<PAGE>
FILED PURSUANT TO RULE 424(b)(2)
Registration # 333-1725301
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED AUGUST 7, 1997
$693,750,000
MBNA MASTER CREDIT CARD TRUST II
$637,500,000 CLASS A 6.55% ASSET BACKED CERTIFICATES, SERIES 1997-I
$56,250,000 CLASS B FLOATING RATE ASSET BACKED CERTIFICATES, SERIES 1997-I
MBNA AMERICA BANK, NATIONAL ASSOCIATION
SELLER AND SERVICER
Each Class A 6.55% Asset Backed Certificate, Series 1997-I (collectively,
the "Class A Certificates") and each Class B Floating Rate Asset Backed
Certificate, Series 1997-I (collectively, the "Class B Certificates" and,
together with the Class A Certificates, the "Certificates") will represent the
right to receive certain payments from the MBNA Master Credit Card Trust II
(the "Trust"), created pursuant to a Pooling and Servicing Agreement between
MBNA America Bank, National Association ("MBNA"), as seller and servicer, and
The Bank of New York, as trustee. The property of the Trust includes
receivables (the "Receivables") generated from time to time in a portfolio of
MasterCard(R) and VISA(R) revolving credit card accounts (the "Accounts"), all
monies due or to become due in payment of the Receivables and the right to
receive Interchange allocable to the Certificates, as described herein.
(continued on next page)
THERE CURRENTLY IS NO SECONDARY MARKET FOR THE CERTIFICATES, AND THERE IS NO
ASSURANCE THAT ONE WILL DEVELOP. POTENTIAL INVESTORS SHOULD CONSIDER, AMONG
OTHER THINGS, THE INFORMATION SET FORTH IN "RISK FACTORS" BEGINNING ON PAGE S-
23 HEREIN AND PAGE 19 IN THE PROSPECTUS.
------------------
THE CERTIFICATES REPRESENT INTERESTS IN THE TRUST ONLY AND DO NOT REPRESENT
INTERESTS IN OR OBLIGATIONS OF MBNA AMERICA BANK, NATIONAL ASSOCIATION OR
ANY AFFILIATE THEREOF. A CERTIFICATE IS NOT A DEPOSIT AND NEITHER THE
CERTIFICATES NOR THE UNDERLYING ACCOUNTS OR RECEIVABLES ARE INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY
OTHER GOVERNMENTAL AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT
OR THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------
<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNT SELLER(1)(2)
--------- ------------ ------------
<S> <C> <C> <C>
Per Class A Certificate............. 99.7816% 0.3750% 99.4066%
Per Class B Certificate............. 100.0000% 0.3750% 99.6250%
Total............................... $692,357,700 $2,601,562.50 $689,756,137.50
</TABLE>
(1) Plus accrued interest, if any, at the Class A Certificate Rate or the
Class B Certificate Rate, as applicable, from August 26, 1997.
(2) Before deduction of expenses estimated to be $800,000.
------------------
The Certificates are offered by the Underwriters when, as and if issued by
the Trust and accepted by the Underwriters and subject to the Underwriters'
right to reject orders in whole or in part. It is expected that the
Certificates will be delivered in book-entry form on or about August 26, 1997,
through the facilities of The Depository Trust Company, Cedel Bank, societe
anonyme, and the Euroclear System.
UNDERWRITERS OF THE CLASS A CERTIFICATES
GOLDMAN, SACHS & CO.
CREDIT SUISSE FIRST BOSTON
LEHMAN BROTHERS
MERRILL LYNCH & CO.
SALOMON BROTHERS INC
UNDERWRITERS OF THE CLASS B CERTIFICATES
GOLDMAN, SACHS & CO. LEHMAN BROTHERS
------------------
The date of this Prospectus Supplement is August 12, 1997.
<PAGE>
(continued from previous page)
In addition, the Collateral Interest (as defined herein) will be issued in the
initial amount of $56,250,000 and will be subordinated to the Certificates as
described herein. Only the Class A Certificates and the Class B Certificates
are offered hereby. MBNA initially will own the remaining undivided interest
in the Trust not represented by the Certificates, the Collateral Interest and
the other interests issued by the Trust and will service the Receivables. MBNA
has offered and may from time to time offer other Series of certificates that
evidence undivided interests in certain assets of the Trust, which may have
terms significantly different from the Certificates.
Interest will accrue on the Class A Certificates from August 26, 1997 (the
"Closing Date") at the rate of 6.55% per annum (the "Class A Certificate
Rate"). Interest will accrue on the Class B Certificates from the Closing Date
through September 14, 1997, and from September 15, 1997 through October 14,
1997, and with respect to each Interest Period (as defined herein) thereafter,
at the rate of 0.31% per annum above the London interbank offered rate for
one-month United States dollar deposits ("LIBOR"), determined as described
herein, prevailing on the related LIBOR Determination Date (as defined herein)
with respect to each such period (the "Class B Certificate Rate"). The initial
LIBOR Determination Date with respect to the Certificates is August 21, 1997.
Interest with respect to the Certificates will be distributed on October 15,
1997 and on the 15th day of each month thereafter (or, if such 15th day is not
a business day, the next succeeding business day) (each, a "Distribution
Date"). For purposes of this Prospectus Supplement and the Prospectus, a
"business day" shall mean, unless otherwise indicated, any day other than a
Saturday, a Sunday or a day on which banking institutions in New York, New
York or Newark, Delaware are authorized or obligated by law or executive order
to be closed. Principal on the Certificates is scheduled to be distributed on
the August 2004 Distribution Date (the "Scheduled Payment Date"), but may be
paid earlier or later under certain limited circumstances described herein.
See "Maturity Assumptions."
The Class B Certificates will be subordinated to the Class A Certificates as
described herein. The Collateral Interest will be subordinated to the Class A
Certificates and the Class B Certificates as described herein.
Application will be made to list the Certificates on the Luxembourg Stock
Exchange.
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE SECURITIES
OFFERED HEREBY, INCLUDING OVER-ALLOTMENT TRANSACTIONS, STABILIZING
TRANSACTIONS, SYNDICATE COVERING TRANSACTIONS AND PENALTY BIDS. FOR A
DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
The Certificates offered hereby constitute a separate Series of certificates
being offered by the Seller from time to time pursuant to its Prospectus dated
August 7, 1997. This Prospectus Supplement does not contain complete
information about the offering of the Certificates. Additional information is
contained in the Prospectus and purchasers are urged to read both this
Prospectus Supplement and the Prospectus in full. Sales of the Certificates
may not be consummated unless the purchaser has received both this Prospectus
Supplement and the Prospectus.
S-2
<PAGE>
SUMMARY OF TERMS
The following is qualified in its entirety by reference to the detailed
information appearing elsewhere in this Prospectus Supplement and the
accompanying Prospectus. Certain capitalized terms used in this summary are
defined elsewhere in this Prospectus Supplement and the accompanying
Prospectus. A listing of the pages on which some of such terms are defined is
found in the "Index of Terms for Prospectus Supplement" beginning on page S-60
herein and the "Index of Terms for Prospectus" beginning on page 62 in the
Prospectus.
TYPE OF SECURITIES.......... Class A 6.55% Asset Backed Certificates, Series
1997-I (the "Class A Certificates") and Class B
Floating Rate Asset Backed Certificates, Series
1997-I (the "Class B Certificates," and together
with the Class A Certificates, the
"Certificates").
THE TRUST................... The MBNA Master Credit Card Trust II (the "Trust")
was formed pursuant to a pooling and servicing
agreement (as amended from time to time, the
"Agreement"), between MBNA America Bank, National
Association, as seller (the "Seller") and as
servicer of the Receivables, and The Bank of New
York, as trustee (the "Trustee"), as supplemented
by the supplement relating to the Certificates
(the "Series 1997-I Supplement") (the term
"Agreement," unless the context requires
otherwise, refers to the Agreement as
supplemented by the Series 1997-I Supplement). As
used in this Prospectus Supplement, the term
"Certificateholders" refers to holders of the
Certificates, the term "Class A
Certificateholders" refers to holders of the
Class A Certificates and the term "Class B
Certificateholders" refers to holders of the
Class B Certificates.
The Trust previously has issued thirty-six other
Series, each of which is in Group One. See "Annex
I: Other Series Issued" for a summary of such
other Series.
TRUST ASSETS................ The property of the Trust includes receivables
(the "Receivables") arising under certain
MasterCard(R) and VISA(R)* revolving credit card
accounts (the "Accounts") selected from the
portfolio of MasterCard and VISA accounts owned
by the Seller (the "Bank Portfolio"), all monies
due or to become due in payment of the
Receivables (other than recoveries on charged-off
Receivables), all proceeds of the Receivables and
proceeds of credit insurance policies relating to
the Receivables, the right to receive Interchange
allocable to the Certificates (which right may
not be afforded to other Series issued by the
Trust) and all monies on deposit in certain bank
accounts of the Trust (other than investment
earnings on such amounts, except as otherwise
described herein), the Interest Rate Swap and any
Enhancement issued with respect to any Series.
The Certificateholders will not be entitled to
the benefits of any Enhancement issued with
respect to any Series other than Series 1997-I,
and the holders of certificates of other Series
will not be
- --------
* MasterCard(R) and VISA(R) are federally registered servicemarks of MasterCard
International Inc. and VISA, U.S.A., Inc., respectively.
S-3
<PAGE>
entitled to the benefits of any Enhancement
issued with respect to Series 1997-I. "Series
1997-I" shall mean the Series of the Trust
represented by the Certificates and the
Collateral Interest.
The Seller has conveyed to the Trustee for the
benefit of the Trust all Receivables existing
under certain Accounts that were selected from
the Bank Portfolio based on criteria provided in
the Agreement as applied on June 22, 1994 (the
"Cut-Off Date") and, with respect to certain
Additional Accounts, as applied on September 19,
1994, November 15, 1994, March 30, 1995, July 6,
1995, October 3, 1995, March 8, 1996, May 30,
1996, September 4, 1996, October 3, 1996,
November 5, 1996, February 4, 1997, April 4, 1997
and July 2, 1997 and has conveyed and will convey
all Receivables arising under the Accounts from
time to time thereafter until the termination of
the Trust. In addition, pursuant to the
Agreement, the Seller may (subject to certain
limitations and conditions) designate other
Additional Accounts for inclusion in the Trust.
Also, the Agreement provides that in lieu of
Additional Accounts or in addition thereto, the
Seller may, subject to certain conditions,
include Participations in the Trust. See "The
Receivables" herein and "Description of the
Certificates--Addition of Trust Assets" in the
Prospectus.
CERTIFICATE INTEREST
AND PRINCIPAL.............. Each of the Certificates offered hereby represents
the right to receive certain payments from the
assets of the Trust, which assets will be
allocated among the Class A Certificateholders
(the "Class A Investor Interest"), the Class B
Certificateholders (the "Class B Investor
Interest"), the Collateral Interest Holder (the
"Collateral Interest," and together with the
Class A Investor Interest and the Class B
Investor Interest, the "Investor Interest"), the
interest of the holders of other undivided
interests in the Trust issued pursuant to the
Agreement and applicable Series Supplements and
the Seller (the "Seller Interest"), as described
below. The Collateral Interest in the initial
amount of $56,250,000 (which amount represents
7.5% of the sum of the initial Class A Investor
Interest, the initial Class B Investor Interest
and the initial Collateral Interest) constitutes
Credit Enhancement for the Certificates. The
provider of such Credit Enhancement is referred
to herein as the "Collateral Interest Holder."
Allocations will be made to the Collateral
Interest, and the Collateral Interest Holder will
have voting and certain other rights, as if the
Collateral Interest were a subordinated class of
certificates. The Seller Interest will represent
the right to the assets of the Trust not
allocated to the Class A Investor Interest, the
Class B Investor Interest, the Collateral
Interest or the holders of other undivided
interests in the Trust. The principal amount of
the Seller Interest will fluctuate as the amount
of Receivables in the Trust changes from time to
time.
The Class A Certificates will represent the right
to receive, from the assets of the Trust
allocated to the Class A Certificates, funds up
to
S-4
<PAGE>
(but not in excess of) the amounts required to
make (a) payments of interest accruing from
August 26, 1997 (the "Closing Date") at the rate
of 6.55% per annum (such rate, the "Class A
Certificate Rate"), and (b) payments of principal
on the Scheduled Payment Date or, under certain
limited circumstances, during the Rapid
Amortization Period, to the extent of the Class A
Investor Interest, which may be less than the
unpaid principal balance of the Class A
Certificates in certain circumstances described
herein. See "Description of the Certificates--
Principal Payments."
The Class B Certificates will represent the right
to receive, from the assets of the Trust
allocated to the Class B Certificates, funds up
to (but not in excess of) the amounts required to
make (a) payments of interest accruing from the
Closing Date through September 14, 1997, and from
September 15, 1997 through October 14, 1997, and
with respect to each Interest Period thereafter,
at the rate of 0.31% per annum above the London
interbank offered rate for one-month United
States dollar deposits ("LIBOR"), determined as
described herein, prevailing on the related LIBOR
Determination Date (such rate, the "Class B
Certificate Rate") and (b) payments of principal
on the Scheduled Payment Date or, under certain
limited circumstances, during the Rapid
Accumulation Period or the Rapid Amortization
Period, to the extent of the Class B Investor
Interest, which may be less than the unpaid
principal balance of the Class B Certificates in
certain circumstances described herein. No
principal will be paid to the Class B
Certificateholders until either the Class A
Investor Interest is paid in full or, during the
Rapid Accumulation Period, funds on deposit in
the Principal Funding Account equal the Class A
Investor Interest.
The aggregate principal amount of the Class A
Investor Interest and the Class B Investor
Interest will, except as otherwise provided
herein, remain fixed at $637,500,000 and
$56,250,000, respectively. The Class A Investor
Interest will decline in certain circumstances if
the Default Amounts allocated to the Class A
Certificates exceed funds allocable thereto as
described herein and the Class B Investor
Interest and the Collateral Interest are zero.
The Class B Investor Interest will decline in
certain circumstances as a result of (a) the
reallocation of collections of Principal
Receivables otherwise allocable to the Class B
Investor Interest to fund certain payments in
respect of the Class A Certificates and the
Interest Rate Swap and (b) the allocation to the
Class B Investor Interest of certain Default
Amounts, including such amounts otherwise
allocable to the Class A Investor Interest when
the Collateral Interest is zero. During the
Controlled Accumulation Period and the Rapid
Accumulation Period (each, an "Accumulation
Period"), for the sole purpose of allocating
collections of Finance Charge Receivables and
Default Amounts with respect to each Monthly
Period, the "Class A Investor Interest" will be
further reduced (in an amount not to exceed the
S-5
<PAGE>
Class A Investor Interest) by the Principal
Funding Account Balance from time to time (as so
reduced, the "Class A Adjusted Investor
Interest") and the "Class B Investor Interest"
will be further reduced (in an amount not to
exceed the Class B Investor Interest) by the
amount by which the Principal Funding Account
Balance exceeds the Class A Investor Interest (as
so reduced, the "Class B Adjusted Investor
Interest," and together with the Class A Adjusted
Investor Interest and the Collateral Interest,
the "Adjusted Investor Interest").
The Class A Certificates, the Class B Certificates
and the Collateral Interest will each include the
right to receive (but only to the extent needed
to make required payments under the Agreement)
varying percentages of collections of Finance
Charge Receivables and Principal Receivables and
will be allocated varying percentages of Default
Amounts during each Monthly Period. The "Monthly
Period," with respect to any Distribution Date,
will be the period from and including the first
day of the preceding calendar month to and
including the last day of such calendar month
(other than the initial Monthly Period, which
will commence on the Closing Date and end on
September 30, 1997).
Collections of Finance Charge Receivables and
Default Amounts at all times, and collections of
Principal Receivables during the Revolving
Period, will be allocated to the Investor
Interest based on the Floating Investor
Percentage and will be further allocated among
the Class A Investor Interest, the Class B
Investor Interest and the Collateral Interest
based on the Class A Floating Allocation, the
Class B Floating Allocation and the Collateral
Floating Allocation, respectively, applicable
during the related Monthly Period. Collections of
Principal Receivables during the Controlled
Accumulation Period, the Rapid Accumulation
Period and the Rapid Amortization Period will be
allocated to the Investor Interest based on the
Fixed Investor Percentage and will be further
allocated among the Class A Investor Interest,
the Class B Investor Interest and the Collateral
Interest based on the Class A Fixed Allocation,
the Class B Fixed Allocation and the Collateral
Fixed Allocation, respectively. See "Description
of the Certificates--Allocation Percentages" and
"--Pay Out Events" herein and "Description of the
Certificates--Pay Out Events" in the Prospectus.
The Seller initially will own the Seller Interest.
The Seller may tender the certificate that
represents the Seller Interest (the "Seller
Certificate") or, if provided in the relevant
Series Supplement, certificates of any Series and
the Seller Certificate, to the Trustee and, upon
satisfying certain conditions, cause the Trustee
to issue one or more new Series, as described in
"Description of the Certificates--Exchanges" in
the Prospectus. The certificates of any new
Series will be issued pursuant to the Agreement
and a related Series Supplement. See "Description
of the Certificates" herein and in the
Prospectus.
S-6
<PAGE>
The final distribution of principal and interest
on the Certificates will be made no later than
the January 2007 Distribution Date in the manner
provided in "Description of the Certificates--
Final Payment of Principal; Termination" in the
Prospectus. Series 1997-I will terminate on the
earliest to occur of (a) the Distribution Date on
which the Investor Interest is paid in full,
(b) the January 2007 Distribution Date or (c) the
Trust Termination Date (such earliest to occur,
the "Series 1997-I Termination Date"). After the
Series 1997-I Termination Date, the Trust will
have no further obligation to pay principal or
interest on the Certificates.
RECEIVABLES................. The Receivables arise in Accounts that have been
selected from the Bank Portfolio based on
criteria provided in the Agreement as applied on
the Cut-Off Date and, with respect to certain
Additional Accounts, as applied on September 19,
1994, November 15, 1994, March 30, 1995, July 6,
1995, October 3, 1995, March 8, 1996, May 30,
1996, September 4, 1996, October 3, 1996,
November 5, 1996, February 4, 1997, April 4, 1997
and July 2, 1997. The Receivables consist of
Principal Receivables and Finance Charge
Receivables. In addition, certain amounts of
Interchange attributed to cardholder charges for
goods and services in the Accounts will be
allocated to the Certificates and treated as
Finance Charge Receivables. See "MBNA's Credit
Card Portfolio--Interchange" herein and "MBNA's
Credit Card Activities--Interchange" in the
Prospectus. With respect to the characterization
of annual credit card membership fees as Finance
Charge Receivables, see "Description of the
Certificates--Transfer of Annual Membership Fees"
in the Prospectus.
The aggregate amount of Receivables in the
Accounts as of the beginning of the day on July
2, 1997 was $30,197,838,208 comprised of
$29,711,553,610 of Principal Receivables and
$486,284,598 of Finance Charge Receivables. The
amount of Finance Charge Receivables will not
affect the amount of the Investor Interest
represented by the Certificates and the
Collateral Interest or the amount of the Seller
Interest, all of which are determined on the
basis of the amount of Principal Receivables in
the Trust. The aggregate interest in the
Principal Receivables in the Trust evidenced by
the Certificates and the Collateral Interest will
never exceed the amount of the Investor Interest
regardless of the total amount of Principal
Receivables in the Trust at any time.
DENOMINATIONS............... Beneficial interests in the Certificates will be
offered for purchase in minimum denominations of
$1,000 and integral multiples thereof.
REGISTRATION OF The Certificates initially will be represented by
CERTIFICATES............... Certificates registered in the name of Cede, as
the nominee of DTC. No Certificate Owner will be
entitled to receive a Definitive Certificate,
except under the limited circumstances described
herein. Certificateholders may elect to hold
their Certificates through DTC (in the United
States) or Cedel or Euroclear (in Europe).
Transfers will be made
S-7
<PAGE>
in accordance with the rules and operating
procedures described herein. See "Description of
the Certificates--Definitive Certificates" in the
Prospectus.
SERVICING FEE............... The Servicer will receive a monthly fee as
servicing compensation from the Trust on each
Transfer Date. On each Transfer Date, Servicer
Interchange with respect to the related Monthly
Period that is on deposit in the Finance Charge
Account will be withdrawn from the Finance Charge
Account and paid to the Servicer in respect of
the Investor Servicing Fee. In addition, the
Class A Servicing Fee, the Class B Servicing Fee
and the Collateral Interest Servicing Fee will be
paid on each Transfer Date as described under
"Description of the Certificates--Servicing
Compensation and Payment of Expenses" herein. See
also "Description of the Certificates--Servicing
Compensation and Payment of Expenses" in the
Prospectus.
INTEREST.................... Interest on the Certificates for each Interest
Period will be distributed on October 15, 1997,
and on the 15th day of each month thereafter, or
if such day is not a business day, on the next
succeeding business day (each, a "Distribution
Date"), in an amount equal to (a) with respect to
the Class A Certificates, one-twelfth of the
product of (i) the Class A Certificate Rate and
(ii) the outstanding principal balance of the
Class A Certificates as of the preceding Record
Date (or in the case of the first Distribution
Date, as of the Closing Date) and (b) with
respect to the Class B Certificates, the product
of (i) the actual number of days in the related
Interest Period divided by 360 and (ii) the Class
B Certificate Rate and (iii) the outstanding
principal balance of the Class B Certificates as
of the preceding Record Date (or in the case of
the first Distribution Date, as of the Closing
Date). Interest on the Class A Certificates will
be calculated on the basis of a 360-day year and
twelve 30-day months. Interest on the Class B
Certificates will be calculated on the basis of
the actual number of days in the related Interest
Period and a 360-day year. Interest for any
Distribution Date due but not paid on such
Distribution Date will be payable on the next
succeeding Distribution Date, together with
additional interest on such amount at the
applicable Certificate Rate plus 2% per annum
(such amount, as applicable, "Additional
Interest").
The "Interest Period," with respect to any
Distribution Date, will be (a) with respect to
the Certificates, the period from and including
the previous Distribution Date (or in the case of
the first Distribution Date, from and including
the Closing Date) through the day preceding such
Distribution Date and (b) with respect to the
Collateral Interest, the period from and
including the Transfer Date related to the
immediately preceding Distribution Date (or in
the case of the first Distribution Date, from and
including the Closing Date) to but excluding the
Transfer Date related to such Distribution Date.
Interest payments on each Distribution Date will
be funded from the portion of Finance Charge
Receivables
S-8
<PAGE>
collected during the preceding Monthly Period and
certain other available amounts (a) with respect
to the Class A Certificates, allocated to the
Class A Investor Interest, payments received
pursuant to the Interest Rate Swap, if any, and,
if necessary, from Excess Spread and Reallocated
Principal Collections (to the extent available),
(b) with respect to the Class B Certificates,
allocated to the Class B Investor Interest and,
if necessary, from Excess Spread and Reallocated
Collateral Principal Collections (to the extent
available) and (c) with respect to the Collateral
Interest, from Excess Spread. See "Description of
the Certificates--Reallocation of Cash Flows" and
"--Application of Collections--Payment of
Interest, Fees and Other Items" herein and "Risk
Factors--Limited Credit Enhancement" in the
Prospectus.
REVOLVING PERIOD............ The "Revolving Period" with respect to the
Certificates means the period from and including
the Closing Date to, but not including, the
earliest of (i) the commencement of the
Controlled Accumulation Period, (ii) the
commencement of the Rapid Accumulation Period and
(iii) the commencement of the Rapid Amortization
Period. The controlled accumulation period with
respect to the Certificates (the "Controlled
Accumulation Period") is scheduled to begin at
the close of business on July 31, 2003. Subject
to the conditions set forth under "Description of
the Certificates--Postponement of Controlled
Accumulation Period," the day on which the
Revolving Period ends and the Controlled
Accumulation Period begins may be delayed to no
later than the close of business on June 30,
2004. During the Revolving Period, Available
Investor Principal Collections otherwise
allocable to the Investor Interest will, subject
to certain limitations and unless a reduction in
the Required Collateral Interest has occurred, be
treated as Shared Principal Collections and
allocated to the holders of other Series of
certificates within Group One issued and
outstanding or, subject to certain limitations,
paid to the holder of the Seller Certificate. See
"Description of the Certificates--Principal
Payments." See "Description of the Certificates--
Pay Out Events" herein and in the Prospectus for
a discussion of the events which might lead to
the termination of the Revolving Period prior to
the commencement of the Controlled Accumulation
Period.
CONTROLLED ACCUMULATION
PERIOD..................... Unless a Pay Out Event has occurred, the
Controlled Accumulation Period will begin at the
close of business on the last day of the
Revolving Period and will end on the earliest of
(i) the commencement of the Rapid Amortization
Period, (ii) the commencement of the Rapid
Accumulation Period, (iii) payment of the
Investor Interest in full and (iv) the Series
1997-I Termination Date. During the Controlled
Accumulation Period, amounts equal to the least
of (a) Available Investor Principal Collections
for the related Monthly Period, (b) the sum of
the applicable Controlled Accumulation Amount for
such Monthly Period and the applicable
Accumulation Shortfall, if any (such applicable
sum, the
S-9
<PAGE>
"Controlled Deposit Amount") and (c) the sum of
the Class A Adjusted Investor Interest and the
Class B Adjusted Investor Interest on such
Transfer Date, will be deposited monthly in a
trust account established by the Trustee (the
"Principal Funding Account") on each Transfer
Date beginning with the Transfer Date in the
month following the commencement of the
Controlled Accumulation Period until the
Principal Funding Account Balance is equal to the
sum of the Class A Investor Interest and the
Class B Investor Interest. If, for any Monthly
Period, the Available Investor Principal
Collections for such Monthly Period exceed the
applicable Controlled Deposit Amount, any such
excess will be first paid to the Collateral
Interest Holder to the extent that the Collateral
Interest exceeds the Required Collateral Interest
and then treated as Shared Principal Collections
and allocated to the holders of other Series of
certificates within Group One issued and
outstanding or, subject to certain limitations,
paid to the holder of the Seller Certificate. If,
for any Monthly Period, the Available Investor
Principal Collections for such Monthly Period are
less than the applicable Controlled Deposit
Amount, the amount of such deficiency will be the
applicable "Accumulation Shortfall" for the
succeeding Monthly Period. See "Description of
the Certificates--Application of Collections."
All funds on deposit in the Principal Funding
Account will be invested at the direction of the
Servicer by the Trustee in certain Permitted
Investments. Investment earnings (net of
investment losses and expenses) on funds on
deposit in the Principal Funding Account (the
"Principal Funding Investment Proceeds") will be
used on each Transfer Date with respect to the
Controlled Accumulation Period to pay interest on
the Certificates (or, in the case of the Class A
Certificates, so long as the Interest Rate Swap
has not been terminated, to pay amounts, if any,
owed to the Swap Counterparty under the Interest
Rate Swap) in an amount up to, for each Transfer
Date, the sum of (a) with respect to the Class A
Certificates, the product of (i) a fraction, the
numerator of which is the actual number of days
in such Interest Period, or, in the event the
Interest Rate Swap has been terminated, the
numerator of which is 30, and, in either case,
the denominator of which is 360, (ii) the Swap
Floating Rate, or, in the event the Interest Rate
Swap has been terminated, the Class A Certificate
Rate, in either case, in effect with respect to
such Interest Period and (iii) the aggregate
amount on deposit in the Principal Funding
Account with respect to Class A Monthly Principal
as of the Record Date preceding such Transfer
Date and (b) with respect to the Class B
Certificates, the product of (i) a fraction, the
numerator of which is the actual number of days
in such Interest Period and the denominator of
which is 360, (ii) the Class B Certificate Rate
in effect with respect to such Interest Period
and (iii) the aggregate amount on deposit in the
Principal Funding Account with respect to Class B
Monthly Principal as of the Record Date preceding
such Transfer Date (such
S-10
<PAGE>
sum, the "Covered Amount"). To the extent that,
on any Transfer Date with respect to the
Controlled Accumulation Period, Principal Funding
Investment Proceeds for such Transfer Date are
less than the Covered Amount determined as of
such Transfer Date, the amount of such shortfall
shall be withdrawn, to the extent available, from
the Reserve Account. See "Description of the
Certificates--Reserve Account."
Funds on deposit in the Principal Funding Account
(in an amount not to exceed the Class A Investor
Interest) will be available to pay the Class A
Certificateholders in respect of the Class A
Investor Interest on the Scheduled Payment Date.
Funds on deposit in the Principal Funding Account
in excess of the Class A Investor Interest (in an
amount not to exceed the Class B Investor
Interest) will be available to pay the Class B
Certificateholders in respect of the Class B
Investor Interest on the Scheduled Payment Date.
If the aggregate principal amount of deposits
made to the Principal Funding Account is
insufficient to pay the Class A Investor Interest
and, after the Class A Investor Interest has been
paid in full, the Class B Investor Interest in
full on the Scheduled Payment Date, the Rapid
Amortization Period will commence as described
below. Although it is anticipated that during the
Controlled Accumulation Period, funds will be
deposited in the Principal Funding Account in an
amount equal to the applicable Controlled Deposit
Amount on each Transfer Date and that scheduled
principal will be available for distribution to
the Class A Certificateholders and then the Class
B Certificateholders on the Scheduled Payment
Date, no assurance can be given in that regard.
See "Maturity Assumptions" herein and in the
Prospectus.
If a Series 1997-I Pay Out Event occurs during the
Controlled Accumulation Period and the Interest
Rate Swap has not been terminated and an Interest
Reserve Account Event has not occurred prior to
the Scheduled Payment Date, the Rapid
Accumulation Period will commence as described
herein. If a Series 1997-I Pay Out Event occurs
during the Controlled Accumulation Period and
either the Interest Rate Swap is or has been
terminated or an Interest Reserve Account Event
occurs or has occurred, the Rapid Amortization
Period will commence as described herein. If a
Trust Pay Out Event occurs during the Controlled
Accumulation Period, the Rapid Amortization
Period will commence as described herein.
Other Series offered by the Trust may or may not
have amortization or accumulation periods like
the Controlled Accumulation Period for the
Certificates, and such periods may have different
lengths and begin on different dates than such
Controlled Accumulation Period. Thus, certain
Series may be in their revolving periods while
others are in periods during which collections of
Principal Receivables are distributed to or held
for the benefit of certificateholders of such
other Series. In addition, other Series may
allocate Principal Receivables based upon
different investor percentages. See "Description
of the Certificates--Exchanges" in
S-11
<PAGE>
the Prospectus for a discussion of the potential
terms of any other Series.
