Prospectus Supplement dated May 18, 2001
to Prospectus dated May 15, 2001
MBNA Credit Card Master Note Trust
Issuer
MBNA America Bank, National Association
Originator of the Issuer
MBNAseries
Class A(2001-1) Notes
The issuer will issue and sell: ---------------------
Principal amount $1,000,000,000
Interest rate 5.75% per year
Interest payment dates 15th day of each month,
beginning in July 2001
Expected principal payment date May 15, 2006
Legal maturity date October 15, 2008
Expected issuance date May 31, 2001
Price to public $998,577,000 (or 99.8577%)
Underwriting discount $2,750,000 (or 0.275%)
Proceeds to the issuer $995,827,000 (or 99.5827%)
The Class A(2001-1) notes are a tranche of the Class A notes of the MBNAseries.
You should consider the discussion under "Risk Factors" beginning on page
S-14 in this prospectus supplement and on page 15 of the accompanying
prospectus before you purchase any notes.
The notes are obligations of the issuer only and are not obligations of any
other person. Each tranche of notes is secured by only some of the assets
of the issuer. Noteholders will have no recourse to any other assets of the
issuer for the payment of the notes.
The primary asset of the issuer is the collateral certificate, Series 2001-
D, representing an undivided interest in MBNA Master Credit Card Trust II,
whose assets include a portfolio of consumer revolving credit card
accounts.
The notes are not insured or guaranteed by the Federal Deposit Insurance
Corporation or any other governmental agency or instrumentality.
Neither the SEC nor any state securities commission has approved these notes or
determined that this prospectus supplement or the prospectus is truthful,
accurate or complete. Any representation to the contrary is a criminal offense.
Underwriters
Lehman Brothers
Banc of America Securities LLC
Banc One Capital Markets, Inc.
Barclays Capital
Credit Suisse First Boston
Deutsche Banc Alex. Brown
JPMorgan
Merrill Lynch & Co.
Salomon Smith Barney
Important Notice about Information Presented in this
Prospectus Supplement and the Accompanying Prospectus
We provide information to you about the notes in two separate documents that
progressively provide more detail: (a) this prospectus supplement, which will
describe the specific terms of the MBNAseries and the Class A(2001-1) notes and
(b) the accompanying prospectus, which provides general information about each
series of notes which may be issued by the MBNA Credit Card Master Note Trust,
some of which may not apply to the MBNAseries or the Class A(2001-1) notes.
This prospectus supplement may be used to offer and sell the Class A(2001-1)
notes only if accompanied by the prospectus.
This prospectus supplement may supplement disclosure in the accompanying
prospectus. If the terms of the MBNAseries or the Class A(2001-1) notes vary
between this prospectus supplement and the prospectus, you should rely on the
information in this prospectus supplement.
You should rely only on the information provided in this prospectus
supplement and the accompanying prospectus including the information
incorporated by reference. We have not authorized anyone to provide you with
different information. We are not offering the Class A(2001-1) notes in any
state where the offer is not permitted. We do not claim the accuracy of the
information in this prospectus supplement or the accompanying prospectus as of
any date other than the dates stated on their respective covers.
We include cross-references in this prospectus supplement and in the
accompanying prospectus to captions in these materials where you can find
further related discussions. The Table of Contents in this prospectus
supplement and in the accompanying prospectus provide the pages on which these
captions are located.
----------------
S-2
Table of Contents
Page
----
Prospectus Supplement Summary.............................................. S-5
Securities Offered........................................................ S-5
The MBNAseries............................................................ S-6
Risk Factors.............................................................. S-6
Interest.................................................................. S-6
Principal................................................................. S-7
Nominal Liquidation Amount................................................ S-7
Required Subordinated Amount.............................................. S-7
Early Redemption of Notes................................................. S-8
Optional Redemption by the Issuer......................................... S-9
Events of Default......................................................... S-9
Master Trust II Assets and Receivables.................................... S-10
Key Operating Documents................................................... S-10
Issuer Accounts........................................................... S-10
Security for the Notes.................................................... S-11
Limited Recourse to the Issuer............................................ S-11
Derivative Agreement...................................................... S-11
Accumulation Reserve Account.............................................. S-12
Shared Excess Available Funds............................................. S-12
Stock Exchange Listing.................................................... S-13
Ratings................................................................... S-13
Risk Factors............................................................... S-14
Glossary................................................................... S-21
The Notes.................................................................. S-21
Subordination of Principal and Interest................................... S-21
Issuances of New Series, Classes and Tranches of Notes.................... S-23
Conditions to Issuance................................................... S-23
Required Subordinated Amount............................................. S-23
Waiver of Issuance Conditions............................................ S-24
Sources of Funds to Pay the Notes......................................... S-24
The Collateral Certificate............................................... S-24
Payments Received from Derivative Counterparties......................... S-24
Derivative Counterparty.................................................. S-27
Page
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The Issuer Accounts..................................................... S-28
Limited Recourse to the Issuer; Security for the Notes.................. S-29
Early Redemption of the Notes............................................ S-29
Deposit and Application of Funds.......................................... S-30
MBNAseries Available Funds............................................... S-30
Application of MBNAseries Available Funds................................ S-31
Targeted Deposits of MBNAseries Available Funds to the Interest Funding
Account................................................................. S-32
Allocation to Interest Funding Subaccounts............................... S-33
Payments Received from Derivative Counterparties for Interest of Foreign
Currency Notes.......................................................... S-34
Allocations of Reductions from Charge-Offs............................... S-34
Allocations of Reimbursements of Nominal Liquidation Amount Deficits..... S-35
Application of MBNAseries Available Principal Amounts.................... S-36
Reductions to the Nominal Liquidation Amount of Subordinated Classes from
Reallocations of MBNAseries Available Principal Amounts................. S-38
Limit on Allocations of MBNAseries Available Principal Amounts and
MBNAseries Available Funds.............................................. S-40
Targeted Deposits of MBNAseries Available Principal Amounts to the
Principal Funding Account............................................... S-40
Allocation to Principal Funding Subaccounts.............................. S-42
Limit on Deposits to the Principal Funding Subaccount of Subordinated
Notes; Limit on Repayments of all Tranches.............................. S-43
S-3
Page
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Payments Received from Derivative Counterparties for Principal........... S-44
Deposits of Withdrawals from the Class C Reserve Account to the Principal
Funding Account......................................................... S-45
Withdrawals from Interest Funding Subaccounts............................ S-45
Withdrawals from Principal Funding Account............................... S-46
Sale of Credit Card Receivables.......................................... S-47
Targeted Deposits to the Class C Reserve Account......................... S-49
Withdrawals from the Class C Reserve Account............................. S-49
Targeted Deposits to the Accumulation Reserve Account.................... S-49
Withdrawals from the Accumulation Reserve Account........................ S-49
Final Payment of the Notes............................................... S-50
Pro Rata Payments Within a Tranche....................................... S-51
Page
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Shared Excess Available Funds............................................. S-51
MBNA and MBNA Corporation................................................ S-51
MBNA's Credit Card Portfolio............................................. S-52
Billing and Payments.................................................... S-52
Delinquencies and Collection Efforts.................................... S-52
The Master Trust II Portfolio............................................ S-53
Delinquency and Principal Charge-Off Experience......................... S-53
Revenue Experience...................................................... S-55
Interchange............................................................. S-57
Principal Payment Rates................................................. S-57
Underwriting............................................................. S-60
Glossary of Defined Terms................................................ S-63
Annex I:
Outstanding Series, Classes and Tranches of Notes....................... A-I-1
Annex II:
Outstanding Master Trust II Series...................................... A-II-1
S-4
Prospectus Supplement Summary
This summary does not contain all the information you may need to make an
informed investment decision. You should read the entire prospectus supplement
and the accompanying prospectus before you purchase any notes.
Securities Offered
$1,000,000,000 5.75% Class A(2001-1) notes.
These Class A(2001-1) notes are part of a series of notes called the
MBNAseries. The MBNAseries consists of Class A notes, Class B notes and Class C
notes. These Class A(2001-1) notes are a tranche of the Class A notes of the
MBNAseries.
These Class A(2001-1) notes are issued by, and are obligations of, the MBNA
Credit Card Master Note Trust. The issuer expects to issue other classes and
tranches of notes of the MBNAseries which may have different interest rates,
interest payment dates, expected principal payment dates, legal maturity dates
and other characteristics. In addition, the issuer may issue other series of
notes which may have different interest rates, interest payment dates, expected
principal payment dates, legal maturity dates and other characteristics. See
"The Notes--Issuances of New Series, Classes and Tranches of Notes" in this
prospectus supplement and in the prospectus.
Each class of notes in the MBNAseries may consist of multiple tranches. Notes
of any tranche can be issued on any date so long as there is sufficient credit
enhancement on that date, either in the form of outstanding subordinated notes
or other forms of credit enhancement. See "The Notes--Issuances of New Series,
Classes and Tranches of Notes" in this prospectus supplement and in the
prospectus. The expected principal payment dates and legal maturity dates of
tranches of senior and subordinated classes of the MBNAseries may be different.
Therefore, subordinated notes may have expected principal payment dates and
legal maturity dates earlier than some or all senior notes of the MBNAseries.
Subordinated notes will generally not be paid before their legal maturity date
unless, after payment, the remaining outstanding subordinated notes provide the
credit enhancement required for the senior notes.
In general, the subordinated notes of the MBNAseries serve as credit
enhancement for all of the senior notes of the MBNAseries, regardless of
whether the subordinated notes are issued before, at the same time as, or after
the senior notes of the MBNAseries. However, certain tranches of senior notes
may not require subordination from each class of notes subordinated to it. For
example, if a tranche of Class A notes requires credit enhancement solely from
Class C notes, the Class B notes will not, in that case, provide credit
enhancement for that tranche of Class A notes. The amount of credit exposure of
any particular tranche of notes is a function of, among other things, the total
amount of notes issued, the required subordinated amount, the amount of usage
of the required subordinated amount and the amount on deposit in the senior
tranches' principal funding subaccounts.
S-5
Only the Class A(2001-1) notes are being offered through this prospectus
supplement and the accompanying prospectus. Other series, classes and tranches
of notes, including other tranches of notes that are included in the MBNAseries
as a part of Class A, may be issued by the MBNA Credit Card Master Note Trust
in the future.
The MBNAseries
These Class A(2001-1) notes will be the first tranche of the Class A notes
issued by the issuer in the MBNAseries.
As of the issuance date of these Class A(2001-1) notes, the aggregate
outstanding dollar principal amount of notes in the MBNAseries is expected to
be $1,500,000,000, including these Class A(2001-1) notes and other tranches of
notes of the MBNAseries issued on or prior to that day, consisting of:
Class A notes $1,000,000,000
Class B notes $ 250,000,000
Class C notes $ 250,000,000
See "Annex I: Outstanding Series, Classes and Tranches of Notes" for additional
information on the other outstanding notes issued, or expected to be issued
upon or prior to the issuance of these Class A(2001-1) notes, by the issuer.
Risk Factors
Investment in the Class A(2001-1) notes involves risks. You should consider
carefully the risk factors beginning on page S-14 in this prospectus supplement
and beginning on page 15 in the accompanying prospectus.
Interest
These Class A(2001-1) notes will accrue interest at an annual rate equal to
5.75%.
Interest on these Class A(2001-1) notes will begin to accrue on May 31, 2001
and will be calculated on the basis of a 360-day year and twelve 30-day months.
Interest on the Class A(2001-1) notes for any interest payment date will equal
one-twelfth of the product of:
.the Class A(2001-1) note interest rate; times
.the outstanding dollar principal amount of the Class A(2001-1) notes as of the
related record date.
However, for the first interest payment date interest on these Class A(2001-1)
notes will be $7,187,500.
The issuer will make interest payments on these Class A(2001-1) notes on the
15th day of each month beginning in July 2001. Interest payments due on a day
that is not a business day in New York, New York and Newark, Delaware will be
made on the following business day.
The Class A(2001-1) notes will have the benefit of a derivative agreement for
interest, as described herein.
The payment of interest on a senior class of notes on any payment date is
senior to the payment of interest on subordinated classes of notes of the
MBNAseries on such date. Generally, no payment of interest will be made on any
Class B note in the MBNAseries until the required payment of interest has been
made to the Class A notes in the MBNAseries. Similarly, generally, no payment
of interest will be made on any Class C note in the MBNAseries until the
S-6
required payment of interest has been made to the Class A notes and the Class B
notes in the MBNAseries. However, funds on deposit in the Class C reserve
account will be available only to holders of Class C notes to cover shortfalls
of interest on any interest payment date.
Principal
The issuer expects to pay the stated principal amount of these Class A(2001-1)
notes in one payment on May 15, 2006, which is the expected principal payment
date, and is obligated to do so if funds are available for that purpose. If the
stated principal amount of these Class A(2001-1) notes is not paid in full on
the expected principal payment date due to insufficient funds, noteholders will
generally not have any remedies against the issuer until October 15, 2008, the
legal maturity date of these Class A(2001-1) notes.
If the stated principal amount of these Class A(2001-1) notes is not paid in
full on the expected principal payment date, then an early redemption event
will occur with respect to these Class A(2001-1) notes and principal and
interest payments on these Class A(2001-1) notes will be made monthly until
they are paid in full or until the legal maturity date occurs, whichever is
earlier.
Principal of these Class A(2001-1) notes will be paid earlier than the expected
principal payment date if (i) an event of default and acceleration occurs with
respect to these Class A(2001-1) notes, (ii) an investment company early
redemption event occurs or (iii) any other early redemption event occurs with
respect to these Class A(2001-1) notes and the derivative agreement terminates
or has been terminated or an interest reserve account event occurs or has
occurred. See "The Indenture--Early Redemption Events" and "--Events of
Default" in the prospectus and "The Notes--Early Redemption of the Notes" in
this prospectus supplement.
Nominal Liquidation Amount
The initial nominal liquidation amount of these Class A(2001-1) notes is
$1,000,000,000.
The nominal liquidation amount of a tranche of notes corresponds to the portion
of the investor interest of the collateral certificate that is allocable to
support that tranche of notes. If the nominal liquidation amount of these Class
A(2001-1) notes is reduced by charge-offs resulting from uncovered defaults on
the principal receivables in master trust II allocable to the MBNAseries, the
principal of and interest on these Class A(2001-1) notes may not be paid in
full. If the nominal liquidation amount of these Class A(2001-1) notes has been
reduced, available principal amounts and available funds allocated to pay
principal of and interest on these Class A(2001-1) notes will be reduced.
For a more detailed discussion of nominal liquidation amount, see "The Notes--
Stated Principal Amount, Outstanding Dollar Principal Amount and Nominal
Liquidation Amount" in the prospectus.
Required Subordinated Amount
In order to issue a senior class of notes, the required subordinated amount of
subordinated notes must be outstanding and available on the issuance date.
Generally, the required subordinated amount of a subordinated class of notes
for any date is an amount equal to a stated percentage of the adjusted
outstanding dollar principal
amount of the senior tranche of notes for such date.
S-7
The Class A required subordinated amount of Class B notes for these Class
A(2001-1) notes is 8.82353%, expressed as a percentage of the adjusted
outstanding dollar principal amount of these Class A(2001-1) notes. The Class A
required subordinated amount of Class C notes for these Class A(2001-1) notes
is 8.82353%, expressed as a percentage of the adjusted outstanding dollar
principal amount of these Class A(2001-1) notes. These percentages may change
without the consent of any noteholders if the rating agencies consent. In
addition, the required subordinated amounts of subordinated notes of other
Class A notes in the MBNAseries may be different than the percentages specified
for these Class A(2001-1) notes. In addition, if the rating agencies consent
and without the consent of any noteholders, the issuer may utilize forms of
credit enhancement other than subordinated notes in order to provide senior
classes of notes with the required credit enhancement.
No payment of principal will be made on any Class B note in the MBNAseries
unless, following the payment, the remaining available subordinated amount of
Class B notes in the MBNAseries is at least equal to the required subordinated
amount for the outstanding Class A notes in the MBNAseries less any usage of
the required subordinated amount of Class B notes for such outstanding Class A
notes. Similarly, no payment of principal will be made on any Class C note in
the MBNAseries unless, following the payment, the remaining available
subordinated amount of Class C notes in the MBNAseries is at least equal to the
required subordinated amount for the outstanding Class A notes and Class B
notes in the MBNAseries less any usage of the required subordinated amount of
Class C notes for such outstanding Class A notes and Class B notes. However,
there are some exceptions to this rule. See "The Notes--Subordination of
Interest and Principal" in the prospectus.
Early Redemption of Notes
The early redemption events applicable to all notes, including these Class
A(2001-1) notes, are described in the accompanying prospectus. In addition, if
for any date the amount of excess available funds averaged over the three
preceding calendar months is less than the required excess available funds for
such date, an early redemption event for the Class A(2001-1) notes will occur.
Excess available funds for any month equals the available funds allocated to
the MBNAseries that month after application for targeted deposits to the
interest funding account, payment of the master trust II servicing fee
allocable to the MBNAseries, application to cover defaults on principal
receivables in master trust II allocable to the MBNAseries and reimbursement of
any deficits in the nominal liquidation amounts of notes. Required excess
available funds is an amount equal to zero. This amount may be changed provided
the issuer (i) receives the consent of the rating agencies and (ii) reasonably
believes that the change will not have a material adverse effect on the notes.
See "The Notes--Early Redemption of Notes" and "The Indenture--Early Redemption
Events" in the prospectus.
If an early redemption event (other than an
investment company early redemption event) applicable to the Class A(2001-1)
notes occurs and the derivative agreement has not been terminated and an
interest reserve account event has not occurred, available principal amounts
allocable to the
S-8
Class A(2001-1) notes together with any amounts in the principal funding
subaccount for the Class A(2001-1) notes will not be paid to the holders of the
Class A(2001-1) notes as described under "The Notes--Early Redemption of the
Notes" and "The Indenture--Early Redemption of the Notes" in the prospectus,
but instead will be retained in the principal funding subaccount and paid to
the holders of the Class A(2001-1) notes on the expected principal payment date
of the Class A(2001-1) notes. However, if (i) the derivative agreement
terminates, (ii) an interest reserve account event occurs, (iii) an investment
company early redemption event occurs or (iv) an event of default and
acceleration of the Class A(2001-1) notes occurs, such amounts will not be
retained in the principal funding subaccount, but instead will be paid to the
holders of the Class A(2001-1) notes.
See "The Indenture--Early Redemption Events" in the prospectus for a
description of the investment company early redemption event and "The Notes--
Sources of Funds to Pay the Notes--Payments Received from Derivative
Counterparties" for a description of an interest reserve account event and the
derivative agreement termination events.
Optional Redemption by the Issuer
The servicer has the right, but not the obligation, to direct the issuer to
redeem these Class A(2001-1) notes in whole but not in part on any day on or
after the day on which the nominal liquidation amount of these Class A(2001-1)
notes is reduced to less than 5% of their highest outstanding dollar principal
amount. This repurchase option is referred to as a clean-up call.
If the issuer is directed to redeem these Class A(2001-1) notes, it will notify
the registered holders at least thirty days prior to the redemption date. The
redemption price of a note will equal 100% of the outstanding principal amount
of that note, plus accrued but unpaid interest on the note to but excluding the
date of redemption.
If the issuer is unable to pay the redemption price in full on the redemption
date, monthly payments on these Class A(2001-1) notes will thereafter be made
until either the principal of and accrued interest on those notes are paid in
full or the legal maturity date occurs, whichever is earlier. Any funds in the
principal funding subaccount and the interest funding subaccount for these
Class A(2001-1) notes will be applied to make the principal and interest
payments on these notes on the redemption date.
Events of Default
The Class A(2001-1) notes are subject to certain events of default described in
"The Indenture--Events of Default" in the prospectus. For a description of the
remedies upon an event of default, see "The Indenture--Events of Default
Remedies" in the prospectus and "Deposit and Application of Funds--Sale of
Credit Card Receivables" in this prospectus supplement.
S-9
Master Trust II Assets and Receivables
The collateral certificate, which is the issuer's primary source of funds for
the payment of principal of and interest on these Class A(2001-1) notes, is an
investor certificate issued by master trust II. The collateral certificate
represents an undivided interest in the assets of master trust II. Master trust
II's assets primarily include credit card receivables from selected
MasterCard(R) and VISA(R) revolving credit card accounts that meet the
eligibility criteria for inclusion in master trust II. These eligibility
criteria are discussed in the prospectus under "Master Trust II--Addition of
Master Trust II Assets."
The credit card receivables in master trust II consist primarily of principal
receivables and finance charge receivables. Principal receivables include
amounts charged by cardholders for merchandise and services and amounts
advanced to cardholders as cash advances. Finance charge receivables include
periodic finance charges, annual membership fees, cash advance fees, late
charges and certain other fees billed to cardholders.
In addition, MBNA is permitted to add to master trust II participations
representing interests in a pool of assets primarily consisting of receivables
arising under consumer revolving credit card accounts owned by MBNA and
collections thereon.
