UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) September 23, 1996
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MBNA Corporation
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(Exact name of registrant as specified in its charter)
Maryland 1-10683 52-1713008
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
Wilmington, Delaware 19884
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (800) 362-6255
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(Former name or former address, if changed since last report.)
<PAGE>
Item 5. Other Events
MBNA Corporation (the "Company") issued 6,000,000 shares of Adjustable Rate
Cumulative Preferred Stock, Series B (the "Series B Preferred Stock") on
September 23, 1996 as shown in the following exhibits:
Exhibit 1(a): Underwriting Agreement dated as of November 9, 1995
(incorporated by reference to Exhibit 1 from the Company's Form
8-K as filed November 14, 1995)
Exhibit 1(b): Pricing Agreement, dated as of September 18, 1996, among the
Company, Bear, Stearns & Co. Inc., Goldman, Sachs & Co., Lehman
Brothers Inc., Merrill Lynch, Pierce, Fenner & Smith
Incorporated and Prudential Securities Incorporated
Exhibit 4: Instruments defining the rights of security holders, including
indentures
Exhibit 5: Opinion re legality
Exhibit 23: Consent of experts and counsel (incorporated by reference to
Exhibit 5 herein)
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MBNA CORPORATION
Date: September 25, 1996 By: /s/ M. Scot Kaufman
---------------------------
M. Scot Kaufman
Executive Vice President
and Chief Financial Officer
Pricing Agreement
-----------------
Bear, Stearns & Co. Inc.
As Representatives of the several Underwriters
named in Schedule I hereto,
c/o Bear, Stearns & Co. Inc.
245 Park Avenue
New York, New York 10167
September 18, 1996
Dear Sirs:
MBNA Corporation, a Maryland corporation (the "Company"), proposes
subject to the terms and conditions stated herein and in the Underwriting
Agreement, dated November 9, 1995 (the "Underwriting Agreement"), to issue and
sell to the Underwriters named in Schedule I hereto (the "Underwriters") the
Shares specified in Schedule II hereto (the "Designated Shares"). Each of the
provisions of the Underwriting Agreement is incorporated herein by reference in
its entirety, and shall be deemed to be a part of this Agreement to the same
extent as if such provisions had been set forth in full herein; and each of the
representations and warranties set forth therein shall be deemed to have been
made at and as of the date of this Pricing Agreement, except that each
representation and warranty which refers to the Prospectus in Section 2 of the
Underwriting Agreement shall be deemed to be a representation or warranty as of
the date of the Underwriting Agreement in relation to the Prospectus (as
therein defined), and also a representation and warranty as of the date of this
Pricing Agreement in relation to the Prospectus as amended or supplemented
relating to the Designated Shares which are the subject of this Pricing
Agreement. Each reference to the Representatives herein and in the provisions
of the Underwriting Agreement so incorporated by reference shall be deemed to
refer to you. Unless otherwise defined herein, terms defined in the
Underwriting Agreement are used herein as therein defined. The Representatives
designated to act on behalf of the Representatives and on behalf of each of the
Underwriters of the Designated Shares pursuant to Section 12 of the
Underwriting Agreement and the address of the Representatives referred to in
such Section 12 are set forth at the end of Schedule II hereto.
An amendment to the Registration Statement, or a supplement to the
Prospectus, as the case may be, relating to the Designated Shares, in the form
heretofore delivered to you is now proposed to be filed with the Commission.
Subject to the terms and conditions set forth herein and in the
Underwriting Agreement incorporated herein by reference, the Company agrees to
issue and sell to each of the Underwriters, and each of the Underwriters
agrees, severally and not jointly, to purchase from the Company, at the time
and place and at the purchase price to the Underwriters set forth in Schedule
II hereto, the number of Designated Shares set forth opposite the name of such
Underwriter in Schedule I hereto.
<PAGE>
If the foregoing is in accordance with your understanding, please sign
and return to us three counterparts hereof, and upon acceptance hereof by you,
on behalf of each of the Underwriters, this letter and such acceptance hereof,
including the provisions of the Underwriting Agreement incorporated herein by
reference, shall constitute a binding agreement between each of the
Underwriters and the Company. It is understood that your acceptance of this
letter on behalf of each of the Underwriters is or will be pursuant to the
authority set forth in a form of Agreement among Underwriters, the form of
which shall be submitted to the Company for examination, upon request, but
without warranty on the part of the Representatives as to the authority of the
signers thereof.
Very truly yours,
MBNA Corporation
By: /s/ Vernon H.C. Wright
------------------
Name: Vernon H.C. Wright
Title: Executive Vice President
Accepted as of the date hereof:
Bear, Stearns & Co. Inc.
Acting on behalf of themselves and
as Representatives of the several
Underwriters named in Schedule I
By: Bear, Stearns & Co. Inc.
By: /s/ Timothy A. O'Neill
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Name: Timothy A. O'Neill
Title: Senior Managing Director
<PAGE>
SCHEDULE I
Number of
Shares
Underwriter to be Purchased
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Bear, Stearns & Co. Inc. 1,200,000
Goldman, Sachs & Co. 1,200,000
Lehman Brothers Inc. 1,200,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated 1,200,000
Prudential Securities Incorporated 1,200,000
---------
Total 6,000,000
=========
<PAGE>
SCHEDULE II
Title of Designated Shares:
Adjustable Rate Cumulative Preferred Stock, Series B
Date of Board Resolution Authorizing the Designated Shares:
November 2, 1995
Date of Loan and Finance Committee Resolution Establishing the Designated
Shares:
September 16, 1996
Number of Designated Shares:
6,000,000
Initial Offering Price to Public:
$25 per Share
Purchase Price by Underwriters:
$24.2125 per Share
Specified Funds for Payment of Purchase Price:
Wire transfer in immediately available funds
Dividend Rate:
7.0% per annum ($.1069 per share) for the initial dividend period from
September 23, 1996 to October 15, 1996. Thereafter, the dividend rate
will be equal to the Applicable Rate from time to time in effect. The
"Applicable Rate" for any dividend period (other than the initial dividend
period) will be equal to 99.0% of the Effective Rate, but not less than
5.5% per annum or more than 11.5% per annum. The "Effective Rate" for any
dividend period will be equal to the highest of the Treasury Bill Rate,
the Ten Year Constant Maturity Rate and the Thirty Year Constant Maturity
Rate (each as defined in the Prospectus) for such dividend period.