RAPID ACCUMULATION PERIOD... Unless either (a) the Interest Rate Swap is or has
been terminated or an Interest Reserve Account
Event occurs or has occurred, or (b) a Trust Pay
Out Event occurs or has occurred, the Rapid
Accumulation Period will begin on the day on
which a Series 1997-I Pay Out Event occurs and
end on the earlier of (i) the commencement of the
Rapid Amortization Period and (ii) the Scheduled
Payment Date (the "Rapid Accumulation Period").
During the Rapid Accumulation Period (a) any
amounts on deposit in the Principal Funding
Account (in an amount not to exceed the Class A
Investor Interest) will remain in the Principal
Funding Account and will be available to pay the
Class A Certificateholders in respect of the
Class A Investor Interest on the Scheduled
Payment Date and (b) any amounts on deposit in
the Principal Funding Account in excess of the
Class A Investor Interest (in an amount not to
exceed the Class B Investor Interest) will be
available to pay the Class B Certificateholders
in respect of the Class B Investor Interest on
the first Distribution Date with respect to the
Rapid Accumulation Period.
During the Rapid Accumulation Period, Available
Investor Principal Collections will be deposited
monthly in the Principal Funding Account on each
Transfer Date beginning with the first Transfer
Date with respect to the Rapid Accumulation
Period until the Transfer Date on which the funds
on deposit in the Principal Funding Account equal
the Class A Investor Interest. Available Investor
Principal Collections deposited in the Principal
Funding Account during the Rapid Accumulation
Period will not be subject to the Controlled
Deposit Amount. During the Rapid Accumulation
Period, commencing on the Distribution Date on
which the funds on deposit in the Principal
Funding Account are equal to the Class A Investor
Interest, Available Investor Principal
Collections not required to be deposited into the
Principal Funding Account in respect of the Class
A Investor Interest will be distributed monthly
on each Distribution Date to the Class B
Certificateholders.
During the Rapid Accumulation Period all funds on
deposit in the Principal Funding Account will be
invested, at the direction of the Servicer, by
the Trustee in certain Permitted Investments.
Principal Funding Investment Proceeds will be
used on each Transfer Date with respect to the
Rapid Accumulation Period to pay interest on the
Class A Certificates, amounts, if any, owed to
the Swap Counterparty under the Interest Rate
Swap and, solely with respect to the first
Transfer Date with respect to the Rapid
Accumulation Period, interest on the Class B
Certificates in an amount up to, for each
Transfer Date, the Covered Amount. To the extent
that, on any Transfer Date with respect to the
Rapid Accumulation Period, Principal Funding
Investment Proceeds for such Transfer Date are
less than the Covered Amount determined as of
such Transfer Date, the amount of such shortfall,
shall be withdrawn, to the extent
S-12
<PAGE>
available (a) on the first Transfer Date with
respect to the Rapid Accumulation Period, from
the Reserve Account to be applied as Class A
Available Funds and Class B Available Funds and
(b) on the first Transfer Date with respect to
the Rapid Accumulation Period (to the extent such
shortfall amount is not available in the Reserve
Account) and on each Transfer Date thereafter,
from the Swap Reserve Fund to be applied as Class
A Available Funds. No amounts withdrawn from the
Swap Reserve Fund will be included as Class B
Available Funds. See "Description of the
Certificates--Reserve Account" and "--Swap
Reserve Fund."
Unless the Rapid Amortization Period has
previously commenced, as described below, on the
Scheduled Payment Date, the funds on deposit in
the Principal Funding Account will be available
to pay the Class A Certificateholders in respect
of the Class A Investor Interest, and the
Interest Rate Swap will terminate. Although it is
anticipated that during the Rapid Accumulation
Period, prior to the payment of the Class A
Investor Interest in full, funds will be
deposited in the Principal Funding Account in an
amount equal to the Class A Investor Interest and
that scheduled principal will be available for
distribution to the Class A Certificateholders on
the Scheduled Payment Date, no assurance can be
given in that regard. See "Maturity Assumptions"
and "Description of the Certificates--Pay Out
Events" herein and in the Prospectus and "--
Interest Rate Swap" for a discussion of the
events that might lead to the commencement of the
Rapid Amortization Period.
If, during the Rapid Accumulation Period, either
(a) the Interest Rate Swap is terminated or an
Interest Reserve Account Event occurs or (b) a
Trust Pay Out Event occurs, the Rapid
Amortization Period will commence and funds on
deposit in the Principal Funding Account will be
distributed to the Class A Certificateholders on
the first Distribution Date with respect to the
Rapid Amortization Period.
RAPID AMORTIZATION PERIOD... During the period from the earlier of the day on
which either (a) a Trust Pay Out Event occurs or
(b)(i) a Series 1997-I Pay Out Event occurs or
has occurred and (ii) either the Interest Rate
Swap is or has been terminated or an Interest
Reserve Account Event occurs or has occurred, and
ending on the earlier of (x) the payment of the
Investor Interest in full and (y) the Series
1997-I Termination Date (the "Rapid Amortization
Period"), Available Investor Principal
Collections, beginning with the first
Distribution Date with respect to the Rapid
Amortization Period, and the amounts available in
the Principal Funding Account, if any, on the
first Distribution Date with respect to the Rapid
Amortization Period, will be distributed monthly
on each Distribution Date (a) to the Class A
Certificateholders to the extent the Class A
Investor Interest has not been paid in full, and
(b) following payment of the Class A Investor
Interest in full, to the Class B
Certificateholders to the extent the Class B
Investor Interest has not been paid in full. See
"Maturity Assumptions" and "Description of the
Certificates--Pay Out
S-13
<PAGE>
Events" herein and in the Prospectus and "--
Interest Rate Swap" for a discussion of the
events which might lead to the commencement of
the Rapid Amortization Period.
SUBORDINATION OF THE CLASS
B CERTIFICATES AND THE
COLLATERAL INTEREST........
The Class B Certificates and the Collateral
Interest will be subordinated, as described
herein, to the extent necessary to fund payments
with respect to the Class A Certificates and the
Interest Rate Swap as described herein. In
addition, the Collateral Interest will be
subordinated to the extent necessary to fund
certain payments with respect to the Class A
Certificates, the Interest Rate Swap and the
Class B Certificates. If the Collateral Interest
is reduced to zero, the Class B
Certificateholders will bear directly the credit
and other risks associated with their interest in
the Trust. To the extent the Class B Investor
Interest is reduced, the percentage of
collections of Finance Charge Receivables
allocable to the Class B Certificateholders in
subsequent Monthly Periods will be reduced.
Moreover, to the extent the amount of such
reduction in the Class B Investor Interest is not
reimbursed, the amount of principal and interest
distributable to the Class B Certificateholders
will be reduced. Such reductions of the Class B
Investor Interest will thereafter be reimbursed
and the Class B Investor Interest increased on
each Transfer Date by the amount, if any, of
Excess Spread for such Transfer Date available
for that purpose. See "Description of the
Certificates--Subordination."
ADDITIONAL AMOUNTS
AVAILABLE TO With respect to any Transfer Date, Excess Spread
CERTIFICATEHOLDERS......... will be applied to fund the Class A Required
Amount and the Class B Required Amount, if any.
The "Class A Required Amount" means the amount,
if any, by which the sum of (a) the Class A
Monthly Interest due on the related Distribution
Date and any overdue Class A Monthly Interest and
Class A Additional Interest, if any, (b) the Net
Swap Payment, if any, for the related
Distribution Date and any overdue Net Swap
Payments, if any, due to the Swap Counterparty,
(c) the Class A Servicing Fee for the related
Monthly Period and any overdue Class A Servicing
Fee and (d) the Class A Investor Default Amount,
if any, for the related Monthly Period, exceeds
the Class A Available Funds for the related
Monthly Period. The "Class B Required Amount"
means the amount, if any, equal to the sum of (a)
the amount, if any, by which the sum of (i) Class
B Monthly Interest due on the related
Distribution Date and any overdue Class B Monthly
Interest and Class B Additional Interest, if any,
and (ii) the Class B Servicing Fee for the
related Monthly Period and any overdue Class B
Servicing Fee exceeds the Class B Available Funds
for the related Monthly Period and (b) the Class
B Investor Default Amount, if any, for the
related Monthly Period. The "Required Amount" for
any Monthly Period shall mean the sum of (a) the
Class A Required Amount and (b) the Class B
Required Amount, each for such Monthly Period.
"Excess
S-14
<PAGE>
Spread" for any Transfer Date will equal the sum
of (a) the excess of (i) Class A Available Funds
for the related Monthly Period over (ii) the sum
of the amounts referred to in clauses (a), (b),
(c) and (d) in the definition of "Class A
Required Amount" above, (b) the excess of (i)
Class B Available Funds for the related Monthly
Period over (ii) the sum of the amounts referred
to in clauses (a)(i) and (a)(ii) in the
definition of "Class B Required Amount" above and
(c) Collateral Available Funds for the related
Monthly Period not used under certain
circumstances to pay the Collateral Interest
Servicing Fee, as described herein.
If, on any Transfer Date, Excess Spread is less
than the Class A Required Amount, Reallocated
Principal Collections allocable first to the
Collateral Interest and then to the Class B
Investor Interest with respect to the related
Monthly Period will be used to fund the remaining
Class A Required Amount. If Reallocated Principal
Collections with respect to such Monthly Period
are insufficient to fund the remaining Class A
Required Amount for the related Transfer Date,
then the Collateral Interest (after giving effect
to reductions for any Collateral Charge-Offs and
Reallocated Principal Collections on such
Transfer Date) will be reduced by the amount of
such deficiency (but not by more than the Class A
Investor Default Amount for such Monthly Period).
In the event that such reduction would cause the
Collateral Interest to be a negative number, the
Collateral Interest will be reduced to zero, and
the Class B Investor Interest (after giving
effect to reductions for any Class B Investor
Charge-Offs and any Reallocated Class B Principal
Collections on such Transfer Date) will be
reduced by the amount by which the Collateral
Interest would have been reduced below zero (but
not by more than the excess of the Class A
Investor Default Amount, if any, for such Monthly
Period over the amount of such reduction, if any,
of the Collateral Interest with respect to such
Monthly Period). In the event that such reduction
would cause the Class B Investor Interest to be a
negative number, the Class B Investor Interest
will be reduced to zero and the Class A Investor
Interest will be reduced by the amount by which
the Class B Investor Interest would have been
reduced below zero (but not by more than the
excess, if any, of the Class A Investor Default
Amount for such Monthly Period over such
reductions in the Collateral Interest and the
Class B Investor Interest with respect to such
Monthly Period) (such reduction, a "Class A
Investor Charge-Off"). If the Collateral Interest
and the Class B Investor Interest are reduced to
zero, the Class A Certificateholders will bear
directly the credit and other risks associated
with their undivided interest in the Trust. See
"Description of the Certificates--Reallocation of
Cash Flows" and "--Defaulted Receivables;
Investor Charge-Offs."
If, on any Transfer Date, Excess Spread not
required to pay the Class A Required Amount and
to reimburse Class A Investor Charge-Offs is less
than the Class B Required Amount, Reallocated
S-15
<PAGE>
Principal Collections allocable to the Collateral
Interest for the related Monthly Period not
required to pay the Class A Required Amount will
be used to fund the remaining Class B Required
Amount. If such remaining Reallocated Principal
Collections allocable to the Collateral Interest
with respect to such Monthly Period are
insufficient to fund the remaining Class B
Required Amount for the related Transfer Date,
then the Collateral Interest (after giving effect
to reductions for any Collateral Charge-Offs,
Reallocated Principal Collections and any
adjustments made thereto for the benefit of the
Class A Certificateholders) will be reduced by
the amount of such deficiency (but not by more
than the Class B Investor Default Amount for such
Monthly Period). In the event that such reduction
would cause the Collateral Interest to be a
negative number, the Collateral Interest will be
reduced to zero, and the Class B Investor
Interest will be reduced by the amount by which
the Collateral Interest would have been reduced
below zero (but not by more than the excess, if
any, of the Class B Investor Default Amount for
such Monthly Period over such reduction in the
Collateral Interest with respect to such Monthly
Period) (such reduction, a "Class B Investor
Charge-Off"). In the event of a reduction of the
Class A Investor Interest, the Class B Investor
Interest or the Collateral Interest, the amount
of principal and interest available to fund
payments with respect to the Class A Certificates
and the Class B Certificates will be decreased.
See "Description of the Certificates--
Reallocation of Cash Flows" and "--Defaulted
Receivables; Investor Charge-Offs."
REQUIRED COLLATERAL The "Required Collateral Interest" means (a)
INTEREST................... initially, $56,250,000 (the "Initial Collateral
Interest") and (b) with respect to any Transfer
Date thereafter, an amount equal to 7.5% of the
sum of the Class A Adjusted Investor Interest and
the Class B Adjusted Investor Interest on such
Transfer Date, after taking into account deposits
into the Principal Funding Account on such
Transfer Date and payments to be made on the
related Distribution Date, and the Collateral
Interest on the prior Transfer Date after any
adjustments made on such Transfer Date, but not
less than $22,500,000; provided, however, that
(i) notwithstanding clause (ii) below, if the
Principal Funding Account Balance equals the
Class A Investor Interest (taking into account
any deposits to be made on such Transfer Date)
and the Class B Investor Interest will be reduced
to zero on the related Distribution Date, the
Required Collateral Interest for any Transfer
Date shall be equal to zero; (ii) if certain
reductions in the Collateral Interest occur or if
the Rapid Amortization Period commences, the
Required Collateral Interest for such Transfer
Date shall equal the Required Collateral Interest
for the Transfer Date immediately preceding the
occurrence of such reduction or such commencement
of the Rapid Amortization Period; (iii) in no
event shall the Required Collateral Interest
exceed the unpaid principal amount of the
Certificates as of the last day of the Monthly
Period preceding such Transfer Date after
S-16
<PAGE>
taking into account payments to be made on the
related Distribution Date; and (iv) the Required
Collateral Interest may be reduced at any time to
a lesser amount if the Rating Agency Condition is
satisfied. See "Description of the Certificates--
Required Collateral Interest."
If on any Transfer Date, the Collateral Interest
is less than the Required Collateral Interest,
certain Excess Spread amounts, if available, will
be used to increase the Collateral Interest to
the extent of such shortfall. If on any Transfer
Date the Collateral Interest equals or exceeds
the Required Collateral Interest, any such Excess
Spread amounts will, first, be deposited into the
Reserve Account as described herein and, second,
to the extent available, be applied in accordance
with the Loan Agreement among the Seller, the
Trustee, the Servicer and the Collateral Interest
Holder (the "Loan Agreement") and the Series
1997-I Supplement and will not be available to
the Certificateholders.
INTEREST RATE SWAP.......... On the Closing Date, the Trustee, on behalf of the
Trust, will enter into an interest rate swap
agreement (as such agreement may be amended,
supplemented or replaced, the "Interest Rate
Swap") with Westdeutsche Landesbank Girozentrale,
New York Branch (the "Swap Counterparty"). In
accordance with the terms of the Interest Rate
Swap, the amount payable by the Swap Counterparty
to the Trust will be, for each Distribution Date,
an amount equal to one-twelfth of the product of
(a) the Swap Fixed Rate and (b) the notional
amount of the Interest Rate Swap (the "Notional
Amount"), which equals the outstanding principal
amount of the Class A Certificates as of the
preceding Record Date (or in the case of the
first Distribution Date, as of the Closing Date).
In the case of the first Distribution Date, such
amounts will include accrued amounts for the
period from the Closing Date through October 14,
1997. Payments from the Swap Counterparty to the
Trust will be calculated on the basis of a 360-
day year and twelve 30-day months. The amount
payable by the Trust to the Swap Counterparty
will be, for each Distribution Date, to the
extent of Class A Available Funds and certain
other amounts available for such purpose, an
amount equal to the product of (i) a fraction,
the numerator of which is the actual number of
days in the Interest Period relating to such
Distribution Date, and the denominator of which
is 360, (ii) the Swap Floating Rate, and (iii)
the Notional Amount as of the preceding Record
Date. The "Swap Fixed Rate" will equal 6.55% per
annum. The "Swap Floating Rate" will equal, with
respect to any Interest Period, 0.10% per annum
above LIBOR with respect to the related Interest
Period (or such lesser rate as is specified in
the Interest Rate Swap). LIBOR shall be
determined on the related LIBOR Determination
Date as described herein.
The Trustee shall establish and maintain the Swap
Reserve Fund to assist in the payment of certain
amounts owed to the Swap Counterparty. The Swap
Reserve Fund will be funded by an initial deposit
by the Seller and, to the extent required and
available,
S-17
<PAGE>
certain amounts of Excess Spread otherwise
allocable to the Seller. Payments required to be
made by the Swap Counterparty to the Trust are
not dependent upon or subject to the availability
of funds in the Swap Reserve Fund. See
"Description of the Certificates--Swap Reserve
Fund."
With respect to each Distribution Date, the Net
Swap Receipt, if any, for the related Transfer
Date will be deposited into the Finance Charge
Account by the Trustee and treated as part of
Class A Available Funds. The Net Swap Payment, if
any, will be paid to the Swap Counterparty for
any Transfer Date out of collections of Finance
Charge Receivables and certain other available
amounts allocated to the Class A Certificates,
including Principal Funding Investment Proceeds,
amounts on deposit in the Reserve Account and the
Swap Reserve Fund, Excess Spread and Reallocated
Principal Collections, based on the respective
amounts due as described under "Description of
the Certificates--Application of Collections--
Payment of Interest, Fees and Other Items." See
"Description of the Certificates--Interest Rate
Swap."
The "Net Swap Payment," for any Transfer Date,
shall mean (a) if the netting provisions of the
Interest Rate Swap apply, the amount by which the
Floating Amount (as defined herein) for such date
exceeds the fixed amount payable by the Swap
Counterparty to the Trust for such date (as
described herein), and (b) otherwise, an amount
equal to the Floating Amount for such date. The
"Net Swap Receipt," for any Transfer Date, shall
mean, (a) if the netting provisions of the
Interest Rate Swap apply, the amount by which the
fixed amount payable by the Swap Counterparty to
the Trust for such date exceeds the Floating
Amount for such date, and (b) otherwise, an
amount equal to the fixed amount payable by the
Swap Counterparty to the Trust for such date. Net
Swap Payments and Net Swap Receipts do not
include any termination payments payable by
either the Swap Counterparty or the Trust
pursuant to the Interest Rate Swap. The netting
provisions of the Interest Rate Swap will apply
unless the Trustee elects gross payments to be
made pursuant to the provisions of the Interest
Rate Swap. If the Trustee elects gross payments
under the Interest Rate Swap, the Trustee's
obligation to pay the Floating Amount on any
Transfer Date to the Swap Counterparty pursuant
to the terms of the Interest Rate Swap is
conditioned upon the prior receipt of the fixed
amounts payable by the Swap Counterparty to the
Trust for such date. The "Floating Amount," for
any Transfer Date, shall mean an amount equal to
the floating amount payable by the Trust to the
Swap Counterparty for such date pursuant to the
Interest Rate Swap (as described herein) minus
the amount by which the amount required to be
withdrawn from the Swap Reserve Fund, if any,
exceeds the amount withdrawn from the Swap
Reserve Fund for such date. See "Description of
the Certificates--Swap Reserve Fund." If the
amount required to be withdrawn from the Swap
Reserve Fund for any Transfer Date exceeds the
amount on deposit
S-18
<PAGE>
in the Swap Reserve Fund for such date, the
amount of such excess will be paid, to the extent
available, from amounts distributed in accordance
with clause (j) of "Description of the
Certificates--Application of Collections--Excess
Spread."
If the Swap Counterparty's long-term credit rating
is reduced below AA- by Standard & Poor's or
below Aa3 by Moody's, or is withdrawn by either
Standard & Poor's or Moody's, the Swap
Counterparty will be required within 30 days from
the date of such reduction or withdrawal to fund
an account (the "Interest Reserve Account") in an
amount equal to one-twelfth of the product of (a)
the Swap Fixed Rate and (b) the Notional Amount
as of the Record Date preceding such reduction or
withdrawal (the "Required Interest Reserve
Amount"). The Trustee shall establish and
maintain, at the direction of the Servicer, the
Interest Reserve Account with a Qualified
Institution as a segregated trust account for the
benefit of the Class A Certificateholders. There
can be no assurance that the Swap Counterparty
can or will adequately fund the Interest Reserve
Account. If the Swap Counterparty fails to
adequately fund the Interest Reserve Account
within 30 days of such reduction or withdrawal
(such failure, an "Interest Reserve Account
Event"), then (i) if the Rapid Accumulation
Period has not previously commenced, there will
be no Rapid Accumulation Period and, upon the
occurrence of a Series 1997-I Pay Out Event or a
Trust Pay Out Event, the Rapid Amortization
Period will commence or (ii) if the Rapid
Accumulation Period has previously commenced, the
Rapid Amortization Period will commence upon such
Interest Reserve Account Event.
All amounts on deposit in the Interest Reserve
Account on any Transfer Date (after giving effect
to any deposits to the Interest Reserve Account
to be made on such Transfer Date) will be
invested to the following Transfer Date by the
Trustee at the direction of the Swap Counterparty
in Permitted Investments. The interest and other
investment income (net of investment expenses and
losses) earned on such investments will be
retained in the Interest Reserve Account (to the
extent the amount on deposit is less than the
Required Interest Reserve Amount) or distributed
by the Trustee to the Swap Counterparty.
On the Transfer Date on or following the
termination of the Interest Rate Swap due to a
default by the Swap Counterparty, the Trustee, at
the direction of the Servicer, shall withdraw an
amount equal to the Net Swap Receipt, if any, for
the related Distribution Date, plus the amount of
any Net Swap Receipt previously due but not paid,
from funds on deposit in the Interest Reserve
Account, if any (up to the Required Interest
Reserve Amount), and deposit such amount into the
Finance Charge Account to be applied as Class A
Available Funds as described under "Description
of the Certificates--Applications of
Collections." The Interest Reserve Account will
be terminated on the Transfer Date on or after
such termination of the Interest Rate Swap (after
giving effect to the
S-19
<PAGE>
withdrawal of an amount equal to the Net Swap
Receipt, if any, on such Transfer Date, plus the
amount of any Net Swap Receipt previously due but
not paid). Upon the termination of the Interest
Reserve Account, all amounts on deposit therein
will be, after the prior payment of all amounts
owing to the Class A Certificateholders that are
payable from the Interest Reserve Account,
distributed to the Swap Counterparty pursuant to
the terms of the Interest Rate Swap.
In the event that the long-term credit rating of
the Swap Counterparty is reduced below BBB- by
Standard & Poor's or below Baa3 by Moody's or is
withdrawn by either Standard & Poor's or Moody's,
the Seller has the right, but not the obligation,
to direct the Trustee to direct the Swap
Counterparty to assign its rights and obligations
under the Interest Rate Swap to a replacement
swap counterparty. There can be no assurance that
a replacement swap counterparty will be found or
that such assignment will be made. See
"Description of the Certificates--Interest Rate
Swap."
SWAP COUNTERPARTY........... Westdeutsche Landesbank Girozentrale, New York
Branch will be the Swap Counterparty. See
"Description of the Certificates--Interest Rate
Swap."
SHARED PRINCIPAL The Series 1997-I Certificates are included in a
COLLECTIONS................ group of Series ("Group One"). Series 1994-A,
1994-B, 1994-C, 1994-D, 1994-E, 1995-A, 1995-B,
1995-C, 1995-D, 1995-E, 1995-F, 1995-G, 1995-H,
1995-I, 1995-J, 1996-A, 1996-B, 1996-C, 1996-D,
1996-E, 1996-F, 1996-G, 1996-H, 1996-I, 1996-J,
1996-K, 1996-L, 1996-M, 1997-A, 1997-B, 1997-C,
1997-D, 1997-E, 1997-F, 1997-G and 1997-H are,
and other Series in the future may be, included
in Group One. To the extent that collections of
Principal Receivables allocated to the Investor
Interest with respect to the Certificates are not
needed to make payments with respect to the
Investor Interest or to be deposited in the
Principal Funding Account, such collections
("Shared Principal Collections") will be
allocated to cover principal payments due to or
for the benefit of certificateholders of other
Series within Group One. Any such reallocation
will not result in a reduction in the Investor
Interest with respect to Series 1997-I. In
addition, collections of Principal Receivables
and certain other amounts otherwise allocable to
other Series in Group One, to the extent such
collections are not needed to make payments to or
deposits for the benefit of the
certificateholders of such other Series, may be
applied to cover principal payments due to or for
the benefit of the holders of the Class A
Certificates and the Class B Certificates or the
Collateral Interest Holder. See "Description of
the Certificates--Shared Principal Collections."
APPLICATION OF COLLECTIONS
OF FINANCE CHARGE With respect to each Monthly Period during the
RECEIVABLES................ Revolving Period, the Servicer is required to
withdraw from the Collection Account and deposit
in the Finance Charge Account collections of
Finance Charge Receivables allocable to the
Certificates and the Collateral Interest in an
amount equal to (a) with respect to the
Certificates and the Collateral Interest, the
amount of current interest, past due
S-20
<PAGE>
interest, if any, and additional interest, if
any, distributable to the Certificateholders and
the holder of the Collateral Interest on the
related Transfer Date or Distribution Date, as
applicable (plus, if the Seller is not the
Servicer, the Certificateholder Servicing Fee for
the related Transfer Date plus the amount of any
Certificateholder Servicing Fee due but not paid
to the Servicer on any prior Transfer Date) and
(b) with respect to the Swap Counterparty, the
amount of the Net Swap Payment, if any, and the
past due Net Swap Payment, if any, distributable
to the Swap Counterparty on the related Transfer
Date. On each Transfer Date with respect to the
Revolving Period, the Servicer is required to
withdraw from the Collection Account and deposit
in the Finance Charge Account all of the
collections of Finance Charge Receivables
allocated to the Certificates and the Collateral
Interest but not previously deposited in the
Finance Charge Account during the related Monthly
Period. With respect to each Monthly Period
during the Controlled Accumulation Period, the
Rapid Accumulation Period and the Rapid
Amortization Period, the Servicer is required to
withdraw from the Collection Account and deposit
in the Finance Charge Account collections of
Finance Charge Receivables allocable to the
Certificates and the Collateral Interest as
described in the Prospectus under "Description of
the Certificates--Application of Collections."
OPTIONAL REPURCHASE......... The Investor Interest will be subject to optional
repurchase by the Seller on any Distribution Date
on or after the Distribution Date on which the
Investor Interest is reduced to an amount less
than or equal to $37,500,000 (5% of the initial
Investor Interest), if certain conditions set
forth in the Agreement are met. The repurchase
price will be equal to the sum of the Investor
Interest and all accrued and unpaid interest on
the Certificates and the Collateral Interest
through the day preceding the Distribution Date
on which the repurchase occurs. See "Description
of the Certificates--Final Payment of Principal;
Termination" in the Prospectus.
TRUSTEE..................... The Bank of New York.
TAX STATUS.................. Special Counsel to the Seller is of the opinion
that under existing law the Certificates will be
characterized as debt for federal income tax
purposes. Under the Agreement, the Seller and the
Certificate Owners will agree to treat the
Certificates as debt for federal income tax
purposes. See "Federal Income Tax Consequences"
in the Prospectus for additional information
concerning the application of federal income tax
laws.
ERISA CONSIDERATIONS........ Subject to the considerations described below, the
Class A Certificates are eligible for purchase by
employee benefit plan investors. Under a
regulation issued by the Department of Labor, the
Trust's assets would not be deemed "plan assets"
of an employee benefit plan holding the Class A
Certificates if certain conditions are met,
including that the Class A Certificates must be
held, upon completion of the public offering made
hereby, by at least 100 investors who are
independent of the Seller and of one
S-21
<PAGE>
another. The Underwriters expect that the Class A
Certificates will be held by at least 100
independent investors at the conclusion of the
offering; however, no assurance can be given and
no monitoring or other measures will be taken to
ensure that such condition will be met. The
Seller anticipates that the other conditions of
the regulation will be met. If the Trust's assets
were deemed to be "plan assets" of an employee
benefit plan investor (e.g., if the 100
independent investor criterion is not satisfied),
violations of the "prohibited transaction" rules
of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), could result and
generate excise tax and other liabilities under
ERISA and section 4975 of the Internal Revenue
Code of 1986, as amended (the "Code"), unless a
statutory, regulatory or administrative exemption
is available. It is uncertain whether existing
exemptions from the "prohibited transaction"
rules of ERISA would apply to all transactions
involving the Trust's assets if such assets were
treated for ERISA purposes as "plan assets" of
employee benefit plan investors. Accordingly,
fiduciaries or other persons contemplating
purchasing the Certificates on behalf or with
"plan assets" of any employee benefit plan should
consult their counsel before making a purchase.
See "ERISA Considerations" in the Prospectus.
The Underwriters currently do not expect that the
Class B Certificates will be held by at least 100
such persons and, therefore, do not expect that
such Class B Certificates will qualify as
publicly-offered securities under the regulation
referred to in the preceding paragraph.
Accordingly, the Class B Certificates may not be
acquired or held by (a) any employee benefit plan
that is subject to ERISA, (b) any plan or other
arrangement (including an individual retirement
account or Keogh plan) that is subject to section
4975 of the Code, or (c) any entity whose
underlying assets include "plan assets" under the
regulation by reason of any such plan's
investment in the entity. By its acceptance of a
Class B Certificate, each Class B
Certificateholder will be deemed to have
represented and warranted that it is not and will
not be subject to the foregoing limitation.
CLASS A CERTIFICATE It is a condition to the issuance of the Class A
RATING..................... Certificates that they be rated in the highest
rating category by at least one nationally
recognized Rating Agency. The rating of the Class
A Certificates is based primarily on the value of
the Receivables and the terms of the Class B
Certificates and the Collateral Interest.
CLASS B CERTIFICATE It is a condition to the issuance of the Class B
RATING..................... Certificates that they be rated in one of the
three highest rating categories by at least one
nationally recognized Rating Agency. The rating
of the Class B Certificates is based primarily on
the value of the Receivables and the terms of the
Collateral Interest.
LISTING..................... Application will be made to list the Certificates
on the Luxembourg Stock Exchange.
S-22
<PAGE>
RISK FACTORS
Interest Rate Swap Considerations. Since the Swap Counterparty makes
payments under the Interest Rate Swap based on a fixed rate for the related
Interest Period and the Trust makes payments under the Interest Rate Swap
based on a floating rate for the related Interest Period, it is possible that
the amount owing to the Swap Counterparty for any Interest Period could exceed
the amount owing to the Trust for the related Interest Period and that a Net
Swap Payment will be owing by the Trust to the Swap Counterparty. If a Net
Swap Payment is owing by the Trust for any Distribution Date, the Swap
Counterparty shall be entitled to such payment from Class A Available Funds
and such other amounts as would otherwise be available for the payment
thereof. If Net Swap Payments are made out of Excess Spread or Reallocated
Principal Collections, the amount of Credit Enhancement supporting the
Certificates may be reduced.
