213
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
-------------------------------------------------
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
--------------------- ------------------------
Commission file number 1-10683
---------------------------------------------------------
MBNA Corporation
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Maryland 52-1713008
- -------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Wilmington, DE 19884-0141
- -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(800) 362-6255
- -------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
- -------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since
last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes x No
---------- ----------
Common Stock, $.01 Par Value - 801,781,250 Shares
Outstanding as of March 31, 2000
MBNA CORPORATION AND SUBSIDIARIES
TABLE OF CONTENTS
Page
Part I - Financial Information
Item 1. Financial Statements
Consolidated Statements of Financial Condition - 1
March 31, 2000 (unaudited) and December 31, 1999
Consolidated Statements of Income - 3
For the Three Months Ended March 31, 2000 and 1999
(unaudited)
Consolidated Statements of Changes in Stockholders' Equity - 5
For the Three Months Ended March 31, 2000 and 1999
(unaudited)
Consolidated Statements of Cash Flows - 7
For the Three Months Ended March 31, 2000 and 1999
(unaudited)
Notes to the Consolidated Financial Statements (unaudited) 9
Item 2. Management's Discussion and Analysis of Financial Condition 16
and Results of Operations (unaudited)
Supplemental Financial Information (unaudited) 40
Part II - Other Information
Item 1. Legal Proceedings 41
Item 4. Submission of Matters to a Vote of Security Holders 42
Item 6. Exhibits and Reports on Form 8-K 43
Signature 214
MBNA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(dollars in thousands, except per share amounts)
March 31, December 31,
2000 1999
------------ ------------
(unaudited)
ASSETS
Cash and due from banks........................... $ 514,143 $ 488,386
Interest-earning time deposits in other banks..... 1,393,206 1,525,748
Federal funds sold and securities purchased
under resale agreements.......................... 428,000 -
Investment securities:
Available-for-sale (at market value, amortized
cost of $2,801,040 and $2,772,305 at
March 31, 2000 and December 31, 1999,
respectively).................................. 2,779,895 2,752,663
Held-to-maturity (market value of $275,757
and $264,832 at March 31, 2000 and
December 31, 1999, respectively)............... 304,621 293,641
Loans held for securitization..................... 8,172,508 9,692,616
Loans:
Credit card..................................... 6,579,232 6,060,564
Other consumer.................................. 2,759,807 1,910,529
------------ ------------
Total loans................................... 9,339,039 7,971,093
Reserve for possible credit losses.............. (368,108) (355,959)
------------ ------------
Net loans..................................... 8,970,931 7,615,134
Premises and equipment, net....................... 1,661,341 1,659,446
Accrued income receivable......................... 189,631 216,867
Accounts receivable from securitizations.......... 4,345,292 4,128,046
Prepaid expenses and deferred charges............. 307,515 274,894
Other assets...................................... 2,352,381 2,211,691
------------ ------------
Total assets.................................. $ 31,419,464 $ 30,859,132
============ ============
March 31, December 31,
2000 1999
------------ ------------
(unaudited)
LIABILITIES
Deposits:
Time deposits................................... $ 14,040,221 $ 13,700,508
Money market deposit accounts................... 4,533,533 4,397,909
Noninterest-bearing demand deposits............. 622,831 567,686
Interest-bearing transaction accounts........... 40,517 39,388
Savings accounts................................ 9,688 9,262
------------ ------------
Total deposits................................ 19,246,790 18,714,753
Short-term borrowings............................. 625,573 1,039,004
Long-term debt and bank notes..................... 5,832,888 5,708,880
Accrued interest payable.......................... 189,291 182,990
Accrued expenses and other liabilities............ 1,233,756 1,014,062
------------ ------------
Total liabilities............................. 27,128,298 26,659,689
STOCKHOLDERS' EQUITY
Preferred stock ($.01 par value, 20,000,000
shares authorized, 8,573,882 shares issued
and outstanding at March 31, 2000 and
December 31, 1999)............................... 86 86
Common stock ($.01 par value, 1,500,000,000
shares authorized, 801,781,250 shares issued
and outstanding at March 31, 2000 and
December 31, 1999)............................... 8,018 8,018
Additional paid-in capital........................ 1,237,389 1,305,935
Retained earnings................................. 3,064,667 2,897,964
Accumulated other comprehensive income............ (18,994) (12,560)
------------ ------------
Total stockholders' equity.................... 4,291,166 4,199,443
------------ ------------
Total liabilities and stockholders' equity.... $ 31,419,464 $ 30,859,132
============ ============
==============================================================================
The accompanying notes are an integral part of the consolidated financial
statements.
MBNA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands, except per share amounts)
For the Three Months Ended
March 31,
--------------------------
2000 1999
------------ ------------
(unaudited)
INTEREST INCOME
Loans.............................................. $ 268,116 $ 381,827
Investment securities:
Taxable.......................................... 41,420 24,321
Tax-exempt....................................... 968 877
Time deposits in other banks....................... 19,161 40,549
Federal funds sold and securities purchased
under resale agreements........................... 7,826 18,221
Loans held for securitization...................... 329,195 75,553
------------ ------------
Total interest income.......................... 666,686 541,348
INTEREST EXPENSE
Deposits........................................... 275,110 213,704
Short-term borrowings.............................. 12,069 9,506
Long-term debt and bank notes...................... 96,436 91,357
------------ ------------
Total interest expense......................... 383,615 314,567
------------ ------------
NET INTEREST INCOME................................ 283,071 226,781
Provision for possible credit losses............... 99,846 84,464
------------ ------------
Net interest income after provision for
possible credit losses............................ 183,225 142,317
OTHER OPERATING INCOME
Interchange........................................ 67,750 39,792
Credit card fees................................... 72,491 38,608
Securitization income.............................. 928,788 802,603
Insurance.......................................... 17,043 9,416
Other.............................................. 24,964 13,311
------------ ------------
Total other operating income................... $ 1,111,036 $ 903,730
For the Three Months Ended
March 31,
--------------------------
2000 1999
------------ ------------
(unaudited)
OTHER OPERATING EXPENSE
Salaries and employee benefits..................... $ 364,805 $ 290,839
Occupancy expense of premises...................... 34,049 30,926
Furniture and equipment expense.................... 49,310 44,590
Other.............................................. 467,146 379,218
------------ ------------
Total other operating expense................... 915,310 745,573
------------ ------------
Income before income taxes......................... 378,951 300,474
Applicable income taxes............................ 144,380 114,481
------------ ------------
NET INCOME......................................... $ 234,571 $ 185,993
============ ============
EARNINGS PER COMMON SHARE.......................... $ .29 $ .23
EARNINGS PER COMMON SHARE-ASSUMING DILUTION........ .28 .22
===============================================================================
The accompanying notes are an integral part of the consolidated financial
statements.
MBNA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(dollars in thousands, except per share amounts) (unaudited)
Outstanding Shares
-----------------------
Preferred Common Preferred Common
(000) (000) Stock Stock
----------- ---------- --------- ----------
BALANCE, DECEMBER 31, 1999. 8,574 801,781 $ 86 $ 8,018
Comprehensive income:
Net income............... - - - -
Other comprehensive
income, net of tax...... - - - -
Comprehensive income.......
Cash dividends:
Common-$.08 per share.... - - - -
Preferred................ - - - -
Exercise of stock options
and other awards.......... - 3,356 - 34
Acquisition and retirement
of common stock........... - (3,356) - (34)
----------- ---------- --------- ----------
BALANCE, MARCH 31, 2000.... 8,574 801,781 $ 86 $ 8,018
=========== ========== ========= ==========
BALANCE, DECEMBER 31, 1998. 8,574 751,796 $ 86 $ 7,518
Comprehensive income:
Net income............... - - - -
Other comprehensive
income, net of tax...... - - - -
Comprehensive income.......
Cash dividends:
Common-$.07 per share.... - - - -
Preferred................ - - - -
Exercise of stock options
and other awards.......... - 3,260 - 33
Issuance of common stock,
net of issuance costs..... - 50,000 - 500
Acquisition and retirement
of common stock........... - (3,275) - (33)
----------- ---------- --------- ----------
BALANCE, MARCH 31, 1999.... 8,574 801,781 $ 86 $ 8,018
=========== ========== ========= ==========
Accumulated
Additional Other Total
Paid-in Retained Comprehensive Stockholders'
Capital Earnings Income Equity
---------- ---------- ------------- ------------
BALANCE, DECEMBER 31, 1999. $1,305,935 $2,897,964 $ (12,560) $ 4,199,443
Comprehensive income:
Net income............... - 234,571 - 234,571
Other comprehensive
income, net of tax...... - - (6,434) (6,434)
------------
Comprehensive income....... 228,137
------------
Cash dividends:
Common-$.08 per share.... - (64,142) - (64,142)
Preferred................ - (3,726) - (3,726)
Exercise of stock options
and other awards.......... 19,902 - - 19,936
Acquisition and retirement
of common stock........... (88,448) - - (88,482)
---------- ---------- ------------- ------------
BALANCE, MARCH 31, 2000.... $1,237,389 $3,064,667 $ (18,994) $ 4,291,166
========== ========== ============= ============
BALANCE, DECEMBER 31, 1998. $ 271,050 $2,112,374 $ 7 $ 2,391,035
Comprehensive income:
Net income............... - 185,993 - 185,993
Other comprehensive
income, net of tax...... - - (9,207) (9,207)
------------
Comprehensive income....... 176,786
------------
Cash dividends:
Common-$.07 per share.... - (56,140) - (56,140)
Preferred................ - (3,516) - (3,516)
Exercise of stock options
and other awards.......... 38,753 - - 38,786
Issuance of common stock,
net of issuance costs..... 1,173,586 - - 1,174,086
Acquisition and retirement
of common stock........... (85,922) - - (85,955)
---------- ---------- ------------- ------------
BALANCE, MARCH 31, 1999.... $1,397,467 $2,238,711 $ (9,200) $ 3,635,082
========== ========== ============= ============
==============================================================================
The accompanying notes are an integral part of the consolidated financial
statements.
MBNA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
For the Three Months Ended
March 31,
--------------------------
2000 1999
------------ ------------
(unaudited)
OPERATING ACTIVITIES
Net income........................................ $ 234,571 $ 185,993
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for possible credit losses............ 99,846 84,464
Depreciation, amortization, and accretion....... 124,606 85,487
Provision (benefit) for deferred income taxes... 9,038 (3,675)
Decrease in accrued income receivable........... 27,236 40,142
Increase in accounts receivable from
securitizations................................ (217,246) (183,797)
Increase in accrued interest payable............ 6,301 4,794
Decrease in other operating activities.......... 108,800 142,862
------------ ------------
Net cash provided by operating activities......... 393,152 356,270
INVESTING ACTIVITIES
Net (increase) decrease in money market
instruments...................................... (295,458) 1,397,282
Proceeds from maturities of investment securities
available-for-sale............................... 129,741 270,039
Purchases of investment securities
available-for-sale............................... (165,329) (506,463)
Proceeds from maturities of investment securities
held-to-maturity ................................ 2,595 9,343
Purchases of investment securities
held-to-maturity................................. (13,666) (30,001)
Proceeds from securitization of loans............. 1,496,242 1,242,787
Proceeds from sale of loans....................... 14,164 2,927
Acquisition of credit card business of
PNC Bank, N.A.................................... - (3,191,786)
Loan portfolio acquisitions....................... (887,625) (611,327)
Amortization of securitized loans................. (653,092) (894,695)
Net loan (originations) repayments................ (53,932) 619,107
Net purchases of premises and equipment........... (51,030) (54,747)
------------ ------------
Net cash used in investing activities......... $ (477,390) $ (1,747,534)
For the Three Months Ended
March 31,
--------------------------
2000 1999
------------ ------------
(unaudited)
FINANCING ACTIVITIES
Net increase in time deposits..................... $ 339,713 $ 654,090
Net increase in money market deposit accounts,
noninterest-bearing demand deposits,
interest-bearing transaction accounts,
and savings accounts............................. 192,324 260,083
Net decrease in short-term borrowings............. (413,431) (687,835)
Proceeds from issuance of long-term debt
and bank notes................................... 207,963 13,861
Maturity of long-term debt and bank notes......... (75,557) (932)
Proceeds from exercise of stock options
and other awards................................. 7,237 15,032
Acquisition and retirement of common stock........ (88,482) (85,955)
Proceeds from issuance of common stock............ - 1,174,086
Dividends paid.................................... (59,772) (48,652)
------------ ------------
Net cash provided by financing activities..... 109,995 1,293,778
------------ ------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS.. 25,757 (97,486)
Cash and cash equivalents at beginning of period.. 488,386 382,882
------------ ------------
Cash and cash equivalents at end of period........ $ 514,143 $ 285,396
============ ============
SUPPLEMENTAL DISCLOSURE
Interest expense paid............................. $ 377,936 $ 308,527
============ ============
Income taxes paid................................. $ 70,011 $ 51,666
============ ============
==============================================================================
The accompanying notes are an integral part of the consolidated financial
statements.
MBNA CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
NOTE A: BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements of MBNA
Corporation ("the Corporation") have been prepared in accordance with generally
accepted accounting principles for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they
do not include all of the information and footnotes required by generally
accepted accounting principles for complete consolidated financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the three months ended March 31, 2000 are not necessarily
indicative of the results that may be expected for the year ended December 31,
2000. The notes to the consolidated financial statements contained in the
Annual Report on Form 10-K for the year ended December 31, 1999 should be read
in conjunction with these consolidated financial statements.
NOTE B: PREFERRED STOCK
The Corporation's Board of Directors declared the following quarterly dividends
for the Corporation's Series A and Series B Preferred Stock:
Series A Series B
--------------------- ---------------------
Dividend Per Dividend Per
Dividend Preferred Dividend Preferred
Declaration Date Payment Date Rate Share Rate Share
- ---------------- ---------------- -------- ------------ -------- ------------
January 10, 2000 April 15, 2000 7.50% $ .46875 6.40% $ .39970
April 13, 2000 July 17, 2000 7.50 .46875 6.07 .37960
NOTE C: COMMON STOCK
To the extent stock options are exercised or restricted shares are awarded from
time to time under the Corporation's Long Term Incentive Plans, the Board of
Directors has approved the purchase, on the open market or in privately
negotiated transactions, of the number of common shares issued.
On April 13, 2000 the Corporation's Board of Directors declared a quarterly
cash dividend of $.08 per common share, payable July 1, 2000 to stockholders of
record as of June 15, 2000.
NOTE D: EARNINGS PER COMMON SHARE
Earnings per common share ("basic") is computed using net income applicable to
common stock and weighted average common shares outstanding during the period.
Earnings per common share-assuming dilution ("diluted") is computed using net
income applicable to common stock and weighted average common shares
outstanding during the period after consideration of the potential dilutive
effect of common stock equivalents, based on the treasury stock method using an
average market price for the period. The Corporation's common stock
equivalents are solely related to employee stock options. The Corporation does
not have any other common stock equivalents.
Computation of Earnings Per Common Share
(dollars in thousands, except per share amounts)
For the Three Months Ended
March 31,
--------------------------
2000 1999
------------ ------------
BASIC
Net income........................................ $ 234,571 $ 185,993
Less: preferred stock dividend requirements....... 3,726 3,516
------------ ------------
Net income applicable to common stock............. $ 230,845 $ 182,477
============ ============
Weighted average common shares outstanding (000).. 801,849 798,538
============ ============
Earnings per common share......................... $ .29 $ .23
============ ============
DILUTED
Net income........................................ $ 234,571 $ 185,993
Less: preferred stock dividend requirements....... 3,726 3,516
------------ ------------
Net income applicable to common stock............. $ 230,845 $ 182,477
============ ============
Weighted average common shares outstanding (000).. 801,849 798,538
Net effect of dilutive stock options-based on the
treasury stock method using average market
price (000)...................................... 22,596 36,349
------------ ------------
Weighted average common shares outstanding and
common stock equivalents (000)................... 824,445 834,887
============ ============
Earnings per common share-assuming dilution....... $ .28 $ .22
============ ============
NOTE E: INTANGIBLE ASSETS
Intangible assets, including the value of acquired Customer accounts and
goodwill, are amortized over the periods the Corporation receives a benefit,
not exceeding fifteen years. The Corporation amortizes its intangible assets
generally using an accelerated method in order to better match the expected
future cash flows from the use of the asset. Intangible assets, which are
included in other assets, had a net book value of $1.7 billion and $1.6 billion
at March 31, 2000 and December 31, 1999, respectively. The Corporation had
accumulated amortization related to its intangible assets of $367.3 million at
March 31, 2000 and $314.3 million at December 31, 1999.
The Corporation periodically reviews the carrying value of its intangible
assets for impairment. The intangible assets are carried at the lower of net
book value or fair value, with the fair value determined by discounting the
expected future cash flows from the use of the asset, using an appropriate
discount rate. The Corporation performs this valuation based on the size and
nature of the intangible asset. For intangible assets that are not considered
material, the Corporation performs this calculation by grouping the assets by
year of acquisition. The Corporation makes certain estimates and assumptions
that affect the determination of the fair value of the intangible assets.
Significant changes in these factors could impact the amortization of the
Corporation's intangible assets.
NOTE F: COMPREHENSIVE INCOME
(dollars in thousands)
The components of comprehensive income, net of tax, are as follows:
For the Three Months Ended
March 31,
--------------------------
2000 1999
------------ ------------
Net income....................................... $ 234,571 $ 185,993
Other comprehensive income:
Foreign currency translation................... (5,713) (7,963)
Net unrealized (losses) gains on investment
securities available-for-sale and other
financial instruments......................... (721) 1,207
Minimum benefit plan liability adjustment...... - (2,451)
------------ ------------
Other comprehensive income....................... (6,434) (9,207)
------------ ------------
Comprehensive income............................. $ 228,137 $ 176,786
============ ============
The components of accumulated other comprehensive income, net of tax, are as
follows:
March 31, December 31,
2000 1999
------------ ------------
Foreign currency translation..................... $ (10,029) $ (4,316)
Net unrealized losses on investment securities
available-for-sale and other financial
instruments..................................... (8,965) (8,244)
------------ ------------
Accumulated other comprehensive income........... $ (18,994) $ (12,560)
============ ============
NOTE G: LONG-TERM DEBT AND BANK NOTES
Long-term debt and bank notes consist of borrowings having an original maturity
of one year or more. During the three months ended March 31, 2000, the
Corporation issued long-term debt and bank notes consisting of the following:
Par Value
----------------------
(dollars in thousands)
Fixed-Rate Euro Medium-Term Notes, with an interest
rate of .80% on the yen denominated note, payable
annually, maturing in 2002 (JPY5.5 billion).............. $51,249
Floating-Rate Euro Medium-Term Notes, priced between
25 basis points and 27 basis points over the
three-month Japanese London Interbank Offered Rate
(LIBOR), with interest payable quarterly, maturing
in 2002 (JPY4.0 billion)................................ 36,258
Floating-Rate Euro Medium-Term Notes, priced between
50 basis points and 58 basis points over the
three-month Sterling LIBOR, with interest payable
quarterly, maturing in varying amounts in 2003 and 2004
(35.0 million pounds sterling).......................... 55,419
Fixed-Rate Medium-Term Deposit Notes, with an interest
rate of 7.26% on the Canadian dollar denominated notes,
payable semiannually, maturing in 2003 (CAD$20.0
million)................................................ 13,779
Floating-Rate Medium-Term Deposit Notes, priced between
55 basis points and 60 basis points over the ninety-day
Bankers Acceptance Rate, payable quarterly, maturing
in 2002 and 2005 (CAD$75.0 million)..................... 51,676
During the three months ended March 31, 2000, MBNA International Bank Limited
entered into foreign exchange swap agreements to offset the exposure to foreign
currency exchange rate risk related to the issuance of Euro Medium-Term Notes
denominated in Japanese Yen.
NOTE H: SENIOR SYNDICATED REVOLVING CREDIT FACILITY
MBNA America Bank, N.A. ("the Bank"), MBNA International Bank Limited
("MBNA Europe"), and the Corporation arranged a $2.5 billion senior syndicated
revolving credit facility in April 2000. The facility consists of a senior
unsecured $2.5 billion four-year revolving credit facility available to the
Bank and MBNA Europe with sublimit availability in an amount of $300.0 million
for the Corporation. The Bank will unconditionally and irrevocably guarantee
the obligations of MBNA Europe. The facility replaces the Bank's existing four-
year $2.0 billion syndicated revolving credit facility.
Advances from the $2.5 billion senior syndicated revolving credit facility are
subject to covenants and conditions customary in a transaction of this kind.
These conditions include requirements for both the Corporation and the Bank to
maintain a minimum level of consolidated tangible net worth. These conditions
also require the Bank to not permit its managed loan receivables 90 days or
more past due plus nonaccruing receivables to exceed 6% of managed credit card
receivables and to maintain its regulatory capital ratios, as defined by
current regulatory standards, at or above regulatory minimum requirements. In
addition, these conditions require that the Corporation not permit its double
leverage ratio (defined as the sum of the Corporation's intangible assets and
investment in subsidiaries divided by total stockholders' equity) to exceed
1.25.
NOTE I: SEGMENT REPORTING
The Corporation derives its income primarily from credit card loans, other
consumer loans, and insurance products. The credit card and other consumer loan
products have similar economic characteristics and, therefore, have been
aggregated into one operating segment. The Corporation's insurance products
have also been aggregated into the one operating segment due to immateriality.
The Corporation allocates resources on a managed basis, and financial
information provided to management reflects the Corporation's results on a
managed basis. Therefore, an adjustment is required to reconcile the managed
financial information to the Corporation's reported financial information in
its consolidated financial statements. This adjustment reclassifies
securitization income into interest income, interchange, credit card and other
fees, insurance income, interest paid to investors, credit losses, and other
trust expenses. The managed results also include the impact of Statement of
Financial Accounting Standards No. 125, "Accounting for Transfers and Servicing
of Financial Assets and Extinguishments of Liabilities."
SEGMENT REPORTING
(dollars in thousands)
For the Three Months Ended
March 31, 2000
------------------------------------------
Total Securitization Total
Managed Adjustments Consolidated
------------ -------------- ------------
Interest income................... $ 2,549,277 $ (1,882,591) $ 666,686
Interest expense.................. 1,192,942 (809,327) 383,615
------------ -------------- ------------
Net interest income............... 1,356,335 (1,073,264) 283,071
Provision for possible credit
losses........................... 731,803 (631,957) 99,846
------------ -------------- ------------
Net interest income after
provision for possible credit
losses........................... 624,532 (441,307) 183,225
Other operating income............ 669,729 441,307 1,111,036
Other operating expense........... 915,310 - 915,310
------------ -------------- ------------
Income before income taxes........ 378,951 - 378,951
Applicable income taxes........... 144,380 - 144,380
------------ -------------- ------------
Net income........................ $ 234,571 $ - $ 234,571
============ ============== ============
Loans............................. $ 72,999,767 $ (55,488,220) $ 17,511,547
For the Three Months Ended
March 31, 1999
------------------------------------------
Total Securitization Total
Managed Adjustments Consolidated
------------ -------------- ------------
Interest income................... $ 2,133,593 $ (1,592,245) $ 541,348
Interest expense.................. 901,674 (587,107) 314,567
------------ -------------- ------------
Net interest income............... 1,231,919 (1,005,138) 226,781
Provision for possible credit
losses........................... 647,952 (563,488) 84,464
------------ -------------- ------------
Net interest income after
provision for possible credit
losses........................... 583,967 (441,650) 142,317
Other operating income............ 462,080 441,650 903,730
Other operating expense........... 745,573 - 745,573
------------ -------------- ------------
Income before income taxes........ 300,474 - 300,474
Applicable income taxes........... 114,481 - 114,481
------------ -------------- ------------
Net income........................ $ 185,993 $ - $ 185,993
============ ============== ============
Loans............................. $ 62,143,960 $ (46,462,404) $ 15,681,556
NOTE J: NEW ACCOUNTING PRONOUNCEMENTS
Statement of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("Statement No. 133"), establishes
accounting and reporting standards for derivative instruments, including
certain derivative instruments embedded in other contracts, and hedging
activities. In June 1999, Statement of Financial Accounting Standards No. 137,
"Accounting for Derivative Instruments and Hedging Activities-Deferral of the
Effective Date of FASB Statement No. 133" ("Statement No. 137"), was issued and
extends the effective date for Statement No. 133 to all fiscal quarters of all
fiscal years beginning after June 15, 2000. Based on the Corporation's current
level of derivative and hedging activities, the implementation of Statement
No. 133, as amended by Statement No. 137, should not have a material impact on
the Corporation's consolidated financial statements.
In February 1999, the Federal Financial Institutions Examination Council
published a revised policy statement on the classification of consumer loans.
The revised policy establishes uniform guidelines for the charge-off of loans
to delinquent, bankrupt, and deceased borrowers, for charge-off of fraudulent
accounts, and for re-aging, extending, deferring or rewriting delinquent
accounts. The guidelines must be implemented by December 31, 2000. The
Corporation expects to implement the guidelines prior to or on December 31,
2000. The Corporation will accelerate charge-off of some delinquent loans when
it implements the guidelines, and does not expect implementation to have a
material impact on the Corporation's consolidated statement of income for the
year ended December 31, 2000.
In March 2000, the Financial Accounting Standards Board issued FASB
Interpretation No. 44, "Accounting for Certain Transactions Involving Stock
Compensation" ("Interpretation No. 44") which is an interpretation of
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees" ("APB Opinion No. 25"). Interpretation No. 44 clarifies the
application of APB Opinion No. 25 for certain issues. The effective date for
Interpretation No. 44 is July 1, 2000, but certain conclusions in
Interpretation No. 44 cover specific events that occur after December 15, 1998,
or January 12, 2000. To the extent that Interpretation No. 44 covers events
occurring during the period after December 31, 1998 or January 12, 2000, but
before the effective date of July 1, 2000, the effects of applying this
interpretation will be recognized on a prospective basis from July 1, 2000. The
Corporation does not expect implementation of Interpretation No. 44 to have a
material impact on the Corporation's consolidated financial statements.
MBNA CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(unaudited)
This discussion is intended to further the reader's understanding of the
consolidated financial statements, financial condition, and results of
operations of MBNA Corporation. It should be read in conjunction with the
consolidated financial statements, notes, and tables included elsewhere in this
report.
INTRODUCTION
MBNA Corporation, ("the Corporation"), a bank holding company located in
Wilmington, Delaware, is the parent company of MBNA America Bank, N.A. ("the
Bank"), a national bank and the Corporation's principal subsidiary. The Bank
has two wholly owned foreign bank subsidiaries, MBNA International Bank Limited
("MBNA Europe") located in the United Kingdom and MBNA Canada Bank ("MBNA
Canada") located in Canada. Through the Bank, the Corporation is the largest
independent credit card lender in the world and is the leading issuer of
affinity credit cards, marketed primarily to members of associations and
Customers of financial institutions. In addition to its credit card lending,
the Corporation also makes other consumer loans and offers insurance and
deposit products.
The Corporation generates interest and other income through finance charges
assessed on outstanding loan receivables, interchange income, credit card and
other fees, securitization income, insurance income, and interest earned on
investment securities and money market instruments. The Corporation's primary
costs are the costs of funding its loan receivables and investment securities
and money market instruments, which include interest paid on deposits, short-
term borrowings, and long-term debt and bank notes; credit losses; royalties
paid to affinity groups and financial institutions; business development and
operating expenses; and income taxes.
EARNINGS SUMMARY
Net income for the three months ended March 31, 2000 increased 26.1% to $234.6
million or $.28 per common share, from $186.0 million or $.22 per common share
for the same period in 1999. Earnings per common share amounts are presented
assuming dilution.
The overall growth in earnings was primarily attributable to the growth in the
Corporation's managed loans outstanding. The Corporation's average managed
loans increased 21.9% to $72.0 billion for the three months ended March 31,
2000, compared to $59.1 billion for the same period in 1999. Total managed
loans at March 31, 2000 were $73.0 billion, a $10.9 billion increase from
March 31, 1999, and a $744.3 million increase since December 31, 1999. During
the three months ended March 31, 2000, the Corporation acquired 97 new
endorsements from organizations and added 2.7 million new accounts.
The Corporation continues to be an active participant in the asset
securitization market. Asset securitization is the sale of loans to
investors, generally through a trust, that converts interest income,
interchange, credit card and other fees, and insurance income in excess of
interest paid to investors, credit losses, and other trust expenses into
securitization income, while reducing the Corporation's on-balance-sheet
assets. Gains are recognized by the Corporation in securitization income at
the time of initial sale and each subsequent sale of loan receivables in a
securitization. During the three months ended March 31, 2000, the Corporation
securitized $1.5 billion of credit card loan receivables, bringing the total
amount of outstanding securitized loans to $55.5 billion at March 31, 2000.
The Corporation's return on average total assets for the three months ended
March 31, 2000 was 3.02%, as compared to 2.81% for the same period during
1999. The increase in the return on average total assets for the three months
ended March 31, 2000 is a result of the Corporation's net income growing
faster than its average total assets. The Corporation's return on average
stockholders' equity for the three months ended March 31, 2000 was 22.46%,
compared to 21.69% for the same period in 1999.
NET INTEREST INCOME
Net interest income for the three months ended March 31, 2000, on a fully
taxable equivalent basis, was $283.6 million compared to $227.3 million for the
same period in 1999. The increase in net interest income for the three months
ended March 31, 2000 is a result of an increase in average interest-earning
assets of $2.3 billion, offset by an increase in average interest-bearing
liabilities of $3.2 billion as compared to the same period in 1999. The
increase in average interest-earning assets for the three months ended
March 31, 2000 is primarily a result of an increase in average loan receivables
of $4.1 billion offset by a decline of $1.8 billion in average investment
securities and money market instruments, as compared to the same period in
1999. The increase in average interest-bearing liabilities for the three
months ended March 31, 2000 resulted primarily from funding the increase in
average interest-earning assets, accounts receivable from securitization, and
the value of acquired Customer accounts. The value of acquired Customer
accounts represents the premiums paid by the Corporation in excess of acquired
loan receivables. Both accounts receivable from securitization and the value
of acquired Customer accounts are included in other assets in Table 2. The
yield earned on average interest-earning assets increased 104 basis points for
the three months ended March 31, 2000, as compared to the same period in 1999.
The rate paid on average interest-bearing liabilities increased 32 basis points
for the three months ended March 31, 2000, as compared to the three months
ended March 31, 1999. The increase in the yield earned by the Corporation on
average interest-earning assets is primarily the result of a change in the mix
of interest-earning assets to higher yielding loan receivables from lower
yielding investment securities and money market instruments.
The net interest margin, on a fully taxable equivalent basis, was 5.12% for
the three months ended March 31, 2000, as compared to 4.61% for the same
period in 1999.
INVESTMENT SECURITIES AND MONEY MARKET INSTRUMENTS
Interest income on investment securities, on a fully taxable equivalent basis,
increased $17.2 million to $42.9 million for the three months ended March 31,
2000, as compared to the same period in 1999. The increase for the three months
ended March 31, 2000, was the result of an increase in average investment
securities of $1.1 billion. In addition, the yield earned on average
investment securities increased 27 basis points, as compared to the same period
in 1999.
Interest income on money market instruments decreased $31.8 million to $27.0
million for the three months ended March 31, 2000, as compared to the same
period in 1999. The decrease for the three months ended March 31, 2000 is a
result of a decrease of $2.9 billion in average money market instruments,
offset by an increase of 86 basis points in the yield earned on average money
market instruments, as compared to the same period in 1999.
Average investment securities and money market instruments are affected by the
timing of receipt of funds from asset securitizations, deposits, loan payments,
long-term debt and bank notes, and maturities of investment securities. Funds
received from these sources are generally invested in short-term, liquid money
market instruments and investment securities available-for-sale until the funds
are needed for loan growth and other liquidity needs. Average money market
instruments were also higher than normal during the three months ended
March 31, 1999 as a result of the temporary investment of the net proceeds from
the issuance of common stock by the Corporation in January 1999. The increase
in average investment securities and the decline in money market instruments
for the three months ended March 31, 2000 are primarily a result of the
Corporation reinvesting funds during the fourth quarter of 1999 from maturing
money market instruments into U.S. treasury obligations, included in the
investment securities available-for-sale portfolio, as part of the
Corporation's Year 2000 readiness planning.
The Corporation tries to maintain its investment securities and money market
instruments position at a level appropriate for the Corporation's anticipated
liquidity needs. Average investment securities and money market instruments as
a percentage of average interest-earning assets were 21.9% for the three months
ended March 31, 2000, as compared to 33.4% for the same period in 1999.
LOAN RECEIVABLES
Interest income generated by the Corporation's loan receivables increased
$139.9 million to $597.3 million for the three months ended March 31, 2000, as
compared to the same period in 1999. The increase is primarily attributable to
an increase in average loan receivables of $4.1 billion for the three months
ended March 31, 2000, as compared to the same period in 1999. The yield earned
by the Corporation on loan receivables declined 16 basis points to 13.79% for
the three months ended March 31, 2000 as compared to the same period in 1999.
Table 1 presents the Corporation's period-end loan receivables distribution by
loan type, excluding securitized loans. Loan receivables decreased $152.2
million to $17.5 billion at March 31, 2000, compared to $17.7 billion at
December 31, 1999. The decrease in loan receivables during the three months
ended March 31, 2000 was primarily due to the Corporation securitizing $1.5
billion of credit card loan receivables. This was offset by growth in the
Corporation's domestic other consumer loan portfolio, $653.1 million of
previously securitized loans which amortized back into the Corporation's loan
portfolio or matured, and loan portfolio acquisitions. During the three months
ended March 31, 2000, the Corporation acquired $605.4 million of domestic
credit card loan receivables and $148.7 million of domestic other consumer loan
receivables.
TABLE 1: LOAN RECEIVABLES DISTRIBUTION
(dollars in thousands)
March 31, December 31,
2000 1999
------------- -------------
(unaudited)
Loans held for securitization:
Domestic:
Credit card.............................. $ 6,432,133 $ 7,835,429
Other consumer........................... 1,007,138 1,001,271
------------- -------------
Total domestic loans held for
securitization........................ 7,439,271 8,836,700
Foreign.................................... 733,237 855,916
------------- -------------
Total loans held for securitization.... 8,172,508 9,692,616
Loan portfolio:
Domestic:
Credit card.............................. 5,501,321 5,116,381
Other consumer........................... 2,049,634 1,268,019
------------- -------------
Total domestic loan portfolio.......... 7,550,955 6,384,400
Foreign.................................... 1,788,084 1,586,693
------------- -------------
Total loan portfolio................... 9,339,039 7,971,093
------------- -------------
Total loan receivables................. $ 17,511,547 $ 17,663,709
============= =============
DEPOSITS
Total interest expense on deposits increased $61.4 million to $275.1 million
for the three months ended March 31, 2000, compared to the same period in 1999.
The increase in interest expense for the three months ended March 31, 2000 is
the result of an increase in average interest-bearing deposits of $3.3 billion,
in addition to a 29 basis point increase in the rate paid on average interest-
bearing deposits, as compared with the same period in 1999. The increase in
average interest-bearing deposits for the three months ended March 31, 2000 was
a result of the Corporation's continued emphasis on marketing certificates of
deposit as well as obtaining other deposits through the use of third-party
intermediaries to fund loan and other asset growth and diversify funding
sources.
BORROWED FUNDS
Interest expense on short-term borrowings was $12.1 million for the three
months ended March 31, 2000, as compared to $9.5 million for the same period in
1999. The increase was a result of an increase in average short-term
borrowings of $83.1 million for the three months ended March 31, 2000, combined
with a 69 basis point increase in the rate paid on average short-term
borrowings, as compared to the same period in 1999. The increase in average
short-term borrowings for the three months ended March 31, 2000 was to provide
funding for the Corporation's short-term domestic liquidity needs.
Total interest expense on long-term debt and bank notes for the three months
ended March 31, 2000 increased to $96.4 million, from $91.4 million for the
same period in 1999. The increase in interest expense was primarily a result of
the increase of 46 basis points in the rate paid on average long-term debt and
bank notes, offset by the decrease in average long-term debt and bank notes of
$148.2 million for the three months ended March 31, 2000, as compared to the
same period in 1999.
Table 2 provides further detail regarding the Corporation's average balances,
yields and rates, and income or expense for the three months ended
March 31, 2000 and 1999, respectively.
TABLE 2: STATEMENTS OF AVERAGE BALANCES, YIELDS AND RATES, INCOME OR EXPENSE
(dollars in thousands, yields and rates on a fully taxable equivalent basis)
For the Three Months Ended
March 31, 2000
--------------------------------
Average Yield/ Income
Amount Rate or Expense
------------ ------ ----------
(unaudited)
ASSETS
Interest-earning assets:
Interest-earning time deposits in other
banks:
Domestic.................................. $ 3,271 4.43% $ 36
Foreign................................... 1,303,904 5.90 19,125
------------ ----------
Total interest-earning time deposits
in other banks....................... 1,307,175 5.90 19,161
Federal funds sold and securities purchased
under resale agreements.................... 540,462 5.82 7,826
------------ ---------
Total money market instruments........ 1,847,637 5.87 26,987
Investment securities(a):
Taxable................................... 2,924,265 5.70 41,420
Tax-exempt(b)............................. 103,070 5.81 1,490
------------ ---------
Total investment securities........... 3,027,335 5.70 42,910
Loans held for securitization:
Domestic.................................. 8,525,325 14.01 296,907
Foreign................................... 950,167 13.67 32,288
------------ ----------
Total loans held for securitization... 9,475,492 13.97 329,195
Loans:
Domestic:
Credit card............................. 4,847,728 13.57 163,551
Other consumer.......................... 1,554,133 14.61 56,473
------------ ----------
Total domestic loans.................. 6,401,861 13.82 220,024
Foreign................................... 1,541,810 12.55 48,092
------------ ----------
Total loans........................... 7,943,671 13.58 268,116
------------ ----------
Total loan receivables................ 17,419,163 13.79 597,311
------------ ----------
Total interest-earning assets......... 22,294,135 12.04 $ 667,208
Cash and due from banks....................... 636,077
Premises and equipment, net................... 1,667,180
Other assets.................................. 6,954,844
Reserve for possible credit losses............ (356,000)
------------
Total assets.......................... $ 31,196,236
============
(a) Average amounts for investment securities available-for-sale are based on
market values; if these securities were carried at amortized cost, there
would not be a material impact on the net interest margin.
For the Three Months Ended
March 31, 2000
--------------------------------
Average Yield/ Income
Amount Rate or Expense
------------ ------ ----------
(unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing liabilities:
Interest-bearing deposits:
Domestic:
Time deposits........................... $ 13,337,551 6.05% $ 200,669
Money market deposit accounts........... 4,425,605 5.72 62,898
Interest-bearing transaction accounts... 37,374 4.91 456
Savings accounts........................ 9,370 4.85 113
------------ ----------
Total domestic interest-bearing
deposits............................. 17,809,900 5.96 264,136
Foreign:
Time deposits........................... 788,294 5.60 10,974
------------ ----------
Total interest-bearing deposits....... 18,598,194 5.95 275,110
Borrowed funds:
Short-term borrowings:
Domestic................................ 637,010 6.16 9,758
Foreign................................. 169,807 5.47 2,311
------------ ----------
Total short-term borrowings........... 806,817 6.02 12,069
Long-term debt and bank notes:
Domestic(c)............................. 4,837,762 6.74 81,123
Foreign................................. 960,114 6.41 15,313
------------ ----------
Total long-term debt and bank notes... 5,797,876 6.69 96,436
------------ ----------
Total borrowed funds.................. 6,604,693 6.61 108,505
------------ ----------
Total interest-bearing liabilities.... 25,202,887 6.12 383,615
Demand deposits............................... 625,008
Other liabilities............................. 1,167,193
------------
Total liabilities..................... 26,995,088
Stockholders' equity.......................... 4,201,148
------------
Total liabilities and stockholders'
equity............................... $ 31,196,236
============ ----------
Net interest income................... $ 283,593
==========
Net interest margin................... 5.12
Interest rate spread.................. 5.92
(b) The fully taxable equivalent adjustment for the three months ended
March 31, 2000 was $522.
(c) Includes the impact of interest rate swap agreements used to change fixed-
rate funding sources to floating-rate funding sources.
For the Three Months Ended
March 31, 1999
--------------------------------
Average Yield/ Income
Amount Rate or Expense
------------ ------ ----------
(unaudited)
ASSETS
Interest-earning assets:
Interest-earning time deposits in other
banks:
Domestic.................................. $ 3,317 3.55% $ 29
Foreign................................... 3,220,469 5.10 40,520
------------ ----------
Total interest-earning time deposits
in other banks....................... 3,223,786 5.10 40,549
Federal funds sold and securities purchased
under resale agreements.................... 1,531,744 4.82 18,221
----------- ----------
Total money market instruments........ 4,755,530 5.01 58,770
Investment securities(a):
Taxable................................... 1,824,265 5.41 24,321
Tax-exempt(b)............................. 92,071 5.94 1,349
------------ ----------
Total investment securities........... 1,916,336 5.43 25,670
Loans held for securitization:
Domestic.................................. 1,521,555 14.27 53,521
Foreign................................... 606,905 14.72 22,032
------------ ----------
Total loans held for securitization... 2,128,460 14.40 75,553
Loans:
Domestic:
Credit card............................. 7,651,805 13.82 260,814
Other consumer.......................... 2,481,037 14.04 85,922
------------ ----------
Total domestic loans.................. 10,132,842 13.88 346,736
Foreign................................... 1,037,932 13.71 35,091
------------ ----------
Total loans........................... 11,170,774 13.86 381,827
------------ ----------
Total loan receivables................ 13,299,234 13.95 457,380
------------ ----------
Total interest-earning assets......... 19,971,100 11.00 $ 541,820
Cash and due from banks....................... 489,045
Premises and equipment, net................... 1,619,461
Other assets.................................. 4,966,166
Reserve for possible credit losses............ (226,592)
------------
Total assets.......................... $ 26,819,180
============
(a) Average amounts for investment securities available-for-sale are based on
market values; if these securities were carried at amortized cost, there
would not be a material impact on the net interest margin.
For the Three Months Ended
March 31, 1999
--------------------------------
Average Yield/ Income
Amount Rate or Expense
------------ ------ ----------
(unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing liabilities:
Interest-bearing deposits:
Domestic:
Time deposits........................... $ 10,367,082 5.97% $ 152,570
Money market deposit accounts........... 4,199,028 4.87 50,468
Interest-bearing transaction accounts... 36,074 4.15 369
Savings accounts........................ 56,691 4.37 611
------------ ----------
Total domestic interest-bearing
deposits............................. 14,658,875 5.64 204,018
Foreign:
Time deposits........................... 662,120 5.93 9,686
------------ ----------
Total interest-bearing deposits....... 15,320,995 5.66 213,704
Borrowed funds:
Short-term borrowings:
Domestic................................ 505,829 5.39 6,720
Foreign................................. 217,896 5.19 2,786
------------ ----------
Total short-term borrowings........... 723,725 5.33 9,506
Long-term debt and bank notes:
Domestic(c)............................. 5,653,913 6.16 85,901
Foreign................................. 292,200 7.57 5,456
------------ ----------
Total long-term debt and bank notes... 5,946,113 6.23 91,357
------------ ----------
Total borrowed funds.................. 6,669,838 6.13 100,863
------------ ----------
Total interest-bearing liabilities.... 21,990,833 5.80 314,567
Demand deposits............................... 513,228
Other liabilities............................. 838,076
------------
Total liabilities..................... 23,342,137
Stockholders' equity.......................... 3,477,043
------------
Total liabilities and stockholders'
equity............................... $ 26,819,180
============ ----------
Net interest income................... $ 227,253
==========
Net interest margin................... 4.61
Interest rate spread.................. 5.20
(b) The fully taxable equivalent adjustment for the three months ended
March 31, 1999 was $472.
(c) Includes the impact of interest rate swap agreements used to change fixed-
rate funding sources to floating-rate funding sources.
OTHER OPERATING INCOME
Total other operating income increased 22.9% to $1.1 billion for the three
months ended March 31, 2000, from $903.7 million for the same period in 1999.
The increase in other operating income is primarily attributable to a $126.2
million, or 15.7% increase in securitization income for the three months ended
March 31, 2000, as compared to the same period in 1999. The increase in
securitization income is primarily attributable to the growth in average
securitized loans of $8.8 billion, or 19.2%, for the three months ended
March 31, 2000, offset by an increase in the average rate paid to investors in
the Corporation's securitized loans. Credit card fees and other income
increased 87.8% and 87.5%, respectively, to $72.5 million and $25.0 million for
the three months ended March 31, 2000, as compared to the same period in 1999,
as a result of the growth in the Corporation's outstanding loan receivables and
a number of the fees assessed. Also, loan servicing fees related to
securitized loans, credit card fees, and other income increased for the three
months ended March 31, 2000, as compared to the same period in 1999, as a
result of the impact from the Corporation increasing its fees charged to credit
card and other consumer loan Customers during 1999. Interchange income
increased $28.0 million to $67.8 million for the three months ended March 31,
2000, as compared to the same period in 1999. The increase in interchange
income is a result of an increase in the Corporation's sales volume in addition
to an increase in the interchange rate set by MasterCard and Visa in 1999.
OTHER OPERATING EXPENSE
Total other operating expense increased 22.8% to $915.3 million, for the three
months ended March 31, 2000, from $745.6 million for the same period in 1999.
The growth in other operating expense reflects the Corporation's continued
investment in business development activities to enhance the ability of the
Corporation to attract and retain Customers. The Corporation has also
continued to invest in its other consumer loan, foreign, and insurance agency
businesses. For the three months ended March 31, 2000, the Corporation added
2.7 million new accounts or 3.2 million new Customers. The Corporation added
97 new endorsements from organizations during the three months ended March 31,
2000.
The growth in other operating expense includes amortization of intangible
assets which increased $25.6 million to $52.7 million for the three months
ended March 31, 2000, as compared to the same period in 1999. The increase in
amortization of intangible assets is a result of the Corporation's loan
portfolio acquisitions.
Table 3 provides further detail regarding the Corporation's other operating
expenses.