Certain adjustments may be made in respect of the dividends payable by the
Company if one or more amendments to the Internal Revenue Code of 1986, as
amended, are enacted in respect of the dividends-received deduction, as
described in the Prospectus.
Dividend Payment Dates:
January 15, April 15, July 15 and October 15
<PAGE>
Dividend Rights:
Cumulative
Voting Rights:
Whenever dividends on the Designated Shares shall be in arrears for six
full quarterly dividend periods, the holders of outstanding Designated
Shares (voting as a class with holders of all series of equity securities
ranking on a parity with the Designated Shares (the "Parity Securities")
upon which like voting rights have been conferred and are exercisable)
will be entitled to vote for the election of two additional directors on
the terms set forth below. Such voting rights will continue until all
past dividends accumulated on the Designated Shares shall have been paid
in full. Upon payment in full of such dividends such voting rights shall
terminate, subject to re-vesting in the event of each and every subsequent
default in the payment of dividends as aforesaid. Holders of all series
of Parity Securities which are granted such voting rights will vote as a
class, each holder of the Designated Shares will have one vote for each
share of stock held and each holder of each other series of Parity
Securities will have such number of votes, if any, for each share of stock
held as may be granted to such holder. If the holders of the Designated
Shares or any other class of Parity Securities become entitled to vote as
described in this paragraph, the Board of Directors will be increased by
two directors, and the holders of the Designated Shares and the holders of
Parity Securities entitled to vote will have the exclusive right, voting
as a class as described above, to elect two directors at the next annual
meeting of stockholders of the Company.
Upon termination of the right of the holders of the Designated Shares and
of the holders of any Parity Securities entitled to vote as described
above to vote for directors as described above, the term of office of all
directors then in office elected by such holders will terminate
immediately. Whenever a default in preference dividends shall no longer
exist and the related special voting rights of the Designated Shares and
Parity Securities expire, the number of directors automatically will be
decreased to such number as otherwise would apply.
So long as any Designated Shares remain outstanding, the Company will not,
without the affirmative vote of at least two-thirds of the votes entitled
to be cast by holders of the Designated Shares, (i) voting as a class with
holders of all Parity Securities upon which like voting rights have been
conferred, authorize, create or issue, or increase the authorized or
issued amount, of any series of equity securities ranking senior to the
Designated Shares, (ii) amend, alter or repeal, whether by merger,
consolidation, share exchange, or otherwise, the Company's charter so as
to adversely affect the preferences, conversion and other rights, voting
powers, restrictions, limitations as to dividends, qualifications and
terms and conditions of the Designated Shares or the holders thereof;
provided, however, that any increase in the amount of the Designated
Shares or the creation and issuance of other series of Preferred Stock, in
each case constituting Parity Securities, will not be deemed to adversely
affect such rights, preferences, privileges or voting powers.
<PAGE>
The foregoing voting provisions will not apply if all outstanding
Designated Shares have been redeemed. Such voting provisions shall also
not apply from and after the redemption date if notice has been given to
effect such a redemption in accordance with the provisions set forth below
under "Redemption Provisions."
Liquidation Rights:
In the event of any voluntary or involuntary liquidation, dissolution or
winding up of the Company, the holders of the Designated Shares will be
entitled to receive out of assets of the Company available for
distribution to the stockholders, before any distribution of assets is
made to any holders of common stock or any other class of stock ranking
junior to the Designated Shares upon liquidation, a liquidating
distribution in the amount of $25 per share plus an amount equal to
accrued and unpaid dividends (whether or not declared). If upon any
voluntary or involuntary liquidation, dissolution or winding up of the
Company, the amounts payable with respect to the Designated Shares and any
other Parity Securities are not paid in full, all distributions to holders
of the Designated Shares and any Parity Securities will be paid pro rata
so that the amount of distributions per share on the Designated Shares and
any Parity Securities will in all cases bear to each other the same ratio
that the stated liquidation preference per share on the Designated Shares
and such Parity Securities bear to each other.
Preemptive and Conversion Rights:
The Designated Shares are not convertible into any other securities of the
Company. The Designated Shares have no preemptive rights.
Redemption Provisions:
Prior to October 15, 2001, the Designated Shares are not redeemable. On
and after such date, the Designated Shares will be redeemable, in whole or
in part, at the option of the Company, at any time and from time to time
upon not less than 30 nor more than 60 days' notice, at $25 per share of
the Designated Shares plus accrued and unpaid dividends (whether or not
declared) on a fully cumulative basis to the date fixed for redemption.
If less than all outstanding Designated Shares are to be redeemed, the
selection of the shares to be redeemed shall be determined by lot or pro
rata as may be determined by the Board of Directors or by any other method
determined by the Board of Directors to be equitable. From and after the
redemption date (unless default be made by the Company in providing for
the payment of the redemption price), dividends shall cease to accrue on
the Designated Shares called for redemption and all rights of the holders
thereof (except the right to receive the redemption price) shall cease.
Notwithstanding the preceding paragraphs, if the Dividends-Received
Percentage (as defined in the Prospectus) is less than 50% and, as a
result, the amount of dividends on the Designated Shares payable on any
Dividend Payment Date will be or is adjusted upwards, the Company, at its
option, may redeem all, but not less than all, of the outstanding shares
of the Designated Shares, provided, that within 60 days of the date on
<PAGE>
which an amendment to the Code is enacted which reduces the Dividends-
Received Percentage to less than 50%, the Company sends notice to holders
of the Designated Shares of such redemption. Any redemption of the
Designated Shares pursuant to this paragraph will take place on the date
specified in the notice, which shall not be less than 30 nor more than 60
days from the date such notice is sent to holders of the Designated
Shares. Any redemption of the Designated Shares in accordance with this
paragraph shall be on notice as aforesaid at the applicable redemption
price set forth in the following table, in each case plus accrued and
unpaid dividends (whether or not declared) thereon to the date fixed for
the redemption, including any changes in dividends payable due to changes
in the Dividends-Received Percentage and Post Declaration Date Dividends,
if any:
Redemption Period Redemption Price
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September 23, 1996 to October 14, 1997 $26.25
October 15, 1997 to October 14, 1998 $26.00
October 15, 1998 to October 14, 1999 $25.75
October 15, 1999 to October 14, 2000 $25.50
October 15, 2000 to October 14, 2001 $25.25
On or after October 15, 2001 $25.00
Sinking Fund Provisions:
None
Time of Delivery:
September 23, 1996; 10:00 a.m.
