<PAGE>
RULE NO.424(b)(2)
REGISTRATION NO. 333-17253
333-17253-1
Prospectus Supplement to Prospectus Dated February 27, 1998
MBNA MASTER CREDIT CARD TRUST II
Issuer
MBNA AMERICA BANK, NATIONAL ASSOCIATION
Seller and Servicer
SERIES 1998-A
$637,500,000 CLASS A FLOATING RATE ASSET BACKED CERTIFICATES
CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE 10 IN THE PROSPECTUS.
A Class A Certificate is not a deposit and neither the Class A Certificates
nor the underlying accounts or receivables are insured or guaranteed by the
Federal Deposit Insurance Corporation or any other governmental agency.
The Class A Certificates will represent interests in the trust only and will
not represent interests in or obligations of MBNA or any MBNA affiliate.
This prospectus supplement may be used to offer and sell the Class A
Certificates only if accompanied by the prospectus.
THE TRUST WILL ISSUE--
Class A Certificates
--------------------
Principal amount $637,500,000
Certificate rate One-Month LIBOR
plus 0.11% annually
Interest paid Monthly
First interest payment May 15, 1998
date
Scheduled principal March 17, 2003
payment date
Legal final maturity August 15, 2005
CREDIT ENHANCEMENT--
The Trust is also issuing:
. Class B Certificates in the amount of $56,250,000 that are
subordinated to the Class A Certificates. Subordination of the
Class B Certificates provides credit enhancement for the Class
A Certificates.
. A Collateral Interest in the amount of $56,250,000 that is
subordinated to the Class A Certificates and the Class B
Certificates. Subordination of the Collateral Interest
provides credit enhancement for both the Class A and the Class
B Certificates.
This prospectus supplement and the accompanying prospectus
relate to the offering of the Class A Certificates only.
NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED THE CLASS A
CERTIFICATES OR DETERMINED THAT THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS IS
ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Underwriters
J.P. MORGAN & CO.
BEAR, STEARNS & CO. INC.
CHASE SECURITIES INC.
CREDIT SUISSE FIRST BOSTON
GOLDMAN, SACHS & CO.
March 3, 1998
<PAGE>
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS
We provide information to you about the Class A Certificates in two separate
documents that progressively provide more detail: (a) the accompanying
Prospectus, which provides general information, some of which may not apply to
your Class A Certificates and (b) this Prospectus Supplement, which describes
the specific terms of your Class A Certificates.
IF THE TERMS OF YOUR CLASS A CERTIFICATES VARY BETWEEN THIS PROSPECTUS
SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS, YOU SHOULD RELY ON THE INFORMATION
IN THIS PROSPECTUS SUPPLEMENT.
We include cross-references in this Prospectus Supplement and the
accompanying Prospectus to captions in these materials where you can find
further related discussions. The following Table of Contents and the Table of
Contents included in the accompanying Prospectus provide the pages on which
these captions are located.
You can find a listing of the pages where capitalized terms used in this
Prospectus Supplement and the accompanying Prospectus are defined under the
caption "Index of Terms for Prospectus Supplement" beginning on page S-46 in
this document and under the caption "Index of Terms for Prospectus" beginning
on page 56 in the accompanying Prospectus.
----------------
S-2
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C>
SUMMARY OF TERMS........................................................... S-5
Offered Securities........................................................ S-5
Interest Payments........................................................ S-5
Principal Payments....................................................... S-6
The Class B Certificates.................................................. S-6
The Collateral Interest................................................... S-6
Credit Enhancement........................................................ S-6
Other Interests in the Trust.............................................. S-6
Other Series of Certificates............................................. S-6
The Seller Certificate................................................... S-7
Information About the Receivables......................................... S-7
Collections by the Servicer............................................... S-7
Allocations and Payments to You and Your Series........................... S-7
Allocations of Collections of Finance Charge Receivables................. S-8
Allocations of Collections of Principal Receivables...................... S-9
Revolving Period........................................................ S-11
Controlled Accumulation Period.......................................... S-11
Rapid Amortization Period............................................... S-11
Pay Out Events.......................................................... S-11
Shared Principal Collections.............................................. S-12
Denominations............................................................. S-12
Registration, Clearance and Settlement.................................... S-12
Tax Status................................................................ S-13
ERISA Considerations...................................................... S-13
Certificate Ratings....................................................... S-13
Exchange Listing.......................................................... S-13
MBNA'S CREDIT CARD PORTFOLIO............................................... S-14
General................................................................... S-14
Billing and Payments...................................................... S-14
Delinquency and Gross Charge-Off Experience............................... S-14
Interchange............................................................... S-16
THE RECEIVABLES............................................................ S-16
MATURITY ASSUMPTIONS....................................................... S-19
Controlled Accumulation Period............................................ S-19
Rapid Amortization Period................................................. S-20
Pay Out Events............................................................ S-20
Payment Rates............................................................. S-20
</TABLE>
<TABLE>
<CAPTION>
Page
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<S> <C>
RECEIVABLE YIELD CONSIDERATIONS............................................ S-21
MBNA AND MBNA CORPORATION.................................................. S-22
DESCRIPTION OF THE CERTIFICATES............................................ S-23
General................................................................... S-23
Exchanges................................................................. S-24
Interest Payments......................................................... S-24
Principal Payments........................................................ S-26
Postponement of Controlled Accumulation Period............................ S-26
Subordination............................................................. S-27
Allocation Percentages.................................................... S-27
Reallocation of Cash Flows................................................ S-30
Application of Collections................................................ S-31
Allocations.............................................................. S-31
Payment of Interest, Fees and Other Items................................ S-32
Excess Spread............................................................ S-33
Payments of Principal.................................................... S-34
Shared Principal Collections.............................................. S-36
Required Collateral Interest.............................................. S-36
Defaulted Receivables; Investor Charge-Offs............................... S-37
Principal Funding Account................................................. S-38
Reserve Account........................................................... S-38
Pay Out Events............................................................ S-40
Servicing Compensation and Payment of Expenses............................ S-41
Reports to Certificateholders............................................. S-42
Amendments................................................................ S-42
ERISA CONSIDERATIONS....................................................... S-42
Class A Certificates...................................................... S-42
Consultation With Counsel................................................. S-43
UNDERWRITING............................................................... S-44
INDEX OF TERMS FOR PROSPECTUS SUPPLEMENT................................... S-46
ANNEX I: OTHER SERIES ISSUED AND OUTSTANDING............................... A-1
</TABLE>
S-3
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[THIS PAGE IS INTENTIONALLY LEFT BLANK.]
S-4
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SUMMARY OF TERMS
. THIS SUMMARY HIGHLIGHTS SELECTED INFORMATION FROM THIS DOCUMENT AND DOES NOT
CONTAIN ALL OF THE INFORMATION THAT YOU NEED TO CONSIDER IN MAKING YOUR
INVESTMENT DECISION. TO UNDERSTAND ALL OF THE TERMS OF THE OFFERING OF THE
CLASS A CERTIFICATES, READ CAREFULLY THIS ENTIRE DOCUMENT AND THE
ACCOMPANYING PROSPECTUS.
. THIS SUMMARY PROVIDES AN OVERVIEW OF CERTAIN CALCULATIONS, CASH FLOWS AND
OTHER INFORMATION TO AID YOUR UNDERSTANDING AND IS QUALIFIED BY THE FULL
DESCRIPTION OF THESE CALCULATIONS, CASH FLOWS AND OTHER INFORMATION IN THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS.
OFFERED SECURITIES
MBNA Master Credit Card Trust II (the "Trust") is offering the Class A Floating
Rate Asset Backed Certificates (the "Class A Certificates") as part of Series
1998-A. The Class A Certificates represent an interest in the assets of the
Trust.
INTEREST PAYMENTS
The Class A Certificates will accrue interest for each Interest Period at the
Class A Certificate Rate set on the related LIBOR Determination Date. The
"Class A Certificate Rate" is an annual rate equal to LIBOR plus 0.11%.
Interest accrued during each Interest Period will be due on each Distribution
Date. Any interest due but not paid on a Distribution Date will be payable on
the next Distribution Date together with additional interest at the Class A
Certificate Rate plus 2% per annum.
. A "Distribution Date" is the 15th day of each month, or if that day is not a
business day, the next business day. The first Distribution Date is May 15,
1998.
. Each "Interest Period" begins on and includes a Distribution Date and ends on
and excludes the next Distribution Date. However, the first Interest Period
will begin on and include March 18, 1998 (the "Closing Date") and end on and
exclude May 15, 1998, the first Distribution Date.
. LIBOR is the rate for deposits in U.S. dollars for a one-month period which
appears on the Dow Jones Telerate Page 3750 (or similar replacement page) as
of 11:00 a.m., London time, on the related LIBOR Determination Date. In
addition, see "Description of the Certificates--Interest Payments" in this
Prospectus Supplement for a discussion of the determination of LIBOR if that
rate does not appear on Dow Jones Telerate Page 3750 (or similar replacement
page).
. "LIBOR Determination Dates" are:
. March 16, 1998, for the period beginning on and including the Closing Date
and ending on and excluding April 15, 1998;
. April 9, 1998 for the period beginning on and including April 15, 1998 and
ending on and excluding May 15, 1998; and
. the second London business day prior to the first day of each Interest
Period, for each Interest Period following the first Interest Period.
The following time line shows the relevant dates for the first two Interest
Periods.
FIRST TWO INTEREST PERIODS
[TIMELINE APPEARS HERE]
Other Interest Periods will follow sequentially after the second Interest
Period in the same manner as is shown in the time line.
See "Description of the Certificates--Interest Payments" in this Prospectus
Supplement for a discussion of the determination of amounts available to pay
interest and for the definition of business day and London business day.
S-5
<PAGE>
You may obtain the Class A Certificate Rate for the current and immediately
preceding Interest Periods by telephoning The Bank of New York, the Trustee, at
its Corporate Trust Office at (212) 815-5738.