See "The Master Trust II Portfolio" for detailed financial information on the
receivables and the accounts.
See "Annex II: Outstanding Master Trust II Series" of this prospectus
supplement for additional information on the outstanding series in master trust
II.
[GRAPH]
Key Operating Documents
- -------------------
MBNA
- -------------------
- -------------------
Credit Card
Receivables
- -------------------
- ------------------- Pooling and
Master Trust II ---- Servicing
- ------------------- Agreement
- -------------------
Collateral ---- Series
Certificate Supplement
- -------------------
- -------------------
Master Note Trust ---- Indenture
- -------------------
- -------------------
MBNAseries ---- Indenture
Notes Supplement
- -------------------
- -------------------
Noteholders
- -------------------
Issuer Accounts
The issuer has established a principal funding account, an interest funding
account, an accumulation reserve account and a Class C reserve account for the
benefit of the MBNAseries. The principal funding account, the interest funding
account and the accumulation reserve account will have subaccounts for the
Class A(2001-1) notes.
S-10
Each month, distributions on the collateral certificate will be deposited into
the collection account. Those deposits will then be allocated to each series of
notes, including the MBNAseries. The amounts allocated to the MBNAseries plus
any other amounts to be treated as available funds and available principal
amounts for the MBNAseries will then be allocated to:
--the principal funding account;
--the interest funding account;
--the accumulation reserve account;
--the Class C reserve account;
--any other supplemental account;
--payments under any applicable derivative agreements; and
--the other purposes as specified in this prospectus supplement.
Funds on deposit in the principal funding account and the interest funding
account will be used to make payments of principal of and interest on the
MBNAseries notes, including the Class A(2001-1) notes.
Security for the Notes
The Class A(2001-1) notes are secured by a shared security interest in:
.the collateral certificate;
.the collection account;
.the applicable principal funding subaccount;
.the applicable interest funding subaccount;
.the applicable accumulation reserve subaccount; and
. the applicable derivative agreement.
However, the Class A(2001-1) notes are entitled to the benefits of only that
portion of those assets allocated to them under the indenture and the indenture
supplement.
See "The Notes--Sources of Funds to Pay the Notes--The Collateral Certificate"
and "--The Issuer Accounts" in this prospectus supplement and "Sources of Funds
to Pay the Notes--The Collateral Certificate" in the prospectus.
Limited Recourse to the Issuer
The sole source of payment for principal of or interest on these Class A(2001-
1) notes is provided by:
.the portion of the available principal amounts and available funds allocated
to the MBNAseries and available to these Class A(2001-1) notes; and
.funds in the applicable issuer accounts for these Class A(2001-1) notes.
Class A(2001-1) noteholders will have no recourse to any other assets of the
issuer or any other person or entity for the payment of principal of or
interest on these Class A(2001-1) notes.
However, following a sale of credit card receivables (i) due to an insolvency
of MBNA, (ii) due to an event of default and acceleration with respect to the
Class A(2001-1) notes or (iii) on the legal maturity date for the Class A(2001-
1) notes, as described in "Deposit and Application of Funds--Sale of Credit
Card Receivables" in this prospectus supplement and "Sources of Funds to Pay
the Notes--Sale of Credit Card Receivables" in the prospectus, the Class
A(2001-1) noteholders have recourse only to the proceeds of that sale.
Derivative Agreement
The issuer and Lehman Brothers Special Financing Inc., the derivative
counterparty,
S-11
will enter into a derivative agreement for interest for the benefit of the
Class A(2001-1) notes. Under the derivative agreement, for each transfer date:
. the derivative counterparty will make a payment to the issuer, based on the
outstanding dollar principal amount of the Class A(2001-1) notes, at an
annual rate equal to 5.75%; and
. the issuer will make a payment to the derivative counterparty, based on the
outstanding dollar principal amount of the Class A(2001-1) notes, at an
annual rate not to exceed LIBOR (for the related interest period) plus 0.15%.
Generally, payments owed between the issuer and the derivative counterparty
will be made on a net basis. Amounts paid by the issuer to the derivative
counterparty will be paid from amounts on deposit in the interest funding
subaccount for the Class A(2001-1) notes as described under "Deposit and
Application of Funds-- Targeted Deposits of MBNAseries Available Funds to the
Interest Funding Account" and "--Withdrawals from Interest Funding
Subaccounts." Amounts paid by the derivative counterparty to the issuer will be
treated as MBNAseries available funds as described under "Deposit and
Application of Funds--MBNAseries Available Funds."
For a more detailed discussion of the derivative agreement, see "The Notes--
Sources of Funds to Pay the Notes--Payments Received from Derivative
Counterparties."
The derivative counterparty has the benefit of a guaranty from Lehman Brothers
Holdings Inc., the derivative counterparty guarantor. The derivative
counterparty
guarantor currently has a short-term credit rating of "A-1" and a long-term
unsecured debt credit rating of "A" from Standard & Poor's and a long-term
unsecured debt credit rating of "A2" from Moody's. For a discussion of the
consequences of certain reductions in, or a withdrawal of, the derivative
counterparty guarantor's credit ratings by either Standard & Poor's or Moody's,
see "Risk Factors" and "The Notes--Sources of Funds to Pay the Notes--Payments
Received from Derivative Counterparties."
Accumulation Reserve Account
The issuer will establish an accumulation reserve subaccount to cover
shortfalls in investment earnings on amounts (other than prefunded amounts) on
deposit in the principal funding subaccount for these Class A(2001-1) notes.
The amount targeted to be deposited in the accumulation reserve subaccount for
these Class A(2001-1) notes is zero, unless more than one budgeted deposit is
required to accumulate and pay the principal of the Class A(2001-1) notes on
its expected principal payment date, in which case, the amount targeted to be
deposited is 0.5% of the outstanding dollar principal amount of the Class
A(2001-1) notes or such other amount designated by the issuer. See "Deposit and
Application of Funds--Targeted Deposits to the Accumulation Reserve Account."
Shared Excess Available Funds
The MBNAseries will be included in "Group A." In addition to the MBNAseries,
the issuer may issue other series of notes that are included in Group A. As of
the date of this prospectus supplement, the MBNAseries is the only series of
notes issued by the issuer.
S-12
To the extent that available funds allocated to the MBNAseries are available
after all required applications of such amounts as described in "Deposit and
Application of Funds--Allocation of MBNAseries Available Funds," these unused
available funds, called shared excess available funds, will be applied to cover
shortfalls in available funds for other series of notes in Group A. In
addition, the MBNAseries may receive the benefits of shared excess available
funds from other series in Group A, to the extent available funds for such
other series of notes are not needed for such series. See "Deposit and
Application of Funds--Shared Excess Available Funds" herein and "Sources of
Funds to Pay the Notes--The Collateral Certificate" and "--Deposit and
Application of Funds" in the prospectus.
Stock Exchange Listing
The issuer will apply to list these Class A(2001-1) notes on the Luxembourg
Stock Exchange. The issuer cannot guarantee that the application for the
listing will be accepted. You should consult with Deutsche Bank Luxembourg
S.A., the Luxembourg listing agent for these Class A(2001-1) notes, Boulevard
Konrad Adenauer 2, L-1115 Luxembourg, phone number (352) 42 12 21, to determine
whether these Class A(2001-1) notes have been listed on the Luxembourg Stock
Exchange.
Ratings
The issuer will issue these Class A(2001-1) notes only if they are rated at
least "AAA" or "Aaa" or its equivalent by at least one nationally recognized
rating agency.
Other tranches of Class A notes may have different rating requirements from the
Class A(2001-1) notes.
A rating addresses the likelihood of the payment of interest on a note when due
and the ultimate payment of principal of that note by its legal maturity date.
A rating does not address the likelihood of payment of principal of a note on
its expected principal payment date. In addition, a rating does not address the
possibility of an early payment or acceleration of a note, which could be
caused by an early redemption event or an event of default. A rating is not a
recommendation to buy, sell or hold notes and may be subject to revision or
withdrawal at any time by the assigning rating agency. Each rating should be
evaluated independently of any other rating.
See "Risk Factors--If the ratings of the notes are lowered or withdrawn, their
market value could decrease" in the prospectus.
S-13
Risk Factors
The risk factors disclosed in this section and in "Risk Factors" in the
accompanying prospectus describe the principal risk factors of an investment in
the Class A(2001-1) notes.
Only some of the assets of the issuer are available
for payments on any tranche of notes
The sole source of payment of principal of and
interest on your tranche of notes is provided by:
. the portion of the available principal amounts and
available funds allocated to the MBNAseries and
available to your tranche of notes after giving
effect to any reallocations and payments and
deposits for senior notes; and
. funds in the applicable issuer accounts for your tranche of
notes.
As a result, you must rely only on the particular
allocated assets as security for your tranche of
notes for repayment of the principal of and interest
on your notes. You will not have recourse to any
other assets of the issuer or any other person for
payment of your notes. See "Sources of Funds to Pay
the Notes" in this prospectus supplement and in the
accompanying prospectus.
In addition, if there is a sale of credit card
receivables due to the insolvency of MBNA, due to an
event of default and acceleration or on the
applicable legal maturity date, as described in
"Deposit and Application of Funds--Sale of Credit
Card Receivables" in this prospectus supplement and
"Sources of Funds to Pay the Notes--Sale of Credit
Card Receivables" in the accompanying prospectus,
your tranche of notes has recourse only to the
proceeds of that sale, any amounts then on deposit in
the issuer accounts allocated to and held for the
benefit of your tranche of notes and any amounts
payable under any applicable derivative agreement.
The derivative agreement can affect the amount of
credit enhancement available to the notes
Since the derivative counterparty makes payments
under the derivative agreement based on a fixed rate
for the related transfer date and the issuer makes
payments under the derivative agreement based on a
floating rate for the related transfer date, it is
possible that the amount owing to the derivative
counterparty for any transfer date could exceed the
S-14
amount owing to the issuer for the related transfer
date and that a net derivative payment will be owing
by the issuer to the derivative counterparty. If a
net derivative payment is owing by the issuer to the
derivative counterparty for any transfer date, the
derivative counterparty will be entitled to that
payment from MBNAseries available funds and certain
other available amounts otherwise allocated to the
Class A(2001-1) notes and deposited into the interest
funding subaccount for the Class A(2001-1) notes. If
deposits to the interest funding subaccount for net
derivative payments are made out of reallocated
available principal amounts, the amount of credit
enhancement supporting the Class A(2001-1) notes may
be reduced.
A payment default under the derivative agreement or a
termination of the derivative agreement may result in
early or reduced payment on the notes
If the long-term credit rating of the derivative
counterparty guarantor is reduced below "BBB-" by
Standard & Poor's or below "Baa3" by Moody's, or is
withdrawn by either Standard & Poor's or Moody's, the
derivative counterparty will be directed to assign
its rights and obligations under the derivative
agreement to a replacement derivative counterparty.
You should be aware that there may not be a suitable
replacement derivative counterparty. In addition, we
cannot assure you that any assignment of the
derivative counterparty's rights and obligations will
occur.
A payment default by the derivative counterparty or
the issuer may result in the termination of the
derivative agreement. The derivative agreement may
also be terminated upon the occurrence of certain
other events described under "The Notes--Sources of
Funds to Pay the Notes--Payments Received from
Derivative Counterparties."
Although the rating agencies have not relied on the
ratings of the derivative counterparty or the
derivative party guarantor in rating any notes, but
rather have relied on the value of the receivables
and the benefits of the applicable credit
enhancement, we cannot assure you that interest on
the Class A(2001-1) notes can be paid if a payment
default by the derivative counterparty occurs.
S-15
The occurrence of certain events may result in early
payment on the notes
The occurrence of an investment company early
redemption event will cause available principal
amounts allocable to the Class A(2001-1) notes,
including amounts on deposit in the related principal
funding subaccount, if any, to be paid to the
Class A(2001-1) noteholders as described under "The
Indenture--Early Redemption Events" in the
prospectus. The occurrence of an early redemption
event other than an investment company early
redemption event will cause available principal
amounts allocable to the Class A(2001-1) notes to be
accumulated in the related principal funding
subaccount and not paid to the Class A(2001-1)
noteholders until the expected principal payment date
for the Class A(2001-1) notes, unless any of the
following events occurs: the derivative agreement is
terminated, an interest reserve account event occurs,
an investment company early redemption event occurs
or an event of default and acceleration of the Class
A(2001-1) notes occurs. Furthermore, upon the
occurrence of any such event, such amounts will not
be accumulated, but instead will be paid to the Class
A(2001-1) noteholders. We cannot assure you that any
of these events will not occur prior to the expected
principal payment date. See "The Notes--Sources of
Funds to Pay the Notes--Payments Received from
Derivative Counterparties" in this prospectus
supplement and "Master Trust II--Pay Out Events" in
the prospectus.
A conservator or receiver may have the power to
prevent or cause the liquidation of the receivables
or to prevent the issuer from retaining amounts in
the principal funding subaccount and keeping the
notes outstanding which may result in delayed,
accelerated or reduced payments
In the case of certain events of insolvency,
conservatorship or receivership of MBNA, a master
trust II pay out event will occur (which is an early
redemption event for the Class A(2001-1) notes), and
MBNA will stop transferring newly created principal
receivables to master trust II. The master trust II
trustee will then proceed to liquidate the credit
card receivables, unless otherwise instructed within
a specified period by holders of certificates
(including the collateral certificate) representing
interests aggregating more than 50% of the investor
interest of each series (or if any series has more
than one class, of each class, and any other person
specified in
S-16
the master trust II agreement or a series
supplement). The noteholders as holders of the
collateral certificate will be deemed to have
disapproved of such liquidation. If such liquidation
occurs, there may be no further collections in
respect of principal receivables or finance charge
receivables by master trust II and, therefore, no
MBNAseries available principal amounts or MBNAseries
available funds.
If the master trust II trustee liquidates the
receivables, the proceeds from such liquidation
allocable to the Class A(2001-1) notes will be
deposited into the principal funding subaccount up to
the outstanding dollar principal amount of the Class
A(2001-1) notes. If the master trust II trustee is
instructed not to liquidate the receivables as
described above and in "Master Trust II--Pay Out
Events" in the prospectus, MBNAseries available
principal amounts allocable to the Class A(2001-1)
notes will be deposited into the principal funding
subaccount up to the outstanding dollar principal
amount of the Class A(2001-1) notes. In either case,
the derivative agreement will remain in effect and
the Class A notes will remain outstanding until the
earliest of:
. the expected principal payment date of the Class
A(2001-1) notes;
. the date on which an investment company early
redemption event occurs;
. the date on which an interest reserve account event
occurs;
. the date on which the derivative agreement
terminates; and
. the date on which an event of default and
acceleration of the Class A(2001-1) notes occurs,
at which time the amount on deposit in the principal
funding account will be distributed to the Class
A(2001-1) noteholders.
However, if the only early redemption event to occur
is the master trust II pay out event relating to the
insolvency of MBNA or the appointment of a
conservator or receiver for MBNA, the conservator or
receiver may have the power to prevent the
liquidation of the receivables or to cause the
liquidation of the receivables regardless of the vote
of the investor certificateholders and noteholders.
In addition, a conservator or receiver may have the
power (i) to prevent the deposit of liquidation
proceeds in the principal funding subaccount or (ii)
if there is no liquidation, to cause the
S-17
payment of the notes prior to the expected principal
payment date. A conservator or receiver may also have
the power to terminate or assign the derivative
agreement, take any funds on deposit in the
accumulation reserve subaccount, and require the
Class A(2001-1) notes to remain outstanding until the
legal maturity date. If a conservator or receiver
were to take any such actions, your payments could be
delayed, accelerated or reduced. See "Risk Factors"
and"Material Legal Aspects of the Receivables--
Certain Matters Relating to Conservatorship or
Receivership" in the prospectus.
Class A and Class B notes of the MBNAseries can lose
their subordination under some circumstances
resulting in delayed or reduced payments to you
Subordinated notes of the MBNAseries may have
expected principal payment dates and legal maturity
dates earlier than some or all of the notes of the
senior classes.
If notes of a subordinated class reach their expected
principal payment date at a time when they are needed
to provide the required subordination for the senior
classes of the MBNAseries and the issuer is unable to
issue additional notes of that subordinated class or
obtain acceptable alternative forms of credit
enhancement, prefunding of the senior classes will
begin and such subordinated notes will not be paid on
their expected principal payment date. The principal
funding subaccounts for the senior classes will be
prefunded with available principal amounts allocable
to the MBNAseries and available for that purpose in
an amount necessary to permit the payment of those
subordinated notes while maintaining the required
subordination for the senior classes. See "Deposit
and Application of Funds--Targeted Deposits of
MBNAseries Available Principal Amounts to the
Principal Funding Account."
There will generally be a 29-month period between the
expected principal payment date and the legal
maturity date of the subordinated notes to prefund
the principal funding subaccounts of the senior
classes, if necessary. Notes of a subordinated class
which have reached their expected principal payment
date will not be paid until the remaining
subordinated notes provide the required subordination
for the senior notes, which payment may be delayed
further as other subordinated notes reach their
expected principal payment date. The subordinated
notes will be paid on their legal maturity date, to
S-18
the extent that any funds are available for that
purpose from proceeds of the sale of receivables or
otherwise, whether or not the senior classes of notes
have been fully prefunded.
If the rate of repayment of principal receivables in
master trust II were to decline during this
prefunding period, then the principal funding
subaccounts for the senior classes of notes may not
be fully prefunded before the legal maturity date of
the subordinated notes. In that event and only to the
extent not fully prefunded, the senior classes would
not have the required subordination beginning on the
legal maturity date of those subordinated notes
unless additional subordinated notes of that class
were issued or a sufficient amount of senior notes
have matured so that the remaining outstanding
subordinated notes provide the necessary
subordination.
The table under "The Master Trust II Portfolio--
Principal Payment Rates" sets forth the highest and
lowest cardholder monthly principal payment rates for
the master trust II portfolio during the periods
shown in such table. Principal payment rates may
change due to a variety of factors including
economic, social and legal factors, changes in the
terms of credit card accounts by MBNA or the addition
of credit card accounts to master trust II with
different characteristics. There can be no assurance
that the rate of principal repayment will remain in
this range in the future.
Yield and payments on the receivables could decrease
resulting in the receipt of principal payments
earlier than the expected principal payment date
There is no assurance that the stated principal
amount of your notes will be paid on its expected
principal payment date.
A significant decrease in the amount of credit card
receivables in master trust II for any reason could
result in an early redemption event and in early
payment of your notes, as well as decreased
protection to you against defaults on the credit card
receivables. In addition, the effective yield on the
credit card receivables owned by master trust II
could decrease due to, among other things, a change
in periodic finance charges on the credit card
accounts, an increase in the level of delinquencies
or increased convenience use of the card whereby
cardholders pay their credit card balance in full
each month and incur no finance charges. This could
reduce the amount of available funds. If the amount
of excess available
S-19
funds for any three consecutive calendar months is
less than the required excess available funds for
such three months, an early redemption event will
occur and could result in an early payment of your
notes. See "Prospectus Supplement Summary--Early
Redemption of Notes."
See "Risk Factors" in the prospectus for a discussion
of other circumstances under which you may receive
principal payments earlier or later than the expected
principal payment date.
S-20
Glossary
This prospectus supplement and the accompanying prospectus use defined terms.
You can find a listing of defined terms in the "Glossary of Defined Terms"
beginning on page S-63 in this prospectus supplement and beginning on page 101
in the accompanying prospectus.
The Notes
The MBNAseries notes will be issued pursuant to the indenture and an
indenture supplement. The following discussion and the discussion under "The
Notes" and "The Indenture" in the prospectus summarize the material terms of
the notes, the indenture and the MBNAseries indenture supplement. These
summaries do not purport to be complete and are qualified in their entirety by
reference to the provisions of the notes, the indenture and the MBNAseries
indenture supplement. Neither the indenture nor the MBNAseries indenture
supplement limits the aggregate principal amount of notes that may be issued.
The MBNAseries will be included in Excess Available Funds Group A for the
purpose of sharing excess available funds. The MBNAseries notes will be issued
in classes. Each class of notes may have multiple tranches which may be issued
at different times and have different terms. Whenever a "class" of notes is
referred to in this prospectus supplement or the accompanying prospectus, it
includes all tranches of that class of notes, unless the context otherwise
requires.
No senior class of the MBNAseries may be issued unless a sufficient amount of
subordinated notes or other acceptable credit enhancement have previously been
issued and are outstanding. See "--Issuances of New Series, Classes and
Tranches of Notes--Required Subordinated Amount."
The issuer will pay principal of and interest on the Class A(2001-1) notes
solely from the portion of MBNAseries Available Funds and MBNAseries Available
Principal Amounts and from other amounts which are available to the Class
A(2001-1) notes under the indenture and the MBNAseries indenture supplement
after giving effect to all allocations and reallocations. If those sources are
not sufficient to pay the Class A(2001-1) notes, Class A(2001-1) noteholders
will have no recourse to any other assets of the issuer or any other person or
entity for the payment of principal of or interest on those notes.