Closing Location:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Names and address of Representatives:
Designated Representatives:
Bear, Stearns & Co. Inc.
245 Park Avenue
New York, New York 10167
Attention: Capital Markets, 4th Floor
Address for Notices, etc.:
Bear, Stearns & Co. Inc.
245 Park Avenue
New York, New York 10167
Attention: Capital Markets, 4th Floor
MBNA CORPORATION
ARTICLES SUPPLEMENTARY
MBNA CORPORATION, a Maryland corporation having its principal
office in Baltimore City, Maryland (the "Corporation"), hereby certifies to
the State Department of Assessments and Taxation of Maryland that:
FIRST: 6,000,000 shares of authorized but unissued Preferred
Stock
of the Corporation have been classified as Adjustable Rate Cumulative
Preferred Stock, Series B, $.01 par value, of the Corporation (the
"Series") with the preferences, conversion and other rights, voting
powers, restrictions, limitations as to dividends, qualifications, and
terms and conditions of redemption, as follows:
1. Dividends. (a) Dividends shall be payable on the shares of
the Series for the period from September 23, 1996 to October 15, 1996 (the
"Initial Dividend Period") at the rate of 7.0% per annum ($.1069 per
share). For each quarterly dividend period after the Initial Dividend
Period (the Initial Dividend Period and each quarterly dividend period
thereafter being hereinafter individually referred to as a "Dividend
Period" and collectively referred to as "Dividend Periods"), which Dividend
Periods shall commence on January 15, April 15, July 15 and October 15 of
each year, commencing October 15, 1996, and shall end on and include the
day next preceding the first day of the next Dividend Period, dividends
payable on the shares of the Series shall be payable at a rate per annum of
the stated value thereof equal to the Applicable Rate (as defined in
Section 2) in respect of such Dividend Period, expressed as a percentage to
the nearest ten thousandth of a percentage point. The amount of dividends
per share for each Dividend Period shall be computed by dividing the
Applicable Rate for such quarterly Dividend Period by four and applying the
resulting rate to the stated value per share of the Series. Dividends
shall be fully cumulative from September 23, 1996 and shall be payable, as,
if and when declared by the Board of Directors, on January 15, April 15,
July 15 and October 15 of each year (each, a "Dividend Payment Date"),
commencing on October 15, 1996. If a Dividend Payment Date is not a
business day, dividends (if declared) on the shares of the Series will be
paid on the immediately succeeding business day, without interest. Each
dividend will be payable to holders of record as they appear on the stock
books of the Corporation on such record dates as shall be fixed by the
Board of Directors of the Corporation and shall be not more than 60 days
preceding the payment date of such dividend. The right of the holders of
the shares of the Series to receive dividends is fully cumulative and,
accordingly, all dividends not paid, whether or not declared, will
accumulate without interest until declared and paid, which declaration and
payment may be for all or part of the then accumulated dividends. The
Corporation's ability to pay dividends on its Preferred Stock, including
the Series, is subject to policies established by the Federal Reserve
Board.
<PAGE>
(a) Dividends payable on the Series for any period greater or less
than a full Dividend Period, including the Initial Dividend Period, shall
be computed on the basis of a 360-day year consisting of twelve 30-day
months and the actual number of days elapsed in any period less than one
month.
(b) Holders of shares of the Series shall not be entitled to any
dividend, whether payable in cash, property or stock, in excess of full
cumulative dividends, as herein provided, on the Series. No interest, or
sum of money in lieu of interest, shall be payable in respect of any
dividend payment or payments on the Series which may be in arrears.
(c) No full dividends shall be declared or paid or set apart for
payment on any stock ranking, as to dividends, on a parity with the Series
for any period unless full cumulative dividends have been or
contemporaneously are declared and paid or declared and a sum sufficient
for the payment thereof set apart for such payment on the Series for all
Dividend Periods terminating on or prior to the date of payment of such
full cumulative dividends. When dividends are not paid in full, as
aforesaid, upon the shares of the Series and any other stock ranking on a
parity as to dividends with the Series, all dividends declared upon shares
of the Series and any other series of stock ranking on a parity as to
dividends with the Series shall be declared pro rata so that the amount of
dividends declared per share on the Series and such other stock shall in
all cases bear to each other the same ratio that accrued and unpaid
dividends per share on the shares of the Series and such other stock bear
to each other.
(d) So long as any shares of the Series are outstanding, no
dividend (other than a dividend payable in common stock or in any other
stock ranking junior to the Series as to dividends and upon liquidation)
shall be declared or paid or set aside for payment or other distribution
declared or made upon the common stock or upon any other stock ranking
junior to the Series as to dividends or upon liquidation, nor shall any
common stock or any other stock of the Corporation ranking junior to the
Series as to dividends or upon liquidation be redeemed, purchased or
otherwise acquired for any consideration (or any moneys be paid to or made
available for a sinking fund for the redemption of any shares of any such
stock) by the Corporation (except by conversion into or exchange for stock
of the Corporation ranking junior to the Series as to dividends and upon
liquidation) unless, in each case, the full cumulative dividends on all
outstanding shares of the Series shall have been paid or declared and set
aside for payment for all past Dividend Periods.