TABLE 3: OTHER EXPENSE COMPONENT OF OTHER OPERATING EXPENSE
(dollars in thousands)
For the Three Months Ended
March 31,
--------------------------
2000 1999
------------ ------------
(unaudited)
Purchased services................................ $ 90,176 $ 87,206
Advertising....................................... 68,350 60,425
Collection........................................ 10,524 9,903
Stationery and supplies........................... 9,179 9,700
Service bureau.................................... 12,835 10,332
Postage and delivery.............................. 98,198 76,645
Telephone usage................................... 17,645 19,777
Loan receivable fraud losses...................... 33,699 22,637
Amortization of intangible assets................. 52,707 27,151
Computer software................................. 17,600 15,757
Other............................................. 56,233 39,685
------------ ------------
Total other operating expense................... $ 467,146 $ 379,218
============ ============
LOAN QUALITY
The Corporation's loan quality at any time reflects, among other factors, the
quality of the Corporation's credit card and other consumer loans, the general
economic conditions, the success of the Corporation's collection efforts, and
the seasoning of the Corporation's loans. As new loans season, the delinquency
rate on these loans generally rises and then stabilizes.
Delinquencies
An account is contractually delinquent if the minimum payment is not received
by the specified date on the Customer's statement. However, the Corporation
generally continues to accrue interest until the loan is either paid or charged
off. Delinquency as a percentage of the Corporation's loan portfolio was 3.35%
at March 31, 2000, compared to 3.82% at December 31, 1999. The Corporation's
managed delinquency, as a percentage of managed loans, was 4.35% at March 31,
2000, as compared to 4.45% at December 31, 1999.
Table 4 presents the stages of delinquency of the Corporation's loan portfolio,
excluding loans held for securitization.
TABLE 4: DELINQUENT LOANS
(dollars in thousands)
March 31, 2000 December 31, 1999
------------------ -----------------
(unaudited)
Loan portfolio......................... $9,339,039 $ 7,971,093
Loans delinquent:
30 to 59 days........................ $ 105,982 1.13% $ 105,667 1.33%
60 to 89 days........................ 63,975 .69 60,452 .76
90 or more days...................... 142,842 1.53 138,531 1.73
----------- ----- ----------- -----
Total.............................. $ 312,799 3.35% $ 304,650 3.82%
=========== ===== =========== =====
Loans delinquent by geographic area:
Domestic............................. $ 275,366 3.65% $ 271,139 4.25%
Foreign.............................. 37,433 2.09 33,511 2.11
The Corporation may modify the terms of its credit card and other consumer loan
agreements with borrowers who have experienced financial difficulties, by
either reducing their interest rate or placing them on nonaccrual status.
These other nonperforming loans, excluding loans held for securitization, are
presented in Table 5.
TABLE 5: OTHER NONPERFORMING LOANS
(dollars in thousands)
March 31, 2000 December 31, 1999
------------------ -----------------
(unaudited)
Nonaccrual loans..................... $ 14,670 $ 12,245
Reduced-rate loans................... 131,831 153,082
------------------ -----------------
Total other nonperforming loans.... $ 146,501 $ 165,327
================== =================
Other nonperforming loans as a % of
ending loan portfolio............... 1.57% 2.07%
The Corporation's total managed other nonperforming loans as a percentage of
ending managed loans was 2.68% at March 31, 2000, as compared to 2.51% at
December 31, 1999.
NET CREDIT LOSSES
The Corporation's policy is generally to charge off accounts when they become
180 days contractually past due. The Corporation sells charged-off receivables
and records the proceeds received from these sales as recoveries, thereby
reducing net credit losses.
Net credit losses for the three months ended March 31, 2000 were $99.8 million,
compared to $80.6 million for the same period in 1999. Net credit losses do not
include credit losses from securitized loans, which are charged to the related
trusts in accordance with their respective contractual agreements. The
increase in net credit losses for the three months ended March 31, 2000,
reflects an increase in the Corporation's outstanding loan receivables, the
general economic conditions, and the seasoning of the Corporation's accounts,
offset by recoveries from the sale of charged-off receivables.
Annualized net credit losses as a percentage of average loan receivables were
2.29% for the three months ended March 31, 2000, as compared to 2.42% for the
same period in 1999. The Corporation's annualized managed credit losses as a
percentage of average managed loans for the three months ended March 31, 2000
were 4.06% as compared to 4.36% for the same period in 1999.
Reserve and Provision for Possible Credit Losses
The loan portfolio is regularly reviewed to determine an appropriate reserve
for possible credit losses based upon the impact of economic conditions on the
borrowers' ability to repay, past collection experience, the risk
characteristics of the portfolio, and other factors. A provision is charged to
operating expense to maintain the reserve at an appropriate level. Table 6
presents an analysis of the Corporation's reserve for possible credit losses.
The provision for possible credit losses for the three months ended March 31,
2000, increased 18.2% to $99.8 million as compared to $84.5 million for the
three months ended March 31, 1999. The increase in the provision for possible
credit losses reflects the increase in the Corporation's net credit losses. In
addition, the Corporation records acquired reserves for current period loan
portfolio acquisitions. During the three months ended March 31, 2000, the
Corporation recorded $12.2 million of reserves acquired for current period loan
portfolio acquisitions. The reserve for possible credit losses is a general
allowance applicable to the Corporation's loan portfolio and does not include
an allocation for credit risk related to securitized loans. Losses on
securitized loans are absorbed directly by the related trusts under their
respective contractual agreements, and reduce securitization income rather than
the reserve for possible credit losses.
TABLE 6: RESERVE FOR POSSIBLE CREDIT LOSSES
(dollars in thousands)
For the Three Months Ended
March 31,
--------------------------
2000 1999
------------ ------------
(unaudited)
Reserve for possible credit losses, beginning of
period............................................ $ 355,959 $ 216,911
Reserves acquired................................ 12,232 83,260
Provision for possible credit losses............. 99,846 84,464
Foreign currency translation..................... (161) (366)
Credit losses:
Domestic:
Credit card.................................. (115,652) (87,565)
Other consumer............................... (27,836) (31,282)
------------ ------------
Total domestic credit losses............... (143,488) (118,847)
Foreign........................................ (12,197) (8,207)
------------ ------------
Total credit losses........................ (155,685) (127,054)
Recoveries:
Domestic:
Credit card.................................. 44,196 38,397
Other consumer............................... 6,401 5,935
------------ ------------
Total domestic recoveries.................. 50,597 44,332
Foreign........................................ 5,320 2,170
------------ ------------
Total recoveries........................... 55,917 46,502
------------ ------------
Net credit losses................................ (99,768) (80,552)
------------ ------------
Reserve for possible credit losses, end of period.. $ 368,108 $ 303,717
============ ============
In February 1999, the Federal Financial Institutions Examination Council
published a revised policy statement on the classification of consumer loans.
The revised policy establishes uniform guidelines for the charge-off of loans
to delinquent, bankrupt, and deceased borrowers, for charge-off of fraudulent
accounts, and for re-aging, extending, deferring or rewriting delinquent
accounts. The guidelines must be implemented by December 31, 2000. The
Corporation expects to implement the guidelines prior to or on December 31,
2000. The Corporation will accelerate charge-off of some delinquent loans when
it implements the guidelines, and does not expect implementation to have a
material impact on the Corporation's consolidated statement of income for the
year ended December 31, 2000.
CAPITAL ADEQUACY
The Corporation is subject to risk-based capital guidelines adopted by the
Federal Reserve Board for bank holding companies. The Bank is also subject to
similar capital requirements adopted by the Office of the Comptroller of the
Currency. Under these requirements, the federal bank regulatory agencies have
established quantitative measures to ensure that minimum thresholds for Tier 1
Capital, Total Capital, and Leverage ratios are maintained. Failure to meet
these minimum capital requirements can initiate certain mandatory, and possible
additional discretionary, actions by the federal bank regulators that, if
undertaken, could have a direct material effect on the Corporation's and the
Bank's financial statements. Under the capital adequacy guidelines and the
regulatory framework for prompt corrective action, the Corporation and the Bank
must meet specific capital guidelines that involve quantitative measures of
their assets, liabilities, and certain off-balance-sheet items as calculated
under regulatory accounting practices.
The Corporation's and the Bank's capital amounts and classification are also
subject to qualitative judgments by the federal bank regulators about
components, risk weightings, and other factors. At March 31, 2000, and
December 31, 1999, the Corporation's and the Bank's capital exceeded all
minimum regulatory requirements to which they are subject, and the Bank was
"well-capitalized" as defined under the federal bank regulatory guidelines.
The risk-based capital ratios, shown in Table 7, have been computed in
accordance with regulatory accounting practices.
TABLE 7: REGULATORY CAPITAL RATIOS
March 31, December 31, Minimum Well-Capitalized
2000 1999 Requirements Requirements
----------- ------------ ------------ ----------------
(unaudited)
MBNA Corporation
Tier 1................. 14.66% 14.72% 4.00% (a)
Total.................. 16.98 17.02 8.00 (a)
Leverage............... 14.30 14.90 4.00 (a)
MBNA America Bank, N.A.
Tier 1................. 11.39 11.06 4.00 6.00%
Total.................. 13.80 13.44 8.00 10.00
Leverage............... 11.44 11.61 4.00 5.00
(a) Not applicable for bank holding companies.
DIVIDEND LIMITATIONS
The payment of dividends in the future and the amount of such dividends, if
any, will be at the discretion of the Corporation's Board of Directors. The
payment of preferred and common stock dividends by the Corporation may be
limited by certain factors, including regulatory capital requirements, broad
enforcement powers of the federal bank regulatory agencies, and tangible net
worth maintenance requirements under the Corporation's revolving credit
facilities. The payment of common stock dividends may also be limited by the
terms of the outstanding preferred stock. If the Corporation has not paid
scheduled dividends on the preferred stock, or declared the dividends and set
aside funds for payment, the Corporation may not declare or pay any cash
dividends on the common stock. In addition, if the Corporation defers interest
payments for consecutive periods covering 10 semiannual periods or 20
consecutive quarterly periods, depending on the series, on its guaranteed
preferred beneficial interests in Corporation's junior subordinated deferrable
interest debentures, the Corporation may not be permitted to declare or pay any
cash dividends on the Corporation's capital stock or interest on debt
securities that have equal or lower priority than the junior subordinated
deferrable interest debentures. During the three months ended March 31, 2000,
the Corporation declared dividends on its preferred stock of $3.7 million and
on its common stock of $64.1 million.
On April 13, 2000, the Corporation's Board of Directors declared a quarterly
dividend of $.08 per common share, payable July 1, 2000 to shareholders of
record as of June 15, 2000. Also, on April 13, 2000, the Corporation's Board
of Directors declared a quarterly dividend of $.46875 per share on the
7 1/2% Cumulative Preferred Stock, Series A, and a quarterly dividend of $.3796
per share on the Adjustable Rate Cumulative Preferred Stock, Series B. The
preferred stock dividends are payable July 17, 2000 to stockholders of record
as of June 30, 2000.
The Corporation is a legal entity separate and distinct from its banking and
other subsidiaries. The primary source of funds for payment of preferred and
common stock dividends by the Corporation is dividends received from the Bank.
The amount of dividends that a bank may declare in any year is subject to
certain regulatory restrictions. Generally, dividends declared in a given year
by a national bank are limited to its net profit, as defined by regulatory
agencies, for that year, combined with its retained net income for the
preceding two years, less any required transfers to surplus or to a fund for
the retirement of any preferred stock. In addition, a national bank may not
pay any dividends in an amount greater than its undivided profit. Under
current regulatory practice, national banks may pay dividends only out of
current operating earnings. Also, a bank may not declare dividends if such
declaration would leave the bank inadequately capitalized. Therefore, the
ability of the Bank to declare dividends will depend on its future net income
and capital requirements. At March 31, 2000, the amount of retained earnings
available for declaration and payment of dividends from the Bank to the
Corporation was $1.6 billion. Payment of dividends by the Bank to the
Corporation, however, can be further limited by federal bank regulatory
agencies.
The Bank's payment of dividends to the Corporation may also be limited by a
tangible net worth requirement under the senior syndicated revolving credit
facility. This facility was established in April 2000. If this facility had
been in place and drawn upon as of March 31, 2000, the amount of retained
earnings available for declaration of dividends would have been further limited
to $525.8 million.
LIQUIDITY AND RATE SENSITIVITY
The Corporation seeks to maintain prudent levels of liquidity, interest rate
risk, and foreign currency exchange rate risk.
Liquidity Management
Liquidity management is the process by which the Corporation manages the use
and availability of various funding sources to meet its current and future
operating needs. These needs change as loans grow, deposits mature, and
payments on obligations are made. Because the characteristics of the
Corporation's assets and liabilities change, liquidity management is a dynamic
process, affected by the pricing and maturity of loans, deposits, and other
assets and liabilities. This process is also affected by changes in the
relationship between short-term and long-term interest rates.
To facilitate liquidity management, the Corporation uses a variety of funding
sources to establish a maturity pattern that provides a prudent mixture of
short- and long-term funds. The Corporation obtains funds through deposits and
debt issuance, and uses securitization of the Corporation's loan receivables as
a major funding alternative.
The funding programs established by the Corporation include medium-term notes,
senior notes, and committed credit facilities. Funding programs established by
the Corporation's bank subsidiaries include deposits, bank notes, and committed
credit facilities.
Total deposits at March 31, 2000 and December 31, 1999 were $19.2 billion and
$18.7 billion, respectively. Included in total deposits at March 31, 2000 are
$739.2 million of foreign time deposits which generally mature within one year.
Table 8 presents the maturities of the Corporation's deposits at March 31,
2000.
TABLE 8: MATURITIES OF DEPOSITS AT MARCH 31, 2000
(dollars in thousands)
Direct Other Total
Deposits Deposits Deposits
------------ ------------ ------------
(unaudited)
Three months or less(a)............. $ 6,990,392 $ 1,199,460 $ 8,189,852
Over three months through twelve
months............................. 3,379,710 1,215,372 4,595,082
Over one year through five years.... 3,474,063 2,982,610 6,456,673
Over five years..................... 5,183 - 5,183
------------ ------------ ------------
Total deposits.................... $ 13,849,348 $ 5,397,442 $ 19,246,790
============ ============ ============
(a) Includes money market deposit accounts, noninterest-bearing demand
deposits, interest-bearing transaction accounts, and savings accounts
totaling $5.2 billion.
MBNA America Bank, N.A., MBNA International Bank Limited, and the Corporation
arranged a $2.5 billion senior syndicated revolving credit facility in April
2000. The facility consists of a senior unsecured $2.5 billion four-year
revolving credit facility available to the Bank and MBNA Europe with sublimit
availability in an amount of $300.0 million for the Corporation. The Bank will
unconditionally and irrevocably guarantee the obligations of MBNA Europe. The
facility replaces the Bank's existing four-year $2.0 billion syndicated
revolving credit facility.
Advances from the $2.5 billion senior syndicated revolving credit facility are
subject to covenants and conditions customary in a transaction of this kind.
These conditions include requirements for both the Corporation and the Bank to
maintain a minimum level of consolidated tangible net worth. These conditions
also require the Bank to not permit its managed loan receivables 90 days or
more past due plus nonaccruing receivables to exceed 6% of managed credit card
receivables and to maintain its regulatory capital ratios, as defined by
current regulatory standards, at or above regulatory minimum requirements. In
addition, these conditions require that the Corporation not permit its double
leverage ratio (defined as the sum of the Corporation's intangible assets and
investment in subsidiaries divided by total stockholders' equity) to exceed
1.25.
The Corporation also held $3.1 billion in investment securities and $1.8
billion of money market instruments at March 31, 2000, compared with $3.0
billion in investment securities and $1.5 billion of money market instruments
at December 31, 1999. The investment securities primarily consist of high-
quality, AAA-rated securities, most of which can be used as collateral under
repurchase agreements. Of the investment securities at March 31, 2000, $997.2
million is anticipated to mature within twelve months. The Corporation's
investment securities available-for-sale portfolio, which consists primarily of
U.S. Treasury obligations or short-term and variable-rate securities, was $2.8
billion at March 31, 2000 and December 31, 1999. These investment securities,
along with the money market instruments, provide increased liquidity and
flexibility to support the Corporation's funding requirements.
Estimated maturities, including the impact of estimated prepayments of the
Corporation's investment securities portfolio, are presented in Table 9.
TABLE 9: SUMMARY OF INVESTMENT SECURITIES AT MARCH 31, 2000
(dollars in thousands) (unaudited)
Estimated Maturity
--------------------------------------------
Within 1 Over
Year 1-5 Years 6-10 Years 10 Years
--------- ----------- ---------- --------
AVAILABLE-FOR-SALE
U.S. Treasury and other U.S.
government agencies obligations.. $ 473,859 $ 1,097,426 $ - $ -
State and political subdivisions
of the United States............. 97,005 - - -
Asset-backed and other securities. 426,268 637,376 37,023 10,938
--------- ----------- ---------- --------
Total investment securities
available-for-sale............. $ 997,132 $ 1,734,802 $ 37,023 $ 10,938
========= =========== ========== ========
HELD-TO-MATURITY
U.S. Treasury and other U.S.
government agencies obligations.. $ - $ - $ - $259,957
State and political subdivisions
of the United States............. 55 191 - 5,734
Asset-backed and other securities. - 12,764 - 25,920
--------- ----------- ---------- --------
Total investment securities
held-to-maturity............... $ 55 $ 12,955 $ - $291,611
========= =========== ========== ========
Book Market
Value Value
----------- ----------
AVAILABLE-FOR-SALE
U.S. Treasury and other U.S.
government agencies obligations.. $ 1,571,285 $1,571,285
State and political subdivisions
of the United States............. 97,005 97,005
Asset-backed and other securities. 1,111,605 1,111,605
----------- ----------
Total investment securities
available-for-sale............. $ 2,779,895 $2,779,895
=========== ==========
HELD-TO-MATURITY
U.S. Treasury and other U.S.
government agencies obligations.. $ 259,957 $ 231,185
State and political subdivisions
of the United States............. 5,980 5,936
Asset-backed and other securities. 38,684 38,636
----------- ----------
Total investment securities
held-to-maturity............... $ 304,621 $ 275,757
=========== ==========
Interest Rate Sensitivity
Interest rate sensitivity refers to the change in earnings resulting from
fluctuations in interest rates, variability in spread relationships, and the
differences in repricing intervals between assets and liabilities. The
management of interest rate sensitivity attempts to maximize earnings by
minimizing any negative impacts of changing market rates, asset and liability
mix, and prepayment trends.
The Corporation analyzes its level of interest rate risk using several
analytical techniques which include the impact of on-balance-sheet financial
instruments. In addition to on-balance-sheet activities, interest rate risk
includes the interest rate sensitivity of securitization income from
securitized loans and the impact of off-balance-sheet financial instruments.
Off-balance-sheet financial instruments include interest rate swap agreements.
The Corporation uses interest rate swap agreements to change fixed-rate funding
sources to floating-rate funding sources to better match the rate sensitivity
of the Corporation's assets. For this reason, the Corporation analyzes its
level of interest rate risk on a managed basis in order to quantify and capture
the full impact of interest rate risk on the Corporation's earnings.
An analytical technique that the Corporation uses to measure interest rate risk
is simulation analysis. Key assumptions in the Corporation's simulation
analysis include cash flows and maturities of interest rate sensitive
instruments, changes in market conditions, loan volumes and pricing, consumer
preferences, fixed-rate credit card repricings as part of the Corporation's
normal planned business strategy, and management's capital plans. Also
included in the analysis are various actions which the Corporation would
undertake to minimize the impact of adverse movements in interest rates. The
Corporation has the contractual right to reprice fixed-rate credit card loans
at any time, by giving notice to the Customer. Accordingly, a key assumption
in the simulation analysis is the repricing of fixed-rate credit card loans in
response to an upward movement in interest rates, with a lag of approximately
45 days between interest rate movements and fixed-rate credit card loan
repricings. The Corporation has repriced its fixed-rate credit card loans on
numerous occasions in the past, and expects to continue to do so in response to
changes in interest rates, market conditions, or other factors.
Based on the simulation analysis at March 31, 2000, the Corporation could
experience a decrease in projected net income during the next twelve months of
approximately $41 million, if interest rates at the time the simulation
analysis was performed increased 100 basis points over 12 months.
The assumptions are inherently uncertain and, as a result, the analysis cannot
precisely predict the impact of higher interest rates on net income. Actual
results would differ from simulated results due to timing, magnitude, and
frequency of interest rate changes, changes in market conditions, and
management strategies to offset the Corporation's potential exposure, among
other factors.
Foreign Currency Exchange Rate Sensitivity
Foreign currency exchange rate risk refers to the potential changes in current
and future earnings or capital arising from movements in foreign exchange
rates. The Corporation's foreign currency exchange rate risk is primarily
limited to the unhedged position of the Corporation's net investment in its
foreign subsidiaries. The Corporation uses forward exchange contracts and
foreign exchange swap agreements to reduce its exposure to foreign currency
exchange rate risk. Management reviews the foreign currency exchange rate risk
of the Corporation on a routine basis. During this review, management
considers the net impact to stockholders' equity under various foreign exchange
rate scenarios. At March 31, 2000, the Corporation could experience a decrease
in stockholders' equity, net of tax, of approximately $35 million as a result
of a 10% depreciation of the Corporation's unhedged foreign exposure to the
U.S. dollar position.
The Corporation does not have any other off-balance-sheet financial
instruments.
ASSET SECURITIZATION
Asset securitization of loan receivables is accomplished primarily through the
public and private issuance of asset-backed securities. As loan receivables
are securitized, the Corporation's on-balance-sheet funding needs are reduced
by the amount of loans securitized.
Asset securitization involves the sale, generally to a trust, of a pool of loan
receivables. The Corporation continues to own the accounts that generate the
loan receivables. In addition, the Corporation also sells the rights to new
loan receivables, including most fees generated by and payments received from
the accounts. The trust sells undivided interests in the trust to investors,
while the Corporation retains the remaining undivided interest. The senior
classes of the asset-backed securities receive a AAA credit rating at the time
of issuance. This AAA credit rating is generally achieved through the sale of
lower rated subordinated classes of asset-backed securities. The Corporation
continues to service the accounts and receives a servicing fee for doing so.
During the revolving period, which generally ranges from 24 to 108 months, the
trust makes no principal payments to the investors. Instead, the trust uses
principal payments received on the accounts to purchase new loan receivables
generated by these accounts, in accordance with the terms of the transaction,
so that the principal dollar amount of the investor's undivided interest
remains unchanged. Once the revolving period ends, the trust distributes
principal payments to the investors according to the terms of the transaction.
When the trust allocates principal payments to the investors, the Corporation's
on-balance-sheet loan receivables increase by the amount of any new purchases
or cash advance activity on the accounts.
Distribution of principal to investors may begin sooner if the average
annualized yield (generally including interest income, interchange, and other
fees) for three consecutive months drops below a minimum yield (generally equal
to the sum of the coupon rate payable to investors, contractual servicing
fees, and principal credit losses during the period) or certain other events
occur.
During the three months ended March 31, 2000, the Corporation securitized
credit card loan receivables totaling $1.5 billion, while $653.1 million of
previously securitized credit card and other consumer loan receivables
amortized or matured. The total amount of outstanding securitized loans was
$55.5 billion or 76.0% of managed loans at March 31, 2000, compared to $54.6
billion or 75.6% at December 31, 1999. An additional $4.4 billion of
previously securitized loans is scheduled to amortize or mature during the
remainder of 2000. The amortization amounts are based upon estimated
amortization periods, which are subject to change.
Table 10 shows the Corporation's securitized loan distribution.
TABLE 10: SECURITIZED LOAN DISTRIBUTION
March 31, December 31,
2000 1999
------------ ------------
(unaudited)
Securitized Loans
Domestic:
Credit card................................... $ 46,833,033 $ 45,851,922
Other consumer................................ 3,993,721 3,987,180
------------ ------------
Total domestic securitized loans............ 50,826,754 49,839,102
Foreign:
Credit card................................... 4,512,425 4,565,996
Other consumer................................ 149,041 186,706
------------ ------------
Total foreign securitized loans............. 4,661,466 4,752,702
------------ ------------
Total securitized loans..................... $ 55,488,220 $ 54,591,804
============ ============
Table 11 compares the average annualized yield for the three month period ended
March 31, 2000, to the minimum yield for each transaction. The yield for each
of the transactions is presented on a cash basis and includes various credit
card or other fees as specified in the securitization agreements.
TABLE 11: YIELDS ON SECURITIZED TRANSACTIONS (a)
Three-Month Average
----------------------- Yield in
Annualized Minimum Excess of
Yield Yield Minimum
---------- ----------- ---------
(unaudited)
MasterTrust II 94-C..................... 18.64% 12.90% 5.74%
MasterTrust II 94-E..................... 18.64 13.01 5.63
MasterTrust II 95-A..................... 18.64 12.93 5.71
MasterTrust II 95-B..................... 18.64 12.81 5.83
MasterTrust II 95-C..................... 18.64 12.87 5.77
MasterTrust II 95-D..................... 18.64 12.74 5.90
MasterTrust II 95-E..................... 18.64 12.88 5.76
Cards No. 1............................. 20.27 12.25 8.02
MasterTrust II 95-F..................... 18.64 13.34 5.30
MasterTrust II 95-G..................... 18.64 12.87 5.77
MasterTrust II 95-I..................... 18.64 12.81 5.83
MasterTrust II 95-J..................... 18.64 12.88 5.76
MasterTrust II 96-A..................... 18.64 12.86 5.78
MasterTrust II 96-B..................... 18.64 12.92 5.72
MasterTrust II 96-C..................... 18.64 12.79 5.85
MasterTrust II 96-D..................... 18.64 12.80 5.84
Cards No. 2............................. 20.27 12.18 8.09
MasterTrust II 96-E..................... 18.64 12.83 5.81
MasterTrust II 96-F..................... 18.64 12.94 5.70
MasterTrust II 96-G..................... 18.64 12.86 5.78
MasterTrust II 96-H..................... 18.67 12.94 5.73
MasterTrust II 96-I..................... 18.67 13.02 5.65
MasterTrust II 96-J..................... 18.64 12.82 5.82
MasterTrust II 96-K..................... 18.64 12.80 5.84
MasterTrust II 96-M..................... 18.67 12.99 5.68
Cards No. 3............................. 20.27 12.19 8.08
MasterTrust II 97-B..................... 18.64 12.85 5.79
MasterTrust II 97-C..................... 18.64 12.78 5.86
MasterTrust II 97-D..................... 18.67 12.92 5.75
MasterTrust II 97-E..................... 18.67 12.89 5.78
MasterTrust II 97-F..................... 18.64 12.73 5.91
MasterTrust II 97-G..................... 18.64 12.82 5.82
Cards No. 4............................. 20.27 12.68 7.59
MasterTrust II 97-H..................... 18.67 13.02 5.65
MasterTrust II 97-I..................... 18.64 12.77 5.87
MasterTrust II 97-J..................... 18.64 12.79 5.85
Consumer Loan MasterTrust 97-1(b)....... 18.89 13.63 5.26
MasterTrust II 97-K..................... 18.64 12.80 5.84
MasterTrust II 97-L..................... 18.67 12.85 5.82
MasterTrust II 97-M..................... 18.67 12.91 5.76
MasterTrust II 97-N..................... 18.67 12.91 5.76
MasterTrust II 97-O..................... 18.64 12.84 5.80
Three-Month Average
----------------------- Yield in
Annualized Minimum Excess of
Yield Yield Minimum
---------- ----------- ---------
(unaudited)
MasterTrust II 98-A..................... 18.64% 12.78% 5.86%
Cards No. 5............................. 20.27 13.24 7.03
MasterTrust II 98-B..................... 18.67 12.93 5.74
MasterTrust II 98-C..................... 18.64 12.74 5.90
MasterTrust II 98-D..................... 18.64 12.65 5.99
MasterTrust II 98-E..................... 18.67 12.96 5.71
MasterTrust II 98-F..................... 18.67 12.98 5.69
MasterTrust II 98-G..................... 18.64 12.83 5.81
MasterTrust II 98-H..................... 18.64 12.98 5.66
Cards No. 6............................. 20.27 12.70 7.57
MasterTrust II 98-I..................... 18.64 12.94 5.70
MasterTrust II 98-J..................... 18.64 12.11 6.53
MasterTrust II 98-K..................... 18.64 12.94 5.70
UK 98-A(b).............................. 15.73 14.45 1.28
Cards No. 7............................. 20.27 12.91 7.36
Gloucester Credit Card Trust 98-1....... 17.55 9.78 7.77
MasterTrust II 98-L..................... 18.64 13.10 5.54
MasterTrust II 99-A..................... 18.64 12.82 5.82
MasterTrust II 99-B..................... 18.64 12.80 5.84
Acquired Portfolio MasterTrust 99-1(c).. 19.29 12.74 6.55
MasterTrust II 99-C..................... 18.67 13.04 5.63
Cards No. 8............................. 20.27 12.73 7.54
MasterTrust II 99-D..................... 18.64 12.90 5.74
MasterTrust II 99-E..................... 18.64 12.80 5.84
MasterTrust II 99-F..................... 18.67 12.79 5.88
MasterTrust II 99-G..................... 18.64 12.89 5.75
Cards No. 9............................. 20.27 12.74 7.53
MasterTrust II 99-H..................... 18.67 13.09 5.58
MasterTrust II 99-I..................... 18.64 12.91 5.73
MasterTrust II 99-J..................... 18.64 13.08 5.56
Gloucester Credit Card Trust 99-1....... 17.55 10.35 7.20
MasterTrust II 99-K..................... 18.76 13.07 5.69
MasterTrust II 99-L..................... 18.64 12.95 5.69
MasterTrust II 99-M..................... 18.64 12.90 5.74
Gloucester Credit Card Trust 99-2....... 17.58 10.68 6.90
Cards No. 10............................ 20.04 13.49 6.55
(a) MasterTrust II 2000-A issued on March 8, 2000 and MasterTrust II 2000-B
issued on March 28, 2000 are excluded from the yields presented above
as a result of their recency.
(b) Yields are provided for informational purposes only. Distribution to
investors may begin sooner if the credit enhancement amount falls
below a predetermined contractual level.
(c) The Acquired Portfolio MasterTrust 99-1 was terminated on April 17, 2000.
MBNA CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL FINANCIAL INFORMATION
(unaudited)
The following supplemental financial information presents selected managed
asset data and managed ratios pertaining to the Corporation. This information
is used to evaluate the Corporation's financial condition as well as the impact
asset securitizations have on the Corporation's managed assets.
MANAGED ASSET DATA
(dollars in thousands)
March 31, 2000 December 31, 1999
-------------- -----------------
AT PERIOD END:
Loans held for securitization.......... $ 8,172,508 $ 9,692,616
Loan portfolio......................... 9,339,039 7,971,093
Securitized loans...................... 55,488,220 54,591,804
-------------- -----------------
Total managed loans.................. $ 72,999,767 $ 72,255,513
============== =================
For the Three Months Ended
March 31,
----------------------------------
2000 1999
--------------- ----------------
AVERAGE FOR THE PERIOD:
Loans held for securitization.......... $ 9,475,492 $ 2,128,460
Loan portfolio......................... 7,943,671 11,170,774
Securitized loans...................... 54,584,913 45,777,689
--------------- ----------------
Total managed loans.................. $ 72,004,076 $ 59,076,923
=============== ================
MANAGED RATIOS:
Delinquency............................ 4.35% 4.65%
Net credit losses...................... 4.06 4.36
Net interest margin (on a fully
taxable equivalent basis)............. 7.10 7.60
PART II-OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In May 1996, Andrew B. Spark filed a lawsuit against the Corporation, the Bank
and certain of its officers and its subsidiary MBNA Marketing Systems, Inc.
The case is pending in the United States District Court for the District of
Delaware. This suit is a purported class action. The plaintiff alleges that
the Bank's advertising of its cash promotional annual percentage rate program
was fraudulent and deceptive. The plaintiff seeks unspecified damages
including actual, treble and punitive damages and attorneys' fees for an
alleged breach of contract, violation of the Delaware Deceptive Trade Practices
Act and violation of the federal Racketeer Influenced and Corrupt Organizations
Act. In February 1998, a class was certified by the District Court. In
October 1998, Gerald D. Broder filed a lawsuit against the Corporation and the
Bank in the Supreme Court of New York, County of New York. This suit is a
purported class action. The plaintiff alleges that the Bank's advertising of
its cash promotional annual percentage rate program was fraudulent and
deceptive. The plaintiff seeks unspecified damages including actual, treble
and punitive damages and attorney's fees for an alleged breach of contract,
common law fraud and violation of New York consumer protection statutes. In
April 2000, summary judgment was granted to the Corporation on the common law
fraud claim and a class was certified by the Court. The Corporation intends to
file an appeal from the order certifying a class. The Corporation believes
that its advertising practices were and are proper under applicable federal and
state law and intends to defend these actions vigorously.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The 2000 Annual Meeting of the Stockholders of MBNA Corporation was held on
April 24, 2000.
The stockholders elected the following nominees to the Corporation's Board of
Directors to serve for the coming year and until their successors are elected
and qualify. The following shows the separate tabulation of votes for each
nominee:
Number of Votes
-----------------------------
For Withheld
------------- --------------
Alfred Lerner.................................. 691,337,221 15,898,499
Charles M. Cawley.............................. 691,278,504 15,957,216
James H. Berick, Esq........................... 676,315,546 30,920,174
Benjamin R. Civiletti, Esq..................... 668,796,908 38,438,812
Randolph D. Lerner, Esq........................ 691,198,087 16,037,633
Stuart L. Markowitz, M.D....................... 695,341,873 11,893,847
Michael Rosenthal, Ph.D........................ 695,329,137 11,906,583
The shareholders did not approve a proposal that greater efforts be made to
ensure that women and persons from minority racial groups are included among
those considered for nomination to the Board of Directors of MBNA Corporation.
The Board opposed the proposal and said it is committed to considering women
and minorities for nominations to the Board when there is a vacancy. There were
136,931,199 affirmative votes, 453,873,982 negative votes, and 14,182,298
abstentions. The Corporation had 801,781,250 shares entitled to vote.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits
Index of Exhibits
Exhibit Description of Exhibit
------- -----------------------------------------------------
10.1 Senior Syndicated Revolving Credit Facility Agreement
10.2 1997 Long Term Incentive Plan and Policies, as
amended
10.3 Restricted Stock Agreement
12 Computation of Ratio of Earnings to Combined Fixed
Charges and Preferred Stock Dividend Requirements
27 Financial Data Schedule
EXHIBIT 10.1
Senior Syndicated Revolving Credit Facility Agreement
CONFORMED COPY
==============================================================================
MBNA AMERICA BANK, N.A.
MBNA INTERNATIONAL BANK LIMITED
MBNA CORPORATION
as Borrowers
-----------------------------------------------------
$2,500,000,000
SENIOR COMPETITIVE ADVANCE AND
REVOLVING CREDIT FACILITY AGREEMENT
Dated as of March 31, 2000
-----------------------------------------------------
THE LENDERS NAMED HEREIN
BANK OF AMERICA, N.A.
as Administrative Agent
THE CHASE MANHATTAN BANK
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
BARCLAYS BANK PLC
as Co-Syndication Agents
CHASE SECURITIES INC.
as Book Manager and Lead Arranger
==============================================================================
(Exhibits E-1 through E-5 are photocopies of the opinions as delivered)
TABLE OF CONTENTS
Article Section Page
ARTICLE I DEFINITIONS....................................................1
SECTION 1.01. Defined Term...........................................1
SECTION 1.02. Terms Generally.......................................19
SECTION 1.03. Accounting Terms......................................19
SECTION 1.04. Classes, Currencies and Types of Loans................19
SECTION 1.05. EMU...................................................19
ARTICLE II THE CREDITS...................................................21
SECTION 2.01. Commitments...........................................21
SECTION 2.02. Loans.................................................22
SECTION 2.03. Competitive Bid Procedures............................23
SECTION 2.04. Revolving Credit Borrowing Procedures.................26
SECTION 2.05. Conversion and Continuation of Revolving
Credit Borrowings.....................................26
SECTION 2.06. Fees..................................................28
SECTION 2.07. Repayment of Loans; Evidence of Debt..................28
SECTION 2.08. Interest on Loans.....................................29
SECTION 2.09. Default Interest......................................30
SECTION 2.10. Alternate Rate of Interest............................30
SECTION 2.11. Termination, Reduction and Extension Commitments......30
SECTION 2.12. Increases in Commitments..............................33
SECTION 2.13. Prepayment............................................34
SECTION 2.14. Reserve Requirements; Change in Circumstances.........35
SECTION 2.15. Change in Legality; Agreed Alternative Currencies.....37
SECTION 2.16. Indemnity.............................................38
SECTION 2.17. Pro Rata Treatment....................................39
SECTION 2.18. Sharing of Setoffs....................................39
SECTION 2.19. Payments..............................................40
SECTION 2.20. Taxes.................................................40
SECTION 2.21. Duty to Mitigate; Assignment of Commitments Under
Certain Circumstances.................................43
SECTION 2.22. Guaranty of MBNA America Bank.........................44
ARTICLE III REPRESENTATIONS AND WARRANTIES................................46
SECTION 3.01. Corporate Existence and Power.........................46
SECTION 3.02. Corporate Authorization; No Contravention.............46
SECTION 3.03. Governmental Authorization............................47
SECTION 3.04. Binding Effect........................................47
SECTION 3.05. Litigation............................................47
SECTION 3.06. No Default............................................47
SECTION 3.07. Employee Benefit Plans................................47
SECTION 3.08. Use of Proceeds.......................................48
SECTION 3.09. Taxes.................................................48
SECTION 3.10. Financial Condition...................................48
SECTION 3.11. Regulated Entities....................................49
SECTION 3.12. Federal Reserve Regulations...........................49
SECTION 3.13. No Material Misstatements.............................49
SECTION 3.14. Environmental and Safety Matters......................49
SECTION 3.15. Commercial Activity; Absence of Immunity..............50
SECTION 3.16. Legal Form............................................50
SECTION 3.17. Year 2000 Issues......................................50
ARTICLE IV CONDITIONS PRECEDENT..........................................50
SECTION 4.01. Conditions to Effectiveness...........................50
SECTION 4.02. Initial and Subsequent Loans..........................52
ARTICLE V AFFIRMATIVE COVENANTS.........................................53
SECTION 5.01. Financial Statements..................................53
SECTION 5.02. Certificates; Other Information.......................54
SECTION 5.03. Notices...............................................55
SECTION 5.04. Preservation of Corporate Existence, etc..............55
SECTION 5.05. Books and Records.....................................55
SECTION 5.06. Compliance with Regulatory Standards..................55
SECTION 5.07. Payment of Obligations................................56
SECTION 5.08. Maintenance of Insurance..............................56
SECTION 5.09. Employee Benefits.....................................56
SECTION 5.10. Capital Requirements..................................56
ARTICLE VI NEGATIVE COVENANTS...........................................57
SECTION 6.01. Limitations on Liens..................................57
SECTION 6.02. Prohibition of Fundamental Changes....................57
SECTION 6.03. Financial Covenants of MBNA America Bank..............59
SECTION 6.04. Financial Covenants of the Parent.....................59
SECTION 6.05. Regulatory Capital....................................59
SECTION 6.06. Regulation U..........................................60
ARTICLE VII EVENTS OF DEFAULT............................................60
ARTICLE VIII THE ADMINISTRATIVE AGENT.....................................63
ARTICLE IX MISCELLANEOUS................................................65
SECTION 9.01. Notices...............................................65
SECTION 9.02. Survival of Agreement.................................65
SECTION 9.03. Binding Effect........................................66
SECTION 9.04. Successors and Assigns................................66
SECTION 9.05. Expenses; Indemnity...................................68
SECTION 9.06. Applicable Law........................................69
SECTION 9.07. Waivers; Amendment....................................69
SECTION 9.08. Entire Agreement......................................70
SECTION 9.09. Severability..........................................70
SECTION 9.10. Counterparts..........................................70
SECTION 9.11. Headings..............................................70
SECTION 9.12. Right of Setoff.......................................71
SECTION 9.13. Jurisdiction; Consent to Service of Process...........71
SECTION 9.14. Waiver of Jury Trial..................................72
SECTION 9.15. Confidentiality.......................................72
SECTION 9.16. Judgment Currency.....................................73
SECTION 9.17. Regulation U..........................................73
Schedules
- ---------
Schedule 2.01 Lenders and Commitments
Exhibits
- --------
Exhibit A-1 Form of Competitive Bid Request
Exhibit A-2 Form of Notice of Competitive Bid Request
Exhibit A-3 Form of Competitive Bid
Exhibit A-4 Form of Competitive Bid Accept/Reject Letter
Exhibit A-5 Form of Revolving Credit Borrowing Request
Exhibit B Form of Administrative Questionnaire
Exhibit C Form of Assignment and Acceptance
Exhibit D Form of Commitment Increase Letter
Exhibit E-1 Form of Opinion of Simpson, Thacher & Bartlett, Special
New York Counsel to the Borrowers
Exhibit E-2 Form of Opinion of Clifford Chance LLP, Special UK Counsel to
MBNA International
Exhibit E-3 Form of Opinion of General Counsel to MBNA International
Exhibit E-4 Form of Opinion of John W. Sheflen, Esq., General Counsel to
MBNA America Bank and the Parent
Exhibit E-5 Form of Opinion of Milbank, Tweed, Hadley & McCloy LLP, Special
New York Counsel to the Administrative Agent
SENIOR COMPETITIVE ADVANCE AND REVOLVING CREDIT FACILITY
AGREEMENT (the "Agreement") dated as of March 31, 2000, among:
MBNA AMERICA BANK, N.A., a national banking
association organized under the laws of the
United States of America ("MBNA America Bank");
MBNA INTERNATIONAL BANK LIMITED, a private limited company
and an authorized institution under the Banking Act of 1987 ("MBNA
International");
MBNA Corporation, a Maryland corporation (the "Parent"; each of MBNA
America Bank, MBNA International and the Parent is herein referred to as
a "Borrower" and collectively, the "Borrowers");
each lender that is a signatory hereto identified under the caption
"LENDERS" on the signature pages hereto and each lender that becomes a
"Lender" after the date hereof pursuant to Section 9.04(b) hereof
(individually, a "Lender" and collectively, the "Lenders"); and
BANK OF AMERICA, N.A., as administrative agent for the Lenders (in
such capacity, together with its successors in such capacity, the
"Administrative Agent").
The Borrowers have requested that the Lenders extend credit to the
Borrowers in order to enable them to borrow on a revolving credit basis on and
after the Closing Date and at any time and from time to time prior to the
Maturity Date (as herein defined) an aggregate principal amount not in excess
of $2,500,000,000 at any time outstanding. The Borrowers have also requested
the Lenders to provide a procedure pursuant to which the Borrowers may invite
the Lenders to bid on an uncommitted basis on short-term borrowings by the
Borrowers. The proceeds of all such borrowings are to be used for general
corporate purposes. The Lenders are willing to extend such credit to the
Borrowers, all as provided herein.
Accordingly, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Defined Terms. As used in this Agreement, the following terms
have the meanings specified below:
"ABR Borrowing" shall mean a Borrowing comprised of ABR Loans.
"ABR Loan" shall mean any Revolving Credit Loan bearing interest at a rate
determined by reference to the Alternate Base Rate in accordance with the
provisions of Article II.
"Administrative Agent Fees" shall have the meaning assigned to such term in
Section 2.06(b).
"Administrative Agent's Account" shall mean the account of the
Administrative Agent most recently designated by the Administrative Agent for
such purpose by notice to the Borrowers and the Lenders, or any other account
in respect of any Alternative Currency as the Administrative Agent shall
designate in a notice to the Borrowers and the Lenders.
"Administrative Questionnaire" shall mean an Administrative Questionnaire in
the form of Exhibit B.
"Affiliate" shall mean, when used with respect to a specified Person, another
Person that directly, or indirectly through one or more intermediaries,
Controls or is Controlled by or is under common Control with the Person
specified.
"Agreed Alternative Currency" shall mean at any time any of Euros
and Pounds Sterling, so long as at such time, (a) such currency is dealt with
in the London interbank deposit market, (b) such currency is freely
transferable and convertible into Dollars in the London foreign exchange
market and (c) no central bank or other governmental authorization in the
country of issue of such currency is required to permit use of such currency
by any Lender for making any Loan to MBNA International hereunder and/or to
permit MBNA International to borrow and repay the principal thereof and to pay
the interest thereon, unless such authorization has been obtained.
"Alternate Base Rate" shall mean, for any day, a rate per annum (rounded
upwards, if necessary, to the next 1/16 of 1%) equal to the greatest of (a)
the Prime Rate in effect on such day, (b) the Base CD Rate in effect on such
day plus 1% and (c) the Federal Funds Effective Rate in effect on such day
plus 1/2 of 1%. "Prime Rate" shall mean the rate of interest per annum
publicly announced from time to time by Bank of America, N.A. as its prime
rate (which is a reference rate and is not necessarily the lowest rate it
charges); each change in the Prime Rate shall be effective on the date such
change is publicly announced as effective. "Base CD Rate" shall mean the sum
of (a) the product of (i) the Three-Month Secondary CD Rate and (ii) Statutory
Reserves and (b) the Assessment Rate. "Three-Month Secondary CD Rate" shall
mean, for any day, the secondary market rate for three-month certificates of
deposit reported as being in effect on such day (or, if such day shall not be
a Business Day, the next preceding Business Day) by the Board through the
public information telephone line of the Federal Reserve Bank of New York
(which rate will, under the current practices of the Board, be published in
Federal Reserve Statistical Release H.15(519) during the week following such
day), or, if such rate shall not be so reported on such day or such next
preceding Business Day, the average of the secondary market quotations for
three-month certificates of deposit of major money center banks in New York
City received at approximately 10:00 a.m., New York City time, on such day
(or, if such day shall not be a Business Day, on the next preceding Business
Day) by the Administrative Agent from three New York City negotiable
certificate of deposit dealers of recognized standing selected by it.
"Federal Funds Effective Rate" shall mean, for any day, the weighted average
of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers, as published on the
next succeeding Business Day by the Federal Reserve Bank of New York, or, if
such rate is not so published for any day which is a Business Day, the average
of the quotations for the day of such transactions received by the
Administrative Agent from three Federal funds brokers of recognized standing
selected by it. If for any reason the Administrative Agent shall have
determined (which determination shall be conclusive absent manifest error)
that it is unable to ascertain the Base CD Rate or the Federal Funds Effective
Rate or both for any reason, including the inability of the Administrative
Agent to obtain sufficient quotations in accordance with the terms hereof, the
Alternate Base Rate shall be determined without regard to clause (b) or (c),
or both, of the first sentence of this definition, as appropriate, until the
circumstances giving rise to such inability no longer exist. Any change in
the Alternate Base Rate due to a change in the Prime Rate, the Base CD Rate or
the Federal Funds Effective Rate shall be effective on the effective date of
such change in the Prime Rate, the Base CD Rate or the Federal Funds Effective
Rate, respectively.
