers representing the principal balances of cash advances, purchases that cardmembers have made with their Discover Cards and balances transferred by cardmembers to their Discover Card accounts from other credit card accounts). They also included finance charge receivables (that is, amounts owed by cardmembers representing finance charges |
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accrued on unpaid principal balances, late fees and other service charges). As cardmembers make additional principal charges and incur additional finance charges and other fees in accounts designated for the trust, Discover Bank also transfers these additional receivables to the trust on an ongoing basis. During the revolving period and all other times while the certificates are outstanding, all new receivables generated on the designated accounts become assets of the trust. | ||
The trust’s assets include, or may include, the following: | ||
• credit card receivables; | ||
• cash payments by cardmembers; | ||
• cash recoveries on receivables in the trust that have been charged off as uncollectible; | ||
• the proceeds that Discover Bank has transferred to the trust relating to any charged-off receivables that Discover Bank has removed from the trust; | ||
• investment income on funds on deposit in certain investor accounts, if any; | ||
• a portion of the interchange fees paid by or through merchant acceptance networks, including the network maintained by Discover Financial Services LLC, to Discover Bank in connection with transactions on accounts of the type included in the trust; | ||
• participation interests in other credit card receivables pools conveyed to the trust in accordance with the pooling and servicing agreement, if applicable; | ||
• credit support or enhancement for each series; | ||
• currency swaps for series denominated in foreign currencies; and | ||
• interest rate protection agreements. |
Classes, Allocations and Reallocations | Each series will have one or more classes; typically Class B certificates rank junior to Class A certificates. | |
The trust allocates collections and interchange, if applicable, among the series based on each series’ investor interest in receivables. The trust also allocates receivables that Discover Bank has charged off as uncollectible to series based on the investor interest in receivables. Each series supplement to the pooling and servicing agreement specifies the percentages of these collections, interchange, if applicable, and charged-off receivables that are allocated to each class of the series at each point in time. These percentages vary based on a number of factors, including whether the trust has started to pay principal to investors in the series and whether Discover Bank has made certain choices regarding credit enhancement. The class percentages may differ for finance charge collections, principal collections, interchange, if applicable, and charged-off amounts. The pooling and servicing agreement determines whether collections are finance charge collec- |
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tions or principal collections, with recoveries on charged-off accounts included in finance charge collections. Once this determination is made, finance charge and principal collections are generally not interchangeable; each can only be used to fund certain payments, deposits and reimbursements. When Discover Bank charges off a receivable as uncollectible, it reduces the amount of principal receivables in the trust, and allocates a portion of the amount charged off against your interest in principal receivables based on your class percentage. However, the trust typically uses finance charge collections and other income, including interchange and investment income from certain trust accounts, to pay interest and to reimburse you for charged-off receivables that have been allocated to you, reinstating your interest in principal receivables. The trust typically uses principal collections to repay your principal. | ||
In general, the trust will use each series’ share of collections and other income to make required payments, to pay its share of servicing fees and to reimburse its share of charged-off amounts. In some circumstances, a prospectus supplement may provide that all or a portion of a series’ share of collections and other income will be reallocated to another series to make that series’ payments and reimbursements for a period of time. If a series has more collections and other income than it needs in any month, the trust may make the excess collections and other income available to other series so those series may make their payments and reimbursements, except that series issued prior to November 3, 2004 will not be eligible to receive reallocated interchange. You will not be entitled to receive these excess collections or other income. If a series issued on or after November 3, 2004 does not have enough collections and other income in any month, the trust may use excess collections and other income, including interchange, from other series to make payments and reimbursements for that series. Each prospectus supplement describes how the trust uses collections and other income to make payments, deposits and reimbursements for a particular series and how the trust reallocates collections and other income. | ||
Investor Interest and Invested Amount | The trust generally allocates collections, interchange and charged-off amounts to you based on your investor interest, which is your interest in the receivables. The trust makes payments to you based on your invested amount, which generally is the principal balance of your certificates. Your investor interest in receivables may decrease over time as principal is paid to you or as principal collections are deposited into the series principal funding account to be paid to you at a later time. | |
Although your investor interest in receivables and your invested amount are related, they diverge under certain circumstances. For instance, if your series has an accumulation period, as the trustee accumulates principal in the series principal funding account, your investor interest in receivables will decline but your invested amount will not be affected. Your invested amount will shift from an interest entirely in the |
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receivables to an interest in the cash in the series principal funding account and a smaller interest in the receivables. | ||
Distribution Dates | The distribution date is the date in each month, typically the 15th, on which the trust allocates collections and other income from the preceding calendar month to investors and the trustee deposits them into appropriate accounts. A distribution date may also be a date the trust pays principal or interest to investors, but it will not always be a payment date. For example, a series that pays interest semiannually will have twelve distribution dates each year but only two interest payment dates; the trust will set aside funds on each distribution date to make the next interest payment. | |
Interest | The certificates accrue interest at the rates specified in or determined in accordance with the prospectus supplement. | |
Principal | The trust will be scheduled to pay principal on each class of a series in a single payment on a specified date or in monthly payments beginning on a specified date, as set forth in the prospectus supplement. Under certain circumstances, the trust may be unable to meet the schedule. | |
Amortization events are designed to protect investors from certain events that may adversely affect the trust and your investment in the certificates. These may include: Discover Bank’s or an additional seller’s inability to continue to transfer receivables to the trust; certain breaches of representations, warranties or covenants by Discover Bank or an additional seller; receivables performance that might impair the long-term ability of the trust to make all required payments with respect to a series; or certain events of insolvency with respect to Discover Bank or an additional seller. For some of these events to become amortization events, the trustee or a specified percentage of certificateholders must declare them to be amortization events; others become amortization events automatically when they occur. If an amortization event occurs with respect to a series, the trust becomes obligated to apply principal collections allocated to that series on a monthly basis to repay the remaining principal amount of the certificates of that series. We note, however, that the FDIC has taken the position, in connection with a credit card securitization not involving Discover Bank, that an amortization event related solely to the appointment of a receiver for the sponsoring bank is unenforceable. Additionally, in a footnote to an interagency advisory, the FDIC and other federal regulatory agencies indicated that this type of amortization event may be void or voidable under the Federal Deposit Insurance Act. | ||
Each series of certificates will have two types of maturity dates, an expected maturity date, which may be different for different classes, and a series termination date. Unless otherwise specified in the prospectus supplement, the expected maturity date is the date Discover Bank believes the trust will make the final principal payment to investors in that class of certificates unless an amortization event occurs. The series termination date is always later than the expected |
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maturity date, and is the last day on which the trust will pay principal to investors in a series. If the trust owes principal in the month before the series termination date, the trustee will sell receivables, proportionate to the series’ remaining interest in the trust, to repay the principal. After the series termination date, the trustee will not allocate collections to the series. | ||
Controlled Liquidation Period | If a series provides that the principal on its certificates will be repaid in scheduled monthly payments, the series will have a controlled liquidation period. During the controlled liquidation period, the trust will apply principal collections allocated to the series to pay principal on the certificates, up to the amount of the scheduled monthly principal payment. The controlled liquidation period will begin on the first day of the month immediately preceding the month in which the trust will make the first principal payment for the series and continue until the principal of the series has been repaid in full, until an amortization event or an early accumulation event has occurred or until the series termination date. | |
Accumulation Period | If a series provides that its principal will be repaid in a single payment, it will have an accumulation period. Unless otherwise specified in the prospectus supplement, during the accumulation period, the trust will accumulate cash in the series principal funding account using collections it receives, to pay principal at maturity, unless Discover Bank elects to delay this process or an amortization event or an early accumulation event has occurred. The trust generally is scheduled to accumulate principal collections in the series principal funding account over several months, so that it will have collections available to make the final payment. | |
Discover Bank may elect to shorten the accumulation period if: | ||
• it determines that enough principal collections from this and other series will be available to make larger deposits into the series principal funding account, and | ||
• the required rating agencies have approved the election to shorten the accumulation period. | ||
Typically, the accumulation period will begin on a date specified in the prospectus supplement, or on a later date if Discover Bank elects to shorten the accumulation period, and, unless otherwise specified in the prospectus supplement, will continue until the principal of the series has been repaid in full, until an amortization event or an early accumulation event has occurred or until the series termination date. | ||
Amortization Period | The amortization period begins when an amortization event occurs and, unless otherwise specified in the prospectus supplement, continues until the trust has fully paid the principal of the series or until the series termination date. |