2. Definition of Applicable Rate, etc. (a) Except as provided
below in this paragraph, the "Applicable Rate" for any Dividend Period
(other than the Initial Dividend Period) will be equal to 99.0% of the
Effective Rate (as defined below), but not less than 5.5% per annum or more
than 11.5% per annum. The "Effective Rate" for any Dividend Period will be
equal to the highest of the Treasury Bill Rate, the Ten Year Constant
Maturity Rate and the Thirty Year Constant Maturity Rate (each as defined
below) for such Dividend Period. In the event that the Corporation
determines in good faith that for any reason:
<PAGE>
(i) any one of the Treasury Bill Rate, the Ten Year
Constant Maturity Rate or the Thirty Year Constant Maturity Rate can-
not be determined for any Dividend Period, the Effective Rate for such
Dividend Period will be equal to the higher of whichever two of such
rates can be so determined;
(ii) only one of the Treasury Bill Rate, the Ten Year
Constant Maturity Rate or the Thirty Year Constant Maturity Rate can
be determined for any Dividend Period, the Effective Rate for such
Dividend Period will be equal to whichever such rate can be so
determined; or
(iii) none of the Treasury Bill Rate, the Ten Year
Constant Maturity Rate or the Thirty Year Constant Maturity Rate can
be determined for any Dividend Period, the Effective Rate for the
preceding dividend period will be continued for such Dividend Period.
(b) Except as described below in this paragraph, the "Treasury Bill
Rate" for each Dividend Period will be the arithmetic average of the two
most recent weekly per annum market discount rates (or the one weekly per
annum market discount rate, if only one such rate is published during the
relevant Calendar Period (as defined below)) for three-month U.S. Treasury
bills, as published weekly by the Federal Reserve Board (as defined below)
during the Calendar Period immediately preceding the last ten calendar days
preceding the Dividend Period for which the dividend rate on the Series is
being determined. In the event that the Federal Reserve Board does not
publish such a weekly per annum market discount rate during any such
Calendar Period, the Treasury Bill Rate for such Dividend Period will be
the arithmetic average of the two most recent weekly per annum market
discount rates (or the one weekly per annum market discount rate, if only
one such rate is published during the relevant Calendar Period) for three-
month U.S. Treasury bills, as published weekly during such Calendar Period
by any Federal Reserve Bank or by any U.S. Government department or agency
selected by the Corporation. In the event that a per annum market discount
rate for three-month U.S. Treasury bills is not published by the Federal
Reserve Board or by any Federal Reserve Bank or by any U.S. Government
department or agency during such Calendar Period, the Treasury Bill Rate
for such Dividend Period will be the arithmetic average of the two most
recent weekly per annum market discount rates (or the one weekly per annum
market discount rate, if only one such rate is published during the
relevant Calendar Period) for all of the U.S. Treasury bills then having
remaining maturities of not less than 80 nor more than 100 days, as
published during such Calendar Period by the Federal Reserve Board or, if
the Federal Reserve Board does not publish such rates, by any Federal
Reserve Bank or by any U.S. Government department or agency selected by the
Corporation. In the event that the Corporation determines in good faith
that for any reason no such U.S. Treasury bill rates are published as
provided above during such Calendar Period, the Treasury Bill Rate for such
Dividend Period will be the arithmetic average of the per annum market
discount rates based upon the closing bids during such Calendar Period for
each of the issues of marketable non-interest-bearing U.S. Treasury
securities with a remaining maturity of not less than 80 nor more than 100
days from the date of each such quotation, as chosen and quoted daily for
each business day in New York City (or less frequently if daily quotations
are not generally available) to the Corporation by at least three
recognized dealers in U.S. Government securities selected by the
Corporation. In the event that the Corporation determines in good faith
that for any reason the Corporation cannot determine the Treasury Bill Rate
for any Dividend Period as provided above in this paragraph, the Treasury
Bill Rate for such Dividend Period will be the arithmetic average of the
per annum market discount rates based upon the closing bids during such
Calendar Period for each of the issues of marketable interest-bearing U.S.
<PAGE>
Treasury securities with a remaining maturity of not less than 80 nor more
than 100 days from the date of each such quotation, as chosen and quoted
daily for each business day in New York City (or less frequently if daily
quotations are not generally available) to the Corporation by at least
three recognized dealers in U.S. Government securities selected by the
Corporation.
(c) Except as described below in this paragraph, the "Ten Year
Constant Maturity Rate" for each Dividend Period will be the arithmetic
average of the two most recent weekly per annum Ten Year Average Yields (as
defined below) (or the one weekly per annum Ten Year Average Yield, if only
one such yield is published during the relevant Calendar Period), as
published weekly by the Federal Reserve Board during the Calendar Period
immediately preceding the last ten calendar days preceding the Dividend
Period for which the dividend rate on the Series is being determined. In
the event that the Federal Reserve Board does not publish such a weekly per
annum Ten Year Average Yield during any such Calendar Period, the Ten Year
Constant Maturity Rate for such Dividend Period will be the arithmetic
average of the two most recent weekly per annum Ten Year Average Yields (or
the one weekly per annum Ten Year Average Yield, if only one such yield is
published during the relevant Calendar Period), as published weekly during
such Calendar Period by any Federal Reserve Bank or by any U.S. Government
department or agency selected by the Corporation. In the event that a per
annum Ten Year Average Yield is not published by the Federal Reserve Board
or by any Federal Reserve Bank or by any U.S. Government department or
agency during such Calendar Period, the Ten Year Constant Maturity Rate for
such Dividend Period will be the arithmetic average of the two most recent
weekly per annum average yields to maturity (or the one weekly per annum
average yield to maturity, if only one such yield is published during the
relevant Calendar Period) for all of the actively traded marketable U.S.
Treasury fixed interest rate securities (other than Special Securities (as
defined below)) then having remaining maturities of not less than eight nor
more than twelve years, as published during such Calendar Period by the
Federal Reserve Board or, if the Federal Reserve Board does not publish
such yields, by any Federal Reserve Bank or by any U.S. Government
department or agency selected by the Corporation. In the event that the
Corporation determines in good faith that for any reason the Corporation
cannot determine the Ten Year Constant Maturity Rate for any Dividend
Period as provided above in this paragraph, then the Ten Year Constant
Maturity Rate for such Dividend Period will be the arithmetic average of
the per annum average yields to maturity based upon the closing bids during
such Calendar Period for each of the issues of actively traded marketable
U.S. Treasury fixed interest rate securities (other than Special
<PAGE>
Securities) with a final maturity date not less than eight nor more than
twelve years from the date of each such quotation, as chosen and quoted
daily for each business day in New York City (or less frequently if daily
quotations are not generally available) to the Corporation by at least
three recognized dealers in U.S. Government securities selected by the
Corporation.