"Alternative Currency" shall mean at any time any Agreed Alternative
Currency and any other currency (other than Dollars) so long as at such time,
(a) such currency is dealt with in the London interbank deposit market, (b)
such currency is freely transferable and convertible into Dollars in the
London foreign exchange market and (c) no central bank or other governmental
authorization in the country of issue of such currency is required to permit
use of such currency by any Lender for making any Loan to MBNA International
hereunder and/or to permit MBNA International to borrow and repay the
principal thereof and to pay the interest thereon, unless such authorization
has been obtained.
"Applicable Accounting Principles" shall mean (i) in the case of
MBNA International, UK GAAP and (ii) in the case of MBNA America Bank and the
Parent, US GAAP.
"Applicable Facility Fee Percentage", "Applicable Spread" and
"Applicable Utilization Fee Percentage" shall mean, with respect to any
Borrower, on any date the respective percentage set forth below under the
caption "Applicable Facility Fee Percentage", "Applicable Spread" or
"Applicable Utilization Fee Percentage", as the case may be, based upon the
ratings by S&P and Moody's, respectively, applicable on such date to the Index
Debt of such Borrower:
CATEGORY 1 Applicable Facility Applicable Spread Applicable
Rating Fee Percentage Utilization Fee
LIBO ABR Percentage
- ------------------ ------------------- -------- ------- ---------------
A or higher by S&P 0.090% 0.210% 0 0.050%
A2 or higher by Moody's
CATEGORY 2
Rating
- ------------------
A- by S&P 0.100% 0.250% 0 0.050%
A3 by Moody's
CATEGORY 3
Rating
- ------------------
BBB+ by S&P 0.125% 0.275% 0 0.100%
Baa1 by Moody's
CATEGORY 4
Rating
- ------------------
BBB by S&P 0.150% 0.350% 0 0.125%
Baa2 by Moody's
CATEGORY 5
Rating
- ------------------
BBB- by S&P 0.175% 0.450% 0 0.250%
Baa3 by Moody's
CATEGORY 6
Rating
- ------------------
BB+ or below by S&P 0.275% 0.725% 0 0.500%
Ba1 or below by Moody's
For purposes of the foregoing and for each Borrower, (i) if at any
time there shall exist no Index Debt or Index Debt is not rated (other than by
reason of the circumstances referred to in the last sentence of this
definition) for such Borrower, then the Lenders acting through the
Administrative Agent and the Borrowers shall negotiate in good faith to
determine a substitute basis for determining the Applicable Facility Fee
Percentage, Applicable Spread and Applicable Utilization Fee Percentage, and
during such negotiations the Applicable Facility Fee Percentage, Applicable
Spread and Applicable Utilization Fee Percentage in effect immediately prior
to such time for such Borrower shall continue in effect; (ii) if the ratings
established or deemed to have been established by S&P and Moody's for the
Index Debt of such Borrower shall fall within different Categories, the
Applicable Facility Fee Percentage, Applicable Spread and Applicable
Utilization Fee Percentage for such Borrower shall be based on the Category
containing the higher of such ratings; provided, however, that if the
difference between such ratings is greater than one Category, the Applicable
Facility Fee Percentage, Applicable Spread and Applicable Utilization Fee
Percentage for such Borrower shall be based on the Category containing the
ratings one Category below the Category containing the higher of such ratings;
and (iii) if any rating for Index Debt for such Borrower established or deemed
to have been established by S&P or Moody's shall be changed (other than as a
result of a change in the rating system of S&P or Moody's), such change shall
be effective (A) if such Index Debt is not publicly rated, as of the date of
the applicable Ratings Review Letter indicating such change, or (B) if such
Index Debt is publicly rated, as of the date on which such change is first
announced by the applicable rating agency. Each change in the Applicable
Facility Fee Percentage, Applicable Spread and Applicable Utilization Fee
Percentage shall apply during the period commencing on the effective date of
such change and ending on the date immediately preceding the effective date of
the next such change. If the rating system of S&P or Moody's shall change, or
if any such rating agency shall cease to be in the business of rating
corporate debt obligations, the Borrowers and the Lenders, acting through the
Administrative Agent, shall negotiate in good faith to amend the references to
specific ratings in this definition to reflect such changed rating system or
the nonavailability of ratings from such rating agency, and pending agreement
on such amendment, the Applicable Facility Fee Percentage, Applicable Spread
and Applicable Utilization Fee Percentage most recently determined in
accordance with this definition shall continue in effect.
"Applicable Lending Office" shall mean, for each Lender and for each
Type and Currency of Loan, the "Lending Office" of such Lender (or of an
affiliate of such Lender) designated for such Type and Currency of Loan in its
Administrative Questionnaire or such other office of such Lender (or of an
affiliate of such Lender) as such Lender may from time to time specify to the
Administrative Agent and the Borrowers as the office by which its Loans of
such Type and Currency are to be made and maintained.
"Assessment Rate" shall mean for any date the annual rate (rounded
upwards, if necessary, to the next 1/100 of 1%) most recently estimated by
Bank of America, N.A. as the then current net annual assessment rate that will
be employed in determining amounts payable by Bank of America, N.A. to the
Federal Deposit Insurance Corporation (or any successor) for insurance by such
Corporation (or such successor) of time deposits made in Dollars at the
domestic offices of Bank of America, N.A.
"Assignment and Acceptance" shall mean an assignment and acceptance
entered into by a Lender and an assignee substantially in the form of Exhibit
C.
"Bank Regulatory Authority" shall mean the OCC, the Board, the
Federal Deposit Insurance Corporation, the FSA and all other relevant bank
regulatory authorities (including relevant state, foreign and international
bank regulatory authorities).
"Board" shall mean the Board of Governors of the Federal Reserve
System of the United States.
"Borrowing" shall mean a Revolving Credit Borrowing or a Competitive
Borrowing. For all purposes of this Agreement (including the definition of
the term "Dollar Equivalent"), the date of a Borrowing initially shall be the
date on which such Borrowing is made or, in the case of a Eurodollar
Borrowing, thereafter shall be the effective date of the most recent
conversion or continuation of such Borrowing.
"Business Day" shall mean any day (a) on which commercial banks are
not authorized or required to close in New York City, Dallas, Texas or
Wilmington, Delaware, (b) if such day relates to the giving of notices in
respect of a Loan denominated in Dollars or to a borrowing, continuation or
conversion of, a payment or prepayment of principal of or interest on, or the
Interest Period for, a Eurodollar Loan denominated in Dollars or a notice by a
Borrower with respect to any such borrowing, payment, prepayment or Interest
Period, that is also a day on which dealings in Dollar deposits are carried
out in the London interbank market, (c) if such day relates to the giving of
notices in respect of a Loan denominated in an Alternative Currency other than
the Euro or to a borrowing of, a payment or prepayment of principal of or
interest on, or the Interest Period for, a Eurodollar Loan denominated in an
Alternative Currency other than the Euro or a notice by MBNA International
with respect to any such borrowing, payment, prepayment or Interest Period,
that is also a day on which commercial banks and foreign exchange markets
settle payments in the Principal Financial Center for the Currency in which
such Loan is denominated and (d) if such day relates to the giving of notices
in respect of a Loan denominated in Euros or to a borrowing of, a payment or
prepayment of principal of or interest on, or the Interest Period for, a
Eurodollar Loan denominated in Euros, or a notice by MBNA International with
respect to any such borrowing, payment, prepayment or Interest Period, that is
also a TARGET Business Day on which commercial banks are generally open for
business in London, New York City and Frankfurt and in any other Principal
Financial Center as the Administrative Agent shall from time to time determine
for this purpose.
"Capital Adequacy Regulations" shall mean (i) with respect to MBNA
America Bank, the capital adequacy regulations of the OCC applicable to
national banks set forth in Part 3 (including Appendices thereto) of Title 12,
Code of Federal Regulations, and with respect to the Parent, the capital
adequacy regulations of the Board applicable to bank holding companies set
forth in Part 225 (including Appendices thereto) of Title 12, Code of Federal
Regulations, or any successor minimum capital adequacy regulations of the
primary federal Bank Regulatory Authority for MBNA America Bank and the Parent
and (ii) with respect to MBNA International, the capital adequacy regulations
of the FSA or any other relevant Bank Regulatory Authority.
"Class" shall have the meaning specified in Section 1.04.
"Closing Date" shall have the meaning set forth in Section 4.01.
"Code" shall mean the Internal Revenue Code of 1986, as the same may
be amended from time to time.
"Commitment" shall mean, with respect to each Lender, the commitment
of such Lender hereunder as set forth in Schedule 2.01 as such Lender's
Commitment may be permanently terminated, reduced or increased from time to
time pursuant to Section 2.11 or 2.12, or changed as a result of an assignment
pursuant to Section 9.04(b).
"Commitment Increase Date" shall have the meaning assigned thereto
in Section 2.12(b).
"Commitment Increase Letter" shall have the meaning assigned thereto
in Section 2.12(b).
"Competitive Bid" shall mean an offer by a Lender to make a
Competitive Loan pursuant to Section 2.03.
"Competitive Bid Accept/Reject Letter" shall mean a notification
made by a Borrower pursuant to Section 2.03(d) in the form of Exhibit A-4.
"Competitive Bid Rate" shall mean, as to any Competitive Bid made by
a Lender pursuant to Section 2.03, (i) in the case of a Eurodollar Competitive
Loan, the Margin, and (ii) in the case of a Fixed Rate Loan, the fixed rate of
interest, offered by such Lender.
"Competitive Bid Request" shall mean a request made pursuant to
Section 2.03 in the form of Exhibit A-1.
"Competitive Borrowing" shall mean a borrowing consisting of a
Competitive Loan or concurrent Competitive Loans of the same Type and Currency
from the Lender or Lenders whose Competitive Bids for such borrowing have been
accepted by a Borrower under the bidding procedure described in Section 2.03,
and made on the same date and as to which a single Interest Period is in
effect.
"Competitive Loan" shall mean a Loan from a Lender to a Borrower
pursuant to the bidding procedure described in Section 2.03. Each Competitive
Loan shall be a Eurodollar Competitive Loan or a Fixed Rate Loan.
"Consolidated Reports" shall have the meaning assigned to such term
in Section 3.10(a).
"Consolidated Tangible Net Worth" at any date shall mean, with
respect to any Borrower, the Tangible Net Worth of such Borrower and its
Subsidiaries on such date, determined on a consolidated basis in accordance
with Applicable Accounting Principles.
"Contingent Obligation" shall mean, with respect to any Borrower or
any Subsidiary thereof, any obligation of such Borrower or such Subsidiary, as
applicable, guaranteeing or in effect guaranteeing any Indebtedness ("primary
obligations") of any other Person (the "primary obligor") in any manner,
whether directly or indirectly, including, without limitation, any obligation
of such Person, whether or not contingent, (a) to purchase any such primary
obligation or any property constituting direct or indirect security therefor,
(b) to advance or supply funds (i) for the purchase or payment of any such
primary obligation or (ii) to maintain working capital or equity capital of
the primary obligor or otherwise to maintain the net worth or solvency of the
primary obligor, (c) to purchase property, securities or services primarily
for the purpose of assuring the owner of any such primary obligation of the
ability of the primary obligor to make payment of such primary obligation or
(d) otherwise to assure or hold harmless the owner of such primary obligation
against loss in respect thereof; provided, however, that the term Contingent
Obligation shall not include endorsements of instruments for deposit or
collection in the ordinary course of business or guarantees by such Borrower
of obligations of any such Subsidiary. The amount of any Contingent
Obligation shall be deemed to equal the stated or determinable amount of the
primary obligation in respect of which such Contingent Obligation is made or,
if not stated or determinable, the maximum reasonably anticipated liability in
respect thereof as determined by such Borrower in good faith.
"Continuing Directors" shall mean, with respect to any Borrower, (i)
persons who are members of the Board of Directors of such Borrower on the date
hereof and (ii) persons who become members of the Board of Directors of such
Borrower after the date hereof (x) whose election or nomination for election
was approved by a vote of a majority of the then Continuing Directors and (y)
who were not so elected or nominated in connection with, or in contemplation
of, any transaction of the type referred to in Section 6.02.
"Contractual Obligation" shall mean, with respect to any Borrower or
any Subsidiary thereof, any provision of any security issued by such Borrower
or such Subsidiary, as applicable, or of any agreement, instrument or
undertaking to which such Borrower or such Subsidiary, as applicable, is a
party or by which it or any of its property is bound.
"Control" shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise, but not including the exercise of investment discretion as an
investment advisor or fiduciary, and "Controlling" and "Controlled" shall have
meanings correlative thereto.
"Currency" shall mean Dollars or any Alternative Currency.
"Default" shall mean any Event of Default or any event or condition which upon
notice, lapse of time or both would constitute an Event of Default.
"Dollar Equivalent" shall mean, with respect to any Loan made to
MBNA International and denominated in an Alternative Currency, the amount of
Dollars that would be required to purchase the amount of the Alternative
Currency of such Loan on the date such Loan is requested or, with respect to
any determination made under Section 2.01(b), on the date of any Borrowing
referred to in said Section, based upon the arithmetic mean (rounded upwards,
if necessary, to the nearest 1/100 of 1%), as determined by the Administrative
Agent, of the spot selling rate at which the Reference Lenders offer to sell
such Alternative Currency for Dollars in the London foreign exchange market at
approximately 11:00 a.m. London time for delivery two Business Days later.
"Dollars" or "$'' shall mean lawful money of the United States of
America.
"Double Leverage Ratio" shall mean, on any date, the ratio of (a)
the sum of (i) Intangibles of the Parent alone on such date plus (ii) the
aggregate investment of the Parent on such date in the capital stock of its
Subsidiaries as reported pursuant to Section 5.01(a) or 5.01(b) hereof
(including the Parent's interest in undistributed earnings of its
Subsidiaries), to (b) Net Worth of the Parent on such date.
"Eligible Receivables" shall mean, on any date and with respect to
any Borrower, the credit card and related plan receivables which are owned by
such Borrower or any Subsidiary thereof on such date and the Sellers' Retained
Interests owned by such Borrower or any Subsidiary thereof on such date, in
each case to the extent they are or would be reflected on a consolidated
balance sheet of such Borrower prepared in accordance with Applicable
Accounting Principles other than any such receivables or Sellers' Retained
Interests which (i) are in accounts (or in the case of the Sellers' Retained
Interests, represent indirect interests in receivables in accounts) that are
nonaccruing or that have balances 90 days or more past due, (ii) represent the
Financed Portion of receivables subject to a Securitization or (iii) are
otherwise subject to any Lien.
"EMU" shall mean Economic and Monetary Union as contemplated in the
Treaty on European Union, as amended and in effect from time to time.
"EMU Legislation" shall mean legislative measures of the European
Council (including European Council regulations) for the introduction of,
changeover to or operation of a single or unified European currency (whether
known as the euro or otherwise), being in part the implementation of the third
stage of EMU.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as the same may be amended from time to time.
"ERISA Affiliate" shall mean, with respect to any Borrower, any
trade or business (whether or not incorporated) that, together with such
Borrower, is treated as a single employer under Section 414 of the Code.
"Euro" shall mean the single currency of Participating Member States
of the European Union.
"Euro Unit" shall mean the currency unit of the Euro.
"Eurocurrency Reserve Requirements" with respect to any Lender shall
mean the aggregate of the reserve percentages (including any marginal,
special, emergency or supplemental reserves) expressed as a decimal
established by the Board and any other banking authority to which such Lender
is subject and applicable to "Eurocurrency Liabilities", as such term is
defined in Regulation D of the Board, or any similar category of assets or
liabilities relating to eurocurrency fundings. Eurodollar Loans shall be
deemed to constitute Eurocurrency Liabilities. Eurocurrency Reserve
Requirements shall be adjusted automatically on and as of the effective date
of any change in any reserve percentage.
"Eurodollar Borrowing" shall mean a Borrowing comprised of
Eurodollar Loans.
"Eurodollar Competitive Borrowing" shall mean a Borrowing comprised
of Eurodollar Competitive Loans.
"Eurodollar Competitive Loan" shall mean any Competitive Loan
bearing interest at a rate determined by reference to the LIBO Rate in
accordance with the provisions of Article II.
"Eurodollar Loan" shall mean any Eurodollar Competitive Loan or
Eurodollar Revolving Credit Loan.
"Eurodollar Revolving Credit Borrowing" shall mean a Borrowing
comprised of Eurodollar Revolving Credit Loans.
"Eurodollar Revolving Credit Loan" shall mean any Revolving Credit
Loan bearing interest at a rate determined by reference to the LIBO Rate in
accordance with the provisions of Article II.
"Event of Default" shall have the meaning assigned to such term in
Article VII.
"Existing Credit Agreement" shall mean the Competitive Advance and
Revolving Credit Facility Agreement dated as of January 15, 1997 (as modified
and supplemented and in effect immediately prior to the Closing Date) among
MBNA America Bank, certain Lenders and The Chase Manhattan Bank, as agent.
"Facility Fee" shall have the meaning assigned to such term in
Section 2.06(a).
"Federal Funds Effective Rate" shall have the meaning assigned to
such term in the definition of "Alternate Base Rate" in this Section 1.01.
"Fees" shall mean the Facility Fees, the Administrative Agent Fees
and the Utilization Fee.
"Financed Portion" shall mean at any time, with respect to
receivables subject to a Securitization, an amount of such receivables equal
to the aggregate amount of then outstanding debt or equity instruments or
securities (other than any seller's interest retained by the relevant Borrower
or a Subsidiary thereof) issued in connection with such Securitization, in
each case determined in accordance with Applicable Accounting Principles.
"Financial Officer" of any corporation shall mean the chief
financial officer, chief corporate finance officer, principal accounting
officer, Treasurer, Assistant Treasurer or Controller of such corporation.
"Fixed Rate Borrowing" shall mean a Borrowing comprised of Fixed
Rate Loans.
"Fixed Rate Loan" shall mean any Competitive Loan bearing interest
at a fixed percentage rate per annum (expressed in the form of a decimal to no
more than four decimal places) specified by the Lender making such Loan in its
Competitive Bid.
"Foreign Currency Equivalent" shall mean, with respect to any amount
in Dollars, the amount of any Alternative Currency that could be purchased
with such amount of Dollars using the reciprocal of the foreign exchange
rate(s) specified in the definition of the term "Dollar Equivalent", as
determined by the Administrative Agent.
"FSA" shall mean the Financial Services Authority in the United
Kingdom.
"Governmental Authority" shall mean any Federal, state, local or
foreign court or governmental agency, authority, instrumentality or regulatory
body.
"Guaranteed Obligations" shall have the meaning assigned thereto in
Section 2.22(a).
"Indebtedness" of any Person at any date shall mean (a) all
indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services (other than current trade liabilities incurred
in the ordinary course of business and payable in accordance with customary
practices), (b) any other indebtedness of such Person which is evidenced by a
note, bond, debenture or similar instrument, (c) all obligations of such
Person in respect of acceptances issued or created for the account of such
Person, (d) all liabilities secured by any Lien on any property owned by such
Person even though such Person has not assumed or otherwise become liable for
the payment thereof, (e) indebtedness arising out of Securitizations which do
not qualify for sale treatment in accordance with Applicable Accounting
Principles to the extent such Indebtedness would be reflected on a balance
sheet of such Person prepared in accordance with Applicable Accounting
Principles, provided that, for purposes hereof, the amount of any such
Indebtedness arising out of a Securitization described in this clause (e)
shall be deemed to be limited to the maximum amounts of such Indebtedness that
can be satisfied, directly or indirectly, by recourse to the assets or credit
of such Person (other than assets constituting the Financed Portion, at the
time of a default, of the receivables subject to such Securitization), and (f)
Contingent Obligations of such Person in respect of Indebtedness of others
(other than any undrawn lines of credit or undrawn credit commitments to
individual persons); provided that Indebtedness shall not include with respect
to any such Person which is a bank, (A) indebtedness in respect of deposits
held by such Person, (B) obligations in respect of federal funds purchased by
such Person, (C) indebtedness in respect of agreements in the ordinary course
of business to purchase or repurchase securities or loans or (D) contingent
liabilities incurred in the ordinary course of banking business (including
banker's acceptances, trade acceptances, letters of credit and finance
acceptances), and provided further, that each of the foregoing items described
in this definition shall be deemed to constitute Indebtedness only to the
extent it would be (or in the case of Contingent Obligations, the Indebtedness
of the primary obligor would be) required to be reflected as a liability by
(and in the amount specified by) Applicable Accounting Principles and provided
further, that Indebtedness shall not include any Securitization which
qualifies for treatment as a sale under Applicable Accounting Principles or
any obligations with respect to a Securitization which so qualifies.
"Index Debt" shall mean, with respect to any Borrower, (i) senior,
unsecured noncredit-enhanced, long-term debt of such Borrower (whether or not
any such debt shall be outstanding) publicly rated by both S&P and Moody's or
(ii) if the debt described in clause (i) shall not exist, long-term
subordinated debt of such Borrower (whether or not any such debt shall be
outstanding) rated by both S&P and Moody's, and the rating applicable to Index
Debt shall be one category higher than such rating, or (iii) if the debt
described in clauses (i) and (ii) shall not exist, senior, unsecured,
noncredit-enhanced, long-term debt of such Borrower (whether or not any such
debt shall be outstanding) with respect to which such Borrower has delivered
to the Administrative Agent a Ratings Review Letter dated not earlier than the
most recent Ratings Review Date (or which has been publicly rated by only one
of S&P or Moody's and as to which a Ratings Review Letter from the other
rating agency has been delivered to the Administrative Agent not earlier than
such date); provided, that the Index Debt on any date of determination with
respect to MBNA International shall be deemed to be the Index Debt on such
date applicable to MBNA America Bank.
"Insured Subsidiary" shall mean any insured depositary institution
(as defined in 12 U.S.C. 1813(c) (or any successor provision), as amended, re-
enacted or redesignated from time to time), that is controlled (within the
meaning of 12 U.S.C. 1841 (or any successor provision), as amended, re-
enacted or redesignated from time to time) by the Parent or by MBNA America
Bank.
"Intangibles" with respect to any Person at any date shall mean the
amount of all assets of such Person that would be classified as intangible
assets in accordance with Applicable Accounting Principles.
"Interest Payment Date" shall mean, with respect to any Loan, the
last day of the Interest Period applicable thereto and, in the case of a
Eurodollar Loan with an Interest Period of more than three months' duration or
a Fixed Rate Loan with an Interest Period of more than 90 days' duration, each
day that would have been an Interest Payment Date for such Loan had successive
Interest Periods of three months' duration or 90 days' duration, as the case
may be, been applicable to such Loan and, in addition, the date of any
refinancing or conversion of such Loan with or to a Loan of a different Type.
"Interest Period" shall mean (a) as to any Eurodollar Borrowing, the
period commencing on the date of such Borrowing and ending on the numerically
corresponding day (or, if there is no numerically corresponding day, on the
last day) in the calendar month that is 1, 2, 3 or 6 months thereafter, as the
relevant Borrower may elect, (b) as to any ABR Borrowing, the period
commencing on the date of such Borrowing and ending on the next succeeding
March 31, June 30, September 30 or December 31, or, if earlier, on the
Maturity Date or the date of prepayment of such Borrowing and (c) as to any
Fixed Rate Borrowing, the period commencing on the date of such Borrowing and
ending on the date specified in the Competitive Bids in which the offers to
make the Fixed Rate Loans comprising such Borrowing were extended, which shall
not be earlier than seven days after the date of such Borrowing or later than
360 days after the date of such Borrowing; provided, however, that (i) if any
Interest Period would end on a day other than a Business Day, such Interest
Period shall be extended to the next succeeding Business Day unless, in the
case of Eurodollar Loans only, such next succeeding Business Day would fall in
the next calendar month, in which case such Interest Period shall end on the
next preceding Business Day, (ii) if any Interest Period for any Loan would
otherwise end after the Maturity Date, such Interest Period shall end on the
Maturity Date and (iii) MBNA International may not select an Interest Period
for a Loan made to it in an Alternative Currency which would extend beyond the
date on which such Alternative Currency ceases to be legal tender in its
respective country. Interest shall accrue from and including the first day of
an Interest Period to but excluding the last day of such Interest Period.
"LIBO Rate" shall mean, with respect to any Eurodollar Borrowing
denominated in any Currency for any Interest Period, an interest rate per
annum equal to the arithmetic mean (rounded upwards, if necessary, to the next
1/16 of 1%) of the offered rates for deposits in such Currency with a maturity
comparable to such Interest Period which appear on the Telerate British
Bankers Assoc. Interest Settlement Rates Page (as hereinafter defined) at
approximately 11:00 a.m., London time, two Business Days (or in the case of a
Eurodollar Loan denominated in an Agreed Alternative Currency, on such other
date as is customary in the relevant interbank market) prior to the
commencement of such Interest Period; provided, however, that if there shall
no longer exist a Telerate British Bankers Assoc. Interest Settlement Rates
Page, "LIBO Rate" shall mean an interest rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to the rate at which deposits in
such Currency approximately equal in principal amount to (i) in the case of a
Eurodollar Revolving Credit Loan, Bank of America, N.A.'s portion of such
Revolving Credit Borrowing and (ii) in the case of a Eurodollar Competitive
Loan, a principal amount that would have been Bank of America, N.A.'s portion
of such Competitive Borrowing had such Competitive Borrowing been a Eurodollar
Revolving Credit Loan, and for a maturity comparable to such Interest Period
are offered to the principal London office of Bank of America, N.A. in
immediately available funds in the London interbank market at approximately
11:00 a.m., London time, two Business Days (or in the case of a Eurodollar
Loan denominated in an Agreed Alternative Currency, on such other date as is
customary in the relevant interbank market) prior to the commencement of such
Interest Period. "Telerate British Bankers Assoc. Interest Settlement Rates
Page" shall mean the display designated as Page 3750 on Teleratesystem
Incorporated (or such other page as may replace the LIBO page on that service
for the purpose of displaying London interbank offered rates of major banks).
"Lien" shall mean, with respect to any asset, any mortgage, deed of
trust, lien, pledge, assignment or transfer for security, encumbrance, charge
or security interest in or on such asset.
"Loan" shall mean a Competitive Loan or a Revolving Credit Loan,
whether made as a Eurodollar Loan, an ABR Loan or a Fixed Rate Loan, as
permitted hereby.
"Loan Documents" shall mean (i) this Agreement and the letter
agreement referred to in Section 2.06(b) and (ii) any amendment, supplement,
modification, consent or waiver of, to or in respect of either of the
foregoing.
"Local Time" shall mean, with respect to any Loan denominated in or
any payment to be made in any Currency, the local time in the Principal
Financial Center for the Currency in which such Loan is denominated or such
payment is to be made.
"Managed Credit Card Receivables" shall mean the aggregate of on-
balance sheet credit card receivables of MBNA America Bank and its
Subsidiaries and credit card receivables of MBNA America Bank and its
Subsidiaries transferred in a Securitization.
"Margin" shall mean, as to any Eurodollar Competitive Loan, the
margin (expressed as a percentage rate per annum in the form of a decimal to
no more than four decimal places) to be added to or subtracted from the LIBO
Rate in order to determine the interest rate applicable to such Loan, as
specified in the Competitive Bid relating to such Loan.
"Margin Stock" shall have the meaning given such term under
Regulation U.
"Material Adverse Effect" shall mean, with respect to a Borrower, a
material adverse effect on (i) the business, assets, operations or financial
condition of such Borrower and its Subsidiaries taken as a whole, (ii) the
ability of such Borrower to perform its obligations hereunder or (iii) the
rights or remedies of the Lenders hereunder.
"Maturity Date" shall mean March 31, 2004, as the same may be
extended pursuant to Section 2.11; provided, that if such day is not a
Business Day, the Maturity Date shall be the immediately preceding Business
Day.
"MBNA America Bank" shall have the meaning assigned thereto in the
introduction hereto.
"MBNA International" shall have the meaning assigned thereto in the
introduction hereto.
"Moody's" shall mean Moody's Investors Service, Inc., and its
successors.
"Multiemployer Plan" shall mean a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.
"National Currency Unit" shall mean a fraction or multiple of one
Euro Unit expressed in units of the former national currency of any
Participating Member State.
"Net Worth" shall mean, on any date, the consolidated stockholders'
equity of the Parent and its consolidated Subsidiaries, all determined as of
such date on a consolidated basis without duplication in accordance with
Applicable Accounting Principles.
"OCC" shall mean the Office of the Comptroller of the Currency of
the United States or any successor Federal Bank Regulatory Authority.
"Organization Documents" shall mean, for any corporation, the
certificate or articles of incorporation, the by-laws, any certificate of
designation or instrument relating to the rights of preferred shareholders of
such corporation and all applicable resolutions of the board of directors (or
any committee thereof) of such corporation.
"Parent" shall have the meaning assigned thereto in the introduction
hereto.
"Parent Borrowing Limit" shall mean $300,000,000, as such amount may
be increased from time to time pursuant to Section 2.12.
"Participating Member State" shall mean each country so described in
any EMU Legislation.
"PBGC" shall mean the Pension Benefit Guaranty Corporation referred
to and defined in ERISA or any successor thereto.
"Person" shall mean any natural person, corporation, business trust,
joint venture, association, company, limited liability company, partnership or
government, or any agency or political subdivision thereof.
"Plan" shall mean any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code that is maintained for current or former employees, or any
beneficiary thereof, of any Borrower or any ERISA Affiliate.
"Pounds Sterling" shall mean lawful money of England.
"Principal Financial Center" shall mean (a) in the case of each
Currency identified in Section 1.4(a)(i)(A) of the 1991 ISDA Definitions (as
amended and supplemented by the 1998 Supplement to the 1991 ISDA Definitions
and the 1998 ISDA Euro Definitions) published by the International Swaps and
Derivatives Association, Inc., the financial center identified in said Section
opposite such Currency and (b) in the case of any other Currency, the
principal financial center of the country that issues such Currency, as
determined by the Administrative Agent.
"Qualifying Bank" shall mean any Person (a) which is a bank as
defined in Section 840A of the Income and Corporation Taxes Act 1988 of the
United Kingdom (as such section may be amended from time to time) which, for
the purposes of Section 349 of said Income and Corporation Taxes Act 1988 (as
such section may be amended from time to time), is within the charge to United
Kingdom corporation tax with respect to any interest received by it hereunder
and is beneficially entitled to any payments made to it; (b) which is a person
carrying on a bona fide banking business who is resident (as such term is
defined in an appropriate double taxation treaty) in a country with which the
United Kingdom has a double taxation treaty giving residents of that country
an exemption from United Kingdom taxation on interest and does not carry on
business in the United Kingdom through a permanent establishment with which
the indebtedness under this Agreement in respect of which interest is paid is
effectively connected and in relation to interest payments made to such
person, the Inland Revenue has given permission to make such interest without
deduction of tax; or (c) if such Person is not funding its Loans to MBNA
International out of an Applicable Lending Office in the United Kingdom (or
another jurisdiction having an exemption from United Kingdom income tax by
treaty), which will submit a duly completed Form FD13 double tax treaty form
to the U.S. Internal Revenue Service (or the comparable or other applicable
form for its jurisdiction to its jurisdiction's tax authorities) no later than
July 1, 2000 seeking exemption from, or reduction of, United Kingdom income
tax on interest payable hereunder by MBNA International.
"Ratings Review Date" shall mean, with respect to a Borrower, (a)
the Closing Date, (b) each anniversary of the Closing Date and (c) any date
after the most recent date referred to in (a) or (b) above which shall have
been designated in a notice delivered by the Required Lenders to such Borrower
not fewer than 90 days prior to such designated date, provided that the
Required Lenders shall not deliver such notice more than once a year.
"Ratings Review Letters" shall mean, on any date and with respect to
a Borrower, the letters of each of S&P and Moody's that set forth the ratings
of the Index Debt of such Borrower by such rating agencies, which letters
shall not be dated earlier than 10 days prior to the date of delivery thereof
to the Administrative Agent.
"Regulations D, U and X" shall mean, respectively, Regulation D, U
and X of the Board as from time to time in effect and all official rulings and
interpretations thereunder or thereof.
"Reportable Event" shall mean any reportable event as defined in
Section 4043 of ERISA or the regulations issued thereunder with respect to a
Plan (other than a Plan maintained by an ERISA Affiliate that is considered an
ERISA Affiliate only pursuant to subsection (m) or (o) of Code Section 414).
"Required Lenders" shall mean, at any time, Lenders having
Commitments representing at least 50.1% in Dollar amount of the Total
Commitment or, for purposes of action taken to accelerate the maturity of
Loans to any Borrower under Article VII, Lenders holding Loans to such
Borrower representing at least a majority of the aggregate principal amount of
the Loans to such Borrower outstanding.
"Requirement of Law" as to any Person shall mean the Organization
Documents of such Person and any law, treaty, rule, regulation, regulatory
guideline or pronouncement or determination of an arbitrator or a court or
other Governmental Authority, in each case applicable to or binding upon such
Person or any of its property or to which such Person or any of its property
is subject.
"Responsible Officer" of any corporation shall mean any executive
officer or Financial Officer of such corporation and any other officer or
similar official thereof responsible for the administration of the obligations
of such corporation in respect of this Agreement.
"Restricted Shares" shall mean, with respect to any Borrower, shares
of stock of or other ownership interests in such Borrower or any Significant
Subsidiary thereof.
"Revolving Credit Borrowing" shall mean a borrowing consisting of
simultaneous Revolving Credit Loans of the same Type and Currency made,
converted or continued on the same date and, in the case of Eurodollar
Revolving Credit Loans, as to which a single Interest Period is in effect.
"Revolving Credit Loan" shall mean a revolving loan made by a Lender
to a Borrower pursuant to Section 2.04. Each Revolving Credit Loan shall be a
Eurodollar Revolving Credit Loan or an ABR Loan.
"Revolving Credit Borrowing Request" shall mean a request made
pursuant to Section 2.04 in the form of Exhibit A-5.
"Risk Adjusted Assets" shall mean, on any date, the amount, for MBNA
America Bank and its consolidated Subsidiaries (determined on a consolidated
basis) on such date, of "risk-weighted assets", within the meaning given to
such term in the Capital Adequacy Guidelines for National Banks published by
the OCC (12 C.F.R. Part 3 and Appendices thereto, as amended, modified and
supplemented and in effect from time to time or any replacement thereof).
"S&P" shall mean Standard and Poor's Ratings Services, a Division of
The McGraw-Hill Companies Inc., and its successors.
"SEC" shall mean the Securities and Exchange Commission of the
United States of America, or any successor agency charged with the enforcement
and administration of the Securities Act of 1933 and the Securities Exchange
Act of 1934, each as amended from time to time.
"Securitization" shall mean the transfer or pledge of assets or
interests in assets to a trust, partnership, corporation or other entity,
which transfer or pledge is funded by such entity in whole or in part by the
issuance of instruments or securities that are paid principally from the cash
flow derived from such assets or interests in assets.
"Sellers' Retained Interests" shall mean, with respect to a
Borrower, the debt or equity interest held by such Borrower or its
Subsidiaries in any trust, partnership, corporation or other entity to which
credit card receivables or related plan receivables of such Borrower or its
Subsidiaries have been transferred in a Securitization, and, for purposes
hereof, the amount of the Sellers' Retained Interests at any date shall be the
amount that would be reflected on a consolidated balance sheet of such
Borrower at such date prepared in accordance with Applicable Accounting
Principles.
"Significant Subsidiary" shall mean, with respect to a Borrower, any
Subsidiary of such Borrower which, at the time any determination is being
made, would constitute a "significant subsidiary" of such Borrower as defined
in Rule 1-02 of Regulation S-X of the Securities and Exchange Commission, 17
C.F.R. 210.1-02, as in effect on the date hereof.
"Statutory Reserves" shall mean a fraction (expressed as a decimal),
the numerator of which is the number one and the denominator of which is the
number one minus the aggregate of the maximum reserve percentages (including
any marginal, special, emergency or supplemental reserves) expressed as a
decimal established by the Board and any other banking authority to which Bank
of America, N.A. is subject for new negotiable nonpersonal time deposits in
Dollars of over $100,000 with maturities approximately equal to three months.
Statutory Reserves shall be adjusted automatically on and as of the effective
date of any change in any reserve percentage.
"subsidiary" shall mean, with respect to any Person (herein referred
to as the "parent"), any corporation, partnership, association or other
business entity (a) of which securities or other ownership interests
representing more than 50% of the equity or more than 50% of the ordinary
voting power or more than 50% of the general partnership interests are, at the
time any determination is being made, owned, controlled or held, other than in
a fiduciary capacity, or (b) which is, at the time any determination is made,
otherwise Controlled by the parent or one or more subsidiaries of the parent
or by the parent and one or more subsidiaries of the parent.
"Subsidiary" shall mean, with respect to a Borrower, any subsidiary
of such Borrower; provided, however, that any special purpose subsidiary of
MBNA America Bank or any of its subsidiaries organized and operated solely to
facilitate or conduct Securitizations which is not a consolidated subsidiary
of MBNA America Bank or any of its subsidiaries under Applicable Accounting
Principles shall not be deemed to be a Subsidiary hereunder.
"Tangible Net Worth" with respect to any Person at any date shall
mean all amounts which would be included as "total equity capital" on a
balance sheet of such Person prepared as of such date in accordance with
Applicable Accounting Principles less the aggregate amount of Intangibles that
would be reflected as assets on such balance sheet.
"TARGET Business Day" shall mean any day that is not (i) a Saturday
or Sunday, or (ii) any other day on which the Trans-European Real-time Gross
Settlement Operating System (or any successor settlement system) is not
operating (as determined by the Administrative Agent).
"Tier 1 Capital" shall mean, on any date, the amount, for MBNA
America Bank and its consolidated Subsidiaries (determined on a consolidated
basis) on such date, of "Tier 1 capital", within the meaning given to such
term in the Capital Adequacy Guidelines for National Banks published by the
OCC (12 C.F.R. Part 3 and Appendices thereto, as amended, modified and
supplemented and in effect from time to time or any replacement thereof).
"Tier 1 Capital to Risk Adjusted Assets Ratio" shall mean, on any
date, the ratio of (a) Tier 1 Capital on such date to (b) Risk Adjusted Assets
on such date.
"Tier 1 Leverage Ratio" shall mean, on any date, the ratio of (a)
Tier 1 Capital on such date to (b) Total Assets on such date.
"Total Assets" shall mean, on any date, the amount, for MBNA America
Bank and its consolidated Subsidiaries (determined on a consolidated basis) on
such date, of "adjusted total assets", within the meaning given to such term
in the Capital Adequacy Guidelines for National Banks published by the OCC (12
C.F.R. Part 3 and Appendices thereto, as amended, modified and supplemented
and in effect from time to time or any replacement thereof).
"Total Capital" shall mean, on any date, the amount, for MBNA
America Bank and its consolidated Subsidiaries (determined on a consolidated
basis) on such date, of "total capital", within the meaning given to such term
in the Capital Adequacy Guidelines for National Banks published by the OCC (12
C.F.R. Part 3 and Appendices thereto, as amended, modified and supplemented
and in effect from time to time or any replacement thereof).
"Total Capital to Risk Adjusted Assets Ratio" shall mean, on any
date, the ratio of (a) Total Capital on such date to (b) Risk Adjusted Assets
on such date.
"Total Commitment" shall mean at any time the aggregate amount of
the Commitments, as in effect at such time.
"Type", when used in respect of any Loan or Borrowing, shall refer
to the Rate by reference to which interest on such Loan or on the Loans
comprising such Borrowing is determined. For purposes hereof, "Rate" shall
include the LIBO Rate, the Alternate Base Rate and any fixed rate.
"UK GAAP" shall mean generally accepted accounting principles in
England and Wales as in effect from time to time.
"US GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect from time to time.
"Utilization Fee" shall have the meaning assigned to such term in
Section 2.06(c).
"Withdrawal Liability" shall mean liability to a Multiemployer Plan
as a result of a complete or partial withdrawal from such Multiemployer Plan,
as such terms are defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02. Terms Generally. The definitions in Section 1.01
shall apply equally to both the singular and plural forms of the terms
defined. Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms. The words include
"includes" and "including" shall be deemed to be followed by the phrase
"without limitation". All references herein to Articles, Sections, Exhibits
and Schedules shall be deemed references to Articles and Sections of, and
Exhibits and Schedules to, this Agreement unless the context shall otherwise
require.
SECTION 1.03. Accounting Terms. Except as otherwise expressly
provided herein, all terms of an accounting or financial nature shall be
construed in accordance with Applicable Accounting Principles consistently
applied. In the event that any change in Applicable Accounting Principles
materially affects any provision of this Agreement, the Administrative Agent,
the Lenders and the Borrowers agree that they shall negotiate in good faith in
order to amend the affected provisions in such a way as will restore the
parties to their respective positions prior to such change, and until such
amendment becomes effective the Borrowers' compliance with such provisions
shall be determined on the basis of Applicable Accounting Principles as in
effect immediately before such change in Applicable Accounting Principles
became effective. Notwithstanding the foregoing, the accounting terms "Risk-
Adjusted Assets", "Tier 1 Capital", "Total Assets" and "Total Capital" defined
in Section 1.01 hereof shall be interpreted by reference to the statutes or
regulations referred to in said definitions, as such statutes or regulations
are amended, modified, supplemented or replaced and in effect from time to
time.
SECTION 1.04 Classes, Currencies and Types of Loans. Loans,
Borrowings and Commitments hereunder are distinguished by "Class", by
"Currency" and by "Type". The "Class" of a Loan, Borrowing or Commitment
refers to whether the relevant Loans are Revolving Credit Loans or Competitive
Loans. The "Currency" of a Loan refers to the Currency in which such Loan is
denominated. The "Type" of a Loan refers to whether such Loan is an ABR Loan,
a Eurodollar Loan or a Fixed Rate Loan, each of which constitutes a Type.
Loans may be identified by one or more of their Class, Currency and Type.
SECTION 1.05 EMU.
(a) Redenomination of Alternative Currency Loans and other
Obligations into Euro Units.
(i) Each obligation under this Agreement of a party to this
Agreement which (1) was originally denominated in the former national
currency of a Participating Member State or (2) would otherwise have
been denominated in such former national currency prior to such date
shall be redenominated into the Euro Unit in accordance with EMU
Legislation and applicable state law, provided, that if and to the
extent that any EMU Legislation provides that amounts denominated either
in the Euro or in the National Currency Unit of a Participating Member
State, that are payable by crediting an account of the creditor within
that country, may be paid by the debtor in either Euro or National
Currency Units, each party to this Agreement shall be entitled to pay or
repay any such amounts in either the Euro Unit or such National Currency
Unit.
(ii) Subject to any EMU Legislation, references in this Agreement
to a minimum amount (or an integral multiple thereof) in a National
Currency Unit to be paid to or by a party hereto shall be deemed to be a
reference to such reasonably comparable and convenient amount (or an
integral multiple thereof) in the Euro Unit as the Administrative Agent
may from time to time specify.
(b) Payments.
(i) All payments by any Borrower or any Lender of amounts
denominated in the Euro or a National Currency Unit of a Participating
Member State shall be made in immediately available, freely transferable,
cleared funds to the account of the Administrative Agent in the principal
financial center in such Participating Member State or in London,
England, as from time to time designated by the Administrative Agent for
such purpose.
(ii) Subject to Section 1.05(a)(i), all amounts payable by the
Administrative Agent to any party under this Agreement in the National
Currency Unit of a Participating Member State shall instead be paid in
the Euro.
(iii) The Administrative Agent shall not be liable to any party to
this Agreement in any way whatsoever for any delay, or the consequences
of any delay, in the crediting to any account of any amount denominated
in the Euro or a National Currency Unit of a Participating Member State,
except to the extent such delay or consequences thereof are finally
determined by a court of competent jurisdiction to have resulted from the
gross negligence or willful or intentional misconduct of the
Administrative Agent.
(iv) All references herein to the London interbank or other
national market with respect to any National Currency Unit of a
Participating Member State shall be deemed a reference to the applicable
markets and locations referred to in the definition of "Business Day" in
Section 1.01 hereof.
(c) Unavailability of Euro. If the Administrative Agent at any
time determines that: (1) the Euro has ceased to be utilized as the basic
accounting unit of the European Community, (2) for reasons affecting the
market in Euros generally, Euros are not freely traded between banks
internationally, or (3) it is illegal, impossible or impracticable for
payments to be made hereunder in Euros, then the Administrative Agent may in
its discretion, after consultation with the Borrowers, declare (such
declaration to be binding on all the parties hereto) that any payment made or
to be made thereafter which, but for this provision, would have been payable
in Euros shall be made in Dollars and the amount to be so paid shall be
calculated on the basis of the equivalent of the Euro in Dollars.
(d) Basis of Accrual. If the basis of accrual of interest or fees
expressed in this Agreement with respect to the Currency of any state that
becomes a Participating Member State shall be inconsistent with any convention
or practice in the relevant interbank market for the offering of deposits
denominated in such Currency for the basis of accrual of interest or fees in
respect of such Currency subsequent to the relevant state becoming a
Participating Member State, such convention or practice shall replace such
expressed basis effective as of and from the date on which such state becomes
a Participating Member State, provided, that if any Loan in the Currency of
such state is outstanding immediately prior to such date, such replacement
shall take effect, with respect to such Advance, at the end of the then
current Interest Period.
(e) Additional Changes at Administrative Agent's Discretion. This
Section and other provisions of this Agreement relating to Euros and the
National Currency Units of Participating Member States shall be subject to
such further changes as the Administrative Agent may from time to time in its
reasonable discretion, after consultation with the Borrowers, specify to the
other parties hereto as necessary or appropriate to reflect any changeover to
or operation of the Euro in Participating Member States.