Although the Seller has the right, but not the obligation, to direct the
Trustee to direct the Swap Counterparty to assign its rights and obligations
under the Interest Rate Swap to a replacement swap counterparty in the event
that the long-term credit rating of the Swap Counterparty is reduced below
BBB- by Standard & Poor's or below Baa3 by Moody's or is withdrawn by either
Standard & Poor's or Moody's, there can be no assurance that a replacement
swap counterparty will be found in such event or that such assignment will be
made. A payment default by the Swap Counterparty or the Trust may result in
the termination of the Interest Rate Swap. The Interest Rate Swap may also be
terminated upon the occurrence of certain other events described under
"Description of the Certificates--Interest Rate Swap." See "Maturity
Assumptions," "Description of the Certificates--Interest Rate Swap" and "--Pay
Out Events." If during the Revolving Period or the Controlled Accumulation
Period either the Interest Rate Swap is terminated or an Interest Reserve
Account Event occurs, the occurrence of a Series 1997-I Pay Out Event will
result in the commencement of the Rapid Amortization Period rather than the
Rapid Accumulation Period. Furthermore, if during the Rapid Accumulation
Period either the Interest Rate Swap is terminated or an Interest Reserve
Account Event occurs, the Rapid Amortization Period will commence. There can
be no assurance that the Interest Rate Swap will not terminate or that an
Interest Reserve Account Event will not occur, in each case, prior to the
Scheduled Payment Date. See "Description of the Certificates--Interest Rate
Swap" and "--Pay Out Events." Although the Rating Agencies have not relied on
the ratings of the Swap Counterparty in rating either the Class A Certificates
or the Class B Certificates, but rather have relied on the value of the
Receivables and the benefits of the applicable Credit Enhancement, there can
be no assurance that interest on the Class A Certificates can be paid if a
payment default by the Swap Counterparty occurs.
Potential Priority of Certain Liens. While the Seller has transferred
interests in Receivables to the Trust, a court could treat any such
transaction as an assignment of collateral as security for the benefit of
holders of Certificates issued by the Trust. The Seller has represented and
warranted in the Agreement that the transfer of the Receivables to the Trust
is either a valid transfer and assignment of the Receivables to the Trust or
the grant to the Trust of a security interest in the Receivables. The Seller
has taken certain actions as are required to perfect the Trust's security
interest in the Receivables and will warrant that if the transfer to the Trust
is deemed to be a grant to the Trust of a security interest in the
Receivables, the Trustee will have a first priority perfected security
interest therein, and, with certain exceptions and for certain limited periods
of time provided for in the Uniform Commercial Code, in the proceeds thereof
(subject, in each case, to certain potential tax liens referred to in the
Prospectus under "Description of the Certificates--Representations and
Warranties"). Nevertheless, if the transfer of Receivables to the Trust is
deemed to create a security interest therein, a tax or government lien or
other nonconsensual lien on property of the Seller arising before Receivables
come into existence may have priority over the Trust's interest in such
Receivables, and if the FDIC were appointed conservator or receiver of the
Seller, the conservator's or receiver's administrative expenses may also have
priority over the Trust's interest in such Receivables. See "Certain Legal
Aspects of the Receivables--Transfer of Receivables" in the Prospectus.
Certain Matters Relating to Receivership. To the extent that the Seller has
granted or will grant a security interest in Receivables to the Trust and that
security interest is validly perfected before the Seller's insolvency
S-23
<PAGE>
and was not or will not be taken in contemplation of insolvency of the Seller,
or with the intent to hinder, delay or defraud the Seller or the creditors of
the Seller, the United States Federal Deposit Insurance Act ("FDIA"), as
amended by the United States Financial Institutions Reform, Recovery and
Enforcement Act of 1989, as amended ("FIRREA"), provides that such security
interest should not be subject to avoidance by the FDIC, as conservator or
receiver for the Seller. Positions taken by the FDIC staff prior to the
passage of FIRREA do not suggest that the FDIC, as receiver or conservator for
the Seller, would interfere with the timely transfer to the Trust of payments
collected on the Receivables. If, however, the FDIC were to assert a contrary
position, such as requiring the Trustee to establish its right to those
payments by submitting to and completing the administrative claims procedure
under the FDIA, or the conservator or receiver were to request a stay of
proceedings with respect to the Seller as provided under the FDIA, delays in
payments on the related Series of Certificates and possible reductions in the
amount of those payments could occur. In addition, the FDIC, if appointed as
conservator or receiver for the Seller, has the power under the FDIA to
repudiate contracts, including secured contracts of the Seller. The FDIA
provides that a claim for damages arising from the repudiation of a contract
is limited to "actual direct compensatory damages". In the event the FDIC were
to be appointed as conservator or receiver of the Seller and were to repudiate
the Agreement, then the amount payable out of available collateral to the
Certificateholders could be lower than the outstanding principal and accrued
interest on the Certificates.
If a conservator or receiver were appointed for the Seller, then a Trust Pay
Out Event would occur with respect to all Series then outstanding, and,
subject to the next succeeding sentence, new Principal Receivables would not
be transferred to the Trust and the Trustee would sell the Receivables (unless
otherwise instructed by holders of more than 50% of the Investor Interest of
each issued and outstanding Series of Certificates (as defined in the
Prospectus) of the Trust, or with respect to any Series with more than one
Class, of each Class, and any other Person specified in the Agreement or a
Series Supplement), thereby causing early termination of the Trust and a loss
to the Certificateholders if the net proceeds of such sale allocable to Series
1997-I and available to make payments on the Certificates were insufficient to
pay the Certificateholders in full. If a Trust Pay Out Event occurs involving
either the insolvency of the Seller or the appointment of a conservator or
receiver for the Seller, the conservator or receiver may have the power to
prevent the early sale, liquidation or disposition of the Receivables and the
commencement of the Rapid Amortization Period. A conservator or receiver may
also have the power to cause the early sale of the Receivables and the early
retirement of the Certificates of each issued and outstanding Series. In
addition, in the event of a Servicer Default relating to the conservatorship
or receivership of the Servicer, if no Servicer Default other than such
conservatorship or receivership exists, the conservator or receiver for the
Servicer may have the power to prevent either the Trustee or the
Certificateholders from appointing a successor Servicer under the Agreement.
See "Certain Legal Aspects of the Receivables--Certain Matters Relating to
Receivership" and "Risk Factors--Potential Effect of Insolvency or Bankruptcy
of Seller or Other Holder of Seller Certificate" in the Prospectus.
MBNA'S CREDIT CARD PORTFOLIO
GENERAL
The Receivables conveyed or to be conveyed to the Trust by MBNA pursuant to
the Agreement have been or will be generated from transactions made by holders
of selected MasterCard and VISA credit card accounts, including premium
accounts and standard accounts, from the Bank Portfolio.
BILLING AND PAYMENTS
MBNA, using MBNA Hallmark Information Services, Inc. as its service bureau,
generates and mails to cardholders monthly statements summarizing account
activity and processes cardholder monthly payments. Currently, cardholders
must make a monthly minimum payment at least equal to the greater of (i) 2% of
the statement balance plus past due amounts and (ii) a stated minimum payment
(generally $15) plus past due amounts. Certain eligible cardholders are given
the option periodically to take a payment deferral.
S-24
<PAGE>
The finance charges on purchases assessed monthly are calculated by
multiplying the account's average daily purchase balance by the applicable
daily periodic rate, and multiplying the result by the number of days in the
billing cycle. Finance charges are calculated on purchases from the date of
the purchase or the first day of the billing cycle in which the purchase is
posted to the account, whichever is later. Monthly periodic finance charges
are not assessed in most circumstances on purchases if all balances shown on
the previous billing statement are paid by the due date, which is generally 25
days after the billing date. The finance charges assessed monthly on cash
advances (including balance transfers) are calculated by multiplying the
account's average cash advance balance by the applicable daily periodic rate,
and multiplying the result by the number of days in the billing cycle. Finance
charges are calculated on cash advances (including balance transfers) from the
date of the transaction. Currently, MBNA generally treats the day on which a
cash advance check is deposited or cashed as the transaction date for such
check.
MBNA offers fixed rate and variable rate credit card accounts. Generally,
fixed annual percentage rates range from 14.9% to 19.9%, and variable rates
range from 6.65% to 10.9% above the prime rate. MBNA also offers temporary
promotional rates and, under certain circumstances, the periodic finance
charges on a limited number of accounts may be either greater than or less
than those assessed by MBNA generally.
MBNA assesses annual membership fees (generally ranging from $18 to $40) on
certain accounts although under various marketing programs these fees may be
waived or rebated. For most credit card accounts, MBNA also assesses late,
overlimit and returned check charges (generally $20 for late and overlimit
charges and generally $18 for returned check charges). MBNA generally assesses
a fee on cash advances and certain purchase transactions typically ranging
from 1% to 2% of the cash advance or purchase amount with a $2 minimum fee. In
some cases, the fee is capped at $10 or $25. Generally, a cash advance fee is
not assessed on balance transfers.
DELINQUENCY AND GROSS CHARGE-OFF EXPERIENCE
An account is contractually delinquent if the minimum payment is not
received by the due date indicated on the customer's statement. Efforts to
collect contractually delinquent credit card receivables currently are made by
MBNA's Customer Assistance personnel. Collection activities include statement
messages, telephone calls and formal collection letters. MBNA employs two
principal computerized systems for collecting past due accounts. The
Predictive Management System analyzes each cardholder's purchase and repayment
habits and selects accounts for initial contact with the objective of
contacting the highest risk accounts first. The accounts selected are queued
to MBNA's proprietary Outbound Call Management System ("OCMS"). OCMS sorts
accounts by a number of factors, including time zone, degree of delinquency
and dollar amount due. OCMS automatically dials delinquent accounts in order
of priority. Representatives are automatically linked to the cardholder's
account information and voice line when a contact is established.
Accounts are worked continually at each stage of delinquency through the 180
day past due level. As an account enters the 180 day delinquency level, it is
classified as a potential charge-off. Accounts failing to make a payment
during the 180 day cycle are written off. Managers may defer a charge-off of
an account for another month, pending continued payment activity or other
special circumstances. Senior manager approval is required on all exceptions
to charge-off. Accounts of cardholders in bankruptcy are currently charged-off
no later than is consistent with this policy.
S-25
<PAGE>
The following tables set forth the delinquency and gross charge-off
experience for each of the periods shown for the Bank Portfolio of credit card
accounts. The Bank Portfolio's delinquency and gross charge-off experience is
comprised of segments which may, when taken individually, have delinquency and
gross charge-off characteristics different from those of the overall Bank
Portfolio of credit card accounts. As of the beginning of the day on July 2,
1997, the Receivables in the Trust Portfolio represented approximately 82% of
the Bank Portfolio. Because the Trust Portfolio is only a portion of the Bank
Portfolio, actual delinquency and gross charge-off experience with respect to
the Receivables may be different from that set forth below for the Bank
Portfolio. There can be no assurance that the delinquency and gross charge-off
experience for the Receivables in the future will be similar to the historical
experience of the Bank Portfolio set forth below.
DELINQUENCY EXPERIENCE
BANK PORTFOLIO
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
----------------------- -----------------------------------------------------------------------
1997 1996 1995 1994
----------------------- ----------------------- ----------------------- -----------------------
PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE
OF TOTAL OF TOTAL OF TOTAL OF TOTAL
RECEIVABLES RECEIVABLES RECEIVABLES RECEIVABLES RECEIVABLES RECEIVABLES RECEIVABLES RECEIVABLES
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Receivables
Outstanding(1)........ $36,646,131 $33,070,523 $24,269,670 $17,162,700
Receivables Delinquent:
35-64 Days............ $ 635,465 1.73% $ 619,940 1.87% $ 393,142 1.62% $ 234,686 1.37%
65-94 Days............ 302,855 0.83 282,815 0.86 178,038 0.73 106,309 0.62
95 or More Days....... 699,931 1.91 606,650 1.83 352,813 1.46 187,764 1.09
----------- ---- ----------- ---- ----------- ---- ----------- ----
Total................. $ 1,638,251 4.47% $ 1,509,405 4.56% $ 923,993 3.81% $ 528,759 3.08%
=========== ==== =========== ==== =========== ==== =========== ====
</TABLE>
- --------
(1) The Receivables Outstanding on the accounts consist of all amounts due
from cardholders as posted to the accounts as of the date shown.
GROSS CHARGE-OFF EXPERIENCE
BANK PORTFOLIO
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
---------------- -------------------------------------
1997 1996 1995 1994
---------------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Average Receivables Out-
standing(1)............ $34,605,355 $27,781,061 $20,562,315 $13,594,814
Total Gross Charge-
Offs(2)................ 868,336 1,193,375 686,687 423,551
Total Gross Charge-Offs
as a percentage of Av-
erage Receivables Out-
standing(3)............ 5.02% 4.30% 3.34% 3.12%
</TABLE>
- --------
(1) Average Receivables Outstanding is the average of the daily receivable
balance during the period indicated.
(2) Total Gross Charge-Offs as a percentage of Average Receivables Outstanding
for the month ended July 31, 1997 was 5.50% calculated as an annualized
figure. Total Gross Charge-Offs are total principal and interest charge-
offs before recoveries and do not include the amount of any reductions in
Average Receivables Outstanding due to fraud, returned goods, customer
disputes or other miscellaneous credit adjustments.
(3) The percentage reflected for the six months ended June 30, 1997 is an
annualized figure.
INTERCHANGE
The Seller will be required, pursuant to the terms of the Agreement, to
transfer to the Trust a percentage of the Interchange attributed to cardholder
charges for goods and services in the Accounts. Interchange arising under the
Accounts will be allocated to the Certificates and the Collateral Interest on
the basis of the percentage equivalent of the ratio which the amount of the
Investor Percentage, with regard to Finance Charge Receivables, of cardholder
charges for goods and services in the Accounts bears to the total amount of
cardholder charges for
S-26
<PAGE>
goods and services in the MasterCard and VISA credit card accounts owned by
MBNA, as reasonably estimated by the Seller. MasterCard and VISA may from time
to time change the amount of Interchange reimbursed to banks issuing their
credit cards. Interchange will be treated as collections of Finance Charge
Receivables for the purposes of determining the amount of Finance Charge
Receivables, allocating collections of Finance Charge Receivables, making
required monthly payments, and calculating the Portfolio Yield. Under the
circumstances described herein, Interchange will be used to pay a portion of
the Investor Servicing Fee required to be paid on each Transfer Date. See
"Description of the Certificates--Servicing Compensation and Payment of
Expenses" herein and "MBNA's Credit Card Activities--Interchange" in the
Prospectus.
THE RECEIVABLES
The Receivables conveyed to the Trust arise in Accounts selected from the
Bank Portfolio on the basis of criteria set forth in the Agreement as applied
on the Cut-Off Date and, with respect to Additional Accounts, as of the
related date of their designation (the "Trust Portfolio"). Pursuant to the
Agreement, the Seller has the right, subject to certain limitations and
conditions set forth therein, to designate from time to time Additional
Accounts and to transfer to the Trust all Receivables of such Additional
Accounts, whether such Receivables are then existing or thereafter created.
Any Additional Accounts designated pursuant to the Agreement must be Eligible
Accounts as of the date the Seller designates such accounts as Additional
Accounts. On September 19, 1994, November 15, 1994, March 30, 1995, July 6,
1995, October 3, 1995, March 8, 1996, May 30, 1996, September 4, 1996, October
3, 1996, November 5, 1996, February 4, 1997, April 4, 1997 and July 2, 1997,
the Seller designated Additional Accounts and conveyed the Receivables arising
therein to the Trust, which included approximately $1.487 billion, $1.087
billion, $1.288 billion, $1.094 billion, $1.193 billion, $1.981 billion,
$1.685 billion, $1.986 billion, $1.087 billion, $690.6 million, $1.681
billion, $1.392 billion and $2.472 billion of Principal Receivables,
respectively. In addition, the Seller will be required to designate Additional
Accounts, to the extent available (a) to maintain the Seller Interest so that,
during any period of 30 consecutive days, the Seller Interest averaged over
that period equals or exceeds the Minimum Seller Interest for the same period
and (b) to maintain, for so long as certificates of any Series (including the
Certificates) remain outstanding, an aggregate amount of Principal Receivables
equal to or greater than the Minimum Aggregate Principal Receivables. "Minimum
Seller Interest" for any period means 7% of the average Principal Receivables
for such period; provided, however, that the Seller may reduce the Minimum
Seller Interest to not less than 2% of the average Principal Receivables for
such period upon satisfaction of the Rating Agency Condition and certain other
conditions set forth in the Agreement. "Minimum Aggregate Principal
Receivables" means, with respect to all Series then outstanding, unless
otherwise provided in the related Series Supplement, an amount equal to the
sum of the numerators used in the calculation of the Investor Percentages with
respect to Principal Receivables for all outstanding Series on such date;
provided, however, that with respect to any Series in its Rapid Accumulation
Period, or such other period as designated in the related Series Supplement,
with an investor interest as of such date of determination equal to the
principal funding account balance relating to such Series, taking into account
any deposit to be made to the principal funding account relating to such
Series on the Transfer Date following such date of determination, the
numerator used in the calculation of the Investor Percentage with respect to
Principal Receivables relating to such Series shall, solely for the purpose of
the definition of Minimum Aggregate Principal Receivables, be deemed to equal
zero; provided further, however, that the Minimum Aggregate Principal
Receivables may be reduced to a lesser amount at any time if the Rating Agency
Condition is satisfied. The Seller will convey the Receivables then existing
or thereafter created under such Additional Accounts to the Trust. Further,
pursuant to the Agreement, the Seller will have the right (subject to certain
limitations and conditions) to designate certain Removed Accounts and to
require the Trustee to reconvey all Receivables in such Removed Accounts to
the Seller, whether such Receivables are then existing or thereafter created.
Throughout the term of the Trust, the Accounts from which the Receivables
arise will be the Accounts designated by the Seller on the Cut-Off Date plus
any Additional Accounts minus any Removed Accounts. As of the Cut-Off Date
and, with respect to Receivables in Additional Accounts, as of the related
date of their conveyance to the Trust, and on the date any new Receivables are
created, the Seller will represent and warrant to the Trust that
S-27
<PAGE>
the Receivables meet the eligibility requirements specified in the Agreement.
See "Description of the Certificates--Representations and Warranties" in the
Prospectus.
The Receivables in the Trust Portfolio, as of the beginning of the day on
July 2, 1997, included $29,711,553,610 of Principal Receivables and
$486,284,598 of Finance Charge Receivables. The Accounts had an average
Principal Receivable balance of $1,263 and an average credit limit of $8,507.
The percentage of the aggregate total Receivable balance to the aggregate
total credit limit was 15.10%. The average age of the Accounts was
approximately 32 months. As of the beginning of the day on July 2, 1997,
cardholders whose Accounts are included in the Trust Portfolio had billing
addresses in all 50 States and the District of Columbia. As of the beginning
of the day on July 2, 1997, 50.5% of the Accounts were standard accounts and
49.5% were premium accounts, and the aggregate Principal Receivable balances
of standard accounts and premium accounts, as a percentage of the total
aggregate Principal Receivables, were 37% and 63%, respectively.
The following tables summarize the Trust Portfolio by various criteria as of
the beginning of the day on July 2, 1997. Because the future composition of
the Trust Portfolio may change over time, these tables are not necessarily
indicative of the composition of the Trust Portfolio at any subsequent time.
COMPOSITION BY ACCOUNT BALANCE
TRUST PORTFOLIO
<TABLE>
<CAPTION>
PERCENTAGE
OF TOTAL PERCENTAGE
NUMBER OF NUMBER OF OF TOTAL
ACCOUNT BALANCE RANGE ACCOUNTS ACCOUNTS RECEIVABLES RECEIVABLES
- --------------------- ---------- ---------- --------------- -----------
<S> <C> <C> <C> <C>
Credit Balance............... 275,576 1.2% $ (28,626,586) (0.1)%
No Balance................... 13,940,356 59.3 0 0.0
$.01-- $5,000.00............. 7,019,708 29.8 10,227,360,396 33.9
$5,000.01--$10,000.00........ 1,739,079 7.4 12,008,534,301 39.8
$10,000.01--$15,000.00....... 371,549 1.6 4,441,893,614 14.7
$15,000.01--$20,000.00....... 102,762 0.4 1,749,840,690 5.8
$20,000.01--$25,000.00....... 37,348 0.2 829,662,003 2.7
$25,000.01 or More........... 29,470 0.1 969,173,790 3.2
---------- ----- --------------- -----
Total.................... 23,515,848 100.0% $30,197,838,208 100.0%
========== ===== =============== =====
</TABLE>
COMPOSITION BY CREDIT LIMIT
TRUST PORTFOLIO
<TABLE>
<CAPTION>
PERCENTAGE
OF TOTAL PERCENTAGE
NUMBER OF NUMBER OF OF TOTAL
CREDIT LIMIT RANGE ACCOUNTS ACCOUNTS RECEIVABLES RECEIVABLES
- ------------------ ---------- ---------- --------------- -----------
<S> <C> <C> <C> <C>
Less than or equal to
$5,000.00.................. 6,946,083 29.6% $ 3,911,727,007 13.0%
$5,000.01--$10,000.00....... 9,638,688 41.0 12,570,893,152 41.6
$10,000.01--$15,000.00...... 4,299,640 18.3 6,668,546,952 22.1
$15,000.01--$20,000.00...... 1,466,548 6.2 3,071,232,335 10.2
$20,000.01--$25,000.00...... 617,332 2.6 1,766,182,581 5.8
$25,000.01 or More.......... 547,557 2.3 2,209,256,181 7.3
---------- ----- --------------- -----
Total................... 23,515,848 100.0% $30,197,838,208 100.0%
========== ===== =============== =====
</TABLE>
S-28
<PAGE>
COMPOSITION BY PERIOD OF DELINQUENCY
TRUST PORTFOLIO
<TABLE>
<CAPTION>
PERCENTAGE
OF TOTAL PERCENTAGE
PERIOD OF DELINQUENCY NUMBER OF NUMBER OF OF TOTAL
(DAY CONTRACTUALLY DELINQUENT)S ACCOUNTS ACCOUNTS RECEIVABLES RECEIVABLES
- ------------------------------- ---------- ---------- --------------- -----------
<S> <C> <C> <C> <C>
Not Delinquent................... 22,767,880 96.8% $26,957,360,691 89.2%
Up to 34 Days.................... 455,936 2.0 1,920,549,518 6.4
35 to 64 Days.................... 119,141 0.5 500,852,747 1.7
65 to 94 Days.................... 56,626 0.2 247,013,533 0.8
95 or More Days.................. 116,265 0.5 572,061,719 1.9
---------- ----- --------------- -----
Total........................ 23,515,848 100.0% $30,197,838,208 100.0%
========== ===== =============== =====
</TABLE>
COMPOSITION BY ACCOUNT AGE
TRUST PORTFOLIO
<TABLE>
<CAPTION>
PERCENTAGE
OF TOTAL PERCENTAGE
NUMBER OF NUMBER OF OF TOTAL
ACCOUNT AGE ACCOUNTS ACCOUNTS RECEIVABLES RECEIVABLES
- ----------- ---------- ---------- --------------- -----------
<S> <C> <C> <C> <C>
Not More than 6 Months...... 3,619,568 15.4% $ 3,291,336,103 10.9%
Over 6 Months to 12 Months.. 2,494,818 10.6 2,586,665,418 8.6
Over 12 Months to 24
Months..................... 6,125,301 26.0 6,105,589,208 20.2
Over 24 Months to 36
Months..................... 5,222,124 22.2 6,859,749,632 22.7
Over 36 Months to 48
Months..................... 2,668,610 11.4 3,984,467,912 13.2
Over 48 Months to 60
Months..................... 589,681 2.5 916,720,328 3.0
Over 60 Months to 72
Months..................... 346,316 1.5 634,522,918 2.1
Over 72 Months.............. 2,449,430 10.4 5,818,786,689 19.3
---------- ----- --------------- -----
Total................... 23,515,848 100.0% $30,197,838,208 100.0%
========== ===== =============== =====
</TABLE>
S-29
<PAGE>
GEOGRAPHIC DISTRIBUTION OF ACCOUNTS
TRUST PORTFOLIO
<TABLE>
<CAPTION>
PERCENTAGE
OF TOTAL PERCENTAGE
NUMBER OF NUMBER OF OF TOTAL
STATE ACCOUNTS ACCOUNTS RECEIVABLES RECEIVABLES
- ----- ---------- ---------- --------------- -----------
<S> <C> <C> <C> <C>
Alabama....................... 227,815 1.0% $ 318,216,714 1.1%
Alaska........................ 46,180 0.2 82,876,505 0.3
Arizona....................... 363,998 1.5 523,007,354 1.7
Arkansas...................... 172,145 0.7 224,804,752 0.7
California.................... 2,553,284 10.9 4,264,081,107 14.1
Colorado...................... 409,045 1.8 533,788,076 1.8
Connecticut................... 399,576 1.7 485,576,894 1.6
Delaware...................... 97,120 0.4 128,405,785 0.4
Florida....................... 1,197,388 5.1 1,609,676,656 5.3
Georgia....................... 524,074 2.2 766,388,189 2.5
Hawaii........................ 90,754 0.4 143,312,394 0.5
Idaho......................... 103,434 0.4 127,295,562 0.4
Illinois...................... 914,909 3.9 1,123,545,060 3.7
Indiana....................... 515,200 2.2 544,952,472 1.8
Iowa.......................... 270,587 1.2 236,199,193 0.8
Kansas........................ 215,176 0.9 249,533,904 0.8
Kentucky...................... 258,907 1.1 288,622,289 1.0
Louisiana..................... 300,710 1.3 378,377,632 1.2
Maine......................... 169,810 0.7 183,474,391 0.6
Maryland...................... 743,698 3.2 1,061,173,806 3.5
Massachusetts................. 776,318 3.3 874,241,088 2.9
Michigan...................... 823,593 3.5 895,036,200 3.0
Minnesota..................... 474,828 2.0 470,304,691 1.6
Mississippi................... 128,964 0.5 174,198,623 0.6
Missouri...................... 420,678 1.8 480,012,864 1.6
Montana....................... 82,606 0.4 86,049,460 0.3
Nebraska...................... 182,611 0.8 185,144,473 0.6
Nevada........................ 143,851 0.6 252,726,384 0.8
New Hampshire................. 150,140 0.6 176,263,830 0.6
New Jersey.................... 939,824 4.0 1,256,619,536 4.2
New Mexico.................... 138,982 0.6 194,437,846 0.6
New York...................... 1,759,945 7.5 2,196,771,521 7.3
North Carolina................ 574,793 2.5 723,143,877 2.4
North Dakota.................. 56,165 0.2 52,765,316 0.2
Ohio.......................... 962,142 4.1 1,017,904,118 3.4
Oklahoma...................... 240,807 1.0 340,796,276 1.1
Oregon........................ 189,348 0.8 269,619,501 0.9
Pennsylvania.................. 1,345,751 5.7 1,296,485,186 4.3
Rhode Island.................. 109,292 0.5 121,187,455 0.4
South Carolina................ 267,923 1.2 330,592,720 1.1
South Dakota.................. 67,837 0.3 68,876,118 0.2
Tennessee..................... 436,898 1.9 603,374,033 2.0
Texas......................... 1,531,021 6.5 2,236,727,055 7.4
Utah.......................... 161,936 0.7 181,766,803 0.6
Vermont....................... 68,303 0.3 78,017,399 0.3
Virginia...................... 640,366 2.7 871,762,624 2.9
Washington.................... 449,102 1.9 638,011,529 2.1
West Virginia................. 126,600 0.5 144,920,421 0.5
Wisconsin..................... 548,415 2.3 489,139,624 1.6
Wyoming....................... 52,500 0.2 61,541,035 0.2
District of Columbia.......... 58,159 0.2 99,648,551 0.3
Other......................... 32,340 0.1 56,443,316 0.2
---------- ----- --------------- ----
Total..................... 23,515,848 100.0% $30,197,838,208 100%
========== ===== =============== ====
</TABLE>
S-30
<PAGE>
MATURITY ASSUMPTIONS
The Agreement provides that Class A Certificateholders will not receive
payments of principal until the Scheduled Payment Date, or earlier in the
event that either (a) a Trust Pay Out Event occurs or (b)(i) a Series 1997-I
Pay Out Event occurs or has occurred and (ii) either the Interest Rate Swap is
or has been terminated or an Interest Reserve Account Event occurs or has
occurred. The occurrence of either of the foregoing would result in the
commencement of the Rapid Amortization Period. The Class B Certificateholders
will not begin to receive principal until the final principal payment on the
Class A Certificates has been made or, during the Rapid Accumulation Period,
until an amount equal to the Class A Investor Interest has been deposited in
the Principal Funding Account.
Controlled Accumulation Period. On each Transfer Date during the Controlled
Accumulation Period, an amount equal to, for each Monthly Period, the least of
(a) the Available Investor Principal Collections, (b) the applicable
"Controlled Deposit Amount," which is equal to the sum of the applicable
Controlled Accumulation Amount for such Monthly Period and the applicable
Accumulation Shortfall, if any, and (c) the sum of the Class A Adjusted
Investor Interest and the Class B Adjusted Investor Interest prior to any
deposits on such day, will be deposited in the Principal Funding Account
established by the Trustee until the amount on deposit in the Principal
Funding Account (the "Principal Funding Account Balance") equals the sum of
the Class A Investor Interest and the Class B Investor Interest. If, for any
Monthly Period, the Available Investor Principal Collections for such Monthly
Period exceed the applicable Controlled Deposit Amount, any such excess will
be paid to the Collateral Interest Holder to the extent that the Collateral
Interest exceeds the Required Collateral Interest. After the Class A Investor
Interest and the Class B Investor Interest have each been paid in full,
Available Investor Principal Collections, to the extent required, will be
distributed to the Collateral Interest Holder on each related Transfer Date
until the earlier of the date the Collateral Interest has been paid in full
and the Series 1997-I Termination Date. Amounts in the Principal Funding
Account are expected to be available to pay in full, on the Scheduled Payment
Date, the Class A Investor Interest and, after the payment of the Class A
Investor Interest in full, the Class B Investor Interest. Although it is
anticipated that collections of Principal Receivables will be available on
each Transfer Date during the Controlled Accumulation Period to make a deposit
of the applicable Controlled Deposit Amount and that the Class A Investor
Interest will be paid to the Class A Certificateholders and the Class B
Investor Interest will be paid to the Class B Certificateholders on the
Scheduled Payment Date, no assurance can be given in this regard. If the
amount required to pay the Class A Investor Interest and the Class B Investor
Interest in full is not available on the Scheduled Payment Date, the Rapid
Amortization Period will commence.