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Early Accumulation Events | Certain events that the series supplement would typically designate as amortization events may instead be designated as early accumulation events for a particular series. If an early accumulation event occurs with respect to a series, the trust becomes obligated to accumulate principal collections allocated to the series on a monthly basis in the series principal funding account. In general, the trust would make principal payments to investors after an early accumulation event in accordance with its original schedule, to the extent it has funds available, unless an amortization event subsequently occurs. | |
Credit Enhancement | A series may have credit enhancement that provides the trust with an additional source of funds if the trust does not receive sufficient collections on receivables and other income to make all required payments, deposits and reimbursements with respect to that series in any month. The credit enhancement may include: | |
• cash collateral accounts or reserve funds, | ||
• letters of credit, | ||
• surety bonds, or | ||
• insurance policies. | ||
The prospectus supplement may also identify other forms of credit enhancement. Series or classes of series may have credit enhancement that is also provided by subordination provisions in other classes or series. These subordination provisions may require the trust to reallocate collections and other assets that it initially allocated to a junior class or a junior series to instead make payments, deposits and reimbursements for a senior class or a senior series. The trust would generally make payments, deposits and reimbursements for a junior class or a junior series only after it had satisfied the requirements of each applicable senior class or senior series. |
Issuance of Series of Certificates by the Trust | The trust has issued many series of certificates, and Discover Bank expects that the trust will issue additional series. The pooling and servicing agreement that created the trust, and applies to all series, permits the trust to issue additional series or, in some circumstances, to increase the size of existing series by issuing additional certificates in those series, without the consent of, or notice to, certificateholders of any outstanding series. The trust will issue additional series only if Standard & Poor’s and Moody’s have confirmed that they will not reduce or withdraw the rating of any class of any series outstanding at the time of the new issuance because of the new issuance. Discover Bank and the trust will not request your consent to issue new series or increase existing series. If the trust does issue additional certificates for a series, then after the date of such issuance, references to initial series |
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investor interest will include the investor interest of such additional certificates for that series. | ||
Interest in Pool Assets | The certificates of each series represent an interest in the aggregate pool of receivables in the trust, not an interest in any specific receivable or subset of the receivables. That interest reflects your right to receive a portion of the collections paid on the receivables, your share of receivables that Discover Bank has charged off as uncollectible, your share of interchange (if interchange is a trust asset allocable to your certificates as specified in the prospectus supplement) your share of investment income on funds on deposit in investor accounts, if any, your right to the benefit of the credit enhancement established for the series and your right to the benefit of any currency swap or interest rate protection agreements for the series. Your right to receive any of these amounts will be limited to the amount of interest accrued on your certificates and the principal amount of your certificates. Discover Bank and the investors in other series currently outstanding own the remaining interest in the trust. | |
Discover Bank’s interest in the trust varies based on the size of the interests of the trust’s investors and the total amount of the trust’s receivables. Assuming the aggregate investor interest in receivables stays the same, if in any month the principal collections and charge-offs exceed the amount of new principal receivables created, Discover Bank’s interest in the trust declines. Assuming the aggregate investor interest in receivables stays the same, if in any month the principal collections and charge-offs are less than the amount of new principal receivables created, Discover Bank’s interest in the trust increases. | ||
Terms of Particular Series; Use of Subseries | Each series has a particular set of terms that will be set forth in a series supplement to the pooling and servicing agreement. The series supplement for each series will specify, among other things, the classes in the series, its size and payment terms, the group to which the series belongs, the methods for allocating collections, interchange, if applicable, and charged-off receivables to it, the kind and size of credit enhancement for the series and any applicable amendments to the pooling and servicing agreement. | |
A series may be comprised of subseries, each of which may have different series investor interests, classes, interest rates, expected maturity dates, series termination dates, credit enhancement, investor accounts, revolving, accumulation, liquidation and amortization periods, amortization events and other provisions. For convenience, we refer throughout this prospectus only to “series.” However, for series comprised of subseries, each such reference should be read to include each subseries as if such subseries were an independent series and each term used with respect to a series should be read to refer to that term as defined for each subseries. |
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Revolving Period | The revolving period is the period from the first day of the calendar month in which the trust issues a series until the trust begins using principal collections to make principal payments to investors or to accumulate the cash to be used to make later principal payments. In general, during the revolving period, the trust pays principal collections to Discover Bank in exchange for new receivables that cardmembers have generated on the accounts designated as part of the trust. | |
The trust may also use principal collections to pay the principal of other series. The revolving period for a series ends when the controlled liquidation period or the accumulation period begins, or when an amortization event or an early accumulation event occurs. |
Addition of Accounts to the Trust | Discover Bank may, and in certain circumstances may be required to, designate additional accounts as trust accounts, subject to rating agency approval, and transfer receivables in those accounts to the trust. Provided that requirements described under“The Trust—Addition of Accounts” are satisfied, there is no limit on the number of additional accounts that Discover Bank can designate as trust accounts. Even though Discover Bank transfers receivables to the trust, Discover Bank continues to own and service the related accounts. | |
Removal of Accounts from the Trust | Under certain circumstances, Discover Bank may designate certain accounts for removal from the trust as described under“The Trust—Removal of Accounts” if the minimum required level of principal receivables in the trust will be maintained and certain other conditions are satisfied. | |
Discover Bank may be required to repurchase receivables from the trust if (i) those receivables were not eligible for inclusion as trust assets at the time of transfer, (ii) their lack of eligibility has a material adverse effect on the investors’ interests in the receivables as a whole, and (iii) the lack of eligibility is not cured. Discover Bank may be required to repurchase all certificates of a series if the series supplement establishing such series does not constitute a legal, valid and binding obligation of Discover Bank enforceable against Discover Bank in accordance with its terms, subject to usual and customary exceptions relating to bankruptcy, insolvency and general equity principles. |
Servicing Fee | The master servicer is paid a monthly servicing fee, on behalf of the certificateholders of each outstanding series and the sellers, for each calendar month in an amount equal to no less than 2% per annum, calculated on the basis of a360-day year of twelve30-day months, of the aggregate amount of receivables, excluding finance charge receivables, in the trust on the first day of that calendar month. The monthly |
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servicing fee compensates the master servicer for its activities and reimburses it for its expenses, including costs related to any servicing or subservicing arrangements. The monthly servicing fee is allocated among the seller interest (held by Discover Bank as seller) and each outstanding series in accordance with the terms of the series supplement for each such series. The class monthly servicing fee for any class will be funded from the finance charge collections allocated to that class and may be funded from certain other sources, as described in“The Certificates—Cash Flows; Fees and Expenses Payable from Collections” in the related prospectus supplement. |
Tax Consequences | For each series Discover Bank will receive an opinion of counsel that, although the matter is not free from doubt, the certificates will be treated as debt for federal income tax purposes. By accepting a certificate, you will agree with Discover Bank to treat the certificate as debt for federal, state and local income and franchise tax purposes. | |
If you are a beneficial owner of a certificate, you should: | ||
• include in your gross income all stated interest paid or accrued on your certificate in accordance with your method of tax accounting; and | ||
• include in your gross income the portion of any principal payments on your certificate that exceeds your allocable tax basis in your certificate. | ||
If you are a United States person, payments on your certificates will generally be exempt from federal backup withholding, provided that you satisfy certain certification requirements. If you are a foreign person, payments on your certificates will generally be exempt from federal income tax and withholding, provided that you satisfy certain certification requirements. See“Federal Income Tax Consequences” for information concerning the application of tax laws. |
ERISA Considerations | In light of an exemption obtained by Discover Bank from the U.S. Department of Labor, Discover Bank believes that many employee benefit plans subject to ERISA may acquire the Class A Certificates. The Class B Certificates will not meet the requirements of the exemption, nor will they be considered “publicly offered securities” and therefore employee benefit plans subject to ERISA may not acquire the Class B Certificates. See“ERISA Considerations.” Advisors to employee benefit plans should consult their own counsel. | |
Denominations, Clearance and Settlement | You may purchase certificates in book-entry form in minimum denominations of $1,000 and integral multiples of $1,000. You may elect to hold the certificates only through the following clearing organizations: | |
• The Depository Trust Company, or DTC, in the United States; |
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• Clearstream Banking, in Europe; and | ||
• Euroclear, in Europe. | ||
These organizations permit transfers of securities or interests in securities by computer entries instead of paper transfers. Certificates will not be available in paper form. | ||
You may transfer your interests within DTC, Clearstream Banking or Euroclear in accordance with the usual rules and operating procedures of the relevant system. Persons holding directly or indirectly through DTC, on the one hand, and counterparties holding directly or indirectly through Clearstream Banking or Euroclear, on the other hand, may affect cross-market transfers through the relevant depositaries of Clearstream Banking and Euroclear. | ||
Listing | To facilitate trading innon-U.S. markets, Discover Bank expects to list the certificates on the Official List of the Luxembourg Stock Exchange and to trade the certificates on the Euro MTF Market of the Luxembourg Stock Exchange, in accordance with the rules of the Luxembourg Stock Exchange. |
