<PAGE>
PURSUANT TO RULE NO. 424(b)(2)
REGISTRATION NO. 333-17253
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED OCTOBER 8, 1997
$693,750,000
MBNA MASTER CREDIT CARD TRUST II
$637,500,000 CLASS A FLOATING RATE ASSET BACKED CERTIFICATES, SERIES 1997-K
$56,250,000 CLASS B FLOATING RATE ASSET BACKED CERTIFICATES, SERIES 1997-K
MBNA AMERICA BANK, NATIONAL ASSOCIATION
SELLER AND SERVICER
----------------
Each Class A Floating Rate Asset Backed Certificate, Series 1997-K
(collectively, the "Class A Certificates") and each Class B Floating Rate Asset
Backed Certificate, Series 1997-K (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. In
addition, the Collateral Interest (as defined herein) will be issued in the
initial amount of $56,250,000 and
(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
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 COMMISSIONNOR HAS THE SECURI-TIES
AND EXCHANGE COMMISSION OR ANY STATESECURITIES COMMISSION PASSED UPON THE
ACCURACY ORADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS.ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OF-FENSE.
<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNT SELLER(1)(2)
--------- ------------ ------------
<S> <C> <C> <C>
Per Class A Certificate.................. 100.000% 0.225% 99.775%
Per Class B Certificate.................. 100.000% 0.300% 99.700%
Total.................................... $693,750,000 $1,603,125 $692,146,875
</TABLE>
(1) Plus accrued interest, if any, at the Class A Certificate Rate or the
Class B Certificate Rate, as applicable, from October 22, 1997.
(2) Before deduction of expenses estimated to be $800,000.
The Certificates are offered by the Underwriter when, as and if issued by
the Trust and accepted by the Underwriter and subject to the Underwriter's
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 October 22,
1997, through the facilities of The Depository Trust Company, Cedel Bank,
societe anonyme, and the Euroclear System.
CREDIT SUISSE FIRST BOSTON
The date of this Prospectus Supplement is October 9, 1997.
<PAGE>
(continued from previous page)
will be subordinated to the Certificates as described herein. 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 October 22, 1997 (the
"Closing Date") through November 16, 1997 and from November 17, 1997 through
December 14, 1997, and with respect to each Interest Period (as defined
herein) thereafter, at the rate of 0.12% 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 such period (the "Class A Certificate Rate").
Interest will accrue on the Class B Certificates from the Closing Date through
November 16, 1997 and from November 17, 1997 through December 14, 1997, and
with respect to each Interest Period thereafter, at the rate of 0.32% per
annum above LIBOR prevailing on the related LIBOR Determination Date with
respect to each such period (the "Class B Certificate Rate"). The initial
LIBOR Determination Date with respect to the Certificates, on which LIBOR for
the period from the Closing Date through November 16, 1997 will be determined,
is October 20, 1997. Interest with respect to the Certificates will be
distributed on December 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 November 2005 Distribution Date (the "Scheduled Payment
Date"), but may be paid earlier or later under certain limited circumstances
described herein. Principal payments will not be made to Class B
Certificateholders until the final principal payment has been made with
respect to the Class A Certificates. 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; however, no assurance can be given that such listing will be
obtained. Certificateholders should consult with Bankers Trust Luxembourg
S.A., the Luxembourg listing agent for the Certificates, 14 Boulevard F.D.
Roosevelt, L-2450 Luxembourg, phone number (352) 46 02 41, for the status of
such listing.
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
October 8, 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-47
herein and the "Index of Terms for Prospectus" beginning on page 62 in the
Prospectus.
TYPE OF SECURITIES...... Class A Floating Rate Asset Backed Certificates,
Series 1997-K (the "Class A Certificates") and
Class B Floating Rate Asset Backed Certificates,
Series 1997-K (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-K
Supplement") (the term "Agreement," unless the
context requires otherwise, refers to the
Agreement as supplemented by the Series 1997-K
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-eight
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), 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-K,
and the holders of certificates of other Series
will not be entitled to the benefits of any
Enhancement issued with respect to Series 1997-
K. "Series 1997-K" shall mean the Series of the
Trust represented by the Certificates and the
Collateral Interest.
- --------
* MasterCard(R) and VISA(R) are federally registered servicemarks of MasterCard
International Inc. and Visa U.S.A., Inc., respectively.
S-3
<PAGE>
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, July 2, 1997 and October 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 (but not in excess of) the amounts required
to make (a) payments of interest accruing from
October 22, 1997 (the "Closing Date") through
November 16, 1997 and from November 17, 1997
through December 14, 1997, and with respect to
each Interest Period thereafter, at the rate of
0.12% per annum above the London interbank
offered rate for one-month United States
S-4
<PAGE>
dollar deposits ("LIBOR"), determined as
described herein, prevailing on the related
LIBOR Determination Date (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 November 16, 1997 and
from November 17, 1997 through December 14,
1997, and with respect to each Interest Period
thereafter, at the rate of 0.32% per annum above
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 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 the Class A Investor
Interest is paid in full.