ARTICLE II
THE CREDITS
SECTION 2.01. Commitments
(a) Subject to the terms and conditions and relying upon the
representations and warranties herein set forth, each Lender agrees, severally
and not jointly, to make Revolving Credit Loans to any Borrower in Dollars,
and to make Eurodollar Revolving Credit Loans to MBNA International in Dollars
or any Agreed Alternative Currency, at any time and from time to time on and
after the date hereof and until the earlier of the Maturity Date or the
termination of the Commitment of such Lender in accordance with the terms
hereof, in an aggregate principal amount (as to all Borrowers) at any time
outstanding not to exceed such Lender's Commitment minus the amount by which
the Competitive Loans outstanding at such time shall be deemed to have used
such Commitment pursuant to Section 2.17; provided, however, that:
(1) after giving effect to repayments being made on the same day,
at no time shall the outstanding aggregate principal amount of all Loans
exceed the Total Commitment, calculated in accordance with Section
2.01(b);
(2) at all times the outstanding aggregate principal amount of all
Revolving Credit Loans made by each Lender shall equal the product of (i)
the percentage which its Commitment represents of the Total Commitment
times (ii) the outstanding aggregate principal amount of all Revolving
Credit Loans made pursuant to Section 2.04 (plus, if applicable, the
amount of any Revolving Credit Loans which would be outstanding had a
Lender not defaulted in its obligation to make such Loans hereunder);
(3) at no time shall the outstanding aggregate principal amount of
all Loans made to the Parent exceed the Parent Borrowing Limit; and
(4) no Revolving Credit Loan denominated in an Agreed Alternative
Currency may be outstanding as an ABR Loan.
Each Lender's initial Commitment is set forth opposite its respective name in
Schedule 2.01. Such Commitments may be terminated, reduced or increased from
time to time pursuant to Sections 2.11, 2.12 and 9.04(b).
(b) For purposes of determining whether the amount of any
Borrowing, together with all other Loans then outstanding, would exceed the
Total Commitment (including for all purposes of Section 2.01(a)), the amount
of any Loan outstanding that is denominated in an Alternative Currency shall
be deemed to be the Dollar Equivalent (determined as of the date of such
Borrowing) of the amount in the Alternative Currency of such Loan. For
purposes of determining the unused portion of the Commitments under Section
2.11(b) hereof, the amount of any Loan outstanding that is denominated in an
Alternative Currency shall be deemed to be the Dollar Equivalent (determined
as of the date of determination of the unused portion of the Commitments) of
the amount in the Alternative Currency of such Loan. For purposes of
calculating the amount of any Utilization Fee payable under Section 2.06(c)
hereof, the amount of any Loan outstanding on any date that is denominated in
an Alternative Currency shall be deemed to be the Dollar Equivalent
(determined as of the date of such Borrowing) of the amount in the Alternative
Currency of such Loan.
(c) Within the foregoing limits, each Borrower may borrow, pay or prepay and
reborrow hereunder, on and after the Closing Date and prior to the Maturity
Date, subject to the terms, conditions and limitations set forth herein.
(d) The Loans of each Type and Currency made by each Lender shall be made and
maintained at such Lender's Applicable Lending Office for Loans of such Type
and Currency.
SECTION 2.02. Loans
(a) Each Revolving Credit Loan shall be made as part of a Borrowing
consisting of Loans made by the Lenders ratably in accordance with their
Commitments; provided, however, that the failure of any Lender to make any
Revolving Credit Loan shall not in itself relieve any other Lender of its
obligation to lend hereunder (it being understood, however, that no Lender
shall be responsible for the failure of any other Lender to make any Loan
required to be made by such other Lender). Each Competitive Loan shall be
made in accordance with the procedures set forth in Section 2.03. The
Revolving Credit Loans or Competitive Loans comprising any Borrowing
denominated in Dollars shall be in an aggregate principal amount which is an
integral multiple of $1,000,000 and not less than $5,000,000. The Dollar
Equivalent of the Revolving Credit Loans or Competitive Loans comprising any
Borrowing denominated in an Agreed Alternative Currency shall be in an
aggregate principal amount which is not less than $5,000,000.
(b) Each Competitive Borrowing shall be comprised of Eurodollar Competitive
Loans or Fixed Rate Loans, and each Revolving Credit Borrowing shall be
comprised of Eurodollar Revolving Credit Loans or ABR Loans, as any Borrower
may request pursuant to Section 2.03 or 2.04, as applicable. Each of MBNA
America Bank and the Parent may request Borrowings only in Dollars, and MBNA
International may request Borrowings in Dollars or any Agreed Alternative
Currency. Each Lender may at its option make any Eurodollar Loan by causing
any domestic or foreign branch or Affiliate of such Lender to make such Loan;
provided that any exercise of such option shall not affect the obligation of
such Borrower to repay such Loan in accordance with the terms of this
Agreement. Borrowings of more than one Type may be outstanding at the same
time and may be requested and effective on the same day; provided, however,
that no Borrower shall be entitled to request any Borrowing which, if made,
would result in an aggregate of more than 30 separate Eurodollar Revolving
Credit Loans of any Lender to all Borrowers being outstanding hereunder at any
one time. For purposes of the foregoing, Loans having different Interest
Periods regardless of whether they commence or end on the same date, shall be
considered separate Loans.
(c) Subject to Section 2.05 and paragraph (d) below, each Lender shall make
each Loan to be made by it hereunder on the proposed date thereof by wire
transfer of immediately available funds for account of the relevant Borrower
to the Administrative Agent, at the Administrative Agent's Account for the
Currency in which such Loan is denominated, not later than 12:00 noon Local
Time, and the Administrative Agent shall by 1:00 p.m. Local Time credit or
wire transfer the amounts so received to an account of such Borrower as
specified in the relevant notice of Borrowing or to such other account as such
Borrower may designate or, if a Borrowing shall not occur on such date because
any condition precedent herein specified shall not have been met, return the
amounts so received to the respective Lenders. Competitive Loans shall be
made by the Lender or Lenders whose Competitive Bids therefor are accepted
pursuant to Section 2.03 in the amounts so accepted and Revolving Credit Loans
shall be made by the Lenders pro rata in accordance with Section 2.17. Unless
the Administrative Agent shall have received notice from a Lender prior to the
date (or, in the case of ABR Borrowings, on the date) of any Borrowing that
such Lender will not make available to the Administrative Agent such Lender's
portion of such Borrowing, the Administrative Agent may assume that such
Lender has made such portion available to the Administrative Agent on the date
of such Borrowing in accordance with this paragraph (c) and the Administrative
Agent may, in reliance upon such assumption, make available to the relevant
Borrower on such date a corresponding amount. If and to the extent that such
Lender shall not have made such portion available to the Administrative Agent,
such Lender and such Borrower severally agree to repay to the Administrative
Agent forthwith on demand such corresponding amount together with interest
thereon, for each day from the date such amount is made available to such
Borrower until the date such amount is repaid to the Administrative Agent at
(i) in the case of such Borrower the interest rate applicable at the time to
the Loans comprising such Borrowing and (ii) in the case of such Lender, the
Federal Funds Effective Rate. The Administrative Agent, after receiving
knowledge of such Lender's failure to make such portion available to the
Administrative Agent, shall promptly provide notice of such to such Borrower.
If such Lender shall repay to the Administrative Agent such corresponding
amount with such interest, such amount shall constitute such Lender's Loan as
part of such Borrowing (from the date such Loan was made by the Administrative
Agent on behalf of such Lender to such Borrower) for purposes of this
Agreement.
(d) Notwithstanding any other provision of this Agreement, no Borrower shall
be entitled to request any Borrowing if the Interest Period requested with
respect thereto would end after the Maturity Date.
SECTION 2.03. Competitive Bid Procedure
(a) In order to request Competitive Bids, a Borrower shall hand
deliver or telecopy to the Administrative Agent a duly completed Competitive
Bid Request in the form of Exhibit A-1, to be received by the Administrative
Agent (i) in the case of a Eurodollar Competitive Borrowing in any Currency,
or Fixed Rate Borrowings in any Currency other than Dollars, not later than
11:00 a.m. Local Time, four Business Days before a proposed Competitive
Borrowing and (ii) in the case of a Fixed Rate Borrowing in Dollars, not later
than 10:00 a.m. Local Time, one Business Day before a proposed Competitive
Borrowing. No ABR Loan shall be requested in, or made pursuant to, a
Competitive Bid Request. A Competitive Bid Request that does not conform
substantially to the format of Exhibit A-1 may be rejected in the
Administrative Agent's sole discretion, and the Administrative Agent shall
promptly notify such requesting Borrower of such rejection by facsimile. Such
request shall in each case refer to this Agreement and specify (x) whether the
Borrowing then being requested is to be a Eurodollar Competitive Borrowing or
a Fixed Rate Borrowing, (y) the Currency and date of such Borrowing (which
shall be a Business Day) and the aggregate principal amount (in such Currency)
thereof which shall be in a minimum principal amount of $5,000,000 and in an
integral multiple of $1,000,000 (or, if such Borrowing is denominated in an
Agreed Alternative Currency, the Dollar Equivalent of such Borrowing shall be
in a minimum principal amount of $5,000,000), and (z) the Interest Period with
respect thereto. Promptly after its receipt of a Competitive Bid Request that
is not rejected as aforesaid, the Administrative Agent shall invite by
telecopier (in the form set forth in Exhibit A-2) the Lenders to bid, on the
terms and conditions of this Agreement, to make Competitive Loans pursuant to
such Competitive Bid Request.
(b) Each Lender may, in its sole discretion, make one or more Competitive
Bids to a requesting Borrower responsive to a Competitive Bid Request. Each
Competitive Bid by a Lender must be received by the Administrative Agent via
telecopier, in the form of Exhibit A-3, (i) in the case of a Eurodollar
Competitive Borrowing in any Currency or Fixed Rate Borrowings in any Currency
other than Dollars, not later than 9:30 a.m. Local Time, three Business Days
before a proposed Competitive Borrowing and (ii) in the case of a Fixed Rate
Borrowing in Dollars, not later than 9:30 a.m. Local Time, on the day of a
proposed Competitive Borrowing. Multiple Competitive Bids will be accepted by
the Administrative Agent. Competitive Bids that do not conform substantially
to the format of Exhibit A-3 may be rejected by the Administrative Agent after
conferring with, and upon the instruction of, such Borrower, and the
Administrative Agent shall notify the Lender making such nonconforming
Competitive Bid of such rejection as soon as practicable. Each Competitive
Bid shall refer to this Agreement and specify (w) the name of such requesting
Borrower, (x) the principal amount, stated in the requested Currency, which
shall be in a minimum principal amount of $5,000,000 and in an integral
multiple of $1,000,000 (or, if such Borrowing is denominated in an Agreed
Alternative Currency, the Dollar Equivalent of such Borrowing shall be in a
minimum principal amount of $5,000,000), and which may equal the entire
principal amount of the Competitive Borrowing requested by such Borrower of
the Competitive Loan or Loans that the applicable Lender is willing to make to
such Borrower, (y) the Competitive Bid Rate or Rates at which such Lender is
prepared to make the Competitive Loan or Loans and (z) the Interest Period and
the last day thereof. A Competitive Bid submitted by a Lender pursuant to
this paragraph (b) shall be irrevocable.
(c) The Administrative Agent shall promptly (but in no event later than 10:00
a.m. Local Time on the day received) notify a requesting Borrower by
telecopier of all the Competitive Bids made in accordance with paragraph (b)
above, the Competitive Bid Rate and the principal amount of each Competitive
Loan in respect of which a Competitive Bid was made and the identity of the
Lender that made each Competitive Bid. The Administrative Agent shall send a
copy of all Competitive Bids to such Borrower for its records as soon as
practicable after completion of the bidding process set forth in this Section
2.03.
(d) A requesting Borrower may in its sole and absolute discretion, subject
only to the provisions of this paragraph (d), accept or reject any Competitive
Bid referred to in paragraph (c) above. Such Borrower shall notify the
Administrative Agent by telephone, confirmed by telecopier in the form of a
Competitive Bid Accept/Reject Letter in the form of Exhibit A-4, whether and
to what extent it has decided to accept or reject any of or all the
Competitive Bids referred to in paragraph (c) above, (x) in the case of a
Eurodollar Competitive Borrowing in any Currency or Fixed Rate Borrowings in
any Currency other than Dollars, not later than 11:00 a.m. Local Time, three
Business Days before a proposed Competitive Borrowing, and (y) in the case of
a Fixed Rate Borrowing in Dollars, not later than 11:00 a.m. Local Time, on
the day of a proposed Competitive Borrowing; provided, however, that (i) the
failure by such Borrower to give such notice shall be deemed to be a rejection
of all the Competitive Bids referred to in paragraph (c) above, (ii) such
Borrower shall not accept a Competitive Bid made at a particular Competitive
Bid Rate if such Borrower has decided to reject a Competitive Bid made at a
lower Competitive Bid Rate, (iii) the aggregate amount of the Competitive Bids
accepted by such Borrower shall not exceed the principal amount specified in
the related Competitive Bid Request, (iv) if such Borrower shall accept a
Competitive Bid or Competitive Bids made at a particular Competitive Bid Rate
but the amount of such Competitive Bid or Competitive Bids shall cause the
total amount of Competitive Bids to be accepted by such Borrower to exceed the
amount specified in the related Competitive Bid Request, then such Borrower
shall accept a portion of such Competitive Bid or Competitive Bids in an
amount specified in the related Competitive Bid Request less the amount of all
other Competitive Bids accepted with respect to such related Competitive Bid
Request, which acceptance, in the case of multiple Competitive Bids at such
Competitive Bid Rate, shall be made pro rata in accordance with the amount of
each such Competitive Bid at such Competitive Bid Rate, and (v) except
pursuant to clause (iv) above, no Competitive Bid shall be accepted for a
Competitive Loan unless such Competitive Loan is in a minimum principal amount
of $5,000,000 and an integral multiple of $1,000,000 (or, if such Competitive
Loan is denominated in an Agreed Alternative Currency, the Dollar Equivalent
of such Competitive Loan shall be in a minimum principal amount of
$5,000,000); provided further, however, that if a Competitive Loan must be in
an amount less than $5,000,000 because of the provisions of clause (iv) above,
such Competitive Loan may be for a minimum of $1,000,000 or any integral
multiple thereof (or, if such Competitive Loan is denominated in an Agreed
Alternative Currency, the Dollar Equivalent of such Competitive Loan may be
for a minimum of $1,000,000), and in calculating the pro rata allocation of
acceptances of portions of multiple Competitive Bids at a particular
Competitive Bid Rate pursuant to clause (iv) the amounts shall be rounded to
integral multiples of $1,000,000 (or, if such Competitive Bids are denominated
in an Agreed Alternative Currency, to the Dollar Equivalent of integral
multiples of $1,000,000) in a manner which shall be in the discretion of such
Borrower. A notice given by such Borrower pursuant to this paragraph (d)
shall be irrevocable.
(e) The Administrative Agent shall promptly notify each bidding Lender
whether or not its Competitive Bid has been accepted (and if so, in what
amount and at what Competitive Bid Rate) by telecopy sent by the
Administrative Agent, and each successful bidder will thereupon become bound,
subject to the other applicable conditions hereof, to make the Competitive
Loan in respect of which its Competitive Bid has been accepted.
(f) If the Administrative Agent shall elect to submit a Competitive Bid in
its capacity as a Lender, it shall submit such Competitive Bid directly to the
requesting Borrower one quarter of an hour earlier than the latest time at
which the other Lenders are required to submit their Competitive Bids to the
Administrative Agent pursuant to paragraph (b) above.
(g) All notices required by this Section 2.03 shall be given in accordance
with Section 9.01.
SECTION 2.04. Revolving Credit Borrowing Procedure. In order to request a
Revolving Credit Borrowing, a Borrower shall hand deliver or telecopy a
Revolving Credit Borrowing Request to the Administrative Agent in the form of
Exhibit A-5 (a) in the case of a Eurodollar Revolving Credit Borrowing in
Dollars, not later than 10:30 a.m. New York time, three Business Days before a
proposed Revolving Credit Borrowing, (b) in the case of a Eurodollar Revolving
Credit Borrowing by MBNA International in an Agreed Alternative Currency, not
later than 10:30 a.m. New York time, four Business Days before a proposed
Revolving Credit Borrowing and (c) in the case of an ABR Borrowing, not later
than 10:00 a.m. New York time, on the day of a proposed Revolving Credit
Borrowing. No Fixed Rate Loan shall be requested or made pursuant to a
Revolving Credit Borrowing Request. Such notice shall be irrevocable and
shall in each case specify (i) whether the Borrowing then being requested is
to be a Eurodollar Revolving Credit Borrowing or an ABR Borrowing; (ii) the
Currency of such Borrowing; (iii) the date of such Revolving Credit Borrowing
(which shall be a Business Day) and the amount thereof; and (iv) if such
Borrowing is to be a Eurodollar Revolving Credit Borrowing, the Interest
Period with respect thereto. If no election as to the Type of Revolving
Credit Borrowing is specified in any such notice, then the requested Revolving
Credit Borrowing shall be an ABR Borrowing. If no Interest Period with
respect to any Eurodollar Revolving Credit Borrowing is specified in any such
notice, then such Borrower shall be deemed to have selected an Interest Period
of one month's duration. The Administrative Agent shall promptly advise the
Lenders of any notice given pursuant to this Section 2.04 and of each Lender's
portion of the requested Borrowing.
SECTION 2.05. Conversion and Continuation of Revolving Credit Borrowings. A
Borrower shall have the right at any time upon prior irrevocable notice to the
Administrative Agent (i) not later than 11:00 a.m., New York time, on the
Business Day of such conversion, to convert any Borrowing consisting of
Eurodollar Revolving Credit Loans into a Borrowing consisting of ABR Loans,
(ii) not later than 10:30 a.m., New York time, three Business Days prior to
conversion or continuation, to convert any Revolving Credit Borrowing
consisting of ABR Loans into a Borrowing consisting of Eurodollar Revolving
Credit Loans or to continue, on the last day of the Interest Period applicable
thereto, any Borrowing consisting of Eurodollar Revolving Credit Loans for an
additional Interest Period and (iii) not later than 10:30 a.m., New York time,
three Business Days prior to conversion, to convert the Interest Period with
respect to any Borrowing consisting of Eurodollar Revolving Credit Loans to
another permissible Interest Period, subject in each case to the following:
(a) each conversion or continuation shall be made pro rata among
the Lenders in accordance with the respective principal amounts of the
Loans comprising the converted or continued Borrowing;
(b) if less than all the outstanding principal amount of any
Borrowing shall be converted or continued, the aggregate principal amount
of such Borrowing converted or continued shall be an integral multiple of
$1,000,000 and not less than $5,000,000 (or, if such Borrowing is
denominated in an Agreed Alternative Currency, the Dollar Equivalent of
such Borrowing shall be not less than $5,000,000);
(c) accrued interest on a Loan (or portion thereof) being converted
shall be paid by such Borrower at the time of conversion;
(d) if any Borrowing consisting of Eurodollar Revolving Credit
Loans is converted at a time other than the end of the Interest Period
applicable thereto, such Borrower shall pay, upon demand, any amounts due
to the Lenders pursuant to Section 2.16 as a result of such conversion;
(e) any portion of a Borrowing maturing or required to be repaid in
less than one month may not be converted into or continued as a Borrowing
consisting of Eurodollar Revolving Credit Loans;
(f) any portion of a Borrowing consisting of Eurodollar Revolving
Credit Loans which cannot be continued as such by reason of clause (e)
above shall be automatically converted at the end of the Interest Period
in effect for such Borrowing into a Revolving Credit Borrowing consisting
of ABR Loans;
(g) any converted or continued Borrowing shall be converted or
continued in the same Currency; and
(h) at any time when there shall have occurred and be continuing
any Default, no Borrowing may be converted into or continued as a
Eurodollar Revolving Credit Borrowing, except for Borrowings denominated
in Agreed Alternative Currencies.
Each notice pursuant to this Section 2.05 shall be irrevocable and shall refer
to this Agreement and specify (i) the identity and amount of the Revolving
Credit Borrowing that such Borrower requests be converted or continued, (ii)
whether such Borrowing is to be converted to or continued as a Borrowing
consisting of Eurodollar Revolving Credit Loans or ABR Loans, (iii) if such
notice requests a conversion, the date of such conversion (which shall be a
Business Day) and (iv) if such Borrowing is to be converted to or continued as
a Borrowing consisting of Eurodollar Revolving Credit Loans, the Interest
Period with respect thereto. If no Interest Period is specified in any such
notice with respect to any conversion to or continuation as a Borrowing
consisting of Eurodollar Revolving Credit Loans, such Borrower shall be deemed
to have selected an Interest Period of one month's duration. The
Administrative Agent shall advise the Lenders of any notice given pursuant to
this Section 2.05 and of each Lender's portion of any converted or continued
Borrowing. If such Borrower shall not have given notice in accordance with
this Section 2.05 to continue any Borrowing into a subsequent Interest Period
(and shall not otherwise have given notice in accordance with this Section
2.05 to convert such Borrowing), such Borrowing shall, at the end of the
Interest Period applicable thereto (unless repaid pursuant to the terms
hereof), automatically be continued into a new Interest Period as an ABR
Borrowing.
SECTION 2.06. Fees.
(a) The Borrowers agree to pay to the Administrative Agent for
account of each Lender, on each March 31, June 30, September 30 and December
31 and on the date on which the Commitment of such Lender shall be terminated
as provided herein, a facility fee (a "Facility Fee"), at a rate per annum
equal to the Applicable Facility Fee Percentage from time to time in effect on
the average daily amount of the Commitment of such Lender, whether used or
unused, during the preceding quarter (or other period commencing on the
Closing Date or ending with the Maturity Date or any date on which the
Commitment of such Lender shall be terminated). All Facility Fees shall be
computed on the basis of the actual number of days elapsed in a year of 360
days. The Facility Fee due to each Lender shall commence to accrue on the
Closing Date and shall cease to accrue on the earlier of the Maturity Date and
the date of termination of the Commitment of such Lender as provided herein.
(b) The Borrowers agree to pay the Administrative Agent, for its own account,
administrative agent and administrative fees (the "Administrative Agent Fees")
at the times and in the amounts agreed upon in the letter agreement dated
March 21, 2000 between the Borrowers and the Administrative Agent.
(c) The Borrowers agree to pay to the Administrative Agent for account of
each Lender, during any period that the aggregate outstanding principal amount
of Revolving Credit Loans exceeds 50% of the Total Commitment, a utilization
fee (a "Utilization Fee") on the average daily amount of each Revolving Credit
Loan of such Lender at a rate per annum equal to the Applicable Utilization
Fee Percentage in effect from time to time, payable on each March 31, June
30, September 30, and December 31 and on each date on which the Commitment of
any Lender shall be terminated or reduced as provided herein. Utilization
Fees payable under this Section 2.06(c) with respect to any day shall be
allocated among the Borrowers pro rata according to the respective daily
average aggregate outstanding principal amounts of Revolving Credit Loans
owing by the Borrowers. All Utilization Fees shall be computed on the basis
of the actual number of days elapsed in a year of 360 days.
(d) All Fees shall be paid on the dates due in Dollars and in immediately
available funds, to the Administrative Agent for distribution, if and as
appropriate, among the Lenders. Once paid, none of the Fees shall be
refundable.
SECTION 2.07. Repayment of Loans; Evidence of Debt.
(a) The outstanding principal balance of each Competitive Loan
shall be payable on the last day of the Interest Period applicable to such
Loan, and the outstanding principal balance of each Revolving Credit Loan
shall be payable on the Maturity Date. Each Competitive Loan and each
Revolving Credit Loan shall bear interest from and including the date of the
Borrowing of which such Loan is part on the outstanding principal balance
thereof, as set forth in Section 2.08.
(b) Each Lender shall maintain in accordance with its usual practice an
account or accounts evidencing the indebtedness to such Lender resulting from
each Loan made by such Lender from time to time, including the amounts of
principal and interest payable and paid to such Lender from time to time under
this Agreement.
(c) The Administrative Agent shall maintain accounts in which it shall record
(i) the amount of each Loan made hereunder, the Class, Currency and Type of
each Loan made and the Interest Period applicable thereto, (ii) the amount of
any principal or interest due and payable or to become due and payable from
each Borrower to each Lender hereunder and (iii) the amount of any sum
received by the Administrative Agent hereunder from each Borrower and each
Lender's share thereof.
(d) The entries made in the accounts maintained pursuant to paragraphs (b)
and (c) of this Section 2.07 shall be prima facie evidence of the existence
and amounts of the obligations therein recorded; provided, however, that the
failure of any Lender or the Administrative Agent to maintain such accounts or
any error therein shall not in any manner affect the obligations of each
Borrower to repay the Loans made to such Borrower in accordance with their
terms.
SECTION 2.08. Interest on Loans.
(a) Subject to the provisions of Section 2.09, the Loans comprising
each Eurodollar Borrowing shall bear interest (computed on the basis of the
actual number of days elapsed over a year of 360 days) at a rate per annum
equal to (i) in the case of each Eurodollar Revolving Credit Loan, (a) the
LIBO Rate for the Interest Period in effect for such Borrowing plus (b) the
Applicable Spread applicable to Eurodollar Revolving Credit Loans from time to
time in effect and (ii) in the case of each Eurodollar Competitive Loan, (a)
the LIBO Rate for the Interest Period in effect for such Borrowing plus (b)
the Margin (which may be negative) offered by the Lender making such Loan and
accepted by the Borrower pursuant to Section 2.03. Interest on each Eurodollar
Borrowing shall be payable on each applicable Interest Payment Date except as
otherwise provided in this Agreement. The LIBO Rate shall be determined by
the Administrative Agent, and such determination shall be conclusive absent
manifest error. The Administrative Agent shall promptly advise the Borrowers
and each Lender of such determination.
(b) Subject to the provisions of Section 2.09, the Loans comprising each ABR
Borrowing shall bear interest (computed on the basis of the actual number of
days elapsed over a year of 365 or 366 days, as the case may be, when
determined by reference to the Prime Rate and over a year of 360 days at all
other times) at a rate per annum equal to the Alternate Base Rate. Interest
on each ABR Borrowing shall be payable on each applicable Interest Payment
Date except as otherwise provided in this Agreement. The Alternate Base Rate
shall be determined by the Administrative Agent, and such determination shall
be conclusive absent manifest error. The Administrative Agent shall promptly
advise the Borrowers and each Lender of such determination.
(c) Subject to the provisions of Section 2.09, each Fixed Rate Loan shall
bear interest at a rate per annum (computed on the basis of the actual number
of days elapsed over a year of 360 days) equal to the fixed rate of interest
offered by the Lender making such Loan and accepted by the applicable Borrower
pursuant to Section 2.03. Interest on each Fixed Rate Loan shall be payable
in arrears on the Interest Payment Dates applicable to such Loan except as
otherwise provided in this Agreement.
SECTION 2.09. Default Interest. If a Borrower shall default in the payment
of the principal of or interest on any Loan or any other amount becoming due
hereunder, whether at scheduled maturity, by notice of prepayment,
acceleration or otherwise, such Borrower shall on demand from time to time
from the Administrative Agent pay interest, to the extent permitted by law, on
such defaulted amount up to (but not including) the date of actual payment
(after as well as before judgment) at a rate per annum (computed on the basis
of the actual number of days elapsed over a year of 360 days) equal to the
Alternate Base Rate plus 2% per annum.
SECTION 2.10. Alternate Rate of Interest. In the event, and on each
occasion, that on the day two Business Days prior to the commencement of any
Interest Period for a Eurodollar Borrowing the Administrative Agent shall have
reasonably determined that the relevant deposits in the principal amounts or
relevant Currencies of the Eurodollar Loans comprising such Borrowing are not
generally available in the London interbank market, or that the rates at which
such deposits are being offered will not adequately and fairly reflect the
cost to the Required Lenders of making or maintaining their Eurodollar Loans
during such Interest Period, or that reasonable means do not exist for
ascertaining the LIBO Rate, the Administrative Agent shall, as soon as
practicable thereafter, give written or telecopied notice of such
determination to the Borrowers and the Lenders. In the event of any such
determination, until the Administrative Agent shall have advised the Borrowers
and the Lenders that the circumstances giving rise to such notice no longer
exist, (i) any request by any Borrower for a Eurodollar Competitive Borrowing
pursuant to Section 2.03 shall be of no force and effect and shall be denied
by the Administrative Agent and (ii) any request by any Borrower for a
Eurodollar Revolving Credit Borrowing pursuant to Section 2.04 shall be deemed
to be a request for an ABR Borrowing; provided, however, that any request for
such a Eurodollar Revolving Credit Borrowing may be revoked by the requesting
Borrower, as soon as is practicable after receiving the aforementioned notice
from the Administrative Agent but in any event prior to the requested
borrowing date. Each determination by the Administrative Agent hereunder
shall be conclusive absent manifest error.
SECTION 2.11. Termination, Reduction and Extension of Commitments.
(a) The Commitments shall be automatically and permanently
terminated on the Maturity Date.
(b) Upon at least three Business Days' prior irrevocable written or
telecopied notice to the Administrative Agent (which shall promptly notify
each Lender thereof), the Borrowers, acting jointly, may at any time in whole
permanently terminate, or from time to time in part permanently reduce, the
Total Commitment; provided, however, that (i) each partial reduction of the
Total Commitment shall be in an integral multiple of $1,000,000 and in a
minimum principal amount of $5,000,000 and (ii) no such termination or
reduction shall be made which would reduce the Total Commitment to an amount
less than the aggregate outstanding principal amount of the Competitive Loans
and the Revolving Credit Loans.
(c) Each reduction in the Total Commitment hereunder shall be made ratably
among the Lenders in accordance with their respective Commitments. The
Borrowers shall pay to the Administrative Agent for the account of the
Lenders, on the date of each termination or reduction, the Facility Fees on
the amount of the Commitments so terminated or reduced accrued through the
date of such termination or reduction.
(d) Notwithstanding anything to the contrary in Section 2.17, the
Borrowers, acting jointly, shall have the right at any time or from time to
time, so long as no Default has occurred and is continuing, (i) to terminate
the Commitment of a Lender or (ii) to partially reduce the Commitment of a
Lender; provided that (w) immediately after giving effect to any such
termination or partial reduction, the Total Commitment shall not be less than
$2,000,000,000 at any time, (x) immediately after giving effect to any such
termination or partial reduction, no Lender shall hold a Commitment in an
aggregate amount exceeding 20% of the aggregate amount of Commitments, (y) the
Borrowers shall give the Administrative Agent and the Lenders at least 30
days' prior written notice of each such termination or partial reduction and
(z) each such partial reduction of a Lender's Commitment shall be in an
integral multiple of $1,000,000 and not less than $10,000,000. On the
effective date of such termination or partial reduction, the Borrowers shall
pay to the Administrative Agent, for the account of such Lender, in
immediately available funds, an amount equal to (in the case of a termination)
the aggregate outstanding principal of and interest on its Loans, or (in the
case of a partial reduction) the aggregate outstanding principal of and
interest on the reduced amount of its Loans, and any and all other amounts
owing to such Lender hereunder. Without prejudice to the survival of any of
the agreements of the Borrowers hereunder, the agreements of the Borrowers
contained in Sections 2.14, 2.20, 2.22, 9.05 and 9.16 (without duplication of
any payments made to a Lender whose Commitment has been terminated by the
Borrowers pursuant to this Section 2.11(d)) shall survive for the benefit of
each Lender under this Section 2.11(d) with respect to the time prior to such
termination.
(e) Extension of Commitments.
(i) The Borrowers may request, in a notice given as herein provided
to the Administrative Agent and each of the Lenders at any time prior to
the Maturity Date then in effect (the "Existing Maturity Date"), that the
Maturity Date be extended, which notice shall specify a date (which shall
be not fewer than 60 and not more than 90 days after the date of such
notice) as of which the requested extension is to be effective (the
"Effective Date"), and the new Maturity Date (which may not be more than
four years after the Effective Date) to be in effect following such
extension (the "Requested Maturity Date"). Each Lender, acting in its
sole discretion, shall, not later than a date 30 days prior to the
Effective Date, notify the Borrowers and the Administrative Agent of its
election to extend or not to extend the Maturity Date with respect to its
Commitment. Any Lender which shall not timely notify the Borrowers and
the Administrative Agent of its election to extend the Maturity Date
shall be deemed to have elected not to extend the Maturity Date with
respect to its Commitment (any Lender who timely notifies the Borrowers
and the Administrative Agent of an election not to extend its Commitment
and any Lender so deemed to have elected not to extend its Commitment
being referred to as a "Terminating Lender"). The election of any Lender
to agree to such extension shall not obligate any other Lender to agree.
(ii) If and only if Lenders holding Commitments that aggregate at
least 66-2/3% of the aggregate amount of the Commitments on the Effective
Date (including Commitments of all Terminating Lenders on such date)
shall have agreed to extend the Existing Maturity Date, then, effective
as of the Effective Date, (A) the Commitments of the Lenders other than
Terminating Lenders (the "Continuing Lenders") shall, subject to the
other provisions of this Agreement, be extended to the Requested Maturity
Date specified in the notice from the Borrowers, and as to such Lenders
the term "Maturity Date" as used herein shall on and after the Effective
Date mean such Requested Maturity Date, provided that if such date is not
a Business Day, then such Requested Maturity Date shall be the next
preceding Business Day and (B) the Commitments of the Terminating Lenders
shall continue until the Existing Maturity Date, and shall then
terminate, and as to the Terminating Lenders, the term "Maturity Date",
as used herein, shall continue to mean such Existing Maturity Date;
provided, however, that notwithstanding the foregoing, the extension of
the Existing Maturity Date shall not be effective with respect to any
Lender unless:
(x) no Default shall have occurred and be continuing on the date of
the notice requesting such extension or on the Effective Date; and
(y) each of the representations and warranties set forth in Article
III (except the representations set forth in Section 3.05(b) or 3.14)
shall be true and correct in all material respects on and as of each of
the date of the notice requesting such extension and the Effective Date
with the same effect as though made on and as of each date, except to the
extent such representations and warranties expressly relate to an earlier
date.
(f) In the event that the Maturity Date shall have been extended for the
Continuing Lenders in accordance with Section 2.11(e) and, in connection with
such extension, there are Terminating Lenders, the Borrowers may, at their own
expense, require any Terminating Lender to transfer and assign in whole or in
part, without recourse (in accordance with Section 9.04) all or part of its
interests, rights and obligations under this Agreement to an assignee (which
assignee may be another Lender, if another Lender accepts such assignment)
that shall assume such assigned obligations and that shall agree that its
Commitment will expire on the Maturity Date in effect for Continuing Lenders
pursuant to Section 2.11(e); provided, however, that (i) the Borrowers shall
have received a written consent of the Administrative Agent in the case of an
assignee that is not a Lender, which consent shall not unreasonably be
withheld, and (ii) the assigning Lender shall have received from the
applicable Borrower(s) or such assignee full payment in immediately available
funds of the principal of and interest accrued to the date of such payment on
the Loans made by it hereunder to such Borrower(s) to the extent that such
Loans are subject to such assignment and all other amounts owed to it
hereunder. Any such assignee's initial Maturity Date shall be the Maturity
Date in effect at the time of such assignment for the Continuing Lenders. The
Borrowers shall not have any right to require a Lender to assign any part of
its interests, rights and obligations under this Agreement pursuant to this
paragraph (f) unless they have notified such Lender of their intention to
require the assignment thereof at least ten days prior to the proposed
assignment date.
SECTION 2.12. Increases in Commitments.
(a) The Borrowers, acting jointly, shall have the right at any time
to increase the Total Commitment to an amount not to exceed $3,500,000,000 by
causing one or more banks or other financial institutions, which may include
any Lender already party to this Agreement, to become a "Lender" party to this
Agreement or (in the case of any Lender already party to this Agreement) to
increase the amount of such Lender's Commitment; provided that (i) the
addition of any bank or other financial institution to this Agreement that is
not already a Lender shall be subject to the consent of the Administrative
Agent (which consent shall not be unreasonably withheld or delayed) and (ii)
the Commitment of any bank or other financial institution becoming a "Lender"
party to this Agreement, and any increase in the amount of the Commitment of
any Lender already party to this Agreement, shall be in an amount equal to an
integral multiple of $1,000,000 and not less than $10,000,000.
(b) Any increase in the Total Commitment pursuant to Section 2.12(a)
shall be effective only upon the execution and delivery to the Borrowers and
the Administrative Agent of a commitment increase letter in substantially the
form of Exhibit D hereto (a "Commitment Increase Letter"), which Commitment
Increase Letter shall be delivered to the Administrative Agent not less than
five Business Days prior to the Commitment Increase Date and shall specify (i)
the amount of the Commitment of any bank or other financial institution
becoming a "Lender" party to this Agreement or of any increase in the amount
of the Commitment of any Lender already party to this Agreement, (ii) the date
such increase is to become effective (the "Commitment Increase Date") and
(iii) the amount, subject to Section 2.12(c)(v), by which the Borrowers
propose to increase the Parent Borrowing Limit.
(c) Any increase in the Total Commitment pursuant to this Section
2.12 shall not be effective unless:
(i) no Default shall have occurred and be continuing on the
Commitment Increase Date;
(ii) each of the representations and warranties made by the
Borrowers in Article III shall be true and correct in all material
respects on and as of the Commitment Increase Date with the same force
and effect as if made on and as of such date (or, if any such
representation or warranty is expressly stated to have been made as of a
specific date, as of such specific date);
(iii) no notice of a Revolving Credit Borrowing affected by such
increase in the Total Commitment shall have been given, in each case, on
and as of such Commitment Increase Date;
(iv) such increase in the Total Commitment does not cause any
Lender to hold a Commitment in an aggregate amount exceeding 20% of the
Total Commitment;
(v) immediately after giving effect to such increase, the Parent
Borrowing Limit shall have been increased by no more than its
proportionate amount; and
(vi) the Administrative Agent shall have received each of (x) a
certificate of the corporate secretary or assistant secretary of each of
the Borrowers as to the taking of any corporate action necessary in
connection with such increase and (y) an opinion or opinions of counsel
to the Borrowers as to their corporate power and authority to borrow
hereunder after giving effect to such increase and such other matters
relating thereto as the
Administrative Agent and its counsel may reasonably request.
Each notice requesting an increase in the Total Commitment pursuant to this
Section 2.12 shall constitute a certification to the effect set forth in
clauses (i) and (ii) of the preceding sentence.
(d) No Lender shall at any time be required to agree to a request
of the Borrowers to increase its Commitment or obligations hereunder.
SECTION 2.13. Prepayment.
(a) Each Borrower shall have the right at any time and from time to
time to prepay any Revolving Credit Borrowing made by such Borrower, in whole
or in part, upon giving written or telecopied notice (or telephonic notice
promptly confirmed by written or telecopied notice) to the Administrative
Agent (which shall promptly notify each Lender thereof): (i) before 10:30
a.m., New York time, three Business Days prior to prepayment, in the case of
Eurodollar Revolving Credit Loans; and (ii) before 10:00 a.m., New York time,
one Business Day prior to prepayment in the case of ABR Loans; provided,
however, that each partial prepayment shall be in an amount which is an
integral multiple of $1,000,000 and not less than $5,000,000 (or, if such
prepayment is with respect to a Borrowing denominated in an Alternative
Currency, the Dollar Equivalent of such prepayment shall be not less than
$5,000,000). The Borrowers shall not have the right to prepay any Competitive
Borrowing without the consent of the relevant Lender.
(b) On the date of any termination or reduction of the Commitments pursuant
to Section 2.11, the Borrowers shall pay or prepay so much of the Revolving
Credit Borrowings as shall be necessary in order that the aggregate principal
amount of the Competitive Loans and Revolving Credit Loans outstanding will
not exceed the Total Commitment after giving effect to such termination or
reduction.
(c) Each notice of prepayment shall specify the prepayment date (which shall
be a Business Day), principal amount, Type, Currency and Class of each
Borrowing (or portion thereof) to be prepaid and the identity of the
applicable Borrower, shall be irrevocable and shall commit such applicable
Borrower to prepay such Borrowing (or portion thereof) by the amount stated
therein on the date stated therein. All prepayments under this Section 2.13
shall be subject to Section 2.16 but otherwise without premium or penalty.
All prepayments under this Section 2.13 shall be accompanied by accrued
interest on the principal amount being prepaid to the date of payment.
(d) Currency Valuation. On each Currency Valuation Date (as
defined below), the Administrative Agent shall determine the sum of the
aggregate outstanding principal amount of all Loans denominated in Alternative
Currencies. For purposes of this determination, the outstanding principal
amount of any Loan that is denominated in any Alternative Currency shall be
deemed to be the Dollar Equivalent of the amount in the Alternative Currency
of such Loan, determined as of such Currency Valuation Date. Upon making such
determination, the Administrative Agent shall promptly notify the Lenders and
MBNA International thereof. If, on the date of such determination, the
aggregate outstanding principal amount of all Loans exceeds 105% of the Total
Commitment as then in effect, MBNA International shall, if requested by any
Lender (through the Administrative Agent), prepay outstanding Loans (ratably
in accordance with the then outstanding aggregate principal amounts thereof)
in such amounts as shall be necessary so that after giving effect thereto the
aggregate outstanding principal amount of all Loans (determined as aforesaid)
does not exceed the Total Commitment. Any such payment shall be accompanied
by accrued interest thereon as provided in Section 2.08 and by any amounts
payable under Section 2.16.
For purposes of this Section 2.13(d), "Currency Valuation Date"
means, for any Borrowing of Loans denominated in Alternative Currencies, (i)
with respect to each Interest Period having an initial duration of three
months or less, the last day of such Interest Period and (ii) with respect to
each Interest Period having an initial duration of more than three months,
each date which occurs at intervals of three months after the first day of
such Interest Period (or, if any such date is not a Business Day, the
immediately preceding Business Day).
SECTION 2.14. Reserve Requirements; Change in Circumstances.
(a) If any Lender shall give notice to the Administrative Agent and
the Borrowers at any time to the effect that Eurocurrency Reserve Requirements
are, or are scheduled to become, effective and that such Lender is or will be
generally subject to such Eurocurrency Reserve Requirements as a result of
which such Lender will incur additional costs, then such Lender shall, for
each day from the later of the date of such notice and the date on which such
Eurocurrency Reserve Requirements become effective, be entitled to additional
interest on each Eurodollar Loan made by it to any Borrower at a rate per
annum determined for such day (rounded upward to the nearest 100th of 1%)
equal to the remainder obtained by subtracting (i) the LIBO Rate for such
Eurodollar Loan from (ii) the rate obtained by dividing such LIBO Rate by a
percentage equal to 100% minus the then-applicable Eurocurrency Reserve
Requirements. Such additional interest will be payable in arrears by such
Borrower to the Administrative Agent, for the account of such Lender, on each
Interest Payment Date relating to such Eurodollar Loan and on any other date
when interest is required to be paid hereunder with respect to such Loan. Any
Lender which gives a notice under this paragraph (a) shall promptly withdraw
such notice (by written notice of withdrawal given to the Administrative Agent
and such Borrower) in the event Eurocurrency Reserve Requirements cease to
apply to it or the circumstances giving rise to such notice otherwise cease to
exist.
(b) Notwithstanding any other provision herein, if after the date of this
Agreement any change in applicable law, rule or regulation or in the
interpretation or administration thereof by any Governmental Authority charged
with the interpretation or administration thereof (whether or not having the
force of law) (including the introduction of, changeover to or operation of
the Euro in a Participating Member State) shall result in the imposition,
modification or applicability of any reserve, special deposit or similar
requirement against assets of, deposits with or for the account of or credit
extended by any Lender (except for any such reserve requirement which is
included in Eurocurrency Reserve Requirements covered by paragraph (a) of this
Section), or shall change the basis of taxation of payments to any Lender of
the principal of or interest on any Eurodollar Loan or Fixed Rate Loan or any
Fees or other amounts payable hereunder (other than changes in respect of
taxes imposed on the overall net income of such Lender), or shall result in
the imposition on any Lender or any applicable interbank market of any other
condition affecting this Agreement, such Lender's Commitment or any Eurodollar
Loan or Fixed Rate Loan made by such Lender, and the result of any of the
foregoing shall be to increase the cost to such Lender of making or
maintaining any Eurodollar Loan or Fixed Rate Loan or to reduce the amount of
any sum received or receivable by such Lender hereunder with respect to
Eurodollar Loans or Fixed Rate Loans (whether of principal, interest or
otherwise) by an amount deemed by such Lender to be material, then such
additional amount or amounts as will compensate such Lender for such
additional costs or reduction will be paid by each applicable Borrower to such
Lender upon demand. Notwithstanding the foregoing, no Lender shall be
entitled to request compensation under this paragraph with respect to any
Competitive Loan if the change giving rise to such request was applicable to
such Lender at the time of submission of the Competitive Bid pursuant to which
such Competitive Loan was made.
(c) If any Lender shall have determined that the adoption after the date
hereof of any law, rule, regulation or guideline regarding capital adequacy,
or any change in any of the foregoing or in the interpretation or
administration of any of the foregoing by any Governmental Authority charged
with the interpretation or administration thereof, or compliance by any Lender
(or any lending office of such Lender) or any Lender's holding company with
any request or directive regarding capital adequacy (whether or not having the
force of law) made or promulgated after the date hereof by any such
Governmental Authority (including in connection with the Euro and EMU) has or
would have the effect of reducing the rate of return on such Lender's capital
or on the capital of such Lender's holding company, if any, as a consequence
of this Agreement or the Loans made by such Lender to any Borrower pursuant
hereto to a level below that which such Lender or such Lender's holding
company could have achieved but for such applicability, adoption, change or
compliance (taking into consideration such Lender's policies and the policies
of such Lender's holding company with respect to capital adequacy) by an
amount deemed by such Lender to be material, then such Borrower shall pay to
such Lender upon such Lender's request such additional amount or amounts as
will compensate such Lender or such Lender's holding company for any such
reduction suffered, using such method of calculation as is used by such Lender
with respect to similarly situated borrowers.
(d) If any Lender becomes entitled to claim any additional amounts pursuant
to this Section 2.14, it shall promptly notify the relevant Borrower, through
the Administrative Agent, of the event by reason of which it has become so
entitled. A certificate of a Lender, delivered through the Administrative
Agent, setting forth such amount or amounts as shall be necessary to
compensate such Lender as specified in paragraph (b) or (c) above, as the case
may be, and, in reasonable detail, the method by which such amount or amounts
shall have been determined, shall be delivered to such Borrower and shall be
conclusive absent manifest error. Such Borrower shall pay each Lender the
amount shown as due on any such certificate delivered by it within 10 days
after the receipt of the same.
(e) Failure on the part of any Lender to demand compensation for any
increased costs or reduction in amounts received or receivable or reduction in
return on capital with respect to any period shall not constitute a waiver of
such Lender's right to demand compensation with respect to such period or any
other period, provided that such demand occurs within 90 days after such
Lender has notified the relevant Borrower of any event, which notification
shall have occurred within 90 days of the date on which it first knows (or in
the exercise of reasonable diligence should have known) of such event that
will give rise to a compensation claim. The protection of this Section shall
be available to each Lender regardless of any possible contention of the
invalidity or inapplicability of the law, rule, regulation, guideline or other
change or condition which shall have occurred or been imposed.