PRINCIPAL PAYMENTS
You are expected to receive payment of principal in full on the "Scheduled
Payment Date" which is March 17, 2003, or, if that date is not a business day,
the next business day. However, certain circumstances could cause principal to
be paid earlier or later, or in reduced amounts. No principal will be paid to
the Class B Certificateholders until the Class A Certificateholders are paid in
full. See "Maturity Assumptions" in this Prospectus Supplement and in the
Prospectus and "Description of the Certificates--Allocation Percentages" in
this Prospectus Supplement.
The final payment of principal and interest on the Class A Certificates will be
made no later than August 15, 2005, or, if that date is not a business day, the
next business day, called the "Legal Final Maturity" or the "Series 1998-A
Termination Date."
See "Description of the Certificates--Principal Payments" in this Prospectus
Supplement for a discussion of the determination of amounts available to pay
principal.
THE CLASS B CERTIFICATES
The Trust is also issuing the Class B Floating Rate Asset Backed Certificates
(the "Class B Certificates") as part of Series 1998-A. The initial principal
amount of the Class B Certificates is $56,250,000. The Class B Certificates
represent an interest in the assets of the Trust. The Class B Certificates are
subordinated to the Class A Certificates. As a subordinated interest, the Class
B Certificates are a form of Credit Enhancement for the Class A Certificates.
The Class A Certificates and the Class B Certificates together are referred to
as the "Certificates."
THE CLASS B CERTIFICATES ARE NOT BEING OFFERED THROUGH THIS PROSPECTUS
SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS.
THE COLLATERAL INTEREST
The Trust is also issuing an interest in the assets of the Trust that is
subordinated to the Certificates called the "Collateral Interest." The initial
size of the Collateral Interest is $56,250,000, representing 7.5% of the
initial aggregate principal amount of the Certificates and the Collateral
Interest. As a subordinated interest, the Collateral Interest is a form of
Credit Enhancement for the Certificates. The Collateral Interest Holder will
have voting and certain other rights as if the Collateral Interest were a
subordinated class of certificates.
THE COLLATERAL INTEREST IS NOT BEING OFFERED THROUGH THIS PROSPECTUS SUPPLEMENT
AND THE ACCOMPANYING PROSPECTUS.
CREDIT ENHANCEMENT
Credit Enhancement for your Series is for your Series's benefit only, and you
are not entitled to the benefits of any credit enhancement available to other
Series.
Subordination of the Class B Certificates provides Credit Enhancement for the
Class A Certificates. Subordination of the Collateral Interest provides Credit
Enhancement for both the Class A Certificates and the Class B Certificates. The
Collateral Interest and the Class B Investor Interest must be reduced to zero
before the Class A Investor Interest will suffer any loss of principal or
interest. The Collateral Interest must be reduced to zero before the Class B
Investor Interest will suffer any loss of principal or interest. For a
description of the events which may lead to a reduction of the Class A Investor
Interest, the Class B Investor Interest and the Collateral Interest, see
"Description of the Certificates--Reallocation of Cash Flows," "-- Application
of Collections" and "--Defaulted Receivables; Investor Charge-Offs" in this
Prospectus Supplement.
OTHER INTERESTS IN THE TRUST
OTHER SERIES OF CERTIFICATES
The Trust has issued other Series of certificates and expects to issue
additional Series of certificates. When issued by the Trust, the certificates
of each of
S-6
<PAGE>
those Series also represent an interest in the assets of the Trust. You can
review a summary of each Series previously issued and currently outstanding
under the caption "Annex I: Other Series Issued and Outstanding" included at
the end of this Prospectus Supplement. The Trust may issue additional Series
with terms that may be different from any other Series without prior review or
consent by any Certificateholders.
THE SELLER CERTIFICATE
MBNA initially will own the "Seller Certificate," which represents the
remaining interest in the assets of the Trust not represented by the
Certificates, the Collateral Interest and the other interests issued by the
Trust. The Seller's interest does not provide credit enhancement for your
Series or any other Series.
INFORMATION ABOUT THE RECEIVABLES
The Trust assets include Receivables in certain MasterCard(R) and VISA(R)*
revolving credit card accounts selected from MBNA's credit card account
portfolio.
The Receivables consist of both Principal Receivables and Finance Charge
Receivables.
"Principal Receivables" are, generally, (a) amounts charged by cardholders for
goods and services and (b) cash advances.
"Finance Charge Receivables" are (a) the related finance charges and credit
card fees and (b) for your Series, certain amounts of fees, called Interchange,
collected through MasterCard and VISA and annual membership fees collected from
cardholders.
See "MBNA's Credit Card Portfolio--Interchange" in this Prospectus Supplement
and "MBNA's Credit Card Activities--Interchange" and "Description of the
Certificates--Transfer of Annual Membership Fees" in the accompanying
Prospectus.
COLLECTIONS BY THE SERVICER
The Servicer will collect payments on the Receivables and will deposit those
collections in an account. The Servicer will keep track of those collections
that are Finance Charge Receivables and those that are Principal Receivables.
ALLOCATIONS AND PAYMENTS TO YOU AND YOUR SERIES
Each month, the Servicer will allocate collections and the amount of
Receivables that are not collected and are written off as uncollectible, called
the Default Amount, among:
. your Series, based on the size of the Investor Interest (initially
$750,000,000);
. other outstanding Series, based on the size of their respective interests in
the Trust; and
. the holder of the Seller Certificate, based on the size of the Seller
Interest.
The Trust assets allocated to your Series will be allocated to the following,
based on varying percentages:
. holders of the Class A Certificates, based on the Class A Investor Interest
(initially $637,500,000);
. holders of the Class B Certificates, based on the Class B Investor Interest
(initially $56,250,000); and
. the holder of the Collateral Interest, based on the Collateral Interest
(initially $56,250,000).
See the following chart and "Description of the Certificates--Allocation
Percentages" in this Prospectus Supplement.
The following chart illustrates the Trust's general allocation structure only
and does not reflect the relative percentages of collections or other amounts
- --------
* MasterCard(R) and VISA(R) are federally registered servicemarks of MasterCard
International Inc. and Visa U.S.A., Inc., respectively.
S-7
<PAGE>
allocated to the Seller's Interest, to any Series, including your Series, or to
holders of the Class A Certificates, the Class B Certificates or the Collateral
Interest.
ALLOCATION OF TRUST ASSETS
[CHART APPEARS HERE]
You are entitled to receive payments of interest and principal based upon
allocations to your Series. The Investor Interest, which is the basis for
allocations to your Series, is the sum of (a) the Class A Investor Interest,
(b) the Class B Investor Interest and (c) the Collateral Interest. The Class A
Investor Interest, the Class B Investor Interest and the Collateral Interest
will initially equal the outstanding principal amount of the Class A
Certificates, the Class B Certificates and the Collateral Interest. The
Investor Interest will decline as a result of principal payments and may
decline due to the writing off of Receivables or other reasons. If your
investor interest declines, amounts allocated and available for payment to your
Series and to you will be reduced. For a description of the events which may
lead to these reductions, see "Description of the Certificates--Reallocation of
Cash Flows" in this Prospectus Supplement.
ALLOCATIONS OF COLLECTIONS OF FINANCE CHARGE RECEIVABLES
The following chart demonstrates the manner in which collections of Finance
Charge Receivables are allocated and applied to your Series. THE CHART IS A
SIMPLIFIED DEMONSTRATION OF CERTAIN ALLOCATION AND PAYMENT PROVISIONS AND IS
QUALIFIED BY THE FULL DESCRIPTIONS OF THESE PROVISIONS IN THIS PROSPECTUS
SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS.
Step 1: Collections of Finance Charge Receivables for your Series are
allocated, based on varying percentages, among the Class A Investor Interest,
the Class B Investor Interest and the Collateral Interest.
Step 2: Collections of Finance Charge Receivables allocated to the Class A
Investor Interest are applied to cover, in the following priority: the
interest payment due to Class A, Class A's portion of the servicing fee due to
the Servicer and Class A's portion of the Default Amount.
Collections of Finance Charge Receivables allocated to the Class B Investor
Interest are applied to cover, in the following priority: the interest
payment due to Class B and Class B's portion of the servicing fee due to the
Servicer.
Collections of Finance Charge Receivables allocated to the Collateral
Interest are applied, under certain circumstances, to cover the Collateral
Interest's portion of the servicing fee due to the Servicer.
Remaining collections of Finance Charge Receivables allocated to the Class B
Investor Interest and the Collateral Interest are applied in Step 3 because
of their subordinated status.
Step 3: Collections of Finance Charge Receivables allocated to your Series and
not used in Step 2 are treated as Excess Spread and applied, in the following
priority, to cover:
. the interest payment due to Class A, Class A's portion of the servicing fee
due to the Servicer and Class A's portion of the Default Amount, each to the
extent not covered in Step 2.
. reimbursement of certain reductions of the Class A Investor Interest.
. the interest payment due to Class B and Class B's portion of the servicing
fee due to the Servicer, each to the extent not covered in Step 2.
. Class B's portion of the Default Amount.
. reimbursement of certain reductions of the Class B Investor Interest.
S-8
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Remaining Excess Spread is then applied, in the following priority, to cover,
among other things:
. the interest payment due to the Collateral Interest;
. the Collateral Interest's portion of the servicing fee due to the Servicer,
to the extent not covered in Step 2;
. the Collateral Interest's portion of the Default Amount;
. reimbursement of reductions of the Collateral Interest if it is below its
minimum required amount;
. funding, if necessary, of a reserve account maintained to cover certain
interest payment shortfalls, if any; and
. other amounts owing to the Collateral Interest.
See "Description of the Certificates--Application of Collections" in this
Prospectus Supplement.