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 (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, 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 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").
S-5
<PAGE>
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 November 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 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.
The final distribution of principal and interest
on the Certificates will be made no later than
the April 2008 Distribution Date in the manner
provided in "Description of the Certificates--
Final Payment of Principal; Termination" in the
Prospectus. Series 1997-K will terminate on the
earliest to occur of (a) the Distribution Date
on which the Investor Interest is paid in full,
(b) the April 2008 Distribution Date or (c) the
Trust Termination Date (such earliest to occur,
the "Series 1997-K Termination Date"). After the
Series 1997-K Termination Date, the Trust will
have no further obligation to pay principal or
interest on the Certificates.
S-6
<PAGE>
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, July 2, 1997 and October 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
October 2, 1997 was $32,355,103,015 comprised of
$31,814,247,878 of Principal Receivables and
$540,855,137 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
CERTIFICATES........... The Certificates initially will be represented by
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 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
S-7
<PAGE>
"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 December 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, the product of (i)
the actual number of days in the related
Interest Period divided by 360 and (ii) the
Class A Certificate Rate and (iii) 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 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 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, 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
earlier of (a) the commencement of the
Controlled Accumulation Period and (b) 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
S-8
<PAGE>
of business on October 31, 2004. 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 September
30, 2005. 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 payment of the Investor
Interest in full and (iii) the Series 1997-K
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 "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."
Unless a Pay Out Event shall have occurred, all
funds on deposit in the Principal Funding
Account will be invested at the direction of the
S-9
<PAGE>
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") during
the Controlled Accumulation Period will be used
to pay interest on the Certificates 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 the
related Interest Period and the denominator of
which is 360, (ii) the Class A 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
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").
If, for any Transfer Date, the Principal Funding
Investment Proceeds are less than the Covered
Amount, the amount of such deficiency (the
"Principal Funding Investment Shortfall") shall
be paid, to the extent required and available,
from the 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 in full and then 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 Pay Out Event occurs during the Controlled
Accumulation Period, the Rapid Amortization
Period will commence and any amounts 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,
to the Class B Certificateholders on the
Distribution Date in the month following the
commencement of the Rapid Amortization Period.
S-10
<PAGE>
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 the Prospectus for a
discussion of the potential terms of any other
Series.
RAPID AMORTIZATION
PERIOD................. During the period from the day on which a Pay Out
Event has occurred and ending on the earlier of
(a) the payment of the Investor Interest in full
and (b) the Series 1997-K Termination Date (the
"Rapid Amortization Period"), Available Investor
Principal Collections will be distributed
monthly on each Distribution Date to the Class A
Certificateholders and, following payment of the
Class A Investor Interest in full, to the Class
B Certificateholders and, following payment of
the Class B Investor Interest in full, to the
Collateral Interest Holder beginning with the
Distribution Date in the month following the
commencement of the Rapid Amortization Period.
See "Description of the Certificates--Pay Out
Events" herein and in the Prospectus 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 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 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
CERTIFICATEHOLDERS..... With respect to any Transfer Date, Excess Spread
will be applied to fund the Class A Required
Amount and the Class B Required Amount, if
S-11
<PAGE>
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, and (b) the Class A Servicing
Fee for the related Monthly Period and any
overdue Class A Servicing Fee and (c) 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 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) and (c) 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
S-12
<PAGE>
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 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
INTEREST............... The "Required Collateral Interest" means (a)
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) if certain reductions in the
Collateral Interest occur or if a Pay Out Event
occurs,
S-13
<PAGE>
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 Pay Out Event; (ii) 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 (iii) 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 will not be available to the
Certificateholders.