(d) Except as described below in this paragraph, the "Thirty Year
Constant Maturity Rate" for each Dividend Period will be the arithmetic
average of the two most recent weekly per annum Thirty Year Average Yields
(as defined below) (or the one weekly per annum Thirty Year Average yield,
if only one such yield is published during the relevant Calendar Period),
as published weekly by the Federal Reserve Board during the Calendar Period
immediately preceding the last ten calendar days preceding the Dividend
Period for which the dividend rate on the Series is being determined. In
the event that the Federal Reserve Board does not publish such a weekly per
annum Thirty Year Average Yield during any such Calendar Period, the Thirty
Year Constant Maturity Rate for such Dividend Period will be the arithmetic
average of the two most recent weekly per annum Thirty Year Average Yields
(or the one weekly per annum Thirty Year Average Yield, if only one such
yield is published during the relevant Calendar Period), as published
weekly during such Calendar Period by any Federal Reserve Bank or by any
U.S. Government department or agency selected by the Corporation. In the
event that a per annum Thirty Year Average Yield is not published by the
Federal Reserve Board or by any Federal Reserve Bank or by any U.S.
Government department or agency during such Calendar Period, the Thirty
Year Constant Maturity Rate for such Dividend Period will be the arithmetic
average of the two most recent weekly per annum average yields to maturity
(or the one weekly per annum average yield to maturity, if only one such
yield is published during the relevant Calendar Period) for all of the
actively traded marketable U.S. Treasury fixed interest rate securities
(other than Special Securities) then having remaining maturities of not
less than 28 nor more than 30 years, as published during such Calendar
Period by the Federal Reserve Board or, if the Federal Reserve Board does
not publish such yields, by any Federal Reserve Bank or by any U.S.
Government department or agency selected by the Corporation. In the event
that the Corporation determines in good faith that for any reason the
Corporation cannot determine the Thirty Year Constant Maturity Rate for any
Dividend Period as provided above in this paragraph, then the Thirty Year
Constant Maturity Rate for such Dividend Period will be the arithmetic
average of the per annum average yields to maturity based upon the closing
bids during such Calendar Period for each of the issues of actively traded
marketable U.S. Treasury fixed interest rate securities (other than Special
Securities) with a final maturity date not less than 28 nor more than 30
years from the date of each such quotation, as chosen and quoted daily for
each business day in New York City (or less frequently if daily quotations
are not generally available) to the Corporation by at least three
recognized dealers in U.S. Government securities selected by the
Corporation.
(e) The Treasury Bill Rate, the Ten Year Constant Maturity Rate and
the Thirty Year Constant Maturity Rate shall each be rounded to the nearest
five hundredths of a percent.
<PAGE>
(f) The Applicable Rate with respect to each Dividend Period (other
than the Initial Dividend Period) will be calculated as promptly as
practicable by the Corporation according to the appropriate method
described above. The Corporation will cause each Applicable Rate to be
published in a newspaper of general circulation in New York City before the
commencement of the Dividend Period to which it applies and will cause
notice of such Applicable Rate to be enclosed with the dividend payment
checks next mailed to the holders of the shares of the Series.
(g) For purposes of this Section,
(i) "Calendar Period" means a period of fourteen calendar
days;
(ii) "Federal Reserve Board" means the Board of Governors
of the Federal Reserve System;
(iii) "Special Securities" means securities which can,
at the option of the holder, be surrendered at face value in payment
of any Federal estate tax or which provide tax benefits to the holder
and are priced to reflect such tax benefits or which were originally
issued at a deep or substantial discount;
(iv) "Ten Year Average Yield" means the average yield to
maturity for actively traded marketable U.S. Treasury fixed interest
rate securities (adjusted to constant maturities of ten years); and
(v) "Thirty Year Average Yield" means the average yield
to maturity for actively traded marketable U.S. Treasury fixed
interest rate securities (adjusted to constant maturities of thirty
years).
3. Changes in the Dividends-Received Percentage. (a) If one or
more amendments to the Internal Revenue Code of 1986, as amended (the
"Code") are enacted that reduce the percentage of the dividends-received
deduction (currently 70%) as specified in Section 243(a)(1) of the Code or
any successor provision (the "Dividends-Received Percentage"), certain
adjustments may be made in respect of the dividends payable by the
Corporation and Post Declaration Date Dividends (as defined below) may
become payable, as described below.
(a) The amount of each dividend payable (if declared) per share of
the Series for dividend payments made on or after the effective date of
enactment of such change in the Code will be adjusted by multiplying the
amount of the dividend payable determined as described in Section 1 above
(before adjustment) by a factor which shall be the number determined in
accordance with the following formula (the "DRD Formula"), and rounding the
result to the nearest cent (with one-half cent rounded up):
1-.35(1-.70)
------------
1-.35(1-DRP)
<PAGE>
(b) For the purposes of the DRD Formula, "DRP" means the Dividends-
Received Percentage (expressed as a decimal) applicable to the dividend in
question. No amendment to the Code, other than a change in the percentage
of the dividends-received deduction set forth in Section 243(a)(1) of the
Code or any successor provision thereto, will give rise to an adjustment.
Notwithstanding the foregoing provisions, if, with respect to any such
amendment, the Corporation receives either an unqualified opinion of
nationally recognized independent tax counsel selected by the Corporation
or a private letter ruling or similar form of authorization from the
Internal Revenue Service (the "IRS") to the effect that such an amendment
would not apply to a dividend payable on the shares of the Series, then
such amendment will not result in the adjustment provided for pursuant to
the DRD Formula with respect to such dividend. The opinion referenced in
the previous sentence shall be based upon the legislation amending or
establishing the DRP or upon a published pronouncement of the IRS
addressing such legislation. The Corporation's calculation of the
dividends payable as so adjusted shall be final and not subject to review.
