Exhibit 4.2
EXECUTION VERSION
DISCOVER CARD EXECUTION NOTE
TRUST
Issuer
and
U.S. BANK NATIONAL
ASSOCIATION
Indenture Trustee
CLASS C(2009-1) TERMS
DOCUMENT
Dated as of September 1,
2009
to
INDENTURE SUPPLEMENT
Dated as of July 26,
2007
for the DiscoverSeries
Notes
to
INDENTURE
Dated as of July 26,
2007
TABLE OF CONTENTS
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Page
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ARTICLE
I
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1
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Definitions and
Other Provisions of General Application
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1
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Section
1.01.
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Definitions
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1
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Section
1.02.
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Representations and Warranties of
Issuer
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9
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Section
1.03.
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Representations and Warranties of Indenture
Trustee
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10
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Section
1.04.
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Limitations
on Liability
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10
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Section
1.05.
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Governing
Law
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10
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Section
1.06.
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Counterparts
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11
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Section
1.07.
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Ratification
of Indenture and Indenture Supplement
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11
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ARTICLE
II
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11
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The Class
C(2009-1) Notes
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11
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Section
2.01.
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Creation and
Designation
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11
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Section
2.02.
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Adjustments
to Required Subordinated Percentage and Amount
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11
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Section
2.03.
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Interest
Payment
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11
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Section
2.04.
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Notification
of LIBOR
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12
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Section
2.05.
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Payments of
Interest and Principal
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12
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Section
2.06.
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Form of
Delivery of Class C(2009-1) Notes; Denominations
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12
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Section
2.07.
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Delivery and
Payment for the Class C(2009-1) Notes
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13
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Section
2.08.
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Targeted
Deposits to the Accumulation Reserve Account
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13
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Section
2.09.
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Additional
Issuances of Notes
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13
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Section
2.10.
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Designation
of Additional Amounts to be included in the Excess Spread Amount
for the DiscoverSeries Notes
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14
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Section
2.11.
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No Payments
from Interest Funding Subaccount for accretion of principal of the
Class C(2009-1) Notes
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14
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Section 2.12.
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Calculation
of Class C(2009-1) Accreted Discount
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14
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Exhibit
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Exhibit A
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Form of Class C Note
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THIS CLASS C(2009-1) TERMS DOCUMENT
(this “ Terms Document ”), by and between
DISCOVER CARD EXECUTION NOTE TRUST, a statutory trust created under
the laws of the State of Delaware (the “ Issuer
”), and U.S. BANK NATIONAL ASSOCIATION, a national banking
association organized and existing under the laws of the United
States of America, as Indenture Trustee (the “ Indenture
Trustee ”), is made and entered into as of
September 1, 2009.
Pursuant to this Terms Document, the
Issuer shall create a new Tranche of Class C Notes of the
DiscoverSeries and shall specify the principal terms
thereof.
ARTICLE I
Definitions and Other Provisions of
General Application
Section 1.01.
Definitions . For all purposes of this Terms Document,
except as otherwise expressly provided or unless the context
otherwise requires:
(1) the terms defined in this
Article have the meanings assigned to them in this Article, and
include the plural as well as the singular;
(2) all other terms used herein
which are defined in the Indenture Supplement or the Indenture,
either directly or by reference therein, have the meanings assigned
to them therein;
(3) all accounting terms not
otherwise defined herein have the meanings assigned to them in
accordance with generally accepted accounting principles and,
except as otherwise herein expressly provided, the term
“generally accepted accounting principles” with respect
to any computation required or permitted hereunder means such
accounting principles as are generally accepted in the United
States of America at the date of such computation;
(4) all references in this Terms
Document to designated “Articles,”
“Sections” and other subdivisions are to the designated
Articles, Sections and other subdivisions of this Terms Document;
The words “herein,” “hereof” and
“hereunder” and other words of similar import refer to
this Terms Document as a whole and not to any particular Article,
Section or other subdivision;
(5) in the event that any term or
provision contained herein shall conflict with or be inconsistent
with any term or provision contained in the Indenture Supplement or
the Indenture, the terms and provisions of this Terms Document
shall be controlling, but solely with respect to the Class
C(2009-1) Notes;
(6) each capitalized term defined
herein shall relate only to the Class C(2009-1) Notes and no other
Tranche of Notes issued by the Issuer;
(7) “including” and
words of similar import will be deemed to be followed by
“without limitation”; and
(8) for purposes of determining any
amount or making any calculation hereunder, such amount or
calculation, (x) if specified to be as of the first day of any
Due Period, shall (a)
include any Notes issued during such Due Period
as if such Notes had been outstanding on the first day of such Due
Period and (b) give effect to any payments, deposits or other
allocations made on the Distribution Date related to the prior Due
Period, and (y) if specified to be as of the close of business
on the last day of any Due Period shall give effect to any
payments, deposits or other allocations made on the related
Distribution Date.