SHARED PRINCIPAL
COLLECTIONS............ The Series 1997-K Certificates are included in a
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, 1997-H, 1997-I
and 1997-J 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-K. 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 RECEIVABLES..... With respect to each Monthly Period during the
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
S-14
<PAGE>
amount equal to the amount of current interest,
past due interest, if any, and additional
interest, if any, distributable to the
Certificateholders and the Collateral Interest
Holder 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). 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 either the
Controlled Accumulation Period or 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 another. The Underwriter expects that the
Class A Certificates will be held by at least
100 independent investors at the conclusion of
the offering. The Underwriter has agreed not to
sell any Class A Certificates to employee
benefit plan investors unless it shall have
given written notification to the Trustee that
such requirement as to the number of holders has
been satisfied with respect to the Class A
S-15
<PAGE>
Certificates. Employee benefit plan investors
can contact the Trustee at (212) 815-5738 to
determine whether the Underwriter has given such
written notification. 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 Underwriter currently does not expect that
the Class B Certificates will be held by at
least 100 such persons and, therefore, does 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
RATING................. It is a condition to the issuance of the Class A
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
RATING................. It is a condition to the issuance of the Class B
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; however, no
assurance can be given that such listing will be
obtained. Certificateholders should consult with
Bankers Trust Luxembourg S.A., the Luxembourg
listing agent for the Certificates, 14 Boulevard
F.D. Roosevelt, L-2450 Luxembourg, phone number
(352) 46 02 41, for the status of such listing.
S-16
<PAGE>
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.
The finance charges on purchases which are 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 which are 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 $25 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.
S-17
<PAGE>
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.
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 October
2, 1997, the Receivables in the Trust Portfolio represented approximately 84%
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
Outstanding(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
Average Receivables
Outstanding(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 months ended July 31, 1997 and August 31, 1997 were 5.50% and
5.30%, respectively, each 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.
S-18
<PAGE>
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 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, July 2, 1997 and
October 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, $2.472 billion and $1.23 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 to be 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,
S-19
<PAGE>
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 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
October 2, 1997, included $31,814,247,878 of Principal Receivables and
$540,855,137 of Finance Charge Receivables. The Accounts had an average
Principal Receivable balance of $1,299 and an average credit limit of $8,627.
The percentage of the aggregate total Receivable balance to the aggregate
total credit limit was 15.32%. The average age of the Accounts was
approximately 31 months. As of the beginning of the day on October 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 October 2, 1997, 49.4% of the Accounts were standard accounts
and 50.6% 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 35.9% and 64.1%, respectively.
The following tables summarize the Trust Portfolio by various criteria as of
the beginning of the day on October 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............... 291,491 1.2% $ (32,865,906) (0.1)%
No Balance................... 14,393,267 58.8 0 0.0
$.01-- $5,000.00............. 7,347,344 30.0 10,652,638,393 32.9
$5,000.01--$10,000.00........ 1,851,146 7.5 12,820,102,042 39.6
$10,000.01--$15,000.00....... 409,461 1.7 4,892,691,834 15.1
$15,000.01--$20,000.00....... 116,911 0.5 1,991,060,713 6.2
$20,000.01--$25,000.00....... 42,286 0.2 939,735,436 2.9
$25,000.01 or More........... 33,079 0.1 1,091,740,503 3.4
---------- ----- --------------- -----
Total.................... 24,484,985 100.0% $32,355,103,015 100.0%
========== ===== =============== =====
</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.................. 6,844,548 28.0% $ 4,038,743,397 12.5%
$5,000.01--$10,000.00....... 10,178,162 41.6 13,378,531,170 41.4
$10,000.01--$15,000.00...... 4,615,807 18.8 7,192,147,311 22.2
$15,000.01--$20,000.00...... 1,607,729 6.6 3,410,949,405 10.5
$20,000.01--$25,000.00...... 665,780 2.7 1,965,560,193 6.1
$25,000.01 or More.......... 572,959 2.3 2,369,171,539 7.3
---------- ----- --------------- -----
Total................... 24,484,985 100.0% $32,355,103,015 100.0%
========== ===== =============== =====
</TABLE>
S-20
<PAGE>
COMPOSITION BY PERIOD OF DELINQUENCY