(c) Notwithstanding the foregoing, if any amendment to the Code is
enacted and effected after a dividend payable on a Dividend Payment Date
has been declared but not paid, the amount of the dividend payable on such
Dividend Payment Date will not be increased; instead, additional dividends
(the "Post Declaration Date Dividends"), equal to the excess, if any, of
(x) the product of the dividend paid by the Corporation on such Dividend
Payment Date and the DRD Formula over (y) the dividend paid by the
Corporation on such Dividend Payment Date, will be payable (if declared) to
holders of shares of the Series on the record date applicable to the next
succeeding Dividend Payment Date or, if the Series is called for redemption
prior to such record date, to holders of shares of the Series on the
applicable redemption date, as the case may be, in addition to any other
amounts payable on such date.
(d) In the event that the amount of dividends payable per share of
the Series is adjusted pursuant to the DRD Formula and/or Post Declaration
Date Dividends are to be paid, the Corporation will give notice of each
such adjustment and, if applicable, any Post Declaration Date Dividends to
the holders of the shares of the Series.
4. Redemption. (a) The holders of the shares of the Series may
not require the Corporation to redeem any shares of the Series. The
Corporation, at its option, may redeem shares of the Series, in whole or in
part, at any time and from time to time, on or after October 15, 2001, at a
redemption price of $25 per share, plus accrued and unpaid dividends
thereon (whether or not declared) to the date fixed for redemption.
(a) In the event that fewer than all the outstanding shares of the
Series are to be redeemed, the number of shares to be redeemed shall be
determined by lot or pro rata as may be determined by the Corporation or by
any other method as may be determined by the Corporation in its sole
discretion to be equitable, provided that such method satisfies any
<PAGE>
applicable requirements of any securities exchange on which the Series is
listed.
(b) In the event the Corporation shall redeem shares of the Series,
notice of such redemption shall be given by first class mail, postage
prepaid, mailed not less than 30 nor more than 60 days prior to the
redemption date, to each holder of record of the shares of the Series to be
redeemed, at such holder's address as the same appears on the stock
register of the Corporation. Each such notice shall state: (i) the
redemption date; (ii) the number of shares of the Series to be redeemed
and, if fewer than all the shares held by such holder are to be redeemed,
the number of such shares to be redeemed from such holder; (iii) the
redemption price; (iv) the place or places where certificates for such
shares are to be surrendered for payment of the redemption price; and
(v) that dividends on the shares of the Series to be redeemed cease to
accrue on the redemption date.
(c) Notice having been mailed as aforesaid, from and after the
redemption date (unless default shall be made by the Corporation in
providing money for the payment of the redemption price) dividends on the
shares of the Series so called for redemption shall cease to accrue, and
said shares shall no longer be deemed to be outstanding, and all rights of
the holders thereof as stockholders of the Corporation (except the right to
receive from the Corporation the redemption price) shall cease. Upon
surrender in accordance with said notice of the certificates for any shares
so redeemed (properly endorsed or assigned for transfer, if the Corporation
shall so require and the notice shall so state), such shares shall be
redeemed by the Corporation at the redemption price aforesaid. In case
fewer than all the shares represented by any such certificate are redeemed,
a new certificate shall be issued representing the unredeemed shares
without cost to the holder thereof.
(d) Any shares of the Series which shall at any time have been
redeemed shall, after such redemption, have the status of authorized but
unissued shares of Preferred Stock, without designation as to series.
(e) Notwithstanding the foregoing provisions of this Section 4, if
any dividends on the shares of the Series or any other series of cumulative
Preferred Stock ranking on a parity with the Series are in arrears, no
shares of the Series or any such parity series shall be redeemed unless all
outstanding shares of the Series or any such parity series are
simultaneously redeemed, and the Corporation shall not purchase or
otherwise acquire any shares of the Series or any such parity series;
provided, however, that the foregoing shall not prevent the purchase or
acquisition of shares of the Series or any such parity series pursuant to a
purchase or exchange offer made on the same terms to holders of all
outstanding shares of the Series.
(f) Notwithstanding the foregoing provisions of this Section 4, if
the Dividends-Received Percentage is less than 50% and, as a result, the
amount of dividends on the Series payable on any Dividend Payment Date will
be or is adjusted upwards as described in Section 3 above, the Corporation,
at its option, may redeem all, but not less than all, of the outstanding
<PAGE>
shares of the Series, provided, that within 60 days of the date on which an
amendment to the Code is enacted which reduces the Dividends-Received
Percentage to less than 50%, the Corporation sends notice to holders of the
Series of such redemption pursuant to paragraph (c) of this Section 4. Any
redemption of the Series pursuant to this paragraph will take place on the
date specified in the notice, which shall not be less than 30 nor more than
60 days from the date such notice is sent to holders of the Series. Any
redemption of the Series in accordance with this paragraph shall be on
notice as aforesaid at the applicable redemption price set forth in the
following table, in each case plus accrued and unpaid dividends (whether or
not declared) thereon to the date fixed for the redemption, including any
changes in dividends payable due to changes in the Dividends-Received
Percentage and Post Declaration Date Dividends, if any:
Redemption Period Redemption Price
September 23, 1996 to October 14, 1997 $26.25
October 15, 1997 to October 14, 1998 $26.00
October 15, 1998 to October 14, 1999 $25.75
October 15, 1999 to October 14, 2000 $25.50
October 15, 2000 to October 14, 2001 $25.25
On or after October 15, 2001 $25.00
5. Conversion. The holders of shares of the Series shall not
have any rights to convert such shares into shares of any other class or
series of capital stock of the Corporation.
6. Liquidation Rights. (a) Upon the voluntary or involuntary
liquidation, dissolution or winding up of the Corporation, the holders of
the shares of the Series shall be entitled to receive and to be paid out of
the assets of the Corporation available for distribution to its
stockholders, before any payment or distribution shall be made on the
common stock or on any other class of stock ranking junior to the Series, a
liquidating distribution in the amount of $25 per share plus an amount
equal to accrued and unpaid dividends thereon (whether or not declared).
(a) After the payment to the holders of the shares of the Series of
the full preferential amounts provided for in this Section 6, the holders
of the Series as such shall have no right or claim to any of the remaining
assets of the Corporation.
(b) If, upon any voluntary or involuntary liquidation, dissolution
or winding up of the Corporation, the amounts payable with respect to the
shares of the Series and any other shares of stock of the Corporation
ranking as to any such distribution on a parity with the shares of the
Series are not paid in full, the holders of the shares of the Series and of
such other shares will share ratably in any such distribution of assets of
the Corporation in proportion to the full preferential amounts to which
they are entitled.