ALLOCATIONS OF COLLECTIONS OF FINANCE CHARGE RECEIVABLES
[CHART APPEARS HERE]
ALLOCATIONS OF COLLECTIONS OF PRINCIPAL RECEIVABLES
The following chart demonstrates the manner in which collections of Principal
Receivables are allocated and applied to your Series. THE CHART IS A SIMPLIFIED
DEMONSTRATION OF CERTAIN ALLOCATION AND PAYMENT PROVISIONS AND IS QUALIFIED BY
THE FULL DESCRIPTIONS OF THESE PROVISIONS IN THIS PROSPECTUS SUPPLEMENT AND THE
ACCOMPANYING PROSPECTUS.
Step 1: Collections of Principal Receivables for your Series are allocated,
based on varying percentages, among the Class A Investor Interest, the Class B
Investor Interest and the Collateral Interest.
S-9
<PAGE>
Step 2: Collections of Principal Receivables allocated to the Collateral
Interest and the Class B Investor Interest may be reallocated and made
available to pay amounts due to the Class A Investor Interest that have not
been paid by either the Class A's share of collections of Finance Charge
Receivables or Excess Spread. If required Class A amounts are satisfied, the
Collateral Interest also provides the same type of protection to the Class B
Investor Interest. Certain collections which are reallocated for Class A or
Class B will not be made part of Available Investor Principal Collections.
Step 3: Collections of Principal Receivables allocated to your Series and not
used in Step 2 above are combined with shared principal collections from other
Series, to the extent necessary and available, and treated as Available
Investor Principal Collections.
Available Investor Principal Collections may be paid, or accumulated and then
paid, to you as payments of principal. The amount, priority and timing of
your principal payments, if any, depend on whether your Series is in the
Revolving Period, the Controlled Accumulation Period or the Rapid
Amortization Period, as described below.
The Class A Certificates will be paid in full before the Class B Certificates
receive any payments of principal.
As Available Investor Principal Collections are accumulated for the Class A
Certificates and the Class B Certificates, the minimum required credit
enhancement (i.e. the Collateral Interest) will decrease and Available
Investor Principal Collections will be paid to the holder of the Collateral
Interest to the extent of this decrease.
See "Maturity Assumptions" and "Description of the Certificates--Application
of Collections" in this Prospectus Supplement.
Step 4: Collections of Principal Receivables allocated to your Series and not
used in Steps 2 and 3 above may be paid to other Series, to the extent
necessary, or to the Seller.
ALLOCATION OF COLLECTIONS OF PRINCIPAL RECEIVABLES
[CHART APPEARS HERE]
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REVOLVING PERIOD: The Certificates will have a period of time, called the
"Revolving Period," when the Trust will not pay, or accumulate, principal for
Certificateholders. In general, during the Revolving Period the Trust will pay
available principal to other Series or the holder of the Seller Certificate.
See "Description of the Certificates--Principal Payments" and "--Application of
Collections" in this Prospectus Supplement.
The Revolving Period starts on the Closing Date and ends on the earlier to
begin of:
. the Controlled Accumulation Period; or
. the Rapid Amortization Period.
CONTROLLED ACCUMULATION PERIOD: During the period called the "Controlled
Accumulation Period," each month the Servicer will deposit a specified amount
in the Principal Funding Account in order to pay the Certificates in full on
the Scheduled Payment Date.
Each month, the Trust will pay principal not required to be deposited in the
Principal Funding Account to other Series or the holder of the Seller
Certificate. Each month, if the amount actually deposited in the Principal
Funding Account is less than the required deposit, the amount of this
deficiency will be carried forward as a shortfall and included in the next
month's required deposit.
See "Description of the Certificates--Principal Payments" and "--Application of
Collections" in this Prospectus Supplement. For information about the
application of money on deposit in the Principal Funding Account, including any
net investment earnings, see "Description of the Certificates--Principal
Funding Account" in this Prospectus Supplement.
On the Scheduled Payment Date, the Trust will use the money on deposit in the
Principal Funding Account to pay (a) the Class A Investor Interest and (b) if
the Class A Investor Interest is paid in full, the Class B Investor Interest.
You should be aware that there may not be sufficient amounts available to pay
principal in full for the Class A Investor Interest and the Class B Investor
Interest on the Scheduled Payment Date. In addition, if the money on deposit in
the Principal Funding Account is insufficient to pay these amounts on the
Scheduled Payment Date or if a Pay Out Event occurs, the Rapid Amortization
Period will begin and the timing of your principal payments could change. See
"Maturity Assumptions" in this Prospectus Supplement and in the accompanying
Prospectus.
The Controlled Accumulation Period is scheduled to begin on February 28, 2002
but in some cases may be delayed to no later than January 31, 2003. See
"Description of the Certificates--Postponement of Controlled Accumulation
Period" in this Prospectus Supplement.
The Controlled Accumulation Period will end when any one of the following
occurs:
. the Investor Interest is paid in full;
. a Rapid Amortization Period begins; or
. the Series 1998-A Termination Date.
RAPID AMORTIZATION PERIOD: If a period called the "Rapid Amortization Period"
begins, the Trust will use any available principal collections allocated to
your Series to pay (a) the Class A Investor Interest, (b) if the Class A
Investor Interest is paid in full, the Class B Investor Interest and (c) if the
Class B Investor Interest is paid in full, the Collateral Interest. These
payments will begin on the Distribution Date in the month after the Rapid
Amortization Period begins.
The Rapid Amortization Period will begin if a Pay Out Event occurs and will end
when any one of the following occurs:
. the Investor Interest is paid in full;
. the Series 1998-A Termination Date; or
. the Trust Termination Date.
PAY OUT EVENTS: Certain adverse events called Pay Out Events might lead to the
start of a Rapid Amortization Period and the end of either the Revolving Period
or the Controlled Accumulation Period.
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A Pay Out Event for your Series will include the following events:
. the Seller does not make any required payment or deposit;
. the Seller materially violates any other obligation or agreement causing you
to be adversely affected, if (a) the Seller does not remedy the violation
within 60 days after it has received written notice and (b) you continue to
be materially and adversely affected for the 60-day period;
. the Seller provides certain representations, warranties or other information
which were materially incorrect at the time they were provided causing you to
be adversely affected, if (a) they continue to be materially incorrect 60
days after the Seller has received written notice and (b) you continue to be
materially and adversely affected for the 60-day period;
. the average yield on the Receivables is below a minimum level called the Base
Rate for three consecutive monthly periods;
. the Seller fails to transfer additional assets to the Trust when required;
. certain defaults by the Servicer that have a material adverse effect on you;
. you are not paid in full on the Scheduled Payment Date;
. certain events of insolvency or receivership relating to the Seller;
. the Seller is unable to transfer Receivables to the Trust as required under
the Agreement; or
. the Trust becomes an "investment company" under the Investment Company Act of
1940.
For a more detailed discussion of these Pay Out Events, see "Description of the
Certificates--Pay Out Events" in this Prospectus Supplement. In addition, see
"Description of the Certificates--Pay Out Events" in the accompanying
Prospectus for a discussion of the consequences of an insolvency or
receivership of the Seller.
SHARED PRINCIPAL COLLECTIONS
This Series is included in a group of Series designated as "Group One." Each
Series identified under the caption "Annex I: Other Series Issued and
Outstanding" included at the end of this Prospectus Supplement is, and other
Series in the future may be, included in Group One. To the extent that
collections of Principal Receivables allocated to your Series are not needed to
make payments or deposits to the Principal Funding Account for your Series,
these collections, called Shared Principal Collections, will be applied to
cover principal payments for other Series within Group One. Any reallocation
for this purpose will not reduce your Series's Investor Interest. In addition,
you may receive the benefits of collections of Principal Receivables and
certain other amounts allocated to other Series in Group One, to the extent
those collections are not needed for those other Series. See "Description of
the Certificates--Shared Principal Collections" in this Prospectus Supplement
and in the accompanying Prospectus.
DENOMINATIONS
Beneficial interests in the Class A Certificates will be offered in minimum
denominations of $1,000 and integral multiples of that amount.
REGISTRATION, CLEARANCE AND SETTLEMENT
Your Class A Certificates will be registered in the name of Cede & Co., as the
nominee of the Depository Trust Company ("DTC"). You will not receive a
definitive certificate representing your interest, except in limited
circumstances described in the accompanying Prospectus when Class A
Certificates in fully registered, certificated form are issued. See
"Description of the Certificates--Definitive Certificates" in the accompanying
Prospectus.
You may elect to hold your Class A Certificates through DTC, in the United
States, or Cedel Bank, societe anonyme ("Cedel") or the Euroclear System
("Euroclear"), in Europe. Transfers within DTC, Cedel or Euroclear, as the case
may be, will be made in accordance with the usual rules and
S-12
<PAGE>
operating procedures of those systems. Cross-market transfers between persons
holding directly or indirectly through DTC and counterparties holding directly
or indirectly through Cedel or Euroclear will be made in DTC through the
relevant depositaries of Cedel or Euroclear. See "Description of the
Certificates--Book-Entry Registration" in the accompanying Prospectus.
We expect that the Class A Certificates will be delivered in book-entry form
through the facilities of DTC, Cedel and Euroclear on or about March 18, 1998.
TAX STATUS
Special Counsel to the Seller is of the opinion that under existing law your
Class A Certificates will be characterized as debt for federal income tax
purposes. Under the Agreement, you and the Seller will agree to treat your
Class A Certificates as debt for federal, state and local income tax purposes
and franchise tax purposes. See "Federal Income Tax Consequences" in the
accompanying Prospectus for additional information concerning the application
of federal income tax laws.
ERISA CONSIDERATIONS
Subject to important considerations described under "ERISA Considerations" in
this Prospectus Supplement and in the accompanying Prospectus, the Class A
Certificates are eligible for purchase by persons investing assets of employee
benefit plans or individual retirement accounts.
CERTIFICATE RATINGS
The Class A Certificates are required to be rated in the highest rating
category by at least one nationally recognized rating organization. See
"Certificate Ratings" in the accompanying Prospectus for a discussion of the
primary factors upon which the ratings are based.