TRUST PORTFOLIO
<TABLE>
<CAPTION>
PERCENTAGE
OF TOTAL PERCENTAGE
PERIOD OF DELINQUENCY NUMBER OF NUMBER OF OF TOTAL
(DAYS CONTRACTUALLY DELINQUENT) ACCOUNTS ACCOUNTS RECEIVABLES RECEIVABLES
- ------------------------------- ---------- ---------- --------------- -----------
<S> <C> <C> <C> <C>
Not Delinquent................... 23,673,945 96.7% $28,729,491,269 88.8%
Up to 34 Days.................... 479,950 2.0 2,119,045,588 6.6
35 to 64 Days.................... 136,843 0.5 589,737,213 1.8
65 to 94 Days.................... 67,725 0.3 295,388,014 0.9
95 or More Days.................. 126,522 0.5 621,440,931 1.9
---------- ----- --------------- -----
Total........................ 24,484,985 100.0% $32,355,103,015 100.0%
========== ===== =============== =====
</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...... 3,426,467 14.0% $ 2,664,744,919 8.2%
Over 6 Months to 12 Months.. 2,906,925 11.9 3,153,691,134 9.7
Over 12 Months to 24
Months..................... 6,286,480 25.7 6,561,507,548 20.3
Over 24 Months to 36
Months..................... 5,273,993 21.5 6,227,446,006 19.3
Over 36 Months to 48
Months..................... 3,488,401 14.2 5,897,380,604 18.2
Over 48 Months to 60
Months..................... 561,270 2.3 1,103,008,799 3.4
Over 60 Months to 72
Months..................... 320,950 1.3 701,056,177 2.2
Over 72 Months.............. 2,220,499 9.1 6,046,267,828 18.7
---------- ----- --------------- -----
Total................... 24,484,985 100.0% $32,355,103,015 100.0%
========== ===== =============== =====
</TABLE>
S-21
<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....................... 242,286 1.0% $ 347,545,402 1.1%
Alaska........................ 48,224 0.2 89,898,998 0.3
Arizona....................... 374,850 1.5 557,595,008 1.7
Arkansas...................... 176,909 0.7 238,260,527 0.7
California.................... 2,645,012 10.8 4,461,950,223 13.8
Colorado...................... 426,614 1.7 567,605,470 1.8
Connecticut................... 412,258 1.7 516,856,233 1.6
Delaware...................... 100,926 0.4 138,043,898 0.4
Florida....................... 1,238,999 5.1 1,758,483,438 5.4
Georgia....................... 545,114 2.2 818,164,103 2.5
Hawaii........................ 93,733 0.4 150,765,746 0.5
Idaho......................... 107,708 0.4 135,294,894 0.4
Illinois...................... 967,336 4.0 1,231,357,036 3.8
Indiana....................... 563,748 2.3 608,239,466 1.9
Iowa.......................... 287,253 1.2 258,698,527 0.8
Kansas........................ 219,407 0.9 265,634,235 0.8
Kentucky...................... 280,480 1.2 323,417,958 1.0
Louisiana..................... 310,753 1.3 401,395,428 1.2
Maine......................... 182,055 0.7 196,431,797 0.6
Maryland...................... 717,391 2.9 1,113,694,875 3.4
Massachusetts................. 800,831 3.3 924,249,002 2.9
Michigan...................... 857,250 3.5 968,019,849 3.0
Minnesota..................... 489,260 2.0 503,407,288 1.6
Mississippi................... 133,020 0.5 185,055,618 0.6
Missouri...................... 444,717 1.8 515,421,667 1.6
Montana....................... 87,148 0.4 93,492,974 0.3
Nebraska...................... 188,224 0.8 195,322,710 0.6
Nevada........................ 148,794 0.6 268,709,582 0.8
New Hampshire................. 156,788 0.6 187,896,406 0.6
New Jersey.................... 974,449 4.0 1,334,871,162 4.1
New Mexico.................... 143,798 0.6 206,438,389 0.6
New York...................... 1,844,515 7.5 2,348,748,567 7.3
North Carolina................ 607,825 2.5 789,689,886 2.4
North Dakota.................. 58,191 0.2 57,345,123 0.2
Ohio.......................... 1,036,723 4.2 1,129,606,274 3.5
Oklahoma...................... 246,922 1.0 357,013,637 1.1
Oregon........................ 198,786 0.8 295,204,045 0.9
Pennsylvania.................. 1,407,488 5.8 1,398,461,624 4.3
Rhode Island.................. 112,221 0.5 128,007,013 0.4
South Carolina................ 280,048 1.1 356,817,571 1.1
South Dakota.................. 70,337 0.3 73,711,523 0.2
Tennessee..................... 436,859 1.8 633,194,842 2.0
Texas......................... 1,590,002 6.5 2,398,879,906 7.4
Utah.......................... 167,562 0.7 198,827,911 0.6
Vermont....................... 71,436 0.3 82,615,639 0.3
Virginia...................... 660,520 2.7 927,479,519 2.9
Washington.................... 474,445 1.9 686,972,053 2.1
West Virginia................. 130,832 0.5 155,232,714 0.5
Wisconsin..................... 576,012 2.4 536,592,137 1.7
Wyoming....................... 54,678 0.2 65,411,149 0.2
District of Columbia.......... 58,312 0.2 106,827,000 0.3
Other......................... 35,936 0.2 66,246,973 0.2
---------- ----- --------------- -----
Total..................... 24,484,985 100.0% $32,355,103,015 100.0%
========== ===== =============== =====
</TABLE>
S-22
<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 of a Pay Out Event which results 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.
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-K 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, a Pay Out
Event will occur and the Rapid Amortization Period will commence.
Rapid Amortization Period. If a Pay Out Event occurs during the Controlled
Accumulation Period, 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-K
Termination Date. After the Class A Certificates have been paid in full and if
the Series 1997-K 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-K Termination Date.