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• | Discover Bank may change terms of the cardmember accounts; | |
• | different rates of interest relating to the receivables in the trust and the interest on the certificates; | |
• | trends in cardmember payments and receivables generation; | |
• | competition in the credit card industry; | |
• | effect of certain consumer protection laws and regulations; and | |
• | changes to cardmember minimum monthly payment requirements. |
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• | you may receive payments of principal earlier than you expected; | |
• | you may not receive all principal payments by the expected maturity date for your certificates; | |
• | we cannot predict how much principal the trust will pay you in any month or how long it will take to pay your invested amount in full; and | |
• | the risk that you will not receive full interest payments or that you will not receive an aggregate amount of principal equal to the face amount of your certificates will increase. |
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• | may contain a higher proportion of newly originated accounts; | |
• | may include accounts originated using criteria different from the criteria Discover Bank used in the accounts already in the trust; | |
• | may not be of the same credit quality as the accounts already included in the trust; | |
• | may have different terms than the accounts already included in the trust, including lower periodic finance charges, which may reduce the average yield on the receivables in the trust; | |
• | may have lower transaction volume or, for accounts that are not Discover Card accounts, have lower rates of interchange fees associated with them, in each case leading to lower levels of related interchange; | |
• | may include accounts for which the cardmembers pay receivables at a slower rate, which could delay principal payments to you; and | |
• | may initially have lower levels of recoveries than accounts already in the trust because Discover Bank will not add charged-off accounts to the trust. |
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• | the Receivables; | |
• | all monies due or to become due under the Receivables; | |
• | all proceeds of the Receivables, including collections that Discover Bank or any other servicer may use for its own benefit before each distribution date subject to satisfaction of specified ratings criteria; | |
• | interchange for the benefit of series issued on or after November 3, 2004; | |
• | all monies on deposit in the investor accounts; | |
• | cash recoveries on Receivables charged off as uncollectible; | |
• | the proceeds that Discover Bank has transferred to the trust from any charged-off receivables that Discover Bank has removed from the trust; | |
• | investment income on funds on deposit in investor accounts, if any; | |
• | participation interests in other credit card receivables pools conveyed to the trust in accordance with the Pooling and Servicing Agreement, if applicable; | |
• | credit support or enhancement for each series; | |
• | currency swaps for series denominated in foreign currencies; and | |
• | interest rate protection agreements. |
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• | acquiring and holding the Receivables and the proceeds from the Receivables and related interchange; | |
• | issuing certificates and the Seller Certificate; | |
• | making payments on certificates and the Seller Certificate; | |
• | investing funds on deposit in the investor accounts; | |
• | entering into interest rate swap, currency swap or interest rate cap or other rate protection agreements; and | |
• | entering into other agreements with third parties for the benefit of the investors of one or more series. |
• | Servicing of receivables. The master servicer and servicer are ultimately responsible for handling all billing, payment processing and collection activity for the trust, and have the ability to modify or cancel receivables as a result of fraudulent or counterfeit charges, returns, or as may be otherwise consistent with their general servicing guidelines. See“Collection Efforts and Charged-Off Accounts.” | |
• | Issuance of new series and additional certificates in existing series. Subject to confirmation from Moody’s and Standard & Poor’s that the issuance of a new series will not cause them to lower or withdraw their ratings on outstanding series, the seller may cause the trust to issue a new series of certificates and may establish the terms of that new series. The seller may also cause the trust to issue additional certificates in existing series. See“Issuance of Additional Series and Additional Certificates.” | |
• | Credit enhancement, swaps and interest rate caps. The master servicer may cause the trust to enter into credit enhancement arrangements, swaps or interest rate caps in connection with any new series, and may cause the trust to enter into replacement or substitute arrangements with respect to the credit enhancement in accordance with the credit enhancement agreement and the series supplement for the applicable series. | |
• | Delays in commencement of the accumulation period. Subject to confirmation from Moody’s and Standard & Poor’s that delaying the commencement of the accumulation period for a series will not cause them to lower or withdraw their ratings on any outstanding class of any outstanding series, the master servicer may cause the commencement of such accumulation period to be delayed if it reasonably determines that the delay will not prevent any class of the applicable series from being paid on its expected final payment date. | |
• | Movement of series among groups. Subject to confirmation from Moody’s and Standard & Poor’s that moving a series will not cause them to lower or withdraw their ratings on any class of any outstanding |
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series and other specified conditions, the master servicer may move a series from one group in the trust to another. See“—Reallocation of Series Among Groups.” | ||
• | Alternative Credit Support Election. The seller may change the way finance charge collections are allocated to a series following an amortization event by making an Alternative Credit Support Election and arranging for additional credit enhancement for the series, as specified in the applicable series supplement. The Seller may also make an Alternative Credit Support Election prior to an amortization event, which election would apply during the amortization event. | |
• | Clean-up call. The seller may repurchase the remaining certificates of a series if the Series Investor Interest for such series is 5% or less of the original Series Investor Interest for the series and other specified conditions are satisfied. See“TheCertificates—Clean-up Call; Termination of Series”in the accompanying prospectus supplement. | |
• | Amendments. The master servicer, servicer, seller and trustee may agree to make certain amendments to the pooling and servicing agreement or to any series supplement without investor consent, and may make other amendments, including those having a material adverse effect on investors in one or more classes of certificates or amendments changing the permitted activities of the trust, if the holders of the specified percentage of the certificates consent to such amendments. See“The Certificates—Amendments.” |
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• | calculates the monthly rate for variable rate securities, makes interest and principal payments on the certificates, or deposits funds into the Series Principal Funding Account, if applicable, out of available trust collections and in accordance with the cash flows for the series; | |
• | delivers to certificateholders of record certain notices, reports and other documents received by the trustee, or otherwise required to be prepared or delivered by the trustee as required under the Pooling and Servicing Agreement; | |
• | authenticates, delivers, cancels and otherwise administers the certificates, including holding global certificates on behalf of DTC; | |
• | establishes and maintains trust accounts and maintains records of activity in those accounts; | |
• | serves as the initial transfer agent, paying agent and registrar, appoints the Luxembourg paying agent and, if it resigns these duties, appoints a successor transfer agent, paying agent and registrar; | |
• | invests funds in trust accounts at the direction of the master servicer; | |
• | if the trust owes principal in the month before the Series Termination Date, sells receivables, proportionate to the series’ remaining interest in the trust, to repay the principal; and | |
• | performs certain other administrative functions identified in the Pooling and Servicing Agreement. |
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• | the trustee for liabilities resulting from fraud, negligence (including negligent failure to act), breach of fiduciary duty or willful misconduct by the trustee in performing its duties as trustee; | |
• | the trust or the investors for liabilities arising from actions taken by the trustee at the investors’ request; or | |
• | the trust or the investors for any taxes, or any related interest or penalties, required to be paid by the trust or the investors. |
• | that seller’s available assets; or | |
• | the full amount of the claimmultiplied bythe percentage of the Principal Receivables in the trust that have been transferred to the trust by that seller. |
• | all Receivables existing in the accounts designated as Accounts on each such date; and | |
• | all Receivables created in those Accounts after each such date, on a daily basis as they arise, until the trust terminates. |
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• | deliver to the trustee any other records or agreements relating to the Accounts and the Receivables; | |
• | segregate the records and agreements that it maintains relating to the Accounts and the Receivables from records and agreements relating to other credit accounts and receivables; or | |
• | otherwise mark these records or agreements to reflect the sale of the Receivables to the trust, except for any electronic or other indicators necessary to service the Accounts in accordance with the Pooling and Servicing Agreement and any Series Supplement. |
• | designate credit card accounts originated by Discover Bank or its affiliates as additional Accounts, and cause the receivables then existing and thereafter arising in those accounts to be transferred to the trust and assign to the trust the corresponding portion of interchange calculated by reference to net merchant sales on those accounts on and after the date of designation; or | |
• | convey interests in other credit card receivables pools to the trust. |
• | Discover Bank and the trustee execute and deliver a written assignment; | |
• | Discover Bank causes its legal counsel to deliver an opinion to the trustee relating to the trust’s security interest in the Receivables in the additional Accounts and insolvency and related matters; | |
• | an authorized officer of the servicer delivers a certificate regarding the selection criteria used to select the additional Accounts; and | |
• | either |
• | each of the Rating Agencies confirms that the proposed assignment will not cause it to lower or withdraw its ratings on any outstanding class of any series of certificates; or | |
• | the proposed assignment complies with any limitations established by the Rating Agencies on Discover Bank’s ability to designate additional Accounts. |
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• | Discover Bank delivers a certificate to the trustee stating that Discover Bank reasonably believes that the addition will not be materially adverse to the interests of investors in any outstanding class of any series or any credit enhancement provider; | |
• | Discover Bank causes its legal counsel to deliver an opinion to the trustee relating to the trust’s security interest in these added interests and insolvency and related matters; and | |
• | each of the Rating Agencies confirms that the proposed assignment will not cause it to lower or withdraw its ratings on any outstanding class of any series of certificates. |