Rapid Accumulation Period. If a Series 1997-I Pay Out Event occurs during
the Revolving Period or the Controlled Accumulation Period and there has not
been a termination of the Interest Rate Swap or the occurrence of an Interest
Reserve Account Event, the Rapid Accumulation Period will commence and (a) any
amount on deposit in the Principal Funding Account up to the Class A Investor
Interest will continue to be held for the benefit of the Class A
Certificateholders and (b) any amount on deposit in the Principal Funding
Account in excess of the Class A Investor Interest (in an amount not to exceed
the Class B Investor Interest) will be available to pay the Class B
Certificateholders in respect of the Class B Investor Interest on the first
Distribution Date with respect to the Rapid Accumulation Period. On each
Transfer Date relating to the Rapid Accumulation Period, an amount equal to,
for each Monthly Period, the lesser of (a) the Available Investor Principal
Collections and (b) the Class A Adjusted Investor Interest prior to any
deposits on such day, will be deposited in the Principal Funding Account,
until the Principal Funding Account Balance equals the Class A Investor
Interest. Available Investor Principal Collections deposited in the Principal
Funding Account during the Rapid Accumulation Period will not be subject to
the Controlled Deposit Amount. Funds on deposit in the Principal Funding
Account will be available to pay the Class A Certificateholders in respect of
the Class A Investor Interest on the Scheduled Payment Date (or earlier under
certain circumstances described herein). Commencing on the Distribution Date
following the Transfer Date on which the Principal Funding Account Balance
(after taking into account all deposits to be made on such Transfer Date)
equals the Class A Investor Interest, remaining Available Investor Principal
Collections will be paid to the Class B Certificateholders on each
Distribution Date until the earlier of
S-31
<PAGE>
the date on which the Class B Certificates have been paid in full and the
Series 1997-I Termination Date. Unless either (a) the Interest Rate Swap
terminates or an Interest Reserve Account Event occurs, or (b) a Trust Pay Out
Event occurs, in each case, prior to the Scheduled Payment Date, the Rapid
Accumulation Period will end on the Scheduled Payment Date.
Rapid Amortization Period. If either (a) a Trust Pay Out Event occurs or (b)
(i) a Series 1997-I Pay Out Event occurs or has occurred and (ii) either the
Interest Rate Swap is or has been terminated or an Interest Reserve Account
Event occurs or has occurred, the Rapid Amortization Period will commence and
any amount on deposit in the Principal Funding Account will be paid to the
Class A Certificateholders and, after the Class A Investor Interest has been
paid in full, the Class B Certificateholders on the first Distribution Date
with respect to the Rapid Amortization Period. In addition, to the extent that
the Class A Investor Interest has not been paid in full, the Class A
Certificateholders will be entitled to monthly payments of principal equal to
the Available Investor Principal Collections until the earlier of the date on
which the Class A Certificates have been paid in full and the Series 1997-I
Termination Date. After the Class A Certificates have been paid in full, and
if the Series 1997-I Termination Date has not occurred, Available Investor
Principal Collections will be paid to the Class B Certificateholders on each
Distribution Date until the earlier of the date on which the Class B
Certificates have been paid in full and the Series 1997-I Termination Date.
Pay Out Events. A Series 1997-I Pay Out Event occurs, either automatically
or after specified notice, upon (a) the failure of the Seller to make certain
payments or transfers of funds for the benefit of the Certificateholders
within the time periods stated in the Agreement, (b) certain material breaches
of certain representations, warranties or covenants of the Seller, (c) the
average of the Portfolio Yields for any three consecutive Monthly Periods
being less than the average of the Base Rates for such period, (d) the failure
of the Seller to convey Receivables arising under Additional Accounts or
Participations to the Trust when required by the Agreement, (e) the occurrence
of a Servicer Default which would have a material adverse effect on the
Certificateholders, or (f) insufficient monies in the Distribution Account to
pay the Class A Investor Interest and the Class B Investor Interest in full on
the Scheduled Payment Date. A Trust Pay Out Event occurs automatically upon
(a) certain insolvency events involving the Seller, (b) the Trust becoming an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended, or (c) the Seller becoming unable for any reason to transfer
Receivables to the Trust in accordance with the provisions of the Agreement.
See "Description of the Certificates--Pay Out Events" herein and in the
Prospectus. The term "Base Rate" means, with respect to any Monthly Period,
the annualized percentage equivalent of a fraction, the numerator of which is
the sum of the Class A Monthly Interest, the Class B Monthly Interest, the
Collateral Monthly Interest and the Net Swap Payment, if any, each for the
related Interest Period, less the Net Swap Receipt, if any, deposited in the
Finance Charge Account for such Interest Period, and the Certificateholder
Servicing Fee and Servicer Interchange, each with respect to such Monthly
Period, and the denominator of which is the Investor Interest as of the close
of business on the last day of such Monthly Period. The term "Portfolio Yield"
means, with respect to any Monthly Period, the annualized percentage
equivalent of a fraction, the numerator of which is an amount equal to the sum
of collections of Finance Charge Receivables, annual membership fees,
Principal Funding Investment Proceeds, amounts withdrawn from the Reserve
Account, the Swap Reserve Fund, and the Interest Reserve Account, if any,
deposited into the Finance Charge Account and allocable to the Certificates
and the Collateral Interest for such Monthly Period, calculated on a cash
basis after subtracting the Investor Default Amount for such Monthly Period,
and the denominator of which is the Investor Interest as of the close of
business on the last day of such Monthly Period.
Swap Termination Events. The Interest Rate Swap may be terminated by its
terms, whether or not the Class A Certificates have been paid in full prior to
such termination, upon the earliest to occur of (i) the termination of the
Trust pursuant to the terms of the Agreement, (ii) the payment in full of the
Class A Investor Interest, (iii) the Scheduled Payment Date, (iv) the
insolvency, conservatorship or receivership of the Swap Counterparty, (v) the
failure on the part of the Trustee (on behalf of the Trust) or the Swap
Counterparty to make any payment under the Interest Rate Swap within the
applicable grace period, if any, and (vi) illegality on the part of the Trust
or the Swap Counterparty to be a party to, or perform an obligation under, the
Interest Rate
S-32
<PAGE>
Swap. If the Interest Rate Swap terminates during either the Revolving Period
or the Controlled Accumulation Period, upon the occurrence of a Series 1997-I
Pay Out Event, there will be no Rapid Accumulation Period and the Rapid
Amortization Period will commence. If the Interest Rate Swap terminates during
the Rapid Accumulation Period, the Rapid Accumulation Period will end and the
Rapid Amortization Period will commence. Any such termination could reduce the
average life of the Certificates.
Interest Reserve Account Event. If the Swap Counterparty fails to deposit an
amount equal to one-twelfth of the product of (a) the Swap Fixed Rate and (b)
the Notional Amount as of the Record Date immediately preceding a reduction of
the Swap Counterparty's long-term credit rating below AA- by Standard & Poor's
or below Aa3 by Moody's or a withdrawal of the Swap Counterparty's long-term
credit rating by either Standard and Poor's or Moody's, into the Interest
Reserve Account within 30 days of such reduction or withdrawal, an Interest
Reserve Account Event shall occur. If an Interest Reserve Account Event occurs
during either the Revolving Period or the Controlled Accumulation Period, upon
the occurrence of a Series 1997-I Pay Out Event, there will be no Rapid
Accumulation Period and the Rapid Amortization Period will commence. If an
Interest Reserve Account Event occurs during the Rapid Accumulation Period,
the Rapid Accumulation Period will end and the Rapid Amortization Period will
commence. The occurrence of any such Interest Reserve Account Event could
reduce the average life of the Certificates.
Payment Rates. The following table sets forth the highest and lowest
cardholder monthly payment rates for the Bank Portfolio during any month in
the period shown and the average cardholder monthly payment rates for all
months during the periods shown, in each case calculated as a percentage of
total opening monthly account balances during the periods shown. Payment rates
shown in the table are based on amounts which would be deemed payments of
Principal Receivables and Finance Charge Receivables with respect to the
Accounts.
CARDHOLDER MONTHLY PAYMENT RATES
BANK PORTFOLIO
<TABLE>
<CAPTION>
SIX MONTHS YEAR ENDED DECEMBER 31,
ENDED -------------------------
JUNE 30, 1997 1996 1995 1994
------------- ------- ------- -------
<S> <C> <C> <C> <C>
Lowest Month........................ 11.30% 10.69% 10.22% 10.46%
Highest Month....................... 12.38% 11.56% 11.34% 12.93%
Monthly Average..................... 11.88% 11.19% 10.79% 11.79%
</TABLE>
Prior to May 1, 1991, the Seller required each cardholder to make monthly
minimum payments of 3.0% of the statement balance plus past due amounts,
insurance payments and other fees. Between May 1, 1991 and September 20, 1993,
the Seller required each cardholder to make monthly minimum payments of 2.5%
of the statement balance plus past due amounts. Currently, cardholders must
make a monthly minimum payment equal to 2.0% of the statement balance plus
past due amounts. However, the cardholder was and is generally required to
make a monthly minimum payment (generally $15) plus past due amounts. There
can be no assurance that the cardholder monthly payment rates in the future
will be similar to the historical experience set forth above. In addition, the
amount of collections of Receivables may vary from month to month due to
seasonal variations, general economic conditions and payment habits of
individual cardholders. There can be no assurance that collections of
Principal Receivables with respect to the Trust Portfolio will be similar to
the historical experience set forth above or that deposits into the Principal
Funding Account or the Distribution Account, as applicable, will be made in
accordance with the applicable Controlled Accumulation Amount. If the Rapid
Amortization Period commences, the average life of the Certificates could be
significantly reduced. If the Rapid Accumulation Period commences, the average
life of the Class B Certificates could be significantly reduced.
Because there may be a slowdown in the payment rate below the payment rates
used to determine the Controlled Accumulation Amounts, or (a) a Series 1997-I
Pay Out Event may occur which would initiate either the Rapid Accumulation
Period or the Rapid Amortization Period, or (b) a Trust Pay Out Event may
occur which would initiate the Rapid Amortization Period, there can be no
assurance that the actual number of months elapsed
S-33
<PAGE>
from the date of issuance of the Class A Certificates and the Class B
Certificates to their final Distribution Date will equal the expected number
of months. As described under "Description of the Certificates--Postponement
of Controlled Accumulation Period," the Servicer may shorten the Controlled
Accumulation Period and, in such event, there can be no assurance that there
will be sufficient time to accumulate all amounts necessary to pay the Class A
Investor Interest and the Class B Investor Interest on the Scheduled Payment
Date. See "Maturity Assumptions" and "Risk Factors--Timing of Principal
Payments Other Than at Expected Maturity" in the Prospectus.
RECEIVABLE YIELD CONSIDERATIONS
The gross revenues from finance charges and fees billed to accounts in the
Bank Portfolio for each of the three calendar years contained in the period
ended December 31, 1996 and the six calendar months contained in the period
ended June 30, 1997 are set forth in the following table.
The historical yield figures in the following table are calculated on an
accrual basis. Collections of Receivables included in the Trust will be on a
cash basis and may not reflect the historical yield experience in the table.
During periods of increasing delinquencies or periodic payment deferral
programs, accrual yields may exceed cash amounts accrued and billed to
cardholders. Conversely, cash yields may exceed accrual yields as amounts
collected in a current period may include amounts accrued during prior
periods. However, the Seller believes that during the three calendar years
contained in the period ended December 31, 1996 and the six calendar months
contained in the period ended June 30, 1997, the yield on an accrual basis
closely approximated the yield on a cash basis. The yield on both an accrual
and a cash basis will be affected by numerous factors, including the monthly
periodic finance charges on the Receivables, the amount of the annual
membership fees and other fees, changes in the delinquency rate on the
Receivables and the percentage of cardholders who pay their balances in full
each month and do not incur monthly periodic finance charges. See "Risk
Factors" in the Prospectus.
BANK PORTFOLIO YIELD
<TABLE>
<CAPTION>
SIX MONTHS YEAR ENDED DECEMBER 31,
ENDED -------------------------------
JUNE 30, 1997 1996 1995 1994
------------- --------- --------- ---------
<S> <C> <C> <C> <C>
Average Account Monthly Accrued
Finance Charges and
Fees(1)(2).................... $ 25.13 $ 24.27 $ 23.70 $ 22.27
Average Account Balance(3)..... $1,816.22 $1,738.50 $1,718.08 $1,624.11
Yield from Finance Charges and
Fees(4)....................... 16.60% 16.75% 16.55% 16.45%
Yield from Interchange(5)...... 1.12% 1.17% 1.20% 1.58%
Yield from Finance Charges,
Fees and Interchange(6)....... 17.72% 17.92% 17.75% 18.03%
</TABLE>
- --------
(1) Finance Charges and Fees are comprised of monthly periodic finance charges
and other credit card fees.
(2) Average Account Monthly Accrued Finance Charges and Fees are presented net
of adjustments made pursuant to MBNA's normal servicing procedures,
including removal of incorrect or disputed monthly periodic finance
charges.
(3) Average Account Balances include purchases, cash advances and accrued and
unpaid monthly periodic finance and other charges and are calculated based
on the average of the account balances during the periods shown for
accounts with charging privileges.
(4) Yield from Finance Charges and Fees is the result of dividing the
annualized Average Account Monthly Accrued Finance Charges and Fees by the
Average Account Balance for the period.
(5) Yield from Interchange is the result of dividing annualized revenue
attributable to Interchange received during the period by the Average
Account Balance for the period. The amount of Interchange for each of the
periods indicated above has been estimated.
(6) The percentage reflected for the six calendar months ended June 30, 1997
is an annualized figure.
S-34
<PAGE>
The revenue for the Bank Portfolio of credit card accounts shown in the
above table is comprised of monthly periodic finance charges, credit card fees
and Interchange. These revenues vary for each account based on the type and
volume of activity for each account. Because the Trust Portfolio is only a
portion of the Bank Portfolio, actual yield with respect to Receivables may be
different from that set forth above for the Bank Portfolio. See "MBNA's Credit
Card Portfolio" herein and "MBNA's Credit Card Activities" in the Prospectus.
MBNA AND MBNA CORPORATION
MBNA America Bank, National Association, a national banking association
located in Wilmington, Delaware, conducts nationwide consumer lending programs
principally comprised of credit card related activities. MBNA International
Bank Limited, a private limited company incorporated under the laws of England
and Wales, is a wholly-owned subsidiary of MBNA. On a managed basis, including
loans originated by MBNA International Bank Limited, MBNA maintained loan
accounts with aggregate outstanding balances of $42.7 billion as of June 30,
1997. Of this amount, $37.1 billion were MasterCard and VISA credit card loans
originated in the United States. As of June 30, 1997, the premium credit card
portfolio in the United States accounted for 52% of MBNA's domestic MasterCard
and VISA credit card accounts with outstanding balances and 64% of MBNA's
outstanding domestic MasterCard and VISA credit card loans.
MBNA conducts all direct customer contact processes with respect to the
cardholder. This involves a 24 hour, 365 day per year Customer Service
telephone staff, Credit Decisions, Correspondence Resolution, Security and
Collection Operations. As of June 30, 1997, MBNA had assets of $18.0 billion,
deposits of $12.2 billion and capital and surplus accounts of $1.8 billion.
MBNA is a wholly-owned subsidiary of the Corporation. MBNA was established
in January 1991 in connection with a restructuring of the former MBNA America
Bank, N.A., a wholly-owned subsidiary of MNC Financial, Inc. The Corporation
is a bank holding company organized under the laws of Maryland in 1990 and
registered under the Bank Holding Company Act of 1956, as amended. As of June
30, 1997, the Corporation had consolidated assets of $19.5 billion,
consolidated deposits of $11.9 billion and capital and surplus accounts of
$1.8 billion. The principal asset of the Corporation is the capital stock of
MBNA.
DESCRIPTION OF THE CERTIFICATES
The Certificates will be issued pursuant to the Agreement and the Series
1997-I Supplement. Pursuant to the Agreement, the Seller and the Trustee may
execute further Series Supplements in order to issue additional Series. The
following summary of the Certificates does not purport to be complete and is
subject to, and is qualified in its entirety by reference to, all of the
provisions of the Agreement and the Series 1997-I Supplement. See "Description
of the Certificates" in the Prospectus for additional information concerning
the Certificates and the Agreement.
GENERAL
The Certificates will represent the right to receive certain payments from
the assets of the Trust, including the right to the applicable allocation
percentage of all cardholder payments on the Receivables in the Trust. Each
Class A Certificate represents the right to receive payments of interest at
the Class A Certificate Rate for the related Interest Period, and payments of
principal on the Scheduled Payment Date or, to the extent of the Class A
Investor Interest, on each Distribution Date with respect to the Rapid
Amortization Period, funded from collections of Finance Charge Receivables and
annual membership fees and Principal Receivables, respectively, allocated to
the Class A Investor Interest and certain other available amounts. Each Class
B Certificate represents the right to receive payments of interest at the
applicable Class B Certificate Rate for the related Interest Period, and
payments of principal on the Scheduled Payment Date or, to the extent of the
Class B Investor Interest, on each Distribution Date with respect to the Rapid
Amortization Period after the Class A Certificates have been
S-35
<PAGE>
paid in full or on each Distribution Date with respect to the Rapid
Accumulation Period after the Principal Funding Account Balance equals the
Class A Investor Interest, funded from collections of Finance Charge
Receivables and annual membership fees and Principal Receivables,
respectively, allocated to the Class B Investor Interest and certain other
available amounts. In addition to representing the right to payment from
collections of Finance Charge Receivables, annual membership fees and
Principal Receivables, each Class A Certificate also represents the right to
receive payments from Net Swap Receipts, Excess Spread, funds on deposit in
the Principal Funding Account (in an amount not to exceed the Class A Investor
Interest), the Interest Reserve Account and the Reserve Account and certain
investment earnings thereon, Reallocated Principal Collections and Shared
Principal Collections and certain other available amounts. In addition to
representing the right to payment from collections of Finance Charge
Receivables, annual membership fees and Principal Receivables, each Class B
Certificate also represents the right to receive payments from Excess Spread,
funds on deposit in the Principal Funding Account (to the extent such funds
exceed the Class A Investor Interest and in an amount not to exceed the Class
B Investor Interest) and the Reserve Account and certain investment earnings
thereon, Reallocated Collateral Principal Collections and Shared Principal
Collections and certain other available amounts. Payments of interest and
principal will be made on each Distribution Date on which such amounts are due
to Certificateholders in whose names the Certificates were registered on the
last business day of the calendar month preceding such Distribution Date
(each, a "Record Date").
The Seller initially will own the Seller Certificate. The Seller Certificate
will represent the right to receive certain payments from the assets of the
Trust, including the right to a percentage (the "Seller Percentage") of all
cardholder payments on the Receivables in the Trust equal to 100% minus the
sum of the applicable Investor Percentages for all Series of certificates then
outstanding. The Seller Certificate may be transferred in whole or in part
subject to certain limitations and conditions set forth in the Agreement. See
"Description of the Certificates--Certain Matters Regarding the Seller and the
Servicer" in the Prospectus.
Application will be made to list the Certificates on the Luxembourg Stock
Exchange.
The Class A Certificates and the Class B Certificates initially will be
represented by certificates registered in the name of Cede, as nominee of DTC.
Unless and until Definitive Certificates are issued, all references herein to
actions by Class A Certificateholders and/or Class B Certificateholders shall
refer to actions taken by DTC upon instructions from its Participants and all
references herein to distributions, notices, reports and statements to Class A
Certificateholders and/or Class B Certificateholders shall refer to
distributions, notices, reports and statements to DTC or Cede, as the
registered holder of the Class A Certificates and the Class B Certificates, as
the case may be, for distribution to Certificate Owners in accordance with DTC
procedures. Certificateholders may hold their Certificates through DTC (in the
United States) or Cedel or Euroclear (in Europe) if they are participants of
such systems, or indirectly through organizations that are participants in
such systems. Cede, as nominee for DTC, will hold the global Certificates.
Cedel and Euroclear will hold omnibus positions on behalf of the Cedel
Participants and the Euroclear Participants, respectively, through customers'
securities accounts in Cedel's and Euroclear's names on the books of their
respective Depositaries which in turn will hold such positions in customers'
securities accounts in the Depositaries' names on the books of DTC. See
"Description of the Certificates--General," "--Book-Entry Registration" and
"--Definitive Certificates" in the Prospectus.
EXCHANGES
The Seller Certificate is transferable only as provided in the Agreement.
The Agreement also provides that the holder of the Seller Certificate may
tender the Seller Certificate to the Trustee in exchange for one or more new
Series and a reissued Seller Certificate as described under "Description of
the Certificates--Exchanges" in the Prospectus.
INTEREST PAYMENTS
Interest will accrue on the Class A Certificates at the Class A Certificate
Rate and on the Class B Certificates at the Class B Certificate Rate from the
Closing Date. Interest will be distributed on the October 15, 1997
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Distribution Date and on each Distribution Date thereafter to
Certificateholders. Interest payments on the Class A Certificates and the
Class B Certificates on any Distribution Date will be calculated on the
outstanding principal balance of the Class A Certificates and the outstanding
principal balance of the Class B Certificates, as applicable, as of the
preceding Record Date, except that interest for the first Distribution Date
will accrue at the applicable Certificate Rate on the initial outstanding
principal balance of the Class A Certificates and the initial outstanding
principal balance of the Class B Certificates, as applicable, from the Closing
Date. Interest due on the Certificates but not paid on any Distribution Date
will be payable on the next succeeding Distribution Date together with
additional interest on such amount at the applicable Certificate Rate plus 2%
per annum (such amount with respect to the Class A Certificates, the "Class A
Additional Interest," and such amount with respect to the Class B
Certificates, the "Class B Additional Interest"). Such Additional Interest
shall accrue on the same basis as interest on the Certificates, and shall
accrue from the Distribution Date such overdue interest became due, to but
excluding the Distribution Date on which such Additional Interest is paid.
Interest payments on the Class A Certificates on any Distribution Date will be
paid from Class A Available Funds for the related Monthly Period, and to the
extent such Class A Available Funds are insufficient to pay such interest,
from Excess Spread and Reallocated Principal Collections (to the extent
available) for such Monthly Period. Interest payments on the Class B
Certificates on any Distribution Date will be paid from Class B Available
Funds for the related Monthly Period, and to the extent such Class B Available
Funds are insufficient to pay such interest, from Excess Spread and
Reallocated Collateral Principal Collections (to the extent available)
remaining after certain other payments have been made with respect to the
Class A Certificates.
"Class A Available Funds" means, with respect to any Monthly Period, an
amount equal to the sum of (a) the Class A Floating Allocation of collections
of Finance Charge Receivables and annual membership fees allocated to the
Investor Interest and deposited in the Finance Charge Account with respect to
such Monthly Period (excluding the portion of collections of Finance Charge
Receivables attributable to Interchange that is allocable to Servicer
Interchange), (b) the Net Swap Receipt, if any, deposited in the Finance
Charge Account with respect to such Monthly Period, and previously due but not
paid Net Swap Receipts, if any, deposited in the Finance Charge Account with
respect to such Monthly Period, (c) the Principal Funding Investment Proceeds,
if any, which are required to be treated as Class A Available Funds pursuant
to the Series 1997-I Supplement, in an amount not to exceed that portion of
the Covered Amount with respect to the Class A Certificates with respect to
the related Transfer Date, (d) amounts, if any, to be withdrawn from the
Reserve Account which are required to be included in Class A Available Funds
pursuant to the Series 1997-I Supplement with respect to such Transfer Date,
(e) amounts, if any, to be withdrawn from the Swap Reserve Fund which are
required to be included in Class A Available Funds pursuant to the Series
1997-I Supplement with respect to such Transfer Date, and (f) amounts, if any,
to be withdrawn from the Interest Reserve Account which are required to be
included in Class A Available Funds pursuant to the Series 1997-I Supplement
with respect to such Transfer Date. "Class B Available Funds" means, with
respect to any Monthly Period, an amount equal to the sum of (a) the Class B
Floating Allocation of collections of Finance Charge Receivables and annual
membership fees allocated to the Investor Interest and deposited in the
Finance Charge Account with respect to such Monthly Period (excluding the
portion of collections of Finance Charge Receivables attributable to
Interchange that is allocable to Servicer Interchange), (b) Principal Funding
Investment Proceeds, if any, which are required to be treated as Class B
Available Funds pursuant to the Series 1997-I Supplement, in an amount not to
exceed that portion of the Covered Amount with respect to the Class B
Certificates with respect to the related Transfer Date and (c) amounts, if
any, to be withdrawn from the Reserve Account which are required to be
included in Class B Available Funds pursuant to the Series 1997-I Supplement
with respect to such Transfer Date.
The Class A Certificates will accrue interest at the Class A Certificate
Rate from the Closing Date. Interest payments on the Class A Certificates on
any Distribution Date will be an amount equal to one-twelfth of the product of
the Class A Certificate Rate and the outstanding principal balance of the
Class A Certificates as of the preceding Record Date, except that interest for
the first Distribution Date will include accrued interest on the initial
outstanding principal balance of the Class A Certificates at the Class A
Certificate Rate from the Closing Date through October 14, 1997. Interest on
the Class A Certificates will be calculated on the basis of a 360-day year and
twelve 30-day months.
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The Class B Certificates will accrue interest from the Closing Date through
September 14, 1997, and from September 15, 1997 through October 14, 1997, and
with respect to each Interest Period thereafter, at the rate of 0.31% per
annum above LIBOR prevailing on the related LIBOR Determination Date with
respect to each such period (the "Class B Certificate Rate"). Interest on the
Class B Certificates will be calculated on the basis of the actual number of
days in the related Interest Period and a 360-day year.
The Trustee will determine LIBOR with respect to the Class B Certificates on
August 21, 1997 for the period from the Closing Date through September 14,
1997, on September 11, 1997 for the period from September 15, 1997 through
October 14, 1997, and for each Interest Period thereafter, on the second
business day prior to the Distribution Date on which such Interest Period
commences (each, a "LIBOR Determination Date"). For purposes of calculating
LIBOR, a business day is any business day on which dealings in deposits in
United States dollars are transacted in the London interbank market.
"LIBOR" means, as of any LIBOR Determination Date, the rate for deposits in
United States dollars for a one-month period which appears on Telerate Page
3750 as of 11:00 a.m., London time, on such date. If such rate does not appear
on Telerate Page 3750, the rate for that LIBOR Determination Date will be
determined on the basis of the rates at which deposits in United States
dollars are offered by the Reference Banks at approximately 11:00 a.m., London
time, on that day to prime banks in the London interbank market for a one-
month period. The Trustee will request the principal London office of each of
the Reference Banks to provide a quotation of its rate. If at least two such
quotations are provided, the rate for that LIBOR Determination Date will be
the arithmetic mean of such quotations. If fewer than two quotations are
provided, the rate for that LIBOR Determination Date will be the arithmetic
mean of the rates quoted by major banks in New York City, selected by the
Servicer, at approximately 11:00 a.m., New York City time, on that day for
loans in United States dollars to leading European banks for a one-month
period.
"Telerate Page 3750" means the display page currently so designated on the
Dow Jones Telerate Service (or such other page as may replace that page on
that service for the purpose of displaying comparable rates or prices).
"Reference Banks" means four major banks in the London interbank market
selected by the Servicer.
The Class B Certificate Rate applicable to the then current and immediately
preceding Interest Period may be obtained by telephoning the Trustee at its
Corporate Trust Office at (212) 815-5738.
PRINCIPAL PAYMENTS
On each Transfer Date relating to the Revolving Period (which begins on the
Closing Date and ends at the commencement of the earliest to occur of the
Controlled Accumulation Period, the Rapid Accumulation Period or the Rapid
Amortization Period), unless a reduction in the Required Collateral Interest
has occurred, collections of Principal Receivables allocable to the Investor
Interest will, subject to certain limitations, including the allocation of any
Reallocated Principal Collections with respect to the related Monthly Period
to pay the Class A Required Amount and the Class B Required Amount, be treated
as Shared Principal Collections.
On each Transfer Date relating to the Controlled Accumulation Period, the
Trustee will deposit in the Principal Funding Account an amount equal to the
least of (a) Available Investor Principal Collections with respect to such
Transfer Date, (b) the applicable Controlled Deposit Amount and (c) the sum of
the Class A Adjusted Investor Interest and the Class B Adjusted Investor
Interest prior to any deposits on such date. Amounts in the Principal Funding
Account will be paid first to the Class A Certificateholders (in an amount not
to exceed the Class A Investor Interest) and then to the Class B
Certificateholders (to the extent such funds exceed the Class A Investor
Interest and in an amount not to exceed the Class B Investor Interest), in
each case, on the Scheduled Payment Date (unless paid earlier due to the
commencement of the Rapid Amortization Period or, in the case of the Class B
Investor Interest, the Rapid Accumulation Period). On each Transfer Date, if a
reduction in the Required Collateral Interest has occurred, a portion of
collections of Principal Receivables allocable to the
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Investor Interest will be applied in accordance with the Loan Agreement to
reduce the Collateral Interest to the Required Collateral Interest. During the
Controlled Accumulation Period, the portion of Available Investor Principal
Collections not applied to Class A Monthly Principal, Class B Monthly
Principal or Collateral Monthly Principal on a Transfer Date will generally be
treated as Shared Principal Collections. If funds on deposit in the Principal
Funding Account are insufficient to pay in full the Class A Investor Interest
and the Class B Investor Interest on the Scheduled Payment Date, the Rapid
Amortization Period will commence.
"Available Investor Principal Collections" means, with respect to any
Monthly Period, an amount equal to the sum of (a) (i) collections of Principal
Receivables received during such Monthly Period and certain other amounts
allocable to the Investor Interest, minus (ii) the amount of Reallocated
Principal Collections with respect to such Monthly Period used to fund the
Required Amount, plus (b) any Shared Principal Collections with respect to
other Series in Group One that are allocated to Series 1997-I.