Subordination of Principal and Interest
Principal and interest payments on Class B notes and Class C notes of the
MBNAseries are subordinated to payments on Class A notes of the MBNAseries.
Subordination of Class B notes and Class C notes of the MBNAseries provides
credit enhancement for Class A notes of the MBNAseries.
Principal and interest payments on Class C notes of the MBNAseries are
subordinated to payments on Class A notes and Class B notes of the MBNAseries.
Subordination of
S-21
Class C notes of the MBNAseries provides credit enhancement for Class A notes
and Class B notes of the MBNAseries.
In addition, in the case of a discount note, the accreted principal of that
note corresponding to capitalized interest will be senior or subordinated to
the same extent that principal is senior or subordinated.
MBNAseries Available Principal Amounts may be reallocated to pay interest on
senior classes of notes or to pay a portion of the master trust II servicing
fee allocable to the MBNAseries, subject to certain limitations. In addition,
charge-offs due to uncovered defaults on principal receivables in master
trust II allocable to the MBNAseries generally are reallocated from the senior
classes to the subordinated classes of the MBNAseries. See "The Notes--Stated
Principal Amount, Outstanding Dollar Principal Amount and Nominal Liquidation
Amount--Nominal Liquidation Amount" and "Master Trust II--Defaulted
Receivables; Rebates and Fraudulent Charges" in the prospectus.
In the MBNAseries, payment of principal may be made on a subordinated class
of notes before payment in full of each senior class of notes only under the
following circumstances:
. If after giving effect to the proposed principal payment there is still
a sufficient amount of subordinated notes to support the outstanding
senior notes. See "Deposit and Application of Funds--Targeted Deposits
of MBNAseries Available Principal Amounts to the Principal Funding
Account" and "--Allocation to Principal Funding Subaccounts." For
example, if a tranche of Class A notes has been repaid, this generally
means that, unless other Class A notes are issued, at least some Class B
notes and Class C notes may be repaid when such Class B notes and Class
C notes are required to be repaid even if other tranches of Class A
notes are outstanding.
. If the principal funding subaccounts for the senior classes of notes
have been sufficiently prefunded as described in "Deposit and
Application of Funds--Targeted Deposits of MBNAseries Available
Principal Amounts to the Principal Funding Account--Prefunding of the
Principal Funding Account for Senior Classes."
. If new tranches of subordinated notes are issued so that the
subordinated notes that have reached their expected principal payment
date are no longer necessary to provide the required subordination.
. If the subordinated tranche of notes reaches its legal maturity date and
there is a sale of credit card receivables as described in "Deposit and
Application of Funds--Sale of Credit Card Receivables."
MBNAseries Available Principal Amounts remaining after any reallocations for
interest on the senior notes or for a portion of the master trust II servicing
fee allocable to the MBNAseries will be applied to make targeted deposits to
the principal funding subaccounts of senior notes before being applied to make
targeted deposits to the principal funding subaccounts of the subordinated
notes if such remaining amounts are not sufficient to make all required
targeted deposits.
S-22
Issuances of New Series, Classes and Tranches of Notes
Conditions to Issuance
The issuer may issue new series, classes and tranches of notes (including
additional notes of an outstanding tranche or class), so long as the conditions
to issuance listed in "The Notes--Issuances of New Series, Classes and Tranches
of Notes" in the prospectus are satisfied and so long as any increase in the
targeted deposit amount of any Class C reserve subaccount caused by such
issuance will have been funded on or prior to such issuance date.
The issuer and the indenture trustee are not required to obtain the consent
of any noteholder of any outstanding series, class or tranche to issue any
additional notes.
Required Subordinated Amount
No Class A notes or Class B notes may be issued unless the required
subordinated amount of subordinated classes is available at the time of its
issuance. The required subordinated amount of a tranche of a senior class of
notes of the MBNAseries is the aggregate nominal liquidation amount of a
subordinated class that is required to be outstanding and available on the date
when a tranche of a senior class of notes is issued.
The issuer may change the required subordinated amount for any tranche of
notes of the MBNAseries, or the method of computing the required subordinated
amount, at any time without the consent of any noteholders so long as the
issuer has:
. received confirmation from each rating agency that has rated any
outstanding notes that the change will not result in the reduction,
qualification or withdrawal of its then-current rating of any
outstanding notes in the MBNAseries; and
. delivered an opinion of counsel that for federal income tax purposes (1)
the change will not adversely affect the tax characterization as debt of
any outstanding series, class or tranche of notes of the issuer that
were characterized as debt at the time of their issuance, (2) following
the change, the issuer will not be treated as an association, or
publicly traded partnership, taxable as a corporation, and (3) such
change will not cause or constitute an event in which gain or loss would
be recognized by any holder of such notes.
In order to issue Class A notes, the issuer must calculate the available
amount of Class B notes and Class C notes. The issuer will first calculate the
amount of Class B notes available for such new tranche of Class A notes. This
is done by computing the following:
. the aggregate nominal liquidation amount of all tranches of outstanding
Class B notes on that date, after giving effect to issuances, deposits,
allocations, reallocations or payments with respect to Class B notes to
be made on that date; minus
. the aggregate amount of the Class A required subordinated amount of
Class B notes for all other Class A notes which are outstanding on that
date, after giving effect to any issuances, deposits, allocations,
reallocations or payments with respect to Class A notes to be made on
that date.
S-23
The calculation in the prior paragraph will also be made in the same manner
for calculating the amount of Class C notes available for Class A notes and the
amount of Class C notes available for Class B notes.
Waiver of Issuance Conditions
If the issuer obtains confirmation from each rating agency that has rated any
outstanding notes that the issuance of a new series, class or tranche of notes
will not cause a reduction or withdrawal of the ratings of any outstanding
notes rated by that rating agency, then some of the conditions to issuance
described above and under "The Notes--Issuance of New Series, Classes and
Tranches of Notes" in the prospectus may be waived.
Sources of Funds to Pay the Notes
The Collateral Certificate
The primary source of funds for the payment of principal of and interest on
the notes is the collateral certificate issued by master trust II to the
issuer. For a description of the collateral certificate, master trust II and
its assets, see "Master Trust II" and "Sources of Funds to Pay the Notes--The
Collateral Certificate" in the prospectus.
Payments Received from Derivative Counterparties
The issuer may enter into derivative agreements with respect to certain
tranches of the MBNAseries as a source of funds to pay principal of or interest
on the notes. See "Deposit and Application of Funds--Payments Received from
Derivative Counterparties for Interest in Foreign Currencies" and "--Payments
Received from Derivative Counterparties for Principal." On the date the Class
A(2001-1) notes are issued, the issuer will enter into a derivative agreement
for interest (referred to in this prospectus supplement as the derivative
agreement) with Lehman Brothers Special Financing Inc., the derivative
counterparty.
The amount payable by the derivative counterparty to the issuer under the
derivative agreement will be, for each Transfer Date, an amount equal to one-
twelfth of the product of (a) 5.75% and (b) the outstanding dollar principal
amount of the Class A(2001-1) notes at the end of the prior month. In the case
of the first Transfer Date, such amounts will include accrued amounts for the
period from and including the issuance date to but excluding the first interest
payment date. Payments from the derivative counterparty to the issuer will be
calculated on the basis of a 360-day year and twelve 30-day months.
The amount payable by the issuer to the derivative counterparty under the
derivative agreement will be, for each Transfer Date, an amount equal to the
product of:
(i) a fraction, the numerator of which is the actual number of days in
the interest period relating to such Transfer Date, and the denominator of
which is 360;
(ii) a rate not to exceed 0.15% per annum above LIBOR prevailing on the
related LIBOR Determination Date with respect to such interest period; and
S-24
(iii) the outstanding dollar principal amount of the Class A(2001-1)
notes at the end of the prior month.
An "interest period" begins on and includes an interest payment date and ends
on but excludes the next interest payment date. However, the first interest
period will begin on and include the issuance date.
With respect to each Transfer Date, the Net Derivative Receipt, if any, will
be treated as MBNAseries Available Funds. The Net Derivative Payment, if any,
will be paid to the derivative counterparty out of MBNAseries Available Funds
and certain other available amounts allocated to the Class A(2001-1) notes and
deposited into the related interest funding subaccount, including amounts on
deposit in the accumulation reserve subaccount and reallocated MBNAseries
Available Principal Amounts, based on the respective amounts due as described
under "Deposit and Application of Funds--Targeted Deposits of MBNAseries
Available Funds to the Interest Funding Account."
The "Net Derivative Payment," for any Transfer Date, means, (a) if the
netting provisions of the derivative agreement apply, the amount by which the
Floating Amount for such date exceeds the Fixed Amount for such date, and (b)
otherwise, an amount equal to the Floating Amount for such date.
The "Net Derivative Receipt," for any Transfer Date, means, (a) if the
netting provisions of the derivative agreement apply, the amount by which the
Fixed Amount for such date exceeds the Floating Amount for such date, and (b)
otherwise, an amount equal to the Fixed Amount for such date.
The netting provisions of the derivative agreement will apply unless the
issuer elects gross payments to be made pursuant to the provisions of the
derivative agreement. If the issuer elects gross payments under the derivative
agreement, the issuer's obligation to pay the Floating Amount on any Transfer
Date to the derivative counterparty pursuant to the terms of the derivative
agreement is conditioned upon the prior receipt of the Fixed Amount from the
derivative counterparty for such date.
The "Fixed Amount," for any Transfer Date, means an amount equal to the fixed
amount (including any termination payments pursuant to the derivative
agreement) payable by the derivative counterparty to the issuer for such date
pursuant to the terms of the derivative agreement.
The "Floating Amount," for any Transfer Date, means an amount equal to the
floating amount payable by the issuer to the derivative counterparty for such
date pursuant to the derivative agreement minus the excess of (i) the targeted
amount of principal funding subaccount earnings for the Class A(2001-1) notes
for the related month over (ii) the sum of the amount actually earned on such
funds for the related month, plus amounts withdrawn from the applicable
accumulation reserve subaccount, plus collections of finance charge receivables
allocable to the designated portion of the Seller Interest, if any, plus
amounts withdrawn from a derivative reserve account, in each case, to cover
shortfalls on principal funding subaccount earnings, if any. The Floating
Amount does not include any termination
S-25
payments payable by the issuer to the derivative counterparty pursuant to the
derivative agreement.
The derivative agreement will terminate by its terms, whether or not the
Class A(2001-1) notes have been paid in full prior to such termination, upon
the earliest to occur of:
(i) the termination of the issuer pursuant to the terms of the indenture;
(ii) the payment in full of the Class A(2001-1) notes;
(iii) the expected principal payment date for the Class A(2001-1) notes;
(iv) the insolvency, conservatorship or receivership of the derivative
counterparty;
(v) the failure on the part of the issuer or the derivative counterparty
to make any payment under the derivative agreement within the applicable
grace period, if any;
(vi) illegality on the part of the issuer or the derivative counterparty
to be a party to, or perform an obligation under, the derivative agreement;
and
(vii) the termination of the guaranty provided by the derivative
counterparty guarantor to the derivative counterparty without a suitable
replacement guaranty or similar arrangement.
In the event that the derivative agreement terminates prior to the payment in
full of the Class A(2001-1) notes, applications of MBNAseries Available Funds
to fund targeted deposits to the interest funding subaccount will be made
without the benefit of any Net Derivative Receipts that might have been due for
any future Transfer Dates.
If (i) the derivative counterparty guarantor's short-term credit rating from
Standard & Poor's is below "A-1", (ii) in the case of a replacement derivative
counterparty that does not have a short-term credit rating from Standard &
Poor's, such derivative counterparty's long-term credit rating from Standard &
Poor's is below "A+", or (iii) either of such ratings is withdrawn by Standard
& Poor's, the derivative counterparty will be required within 30 days from the
date of such rating or withdrawal to fund an interest reserve account in an
amount equal to one-twelfth of the product of (a) 5.75% and (b) the outstanding
dollar principal amount of the Class A(2001-1) notes at the end of the month
preceding such reduction or withdrawal (the "required interest reserve
amount"). On any Transfer Date after such deposit, if Standard & Poor's short-
term credit rating of the derivative counterparty or its guarantor is "A-1" or
higher, or if Standard & Poor's long-term credit rating of the derivative
counterparty or its guarantor is "A+" or higher, the issuer will distribute any
amounts on deposit in the interest reserve account to the derivative
counterparty pursuant to the terms of the derivative agreement. The issuer will
establish and maintain the interest reserve account for the benefit of the
Class A(2001-1) noteholders. There can be no assurance that the derivative
counterparty can or will adequately fund the interest reserve account. If the
derivative counterparty fails to adequately fund the interest reserve account
within 30 days of such reduction or withdrawal (an "interest reserve account
event"), then (i) if an early redemption event has not previously occurred,
upon the
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occurrence of an early redemption event, MBNAseries Available Principal Amounts
allocable to the Class A(2001-1) notes, together with any amounts in the
principal funding subaccount for the Class A(2001-1) notes, will not be
retained in such subaccount and will be paid to the Class A(2001-1) noteholders
or (ii) if an early redemption event has previously occurred, upon the
occurrence of such interest reserve account event, any amounts in the principal
funding subaccount for the Class A(2001-1) notes will not be retained in such
account and will, together with MBNAseries Available Principal Amounts
allocable to the Class A(2001-1) notes, if any, be paid to the Class A(2001-1)
noteholders.
All amounts on deposit in the interest reserve account on any Transfer Date
(after giving effect to any deposits to the interest reserve account to be made
on such Transfer Date) will be invested in Permitted Investments. Investment
earnings on amounts on deposit in the interest reserve account will be retained
in the interest reserve account (to the extent the amount on deposit is less
than the required interest reserve amount) or paid to the derivative
counterparty.
On the Transfer Date on or following the termination of the derivative
agreement due to a default by the derivative counterparty, the issuer will
withdraw an amount equal to the Net Derivative Receipt, if any, for such
Transfer Date, plus the amount of any Net Derivative Receipt previously due but
not paid, from funds on deposit in the interest reserve account, if any, and
treat such amounts as MBNAseries Available Funds as described under "Deposit
and Application of Funds--MBNAseries Available Funds" as if such amounts were a
Net Derivative Receipt received from the derivative counterparty. The interest
reserve account will thereafter be terminated.
Upon the termination of the interest reserve account, any remaining amounts
will be paid to the derivative counterparty.
In the event the long-term credit rating of the derivative counterparty
guarantor or a replacement derivative counterparty is reduced below "BBB-" by
Standard & Poor's or below "Baa3" by Moody's, or is withdrawn by either
Standard & Poor's or Moody's, the issuer will direct the derivative
counterparty to assign its rights and obligations under the derivative
agreement to a replacement derivative counterparty. There can be no assurance
that a successor derivative counterparty will be found or that such assignment
can be made.
The rating agencies have not relied on the ratings of the derivative
counterparty in rating the Class A(2001-1) notes but rather on the value of the
receivables in master trust II and the terms of the applicable credit
enhancements. See "Risk Factors."
Derivative Counterparty
The derivative counterparty under the derivative agreement for interest for
the Class A(2001-1) notes is Lehman Brothers Special Financing Inc. ("LBSF"), a
Delaware corporation and wholly owned subsidiary of Lehman Brothers Holdings
Inc. ("Holdings"), a Delaware corporation. The obligations of LBSF under the
derivative agreement are fully and unconditionally guaranteed by Holdings.
Holdings currently has a
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long-term unsecured debt credit rating of "A" and a short-term credit rating of
"A-1" from Standard & Poor's and a long-term unsecured debt credit rating of
"A2" and a short-term credit rating of "P-1" from Moody's.
The information set forth in the preceding paragraph and in the first and
second sentences of the last paragraph of "Summary of Terms--Derivative
Agreement" has been provided by the derivative counterparty. The issuer makes
no representations as to the accuracy or completeness of such information.
The Issuer Accounts
The issuer will establish a principal funding account, an interest funding
account and an accumulation reserve account for the benefit of the MBNAseries,
which will have subaccounts for each tranche of notes of the MBNAseries, and a
Class C reserve account, which will have subaccounts for each tranche of Class
C notes of the MBNAseries.
Each month, distributions on the collateral certificate will be deposited
into the collection account, and then allocated to each series of notes
(including the MBNAseries) as described in the accompanying prospectus, and
then allocated to the principal funding account, the interest funding account,
the accumulation reserve account, the Class C reserve account and any other
supplemental account, to make payments under any applicable derivative
agreements and additionally as specified in "Deposit and Application of Funds."
Funds on deposit in the principal funding account and the interest funding
account will be used to make payments of principal of and interest on the
MBNAseries notes when such payments are due. Payments of interest and principal
will be due in the month when the funds are deposited into the accounts, or in
later months. If interest on a note is not scheduled to be paid every month--
for example, if interest on that note is payable quarterly, semiannually or at
another interval less frequently than monthly--the issuer will deposit accrued
interest amounts funded from MBNAseries Available Funds into the interest
funding subaccount for that note to be held until the interest is due. See
"Deposit and Application of Funds--Targeted Deposits of MBNAseries Available
Funds to the Interest Funding Account."
If the issuer anticipates that MBNAseries Available Principal Amounts will
not be enough to pay the stated principal amount of a note on its expected
principal payment date, the issuer may begin to apply MBNAseries Available
Principal Amounts in months before the expected principal payment date and
deposit those funds into the principal funding subaccount established for that
tranche to be held until the expected principal payment date of that note.
However, since funds in the principal funding subaccount for tranches of
subordinated notes will not be available for credit enhancement for any senior
classes of notes, MBNAseries Available Principal Amounts will not be deposited
into the principal funding subaccount for a tranche of subordinated notes if
such deposit would reduce the available subordination below the required
subordination.
If the earnings on funds in the principal funding subaccount are less than
the interest payable on the portion of principal in the principal funding
subaccount for the applicable
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tranche of notes, the amount of such shortfall will be withdrawn from the
accumulation reserve account to the extent available, unless the amounts on
deposit in the principal funding subaccount are prefunded amounts, in which
case additional finance charge collections will be allocable to the collateral
certificate and the MBNAseries and will be treated as MBNAseries Available
Funds as described under "Deposit and Application of Funds--MBNAseries
Available Funds" in this prospectus supplement and "Master Trust II--
Application of Collections" in the prospectus.
Limited Recourse to the Issuer; Security for the Notes
The collateral certificate is allocated a portion of collections of finance
charge receivables, collections of principal receivables, its share of the
payment obligation on the master trust II servicing fee and its share of
defaults on principal receivables in master trust II based on the investor
percentage. The MBNAseries and the other series of notes are secured by a
shared security interest in the collateral certificate and the collection
account of the issuer, but each series of notes (including the MBNAseries) is
entitled to the benefits of only that portion of those assets allocable to it
under the indenture and the applicable indenture supplement. Therefore, only a
portion of the collections allocated to the collateral certificate are
available to the MBNAseries. Similarly, MBNAseries notes are entitled only to
their allocable share of MBNAseries Available Funds, MBNAseries Available
Principal Amounts, amounts on deposit in the applicable issuer accounts, any
payments received from derivative counterparties (to the extent not included in
MBNAseries Available Funds) and proceeds of the sale of credit card receivables
by master trust II. Noteholders will have no recourse to any other assets of
the issuer or any other person or entity for the payment of principal of or
interest on the notes.
Each tranche of notes of the MBNAseries is entitled to the benefits of only
that portion of the issuer's assets allocated to that tranche under the
indenture and the MBNAseries indenture supplement. Each tranche of notes is
also secured by a security interest in the applicable principal funding
subaccount, the applicable interest funding subaccount, the applicable
accumulation reserve subaccount, in the case of a tranche of Class C notes, the
applicable Class C reserve subaccount and any other applicable supplemental
account, and by a security interest in any applicable derivative agreement.
Early Redemption of the Notes
The early redemption events applicable to all notes are described in "The
Indenture-- Early Redemption Events" in the prospectus. In addition, if for any
date the amount of Excess Available Funds averaged over the three preceding
months is less than the Required Excess Available Funds for such date, an early
redemption event for the Class A(2001-1) notes will occur.
If any of the early redemption events applicable to the Class A(2001-1) notes
occurs (other than an investment company early redemption event) and the
derivative agreement has not been terminated, an interest reserve account event
has not occurred and an event of default and acceleration of the Class A(2001-
1) notes has not occurred, MBNAseries Available Principal Amounts allocable to
the Class A(2001-1) notes and amounts in the
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principal funding subaccount for the Class A(2001-1) notes will not be paid to
the holders of the Class A(2001-1) notes as described under "The Notes--Early
Redemption of the Notes" and "The Indenture--Early Redemption of the Notes" in
the prospectus, but instead will be retained in the principal funding
subaccount for the Class A(2001-1) notes until the expected principal payment
date of the Class A(2001-1) notes. However, if (i) the derivative agreement
terminates, (ii) an interest reserve account event occurs, (iii) an investment
company early redemption event occurs or (iv) an event of default and
acceleration of the Class A(2001-1) notes occurs, such amounts will not be
accumulated in the principal funding subaccount for the Class A(2001-1) notes,
but instead will be paid to the holders of the Class A(2001-1) notes. See "The
Notes--Sources of Funds to Pay the Notes--Payments Received from Derivative
Counterparties" for a description of an interest reserve account event and the
derivative agreement termination events.