• | need not be Discover Card accounts or accounts originated by Discover Bank; | |
• | may have different terms than the terms governing the Accounts initially included in the trust, including the possibility of lower periodic finance charges or fees; | |
• | may have lower transaction volume or, for accounts that are not Discover Card accounts, have lower rates of interchange fees associated with them, in each case leading to lower levels of related interchange; | |
• | may be composed entirely of newly originated accounts; | |
• | may contain a higher percentage of newly originated accounts than the Accounts currently included in the trust; and | |
• | may contain accounts originated using criteria different from those applied to the Accounts currently included in the trust. |
• | the aggregate amount of Principal Receivables in the trustminusthe aggregate amount of Principal Receivables in the removed Accounts is not less than the Minimum Principal Receivables Balance; |
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• | Discover Bank reasonably believes that removing the Accounts will not cause an Amortization Event to occur for any outstanding series; | |
• | Discover Bank reasonably believes that removing the Accounts will not prevent the trust from making any scheduled principal payment or deposit for any series in full; | |
• | Discover Bank did not select the Accounts to be removed using procedures that it believed to be materially adverse to the investors; | |
• | the Rating Agencies have advised Discover Bank that the removal will not cause them to lower or withdraw their ratings on any class of any outstanding series of certificates; and | |
• | the Accounts to be removed will meet one of the following criteria: |
• | each of the Accounts is a Charged-Off Account; | |
• | the Accounts to be removed were randomly selected; or | |
• | the Accounts were originated or maintained in connection with a so-called “affinity” or “private-label” arrangement that has expired or been terminated by a third party. |
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• | If in any month the amount of collections of Principal Receivables and the Charged-Off Amount exceed the amount of new Principal Receivables created, Discover Bank’s interest in the trust declines. | |
• | If in any month the amount of collections of Principal Receivables and the Charged-Off Amount are less than the amount of new Principal Receivables created, Discover Bank’s interest in the trust increases. |
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• | the initial series investor interest in Receivables; | |
• | the number of classes; | |
• | the initial investor interest in Receivables for each class; | |
• | the interest rate for each class; | |
• | the payment dates for each class; | |
• | the Series Termination Date; and | |
• | the group to which the series will belong. |
• | organized under the laws of the United States or any individual state; | |
• | that at all times has a short-term certificate of deposit rating of A-1/ P-1 or better from the Rating Agencies; and | |
• | whose deposits are insured by the FDIC. |
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• | to withdraw from the Collections Account that portion of collections and interchange allocable to the Seller Interest on that distribution date; | |
• | to pay the amount of that withdrawal to the holder of the Seller Certificate; and | |
• | to withdraw all remaining collections from the Collections Account and deposit those collections in each Group Collections Account, on or before the distribution date for that group, in an amount equal to: |
• | the sum of the Finance Charge Collections allocated to each series in the group; | |
• | the sum of the interchange allocated to each series in the group that is eligible for allocations of interchange; and | |
• | the sum of the Principal Collections allocated to each series in the group. |
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• | the Series Termination Date for that series; and | |
• | the day after the distribution date on which the trust makes the final payment of principal to the investors in that series. |
• | the aggregate amount of Receivables in the trust;multiplied by | |
• | the series investor interest in Receivables;divided by | |
• | the Aggregate Investor Interest; |
• | the amount payable under the credit enhancement; | |
• | any conditions to that payment; | |
• | the circumstances under which the credit enhancement will be available; | |
• | the class or classes of the series that will receive the direct benefit of the credit enhancement; | |
• | the conditions, if any, under which the amount payable under the credit enhancement may be terminated, reduced or replaced; | |
• | repayment of the principal balance to the credit enhancement provider; and | |
• | other material provisions of the related credit enhancement agreement. |
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• | the Pooling and Servicing Agreement or appropriate assignment, as the case may be, does not constitute a valid and binding obligation of each seller, subject to usual and customary exceptions relating to bankruptcy, insolvency and general equity principles; | |
• | the Pooling and Servicing Agreement or appropriate assignment, as the case may be, does not constitute: |
• | a valid transfer and assignment to the trust of all right, title and interest of each seller in and to the Receivables, whether then existing or thereafter created, and the proceeds of those Receivables; or |
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• | the grant of a perfected security interest of first priority under the UCC as in effect in the state in which the applicable seller is located— which for purposes of the UCC will generally be the state in which it was incorporated or otherwise formed— in those Receivables and the proceeds of those Receivables, effective as to each Receivable at the time it was or is created; |
• | any seller or a person claiming through or under any seller has any claim to or interest in any investor account, other than the interests of the investors or the interest of any seller as a debtor for purposes of the UCC as in effect in the state in which the applicable seller is located; or | |
• | certain representations and warranties of any seller regarding: |
• | its corporate status and authority to assign Receivables and perform its obligations under the Pooling and Servicing Agreement and any Series Supplement; and | |
• | the accuracy of information furnished by that seller to the trustee, |
• | the sum of the Class Percentages for each class of the series for Principal Collections for the next following distribution date for the series;multiplied by | |
• | the amount of Receivables attributable to the additional Accounts, |
• | this has a material adverse effect on the investors’ interest in the Receivables as a whole; and | |
• | it is not cured within 60 days of the earlier of: |
• | actual knowledge of the breach by the relevant seller; or | |
• | receipt by that seller of written notice of the breach given by the trustee. |
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• | the amount of Principal Receivables in the trust at the end of the calendar month in which the relevant seller obtained |
• | actual knowledge of the transfer of a Receivable that is not an Eligible Receivable; or | |
• | 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 |
• | the relevant seller’s short term debt rating from Standard & Poor’s is less than A-1; |
• | which is payable in United States dollars; | |
• | which was created in compliance, in all material respects, with all requirements of law applicable to the seller and the servicer with respect to that Receivable, and pursuant to a credit agreement that complies, in all material respects, with all requirements of law applicable to that seller and servicer; | |
• | as to which, if the Receivable was created before October 27, 1993, or the relevant addition date if the Account was added to the trust after October 27, 1993; |
• | at the time the Receivable was created, the seller of the Receivable had good and marketable title to the Receivable free and clear of all liens arising under or through the seller; and | |
• | at the time the seller conveyed the Receivable to the trust, the seller had, or the trust will have, good and marketable title to the Receivable free and clear of all liens arising under or through the seller; |
• | as to which, if the Receivable was created on or after October 27, 1993 or the relevant addition date if the Account was added to the trust after October 27, 1993, at the time the Receivable was created, the trust will have good and marketable title to the Receivable free and clear of all liens arising under or through the seller with respect to the Receivable; and | |
• | which constitutes an “account” under and as defined in Article 9 of the UCC as then in effect in the state in which the chief executive office of the seller of that Receivable is located. |
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• | any seller may transfer all or part of its 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; and | |
• | any seller may transfer a portion of the Seller Interest on terms substantially similar to the terms of the Pooling and Servicing Agreement, so long as | |
• | the agreements and other related documentation are consistent with, and subject to, the terms of the Pooling and Servicing Agreement and any Series Supplement and do not require any action prohibited or prohibit any action that is required on the part of the master servicer, any seller, the trustee or any servicer by the Pooling and Servicing Agreement or any Series Supplement or necessary to protect the interests of the investors; and | |
• | the Rating Agencies advise the seller that they will not lower or withdraw the rating of any class of any outstanding series as a result of the transfer. |
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• | the group from which the series is moved and the group to which the series is moved have the same distribution date; | |
• | the master servicer has certified to the trustee that the master servicer reasonably believes that moving the series would not delay any payment of principal to the investors in any series then outstanding; | |
• | the master servicer has certified to the trustee that the master servicer reasonably believes that moving the series would not cause an Amortization Event to occur with respect to any series then outstanding; and | |
• | the Rating Agencies have advised the master servicer and Discover Bank that moving the series would not cause them to lower or withdraw their ratings of any class of any series then outstanding. |
• | to add to the covenants and agreements contained in the Pooling and Servicing Agreement or the Series Supplement or to surrender any right or power in those agreements reserved to or conferred upon the sellers, the master servicer or any servicer, provided that the amendment will not adversely affect in any material respect the interests of the investors in any class of any series then outstanding; | |
• | to add provisions to or change or eliminate any of the provisions of the Pooling and Servicing Agreement or any Series Supplement, provided that the amendment will not adversely affect in any material respect the interests of the investors in any class of any series then outstanding; | |
• | to add provisions to or change any of the provisions of the Pooling and Servicing Agreement or any Series Supplement to accommodate the addition of interests in other pools of credit card receivables to the trust; or | |
• | to cure any ambiguity or to correct or supplement any defective or inconsistent provision contained in the Pooling and Servicing Agreement, in any Series Supplement or in any amendment to the Pooling and Servicing Agreement or any Series Supplement. |
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• | the trustee will have been advised by each Rating Agency that the Rating Agency will not lower or withdraw its ratings assigned to the certificates of the series as a result of the amendment; and | |