On each Transfer Date relating to the Rapid Accumulation Period, the Trustee
will deposit in the Principal Funding Account an amount equal to the lesser of
(a) Available Investor Principal Collections with respect to such Transfer
Date and (b) the Class A Adjusted Investor Interest prior to any deposits on
such date. Provided that the Interest Rate Swap has not been terminated and
that an Interest Reserve Account Event has not occurred, amounts in the
Principal Funding Account will be paid to the Class A Certificateholders on
the Scheduled Payment Date. After the Principal Funding Account Balance equals
the Class A Investor Interest, on each Transfer Date during the Rapid
Accumulation Period, amounts equal to the lesser of (a) Available Investor
Principal Collections with respect to such Transfer Date minus the portion of
Available Investor Principal Collections applied to Class A Monthly Principal
on such Transfer Date and (b) the Class B Investor Interest will be deposited
in the Distribution Account for distribution to the Class B Certificateholders
on each following Distribution Date until the Class B Investor Interest has
been paid in full. The Rapid Accumulation Period will end on the Scheduled
Payment Date, unless prior to the Scheduled Payment Date, the Interest Rate
Swap terminates or an Interest Reserve Account Event occurs. See "--Pay Out
Events" below for a discussion of events which might lead to the commencement
of the Rapid Accumulation Period.
On each Distribution Date with respect to the Rapid Amortization Period, the
Class A Certificateholders will be entitled to receive Available Investor
Principal Collections for the related Monthly Period in an amount up to the
Class A Investor Interest until the earlier of the date the Class A
Certificates are paid in full and the Series 1997-I Termination Date. After
payment in full of the Class A Investor Interest, the Class B
Certificateholders will be entitled to receive, on each Distribution Date with
respect to the Rapid Amortization Period, Available Investor Principal
Collections for the related Monthly Period in an amount up to the Class B
Investor Interest until the earlier of the date the Class B Certificates are
paid in full and the Series 1997-I Termination Date. After payment in full of
the Class B Investor Interest, the Collateral Interest Holder will be entitled
to receive, on each Transfer Date (other than the Transfer Date prior to the
Series 1997-I Termination Date) and on the Series 1997-I Termination Date,
Available Investor Principal Collections until the earlier of the date the
Collateral Interest is paid in full and the Series 1997-I Termination Date.
See "--Pay Out Events" below for a discussion of events which might lead to
the commencement of the Rapid Amortization Period.
POSTPONEMENT OF CONTROLLED ACCUMULATION PERIOD
Upon written notice to the Trustee, the Servicer may elect to postpone the
commencement of the Controlled Accumulation Period, and extend the length of
the Revolving Period, subject to certain conditions including those set forth
below. The Servicer may make such election only if the Accumulation Period
Length (determined as described below) is less than twelve months. On the
Determination Date immediately preceding the July 2003 Distribution Date, and
each Determination Date thereafter, until the Controlled Accumulation Period
begins, the Servicer will determine the "Accumulation Period Length," which is
the number of whole months expected to be required to fully fund the Principal
Funding Account no later than the Scheduled Payment Date, based on (a) the
expected monthly collections of Principal Receivables expected to be
distributable to the certificateholders of all Series (excluding certain other
Series), assuming a principal payment rate no greater than the lowest monthly
principal payment rate on the Receivables for the preceding twelve months and
(b) the amount of
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principal expected to be distributable to certificateholders of all Series
(excluding certain other Series) which are not expected to be in their
revolving periods during the Controlled Accumulation Period; provided,
however, that the calculation of Accumulation Period Length may be changed at
any time if the Rating Agency Condition is satisfied. If the Accumulation
Period Length is less than twelve months, the Servicer may, at its option,
postpone the commencement of the Controlled Accumulation Period such that the
number of months included in the Controlled Accumulation Period will be equal
to or exceed the Accumulation Period Length. The effect of the foregoing
calculation is to permit the reduction of the length of the Controlled
Accumulation Period based on the investor interest of certain other Series
which are scheduled to be in their revolving periods during the Controlled
Accumulation Period and on increases in the principal payment rate occurring
after the Closing Date. The length of the Controlled Accumulation Period will
not be determined to be less than one month.
INTEREST RATE SWAP
On the Closing Date, the Trustee, on behalf of the Trust, will enter into
the Interest Rate Swap with Westdeutsche Landesbank Girozentrale, New York
Branch (the "Swap Counterparty"). In accordance with the terms of the Interest
Rate Swap, the amount payable by the Swap Counterparty to the Trust will be,
for each Distribution Date, an amount equal to one-twelfth of the product of
(a) the Swap Fixed Rate and (b) notional amount of the Interest Rate Swap (the
"Notional Amount"), which equals the outstanding principal balance of the
Class A Certificates as of the preceding Record Date (or in the case of the
first Distribution Date, as of the Closing Date). In the case of the first
Distribution Date, such amounts will include accrued amounts for the period
from the Closing Date through October 14, 1997. Payments from the Swap
Counterparty to the Trust will be calculated on the basis of a 360-day year
and twelve 30-day months. The amount payable by the Trust to the Swap
Counterparty will be, for each Distribution Date, to the extent of Class A
Available Funds and certain other amounts available for such purpose, an
amount equal to the product of (i) a fraction, the numerator of which is the
actual number of days in the Interest Period relating to such Distribution
Date, and the denominator of which is 360, (ii) the Swap Floating Rate, and
(iii) the Notional Amount as of the preceding Record Date. The "Swap Fixed
Rate" will equal 6.55% per annum. The "Swap Floating Rate" will equal, with
respect to any Interest Period, 0.10% per annum above LIBOR with respect to
the related Interest Period (or such lesser rate as is specified in the
Interest Rate Swap).
With respect to each Distribution Date, the Net Swap Receipt, if any, for
the related Transfer Date will be deposited into the Finance Charge Account by
the Trustee and treated as part of Class A Available Funds. The Net Swap
Payment, if any, will be paid to the Swap Counterparty for any Transfer Date
out of collections of Finance Charge Receivables and certain other available
amounts allocated to the Class A Certificates, including Principal Funding
Investment Proceeds, amounts on deposit in the Reserve Account and the Swap
Reserve Fund, Excess Spread and Reallocated Principal Collections, based on
the respective amounts due as described under "--Application of Collections--
Payment of Interest, Fees and Other Items."
The "Net Swap Payment," for any Transfer Date, shall mean, (a) if the
netting provisions of the Interest Rate Swap apply, the amount by which the
Floating Amount for such date exceeds the fixed amount payable by the Swap
Counterparty to the Trust for such date, and (b) otherwise, an amount equal to
the Floating Amount for such date. The "Net Swap Receipt," for any Transfer
Date, shall mean, (a) if the netting provisions of the Interest Rate Swap
apply, the amount by which the fixed amount payable by the Swap Counterparty
to the Trust for such date exceeds the Floating Amount for such date, and (b)
otherwise, an amount equal to the fixed amount payable by the Swap
Counterparty to the Trust for such date. Net Swap Payments and Net Swap
Receipts do not include any termination payments payable by either the Swap
Counterparty or the Trust pursuant to the Interest Rate Swap. The netting
provisions of the Interest Rate Swap will apply unless the Trustee elects
gross payments to be made pursuant to the provisions of the Interest Rate
Swap. If the Trustee elects gross payments under the Interest Rate Swap, the
Trustee's obligation to pay the Floating Amount on any Transfer Date to the
Swap Counterparty pursuant to the terms of the Interest Rate Swap is
conditioned upon the prior receipt of the fixed amounts payable by the Swap
Counterparty to the Trust for such date. The "Floating Amount," for any
Transfer Date, shall mean an amount equal to the floating amount payable by
the Trust to the Swap Counterparty for such date pursuant to the Interest Rate
Swap minus the amount by which the amount required to be withdrawn from
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the Swap Reserve Fund, if any, exceeds the amount withdrawn from the Swap
Reserve Fund for such date. See "--Swap Reserve Fund." If the amount required
to be withdrawn from the Swap Reserve Fund for any Transfer Date exceeds the
amount on deposit in the Swap Reserve Fund for such date, the amount of such
excess will be paid, to the extent available, from amounts distributed in
accordance with clause (j) of "--Application of Collections--Excess Spread."
The Interest Rate Swap will terminate by its terms, whether or not the Class
A Certificates have been paid in full prior to such termination, upon the
earliest to occur of (i) the termination of the Trust pursuant to the terms of
the Agreement, (ii) the payment in full of the Class A Investor Interest,
(iii) the Scheduled Payment Date, (iv) the insolvency, conservatorship or
receivership of the Swap Counterparty, (v) failure on the part of the Trustee
(on behalf of the Trust) or the Swap Counterparty to make any payment under
the Interest Rate Swap within the applicable grace period and (vi) illegality
on the part of the Trust or the Swap Counterparty to be a party to, or perform
an obligation under, the Interest Rate Swap. In the event that the Interest
Rate Swap terminates prior to the payment in full of the Class A Certificates,
interest due on the Class A Certificates will be paid from Class A Available
Funds, Excess Spread, Reallocated Principal Collections and amounts withdrawn
from the Interest Reserve Account, if any, as described herein, without the
benefits of any Net Swap Receipts that might have been due for any future
Distribution Dates, and Excess Spread available to be distributed with respect
to amounts due on the Class B Certificates will not include the benefits of
any Net Swap Receipts that might have been due for such future Distribution
Dates.
If the Swap Counterparty's long-term credit rating is reduced below AA- by
Standard and Poor's or below Aa3 by Moody's or is withdrawn by either Standard
& Poor's or Moody's, the Swap Counterparty will be required within 30 days
from the date of such reduction or withdrawal to fund an account (the
"Interest Reserve Account") in an amount equal to one-twelfth of the product
of (a) the Swap Fixed Rate and (b) the Notional Amount as of the Record Date
preceding such reduction or withdrawal (the "Required Interest Reserve
Amount"). The Trustee shall establish and maintain, at the direction of the
Servicer, the Interest Reserve Account with a Qualified Institution as a
segregated trust account for the benefit of the Class A Certificateholders.
There can be no assurance that the Swap Counterparty can or will adequately
fund the Interest Reserve Account. If the Swap Counterparty fails to
adequately fund the Interest Reserve Account within 30 days of such reduction
or withdrawal (an "Interest Reserve Account Event"), then (i) if the Rapid
Accumulation Period has not previously commenced, there will be no Rapid
Accumulation Period and, upon the occurrence of a Series 1997-I Pay Out Event
or a Trust Pay Out Event, the Rapid Amortization Period will commence or (ii)
if the Rapid Accumulation Period has commenced prior to the occurrence of an
Interest Reserve Account Event, upon the occurrence of such Interest Reserve
Account Event, the Rapid Amortization Period will commence.
All amounts on deposit in the Interest Reserve Account on any Transfer Date
(after giving effect to any deposits to the Interest Reserve Account to be
made on such Transfer Date) will be invested to the following Transfer Date by
the Trustee at the direction of the Swap Counterparty in Permitted
Investments. The interest and other investment income (net of investment
expenses and losses) earned on such investments will be retained in the
Interest Reserve Account (to the extent the amount on deposit is less than the
Required Interest Reserve Amount) or distributed by the Trustee to the Swap
Counterparty.
On the Transfer Date on or following the termination of the Interest Rate
Swap due to a default by the Swap Counterparty, the Trustee, at the direction
of the Servicer, shall withdraw an amount equal to the Net Swap Receipt, if
any, for the related Distribution Date, plus the amount of any Net Swap
Receipt previously due but not paid, from funds on deposit in the Interest
Reserve Account, if any (up to the Required Interest Reserve Amount), and
deposit such amount into the Finance Charge Account to be applied as Class A
Available Funds as described below under "--Application of Collections." The
Interest Reserve Account will be terminated on the Transfer Date on or
following such termination of the Interest Rate Swap (after giving effect to
the withdrawal of an amount equal to the Net Swap Receipt, if any, on such
Transfer Date, plus the amount of any Net Swap Receipt previously due but not
paid).
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Upon the termination of the Interest Reserve Account, all amounts on deposit
therein will be, after the prior payment of all amounts owing to the Class A
Certificateholders that are payable from the Interest Reserve Account,
distributed to the Swap Counterparty pursuant to the terms of the Interest
Rate Swap.
In the event the long-term credit rating of the Swap Counterparty is reduced
below BBB- by Standard & Poor's or Baa3 by Moody's or is withdrawn by either
Standard & Poor's or Moody's, the Seller, may, but shall not be obligated to,
direct the Trustee to direct the Swap Counterparty to assign its rights and
obligations under the Interest Rate Swap to a replacement swap counterparty.
There can be no assurance that a successor swap counterparty will be found or
that such assignment will be made.
The Rating Agencies have not relied on the ratings of the Swap Counterparty
in rating either the Class A Certificates or the Class B Certificates but
rather on the value of the Receivables and the terms of the applicable Credit
Enhancement. See "Risk Factors--Interest Rate Swap Considerations."
The Swap Counterparty currently has a long-term credit rating of AA+ from
Standard & Poor's and Aal from Moody's. The Swap Counterparty will provide
upon request, without charge to each person to whom this Prospectus Supplement
and the related Prospectus is delivered, a copy of (i) the ratings analysis
from each of Standard & Poor's and Moody's evidencing those respective long-
term credit ratings and (ii) the annual reports of Westdeutsche Landesbank
Girozentrale, which can be obtained upon written or oral request from
Westdeutsche Landesbank Girozentrale, New York Branch, 1211 Avenue of the
Americas, New York, New York 10036, telephone (212) 597-8500.
THE INFORMATION SET FORTH IN THE PRECEDING PARAGRAPH HAS BEEN PROVIDED BY
THE SWAP COUNTERPARTY. THE SELLER MAKES NO REPRESENTATIONS AS TO THE ACCURACY
OR COMPLETENESS OF SUCH INFORMATION.
SUBORDINATION
The Class B Certificates and the Collateral Interest will be subordinated to
the extent necessary to fund certain payments with respect to the Class A
Certificates and to fund the Net Swap Payments. In addition, the Collateral
Interest will be subordinated to the extent necessary to fund certain payments
with respect to the Class B Certificates. Certain principal payments otherwise
allocable to the Class B Certificateholders may be reallocated to cover
amounts in respect of the Class A Certificates and the Interest Rate Swap and
the Class B Investor Interest may be reduced if the Collateral Interest is
equal to zero. Similarly, certain principal payments allocable to the
Collateral Interest may be reallocated to cover amounts in respect of the
Class A Certificates, the Interest Rate Swap and the Class B Certificates and
the Collateral Interest may be reduced. To the extent the Class B Investor
Interest is reduced, the percentage of collections of Finance Charge
Receivables allocated to the Class B Certificates in subsequent Monthly
Periods will be reduced. Moreover, to the extent the amount of such reduction
in the Class B Investor Interest is not reimbursed, the amount of principal
distributable to, and the amounts available to be distributed with respect to
interest on, the Class B Certificateholders will be reduced. See "--Allocation
Percentages," "--Reallocation of Cash Flows" and "--Application of
Collections--Excess Spread."
ALLOCATION PERCENTAGES
Pursuant to the Agreement, with respect to each Monthly Period the Servicer
will allocate among the Investor Interest, the investor interest for all other
Series issued and outstanding and the Seller Interest, all amounts collected
on Finance Charge Receivables, all amounts collected on Principal Receivables
and all Default Amounts with respect to such Monthly Period.
Collections of Finance Charge Receivables and Default Amounts at any time
and collections of Principal Receivables during the Revolving Period will be
allocated to the Investor Interest based on the Floating Investor Percentage.
The "Floating Investor Percentage" means, with respect to any Monthly Period,
the percentage equivalent of a fraction, the numerator of which is the
Adjusted Investor Interest as of the close of business on the last day of the
preceding Monthly Period (or with respect to the first Monthly Period, the
initial Investor Interest) and the denominator of which is the greater of (x)
the aggregate amount of Principal Receivables as of the close of business on
the last day of the preceding Monthly Period (or with respect to the first
calendar month in the first Monthly Period, the aggregate amount of Principal
Receivables as of the close of business on the day
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immediately preceding the Closing Date and with respect to the second calendar
month in the first Monthly Period, the aggregate amount of Principal
Receivables as of the close of business on the last day of the first calendar
month in the first Monthly Period), and (y) the sum of the numerators used to
calculate the Investor Percentages for allocations with respect to Finance
Charge Receivables, Default Amounts or Principal Receivables, as applicable,
for all outstanding Series on such date of determination; provided, however,
that with respect to any Monthly Period in which an Addition Date occurs or in
which a Removal Date occurs on which, if any Series has been paid in full,
Principal Receivables in an aggregate amount approximately equal to the
initial investor interest of such Series are removed from the Trust, the
amount in clause (x) above shall be (i) the aggregate amount of Principal
Receivables in the Trust as of the close of business on the last day of the
prior Monthly Period for the period from and including the first day of such
Monthly Period to but excluding the related Addition Date or Removal Date and
(ii) the aggregate amount of Principal Receivables in the Trust as of the
beginning of the day on the related Addition Date or Removal Date after
adjusting for the aggregate amount of Principal Receivables added to or
removed from the Trust on the related Addition Date or Removal Date, as the
case may be, for the period from and including the related Addition Date or
Removal Date to and including the last day of such Monthly Period. Such
amounts so allocated will be further allocated between the Class A
Certificateholders, Class B Certificateholders and the Collateral Interest
Holder based on the Class A Floating Allocation, the Class B Floating
Allocation and the Collateral Floating Allocation, respectively. The "Class A
Floating Allocation" means, with respect to any Monthly Period, the percentage
equivalent (which percentage shall never exceed 100%) of a fraction, the
numerator of which is equal to the Class A Adjusted Investor Interest as of
the close of business on the last day of the preceding Monthly Period (or with
respect to the first Monthly Period, as of the Closing Date) and the
denominator of which is equal to the Adjusted Investor Interest as of the
close of business on such day. The "Class B Floating Allocation" means, with
respect to any Monthly Period, the percentage equivalent (which percentage
shall never exceed 100%) of a fraction, the numerator of which is equal to the
Class B Adjusted Investor Interest as of the close of business on the last day
of the preceding Monthly Period (or with respect to the first Monthly Period,
as of the Closing Date) and the denominator of which is equal to the Adjusted
Investor Interest as of the close of business on such day. The "Collateral
Floating Allocation" means, with respect to any Monthly Period, the percentage
equivalent (which percentage shall never exceed 100%) of a fraction, the
numerator of which is equal to the Collateral Interest as of the close of
business on the last day of the preceding Monthly Period (or with respect to
the first Monthly Period, as of the Closing Date) and the denominator of which
is equal to the Adjusted Investor Interest as of the close of business on such
day.
Collections of Principal Receivables during the Controlled Accumulation
Period, Rapid Accumulation Period and Rapid Amortization Period will be
allocated to the Investor Interest based on the Fixed Investor Percentage. The
"Fixed Investor Percentage" means, with respect to any Monthly Period, the
percentage equivalent of a fraction, the numerator of which is the Investor
Interest as of the close of business on the last day of the Revolving Period
and the denominator of which is the greater of (x) the aggregate amount of
Principal Receivables as of the close of business on the last day of the prior
Monthly Period and (y) the sum of the numerators used to calculate the
Investor Percentages for allocations with respect to Principal Receivables for
all outstanding Series for such Monthly Period; provided, however, that with
respect to any Monthly Period in which an Addition Date occurs or in which a
Removal Date occurs on which, if any Series has been paid in full, Principal
Receivables in an aggregate amount approximately equal to the initial investor
interest of such Series are removed from the Trust, the amount in clause (x)
above shall be (i) the aggregate amount of Principal Receivables in the Trust
as of the close of business on the last day of the prior Monthly Period for
the period from and including the first day of such Monthly Period to but
excluding the related Addition Date or Removal Date and (ii) the aggregate
amount of Principal Receivables in the Trust at the beginning of the day on
the related Addition Date or Removal Date after adjusting for the aggregate
amount of Principal Receivables added to or removed from the Trust on the
related Addition Date or Removal Date, as the case may be, for the period from
and including the related Addition Date or Removal Date to and including the
last day of such Monthly Period. Such amounts so allocated will be further
allocated between the Class A Certificateholders, the Class B
Certificateholders and the Collateral Interest Holder based on the Class A
Fixed Allocation, the Class B Fixed Allocation and the Collateral Fixed
Allocation, respectively. The "Class A Fixed Allocation" means, with
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respect to any Monthly Period, the percentage equivalent (which percentage
shall never exceed 100%) of a fraction, the numerator of which is equal to the
Class A Investor Interest as of the close of business on the last day of the
Revolving Period, and the denominator of which is equal to the Investor
Interest as of the close of business on the last day of the Revolving Period.
The "Class B Fixed Allocation" means, with respect to any Monthly Period, the
percentage equivalent (which percentage shall never exceed 100%) of a
fraction, the numerator of which is equal to the Class B Investor Interest as
of the close of business on the last day of the Revolving Period, and the
denominator of which is equal to the Investor Interest as of the close of
business on the last day of the Revolving Period. The "Collateral Fixed
Allocation" means, with respect to any Monthly Period, the percentage
equivalent (which percentage shall never exceed 100%) of a fraction, the
numerator of which is equal to the Collateral Interest as of the close of
business on the last day of the Revolving Period, and the denominator of which
is equal to the Investor Interest as of the close of business on the last day
of the Revolving Period.
"Class A Investor Interest" for any date means an amount equal to (a) the
aggregate initial principal amount of the Class A Certificates, minus (b) the
aggregate amount of principal payments made to Class A Certificateholders
prior to such date, minus (c) the excess, if any, of the aggregate amount of
Class A Investor Charge-Offs for all Transfer Dates preceding such date over
the aggregate amount of any reimbursements of Class A Investor Charge-Offs for
all Transfer Dates preceding such date; provided, however, that the Class A
Investor Interest may not be reduced below zero.
"Class B Investor Interest" for any date means an amount equal to (a) the
aggregate initial principal amount of the Class B Certificates, minus (b) the
aggregate amount of principal payments made to Class B Certificateholders
prior to such date, minus (c) the aggregate amount of Class B Investor Charge-
Offs for all prior Transfer Dates, minus (d) the aggregate amount of
Reallocated Class B Principal Collections for all prior Transfer Dates for
which the Collateral Interest has not been reduced, minus (e) an amount equal
to the aggregate amount by which the Class B Investor Interest has been
reduced to fund the Class A Investor Default Amount on all prior Transfer
Dates as described under "--Defaulted Receivables; Investor Charge-Offs," and
plus (f) the aggregate amount of Excess Spread allocated and available on all
prior Transfer Dates for the purpose of reimbursing amounts deducted pursuant
to the foregoing clauses (c), (d) and (e); provided, however, that the Class B
Investor Interest may not be reduced below zero.
"Collateral Interest" for any date means an amount equal to (a) the Initial
Collateral Interest, minus (b) the aggregate amount of principal payments made
to the Collateral Interest Holder prior to such date, minus (c) the aggregate
amount of Collateral Charge-Offs for all prior Transfer Dates, minus (d) the
aggregate amount of Reallocated Principal Collections for all prior Transfer
Dates, minus (e) an amount equal to the aggregate amount by which the
Collateral Interest has been reduced to fund the Class A Investor Default
Amount and the Class B Investor Default Amount on all prior Transfer Dates as
described under "--Defaulted Receivables; Investor Charge-Offs," and plus (f)
the aggregate amount of Excess Spread allocated and available on all prior
Transfer Dates for the purpose of reimbursing amounts deducted pursuant to the
foregoing clauses (c), (d) and (e); provided, however, that the Collateral
Interest may not be reduced below zero.
"Class A Adjusted Investor Interest," for any date of determination, means
an amount equal to the Class A Investor Interest, minus the funds on deposit
in the Principal Funding Account on such date (up to the Class A Investor
Interest).
"Class B Adjusted Investor Interest," for any date of determination, means
an amount equal to the Class B Investor Interest, minus the funds on deposit
in the Principal Funding Account in excess of the Class A Investor Interest on
such date (up to the Class B Investor Interest).
REALLOCATION OF CASH FLOWS
With respect to each Transfer Date, the Servicer will determine the amount
(the "Class A Required Amount"), which will be equal to the amount, if any, by
which the sum of (a) Class A Monthly Interest due on
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the related Distribution Date and overdue Class A Monthly Interest and Class A
Additional Interest, if any, (b) the Net Swap Payment, if any, for such
Transfer Date and overdue Net Swap Payments, if any, due to the Swap
Counterparty, (c) the Class A Servicing Fee for the related Monthly Period and
overdue Class A Servicing Fee, if any, and (d) the Class A Investor Default
Amount, if any, for the related Monthly Period exceeds the Class A Available
Funds for the related Monthly Period. If the Class A Required Amount is
greater than zero, Excess Spread allocated to Series 1997-I and available for
such purpose will be used to fund the Class A Required Amount with respect to
such Transfer Date. If such Excess Spread is insufficient to fund the Class A
Required Amount, first, Reallocated Collateral Principal Collections and,
then, Reallocated Class B Principal Collections will be used to fund the
remaining Class A Required Amount. If Reallocated Principal Collections with
respect to the related Monthly Period, together with Excess Spread, are
insufficient to fund the remaining Class A Required Amount for such related
Monthly Period, then the Collateral Interest (after giving effect to
reductions for any Collateral Charge-Offs and Reallocated Principal
Collections on such Transfer Date) will be reduced by the amount of such
excess (but not by more than the Class A Investor Default Amount for such
Monthly Period). In the event that such reduction would cause the Collateral
Interest to be a negative number, the Collateral Interest will be reduced to
zero and the Class B Investor Interest (after giving effect to reductions for
any Class B Investor Charge-Offs and any Reallocated Class B Principal
Collections for which the Collateral Interest was not reduced on such Transfer
Date) will be reduced by the amount by which the Collateral Interest would
have been reduced below zero (but not by more than the excess of the Class A
Investor Default Amount, if any, for such Monthly Period over the amount of
such reduction, if any, of the Collateral Interest with respect to such
Monthly Period). In the event that such reduction would cause the Class B
Investor Interest to be a negative number, the Class B Investor Interest will
be reduced to zero and the Class A Investor Interest will be reduced by the
amount by which the Class B Investor Interest would have been reduced below
zero (but not by more than the excess, if any, of the Class A Investor Default
Amount for such Monthly Period over the amount of the reductions, if any, of
the Collateral Interest and the Class B Investor Interest with respect to such
Monthly Period). Any such reduction in the Class A Investor Interest will have
the effect of slowing or reducing the return of principal and interest to the
Class A Certificateholders. In such case, the Class A Certificateholders will
bear directly the credit and other risks associated with their interests in
the Trust. See"--Defaulted Receivables; Investor Charge-Offs."
With respect to each Transfer Date, the Servicer will determine the amount
(the "Class B Required Amount"), which will be equal to the sum of (a) the
amount, if any, by which the sum of (i) Class B Monthly Interest due on the
related Distribution Date and overdue Class B Monthly Interest and Class B
Additional Interest, if any, and (ii) the Class B Servicing Fee for the
related Monthly Period and overdue Class B Servicing Fee, if any, exceeds the
Class B Available Funds for the related Monthly Period and (b) the Class B
Investor Default Amount, if any, for the related Monthly Period. If the Class
B Required Amount is greater than zero, Excess Spread allocated to Series
1997-I not required to pay the Class A Required Amount or reimburse Class A
Investor Charge-Offs will be used to fund the Class B Required Amount with
respect to such Transfer Date. If such Excess Spread is insufficient to fund
the Class B Required Amount, Reallocated Collateral Principal Collections not
required to fund the Class A Required Amount for the related Monthly Period
will be used to fund the remaining Class B Required Amount. If such
Reallocated Collateral Principal Collections with respect to the related
Monthly Period are insufficient to fund the remaining Class B Required Amount,
then the Collateral Interest (after giving effect to reductions for any
Collateral Charge-Offs and Reallocated Principal Collections on such Transfer
Date and after any adjustments made thereto for the benefit of the Class A
Certificateholders) will be reduced by the amount of such deficiency (but not
by more than the Class B Investor Default Amount for such Monthly Period). In
the event that such a reduction would cause the Collateral Interest to be a
negative number, the Collateral Interest will be reduced to zero, and the
Class B Investor Interest will be reduced by the amount by which the
Collateral Interest would have been reduced below zero (but not by more than
the excess of the Class B Investor Default Amount for such Monthly Period over
the amount of such reduction of the Collateral Interest), and the Class B
Certificateholders will bear directly the credit and other risks associated
with their interests in the Trust. See "--Defaulted Receivables; Investor
Charge-Offs."
Reductions of the Class A Investor Interest or Class B Investor Interest
described above shall be reimbursed by, and the Class A Investor Interest or
Class B Investor Interest increased to the extent of, Excess Spread
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available for such purposes on each Transfer Date. See "--Application of
Collections--Excess Spread." When such reductions of the Class A Investor
Interest and Class B Investor Interest have been fully reimbursed, reductions
of the Collateral Interest shall be reimbursed until reimbursed in full in a
similar manner.
"Reallocated Class B Principal Collections" for any Monthly Period means
collections of Principal Receivables allocable to the Class B Investor
Interest for the related Monthly Period in an amount not to exceed the amount
applied to fund the Class A Required Amount, if any; provided, however, that
such amount will not exceed the Class B Investor Interest after giving effect
to any Class B Investor Charge-Offs for the related Transfer Date.
"Reallocated Collateral Principal Collections" for any Monthly Period means
collections of Principal Receivables allocable to the Collateral Interest for
the related Monthly Period in an amount not to exceed the amount applied to
fund the Class A Required Amount and the Class B Required Amount, if any;
provided, however, that such amount will not exceed the Collateral Interest
after giving effect to any Collateral Charge-Offs for the related Transfer
Date.
"Reallocated Principal Collections" for any Monthly Period means the sum of
(a) the Reallocated Class B Principal Collections for such Monthly Period, if
any, and (b) the Reallocated Collateral Principal Collections for such Monthly
Period, if any.
APPLICATION OF COLLECTIONS
Allocations. Except as otherwise provided below, the Servicer will deposit
into the Collection Account, no later than the second business day following
the date of processing, any payment collected by the Servicer on the
Receivables. On the same day as any such deposit is made, the Servicer will
make the deposits and payments to the accounts and parties as indicated below;
provided, however, that for as long as MBNA remains the Servicer under the
Agreement and (a)(i) the Servicer provides to the Trustee a letter of credit
covering the risk of collection of the Servicer and (ii) the Seller shall not
have received a notice from the Rating Agency that such letter of credit would
result in the lowering of such Rating Agency's then-existing rating of any
Series then outstanding or (b) the Servicer has and maintains a certificate of
deposit rating of P-1 by Moody's and of A-1 by Standard & Poor's and deposit
insurance provided by either BIF or SAIF, then the Servicer may make such
deposits and payments on the business day immediately prior to the
Distribution Date (the "Transfer Date") in an amount equal to the net amount
of such deposits and payments which would have been made had the conditions of
this proviso not applied.