Pay Out Events. A 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) certain insolvency
events involving the Seller, (d) the average of the Portfolio Yields for any
three consecutive Monthly Periods being less than the average of the Base
Rates for such period, (e) the Trust becoming an "investment company" within
the meaning of the Investment Company Act of 1940, as amended, (f) the failure
of the Seller to convey Receivables arising under Additional Accounts or
Participations to the Trust when required by the Agreement, (g) the occurrence
of a Servicer Default which would have a material adverse effect on the
Certificateholders, (h) 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, or (i) the Seller becomes unable for any reason to
transfer Receivables to the Trust in accordance with the provisions of
S-23
<PAGE>
the Agreement. See "Description of the Certificates--Pay Out Events." 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 and the Collateral
Monthly Interest, each for the related Interest Period and the
Certificateholder Servicing Fee and the Servicer Interchange, each 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. The term
"Portfolio Yield" means, with respect to any Monthly Period, the annualized
percentage equivalent of a fraction, the numerator of which is the sum of
collections of Finance Charge Receivables, annual membership fees, Principal
Funding Investment Proceeds and amounts withdrawn from the Reserve Account
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.
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 a Pay Out
Event occurs, the average life of the 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 Pay Out Event may
occur which would initiate the Rapid Amortization Period, there can be no
assurance that the actual number of months elapsed 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.
S-24
<PAGE>
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.
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.
S-25
<PAGE>
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-K 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-K 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 paid in full,
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 Excess Spread,
funds on deposit in the Principal Funding Account (in an amount not to exceed
the Class A Investor Interest) and the Reserve Account and certain investment
earnings thereon, Reallocated Principal Collections and Shared Principal
Collections and certain other available amounts. In addition to
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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; however, no assurance can be given that such listing will be
obtained. Certificateholders should consult with Bankers Trust Luxembourg
S.A., the Luxembourg listing agent for the Certificates, 14 Boulevard F.D.
Roosevelt, L-2450 Luxembourg, phone number (352) 46 02 41, for the status of
such listing.
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 December 1997 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
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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) Principal Funding Investment Proceeds, if any, which are
required to be treated as Class A Available Funds pursuant to the Series 1997-
K 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 and (c) 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-K 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-K 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-K
Supplement with respect to such Transfer Date.
The Class A Certificates will accrue interest from the Closing Date through
November 16, 1997 and from November 17, 1997 through December 14, 1997, and
with respect to each Interest Period thereafter, at a rate of 0.12% per annum
above LIBOR prevailing on the related LIBOR Determination Date with respect to
each such period (the "Class A Certificate Rate"). The Class B Certificates
will accrue interest from the Closing Date through November 16, 1997 and from
November 17, 1997 through December 14, 1997, and with respect to each Interest
Period thereafter, at a rate of 0.32% per annum above LIBOR prevailing on the
related LIBOR Determination Date with respect to each such period (the "Class
B Certificate Rate").
The Trustee will determine LIBOR with respect to the Certificates on October
20, 1997 for the period from the Closing Date through November 16, 1997, on
November 13, 1997 for the period from November 17, 1997 through December 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
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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 A Certificate Rate and 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.
Interest on the Certificates will be calculated on the basis of the actual
number of days in the related Interest Period and a 360-day year.
PRINCIPAL PAYMENTS
On each Transfer Date relating to the Revolving Period (which begins on the
Closing Date and ends at the commencement of the Controlled Accumulation
Period or, if earlier, 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). On each Transfer Date, if a
reduction in the Required Collateral Interest has occurred, a portion of
collections of Principal Receivables allocable to the 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.
"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-K.
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-K 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-K
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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-K Termination Date) and
on the Series 1997-K Termination Date, Available Investor Principal
Collections until the earlier of the date the Collateral Interest is paid in
full and the Series 1997-K 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 October 2004 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 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.
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. 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 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 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
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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 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 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
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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 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).
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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 the related Distribution
Date and overdue Class A Monthly Interest and Class A Additional Interest, if
any, (b) the Class A Servicing Fee for the related Monthly Period and overdue
Class A Servicing Fee, if any, and (c) 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-K 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-K 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."
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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 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:
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(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
deposited into the Distribution Account for distribution to Class A
Certificateholders on such Distribution Date;
(ii) 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;
(iii) 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
(iv) 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
the product of (i) the Class A Certificate Rate for the related Interest
Period, (ii) the actual number of days in such Interest Period divided by 360
and (iii) 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 applicable Class A Certificate Rate for the period from
the Closing Date through December 14, 1997.
"Class B Monthly Interest" with respect to any Distribution Date will equal
the product of (i) the Class B Certificate Rate for the related Interest
Period, (ii) the actual number of days in such Interest Period divided by 360
and (iii) 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 December 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)(iv), 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" and 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";
(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.