• | the amendment will not materially and adversely affect the interests of the certificateholders of any class of the series by reducing in any manner the amount of, or delaying the timing of, distributions that are required to be made to them without the consent of the affected certificateholders, or by reducing the percentage required to consent to any such amendment, without the consent of each certificateholder of each affected class. |
• | the execution and delivery of any Series Supplement; | |
• | the addition of Receivables and the corresponding portion of interchange calculated by reference to net merchant sales on the related Accounts on and after the date of addition to the trust; | |
• | the removal of Receivables and the corresponding portion of interchange calculated by reference to net merchant sales on the related Accounts on and after the date of removal from the trust; | |
• | the addition or removal of any seller or servicer in connection with an addition to or removal from the trust of Receivables and the corresponding portion of interchange calculated by reference to net merchant sales on the related Accounts on and after the date of addition or removal, as applicable; or | |
• | the replacement of any servicer, master servicer or trustee. |
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• | a limited-purpose trust company organized under the New York Banking Law; | |
• | a member of the Federal Reserve System; | |
• | a “clearing corporation” within the meaning of the New York UCC; and | |
• | a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. |
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• | to make book-entry transfers among participants on whose behalf it acts with respect to the certificates; and | |
• | to receive and transmit distributions of the principal of and interest on the certificates. |
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• | transfers of securities and cash within the Euroclear System; | |
• | withdrawal of securities and cash from the Euroclear System; and | |
• | receipts of payments with respect to securities in the Euroclear System. |
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• | the master servicer advises the trustee in writing that DTC is no longer willing or able to discharge properly its responsibilities as depository for that class, and the trustee or the master servicer is unable to locate a qualified successor; | |
• | the master servicer, at its option, elects to terminate the book-entry system through DTC; or | |
• | after a Master Servicer Termination Event occurs, beneficial owners representing in the aggregate at least 51% of the respective class invested amount advise the trustee and DTC through DTC participants in writing that continuing a book-entry system through DTC, or a successor to DTC, is no longer in the best interest of the beneficial owners of that class. |
• | aggregating collections from the servicers and distributing those collections to the various investor accounts; | |
• | directing the investment of funds on deposit in the investor accounts and the credit enhancement accounts in Permitted Investments; | |
• | receiving the monthly servicing fee and allocating it among the servicers; |
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• | preparing reports for investors; and | |
• | making any filings on behalf of the trust with the Securities and Exchange Commission or other governmental agencies. |
• | collecting payments due under the receivables for which it acts as servicer; | |
• | executing and delivering any and all instruments of satisfaction or cancellation or of partial or full release or discharge with respect to the receivables for which it is acting as servicer; | |
• | commencing collection proceedings if the accounts become delinquent; | |
• | removing charged-off accounts; | |
• | confirming that accounts added to the trust were not selected on the basis of selection criteria believed by the servicer to be materially adverse to the interests of the holders of any class of any outstanding series; and | |
• | calculating a reasonable estimate of the amount of finance charge receivables billed in the accounts. |
• | Customer service; | |
• | Collections; | |
• | Certain credit services, including new account application review and authorization, transaction and remittance processing, and monthly statement preparation; |
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• | Information technology and related services; and | |
• | Statistical reporting of account performances and measures. |
• | the investor servicing fee percentage of 2% per year,divided by twelve, unless otherwise specified in the related prospectus supplement;multiplied by | |
• | the amount of Principal Receivables in the trust as of the first day of the calendar month preceding that Trust Distribution Date;multiplied by | |
• | the amount of the Seller Interest;divided by | |
• | the greater of: |
• | the amount of Principal Receivables in the trust; and | |
• | the Aggregate Investor Interest. |
• | the amount of the servicing fee for a given calendar month;multiplied by | |
• | the class investor interest on the first day of the calendar month;divided by | |
• | the series investor interest on the first day of the calendar month. |
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• | any corporation into which the master servicer or the servicer is merged or consolidated in accordance with the Pooling and Servicing Agreement; | |
• | any corporation resulting from any merger or consolidation to which the master servicer or any servicer is a party; or | |
• | any corporation succeeding to the business of the master servicer or any servicer. |
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• | the master servicer fails to make any payment, transfer or deposit, or to give instructions to the trustee to make any withdrawal, on the date it is required to do so under the Pooling and Servicing Agreement, any Series Supplement or any master servicing agreement, or within five business days after the date it was required to do so; | |
• | the master servicer fails duly to observe or perform in any material respect any of its other covenants or agreements set forth in the Pooling and Servicing Agreement, any Series Supplement or any master servicing agreement, and does not cure that failure for 60 days after it receives notice that it has failed to perform from the trustee, or for 60 days after it and the trustee receive notice that it has failed to perform from holders of certificates that represent at least 25% of the invested amount for any class of any series materially adversely affected by the failure; | |
• | any representation, warranty or certification made by the master servicer in the Pooling and Servicing Agreement, any Series Supplement, any master servicing agreement or in any certificate delivered pursuant to any of these agreements proves to have been incorrect when made, which: |
• | has a material adverse effect on the rights of the investors of any class of any series then outstanding; and | |
• | continues to be incorrect in any material respect for 60 days after written notice of its incorrectness has been given to the master servicer by the trustee, or to the master servicer and the trustee by holders of certificates that represent at least 25% of the invested amount for any class of any series materially adversely affected by the incorrect representation, warranty or certification; or |
• | certain events of bankruptcy, insolvency or receivership of the master servicer occur. However, the FDIC may have the power to prevent the trustee or investors from effecting a transfer of servicing if the Master Servicer Termination Event relates only to the appointment of a conservator or receiver or the insolvency of Discover Bank, or any other FDIC-insured depository institution, as master servicer. Similarly, if a Master Servicer Termination Event occurs with respect to a master servicer subject to Title 11 of the United States Code, and no Master Servicer Termination Event exists other than the filing of a bankruptcy petition by or against the master servicer, the trustee or investors may be prevented from effecting a transfer of servicing. |
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• | the servicer fails to make any payment, transfer or deposit on the date it is required to do so under the Pooling and Servicing Agreement, any Series Supplement, or any master servicing agreement, or within five business days after the date it was required to do so; | |
• | the servicer fails duly to observe or perform in any material respect any of its other covenants or agreements set forth in the Pooling and Servicing Agreement, any Series Supplement or any master servicing agreement, and does not cure that failure for 60 days after it receives notice that it has failed to perform from the trustee, or for 60 days after it and the trustee receive notice that it has failed to perform from holders of certificates that represent at least 25% of the invested amount for any class of any series materially adversely affected by the failure; | |
• | any representation, warranty or certification made by the servicer in the Pooling and Servicing Agreement, any Series Supplement, any master servicing agreement or in any certificate delivered pursuant to any of these agreements proves to have been incorrect when made, which: |
• | has a material adverse effect on the rights of the investors of any class of any series then outstanding; and | |
• | continues to be incorrect in any material respect for 60 days after written notice of its incorrectness has been given to the servicer by the trustee, or to the servicer and the trustee by holders of certificates that represent at least 25% of the invested amount for any class of any series materially adversely affected by the incorrect representation, warranty or certification; or |
• | certain events of bankruptcy, insolvency or receivership of the servicer occur. However, the FDIC may have the power to prevent the trustee or investors from effecting a transfer of servicing if the Servicer Termination Event relates only to the appointment of a conservator or receiver or the insolvency of Discover Bank, or any other FDIC-insured depository institution, as servicer. Similarly, if a Servicer Termination Event occurs with respect to a servicer subject to Title 11 of the United States Code, and no Servicer Termination Event exists other than the filing of a bankruptcy petition by or against the servicer, the trustee or investors may be prevented from effecting a transfer of servicing. |
If the servicer is in bankruptcy or receivership, it is possible that a transfer of servicing may be delayed pending court or FDIC approval. |
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• | a report on an assessment of compliance with all applicable servicing criteria required by relevant SEC regulations with respect toasset-backed securities transactions that are backed by the same types of assets as those backing the certificates, as set forth in the Pooling and Servicing Agreement; and | |
• | an attestation report from a firm of registered public accountants on the related assessment of compliance with such servicing criteria, in the form required by relevant SEC regulations with respect to asset backed issuers |
• | a review of such entity’s activities during the reporting period and its performance under the applicable servicing agreement has been made under such officer’s supervision; and | |
• | to the best of such officer’s knowledge, based on such review, such entity has fulfilled its obligations under the applicable servicing agreement in all material respects throughout the reporting period or, if there has been a failure to fulfill any such obligation in any material respect, specifying each such failure known to such officer and the nature and status thereof. |
• | in the course of the officer’s duties as an officer of the master servicer, the officer would normally obtain knowledge of any Master Servicer Termination Event; and | |
• | whether or not such officer has obtained knowledge of any Master Servicer Termination Event during the previous fiscal year ended November 30 and, if so, specifying each Master Servicer Termination Event of which the signing officer has knowledge and the nature of that event. |
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• | Has the right, and in some circumstances the obligation, to designate additional Accounts, or in some cases participation interests in other receivables pools, for the trust; | |