With respect to the Certificates, and notwithstanding anything in the
Agreement to the contrary, whether the Servicer is required to make monthly or
daily deposits from the Collection Account into the Finance Charge Account or
the Principal Account, with respect to any Monthly Period, (i) the Servicer
will only be required to deposit Collections from the Collection Account into
the Finance Charge Account or the Principal Account up to the required amount
to be deposited into any such deposit account or, without duplication,
distributed on or prior to the related Distribution Date to Certificateholders
or to the Collateral Interest Holder and (ii) if at any time prior to such
Distribution Date the amount of Collections deposited in the Collection
Account exceeds the amount required to be deposited pursuant to clause (i)
above, the Servicer will be permitted to withdraw the excess from the
Collection Account.
Payment of Interest, Fees and Other Items. On each Transfer Date, the
Trustee, acting pursuant to the Servicer's instructions, will apply the Class
A Available Funds, Class B Available Funds and Collateral Available Funds in
the Finance Charge Account in the following priority:
(a) On each Transfer Date, an amount equal to the Class A Available Funds
will be distributed in the following priority:
(i) an amount equal to Class A Monthly Interest for the related
Distribution Date, plus the amount of any overdue Class A Monthly
Interest and Class A Additional Interest thereon, if any, will be
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deposited into the Distribution Account for distribution to Class A
Certificateholders on such Distribution Date;
(ii) an amount equal to the Net Swap Payment, if any, for such
Transfer Date, plus the amount of any Net Swap Payments previously due
but not paid to the Swap Counterparty will be paid to the Swap
Counterparty;
(iii) an amount equal to the Class A Servicing Fee for the related
Monthly Period, plus the amount of any overdue Class A Servicing Fee,
will be paid to the Servicer;
(iv) an amount equal to the Class A Investor Default Amount, if any,
for the related Monthly Period will be treated as a portion of
Available Investor Principal Collections and deposited into the
Principal Account for such Transfer Date; and
(v) the balance, if any, will constitute a portion of Excess Spread
and will be allocated and distributed as described under "--Excess
Spread."
(b) On each Transfer Date, an amount equal to the Class B Available Funds
will be distributed in the following priority:
(i) an amount equal to Class B Monthly Interest for the related
Distribution Date, plus the amount of any overdue Class B Monthly
Interest and Class B Additional Interest thereon, if any, will be
deposited into the Distribution Account for distribution to Class B
Certificateholders on such Distribution Date;
(ii) an amount equal to the Class B Servicing Fee for the related
Monthly Period, plus the amount of any overdue Class B Servicing Fee,
will be paid to the Servicer; and
(iii) the balance, if any, will constitute a portion of Excess Spread
and will be allocated and distributed as described under "--Excess
Spread."
(c) On each Transfer Date, an amount equal to the Collateral Available
Funds will be distributed in the following priority:
(i) if MBNA or The Bank of New York is no longer the Servicer, an
amount equal to the Collateral Interest Servicing Fee, plus the amount
of any overdue Collateral Interest Servicing Fee, for the related
Monthly Period will be paid to the Servicer; and
(ii) the balance, if any, will constitute a portion of Excess Spread
and will be allocated and distributed as described under "--Excess
Spread."
"Class A Monthly Interest" with respect to any Distribution Date will equal
one-twelfth of the product of (a) the Class A Certificate Rate and (b) the
outstanding principal balance of the Class A Certificates as of the related
Record Date; provided, however, with respect to the first Distribution Date,
Class A Monthly Interest will be equal to the interest accrued on the initial
outstanding principal balance of the Class A Certificates at the Class A
Certificate Rate for the period from the Closing Date through October 14,
1997.
"Class B Monthly Interest" with respect to any Distribution Date will equal
the product of (a) the Class B Certificate Rate for the related Interest
Period, (b) the actual number of days in such Interest Period divided by 360
and (c) the outstanding principal balance of the Class B Certificates as of
the related Record Date; provided, however, with respect to the first
Distribution Date, Class B Monthly Interest will be equal to the interest
accrued on the initial outstanding principal balance of the Class B
Certificates at the applicable Class B Certificate Rate for the period from
the Closing Date through October 14, 1997.
"Collateral Available Funds" means, with respect to any Monthly Period, an
amount equal to the Collateral Floating Allocation of collections of Finance
Charge Receivables and annual membership fees allocated to the Investor
Interest with respect to such Monthly Period (excluding the portion of
collections of Finance Charge Receivables attributable to Interchange that is
allocable to Servicer Interchange).
"Excess Spread" means, with respect to any Transfer Date, an amount equal to
the sum of the amounts described in clause (a)(v), clause (b)(iii) and clause
(c)(ii) above.
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Excess Spread. On each Transfer Date, the Trustee, acting pursuant to the
Servicer's instructions, will apply Excess Spread with respect to the related
Monthly Period, to make the following distributions in the following priority:
(a) an amount equal to the Class A Required Amount, if any, with respect
to such Transfer Date will be used to fund the Class A Required Amount;
provided, however, that in the event the Class A Required Amount for such
Transfer Date exceeds the amount of Excess Spread, such Excess Spread shall
be applied first to pay amounts due with respect to such Transfer Date
pursuant to clause (a)(i) above under "--Payment of Interest, Fees and
Other Items," second to pay amounts due with respect to such Transfer Date
pursuant to clause (a)(ii) above under "--Payment of Interest, Fees and
Other Items," third to pay amounts due with respect to such Transfer Date
pursuant to clause (a)(iii) above under "--Payment of Interest, Fees and
Other Items" and fourth to pay amounts due with respect to such Transfer
Date pursuant to clause (a)(iv) above under "--Payment of Interest, Fees
and Other Items;"
(b) an amount equal to the aggregate amount of Class A Investor Charge-
Offs which have not been previously reimbursed (after giving effect to the
allocation on such Transfer Date of certain other amounts applied for that
purpose) will be deposited into the Principal Account and treated as a
portion of Available Investor Principal Collections for such Transfer Date
as described under "--Payments of Principal" below;
(c) an amount equal to the Class B Required Amount, if any, with respect
to such Transfer Date will be used to fund the Class B Required Amount and
will be applied first to pay amounts due with respect to such Transfer Date
pursuant to clause (b)(i) above under "--Payment of Interest, Fees and
Other Items," second to pay amounts due with respect to such Transfer Date
pursuant to clause (b)(ii) above under "--Payment of Interest, Fees and
Other Items" and third, the amount remaining, up to the Class B Investor
Default Amount, will be deposited into the Principal Account and treated as
a portion of Available Investor Principal Collections for such Transfer
Date as described under "--Payments of Principal" below;
(d) an amount equal to the aggregate amount by which the Class B
Investor Interest has been reduced below the initial Class B Investor
Interest for reasons other than the payment of principal to the Class B
Certificateholders (but not in excess of the aggregate amount of such
reductions which have not been previously reimbursed) will be deposited
into the Principal Account and treated as a portion of Available Investor
Principal Collections for such Transfer Date as described under "--Payments
of Principal" below;
(e) an amount equal to the Collateral Monthly Interest for such Transfer
Date, plus the amount of any Collateral Monthly Interest previously due but
not distributed to the Collateral Interest Holder on a prior Transfer Date,
will be distributed to the Collateral Interest Holder for distribution in
accordance with the Loan Agreement;
(f) if MBNA or The Bank of New York is the Servicer, an amount equal to
the Collateral Interest Servicing Fee, plus the amount of any overdue
Collateral Interest Servicing Fee, for the related Monthly Period will be
paid to the Servicer;
(g) an amount equal to the aggregate Collateral Default Amount, if any,
for such Transfer Date will be deposited into the Principal Account and
treated as a portion of Available Investor Principal Collections for such
Transfer Date as described under "--Payments of Principal" below;
(h) an amount equal to the aggregate amount by which the Collateral
Interest has been reduced below the Required Collateral Interest for
reasons other than the payment of principal to the Collateral Interest
Holder (but not in excess of the aggregate amount of such reductions which
have not been previously reimbursed) will be deposited into the Principal
Account and treated as a portion of Available Investor Principal
Collections for such Transfer Date as described under "--Payments of
Principal" below;
(i) on each Transfer Date from and after the Reserve Account Funding
Date, but prior to the date on which the Reserve Account terminates as
described under "--Reserve Account," an amount up to the excess, if any, of
the Required Reserve Account Amount over the Available Reserve Account
Amount shall be deposited into the Reserve Account; and
(j) the balance, if any, after giving effect to the payments made
pursuant to subparagraphs (a) through (i) above shall be applied in
accordance with the provisions of the Loan Agreement and the Series 1997-I
Supplement.
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"Collateral Monthly Interest" with respect to any Transfer Date will equal
the product of (a) an amount equal to the London interbank offered rate for
one-month United States dollar deposits plus 1.0% per annum, or such lesser
amount as may be designated in the Loan Agreement (the "Collateral Rate"), (b)
the actual number of days in the related Interest Period divided by 360 and
(c) the Collateral Interest as of the related Record Date or, with respect to
the first Transfer Date, the Initial Collateral Interest. The Trustee will
determine the London interbank offered rate for one-month United States dollar
deposits with respect to the Collateral Interest for each Interest Period on
the second business day prior to the Transfer Date on which such Interest
Period commences.
Payments of Principal. On each Transfer Date, the Trustee, acting pursuant
to the Servicer's instructions, will distribute Available Investor Principal
Collections (see "--Principal Payments" above) on deposit in the Principal
Account in the following priority:
(a) on each Transfer Date with respect to the Revolving Period, all such
Available Investor Principal Collections will be distributed or deposited
in the following priority:
(i) an amount equal to the Collateral Monthly Principal will be paid
to the Collateral Interest Holder in accordance with the Loan
Agreement; and
(ii) the balance will be treated as Shared Principal Collections and
applied as described under "Description of the Certificates--Shared
Principal Collections" herein and in the Prospectus;
(b) on each Transfer Date with respect to the Controlled Accumulation
Period, the Rapid Accumulation Period or the Rapid Amortization Period, all
such Available Investor Principal Collections will be distributed or
deposited in the following priority:
(i) an amount equal to Class A Monthly Principal will be deposited in
the Principal Funding Account (during the Controlled Accumulation
Period or the Rapid Accumulation Period) or distributed (on the related
Distribution Date) to the Class A Certificateholders (during the Rapid
Amortization Period); and
(ii) an amount equal to Class B Monthly Principal will be (x) after
an amount equal to the Class A Investor Interest has been deposited in
the Principal Funding Account (taking into account deposits to be made
on such Transfer Date), deposited in the Principal Funding Account
(during the Controlled Accumulation Period) or distributed (on the
related Distribution Date) to the Class B Certificateholders (during
the Rapid Accumulation Period), or (y) after the Class A Investor
Interest has been paid in full (taking into account payments to be made
on the related Distribution Date), distributed (on the related
Distribution Date) to the Class B Certificateholders (during the Rapid
Amortization Period);
(c) on each Transfer Date with respect to the Controlled Accumulation
Period, the Rapid Accumulation Period and the Rapid Amortization Period in
which a reduction in the Required Collateral Interest has occurred,
Available Investor Principal Collections not applied to Class A Monthly
Principal or Class B Monthly Principal will be applied to reduce the
Collateral Interest to the Required Collateral Interest; and
(d) on each Transfer Date with respect to the Controlled Accumulation
Period, the Rapid Accumulation Period and the Rapid Amortization Period,
the balance of Available Investor Principal Collections not applied
pursuant to (b) and (c) above, if any, will be treated as Shared Principal
Collections and applied as described under "Description of the
Certificates--Shared Principal Collections" herein and in the Prospectus.
"Class A Monthly Principal" with respect to any Transfer Date relating to
(a) the Controlled Accumulation Period or the Rapid Accumulation Period, prior
to the deposit in full of an amount equal to the Class A Investor Interest in
the Principal Funding Account, or (b) the Rapid Amortization Period, prior to
the payment in full of the Class A Investor Interest, will equal the least of
(i) the Available Investor Principal Collections on deposit in the Principal
Account with respect to such Transfer Date, (ii) for each Transfer Date with
respect to the Controlled Accumulation Period, the Controlled Deposit Amount
for such Transfer Date and (iii) the Class A Adjusted Investor Interest on
such Transfer Date.
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"Class B Monthly Principal" with respect to any Transfer Date relating to
(a) the Controlled Accumulation Period or the Rapid Accumulation Period,
beginning with the Transfer Date on which an amount equal to the Class A
Investor Interest has been deposited in the Principal Funding Account (after
taking into account deposits to be made on such Transfer Date), or (b) the
Rapid Amortization Period, beginning with the Transfer Date immediately
preceding the Distribution Date on which the Class A Certificates will be paid
in full (after taking into account payments to be made on the related
Distribution Date), will equal the least of (i) the Available Investor
Principal Collections on deposit in the Principal Account with respect to such
Transfer Date (minus the portion of such Available Investor Principal
Collections applied to Class A Monthly Principal on such Transfer Date), (ii)
for each Transfer Date with respect to the Controlled Accumulation Period, the
Controlled Deposit Amount for such Transfer Date (minus the Class A Monthly
Principal with respect to such Transfer Date) and (iii) the Class B Adjusted
Investor Interest prior to any deposits on such Transfer Date.
"Collateral Monthly Principal" means (a) with respect to any Transfer Date
relating to the Revolving Period following any reduction of the Required
Collateral Interest pursuant to clause (4) of the proviso in the definition
thereof an amount equal to the lesser of (i) the excess, if any, of the
Collateral Interest (after giving effect to reductions for any Collateral
Charge-Offs and Reallocated Principal Collections on such Transfer Date and
after giving effect to any adjustments thereto for the benefit of the Class A
Certificateholders and the Class B Certificateholders on such Transfer Date)
over the Required Collateral Interest on such Transfer Date, and (ii) the
Available Investor Principal Collections on such Transfer Date or (b) with
respect to any Transfer Date relating to the Controlled Accumulation Period,
the Rapid Accumulation Period or Rapid Amortization Period an amount equal to
the lesser of (i) the excess, if any, of the Collateral Interest (after giving
effect to reductions for any Collateral Charge-Offs and Reallocated Principal
Collections on such Transfer Date and after giving effect to any adjustments
thereto for the benefit of the Class A Certificateholders and the Class B
Certificateholders on such Transfer Date) over the Required Collateral
Interest on such Transfer Date, and (ii) the excess, if any, of (A) the
Available Investor Principal Collections on such Transfer Date over (B) the
sum of the Class A Monthly Principal and the Class B Monthly Principal for
such Transfer Date.
"Controlled Accumulation Amount" means for any Transfer Date with respect to
the Controlled Accumulation Period, $57,812,500; provided, however, that if
the commencement of the Controlled Accumulation Period is delayed as described
above under "--Postponement of Controlled Accumulation Period," the Controlled
Accumulation Amount may be higher than the amount stated above for each
Transfer Date with respect to the Controlled Accumulation Period and will be
determined by the Servicer in accordance with the Agreement based on the
principal payment rates for the Accounts and on the investor interests of
other Series (other than certain excluded Series) which are scheduled to be in
their revolving periods and then scheduled to create Shared Principal
Collections during the Controlled Accumulation Period.
"Accumulation Shortfall" means (a) on the first Transfer Date with respect
to the Controlled Accumulation Period, the excess, if any, of the Controlled
Accumulation Amount for such Transfer Date over the amount deposited in the
Principal Funding Account on such Transfer Date and (b) on each subsequent
Transfer Date with respect to the Controlled Accumulation Period, the excess,
if any, of the applicable Controlled Accumulation Amount for such subsequent
Transfer Date plus any Accumulation Shortfall for the prior Transfer Date over
the amount deposited in the Principal Funding Account on such subsequent
Transfer Date.
SHARED PRINCIPAL COLLECTIONS
Collections of Principal Receivables for any Monthly Period allocated to the
Investor Interest will first be used to cover, with respect to any Monthly
Period (a) with respect to the Controlled Accumulation Period, deposits of the
applicable Controlled Deposit Amount to the Principal Funding Account and
payments to the Collateral Interest Holder, (b) with respect to the Rapid
Accumulation Period, deposits of Available Investor Principal Collections into
the Principal Funding Account up to the Class A Investor Interest and payments
to the Class B Certificateholders and the Collateral Interest Holder and (c)
with respect to the Rapid Amortization Period, payments to the
Certificateholders and then under certain circumstances payments to the
Collateral Interest Holder. The Servicer will determine the amount of
collections of Principal Receivables for any Monthly Period allocated to the
Investor Interest remaining after covering required payments to the
Certificateholders and the
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Collateral Interest Holder and any similar amount remaining for any other
Series in Group One ("Shared Principal Collections"). The Servicer will
allocate the Shared Principal Collections to cover any scheduled or permitted
principal distributions to certificateholders and deposits to principal
funding accounts, if any, for any Series in Group One which have not been
covered out of the collections of Principal Receivables allocable to such
Series and certain other amounts for such Series ("Principal Shortfalls").
Shared Principal Collections will not be used to cover investor charge-offs
for any Series. If Principal Shortfalls exceed Shared Principal Collections
for any Monthly Period, Shared Principal Collections will be allocated pro
rata among the applicable Series in Group One based on the relative amounts of
Principal Shortfalls. To the extent that Shared Principal Collections exceed
Principal Shortfalls, the balance will, subject to certain limitations, be
paid to the holder of the Seller Certificate.
REQUIRED COLLATERAL INTEREST
The "Required Collateral Interest" with respect to any Transfer Date means
(i) initially $56,250,000 and (ii) thereafter on each Transfer Date an amount
equal to 7.5% of the sum of the Class A Adjusted Investor Interest and the
Class B Adjusted Investor Interest on such Transfer Date, after taking into
account deposits into the Principal Funding Account on such Transfer Date and
payments to be made on the related Distribution Date, and the Collateral
Interest on the prior Transfer Date after any adjustments made on such
Transfer Date, but not less than $22,500,000; provided, however, that (1)
notwithstanding clause (2) below, if the Principal Funding Account Balance
equals the Class A Investor Interest (taking into account any deposits to be
made on such Transfer Date) and the Class B Investor Interest will be reduced
to zero on the related Distribution Date, the Required Collateral Interest for
any Transfer Date shall be equal to zero; (2) if certain reductions in the
Collateral Interest are made or if the Rapid Amortization Period commences,
the Required Collateral Interest for such Transfer Date shall equal the
Required Collateral Interest for the Transfer Date immediately preceding the
occurrence of such reduction or such commencement of the Rapid Amortization
Period, (3) in no event shall the Required Collateral Interest exceed the
unpaid principal amount of the Certificates as of the last day of the Monthly
Period preceding such Transfer Date after taking into account payments to be
made on the related Distribution Date and (4) the Required Collateral Interest
may be reduced to a lesser amount at any time if the Rating Agency Condition
is satisfied.
"Rating Agency Condition" means the notification in writing by each Rating
Agency to the Seller, the Servicer and the Trustee that a proposed action will
not result in any Rating Agency reducing or withdrawing its then existing
rating of the investor certificates of any outstanding Series or Class of a
Series with respect to which it is a Rating Agency.
With respect to any Transfer Date, if the Collateral Interest is less than
the Required Collateral Interest, certain Excess Spread, if available, will be
allocated to increase the Collateral Interest to the extent of such shortfall.
Any of such Excess Spread not required to be so allocated or deposited into
the Reserve Account with respect to any Transfer Date will be applied in
accordance with the Loan Agreement and the Series 1997-I Supplement. See "--
Application of Collections--Excess Spread."
DEFAULTED RECEIVABLES; INVESTOR CHARGE-OFFS
On or before each Transfer Date, the Servicer will calculate the Investor
Default Amount for the preceding Monthly Period. The term "Investor Default
Amount" means, for any Monthly Period, the product of (a) the Floating
Investor Percentage on the day the applicable Account became a Defaulted
Account and (b) the aggregate amount of Receivables in Defaulted Accounts (the
"Default Amount") for such Monthly Period. A portion of the Investor Default
Amount will be allocated to the Class A Certificateholders (the "Class A
Investor Default Amount") on each Transfer Date in an amount equal to the
product of the Class A Floating Allocation applicable during the related
Monthly Period and the Investor Default Amount for such Monthly Period. A
portion of the Investor Default Amount will be allocated to the Class B
Certificateholders (the "Class B Investor Default Amount") on each Transfer
Date in an amount equal to the product of the Class B Floating Allocation
applicable during the related Monthly Period and the Investor Default Amount
for such Monthly Period. A portion of the Investor Default Amount will be
allocated to the Collateral Interest Holder (the "Collateral Default
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Amount") on each Transfer Date in an amount equal to the product of the
Collateral Floating Allocation applicable during the related Monthly Period
and the Investor Default Amount for such Monthly Period.
On each Transfer Date, if the Class A Investor Default Amount for such
Transfer Date exceeds the amount of Class A Available Funds, Excess Spread and
Reallocated Principal Collections available to fund such amount with respect
to the Monthly Period immediately preceding such Transfer Date as described
under "--Application of Collections--Excess Spread," the Collateral Interest
(after giving effect to reductions for any Collateral Charge-Offs and any
Reallocated Principal Collections on such Transfer Date) will be reduced by
the amount of such excess, but not more than the lesser of the Class A
Investor Default Amount and the Collateral Interest (after giving effect to
reductions for any Collateral Charge-Offs and any Reallocated Principal
Collections on such Transfer Date) for such Transfer Date. In the event that
such reduction would cause the Collateral Interest to be a negative number,
the Collateral Interest will be reduced to zero, and the Class B Investor
Interest (after giving effect to reductions for any Class B Investor Charge-
Offs and any Reallocated Class B Principal Collections on such Transfer Date
for which the Collateral Interest is not reduced) will be reduced by the
amount by which the Collateral Interest would have been reduced below zero. In
the event that such reduction would cause the Class B Investor Interest to be
a negative number, the Class B Investor Interest will be reduced to zero, and
the Class A Investor Interest will be reduced by the amount by which the Class
B Investor Interest would have been reduced below zero, but not more than the
Class A Investor Default Amount for such Transfer Date (a "Class A Investor
Charge-Off"), which will have the effect of slowing or reducing the return of
principal and interest to the Class A Certificateholders. If the Class A
Investor Interest has been reduced by the amount of any Class A Investor
Charge-Offs, it will be reimbursed on any Transfer Date (but not by an amount
in excess of the aggregate Class A Investor Charge-Offs) by the amount of
Excess Spread allocated and available for such purpose as described under "--
Application of Collections--Excess Spread."
On each Transfer Date, if the Class B Investor Default Amount for such
Transfer Date exceeds the amount of Excess Spread and Reallocated Collateral
Principal Collections which are allocated and available to fund such amount
with respect to the Monthly Period preceding such Transfer Date as described
under "--Application of Collections--Excess Spread," the Collateral Interest
(after giving effect to reductions for any Collateral Charge-Offs and any
Reallocated Principal Collections on such Transfer Date and after giving
effect to any adjustments with respect thereto as described in the preceding
paragraph) will be reduced by the amount of such excess but not more than the
lesser of the Class B Investor Default Amount and the Collateral Interest
(after giving effect to reductions for any Collateral Charge-Offs and any
Reallocated Principal Collections on such Transfer Date and after giving
effect to any adjustments with respect thereto as described in the preceding
paragraph) for such Transfer Date. In the event that such reduction would
cause the Collateral Interest to be a negative number, the Collateral Interest
will be reduced to zero and the Class B Investor Interest will be reduced by
the amount by which the Collateral Interest would have been reduced below
zero, but not more than the Class B Investor Default Amount for such Transfer
Date (a "Class B Investor Charge-Off"). The Class B Investor Interest will
also be reduced by the amount of Reallocated Class B Principal Collections in
excess of the Collateral Interest (after giving effect to reductions for any
Collateral Charge-Offs and any Reallocated Collateral Principal Collections on
such Transfer Date) and the amount of any portion of the Class B Investor
Interest allocated to the Class A Certificates to avoid a reduction in the
Class A Investor Interest. The Class B Investor Interest will thereafter be
reimbursed (but not in excess of the unpaid principal balance of the Class B
Certificates) on any Transfer Date by the amount of Excess Spread allocated
and available for that purpose as described under "--Application of
Collections--Excess Spread."
On each Transfer Date, if the Collateral Default Amount for such Transfer
Date exceeds the amount of Excess Spread which is allocated and available to
fund such amount as described under "--Application of Collections--Excess
Spread," the Collateral Interest will be reduced by the amount of such excess
but not more than the lesser of the Collateral Default Amount and the
Collateral Interest for such Transfer Date (a "Collateral Charge-Off"). The
Collateral Interest will also be reduced by the amount of Reallocated
Principal Collections and the amount of any portion of the Collateral Interest
allocated to the Class A Certificates to avoid a reduction in the Class A
Investor Interest or to the Class B Certificates to avoid a reduction in the
Class B Investor Interest. The Collateral Interest will thereafter be
reimbursed on any Transfer Date by the amount of Excess Spread allocated and
available for that purpose as described under "--Application of Collections--
Excess Spread."
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PRINCIPAL FUNDING ACCOUNT
Pursuant to the Series 1997-I Supplement, the Trustee will establish and
maintain with a Qualified Institution the principal funding account as a
segregated trust account held for the benefit of the Certificateholders (the
"Principal Funding Account"). During the Controlled Accumulation Period and
the Rapid Accumulation Period, the Trustee at the direction of the Servicer
shall transfer collections in respect of Principal Receivables (other than
Reallocated Principal Collections) and Shared Principal Collections from other
Series, if any, allocated to the Series 1997-I Certificates from the Principal
Account to the Principal Funding Account as described under "--Application of
Collections."
Funds on deposit in the Principal Funding Account will be invested to the
following Transfer Date by the Trustee at the direction of the Servicer in
Permitted Investments. During the Controlled Accumulation Period and the Rapid
Accumulation Period, investment earnings (net of investment losses and
expenses) on funds on deposit in the Principal Funding Account (the "Principal
Funding Investment Proceeds") will be used to pay interest on the Certificates
and amounts, if any, owed to the Swap Counterparty under the Interest Rate
Swap in an amount up to, for each Transfer Date, the sum of (a) with respect
to the Class A Certificates, the product of (i) a fraction, the numerator of
which is the actual number of days in such Interest Period, or, in the event
the Interest Rate Swap has been terminated, the numerator of which is 30, and
the denominator of which is 360, (ii) the Swap Floating Rate, or, in the event
the Interest Rate Swap has been terminated, the Class A Certificate Rate, in
either case, for such Interest Period and (iii) the aggregate amount on
deposit in the Principal Funding Account with respect to Class A Monthly
Principal as of the Record Date preceding such Transfer Date and (b) with
respect to the Class B Certificates, the product of (i) a fraction, the
numerator of which is the actual number of days in such Interest Period and
the denominator of which is 360, (ii) the Class B Certificate Rate in effect
with respect to such Interest Period and (iii) the aggregate amount on deposit
in the Principal Funding Account with respect to Class B Monthly Principal as
of the Record Date preceding such Transfer Date (such sum, the "Covered
Amount"). To the extent that, on any Transfer Date with respect to the
Controlled Accumulation Period or the Rapid Accumulation Period or the first
Transfer Date with respect to the Rapid Amortization Period, Principal Funding
Investment Proceeds for such Transfer Date are less than the Covered Amount
determined as of such Transfer Date, an amount equal to the Principal Funding
Investment Shortfall shall be withdrawn, to the extent required and available,
from the Reserve Account and, to the extent required and available, the Swap
Reserve Fund and applied as Class A Available Funds and Class B Available
Funds for such Transfer Date. See "--Reserve Account" and "--Swap Reserve
Fund."
"Principal Funding Investment Shortfall" means with respect to each Transfer
Date relating to the Controlled Accumulation Period or the Rapid Accumulation
Period, the amount, if any, by which the Principal Funding Investment Proceeds
for such Transfer Date are less than the Covered Amount determined as of such
Transfer Date.
RESERVE ACCOUNT
Pursuant to the Series 1997-I Supplement, the Trustee will establish and
maintain with a Qualified Institution the reserve account as a segregated
trust account held for the benefit of the Certificateholders (the "Reserve
Account"). The Reserve Account is established to assist with the subsequent
distribution of interest on the Certificates and Net Swap Payments, if any,
during the Controlled Accumulation Period and on the first Transfer Date with
respect to the Rapid Accumulation Period or the Rapid Amortization Period. On
each Transfer Date from and after the Reserve Account Funding Date, but prior
to the termination of the Reserve Account, the Trustee, acting pursuant to the
Servicer's instructions, will apply Excess Spread allocated to the
Certificates (to the extent described above under "--Application of
Collections--Excess Spread") to increase the amount on deposit in the Reserve
Account (to the extent such amount is less than the Required Reserve Account
Amount). The "Reserve Account Funding Date" will be the Transfer Date with
respect to the Monthly Period which commences no later than three months prior
to the commencement of the Controlled Accumulation Period, or such earlier
date as the Servicer may determine. The "Required Reserve Account Amount" for
any Transfer Date on or after the Reserve Account Funding Date will be equal
to (a) 0.5% of the outstanding principal balance of the Class A Certificates
or (b) any other amount designated by the Seller; provided, however, that if
such designation is of a lesser amount, the Seller shall have provided the
Servicer, the Collateral Interest Holder and the Trustee with evidence that
the Rating Agency Condition has been satisfied and the Seller shall
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have delivered to the Trustee a certificate of an authorized officer of the
Seller to the effect that, based on the facts known to such officer at such
time, in the reasonable belief of the Seller, such designation will not cause
a Pay Out Event or an event that, after the giving of notice or the lapse of
time, would cause a Pay Out Event to occur with respect to Series 1997-I. On
each Transfer Date, after giving effect to any deposit to be made to, and any
withdrawal to be made from, the Reserve Account on such Transfer Date, the
Trustee will withdraw from the Reserve Account an amount equal to the excess,
if any, of the amount on deposit in the Reserve Account over the Required
Reserve Account Amount and treat such amount as Excess Spread to be applied in
accordance with clause (j) of "--Application of Collections--Excess Spread."
Any amounts withdrawn from the Reserve Account for treatment as Excess Spread
in accordance with the preceding sentence will not be available for
distribution to the Certificateholders.
Provided that the Reserve Account has not terminated as described below, all
amounts on deposit in the Reserve Account on any Transfer Date (after giving
effect to any deposits to, or withdrawals from, the Reserve Account to be made
on such Transfer Date) will be invested to the following Transfer Date by the
Trustee at the direction of the Servicer in Permitted Investments. The
interest and other investment income (net of investment expenses and losses)
earned on such investments will be retained in the Reserve Account (to the
extent the amount on deposit is less than the Required Reserve Account Amount)
or deposited in the Finance Charge Account and treated as Class A Available
Funds.