EXCHANGE LISTING
We will apply to list the Class A Certificates on the Luxembourg Stock
Exchange. We cannot guaranty that the application for the listing will be
accepted. You should consult with Bankers Trust Luxembourg S.A., the Luxembourg
listing agent for the Class A Certificates, 14 Boulevard F.D. Roosevelt, L-2450
Luxembourg, phone number (352) 46 02 41, to determine whether or not the Class
A Certificates are listed on the Luxembourg Stock Exchange.
S-13
<PAGE>
MBNA'S CREDIT CARD PORTFOLIO
GENERAL
The receivables (the "Receivables") conveyed or to be conveyed to the Trust
by MBNA America Bank, National Association ("MBNA") pursuant to a pooling and
servicing agreement dated as of August 4, 1994 (as amended from time to time,
the "Agreement") between MBNA, as seller (the "Seller") and as servicer of the
Receivables, and The Bank of New York, as trustee (the "Trustee"), have been or
will be generated from transactions made by holders of selected MasterCard and
VISA credit card accounts (the "Accounts"), including premium accounts and
standard accounts, from the portfolio of MasterCard and Visa accounts owned by
the Seller (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 new 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. Monthly periodic finance charges are not assessed in
most circumstances on previous purchases if all balances shown on the two
previous billing statements are paid by their respective due dates. 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. MBNA also
offers temporary promotional rates.
MBNA assesses annual membership fees 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.
MBNA generally assesses a fee on cash advances and certain purchase
transactions. 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-14
<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 February
20, 1998, 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>
DECEMBER 31,
-----------------------------------------------------------------------
1997 1996 1995
----------------------- ----------------------- -----------------------
PERCENTAGE PERCENTAGE PERCENTAGE
OF TOTAL OF TOTAL OF TOTAL
RECEIVABLES RECEIVABLES RECEIVABLES RECEIVABLES RECEIVABLES RECEIVABLES
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Receivables Outstand-
ing(1)................. $41,567,876 $33,070,523 $24,269,670
Receivables Delinquent:
35 - 64 Days........... $ 799,458 1.92% $ 619,940 1.87% $ 393,142 1.62%
65 - 94 Days........... 386,276 0.93 282,815 0.86 178,038 0.73
95 or more............. 833,957 2.01 606,650 1.83 352,813 1.46
----------- ---- ----------- ---- ----------- ----
Total................. $ 2,019,691 4.86% $ 1,509,405 4.56% $ 923,993 3.81%
=========== ==== =========== ==== =========== ====
</TABLE>
- --------
(1) The Receivables Outstanding on the accounts consist of all amounts due from
cardholders as posted to the accounts as the end of the period shown.
GROSS CHARGE-OFF EXPERIENCE
BANK PORTFOLIO
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
Average Receivables Outstanding(1)..... $36,651,499 $27,781,061 $20,562,315
Total Gross Charge-Offs(2)............. 1,897,006 1,193,375 686,687
Total Gross Charge-Offs as a percentage
of Average Receivables Outstanding.... 5.18% 4.30% 3.34%
</TABLE>
- --------
(1) Average Receivables Outstanding is the average of the daily receivable
balance during the period indicated.
(2) Total Gross Charge-Offs as a percentage of Average Receivables Outstanding
for the month ended January 31, 1998 were 5.32% 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.
S-15
<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" in this Prospectus Supplement and "MBNA's Credit Card
Activities--Interchange" in the accompanying 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 June 22, 1994 (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,
October 2, 1997 and December 17, 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, $1.23
billion and $1.862 billion of Principal Receivables, respectively. In addition,
the Seller will be required to designate Additional Accounts, to the extent
available, (a) to maintain the interest of the Seller in the Trust (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
S-16
<PAGE>
Receivables then existing or thereafter created under such Additional Accounts
to the Trust. Further, pursuant to the Agreement, the Seller will have the
right (subject to certain limitations and conditions) to designate certain
Removed Accounts and to require the Trustee to reconvey all Receivables in such
Removed Accounts to the Seller, whether such Receivables are then existing or
thereafter created. Throughout the term of the Trust, the Accounts from which
the Receivables arise will be the Accounts designated by the Seller on the Cut-
Off Date plus any Additional Accounts minus any Removed Accounts. As of the
Cut-Off Date and, with respect to Receivables in Additional Accounts, as of the
related date of their conveyance to the Trust, and on the date any new
Receivables are created, the Seller will represent and warrant to the Trust
that the Receivables meet the eligibility requirements specified in the
Agreement. See "Description of the Certificates--Representations and
Warranties" in the accompanying Prospectus.
The Receivables in the Trust Portfolio, as of the beginning of the day on
February 20, 1998, included $34,581,613,877 of Principal Receivables and
$675,526,280 of Finance Charge Receivables. The Accounts had an average
Principal Receivable balance of $1,380 and an average credit limit of $9,321.
The percentage of the aggregate total Receivable balance to the aggregate total
credit limit was 15.10%. The average age of the Accounts was approximately 34
months. As of the beginning of the day on February 20, 1998, 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 February
20, 1998, 46.29% of the Accounts were standard accounts and 53.71% 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 34.1% and 65.9%, respectively.
The following tables summarize the Trust Portfolio by various criteria as of
the beginning of the day on February 20, 1998. 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>
NUMBER PERCENTAGE OF PERCENTAGE
OF TOTAL NUMBER OF TOTAL
ACCOUNT BALANCE RANGE ACCOUNTS OF ACCOUNTS RECEIVABLES RECEIVABLES
- --------------------- ---------- ------------- --------------- -----------
<S> <C> <C> <C> <C>
Credit Balance............ 347,520 1.4% $ (40,648,449) (0.1)%
No Balance................ 14,348,784 57.3 0 0.0
$ .01 - $ 5,000.00... 7,665,464 30.6 11,135,680,821 31.6
$ 5,000.01 - $10,000.00... 2,005,484 8.0 13,932,502,694 39.5
$10,000.01 - $15,000.00... 461,074 1.8 5,509,513,333 15.6
$15,000.01 - $20,000.00... 135,311 0.5 2,307,019,143 6.5
$20,000.01 - $25,000.00... 50,077 0.2 1,113,308,481 3.2
$25,000.01 or More........ 39,054 0.2 1,299,764,134 3.7
---------- ----- --------------- -----
Total................... 25,052,768 100.0% $35,257,140,157 100.0%
========== ===== =============== =====
</TABLE>
S-17
<PAGE>
COMPOSITION BY CREDIT LIMIT
TRUST PORTFOLIO
<TABLE>
<CAPTION>
PERCENTAGE OF PERCENTAGE
NUMBER TOTAL NUMBER OF TOTAL
CREDIT LIMIT RANGE OF ACCOUNTS OF ACCOUNTS RECEIVABLES RECEIVABLES
- ------------------ ----------- ------------- --------------- -----------
<S> <C> <C> <C> <C>
Less than or equal to
$5,000.00.............. 6,104,321 24.4% $ 4,085,147,824 11.6%
$ 5,000.01 -
$10,000.00............ 10,469,165 41.8 14,329,635,561 40.6
$10,000.01 -
$15,000.00............ 4,859,153 19.4 7,882,572,482 22.4
$15,000.01 -
$20,000.00............ 1,908,450 7.6 3,666,240,247 10.4
$20,000.01 -
$25,000.00............ 1,034,461 4.1 2,514,630,524 7.1
$25,000.01 or More...... 677,218 2.7 2,778,913,519 7.9
---------- ----- --------------- -----
Total................. 25,052,768 100.0% $35,257,140,157 100.0%
========== ===== =============== =====
</TABLE>
COMPOSITION BY PERIOD OF DELINQUENCY
TRUST PORTFOLIO
<TABLE>
<CAPTION>
PERIOD OF DELINQUENCY PERCENTAGE OF PERCENTAGE
(DAYS CONTRACTUALLY NUMBER TOTAL NUMBER OF TOTAL
DELINQUENT) OF ACCOUNTS OF ACCOUNTS RECEIVABLES RECEIVABLES
- --------------------- ----------- ------------- --------------- -----------
<S> <C> <C> <C> <C>
Not Delinquent............ 24,087,092 96.1% $30,685,946,047 87.0%
Up to 34 Days............. 578,421 2.3 2,680,259,152 7.6
35 to 64 Days............. 168,070 0.7 791,403,662 2.2
65 to 94 Days............. 74,528 0.3 343,004,725 1.0
95 or More Days........... 144,657 0.6 756,526,571 2.2
---------- ----- --------------- -----
Total................... 25,052,768 100.0% $35,257,140,157 100.0%
========== ===== =============== =====
</TABLE>
COMPOSITION BY ACCOUNT AGE
TRUST PORTFOLIO
<TABLE>
<CAPTION>
PERCENTAGE OF PERCENTAGE
NUMBER TOTAL NUMBER OF TOTAL
ACCOUNT AGE OF ACCOUNTS OF ACCOUNTS RECEIVABLES RECEIVABLES
- ----------- ----------- -------------- --------------- -----------
<S> <C> <C> <C> <C>
Not More Than 6 Months.. 2,287,011 9.1% $ 2,487,609,360 7.0%
Over 6 Months to 12
Months................. 3,526,605 14.1 3,473,705,338 9.8
Over 12 Months to 24
Months................. 6,147,796 24.5 7,164,631,382 20.3
Over 24 Months to 36
Months................. 5,451,488 21.8 6,199,022,604 17.6
Over 36 Months to 48
Months................. 3,700,574 14.8 6,439,710,646 18.3
Over 48 Months to 60
Months................. 1,139,274 4.5 2,071,006,242 5.9
Over 60 Months to 72
Months................. 406,691 1.6 843,428,122 2.4
Over 72 Months.......... 2,393,329 9.6 6,578,026,463 18.7
---------- ----- --------------- -----
Total................. 25,052,768 100.0% $35,257,140,157 100.0%
========== ===== =============== =====
</TABLE>
S-18
<PAGE>
GEOGRAPHIC DISTRIBUTION OF ACCOUNTS
TRUST PORTFOLIO
<TABLE>
<CAPTION>
PERCENTAGE OF PERCENTAGE
NUMBER TOTAL NUMBER OF TOTAL
STATE OF ACCOUNTS OF ACCOUNTS RECEIVABLES RECEIVABLES
- ----- ----------- ------------- --------------- -----------
<S> <C> <C> <C> <C>
California................ 2,670,506 10.6% $ 4,813,260,887 13.7%
Texas..................... 1,593,966 6.4 2,615,721,746 7.4
New York.................. 1,887,606 7.5 2,580,519,802 7.3
Florida................... 1,268,149 5.1 1,955,887,742 5.5
Pennsylvania.............. 1,457,939 5.8 1,542,755,757 4.4
New Jersey................ 999,757 4.0 1,461,584,251 4.1
Illinois.................. 992,060 4.0 1,335,820,071 3.8
Ohio...................... 1,078,582 4.3 1,229,174,085 3.5
Maryland.................. 724,359 2.9 1,185,833,895 3.4
Michigan.................. 884,303 3.5 1,052,785,421 3.0
Other..................... 11,495,541 45.9 15,483,796,500 43.9
---------- ----- --------------- -----
Total................... 25,052,768 100.0% $35,257,140,157 100.0%
========== ===== =============== =====
</TABLE>
MATURITY ASSUMPTIONS
The Agreement provides that the holders of the Class A Certificates (the
"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 holders of
the Class B Certificates (the "Class B Certificateholders" and, together with
the Class A Certificateholders, the "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 holder of the Collateral Interest (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 1998-A 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.