• | Has the right to remove Receivables from the trust, subject to specified constraints; | |
• | Indemnifies the trust and the trustee against losses arising out of the seller’s activities in connection with the trust or the trustee; | |
• | Repurchases Receivables that have been transferred to the trust if a Receivables Repurchase Event or a Trust Portfolio Repurchase Event occurs; | |
• | Prepares required SEC reports; | |
• | Receives the proceeds of sales of trust certificates; | |
• | Pays the fees and expenses of the trustee; and | |
• | Receives all residual payments in connection with the seller interest. |
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• | the law of the jurisdiction in which the debtor—in this case, Discover Bank—is located governs perfection, the effect of perfection or nonperfection and the priority of a security interest in the Receivables; | |
• | the provisions of the Pooling and Servicing Agreement are effective under the UCC to create a valid security interest in favor of the trust in Discover Bank’s right, title and interest in and to the Receivables; and | |
• | to the extent the transfer of Receivables to the trust meets all conditions for sale accounting treatment under U.S. generally accepted accounting principles and the Receivables constitute “financial assets” under the FDIC rule, the FDIC rule will apply to the transfer. |
• | to the extent Delaware law applies, the security interest created by the Pooling and Servicing Agreement in favor of the trust is a valid security interest in all right, title and interest of Discover Bank in and to the Receivables; | |
• | the security interest is a perfected security interest; and | |
• | the security interest is a first priority security interest. |
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• | the obligor receives a notification, authenticated by the assignor or the assignee, reasonably identifying the rights assigned, that the amount due or to become due has been assigned and that payment is to be made to the trustee; and | |
• | if requested by the obligor, the trustee has furnished reasonable proof of the assignment. |
• | a life insurance company; | |
• | a tax-exempt organization; | |
• | a financial institution; | |
• | a broker-dealer; | |
• | an investor that has a functional currency other than the United States dollar; or | |
• | an investor that holds certificates as part of a hedge, straddle or conversion transaction. |
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• | is issued in registered form; | |
• | has all payments denominated in United States dollars and not determined by reference to the value of any other currency; | |
• | has a term that exceeds one year; | |
• | has an interest formula that meets the requirements for “qualified stated interest” under Treasury Regulations relating to original issue discount—“OID”—unless Section 1272(a)(6) of the Code applies to the certificate; and | |
• | does not have any OID arising from any excess of its stated redemption price at maturity—generally, its principal amount—over its issue price, or has only ade minimisamount of OID. OID generally isde minimisif it is less than1/4% of the certificate’s principal amountmultiplied bythe number of full years until the certificate’s maturity date. |
• | Discover Bank uses different criteria to determine the nontax accounting treatment of the transaction; and | |
• | for regulatory and financial accounting purposes, Discover Bank will treat the transfer of the Receivables under the Pooling and Servicing Agreement and each Series Supplement as a transfer of an ownership interest in the Receivables and not as the creation of a debt obligation. |
• | Discover Bank’s expressed intent to treat the certificates for federal, state and local income and franchise tax purposes as debt secured by the Receivables and other assets held in the trust; and | |
• | each investor’s commitment, by accepting a certificate, similarly to treat the certificate for federal, state and local income and franchise tax purposes as debt. |
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• | a citizen or resident of the United States; | |
• | a corporation or partnership, including an entity treated as a corporation or partnership for federal income tax purposes, created or organized in the United States or under the laws of the United States or of any state; | |
• | an estate the income of which is subject to United States federal income taxation regardless of the source of that income; or | |
• | a trust if a court within the United States is able to exercise primary supervision over the trust’s administration, and one or more United States persons have the authority to control all substantial decisions of the trust, and certain other trusts in existence on August 20, 1996 that have validly elected to be treated as United States Persons. |
Stated Interest on Certificates. Subject to the discussion below: |
• | if you use the cash method of accounting for tax purposes, you generally will be taxed on the interest on your certificate at the time it is paid to you; or | |
• | if you use the accrual method of accounting for tax purposes, you generally will be taxed on the interest on your certificate at the time it accrues. |
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• | you acquire your certificate upon its original issue at a price that is less than the certificate’s issue price; or | |
• | you acquire a certificate that is issued with OID at a price that is less than the certificate’s revised issue price. A certificate’s revised issue price should generally be its issue priceplusthe amount of OID previously includible in income by all prior holders of the certificate. |
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• | the amount of cash and the fair market value of any property received for the certificate, other than the amount attributable to, and taxable as, accrued but unpaid interest; and | |
• | your tax basis in the certificate, as increased by any OID or market discount, includingde minimisamounts, that you previously included in income, and decreased by any deductions previously allowed to you for amortizable bond premium and by any payments reflecting principal or OID that you received with respect to the certificate. |
• | a nonresident alien individual; | |
• | a foreign corporation; | |
• | a foreign partnership; or | |
• | a foreign estate or trust; |
• | you are not a “10 percent shareholder” of Discover Bank or a “controlled foreign corporation” with respect to which Discover Bank is a “related person” within the meaning of the Code, and either | |
• | you represent that you are not a United States Person and provide your name and address to Discover Bank or its paying agent on a properly executed IRS Form W-8BEN, signed under penalties of perjury; or | |
• | a securities clearing organization, bank, or other financial institution that holds customers’ securities in the ordinary course of its business holds your certificate on your behalf, certifies to Discover Bank or its paying agent under penalties of perjury that it has received the appropriate certification form from you or from another qualifying financial institution intermediary, and provides a copy to Discover Bank or its paying agent; or | |
• | these interest payments are effectively connected with your conduct of a trade or business within the United States and you provide a properly executed IRS Form W-8ECI. |
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• | the gain is not effectively connected with your conduct of a trade or business within the United States; and | |
• | if you are an individual; | |
• | you have not been present in the United States for 183 days or more in the taxable year of the disposition; or | |
• | you do not have a “tax home” in the United States and the gain is not attributable to an office or other fixed place of business that you maintain in the United States. |
• | you were not a “10 percent shareholder” of Discover Bank; and | |
• | your interest on the certificate was not effectively connected with your conduct of a trade or business within the United States. |
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• | the broker has evidence in its records that you are not a United States Person and certain other conditions are met; or | |
• | you otherwise qualify for an exemption. |
• | you properly certify under penalties of perjury that you are not a United States Person and certain other conditions are met; or | |
• | you otherwise qualify for an exemption. |
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• | the Class A certificates cannot be subordinated to any other similar interests in the trust; | |
• | the Class A certificates must be rated, at the time a plan acquires them, in one of the two highest rating categories by at least one rating agency, or, if they have a maturity of one year or less, they must have the highest short-term rating; | |
• | the Class A certificates must have specified levels of credit support; | |
• | certain other rating agency conditions must be satisfied; | |
• | the certificates must be subject to early amortization or cash accumulation under certain circumstances; | |
• | any interest rate swaps and caps must meet certain conditions; | |
• | the Class A certificates must be sold initially in an underwriting or private placement, including a placement by underwriters or dealers on behalf of the trust; | |
• | the initial sale must be by an entity that received an individual “Underwriter Exemption” from the DOL, an affiliate of such an entity, or a member of a selling group of which such an entity or affiliate is a manager or co-manager; and | |
• | the trustee cannot be affiliated with any underwriter or member of the selling group for the Class A certificates, any provider of credit support for the Class A certificates, or any swap counterparty for the Class A certificates. |
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• | The acquisition of Class A certificates must be on terms, including price, that are at least as favorable to the plan as those terms would be in an arm’s-length transaction with an unrelated party. | |
• | Amounts retained by underwriters or selling agents for selling or placing the Class A certificates must be reasonable in amount, the servicing fee must be reasonable in amount, and the amounts received by Discover Bank upon the sale of Receivables to the trust cannot exceed the fair market value of the Receivables. | |
• | The plan must be an “accredited investor” as defined in Rule 501(a)(1) of Regulation D under the Securities Act of 1933, as amended. | |
• | If the particular Class A certificates are supported by one or more interest rate swaps or caps, the decision to acquire the Class A certificates must be made by an independent fiduciary that is qualified to analyze and understand the terms of the swaps or caps and any resulting effect on the credit rating of the Class A certificates. Moreover, the fiduciary must be either a “QPAM” or “INHAM” as described in the applicable DOL Prohibited Transaction Exemptions, or a plan fiduciary with at least $100 million of total assets under management. | |
• | In order for an acquisition of Class A certificates by a plan to be exempt from certain of the prohibited transaction rules concerning “self-dealing”—i.e., Section 406(b)(1) and (2) of ERISA and Section 4975(c)(1)(E) of the Code—the Exemption imposes additional requirements relating to the particular plan. See Section I.B. of the Exemption. Plans investing in Class A certificates should carefully consider whether or not they need to rely on these particular provisions of the Exemption and, if so, whether they satisfy these requirements of Section I.B. |
• | freely transferable; | |
• | part of a class of securities that is owned by 100 or more investors independent of the issuer and of one another by the conclusion of the offering; and | |
• | either is |
• | part of a class of securities registered under section 12(b) or 12(g) of the Securities Exchange Act of 1934; or | |
• | sold to the plan as part of an offering of securities to the public pursuant to an effective registration statement under the Securities Act of 1933 and the class of securities of which such security is a part is registered under the Securities Exchange Act of 1934 within 120 days, or such later time as may |