Deposit and Application of Funds
The indenture specifies how Available Funds (primarily consisting of
collections of finance charge receivables allocated and paid to the collateral
certificateholder) and Available Principal Amounts (primarily consisting of
collections of principal receivables allocated and paid to the collateral
certificateholder) will be allocated among the multiple series of notes secured
by the collateral certificate. The MBNAseries indenture supplement specifies
how MBNAseries Available Funds (which are the MBNAseries' share of Available
Funds plus other amounts treated as MBNAseries Available Funds) and MBNAseries
Available Principal Amounts (which are the MBNAseries' share of Available
Principal Amounts plus other amounts treated as MBNAseries Available Principal
Amounts) will be deposited into the issuer accounts established for the
MBNAseries to provide for the payment of interest on and principal of
MBNAseries notes as payments become due. In addition, the MBNAseries indenture
supplement specifies how defaults on principal receivables in master trust II
and the master trust II servicing fee will be allocated to the collateral
certificate and the MBNAseries. The following sections summarize those
provisions.
MBNAseries Available Funds
MBNAseries Available Funds will consist of the following amounts:
. The MBNAseries' share of collections of finance charge receivables
allocated and paid to the collateral certificateholder and investment
earnings on funds held in the collection account. See "Sources of Funds
to Pay the Notes--Deposit and Application of Funds" in the prospectus.
. Withdrawals from the accumulation reserve subaccount.
If the number of months targeted to accumulate budgeted deposits of
MBNAseries Available Principal Amounts for the payment of principal on a
tranche of notes is greater than one month, then the issuer will begin
to fund an accumulation reserve subaccount for such tranche. See "--
Targeted Deposits of MBNAseries Available Principal Amounts to the
Principal Funding Account." The amount targeted to be deposited in the
accumulation reserve account for each month, beginning with the
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third month prior to which MBNAseries Available Principal Amounts are to
be accumulated for such tranche, will be an amount equal to 0.5% of the
outstanding dollar principal amount of such tranche of notes.
On each Transfer Date, the issuer will calculate the targeted amount of
principal funding subaccount earnings for each tranche of notes, which
will be equal to the amount that the funds (other than prefunded
amounts) on deposit in each principal funding subaccount would earn at
the interest rate payable by the issuer--taking into account payments
due under applicable derivative agreements--on the related tranche of
notes. As a general rule, if the amount actually earned on such funds on
deposit is less than the targeted amount of earnings, then the amount of
such shortfall will be withdrawn from the applicable accumulation
reserve subaccount and treated as MBNAseries Available Funds for such
month.
. Additional finance charge collections allocable to the MBNAseries.
The issuer will notify the servicer from time to time of the aggregate
prefunded amount on deposit in the principal funding account. Whenever
there are any prefunded amounts on deposit in any principal funding
subaccount, master trust II will designate an amount of the Seller
Interest equal to such prefunded amounts. On each Transfer Date, the
issuer will calculate the targeted amount of principal funding
subaccount prefunded amount earnings for each tranche of notes, which
will be equal to the amount that the prefunded amounts on deposit in
each principal funding subaccount would earn at the interest rate
payable by the issuer--taking into account payments due under applicable
derivative agreements--on the related tranche of notes. As a general
rule, if the amount actually earned on such funds on deposit is less
than the targeted amount of earnings, collections of finance charge
receivables allocable to such designated portion of the Seller Interest
up to the amount of the shortfall will be treated as MBNAseries
Available Funds. See "Master Trust II--Application of Collections" in
the prospectus.
. Investment earnings on amounts on deposit in the principal funding
account, interest funding account and accumulation reserve account for
the MBNAseries.
. Any shared excess available funds allocable to the MBNAseries.
See "--Shared Excess Available Funds" in this prospectus supplement.
. Amounts received from derivative counterparties.
Unless otherwise specified in the MBNAseries indenture supplement,
payments received under derivative agreements for interest on notes of
the MBNAseries payable in U.S. dollars will be treated as MBNAseries
Available Funds.
Application of MBNAseries Available Funds
On each Transfer Date, the indenture trustee will apply MBNAseries Available
Funds as follows:
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. first, to make the targeted deposits to the interest funding account to
fund the payment of interest on the notes and certain payments due to
derivative counterparties;
. second, to pay the MBNAseries's share of the master trust II servicing
fee, plus any previously due and unpaid master trust II servicing fee
allocable to the MBNAseries, to the servicer;
. third, to be treated as MBNAseries Available Principal Amounts in an
amount equal to the amount of defaults on principal receivables in
master trust II allocated to the MBNAseries for the preceding month;
. fourth, to be treated as MBNAseries Available Principal Amounts in an
amount equal to the Nominal Liquidation Amount Deficits, if any, of
MBNAseries notes;
. fifth, to make the targeted deposit to the accumulation reserve account,
if any;
. sixth, to make the targeted deposit to the Class C reserve account, if
any;
. seventh, to make any other payment or deposit required by any class or
tranche of MBNAseries notes;
. eighth, to be treated as shared excess available funds; and
. ninth, to the issuer.
Targeted Deposits of MBNAseries Available Funds to the Interest Funding Account
The aggregate deposit targeted to be made each month to the interest funding
account will be equal to the sum of the interest funding account deposits
targeted to be made for each tranche of notes set forth below. The deposit
targeted for any month will also include any shortfall in the targeted deposit
from any prior month which has not been previously deposited.
. Interest Payments. The deposit targeted for any tranche of outstanding
interest-bearing notes on each Transfer Date will be equal to the amount
of interest accrued on the outstanding dollar principal amount of that
tranche during the period from and including the first Monthly Interest
Accrual Date in the prior month to but excluding the first Monthly
Interest Accrual Date for the current month.
. Amounts Owed to Derivative Counterparties. If a tranche of notes has a
Performing or non-Performing derivative agreement for interest that
provides for payments to the applicable derivative counterparty, in
addition to any applicable stated interest as determined under the item
above, the deposit targeted for that tranche of notes on each Transfer
Date with respect to any payment to the derivative counterparty will be
specified in the MBNAseries indenture supplement.
. Discount Notes. The deposit targeted for a tranche of discount notes on
each Transfer Date is the amount of accretion of principal of that
tranche of notes from and including the prior Monthly Principal Accrual
Date--or in the case of the first Monthly Principal Accrual Date, from
and including the date of issuance of that
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tranche--to but excluding the first Monthly Principal Accrual Date for
the next month.
. Specified Deposits. If any tranche of notes provides for deposits in
addition to or different from the deposits described above to be made to
the interest funding subaccount for that tranche, the deposits targeted
for that tranche each month are the specified amounts.
. Additional Interest. The deposit targeted for any tranche of notes that
has previously due and unpaid interest for any month will include the
interest accrued on that overdue interest during the period from and
including the first Monthly Interest Accrual Date in the prior month to
but excluding the first Monthly Interest Accrual Date for the current
month.
Each deposit to the interest funding account for each month will be made on
the following Transfer Date. A tranche of notes may be entitled to more than
one of the preceding deposits.
A class or tranche of notes for which credit card receivables have been sold
by master trust II as described in "--Sale of Credit Card Receivables" will not
be entitled to receive any of the preceding deposits to be made from MBNAseries
Available Funds after the sale has occurred.
Allocation to Interest Funding Subaccounts
The aggregate amount to be deposited in the interest funding account will be
allocated, and a portion deposited in the interest funding subaccount
established for each tranche of notes, as follows:
. MBNAseries Available Funds are at least equal to targeted amounts. If
MBNAseries Available Funds are at least equal to the sum of the deposits
targeted by each tranche of notes as described above, then that targeted
amount will be deposited in the interest funding subaccount established
for each tranche.
. MBNAseries Available Funds are less than targeted amounts. If MBNAseries
Available Funds are less than the sum of the deposits targeted by each
tranche of notes as described above, then MBNAseries Available Funds
will be allocated to each tranche of notes as follows:
--first, to cover the deposits with respect to the Class A notes
(including any applicable derivative counterparty payments),
--second, to cover the deposits with respect to the Class B notes
(including any applicable derivative counterparty payments), and
--third, to cover the deposits with respect to the Class C notes
(including any applicable derivative counterparty payments).
In each case, MBNAseries Available Funds allocated to a class will be
allocated to each tranche of notes within such class pro rata based on the
ratio of:
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--the aggregate amount of the deposits targeted with respect to that
tranche of notes, to
--the aggregate amount of the deposits targeted with respect to all
tranches of notes in such class.
Payments Received from Derivative Counterparties for Interest of Foreign
Currency Notes
Payments received under derivative agreements for interest of foreign
currency notes in the MBNAseries will be applied as specified in the MBNAseries
indenture supplement.
Allocations of Reductions from Charge-Offs
On each Transfer Date when there is a charge-off for uncovered defaults on
principal receivables in master trust II allocable to the MBNAseries for the
prior month, that reduction will be allocated (and reallocated) on that date to
each tranche of notes as set forth below:
Initially, the amount of such charge-off will be allocated to each tranche of
outstanding notes pro rata based on the ratio of the Weighted Average Available
Funds Allocation Amount for such tranche for the prior month to the Weighted
Average Available Funds Allocation Amount for the MBNAseries for the prior
month.
Immediately afterwards, the amount of charge-offs allocated to the Class A
notes and Class B notes will be reallocated to the Class C notes as set forth
below, and the amount of charge-offs allocated to the Class A notes and not
reallocated to the Class C notes because of the limits set forth below will be
reallocated to the Class B notes as set forth below. In addition, charge-offs
initially allocated to Class A notes which are reallocated to Class B notes
because of Class C usage limitations can be reallocated to Class C notes if
permitted as described below. Any amount of charge-offs which cannot be
reallocated to a subordinated class as a result of the limits set forth below
will reduce the nominal liquidation amount of the tranche of notes to which it
was initially allocated.
Limits on Reallocations of Charge-Offs to a Tranche of Class C Notes from
Tranches of Class A and Class B Notes.
No reallocations of charge-offs from a tranche of Class A notes to Class C
notes may cause that tranche's Class A Usage of Class C Required Subordinated
Amount to exceed that tranche's Class A required subordinated amount of Class C
notes.
No reallocations from a tranche of Class B notes to Class C notes may cause
that tranche's Class B Usage of Class C Required Subordinated Amount to exceed
that tranche's Class B required subordinated amount of Class C notes.
The amount permitted to be reallocated to tranches of Class C notes will be
applied to each tranche of Class C notes pro rata based on the ratio of the
Weighted Average Available Funds Allocation Amount of such tranche of Class C
notes for the prior month to the
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Weighted Average Available Funds Allocation Amount of all Class C notes in the
MBNAseries for the prior month.
No such reallocation will reduce the nominal liquidation amount of any
tranche of Class C notes below zero.
Limits on Reallocations of Charge-Offs to a Tranche of Class B Notes from
Tranches of Class A Notes.
No reallocations of charge-offs from a tranche of Class A notes to Class B
notes may cause that tranche's Class A Usage of Class B Required Subordinated
Amount to exceed that tranche's Class A required subordinated amount of Class B
notes.
The amount permitted to be reallocated to tranches of Class B notes will be
applied to each tranche of Class B notes pro rata based on the ratio of the
Weighted Average Available Funds Allocation Amount for that tranche of Class B
notes for the prior month to the Weighted Average Available Funds Allocation
Amount for all Class B notes in the MBNAseries for the prior month.
No such reallocation will reduce the nominal liquidation amount of any
tranche of Class B notes below zero.
For each tranche of notes, the nominal liquidation amount of that tranche
will be reduced by an amount equal to the charge-offs which are allocated or
reallocated to that tranche of notes less the amount of charge-offs that are
reallocated from that tranche of notes to a subordinated class of notes.
Allocations of Reimbursements of Nominal Liquidation Amount Deficits
If there are MBNAseries Available Funds available to reimburse any Nominal
Liquidation Amount Deficits on any Transfer Date, such funds will be allocated
to each tranche of notes as follows:
. first, to each tranche of Class A notes,
. second, to each tranche of Class B notes, and
. third, to each tranche of Class C notes.
In each case, MBNAseries Available Funds allocated to a class will be
allocated to each tranche of notes within such class pro rata based on the
ratio of:
--the Nominal Liquidation Amount Deficit of such tranche of notes, to
--the aggregate Nominal Liquidation Amount Deficit of all tranches of such
class.
In no event will the nominal liquidation amount of a tranche of notes be
increased above the Adjusted Outstanding Dollar Principal Amount of such
tranche.
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Application of MBNAseries Available Principal Amounts
On each Transfer Date, the indenture trustee will apply MBNAseries Available
Principal Amounts as follows:
. first, for each month, if MBNAseries Available Funds are insufficient to
make the full targeted deposit into the interest funding subaccount for
any tranche of Class A notes, then MBNAseries Available Principal
Amounts (in an amount not to exceed the sum of the investor percentage
of collections of principal receivables allocated to the Class B notes
and the Class C notes for each day during such month) will be allocated
to the interest funding subaccount of each such tranche of Class A notes
pro rata based on, in the case of each such tranche of Class A notes,
the lesser of:
--the amount of the deficiency of the targeted amount to be deposited
into the interest funding subaccount of such tranche of Class A notes,
and
--an amount equal to the sum of the Class A Unused Subordinated Amount of
Class C notes plus the Class A Unused Subordinated Amount of Class B
notes for such tranche of Class A notes (determined after giving effect
to the allocation of charge-offs for uncovered defaults on principal
receivables in master trust II);
. second, for each month, if MBNAseries Available Funds are insufficient
to make the full targeted deposit into the interest funding subaccount
for any tranche of Class B notes, then MBNAseries Available Principal
Amounts (in an amount not to exceed the sum of the investor percentage
of collections of principal receivables allocated to the Class B notes
and the Class C notes for each day during such month minus the aggregate
amount of MBNAseries Available Principal Amounts reallocated as
described in the first clause above) will be allocated to the interest
funding subaccount of each such tranche of Class B notes pro rata based
on, in the case of each such tranche of Class B notes, the lesser of:
--the amount of the deficiency of the targeted amount to be deposited
into the interest funding subaccount of such tranche of Class B notes,
and
--an amount equal to the Class B Unused Subordinated Amount of Class C
notes for such tranche of Class B notes (determined after giving effect
to the allocation of charge-offs for uncovered defaults on principal
receivables in master trust II and the reallocation of MBNAseries
Available Principal Amounts as described in the first clause above);
. third, for each month, if MBNAseries Available Funds are insufficient to
pay the portion of the master trust II servicing fee allocable to the
MBNAseries, then MBNAseries Available Principal Amounts (in an amount
not to exceed the sum of the investor percentage of collections of
principal receivables allocated to the Class B notes and the Class C
notes for each day during such month minus the aggregate amount of
MBNAseries Available Principal Amounts reallocated as described in the
first and second clauses above) will be paid to the servicer in an
amount equal to, and allocated to each such tranche of Class A notes pro
rata based on, in the case of each tranche of Class A notes, the lesser
of:
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--the amount of the deficiency times the Weighted Average Available Funds
Allocation Amount for such tranche for such month to the Weighted
Average Available Funds Allocation Amount for the MBNAseries for such
month, and
--an amount equal to the Class A Unused Subordinated Amount of Class C
notes plus the Class A Unused Subordinated Amount of Class B notes for
such tranche of Class A notes (determined after giving effect to the
allocation of charge-offs for uncovered defaults on principal
receivables in master trust II and the reallocation of MBNAseries
Available Principal Amounts as described in the first and second
clauses above);
. fourth, for each month, if MBNAseries Available Funds are insufficient
to pay the portion of the master trust II servicing fee allocable to the
MBNAseries, then MBNAseries Available Principal Amounts (in an amount
not to exceed the sum of the investor percentage of collections of
principal receivables allocated to the Class B notes and the Class C
notes for each day during such month minus the aggregate amount of
MBNAseries Available Principal Amounts reallocated as described in the
first, second and third clauses above) will be paid to the servicer in
an amount equal to, and allocated to each tranche of Class B notes pro
rata based on, in the case of each such tranche of Class B notes, the
lesser of:
--the amount of the deficiency times the Weighted Average Available Funds
Allocation Amount for such tranche for such month to the Weighted
Average Available Funds Allocation Amount for the MBNAseries for such
month, and
--an amount equal to the Class B Unused Subordinated Amount of Class C
notes for such tranche of Class B notes (determined after giving effect
to the allocation of charge-offs for uncovered defaults on principal
receivables in master trust II and the reallocation of MBNAseries
Available Principal Amounts as described in the preceding clauses);
. fifth, to make the targeted deposits to the principal funding account as
described below under "--Targeted Deposits of MBNAseries Available
Principal Amounts to the Principal Funding Account;" and
. sixth, to the issuer for reinvestment in the Investor Interest of the
collateral certificate.
A tranche of notes for which credit card receivables have been sold by master
trust II as described in "--Sale of Credit Card Receivables" will not be
entitled to receive any further allocations of MBNAseries Available Funds or
MBNAseries Available Principal Amounts.
The Investor Interest of the collateral certificate is the sum of the nominal
liquidation amounts of each tranche of notes issued by the issuer and
outstanding and, therefore, will be reduced by the amount of MBNAseries
Available Principal Amounts used to make deposits into the interest funding
account, payments to the servicer and deposits into the principal funding
account. If the Investor Interest of the collateral certificate is reduced
because MBNAseries Available Principal Amounts have been used to make deposits
into the interest funding account or payments to the servicer or because of
charge-offs due to uncovered
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defaults on principal receivables in master trust II, the amount of Available
Funds and Available Principal Amounts allocated to the collateral certificate
and the amount of MBNAseries Available Funds and MBNAseries Available Principal
Amounts will be reduced unless the reduction in the Investor Interest is
reimbursed from amounts described above in the fourth item in "--Application of
MBNAseries Available Funds."
Reductions to the Nominal Liquidation Amount of Subordinated Classes from
Reallocations of MBNAseries Available Principal Amounts
Each reallocation of MBNAseries Available Principal Amounts deposited to the
interest funding subaccount of a tranche of Class A notes as described in the
first clause of "--Application of MBNAseries Available Principal Amounts" will
reduce the nominal liquidation amount of the Class C notes. However, the amount
of such reduction for each such tranche of Class A notes will not exceed the
Class A Unused Subordinated Amount of Class C notes for such tranche of Class A
notes.
Each reallocation of MBNAseries Available Principal Amounts deposited to the
interest funding subaccount of a tranche of Class A notes as described in the
first clause of "--Application of MBNAseries Available Principal Amounts" which
does not reduce the nominal liquidation amount of Class C notes pursuant to the
preceding paragraph will reduce the nominal liquidation amount of the Class B
notes. However, the amount of such reduction for each such tranche of Class A
notes will not exceed the Class A Unused Subordinated Amount of Class B notes
for such tranche of Class A notes, and such reductions in the nominal
liquidation amount of the Class B notes may be reallocated to the Class C notes
if permitted as described below.
Each reallocation of MBNAseries Available Principal Amounts deposited to the
interest funding subaccount of a tranche of Class B notes as described in the
second clause of "--Application of MBNAseries Available Principal Amounts"
will reduce the nominal liquidation amount (determined after giving effect to
the preceding paragraphs) of the Class C notes.
Each reallocation of MBNAseries Available Principal Amounts paid to the
servicer as described in the third clause of "--Application of MBNAseries
Available Principal Amounts" will reduce the nominal liquidation amount
(determined after giving effect to the preceding paragraphs) of the Class C
notes. However, the amount of such reduction for each such tranche of Class A
notes will not exceed the Class A Unused Subordinated Amount of Class C notes
for such tranche of Class A notes (after giving effect to the preceding
paragraphs).
Each reallocation of MBNAseries Available Principal Amounts paid to the
servicer as described in the third clause of "--Application of MBNAseries
Available Principal Amounts" which does not reduce the nominal liquidation
amount of Class C notes as described above will reduce the nominal liquidation
amount (determined after giving effect to the preceding paragraphs) of the
Class B notes. However, the amount of such reduction for each such tranche of
Class A notes will not exceed the Class A Unused Subordinated
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Amount of Class B notes for such tranche of Class A notes (after giving effect
to the preceding paragraphs), and such reductions in the nominal liquidation
amount of the Class B notes may be reallocated to the Class C notes if
permitted as described below.
Each reallocation of MBNAseries Available Principal Amounts paid to the
servicer as described in the fourth clause of "--Application of MBNAseries
Available Principal Amounts" will reduce the nominal liquidation amount
(determined after giving effect to the preceding paragraphs) of the Class C
notes.