S-19
<PAGE>
RAPID AMORTIZATION PERIOD
If a Pay Out Event occurs during either the Revolving Period or the
Controlled Accumulation Period, the Rapid Amortization Period will commence. If
a Pay Out Event occurs during the Controlled Amortization Period, 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 (a) the date
on which the Class A Certificates have been paid in full, (b) the Series 1998-A
Termination Date and (c) the Trust Termination Date. After the Class A
Certificates have been paid in full and if the Series 1998-A Termination Date
or the Trust 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 (a) the date on which the Class B Certificates have
been paid in full, (b) the Series 1998-A Termination Date and (c) the Trust
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 the Agreement. See
"Description of the Certificates--Pay Out Events" in this Prospectus
Supplement. 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.
S-20
<PAGE>
CARDHOLDER MONTHLY PAYMENT RATES
BANK PORTFOLIO
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
1997 1996 1995
------- ------- -------
<S> <C> <C> <C>
Lowest Month.................................... 11.30% 10.69% 10.22%
Highest Month................................... 13.15% 11.56% 11.34%
Monthly Average................................. 12.20% 11.19% 10.79%
</TABLE>
Generally, 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" in this Prospectus Supplement, 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" in the accompanying Prospectus.
RECEIVABLE YIELD CONSIDERATIONS
The gross revenues from finance charges and fees billed to accounts in the
Bank Portfolio for each of the three calendar years contained in the period
ended December 31, 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, 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 accompanying
Prospectus.
S-21
<PAGE>
BANK PORTFOLIO YIELD
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
Average Account Monthly Accrued Finance
Charges and Fees(1)(2)...................... $ 25.58 $ 24.27 $ 23.70
Average Account Balance(3)................... $1,822.14 $1,738.50 $1,718.08
Yield from Finance Charges and Fees(4)....... 16.85% 16.75% 16.55%
Yield from Interchange(5).................... 1.23% 1.17% 1.20%
Yield from Finance Charges, Fees and
Interchange................................. 18.08% 17.92% 17.75%
</TABLE>
- --------
(1) Finance Charges and Fees are comprised of monthly periodic finance charges
and 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 Balance includes purchases, cash advances and accrued and
unpaid monthly periodic finance charges and other charges and is 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
years indicated above has been estimated.
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" in this Prospectus Supplement and "MBNA's Credit Card Activities" in
the accompanying Prospectus.
MBNA AND MBNA CORPORATION
MBNA America Bank, National Association, a national banking association
located in Wilmington, Delaware, conducts nationwide consumer lending programs
principally comprised of credit card related activities. MBNA International
Bank Limited, a private limited company incorporated under the laws of England
and Wales, is a wholly-owned subsidiary of MBNA. On a managed basis, including
loans originated by MBNA International Bank Limited, MBNA maintained loan
accounts with aggregate outstanding balances of $48.7 billion as of December
31, 1997. Of this amount, $42.0 billion were MasterCard and VISA credit card
loans originated in the United States. As of December 31, 1997, the premium
credit card portfolio in the United States accounted for 55% of MBNA's domestic
MasterCard and VISA credit card accounts with outstanding balances and 67% 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 December 31, 1997, MBNA had assets of $19.3
billion, deposits of $13.1 billion and capital and surplus accounts of $2.1
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
December 31, 1997, the
S-22
<PAGE>
Corporation had consolidated assets of $21.3 billion, consolidated deposits of
$12.9 billion and capital and surplus accounts of $2.0 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, as supplemented by
the supplement relating to the Certificates (the "Series 1998-A 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 1998-A Supplement. See "Description of the
Certificates" in the accompanying 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 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 accompanying Prospectus.
Application will be made to list the Class A Certificates on the Luxembourg
Stock Exchange; however, no assurance can be given that such listing will be
obtained. Class A Certificateholders should consult with Bankers Trust
Luxembourg S.A., the Luxembourg listing agent for the Class A Certificates, 14
Boulevard F.D. Roosevelt, L-2450 Luxembourg, phone number (352) 46 02 41, for
the status of such listing.
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<PAGE>
The Class A 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 in this Prospectus Supplement to
actions by Class A Certificateholders shall refer to actions taken by DTC upon
instructions from its Participants and all references in this Prospectus
Supplement to distributions, notices, reports and statements to Class A
Certificateholders shall refer to distributions, notices, reports and
statements to DTC or Cede, as the registered holder of the Class A Certificates
for distribution to Certificate Owners in accordance with DTC procedures. Class
A Certificateholders may hold their Class A 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 Class A Certificate.
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 accompanying 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 accompanying 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 May 15, 1998 and on the 15th day
of each following month (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 accompanying Prospectus, a "business day" is,
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. 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 (the "Additional
Interest") on such amount at the applicable Certificate Rate plus 2% per annum
(such amount with respect to the Class A Certificates, the "Class A Additional
Interest," and such amount with respect to the Class B Certificates, the "Class
B Additional Interest"). Such Additional Interest shall accrue on the same
basis as interest on the Certificates, and shall accrue from the Distribution
Date such overdue interest became due, to but excluding the Distribution Date
on which such Additional Interest is paid. Interest payments on the Class A
Certificates on any Distribution Date will be paid from Class A Available Funds
for the related Monthly Period and, to the extent such Class A Available Funds
are insufficient to pay such interest, from Excess Spread and Reallocated
Principal Collections (to the extent available) for such Monthly Period.
Interest payments on the Class B Certificates on any Distribution Date will be
paid from Class B Available Funds for the related Monthly Period and, to the
extent such Class B Available Funds are insufficient to pay such interest, from
Excess Spread and Reallocated Collateral Principal Collections (to the extent
available) remaining after certain other payments have been made with respect
to the Class A Certificates.
"Class A Available Funds" means, with respect to any Monthly Period, an
amount equal to the sum of (a) the Class A Floating Allocation of collections
of Finance Charge Receivables and annual membership fees allocated to the
Investor Interest and deposited in the Finance Charge Account with respect to
such Monthly
S-24
<PAGE>
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 1998-A 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 1998-A 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 1998-A 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 1998-A Supplement with respect to such Transfer Date.
The Class A Certificates will accrue interest from and including the Closing
Date through and excluding April 15, 1998, from and including April 15, 1998
through and excluding May 15, 1998 and with respect to each Interest Period
thereafter, at a rate of 0.11% per annum above LIBOR prevailing on the related
LIBOR Determination Date with respect to each such period. The Class B
Certificates will accrue interest from and including the Closing Date through
and excluding April 15, 1998, from and including April 15, 1998 through and
excluding May 15, 1998 and with respect to each Interest Period thereafter, at
a rate not to exceed 0.50% 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 March
16, 1998 for the period from and including the Closing Date through and
excluding April 15, 1998, on April 9, 1998 for the period from and including
April 15, 1998 through and excluding May 15, 1998 and for each Interest Period
thereafter, on the second London business day prior to the Distribution Date on
which such Interest Period commences (each, a "LIBOR Determination Date"). For
purposes of calculating LIBOR, a "London business day" is any business day on
which dealings in deposits in United States dollars are transacted in the
London interbank market.
"LIBOR" means, as of any LIBOR Determination Date, the rate for deposits in
United States dollars for a one-month period which appears on Telerate Page
3750 as of 11:00 a.m., London time, on such date. If such rate does not appear
on Telerate Page 3750, the rate for that LIBOR Determination Date will be
determined on the basis of the rates at which deposits in United States dollars
are offered by the Reference Banks at approximately 11:00 a.m., London time, on
that day to prime banks in the London interbank market for a one-month period.
The Trustee will request the principal London office of each of the Reference
Banks to provide a quotation of its rate. If at least two such quotations are
provided, the rate for that LIBOR Determination Date will be the arithmetic
mean of such quotations. If fewer than two quotations are provided, the rate
for that LIBOR Determination Date will be the arithmetic mean of the rates
quoted by major banks in New York City, selected by the Servicer, at
approximately 11:00 a.m., New York City time, on that day for loans in United
States dollars to leading European banks for a one-month period.
"Telerate Page 3750" means the display page currently so designated on the
Dow Jones Telerate Service (or such other page as may replace that page on that
service for the purpose of displaying comparable rates or prices).
"Reference Banks" means four major banks in the London interbank market
selected by the Servicer.
The Class A 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.