<PAGE>
(c) Neither the sale of all or substantially all of the assets of
the Corporation, nor the merger or consolidation or share exchange of the
Corporation into or with any other corporation or the merger or
consolidation or share exchange of any other corporation into or with the
Corporation, shall be deemed to be a liquidation, dissolution or winding
up, voluntary or involuntary, for the purposes of this Section 6.
7. Ranking. Any stock of any class or classes of the Corporation
shall be deemed to rank:
(a) senior to the shares of the Series, either as to dividends or
upon liquidation, if the holders of such class or classes shall be entitled
to the receipt of dividends or of amounts distributable upon liquidation,
dissolution or winding up of the Corporation, as the case may be, in
preference or priority to the holders of shares of the Series;
(b) on a parity with shares of the Series, either as to dividends
or upon liquidation, whether or not the dividend rates, dividend payment
dates or redemption or liquidation prices per share or sinking fund
provisions, if any, be different from those of the Series, if the holders
of such stock shall be entitled to the receipt of dividends or of amounts
distributable upon liquidation, dissolution or winding up of the
Corporation, as the case may be, without preference or priority, one over
the other, as between the holders of such stock and the holders of shares
of the Series; and
(c) junior to shares of the Series, either as to dividends or upon
liquidation, if such class shall be common stock or if the holders of
shares of the Series shall be entitled to receipt of dividends or of
amounts distributable upon liquidation, dissolution or winding up of the
Corporation, as the case may be, in preference or priority to the holders
of shares of such class or classes.
8. Voting Rights. (a) Except as indicated below, the shares of
the Series shall not be entitled to vote on any matter including, but not
limited to:
(i) Any merger, consolidation, share exchange or sale of
all or substantially all of the assets of the Corporation except to
the extent such action amends, alters or repeals the preferences,
conversion and other rights, voting powers, restrictions, limitation
as to dividends, qualifications and terms and conditions of the
redemption of the Series as expressly set forth herein in a manner
adverse to the holders of the Series, or,
(ii) An increase in the authorized amount of the Series or
the creation, authorization or issuance of an additional series
ranking on a parity with the shares of the Series as to dividends or
upon liquidation, or to reclassify any authorized stock of the
Corporation into any such shares ranking on a parity with, or to
authorize or issue any obligation or security convertible into or
evidencing the right to purchase any such pari passu shares.
<PAGE>
(b) Notwithstanding the foregoing:
(i) The affirmative vote of at least two-thirds of the
votes entitled to be cast by holders of shares of the Series and all
other series of Preferred Stock ranking on a parity with shares of the
Series as to dividends or upon liquidation upon which like voting
rights have been conferred and are exercisable, voting together as a
single class without regard to series, shall be necessary for any
amendment, alteration or repeal, whether by merger, consolidation,
share exchange or otherwise, of the Charter of the Corporation,
including any articles supplementary thereto, which adversely affects
the preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends, qualifications and terms
and conditions of the redemption of the Series as expressly set forth
herein in a manner adverse to the holders of the Series;
(ii) The affirmative vote of at least two-thirds of the
votes entitled to be cast by the holders of the shares of the Series
and all other series of Preferred Stock ranking on a parity with
shares of the Series as to dividends or upon liquidation upon which
like voting rights have been conferred and are exercisable, voting
together as a single class without regard to series, shall be
necessary to authorize or issue any shares of any class of stock of
the Corporation ranking prior to the shares of the Series as to
dividends or upon liquidation, or to reclassify any authorized stock
of the Corporation into any such prior shares, or authorize or issue
any obligation or security convertible into or evidencing the right to
purchase any such prior shares; and
(iii) If at the time of any annual meeting of the
Corporation's stockholders for the election of directors there is a
default in preference dividends (as defined below) on the Series, the
number of directors constituting the Board of Directors of the
Corporation shall be increased by two, and the holders of the shares
of the Series (together with the holders of the Preferred Stock of all
other series upon which like voting rights have been conferred and are
exercisable), shall have the right at such meeting, voting together as
a single class without regard to series, to the exclusion of the
holders of common stock, to elect two directors of the Corporation
(each a "Preferred Director") to fill such newly created
directorships. Each holder of shares of the Series will have one vote
for each share of stock held and each holder of each other series of
Preferred Stock with like voting rights will have such number of
rights, if any, for each share of stock held as may be granted to such
holder. Such right shall continue until there are no dividends in
arrears upon the Series, subject to re-vesting in the event of each
and every subsequent default in preference dividends on the Series.
Any Preferred Director may be removed with or without cause by the
<PAGE>
vote of the holders of record of the outstanding shares of Preferred
Stock entitled to elect such Preferred Director, voting together as a
single class without regard to series, at a meeting of the
Corporation's stockholders, or of the holders of such shares of
Preferred Stock, called for that purpose. Any Preferred Director may
be removed for cause by the vote of the holders of outstanding shares
of stock of the Corporation entitled to vote for the election of
directors. So long as a default in any preference dividends on the
Series shall exist, (a) any vacancy in the office of a Preferred
Director may be filled (except as provided in the following clause
(b)) by an instrument in writing signed by the remaining Preferred
Director and filed with the Corporation and (b) in the case of the
removal of any Preferred Director, the vacancy may be filled by the
vote of the holders of the outstanding shares of Preferred Stock,
voting together as a single class without regard to series, at the
same meeting at which such removal shall be voted. Each director
appointed as aforesaid by the remaining Preferred Director shall be
deemed, for all purposes hereof, to be a Preferred Director. Whenever
a default in preference dividends shall no longer exist, subject to
the rights of the holders of any other series of Preferred Stock, the
number of directors constituting the Board of Directors of the
Corporation shall be reduced by two. For the purposes hereof, a
"default in preference dividends" on the Series shall be deemed to
have occurred whenever the amount of accrued dividends upon the Series
shall be equivalent to six full quarterly dividends or more (whether
or not consecutive), and, having so occurred, such default shall be
deemed to exist thereafter until, but only until, all accrued
dividends on all shares of the Series shall have been paid to the
end of the last preceding dividend period.