SECTION 2.15. Change in Legality; Agreed Alternative Currencies.
(a) Notwithstanding any other provision herein, if any change in
any law or regulation or in the interpretation thereof by any Governmental
Authority charged with the administration or interpretation thereof shall make
it unlawful for any Lender to make or maintain any Eurodollar Loan in any
Currency or to give effect to its obligations as contemplated hereby with
respect to any Eurodollar Loan in any Currency, then, by written notice to
each affected Borrower and to the Administrative Agent, such Lender may:
(i) declare that Eurodollar Loans in such Currency will not
thereafter be made by such Lender hereunder, whereupon such Lender shall
not submit a Competitive Bid in response to a request for Eurodollar
Competitive Loans in such Currency and any request by a Borrower for a
Eurodollar Revolving Credit Borrowing shall be treated in accordance with
the provisions of Section 2.15(d), unless such declaration shall be
subsequently withdrawn; and
(ii) require that all outstanding Eurodollar Loans made by it shall
be repaid (except that if such Eurodollar Loan is denominated in Dollars,
such Loan shall be converted automatically to an ABR Loan in Dollars as
of the effective date of such notice as provided in paragraph (b) below).
In the event any Lender shall exercise its rights under (i) or (ii) above, all
payments and prepayments of principal which would otherwise have been applied
to repay the Eurodollar Loans that would have been made by such Lender or the
converted Eurodollar Loans of such Lender shall instead be applied to repay
the ABR Loans made by such Lender in lieu of, or resulting from the conversion
of, such Eurodollar Loans.
(b) For purposes of this Section 2.15, a notice to an affected Borrower by
any Lender shall be effective as to each Eurodollar Loan made to such
Borrower, if lawful, on the last day of the Interest Period currently
applicable to such Eurodollar Loan; in all other cases such notice shall be
effective on the date of receipt by such Borrower.
(c) Notwithstanding any other provision of this Agreement, if with
respect to any Loan to MBNA International, the Required Lenders determine,
which determination shall be conclusive, and notify the Administrative Agent
that such event shall require one or more Lenders to perform obligations that
have become incapable of performance or the performance of which is
fundamentally different in character than the nature of performance
contemplated at the time of the execution and delivery of this Agreement, then
no Lender shall thereafter be obligated to make any Loan available in an
Agreed Alternative Currency included in or converted into the Euro.
(d) In the event any Lender shall exercise its rights under Section
2.15(a) with respect to Eurodollar Loans in Dollars, then, unless and until
such Lender gives notice as provided below that the circumstances specified in
this Section that gave rise to such declaration no longer exist (which such
Lender agrees to do promptly upon such circumstances ceasing to exist), all
Loans that would otherwise be made by such Lender as Eurodollar Loans in
Dollars shall be made instead as ABR Loans. In the event any Lender shall
exercise its rights under Section 2.15(a) with respect to Loans denominated in
any Agreed Alternative Currency, then, unless and until such Lender gives
notice as provided below that the circumstances specified in this Section that
gave rise to such declaration no longer exist (which such Lender agrees to do
promptly upon such circumstances ceasing to exist), all Loans that would
otherwise be made by such Lender as Eurodollar Loans in such Agreed
Alternative Currency shall, except as provided in the immediately preceding
sentence, be made instead as Eurodollar Loans denominated in Dollars.
SECTION 2.16. Indemnity. Each Borrower shall indemnify each Lender against
any loss or expense which such Lender may sustain or incur as a consequence of
(a) any failure by such Borrower to fulfill on the date of any Borrowing by
such Borrower hereunder the applicable conditions set forth in Article IV, (b)
any failure by such Borrower to borrow or to convert or continue any Loan
hereunder after irrevocable notice of such Borrowing, conversion or
continuation has been given pursuant to Section 2.03, 2.04 or 2.05, (c) any
payment, prepayment or conversion of a Eurodollar Loan or Fixed Rate Loan made
to such Borrower required by any other provision of this Agreement or
otherwise made or deemed made on a date other than the last day of the
Interest Period applicable thereto, (d) any default in payment or prepayment
of the principal amount of any Loan made to such Borrower or any part thereof
or interest accrued thereon, as and when due and payable (at the due date
thereof, whether at scheduled maturity, by acceleration, irrevocable notice of
prepayment or otherwise), or (e) any transfer or assignment pursuant to
Sections 2.11(e) and 2.21(b), including, in each such case, any loss or
reasonable expense sustained or incurred or to be sustained or incurred in
liquidating or employing deposits from third parties acquired to effect or
maintain such Loan or any part thereof as a Eurodollar Loan or Fixed Rate
Loan. Such loss or expense shall exclude any loss of margin hereunder, but
shall include an amount equal to the excess, if any, as reasonably determined
by such Lender, of (i) its cost of obtaining the funds for the Loan being
paid, prepaid, converted or not borrowed, converted or continued (assumed to
be the LIBO Rate or, in the case of a Fixed Rate Loan, the fixed rate of
interest applicable thereto) for the period from the date of such payment,
prepayment or conversion or failure to borrow, convert or continue to the last
day of the Interest Period for such Loan (or, in the case of a failure to
borrow, convert or continue, the Interest Period for such Loan which would
have commenced on the date of such failure) over (ii) the amount of interest
(as reasonably determined by such Lender) that would be realized by such
Lender in reemploying the funds so paid, prepaid, converted or continued or
not borrowed, converted or continued for such period or Interest Period, as
the case may be. A certificate of any Lender setting forth any amount or
amounts which such Lender is entitled to receive pursuant to this Section and,
in reasonable detail, the method by which such amount or amounts shall have
been determined, shall be delivered to such Borrower and shall be conclusive
absent manifest error.
SECTION 2.17. Pro Rata Treatment.
(a) Except as required under Section 2.15, each Revolving Credit
Borrowing, each payment or prepayment of principal of any Revolving Credit
Borrowing, each payment of interest on the Revolving Credit Loans, each
payment of Facility Fees, each reduction of the Commitments and each
conversion or continuation of any Borrowing with a Revolving Credit Borrowing
of any Type, shall be allocated pro rata among the Lenders in accordance with
their respective Commitments (or, if such Commitments shall have expired or
been terminated, in accordance with the respective principal amounts of their
outstanding Revolving Credit Loans). Except as otherwise provided in Section
2.15(d), Eurodollar Loans denominated in the same Currency and having the same
Interest Period shall be allocated among the Lenders pro rata according to the
amounts of their respective Commitments (or, if such Commitments shall have
expired or been terminated, in accordance with the respective principal
amounts of their outstanding Revolving Credit Loans).
(b) Each payment of principal of any Competitive Borrowing shall be
allocated pro rata among the Lenders participating in such Borrowing in
accordance with the respective principal amounts of their outstanding
Competitive Loans comprising such Borrowing. Each payment of interest on any
Competitive Borrowing shall be allocated pro rata among the Lenders
participating in such Borrowing in accordance with the respective amounts of
accrued and unpaid interest on their outstanding Competitive Loans comprising
such Borrowing. For purposes of determining the available Commitments of the
Lenders at any time, each outstanding Competitive Borrowing shall be deemed to
have utilized the Commitments of the Lenders (including those Lenders which
shall not have made Loans as part of such Competitive Borrowing) pro rata in
accordance with such respective Commitments.
(c) Each Lender agrees that in computing such Lender's portion of
any Borrowing to be made hereunder, the Administrative Agent may, in its
discretion, round each Lender's percentage of such Borrowing to the next
higher or lower whole Dollar amount.
SECTION 2.18. Sharing of Setoffs. Each Lender agrees that if it shall,
through the exercise of a right of banker's lien, setoff or counterclaim
against a Borrower, including, but not limited to, a secured claim under
Section 506 of Title 11 of the United States Code or other security or
interest arising from, or in lieu of, such secured claim, received by such
Lender under any applicable bankruptcy, insolvency or other similar law or
otherwise, or by any other means (except pursuant to Section 2.11(e), 2.21(b)
or 9.04), obtain payment (voluntary or involuntary) in respect of any
Revolving Credit Loan or Loans made to such Borrower as a result of which the
unpaid principal portion of its Revolving Credit Loans made to such Borrower
shall be proportionately less than the unpaid principal portion of the
Revolving Credit Loans made to such Borrower of any other Lender, it shall be
deemed simultaneously to have purchased from such other Lender at face value,
and shall promptly pay to such other Lender the purchase price for, a
participation in the Revolving Credit Loans made to such Borrower of such
other Lender, so that the aggregate unpaid principal amount of the Revolving
Credit Loans made to such Borrower and participations in such Revolving Credit
Loans held by each Lender shall be in the same proportion to the aggregate
unpaid principal amount of all Revolving Credit Loans made to such Borrower
then outstanding as the principal amount prior to such exercise of banker's
lien, setoff or counterclaim or other event of its Revolving Credit Loans made
to such Borrower was to the principal amount of all Revolving Credit Loans
made to such Borrower outstanding prior to such exercise of banker's lien,
setoff or counterclaim or other event; provided, however, that, if any such
purchase or purchases or adjustments shall be made pursuant to this Section
2.18 and the payment giving rise thereto shall thereafter be recovered, such
purchase or purchases or adjustments shall be rescinded to the extent of such
recovery and the purchase price or prices or adjustment restored without
interest. Each Borrower expressly consents to the foregoing arrangements and
agrees that any Lender holding a participation in a Revolving Credit Loan made
to such Borrower and deemed to have been so purchased may exercise any and all
rights of banker's lien, setoff or counterclaim with respect to any and all
moneys owing by such Borrower to such Lender by reason thereof as fully as if
such Lender had made a Revolving Credit Loan directly to such Borrower in the
amount of such participation.
SECTION 2.19. Payments.
(a) Except to the extent otherwise provided herein, each Borrower
shall make all payments (including principal of and interest on any Loan, any
Fees and all other amounts to be paid by such Borrower) hereunder and under
any other Loan Document in the Currency in which such Loan or other amount is
denominated, in immediately available funds, without deduction, set-off or
counterclaim, to the Administrative Agent at the Administrative Agent's
Account for the Currency in which such Loan or other amount is denominated,
not later than 12:00 (noon) Local Time on the date on which such payment shall
become due (each such payment made after such time on such due date to be
deemed to have been made on the next succeeding Business Day). All amounts
owing under this Agreement (other than principal of and interest on Loans
denominated in an Alternative Currency) are denominated and payable in
Dollars.
(b) Whenever any payment (including principal of or interest on any Borrowing
or any Fees or other amounts) hereunder or under any other Loan Document shall
become due, or otherwise would occur, on a day that is not a Business Day,
such payment may be made on the next succeeding Business Day, and such
extension of time shall in such case be included in the computation of
interest or Fees, if applicable.
(c) Each payment received by the Administrative Agent under this
Agreement or any other Loan Document for account of any Lender shall be paid
by the Administrative Agent promptly to such Lender, in like Currency and
immediately available funds, for account of such Lender's Applicable Lending
Office for the Loan or other obligation in respect of which such payment is
made.
SECTION 2.20. Taxes.
(a) Any and all payments by each Borrower hereunder shall be made,
in accordance with Section 2.19, free and clear of and without deduction or
liability for any and all current or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto,
excluding taxes imposed on the Administrative Agent or any Lender (or any
transferee or assignee thereof, including a participation holder (any such
entity a "Transferee")) as a result of a present, former or future connection
between the jurisdiction of the Governmental Authority imposing such tax or
any political subdivision or taxing authority thereof or therein and the
Administrative Agent or the Lender (other than a connection resulting from or
attributable to such Administrative Agent or Lender having executed, delivered
or performed its obligations or received a payment under, or enforced, this
Agreement or any other Loan Documents) (all such nonexcluded taxes, levies,
imposts, deductions, charges, withholdings and liabilities, collectively or
individually, "Taxes"). If a Borrower shall be required to deduct any Taxes
from or in respect of any sum payable hereunder to any Lender (or any
Transferee) or the Administrative Agent, or any Lender, Transferee or the
Administrative Agent shall be required to pay such Taxes, (i) the sum payable
shall be increased by the amount (an "additional amount") necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section 2.20) such Lender (or Transferee)
or the Administrative Agent (as the case may be) shall receive an amount equal
to the sum it would have received had no such deductions been made, (ii) such
Borrower shall make such deductions and (iii) such Borrower shall pay the full
amount deducted to the relevant Governmental Authority in accordance with
applicable law.
(b) In addition, each Borrower agrees to pay to the relevant Governmental
Authority in accordance with applicable law any current or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies that arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement or
any other Loan Document ("Other Taxes").
(c) Each Borrower will indemnify each Lender (or Transferee) and the
Administrative Agent on an after-tax basis for the full amount of Taxes and
Other Taxes paid by such Lender (or Transferee) or the Administrative Agent,
as the case may be, and any liability (including penalties, interest and
expenses (including reasonable attorney's fees and expenses)) arising
therefrom or with respect thereto (except in the case of gross negligence or
willful misconduct of such Lender (or Transferee) or the Administrative
Agent), whether or not such Taxes or Other Taxes were correctly or legally
asserted by the relevant Governmental Authority. A certificate as to the
amount of such payment or liability prepared by a Lender (or Transferee), or
the Administrative Agent, absent manifest error, shall be final, conclusive
and binding for all purposes. Such indemnification shall be made within 30
days after the date such Lender (or Transferee) or the Administrative Agent,
as the case may be, makes written demand therefor.
(d) If a Borrower determines in good faith that a reasonable basis exists for
contesting a Tax, the relevant Lender (or Transferee), or the Administrative
Agent, as applicable, shall cooperate with such Borrower in challenging such
Tax in such Borrower's name at such Borrower's expense if requested by such
Borrower. If a Lender (or Transferee) or the Administrative Agent shall
become aware that it is entitled to claim a refund from a Governmental
Authority in respect of Taxes or Other Taxes as to which it has been
indemnified by a Borrower, or with respect to which a Borrower has paid
additional amounts, pursuant to this Section 2.20, it shall promptly notify
such Borrower of the availability of such refund claim and shall, within 30
days after receipt of a request by such Borrower, make a claim to such
Governmental Authority for such refund at such Borrower's expense. If a
Lender (or Transferee) or the Administrative Agent receives a refund
(including pursuant to a claim for refund made pursuant to the preceding
sentence) in respect of any Taxes or Other Taxes as to which it has been
indemnified by a Borrower or with respect to which a Borrower has paid
additional amounts pursuant to this Section 2.20, it shall within 30 days from
the date of such receipt pay over such refund to such Borrower (but only to
the extent of indemnity payments made, or additional amounts paid, by such
Borrower under this Section 2.20 with respect to the Taxes or Other Taxes
giving rise to such refund), net of all out-of-pocket expenses of such Lender
(or Transferee) or the Administrative Agent and without interest (other than
interest paid by the relevant Governmental Authority with respect to such
refund); provided, however, that such Borrower, upon the request of such
Lender (or Transferee) or the Administrative Agent, agrees to repay the amount
paid over to such Borrower (plus penalties, interest or other charges) to such
Lender (or Transferee) or the Administrative Agent in the event such Lender
(or Transferee) or the Administrative Agent is required to repay such refund
to such Governmental Authority.
(e) As soon as practicable after the date of any payment of Taxes or Other
Taxes by a Borrower to the relevant Governmental Authority, such Borrower will
deliver to the Administrative Agent, at its address referred to in Section
9.01, the original or a certified copy of a receipt issued by such
Governmental Authority evidencing payment thereof.
(f) Without prejudice to the survival of any other agreement contained
herein, the agreements and obligations contained in this Section 2.20 shall
survive the payment in full of the principal of and interest on all Loans made
hereunder.
(g) Each Lender (or Transferee) that is organized under the laws of a
jurisdiction other than the United States, any State thereof or the District
of Columbia (a "Non-U.S. Lender") shall deliver to the Borrowers and the
Administrative Agent two copies of either United States Internal Revenue
Service Form W-8BEN, Form W-8ECI or applicable successor form, or, in the case
of a Non-U.S. Lender claiming exemption from U.S. Federal withholding tax
under Section 871(h) or 881(c) of the Code with respect to payments of
"portfolio interest", a Form W-8BEN, or any subsequent versions thereof or
successors thereto (and, if such Non-U.S. Lender delivers a Form W-8BEN, a
certificate representing that such Non-U.S. Lender is not a bank for purposes
of Section 881(c)(3)(A) of the Code, is not, to the best of its knowledge,
subject to regulatory or other legal requirements as a bank in any
jurisdiction, and has not been treated as a bank for purposes of any tax,
securities law or other filing or submission made to any Governmental
Authority, any application made to a rating agency or qualification for any
exemption from tax, securities laws or other legal requirements), is not a 10-
percent shareholder (within the meaning of Section 881(c)(3)(B) of the Code)
of any Borrower and is not a controlled foreign corporation related to any
Borrower (within the meaning of Section 881(c)(3)(C) of the Code)), properly
completed and duly executed by such Non-U.S. Lender claiming complete
exemption from, or reduced rate of, withholding of U.S. Federal tax on
payments by the Borrowers under this Agreement and the other Loan Documents.
Such forms shall be delivered by each Non-U.S. Lender on or before the date it
becomes a party to this Agreement (or, in the case of a Transferee that is a
participation holder, on or before the date such participation holder becomes
a Transferee hereunder) and on or before the date, if any, such Non-U.S.
Lender changes its applicable lending office by designating a different
lending office (a "New Lending Office"). In addition, each Non-U.S. Lender
shall deliver such forms promptly upon the obsolescence or invalidity of any
form previously delivered by such Non-U.S. Lender. Notwithstanding any other
provision of this Section 2.20(g), a Non-U.S. Lender shall not be required to
deliver any form pursuant to this Section 2.20(g) that such Non-U.S. Lender is
not legally able to deliver.
(h) Each Lender represents to MBNA International and the Administrative Agent
that it is a Qualifying Bank, and shall forthwith notify the Borrowers and
the Administrative Agent if such representation ceases to be correct.
(i) A Borrower shall not be required to indemnify any Non-U.S. Lender, or to
pay any additional amounts to any Non-U.S. Lender, in respect of United States
Federal tax pursuant to paragraph (a) or (c) above to the extent that (i) the
obligation to withhold amounts with respect to United States Federal tax
existed on the date such Non-U.S. Lender became a party to this Agreement (or,
in the case of a Transferee that is a participation holder, on the date such
participation holder became a Transferee hereunder) or, with respect to
payments to a New Lending Office, the date such Non-U.S. Lender designated
such New Lending Office with respect to a Loan; provided, however, that this
clause (i) shall not apply to any Transferee or New Lending Office that
becomes a Transferee or New Lending Office as a result of an assignment,
participation, transfer or designation made at the request of such Borrower;
and provided further, however, that this clause (i) shall not apply to the
extent the indemnity payment or additional amounts any Transferee, or Lender
(or Transferee) through a New Lending Office, would be entitled to receive
(without regard to this clause (i)) do not exceed the indemnity payment or
additional amounts that the Person making the assignment, participation or
transfer to such Transferee, or Lender (or Transferee) making the designation
of such New Lending office, would have been entitled to receive in the absence
of such assignment, participation, transfer or designation or (ii) the
obligation to pay such additional amounts would not have arisen but for a
failure by such Non-U.S. Lender to comply with the provisions of paragraph (g)
above.
(j) Nothing contained in this Section 2.20 shall require any Lender (or
Transferee) or the Administrative Agent to make available any of its tax
returns (or any other information that it deems to be confidential or
proprietary).
(k) Each Lender (or Transferee) represents and agrees that, at all times
during the term of this Agreement, it is not and will not be a conduit entity
participating in a conduit financing arrangement (as defined in Section
7701(l) of the Code and the regulations thereunder) with respect to any
borrowings hereunder unless the Borrowers have consented to such arrangement
prior thereto.
SECTION 2.21. Duty To Mitigate; Assignment of Commitments Under Certain
Circumstances.
(a) Any Lender (or Transferee) claiming any indemnity payment or
additional amounts payable pursuant to Section 2.14 or Section 2.20 shall use
reasonable efforts (consistent with legal and regulatory restrictions) to file
any certificate or document reasonably requested in writing by a relevant
Borrower or to change the jurisdiction of its applicable lending office if the
making of such a filing or change would avoid the need for or reduce the
amount of any such indemnity payment or additional amounts that may thereafter
accrue or avoid the circumstances giving rise to such exercise and would not,
in the sole determination of such Lender (or Transferee), be otherwise
disadvantageous to such Lender (or Transferee).
(b) In the event that any Lender shall have delivered a notice or certificate
pursuant to Section 2.14 or 2.15, or a Borrower shall be required to make
additional payments to any Lender under Section 2.20 (any such Lender being
herein called a "Subject Lender"), the Borrowers, upon three Business Days'
notice, may (jointly but not severally) require that such Subject Lender
transfer all of its right, title and interest under this Agreement to any bank
or other financial institution (a "Proposed Lender") identified by the
Borrowers and approved by the Administrative Agent (which approval shall not
be unreasonably withheld); provided that (i) such Proposed Lender agrees to
assume all of the obligations of such Subject Lender hereunder, and to
purchase all of such Subject Lender's Loans hereunder for consideration equal
to the aggregate outstanding principal amount of such Subject Lender's Loans,
together with interest thereon to the date of such purchase, and satisfactory
arrangements are made for payment to such Subject Lender of all other amounts
payable hereunder to such Subject Lender on or prior to the date of such
transfer (including any fees accrued hereunder and any amounts that would be
payable under Section 2.16 as if all of such Subject Lender's Loans were being
prepaid in full on such date), (ii) if such Subject Lender has requested
compensation pursuant to Section 2.14 or 2.20, such Proposed Lender's
aggregate requested compensation, if any, pursuant to said Section 2.14 or
2.20 with respect to such Subject Lender's Loans is reasonably expected to be
lower than that of the Subject Lender and (iii) no such assignment shall
conflict with any law, rule or regulation or order of any Governmental
Authority. Subject to the provisions of Section 9.04(b), such Proposed Lender
shall be a "Lender" for all purposes hereunder. Without prejudice to the
survival of any other agreement of the Borrowers hereunder, the agreements of
MBNA America Bank contained in Section 2.22 and of the Borrowers contained in
Sections 2.14, 2.20, 9.05 and 9.16 (without duplication of any payments made
to such Subject Lender by the Borrowers or the Proposed Lender) shall survive
for the benefit of such Subject Lender under this Section 2.21(b) with respect
to the time prior to such replacement.
SECTION 2.22. Guaranty of MBNA America Bank.
(a) The Guaranty. MBNA America Bank hereby guarantees to each
Lender and the Administrative Agent and their respective successors and
assigns the prompt payment in full when due (whether at stated maturity, by
acceleration or otherwise) of the principal of and interest on the Loans made
by the Lenders to MBNA International and all other amounts now or from time to
time hereafter owing to the Lenders or the Administrative Agent by MBNA
International under the Loan Documents, in each case strictly in accordance
with the terms thereof (such obligations being herein collectively called the
"Guaranteed Obligations"). MBNA America Bank hereby further agrees that if
MBNA International shall fail to pay in full when due (whether at stated
maturity, by acceleration or otherwise) any of the Guaranteed Obligations,
MBNA America Bank will promptly pay the same, within five days after written
notice of such failure, without any other demand or notice whatsoever, and
that in the case of any extension of time of payment or renewal of any of the
Guaranteed Obligations, the same will be promptly paid in full when due
(whether at extended maturity, by acceleration or otherwise) in accordance
with the terms of such extension or renewal.
(b) Obligations Unconditional. The obligations of MBNA America
Bank under Section 2.22(a) are continuing, absolute and unconditional,
irrespective of the value, validity, regularity or enforceability of the
obligations of MBNA International under this Agreement or any other agreement
or instrument referred to herein, of any extension or other indulgence granted
at any time to MBNA International, of any bankruptcy or insolvency or similar
proceeding with respect to MBNA International, or of any amendment or
modification consented to by MBNA America Bank of any of the Guaranteed
Obligations, and, to the fullest extent permitted by applicable law,
irrespective of any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a surety or guarantor,
it being the intent of this Section 2.22(b) that the obligations of MBNA
America Bank hereunder shall be absolute and unconditional, under any and all
circumstances. MBNA America Bank hereby expressly waives, to the fullest
extent permitted by applicable law, diligence, presentment, demand of payment,
protest and all notices whatsoever (except as set forth in Section 2.22(a)),
and any requirement that the Administrative Agent or any Lender exhaust any
right, power or remedy or proceed against MBNA International under this
Agreement or any other agreement or instrument referred to herein, or against
any other Person under any other guarantee of, or security for, any of the
Guaranteed Obligations.
(c) Reinstatement. The obligations of MBNA America Bank under this
Section 2.22 shall be automatically reinstated if and to the extent that for
any reason any payment by or on behalf of MBNA International in respect of the
Guaranteed Obligations is rescinded or must be otherwise restored by any
holder of any of the Guaranteed Obligations, whether as a result of any
proceedings in bankruptcy or reorganization or otherwise and MBNA America Bank
agrees that it will indemnify the Administrative Agent and each Lender on
demand for all reasonable costs and expenses (including, without limitation,
fees of counsel) incurred by the Administrative Agent or such Lender in
connection with such rescission or restoration, including any such costs and
expenses incurred in defending against any claim alleging that such payment
constituted a preference, fraudulent transfer or similar payment under any
bankruptcy, insolvency or similar law.
(d) Remedies. MBNA America Bank agrees that, as between MBNA
America Bank and the Lenders, the obligations of MBNA International under this
Agreement may be declared to be forthwith due and payable as provided in
Article VII hereof (and shall be deemed to have become automatically due and
payable in the circumstances provided in said Article VII) for purposes of
Section 2.22(a) notwithstanding any stay, injunction or other prohibition
preventing such declaration (or such obligations from becoming automatically
due and payable) as against MBNA International and that, in the event of such
declaration (or such obligations being deemed to have become automatically due
and payable), such obligations (whether or not due and payable by MBNA
International) shall forthwith become due and payable by MBNA America Bank for
purposes of Section 2.22(a).
(e) Instrument for the Payment of Money. MBNA America Bank hereby
acknowledges that the guarantee in this Section 2.22 constitutes an instrument
for the payment of money only, and consents and agrees that any Lender or the
Administrative Agent, at its sole option, in the event of a dispute by MBNA
America Bank in the payment of any moneys due hereunder, shall have the right
to bring motion-action under New York CPLR Section 3213.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Each Borrower represents and warrants to each of the Lenders as to
itself that:
SECTION 3.01. Corporate Existence and Power.
(a) (i) MBNA America Bank is a national bank duly formed, validly
existing and in good standing under the National Bank Act, as amended,
(ii) MBNA International is a private limited company and an authorized
institution under the Banking Act of 1987 (as amended by the Bank of
England Act 1998) duly formed and validly existing under the laws of
England and is a Qualifying Bank and (iii) the Parent is a corporation
duly formed, validly existing and in good standing under the laws of the
State of Maryland;
(b) each Significant Subsidiary of such Borrower is a corporation
duly organized, validly existing and in good standing under the laws of
the jurisdiction of its incorporation;
(c) such Borrower and each Significant Subsidiary thereof have the
power and authority and all governmental licenses, authorizations,
consents and approvals to own its assets and carry on their respective
businesses as now conducted and, in the case of such Borrower, to
execute, deliver, and perform its obligations under this Agreement;
(d) such Borrower and each Significant Subsidiary thereof are duly
qualified as a foreign corporation, licensed and in good standing under
the laws of each jurisdiction where their respective ownership, lease or
operation of property or the conduct of their respective businesses
requires such qualification; and
(e) such Borrower and each Significant Subsidiary thereof are in
compliance in all material respects with all Requirements of Law;
except, in each case referred to in clause (c) or clause (d), to the extent
that the failure to do so would not, in the aggregate for all such failures,
reasonably be expected to have a Material Adverse Effect.
SECTION 3.02. Corporate Authorization; No Contravention. The execution,
delivery and performance by such Borrower of this Agreement, the borrowings
hereunder and the use of proceeds thereof have been duly authorized by all
necessary corporate action, and do not and will not:
(a) contravene the terms of any of its Organization Documents;
(b) conflict with or result in any breach or contravention of, or
the creation of any Lien under, any document evidencing any Contractual
Obligation to which such Borrower or any Subsidiary thereof is a party or
any order, injunction, writ or decree of any Governmental Authority or
arbitrator to which such Borrower or its property is subject which, in
the aggregate, would reasonably be expected to result in a Material
Adverse Effect; or
(c) violate any Requirement of Law.
SECTION 3.03. Governmental Authorization. No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority is necessary or required in connection with the
execution, validity, delivery or performance by, or enforcement against, such
Borrower of this Agreement.
SECTION 3.04. Binding Effect. This Agreement has been duly executed on
behalf of such Borrower and constitutes the legal, valid and binding
obligation of such Borrower, enforceable against such Borrower in accordance
with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, or similar laws affecting the enforcement of
creditors' rights generally or by equitable principles relating to
enforceability (whether enforcement is sought by proceedings in equity or at
law).
SECTION 3.05. Litigation. Except as disclosed in the Parent's most recent
Annual Report on Form 10-K or in any subsequent report of the Parent on Forms
10-Q or 8-K filed with the Securities and Exchange Commission, there are no
litigation, investigations, actions, suits, proceedings, claims or disputes
pending, or, to the knowledge of such Borrower, threatened or contemplated, at
law, in equity, in arbitration or before any Governmental Authority, against
such Borrower or its Subsidiaries or any of its or their respective assets or
properties:
(a) which purport to affect or pertain to this Agreement or any of
the transactions contemplated hereby; or
(b) as to which there is a reasonable possibility of an adverse
determination and which, if determined adversely to such Borrower or its
Subsidiaries, would reasonably be expected to have a Material Adverse
Effect.
No injunction, writ, temporary restraining order or any order of any nature
has been issued by any court or other Governmental Authority purporting to
enjoin or restrain the execution, delivery and performance of this Agreement,
or directing that the transactions provided for herein not be consummated as
herein provided.
SECTION 3.06. No Default. No Default exists or would result from the
incurring of any obligations hereunder by such Borrower. On the date of this
Agreement, neither such Borrower nor any of its Subsidiaries is in default
under or with respect to any Contractual Obligation in any respect which,
individually or together with all such defaults, would reasonably be expected
to have a Material Adverse Effect.
SECTION 3.07. Employee Benefit Plans. Such Borrower (excluding MBNA
International) and each of its ERISA Affiliates is in compliance in all
respects with the applicable provisions of ERISA and the Code and the
regulations and published interpretations thereunder where a failure to
comply, individually or in the aggregate, could result in a Material Adverse
Effect. No Reportable Event has occurred in respect of any Plan. The present
value of all accrued benefit liabilities determined on a termination basis
under all underfunded Plans (based on those assumptions used to fund such
Plans) did not, as of the last annual valuation date applicable thereto,
exceed the value of the assets of such Plans by an amount that could have a
Material Adverse Effect. Such Borrower (excluding MBNA International), and no
ERISA Affiliate thereof, are required to contribute to any Multiemployer Plan
or have withdrawn from any Multiemployer Plan where such withdrawal has
resulted or would result in any Withdrawal Liability that has not been fully
paid.
SECTION 3.08. Use of Proceeds. The proceeds of the Loans are intended to be
and shall be used solely for general corporate purposes and in compliance with
Section 6.06.
SECTION 3.09. Taxes. Such Borrower and its Subsidiaries (or a Controlling
Affiliate of such Borrower which is part of the same consolidated group as
such Borrower for tax purposes) have filed all Federal and other material tax
returns and reports required to be filed, and have paid all Federal and other
material taxes, assessments, fees and other government charges levied or
imposed upon them or their properties, income or assets otherwise due and
payable, except those which are being contested in good faith by appropriate
proceedings and for which adequate reserves have been provided in accordance
with Applicable Accounting Principles. No notice of Lien (other than a Lien
that attaches before taxes with respect to such Lien are due) has been filed
or recorded. There is no proposed tax assessment against such Borrower or any
of its Subsidiaries (or any entity within such Borrower's consolidated group
for tax purposes) which would, if the assessment were made, have a Material
Adverse Effect.
SECTION 3.10. Financial Condition.
(a) The "Consolidated Reports of Condition and Income for a Bank
with Domestic and Foreign Offices" (FFIEC 031) (the "Consolidated Reports") of
MBNA America Bank and its Subsidiaries dated December 31, 1999 for the fiscal
year ended on such date:
(i) were prepared in accordance with Applicable Accounting
Principles, consistently applied throughout the period covered thereby,
including the related schedules and notes thereto, except as otherwise
expressly noted therein;
(ii) fairly present the financial condition of MBNA America Bank
and its Subsidiaries as of the date thereof and results of operations for
the period covered thereby; and
(iii) show all material indebtedness and other liabilities, direct
or contingent, of MBNA America Bank and its consolidated Subsidiaries as
of the date thereof including liabilities for taxes, and material
commitments, all to the extent required by Applicable Accounting
Principles.
(b) The consolidated balance sheet of each of (1) MBNA International and its
Subsidiaries and (2) the Parent and its Subsidiaries as at December 31, 1999
and the related consolidated statements of income, changes in
stockholders'/division equity and cash flows of MBNA International and its
Subsidiaries and the Parent and its Subsidiaries, respectively, for the fiscal
year ended on said date, with the opinion thereon of PricewaterhouseCoopers
LLP and Ernst & Young LLP, respectively:
(i) were prepared in accordance with Applicable Accounting
Principles, consistently applied throughout the period covered thereby,
including the related schedules and notes thereto, except as otherwise
expressly noted therein;
(ii) fairly present the financial condition of MBNA International
and its Subsidiaries, or of the Parent and its Subsidiaries, as the case
may be, as of the date thereof and results of operations for the period
covered thereby; and
(iii) show all material indebtedness and other liabilities, direct
or contingent, of MBNA International and its consolidated Subsidiaries,
or of the Parent and its consolidated Subsidiaries, as the case may be,
as of the date thereof including liabilities for taxes, and material
commitments, all to the extent required by Applicable Accounting
Principles.
(c) From December 31, 1999 to the Closing Date there has been no Material
Adverse Effect.
SECTION 3.11. Regulated Entities. None of such Borrower, any Person
Controlling such Borrower, or any Subsidiary thereof, is (a) an "investment
company", or a company "controlled" by an "investment company", within the
meaning of the Investment Company Act of 1940, as amended, or (b) a "holding
company" as defined in, or subject to regulation under, the Public Utility
Holding Company Act of 1935, as amended.
SECTION 3.12. Federal Reserve Regulations.
(a) Neither such Borrower nor any of the Subsidiaries is engaged
principally in the business of extending credit for the purpose of purchasing
or carrying Margin Stock.
(b) No part of the proceeds of any Loan made to such Borrower will be used by
such Borrower or any of its Affiliates for any purpose which entails a
violation of, or which is inconsistent with, the provisions of the Regulations
of the Board, including Regulation U or X.
SECTION 3.13. No Material Misstatements. To the knowledge of such Borrower,
no financial statement, certificate or statement furnished on behalf of such
Borrower pursuant to Article III and Sections 5.01, 5.02, 5.03 and 5.09
delivered on or after the date hereof pursuant to any Loan Document contains
or will contain any material misstatement of fact or omits or will omit to
state any material fact necessary to make the statements therein, in the light
of the circumstances under which they were, are or will be made, not
misleading; provided that the foregoing will not apply to information
furnished pursuant to Section 5.02(b)(iv) or to portions of the Parent's
Annual Report to Stockholders or other stockholder reports that are not
incorporated in its Annual Report on Form 10-K or other periodic reports filed
with the Securities and Exchange Commission.
SECTION 3.14. Environmental and Safety Matters. Such Borrower is aware of no
events, conditions or circumstances involving environmental pollution or
contamination or employee health or safety that would reasonably be expected
to result in a Material Adverse Effect.
SECTION 3.15. Commercial Activity; Absence of Immunity. MBNA International
is subject to civil and commercial law with respect to its obligations under
the Loan Documents to which it is a party, and the making and performance of
the Loan Documents by MBNA International constitute private and commercial
acts rather than public or governmental acts. Under English law, MBNA
International is not entitled to immunity on the ground of sovereignty or the
like from the jurisdiction of any court or from any action, suit, set-off or
proceeding, or service of process in connection therewith, arising under the
Loan Documents.
SECTION 3.16. Legal Form. Each of the Loan Documents to which MBNA
International is a party is in proper legal form under English law for the
enforcement thereof against MBNA International under such law, and if each
were stated to be governed by such law, it would constitute a legal, valid,
binding and enforceable obligation of MBNA International under such law,
subject to the qualifications as to matters of law only set forth in the legal
opinion the form of which is set forth in Exhibit E-2. All formalities
required in the United Kingdom for the validity and enforceability against
MBNA International of each of the Loan Documents to which it is party have
been accomplished, and no Taxes or Other Taxes are required to be paid, and no
notarization is required, for the validity and enforceability thereof against
MBNA International.
SECTION 3.17. Year 2000 Issues. The information regarding Year 2000 issues
as disclosed in the Parent's Annual Report on Form 10-K dated December 31,
1999 is correct.
ARTICLE IV
CONDITIONS PRECEDENT
SECTION 4.01.Conditions to Effectiveness. This Agreement shall become
effective on the date (the "Closing Date") on which the Administrative Agent
shall notify the Borrowers that it has received the following documents (with,
in the case of this Agreement and clauses (b), (c), (d), (e) and (f) below,
sufficient copies for each Lender), each of which shall be satisfactory to the
Administrative Agent and its counsel in form and substance:
(a) Loan Documents. Each Loan Document, duly executed and
delivered by each of the parties thereto.
(b) Corporate Documents. Certified copies of the charter and by-
laws (or equivalent documents) of each Borrower and of all corporate
authority for each Borrower (including, without limitation, board of
director resolutions and evidence of the incumbency, including specimen
signatures, of officers) with respect to the execution, delivery and
performance of the Loan Documents and each other document to be delivered
by such Borrower from time to time in connection herewith and the Loans
hereunder (and the Administrative Agent and each Lender may conclusively
rely on such certificate until it receives notice in writing from the
relevant Borrower to the contrary).
(c) Officer's Certificate. A certificate of a senior officer of
each Borrower, dated the Closing Date, to the effect that, after giving
effect to any borrowing of Loans to be made on the Closing Date, (i) no
Default shall have occurred and be continuing and (ii) the
representations and warranties made by the Borrowers in Article III shall
be true and correct in all material respects on and as of the Closing
Date with the same effect as though made on and as of such date, except
to the extent such representations and warranties expressly relate to an
earlier date.
(d) Approvals. Certified copies of all licenses, consents,
authorizations and approvals of, and notices to and filings and
registrations with, any Governmental Authority, and of third-party
consents and approvals, necessary in connection with the making and
performance by the Borrowers of the Loan Documents.
(e) Opinions of Counsel.
(1) An opinion, dated the Closing Date, of Simpson Thacher &
Bartlett, special New York counsel to the Borrowers, substantially
in the form of Exhibit E-1 hereto and covering such other matters as
the Administrative Agent may reasonably request (and the Borrowers
hereby instruct such counsel to deliver such opinion to the Lenders
and the Administrative Agent).
(2) An opinion, dated the Closing Date, of Clifford Chance
LLP, UK counsel to MBNA International, substantially in the form of
Exhibit E-2 hereto and covering such other matters as the
Administrative Agent may reasonably request (and MBNA International
hereby instructs such counsel to deliver such opinion to the Lenders
and the Administrative Agent).
(3) An opinion, dated the Closing Date, of Donna Pumfrey,
Esq., general counsel to MBNA International, substantially in the
form of Exhibit E-3 hereto and covering such other matters as the
Administrative Agent may reasonably request (and MBNA International
hereby instructs such counsel to deliver such opinion to the Lenders
and the Administrative Agent).
(4) An opinion, dated the Closing Date, of John W. Sheflen,
Esq., general counsel to MBNA America Bank and the Parent,
substantially in the form of Exhibit E-4 hereto and covering such
other matters as the Administrative Agent may reasonably request
(and such Borrowers hereby instruct such counsel to deliver such
opinion to the Lenders and the Administrative Agent).
(5) An opinion, dated the Closing Date, of Milbank, Tweed,
Hadley & McCloy LLP, special New York counsel to the Administrative
Agent, substantially in the form of Exhibit E-5 hereto (and the
Administrative Agent hereby instructs such counsel to deliver such
opinion to the Lenders).
(f) Financial Statements. For distribution to the Lenders, (i)
reasonably satisfactory audited consolidated financial statements of the
Parent and its Subsidiaries for the two most recent fiscal years ended
prior to the Closing Date as to which such financial statements are
available, (ii) reasonably satisfactory unaudited interim consolidated
financial statements of the Parent and its Subsidiaries for each
quarterly period ended subsequent to the date of the latest financial
statements delivered pursuant to clause (i) of this paragraph as to which
such financial statements are available and (iii) call reports of MBNA
America Bank for the two most recent fiscal years ended prior to the
Closing Date.
(g) Existing Credit Agreement. Evidence of termination of the
commitments under the Existing Credit Agreement, and that MBNA America
Bank shall have paid in full all unpaid fees and all other amounts
outstanding under the Existing Credit Agreement accrued through the
Closing Date.
(h) Other Documents. Such other documents as the Administrative
Agent or its counsel may reasonably request.
The effectiveness of the obligations of any Lender hereunder is also
subject to the payment by the Borrowers of such fees as the Borrowers shall
have agreed to pay or deliver to any Lender or the Administrative Agent in
connection herewith, including, without limitation, the reasonable fees and
expenses of Milbank, Tweed, Hadley & McCloy LLP, special New York counsel to
the Administrative Agent, in connection with the negotiation, preparation,
execution and delivery of this Agreement (to the extent that statements for
such fees and expenses have been delivered to the Borrowers, and subject to
the limitations referred to in Section 9.05(a)).
SECTION 4.02. Initial and Subsequent Loans. The obligations of the Lenders
to make Loans hereunder to a Borrower are subject to the satisfaction on the
date of each Borrowing by such Borrower of the following conditions:
(a) The Administrative Agent shall have received a notice of such
Borrowing as required by Section 2.03 or Section 2.04, as applicable.
(b) The representations and warranties made by such Borrower in
Article III (except the representations set forth in Section 3.05(b) or
Section 3.14) shall be true and correct in all material respects on and
as of the date of such Borrowing with the same effect as though made on
and as of such date, except to the extent such representations and
warranties expressly relate to an earlier date.
(c) Such Borrower shall be in compliance in all material respects
with all the terms and provisions set forth herein and in each other Loan
Document on its part to be observed or performed, and at the time of and
immediately after such Borrowing no Default shall have occurred and be
continuing.
Each Borrowing by a Borrower shall be deemed to constitute a representation
and warranty by such Borrower on the date of such Borrowing as to the matters
specified in paragraphs (b) and (c) of this Section 4.02.
ARTICLE V
AFFIRMATIVE COVENANTS
The Borrowers covenant and agree with each Lender and the Administrative Agent
that, so long as this Agreement shall remain in effect or the principal of or
interest on any Loan, any Fees or any other expenses or amounts payable under
any Loan Document shall be unpaid, unless the Required Lenders shall otherwise
consent in writing:
SECTION 5.01. Financial Statements.
(a) MBNA America Bank will make available through electronic media
to the Lenders and the Administrative Agent (and MBNA America Bank will
provide prior written notice to the Administrative Agent, which shall promptly
inform the Lenders, of such availability) and, so long as any of the following
information is not generally publicly available through electronic media, upon
the request of a Lender, MBNA America Bank shall furnish hard copies to the
Administrative Agent for distribution to such requesting Lender:
(i) as soon as available, but not later than 120 days after the end
of each fiscal year of MBNA America Bank, a copy of the Consolidated
Reports of MBNA America Bank and its Subsidiaries for such fiscal year;
and
(ii) as soon as available, but not later than 60 days after the end
of each of the first three fiscal quarters of each year of MBNA America
Bank, a copy of the Consolidated Reports of MBNA America Bank and its
Subsidiaries for such fiscal quarter;
in each case certified by an appropriate Responsible Officer as being the
complete and correct copies of the statements on such forms filed by it with
the OCC.
(b) MBNA International will make available through electronic media
to the Lenders and the Administrative Agent (and MBNA International will
provide prior written notice to the Administrative Agent, which shall promptly
inform the Lenders, of such availability) and, so long as any of the following
information is not generally publicly available through electronic media, upon
the request of a Lender, MBNA International shall furnish hard copies to the
Administrative Agent for distribution to such requesting Lender:
(i) as soon as available, but not later than 120 days after the end
of each fiscal year of MBNA International, a copy of the annual report
and accounts for MBNA International and its Subsidiaries for such fiscal
year, prepared in accordance with Applicable Accounting Principles; and
(ii) as soon as available, but not later than 60 days after
production of the half- yearly accounts for each fiscal year of MBNA
International, a copy of the consolidated profit and loss accounts for
MBNA International and its Subsidiaries for such fiscal semester,
prepared in accordance with Applicable Accounting Principles;
in each case certified by an appropriate Responsible Officer as being the
complete and correct copies of the statements on such forms furnished by it to
the FSA.
(c) The Parent will make available through electronic media to the
Lenders and the Administrative Agent (and the Parent will provide prior
written notice to the Administrative Agent, which shall promptly inform the
Lenders, of such availability) and, so long as any of the following
information is not generally publicly available through electronic media, upon
the request of a Lender, the Parent shall furnish hard copies to the
Administrative Agent for distribution to such requesting Lender:
(i) as soon as available, but not later than 120 days after the end
of each fiscal year of the Parent, copies of the Parent's Annual Report
on Form 10-K as filed with the SEC for such fiscal year; and
(ii) as soon as available, but not later than 60 days after the end
of each of the first three fiscal quarters of each fiscal year of the
Parent, copies of the Parent's Quarterly Report on Form 10-Q as filed
with the SEC for such fiscal quarter;
in each case certified by an appropriate Responsible Officer as being the
complete and correct copies of the statements on such forms furnished by it to
the SEC.