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<PAGE>
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 among the Seller, the Trustee,
the Servicer and the Collateral Interest Holder (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 the Series of the Trust
represented by the Certificates and the Collateral Interest ("Series 1998-A").
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, the Series 1998-A Termination Date and the Trust
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, the Series 1998-A Termination Date and the Trust
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 1998-A Termination Date) and
on the Series 1998-A Termination Date, Available Investor Principal Collections
until the earlier of the date the Collateral Interest is paid in full, the
Series 1998-A Termination Date and the Trust 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
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<PAGE>
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 February
2002 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"
in this Prospectus Supplement.
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. Each "Monthly Period"
will be the period from and including the first day of a calendar month to and
including the last day of such calendar month (other than the initial Monthly
Period, which will commence on and include the Closing Date and end on and
include April 30, 1998).
Collections of Finance Charge Receivables and Default Amounts at any time and
collections of Principal Receivables during the Revolving Period will be
allocated to the Investor Interest based on the Floating Investor Percentage.
The "Floating Investor Percentage" means, with respect to any Monthly Period,
the percentage equivalent of a fraction, the numerator of which is the Adjusted
Investor Interest as of the close of business on the last day of the preceding
Monthly Period (or with respect to the first Monthly Period, the initial
Investor Interest) and the denominator of which is the greater of (x) the
aggregate amount of Principal Receivables as of the close of business on the
last day of the preceding Monthly Period (or with respect to the
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<PAGE>
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
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
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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" in this
Prospectus Supplement, 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) $56,250,000
(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" in
this Prospectus Supplement, 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.
"Investor Interest," for any date of determination, means an amount equal to
the sum of (a) the Class A Investor Interest, (b) the Class B Investor Interest
and (c) the Collateral Interest.
"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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"Adjusted Investor Interest," for any date of determination, means the sum of
(a) the Class A Adjusted Investor Interest, (b) the Class B Adjusted Investor
Interest and (c) the Collateral Interest.
REALLOCATION OF CASH FLOWS
With respect to each Transfer Date, the Servicer will determine the amount
(the "Class A Required Amount"), which will be equal to the amount, if any, by
which the sum of (a) Class A Monthly Interest due on 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 1998-A 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" in this Prospectus Supplement.
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 1998-A 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
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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" in this
Prospectus Supplement.
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" in this Prospectus Supplement. 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.
"Required Amount" for any Monthly Period means the sum of (a) the Class A
Required Amount and (b) the Class B Required Amount, each for such Monthly
Period.
"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
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time prior to such Distribution Date the amount of Collections deposited in the
Collection Account exceeds the amount required to be deposited pursuant to
clause (i) above, the Servicer will be permitted to withdraw the excess from
the Collection Account.
Payment of Interest, Fees and Other Items. On each Transfer Date, the
Trustee, acting pursuant to the Servicer's instructions, will apply the Class A
Available Funds, Class B Available Funds and Collateral Available Funds in the
Finance Charge Account in the following priority:
(a) On each Transfer Date, an amount equal to the Class A Available Funds
will be distributed in the following priority:
(i) an amount equal to Class A Monthly Interest for the related
Distribution Date, plus the amount of any overdue Class A Monthly
Interest and Class A Additional Interest thereon, if any, will be
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" in this Prospectus Supplement.
(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" in this Prospectus Supplement.
(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" in this Prospectus Supplement.
"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 and
including the Closing Date through and including May 14, 1998.
"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;
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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 and including the Closing Date through and
including May 14, 1998.
"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.
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;
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(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" in this Prospectus Supplement, 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.
"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" in this Prospectus Supplement and in the
accompanying 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
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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" in
this Prospectus Supplement and in the accompanying 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 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.
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"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 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" in
this Prospectus Supplement.
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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" in this Prospectus Supplement,
the Collateral Interest (after giving effect to reductions for any Collateral
Charge-Offs and any Reallocated Principal Collections on such Transfer Date)
will be reduced by the amount of such excess, but not more than the lesser of
the Class A Investor Default Amount and the Collateral Interest (after giving
effect to reductions for any Collateral Charge-Offs and any Reallocated
Principal Collections on such Transfer Date) for such Transfer Date. In the
event that such reduction would cause the Collateral Interest to be a negative
number, the Collateral Interest will be reduced to zero, and the Class B
Investor Interest (after giving effect to reductions for any Class B Investor
Charge-Offs and any Reallocated Class B Principal Collections on such Transfer
Date for which the Collateral Interest is not reduced) will be reduced by the
amount by which the Collateral Interest would have been reduced below zero. In
the event that such reduction would cause the Class B Investor Interest to be a
negative number, the Class B Investor Interest will be reduced to zero, and the
Class A Investor Interest will be reduced by the amount by which the Class B
Investor Interest would have been reduced below zero, but not more than the
Class A Investor Default Amount for such Transfer Date (a "Class A Investor
Charge-Off"), which will have the effect of slowing or reducing the return of
principal and interest to the Class A Certificateholders. If the Class A
Investor Interest has been reduced by the amount of any Class A Investor
Charge-Offs, it will be reimbursed on any Transfer Date (but not by an amount
in excess of the aggregate Class A Investor Charge-Offs) by the amount of
Excess Spread allocated and available for such purpose as described under "--
Application of Collections--Excess Spread" in this Prospectus Supplement.
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" in this Prospectus
Supplement, 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
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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" in this Prospectus
Supplement.
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" in this Prospectus Supplement, 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" in this Prospectus Supplement.
PRINCIPAL FUNDING ACCOUNT
Pursuant to the Series 1998-A 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
1998-A Certificates from the Principal Account to the Principal Funding Account
as described under "--Application of Collections" in this Prospectus
Supplement.
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 1998-A 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
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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 1998-A. 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.
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
1998-A 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.
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PAY OUT EVENTS
As described above, the Revolving Period will continue through February 28,
2002 (unless such date is postponed as described under "--Postponement of
Controlled Accumulation Period" in this Prospectus Supplement), 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 1998-A 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 1998-A
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 1998-A Supplement, or any information required to be given by
the Seller to the Trustee to identify the Accounts proves to have been
incorrect in any material respect when made or delivered and which
continues to be incorrect in any material respect for a period of 60 days
after written notice of such failure, requiring the same to be remedied,
and as a result of which the interests of the Certificateholders are
materially and adversely affected (which determination shall be made
without reference to whether any funds are available under the Collateral
Interest) and continue to be materially and adversely affected for such
period; provided, however, that a Pay Out Event pursuant to this
subparagraph (b) shall not be deemed to occur thereunder if the Seller has
accepted reassignment of the related Receivable or all such Receivables, if
applicable, during such period (or such longer period as the Trustee may
specify) in accordance with the provisions of the Agreement;
(c) the average of the Portfolio Yields for any three consecutive Monthly
Periods is less than the average of the Base Rates for such period;
(d) a failure by the Seller to convey Receivables arising under
Additional Accounts, or Participations, to the Trust when required by the
Agreement;
(e) any Servicer Default occurs which would have a material adverse
effect on the Certificateholders;
(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 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
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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 January 31, 2003, 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 accompanying
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 $1,791,666.67. 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 $671,875. In the case of any
insufficiency of Servicer Interchange on deposit in the Finance Charge Account,
a portion of the Investor Servicing Fee with respect to such Monthly Period
will not be paid to the extent of such insufficiency and in no event shall the
Trust, the Trustee, the Certificateholders or the Collateral Interest Holder be
liable for the share of the Servicing Fee to be paid out of Servicer
Interchange.
The share of the Investor Servicing Fee allocable to the Class A
Certificateholders with respect to any Transfer Date (the "Class A Servicing
Fee") shall be equal to one-twelfth of the product of (a) the Class A Floating
Allocation, (b) 1.25%, or if MBNA or The Bank of New York is not the Servicer,
2.0% (the "Net Servicing Fee Rate") and (c) the Adjusted Investor Interest as
of the last day of the Monthly Period preceding such Transfer Date; provided,
however, that with respect to the first Transfer Date, the Class A Servicing
Fee shall be equal to $951,822.91. 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 $83,984.38. The share of the
Investor Servicing Fee allocable to the Collateral Interest Holder with respect
to any Transfer Date (the "Collateral Interest Servicing Fee", together with
the Class A Servicing Fee and the Class B Servicing Fee, the "Certificateholder
Servicing Fee") shall be equal to one-twelfth of the product of (a) the
Collateral Floating Allocation, (b) the Net Servicing Fee Rate and (c) the
Adjusted Investor Interest as of the last day of the Monthly Period preceding
such Transfer Date; provided, however, that with respect to the first Transfer
Date, the Collateral Interest Servicing Fee shall be equal to $83,984.38. The
remainder of the Servicing Fee shall be paid by the holder of the Seller
Certificate or other Series (as provided in the related Series Supplements) or,
to the extent of any insufficiency of Servicer Interchange as described above,
not be paid. In no event shall the Trust, the Trustee, the Certificateholders
or the Collateral Interest Holder be liable for the share of the Servicing Fee
to be paid out of Servicer Interchange. The Class A Servicing Fee and the Class
B Servicing Fee shall be payable to the Servicer solely to the extent amounts
are available for distribution in respect thereof as described under "--
Application of Collections--Payment of Interest, Fees and Other Items" in this
Prospectus Supplement.
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
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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
accompanying 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 1998-A Supplement,
the Series 1998-A 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 section 7704 of the Internal
Revenue Code of 1986, as amended (the "Code") 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 1998-A 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 1998-A Supplement.
ERISA CONSIDERATIONS
Section 406 of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and section 4975 of the Code prohibit certain pension,
profit sharing or other employee benefit plans, individual retirement accounts
or annuities and employee annuity plans and Keogh plans (collectively, "Plans")
from engaging in certain transactions involving "plan assets" with persons that
are "parties in interest" under ERISA or "disqualified persons" under the Code
(collectively, "Parties in Interest") with respect to the Plan. A violation of
these "prohibited transaction" rules may generate excise tax and other
liabilities under ERISA and section 4975 of the Code for such persons, unless a
statutory, regulatory or administrative exemption is available. Plans that are
governmental plans (as defined in section 3(32) of ERISA) and certain church
plans (as defined in section 3(33) of ERISA) are not subject to ERISA
requirements.