Subject to the following paragraph, each reallocation of MBNAseries Available
Principal Amounts which reduces the nominal liquidation amount of Class B notes
as described above will reduce the nominal liquidation amount of each tranche
of the Class B notes pro rata based on ratio of the Weighted Average Available
Funds Allocation Amount for such tranche of Class B notes for the related month
to the Weighted Average Available Funds Allocation Amount for all Class B notes
for the related month. However, any allocation of any such reduction that would
otherwise have reduced the nominal liquidation amount of a tranche of Class B
notes below zero will be reallocated to the remaining tranches of Class B notes
in the manner set forth in this paragraph.
Each reallocation of MBNAseries Available Principal Amounts which reduces the
nominal liquidation amount of Class B notes as described in the preceding
paragraph may be reallocated to the Class C notes and such reallocation will
reduce the nominal liquidation amount of the Class C notes. However, the amount
of such reallocation from each tranche of Class B notes will not exceed the
Class B Unused Subordinated Amount of Class C notes for such tranche of Class B
notes.
Each reallocation of MBNAseries Available Principal Amounts which reduces the
nominal liquidation amount of Class C notes as described above will reduce the
nominal liquidation amount of each tranche of the Class C notes pro rata based
on ratio of the Weighted Average Available Funds Allocation Amount for such
tranche of Class C notes for the related month to the Weighted Average
Available Funds Allocation Amount for all Class C notes for the related month.
However, any allocation of any such reduction that would otherwise have reduced
the nominal liquidation amount of a tranche of Class C notes below zero will be
reallocated to the remaining tranches of Class C notes in the manner set forth
in this paragraph.
None of such reallocations will reduce the nominal liquidation amount of any
tranche of Class B or Class C notes below zero.
For each tranche of notes, the nominal liquidation amount of that tranche
will be reduced by the amount of reductions which are allocated or reallocated
to that tranche less the amount of reductions which are reallocated from that
tranche to notes of a subordinated class.
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Limit on Allocations of MBNAseries Available Principal Amounts and MBNAseries
Available Funds
Each tranche of notes will be allocated MBNAseries Available Principal
Amounts and MBNAseries Available Funds solely to the extent of its nominal
liquidation amount. Therefore, if the nominal liquidation amount of any tranche
of notes has been reduced due to reallocations of MBNAseries Available
Principal Amounts to cover payments of interest or the master trust II
servicing fee or due to charge-offs for uncovered defaults on principal
receivables in master trust II, such tranche of notes will not be allocated
MBNAseries Available Principal Amounts or MBNAseries Available Funds to the
extent of such reductions. However, any funds in the applicable principal
funding subaccount, any funds in the applicable interest funding subaccount,
any amounts payable from any applicable derivative agreement, any funds in the
applicable accumulation reserve subaccount, and in the case of Class C notes,
any funds in the applicable Class C reserve account, will still be available to
pay principal of and interest on that tranche of notes. If the nominal
liquidation amount of a tranche of notes has been reduced due to reallocation
of MBNAseries Available Principal Amounts to pay interest on senior classes of
notes or the master trust II servicing fee, or due to charge-offs for uncovered
defaults on principal receivables in master trust II, it is possible for that
tranche's nominal liquidation amount to be increased by allocations of
MBNAseries Available Funds. However, there are no assurances that there will be
any MBNAseries Available Funds for such allocations.
Targeted Deposits of MBNAseries Available Principal Amounts to the Principal
Funding Account
The amount targeted to be deposited into the principal funding account in any
month will be the sum of the following amounts. However, no amount will be
deposited into the principal funding subaccount for any subordinated note
unless following such deposit the remaining available subordinated amount is
equal to the aggregate unused subordinated amount for all outstanding senior
notes. A tranche of notes may be entitled to more than one of the following
deposits in a particular month:
. Principal Payment Date. For the month before any principal payment date
of a tranche of notes, the deposit targeted for that tranche of notes
for that month is equal to the nominal liquidation amount of that
tranche of notes as of the close of business on the last day of such
month, determined after giving effect to any charge-offs for uncovered
defaults on principal receivables in master trust II and any
reallocations, payments or deposits of MBNAseries Available Principal
Amounts occurring on the following Transfer Date.
. Budgeted Deposits. Each month beginning with the twelfth month before
the expected principal payment date of a tranche of notes, the deposit
targeted to be made into the principal funding subaccount for a tranche
of notes will be one-twelfth of the expected outstanding dollar
principal amount of that tranche of notes as of its expected principal
payment date.
The issuer may postpone the date of the targeted deposits under the
previous sentence. If the issuer and the servicer determine that less
than twelve months would
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be required to accumulate MBNAseries Available Principal Amounts
necessary to pay a tranche of notes on its expected principal payment
date, using conservative historical information about payment rates of
principal receivables under master trust II and after taking into account
all of the other expected payments of principal of master trust II
investor certificates and notes to be made in the next twelve months,
then the start of the targeted deposits may be postponed each month by
one month, with proportionately larger targeted deposits for each month
of postponement.
. Prefunding of the Principal Funding Account for Senior Classes. If the
issuer determines that any date on which principal is payable or to be
deposited into a principal funding subaccount with respect to any
tranche of Class C notes will occur at a time when the payment or
deposit of all or part of that tranche of Class C notes would be
prohibited because it would cause a deficiency in the remaining
available subordination for the Class A notes or Class B notes, the
targeted deposit amount for the Class A notes and Class B notes will be
an amount equal to the portion of the Adjusted Outstanding Dollar
Principal Amount of the Class A notes and Class B notes that would have
to cease to be outstanding in order to permit the payment of or deposit
with respect to that tranche of Class C notes.
If the issuer determines that any date on which principal is payable or
to be deposited into a principal funding subaccount with respect to any
Class B notes will occur at a time when the payment or deposit of all or
part of that tranche of Class B notes would be prohibited because it
would cause a deficiency in the remaining available subordination for
the Class A notes, the targeted deposit amount for the Class A notes
will be an amount equal to the portion of the Adjusted Outstanding
Dollar Principal Amount of the Class A notes that would have to cease to
be outstanding in order to permit the payment of or deposit with respect
to that tranche of Class B notes.
Prefunding of the principal funding subaccount for the senior tranches of
the MBNAseries will continue until:
--enough senior notes are repaid so that the subordinated notes that
are payable are no longer necessary to provide the required
subordination for the outstanding senior notes;
--new subordinated notes are issued so that the subordinated notes that
are payable are no longer necessary to provide the required
subordination for the outstanding senior notes; or
--the principal funding subaccounts for the senior notes are prefunded
so that the subordinated notes that are payable are no longer
necessary to provide the required subordination for the outstanding
senior notes.
For purposes of calculating the prefunding requirements, the required
subordinated amount of a tranche of a senior class of notes of the
MBNAseries will be calculated as described under "The Notes--Issuance of
New Series, Classes and Tranches of Notes--Required Subordinated Amount"
based on its Adjusted Outstanding Dollar Principal Amount on such date.
However, if any early redemption event has occurred
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with respect to the subordinated notes or if the usage of the
subordinated notes with respect to such senior notes is greater than
zero, the required subordinated amount will be calculated based on the
Adjusted Outstanding Dollar Principal Amount of such tranche as of the
close of business on the day immediately preceding the occurrence of such
early redemption event or the date on which the usage of the subordinated
notes exceeds zero.
When the prefunded amounts are no longer necessary, they will be
withdrawn from the principal funding account and applied in accordance
with the description under "--Withdrawals from Principal Funding
Account--Withdrawal of Prefunded Amount." The nominal liquidation amount
of the prefunded tranches will be increased by the amount removed from
the principal funding account.
If any tranche of senior notes becomes payable as a result of an early
redemption event, event of default or other optional or mandatory
redemption, or upon reaching its expected principal payment date, any
prefunded amounts on deposit in its principal funding subaccount will be
paid to noteholders of that tranche and deposits to pay the notes will
continue as necessary to pay that tranche.
. Event of Default, Early Redemption Event or Other Optional or Mandatory
Redemption. If any tranche of notes has been accelerated after the
occurrence of an event of default during that month, or an early
redemption event or other optional or mandatory redemption has occurred
with respect to any tranche of notes, the deposit targeted for that
tranche of notes with respect to that month and each following month
will equal the nominal liquidation amount of that tranche of notes as of
the close of business on the last day of the preceding month, determined
after giving effect to reallocations, payments or deposits occurring on
the Transfer Date with respect to such month.
. Amounts Owed to Derivative Counterparties. If a tranche of U.S. dollar
notes or foreign currency notes that has a Performing or non-Performing
derivative agreement for principal that provides for a payment to the
applicable derivative counterparty, the deposit targeted for that
tranche of notes on each Transfer Date with respect to any payment to
the derivative counterparty will be specified in the MBNAseries
indenture supplement.
Allocation to Principal Funding Subaccounts
MBNAseries Available Principal Amounts, after any reallocation to cover
MBNAseries Available Funds shortfalls, if any, will be allocated each month,
and a portion deposited in the principal funding subaccount established for
each tranche of notes, as follows:
. MBNAseries Available Principal Amounts Equal Targeted Amounts. If
MBNAseries Available Principal Amounts remaining after giving effect to
clauses one through four under "--Application of MBNAseries Available
Principal Amounts" are equal to the sum of the deposits targeted by each
tranche of notes, then the applicable targeted amount will be deposited
in the principal funding subaccount established for each tranche.
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. MBNAseries Available Principal Amounts Are Less Than Targeted
Amounts. If MBNAseries Available Principal Amounts remaining after
giving effect to clauses one through four under "--Application of
MBNAseries Available Principal Amounts" are less than the sum of the
deposits targeted by each tranche of notes, then MBNAseries Available
Principal Amounts will be deposited in the principal funding subaccounts
for each tranche in the following priority:
--first, the amount available will be allocated to the Class A notes,
--second, the amount available after the application above will be
allocated to the Class B notes, and
--third, the amount available after the applications above will be
allocated to the Class C notes.
In each case, MBNAseries Available Principal Amounts allocated to a class
will be allocated to each tranche of notes within such class pro rata based on
the ratio of:
--the amount targeted to be deposited into the principal funding
subaccount for the applicable tranche of such class, to
--the aggregate amount targeted to be deposited into the principal
funding subaccount for all tranches of such class.
If restrictions in "--Limit on Deposits to the Principal Funding Subaccount
of Subordinated Notes; Limit on Repayments of all Tranches" prevent the deposit
of MBNAseries Available Principal Amounts into the principal funding subaccount
of any subordinated note, the aggregate amount of MBNAseries Available
Principal Amounts available to make the targeted deposit for such subordinated
tranche will be allocated first to the Class A notes and then to the Class B
notes, in each case pro rata based on the dollar amount of subordinated notes
required to be outstanding for the related senior notes. See "--Targeted
Deposits of MBNAseries Available Principal Amounts to the Principal Funding
Account."
Limit on Deposits to the Principal Funding Subaccount of Subordinated Notes;
Limit on Repayments of all Tranches
Limit on Deposits to the Principal Funding Subaccount of Subordinated Notes.
No MBNAseries Available Principal Amounts will be deposited in the principal
funding subaccount of any tranche of Class B notes unless, following such
deposit, the available subordinated amount of Class B notes is at least equal
to the required subordinated amount of Class B notes for all outstanding Class
A notes minus the Class A Usage of the Class B Required Subordinated Amount for
all Class A notes. For this purpose, the available subordinated amount of Class
B notes is equal to the aggregate nominal liquidation amounts of all other
Class B notes of the MBNAseries which will be outstanding after giving effect
to the deposit into the principal funding subaccount of such tranche of Class B
notes and all other Class B notes which have a targeted deposit into the
principal funding account for such month.
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No MBNAseries Available Principal Amounts will be deposited in the principal
funding subaccount of any tranche of Class C notes unless, following such
deposit:
--the available subordinated amount of Class C notes is at least equal to
the required subordinated amount of Class C notes for all outstanding
Class A notes minus the Class A Usage of the Class C Required
Subordinated Amount for all Class A notes; and
--the available subordinated amount of Class C notes is at least equal to
the required subordinated amount of Class C notes for all outstanding
Class B notes minus the Class B Usage of the Class C Required
Subordinated Amount for all Class B notes.
For this purpose, the available subordinated amount of Class C notes is equal
to the aggregate nominal liquidation amounts of all other Class C notes of the
MBNAseries which will be outstanding after giving effect to the deposit into
the principal funding subaccount of such tranche of Class C notes and all other
Class C notes which have a targeted deposit into the principal funding account
for such month.
MBNAseries Available Principal Amounts will be deposited in the principal
funding subaccount of a subordinated note if and only to the extent that such
deposit is not contrary to either of the preceding two paragraphs and the
prefunding target amount for each senior note is zero.
Limit on Repayments of all Tranches.
No amounts on deposit in a principal funding subaccount for any tranche of
Class A notes or Class B notes will be applied to pay principal of that tranche
or to make a payment under a derivative agreement with respect to principal of
that tranche in excess of the highest outstanding dollar principal amount of
that tranche (or, in the case of foreign currency notes, such other amount that
may be specified in the MBNAseries indenture supplement). In the case of any
tranche of Class C notes, no amounts on deposit in a principal funding
subaccount or, if applicable, a Class C reserve subaccount for any such tranche
will be applied to pay principal of that tranche or to make a payment under a
derivative agreement with respect to principal of that tranche in excess of the
highest outstanding dollar principal amount of that tranche (or, in the case of
foreign currency notes, such other amount that may be specified in the
MBNAseries indenture supplement).
Payments Received from Derivative Counterparties for Principal
Unless otherwise specified in the related indenture supplement, dollar
payments for principal received under derivative agreements of U.S. dollar
notes in the MBNAseries will be treated as MBNAseries Available Principal
Amounts. Payments received under derivative agreements for principal of foreign
currency notes in the MBNAseries will be applied as specified in the MBNAseries
indenture supplement.
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Deposits of Withdrawals from the Class C Reserve Account to the Principal
Funding Account
Withdrawals from any Class C reserve subaccount will be deposited into the
principal funding subaccount for the applicable tranche of Class C notes to the
extent required pursuant to the MBNAseries indenture supplement.
Withdrawals from Interest Funding Subaccounts
After giving effect to all deposits of funds to the interest funding account
in a month, the following withdrawals from the applicable interest funding
subaccount may be made, to the extent funds are available, in the applicable
interest funding subaccount. A tranche of notes may be entitled to more than
one of the following withdrawals in a particular month:
. Withdrawals for U.S. Dollar Notes. On each applicable interest payment
date for each tranche of U.S. dollar notes, an amount equal to interest
due on the applicable tranche of notes on the applicable interest
payment date (including any overdue interest payments and additional
interest on overdue interest payments) will be withdrawn from that
interest funding subaccount and paid to the applicable paying agent.
. Withdrawal for Foreign Currency Notes with a Non-Performing Derivative
Agreement. On each applicable interest payment date with respect to a
tranche of foreign currency notes that has a non-Performing derivative
agreement for interest, the amount specified in the MBNAseries indenture
supplement will be withdrawn from that interest funding subaccount and,
if so specified in the applicable indenture supplement, converted to the
applicable foreign currency at the applicable spot exchange rate and
remitted to the applicable paying agent.
. Withdrawals for Discount Notes. On each applicable principal payment
date, with respect to each tranche of discount notes, an amount equal to
the amount of the accretion of principal of that tranche of notes from
the prior principal payment date-- or, in the case of the first
principal payment date, the date of issuance of that tranche--to but
excluding the applicable principal payment date will be withdrawn from
that interest funding subaccount and invested in the Investor Interest
of the collateral certificate.
. Withdrawals for Payments to Derivative Counterparties. On each date on
which a payment is required under the applicable derivative agreement,
with respect to any tranche of notes that has a Performing or non-
Performing derivative agreement for interest, an amount equal to the
amount of the payment to be made under the applicable derivative
agreement (including, if applicable, any overdue payment and any
additional interest on overdue payments) will be withdrawn from that
interest funding subaccount and paid in accordance with the MBNAseries
indenture supplement.
If the aggregate amount available for withdrawal from an interest funding
subaccount is less than all withdrawals required to be made from that
subaccount in a month after giving
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effect to all deposits, then the amounts on deposit in that interest funding
subaccount will be withdrawn and, if payable to more than one person, applied
pro rata based on the amounts of the withdrawals required to be made. After
payment in full of any tranche of notes, any amount remaining on deposit in the
applicable interest funding subaccount will be first applied to cover any
interest funding subaccount shortfalls for other tranches of notes in the
manner described in "--Allocation to Interest Funding Subaccounts," second
applied to cover any principal funding subaccount shortfalls in the manner
described in "--Allocation to Principal Funding Subaccounts," and third paid to
the issuer.
Withdrawals from Principal Funding Account
After giving effect to all deposits of funds to the principal funding account
in a month, the following withdrawals from the applicable principal funding
subaccount will be made to the extent funds are available in the applicable
principal funding subaccount. A tranche of notes may be entitled to more than
one of the following withdrawals in a particular month:
. Withdrawals for U.S. Dollar Notes with no Derivative Agreement for
Principal. On each applicable principal payment date, with respect to
each tranche of U.S. dollar notes that has no derivative agreement for
principal, an amount equal to the principal due on the applicable
tranche of notes on the applicable principal payment date will be
withdrawn from the applicable principal funding subaccount and paid to
the applicable paying agent.
. Withdrawals for U.S. Dollar or Foreign Currency Notes with a Performing
Derivative Agreement for Principal. On each date on which a payment is
required under the applicable derivative agreement with respect to any
tranche of U.S. dollar or foreign currency notes that has a Performing
derivative agreement for principal, an amount equal to the amount of the
payment to be made under the applicable derivative agreement will be
withdrawn from the applicable principal funding subaccount and paid to
the applicable derivative counterparty. The issuer will direct the
applicable derivative counterparty to remit its payments under the
applicable derivative agreement to the applicable paying agent.
. Withdrawals for Foreign Currency Notes with non-Performing Derivative
Agreement for Principal. On each principal payment date with respect to
a tranche of foreign currency notes that has a non-Performing derivative
agreement for principal, an amount equal to the amount specified in the
applicable indenture supplement will be withdrawn from that principal
funding subaccount and, if so specified in the applicable indenture
supplement, converted to the applicable foreign currency at the
prevailing spot exchange rate and paid to the applicable paying agent.
Any excess dollar amount will be retained on deposit in the applicable
principal funding subaccount to be applied to make principal payments on
later principal payment dates.
. Withdrawals for U.S. Dollar Notes with a non-Performing Derivative
Agreement for Principal. On each principal payment date with respect to
a tranche of U.S. dollar notes with a non-Performing derivative
agreement for principal, the amount specified
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in the applicable indenture supplement will be withdrawn from the
applicable principal funding subaccount and paid to the applicable paying
agent.
. Withdrawal of Prefunded Amount. If prefunding of the principal funding
subaccounts for senior classes of notes is no longer necessary as a
result of payment of senior notes or issuance of additional subordinated
notes, as described under "--Targeted Deposits of Available Principal
Amounts to the Principal Funding Account--Prefunding of the Principal
Funding Account for Senior Classes," the prefunded amounts will be
withdrawn from the principal funding account and first, allocated among
and deposited to the principal funding subaccounts of the Class A notes
up to the amount then targeted to be on deposit in such principal
funding subaccount; second, allocated among and deposited to the
principal funding subaccounts of the Class B notes up to the amount then
targeted to be on deposit in such principal funding subaccount; third,
allocated among and deposited to the principal funding subaccount of the
Class C notes up to the amount then targeted to be on deposit in such
principal funding subaccount; and fourth, any remaining amounts paid to
master trust II to increase the Investor Interest of the collateral
certificate.
. Withdrawals on the Legal Maturity Date. On the legal maturity date of
any tranche of notes, amounts on deposit in the principal funding
subaccount of such tranche may be applied to pay principal of that
tranche or to make a payment under a derivative agreement with respect
to principal of that tranche.
If the aggregate amount available for withdrawal from a principal funding
subaccount for any tranche of notes is less than all withdrawals required to be
made from that principal funding subaccount for that tranche in a month, then
the amounts on deposit will be withdrawn and applied pro rata based on the
amounts of the withdrawals required to be made. Upon payment in full of any
tranche of notes, any remaining amount on deposit in the applicable principal
funding subaccount will be first applied to cover any interest funding
subaccount shortfalls for other tranches of notes, second applied to cover any
principal funding subaccount shortfalls, and third paid to the issuer.
Sale of Credit Card Receivables
Credit card receivables may be sold upon the insolvency of MBNA, upon an
event of default and acceleration with respect to a tranche of notes and on the
legal maturity date of a tranche of notes. See "The Indenture--Events of
Default" and "Master Trust II--Pay Out Events" in the prospectus.