SECTION 5.02. Certificates; Other Information. Each Borrower will furnish or
cause to be furnished to the Lenders and the Administrative Agent:
(a) within the timeframes relating to the financial statements
referred to in Section 5.01 above, a certificate of a Responsible Officer of
such Borrower (i) stating that, to such officer's knowledge, such Borrower,
during such period, has observed, performed and fulfilled all of its covenants
and other agreements, and satisfied every condition contained in the Loan
Documents to be observed, performed or satisfied by it, and that such officer
has obtained no knowledge of any Default except as specified (by applicable
Section reference) in such certificate and (ii) showing, in the case of each
Borrower as applicable, compliance with Sections 6.03, 6.04 and 6.05;
(b) if any of the following information is not generally publicly
available through electronic media:
(i) promptly after the same are sent, copies of all financial
statements and reports which the Parent sends generally to its
shareholders in their capacities as such;
(ii) promptly after the same are filed, copies of all financial
statements and regular, periodic or special reports (except for the Form
8-K filed monthly for entities established in connection with
Securitizations by the Parent or any of its Subsidiaries) which the
Parent may make to, or file with, the Securities and Exchange Commission
or any successor or similar Governmental Authority, except for private
filings which are not publicly available;
(iii) promptly after the same are filed and to the extent not
covered by clause (i) or (ii) above, copies of all regular, periodic
reports that such Borrower may make to, or file with, any Bank Regulatory
Authority (including without limitation, FR Y-9LP, FR Y-9C and FFIEC lead
bank reports), except for private filings which are not publicly
available; and
(iv) promptly, such additional public financial and other
information as the Administrative Agent may from time to time reasonably
request.
SECTION 5.03. Notices. Each Borrower will, and will cause each of its
Subsidiaries to, promptly give notice to the Administrative Agent and each
Lender of:
(a) the occurrence of any Default;
(b) the filing or commencement of any action, suit or proceeding
against such Borrower or any Subsidiary whether at law or equity or by or
before any Governmental Authority, which is reasonably likely to result
in a Material Adverse Effect; and
(c) any Material Adverse Effect.
Each notice by a Borrower pursuant to this Section shall be accompanied by a
written statement by a Responsible Officer of such Borrower setting forth
details of the occurrence referred to therein, and stating what action such
Borrower proposes to take with respect thereto and at what time. Each notice
under Section 5.03(a) shall describe with particularity any and all clauses or
provisions of this Agreement that have been breached or violated.
SECTION 5.04. Preservation of Corporate Existence, etc. Each Borrower shall
continue (and shall cause each of its Significant Subsidiaries) to preserve
and maintain in full force and effect its corporate existence and good
standing under the laws of its state or jurisdiction of incorporation.
Without limiting the foregoing, MBNA America Bank shall at all times be a
national banking association validly existing and in good standing under the
National Bank Act or a bank chartered under the applicable banking law of any
state and be an insured bank and member bank of the Federal Deposit Insurance
Corporation, under the Federal Deposit Insurance Act.
SECTION 5.05. Books and Records. Each Borrower will, and will cause each of
its Subsidiaries to, maintain proper books of record and account, in which
full, true and correct entries in conformity with Applicable Accounting
Principles, and with all Requirements of Law, consistently applied shall be
made of all financial transactions and matters involving the assets and
business of such Borrower and such Subsidiaries; and permit representatives of
the Administrative Agent to discuss with representatives of such Borrower and
its Significant Subsidiaries the affairs, finances, and accounts of such
Borrower and such Significant Subsidiaries, at such times during normal
business hours and as often as any of the Lenders may reasonably request.
SECTION 5.06. Compliance with Regulatory Standards. Each Borrower will, and
will cause each of its Subsidiaries to, at all times comply with all
applicable regulatory guidelines, policy statements, regulations or other
Requirements of Law, except to the extent such noncompliance does not
constitute a Material Adverse Effect.
SECTION 5.07. Payment of Obligations. Each Borrower will, and will cause
each of its Subsidiaries to, pay, discharge or otherwise satisfy at or before
maturity or before they become delinquent, as the case may be, all its taxes
and other material obligations of whatever nature, except, without prejudice
to the effectiveness of paragraph (f) of Article VII, for any taxes or other
obligations when the amount or validity thereof is currently being contested
in good faith by appropriate proceedings and reserves in conformity with
Applicable Accounting Principles with respect thereto have been provided on
the books of such Borrower or any such Subsidiary, as the case may be.
SECTION 5.08. Maintenance of Insurance. The Borrowers will, and will cause
each of their Subsidiaries to, substantially keep their respective insurable
properties insured (including pursuant to self insurance) in such minimum
amounts and against at least such risks and covering such assets and at such
levels as exist as of the Closing Date and the Borrowers and their
Subsidiaries will collectively maintain public liability insurance policies in
amounts not less than $25,000,000.
SECTION 5.09. Employee Benefits. Each Borrower will, and will cause each of
its Subsidiaries to, (a) comply in all respects with the applicable provisions
of ERISA and the Code where a failure to comply, individually or in the
aggregate, could result in a Material Adverse Effect and (b) furnish to the
Administrative Agent (i) as soon as possible after, and in any event within 30
days after any Financial Officer of such Borrower or any ERISA Affiliate
thereof knows or has reason to know that, any Reportable Event has occurred
that alone or together with any other Reportable Event could reasonably be
expected to result in liability of such Borrower to the PBGC in an aggregate
amount that could have a Material Adverse Effect, a statement of a Financial
Officer of such Borrower setting forth details as to such Reportable Event and
the action that such Borrower proposes to take with respect thereto, together
with a copy of the notice, if any, of such Reportable Event given to the PBGC,
(ii) promptly after receipt thereof, a copy of any notice that such Borrower
or any ERISA Affiliate thereof may receive from the PBGC relating to the
intention of the PBGC to terminate any Plan or Plans (other than a Plan
maintained by an ERISA Affiliate that is considered an ERISA Affiliate only
pursuant to subsection (m) or (o) of Section 414 of the Code) or to appoint a
trustee to administer any such Plan or Plans where any such terminations or
trustee appointments could in the aggregate result in a Material Adverse
Effect and (iii) within 10 days after the due date for filing with the PBGC
pursuant to Section 412(n) of the Code a notice of failure to make a required
installment or other payment with respect to a Plan, a statement of a
Financial Officer of such Borrower setting forth details as to such failure
and the action that such Borrower proposes to take with respect thereto,
together with a copy of any such notice given to the PBGC.
SECTION 5.10. Capital Requirements. Each Borrower will at all times maintain
such minimum amounts of capital as shall from time to time be required by, and
otherwise comply with, the applicable Capital Adequacy Regulations.
ARTICLE VI
NEGATIVE COVENANTS
The Borrowers covenant and agree with each Lender and the Administrative Agent
that, so long as this Agreement shall remain in effect or the principal of or
interest on any Loan, any Fees or any other expenses or amounts payable under
any Loan Document shall be unpaid, unless the Required Lenders shall otherwise
consent in writing:
SECTION 6.01. Limitation on Liens. Each Borrower will not, and will not
permit any of its Subsidiaries to, create, incur, assume or suffer to exist
any Lien upon or with respect to any (1) Restricted Shares owned by it or (2)
Eligible Receivables or credit card or related plan receivables which would be
Eligible Receivables but for a failure to comply with clause (i) or (iii) of
the definition of the term "Eligible Receivables", in each case whether now
owned or hereafter acquired, provided, however, that the foregoing shall not
prohibit:
(i) in the case of MBNA America Bank and its Subsidiaries, any
Securitization of Eligible Receivables other than the Sellers' Retained
Interests,
(ii) in the case of MBNA America Bank and its Subsidiaries, any
Securitization of Sellers' Retained Interests, if such Securitization
qualifies for sale treatment under Applicable Accounting Principles, or
(iii) in the case of MBNA America Bank and its Subsidiaries, any
Securitization of Sellers' Retained Interests which does not qualify for
sale treatment under Applicable Accounting Principles.
SECTION 6.02. Prohibition of Fundamental Changes. Each Borrower agrees that
it will not, and will not permit any of its Significant Subsidiaries to:
(a) Except with respect to Securitizations or repurchase
agreements, sell, assign, lease, convey, transfer or otherwise dispose of
(whether in one or a series of transactions) any of its assets or properties
(including accounts and notes receivable, with or without recourse) or enter
into any agreement to do any of the foregoing, if to do so would result in a
Material Adverse Effect or if clause (c) of this Section 6.02 would be
contravened thereby; provided, however, that the foregoing shall not preclude
the sale of investment securities for then current market value.
(b) Merge, consolidate with or into, or convey, transfer, lease or
otherwise dispose of (whether in one transaction or in a series of related
transactions) all or substantially all of its assets (whether now owned or
hereafter acquired) to or in favor of, any Person, except:
(i) any Significant Subsidiary of such Borrower may merge with
such Borrower or any one or more Subsidiaries of such Borrower, provided
that (A) if any transaction shall be between a Significant Subsidiary of
such Borrower and such Borrower, such Borrower shall be the continuing or
surviving corporation and (B) if any transaction shall be between a
Subsidiary thereof and a wholly-owned Subsidiary thereof, the wholly-
owned Subsidiary shall be the continuing or surviving corporation; and
(ii) any Significant Subsidiary of such Borrower may sell all or
substantially all of its assets (upon voluntary liquidation or otherwise)
to such Borrower or another Subsidiary thereof; and
(iii) such Borrower or any Significant Subsidiary thereof may merge
or consolidate with or into any other corporation, or convey, transfer,
lease or otherwise dispose of (whether in one transaction or in a series
of related transactions), all or substantially all of the assets of such
Borrower or such Significant Subsidiary, so long as:
(A) in the case of any such merger or consolidation involving
such Borrower, clause (c) of this Section 6.02 would not be
contravened thereby, and either:
(x) such Borrower is the surviving corporation or
(y) the corporation which is the surviving corporation
shall expressly assume the due and punctual payment and
performance of the obligations of, and the performance of each
covenant, agreement, and condition of this Agreement binding
on, such Borrower and Continuing Directors shall constitute a
majority of the Board of Directors of the surviving
corporation, after giving effect to such merger or
consolidation; and
(B) in the case of any such conveyance, transfer, lease or
other disposition involving such Borrower, clause (c) of this
Section 6.02 would not be contravened thereby, and the Person to
which such assets of such Borrower shall be sold shall expressly
assume the due and punctual payment and performance of the
obligations of, and the performance of each covenant, agreement, and
condition of this Agreement binding upon, such Borrower and
Continuing Directors shall constitute a majority of the Board of
Directors of the Person to which such assets of such Borrower shall
be sold after giving effect to such conveyance, transfer, lease, or
other disposition; and
(C) in the case of any merger or consolidation involving such
Significant Subsidiary, either the surviving corporation shall be a
Subsidiary of such Borrower after giving effect to such merger or
consolidation or the consideration received by such Borrower and its
Subsidiaries in connection with such transaction shall equal or
exceed the fair market value of the equity interests in such
Significant Subsidiary disposed of by such Borrower in such
transaction, as reasonably determined by the Board of Directors of
such Borrower; and
(D) in the case of any such conveyance, transfer, lease or
other disposition involving such Significant Subsidiary, the
consideration received by such Borrower and its Subsidiaries in
connection with such transaction shall equal or exceed the fair
market value of the assets sold or disposed of, as reasonably
determined by the Board of Directors of such Borrower;
provided, however, that immediately after giving effect to any transaction
referred to in clause (i), (ii) or (iii) above, no Default shall have occurred
and be continuing.
(c) In the case of MBNA America Bank (including any successor pursuant to
this Section 6.02) and MBNA America Bank and its Subsidiaries taken as a
whole, as a result of any transaction covered by this Section 6.02, cease to
be predominantly engaged in the credit and other similar card business, other
consumer loan business, and businesses which are related thereto or are
reasonable extensions thereof.
SECTION 6.03. Financial Covenants of MBNA America Bank.
(a) Consolidated Tangible Net Worth. MBNA America Bank will not
permit its Consolidated Tangible Net Worth on any date to be less than the sum
of (i) $1,675,000,000, plus (ii) an amount equal to 40% of MBNA America Bank's
consolidated net income, if positive, for each fiscal year that ends after
December 31, 1999, plus (iii) if such date is not the last day of a fiscal
year, an amount equal to 40% of MBNA America Bank's consolidated net income,
if positive, for the then elapsed portion of the current fiscal year ending on
the last day of the fiscal quarter (if any) ending on or before such date.
(b) Past Due Receivables. MBNA America Bank will not permit (x) as
of the last day of any calendar month, the aggregate amount of Managed Credit
Card Receivables that are 90 days or more past due plus (without duplication)
the aggregate amount of Managed Credit Card Receivables that are on nonaccrual
status, in each case for MBNA America Bank and its Subsidiaries, to exceed (y)
an amount equal to 6% of the aggregate amount of Managed Credit Card
Receivables as of such day.
(c) Regulatory Capital. MBNA America Bank will not permit the
Tier 1 Leverage Ratio, Tier 1 Capital to Risk Adjusted Assets Ratio and the
Total Capital to Risk Adjusted Assets Ratio on any date to be less than the
respective minimum ratios required under the Capital Adequacy Regulations
applicable to it, as in effect from time to time.
SECTION 6.04. Financial Covenants of the Parent.
(a) Double Leverage Ratio. The Parent will not permit the Double
Leverage Ratio on any date of determination to exceed 1.25 to 1.
(b) Consolidated Tangible Net Worth. The Parent will not permit
its Consolidated Tangible Net Worth on any date to be less than the sum of (i)
$1,675,000,000, plus (ii) an amount equal to 40% of the Parent's consolidated
net income, if positive, for each fiscal year that ends after December 31,
1999, plus (iii) if such date is not the last day of a fiscal year, an amount
equal to 40% of the Parent's consolidated net income, if positive, for the
then elapsed portion of the current fiscal year ending on the last day of the
fiscal quarter (if any) ending on or before such date.
SECTION 6.05. Regulatory Capital. Each Borrower will cause each of its
Insured Subsidiaries to be (and MBNA America Bank so long as it is an Insured
Subsidiary will be) at all times "adequately capitalized" for purposes of 12
U.S.C. 1831o, as amended, re-enacted or redesignated from time to time, and
at all times to maintain (and MBNA America Bank so long as it is an Insured
Subsidiary will maintain) such amount of capital as may be prescribed from
time to time, whether by regulation, agreement or order, by each Bank
Regulatory Authority having jurisdiction over such Insured Subsidiary.
SECTION 6.06. Regulation U. In the event the proceeds of any Loans are used
by any Borrower for the purpose (whether immediate, incidental or ultimate) of
buying or carrying Margin Stock, such Borrower will not permit at any time
more than 25% of the value (determined in accordance with Regulation U) of the
assets of such Borrower (if any) which are subject to Section 6.01 or 6.02 to
constitute Margin Stock.
ARTICLE VII
EVENTS OF DEFAULT
Upon the occurrence of any of the following events ("Events of Default"):
(a) any Borrower shall default in the payment of any principal of
any Loan when and as the same shall become due and payable, whether at
the due date thereof or at a date fixed for prepayment thereof or by
acceleration thereof or otherwise; or
(b) any Borrower shall default in the payment of any interest on
any Loan or any Fee or any other amount (other than an amount referred to
in paragraph (a) above) due and payable by it hereunder, when and as the
same shall become due and payable, and such default shall continue
unremedied for a period of five days; or
(c) any representation or warranty made or deemed made by any
Borrower herein or which is contained in any certificate, document or
financial or other statement furnished at any time under or in connection
with this Agreement shall prove to have been false or misleading in any
material respect on or as of the date made, deemed made or furnished; or
(d) any Borrower shall default in the observance or performance of
any of its obligations under Article VI; or
(e) any Borrower shall default in the observance or performance of
any of its other obligations in any Loan Document (other than those
specified in (a), (b) or (d) above), and such default shall continue
unremedied for a period of 30 days after notice of such default is given
by the Administrative Agent or any Lender to such Borrower; or
(f) any Borrower or any Subsidiary thereof shall (i) default in any
payment of any amount of principal of or interest on any Indebtedness the
aggregate principal amount of which Indebtedness is in excess of
$50,000,000 (or its equivalent in any other Currency or Currencies),
beyond the period of grace, if any, provided in the instrument or
agreement under which such Indebtedness was created; or (ii) default in
the observance or performance of any other agreement or condition
relating to any such Indebtedness (in excess of $50,000,000, or its
equivalent in any other Currency or Currencies, in the aggregate) or
contained in any instrument or agreement evidencing, securing or relating
thereto, or any other event shall occur or condition exist, the effect of
which default or other event or condition is to cause, or to permit the
holder or holders or beneficiary or beneficiaries of such Indebtedness
(or a trustee or agent on behalf of such holder or holders or beneficiary
or beneficiaries) to cause, with the giving of notice if required, such
Indebtedness to become due prior to its stated maturity; or
(g) (i) any Borrower or any Significant Subsidiary thereof shall
commence any case, proceeding or other action (A) under any existing or
future law of any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, liquidation, reorganization or relief of debtors,
seeking to have an order for relief entered with respect to it, or
seeking to adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to it or its debts,
or (B) seeking appointment of a conservator, receiver, trustee, custodian
or other similar official for it or for all or any substantial part of
its assets, or any Borrower or any Significant Subsidiary thereof shall
make a general assignment for the benefit of its creditors; or (ii) there
shall be commenced against any Borrower or any Significant Subsidiary
thereof any case, proceeding or other action of a nature referred to in
clause (i) above which (A) results in the entry of an order for relief or
in any such adjudication or appointment or (B) remains undismissed or
undischarged for a period of 60 days; or (iii) there shall be commenced
against any Borrower or any Significant Subsidiary thereof any case,
proceeding or other action seeking issuance of a warrant of attachment,
execution, distraint or similar process against all or any substantial
part of its assets which results in the entry of an order for any such
result which shall not have been vacated, discharged or stayed within 60
days from the entry thereof; or (iv) any Borrower or any Significant
Subsidiary thereof shall take any action in furtherance of, or indicating
its consent to, approval of, or acquiescence in, any of the acts set
forth in clause (i), (ii) or (iii) above;
(h) (i) a Reportable Event or Reportable Events, or a failure to
make a required installment or other payment (within the meaning of
Section 412(n)(1) of the Code), shall have occurred with respect to any
Plan or Plans that could result in liability of any Borrower to the PBGC
or to any Plan or Plans that could reasonably result in a Material
Adverse Effect and, within 30 days after the reporting of any such
Reportable Event to the Administrative Agent or after the receipt by the
Administrative Agent of a statement required pursuant to Section
5.09(b)(iii), the Administrative Agent shall have notified such Borrower
in writing that (A) the Required Lenders have made a determination that,
on the basis of such Reportable Event or Reportable Events or the failure
to make a required payment, there are reasonable grounds for the
termination of such Plan or Plans by the PBGC, the appointment by the
appropriate United States district court of a trustee to administer such
Plan or Plans or the imposition of a lien in favor of a Plan and (B) as a
result thereof an Event of Default exists hereunder; or (ii) a trustee
shall be appointed by a United States district court to administer any
such Plan or Plans and such appointment could reasonably result in a
Material Adverse Effect; or (iii) the PBGC shall institute proceedings
(including giving notice of intent thereof) to terminate any such Plan or
Plans and such termination could reasonably result in a Material Adverse
Effect; or
(i) one or more final judgments or decrees shall be entered against
any Borrower or any Significant Subsidiary thereof involving in the
aggregate a liability (not paid or fully covered by insurance) of
$50,000,000 (or its equivalent in any other Currency or Currencies) or
more and all such judgments or decrees shall not have been vacated,
discharged, paid in full or stayed within 30 days from entry thereof; or
(j) the OCC shall, pursuant to 12 U.S.C. 55 or any successor
statute, notify MBNA America Bank that its capital stock has become
impaired; or MBNA America Bank shall cease to be an insured bank under
the Federal Deposit Insurance Act, as amended, and the rules and
regulations promulgated thereunder; or
(k) MBNA America Bank shall be required (whether or not the time
allowed by the appropriate federal Bank Regulatory Authority for the
submission of such plan has been established or elapsed) to submit a
capital restoration plan of the type referred to in 12 U.S.C.
183lo(b)(2)(C), as amended, reenacted or redesignated from time to time;
or
(l) the Parent shall at any time fail to own and control,
beneficially and of record (free and clear of all Liens and other
encumbrances), directly or indirectly, at least 95% of the issued and
outstanding shares of capital stock of MBNA America Bank; or MBNA America
Bank shall at any time fail to own and control, beneficially and of
record (free and clear of all Liens and other encumbrances), directly or
indirectly, at least 95% of the issued and outstanding shares of capital
stock of MBNA International;
then, and in any such event, (a) if such event is an Event of Default
specified in clause (i) or (ii) of paragraph (g) above with respect to any
Borrower, the Commitments shall immediately and automatically terminate and
the Loans hereunder (with accrued interest thereon) and all other amounts
owing under any Loan Document shall immediately become due and payable, and
(b) if such event is any other Event of Default, either or both of the
following actions may be taken: (i) with the consent of the Required Lenders,
the Administrative Agent may, or upon the request of the Required Lenders, the
Administrative Agent shall, by notice to the Borrowers declare the Commitments
to be terminated forthwith, whereupon the Commitments shall immediately
terminate; and (ii) with the consent of the Required Lenders, the
Administrative Agent may, or upon the request of the Required Lenders, the
Administrative Agent shall, declare the Loans owing by such Borrower hereunder
(with accrued interest thereon) and all other amounts owing by such Borrower
under the Loan Documents to be due and payable forthwith, whereupon the same
shall immediately become due and payable, in the case of each of (a) and (b),
without presentment, demand, protest or any other notice of any kind, all of
which are hereby expressly waived notwithstanding anything contained herein or
in any other Loan Document.
Notwithstanding the foregoing, the occurrence of an Event of Default
under paragraph (c), (d) or (e) of this Article VII solely with respect to the
Parent shall not permit the Administrative Agent or the Required Lenders
(a) to declare the principal amount then outstanding of, and the accrued
interest on, the Loans to MBNA America Bank or MBNA International or any other
amounts payable by MBNA America Bank or MBNA International hereunder to be
forthwith due and payable or (b) to terminate the Commitments (except with
respect to a termination of the Commitments insofar as the same relate to
Loans to be made to the Parent).
ARTICLE VIII
THE ADMINISTRATIVE AGENT
Bank of America, N.A. is hereby appointed to act as Administrative Agent on
behalf of the Lenders. Each of the Lenders hereby irrevocably authorizes the
Administrative Agent to take such actions on behalf of such Lender or holder
and to exercise such powers as are specifically delegated to the
Administrative Agent by the terms and provisions hereof, together with such
actions and powers as are reasonably incidental thereto. The Administrative
Agent is hereby expressly authorized by the Lenders, without hereby limiting
any implied authority, (a) to receive on behalf of the Lenders all payments of
principal of and interest on the Loans and all other amounts due to the
Lenders hereunder, and promptly to distribute to each Lender its proper share
of each payment so received; (b) to give notice on behalf of each of the
Lenders to any Borrower of any Event of Default of which the Administrative
Agent has actual knowledge acquired in connection with its agency hereunder;
and (c) to distribute to each Lender copies of all notices, financial
statements and other materials delivered by the Borrowers pursuant to this
Agreement as received by the Administrative Agent.
Neither the Administrative Agent nor any of its directors, officers, employees
or agents shall have any fiduciary duty hereunder or be liable as such for any
action taken or omitted by any of them except for its or his or her own gross
negligence or willful or intentional misconduct, or be responsible for any
statement, warranty or representation herein or the contents of any document
delivered in connection herewith, or be required to ascertain or to make any
inquiry concerning the performance or observance by any Borrower of any of the
terms, conditions, covenants or agreements contained in this Agreement. The
Administrative Agent shall not be responsible to the Lenders for the due
execution, genuineness, validity, enforceability or effectiveness of this
Agreement or other such instruments or agreements. The Administrative Agent
may deem and treat the Lender which makes any Loan as the holder of the
indebtedness resulting therefrom for all purposes hereof until it shall have
received notice from such Lender, given as provided herein, of the transfer
thereof. The Administrative Agent shall in all cases be fully protected in
acting, or refraining from acting, in accordance with written instructions
signed by the Required Lenders and, except as otherwise specifically provided
herein, such instructions and any action or inaction pursuant thereto shall be
binding on all the Lenders. The Administrative Agent shall, in the absence of
knowledge to the contrary, be entitled to rely on any instrument or document
believed by it in good faith to be genuine and correct and to have been signed
or sent by the proper person or persons. Neither the Administrative Agent nor
any of its directors, officers, employees or agents shall have any
responsibility to any Borrower on account of the failure of or delay in
performance or breach by any Lender of any of its obligations hereunder or to
any Lender on account of the failure of or delay in performance or breach by
any other Lender or any Borrower of any of their respective obligations
hereunder or in connection herewith. The Administrative Agent may execute any
and all duties hereunder by or through agents or employees and shall be
entitled to rely upon the advice of legal counsel selected by it with respect
to all matters arising hereunder and shall not be liable for any action taken
or suffered in good faith by it in accordance with the advice of such counsel.
The Lenders hereby acknowledge that the Administrative Agent shall be under no
duty to take any discretionary action permitted to be taken by it pursuant to
the provisions of this Agreement unless it shall be requested in writing to do
so by the Required Lenders or as otherwise expressly provided in Article VII.
Subject to the appointment and acceptance of a successor Administrative Agent
as provided below, the Administrative Agent may resign at any time by
notifying the Lenders and the Borrowers. Upon any such resignation, the
Required Lenders shall have the right to appoint a successor Administrative
Agent acceptable to the Borrowers; provided, that no such acceptance by the
Borrowers shall be required so long as an Event of Default has occurred and is
continuing. If no successor shall have been so appointed by the Required
Lenders and shall have accepted such appointment within 30 days after the
retiring Administrative Agent gives notice of its resignation, then the
retiring Administrative Agent shall, on behalf of the Lenders, appoint a
successor Administrative Agent which shall be a bank with an office in New
York, New York, having a combined capital and surplus of at least $500,000,000
reasonably acceptable to the Borrowers. Upon the acceptance of any
appointment as Administrative Agent hereunder by a successor bank, such
successor shall succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Administrative Agent and the retiring
Administrative Agent shall be discharged from its duties and obligations
hereunder. After the Administrative Agent's resignation, the provisions of
this Article shall continue in effect for its benefit in respect of any
actions taken or omitted to be taken by it while it was acting as
Administrative Agent.
With respect to the Loans made by it hereunder, the Administrative Agent in
its individual capacity and not as Administrative Agent shall have the same
rights and powers as any other Lender and may exercise the same as though it
were not the Administrative Agent, and the Administrative Agent and its
Affiliates may accept deposits from, lend money to and generally engage in any
kind of business with the Borrowers or any Subsidiary or other Affiliate
thereof as if it were not the Administrative Agent.
Each Lender agrees (i) to reimburse the Administrative Agent, on demand, in
the amount of its pro rata share (based on its Commitment hereunder or, if the
Commitments shall have been terminated, the amount of its outstanding Loans)
of any expenses incurred for the benefit of the Lenders by the Administrative
Agent, including counsel fees and compensation of agents and employees paid
for services rendered on behalf of the Lenders, which shall not have been
reimbursed by the Borrowers and (ii) to indemnify and hold harmless the
Administrative Agent and any of its directors, officers, employees or agents,
on demand, in the amount of such pro rata share, from and against any and all
liabilities, taxes, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever which may be imposed on, incurred by or asserted against it in its
capacity as the Administrative Agent in any way relating to or arising out of
this Agreement or any action taken or omitted by it under this Agreement to
the extent the same shall not have been reimbursed by the Borrowers; provided
that no Lender shall be liable to the Administrative Agent for any portion of
such liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from the gross negligence or
willful or intentional misconduct of the Administrative Agent or any of its
directors, officers, employees or agents.
Each Lender acknowledges that it has, independently and without reliance upon
the Administrative Agent or any other Lender and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon the Administrative Agent or any
other Lender and based on such documents and information as it shall from time
to time deem appropriate, continue to make its own decisions in taking or not
taking action under or based upon this Agreement or any related agreement or
any document furnished hereunder or thereunder.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Notices. Notices and other communications provided for herein
shall be in writing and shall be delivered by hand or overnight courier
service, mailed or sent by telecopy as follows:
(a) if to any Borrower, to it at MBNA America Bank, N.A., 1100
North King Street, Wilmington, DE 19884, Attention of Thomas D. Wren
(Telecopy No. 302-456-8545) and Investment and Funding Support (Telecopy
No. 302-457-0172);
(b) if to the Administrative Agent, to it at 901 Main Street, 66th
Floor, Dallas, TX 75202, Attention of Mary Pat Riggins (Telephone No. 214-
209-0585, Facsimile No. 214-209-0604); and
(c) if to a Lender, to it at its address (or telecopy number) set
forth in the Administrative Questionnaire delivered to the Administrative
Agent by such Lender in connection with the execution of this Agreement
or in the Assignment and Acceptance pursuant to which such Lender shall
have become a party hereto or at such other address as shall be specified
in writing by such Lender to the Administrative Agent from time to time.
All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given on
the date of receipt if delivered by hand or overnight courier service or sent
by telecopy, or on the date five Business Days after dispatch by certified or
registered mail if mailed, in each case delivered, sent or mailed (properly
addressed) to such party as provided in this Section 9.01 or in accordance
with the latest unrevoked direction from such party given in accordance with
this Section 9.01.
SECTION 9.02. Survival of Agreement. All covenants, agreements,
representations and warranties made by each Borrower herein and in the
certificates or other instruments prepared or delivered in connection with or
pursuant to this Agreement or any other Loan Document shall be considered to
have been relied upon by the Lenders and shall survive the making by the
Lenders of the Loans, regardless of any investigation made by the Lenders or
on their behalf, and shall continue in full force and effect as long as the
principal of or any accrued interest on any Loan or any Fee or any other
amount payable under this Agreement or any other Loan Document is outstanding
and unpaid and so long as the Commitments have not been terminated.
SECTION 9.03. Binding Effect. This Agreement shall become effective when it
shall have been executed by the Borrowers and the Administrative Agent and
when the Administrative Agent shall have received copies hereof which, when
taken together, bear the signatures of each Lender, and thereafter shall be
binding upon and inure to the benefit of the Borrowers, the Administrative
Agent and each Lender and their respective successors and assigns, except that
no Borrower shall have the right to assign its rights hereunder or any
interest herein without the prior consent of all the Lenders.
SECTION 9.04. Successors and Assigns.
(a) Whenever in this Agreement any of the parties hereto is
referred to, such reference shall be deemed to include the successors and
assigns of such party; and all covenants, promises and agreements by or on
behalf of the Borrowers, the Administrative Agent or the Lenders that are
contained in this Agreement shall bind and inure to the benefit of their
respective successors and assigns.
(b) Each Lender may assign to one or more assignees all or a portion of its
interests, rights and obligations under this Agreement (including all or a
portion of its Commitment and the Loans at the time owing to it by any
Borrower); provided, however, that (i) except in the case of an assignment to
a Lender or an Affiliate of a Lender (other than any such Affiliate
substantially all the business of which is a credit card business), the
relevant Borrower and the Administrative Agent must give their prior written
consent to such assignment (which consent shall not be unreasonably withheld),
provided, that no such consent of any Borrower shall be required so long as an
Event of Default of the kind referred to in clauses (a) or (g) of Article VII
shall have occurred and be continuing, (ii) each such assignment shall be of a
constant, and not a varying, percentage of all the assigning Lender's rights
and obligations under this Agreement, (iii) the amount of the Commitment of
the assigning Lender subject to each such assignment (determined as of the
date the Assignment and Acceptance with respect to such assignment is
delivered to the Administrative Agent) shall not be less than $5,000,000 and
the amount of the Commitment of such Lender remaining after such assignment
shall not be less than $5,000,000 or shall be zero, (iv) the parties to each
such assignment shall execute and deliver to the Administrative Agent an
Assignment and Acceptance, and a processing and recordation fee of $3,500 and
(v) the assignee, if it shall not be a Lender, shall deliver to the
Administrative Agent an Administrative Questionnaire. Upon acceptance by the
Administrative Agent of any such Assignment and Acceptance, from and after the
effective date specified in such Assignment and Acceptance, which effective
date shall be at least five Business Days after the execution thereof, (A) the
assignee thereunder shall be a party hereto and, to the extent of the interest
assigned by such Assignment and Acceptance, have the rights and obligations of
a Lender under this Agreement, (B) the assigning Lender thereunder shall, to
the extent of the interest assigned by such Assignment and Acceptance, be
released from its obligations under this Agreement (and, in the case of an
Assignment and Acceptance covering all or the remaining portion of an
assigning Lender's rights and obligations under this Agreement, such Lender
shall cease to be a party hereto (but shall continue to be entitled to the
benefits of Sections 2.14, 2.16, 2.20 and 9.05, as well as to any Fees accrued
for its account hereunder and not yet paid)) and (C) Schedule 2.01 shall be
deemed amended to give effect to the assignment effected thereby.
Notwithstanding the foregoing, any Lender assigning its rights and obligations
under this Agreement may retain any Competitive Loans made by it outstanding
at such time, and in such case shall retain its rights hereunder in respect of
any Loans so retained until such Loans have been repaid in full in accordance
with this Agreement.
(c) By executing and delivering an Assignment and Acceptance, the assigning
Lender thereunder and the assignee thereunder shall be deemed to confirm to
and agree with each other and the other parties hereto as follows: (i) such
assigning Lender warrants that it is the legal and beneficial owner of the
interest being assigned thereby free and clear of any adverse claim created by
it, (ii) except as set forth in (i) above, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or any other instrument or document furnished pursuant hereto, or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement or any other instrument or document furnished pursuant
hereto or the financial condition of any Borrower or the performance or
observance by any Borrower of any of its obligations under this Agreement or
any other instrument or document furnished pursuant hereto; (iii) such
assignee represents and warrants that it is legally authorized to enter into
such Assignment and Acceptance; (iv) such assignee confirms that it has
received a copy of this Agreement, together with copies of the most recent
financial statements delivered pursuant to Section 5.01 and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into such Assignment and Acceptance; (v) such
assignee will independently and without reliance upon the Administrative
Agent, such assigning Lender or any other Lender and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under this Agreement; (vi)
such assignee appoints and authorizes the Administrative Agent to take such
action as Administrative Agent on its behalf and to exercise such powers under
this Agreement as are delegated to the Administrative Agent by the terms
hereof, together with such powers as are reasonably incidental thereto; and
(vii) such assignee agrees that it will perform in accordance with their terms
all the obligations which by the terms of this Agreement are required to be
performed by it as a Lender.
(d) The Administrative Agent shall maintain a copy of each Assignment and
Acceptance delivered to it and a register for the recordation of the names and
addresses of the Lenders, and the Commitment of, and the principal amount of
the Loans owing to, each Lender pursuant to the terms hereof from time to time
(the "Register"). The entries in the Register shall be conclusive in the
absence of manifest error and the Borrowers, the Administrative Agent and the
Lenders may treat each Person whose name is recorded in the Register pursuant
to the terms hereof as a Lender hereunder for all purposes of this Agreement.
The Register shall be available for inspection by each party hereto, at any
reasonable time and from time to time upon reasonable prior notice.
(e) Upon its receipt of a duly completed Assignment and Acceptance executed
by an assigning Lender and an assignee together with an Administrative
Questionnaire completed in respect of the assignee (unless the assignee shall
already be a Lender hereunder), the processing and recordation fee referred to
in paragraph (b) above and, if required, the written consent of the relevant
Borrower to such assignment, the Administrative Agent shall (i) accept such
Assignment and Acceptance and (ii) record the information contained therein in
the Register.
(f) Each Lender may sell participations to one or more banks or other
entities in all or a portion of its rights and obligations under this
Agreement (including all or a portion of its Commitment and the Loans owing to
it); provided, however, that (i) such Lender's obligations under this
Agreement shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such
obligations, (iii) each participating bank or other entity shall be entitled
to the benefit of the cost protection provisions contained in Sections 2.14,
2.15, 2.16 and 2.20 to the same extent as if it were the selling Lender (and
limited to the amount that could have been claimed by the selling Lender had
it continued to hold the interest of such participating bank or other entity),
except that all claims made pursuant to such Sections shall be made through
such selling Lender, and (iv) the Borrowers, the Administrative Agent and the
other Lenders shall continue to deal solely and directly with such selling
Lender in connection with such Lender's rights and obligations under this
Agreement, and such Lender shall retain the sole right to enforce the
obligations of the Borrowers relating to the Loans and to approve, without the
consent of or consultation with any participant, any amendment, modification
or waiver of any provision of this Agreement (other than amendments,
modifications or waivers which would decrease the Fees payable hereunder or
increase the amount of principal of or decrease the rate at which interest is
payable on the Loans, or extend the dates fixed for payments of principal of
or interest on the Loans or Fees).
(g) Any Lender or participant may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this
Section, disclose to the assignee or participant or proposed assignee or
participant any information relating to the Borrowers furnished to such
Lender; provided that, prior to any such disclosure, each such assignee or
participant or proposed assignee or participant shall execute an agreement
whereby such assignee or participant shall agree (subject to customary
exceptions) to preserve the confidentiality of any such information.
(h) No Borrower shall assign or delegate any of its rights and duties
hereunder without the prior written consent of all Lenders.
(i) Any Lender may at any time pledge all or any portion of its rights under
this Agreement to a Federal Reserve Bank without the consent of the
Administrative Agent or the Borrowers; provided that no such pledge shall
release any Lender from its obligations hereunder or substitute any such
Federal Reserve Bank for such Lender as a party hereto. In order to
facilitate such an assignment to a Federal Reserve Bank, each Borrower shall,
at the request of the assigning Lender, duly execute and deliver to the
assigning Lender a promissory note or notes evidencing the Loans made to such
Borrower by the assigning Lender hereunder.
SECTION 9.05. Expenses; Indemnity.
(a) Each Borrower agrees to pay all reasonable out-of-pocket
expenses incurred by the Administrative Agent and Chase Securities Inc., as
lead arranger, in connection with the preparation, negotiation, execution and
delivery of this Agreement (subject to the limitations set forth in the
commitment letter dated February 8, 2000 from The Chase Manhattan Bank and
Chase Securities Inc. to the Borrowers) or any amendments, modifications or
waivers of the provisions hereof, or incurred by the Administrative Agent or
any Lender in connection with the enforcement or protection of their rights in
connection with this Agreement or any other Loan Document or in connection
with the Loans made hereunder, including the reasonable fees and disbursements
of counsel for the Administrative Agent and an additional counsel for the
other Lenders (including, the reasonable allocated costs of in-house counsel)
and, in addition, fees and disbursements of appropriate local counsel.
(b) Each Borrower agrees to indemnify the Administrative Agent, each Lender,
each of their Affiliates and the directors, officers, employees and
Administrative Agents of the foregoing (each such Person being called an
"Indemnitee") against, and to hold each Indemnitee harmless from, any and all
losses, claims, damages, liabilities and related expenses, including
reasonable counsel fees and expenses (including the reasonable allocated costs
of in-house counsel), incurred by or asserted against any Indemnitee arising
out of (i) the execution or delivery of this Agreement or any other Loan
Document or any agreement or instrument contemplated hereby or thereby, the
performance by the parties hereto or thereto of their respective obligations
hereunder or thereunder or the consummation of the transactions contemplated
hereby or thereby, (ii) the use of the proceeds of the Loans or (iii) any
claim, litigation, investigation or proceeding relating to any of the
foregoing, whether or not any Indemnitee is a party thereto; provided that
such indemnity shall not, as to any Indemnitee, be available to the extent
that such losses, claims, damages, liabilities or related expenses are finally
determined by a court of competent jurisdiction to have resulted from the
gross negligence or willful or intentional misconduct of such Indemnitee or
arose as a result of a dispute between the Administrative Agent or any of the
Lenders or any litigation brought by any securityholder of the Administrative
Agent or the Lenders in its capacity as such.
(c) The provisions of this Section and of Sections 2.14(b), 2.14(c), 2.14(d),
2.14(e) and 2.16 shall remain operative and in full force and effect
regardless of the expiration of the term of this Agreement, the consummation
of the transactions contemplated hereby, the repayment of any of the Loans,
the invalidity or unenforceability of any term or provision of this Agreement
or any investigation made by or on behalf of the Administrative Agent or any
Lender. All amounts due under this Section shall be payable on written demand
therefor.
SECTION 9.06. Applicable Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK.
SECTION 9.07. Waivers; Amendment.
(a) No failure or delay of the Administrative Agent or any Lender
in exercising any power or right hereunder shall operate as a waiver thereof,
nor shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Administrative Agent and the
Lenders hereunder are cumulative and are not exclusive of any rights or
remedies which they would otherwise have. No waiver of any provision of this
Agreement or consent to any departure therefrom shall in any event be
effective unless the same shall be permitted by paragraph (b) below, and then
such waiver or consent shall be effective only in the specific instance and
for the purpose for which given. No notice or demand on any Borrower or any
Subsidiary thereof in any case shall entitle such party to any other or
further notice or demand in similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be waived, amended or
modified except pursuant to an agreement or agreements in writing entered into
by the Borrowers and the Required Lenders; provided, however, that no such
agreement shall (i) decrease the principal amount of, or extend the maturity
of or any scheduled principal payment date or date for the payment of any
interest on any Loan, or waive or excuse any such payment or any part thereof,
or decrease the rate of interest on any Loan, without the prior written
consent of each Lender directly affected thereby, (ii) increase or extend the
duration of the Commitment or decrease the amount or extend the date of
payment of the Facility Fee or Utilization Fee of any Lender without the prior
written consent of such Lender, (iii) release any of the obligations of MBNA
America Bank under Section 2.22 (other than in accordance with the terms
thereof) or (iv) amend or modify the provisions of Section 2.11(e), 2.17 or
9.04(h), the provisions of this Section or the definition of "Required
Lenders", in each case without the prior written consent of each Lender;
provided further, however, that no such agreement shall amend, modify or
otherwise affect the rights or duties of the Administrative Agent hereunder
without the prior written consent of the Administrative Agent. Each Lender
shall be bound by any waiver, amendment or modification authorized by this
Section and any consent by any Lender pursuant to this Section shall bind any
prospective assignee or participant of its rights and interests hereunder.
SECTION 9.08. Entire Agreement. This Agreement constitutes the entire
contract among the parties relative to the subject matter hereof. Any
previous agreement among the parties with respect to the subject matter hereof
is superseded by this Agreement. Nothing in this Agreement, expressed or
implied, is intended to confer upon any party other than the parties hereto
any rights, remedies, obligations or liabilities under or by reason of this
Agreement.
SECTION 9.09. Severability. In the event any one or more of the provisions
contained in this Agreement should be held invalid, illegal or unenforceable
in any respect, the validity, legality and enforceability of the remaining
provisions contained herein shall not in any way be affected or impaired
thereby. The parties shall endeavor in good-faith negotiations to replace the
invalid, illegal or unenforceable provisions with valid provisions the
economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
SECTION 9.10. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original but all of which when
taken together shall constitute but one contract, and shall become effective
as provided in Section 9.03.
SECTION 9.11. Headings. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of
this Agreement and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.
SECTION 9.12. Right of Setoff. If an Event of Default shall have occurred
and be continuing and the Loans shall have been accelerated pursuant to
Article VII, each Lender is hereby authorized at any time and from time to
time, to the fullest extent permitted by law, to set off and apply any and all
deposits (general or special, time or demand, provisional or final) at any
time held and other indebtedness at any time owing by such Lender to or for
the credit or the account of any Borrower against any and all the obligations
of such Borrower now or hereafter existing under this Agreement held by such
Lender, irrespective of whether or not such Lender shall have made any demand
under this Agreement and although such obligations may be unmatured. Each
Lender agrees promptly to notify the Borrowers after such setoff and
application made by such Lender, but the failure to give such notice shall not
affect the validity of such setoff and application. The rights of each Lender
under this Section are in addition to other rights and remedies (including,
without limitation, other rights of setoff) which such Lender may have.
SECTION 9.13. Jurisdiction; Consent to Service of Process.
(a) Each Borrower hereby irrevocably and unconditionally submits,
for itself and its property, to the nonexclusive jurisdiction of any New York
State court or Federal court of the United States of America sitting in New
York City, and any appellate court from any thereof, in any action or
proceeding arising out of or relating to this Agreement, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the
extent permitted by law, in such Federal court. Each of the parties hereto
agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by law. Subject to the foregoing and to
paragraph (b) below, nothing in this Agreement shall affect any right that any
party hereto may otherwise have to bring any action or proceeding relating to
this Agreement against any other party hereto in the courts of any
jurisdiction.
(b) Each Borrower hereby irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection which
it may now or hereafter have to the laying of venue of any action or
proceeding arising out of or relating to this Agreement in any New York State
or Federal court. Each of the parties hereto hereby irrevocably waives, to
the fullest extent permitted by law, the defense of an inconvenient forum to
the maintenance of such action or proceeding in any such court.
(c) Each party to this Agreement other than MBNA International
irrevocably consents to service of process in the manner provided for notices
in Section 9.01. MBNA International hereby appoints MBNA America Bank, with
an office on the date hereof at the address for notices specified in Section
9.01(a), as its agent to receive on behalf of MBNA International service of
copies of the summons and complaint and any other process which may be served
in any such action or proceeding brought in the State of New York. MBNA
America Bank hereby accepts such appointment as is set forth in this
Section 9.13(c) and agrees that (i) it will not terminate such agency
relationship prior to one year after the payment in full of the principal of
and interest on the Loans made to MBNA International, (ii) it will give the
Administrative Agent prompt notice of any change of its address during such
period and (iii) it will promptly forward to MBNA International any summons,
complaint or other legal process that MBNA America Bank receives in connection
with its appointment as process agent of MBNA International. MBNA
International agrees that the failure of MBNA America Bank to give any notice
of any such service of process to MBNA International shall not impair or
affect the validity of such service or, to the extent permitted by applicable
law, the enforcement of any judgment based thereon. Such appointment shall be
irrevocable until the final payment of all amounts payable under this
Agreement, except that if for any reason MBNA America Bank ceases to be able
to act as such, MBNA International will, by an instrument reasonably
satisfactory to the Administrative Agent, appoint another Person in the
Borough of Manhattan as such process agent subject to the approval (which
approval shall not be unreasonably withheld) of the Administrative Agent.
MBNA International covenants and agrees that it shall take any and all
reasonable action, including the execution and filing of any and all
documents, that may be necessary to continue the designation of a process
agent pursuant to this Section in full force and effect and to cause MBNA
America Bank to act as such. Nothing in this Agreement will affect the right
of any party to this Agreement to serve process in any other manner permitted
by law.
(d) To the extent that MBNA International may be or become entitled
to claim for itself or its property, assets or revenues any immunity on the
ground of sovereignty or the like from suit, court jurisdiction, attachment
prior to judgment, attachment in aid of execution of a judgment or execution
of a judgment, and to the extent that in any such jurisdiction there may be
attributed such an immunity (whether or not claimed), MBNA International
hereby irrevocably agrees not to claim and hereby irrevocably waives such
immunity with respect to its obligations under this Agreement and the other
Loan Documents.