CLASS A CERTIFICATES
A violation of the prohibited transaction rules could occur if the Class A
Certificates were to be purchased with assets of any Plan if the Seller, the
Trustee, any underwriters of such Series or any of their affiliates were a
Party in Interest with respect to such Plan, unless a statutory, regulatory or
administrative exemption is available or an exemption applies under a
regulation (the "Plan Asset Regulation") issued by the Department of Labor
("DoL"). The Seller, the Trustee, the Underwriters and their affiliates are
likely to be Parties in Interest with respect to many Plans. Before purchasing
the Class A Certificates, a Plan fiduciary or other Plan investor should
consider whether a prohibited transaction might arise by reason of the
relationship between the Plan and the Seller, the Trustee, any Underwriter of
such Series or any of their affiliates and consult their counsel regarding the
purchase in light of the considerations described below and in the accompanying
Prospectus.
Under certain circumstances, the Plan Asset Regulation treats the assets of
an entity in which a Plan holds an equity interest as "plan assets" of such
Plan. Because the Class A Certificates will represent beneficial
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interests in the Trust, and despite the agreement of the Seller and the
Certificate Owners to treat the Class A Certificates as debt instruments, the
Class A Certificates are likely to be considered equity interests in the Trust
for purposes of the Plan Asset Regulation, with the result that the assets of
the Trust are likely to be treated as "plan assets" of the investing Plans for
purposes of ERISA and section 4975 of the Code, unless the exception for
"publicly-offered securities" is applicable as described in the accompanying
Prospectus. It is anticipated that the Class A Certificates will meet the
criteria for treatment as "public-offered securities" as described in the
accompanying Prospectus. No restrictions will be imposed on the transfer of the
Class A Certificates. It is expected that the Class A Certificates will be held
by at least 100 Independent Investors at the conclusion of the initial public
offering although no assurance can be given, and no monitoring or other
measures will be taken to ensure, that such condition is met. The Class A
Certificates will be sold as part of an offering pursuant to an effective
registration statement under the Act and then will be timely registered under
the Exchange Act.
If the foregoing exception under the Plan Asset Regulation were not
satisfied, transactions involving the Trust and Parties in Interest with
respect to a Plan that purchases or holds Class A Certificates might be
prohibited under section 406 of ERISA and/or section 4975 of the Code and
result in excise tax and other liabilities under ERISA and section 4975 of the
Code unless an exemption were available. The five DoL class exemptions
described in the accompanying Prospectus may not provide relief for all
transactions involving the assets of the Trust even if they would otherwise
apply to the purchase of a Class A Certificate by a Plan.
At the request of MBNA, on January 27, 1998 the DoL published in the Federal
Register (63 F.R. 4038) a proposed exemption (the "Proposed Exemption") from
certain of the prohibited transaction provisions of ERISA and section 4975 of
the Code which, when finalized, would apply to the purchase and holding by
Plans of certificates similar to the Class A Certificates if certain conditions
are met. You may request a copy of this Proposed Exemption by writing to: MBNA
America Bank, National Association; Attention: Chief Corporate Finance Officer;
Wilmington, Delaware 19884-0152. Interested persons may submit comments or a
request for a hearing on the Proposed Exemption by March 13, 1998 to: Office of
Exemption Determinations, Pension and Welfare Benefits Administration, Room N-
5649, U.S. Department of Labor, 200 Constitution Avenue, N.W., Washington, D.C.
20210, Attention: Application No. D-10304.
CONSULTATION WITH COUNSEL
In light of the foregoing, fiduciaries or other persons contemplating
purchasing the Class A Certificates on behalf or with "plan assets" of any Plan
should consult their own counsel regarding whether the Trust assets represented
by the Class A Certificates would be considered "plan assets," the consequences
that would apply if the Trust's assets were considered "plan assets," and the
possibility of exemptive relief from the prohibited transaction rules.
Finally, Plan fiduciaries and other Plan investors should consider the
fiduciary standards under ERISA or other applicable law in the context of the
Plan's particular circumstances before authorizing an investment of a portion
of the Plan's assets in the Class A Certificates. Accordingly, among other
factors, Plan fiduciaries and other Plan investors should consider whether the
investment (i) satisfies the diversification requirement of ERISA or other
applicable law, (ii) is in accordance with the Plan's governing instruments,
and (iii) is prudent in light of the "Risk Factors" and other factors discussed
in this Prospectus Supplement and the accompanying Prospectus.
S-43
<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in an underwriting agreement as
supplemented by a terms agreement relating to the Class A Certificates
(together, the "Underwriting Agreement") between the Seller and the
Underwriters named below (the "Underwriters"), the Seller has agreed to sell to
the Underwriters, and each of the Underwriters has severally agreed to
purchase, the principal amount of the Class A Certificates set forth opposite
its name:
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT OF
UNDERWRITERS CLASS A CERTIFICATES
- ------------ --------------------
<S> <C>
J.P. Morgan Securities Inc................................. $127,500,000
Bear, Stearns & Co. Inc.................................... 127,500,000
Chase Securities Inc....................................... 127,500,000
Credit Suisse First Boston Corporation..................... 127,500,000
Goldman, Sachs & Co........................................ 127,500,000
------------
Total................................................... $637,500,000
============
</TABLE>
In the Underwriting Agreement, the Underwriters have agreed, subject to the
terms and conditions set forth therein, to purchase all of the Class A
Certificates offered hereby if any of the Class A Certificates are purchased.
The Underwriters have agreed to reimburse the Seller for certain expenses of
the issuance and distribution of the Class A Certificates.
The Underwriters propose initially to offer the Class A Certificates to the
public at 100% of their principal amount and to certain dealers at such price
less concessions not in excess of 0.175% of the principal amount of the Class A
Certificates. The Underwriters 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. After the initial public offering,
the public offering price and other selling terms may be changed by the
Underwriters.
We will receive proceeds of approximately $635,746,875 from the sale of the
Class A Certificates (representing 99.725% of the principal amount of each
Class A Certificate) after paying the underwriting discount of $1,753,125
(representing 0.275% of the principal amount of each Class A Certificate).
Additional offering expenses are estimated to be $800,000.
Each Underwriter has represented and agreed that:
(a) it has complied and will comply with all applicable provisions of the
Financial Services Act 1986 with respect to anything done by it in relation
to the Class A 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 Class A 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
S-44
<PAGE>
(d) it is a person of a kind described in Article 11(3) of the Financial
Services Act 1986 (Investment Advertisements) (Exemptions) Order 1996.
The Seller will indemnify the Underwriters against certain liabilities,
including liabilities under the Securities Act, or contribute to payments the
Underwriters may be required to make in respect thereof.
The Underwriters may engage in over-allotment transactions, stabilizing
transactions, syndicate covering transactions and penalty bids with respect to
the Class A 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 Class A Certificates so long as the
stabilizing bids do not exceed a specified maximum. Syndicate covering
transactions involve purchases of the Class A Certificates in the open market
after the distribution has been completed in order to cover syndicate short
positions. Penalty bids permit the Underwriters to reclaim a selling concession
from a syndicate member when the Class A Certificates originally sold by such
syndicate member are purchased in a syndicate covering transaction. Such over-
allotment transactions, stabilizing transactions, syndicate covering
transactions and penalty bids may cause the prices of the Class A Certificates
to be higher than they would otherwise be in the absence of such transactions.
Neither the Seller nor any of the Underwriters represent that the Underwriters
will engage in any such transactions or that such transactions, once commenced,
will not be discontinued without notice at any time.