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be allowed by the Securities and Exchange Commission, after the end of the fiscal year of the issuer during which the offering of the securities to the public occurred. |
• | DOL Prohibited Transaction Exemption (“PTE”)84-14 (Class Exemption for Plan Asset Transactions determined by Independent Qualified Professional Asset Managers); | |
• | PTE 91-38 (Class Exemption for Certain Transactions Involving Bank Collective Investment Funds); | |
• | PTE 90-1 (Class Exemption for Certain Transactions Involving Insurance Company Pooled Separate Accounts); | |
• | PTE 95-60 (Class Exemption for Certain Transactions Involving Insurance Company General Accounts); and | |
• | PTE 96-23 (Class Exemption for Plan Asset Transactions Determined by In-House Asset Managers). |
• | that person exercises any discretionary authority or discretionary control respecting management of the plan or exercises any authority or control respecting management or disposition of its assets; | |
• | that person renders investment advice for a fee or other compensation, direct or indirect, with respect to any moneys or other property of the plan, or has any authority or responsibility to do so; or | |
• | that person has any discretionary authority or discretionary responsibility in the administration of the plan. |
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• | through underwriters or dealers; | |
• | directly to one or more purchasers; or | |
• | through agents. |
• | the name or names of any underwriters; | |
• | the purchase price of the certificates; | |
• | the proceeds to Discover Bank from the sale; | |
• | any underwriting discounts and other items constituting underwriters’ compensation; | |
• | any initial offering price; | |
• | any discounts or concessions allowed or reallowed or paid to dealers; and | |
• | any securities exchanges on which the certificates may be listed. |
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• | the institution shall not, at the time of delivery, be prohibited from purchasing the certificates under the laws of any jurisdiction of the United States to which the institution is subject; and | |
• | if Discover Bank is selling the certificates to underwriters, Discover Bank will have sold to those underwriters the total principal amount of the applicable certificatesminusthe principal amount of those certificates covered by delayed delivery and payment arrangements. |
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• | a Discover Card account established pursuant to a credit agreement between Discover Bank and any person, receivables under which are transferred to the trust by Discover Bank pursuant to either the Pooling and Servicing Agreement or an Assignment of Additional Accounts; | |
• | 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 by the Additional Seller pursuant to an Assignment of Additional Accounts; and | |
• | a credit account that 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 by Discover Bank or the Additional Seller pursuant to an Assignment of Additional Accounts. |
• | an Account or another credit account is combined with an Account pursuant to the credit guidelines for the Account; and | |
• | the surviving credit account was an Account before the accounts were combined. |
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• | the cumulative, uncollected amount previously billed by the servicers to Accounts that became Charged-Off Accounts during the prior calendar month with respect to finance charges, cash advance fees, annual membership fees, if any, 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” for Accounts that are not Charged-Off Accounts, and | |
• | the full amount of any Receivables in these Charged-Off Accounts that Discover Bank repurchased. |
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• | the aggregate amount of Finance Charge Receivables for the preceding calendar month and | |
• | collections actually received in the applicable calendar month; and |
• | the net amount billed by the servicer during that month as periodic finance charges on the Account and cash advance fees, annual membership fees, if any, fees for transactions that exceed the credit limit on the Account, late payment charges billed during that month to the Account and any other charges that the servicer may designate as “Finance Charge Receivables” from time to time, provided that the servicer will not designate amounts owing for the payment of goods and services or cash advances as “Finance Charge Receivables,”minus | |
• | if the Account becomes a Charged-Off Account during that month, the cumulative, uncollected amount previously billed by the servicer to the Account as periodic finance charges, cash advance fees, annual membership fees, if any, 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. |
• | terminate the master servicer’s rights and obligations under the Pooling and Servicing Agreement and any Series Supplement then outstanding; and | |
• | cause the trustee to appoint a successor master servicer. |
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• | a nonresident alien individual; | |
• | a foreign corporation; | |
• | a foreign partnership; or | |
• | a foreign estate or trust, |
(i) | negotiable instruments or securities represented by instruments in bearer or registered form which evidence: |
(a) | obligations issued or fully guaranteed, as to timely payment, by the United States of America or any instrumentality or agency of the United States of America, when those obligations are backed by the full faith and credit of the United States of America; | |
(b) | 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 of the United States, or which is a domestic branch of a foreign bank; | |
• | subject to supervision and examination by federal or state banking or depository institution authorities; and | |
• | that has, at the time the trust invests or contractually commits to invest in its time deposits or bankers’ acceptances, the Highest Rating on its short-term deposits or commercial paper or, if its short-term deposits or commercial paper are unrated, the Highest Rating on its long-term unsecured debt obligations; |
(c) | commercial paper or other short-term obligations having the Highest Rating at the time the trust invests or contractually commits to invest in that commercial paper or other short-term obligations; or | |
(d) | investments in money market funds having the Highest Rating; |
(ii) | demand deposits in the name of the trust or the trustee in any depository institution or trust company referred to in clause (i)(b) above; | |
(iii) | shares of an open end diversified investment company that is registered under the Investment Company Act of 1940, as amended, and that: |
(a) | invests its assets exclusively in obligations of or guaranteed by the United States of America or any instrumentality or agency of the United States of America, having in each instance a final maturity date of less than one year from their date of purchase, or other Permitted Investments; | |
(b) | seeks to maintain a constant net asset value per share; and | |
(c) | has aggregate net assets of not less than $100,000,000 on the date the trust purchases those shares. |
These securities will not be represented by an instrument, will be registered in the name of the trustee upon books maintained for that purpose by or on behalf of the issuer of these securities and will be identified on books maintained for that purpose by the trustee as held for the benefit of the |
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trust or the investors. The trust may only invest in these securities if they 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; |
(iv) | 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 | |
(v) | repurchase agreements transacted with either |
(a) | an entity subject to the United States federal bankruptcy code, provided that: |
(1) | the term of the repurchase agreement is consistent with the requirements set forth in Section 4.02(c) of the Pooling and Servicing Agreement with regard to the maturity of Permitted Investments or is due on demand, | |
(2) | the trustee or a third party acting solely as agent for the trustee has possession of the collateral, | |
(3) | 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, | |
(4) | 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, | |
(5) | the failure to maintain the requisite collateral level will obligate the trustee to liquidate the collateral immediately, | |
(6) | the securities subject to the repurchase agreement are certificates of deposit, bankers acceptances or obligations of, or fully guaranteed as to principal and interest by, the United States of America or an agency of the United States of America, | |
(7) | 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 |
(b) | 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., or SIPC, provided that: |
(1) | 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, | |
(2) | the trustee or a third party acting solely as agent for the trustee has possession of the collateral, | |
(3) | 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, | |
(4) | 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 | |
(5) | failure to maintain the requisite collateral percentage will obligate the trustee to liquidate the collateral. |
At the time the trust invests or contractually commits to invest in any repurchase agreement, the entity or institution must have the Highest Rating on its short-term deposits or commercial paper or, if its short-term deposits or commercial paper are unrated, the Highest Rating on its long-term unsecured debt obligations. Permitted Investments will include, without limitation, securities of |
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Discover Bank or any of its affiliates which otherwise qualify as a Permitted Investment under clause (i), (ii), (iii), (iv) or (v) above. |
• | the relevant seller’s actual knowledge of the breach; or | |
• | the relevant seller’s receipt of written notice of the event from the trustee. |
A Receivables Repurchase Event will also occur automatically if: |
• | the amount of Principal Receivables in the trust at the end of the calendar month in which the relevant seller obtained | |
• | actual knowledge of the transfer of a Receivable that is not an Eligible Receivable; or | |
• | written notice of such a transfer from the trustee; |
• | the relevant seller’s short term debt rating from Standard & Poor’s is less than A-1. |
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• | if a seller elects to evidence its interest in the trust in certificated form pursuant to the Pooling and Servicing Agreement, the certificate executed by Discover Bank and authenticated by the trustee, or | |
• | an uncertificated interest in the trust as evidenced by a recording in the books and records of the trustee, |
• | terminate the servicer’s rights and obligations under the Pooling and Servicing Agreement and any Series Supplement then outstanding, and | |
• | cause the trustee to appoint a successor servicer. |
• | certain legal defects existed under the Pooling and Servicing Agreement or the assignments; |
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• | certain defects existed in the trust’s rights in the Receivables; or | |
• | certain representations and warranties of any seller were not true and the breach is not cured within a specified time period. |
• | a citizen or resident of the United States; | |
• | a corporation or partnership, including an entity treated as a corporation or partnership for federal income tax purposes, created or organized in the United States or under the laws of the United States or of any state; | |
• | an estate the income of which is subject to United States federal income taxation regardless of the source of that income; or | |
• | a trust if a court within the United States is able to exercise primary supervision over the trust’s administration, and one or more United States persons have the authority to control all substantial decisions of the trust, and certain other trusts in existence on August 20, 1996 that have validly elected to be treated as United States Persons. |