“ Accumulation Amount
” means $16,666,666.67; provided , however , if
the commencement of the Accumulation Period is delayed in
accordance with Section 4.02 of the Indenture Supplement, the
Accumulation Amount shall be determined in accordance with the
definition of “Accumulation Amount” in the Indenture
Supplement.
“ Accumulation Commencement
Date ” means August 1, 2010, or such later date as
the Calculation Agent on behalf of the Issuer determines in
accordance with Section 4.02 of the Indenture
Supplement.
“ Accumulation Period
” has the meaning set forth in the Indenture
Supplement.
“ Accumulation Period
Length ” means 12 months; provided ,
however , if the commencement of the Accumulation Period is
delayed in accordance with Section 4.02 of the Indenture
Supplement, the Accumulation Period Length shall be determined in
accordance with the definition of “Accumulation Period
Length” in the Indenture Supplement.
“ Accumulation Reserve
Funding Period ” shall not apply if the Calculation Agent
on behalf of the Issuer notifies the Indenture Trustee that it
expects the Accumulation Period Length to be adjusted to one
(1) month, and otherwise shall mean a period commencing on the
first Distribution Date on which a condition in the right column of
the following table was in effect on the immediately preceding
Distribution Date, if the Distribution Date is a Distribution Date
described in the corresponding left column of the following table,
and ending on the Distribution Date immediately preceding the
earlier to occur of:
(x) the Expected Maturity Date for
the Class C(2009-1) Notes and
(y) the Principal Payment Date on
which the Outstanding Dollar Principal Amount of the Class
C(2009-1) Notes is paid in full.
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Distribution Date:
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Condition:
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(a) The
Distribution Date occurring three (3) calendar months prior to
the first scheduled Distribution Date of the Accumulation Period
(as adjusted in accordance with Section 4.02 of the Indenture
Supplement) and any following Distribution Date
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No
condition.
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(b) The
Distribution Date occurring four (4) calendar months prior to
the first scheduled Distribution Date of the Accumulation Period
(as adjusted in accordance with Section 4.02 of the Indenture
Supplement) and any following Distribution Date
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The three-month
rolling average Excess Spread Percentage is less than
4%.
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2
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(c) The
Distribution Date occurring six (6) calendar months prior to the
first scheduled Distribution Date of the Accumulation Period (as
adjusted in accordance with Section 4.02 of the Indenture
Supplement) and any following Distribution Date
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The three-month
rolling average Excess Spread Percentage is less than
3%.
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(D) The
Distribution Date occurring twelve (12) calendar months prior
to the first scheduled Distribution Date of the Accumulation Period
(as adjusted in accordance with Section 4.02 of the Indenture
Supplement) and any following Distribution Date
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The three-month
rolling average Excess Spread Percentage is less than
2%.
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“ Class C(2009-1) Accreted
Discount ” means, for any Distribution Date, the amount
of principal accreted on the Class C(2009-1) Notes in accordance
with Section 2.12 hereof through the Monthly Principal
Accretion Period ending on such Distribution Date.
“ Class C(2009-1) Adverse
Event ” means the occurrence of any of the following:
(a) an Early Redemption Event with respect to the Class
C(2009-1) Notes or (b) an Event of Default and acceleration of
the Class C(2009-1) Notes; provided , however , that
if the only such event to have occurred is an Excess Spread Early
Redemption Event for which an Excess Spread Early Redemption Cure
has occurred, a Class C(2009-1) Adverse Event shall not be treated
as continuing from and after the date of such cure.
“ Class C(2009-1) Note
” means any Note, in the form set forth in Exhibit A hereto,
designated therein as a Class C(2009-1) Note and duly executed and
authenticated in accordance with the Indenture.
“ Class C(2009-1)
Noteholder ” means a Person in whose name a Class
C(2009-1) Note is registered in the Note Register.
“ Class C(2009-1)
Termination Date ” means the earliest to occur of
(a) the Principal Payment Date on which the Outstanding Dollar
Principal Amount of the Class C(2009-1) Notes is paid in full,
(b) the Legal Maturity Date and (c) the date on which the
Indenture is discharged and satisfied pursuant to Article VI
thereof.
“ Class C Tranche Interest
Allocation ” notwithstanding anything to the contrary in
the Indenture Supplement, for the Class C (2009-1) Notes shall be
zero; provided that, if the Outstanding Dollar Principal Amount is
not paid in full on or prior to the Expected Maturity Date, for any
Distribution Date after the Expected Maturity Date, the Class C
Tranche Interest Allocation shall be the Class C Interest for the
Class C(2009-1) Notes plus any Interest Allocation Shortfall from
the prior Distribution Date. Following a Receivables Sale for the
Class C (2009-1) Notes, the Class C Tranche Interest Allocation
shall be zero.
3
“ Class C Reserve Account
Percentage ” means, for any Distribution Date on which a
condition in the left column of the following table was in effect
on the immediately preceding Distribution Date, the percentage in
the corresponding right column of the following table (or if more
than one conditions were in effect on the immediately preceding
Distribution Date, the largest percentage).