SECTION 9.14. Waiver of Jury Trial. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS AGREEMENT. Each party hereto (a) certifies
that no representative, agent or attorney of any other party has represented,
expressly or otherwise, that such other party would not, in the event of
litigation, seek to enforce the foregoing waiver and (b) acknowledges that it
and other parties hereto have been induced to enter into this Agreement by,
among other things, the mutual waivers and certification in this Section.
SECTION 9.15. Confidentiality. Each Lender agrees (a) to keep confidential
any written or oral information (i) provided to it by or on behalf of the
Borrowers or any of them or any of their Subsidiaries pursuant to or in
connection with this Agreement or (ii) obtained by such Lender based on a
review of the books and records of the Borrowers or any of them or any of
their Subsidiaries and (b) to use such information on its own behalf solely in
connection with such Lender's administration of its Commitment and Loans;
provided that nothing herein shall prevent any Lender from disclosing any such
information (i) to the Administrative Agent or any other Lender, (ii) to any
prospective transferee which agrees to comply with the provisions of this
Section and, in the case of a prospective assignee, the relevant Borrower
shall have consented to such prospective assignment to the extent required by
Section 9.04(b), (iii) to its employees, directors, agents, attorneys,
accountants and other professional advisors, (iv) to such of the officers,
directors, employees, agents, independent auditors and representatives of such
Lender or any of its Affiliates as need to know such information in connection
with such Lender's administration of its Commitment and Loans (provided such
persons referred to in the foregoing clauses (b)(i), (ii), (iii) and (iv) are
informed of the confidential nature of the information and the restrictions
imposed by this subsection), (v) upon the request or demand of any
Governmental Authority having jurisdiction over such Lender, (vi) in response
to any order of any court or other Governmental Authority or as may otherwise
be required pursuant to any Requirement of Law or (vii) to the extent
necessary or advisable in connection with any suit, action or proceeding in
connection with the enforcement of rights hereunder, provided that such Lender
shall give the Borrowers prior notification of such disclosure to the extent
the Borrowers are not a party to such proceeding.
SECTION 9.16 Judgment Currency. This is an international loan transaction in
which the specification of Dollars or an Alternative Currency, as the case may
be (the "Specified Currency"), and any payment in New York City or the country
of the Specified Currency, as the case may be (the "Specified Place"), is of
the essence, and the Specified Currency shall be the currency of account in
all events relating to Loans denominated in the Specified Currency. The
payment obligations of the Borrowers under this Agreement shall not be
discharged by an amount paid in another currency or in another place, whether
pursuant to a judgment or otherwise, to the extent that the amount so paid on
conversion to the Specified Currency and transfer to the Specified Place under
normal banking procedures does not yield the amount of the Specified Currency
at the Specified Place due hereunder. If for the purpose of obtaining
judgment in any court it is necessary to convert a sum due hereunder in the
Specified Currency into another currency (the "Second Currency"), the rate of
exchange which shall be applied shall be that at which in accordance with
normal banking procedures the Administrative Agent could purchase the
Specified Currency with the Second Currency on the Business Day next preceding
that on which such judgment is rendered. The obligation of each Borrower in
respect of any such sum due from it to the Administrative Agent or any Lender
hereunder shall, notwithstanding the rate of exchange actually applied in
rendering such judgment, be discharged only to the extent that on the Business
Day following receipt by the Administrative Agent or such Lender, as the case
may be, of any sum adjudged to be due hereunder in the Second Currency to the
Administrative Agent or such Lender, as the case may be, may in accordance
with normal banking procedures purchase and transfer to the Specified Place
the Specified Currency with the amount of the Second Currency so adjudged to
be due; and each Borrower hereby, as a separate obligation and notwithstanding
any such judgment, agrees to indemnify the Administrative Agent or such
Lender, as the case may be, against, and to pay the Administrative Agent or
such Lender, as the case may be, on demand in the Specified Currency, any
difference between the sum originally due to the Administrative Agent or such
Lender, as the case may be, in the Specified Currency and the amount of the
Specified Currency so purchased and transferred.
SECTION 9.17 Regulation U. Each Lender represents and warrants that in
extending or maintaining credit hereunder, it, in good faith, has not relied
and will not rely upon any Margin Stock as collateral.
IN WITNESS WHEREOF, the Borrowers, the Administrative Agent and the
Lenders have caused this Agreement to be duly executed by their respective
authorized officers as of the day and year first above written.
BORROWERS
MBNA AMERICA BANK, N.A.
By: /s/ David N. Schlesinger
---------------------------------------
Title: Executive Vice President
MBNA INTERNATIONAL BANK LIMITED
By: /s/ Duncan Akin
---------------------------------------
Title: First Vice President
MBNA CORPORATION
By: /s/ Vernon H. C. Wright
---------------------------------------
Title: Executive Vice President
LENDERS
THE CHASE MANHATTAN BANK
By: /s/ Roger Parker
---------------------------------------
Title: Vice President
BANK OF AMERICA, N.A.
By: /s/ Mary Pat Riggins
---------------------------------------
Title: Principal
BARCLAYS BANK PLC
By: /s/ Douglas Bernegger
---------------------------------------
Title: Director
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
By: /s/ Dennis Wilczek
---------------------------------------
Title: Associate
BANK ONE, NA
By: /s/ Steven D. Franklin
---------------------------------------
Title: First Vice President
CITIBANK, N.A.
By: /s/ Robert B. Goldstein
---------------------------------------
Title: Managing Director
CREDIT SUISSE FIRST BOSTON
By: /s/ Jay Chall
---------------------------------------
Title: Director
By: /s/ James H. Lee
---------------------------------------
Title: Assistant Vice President
ROYAL BANK OF CANADA
By: /s/ C.W. Evans
---------------------------------------
Title: Senior Account Manager
TORONTO DOMINION (TEXAS), INC.
By: /s/ Carol Brandt
---------------------------------------
Title: Vice President
LLOYDS TSB BANK PLC
By: /s/ Michael J. Gilligan
---------------------------------------
Title: Director, Financial Institutions
By: /s/ David Rodway
---------------------------------------
Title: Assistant Director
THE BANK OF NEW YORK
By: /s/ Patricia Aquaro
---------------------------------------
Title: Vice President
DEUTSCHE BANK AG, NEW YORK
AND/OR CAYMAN ISLANDS BRANCHES
By: /s/ Gayma Z. Shivnarain
---------------------------------------
Title: Director
By: /s/ Elizabeth Zieglmeier
---------------------------------------
Title: Managing Director
LEHMAN COMMERCIAL PAPER INC.
By: /s/ Michele Swanson
---------------------------------------
Title: Authorized Signatory
ABN AMRO BANK N.V.
By: /s/ Giovanni Fallone
---------------------------------------
Title: Group Vice President
By: /s/ Parker Douglas
---------------------------------------
Title: Group Vice President
BAYERISCHE HYPO-UND VEREINSBANK AG NEW YORK BRANCH
By: /s/ Michael F. Davis
---------------------------------------
Title: Associate Director
By: /s/ Karen von Ruffer
---------------------------------------
Title: Assistant Manager Bank
Relations
COMMERZBANK AG, NEW YORK AND GRAND CAYMAN
BRANCHES
By: /s/ Lawrence J. Manochio
---------------------------------------
Title: Assistant Treasurer
By: /s/ Joseph J. Hayes
---------------------------------------
Title: Assistant Vice President
CREDIT AGRICOLE INDOSUEZ
By: /s/ Katherine L. Abbott
---------------------------------------
Title: First Vice President
By: /s/ Laurence F. Grant
---------------------------------------
Title: Vice President Senior
Relationship Manager
FIRST UNION NATIONAL BANK
By: /s/ Ward S. Johnson
---------------------------------------
Title: Vice President
FLEET BANK, N.A.
By: /s/ Robert T.P. Storer
---------------------------------------
Title: Senior Vice President
THE NORINCHUKIN BANK
By: /s/ Yoshiro Niiro
---------------------------------------
Title: General Manager
THE ROYAL BANK OF SCOTLAND PLC
By: /s/ Cleo Keary
---------------------------------------
Title: Regional Corporate
Director
SOCIETE GENERALE-NEW YORK BRANCH
By: /s/ Charles D. Fischer, Jr.
---------------------------------------
Title: Vice President
ALLFIRST BANK
By: /s/ Glenn Page
---------------------------------------
Title: Vice President
DG BANK
DEUTSCHE GENOSSENSCHAFTSBANK AG
By: /s/ Michael Campites
---------------------------------------
Title: Assistant Vice President
By: /s/ Norah McCann
---------------------------------------
Title: Senior Vice President
DRESDNER BANK AG, NEW YORK AND GRAND CAYMAN
BRANCHES
By: /s/ J. Curtain Beaudouin
---------------------------------------
Title: First Vice President
By: /s/ Stephen A. Kovach
---------------------------------------
Title: Assistant Vice President
THE INDUSTRIAL BANK OF JAPAN, LIMITED
By: /s/ Takuya Honjo
---------------------------------------
Title: Deputy General Manager
KBC BANK N.V.
By: /s/ Patrick J. Owens
---------------------------------------
Title: Vice President
By: /s/ Robert Snauffer
---------------------------------------
Title: First Vice President
MELLON BANK N.A.
By: /s/ David B. Wirl
---------------------------------------
Title: Assistant Vice President
MERRILL LYNCH BANK USA
By: /s/ Preston L. Jackson
---------------------------------------
Title: President & C.E.O.
BANCA MONTE DEI PASCHI DI SIENA S.P.A
By: /s/ Giulio Natalicchi
---------------------------------------
Title: Senior Vice President &
General Manager
By: /s/ Brian R. Landy
---------------------------------------
Title: Vice President
THE BANK OF TOKYO-MITSUBISHI TRUST CO.
By: /s/ Mark O'Connor
---------------------------------------
Title: Vice President
CIBC INC.
By: /s/ Robert Mendeles
---------------------------------------
Title: Executive Director
THE DAI-ICHI KANGYO BANK, LTD.
By: /s/ Nobuyasu Fukatsu
---------------------------------------
Title: General Manager
DEN DANSKE BANK
By: /s/ George Neofitidis
---------------------------------------
Title: Assistant Vice President
By: /s/ John A. O'Neill
---------------------------------------
Title: Vice President
WESTDEUTSCHE LANDESBANK GIROZENTRALE
By: /s/ Jay S. White
---------------------------------------
Title: Vice President
By: /s/ James J. Davendonis
---------------------------------------
Title: Manager
THE NORTHERN TRUST COMPANY
By: /s/ David J. Mitchell
---------------------------------------
Title: Vice President
SANWA BANK, LIMITED
By: /s/ Kazuya Kurano
---------------------------------------
Title: SVP & DGM
ADMINISTRATIVE AGENT
BANK OF AMERICA, N.A., as Administrative Agent
By: /s/ Mary Pat Riggins
---------------------------------------
Title: Principal
Schedule 2.01
MBNA ALLOCATIONS
Lender Commitment
- --------------------------------------------- ------------------
The Chase Manhattan Bank $135,000,000
Bank of America, N.A. $120,000,000
Barclays Bank PLC $120,000,000
Morgan Guaranty Trust Company of New York $120,000,000
Bank One, NA $95,000,000
Citibank, N.A. $95,000,000
Credit Suisse First Boston $95,000,000
Royal Bank of Canada $95,000,000
Toronto Dominion (Texas), Inc. $95,000,000
Lloyds TSB Bank plc $95,000,000
The Bank of New York $95,000,000
Deutsche Bank AG, New York and/or Cayman
Islands Branches $90,000,000
Lehman Commercial Paper Inc. $90,000,000
ABN AMRO Bank N.V. $65,000,000
Bayerische Hypo-und Vereinsbank AG New York
Branch $65,000,000
Commerzbank AG, New York and Grand Cayman
Branches $65,000,000
Credit Agricole Indosuez $65,000,000
First Union National Bank $65,000,000
Fleet Bank, N.A. $65,000,000
The Norinchukin Bank $65,000,000
The Royal Bank of Scotland plc $65,000,000
Societe Generale-New York Branch $65,000,000
Allfirst Bank $45,000,000
DG Bank Deutsche Genossenschaftsbank AG $45,000,000
Dresdner Bank AG, New York and Grand Cayman
Branches $45,000,000
The Industrial Bank of Japan, Limited $45,000,000
KBC Bank N.V. $45,000,000
Mellon Bank N.A. $45,000,000
Merrill Lynch Bank USA $45,000,000
Banca Monte Dei Paschi Di Siena S.P.A. $35,000,000
The Bank of Tokyo-Mitsubishi Trust Company $35,000,000
CIBC Inc. $35,000,000
The Dai-Ichi Kangyo Bank, Ltd. $35,000,000
Den Danske Bank $35,000,000
Westdeutsche Landesbank Girozentrale $35,000,000
The Northern Trust Company $25,000,000
Sanwa Bank, Limited $25,000,000
TOTAL $2,500,000,000
EXHIBIT A-1
FORM OF COMPETITIVE BID REQUEST
[Date]
Bank of America, N.A.,
as Administrative Agent
for the Lenders referred to below
901 Main Street
Dallas, TX 75202
Attention: CCS/Agency Services
Chris Levine, Tel. 214-209-1349, Fax 214-290-9410
Dear Ladies and Gentlemen:
The undersigned, [name of Borrower] (the "Borrower"), refers to the Senior
Competitive Advance and Revolving Credit Facility Agreement dated as of March
31, 2000 (as it may be amended, modified, extended or restated from time to
time, the "Credit Agreement"), among the Borrower, [list other Borrowers], the
Lenders parties thereto and Bank of America, N.A., as Administrative Agent.
Capitalized terms used herein and not otherwise defined herein shall have the
meanings assigned to such terms in the Credit Agreement. The Borrower hereby
gives you notice pursuant to Section 2.03(a) of the Credit Agreement that it
requests a Competitive Borrowing under the Credit Agreement, and in that
connection sets forth below the terms on which such Competitive Borrowing is
requested to be made:
(A) Date of Competitive Borrowing
(which is a Business Day)
------------------------
(B) Currency and Principal Amount of
Competitive Borrowing (1)
------------------------
(C) Interest rate basis (2)
------------------------
(D) Interest Period and the last
day thereof (3)
------------------------
(1) Not less than $5,000,000 (and in integral multiples of $1,000,000),
and not greater than the Total Commitment then available.
(2) Eurodollar Loan or Fixed Rate Loan.
(3) Which shall be subject to the definition of "Interest Period" and end
not later than the Maturity Date.
Upon acceptance of any or all of the Loans offered by the Banks in response to
this request, the Borrower shall be deemed to have represented and warranted
that the conditions to lending specified in Sections 4.02(b) and 4.02(c) of
the Credit Agreement have been satisfied.
Very truly yours,
[NAME OF BORROWER]
By:
-----------------------------
Title: [Responsible Officer]
[MBNA America Bank hereby
confirms its obligations under
Section 2.22 of the Credit Agreement
after giving effect to the Borrowing
by MBNA International requested
in this notice of borrowing:
MBNA AMERICA BANK, N.A.
By:
-------------------------
Name:
Title:
(4) Insert if MBNA International is the Borrower.
EXHIBIT A-2
FORM OF NOTICE OF COMPETITIVE BID REQUEST
[Date]
[Name of Lender]
[Address]
Attention:
Dear Ladies and Gentlemen:
Reference is made to the Senior Competitive Advance and Revolving Credit
Facility Agreement dated as of March 31, 2000 (as it may be amended, modified,
extended or restated from time to time, the "Credit Agreement"), among [name
of Borrower] (the "Borrower"), [list other Borrowers], the Lenders parties
thereto and Bank of America, N.A., as Administrative Agent. Capitalized terms
used herein and not otherwise defined herein shall have the meanings assigned
to such terms in the Credit Agreement. The Borrower made a Competitive Bid
Request on [ ], 200[ ], pursuant to Section 2.03(a) of the Credit
Agreement, and in that connection you are invited to submit a Competitive Bid
by [Date]/[Time].(1) Your Competitive Bid must comply with Section 2.03(b) of
the Credit Agreement and the terms set forth below on which the Competitive
Bid Request was made:
(A) Requesting Borrower
------------------------
(B) Date of Competitive Borrowing
------------------------
(C) Currency and Principal amount of
Competitive Borrowing
------------------------
(D) Interest rate basis
------------------------
(E) Interest Period and the last
day thereof
------------------------
(1) The Competitive Bid must be received by the Adminstrative Agent (i)
in the case of Eurodollar Loans in any Currency or Fixed Rate Loans in any
Currency other than Dollars, not later than 9:30 a.m. Local Time, three
Business Days before the proposed Competitive Borrowing, and (ii) in the case
of Fixed Rate Loans in Dollars, not later than 9:30 a.m. Local Time, on the
day of a proposed Competitive Borrowing.
Very truly yours,
BANK OF AMERICA, N.A., as Administrative Agent
By
--------------------------------------
Name:
Title:
EXHIBIT A-3
FORM OF COMPETITIVE BID
[Date]
Bank of America, N.A.,
as Administrative Agent for
the Lenders referred to below
901 Main Street
Dallas, TX 75202
Attention: CCS/Agency Services
Chris Levine, Tel. 214-209-1349, Fax 214-290-9410
Dear Ladies and Gentlemen:
The undersigned, [Name of Lender], refers to the Senior Competitive Advance
and Revolving Credit Facility Agreement dated as of March 31, 2000 (as it may
be amended, modified, extended or restated from time to time, the "Credit
Agreement"), among MBNA America Bank, N.A., MBNA International Bank Limited
and MBNA Corporation (each, a "Borrower" and collectively, the "Borrowers"),
the Lenders parties thereto and Bank of America, N.A., as Administrative
Agent. Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to such terms in the Credit Agreement. The
undersigned hereby makes a Competitive Bid pursuant to Section 2.03(b) of the
Credit Agreement, in response to the Competitive Bid Request made by the [name
of requesting Borrower] on [ ], 200[ ], and in that connection
sets forth below terms on which such Competitive Bid is made:
(A) Requesting Borrower
------------------------
(B) Principal Amount and Currency (1)
------------------------
(C) Competitive Bid Rate (2)
------------------------
(D) Interest Period and the last
day thereof
------------------------
(1) Not less than $5,000,000 and not greater than the requested
Competitive Borrowing and in integral multiples of $1,000,000. Multiple bids
will be accepted by the Administrative Agent.
(2) i.e., LIBO Rate + or 1 [ ]%, in the case of Eurodollar Loans or [ ]%
in the case of Fixed Rate Loans.
The undersigned hereby confirms that it is prepared, subject to the conditions
set forth in the Credit Agreement, to extend credit to the requesting Borrower
upon acceptance by such Borrower of this Competitive Bid in accordance with
Section 2.03(d) of the Credit Agreement.
Very truly yours,
[NAME OF LENDER]
By
--------------------------------
Title:
EXHIBIT A-4
FORM OF COMPETITIVE BID ACCEPT/REJECT LETTER
[Date]
Bank of America, N.A.,
as Administrative Agent for
the Lenders referred to below
901 Main Street
Dallas, TX 75202
Attention: CCS/Agency Services
Chris Levine, Tel. 214-209-1349, Fax 214-290-9410
Dear Ladies and Gentlemen:
The undersigned refers to the Senior Competitive Advance and Revolving Credit
Facility Agreement dated as of March 31, 2000 (as it may be amended, modified,
extended or restated from time to time, the "Credit Agreement"), among MBNA
America Bank, N.A., MBNA International Bank Limited and MBNA Corporation
(each, a "Borrower" and collectively, the "Borrowers"), the Lenders parties
thereto and Bank of America, N.A., as Administrative Agent for the Lenders.
In accordance with Section 2.03(c) of the Credit Agreement, we have received a
summary of Competitive Bids in connection with our Competitive Bid Request
dated [ ], 200[ ] and in accordance with Section 2.03(d) of the Credit
Agreement, we hereby accept the following Competitive Bids for maturity on
[date]:
Currency and Principal Amount Fixed Rate/Margin Lender
- ----------------------------- ------------------ -------
[%] / [+/-. %]
We hereby reject the following Competitive Bids:
Currency and Principal Amount Fixed Rate/Margin Lender
- ----------------------------- ------------------ -------
[%] / [+/-. %]
The [insert amount and Currency] should be remitted to the undersigned on
[date] as follows:
[SPECIFY WIRE TRANSFER INSTRUCTIONS]
Very truly yours,
[NAME OF BORROWER]
By
------------------------------
Name:
Title:
[MBNA America Bank hereby
confirms its obligations under
Section 2.22 of the Credit Agreement
after giving effect to the Borrowings
accepted by MBNA International
in this letter:
MBNA AMERICA BANK, N.A.
By:
------------------------
Name:
Title:](1)
(1) Insert if MBNA International is the accepting Borrower.
EXHIBIT A-5
FORM OF REVOLVING CREDIT BORROWING REQUEST
[Date]
Bank of America, N.A.,
as Administrative Agent for
the Lenders referred to below
901 Main Street
Dallas, TX 75202
Attention: CCS/Agency Services
Chris Levine, Tel. 214-209-1349, Fax 214-290-9410
Dear Ladies and Gentlemen:
The undersigned refers to the Senior Competitive Advance and Revolving Credit
Facility Agreement dated as of March 31, 2000 (as it may be amended, modified,
extended or restated from time to time, the "Credit Agreement"), among MBNA
America Bank, N.A., MBNA International Bank Limited and MBNA Corporation
(each, a "Borrower" and collectively, the "Borrowers"), the Lenders parties
thereto and Bank of America, N.A., as Administrative Agent. Capitalized terms
used herein and not otherwise defined herein shall have the meanings assigned
to such terms in the Credit Agreement. The undersigned hereby gives you
notice pursuant to Section 2.04 of the Credit Agreement that it requests a
Revolving Credit Borrowing under the Credit Agreement, and in that connection
sets forth below the terms on which such Revolving Credit Borrowing is
requested to be made:
(A) Requesting Borrower
------------------------
(B) Date of Revolving Credit
Borrowing (which is a Business
Day)
------------------------
(C) Currency and Principal Amount of
Revolving Credit Borrowing (1)
------------------------
(D) Interest rate basis (2)
------------------------
(1) Not less than $5,000,000 (and in integral multiples of $1,000,000),
and not greater than the Total Commitment then available.
(E) Interest Period and the last
day thereof (3) ------------------------
The proceeds of the requested Revolving Credit Borrowing shall be
remitted as follows:
[SPECIFY]
Upon acceptance of any or all of the Loans made by the Lenders in response to
this request, the Borrower shall be deemed to have represented and warranted
that the conditions to lending specified in Sections 4.02(b) and 4.02(c) of
the Credit Agreement have been satisfied.
Very truly yours,
[NAME OF REQUESTING BORROWER]
By
------------------------------
Title: [Responsible Officer]
[MBNA America Bank hereby
confirms its obligations under
Section 2.22 of the Credit Agreement
after giving effect to the Borrowings
accepted by MBNA International
in this letter:
MBNA AMERICA BANK, N.A.
By: ________________________
Name:
Title:](4)
(2) Eurodollar Loan or ABR Loan.
(3) Which shall be subject to the defintion of "Interest Period" and end
not later than the Maturity Date.
(4) Insert if MBNA International is the requesting Borrower.
ADMINISTRATIVE DETAILS REPLY FORM
MBNA CONFIDENTIAL
- ------------------------------------------------------------------------------
EXHIBIT B
[FORM OF ADMINISTRATIVE QUESTIONNAIRE]
- ------------------------------------------------------------------------------
Bank of America LOG
ADMINISTRATIVE DETAILS REPLY FORM
MBNA CONFIDENTIAL
- ------------------------------------------------------------------------------
FAX TO: STACY GEE, FAX#: 312/828-7448
I. Borrowers Names: MBNA America Bank, MBNA International, and MBNA
Corporation $2,500,000,000 Revolving Credit Facility
II. Legal Name of Lender for Signature Page:
---------------------------
III. Name of Lender for any eventual tombstone:
---------------------------
IV. Domestic Address: V. Eurodollar Address:
- ------------------------------------ ------------------------------------
- ------------------------------------ ------------------------------------
VI. Contact Information:
Credit Contact Operations Contact Legal Counsel
Name:
------------------- ------------------- -------------------
Title:
------------------- ------------------- -------------------
Address:
------------------- ------------------- -------------------
Telephone:
------------------- ------------------- -------------------
Facsimile:
------------------- ------------------- -------------------
E Mail Address
------------------- ------------------- -------------------
- ------------------------------------------------------------------------------
Bank of America LOG
ADMINISTRATIVE DETAILS REPLY FORM
MBNA CONFIDENTIAL
- ------------------------------------------------------------------------------
L/C Contact Draft Documentation
Contact
Name:
------------------- -------------------
Title:
------------------- -------------------
Address:
------------------- -------------------
------------------- -------------------
------------------- -------------------
Telephone:
------------------- -------------------
Facsimile:
------------------- -------------------
E Mail Address
------------------- -------------------
------------------- -------------------
VII. Lender's Fed Wire Payment Instructions:
Pay to:
-------------------------------------------------------------
(Name of Lender)
-------------------------------------------------------------
(ABA#) (City/State)
-------------------------------------------------------------
(Account #) (Account Name)
-------------------------------------------------------------
(Attention)
- ------------------------------------------------------------------------------
Bank of America LOG
ADMINISTRATIVE DETAILS REPLY FORM
MBNA CONFIDENTIAL
- ------------------------------------------------------------------------------
VIII. Lender's Standby L/C Fed Wire Payment Instructions (if applicable):
Pay to:
-------------------------------------------------------------
(Name of Lender)
-------------------------------------------------------------
(ABA#) (City/State)
-------------------------------------------------------------
(Account #) (Account Name)
-------------------------------------------------------------
(Attention)
IX. Organizational Structure:
Foreign Br., organized under which laws, etc.
-------------------------------
Lender's Tax ID:
-------------------------------
Tax withholding Form Attached (For Foreign Buyers)
[ ] Form W-9
[ ] Form W-8
[ ] Form 4224 effective:
------------------
[ ] Form 1001
[ ] W/Hold % Effective
----------- -----------
[ ] Form 4224 on file with Bank of America from previous current years
transaction
-------------------
- ------------------------------------------------------------------------------
Bank of America LOG
ADMINISTRATIVE DETAILS REPLY FORM
MBNA CONFIDENTIAL
- ------------------------------------------------------------------------------
X. Bank of America Payment Instructions:
Servicing Site: Dallas, TX
Pay to: Bank of America, N.A.
ABA #111000012
Dallas, TX
Acct. #1292000883
Attn: CCS/Agency Services
Ref: MBNA
XI. Name of Authorized Officer:
---------------------------------------------
Name:
---------------------------------------------
Signature:
---------------------------------------------
Date:
---------------------------------------------
- ------------------------------------------------------------------------------
Bank of America LOG
EXHIBIT C
[FORM OF]
ASSIGNMENT AND ACCEPTANCE
Reference is made to the Senior Competitive Advance and Revolving Credit
Facility Agreement dated as of March 31, 2000 (as in effect on the date
hereof, the "Credit Agreement") among MBNA America Bank, N.A., MBNA
International Bank Limited and MBNA Corporation (each, a "Borrower" and
collectively, the "Borrowers"), the Lenders parties thereto (the "Lenders")
and Bank of America, N.A., as Administrative Agent for the Banks (in such
capacity, the "Administrative Agent"). Terms defined in the Credit Agreement
are used herein with the same meanings.
1. The Assignor hereby sells and assigns, without recourse, to the Assignee,
and the Assignee hereby purchases and assumes, without recourse, from the
Assignor, effective as of the Effective Date set forth on the second page
hereof, the interests set forth on the second page hereof (the "Assigned
Interest") in the Assignor's rights and obligations under the Credit
Agreement, including, without limitation, the interests set forth on the
second page hereof in the Commitment of the Assignor on the Effective Date and
the Competitive Loans and Revolving Credit Loans owing to the Assignor which
are outstanding on the Effective Date, together with unpaid interest accrued
on the assigned Loans to the Effective Date and the amount, if any, set forth
on the second page hereof of the Fees accrued to the Effective Date for the
account of the Assignor. Each of the Assignor and the Assignee hereby makes
and agrees to be bound by all the representations, warranties and agreements
set forth in Section 9.04(c) of the Credit Agreement, a copy of which has been
received by each such party. From and after the Effective Date (i) the
Assignee shall be a party to and be bound by the provisions of the Credit
Agreement and, to the extent of the interests assigned by this Assignment and
Acceptance, have the rights and obligations of a Lender thereunder and under
the other Loan Documents and (ii) the Assignor shall, to the extent of the
interests assigned by this Assignment and Acceptance, relinquish its rights
and be released from its obligations under the Credit Agreement.
2. This Assignment and Acceptance is being delivered to the Administrative
Agent together with (i) if the Assignee is organized under the laws of a
jurisdiction outside the United States, the forms specified in Section 2.20(g)
and (h) of the Credit Agreement (as applicable), duly completed and executed
by such Assignee, (ii) if the Assignee is not already a Lender under the
Credit Agreement, an Administrative Questionnaire in the form of Exhibit B to
the Credit Agreement and (iii) a processing and recordation fee of $3,500.
3. This Assignment and Acceptance shall be governed by and construed in
accordance with the laws of the State of New York.
Date of Assignment:
Legal Name of Assignor:
Legal Name of Assignee:
Assignee's Address for Notices:
Effective Date of Assignment
(may not be fewer than 5 Business
Days after the Date of Assignment):
Percentage Assigned of
Facility/Commitment
(set forth, to at
least 8 decimals, as a
Principal Amount Assigned percentage of the
(and identifying information Facility and the
as to individual aggregate Commitments
Facility Competitive Loans) of all Lenders thereunder
- ----------------------- ---------------------------- -------------------------
Commitment Assigned: $ %
Revolving Credit Loans:
Competitive Loans:
Fees Assigned (if any):
The terms set forth above and on the reverse
side hereof are hereby agreed to: Accepted (1)
, as Assignor BANK OF AMERICA, N.A., as
- ---------------- Administrative Agent
By:
--------------------------------
Name:
Title:
By:
, as Assignee -------------------------
- ---------------- Name:
Title:
By:
--------------------------------
Name:
Title:
MBNA AMERICA BANK, N.A.
By:
----------------------------
Name:
Title:
(1) To be completed only if consents are required under Section 9.04(a)
- ------------------------------------------------------------------------------
Bank of America LOG
MBNA INTERNATIONAL BANK LIMITED
By:
----------------------------
Name:
Title:
MBNA CORPORATION
By:
----------------------------
Name:
Title:
- ------------------------------------------------------------------------------
Bank of America LOG
EXHIBIT D
[FORM OF COMMITMENT INCREASE LETTER]
COMMITMENT INCREASE LETTER
[Date]
MBNA America Bank, N.A.
MBNA International Bank Limited
MBNA Corporation
1100 North King Street
Wilmington, Delaware 19884
Bank of America, N.A.,
as Administrative Agent
901 Main Street
Dallas, TX 75202
Attention: Mary Pat Riggins
Ladies and Gentlemen:
Reference is made to the Senior Credit Agreement dated as of March
31, 2000 (as modified and supplemented and in effect from time to time, the
"Credit Agreement") among MBNA America Bank, N.A., MBNA International Bank
Limited and MBNA Corporation, the lenders party thereto and Bank of America,
N.A., as Administrative Agent. Terms used but not defined herein have the
respective meanings given to such terms in the Credit Agreement.
This Commitment Increase Letter is delivered pursuant to
Section 2.12 of the Credit Agreement.
If, prior to the execution and delivery of this Commitment Increase
Letter, the undersigned is a Lender already party to the Credit Agreement,
then the undersigned hereby agrees that, effective as of the Commitment
Increase Date set forth below, the Commitment of such Lender set forth below
is increased by an amount equal to the "Commitment Increase Amount" set forth
below.
If, prior to the execution and delivery of this Commitment Increase
Letter, the undersigned is not a Lender already party to the Credit Agreement,
then the undersigned hereby agrees that, effective as of the Commitment
Increase Date set forth below, the undersigned shall have a Commitment set
forth below in an amount equal to the "Commitment Increase Amount" set forth
below.
Commitment Increase Date: ,
------------ -----
Commitment Increase Amount: $
------------------
The undersigned agrees with the Borrowers and the Administrative
Agent that the undersigned will, from and after the Commitment Increase Date,
be a "Lender" under the Credit Agreement (if not already a "Lender"
thereunder) and perform all of the obligations of the undersigned as a
"Lender" under the Credit Agreement in respect of the Commitment Increase
Amount (together with, if already a "Lender" under the Credit Agreement, the
Commitment of the Lender in effect immediately prior to the execution and
delivery of this Commitment Increase Letter).
This Commitment Increase Letter shall be governed by and construed in
accordance with the law of the State of New York without reference to choice
of law doctrine.
Very truly yours,
[INSERT NAME OF LENDER]
By
-------------------------
Title:
EXHIBIT E-1
[FORM OF OPINION OF SPECIAL NEW YORK COUNSEL
TO THE BORROWERS]
[Closing Date]
To: The Lenders named in Schedule I that are parties
to the Credit Agreement referred to below
Bank of America, N.A., as Administrative Agent under said Credit
Agreement
Ladies and Gentlemen:
We have acted as special New York counsel to each of MBNA America Bank, N.A.,
MBNA International Bank Limited and MBNA Corporation (each, a "Borrower" and
collectively, the "Borrowers"), in connection with the preparation, execution
and delivery of the Senior Competitive Advance and Revolving Credit Facility
Agreement dated as of March 31, 2000 (the "Credit Agreement") among the
Borrowers, the lenders party thereto and Bank of America, N.A., as
administrative agent for such lenders (the "Administrative Agent").
This opinion is delivered to you pursuant to Section 4.01 of the Credit
Agreement. Unless otherwise defined herein, terms defined in the Credit
Agreement and used herein shall have the meanings given to them in the Credit
Agreement.
In arriving at the opinion expressed below, we have examined the following
documents:
(a) counterparts of the Credit Agreement, each signed by the
Borrowers and the Administrative Agent;
(b) a copy of the opinion letter of (1) John W. Scheflen, Esq.,
Vice Chairman, General Counsel and Cashier of MBNA America Bank and
Executive Vice President, Chief Counsel and Corporate Secretary of the
Parent, (2) Donna Pumfrey, Esq., General Counsel of MBNA International
and (3) Clifford Chance LLP, each addressed to you and dated the date
hereof, in respect of the Credit Agreement and the other Loan Documents.
In rendering the opinion expressed below, we have assumed, with your
permission, without independent investigation or inquiry, (i) the authenticity
of all documents submitted to us as originals, (ii) the genuineness of all
signatures on all documents that we examined and (iii) the conformity to
authentic originals of documents submitted to us as certified, conformed or
photostatic copies.
Insofar as our opinion expressed below relates to the matters set forth in the
aforementioned opinion letters of John W. Scheflen, Esq., Donna Pumfrey, Esq.
and Clifford Chance LLP (other than as to matters opined upon below), we have
assumed without independent investigation the correctness of the matters set
forth in such opinions, and our opinion is subject to the assumptions,
qualifications and limitations set forth in such opinion letters.
Based upon and subject to the foregoing, and subject to the qualifications and
limitations stated herein, we are of the opinion that, insofar as the law of
the State of New York is concerned, the Credit Agreement constitutes valid and
legally binding obligations of each Borrower, enforceable against each
Borrower in accordance with its terms, subject to (i) the effects of
bankruptcy, insolvency, liquidation, receivership, conservatorship, fraudulent
conveyance, reorganization, moratorium and other similar laws relating to or
affecting the rights of creditors generally or of creditors of banks in the
relevant jurisdiction, (ii) general equitable principles (whether considered
in a proceeding in equity or at law), (iii) an implied covenant of good faith
and fair dealing and (iv) the effects of the possible judicial application of
foreign laws or foreign governmental or judicial action affecting creditors'
rights.
Our opinion is subject to the following qualifications:
1. We express no opinion as to any indemnification obligations of
the Borrowers under the Credit Agreement to the extent such obligations
might be deemed to be inconsistent with public policy.
2. We express no opinion as to the provisions of Sections 2.18 and
9.04 of the Credit Agreement purporting to grant to participants a right
to set-off.
3. We express no opinion as to any provision of the Credit
Agreement that purports to establish an evidentiary standard for
determinations by the Lenders or the Administrative Agent.
4. We express no opinion with respect to any provision of the
Credit Agreement which relates to choice of law or forum selection
(including, without limitation, any waiver of any objection to venue in
any court or of any objection that a court is an inconvenient forum). In
connection with provisions of the Credit Agreement whereby the Borrowers
submit to the jurisdiction of any Federal court of the United States of
America sitting in New York City, we note the limitations of 28 U.S.C.
Sections 1331 and 1332 on Federal court jurisdiction, and we also note
that such submissions cannot supersede such court's discretion in
determining whether to transfer an action from one Federal court to
another under 28 U.S.C. Section 1404(a).
We are members of the Bar of the State of New York, and we do not express any
opinion herein concerning any law other than the law of the State of New York.
This opinion has been rendered solely for your benefit in connection with the
Credit Agreement and the transactions contemplated thereby and may not be
relied upon by you for any other purpose, or relied upon by or furnished to
any other Person, firm or corporation without our prior written consent
(except that this opinion may be furnished to any regulatory authority which
is entitled to obtain it, and may be furnished pursuant to a lawful subpoena).
Very truly yours,
SIMPSON THACHER & BARTLETT
THE LENDERS
The Chase Manhattan Bank
Bank of America, N.A.
Barclays Bank PLC
Morgan Guaranty Trust Company of New York
Bank One, NA
Citibank, N.A.
Credit Suisse First Boston
Royal Bank of Canada
The Toronto-Dominion Bank
Lloyds TSB Bank plc
The Bank of New York
Deutsche Bank AG
Lehman Brothers
ABN AMRO Bank N.V.
Bayerische Hypo-und Vereinsbank AG
Commerzbank AG
Credit Agricole Indosuez
First Union National Bank
Fleet National Bank
The Norinchukin Bank
The Royal Bank of Scotland plc
Societe Generale
Allfirst Bank
Deutsche Genossenschaftsbank AG
Dresdner Bank AG, New York and Grand Cayman Branches
The Industrial Bank of Japan, Limited
KBC Bank N.V.
Mellon Bank N.A.
Merrill Lynch Bank USA
Banca Monte Dei Paschi Di Siena
The Bank of Tokyo-Mitsubishi Trust Co.
Canadian Imperial Bank of Commerce
The Dai-Ichi Kangyo Bank, Ltd.
Den Danske Bank
Westdeutsche Landesbank Girozentrale
The Northern Trust Company
Sanwa Bank, Limited
EXHIBIT E-2
[FORM OF OPINION OF SPECIAL UK COUNSEL TO MBNA INTERNATIONAL]
[Closing Date]
To: Bank of America, N.A. as Administrative Agent and the Lenders (as defined
below)
Dear Sirs:
Senior competitive advance and revolving credit facility agreement dated as of
31 March 2000 between Bank of America, N.A. as administrative agent, the
financial institutions named therein as Lenders and MBNA America Bank, N.A.,
MBNA International Bank Limited and MBNA Corporation, as borrowers (the
"Credit Agreement")
We have acted as English legal advisers on the instructions of MBNA
International Bank Limited ("MBNA International") in connection with the
Credit Agreement.
1. INTRODUCTION
1.1 Finance Documents
The opinions given in this Opinion Letter relate to the Credit Agreement.
1.2 Defined Terms
In this Opinion Letter:
1.2.1 "Lenders" means any bank or financial institution which is a
"Lender" under the Credit Agreement as at the date of this Opinion
Letter; and
1.2.2 headings in this Opinion Letter are for ease of reference only and
shall not affect its interpretation.
1.3 Legal Review
For the purpose of issuing this Opinion Letter we have reviewed only the
documents and completed only the searches and enquiries referred to in
Schedule 1 (Documents and Enquiries) to this Opinion Letter.
1.4 Applicable Law
The opinions given in this Opinion Letter relate only to English law as
applied by the English courts as at today's date. We express no opinion
in this Opinion Letter on the laws of any other jurisdiction.
1.5 Assumptions and Reservations
The opinions given in this Opinion Letter are given on the basis of the
assumptions set out in Schedule 2 (Assumptions) and are subject to the
reservations set out in Schedule 3 (Reservations) to this Opinion Letter.
The opinions given in this Opinion Letter are strictly limited to the
matters stated in paragraph 2 (Opinions) and do not extend to any other
matters.
2. OPINIONS
We are of the opinion that:
2.1 Proper Legal Form
The Credit Agreement is in proper legal form under English law for the
enforcement thereof against MBNA International under English law.
2.2 Legal, Valid, Binding and Enforceable Obligations
If the Credit Agreement were stated to be governed by English law, it
would constitute legal, valid, binding and enforceable obligations of
MBNA International.
2.3 Further Acts
All formalities required under English law for the validity and
enforceability of the Credit Agreement have been performed.
2.4 Registration Taxes
No stamp, registration or similar tax is required to be paid in England
on or in relation to the Credit Agreement.
2.5 Licences
It is not necessary under English law:
(i) in order to enable parties to the Credit Agreement to enforce their
rights thereunder, or
(ii) by reason of the execution, delivery or performance of the Credit
Agreement, that such parties to the Credit Agreement should be
licensed, qualified or entitled to carry on business in England.
2.6 Choice of Law
If the matter were to come before the courts of England and Wales, those
courts would recognise the choice of New York law to govern the contract,
subject to the provisions of the Contracts (Applicable Law) Act 1990 (the
"Act"). In summary, the Act allows parties to a contract to select the
law governing the contract, subject to the following principal
provisions:
2.6.1 the choice of law does not affect mandatory rules of English law;
and
2.6.2 a rule of New York law will not be applied if it would
be manifestly incompatible with English public policy.
2.7 Enforcement of Judgments
A judgment by a New York State court or by a Federal Court of the United
States of America sitting in New York City (together, the "New York
Courts") is not enforceable directly in England. In our opinion,
however, the English courts would enforce by separate action for the sum
payable a final and conclusive judgment given by the New York Courts for
a definitive sum of money (not being a sum payable in respect of taxes or
other charges of a like nature or in respect of a fine or other penalty),
unless:
2.7.1 the proceedings in which the judgment was given were opposed to
natural justice;
2.7.2 the judgment was obtained by fraud;
2.7.3 the enforcement of the judgment would be contrary to English
public policy;
2.7.4 before the date on which the New York Courts gave judgment, the
matter in dispute had been the subject of a final judgment
of another court having jurisdiction whose judgment is enforceable
in England;
2.7.5 the judgment is for multiple damages; or
2.7.6 is based on various provisions of the US Export Control
Regulations or of the Cuban Assets Control Regulations.
If the English court gives judgment for the sum payable under a judgment
of the New York Courts, the English judgment would be enforceable by the
methods generally available for the enforcement of English judgments.
These give the court a discretion whether to allow enforcement by any
particular method. In addition, it may not be possible to obtain an
English judgment or to enforce that judgment if the judgment debtor is
subject to any insolvency or similar proceedings, if there is a delay, or
if he has any set-off or counterclaim against the judgment creditor.
3. ADDRESSEES AND PURPOSE
This Opinion Letter is provided in connection with Section 4.01 of the
Credit Agreement and is addressed to the Administrative Agent and the
Lenders. It may not, without our prior written consent, be relied on for
any other purpose or be disclosed to or relied upon by any other person.
Yours faithfully,
CLIFFORD CHANCE LIMITED LIABILITY PARTNERSHIP
SCHEDULE 1
DOCUMENTS AND ENQUIRIES
1. DOCUMENTS
We have reviewed only the following documents for the purposes of this
Opinion Letter.
(a) A faxed copy of a draft dated [ ] of the Credit Agreement; and
(b) An opinion of internal counsel to MBNA International dated [ ].
2. SEARCHES AND ENQUIRIES
We have undertaken only the following search and enquiry in England for
the purposes of this Opinion Letter.
An enquiry by telephone was made at the Central Index of Winding Up
Petitions on [ ] at [ ] [a.m./p.m.] with respect to MBNA
International.
SCHEDULE 2
ASSUMPTIONS
The opinions in this Opinion Letter have been made on the following
assumptions.
1. ACCURACY OF OTHER OPINIONS
The opinions identified in paragraph 1 of Schedule 1 (Documents and
Enquiries) are correct in all respects.
2. ORIGINAL AND GENUINE DOCUMENTATION
(a) All signatures, stamps and seals are genuine, all original documents
are authentic and all copy documents are complete and conform to the
originals.
(b) Any document identified in Schedule 1 (Documents and Enquiries) as a
draft has been duly executed on the date specified in that document
by all parties to it in the form examined by us.
3. OBLIGATIONS OF THE PARTIES
(a) Each party to the Credit Agreement has the capacity, power and
authority to enter into and to exercise its rights and to perform
its obligations under the Credit Agreement.
(b) The execution and delivery of the Credit Agreement by MBNA
International and the exercise of its rights and performance of its
obligations under the Credit Agreement will sufficiently benefit and
is in the interests of MBNA International.
(c) The directors of MBNA International acted in good faith and in the
interests of MBNA International in approving the Credit Agreement
and the transactions contemplated thereby.
(d) The consideration granted by each promisee under the Credit
Agreement was sufficient and real. The consideration granted for
the entry into the Credit Agreement is not past consideration.
(e) Each party to the Credit Agreement has duly authorised, executed and
delivered the Credit Agreement.
4. SEARCHES AND ENQUIRIES
There has been no alteration in the status or condition of MBNA
International as disclosed by the searches and enquiries referred to in
Schedule 1 (Documents and Enquiries).
5. OTHER DOCUMENTS
Save for those listed in Schedule 1 (Documents and Enquiries), there is
no other agreement, instrument or other arrangement between any of the
parties to any of the Credit Agreement which modifies or supersedes the
Credit Agreement.
6. MISCELLANEOUS
(a) There is no matter under the laws of any jurisdiction (other than
England) which would, or might, affect the opinions herein
expressed.
(b) Under the laws of the respective places of establishment or
incorporation, as the case may be, of the persons expressed to be
party to the Credit Agreement, as each such document to which such
person is party constitutes legal, valid and binding obligations of
such person enforceable in accordance with its terms.
7. SOLVENCY
MBNA International is not unable to pay its debts within the meaning of
Section 123 of the Insolvency Act 1986 at the time it enters into the
Credit Agreement and will not, as a consequence of entering into the
Credit Agreement, be unable to pay its debts within the meaning of that
Section.