On or before each Transfer Date with respect to the Controlled Accumulation
Period and on the first Transfer Date with respect to the first to occur of
the Rapid Accumulation Period or the Rapid Amortization Period, a withdrawal
will be made from the Reserve Account, and the amount of such withdrawal will
be deposited in the Finance Charge Account and included as Class A Available
Funds or Class B Available Funds, as provided in the Series 1997-I Supplement,
for such Transfer Date in an aggregate amount equal to the lesser of (a) the
Available Reserve Account Amount with respect to such Transfer Date and (b)
the Principal Funding Investment Shortfall with respect to such Transfer Date;
provided, however, that the amount of such withdrawal shall be reduced to the
extent that funds otherwise would be available to be deposited in the Reserve
Account on such Transfer Date. On each Transfer Date, the amount available to
be withdrawn from the Reserve Account (the "Available Reserve Account Amount")
will be equal to the lesser of the amount on deposit in the Reserve Account
(before giving effect to any deposit to be made to the Reserve Account on such
Transfer Date) and the Required Reserve Account Amount for such Transfer Date.
The Reserve Account will be terminated upon the earliest to occur of (a) the
termination of the Trust pursuant to the Agreement, (b) the first Transfer
Date with respect to the Rapid Accumulation Period, (c) the first Transfer
Date with respect to the Rapid Amortization Period, and (d) the Transfer Date
immediately preceding the Scheduled Payment Date. Upon the termination of the
Reserve Account, all amounts on deposit therein (after giving effect to any
withdrawal from the Reserve Account on such date as described above) will be
treated as Excess Spread to be applied in accordance with clause (j) of "--
Application of Collections--Excess Spread." Any amounts withdrawn from the
Reserve Account for treatment as Excess Spread in accordance with the
preceding sentence will not be available for distribution to the
Certificateholders.
SWAP RESERVE FUND
Pursuant to the Series 1997-I Supplement, the Trustee will establish and
maintain with a Qualified Institution the swap reserve fund as a segregated
trust account held for the benefit of the Class A Certificateholders and the
Swap Counterparty, as their interests appear in the Series 1997-I Supplement
(the "Swap Reserve Fund"). The Swap Reserve Fund is established to assist in
the payment of certain amounts owed to the Swap Counterparty during the Rapid
Accumulation Period. The Swap Reserve Fund will be funded by an initial
deposit by the Seller and, to the extent required and available, from amounts
distributed in accordance with clause (j) of "--Application of Collections--
Excess Spread." Payments required to be made by the Swap Counterparty to the
Trust are not dependent upon or subject to the availability of funds in the
Swap Reserve Fund.
On or before each Transfer Date with respect to the Rapid Accumulation
Period and on the first Transfer Date with respect to the Rapid Amortization
Period if the Rapid Amortization Period is preceded by the Rapid Accumulation
Period, a withdrawal will be made from the Swap Reserve Fund in an amount
equal to the lesser
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of (a) the amount on deposit in the Swap Reserve Fund with respect to such
Transfer Date and (b) the Principal Funding Investment Shortfall with respect
to such Transfer Date; provided, however, that on the first Transfer Date with
respect to the Rapid Accumulation Period, the Principal Funding Investment
Shortfall shall equal the amount, if any, by which the sum of (i) the
Principal Funding Investment Proceeds for such Transfer Date and (ii) the
amount withdrawn from the Reserve Account on such Transfer Date as described
under "--Principal Funding Account" and "--Reserve Account" is less than the
amount computed pursuant to clause (a) of the definition of Covered Amount for
such Transfer Date; provided further, however, that the amount of such
withdrawal shall be reduced to the extent that funds otherwise would be
available to be deposited in the Swap Reserve Fund on such Transfer Date. Such
withdrawal will be deposited into the Finance Charge Account and included as
Class A Available Funds for such Transfer Date. No amounts withdrawn from the
Swap Reserve Fund will be included as Class B Available Funds.
PAY OUT EVENTS
As described above, the Revolving Period will continue through July 31, 2003
(unless such date is postponed as described under "--Postponement of
Controlled Accumulation Period"), unless either a Series 1997-I Pay Out Event
or Trust Pay Out Event (jointly, a "Pay Out Event") occurs prior to such date.
A "Series 1997-I Pay Out Event" refers to any of the following events:
(a) failure on the part of the Seller (i) to make any payment or deposit
on the date required under the Agreement or the Series 1997-I Supplement
(or within the applicable grace period which shall not exceed five days) or
(ii) to observe or perform in any material respect any other covenants or
agreements of the Seller set forth in the Agreement or the Series 1997-I
Supplement, which failure has a material adverse effect on
Certificateholders (which determination shall be made without reference to
whether any funds are available under the Collateral Interest) and which
continues unremedied for a period of 60 days after written notice of such
failure, requiring the same to be remedied, and continues to materially and
adversely affect the interests of the Certificateholders (which
determination shall be made without reference to whether any funds are
available under the Collateral Interest) for such period;
(b) any representation or warranty made by the Seller in the Agreement or
the Series 1997-I Supplement, or any information required to be given by
the Seller to the Trustee to identify the Accounts proves to have been
incorrect in any material respect when made or delivered and which
continues to be incorrect in any material respect for a period of 60 days
after written notice of such failure, requiring the same to be remedied,
and as a result of which the interests of the Certificateholders are
materially and adversely affected (which determination shall be made
without reference to whether any funds are available under the Collateral
Interest) and continue to be materially and adversely affected for such
period; provided, however, that a Pay Out Event pursuant to this
subparagraph (b) shall not be deemed to occur thereunder if the Seller has
accepted reassignment of the related Receivable or all such Receivables, if
applicable, during such period (or such longer period as the Trustee may
specify) in accordance with the provisions of the Agreement;
(c) the average of the Portfolio Yields for any three consecutive Monthly
Periods is less than the average of the Base Rates for such period;
(d) a failure by the Seller to convey Receivables arising under
Additional Accounts, or Participations, to the Trust when required by the
Agreement;
(e) any Servicer Default occurs which would have a material adverse
effect on the Certificateholders; or
(f) insufficient moneys in the Distribution Account to pay the Class A
Investor Interest and the Class B Investor Interest on the Scheduled
Payment Date.
A "Trust Pay Out Event" refers to any of the following events:
(a) certain events of insolvency, conservatorship or receivership
relating to the Seller;
(b) the Seller becomes unable for any reason to transfer Receivables to
the Trust in accordance with the provisions of the Agreement; or
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(c) the Trust becomes an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
In the case of any event described in clause (a), (b) or (e) of the
definition of a Series 1997-I Pay Out Event, a Series 1997-I Pay Out Event
will be deemed to have occurred only if, after any applicable grace period,
either the Trustee or Certificateholders and the Collateral Interest Holder
evidencing undivided interests aggregating not less than 50% of the Investor
Interest, by written notice to the Seller and the Servicer (and to the Trustee
if given by the Certificateholders) declare that a Series 1997-I Pay Out Event
has occurred with respect to the Certificates as of the date of such notice.
In the case of any event described in clause (a), (b) or (c) of the definition
of a Trust Pay Out Event, a Trust Pay Out Event with respect to all Series
then outstanding, and in the case of any event described in clause (c), (d),
or (f) of the definition of a Series 1997-I Pay Out Event, a Series 1997-I Pay
Out Event with respect to only the Certificates, will be deemed to have
occurred, without any notice or other action on the part of the Trustee or the
Certificateholders or all certificateholders, as appropriate, immediately upon
the occurrence of such event. On the date on which a Series 1997-I Pay Out
Event is deemed to have occurred, the Rapid Amortization Period will commence
if the Interest Rate Swap has been terminated or an Interest Reserve Account
Event has occurred, and the Rapid Accumulation Period will commence if the
Interest Rate Swap has not been terminated and an Interest Reserve Account
Event has not occurred. On the date on which a Trust Pay Out Event occurs, the
Rapid Amortization Period will commence regardless of whether the Interest
Rate Swap has previously terminated or an Interest Reserve Account Event has
previously occurred.
In the event the Rapid Amortization Period commences, distributions of
principal to the Certificateholders will begin on the first Distribution Date
following the month in which such Rapid Amortization Period commenced. The
amount on deposit in the Principal Funding Account, if any, will be
distributed to the Class A Certificateholders and the Class B
Certificateholders to the extent allocable to each, on the first Distribution
Date with respect to the Rapid Amortization Period. In the event the Rapid
Accumulation Period commences, Available Investor Principal Collections will
be accumulated in the Principal Funding Account up to the Class A Investor
Interest and held for the benefit of the Class A Certificateholders, and then
distributions of principal to the Class B Certificateholders, will begin (to
the extent of available funds) on the first Distribution Date following the
day on which the Principal Funding Account Balance is equal to the Class A
Investor Interest. If, because of the occurrence of either (a) a Trust Pay Out
Event, or (b) (i) a Series 1997-I Pay Out Event and (ii) either the
termination of the Interest Rate Swap or the occurrence of an Interest Reserve
Account Event, the Rapid Amortization Period begins on or prior to June 30,
2004, Certificateholders may begin receiving distributions of principal
earlier than they otherwise would have, which may shorten the average life of
the Certificates. If the Rapid Accumulation Period begins and the Principal
Funding Account Balance equals the Class A Investor Interest prior to the
Scheduled Payment Date, the Class B Certificateholders will begin receiving
distributions of principal earlier than they otherwise would have, which may
reduce the average life of the Class B Certificates.
See "Description of the Certificates--Pay Out Events" in the Prospectus for
an additional discussion of the consequences of an insolvency, conservatorship
or receivership of the Seller.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
The share of the Servicing Fee allocable to the Investor Interest with
respect to any Transfer Date (the "Investor Servicing Fee") shall be equal to
one-twelfth of the product of (a) 2.0% and (b) the Adjusted Investor Interest
as of the last day of the Monthly Period preceding such Transfer Date;
provided, however, with respect to the first Transfer Date, the Investor
Servicing Fee shall be equal to $1,458,333.33. On each Transfer Date, but only
if MBNA or The Bank of New York is the Servicer, Servicer Interchange with
respect to the related Monthly Period that is on deposit in the Finance Charge
Account shall be withdrawn from the Finance Charge Account and paid to the
Servicer in payment of a portion of the Investor Servicing Fee with respect to
such Monthly Period. The "Servicer Interchange" for any Monthly Period for
which MBNA or The Bank of New York is the Servicer will be an amount equal to
the portion of collections of Finance Charge Receivables allocated to the
Investor Interest with respect to such Monthly Period that is attributable to
Interchange; provided, however, that Servicer Interchange for a Monthly Period
shall not exceed one-twelfth of the product of (i) the Adjusted Investor
Interest, as of the last day of such Monthly Period and (ii) 0.75%; provided
further, however,
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that with respect to the first Transfer Date, the Servicer Interchange may
equal but shall not exceed $546,875. In the case of any insufficiency of
Servicer Interchange on deposit in the Finance Charge Account, a portion of
the Investor Servicing Fee with respect to such Monthly Period will not be
paid to the extent of such insufficiency and in no event shall the Trust, the
Trustee, the Certificateholders or the Collateral Interest Holder be liable
for the share of the Servicing Fee to be paid out of Servicer Interchange.
The share of the Investor Servicing Fee allocable to the Class A
Certificateholders with respect to any Transfer Date (the "Class A Servicing
Fee") shall be equal to one-twelfth of the product of (a) the Class A Floating
Allocation, (b) 1.25%, or if MBNA or The Bank of New York is not the Servicer,
2.0% (the "Net Servicing Fee Rate") and (c) the Adjusted Investor Interest as
of the last day of the Monthly Period preceding such Transfer Date; provided,
however, that with respect to the first Transfer Date, the Class A Servicing
Fee shall be equal to $774,739.57. The share of the Investor Servicing Fee
allocable to the Class B Certificateholders with respect to any Transfer Date
(the "Class B Servicing Fee") shall be equal to one-twelfth of the product of
(a) the Class B Floating Allocation, (b) the Net Servicing Fee Rate and (c)
the Adjusted Investor Interest as of the last day of the Monthly Period
preceding such Transfer Date; provided, however, that with respect to the
first Transfer Date, the Class B Servicing Fee shall be equal to $68,359.38.
The share of the Investor Servicing Fee allocable to the Collateral Interest
Holder with respect to any Transfer Date (the "Collateral Interest Servicing
Fee," together with the Class A Servicing Fee and the Class B Servicing Fee,
the "Certificateholder Servicing Fee") shall be equal to one-twelfth of the
product of (a) the Collateral Floating Allocation, (b) the Net Servicing Fee
Rate and (c) the Adjusted Investor Interest as of the last day of the Monthly
Period preceding such Transfer Date; provided, however, that with respect to
the first Transfer Date, the Collateral Interest Servicing Fee shall be equal
to $68,359.38. The remainder of the Servicing Fee shall be paid by the holder
of the Seller Certificate or other Series (as provided in the related Series
Supplements) or, to the extent of any insufficiency of Servicer Interchange as
described above, not be paid. In no event shall the Trust, the Trustee, the
Certificateholders or the Collateral Interest Holder be liable for the share
of the Servicing Fee to be paid out of Servicer Interchange. The Class A
Servicing Fee and the Class B Servicing Fee shall be payable to the Servicer
solely to the extent amounts are available for distribution in respect thereof
as described under "--Application of Collections--Payment of Interest, Fees
and Other Items."
The Servicer will pay from its servicing compensation certain expenses
incurred in connection with servicing the Receivables including, without
limitation, payment of the fees and disbursements of the Trustee and
independent certified public accountants and other fees which are not
expressly stated in the Agreement to be payable by the Trust or the
Certificateholders other than federal, state and local income and franchise
taxes, if any, of the Trust.
REPORTS TO CERTIFICATEHOLDERS
On each Transfer Date, the Trustee will forward to each Certificateholder of
record, a statement prepared by the Servicer setting forth the items described
in "Description of the Certificates--Reports to Certificateholders" in the
Prospectus. In addition, such statement will include certain information
regarding the Principal Funding Account and the Collateral Interest, if any,
for such Transfer Date.
AMENDMENTS
In addition to being subject to amendment pursuant to any other provisions
relating to amendments in either the Agreement or the Series 1997-I
Supplement, the Series 1997-I Supplement may be amended by the Seller without
the consent of the Servicer, the Trustee or any Certificateholder if the
Seller provides the Trustee with (a) an opinion of counsel to the effect that
such amendment or modification would reduce the risk that the Trust would be
treated as taxable as a publicly traded partnership pursuant to Code section
7704 and (b) a certificate that such amendment or modification would not
materially and adversely affect any Certificateholder, provided, however, that
no such amendment shall be deemed effective without the Trustee's consent, if
the Trustee's rights, duties and obligations under the Series 1997-I
Supplement are thereby modified. Promptly after the effectiveness of any such
amendment, the Seller shall deliver a copy of such amendment to each of the
Servicer, the Trustee and each Rating Agency described in the Series 1997-I
Supplement.
S-57
<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in an underwriting agreement
as supplemented by a terms agreement relating to the Class A Certificates
(together, the "Class A Underwriting Agreement") between the Seller and the
Class A Underwriters named below (the "Class A Underwriters"), and the terms
and conditions set forth in an underwriting agreement as supplemented by a
terms agreement relating to the Class B Certificates (together, the "Class B
Underwriting Agreement," and together with the Class A Underwriting Agreement,
the "Underwriting Agreement") between the Seller and the Class B Underwriters
named below (the "Class B Underwriters," and together with the Class A
Underwriters, the "Underwriters"), the Seller has agreed to sell to the
Underwriters, and each of the Underwriters has severally agreed to purchase,
the principal amount of the Certificates set forth opposite its name:
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT OF
CLASS A UNDERWRITERS CLASS A CERTIFICATES
-------------------- --------------------
<S> <C>
Goldman, Sachs & Co. ................................... $127,500,000
Credit Suisse First Boston Corporation.................. 127,500,000
Lehman Brothers Inc. ................................... 127,500,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated ...................................... 127,500,000
Salomon Brothers Inc.................................... 127,500,000
------------
Total............................................... $637,500,000
============
<CAPTION>
PRINCIPAL AMOUNT OF
CLASS B UNDERWRITERS CLASS B CERTIFICATES
-------------------- --------------------
<S> <C>
Goldman, Sachs & Co. ................................... $ 28,125,000
Lehman Brothers Inc. ................................... 28,125,000
------------
Total............................................... $ 56,250,000
============
</TABLE>
In the Class A Underwriting Agreement, the Class A Underwriters have agreed,
subject to the terms and conditions set forth therein, to purchase all of the
Class A Certificates offered hereby if any of the Class A Certificates are
purchased. In the Class B Underwriting Agreement, the Class B Underwriters
have agreed, subject to the terms and conditions set forth therein, to
purchase all of the Class B Certificates offered hereby if any of the Class B
Certificates are purchased. The Underwriters have agreed to reimburse the
Seller for certain expenses of the issuance and distribution of the
Certificates.
The Class A Underwriters propose initially to offer the Class A Certificates
to the public at the price set forth on the cover page hereof and to certain
dealers at such price less concessions not in excess of 0.25% of the principal
amount of the Class A Certificates. The Class A Underwriters may allow, and
such dealers may reallow, concessions not in excess of 0.15% of the principal
amount of the Class A Certificates to certain brokers and dealers. After the
initial public offering, the public offering price and other selling terms may
be changed by the Class A Underwriters.
The Class B Underwriters propose initially to offer the Class B Certificates
to the public at the price set forth on the cover page hereof and to certain
dealers at such price less concessions not in excess of 0.25% of the principal
amount of the Class B Certificates. The Class B Underwriters may allow, and
such dealers may reallow, concessions not in excess of 0.15% of the principal
amount of the Class B Certificates to certain brokers and dealers. After the
initial public offering, the public offering price and other selling terms may
be changed by the Class B Underwriters.
Each Underwriter has represented and agreed that:
(a) it has complied and will comply with all applicable provisions of the
Financial Services Act 1986 with respect to anything done by it in relation
to the Certificates in, from or otherwise involving the United Kingdom;
S-58
<PAGE>
(b) it has only issued or passed on and will only issue or pass on in the
United Kingdom any document received by it in connection with the issue or
sale of the Certificates to a person who is of a kind described in Article
11(3) of the Financial Services Act 1986 (Investment Advertisements)
(Exemptions) Order 1996 or is a person to whom such document may otherwise
lawfully be issued or passed on;
(c) if it is an authorized person under Chapter III of part I of the
Financial Services Act 1986, it has only promoted and will only promote (as
that term is defined in Regulation 1.02(2) of the Financial Services
(Promotion of Unregulated Schemes) Regulations 1991) to any person in the
United Kingdom the scheme described in this Prospectus Supplement and the
Prospectus if that person is of a kind described either in Section 76(2) of
the Financial Services Act 1986 or in Regulation 1.04 of the Financial
Services (Promotion of Unregulated Schemes) Regulations 1991; and
(d) it is a person of a kind described in Article 11(3) of the Financial
Services Act 1986 (Investment Advertisements) (Exemptions) Order 1996.
The Seller will indemnify the Underwriters against certain liabilities,
including liabilities under the Securities Act, or contribute to payments the
Underwriters may be required to make in respect thereof.
The Underwriters may engage in over-allotment transactions, stabilizing
transactions, syndicate covering transactions and penalty bids with respect to
the Certificates in accordance with Regulation M under the Exchange Act. Over-
allotment transactions involve syndicate sales in excess of the offering size,
which creates a syndicate short position. Stabilizing transactions permit bids
to purchase the Certificates so long as the stabilizing bids do not exceed a
specified maximum. Syndicate covering transactions involve purchases of the
Certificates in the open market after the distribution has been completed in
order to cover syndicate short positions. Penalty bids permit the Underwriters
to reclaim a selling concession from a syndicate member when the Certificates
originally sold by such syndicate member are purchased in a syndicate covering
transaction. Such over-allotment transactions, stabilizing transactions,
syndicate covering transactions and penalty bids may cause the prices of the
Certificates to be higher than they would otherwise be in the absence of such
transactions. Neither the Seller nor any of the Underwriters represent that
the Underwriters will engage in any such transactions or that such
transactions, once commenced, will not be discontinued without notice at any
time.
S-59
<PAGE>
INDEX OF TERMS FOR PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
TERM PAGE
- ---- ----
<S> <C>
Accounts......................................................... S-1, S-3
Accumulation Period.............................................. S-5
Accumulation Period Length....................................... S-39
Accumulation Shortfall........................................... S-10, S-50
Additional Interest.............................................. S-8
Adjusted Investor Interest....................................... S-6
Agreement........................................................ S-3
Available Investor Principal Collections......................... S-39
Available Reserve Account Amount................................. S-54
Bank Portfolio................................................... S-3
Base Rate........................................................ S-32
Certificateholder Servicing Fee.................................. S-57
Certificateholders............................................... S-3
Certificates..................................................... S-1, S-3
Class A Additional Interest...................................... S-37
Class A Adjusted Investor Interest............................... S-6, S-44
Class A Available Funds.......................................... S-37
Class A Certificate Rate......................................... S-2, S-5
Class A Certificateholders....................................... S-3
Class A Certificates............................................. S-1, S-3
Class A Fixed Allocation......................................... S-43
Class A Floating Allocation...................................... S-43
Class A Investor Charge-Off...................................... S-15, S-52
Class A Investor Default Amount.................................. S-51
Class A Investor Interest........................................ S-4, S-5, S-44
Class A Monthly Interest......................................... S-47
Class A Monthly Principal........................................ S-49
Class A Required Amount.......................................... S-14, S-44
Class A Servicing Fee............................................ S-57
Class A Underwriters............................................. S-58
Class A Underwriting Agreement................................... S-58
Class B Additional Interest...................................... S-37
Class B Adjusted Investor Interest............................... S-6, S-44
Class B Available Funds.......................................... S-37
Class B Certificate Rate......................................... S-2, S-5, S-38
Class B Certificateholders....................................... S-3
Class B Certificates............................................. S-1, S-3
Class B Fixed Allocation......................................... S-44
Class B Floating Allocation...................................... S-43
Class B Investor Charge-Off...................................... S-16, S-52
Class B Investor Default Amount.................................. S-51
Class B Investor Interest........................................ S-4, S-6, S-44
Class B Monthly Interest......................................... S-47
Class B Monthly Principal........................................ S-50
Class B Required Amount.......................................... S-14, S-45
Class B Servicing Fee............................................ S-57
Class B Underwriters............................................. S-58
Class B Underwriting Agreement,.................................. S-58
Closing Date..................................................... S-2, S-5
</TABLE>
S-60
<PAGE>
<TABLE>
<CAPTION>
TERM PAGE
- ---- ----
<S> <C>
Code............................................................ S-22
Collateral Available Funds...................................... S-47
Collateral Charge-Off........................................... S-52
Collateral Default Amount....................................... S-51
Collateral Fixed Allocation..................................... S-44
Collateral Floating Allocation.................................. S-43
Collateral Interest............................................. S-4, S-44
Collateral Interest Holder...................................... S-4
Collateral Interest Servicing Fee............................... S-57
Collateral Monthly Interest..................................... S-49
Collateral Monthly Principal.................................... S-50
Collateral Rate................................................. S-49
Controlled Accumulation Amount.................................. S-50
Controlled Accumulation Period.................................. S-9
Controlled Deposit Amount....................................... S-10, S-31
Covered Amount.................................................. S-11, S-53
Cut-Off Date.................................................... S-4
Default Amount.................................................. S-51
Distribution Date............................................... S-2, S-8
ERISA........................................................... S-22
Excess Spread................................................... S-14, S-47
FDIA............................................................ S-24
FIRREA.......................................................... S-24
Fixed Investor Percentage....................................... S-43
Floating Amount................................................. S-18, S-40
Floating Investor Percentage.................................... S-42
Group One....................................................... S-20
Initial Collateral Interest..................................... S-16
Interest Period................................................. S-8
Interest Rate Swap.............................................. S-17
Interest Reserve Account........................................ S-19, S-41
Interest Reserve Account Event.................................. S-19, S-41
Investor Default Amount......................................... S-51
Investor Interest............................................... S-4
Investor Servicing Fee.......................................... S-56
LIBOR........................................................... S-2, S-5, S-38
LIBOR Determination Date........................................ S-38
Loan Agreement.................................................. S-17
MBNA............................................................ S-1
Minimum Aggregate Principal Receivables......................... S-27
Minimum Seller Interest......................................... S-27
Monthly Period.................................................. S-6
Net Servicing Fee Rate.......................................... S-57
Net Swap Payment................................................ S-18, S-40
Net Swap Receipt................................................ S-18, S-40
Notional Amount................................................. S-17, S-40
OCMS............................................................ S-25
Pay Out Event................................................... S-55
Portfolio Yield................................................. S-32
Principal Funding Account....................................... S-10, S-53
Principal Funding Account Balance............................... S-31
</TABLE>
S-61
<PAGE>
<TABLE>
<CAPTION>
TERM PAGE
- ---- ----
<S> <C>
Principal Funding Investment Proceeds............................... S-10, S-53
Principal Funding Investment Shortfall.............................. S-53
Principal Shortfalls................................................ S-51
Rapid Accumulation Period........................................... S-12
Rapid Amortization Period........................................... S-13
Rating Agency Condition............................................. S-51
Reallocated Class B Principal Collections........................... S-46
Reallocated Collateral Principal Collections........................ S-46
Reallocated Principal Collections................................... S-46
Receivables......................................................... S-1, S-3
Record Date......................................................... S-36
Reference Banks..................................................... S-38
Required Amount..................................................... S-14
Required Collateral Interest........................................ S-16, S-51
Required Interest Reserve Amount.................................... S-19, S-41
Required Reserve Account Amount..................................... S-53
Reserve Account..................................................... S-53
Reserve Account Funding Date........................................ S-53
Revolving Period.................................................... S-9
Scheduled Payment Date.............................................. S-2
Seller.............................................................. S-3
Seller Certificate.................................................. S-6
Seller Interest..................................................... S-4
Seller Percentage................................................... S-36
Series 1997-I....................................................... S-4
Series 1997-I Pay Out Event......................................... S-55
Series 1997-I Supplement............................................ S-3
Series 1997-I Termination Date...................................... S-7
Servicer Interchange................................................ S-56
Shared Principal Collections........................................ S-20, S-51
Swap Counterparty................................................... S-17, S-40
Swap Fixed Rate..................................................... S-17, S-40
Swap Floating Rate.................................................. S-17, S-40
Swap Reserve Fund................................................... S-54
Telerate Page 3750.................................................. S-38
Transfer Date....................................................... S-46
Trust............................................................... S-1, S-3
Trust Pay Out Event................................................. S-55
Trust Portfolio..................................................... S-27
Trustee............................................................. S-3
Underwriters........................................................ S-58
Underwriting Agreement.............................................. S-58
</TABLE>
S-62
<PAGE>
ANNEX I
OTHER SERIES ISSUED
The table below sets forth the principal characteristics of the thirty-six
other Series previously issued by the Trust, all of which are in Group One.
For more specific information with respect to any Series, any prospective
investor should contact MBNA at (800) 362-6255 or (302) 456-8588. MBNA will
provide, without charge, to any prospective purchaser of the Certificates, a
copy of the Disclosure Documents for any previous publicly-issued Series.