If a tranche of notes has an event of default and is accelerated before its
legal maturity date, master trust II may sell credit card receivables in an
amount up to the nominal liquidation amount of the affected tranche plus any
accrued, past due or additional interest on the affected tranche if the
conditions described in "Indenture--Events of Default" in the prospectus are
satisfied. This sale will take place at the option of the indenture trustee or
at the direction of the holders of a majority of aggregate outstanding dollar
principal amount of notes of that tranche. However, a sale will only be
permitted if at least one of the following conditions is met:
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. the holders of 90% of the aggregate outstanding dollar principal amount
of the accelerated tranche of notes consent;
. the net proceeds of such sale (plus amounts on deposit in the applicable
subaccounts and payments to be received from any applicable derivative
agreement) would be sufficient to pay all amounts due on the accelerated
tranche of notes; or
. if the indenture trustee determines that the funds to be allocated to
the accelerated tranche of notes, including MBNAseries Available Funds
and MBNAseries Available Principal Amounts allocable to the accelerated
tranche of notes, payments to be received from any applicable derivative
agreement and amounts on deposit in the applicable subaccounts, may not
be sufficient on an ongoing basis to make all payments on the
accelerated tranche of notes as such payments would have become due if
such obligations had not been declared due and payable, and 66 2/3% of
the noteholders of the accelerated tranche of notes consent to the sale.
Any sale of receivables for a subordinated tranche of notes will be delayed
if the subordination provisions prevent payment of the accelerated tranche
until a sufficient amount of senior classes of notes are prefunded, or a
sufficient amount of senior notes have been repaid, or a sufficient amount of
subordinated tranches have been issued, in each case, to the extent that the
accelerated tranche of notes is no longer needed to provide the required
subordination for the senior classes.
If principal of or interest on a tranche of notes has not been paid in full
on its legal maturity date (after giving effect to any allocations, deposits
and distributions to be made on such date), the sale will automatically take
place on that date regardless of the subordination requirements of any senior
classes of notes. Proceeds from such a sale will be immediately paid to the
noteholders of the related tranche.
The amount of credit card receivables sold will be up to the nominal
liquidation amount of, plus any accrued, past due and additional interest on,
the tranches of notes that directed the sale to be made. The nominal
liquidation amount of any tranche of notes that directed the sale to be made
will be automatically reduced to zero upon such sale. After such sale, no more
MBNAseries Available Principal Amounts or MBNAseries Available Funds will be
allocated to that tranche.
If a tranche of notes directs a sale of credit card receivables, then after
the sale that tranche will no longer be entitled to credit enhancement from
subordinated classes of notes of the same series. Tranches of notes that have
directed sales of credit card receivables are not outstanding under the
indenture.
After giving effect to a sale of receivables for a tranche of notes, the
amount of proceeds may be less than the outstanding dollar principal amount of
that tranche. This deficiency can arise because of a Nominal Liquidation Amount
Deficit or if the sale price for the receivables was less than the outstanding
dollar principal amount. These types of deficiencies will not be reimbursed
unless, in the case of Class C notes only, there are sufficient amounts in the
related Class C reserve subaccount.
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Any amount remaining on deposit in the interest funding subaccount for a
tranche of notes that has received final payment as described in "--Final
Payment of the Notes" and that has caused a sale of receivables will be treated
as MBNAseries Available Funds and be allocated as described in "--Application
of MBNAseries Available Funds."
Targeted Deposits to the Class C Reserve Account
The Class C reserve account will be funded on each Transfer Date, as
necessary, from MBNAseries Available Funds as described under "--Application of
MBNAseries Available Funds." The aggregate deposit targeted to be made to the
Class C reserve account in each month will be the sum of the Class C reserve
subaccount deposits targeted to be made for each tranche of Class C notes as
required under the MBNAseries indenture supplement.
Withdrawals from the Class C Reserve Account
Withdrawals will be made from the Class C reserve account in the amount and
manner required under the MBNAseries indenture supplement.
Targeted Deposits to the Accumulation Reserve Account
If more than one budgeted deposit is targeted for a tranche, the accumulation
reserve subaccount will be funded for such tranche no later than three months
prior to the date on which a budgeted deposit is first targeted for such
tranche as described under "Deposit and Application of Funds--Targeted Deposits
of MBNAseries Available Principal Amounts to the Principal Funding Account."
The accumulation reserve subaccount for a tranche of notes will be funded on
each Transfer Date, as necessary, from MBNAseries Available Funds as described
under "--Application of MBNAseries Available Funds." The aggregate deposit
targeted to be made to the accumulation reserve account in each month will be
the sum of the accumulation reserve subaccount deposits targeted to be made for
each tranche of notes.
If the aggregate amount of MBNAseries Available Funds available for deposit
to the accumulation reserve account is less than the sum of the targeted
deposits for each tranche of notes, then the amount available will be allocated
to each tranche of notes up to the targeted deposit pro rata based on the ratio
of the Weighted Average Available Funds Allocation Amount for that tranche for
that month to the Weighted Average Available Funds Allocation Amount for all
tranches of notes that have a targeted deposit to their accumulation reserve
subaccounts for that month. After the initial allocation, any excess will be
further allocated in a similar manner to those accumulation reserve subaccounts
which still have an uncovered targeted deposit.
Withdrawals from the Accumulation Reserve Account
Withdrawals will be made from the accumulation reserve subaccounts, but in no
event more than the amount on deposit in the applicable accumulation reserve
subaccount, in the following order:
S-49
. Interest. On or prior to each Transfer Date, the issuer will calculate
for each tranche of notes the amount of any shortfall of net investment
earnings for amounts on deposit in the principal funding subaccount for
that tranche (other than prefunded amounts) over the amount of interest
that would have accrued on such deposit if that tranche had borne
interest at the applicable note interest rate (or other rate specified in
the MBNAseries indenture supplement) for the prior month. If there is any
such shortfall for that Transfer Date, or any unpaid shortfall from any
earlier Transfer Date, the issuer will withdraw the sum of those amounts
from the accumulation reserve subaccount, to the extent available, for
treatment as MBNAseries Available Funds for such month.
. Payment to Issuer. Upon payment in full of any tranche of notes, any
amount on deposit in the applicable accumulation reserve subaccount will
be paid to the Issuer.
Final Payment of the Notes
Noteholders are entitled to payment of principal in an amount equal to the
outstanding dollar principal amount of their respective notes. However,
MBNAseries Available Principal Amounts will be allocated to pay principal on
the notes only up to their nominal liquidation amount, which will be reduced
for charge-offs due to uncovered defaults of principal receivables in master
trust II and reallocations of MBNAseries Available Principals Amounts to pay
interest on senior classes of notes or a portion of the master trust II
servicing fee allocable to such notes. In addition, if a sale of receivables
occurs, as described in "--Sale of Credit Card Receivables," the amount of
receivables sold will be limited to the nominal liquidation amount of, plus any
accrued, past due or additional interest on, the related tranche of notes. If
the nominal liquidation amount of a tranche has been reduced, noteholders of
such tranche will receive full payment of principal only to the extent proceeds
from the sale of receivables are sufficient to pay the full principal amount,
amounts are received from an applicable derivative agreement or amounts have
been previously deposited in an issuer account for such tranche of notes.
On the date of a sale of receivables, the proceeds of such sale will be
available to pay the outstanding dollar principal amount of, plus any accrued,
past due and additional interest on, that tranche.
A tranche of notes will be considered to be paid in full, the holders of
those notes will have no further right or claim, and the issuer will have no
further obligation or liability for principal or interest, on the earliest to
occur of:
. the date of the payment in full of the stated principal amount of and
all accrued, past due and additional interest on that tranche of notes;
. the date on which the outstanding dollar principal amount of that
tranche of notes is reduced to zero, and all accrued, past due or
additional interest on that tranche of notes is paid in full;
S-50
. the legal maturity date of that tranche of notes, after giving effect to
all deposits, allocations, reallocations, sales of credit card
receivables and payments to be made on that date; or
. the date on which a sale of receivables has taken place with respect to
such tranche, as described in "--Sale of Credit Card Receivables."
Pro Rata Payments Within a Tranche
All notes of a tranche will receive payments of principal and interest pro
rata based on the stated principal amount of each note in that tranche.
Shared Excess Available Funds
MBNAseries Available Funds for any month remaining after making the seventh
application described under "--Application of MBNAseries Available Funds" will
be available for allocation to other series of notes in Group A. Such excess
including excesses, if any, from other series of notes in Group A, called
shared excess available funds, will be allocated to cover certain shortfalls in
Available Funds for the series in Group A, if any, which have not been covered
out of Available Funds allocable to such series. If these shortfalls exceed
shared excess available funds for any month, shared excess available funds will
be allocated pro rata among the applicable series in Group A based on the
relative amounts of those shortfalls in Available Funds. To the extent that
shared excess available funds exceed those shortfalls, the balance will be paid
to the issuer. For the MBNAseries, shared excess available funds, to the extent
available and allocated to the MBNAseries, will cover shortfalls in the first
four applications described in "--Application of MBNAseries Available Funds."
MBNA and MBNA Corporation
MBNA America Bank, National Association (referred to in this prospectus
supplement as MBNA) is a wholly-owned subsidiary of MBNA Corporation. MBNA has
two wholly owned foreign bank subsidiaries, MBNA Europe Bank Limited located in
the United Kingdom and MBNA Canada Bank, located in Canada.
On a managed basis, including loans originated by MBNA Europe Bank Limited
and MBNA Canada Bank, MBNA maintained loan accounts with aggregate outstanding
balances of $86.7 billion as of March 31, 2001. Of this amount, $68.3 billion
were MasterCard and VISA credit card loans originated in the United States. As
of March 31, 2001, MBNA had assets of $37.2 billion, deposits of $24.8 billion
and capital and surplus accounts of $5.8 billion, and MBNA Corporation had
consolidated assets of $39.3 billion, consolidated deposits of $24.2 billion
and capital and surplus accounts of $6.8 billion.
S-51
MBNA's Credit Card Portfolio
Billing and Payments
MBNA, using MBNA Hallmark Information Services, Inc. as its service bureau,
generates and mails to cardholders monthly statements summarizing account
activity and processes cardholder monthly payments. Generally, cardholders must
make a monthly minimum payment at least equal to the lesser of (i) the sum of
all finance charges, bank imposed fees, a stated minimum amount (generally $15)
and past due amounts or (ii) 2.25% of the statement balance plus past due
amounts, but generally not less than $15. Certain eligible cardholders are
given the option periodically to take a payment deferral.
The finance charges on purchases, which are assessed monthly, are calculated
by multiplying the account's average daily purchase balance by the applicable
daily periodic rate, and multiplying the result by the number of days in the
billing cycle. Finance charges are calculated on purchases from the date of the
purchase or the first day of the billing cycle in which the purchase is posted
to the account, whichever is later. Monthly periodic finance charges are not
assessed in most circumstances on new purchases if all balances shown on the
previous billing statement are paid by the due date, which is generally at
least 25 days after the billing date. Monthly periodic finance charges are not
assessed in most circumstances on previous purchases if all balances shown on
the two previous billing statements are paid by their respective due dates.
The finance charges, which are assessed monthly on cash advances (including
balance transfers), are calculated by multiplying the account's average cash
advance balance by the applicable daily periodic rate, and multiplying the
result by the number of days in the billing cycle. Finance charges are
calculated on cash advances (including balance transfers) from the date of the
transaction. Currently, MBNA generally treats the day on which a cash advance
check is deposited or cashed as the transaction date for such check.
MBNA offers fixed rate and variable rate credit card accounts. MBNA also
offers temporary promotional rates.
MBNA assesses annual membership fees on certain accounts although under
various marketing programs these fees may be waived or rebated. For most credit
card accounts, MBNA also assesses late, overlimit and returned check charges.
MBNA generally assesses a fee on cash advances and certain purchase
transactions.
Delinquencies and Collection Efforts
An account is contractually delinquent if the minimum payment is not received
by the due date indicated on the customer's statement. Efforts to collect
contractually delinquent credit card receivables currently are made by MBNA's
Customer Assistance personnel. Collection activities include statement
messages, telephone calls and formal collection letters. MBNA employs two
principal computerized systems for collecting past due accounts. The Predictive
Management System analyzes each cardholder's purchase and repayment habits and
selects accounts for initial contact with the objective of contacting the
highest risk
S-52
accounts first. The accounts selected are queued to MBNA's proprietary Outbound
Call Management System. This system sorts accounts by a number of factors,
including time zone, degree of delinquency and dollar amount due, and
automatically dials delinquent accounts in order of priority. Representatives
are automatically linked to the cardholder's account information and voice line
when a contact is established.
Accounts are worked continually at each stage of delinquency through the end
of the month in which the account falls 180 day past due. As an account enters
the 180 day delinquency level, it is classified as a potential charge-off.
Accounts failing to make a payment by the end of the month in which the account
falls 180 days past due are written off. Managers may defer a charge-off of an
account for another month, pending continued payment activity or other special
circumstances. Senior manager approval is required on all exceptions to charge-
off. Accounts of cardholders in bankruptcy are currently charged-off no later
than is consistent with this policy.
The Master Trust II Portfolio
The receivables conveyed to master trust II arise in accounts selected from
the Bank Portfolio on the basis of criteria set forth in master trust II
agreement as applied on the Cut-Off Date and, with respect to additional
accounts, as of the related date of their designation. The receivables in
master trust II may include receivables that are contractually delinquent. The
seller has the right, subject to certain limitations and conditions set forth
therein, to designate from time to time additional accounts and to transfer to
master trust II all receivables of such additional accounts. Any additional
accounts designated must be Eligible Accounts as of the date the seller
designates such accounts as additional accounts.
Delinquency and Principal Charge-Off Experience
Minimum scheduled payments for the accounts are generally due 25 days from
the end of the last billing cycle. A credit card account is contractually
delinquent if less than 90% of the minimum payment is made by the payment due
date. For collection purposes, however, an account is considered delinquent if
at least 90% of the minimum payment required to be made is not received by MBNA
within 5 days after the due date reflected in the respective monthly billing
statement. Upon receipt of 3 consecutive payments on their respective due
dates, delinquent accounts may qualify to be redesignated as non-delinquent.
S-53
The following tables sets forth the delinquency experience for cardholder
payments on the credit card accounts in the Master Trust II Portfolio for each
of the periods shown. The receivables outstanding on the accounts consist of
all amounts due from cardholders as posted to the accounts as of the end of the
period shown. We cannot provide any assurance that the delinquency experience
for the receivables in the future will be similar to the historical experience
set forth below.
Delinquency Experience
Master Trust II Portfolio
(Dollars in Thousands)
March 31, December 31,
----------------------- -----------------------------------------------
2001 2000 1999
----------------------- ----------------------- -----------------------
Percentage Percentage Percentage
of Total of Total of Total
Receivables Receivables Receivables Receivables Receivables Receivables
----------- ----------- ----------- ----------- ----------- -----------
Receivables
Outstanding............ $58,072,403 $58,611,594 $51,032,411
Receivables
Delinquent:
30-59 Days............. $ 1,013,960 1.75% $ 1,024,175 1.75% $ 817,374 1.60%
60-89 Days............. 619,948 1.07 583,768 1.00 482,084 0.94
90 or More............. 1,212,782 2.08 1,158,371 1.97 1,064,669 2.09
----------- ---- ----------- ---- ----------- ----
Total.................. $ 2,846,690 4.90% $ 2,766,314 4.72% $ 2,364,127 4.63%
=========== ==== =========== ==== =========== ====
December 31,
-----------------------------------------------------------------------
1998 1997 1996
----------------------- ----------------------- -----------------------
Percentage Percentage Percentage
of Total of Total of Total
Receivables Receivables Receivables Receivables Receivables Receivables
----------- ----------- ----------- ----------- ----------- -----------
Receivables
Outstanding............ $42,099,780 $35,542,445 $23,743,488
Receivables
Delinquent:
30-59 Days............. $ 756,062 1.80% $ 671,313 1.89% $ 433,068 1.82%
60-89 Days............. 416,500 0.99 329,087 0.93 204,156 0.86
90 or More............. 914,003 2.17 708,755 1.99 436,245 1.84
----------- ---- ----------- ---- ----------- ----
Total.................. $ 2,086,565 4.96% $ 1,709,155 4.81% $ 1,073,469 4.52%
=========== ==== =========== ==== =========== ====
S-54
The following tables set forth the principal charge-off experience for
cardholder payments on the credit card accounts in the Master Trust II
Portfolio for each of the periods shown. Charge-offs consist of write-offs of
principal receivables. If accrued finance charge receivables that have been
written off were included in total charge-offs, total charge-offs would be
higher as an absolute number and as a percentage of the average of principal
receivables outstanding during the periods indicated. Average principal
receivables outstanding is the average of the daily principal receivables
balance during the periods indicated. We cannot provide any assurance that the
charge-off experience for the receivables in the future will be similar to the
historical experience set forth below.
Principal Charge-Off Experience
Master Trust II Portfolio
(Dollars in Thousands)
Three Months Year Ended December 31,
Ended March 31, ------------------------
2001 2000 1999
--------------- ----------- -----------
Average Principal Receivables
Outstanding........................ $56,939,061 $52,869,754 $44,034,527
Total Charge-Offs................... $ 681,996 $ 2,697,976 $ 2,172,404
Total Charge-Offs as a percentage of
Average Principal Receivables
Outstanding........................ 4.79% 5.10% 4.93%
Year Ended December 31,
-------------------------------------
1998 1997 1996
----------- ----------- -----------
Average Principal Receivables
Outstanding........................... $36,987,103 $28,445,493 $16,934,810
Total Charge-Offs...................... $ 1,843,986 $ 1,330,140 $ 672,553
Total Charge-Offs as a percentage of
Average Principal Receivables
Outstanding........................... 4.99% 4.68% 3.97%
Total charge-offs are total principal charge-offs before recoveries and do
not include any charge-offs of finance charge receivables or the amount of any
reductions in average daily principal receivables outstanding due to fraud,
returned goods, customer disputes or other miscellaneous adjustments.
In 1999, the Federal Financial Institutions Examination Counsel published a
revised policy statement on the classification of consumer loans. The revised
policy statement establishes uniform guidelines for charge-off of loans to
delinquent, bankrupt and deceased borrowers, for charge-off of fraudulent
accounts, and for re-aging. MBNA implemented the guidelines in December 2000.
In doing so, MBNA accelerated charge-off of some delinquent loans. The one time
acceleration caused the reported charge-off rate for the month of December 2000
for master trust II to increase by 5.34%.
Revenue Experience
The following table sets forth the revenue experience for the credit card
accounts from finance charges, fees paid and interchange in the Master Trust II
Portfolio for each of the periods shown.
S-55
The revenue experience in the following table is calculated on a cash basis.
Yield from finance charges and fees is the result of dividing finance charges
and fees by average daily principal receivables outstanding during the periods
indicated. Finance charges and fees are comprised of monthly cash collections
of periodic finance charges and other credit card fees including Interchange.
Revenue Experience
Master Trust II Portfolio
(Dollars in Thousands)
Year Ended December
Three Months 31,
Ended March 31, -----------------------
2001 2000 1999
--------------- ----------- ----------
Finance Charges and Fees.............. $2,866,486 $10,122,205 $8,121,775
Yield from Finance Charges and Fees... 20.14% 19.15% 18.44%
Year Ended December 31,
----------------------------------
1998 1997 1996
---------- ---------- ----------
Finance Charges and Fees.................... $6,737,139 $4,951,621 $2,893,047
Yield from Finance Charges and Fees......... 18.21% 17.41% 17.08%
The yield on a cash basis will be affected by numerous factors, including the
monthly periodic finance charges on the receivables, the amount of the annual
membership fees and other fees, changes in the delinquency rate on the
receivables, the percentage of cardholders who pay their balances in full each
month and do not incur monthly periodic finance charges, the percentage of
credit card accounts bearing finance charges at promotional rates and changes
in the level of delinquencies on the receivables. See "Risk Factors" in the
prospectus.
The revenue from periodic finance charges and fees--other than annual fees--
depend in part upon the collective preference of cardholders to use their
credit cards as revolving debt instruments for purchases and cash advances and
to pay account balances over several months--as opposed to convenience use,
where cardholders pay off their entire balance each month, thereby avoiding
periodic finance charges on their purchases--and upon other credit card related
services for which the cardholder pays a fee. Fees for these other services
will be treated for purposes of the master trust II agreement as principal
receivables rather than finance charge receivables; however, MBNA may specify
that it will treat these fees as finance charge receivables. Revenues from
periodic finance charges and fees also depend on the types of charges and fees
assessed on the credit card accounts. Accordingly, revenue will be affected by
future changes in the types of charges and fees assessed on the accounts and on
the types of additional accounts added from time to time. These revenues could
be adversely affected by future changes in fees and charges assessed by MBNA
and other factors. See "MBNA's Credit Card Activities" in the prospectus.