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<PAGE>
"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 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 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, 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, 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 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 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, 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 prior to any
deposits on such Transfer Date.
"Class B Monthly Principal" with respect to any Transfer Date relating to
(a) the Controlled 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
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<PAGE>
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, prior to the
Scheduled Payment Date, 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 (3) 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 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 during the Controlled Accumulation Period, deposits of the applicable
Controlled Deposit Amount to the Principal Funding Account or the Distribution
Account, and during 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 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
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<PAGE>
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) if
certain reductions in the Collateral Interest are made or if a Pay Out Event
occurs, 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 Pay Out Event, (2) 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 (3) 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. 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 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
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<PAGE>
(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."
PRINCIPAL FUNDING ACCOUNT
Pursuant to the Series 1997-K 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, 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-K
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<PAGE>
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. 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 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 and the denominator of which is
360, (ii) the Class A 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 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"). If, for any
Transfer Date, the Principal Funding Investment Proceeds are less than the
Covered Amount, the amount of such deficiency (the "Principal Funding
Investment Shortfall") shall be withdrawn, to the extent required and
available, from the Reserve Account and deposited in the Finance Charge
Account and included as Class A Available Funds or Class B Available Funds, as
applicable, for such Transfer Date.
RESERVE ACCOUNT
Pursuant to the Series 1997-K 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 during the Controlled
Accumulation Period and on the first Transfer Date with respect to 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 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-K. 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 shall distribute such excess to the
Collateral Interest Holder for application in accordance with the terms of the
Loan Agreement.
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.
S-41
<PAGE>
On or before each Transfer Date with respect to the Controlled Accumulation
Period and on the first Transfer Date with respect to 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-K 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 earlier to occur of (a) the
termination of the Trust pursuant to the Agreement and (b) if the Controlled
Accumulation Period has not commenced, the first Transfer Date with respect to
the Rapid Amortization Period or, if the Controlled Accumulation Period has
commenced, the earlier to occur of (i) the first Transfer Date with respect to
the Rapid Amortization Period and (ii) 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 distributed to the
Collateral Interest Holder for application in accordance with the terms of the
Loan Agreement. Any amounts withdrawn from the Reserve Account and distributed
to the Collateral Interest Holder as described above will not be available for
distribution to the Certificateholders.
PAY OUT EVENTS
As described above, the Revolving Period will continue through October 31,
2004 (unless such date is postponed as described under "--Postponement of
Controlled Accumulation Period"), unless a Pay Out Event occurs prior to such
date. A "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-K 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-K
Supplement, which failure has a material adverse effect on the
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-K 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;
S-42
<PAGE>
(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;
(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;
(g) certain events of insolvency, conservatorship or receivership
relating to the Seller;
(h) the Seller becomes unable for any reason to transfer Receivables to
the Trust in accordance with the provisions of the Agreement; or
(i) 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) above, a Pay
Out Event will be deemed to have occurred with respect to the Certificates
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 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 (g), (h) or (i), a Pay Out Event with respect to all
Series then outstanding, and in the case of any event described in clause (c),
(d) or (f), a 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 Pay Out
Event is deemed to have occurred, the Rapid Amortization Period will commence.
In such event, distributions of principal to the Certificateholders will begin
on the first Distribution Date following the month in which such Pay Out Event
occurred. If, because of the occurrence of a Pay Out Event, the Rapid
Amortization Period begins on or prior to September 30, 2005,
Certificateholders may begin receiving distributions of principal earlier than
they otherwise would have, which may shorten the average life of the
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 $1,625,000. 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, that with respect to the first Transfer Date, the Servicer
Interchange may equal but shall not exceed $609,375. 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.
S-43
<PAGE>
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 $863,281.24. 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 $76,171.88.
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 $76,171.88. 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-K
Supplement, the Series 1997-K 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-K
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-K
Supplement.
S-44
<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 and
the Class B Certificates (together, the "Underwriting Agreement") between the
Seller and Credit Suisse First Boston Corporation (the "Underwriter"), the
Seller has agreed to sell to the Underwriter, and the Underwriter has agreed
to purchase, the Class A Certificates and the Class B Certificates.
In the Underwriting Agreement, the Underwriter has agreed, subject to the
terms and conditions set forth therein, to purchase all of the Certificates
offered hereby if any of the Certificates are purchased. The Underwriter has
agreed to reimburse the Seller for certain expenses of the issuance and
distribution of the Certificates.