1. Series 1994-A
<TABLE>
<S> <C>
Initial Class A Investor Interest.......................................................... $661,200,000
Class A Certificate Rate........................................... One-Month LIBOR plus 0.17% per annum
Initial Class B Investor Interest........................................................... $34,200,000
Class B Certificate Rate........................................... One-Month LIBOR plus 0.37% per annum
Class A Controlled Accumulation Amount..................................................... $55,100,000*
Class A Scheduled Payment Date............................................ August 1999 Distribution Date
Class B Scheduled Payment Date......................................... September 1999 Distribution Date
Annual Servicing Fee Percentage.......................................................... 2.0% per annum
Initial Collateral Interest................................................................. $64,600,000
Other Enhancement for the Class A Certificates.................... Subordination of Class B Certificates
Series 1994-A Termination Date........................................... January 2002 Distribution Date
Series Issuance Date..................................................................... August 4, 1994
</TABLE>
2. Series 1994-B
<TABLE>
<S> <C>
Initial Class A Investor Interest.......................................................... $870,000,000
Class A Certificate Rate............................... Thirteen-week Treasury Bill plus 0.45% per annum
Initial Class B Investor Interest........................................................... $45,000,000
Class B Certificate Rate........................................... One-Month LIBOR plus 0.35% per annum
Class A Controlled Accumulation Amount..................................................... $72,500,000*
Class A Scheduled Payment Date............................................ August 1999 Distribution Date
Class B Scheduled Payment Date......................................... September 1999 Distribution Date
Annual Servicing Fee Percentage.......................................................... 2.0% per annum
Initial Collateral Interest................................................................. $85,000,000
Other Enhancement for the Class A Certificates.................... Subordination of Class B Certificates
Series 1994-B Termination Date........................................... January 2002 Distribution Date
Series Issuance Date.................................................................... August 18, 1994
</TABLE>
3. Series 1994-C
<TABLE>
<S> <C>
Initial Class A Investor Interest.......................................................... $870,000,000
Class A Certificate Rate........................................... One-Month LIBOR plus 0.25% per annum
Initial Class B Investor Interest........................................................... $45,000,000
Class B Certificate Rate........................................... One-Month LIBOR plus 0.45% per annum
Class A Controlled Accumulation Amount..................................................... $72,500,000*
Class A Scheduled Payment Date........................................... October 2001 Distribution Date
Class B Scheduled Payment Date.......................................... November 2001 Distribution Date
Annual Servicing Fee Percentage.......................................................... 2.0% per annum
Initial Collateral Interest................................................................. $85,000,000
Other Enhancement for the Class A Certificates.................... Subordination of Class B Certificates
Series 1994-C Termination Date............................................. March 2004 Distribution Date
Series Issuance Date................................................................... October 26, 1994
</TABLE>
A-1
<PAGE>
4. Series 1994-D
<TABLE>
<S> <C>
Initial Class A Investor Interest.......................................................... $870,000,000
Class A Certificate Rate.................................. Daily Federal Funds Rate plus 0.33% per annum
Initial Class B Investor Interest........................................................... $45,000,000
Class B Certificate Rate........................................... One-Month LIBOR plus 0.35% per annum
Class A Controlled Accumulation Amount..................................................... $72,500,000*
Class A Scheduled Payment Date........................................... October 1997 Distribution Date
Class B Scheduled Payment Date.......................................... November 1997 Distribution Date
Annual Servicing Fee Percentage.......................................................... 2.0% per annum
Initial Collateral Interest................................................................. $85,000,000
Other Enhancement for the Class A Certificates.................... Subordination of Class B Certificates
Series 1994-D Termination Date............................................. March 2000 Distribution Date
Series Issuance Date................................................................... October 26, 1994
</TABLE>
5. Series 1994-E
<TABLE>
<S> <C>
Initial Investor Interest.................................................................. $500,000,000
Current Investor Interest as of July 31, 1997.............................................. $700,000,000
Maximum Investor Interest.................................................................. $700,000,000
Certificate Rate................................................................. Commercial Paper Index
Annual Servicing Fee Percentage.......................................................... 2.0% per annum
Initial Cash Collateral Amount.............................................................. $20,000,000
Series Issuance Date.................................................................. December 15, 1994
</TABLE>
6. Series 1995-A
<TABLE>
<S> <C>
Initial Class A Investor Interest.......................................................... $500,250,000
Class A Certificate Rate........................................... One-Month LIBOR plus 0.27% per annum
Initial Class B Investor Interest........................................................... $25,875,000
Class B Certificate Rate........................................... One-Month LIBOR plus 0.45% per annum
Class A Controlled Accumulation Amount..................................................... $41,687,500*
Class A Scheduled Payment Date............................................ August 2004 Distribution Date
Class B Scheduled Payment Date......................................... September 2004 Distribution Date
Annual Servicing Fee Percentage.......................................................... 2.0% per annum
Initial Collateral Interest................................................................. $48,875,000
Other Enhancement for the Class A Certificates.................... Subordination of Class B Certificates
Series 1995-A Termination Date........................................... January 2007 Distribution Date
Series Issuance Date..................................................................... March 22, 1995
</TABLE>
7. Series 1995-B
<TABLE>
<S> <C>
Initial Class A Investor Interest.......................................................... $652,500,000
Class A Certificate Rate........................................... One-Month LIBOR plus 0.16% per annum
Initial Class B Investor Interest........................................................... $33,750,000
Class B Certificate Rate........................................... One-Month LIBOR plus 0.32% per annum
Class A Controlled Accumulation Amount..................................................... $54,375,000*
Class A Scheduled Payment Date............................................... May 2000 Distribution Date
Class B Scheduled Payment Date.............................................. June 2000 Distribution Date
Annual Servicing Fee Percentage.......................................................... 2.0% per annum
Initial Collateral Interest................................................................. $63,750,000
Other Enhancement for the Class A Certificates.................... Subordination of Class B Certificates
Series 1995-B Termination Date........................................... October 2002 Distribution Date
Series Issuance Date....................................................................... May 23, 1995
</TABLE>
A-2
<PAGE>
8. Series 1995-C
<TABLE>
<S> <C>
Initial Class A Investor Interest.......................................................... $500,250,000
Class A Certificate Rate................................................................ 6.45% per annum
Initial Class B Investor Interest........................................................... $25,875,000
Class B Certificate Rate........................................... One-Month LIBOR plus 0.42% per annum
Class A Controlled Accumulation Amount..................................................... $41,687,500*
Class A Scheduled Payment Date.............................................. June 2005 Distribution Date
Class B Scheduled Payment Date.............................................. July 2005 Distribution Date
Annual Servicing Fee Percentage.......................................................... 2.0% per annum
Initial Collateral Interest................................................................. $48,875,000
Other Enhancement for the Class A Certificates.................... Subordination of Class B Certificates
Series 1995-C Termination Date.......................................... February 2008 Distribution Date
Series Issuance Date...................................................................... June 29, 1995
</TABLE>
9. Series 1995-D
<TABLE>
<S> <C>
Initial Class A Investor Interest.......................................................... $435,000,000
Class A Certificate Rate................................................................ 6.05% per annum
Initial Class B Investor Interest........................................................... $22,500,000
Class B Certificate Rate........................................... One-Month LIBOR plus 0.29% per annum
Class A Controlled Accumulation Amount..................................................... $36,250,000*
Class A Scheduled Payment Date.............................................. June 2000 Distribution Date
Class B Scheduled Payment Date.............................................. July 2000 Distribution Date
Annual Servicing Fee Percentage.......................................................... 2.0% per annum
Initial Collateral Interest................................................................. $42,500,000
Other Enhancement for the Class A Certificates.................... Subordination of Class B Certificates
Series 1995-D Termination Date.......................................... November 2002 Distribution Date
Series Issuance Date...................................................................... June 29, 1995
</TABLE>
10. Series 1995-E
<TABLE>
<S> <C>
Initial Class A Investor Interest.......................................................... $435,000,000
Class A Certificate Rate........................................... One-Month LIBOR plus 0.22% per annum
Initial Class B Investor Interest........................................................... $22,500,000
Class B Certificate Rate........................................... One-Month LIBOR plus 0.32% per annum
Class A Controlled Accumulation Amount..................................................... $36,250,000*
Class A Scheduled Payment Date............................................ August 2002 Distribution Date
Class B Scheduled Payment Date......................................... September 2002 Distribution Date
Annual Servicing Fee Percentage.......................................................... 2.0% per annum
Initial Collateral Interest................................................................. $42,500,000
Other Enhancement for the Class A Certificates.................... Subordination of Class B Certificates
Series 1995-E Termination Date........................................... January 2005 Distribution Date
Series Issuance Date..................................................................... August 2, 1995
</TABLE>
A-3
<PAGE>
11. Series 1995-F
<TABLE>
<S> <C>
Initial Class A Investor Interest.............................. $455,000,000
Class A Certificate Rate.................................... 6.60% per annum
Initial Class B Investor Interest............................... $18,750,000
Class B Certificate Rate.................................... 6.75% per annum
Class A Controlled Accumulation Amount...................... $37,916,666.67*
Class A Scheduled Payment Date................ August 2000 Distribution Date
Class B Scheduled Payment Date............. September 2000 Distribution Date
Annual Servicing Fee Percentage.............................. 2.0% per annum
Initial Collateral Interest..................................... $26,250,000
Other Enhancement for the Class A Certificates..... Subordination of Class B
Certificates
Series 1995-F Termination Date............... January 2003 Distribution Date
Series Issuance Date........................................ August 30, 1995
</TABLE>
12. Series 1995-G
<TABLE>
<S> <C>
Initial Class A Investor Interest.............................. $435,000,000
Class A Certificate Rate............... One-Month LIBOR plus 0.21% per annum
Initial Class B Investor Interest............................... $22,500,000
Class B Certificate Rate............... One-Month LIBOR plus 0.33% per annum
Class A Controlled Accumulation Amount......................... $36,250,000*
Class A Scheduled Payment Date............... October 2002 Distribution Date
Class B Scheduled Payment Date.............. November 2002 Distribution Date
Annual Servicing Fee Percentage.............................. 2.0% per annum
Initial Collateral Interest..................................... $42,500,000
Other Enhancement for the Class A Certificates..... Subordination of Class B
Certificates
Series 1995-G Termination Date................. March 2005 Distribution Date
Series Issuance Date..................................... September 27, 1995
</TABLE>
13. Series 1995-H
<TABLE>
<S> <C>
Initial Class A Investor Interest.............................. $285,245,000
Class A Certificate Rate............... One-Month LIBOR plus 0.07% per annum
Initial Class B Investor Interest............................... $14,755,000
Class B Certificate Rate............... One-Month LIBOR plus 0.19% per annum
Class A Controlled Accumulation Amount...................... $23,770,416.67*
Class A Scheduled Payment Date............... October 1998 Distribution Date
Class B Scheduled Payment Date.............. November 1998 Distribution Date
Annual Servicing Fee Percentage.............................. 2.0% per annum
Initial Collateral Interest..................................... $27,875,000
Other Enhancement for the Class A Certificates..... Subordination of Class B
Certificates
Series 1995-H Termination Date................. March 2001 Distribution Date
Series Issuance Date..................................... September 28, 1995
</TABLE>
A-4
<PAGE>
14. Series 1995-I
<TABLE>
<S> <C>
Initial Class A Investor Interest.............................. $652,500,000
Class A Certificate Rate............... One-Month LIBOR plus 0.17% per annum
Initial Class B Investor Interest............................... $33,750,000
Class B Certificate Rate............... One-Month LIBOR plus 0.27% per annum
Class A Controlled Accumulation Amount......................... $54,375,000*
Class A Scheduled Payment Date............... October 2000 Distribution Date
Class B Scheduled Payment Date.............. November 2000 Distribution Date
Annual Servicing Fee Percentage.............................. 2.0% per annum
Initial Collateral Interest..................................... $63,750,000
Other Enhancement for the Class A Certificates..... Subordination of Class B
Certificates
Series 1995-I Termination Date................. March 2003 Distribution Date
Series Issuance Date....................................... October 26, 1995
</TABLE>
15. Series 1995-J
<TABLE>
<S> <C>
Initial Class A Investor Interest.............................. $435,000,000
Class A Certificate Rate............... One-Month LIBOR plus 0.23% per annum
Initial Class B Investor Interest............................... $22,500,000
Class B Certificate Rate............... One-Month LIBOR plus 0.35% per annum
Class A Controlled Accumulation Amount......................... $36,250,000*
Class A Scheduled Payment Date.............. November 2002 Distribution Date
Class B Scheduled Payment Date.............. December 2002 Distribution Date
Annual Servicing Fee Percentage.............................. 2.0% per annum
Initial Collateral Interest..................................... $42,500,000
Other Enhancement for the Class A Certificates..... Subordination of Class B
Certificates
Series 1995-J Termination Date................. April 2005 Distribution Date
Series Issuance Date...................................... November 21, 1995
</TABLE>
16. Series 1996-A
<TABLE>
<S> <C>
Initial Class A Investor Interest.............................. $609,000,000
Class A Certificate Rate............... One-Month LIBOR plus 0.21% per annum
Initial Class B Investor Interest............................... $31,500,000
Class B Certificate Rate............... One-Month LIBOR plus 0.34% per annum
Class A Controlled Accumulation Amount......................... $50,750,000*
Class A Scheduled Payment Date.............. February 2003 Distribution Date
Class B Scheduled Payment Date................. March 2003 Distribution Date
Annual Servicing Fee Percentage.............................. 2.0% per annum
Initial Collateral Interest..................................... $59,500,000
Other Enhancement for the Class A Certificates..... Subordination of Class B
Certificates
Series 1996-A Termination Date.................. July 2005 Distribution Date
Series Issuance Date...................................... February 28, 1996
</TABLE>
A-5
<PAGE>
17. Series 1996-B
<TABLE>
<S> <C>
Initial Class A Investor Interest.............................. $435,000,000
Class A Certificate Rate............... One-Month LIBOR plus 0.26% per annum
Initial Class B Investor Interest............................... $22,500,000
Class B Certificate Rate............... One-Month LIBOR plus 0.37% per annum
Class A Controlled Accumulation Amount......................... $36,250,000*
Class A Scheduled Payment Date................. March 2006 Distribution Date
Class B Scheduled Payment Date................. April 2006 Distribution Date
Annual Servicing Fee Percentage.............................. 2.0% per annum
Initial Collateral Interest..................................... $42,500,000
Other Enhancement for the Class A Certificates..... Subordination of Class B
Certificates
Series 1996-B Termination Date................ August 2008 Distribution Date
Series Issuance Date......................................... March 26, 1996
</TABLE>
18. Series 1996-C
<TABLE>
<S> <C>
Initial Class A Investor Interest.............................. $435,000,000
Class A Certificate Rate............... One-Month LIBOR plus 0.14% per annum
Initial Class B Investor Interest............................... $22,500,000
Class B Certificate Rate............... One-Month LIBOR plus 0.28% per annum
Class A Controlled Accumulation Amount......................... $36,250,000*
Class A Scheduled Payment Date................. March 2001 Distribution Date
Class B Scheduled Payment Date................. April 2001 Distribution Date
Annual Servicing Fee Percentage.............................. 2.0% per annum
Initial Collateral Interest..................................... $42,500,000
Other Enhancement for the Class A Certificates..... Subordination of Class B
Certificates
Series 1996-C Termination Date................ August 2003 Distribution Date
Series Issuance Date......................................... March 27, 1996
</TABLE>
19. Series 1996-D
<TABLE>
<S> <C>
Initial Class A Investor Interest.............................. $850,000,000
Class A Certificate Rate............... One-Month LIBOR plus 0.15% per annum
Initial Class B Investor Interest............................... $75,000,000
Class B Certificate Rate............... One-Month LIBOR plus 0.29% per annum
Class A Controlled Accumulation Amount...................... $70,833,333.33*
Class A Scheduled Payment Date................. April 2001 Distribution Date
Class B Scheduled Payment Date................... May 2001 Distribution Date
Annual Servicing Fee Percentage.............................. 2.0% per annum
Initial Collateral Interest..................................... $75,000,000
Other Enhancement for the Class A Certificates..... Subordination of Class B
Certificates
Series 1996-D Termination Date............. September 2003 Distribution Date
Series Issuance Date............................................ May 1, 1996
</TABLE>
A-6
<PAGE>
20. Series 1996-E
<TABLE>
<S> <C>
Initial Class A Investor Interest.............................. $637,500,000
Class A Certificate Rate............... One-Month LIBOR plus 0.17% per annum
Initial Class B Investor Interest............................... $56,250,000
Class B Certificate Rate............... One-Month LIBOR plus 0.31% per annum
Class A Controlled Accumulation Amount......................... $53,125,000*
Class A Scheduled Payment Date................... May 2003 Distribution Date
Class B Scheduled Payment Date.................. June 2003 Distribution Date
Annual Servicing Fee Percentage.............................. 2.0% per annum
Initial Collateral Interest..................................... $56,250,000
Other Enhancement for the Class A Certificates..... Subordination of Class B
Certificates
Series 1996-E Termination Date............... October 2005 Distribution Date
Series Issuance Date........................................... May 21, 1996
</TABLE>
21. Series 1996-F
<TABLE>
<S> <C>
Initial Class A Investor Interest.............................. $705,000,000
Initial Collateral Interest..................................... $45,000,000
Current Investor Interest as of July 31, 1997................ $1,000,000,000
Maximum Investor Interest.................................... $1,000,000,000
Certificate Rate..................................... Commercial Paper Index
Annual Servicing Fee Percentage.............................. 2.0% per annum
Series Issuance Date.......................................... June 25, 1996
</TABLE>
22. Series 1996-G
<TABLE>
<S> <C>
Initial Class A Investor Interest.............................. $425,000,000
Class A Certificate Rate............... One-Month LIBOR plus 0.18% per annum
Initial Class B Investor Interest............................... $37,500,000
Class B Certificate Rate............... One-Month LIBOR plus 0.35% per annum
Class A Controlled Accumulation Amount...................... $35,416,666.67*
Class A Scheduled Payment Date.................. July 2006 Distribution Date
Class B Scheduled Payment Date................ August 2006 Distribution Date
Annual Servicing Fee Percentage.............................. 2.0% per annum
Initial Collateral Interest..................................... $37,500,000
Other Enhancement for the Class A Certificates..... Subordination of Class B
Certificates
Series 1996-G Termination Date.............. December 2008 Distribution Date
Series Issuance Date.......................................... July 17, 1996
</TABLE>
23. Series 1996-H
<TABLE>
<S> <C>
Initial Class A Investor Interest............................ $1,020,000,000
Class A Certificate Rate............. Three-Month LIBOR plus 0.10% per annum
Initial Class B Investor Interest............................... $90,000,000
Class B Certificate Rate............. Three-Month LIBOR plus 0.27% per annum
Class A Controlled Accumulation Amount......................... $85,000,000*
Class A Scheduled Payment Date................ August 2001 Distribution Date
Class B Scheduled Payment Date............. September 2001 Distribution Date
Annual Servicing Fee Percentage.............................. 2.0% per annum
Initial Collateral Interest..................................... $90,000,000
Other Enhancement for the Class A Certificates..... Subordination of Class B
Certificates
Series 1996-H Termination Date............... January 2004 Distribution Date
Series Issuance Date........................................ August 14, 1996
</TABLE>
A-7
<PAGE>
24. Series 1996-I
<TABLE>
<S> <C>
Initial Class A Deutsche Mark ("DM") Investor Interest..... DM 1,000,000,000
Initial Class A Investor Interest........................... $666,444,518.49
Class A Certificate Rate.......... Three-Month DM LIBOR plus 0.09% per annum
Class A Floating Dollar Rate........ Three-Month LIBOR plus 0.115% per annum
Initial Class B Investor Interest............................... $58,804,000
Class B Certificate Rate..... Not to Exceed Three-Month LIBOR plus 0.50% per
annum
Class A Controlled Accumulation Amount...................... $55,537,043.21*
Class A Scheduled Payment Date........................... September 19, 2001
Class B Scheduled Payment Date............... October 2001 Distribution Date
Annual Servicing Fee Percentage.............................. 2.0% per annum
Initial Collateral Interest..................................... $58,804,000
Other Enhancement for the Class A Certificates..... Subordination of Class B
Certificates
Series 1996-I Termination Date............................ February 18, 2004
Series Issuance Date..................................... September 25, 1996
</TABLE>
25. Series 1996-J
<TABLE>
<S> <C>
Initial Class A Investor Interest.............................. $850,000,000
Class A Certificate Rate............... One-Month LIBOR plus 0.15% per annum
Initial Class B Investor Interest............................... $75,000,000
Class B Certificate Rate............... One-Month LIBOR plus 0.36% per annum
Class A Controlled Accumulation Amount...................... $70,833,333.33*
Class A Scheduled Payment Date............. September 2003 Distribution Date
Class B Scheduled Payment Date............... October 2003 Distribution Date
Annual Servicing Fee Percentage.............................. 2.0% per annum
Initial Collateral Interest..................................... $75,000,000
Other Enhancement for the Class A Certificates..... Subordination of Class B
Certificates
Series 1996-J Termination Date.............. February 2006 Distribution Date
Series Issuance Date..................................... September 19, 1996
</TABLE>
26. Series 1996-K
<TABLE>
<S> <C>
Initial Class A Investor Interest.............................. $850,000,000
Class A Certificate Rate............... One-Month LIBOR plus 0.13% per annum
Initial Class B Investor Interest............................... $75,000,000
Class B Certificate Rate............... One-Month LIBOR plus 0.35% per annum
Class A Controlled Accumulation Amount...................... $70,833,333.34*
Class A Scheduled Payment Date............... October 2003 Distribution Date
Class B Scheduled Payment Date.............. November 2003 Distribution Date
Annual Servicing Fee Percentage.............................. 2.0% per annum
Initial Collateral Interest..................................... $75,000,000
Other Enhancement for the Class A Certificates..... Subordination of Class B
Certificates
Series 1996-K Termination Date................. March 2006 Distribution Date
Series Issuance Date....................................... October 24, 1996
</TABLE>
A-8
<PAGE>
27. Series 1996-L
<TABLE>
<S> <C>
Initial Class A Investor Interest.............................. $425,000,000
Class A Certificate Rate............. Three-Month LIBOR plus 0.03% per annum
Initial Class B Investor Interest............................... $37,500,000
Class B Certificate Rate............. Three-Month LIBOR plus 0.24% per annum
Class A Controlled Accumulation Amount...................... $35,416,666.67*
Class A Scheduled Payment Date.............. November 1999 Distribution Date
Class B Scheduled Payment Date.............. December 1999 Distribution Date
Annual Servicing Fee Percentage.............................. 2.0% per annum
Initial Collateral Interest..................................... $37,500,000
Other Enhancement for the Class A Certificates..... Subordination of Class B
Certificates
Series 1996-L Termination Date.............. November 2001 Distribution Date
Series Issuance Date....................................... December 3, 1996
</TABLE>
28. Series 1996-M
<TABLE>
<S> <C>
Initial Class A Investor Interest.............................. $425,000,000
Class A Certificate Rate............. Three-Month LIBOR plus 0.13% per annum
Initial Class B Investor Interest............................... $37,500,000
Class B Certificate Rate............. Three-Month LIBOR plus 0.35% per annum
Class A Controlled Accumulation Amount...................... $35,416,666.67*
Class A Scheduled Payment Date.............. November 2006 Distribution Date
Class B Scheduled Payment Date.............. December 2006 Distribution Date
Annual Servicing Fee Percentage.............................. 2.0% per annum
Initial Collateral Interest..................................... $37,500,000
Other Enhancement for the Class A Certificates..... Subordination of Class B
Certificates
Series 1996-M Termination Date................. April 2009 Distribution Date
Series Issuance Date...................................... November 26, 1996
</TABLE>
29. Series 1997-A
<TABLE>
<S> <C>
Initial Class A Investor Interest.............................. $525,000,000
Class A Certificate Rate........... Three-Month LIBOR minus 0.075% per annum
Initial Class B Investor Interest............................... $46,350,000
Class B Certificate Rate............. Three-Month LIBOR plus 0.27% per annum
Controlled Accumulation Amount................................. $47,612,500*
Scheduled Payment Date...................... February 2000 Distribution Date
Annual Servicing Fee Percentage.............................. 2.0% per annum
Initial Collateral Interest..................................... $46,350,000
Other Enhancement for the Class A Certificates..... Subordination of Class B
Certificates
Series 1997-A Termination Date.................. July 2002 Distribution Date
Series Issuance Date....................................... January 30, 1997
</TABLE>
30. Series 1997-B
<TABLE>
<S> <C>
Initial Class A Investor Interest.............................. $850,000,000
Class A Certificate Rate............... One-Month LIBOR plus 0.16% per annum
Initial Class B Investor Interest............................... $75,000,000
Class B Certificate Rate............... One-Month LIBOR plus 0.35% per annum
Controlled Accumulation Amount.............................. $83,333,333.34*
Scheduled Payment Date......................... March 2012 Distribution Date
Annual Servicing Fee Percentage.............................. 2.0% per annum
Initial Class C Investor Interest............................... $75,000,000
Other Enhancement for the Class A Certificates..... Subordination of Class B
Certificates
Series 1997-B Termination Date................ August 2014 Distribution Date
Series Issuance Date...................................... February 27, 1997
</TABLE>
A-9
<PAGE>
31. Series 1997-C
<TABLE>
<S> <C>
Initial Class A Investor Interest.............................. $637,500,000
Class A Certificate Rate............... One-Month LIBOR plus 0.11% per annum
Initial Class B Investor Interest............................... $56,250,000
Class B Certificate Rate............... One-Month LIBOR plus 0.30% per annum
Controlled Accumulation Amount................................. $57,812,500*
Scheduled Payment Date......................... March 2004 Distribution Date
Annual Servicing Fee Percentage.............................. 2.0% per annum
Initial Collateral Interest..................................... $56,250,000
Other Enhancement for the Class A Certificates..... Subordination of Class B
Certificates
Series 1997-C Termination Date................ August 2006 Distribution Date
Series Issuance Date......................................... March 26, 1997
</TABLE>
32. Series 1997-D
<TABLE>
<S> <C>
Initial Class A Investor Interest.............................. $387,948,000
Class A Certificate Rate............. Three-Month LIBOR plus 0.05% per annum
Initial Class B Investor Interest............................... $34,231,000
Class B Certificate Rate..... Not to Exceed Three-Month LIBOR plus 0.50% per
annum
Controlled Accumulation Amount.............................. $38,034,166.67*
Scheduled Payment Date........................... May 2007 Distribution Date
Annual Servicing Fee Percentage.............................. 2.0% per annum
Initial Class C Investor Interest............................... $34,231,000
Other Enhancement for the Class A Certificates..... Subordination of Class B
Certificates
Series 1997-D Termination Date............... October 2009 Distribution Date
Series Issuance Date........................................... May 22, 1997
</TABLE>
33. Series 1997-E
<TABLE>
<S> <C>
Initial Class A Investor Interest.............................. $637,500,000
Class A Certificate Rate............. Three-Month LIBOR plus 0.08% per annum
Initial Class B Investor Interest............................... $56,250,000
Class B Certificate Rate............. Three-Month LIBOR plus 0.28% per annum
Controlled Accumulation Amount................................. $57,812,500*
Scheduled Payment Date......................... April 2002 Distribution Date
Annual Servicing Fee Percentage.............................. 2.0% per annum
Initial Collateral Interest..................................... $56,250,000
Other Enhancement for the Class A Certificates..... Subordination of Class B
Certificates
Series 1997-E Termination Date............. September 2004 Distribution Date
Series Issuance Date............................................ May 8, 1997
</TABLE>
A-10
<PAGE>
34. Series 1997-F
<TABLE>
<S> <C>
Initial Class A Investor Interest...............................$600,000,000
Class A Certificate Rate.....................................6.60% per annum
Initial Class B Investor Interest................................$53,000,000
Class B Certificate Rate................One-Month LIBOR plus 0.29% per annum
Controlled Accumulation Amount...............................$54,416,666.67*
Scheduled Payment Date...........................June 2002 Distribution Date
Annual Servicing Fee Percentage...............................2.0% per annum
Initial Collateral Interest......................................$53,000,000
Other Enhancement for the Class A Certificates......Subordination of Class B
Certificates
Series 1997-F Termination Date...............November 2004 Distribution Date
Series Issuance Date...........................................June 18, 1997
</TABLE>
35. Series 1997-G
<TABLE>
<S> <C>
Initial Class A Investor Interest...............................$460,000,000
Class A Certificate Rate................One-Month LIBOR plus 0.15% per annum
Initial Class B Investor Interest................................$40,600,000
Class B Certificate Rate................One-Month LIBOR plus 0.36% per annum
Controlled Accumulation Amount...............................$41,716,666.67*
Scheduled Payment Date...........................June 2004 Distribution Date
Annual Servicing Fee Percentage...............................2.0% per annum
Initial Collateral Interest......................................$40,600,000
Other Enhancement for the Class A Certificates......Subordination of Class B
Certificates
Series 1997-G Termination Date...............November 2006 Distribution Date
Series Issuance Date...........................................June 18, 1997
</TABLE>
36. Series 1997-H
<TABLE>
<S> <C>
Initial Class A Investor Interest...............................$507,357,000
Class A Certificate Rate..............Three-Month LIBOR plus 0.07% per annum
Initial Class B Investor Interest................................$44,770,000
Class B Certificate Rate..Not to Exceed Three-Month LIBOR plus 0.50% per
annum
Controlled Accumulation Amount...............................$49,741,416.67*
Scheduled Payment Date......................September 2007 Distribution Date
Annual Servicing Fee Percentage...............................2.0% per annum
Initial Class C Investor Interest................................$44,770,000
Other Enhancement for the Class A Certificates......Subordination of Class B
Certificates
Series 1997-H Termination Date...............February 2010 Distribution Date
Series Issuance Date..........................................August 6, 1997
</TABLE>
- --------
* Subject to change if the commencement of the Accumulation Period or
Controlled Accumulation Period, as applicable, is delayed.
A-11
<PAGE>
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- -------------------------------------------------------------------------------
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMA-
TION OR TO MAKE ANY REPRESENTATION NOT CONTAINED OR INCORPORATED BY REFERENCE
IN THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE SELLER OR ANY AGENT OR UNDERWRITER. NEITHER THIS PRO-
SPECTUS SUPPLEMENT NOR THE ACCOMPANYING PROSPECTUS CONSTITUTES AN OFFER OR SO-
LICITATION BY ANYONE IN ANY STATE IN WHICH SUCH OFFER OR SOLICITATION IS NOT
AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE ACCOM-
PANYING PROSPECTUS, NOR ANY SALE MADE HEREUNDER OR THEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AF-
FAIRS OF THE SELLER OR THE RECEIVABLES OR THE ACCOUNTS SINCE THE DATE HEREOF
OR THEREOF OR THAT THE INFORMATION CONTAINED OR INCORPORATED BY REFERENCE
HEREIN OR THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
-----------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Summary of Terms.......................................................... S-3
Risk Factors.............................................................. S-23
MBNA's Credit Card Portfolio.............................................. S-24
The Receivables........................................................... S-27
Maturity Assumptions...................................................... S-31
Receivable Yield Considerations........................................... S-34
MBNA and MBNA Corporation................................................. S-35
Description of the Certificates........................................... S-35
Underwriting.............................................................. S-58
Index of Terms for Prospectus Supplement.................................. S-60
Annex I: Other Series Issued.............................................. A-1
PROSPECTUS
Prospectus Supplement..................................................... 2
Reports to Certificateholders............................................. 2
Available Information..................................................... 2
Incorporation of Certain Documents by Reference........................... 2
Prospectus Summary........................................................ 4
Risk Factors.............................................................. 19
The Trust................................................................. 24
MBNA's Credit Card Activities............................................. 24
The Receivables........................................................... 25
Maturity Assumptions...................................................... 26
Use of Proceeds........................................................... 27
MBNA and MBNA Corporation................................................. 27
Description of the Certificates........................................... 27
Credit Enhancement........................................................ 49
Certain Legal Aspects of the Receivables.................................. 51
Federal Income Tax Consequences........................................... 54
ERISA Considerations...................................................... 58
Plan of Distribution...................................................... 60
Legal Matters............................................................. 61
Index of Terms for Prospectus............................................. 62
Annex I: Global Clearance, Settlement and Tax Documentation Procedures.... A-1
</TABLE>
-----------
UNTIL NOVEMBER 10, 1997, ALL DEALERS EFFECTING TRANSACTIONS IN THE CERTIFI-
CATES, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO
DELIVER A PROSPECTUS SUPPLEMENT AND A PROSPECTUS. THIS DELIVERY REQUIREMENT IS
IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS SUPPLEMENT
AND A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
MBNA MASTER
CREDIT CARD TRUST II
$637,500,000 CLASS A
6.55% ASSET BACKED
CERTIFICATES, SERIES 1997-I
$56,250,000 CLASS B
FLOATING RATE ASSET BACKED
CERTIFICATES, SERIES 1997-I
[LOGO OF MBNA APPEARS HERE]
MBNA AMERICA BANK,
NATIONAL ASSOCIATION
SELLER AND SERVICER
-----------
PROSPECTUS SUPPLEMENT
-----------
UNDERWRITERS OF THE CLASS A CERTIFICATES
GOLDMAN, SACHS & CO.
CREDIT SUISSE FIRST BOSTON
LEHMAN BROTHERS
MERRILL LYNCH & CO.
SALOMON BROTHERS INC
UNDERWRITERS OF THE CLASS B CERTIFICATES
GOLDMAN, SACHS & CO.
LEHMAN BROTHERS
THIS DOCUMENT IS PRINTED ENTIRELY ON RECYCLED PAPER.
[LOGO OF RECYCLED PAPER APPEARS HERE]
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