S-56
Interchange
MBNA, as seller, will transfer to master trust II a percentage of the
interchange attributed to cardholder charges for goods and services in the
accounts of master trust II. Interchange will be allocated to each series of
master trust II investor certificates based on such series's pro rata portion
as measured by its Investor Interest of cardholder charges for goods and
services in the accounts of master trust II relative to the total amount of
cardholder charges for goods and services in the MasterCard and VISA credit
card accounts owned by MBNA, as reasonably estimated by the seller.
MasterCard and VISA may from time to time change the amount of interchange
reimbursed to banks issuing their credit cards. Interchange will be treated as
collections of finance charge receivables. Under the circumstances described
herein, interchange will be used to pay a portion of the Investor Servicing Fee
required to be paid on each Transfer Date. See "Master Trust II--Servicing
Compensation and Payment of Expenses" and "MBNA's Credit Card Activities--
Interchange" in the prospectus.
Principal Payment Rates
The following table sets forth the highest and lowest cardholder monthly
principal payment rates for the Master Trust II Portfolio during any month in
the periods shown and the average cardholder monthly principal payment rates
for all months during the periods shown, in each case calculated as a
percentage of total beginning monthly account principal balances during the
periods shown. Principal payment rates shown in the table are based on amounts
which are deemed payments of principal receivables with respect to the
accounts.
Cardholder Monthly Principal Payment Rates
Master Trust II Portfolio
Three Months Year Ended December 31,
Ended ----------------------------------
March 31, 2001 2000 1999 1998 1997 1996
-------------- ------ ------ ------ ------ ------
Lowest Month.................. 12.28% 12.21% 12.56% 11.47% 11.02% 9.30%
Highest Month................. 13.40% 14.05% 13.61% 13.43% 13.00% 11.52%
Monthly Average............... 13.00% 13.01% 13.17% 12.59% 11.62% 10.36%
Generally, cardholders must make a monthly minimum payment at least equal to
the lesser of (i) the sum of all finance charges, bank imposed fees, a stated
minimum amount (generally $15) and past due amounts or (ii) 2.25% of the
statement balance plus past due amounts, but generally not less than $15.
Certain eligible cardholders are given the option periodically to take a
payment deferral. We cannot assure you that the cardholder monthly principal
payment rates in the future will be similar to the historical experience set
forth above. In addition, the amount of collections of receivables may vary
from month to month due to seasonal variations, general economic conditions and
payment habits of individual cardholders.
S-57
MBNA, as seller, has the right, subject to certain limitations and
conditions, to designate certain removed credit card accounts and to require
the master trust II trustee to reconvey all receivables in such removed credit
card accounts to the seller. Once an account is removed, receivables existing
or guaranteed under that credit card account are not transferred to master
trust II.
As of the beginning of the day on April 30, 2001:
. the Master Trust II Portfolio included $58,107,360,089 of principal
receivables and $1,515,415,888 of finance charge receivables;
. the credit card accounts had an average principal receivable balance of
$1,395 and an average credit limit of $12,053;
. the percentage of the aggregate total receivable balance to the
aggregate total credit limit was 11.9%;
. the average age of the credit card accounts was approximately 56
months; and
. cardholders whose accounts are included in the Master Trust II
Portfolio had billing addresses in all 50 States and the District of
Columbia.
The following tables summarize the Master Trust II Portfolio by various
criteria as of the beginning of the day on April 30, 2001. Because the future
composition of the Master Trust II Portfolio may change over time, these tables
do not describe the composition of the Master Trust II Portfolio at any future
time.
Composition by Account Balance
Master Trust II Portfolio
Percentage
of Percentage
Number Total Number of Total
Account Balance Range of Accounts of Accounts Receivables Receivables
- --------------------- ----------- ------------ --------------- -----------
Credit Balance............ 589,299 1.4% $ (67,142,519) (0.1)%
No Balance................ 25,710,281 61.7 0 0.0
$ .01-$ 5,000.00..... 11,020,579 26.5 15,068,066,725 25.3
$ 5,000.01-$10,000.00..... 2,767,133 6.6 19,516,265,975 32.7
$10,000.01-$15,000.00..... 920,318 2.2 11,122,494,745 18.7
$15,000.01-$20,000.00..... 355,199 0.9 6,095,656,425 10.2
$20,000.01-$25,000.00..... 170,686 0.4 3,818,813,996 6.4
$25,000.01 or More........ 119,289 0.3 4,068,620,630 6.8
---------- ----- --------------- -----
Total................... 41,652,784 100.0% $59,622,775,977 100.0%
========== ===== =============== =====
S-58
Composition by Credit Limit
Master Trust II Portfolio
Percentage
of Total Percentage
Number Number of of Total
Credit Limit Range of Accounts Accounts Receivables Receivables
- ------------------ ----------- ---------- --------------- -----------
Less than or equal to
$5,000.00................. 7,846,578 18.8% $ 4,652,736,126 7.8%
$ 5,000.01-$10,000.00...... 12,486,555 30.0 16,270,420,238 27.3
$10,000.01-$15,000.00...... 9,478,636 22.8 13,481,588,763 22.6
$15,000.01-$20,000.00...... 5,500,306 13.2 9,090,771,993 15.2
$20,000.01-$25,000.00...... 4,510,181 10.8 9,051,714,836 15.2
$25,000.01 or More......... 1,830,528 4.4 7,075,544,021 11.9
---------- ----- --------------- -----
Total.................... 41,652,784 100.0% $59,622,775,977 100.0%
========== ===== =============== =====
Composition by Period of Delinquency
Master Trust II Portfolio
Percentage
of Total Percentage
Period of Delinquency (Days Number Number of of Total
Contractually Delinquent) of Accounts Accounts Receivables Receivables
- --------------------------- ----------- ---------- --------------- -----------
Not Delinquent............. 40,393,470 97.0% $52,520,667,218 88.1%
Up to 29 Days.............. 752,274 1.8 4,044,296,463 6.8
30 to 59 Days.............. 205,075 0.5 1,147,019,545 1.9
60 to 89 Days.............. 105,928 0.2 635,650,076 1.1
90 or More Days............ 196,037 0.5 1,275,142,675 2.1
---------- ----- --------------- -----
Total.................... 41,652,784 100.0% $59,622,775,977 100.0%
========== ===== =============== =====
Composition by Account Age
Master Trust II Portfolio
Percentage
of Total Percentage
Number Number of of Total
Account Age of Accounts Accounts Receivables Receivables
- ----------- ----------- ---------- --------------- -----------
Not More than 6 Months..... 2,119,632 5.1% $ 2,389,246,595 4.0%
Over 6 Months to 12
Months.................... 2,845,687 6.8 3,589,497,726 6.0
Over 12 Months to 24
Months.................... 5,526,576 13.3 7,400,776,068 12.4
Over 24 Months to 36
Months.................... 5,594,745 13.4 6,394,014,369 10.7
Over 36 Months to 48
Months.................... 6,148,817 14.8 6,349,765,667 10.7
Over 48 Months to 60
Months.................... 5,657,468 13.6 7,237,594,788 12.1
Over 60 Months to 72
Months.................... 3,871,519 9.3 5,519,533,735 9.3
Over 72 Months............. 9,888,340 23.7 20,742,347,029 34.8
---------- ----- --------------- -----
Total.................... 41,652,784 100.0% $59,622,775,977 100.0%
========== ===== =============== =====
S-59
Geographic Distribution of Accounts
Master Trust II Portfolio
Percentage
of Total Percentage
Number of Number of of Total
State Accounts Accounts Receivables Receivables
- ----- ---------- ---------- --------------- -----------
California.................... 4,206,029 10.1% $ 6,931,600,219 11.6%
New York...................... 3,108,974 7.4 4,175,260,127 7.0
Florida....................... 2,527,845 6.1 3,743,449,398 6.3
Texas......................... 2,442,877 5.9 4,092,295,540 6.9
Pennsylvania.................. 2,433,506 5.8 2,932,604,720 4.9
Ohio.......................... 1,790,396 4.3 2,168,116,472 3.6
Illinois...................... 1,763,836 4.2 2,353,570,620 4.0
New Jersey.................... 1,631,270 3.9 2,432,135,239 4.1
Michigan...................... 1,530,840 3.7 2,150,441,641 3.6
Massachusetts................. 1,359,360 3.3 1,726,205,242 2.9
Other......................... 18,857,851 45.3 26,917,096,759 45.1
---------- ----- --------------- -----
Total....................... 41,652,784 100.0% $59,622,775,977 100.0%
========== ===== =============== =====
Since the largest number of cardholders (based on billing address) whose
accounts were included in master trust II as of April 30, 2001 were in
California, New York, Florida, Texas and Pennsylvania, adverse changes in the
economic conditions in these areas could have a direct impact on the timing and
amount of payments on the notes.
Underwriting
Subject to the terms and conditions of the underwriting agreement for these
Class A(2001-1) notes, the issuer has agreed to sell to each of the
underwriters named below, and each of those underwriters has severally agreed
to purchase, the principal amount of these Class A(2001-1) notes set forth
opposite its name:
Principal
Underwriters Amount
------------ --------------
Lehman Brothers Inc. ................................... $ 111,112,000
Banc of America Securities LLC.......................... 111,111,000
Banc One Capital Markets, Inc. ......................... 111,111,000
Barclays Capital Inc. ................................. 111,111,000
Credit Suisse First Boston Corporation.................. 111,111,000
Deutsche Banc Alex. Brown Inc. ......................... 111,111,000
J.P. Morgan Securities Inc. ............................ 111,111,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated...................................... 111,111,000
Salomon Smith Barney Inc. .............................. 111,111,000
--------------
Total................................................. $1,000,000,000
==============
S-60
The several underwriters have agreed, subject to the terms and conditions of
the underwriting agreement, to purchase all $1,000,000,000 aggregate principal
amount of these Class A(2001-1) notes if any of these Class A(2001-1) notes are
purchased.
The underwriters have advised the issuer that the several underwriters
propose initially to offer these Class A(2001-1) notes to the public at the
public offering price set forth on the cover page of this prospectus
supplement, and to certain dealers at that public offering price less a
concession not in excess of 0.165% of the principal amount of these Class
A(2001-1) notes. The underwriters may allow, and those dealers may reallow to
other dealers, a concession not in excess of 0.100% of the principal amount.
After the public offering, the public offering price and other selling terms
may be changed by the underwriters.
Each underwriter of these Class A(2001-1) notes has agreed that:
. it has complied and will comply with all applicable provisions of the
Financial Services Act 1986 with respect to anything done by it in
relation to these Class A(2001-1) notes in, from or otherwise involving
the United Kingdom;
. it has only issued, distributed or passed on and will only issue,
distribute or pass on in the United Kingdom any document received by it
in connection with the issue of these Class A(2001-1) notes to a person
who is of a kind described in Article 11(3) of the Financial Services
Act 1986 (Investment Advertisements) (Exemptions) Order 1996 or is a
person to whom such document may otherwise lawfully be issued,
distributed or passed on;
. if it is an authorized person under Chapter III of Part I of the
Financial Services Act 1986, it has only promoted and will only promote
(as that term is defined in Regulation 1.02(2) of the Financial Services
(Promotion of Unregulated Schemes) Regulations 1991) to any person in
the United Kingdom the scheme described in this prospectus supplement
and the prospectus if that person is a kind described either in Section
76(2) of the Financial Services Act 1986 or in Regulation 1.04 of the
Financial Services (Promotion of Unregulated Schemes) Regulations 1991;
and
. it is a person of a kind described in Article 11(3) of the Financial
Services Act 1986 (Investment Advertisements) (Exemptions) Order 1996.
In connection with the sale of these Class A(2001-1) notes, the underwriters
may engage in:
. over-allotments, in which members of the syndicate selling these Class
A(2001-1) notes sell more notes than the issuer actually sold to the
syndicate, creating a syndicate short position;
. stabilizing transactions, in which purchases and sales of these Class
A(2001-1) notes may be made by the members of the selling syndicate at
prices that do not exceed a specified maximum;
S-61
. syndicate covering transactions, in which members of the selling
syndicate purchase these Class A(2001-1) notes in the open market after
the distribution has been completed in order to cover syndicate short
positions; and
. penalty bids, by which underwriters reclaim a selling concession from a
syndicate member when any of these Class A(2001-1) notes originally sold
by that syndicate member are purchased in a syndicate covering
transaction to cover syndicate short positions.
These stabilizing transactions, syndicate covering transactions and penalty
bids may cause the price of these Class A(2001-1) notes to be higher than it
would otherwise be. These transactions, if commenced, may be discontinued at
any time.
The issuer and MBNA will, jointly and severally, indemnify the underwriters
against certain liabilities, including liabilities under applicable securities
laws, or contribute to payments the underwriters may be required to make in
respect of those liabilities.
The proceeds to the issuer from the sale of these Class A(2001-1) notes and
the underwriting discount are set forth on the cover page of this prospectus
supplement. Additional offering expenses are estimated to be $700,000.
Lehman Brothers Inc. is an affiliate of Lehman Brothers Special Financing
Inc., the derivative counterparty, and Lehman Brothers Holdings Inc., the
derivative counterparty guarantor.
S-62
Glossary of Defined Terms
"Class A Unused Subordinated Amount of Class B notes" means for any tranche
of outstanding Class A notes, with respect to any Transfer Date, an amount
equal to the Class A required subordinated amount of Class B notes minus the
Class A Usage of the Class B Required Subordinated Amount, each as of such
Transfer Date.
"Class A Unused Subordinated Amount of Class C notes" means for any tranche
of outstanding Class A notes, with respect to any Transfer Date, an amount
equal to the Class A required subordinated amount of Class C notes minus the
Class A Usage of the Class C Required Subordinated Amount, each as of such
Transfer Date.
"Class A Usage of Class B Required Subordinated Amount" means, with respect
to any tranche of outstanding Class A notes, zero on the date of issuance of
such tranche, and on any Transfer Date thereafter, the sum of the Class A Usage
of Class B Required Subordinated Amount as of the preceding date of
determination plus the sum of the following amounts:
(1) an amount equal to the product of:
. a fraction, the numerator of which is the Class A Unused Subordinated
Amount of Class B notes for that tranche of Class A notes (as of the
last day of the preceding month) and the denominator of which is the
aggregate Nominal Liquidation Amount of all Class B notes (as of the
last day of the preceding month), times
. the amount of charge-offs for uncovered defaults on principal
receivables in master trust II initially allocated to Class B notes
which did not result in a Class A Usage of Class C Required
Subordinated Amount on such Transfer Date; plus
(2) the amount of charge-offs for uncovered defaults on principal
receivables in master trust II initially allocated to Class A notes and
then reallocated on such Transfer Date to Class B notes; plus
(3) the amount of MBNAseries Available Principal Amounts reallocated on
such Transfer Date to the interest funding sub-account for that tranche of
Class A notes which did not result in a Class A Usage of Class C Required
Subordinated Amount for such tranche of Class A notes; plus
(4) an amount equal to the aggregate amount of MBNAseries Available
Principal Amounts reallocated to pay any amount to the servicer for such
tranche of Class A notes which did not result in a Class A Usage of Class C
Required Subordinated Amount for such tranche of Class A notes on such
Transfer Date; minus
(5) an amount (which will not exceed the sum of items (1) through (4)
above) equal to the sum of:
. the product of:
--a fraction, the numerator of which is the Class A Usage of Class B
Required Subordinated Amount (prior to giving effect to any
reimbursement of a Nominal Liquidation Amount Deficit for any
tranche of Class B notes on such
S-63
Transfer Date) for such tranche of Class A notes and the
denominator of which is the aggregate Nominal Liquidation Amount
Deficits for all tranches of Class B notes (prior to giving effect
to any reimbursement of a Nominal Liquidation Amount Deficit for
any tranche of Class B notes on such Transfer Date), times
--the aggregate amount of the Nominal Liquidation Amount Deficits of
any tranche of Class B notes which are reimbursed on such Transfer
Date, plus
. if the aggregate Class A Usage of Class B Required Subordinated
Amount (prior to giving effect to any reimbursement of Nominal
Liquidation Amount Deficits for any tranche of Class B notes on such
Transfer Date) for all Class A notes exceeds the aggregate Nominal
Liquidation Amount Deficits of all tranches of Class B notes (prior
to giving effect to any reimbursement on such Transfer Date), the
product of:
--a fraction, the numerator of which is the amount of such excess
and the denominator of which is the aggregate Nominal Liquidation
Amount Deficits for all tranches of Class C notes (prior to giving
effect to any reimbursement of a Nominal Liquidation Amount
Deficit for any tranche of Class C notes on such Transfer Date),
times
--the aggregate amount of the Nominal Liquidation Amount Deficits of
any tranche of Class C notes which are reimbursed on such Transfer
Date, times
--a fraction, the numerator of which is the Class A Usage of the
Class B Required Subordinated Amount of such tranche of Class A
notes and the denominator of which is the Class A Usage of Class B
Required Subordinated Amount for all Class A notes in the
MBNAseries.
"Class A Usage of Class C Required Subordinated Amount" means, with respect
to any tranche of outstanding Class A notes, zero on the date of issuance of
such tranche of Class A notes, and on any Transfer Date thereafter, the sum of
the Class A Usage of Class C Required Subordinated Amount as of the preceding
date of determination plus the sum of the following amounts:
(1) an amount equal to the product of:
. a fraction, the numerator of which is the Class A Unused Subordinated
Amount of Class C notes for that tranche of Class A notes (as of the
last day of the preceding month) and the denominator of which is the
aggregate nominal liquidation amount of all Class C notes (as of the
last day of the preceding month), times
. the amount of charge-offs for uncovered defaults on principal
receivables in master trust II initially allocated on such Transfer
Date to Class C notes; plus
(2) the amount of charge-offs for uncovered defaults on principal
receivables in master trust II initially allocated to Class A notes and
then reallocated on such date to Class C notes; plus
(3) an amount equal to the product of:
S-64
. a fraction, the numerator of which is the Class A Unused Subordinated
Amount of Class B notes for that tranche of Class A notes (as of the
last day of the preceding month) and the denominator of which is the
aggregate nominal liquidation amount of all Class B notes (as of the
last day of the preceding month), times
. the amount of charge-offs for uncovered defaults on principal
receivables in master trust II initially allocated on such Transfer
Date to Class B notes; plus
(4) the amount of MBNAseries Available Principal Amounts reallocated on
such Transfer Date to the interest funding subaccount for that tranche of
Class A notes; plus
(5) an amount equal to the product of:
. a fraction, the numerator of which is the Class A Unused Subordinated
Amount of Class B notes for such tranche of Class A notes (as of the
last day of the preceding month) and the denominator of which is the
aggregate nominal liquidation amount of all Class B notes (as of the
last day of the preceding month), times
. the amount of MBNAseries Available Principal Amounts reallocated on
such Transfer Date to the interest funding sub-account for any
tranche of Class B notes; plus
(6) the amount of MBNAseries Available Principal Amounts reallocated on
such Transfer Date to pay any amount to the servicer for such tranche of
Class A notes; plus
(7) an amount equal to the product of:
. a fraction, the numerator of which is the Class A Unused Subordinated
Amount of Class B notes for that tranche of Class A notes (as of the
last day of the preceding month) and the denominator of which is the
aggregate nominal liquidation amount of all Class B notes (as of the
last day of the preceding month), times
. the amount of MBNAseries Available Principal Amounts reallocated on
such Transfer Date to pay any amount to the servicer for any tranche
of Class B notes; minus
(8) an amount (which will not exceed the sum of items (1) through (7)
above) equal to the product of:
. a fraction, the numerator of which is the Class A Usage of Class C
Required Subordinated Amount (prior to giving effect to any
reimbursement of a Nominal Liquidation Amount Deficit for any tranche
of Class C notes on such Transfer Date) for that tranche of Class A
notes and the denominator of which is the aggregate Nominal
Liquidation Amount Deficits (prior to giving effect to such
reimbursement) of all Class C notes, times
. the aggregate Nominal Liquidation Amount Deficits of all Class C
notes which are reimbursed on such Transfer Date.
"Class B Unused Subordinated Amount of Class C notes" means for any tranche
of outstanding Class B notes, with respect to any Transfer Date, an amount
equal to the Class B
S-65
required subordinated amount of Class C notes minus the Class B Usage of the
Class C Required Subordinated Amount, each as of such Transfer Date.