The Underwriter proposes 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 0.135% of the principal amount
of the Class A Certificates. The Underwriter may allow, and such dealers may
reallow, concessions not in excess of 0.125% of the principal amount of the
Class A Certificates to certain brokers and dealers. The Underwriter may sell
some of the Class A Certificates to a trust with respect to which the
Underwriter will act as depositor. The Underwriter proposes 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 0.180% of the principal amount of the Class B Certificates. The
Underwriter may allow, and such dealers may reallow, concessions not in excess
of 0.125% 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 Underwriter.
The 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;
(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 Underwriter against certain liabilities,
including liabilities under the Securities Act, or contribute to payments the
Underwriter may be required to make in respect thereof.
The Underwriter 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 Underwriter
to reclaim a selling concession from a syndicate member when the Certificates
S-45
<PAGE>
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 the Underwriter represents that the
Underwriter will engage in any such transactions or that such transactions,
once commenced, will not be discontinued without notice at any time.
In the ordinary course of business, the Underwriter and its affiliates have
engaged and may engage in investment banking and/or commercial transactions
with MBNA, its affiliates and the Trust and receive customary fees in
connection therewith.
S-46
<PAGE>
INDEX OF TERMS FOR PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
TERM PAGE
- ---- ----
<S> <C>
Accounts........................................................ S-1, S-3
Accumulation Period Length...................................... S-30
Accumulation Shortfall.......................................... S-9, S-38
Additional Interest............................................. S-8
Adjusted Investor Interest...................................... S-5
Agreement....................................................... S-3
Available Investor Principal Collections........................ S-29
Available Reserve Account Amount................................ S-42
Bank Portfolio.................................................. S-3
Base Rate....................................................... S-24
Certificateholder Servicing Fee................................. S-44
Certificateholders.............................................. S-3
Certificates.................................................... S-1, S-3
Class A Additional Interest..................................... S-27
Class A Adjusted Investor Interest.............................. S-5, S-32
Class A Available Funds......................................... S-28
Class A Certificate Rate........................................ S-2, S-5, S-28
Class A Certificateholders...................................... S-3
Class A Certificates............................................ S-1, S-3
Class A Fixed Allocation........................................ S-32
Class A Floating Allocation..................................... S-31
Class A Investor Charge-Off..................................... S-13, S-40
Class A Investor Default Amount................................. S-39
Class A Investor Interest....................................... S-4, S-5, S-32
Class A Monthly Interest........................................ S-35
Class A Monthly Principal....................................... S-37
Class A Required Amount......................................... S-12, S-33
Class A Servicing Fee........................................... S-44
Class B Additional Interest..................................... S-28
Class B Adjusted Investor Interest.............................. S-5, S-32
Class B Available Funds......................................... S-28
Class B Certificate Rate........................................ S-2, S-5, S-28
Class B Certificateholders...................................... S-3
Class B Certificates............................................ S-1, S-3
Class B Fixed Allocation........................................ S-32
Class B Floating Allocation..................................... S-31
Class B Investor Charge-Off..................................... S-13, S-40
Class B Investor Default Amount................................. S-39
Class B Investor Interest....................................... S-4, S-5, S-32
Class B Monthly Interest........................................ S-35
Class B Monthly Principal....................................... S-37
Class B Required Amount......................................... S-12, S-33
Class B Servicing Fee........................................... S-44
Closing Date.................................................... S-2, S-4
Code............................................................ S-16
Collateral Available Funds...................................... S-35
Collateral Charge-Off........................................... S-40
Collateral Default Amount....................................... S-39
</TABLE>
S-47
<PAGE>
<TABLE>
<CAPTION>
TERM PAGE
- ---- ----
<S> <C>
Collateral Fixed Allocation..................................... S-32
Collateral Floating Allocation.................................. S-31
Collateral Interest............................................. S-4, S-32
Collateral Interest Holder...................................... S-4
Collateral Interest Servicing Fee............................... S-44
Collateral Monthly Interest..................................... S-37
Collateral Monthly Principal.................................... S-38
Collateral Rate................................................. S-37
Controlled Accumulation Amount.................................. S-38
Controlled Accumulation Period.................................. S-8
Controlled Deposit Amount....................................... S-9, S-23
Covered Amount.................................................. S-10, S-41
Cut-Off Date.................................................... S-4
Default Amount.................................................. S-39
Distribution Date............................................... S-2, S-8
ERISA........................................................... S-16
Excess Spread................................................... S-12, S-35
Fixed Investor Percentage....................................... S-31
Floating Investor Percentage.................................... S-31
Group One....................................................... S-14
Initial Collateral Interest..................................... S-13
Interest Period................................................. S-8
Investor Default Amount......................................... S-39
Investor Interest............................................... S-4