8. ENFORCEABILITY UNDER LAW OF STATE OF NEW YORK
The Credit Agreement constitutes legal, valid and binding obligations of
the parties to it, enforceable in accordance with its terms, under the
law of the State of New York.
SCHEDULE 3
RESERVATIONS
The opinions in this Opinion Letter are subject to the following reservations.
1. LIMITATIONS ARISING FROM INSOLVENCY LAW
(a) The opinions set out in this Opinion Letter are subject to any
limitations arising from insolvency, liquidation, administration,
reorganisation and similar laws generally affecting the rights of
creditors.
(b) The opinions set out in this Opinion Letter are subject to an
English court exercising its discretion under section 426 of the
Insolvency Act 1986 (Co-operation between courts exercising
jurisdiction in relation to insolvency) to assist the courts having
the corresponding jurisdiction in any other part of the United
Kingdom or any relevant country or territory.
(c) Any provision in the Credit Agreement which confers, purports to
confer or waives a right of set-off or similar right may be
ineffective against a liquidator or creditor.
2. ENFORCEABILITY OF CLAIMS
In this Opinion Letter "enforceable" means that an obligation is of a type
which the English courts enforce. It does not mean that those obligations
will be enforced in all circumstances in accordance with the terms of the
Credit Agreement. In particular:
(a) the power of an English court to order specific performance of an
obligation or other equitable remedy is discretionary and
accordingly, an English court might make an award of damages where
specific performance of an obligation or other equitable remedy is
sought;
(b) where any party to the Credit Agreement is vested with a discretion
or may determine a matter in its opinion, that party may be required
to exercise its discretion in good faith, reasonably and for a
proper purpose, and to form its opinion in good faith and on
reasonable grounds;
(c) enforcement may be limited by the provisions of English law
applicable to agreements held to have been frustrated by events
happening after its execution;
(d) claims may become barred under the Limitation Acts or may be or
become subject to a defence of set-off or counterclaim;
(e) an English court may stay proceedings if concurrent proceedings are
being brought elsewhere and may decline to accept jurisdiction in
certain cases;
(f) a party to a contract may be able to avoid its obligations under
that contract (and may have other remedies) where it has been
induced to enter into that contract by a misrepresentation and the
English courts will generally not enforce an obligation if there has
been fraud;
(g) whilst an English court has power to give judgment in a currency
other than pounds sterling, it has the discretion to decline to do
so; and
(h) any provision providing that any calculation, determination or
certification is to be conclusive and binding may not be effective
if such calculation, determination or certification is fraudulent or
manifestly incorrect and an English court may regard any
certification, determination or calculation as no more than prima
facie evidence.
3. APPLICATION OF FOREIGN LAW
(a) If any obligation is to be performed in a jurisdiction outside
England, it may not be enforceable in England to the extent that
performance would be illegal or contrary to public policy under the
laws of the other jurisdiction and an English court may take into
account the law of the place of performance in relation to the
manner of performance and to the steps to be taken in the event of
defective performance.
(b) It is uncertain whether the parties can agree in advance the
governing law of claims connected with the contract but which are
not claims on the contract, such as a claim in tort.
4. DEFAULT INTEREST AND INDEMNITIES BETWEEN PARTIES
(a) Any provision of the Credit Agreement requiring any person to pay
amounts imposed in circumstances of breach or default may be held to
be unenforceable on the grounds that it is a penalty.
(b) There is some possibility that an English court would hold that a
judgment on the Credit Agreement, whether given in an English court
or elsewhere, would supersede the Credit Agreement so that any
obligations relating to the payment of interest after judgment or
any currency indemnities would not be held to survive judgment.
(c) Any undertaking or indemnity given by a party to the Credit
Agreement in respect of stamp duties or registration taxes payable
in the United Kingdom may be void.
(d) An English court may in its discretion decline to give effect to any
indemnity for legal costs incurred by an unsuccessful litigant.
5. OTHER QUALIFICATIONS
(a) The parties to the Credit Agreement may be able to amend the Credit
Agreement by oral agreement despite any provision to the contrary
and the terms of the Credit Agreement may be subject to preceding
representations made by parties to the Credit Agreement.
(b) Any provision of the Credit Agreement which constitutes, or purports
to constitute, a restriction on the exercise of any statutory power
by any party to the Credit Agreement or any other person may be
ineffective.
(c) To the extent that any matter is expressly to be determined by
future agreement or negotiation, the relevant provision may be
unenforceable or void for uncertainty.
(d) The effectiveness of any provision of the Credit Agreement which
allows an invalid provision to be severed in order to save the
remainder of the Credit Agreement will be determined by the English
courts in their discretion.
(e) If any party to the Credit Agreement is controlled by a person or is
itself resident in, incorporated in or constituted under the laws of
a country which is the subject of United Nations sanctions as
implemented, then the obligations of the other parties to the Credit
Agreement to that party may be unenforceable or void.
EXHIBIT E-3
[FORM OF OPINION OF COUNSEL TO MBNA INTERNATIONAL]
[Closing Date]
The Lenders named in Schedule 2.01
to the Credit Agreement referred to below
Bank of America, N.A.,
as Administrative Agent under the Credit Agreement
901 Main Street
Dallas, TX 75202
Ladies and Gentlemen:
I am Donna Pumfrey, General Counsel of MBNA International Bank Limited ("MBNA
International") and in that capacity have acted as counsel to MBNA
International in connection with the Senior Competitive Advance and Revolving
Credit Facility Agreement (the "Credit Agreement"), dated as of March 31,
2000, among MBNA America Bank, MBNA International and MBNA Corporation (each,
a "Borrower" and collectively, the "Borrowers"), the Lenders party thereto,
and Bank of America, N.A., as Administrative Agent. This opinion is rendered
to the Lenders and the Administrative Agent pursuant to Section 4.01 of the
Agreement. Capitalized terms used herein but not otherwise defined have the
meanings given such terms in the Credit Agreement.
In my capacity as such counsel, I have examined and relied upon such records,
documents, certificates, opinions and other matters as are in my judgment
necessary or appropriate to render the opinions expressed herein. With
respect to all documents examined by me I have assumed (i) the due
authorization, execution and delivery by each of the parties thereto, other
than MBNA International, of the documents to which each is a party, and that
each of such parties has the power and authority to execute, deliver and
perform its obligations under each such document, (ii) the authenticity of all
documents submitted to me as originals, (iii) the genuineness of all
signatures on all documents I have examined, and (iv) that all documents
submitted to me as copies conform with the original copies of those documents.
In rendering the opinion set forth in the last sentence of paragraph 5 below,
I have assumed that the Credit Agreement is a valid and binding obligation of
the parties thereto, except with respect to MBNA International, and is
enforceable against the parties thereto in accordance with its terms
Based on the foregoing and subject to the qualifications set forth herein, I
am of the opinion that:
1. MBNA International is a private limited company and an authorized
institution under the Banking Act of 1987, duly formed and validly existing
under the laws of the United Kingdom. MBNA International (i) has all
requisite power and authority to own its assets and to carry on its business
as now conducted, except to the extent that the failure to do so would not
have a Material Adverse Effect, and (ii) has all requisite corporate power and
authority to execute, deliver and perform its obligations under the Credit
Agreement and to borrow thereunder.
2. The execution, delivery and performance by MBNA International of the
Credit Agreement and the borrowings of MBNA International thereunder
(collectively, the "Transactions") will not (i) conflict with, or result in a
breach of, any provision of any indenture, agreement or other instrument to
which MBNA International is a party or by which it or its property is or may
be bound, which in the aggregate would reasonably be expected to have a
Material Adverse Effect, or (ii) result in the creation or imposition of any
lien upon any property or assets of MBNA International.
3. The Credit Agreement has been duly authorized by all requisite corporate
action of MBNA International, and has been duly executed and delivered by MBNA
International.
4. No action, consent or approval of, registration or filing with, or any
other action by, any applicable Governmental Authority is or will be required
in connection with the Transactions, except such as have been made or obtained
and are in full force and effect.
5. The execution, delivery and performance by MBNA International of the
Credit Agreement and the borrowings of MBNA International thereunder will not
violate any requirement of law applicable to MBNA International or any order
known to me of any Governmental Authority.
6. There is no income, stamp or other tax, levy, assessment,
impost, deduction, charge or withholding of any kind imposed by the United
Kingdom (or any municipality or other political subdivision or taxing
authority thereof or therein that exercises de facto or de jure power to
impose such tax, levy, assessment, impost, deduction, charge or withholding)
either (i) on or by virtue of the execution or delivery of the Credit
Agreement or (ii) on any payment to be made by MBNA International pursuant to
the Credit Agreement, other than any such tax, levy, assessment, impost,
deduction, charge or withholding imposed on any Person as a result of such
Person being organized under the laws of the United Kingdom or by virtue of
its Applicable Lending Office being located in the United Kingdom. The
obligations of MBNA International under Section 2.20 of the Credit Agreement
are legal, valid and binding under the laws of the United Kingdom.
7. MBNA International is subject to civil and commercial law with
respect to its obligations under the Credit Agreement, and the making and
performance by it of the Credit Agreement constitute private and commercial
acts rather than public or governmental acts. Under the laws of the United
Kingdom, MBNA International is not entitled to any immunity on the grounds of
sovereignty or the like from the jurisdiction of any court or from any action,
suit or proceeding, or the service of process in connection therewith, arising
under the Credit Agreement.
I am admitted to practice in the United Kingdom and express no opinion as to
the laws of any other jurisdiction. The opinions given in this letter relate
only to English law as applied by the English courts as at today's date.
This opinion may be relied upon by the Lenders and Bank of America, N.A., as
Administrative Agent. A copy of this opinion may be made available to a
regulatory authority entitled to receive it or pursuant to a lawful subpoena.
Without my prior written consent, this opinion may not be furnished to or
quoted to, or relied upon by, any other person or entity for any purpose.
Very truly yours,
EXHIBIT E-4
[FORM OF OPINION OF COUNSEL TO MBNA AMERICA BANK AND THE PARENT]
[Closing Date]
The Lenders named in Schedule 2.01
to the Credit Agreement referred to below
Bank of America, N.A.,
as Administrative Agent under the Credit Agreement
901 Main Street
Dallas, TX 75202
Ladies and Gentlemen:
I am Executive Vice President, Chief Counsel and Corporate Secretary of MBNA
Corporation ("MBNA") and Vice Chairman, General Counsel and Cashier of MBNA
America Bank, N.A. (the "Bank" and, together with MBNA, the "Borrowers"), and
in that capacity have acted as counsel to the Borrowers in connection with the
Senior Competitive Advance and Revolving Credit Facility Agreement (the
"Credit Agreement"), dated as of March 31, 2000, among the Borrowers, MBNA
International Bank Limited, the Lenders party thereto and Bank of America,
N.A., as Administrative Agent. This opinion is rendered to the Lenders and
the Administrative Agent pursuant to Section 4.01 of the Agreement.
Capitalized terms used herein but not otherwise defined have the meanings
given such terms in the Credit Agreement.
In my capacity as such counsel, I have examined and relied upon such records,
documents, certificates, opinions and other matters as are in my judgment
necessary or appropriate to render the opinions expressed herein. With
respect to all documents examined by me I have assumed (i) the due
authorization, execution and delivery by each of the parties thereto, other
than the Borrowers, of the documents to which each is a party, and that each
of such parties has the power and authority to execute, deliver and perform
its obligations under each such document, (ii) the authenticity of all
documents submitted to me as originals, (iii) the genuineness of all
signatures, other than those of the Borrowers, on all documents I have
examined, and (iv) that all documents submitted to me as copies conform with
the original copies of those documents.
Based on the foregoing and subject to the qualifications set forth herein, I
am of the opinion that:
1. The Bank is a national bank duly formed and validly existing under the
laws of the United States. MBNA is a corporation duly formed and validly
existing under the laws of the State of Maryland. Each Borrower (i) has all
requisite power and authority to own its assets and to carry on its business
as now conducted, except to the extent that the failure to do so would not
have a Material Adverse Effect, (ii) is qualified to do business in every
jurisdiction within the United States where such qualification is required,
except to the extent that the failure to do so would not have a Material
Adverse Effect, and (iii) has all requisite corporate power and authority to
execute, deliver and perform its obligations under the Credit Agreement and to
borrow funds thereunder.
2. The execution, delivery and performance by each Borrower of the Credit
Agreement and the borrowings of each Borrower thereunder (collectively, the
"Transactions") will not (i) violate any requirement of law applicable to any
Borrower or any order known to me of any Governmental Authority, (ii) conflict
with, or result in a breach of, any provision of any indenture, agreement or
other instrument to which any Borrower is a party or by which it or its
property is or may be bound, which in the aggregate would reasonably be
expected to have a Material Adverse Effect, or (iii) result in the creation or
imposition of any lien upon any property or assets of any Borrower.
3. The Credit Agreement has been duly authorized by all requisite corporate
action of each Borrower, and has been duly executed and delivered by each
Borrower.
4. No action, consent or approval of, registration or filing with, or any
other action by, any Governmental Authority is or will be required in
connection with the Transactions, except such as have been made or obtained
and are in full force and effect.
5. No Borrower nor any of their subsidiaries is (i) an "investment company"
as defined in, or subject to regulation under, the Investment Company Act of
1940 or (ii) a "holding company" as defined in, or subject to regulation
under, the Public Utility Holding Company Act of 1935.
I am admitted to practice in the State of Maryland and express no opinion as
to the laws of any other jurisdiction other than the federal laws of the
United States of America.
This opinion may be relied upon by the Lenders and Bank of America, N.A., as
Administrative Agent. A copy of this opinion may be made available to a
regulatory authority entitled to receive it or pursuant to a lawful subpoena.
Without my prior written consent, this opinion may not be furnished to or
quoted to, or relied upon by, any other person or entity for any purpose.
Very truly yours,
John W. Sheflen
EXHIBIT E-5
[FORM OF OPINION OF SPECIAL NEW YORK COUNSEL
TO THE ADMINISTRATIVE AGENT]
[Closing Date]
Each of the Lenders party
to the Credit Agreement
referred to below
Bank of America, N.A.,
as Administrative Agent
901 Main Street
Dallas, TX 75202
Ladies and Gentlemen:
We have acted as special New York counsel to Bank of America, N.A.
("Bank of America") in connection with (i) the Senior Competitive Advance and
Revolving Credit Facility Agreement dated as of March 31, 2000 (the "Credit
Agreement") among MBNA America Bank, N.A., MBNA International Bank Limited and
MBNA Corporation (each, a "Borrower" and collectively, the "Borrowers"), the
Lenders party thereto and Bank of America, as Administrative Agent, providing
for loans to be made by the Lenders to the Borrowers in an aggregate principal
amount not exceeding $2,500,000,000 (or, to the extent specified in the Credit
Agreement, its equivalent in certain foreign currencies and as such amount may
be increased pursuant to Section 2.12 of the Credit Agreement) and (ii) the
various other agreements, instruments and other documents referred to in the
next following paragraph. Capitalized terms used but not defined herein have
the respective meanings given to such terms in the Credit Agreement. This
opinion letter is being delivered pursuant to Section 4.01 of the Credit
Agreement.
In rendering the opinions expressed below, we have examined the
following agreements, instruments and other documents:
(a) the Credit Agreement; and
(b) such records of the Borrowers and such other documents as we
have deemed necessary as a basis for the opinions expressed below.
The agreements, instruments and other documents referred to in clauses (a) and
(b) above are collectively referred to as the "Credit Documents".
In our examination, we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals and
the conformity with authentic original documents of all documents submitted to
us as copies. When relevant facts were not independently established, we have
relied upon representations made in or pursuant to the Credit Documents.
In rendering the opinions expressed below, we have assumed, with
respect to all of the documents referred to in this opinion letter, that:
(i) such documents have been duly authorized by, have been duly
executed and delivered by, and (except to the extent set forth in the
opinions below as to the Borrowers) constitute legal, valid, binding and
enforceable obligations of, all of the parties to such documents;
(ii) all signatories to such documents have been duly authorized;
and
(iii)all of the parties to such documents are duly organized and
validly existing and have the power and authority (corporate or other) to
execute, deliver and perform such documents.
Based upon and subject to the foregoing and subject also to the
comments and qualifications set forth below, and having considered such
questions of law as we have deemed necessary as a basis for the opinions
expressed below, we are of the opinion that each of the Credit Documents
constitutes the legal, valid and binding obligation of each Borrower,
enforceable against each Borrower in accordance with its terms, except as may
be limited by bankruptcy, fraudulent conveyance or transfer, insolvency,
receivership, conservatorship, reorganization, moratorium or other similar
laws relating to or affecting the rights of creditors generally (as such laws
would apply in the event of the insolvency, receivership, conservatorship or
reorganization of, or other similar occurrence with respect to, MBNA America
Bank or MBNA International) and except as the enforceability of the Credit
Documents is subject to the application of general principles of equity
(regardless of whether considered in a proceeding in equity or at law),
including, without limitation, (a) the possible unavailability of specific
performance, injunctive relief or any other equitable remedy and (b) concepts
of materiality, reasonableness, good faith and fair dealing.
The foregoing opinions are subject to the following comments and
qualifications:
(A) The enforceability of Section 9.05(b) of the Credit Agreement
may be limited by (i) laws rendering unenforceable indemnification
contrary to Federal or state securities laws and the public policy
underlying such laws and (ii) laws limiting the enforceability of
provisions exculpating or exempting a party from, or requiring
indemnification of a party for, liability for its own action or inaction,
to the extent the action or inaction involves gross negligence,
recklessness, willful misconduct or unlawful conduct.
(B) The enforceability of provisions in the Credit Documents to the
effect that terms may not be waived or modified except in writing may be
limited under certain circumstances.
(C) We express no opinion as to (i) the effect of the laws of any
jurisdiction in which any Lender is located (other than the State of New
York) that limit the interest, fees or other charges such Lender may
impose, (ii) the second sentence of Section 2.18 of the Credit Agreement,
(iii) Sections 9.09, 9.12 or 9.16 of the Credit Agreement, (iv)
Section 9.13(a) of the Credit Agreement, insofar as such provision
relates to the subject matter jurisdiction of any Federal court of the
United States of America sitting in New York City to adjudicate any
controversy related to any of the Credit Documents or (v) the second
sentence of Section 9.13(b) of the Credit Agreement, insofar as such
sentence relates to inconvenient forum with respect to proceedings in the
United States District Court for the Southern District of New York.
(D) We express no opinion as to the enforceability in the United
States of America of the waiver of immunity set forth in Section 9.13(d)
of the Credit Agreement, to the extent it applies to immunity acquired
after the date of the Credit Agreement.
(E) The first sentence of Section 2.22(b) may not be enforceable to
the extent that the Guaranteed Obligations are materially modified.
(F) We point out with reference to obligations stated to be payable
in a currency other than Dollars that (i) a New York statute provides
that a judgment rendered by a court of the State of New York in respect
of an obligation denominated in any such other currency would be rendered
in such other currency and would be converted into Dollars at the rate of
exchange prevailing on the date of entry of the judgment and (ii) a
judgment rendered by a Federal court sitting in the State of New York in
respect of an obligation denominated in any such other currency may be
expressed in Dollars, but we express no opinion as to the rate of
exchange such Federal court would apply.
(G) Our opinions above are subject, as to enforceability, with
respect to MBNA International, to the possible judicial application of
foreign laws or governmental action affecting the enforcement of
creditors' rights.
The foregoing opinions are limited to matters involving the Federal
laws of the United States and the law of the State of New York, and we do not
express any opinion as to the laws of any other jurisdiction (including
without limitation, the laws of England).
At the request of our client, this opinion letter is, pursuant to
Section 4.01 of the Credit Agreement, provided to you by us in our capacity as
special New York counsel to Bank of America and may not be relied upon by any
Person for any purpose other than in connection with the transactions
contemplated by the Credit Agreement without, in each instance, our prior
written consent.
Very truly yours,
WFC/RJW
EXHIBIT 10.2
1997 Long Term Incentive Plan and Policies, as amended
MBNA CORPORATION
1997 LONG TERM INCENTIVE PLAN
(as amended effective April 24, 2000 and restated)
1. Establishment
MBNA Corporation (the "Corporation") hereby establishes the 1997 LONG TERM
INCENTIVE PLAN (the "Plan"). The Plan permits the grant of stock options and
restricted share awards for shares of the Corporation's Common Stock ("Common
Stock").
2. Administration
The Plan shall be administered by the Board of Directors of the Corporation
or a committee ("Committee") of the Board of Directors. All references herein
to "Committee" shall mean the Board of Directors if no committee of the Board
of Directors is appointed or otherwise authorized to act on a particular
matter. The Committee shall have all power and authority necessary to
administer the Plan, including but not limited to the power to select persons
to participate in the Plan, determine the terms of grants made under the Plan,
interpret the Plan and adopt such policies for carrying out the Plan as it may
deem appropriate. The decisions of the Committee on all matters relating to the
Plan shall be conclusive.
3. Shares Available for the Plan; Limitations
(a) Shares of Common Stock may be issued by the Corporation pursuant to
incentive or nonqualified stock options or restricted share awards granted
under the Plan.
(b) On any given date, the maximum number of shares of Common Stock with
respect to which option and restricted share awards may be made pursuant to the
Plan shall be equal to the number of shares of Common Stock which, when added
to the number of shares of Common Stock subject to outstanding option and
restricted share awards immediately prior to the grant, equals 10% of "fully
diluted shares outstanding" immediately after the grant. "Fully diluted shares
outstanding" for purposes of the Plan shall mean all issued and outstanding
shares of Common Stock, including restricted shares, and shares of Common Stock
subject to all outstanding options. If the Corporation has outstanding
securities convertible into or exercisable for shares of Common Stock, the
shares of Common Stock into which the securities may be converted or for which
the securities may be exercised shall also be included in "fully diluted shares
outstanding."
(c) In addition to the limitation in Section 3(b), the maximum number of
restricted shares which may be granted in any calendar year beginning in 1999
is 2,000,000.
(d) For purposes of the formula and limitation in Sections 3(b) and 3(c),
restricted shares shall not include restricted shares issued in lieu of payment
of cash bonuses under the Corporation's Senior Executive Performance Plan or
other annual bonus plans.
(e) In addition to the limitation in Section 3(b), the maximum number of
shares of Common Stock with respect to which incentive stock options may be
granted from April 26, 1999 through the remaining term of the Plan is
10,000,000.
(f) The maximum number of shares of Common Stock with respect to which
options may be granted pursuant to the Plan in any calendar year to any one
participant is 2,250,000.
(g) In the event of a reorganization, recapitalization, stock split, stock
dividend, combination of shares, merger, share exchange, consolidation,
substantial distribution of assets, or any other change in the corporate
structure or shares of the Corporation, the maximum numbers of shares provided
in Sections 3(b), 3(c), 3(e) and 3(f), but not Section 5(e), and the kinds of
shares under the Plan shall be appropriately adjusted.
4. Participation
Participation in the Plan is limited to officers, directors, key employees,
consultants and advisors of the Corporation and its subsidiaries selected by
the Committee. Only officers and key employees of the Corporation and its
subsidiaries are eligible to receive incentive stock options.
5. Stock Options
(a) The Committee may from time to time grant to participants non-qualified
stock options or incentive stock options.
(b) The price per share payable upon the exercise of each option shall not
be less than 100% of the fair market value of a share of Common Stock on the
date the option is granted.
(c) The Committee shall determine all terms and conditions of options,
including but not limited to the period for exercise, the expiration date and
any conditions to exercise. The Committee may amend or modify the terms of any
outstanding option grant except that the Committee may not reprice any
outstanding option grant.
(d) Options may be exercised in any manner approved by the Committee. If
authorized by the Committee, a participant may deliver Common Stock, including
shares acquired upon exercise of the option, to pay the exercise price or
withholding taxes in connection with exercise of an option.
(e) Each person who becomes a nonemployee director of the Corporation shall
be granted an option to purchase 5,000 shares of Common Stock on the date the
person becomes a director and each person who is a nonemployee director on
January 2 of each year beginning in 1998 shall be granted an option to purchase
5,000 shares of Common Stock on that date or the next day the New York Stock
Exchange is open for trading. The exercise price shall be the closing price of
the Common Stock on the New York Stock Exchange on the grant date. All
nonemployee director's options are exerciseable immediately following the
effective date of the grant, shall have a term of ten years, and shall expire
90 days after the grantee is no longer a director.
6. Restricted Share Awards
The Committee may from time to time make restricted share awards of shares
of Common Stock to participants in such amounts and on such terms as it
determines. Each award of shares shall specify the restrictions on the shares.
The Committee may waive or modify any restriction.
7. Deferral of Shares
A director, employee or other holder of a stock option or restricted share
award may defer delivery of shares of Common Stock issuable upon exercise of a
stock option or upon the vesting of a restricted share award pursuant to
policies approved by the Committee. Deferral arrangements may include the
issuance of deferred share units, the issuance of shares to a trust, or other
arrangements approved by the Committee. The arrangements may include the
payment of dividend equivalents on deferred share units if approved by the
Committee.
8. Amendment and Termination of the Plan
The Plan may be amended or terminated at any time by the Board of
Directors. The Board of Directors may condition any amendment of the Plan on
approval by the stockholders of the Corporation. No further grants may be made
under the Plan after December 31, 2006.
POLICIES
1. General
Unless otherwise provided by the committee (the "Committee") administering
the MBNA Corporation 1997 Long Term Incentive Plan ("Plan"), the grants of
stock options and restricted or unrestricted share awards shall be governed by
the terms and policies set forth herein.
2. Definitions
(a) "Cause" means the occurrence of one of the following:
(i) Conviction for a felony or for any crime or offense lesser than a
felony involving the property of the Corporation or a subsidiary.
(ii) Conduct that has caused demonstrable and serious injury to the
Corporation or a subsidiary, monetary or otherwise as evidenced by a final
determination of a court or governmental agency of competent jurisdiction in
effect after exhaustion or lapse of all rights of appeals.
(iii) Gross neglect or dereliction of duty to the Corporation or other
grave misconduct by the participant and failure to cure such situation within
30 days after receipt of notice thereof from the Chief Executive Officer of the
Corporation. If the participant who receives such a notice is the Chief
Executive Officer of the Corporation, it shall be received from the Committee,
as authorized by not less than two-thirds of all of the members thereof.
(b) "Change in Control" means:
(i) the acquisition by any individual, entity or group (within the meaning
of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"))(a "Person") of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of
either (A) the then outstanding shares of the common stock of the Corporation
(the "Outstanding Common Stock") or (B) the combined voting power of the then
outstanding voting securities of the Corporation entitled to vote generally in
the election of directors (the "Outstanding Voting Securities"); provided,
however, that for purposes of this subsection (i), the following acquisitions
shall not constitute a Change in Control: (A) any acquisition directly from the
Corporation, (B) any acquisition by the Corporation, (C) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by the
Corporation or any corporation controlled by the Corporation, (D) any
acquisition by any corporation pursuant to a transaction which complies with
clauses (A), (B) and (C) of subsection (iii) and (E) any acquisition by Alfred
Lerner or his personal representatives, heirs, executors, beneficiaries or
trustees, any group (as defined above) including Alfred Lerner, or any
corporation, partnership, trust or other entity controlled by Alfred Lerner; or
(ii) Individuals who, as of the date hereof, constitute the Board of
Directors of the Corporation (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board of Directors of the Corporation;
provided, however, that any individual becoming a director subsequent to the
date hereof whose election, or nomination for election by the Corporation's
shareholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding for this purpose
any such individual whose initial assumption of office occurs as a result of an
actual or threatened election contest with respect to the election or removal
of directors or other actual or threatened solicitation of proxies by or on
behalf of a Person other than the Board of Directors of the Corporation; or
(iii) Consummation of a reorganization, merger or consolidation or sale or
other disposition of all or substantially all of the assets of the Corporation
(a "Business Combination"), in each case unless, following such Business
Combination, (A) all or substantially all of the individuals and entities who
were the beneficial owners, respectively, of the Outstanding Common Stock and
Outstanding Voting Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 50% of, respectively, the
then outstanding shares of common stock and the combined voting power of the
then outstanding voting securities entitled to vote generally in the election
of directors, as the case may be, of the corporation resulting from such
Business Combination (including, without limitation, a corporation which as a
result of such transaction owns the Corporation or all or substantially all of
the Corporation's assets either directly or through one or more subsidiaries)
in substantially the same proportions as their ownership, immediately prior to
such Business Combination, of the Outstanding Common Stock and Outstanding
Voting Securities, as the case may be, (B) no Person (excluding any corporation
resulting from such Business Combination or any employee benefit plan (or
related trust) of the Corporation or such corporation resulting from such
Business Combination) beneficially owns, directly or indirectly, 20% or more
of, respectively, the then outstanding shares of common stock of the
corporation resulting from such Business Combination or the combined voting
power of the then outstanding voting securities of such corporation except to
the extent that such ownership existed prior to the Business Combination and
(C) at least a majority of the members of the board of directors of the
corporation resulting from such Business Combination were members of the
Incumbent Board at the time of the execution of the initial agreement, or of
the action of the board, providing for such Business Combination; or
(iv) Approval by the shareholders of the Corporation of a complete
liquidation or dissolution of the Corporation.
(c) "Code" means the Internal Revenue Code of 1986, as amended, and any
successor statute.
(d) "Corporation" means, for purposes of Sections 2(b) and 8 hereof, MBNA
Corporation, and for all other purposes, MBNA Corporation and any "subsidiary
corporation" of MBNA Corporation as defined in Section 424(f) of the Code, or
any successor statute of similar import.
(e) "Competition" means acting as a director, trustee, partner, officer,
employee, consultant or advisor with or to, or acquiring an ownership interest
in excess of 5% of, a corporation, partnership, firm or other entity that
engages in any business which competes with the Corporation or any subsidiary
of the Corporation as determined by the Committee in its sole discretion.
(f) "Disability" means a permanent and total disability as defined in the
Corporation's long term disability or similar plan, as from to time in effect,
or by the Committee.
(g) "Retirement" means voluntary termination of employment with the
Corporation and its Subsidiaries at or after age 60 except with the approval of
the Committee.
3. Stock Options
(a) Exercise Price. The exercise price of stock options may be paid in
cash or, with respect to incentive stock options, by delivery of any previously
owned shares of Common Stock acquired upon exercise of an incentive stock
option provided that the shares have been held by the optionee for at least
twelve months. The fair market value of shares of Common Stock delivered as
payment of the exercise price of options shall be determined on the date of
exercise. Any fractional share will be paid in cash.
(b) Term. The Committee shall determine when each option may be exercised
at the time of grant. Unless otherwise determined by the Committee at the time
of grant and specified in the document evidencing the grant, each option shall
have a term of ten years from the date of grant. The Committee may amend any
outstanding option to accelerate the date on which an option becomes
exercisable.
(c) Termination of Employment. If a participant ceases to be an employee of
the Corporation due to death or Disability, each of the participant's options
shall become fully vested and exercisable and shall remain so for a period of
one year from the date of termination of employment, but in no event after its
expiration date.
If a participant ceases to be an employee of the Corporation upon
Retirement, each of the participant's options shall become fully vested and
exercisable and shall remain so for a period of two years from the date of
Retirement, but in no event after its expiration date.
If a participant ceases to be an employee of the Corporation due to Cause,
each of the participant's options shall be forfeited immediately, whether or
not vested.
If a participant ceases to be an employee of the Corporation for any reason
other than death, Disability, Retirement or Cause, each option of the
participant which is vested and exercisable at the termination date shall
remain so for a period of ninety days from the date of termination of
employment, but in no event after its expiration date. Options which have not
vested at the termination date will be forfeited.
If a participant engages in Competition without written approval from the
Corporation to do so, each of the participant's options shall be forfeited
immediately, whether or not vested.
The Committee may amend any outstanding option to extend the period for
exercise following termination of employment.
(d) Restrictions on Incentive Stock Options. The aggregate fair market
value (determined as of the grant date) of shares of Common Stock with respect
to which all incentive stock options first become exercisable by any
participant in any calendar year under this or any other plan of the
Corporation or any related or predecessor corporation of the Corporation or any
related corporation (as defined in the applicable regulations under the Code)
may not exceed $100,000.
The exercise price of any incentive stock option granted to a participant
who owns (within the meaning of Section 422(b)(6) of the Code, after the
application of the attribution rules in Section 424(d) of the Code) more than
10% of the combined voting power of all classes of shares of the Corporation or
any related corporation shall be not less than 110% of the fair market value of
the Common Stock on the grant date and the term of such option shall not exceed
five years.
4. Restricted and Unrestricted Share Awards
Each award of shares shall specify the applicable restrictions, if any, on
such shares, the duration of such restrictions, and the time or times at which
such restrictions shall lapse with respect to all or a portion of the shares
that are part of the award. The Committee may reduce or shorten the duration of
any restriction applicable to any shares awarded to any participant under the
Plan.
Restricted shares shall be issued at the time of award, subject to
forfeiture if the restrictions do not lapse. The holder of the restricted
shares will be required to deposit the certificates with the Corporation during
the period of any restriction thereon and to execute a blank stock power
therefor. During such period of restriction the participant shall have all of
the rights of a holder of Common Stock, including but not limited to the rights
to receive cash dividends (or amounts equivalent to dividends) and to vote,
except that additional shares of stock distributed to the participant pursuant
to a stock dividend or stock split shall be restricted shares and shall be
deposited with the Corporation during the period of any restriction thereon.
Except as otherwise provided by the Committee, on termination of a
grantee's employment due to death, Disability, Retirement or a Change in
Control during any period of restriction, all restrictions on shares awarded to
such grantee shall lapse. On termination of a grantee's employment for any
other reason, all shares granted to such grantee which are subject to
restriction shall be forfeited to the Corporation.
5. Withholding of Taxes
The Corporation shall require that the grantee pay to the Corporation any
federal, state or local taxes of any kind required by law to be withheld with
respect to any grant, payment or issuance or delivery of shares. The payment
may be made in cash or, with respect to the exercise of stock options or
vesting of restricted shares, by delivering shares of Common Stock, including
shares of Common Stock otherwise deliverable in connection with the exercise of
the stock options or vesting of the restricted shares, at fair market value on
the date as of which the withholding tax liability is determined. The
Corporation, to the extent permitted or required by law, shall have the right
to deduct from any payment of any kind (including salary or bonus) otherwise
due to a grantee any federal, state or local taxes of any kind required by law
to be withheld with respect to any grant or payment or the issuance or delivery
of shares under the Plan, or to retain or sell without notice a sufficient
number of shares to be issued to such grantee to cover any such taxes.
6. Transferability
Except as provided below, no option or restricted share award (prior to
lapse of the restrictions) granted under the Plan shall be transferable by the
recipient otherwise than by will or the laws of descent and distribution. The
holder of non-qualified options or restricted shares may designate a
beneficiary to receive nonqualified options or restricted shares in the event
of his or her death, with such designation to be made on a form provided by the
Corporation and signed by the holder, and in accordance with such other
procedures as the Corporation may determine. A beneficiary designation form
will be effective when received and accepted by the Corporation's Benefits
Department. An option may be exercised during the lifetime of an optionee only
by the optionee or his or her guardian or legal representative, and after the
optionee's death only by the optionee's designated beneficiary or the person to
whom such option is transferred pursuant to the optionee's will or by laws of
descent or distribution.
7. Transfer of Employee; Rights
Transfer of an employee from the Corporation to a subsidiary, from a
subsidiary to the Corporation, or from one subsidiary to another shall not be
considered a termination of employment. Nor shall it be considered a
termination of employment if an employee is placed on military or sick leave or
such other leave of absence which is considered by the Corporation as
continuing intact the employment relationship, until the employee's right to
reemployment shall no longer be guaranteed by law, contract or Corporation
policy.
Nothing in the Plan or in any grant thereunder shall confer any right on an
employee to continue in the employ of the Corporation or shall interfere in any
way with the right of the Corporation to terminate an employee at any time.
8. Adjustments; Change in Control
In the event of a reorganization, recapitalization, stock split, stock
dividend, combination of shares, merger, share exchange, consolidation,
substantial distribution of assets, or any other change in the corporate
structure or shares of the Corporation, the number and kind of shares covered
by outstanding options and share awards made under the Plan and the exercise
price of outstanding options shall be appropriately adjusted.
In the event of a Change in Control, all outstanding options and all
restricted shares shall be exercisable and shall vest, notwithstanding any
restriction on exercise or vesting, upon the effective date of the Change in
Control.
The Committee may amend or modify the grant of any outstanding option or
restricted share award in any manner determined by the Committee. No
modification may be made that would materially adversely affect any grant
previously made under the Plan without the approval of the grantee.
9. Deferral of Shares Upon Exercise of Director Stock Options
(a) A nonemployee director may make an advance election to defer receipt
of the shares deliverable by the Corporation upon exercise of a stock option.
A deferral election with respect to a stock option must be made (i) at least
six months prior to the date the director exercises the stock option and (ii)
in a calendar year prior to the year in which the director exercises the stock
option. A deferral election may not be revoked or changed after it is made.
(b) The exercise price for a stock option subject to a deferral election
shall be paid by the tender of shares of Common Stock with a then-fair market
value equal to the option exercise price. The shares must be shares purchased
on the open market with cash, or shares acquired pursuant to exercise of a
nonemployee director stock option at least six months prior to the date of
tender, or shares that otherwise constitute "mature shares" for financial
accounting purposes. The tendered shares may not be shares previously tendered
for the exercise of a stock option within the previous six months. Shares may
be tendered by the actual delivery of the certificate(s) representing the
shares or by certifying ownership of the shares on forms provided by the
Corporation. The Committee expressly approves the disposition of the tendered
shares to the Corporation as described in this section 9(a).
(c) For the period that the shares are deferred, the Corporation shall pay
the director an amount equal to the dividends that the director would have
received after exercise of the option had the deferred shares been outstanding
shares of Common Stock ("dividend equivalent payment"). Each dividend
equivalent payment shall be paid in cash or, if elected by the director on the
deferral election form, shall be deferred into and otherwise subject to the
terms of the Corporation's deferred compensation plan.
(d) The director's right to receive the shares deferred and the dividend
equivalent payments shall at all times be fully vested, but shall be an
unfunded, unsecured promise of future delivery of shares or payment by the
Corporation and shall be not greater than the right of an unsecured general
creditor of the Corporation. The shares deferred shall be distributed to the
director on the date or dates specified by the director on the deferral
election form, provided that a distribution may not be any earlier than two
years from the exercise date of the option or any later than ten years from the
date the person ceases to be a director of the Corporation. In the event of
the death of the director, any remaining deferred shares shall be delivered to
the beneficiary designated by the director or to the director's estate if no
beneficiary is designated.
(e) In the event of a reorganization, recapitalization, stock split, stock
dividend, combination of shares, merger, share exchange, consolidation,
substantial distribution of assets, or any other change in the corporate
structure or shares of the Corporation, the Committee shall adjust the number
and kind of shares deferred as it deems appropriate to prevent dilution or
enlargement of rights. In addition to making such adjustments, the Committee
may make appropriate provision for the protection of outstanding deferred share
units by the substitution of appropriate equity interests or awards similar to
the deferred share units or by providing for the distribution of shares or the
exchange of shares for cash or other value pursuant to such terms and
conditions as the Committee deems appropriate to protect the rights and
interests of the director and the Corporation.
EXHIBIT 10.3
RESTRICTED STOCK AGREEMENT
This Agreement is between Charles M. Cawley (the "Executive") and
MBNA Corporation (the "Corporation") and is effective as of March 8, 2000.
The terms and conditions of all outstanding restricted shares granted
to the Executive are amended to provide that the restrictions on such shares
shall lapse (1) upon the Executive's death, Disability or retirement at or
after age 65, (2) upon a Change in Control, (3) in the event of a change in the
chief executive officer of the Corporation to someone other than the Executive,
or (4) as otherwise provided in the Corporation's 1997 Long Term Incentive Plan
and the policies thereunder (the "Plan").
All other terms and conditions of the restricted shares are
unchanged. All terms not otherwise defined in this Agreement have the meaning
as set forth in the Plan as it may be amended from time to time. This
Agreement may not be modified except as set forth in a written agreement signed
by the Corporation and the Executive.
/s/ Charles M. Cawley
-----------------------
Charles M. Cawley
MBNA CORPORATION
By /s/ John W. Scheflen
-----------------------
John W. Scheflen
Exhibit 12: Computation of Ratio of Earnings to Combined Fixed Charges and
Preferred Stock Dividend Requirements
(dollars in thousands)
For the Three Months Ended
March 31,
--------------------------
2000 1999
------------ ------------
(unaudited)
INCLUDING INTEREST ON DEPOSITS
Earnings:
Income before income taxes....................... $ 378,951 $ 300,474
Fixed charges.................................... 386,999 317,607
Interest capitalized during period, net of
amortization of previously capitalized interest. (929) (534)
------------ ------------
Earnings, for computation purposes............... $ 765,021 $ 617,547
============ ============
Fixed Charges and Preferred Stock Dividend
Requirements:
Interest on deposits, short-term borrowings,
and long-term debt and bank notes, expensed or
capitalized..................................... $ 384,673 $ 315,202
Portion of rents representative of the interest
factor.......................................... 2,326 2,405
------------ ------------
Fixed charges.................................... 386,999 317,607
Preferred stock dividend requirements............ 6,019 5,680
------------ ------------
Fixed charges and preferred stock dividend
requirements, including interest on deposits,
for computation purposes........................ $ 393,018 $ 323,287
============ ============
Ratio of earnings to combined fixed charges and
preferred stock dividend requirements,
including interest on deposits.................. 1.95 1.91
For the Three Months Ended
March 31,
--------------------------
2000 1999
------------ ------------
(unaudited)
EXCLUDING INTEREST ON DEPOSITS
Earnings:
Income before income taxes....................... $ 378,951 $ 300,474
Fixed charges.................................... 111,889 103,903
Interest capitalized during period, net of
amortization of previously capitalized interest. (934) (539)
------------ ------------
Earnings, for computation purposes............... $ 489,906 $ 403,838
============ ============
Fixed Charges and Preferred Stock Dividend
Requirements:
Interest on short-term borrowings and long-term
debt and bank notes, expensed or capitalized.... $ 109,563 $ 101,498
Portion of rents representative of the interest
factor.......................................... 2,326 2,405
------------ ------------
Fixed charges.................................... 111,889 103,903
Preferred stock dividend requirements............ 6,019 5,680
------------ ------------
Fixed charges and preferred stock dividend
requirements, excluding interest on deposits,
for computation purposes........................ $ 117,908 $ 109,583
============ ============
Ratio of earnings to combined fixed charges and
preferred stock dividend requirements,
excluding interest on deposits.................. 4.15 3.69
The ratio of earnings to combined fixed charges and preferred stock dividend
requirements is computed by dividing (i) income before income taxes and fixed
charges less interest capitalized during such period, net of amortization of
previously capitalized interest, by (ii) fixed charges and preferred stock
dividend requirements. Fixed charges consist of interest, expensed or
capitalized, on borrowings (including or excluding deposits, as applicable),
and the portion of rental expense which is deemed representative of interest.
The preferred stock dividend requirements represent the pretax earnings which
would have been required to cover such dividend requirements on the
Corporation's Preferred Stock outstanding.
b. Reports on Form 8-K
1. Report dated January 10, 2000, reporting MBNA Corporation's earnings
release for the fourth quarter of 1999.
2. Report dated January 31, 2000, reporting the net credit losses and
loan delinquencies for MBNA America Bank, N.A., for its net loan
portfolio and managed loan portfolio for January 2000.
3. Report dated February 29, 2000, reporting the net credit losses and
loan delinquencies for MBNA America Bank, N.A., for its net loan
portfolio and managed loan portfolio for February 2000.
4. Report dated March 8, 2000, reporting the securitization of
$750.0 million of credit card receivables by MBNA America Bank, N.A.
5. Report dated March 28, 2000, reporting the securitization of
$750.0 million of credit card receivables by MBNA America Bank, N.A.
6. Report dated March 31, 2000, reporting the net credit losses and
loan delinquencies for MBNA America Bank, N.A., for its net loan
portfolio and managed loan portfolio for March 2000.
7. Report dated April 12, 2000, reporting MBNA Corporation's earnings
release for the first quarter of 2000.
8. Report dated April 13, 2000, reporting the securitization of
$1.5 billion of credit card receivables by MBNA America Bank, N.A.
9. Report dated April 30, 2000, reporting the net credit losses and
loan delinquencies for MBNA America Bank, N.A., for its net loan
portfolio and managed loan portfolio for April 2000.
10. Report dated May 11, 2000, reporting the securitization of
$850.0 million of credit card receivables by MBNA America Bank, N.A.
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 hereunto duly authorized.
MBNA CORPORATION
Date: May 15, 2000 By: /s/ M. Scot Kaufman
-------------------------------
M. Scot Kaufman
Senior Executive Vice President
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MBNA
CORPORATION'S FORM 10-Q FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 514,143
<INT-BEARING-DEPOSITS> 1,393,206
<FED-FUNDS-SOLD> 428,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 2,779,895
<INVESTMENTS-CARRYING> 304,621
<INVESTMENTS-MARKET> 275,757
<LOANS> 17,511,547<F1>
<ALLOWANCE> 368,108
<TOTAL-ASSETS> 31,419,464
<DEPOSITS> 19,246,790
<SHORT-TERM> 625,573
<LIABILITIES-OTHER> 1,423,047
<LONG-TERM> 5,832,888
0
86
<COMMON> 8,018
<OTHER-SE> 4,283,062
<TOTAL-LIABILITIES-AND-EQUITY> 31,419,464
<INTEREST-LOAN> 597,311<F1>
<INTEREST-INVEST> 42,388
<INTEREST-OTHER> 26,987
<INTEREST-TOTAL> 666,686
<INTEREST-DEPOSIT> 275,110
<INTEREST-EXPENSE> 383,615
<INTEREST-INCOME-NET> 283,071
<LOAN-LOSSES> 99,846
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 915,310
<INCOME-PRETAX> 378,951
<INCOME-PRE-EXTRAORDINARY> 378,951
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 234,571
<EPS-BASIC> .29
<EPS-DILUTED> .28
<YIELD-ACTUAL> 12.04<F2>
<LOANS-NON> 14,670<F3>
<LOANS-PAST> 142,842<F3>
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 131,831<F3>
<ALLOWANCE-OPEN> 355,959
<CHARGE-OFFS> 155,685
<RECOVERIES> 55,917
<ALLOWANCE-CLOSE> 368,108
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
<FN>
<F1> Includes loans held for securitization.
<F2> On a fully taxable equivalent basis.
<F3> Excludes loans held for securitization.
</FN>
</TABLE>