S-45
<PAGE>
INDEX OF TERMS FOR PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
Term Page
- ---- ----
<S> <C>
Accounts................................................................... S-14
Accumulation Period Length................................................. S-27
Accumulation Shortfall..................................................... S-36
Additional Interest........................................................ S-24
Adjusted Investor Interest................................................. S-30
Agreement.................................................................. S-14
Available Investor Principal Collections................................... S-26
Available Reserve Account Amount........................................... S-39
Bank Portfolio............................................................. S-14
Base Rate.................................................................. S-20
business day............................................................... S-24
Cedel...................................................................... S-12
Certificateholder Servicing Fee............................................ S-41
Certificateholders......................................................... S-19
Certificates............................................................... S-6
Class A Additional Interest................................................ S-24
Class A Adjusted Investor Interest......................................... S-29
Class A Available Funds.................................................... S-24
Class A Certificate Rate................................................... S-5
Class A Certificateholders................................................. S-19
Class A Certificates....................................................... S-5
Class A Fixed Allocation................................................... S-29
Class A Floating Allocation................................................ S-28
Class A Investor Charge-Off................................................ S-37
Class A Investor Default Amount............................................ S-37
Class A Investor Interest.................................................. S-29
Class A Monthly Interest................................................... S-32
Class A Monthly Principal.................................................. S-35
Class A Required Amount.................................................... S-30
Class A Servicing Fee...................................................... S-41
Class B Additional Interest................................................ S-24
Class B Adjusted Investor Interest......................................... S-29
Class B Available Funds.................................................... S-25
Class B Certificate Rate................................................... S-25
Class B Certificateholders................................................. S-19
Class B Certificates....................................................... S-6
Class B Fixed Allocation................................................... S-29
Class B Floating Allocation................................................ S-28
Class B Investor Charge-Off................................................ S-37
Class B Investor Default Amount............................................ S-37
Class B Investor Interest.................................................. S-29
Class B Monthly Interest................................................... S-32
Class B Monthly Principal.................................................. S-35
Class B Required Amount.................................................... S-30
Class B Servicing Fee...................................................... S-41
Closing Date............................................................... S-5
</TABLE>
<TABLE>
<CAPTION>
Term Page
- ---- ----
<S> <C>
Code.................................................................. S-42
Collateral Available Funds............................................ S-33
Collateral Charge-Off................................................. S-38
Collateral Default Amount............................................. S-37
Collateral Fixed Allocation........................................... S-29
Collateral Floating Allocation........................................ S-28
Collateral Interest................................................... S-6, S-29
Collateral Interest Holder............................................ S-19
Collateral Interest Servicing Fee..................................... S-41
Collateral Monthly Interest........................................... S-34
Collateral Monthly Principal.......................................... S-35
Collateral Rate....................................................... S-34
Controlled Accumulation Amount........................................ S-35
Controlled Accumulation Period........................................ S-11
Controlled Deposit Amount............................................. S-19
Covered Amount........................................................ S-38
Cut-Off Date.......................................................... S-16
Default Amount........................................................ S-37
Distribution Date..................................................... S-5, S-24
DoL................................................................... S-42
DTC................................................................... S-12
ERISA................................................................. S-42
Euroclear............................................................. S-12
Excess Spread......................................................... S-33
Finance Charge Receivables............................................ S-7
Fixed Investor Percentage............................................. S-28
Floating Investor Percentage.......................................... S-27
Group One............................................................. S-12
Initial Collateral Interest........................................... S-29
Interest Period....................................................... S-5
Investor Default Amount............................................... S-37
Investor Interest..................................................... S-29
Investor Servicing Fee................................................ S-41
Legal Final Maturity.................................................. S-6
LIBOR................................................................. S-25
LIBOR Determination Date.............................................. S-5, S-25
Loan Agreement........................................................ S-26
London business day................................................... S-25
MBNA.................................................................. S-14
Minimum Aggregate Principal Receivables............................... S-16
Minimum Seller Interest............................................... S-16
Monthly Period........................................................ S-27
Net Servicing Fee Rate................................................ S-41
OCMS.................................................................. S-14
Parties in Interest................................................... S-42
Pay Out Event......................................................... S-40
</TABLE>
S-46
<PAGE>
<TABLE>
<CAPTION>
Term Page
- ---- ----
<S> <C>
Plan Asset Regulation...................................................... S-42
Plans...................................................................... S-42
Portfolio Yield............................................................ S-20
Principal Funding Account.................................................. S-38
Principal Funding Account Balance.......................................... S-19
Principal Funding Investment Proceeds...................................... S-38
Principal Funding Investment Shortfall..................................... S-38
Principal Receivables...................................................... S-7
Principal Shortfalls....................................................... S-36
Proposed Exemption......................................................... S-43
Rapid Amortization Period.................................................. S-11
Rating Agency Condition.................................................... S-36
Reallocated Class B Principal Collections.................................. S-31
Reallocated Collateral Principal Collections............................... S-31
Reallocated Principal Collections.......................................... S-31
Receivables................................................................ S-14
Record Date................................................................ S-23
Reference Banks............................................................ S-25
Required Amount............................................................ S-31
Required Collateral Interest............................................... S-36
</TABLE>
<TABLE>
<CAPTION>
Term Page
- ---- ----
<S> <C>
Required Reserve Account Amount............................................ S-39
Reserve Account............................................................ S-38
Reserve Account Funding Date............................................... S-39
Revolving Period........................................................... S-11
Scheduled Payment Date..................................................... S-6
Seller..................................................................... S-14
Seller Certificate......................................................... S-7
Seller Interest............................................................ S-16
Seller Percentage.......................................................... S-23
Series 1998-A.............................................................. S-26
Series 1998-A Supplement................................................... S-23
Series 1998-A Termination Date............................................. S-6
Servicer Interchange....................................................... S-41
Shared Principal Collections............................................... S-36
Telerate Page 3750......................................................... S-25
Transfer Date.............................................................. S-31
Trust...................................................................... S-5
Trust Portfolio............................................................ S-16
Trustee.................................................................... S-14
Underwriters............................................................... S-44
Underwriting Agreement..................................................... S-44
</TABLE>
S-47
<PAGE>
ANNEX I
OTHER SERIES ISSUED AND OUTSTANDING
The table below sets forth the principal characteristics of the forty-two
other Series previously issued by the Trust that are currently outstanding, 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-E
<TABLE>
<S> <C>
Initial Investor Interest.......................................................................$500,000,000
Current Investor Interest as of January 31, 1998................................................$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>
5.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>
6.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>
7.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>
A-2
<PAGE>
8.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>
9.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>
10.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>
A-3
<PAGE>
11.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>
12.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>
13.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>
A-4
<PAGE>
14.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>
15.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>
16.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>
A-5
<PAGE>
17.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>
18.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>
19.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>
20.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 January 31, 1998..............................................$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>
A-6
<PAGE>
21.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>
22.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>
23.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>
A-7
<PAGE>
24.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>
25.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>
26.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>
A-8
<PAGE>
27.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>
28.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>
29.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>
30.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>
A-9
<PAGE>
31.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>
32.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>
33.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>
34.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>
A-10
<PAGE>
35.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>
36.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>
37.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>
38.Series 1997-K
<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 0.32% per annum
Controlled Accumulation Amount.................................................................$57,812,500*
Scheduled Payment Date......................................................November 2005 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-K Termination Date.................................................April 2008 Distribution Date
Series Issuance Date.......................................................................October 22, 1997
</TABLE>
A-11
<PAGE>
39.Series 1997-L
<TABLE>
<S> <C>
Initial Class A Investor Interest................................................................$511,000,000
Class A Certificate Rate..............................................Three-Month LIBOR minus 0.01% per annum
Initial Class B Investor Interest.................................................................$45,100,000
Class B Certificate Rate.................................Not to Exceed Three-Month LIBOR plus 0.50% per annum
Controlled Accumulation Amount................................................................$46,341,666.67*
Scheduled Payment Date........................................................November 2002 Distribution Date
Annual Servicing Fee Percentage................................................................2.0% per annum
Initial Collateral Interest.......................................................................$45,100,000
Other Enhancement for the Class A Certificates..........................Subordination of Class B Certificates
Series 1997-L Termination Date...................................................April 2005 Distribution Date
Series Issuance Date........................................................................November 13, 1997
</TABLE>
40.Series 1997-M
<TABLE>
<S> <C>
Initial Class A Investor Interest................................................................$637,500,000
Class A Certificate Rate...............................................Three-Month LIBOR plus 0.11% per annum
Initial Class B Investor Interest.................................................................$56,250,000
Class B Certificate Rate...............................................Three-Month LIBOR plus 0.27% per annum
Controlled Accumulation Amount...................................................................$57,812,500*
Scheduled Payment Date.........................................................October 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-M Termination Date...................................................March 2005 Distribution Date
Series Issuance Date.........................................................................November 6, 1997
</TABLE>
41.Series 1997-N
<TABLE>
<S> <C>
Initial Class A Investor Interest................................................................$765,000,000
Class A Certificate Rate...............................................Three-Month LIBOR plus 0.07% per annum
Initial Class B Investor Interest.................................................................$67,500,000
Class B Certificate Rate...............................................Three-Month LIBOR plus 0.23% per annum
Controlled Accumulation Amount....................................................................$69,375,000
Scheduled Payment Date........................................................November 2000 Distribution Date
Annual Servicing Fee Percentage................................................................2.0% per annum
Initial Collateral Interest.......................................................................$67,500,000
Other Enhancement for the Class A Certificates..........................Subordination of Class B Certificates
Series 1997-N Termination Date................................................November 2002 Distribution Date
Series Issuance Date.........................................................................December 9, 1997
</TABLE>
A-12
<PAGE>
42.Series 1997-O
<TABLE>
<S> <C>
Initial Class A Investor Interest..............................................................$425,000,000
Class A Certificate Rate...............................................One-Month LIBOR plus 0.17% per annum
Initial Class B Investor Interest...............................................................$37,500,000
Class B Certificate Rate...............................................One-Month LIBOR plus 0.35% per annum
Controlled Accumulation Amount...............................................................$38,541,666.67
Scheduled Payment Date......................................................December 2007 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 1997-O Termination Date...................................................May 2010 Distribution Date
Series Issuance Date......................................................................December 23, 1997
</TABLE>
- --------
* Subject to change if the commencement of the Accumulation Period or
Controlled Accumulation Period, as applicable, is delayed.
A-13
<PAGE>
MBNA MASTER CREDIT CARD TRUST II
Issuer
[LOGO OF MBNA AMERICA(R) APPEARS HERE]
MBNA AMERICA BANK, NATIONAL ASSOCIATION
Seller and Servicer
SERIES 1998-A
$637,500,000
CLASS A FLOATING RATE ASSET BACKED CERTIFICATES
----------------
PROSPECTUS SUPPLEMENT
----------------
UNDERWRITERS
J.P. MORGAN & CO.
BEAR, STEARNS & CO. INC.
CHASE SECURITIES INC.
CREDIT SUISSE FIRST BOSTON
GOLDMAN, SACHS & CO.
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT AND
THE ACCOMPANYING PROSPECTUS. WE HAVE NOT AUTHORIZED ANYONE TO
PROVIDE YOU WITH DIFFERENT INFORMATION.
WE ARE NOT OFFERING THE CLASS A CERTIFICATES IN ANY STATE
WHERE THE OFFER IS NOT PERMITTED.
WE DO NOT CLAIM THE ACCURACY OF THE INFORMATION IN THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS AS OF
ANY DATE OTHER THAN THE DATES STATED ON THEIR RESPECTIVE
COVERS.
DEALERS WILL DELIVER A PROSPECTUS SUPPLEMENT AND PROSPECTUS
WHEN ACTING AS UNDERWRITERS OF THE CLASS A CERTIFICATES AND
WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS. IN
ADDITION, ALL DEALERS SELLING THE CLASS A CERTIFICATES WILL
DELIVER A PROSPECTUS SUPPLEMENT AND PROSPECTUS UNTIL JUNE 1,
1998.
[LOGO OF RECYCLED PAPER APPEARS HERE]