Investor Servicing Fee.......................................... S-43
LIBOR........................................................... S-2, S-5, S-28
LIBOR Determination Date........................................ S-28
Loan Agreement.................................................. S-14
MBNA............................................................ S-1
Minimum Aggregate Principal Receivables......................... S-19
Minimum Seller Interest......................................... S-19
Monthly Period.................................................. S-6
Net Servicing Fee Rate.......................................... S-44
OCMS............................................................ S-17
Pay Out Event................................................... S-42
Portfolio Yield................................................. S-24
Principal Funding Account....................................... S-9, S-40
Principal Funding Account Balance............................... S-23
Principal Funding Investment Proceeds........................... S-10, S-41
Principal Funding Investment Shortfall.......................... S-10, S-41
Principal Shortfalls............................................ S-38
Rapid Amortization Period....................................... S-11
Rating Agency Condition......................................... S-39
Reallocated Class B Principal Collections....................... S-34
Reallocated Collateral Principal Collections.................... S-34
Reallocated Principal Collections............................... S-34
Receivables..................................................... S-1, S-3
</TABLE>
S-48
<PAGE>
<TABLE>
<CAPTION>
TERM PAGE
- ---- ----
<S> <C>
Record Date.......................................................... S-27
Reference Banks...................................................... S-29
Required Amount...................................................... S-12
Required Collateral Interest......................................... S-13, S-39
Required Reserve Account Amount...................................... S-41
Reserve Account...................................................... S-41
Reserve Account Funding Date......................................... S-41
Revolving Period..................................................... S-8
Scheduled Payment Date............................................... S-2
Seller............................................................... S-3
Seller Certificate................................................... S-6
Seller Interest...................................................... S-4
Seller Percentage.................................................... S-27
Series 1997-K........................................................ S-3
Series 1997-K Supplement............................................. S-3
Series 1997-K Termination Date....................................... S-6
Servicer Interchange................................................. S-43
Shared Principal Collections......................................... S-14, S-38
Telerate Page 3750................................................... S-29
Transfer Date........................................................ S-34
Trust................................................................ S-1, S-3
Trust Portfolio...................................................... S-19
Trustee.............................................................. S-3
Underwriter.......................................................... S-45
Underwriting Agreement............................................... S-45
</TABLE>
S-49
<PAGE>
ANNEX I
OTHER SERIES ISSUED
The table below sets forth the principal characteristics of the thirty-eight
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 September 30, 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 September 30, 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>
37.Series 1997-I
<TABLE>
<S> <C>
Initial Class A Investor Interest...............................$637,500,000
Class A Certificate Rate.....................................6.55% per annum
Initial Class B Investor Interest................................$56,250,000
Class B Certificate Rate................One-Month LIBOR plus 0.31% per annum
Controlled Accumulation Amount..................................$57,812,500*
Scheduled Payment Date.........................August 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-I Termination Date................January 2007 Distribution Date
Series Issuance Date.........................................August 26, 1997
</TABLE>
A-11
<PAGE>
38.Series 1997-J
<TABLE>
<S> <C>
Initial Class A Investor Interest...............................$637,500,000
Class A Certificate Rate................One-Month LIBOR plus 0.12% 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......................September 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-J Termination Date...............February 2007 Distribution Date
Series Issuance Date......................................September 10, 1997
</TABLE>
- --------
* Subject to change if the commencement of the Accumulation Period or
Controlled Accumulation Period, as applicable, is delayed.
A-12
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
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.
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TABLE OF CONTENTS
Prospectus Supplement
<TABLE>
<CAPTION>
Page
----
<S> <C>
Summary of Terms........................................................... S-3
MBNA's Credit Card Portfolio............................................... S-17
The Receivables............................................................ S-19
Maturity Assumptions....................................................... S-23
Receivable Yield Considerations............................................ S-25
MBNA and MBNA Corporation.................................................. S-26
Description of the Certificates............................................ S-26
Underwriting............................................................... S-45
Index of Terms for Prospectus Supplement................................... S-47
Annex I: Other Series Issued............................................... A-1
</TABLE>
Prospectus
<TABLE>
<S> <C>
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>
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UNTIL JANUARY 7, 1998, 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.
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MBNA MASTER
CREDIT CARD TRUST II
$637,500,000 CLASS A
FLOATING RATE ASSET BACKED
CERTIFICATES, SERIES 1997-K
$56,250,000 CLASS B
FLOATING RATE ASSET BACKED
CERTIFICATES, SERIES 1997-K
[LOGO OF MBNA AMERICA(R) APPEARS HERE]
MBNA AMERICA BANK,
NATIONAL ASSOCIATION
SELLER AND SERVICER
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PROSPECTUS SUPPLEMENT
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CREDIT SUISSE FIRST BOSTON
[LOGO OF RECYCLED PAPER APPEARS HERE]
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