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Condition:
The three-month rolling average
Excess Spread Percentage is:
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Class C Reserve
Account Percentage:
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(a) 4.50% or
greater
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0%
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(b) 4.00% to
4.49%
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1.25%
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(c) 3.50% to
3.99%
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2.00%
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(d) 3.00% to
3.49%
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2.75%
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(e) 2.50% to
2.99%
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3.50%
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(f) 2.00% to
2.49%
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4.50%
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(g) less than 2.00%, or
an Early Redemption Event or Event
of Default for the Class C(2009-1) Notes has occurred and is
continuing.
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6.00%
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“ Discount Amount
” means initially $36,362,600; provided that following any
issuance of additional Class C(2009-1) Notes in accordance with
Section 2.09, the Discount Amount shall mean the amount
specified in the Notice of Additional Issuance.
“ Encumbered Amount
” means, for the Class C(2009-1) Notes, an amount equal
to
(a) the Nominal Liquidation Amount
of the Class C(2009-1) Notes, divided by
(b) the Nominal Liquidation Amount
of all Tranches of Class C Notes in the DiscoverSeries,
multiplied by
(c) the sum of (i) the
aggregate Required Subordinated Amount of Class C Notes for all
Tranches of Class A Notes in the DiscoverSeries with a
Required Subordinated Amount of Class B Notes equal to zero and a
Required Subordinated Amount of Class C Notes greater
than
4
zero and (ii) the aggregate Required
Subordinated Amount of Class C Notes for all Tranches of Class B
Notes in the DiscoverSeries with a Required Subordinated Amount of
Class C Notes greater than zero.
“ Encumbered Required
Subordinated Amount of Class D Notes ” means, for the
Class C(2009-1) Notes, the product of
(a) the sum of (1) the
aggregate Required Subordinated Amount of Class D Notes for all
Tranches of Class A Notes in the DiscoverSeries with a
Required Subordinated Amount of Class D Notes greater than zero,
plus (2) the aggregate Unencumbered Required
Subordinated Amount of Class D Notes for all Tranches of Class B
Notes in the DiscoverSeries with an Unencumbered Required
Subordinated Amount of Class D Notes greater than zero,
multiplied by
(b) a percentage equivalent to a
fraction, the numerator of which is the Nominal Liquidation Amount
of the Class C(2009-1) Notes, and the denominator of which is the
Nominal Liquidation Amount of all Tranches of Class C Notes in the
DiscoverSeries.
“ Excess Spread
Percentage ” for any Distribution Date means a fraction,
the numerator of which is the Excess Spread Amount for such
Distribution Date multiplied by 12 and the denominator of
which is the sum of the Nominal Liquidation Amounts of all Tranches
of DiscoverSeries Notes as of the first day of the related Due
Period.
“ Expected Maturity
Date ” means August 15, 2011.
“ Indenture ”
means the Indenture dated as of July 26, 2007 between the
Issuer and Indenture Trustee, as the same may be amended,
supplemented, restated, amended and restated, replaced or otherwise
modified from time to time.
“ Indenture Supplement
” means the Indenture Supplement dated as of July 26,
2007, as amended by the Omnibus Amendment dated as of July 2,
2009, for the DiscoverSeries Notes, by and between the Issuer and
the Indenture Trustee, as the same may be amended, supplemented,
restated, amended and restated, replaced or otherwise modified from
time to time.
“ Initial Dollar Principal
Amount ” means $163,637,400, or such higher amount as is
specified in any Notice of Additional Issuance under
Section 2.09.
“ Interest Accrual
Period ” means, with respect to any Interest Payment
Date, the period from and including the previous Interest Payment
Date to but excluding such Interest Payment Date (or, in the case
of the first Interest Payment Date occurring after the Expected
Maturity Date, from and including the Expected Maturity Date to but
excluding such Interest Payment Date).
“ Interest Payment Date
” means, if the Outstanding Dollar Principal Amount is not
paid in full on or prior to the Expected Maturity Date, the
fifteenth day of each month commencing in September 2011, or if
such fifteenth day is not a Business Day, the next succeeding
Business Day.
5
“ Issuance Date ”
means September 1, 2009 with respect to all Class C(2009-1)
Notes issued on the date hereof and, with respect to any additional
Class C(2009-1) Notes issued pursuant to Section 2.09, any
Issuance Date specified in the Notice of Additional Issuance
delivered thereunder.
“ Legal Maturity Date
” means February 18, 2014.
“ LIBOR ” means,
with respect to any LIBOR Determination Date, the rate for deposits
in United States dollars with a duration comparable to the relevant
Interest Accrual Period which appears on Reuters Screen LIBOR01 as
of 11:00 a.m., London time, on such day. If such rate does not
appear on Reuters Screen LIBOR01, the rate will be determined by
the Indenture