SECOND: The shares of the Series have been classified and the terms
of the Series have been fixed by a committee of the Board of Directors
pursuant to a general formula adopted by the Board of Directors under
authority set forth in the Charter of the Corporation.
<PAGE>
IN WITNESS WHEREOF, MBNA Corporation has caused this instrument to
be signed in its name and on its behalf by its Executive Vice President,
and attested by its Secretary, this 18th day of September, 1996.
The undersigned Executive Vice President acknowledges these
Articles Supplementary to be the corporate act of the Corporation and
states that to the best of his knowledge, information and belief the
matters and facts set forth herein with respect to the authorization and
approval thereof are true in all material respects and that this statement
is made under the penalties of perjury.
MBNA CORPORATION
By: /s/ Vernon H.C. Wright
-----------------------
Executive Vice President
Attest:
/s/ John W. Scheflen
- ----------------------
Secretary
Face of Stock Certificate:
<PAGE>
MBNA Corporation Logo
Number Shares
T
Adjustable Rate Cumulative Preferred Adjustable Rate Cumulative Preferred
Stock, Series B Stock, Series B
MBNA CORPORATION
INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND
CUSIP 55626L 30 8
SEE REVERSE FOR CERTAIN DEFINITIONS
This Certifies that
is the owner of
FULLY PAID AND NON-ASSESSABLE SHARES OF THE ADJUSTABLE RATE CUMULATIVE
PREFERRED STOCK SERIES B OF
MBNA Corporation, transferable on the books of the Corporation by the
registered holder hereof in person or by duly authorized attorney upon
surrender of this certificate properly endorsed. This certificate is not
valid unless countersigned and registered by the Transfer Agent and
Registrar.
Witness the facsimile seal of the Corporation and the signatures of
its duly authorized officers.
MBNA CORPORATION
Dated
COUNTERSIGNED AND REGISTERED: /s/ Charles M. Cawley
THE BANK OF NEW YORK President
TRANSFER AGENT
AND REGISTRAR
BY /s/ John W. Scheflen
Secretary
AUTHORIZED SIGNATURE
Seal of MBNA Corporation
<PAGE>
Reverse of Stock Certificate:
MBNA CORPORATION
THE CORPORATION IS AUTHORIZED TO ISSUE MORE THAN ONE CLASS OF STOCK,
INCLUDING PREFERRED STOCK ISSUABLE IN SERIES. THE CORPORATION WILL FURNISH
A FULL STATEMENT OF THE DESIGNATIONS AND ANY PREFERENCES, CONVERSION AND
OTHER RIGHTS, VOTING POWERS, RESTRICTIONS, LIMITATIONS AS TO DIVIDENDS,
QUALIFICATIONS, TERMS AND CONDITIONS OF REDEMPTION OF THE STOCK OF EACH
CLASS WHICH THE CORPORATION IS AUTHORIZED TO ISSUE, THE DIFFERENCES IN THE
RELATIVE RIGHTS AND PREFERENCES BETWEEN THE SHARES OF EACH SERIES TO THE
EXTENT THEY HAVE BEEN SET, AND THE AUTHORITY OF THE BOARD OF DIRECTORS TO
SET THE RELATIVE RIGHTS AND PREFERENCES OF SUBSEQUENT SERIES TO ANY
STOCKHOLDER ON REQUEST AND WITHOUT CHARGE. A STATEMENT MAY BE OBTAINED
FROM THE CORPORATION BY WRITING TO THE DIRECTOR OF INVESTOR RELATIONS,
WILMINGTON, DELAWARE 19884-0786.
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in
full according to applicable laws or regulations:
TEN COM--as tenants in common UNIF GIFT MIN ACT--
......Custodian...........
(Cust) (Minor)
TEN ENT--as tenants by the entireties under Uniform Gifts to
Minors
JT TEN--as joint tenants with right ACT
.........................
of survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in the above list.
For value received, .........hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- --------------------------------------
- --------------------------------------
......................................
...........................................................................
.
Please print or typewrite name and address including postal zip code of
assignee
...........................................................................
.
...........................................................................
.
.....................................................................Shares
of the Preferred Stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint ........................................
...........................................................................
Attorney to transfer the said stock on the books of the within-named
Corporation
with full power of substitution in the premises.
<PAGE>
Dated,...........................................
........................................
SIGNATURE(S) GUARANTEED:
---------------------------------------------------
- ---
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION
(BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH
MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT
TO S.E.C. RULE 17AD-15.
NOTICE: The signature to this assignment must correspond with the name
written upon the face of the Certificate, in every particular, without
alteration or enlargement, or any change whatever.
September 23, 1996
MBNA Corporation
Wilmington, Delaware 19884
Ladies and Gentlemen:
I have acted as counsel to MBNA Corporation, a Maryland corporation (the
"Corporation"), in connection with the issuance and sale of 6,000,000 shares of
Adjustable Rate Cumulative Preferred Stock, Series B (the "Preferred Stock").
I have examined and relied upon such corporate records, agreements,
documents and other instruments and such certificates or comparable documents
of public officials and of officers and representatives of the Corporation, and
have made such other and further investigations, as I have deemed relevant and
necessary as a basis for the opinions hereinafter set forth. In such
examination, I have assumed the genuineness of all signatures, the authenticity
of all documents submitted to me as originals, the conformity to original
documents of all documents submitted to me as certified or photostatic copies
and the authenticity of the originals of such latter documents.
Based upon the foregoing, and subject to the qualifications and
limitations stated herein, it is my opinion that the Preferred Stock has been
duly authorized by the Corporation and is validly issued, fully paid and
nonassessable.
I am a member of the Bar of the State of Maryland and I do not express any
opinion herein concerning any law other than the laws of the State of Maryland
and the federal law of the United States.
I consent to the filing of this opinion with the Securities and Exchange
Commission. In giving this consent I do not thereby admit that I am in the
category of persons whose consent is required under Section 7 of the Securities
Act of 1933, as amended, or the rules and regulations of the Securities and
Exchange Commission.
Very truly yours,
/s/ John W. Scheflen
John W. Scheflen