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Registration Fee | $ | 1,633,158.55 | ** | ||
Printing and Engraving | $ | 1,520,000 | * | ||
Trustee’s Fees | $ | 636,500 | * | ||
Legal Fees and Expenses | $ | 3,800,000 | * | ||
Blue Sky Fees and Expenses | $ | 100,000 | * | ||
Accountants’ Fees and Expenses | $ | 1,140,000 | * | ||
Rating Agency Fees | $ | 9,500,000 | * | ||
Miscellaneous Fees | $ | 285,000 | * | ||
Total | $ | 18,614,658.55 | |||
** | Actual. |
* | Estimated, based on $15,263,164,000 of securities to be registered hereunder plus $3,736,836,000 of securities previously registered and unissued under Registration Statement No. 333-110560 to which the prospectus and form of prospectus supplement included in this Registration Statement also relate. |
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Item 16. | Exhibits |
Exhibit | ||||||||
Number | Description | |||||||
*1.1 | Form of Underwriting Agreement between Discover Bank and Morgan Stanley & Co. Incorporated. | |||||||
*4.1 | Amended and Restated Pooling and Servicing Agreement between Discover Bank as Master Servicer, Servicer and Seller and U.S. Bank National Association, as Trustee, dated as of November 3, 2004, incorporated by reference to the Trust’s Current Report on Form 8-K filed on October 29, 2004. | |||||||
*4.2 | First Amendment to Amended and Restated Pooling and Servicing Agreement between Discover Bank as Master Servicer, Servicer and Seller and U.S. Bank National Association, as Trustee, dated as of January 4, 2006, and Global Amendment to Certain Series Supplements thereto, incorporated by reference to the Trust’s Current Report on Form 8-K filed on January 9, 2006. | |||||||
*4.3 | Second Amendment to Amended and Restated Pooling and Servicing Agreement between Discover Bank as Master Servicer, Servicer and Seller and U.S. Bank National Association, as Trustee, dated as of March 30, 2006. | |||||||
*4.4 | Form of Series Supplement between Discover Bank, as Master Servicer, Servicer and Seller and U.S. Bank National Association, as Trustee, including form of Class A Certificate and form of Class B Certificate. | |||||||
*4.5 | Form of Credit Enhancement Agreement among U.S. Bank National Association, as Trustee for Discover Card Master Trust I, Discover Bank, as Master Servicer, Servicer and Seller with respect to the Discover Card Master Trust I and Discover Receivables Financing Corporation, as Credit Enhancement Provider. | |||||||
*5.1 | Opinion of Latham & Watkins LLP. | |||||||
*5.2 | Form of opinion of Latham & Watkins LLP as to certain creditors’ rights matters relating to Discover Bank. | |||||||
*5.3 | Form of opinion of Young, Conaway, Stargatt & Taylor, LLP as to certain creditors’ rights matters relating to Discover Bank. | |||||||
*8.1 | Opinion of Latham & Watkins LLP as to certain federal tax matters concerning the certificates. | |||||||
*†10.1 | First Revised Service Agreement, dated May 17, 2000, as amended, between Discover Financial Services, Inc. (n/k/a Discover Financial Services LLC) and Greenwood Trust Company (n/k/a Discover Bank). | |||||||
*23.1 | Consent of Latham & Watkins LLP (included in Exhibit 5.1). | |||||||
*23.2 | Consent of Young Conaway Stargatt & Taylor, LLP. | |||||||
*23.3 | Consent of Deloitte & Touche LLP. | |||||||
*24.1 | Powers of Attorney, dated as of February 14, 2006. |
* | Previously filed. |
† | Confidential treatment requested for certain portions of this Exhibit pursuant to Rule 406 under the Securities Act, which portions are omitted and filed separately with the Securities and Exchange Commission. |
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Item 17. | Undertakings |
(a) (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: |
(i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; | |
(ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high and of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; | |
(iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; |
Provided, however,that: |
(A) Paragraphs (a)(1)(i), (a)(1)(ii) and (a)(1)(iii) of this section do not apply if the registration statement is on Form S-3 or Form F-3 and the information required to be included in a post-effective amendment by those paragraphs is contained in reports filed with or furnished to the Commission by each Registrant pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement, or is contained in a form of prospectus filed pursuant to Rule 424(b) that is part of the registration statement. | |
(B) Provided further, however,that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the registration statement is for an offering of asset-backed securities on Form S-1 or Form S-3, and the information required to be included in a post-effective amendment is provided pursuant to Item 1100(c) of Regulation AB. |
(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initialbona fideoffering thereof. | |
(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. | |
(4) That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser: | |
If any Registrant is relying on Rule 430B: |
(A) Each prospectus filed by such Registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and | |
(B) Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5) or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of providing the information required by section 10(a) of the Securities Act of 1933 shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after |
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effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initialbona fideoffering thereof.Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date. |
(5) That, for the purpose of determining liability of any Registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities: |
Each undersigned Registrant undertakes that in a primary offering of securities of the undersigned Registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, each undersigned Registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser: |
(i) Any preliminary prospectus or prospectus of any undersigned Registrant relating to the offering required to be filed pursuant to Rule 424; | |
(ii) Any free writing prospectus relating to the offering prepared by or on behalf of any undersigned Registrant or used or referred to by any undersigned Registrant; | |
(iii) The portion of any other free writing prospectus relating to the offering containing material information about any undersigned Registrant or its securities provided by or on behalf of each such undersigned Registrant; and | |
(iv) Any other communication that is an offer in the offering made by any undersigned Registrant to the purchaser. |
(b) Each undersigned Registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of each such Registrant’s annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initialbona fideoffering thereof. | |
(c) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of each such Registrant pursuant to the foregoing provisions, or otherwise, each such Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by each such Registrant of expenses incurred or paid by a director, officer or controlling person of each such Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, each such Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. | |
(d) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this Registration Statement in reliance upon |
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Rule 430A and contained in a form of prospectus filed by the Registrants pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act of 1933 shall be deemed to be a part of this Registration Statement as of the time it was declared effective. | |
(e) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initialbona fide offering thereof. | |
(f) Each undersigned Registrant hereby undertakes that, except as otherwise provided by Item 1105 of Regulation AB, information provided in response to that Item pursuant to Rule 312 of Regulation S-T through the specified Internet address in the prospectus is deemed to be a part of the prospectus included in the registration statement. In addition, each undersigned Registrant hereby undertakes to provide to any person without charge, upon request, a copy of the information provided in response to Item 1105 of Regulation AB pursuant to Rule 312 of Regulation S-T through the specified Internet address as of the date of the prospectus included in the registration statement if a subsequent update or change is made to the information. |
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DISCOVER BANK, | |
as Depositor | |
(Registrant) |
By | /s/Michael F. Rickert |
Michael F. Rickert | |
Vice President, Chief Accounting Officer, | |
Treasurer and Assistant Secretary | |
DISCOVER CARD MASTER TRUST I, | |
(Registrant) | |
By: Discover Bank, | |
as Master Servicer |
By | /s/Michael F. Rickert |
Michael F. Rickert | |
Vice President, Chief Accounting Officer, | |
Treasurer and Assistant Secretary |
Signature | Title | Date | ||
David W. Nelms* | Chairman, Investment Officer and Loan Officer (Principal Executive Officer) | |||
Michael F. Rickert* | Vice President, Chief Accounting Officer, Treasurer and Assistant Secretary (Principal Financial Officer and Principal Accounting Officer) | |||
Margaret J. Bellock* | Director | |||
Alexander C. Frank* | Director | |||
Roger C. Hochschild* | Director | April 21, 2006 | ||
Carlos Minetti* | Director | |||
William P. O’Hara* | Director | |||
Frank K. Reilly* | Director | |||
Kathy M. Roberts* | Director | |||
Joseph A. Yob* | Director |
*By | /s/ Michael F. Rickert , individually and asAttorney-in-fact |
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Exhibit | Sequential | |||||||
Number | Description | Page No. | ||||||
*1.1 | Form of Underwriting Agreement between Discover Bank and Morgan Stanley & Co. Incorporated. | |||||||
*4.1 | Amended and Restated Pooling and Servicing Agreement between Discover Bank as Master Servicer, Servicer and Seller and U.S. Bank National Association, as Trustee, dated as of November 3, 2004, incorporated by reference to the Trust’s Current Report on Form 8-K filed on October 29, 2004. | |||||||
*4.2 | First Amendment to Amended and Restated Pooling and Servicing Agreement between Discover Bank as Master Servicer, Servicer and Seller and U.S. Bank National Association, as Trustee, dated as of January 4, 2006, and Global Amendment to Certain Series Supplements thereto, incorporated by reference to the Trust’s Current Report on Form 8-K filed on January 9, 2006. | |||||||
*4.3 | Second Amendment to Amended and Restated Pooling and Servicing Agreement between Discover Bank as Master Servicer, Servicer and Seller and U.S. Bank National Association, as Trustee, dated as of March 30, 2006. | |||||||
*4.4 | Form of Series Supplement between Discover Bank, as Master Servicer, Servicer and Seller and U.S. Bank National Association, as Trustee, including form of Class A Certificate and form of Class B Certificate. | |||||||
*4.5 | Form of Credit Enhancement Agreement among U.S. Bank National Association, as Trustee for Discover Card Master Trust I, Discover Bank, as Master Servicer, Servicer and Seller with respect to the Discover Card Master Trust I and Discover Receivables Financing Corporation, as Credit Enhancement Provider. | |||||||
*5.1 | Opinion of Latham & Watkins LLP. | |||||||
*5.2 | Form of opinion of Latham & Watkins LLP as to certain creditors’ rights matters relating to Discover Bank. | |||||||
*5.3 | Form of opinion of Young, Conaway, Stargatt & Taylor, LLP as to certain creditors’ rights matters relating to Discover Bank. | |||||||
*8.1 | Opinion of Latham & Watkins LLP as to certain federal tax matters concerning the certificates. | |||||||
*†10.1 | First Revised Service Agreement, dated May 17, 2000, as amended, between Discover Financial Services, Inc. (n/k/a Discover Financial Services LLC) and Greenwood Trust Company (n/k/a Discover Bank). | |||||||
*23.1 | Consent of Latham & Watkins LLP (included in Exhibit 5.1). | |||||||
*23.2 | Consent of Young Conaway Stargatt & Taylor, LLP. | |||||||
*23.3 | Consent of Deloitte & Touche LLP. | |||||||
*24.1 | Powers of Attorney, dated as of February 14, 2006. |
* | Previously filed. |
† | Confidential treatment requested for certain portions of this Exhibit pursuant to Rule 406 under the Securities Act, which portions are omitted and filed separately with the Securities and Exchange Commission. |