"Class B Usage of Class C Required Subordinated Amount" means, with respect
to any tranche of outstanding Class B notes, zero on the date of issuance of
such tranche, and on any Transfer Date thereafter, the sum of the Class B Usage
of Class C Required Subordinated Amount as of the preceding date of
determination plus the sum of the following amounts:
(1) an amount equal to the product of:
. a fraction, the numerator of which is the Class B Unused Subordinated
Amount of Class C notes for that tranche of Class B notes (as of the
last day of the preceding month) and the denominator of which is the
aggregate nominal liquidation amount of all Class C notes (as of the
last day of the preceding month), times
. the amount of charge-offs for uncovered defaults on principal
receivables in master trust II initially allocated on such Transfer
Date to Class C notes; plus
(2) an amount equal to the product of:
. a fraction, the numerator of which is the nominal liquidation amount
for that tranche of Class B notes (as of the last day of the
preceding month) and the denominator of which is the aggregate
nominal liquidation amount of all Class B notes (as of the last day
of the preceding month), times
. the sum of (i) the amount of charge-offs for uncovered defaults on
principal receivables in master trust II initially allocated to any
tranche of Class A notes that has a Class A Unused Subordinated
Amount of Class B notes that was included in Class A Usage of Class C
Required Subordinated Amount and (ii) the amount of charge-offs for
uncovered defaults on principal receivables in master trust II
initially allocated to any tranche of Class A notes that has a Class
A Unused Subordinated Amount of Class B notes that was included in
Class A Usage of Class B Required Subordinated Amount; plus
(3) the amount of charge-offs for uncovered defaults on principal
receivables in master trust II initially allocated to that tranche of Class
B notes, and then reallocated on such date to the Class C notes; plus
(4) an amount equal to the product of:
. a fraction, the numerator of which is the nominal liquidation amount
for that tranche of Class B notes (as of the last day of the
preceding month) and the denominator of which is the aggregate
nominal liquidation amount of all Class B notes (as of the last day
of the preceding month), times
. the amount of MBNAseries Available Principal Amounts reallocated on
such Transfer Date to the interest funding sub-account for any
tranche of Class A notes that has a Class A Unused Subordinated
Amount of Class B notes; plus
S-66
(5) the amount of MBNAseries Available Principal Amounts reallocated on
such Transfer Date to the interest funding sub-account for that tranche of
Class B notes; plus
(6) an amount equal to the product of:
. a fraction, the numerator of which is the nominal liquidation amount
for such tranche of Class B notes (as of the last day of the
preceding month) and the denominator of which is the aggregate
nominal liquidation amount of all Class B notes (as of the last day
of the preceding month), times
. the amount of MBNAseries Available Principal Amounts reallocated on
such Transfer Date to pay any amount to the servicer for any tranche
of Class A notes that has a Class A Unused Subordinated Amount of
Class B notes; plus
(7) the amount of MBNAseries Available Principal Amounts reallocated on
such Transfer Date to pay any amount to the servicer for such tranche of
Class B notes; minus
(8) an amount (which will not exceed the sum of items (1) through (7)
above) equal to the product of:
. a fraction, the numerator of which is the Class B Usage of Class C
Required Subordinated Amount (prior to giving effect to any
reimbursement of a Nominal Liquidation Amount Deficit for any tranche
of Class C notes on such Transfer Date) for that tranche of Class B
notes and the denominator of which is the Nominal Liquidation Amount
Deficits (prior to giving effect to such reimbursement) of all
tranches of Class C notes, times
. the aggregate Nominal Liquidation Amount Deficits of all Class C
notes which are reimbursed on such Transfer Date.
"Excess Available Funds" means, for the MBNAseries for any month, the
Available Funds allocable to the MBNAseries remaining after application to
cover targeted deposits to the interest funding account, payment of the portion
of the master trust II servicing fee allocable to the MBNAseries, and
application to cover any defaults on principal receivables in master trust II
allocable to the MBNAseries or any deficits in the nominal liquidation amount
of the MBNAseries notes.
"LIBOR" means, as of any LIBOR Determination Date, the rate for deposits in
United States dollars for a one-month period which appears on Telerate Page
3750 as of 11:00 a.m., London time, on such date (or, in the case of the first
interest period, such rate that corresponds with the actual number of days in
the first interest period). If such rate does not appear on Telerate Page 3750,
the rate for that LIBOR Determination Date will be determined on the basis of
the rates at which deposits in United States dollars are offered by four major
banks selected by the beneficiary of the issuer at approximately 11:00 a.m.,
London time, on that day to prime banks in the London interbank market for a
one-month period. The indenture trustee will request the principal London
office of each of such banks to provide a quotation of its rate. If at least
two such quotations are provided, the rate for that LIBOR Determination Date
will be the arithmetic mean of such quotations. If fewer than two quotations
are provided, the rate for that LIBOR Determination Date will be the
S-67
arithmetic mean of the rates quoted by major banks in New York City, selected
by the beneficiary of the issuer, at approximately 11:00 a.m., New York City
time, on that day for loans in United States dollars to leading European banks
for a one-month period.
"LIBOR Determination Date" means (i) May 29, 2001 for the period from and
including the issuance date through but excluding July 16, 2001 and (ii) for
each interest period thereafter, the second London Business Day prior to each
interest payment date on which such interest period commences.
"London Business Day" means any Business Day on which dealings in deposits in
United States dollars are transacted in the London interbank market.
"MBNAseries Available Funds" means, for any month, the amounts to be treated
as MBNAseries Available Funds as described in "Deposit and Application of
Funds--MBNAseries Available Funds."
"MBNAseries Available Principal Amounts" means, for any month, the sum of the
Available Principal Amounts allocated to the MBNAseries, dollar payments for
principal under any derivative agreements for tranches of notes of the
MBNAseries, and any amounts of MBNAseries Available Funds available to cover
defaults on principal receivables in master trust II allocable to the
MBNAseries or any deficits in the nominal liquidation amount of the MBNAseries
notes.
"Monthly Interest Accrual Date" means, with respect to any outstanding
series, class or tranche of notes:
. each interest payment date for such series, class or tranche, and
. for any month in which no interest payment date occurs, the date in that
month corresponding numerically to the next interest payment date for
that series, class or tranche of notes, or in the case of a series,
class or tranche of zero-coupon discount notes, the expected principal
payment date for that series, class or tranche; but
--for the month in which a series, class or tranche of notes is issued,
the date of issuance of such series, class or tranche will be the first
Monthly Interest Accrual Date for such tranche of notes;
--for the month next following the month in which a series, class or
tranche of notes is issued, unless otherwise indicated, the first day
of such month will be the first Monthly Interest Accrual Date in such
next following month for such series, class or tranche of notes;
--any date on which proceeds from a sale of receivables following an
event of default and acceleration of any series, class or tranche of
notes are deposited into the interest funding account for such series,
class or tranche of notes will be a Monthly Interest Accrual Date for
such series, class or tranche of notes;
--if there is no such numerically corresponding date in that month, then
the Monthly Interest Accrual Date will be the last Business Day of the
month; and
S-68
--if the numerically corresponding date in such month is not a Business
Day with respect to that class or tranche, then the Monthly Interest
Accrual Date will be the next following Business Day, unless that
Business Day would fall in the following month, in which case the
monthly interest date will be the last Business Day of the earlier
month.
"Monthly Principal Accrual Date" means with respect to any outstanding
series, class or tranche of notes:
. for any month in which the expected principal payment date occurs for
such series, class or tranche, such expected principal payment date, or
if that day is not a Business Day, the next following Business Day, and
. for any month in which no expected principal payment date occurs for
such series, class or tranche, the date in that month corresponding
numerically to the expected principal payment date for that tranche of
notes (or for any month following the last expected principal payment
date, the date in such month corresponding numerically to the preceding
expected principal payment date for such tranche of notes); but
--following a Pay Out Event, the second Business Day following such Pay
Out Event shall be a Monthly Principal Accrual Date;
--any date on which prefunded excess amounts are released from any
principal funding subaccount and deposited into the principal funding
subaccount of any tranche of notes on or after the expected principal
payment date for such tranche of notes will be a Monthly Principal
Accrual Date for such tranche of notes;
--any date on which proceeds from a sale of receivables following an
event of default and acceleration of any series, class or tranche of
notes are deposited into the principal funding account for such series,
class or tranche of notes will be a Monthly Principal Accrual Date for
such series, class or tranche of notes;
--if there is no numerically corresponding date in that month, then the
Monthly Principal Accrual Date will be the last Business Day of the
month; and
--if the numerically corresponding date in such month is not a Business
Day, the Monthly Principal Accrual Date will be the next following
Business Day, unless that Business Day would fall in the following
month, in which case the Monthly Principal Accrual Date will be the
last Business Day of the earlier month.
"Nominal Liquidation Amount Deficit" means, for any tranche of notes, the
Adjusted Outstanding Dollar Principal Amount minus the nominal liquidation
amount of that tranche.
"Performing" means, with respect to any derivative agreement, that no payment
default or repudiation by the derivative counterparty has occurred and such
derivative agreement has not been terminated.
"Required Excess Available Funds" means, for any month, zero; provided,
however, that this amount may be changed if the issuer (i) receives the consent
of the rating agencies
S-69
and (ii) reasonably believes that the change will not have a material adverse
effect on the notes.
"Telerate Page 3750" means the display page currently so designated on the
Bridge Telerate Market Report (or such other page as may replace that page on
that service for the purpose of displaying comparable rates or prices).
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Annex I
Outstanding Series, Classes and Tranches of Notes
The information provided in this Annex I is an integral part of the
prospectus supplement.
MBNAseries
Nominal Expected Principal Legal
# Class/Tranche Issuance Date Liquidation Amount Certificate Rate Payment Date Maturity Date
- - --------------- ------------- ------------------ ------------------------ ------------------ -------------
1 Class C(2001-1) 5/24/01* $250,000,000 One Month LIBOR + 1.05% May 2006 October 2008
2 Class B(2001-1) 5/24/01* $250,000,000 One Month LIBOR + 0.375% May 2006 October 2008
* Expected
A-I-1
Annex II
Outstanding Master Trust II Series
The information provided in this Annex II is an integral part of the
prospectus supplement.
# Series/Class Issuance Date Investor Interest Certificate Rate Scheduled Payment Date Termination Date
--- -------------- ------------- ----------------- ------------------------ ---------------------- ----------------
1 Series 1994-C 10/26/94
Class A -- $870,000,000 One Month LIBOR + .25% October 2001 March 2004
Class B -- $45,000,000 One Month LIBOR + .45% November 2001 March 2004
Collateral
Interest -- $85,000,000 -- -- --
2 Series 1994-E 12/15/94
Investor
Interest
(as of
4/30/01) -- $450,000,000 Commercial Paper Index -- --
Cash
Collateral
Amount -- $20,000,000 -- -- --
3 Series 1995-A 3/22/95
Class A -- $500,250,000 One Month LIBOR + .27% August 2004 January 2007
Class B -- $25,875,000 One Month LIBOR + .45% September 2004 January 2007
Collateral
Interest -- $48,875,000 -- -- --
4 Series 1995-C 6/29/95
Class A -- $500,250,000 6.45% June 2005 February 2008
Class B -- $25,875,000 One Month LIBOR + .42% July 2005 February 2008
Collateral
Interest -- $48,875,000 -- -- --
5 Series 1995-E 8/2/95
Class A -- $435,000,000 One Month LIBOR + .22% August 2002 January 2005
Class B -- $22,500,000 One Month LIBOR + .32% September 2002 January 2005
Collateral
Interest -- $42,500,000 -- -- --
6 Series 1995-G 9/27/95
Class A -- $435,000,000 One Month LIBOR + .21% October 2002 March 2005
Class B -- $22,500,000 One Month LIBOR + .33% November 2002 March 2005
Collateral
Interest -- $42,500,000 -- -- --
7 Series 1995-J 11/21/95
Class A -- $435,000,000 One Month LIBOR + .23% November 2002 April 2005
Class B -- $22,500,000 One Month LIBOR + .35% December 2002 April 2005
Collateral
Interest -- $42,500,000 -- -- --
8 Series 1996-A 2/28/96
Class A -- $609,000,000 One Month LIBOR + .21% February 2003 July 2005
Class B -- $31,500,000 One Month LIBOR + .34% March 2003 July 2005
Collateral
Interest -- $59,500,000 -- -- --
9 Series 1996-B 3/26/96
Class A -- $435,000,000 One Month LIBOR + .26% March 2006 August 2008
Class B -- $22,500,000 One Month LIBOR + .37% April 2006 August 2008
Collateral
Interest -- $42,500,000 -- -- --
10 Series 1996-E 5/21/96
Class A -- $637,500,000 One Month LIBOR + .17% May 2003 October 2005
Class B -- $56,250,000 One Month LIBOR + .31% June 2003 October 2005
Collateral
Interest -- $56,250,000 -- -- --
11 Series 1996-F 6/25/96
Investor
Interest
(as of
4/30/01) -- $744,681,000 Commercial Paper Index -- --
Collateral
Interest -- $45,000,000 -- -- --
12 Series 1996-G 7/17/96
Class A -- $425,000,000 One Month LIBOR + .18% July 2006 December 2008
Class B -- $37,500,000 One Month LIBOR + .35% August 2006 December 2008
Collateral
Interest -- $37,500,000 -- -- --
13 Series 1996-H 8/14/96
Class A -- $1,020,000,000 Three Month LIBOR + .10% August 2001 January 2004
Class B -- $90,000,000 Three Month LIBOR + .27% September 2001 January 2004
Collateral
Interest -- $90,000,000 -- -- --
A-II-1
# Series/Class Issuance Date Investor Interest Certificate Rate Scheduled Payment Date Termination Date
- - ---------------------- ------------- ----------------- --------------------------- ---------------------- ----------------
14 Series 1996-I 9/25/96
Class A Deutsche Mark -- DM 1,000,000,000 Three Month DM LIBOR + .09% September 19, 2001 February 18, 2004
Class A -- $666,444,518.49 Three Month LIBOR + .115% September 19, 2001 February 18, 2004
Class B -- $58,804,000 Not to Exceed Three Month October 2001 February 18, 2004
LIBOR + .50%
Collateral Interest -- $58,804,000 -- -- --
15 Series 1996-J 9/19/96
Class A -- $850,000,000 One Month LIBOR +.15% September 2003 February 2006
Class B -- $75,000,000 One Month LIBOR + .36% October 2003 February 2006
Collateral Interest -- $75,000,000 -- -- --
16 Series 1996-K 10/24/96
Class A -- $850,000,000 One Month LIBOR + .13% October 2003 March 2006
Class B -- $75,000,000 One Month LIBOR + .35% November 2003 March 2006
Collateral Interest -- $75,000,000 -- -- --
17 Series 1996-M 11/26/96
Class A -- $425,000,000 Three Month LIBOR + .13% November 2006 April 2009
Class B -- $37,500,000 Three Month LIBOR + .35% December 2006 April 2009
Collateral Interest -- $37,500,000 -- -- --
18 Series 1997-B 2/27/97
Class A -- $850,000,000 One Month LIBOR + .16% March 2012 August 2014
Class B -- $75,000,000 One Month LIBOR + .35% March 2012 August 2014
Collateral Interest -- $75,000,000 -- -- --
19 Series 1997-C 3/26/97
Class A -- $637,500,000 One Month LIBOR + .11% March 2004 August 2006
Class B -- $56,250,000 One Month LIBOR + .30% March 2004 August 2006
Collateral Interest -- $56,250,000 -- -- --
20 Series 1997-D 5/22/97
Class A -- $387,948,000 Three Month LIBOR + .05% May 2007 October 2009
Class B -- $34,231,000 Not to Exceed Three Month May 2007 October 2009
LIBOR + .50%
Collateral Interest -- $34,231,000 -- -- --
21 Series 1997-E 5/8/97
Class A -- $637,500,000 Three Month LIBOR + .08% April 2002 September 2004
Class B -- $56,250,000 Three Month LIBOR + .28% April 2002 September 2004
Collateral Interest -- $56,250,000 -- -- --
22 Series 1997-F 6/18/97
Class A -- $600,000,000 6.60% June 2002 November 2004
Class B -- $53,000,000 One Month LIBOR + .29% June 2002 November 2004
Collateral Interest -- $53,000,000 -- -- --
23 Series 1997-G 6/18/97
Class A -- $460,000,000 One Month LIBOR + .15% June 2004 November 2006
Class B -- $40,600,000 One Month LIBOR + .36% June 2004 November 2006
Collateral Interest -- $40,600,000 -- -- --
24 Series 1997-H 8/6/97
Class A -- $507,357,000 Three Month LIBOR + .07% September 2007 February 2010
Class B -- $44,770,000 Not to Exceed Three Month September 2007 February 2010
LIBOR + .50%
Collateral Interest -- $44,770,000 -- -- --
25 Series 1997-I 8/26/97
Class A -- $637,500,000 6.55% August 2004 January 2007
Class B -- $56,250,000 One Month LIBOR + .31% August 2004 January 2007
Collateral Interest -- $56,250,000 -- -- --
26 Series 1997-J 9/10/97
Class A -- $637,500,000 One Month LIBOR + .12% September 2004 February 2007
Class B -- $56,250,000 One Month LIBOR + .30% September 2004 February 2007
Collateral Interest -- $56,250,000 -- -- --
27 Series 1997-K 10/22/97
Class A -- $637,500,000 One Month LIBOR + .12% November 2005 April 2008
Class B -- $56,250,000 One Month LIBOR + .32% November 2005 April 2008
Collateral Interest -- $56,250,000 -- -- --
28 Series 1997-L 11/13/97
Class A -- $511,000,000 Three Month LIBOR - .01% November 2002 April 2005
Class B -- $45,100,000 Not to Exceed Three Month November 2002 April 2005
LIBOR + .50%
Collateral Interest -- $45,100,000 -- -- --
29 Series 1997-M 11/6/97
Class A -- $637,500,000 Three Month LIBOR + .11% October 2002 March 2005
Class B -- $56,250,000 Three Month LIBOR + .27% October 2002 March 2005
Collateral Interest -- $56,250,000 -- --
A-II-2
# Series/Class Issuance Date Investor Interest Certificate Rate Scheduled Payment Date Termination Date
- - -------------------- ------------- ----------------- ------------------------ ---------------------- ----------------
30 Series 1997-O 12/23/97
Class A -- $425,000,000 One Month LIBOR + .17% December 2007 May 2010
Class B -- $37,500,000 One Month LIBOR + .35% December 2007 May 2010
Collateral Interest -- $37,500,000 -- -- --
31 Series 1998-A 3/18/98
Class A -- $637,500,000 One Month LIBOR + .11% March 2003 August 2005
Class B -- $56,250,000 Not to Exceed One Month March 2003 August 2005
LIBOR + .50%
Collateral Interest -- $56,250,000 -- -- --
32 Series 1998-B 4/14/98
Class A -- $550,000,000 Three Month LIBOR + .09% April 2008 September 2010
Class B -- $48,530,000 Not to Exceed Three Month April 2008 September 2010
LIBOR + .50%
Collateral Interest -- $48,530,000 -- -- --
33 Series 1998-C 6/24/98
Class A -- $637,500,000 One Month LIBOR + .08% June 2003 November 2005
Class B -- $56,250,000 One Month LIBOR + .25% June 2003 November 2005
Collateral Interest -- $56,250,000 -- -- --
34 Series 1998-D 7/30/98
Class A -- $475,000,000 5.80% July 2003 December 2005
Class B -- $42,000,000 One Month LIBOR + .25% July 2003 December 2005
Collateral Interest -- $42,000,000 -- -- --
35 Series 1998-E 8/11/98
Class A -- $750,000,000 Three Month LIBOR + .145% April 2008 September 2010
Class B -- $66,200,000 Three Month LIBOR + .33% April 2008 September 2010
Collateral Interest -- $66,200,000 -- --
36 Series 1998-F 8/26/98
Class A -- $425,000,000 Three Month LIBOR + .10% September 2005 February 2008
Class B -- $37,500,000 Three Month LIBOR + .28% September 2005 February 2008
Collateral Interest -- $37,500,000 -- -- --
37 Series 1998-G 9/10/98
Class A -- $637,500,000 One Month LIBOR + .13% September 2006 February 2009
Class B -- $56,250,000 One Month LIBOR + .40% September 2006 February 2009
Collateral Interest -- $56,250,000 -- -- --
38 Series 1998-I 10/22/98
Class A -- $637,500,000 One Month LIBOR + .26% October 2001 October 2003
Class B -- $56,250,000 One Month LIBOR + .51% October 2001 October 2003
Collateral Interest -- $56,250,000 -- --
39 Series 1998-J 10/29/98
Class A -- $660,000,000 5.25% September 2003 February 2006
Class B -- $45,000,000 5.65% September 2003 February 2006
Collateral Interest -- $45,000,000 -- -- --
40 Series 1998-K 11/24/98
Class A -- $637,500,000 One Month LIBOR + .24% August 2002 January 2005
Class B -- $56,250,000 One Month LIBOR + .49% August 2002 January 2005
Collateral Interest -- $56,250,000 -- -- --
41 Series 1999-A 3/25/99
Class A -- $425,000,000 One Month LIBOR + .14% February 2004 July 2006
Class B -- $37,500,000 One Month LIBOR + .37% February 2004 July 2006
Collateral Interest -- $37,500,000 --
42 Series 1999-B 3/26/99 March 2009 August 2011
Class A -- $637,500,000 5.90% March 2009 August 2011
Class B -- $56,250,000 6.20% -- --
Collateral Interest -- $56,250,000 --
43 Series 1999-C 5/18/99 May 2004 October 2006
Class A -- $799,500,000 Three Month LIBOR + .19% May 2004 October 2006
Class B -- $70,550,000 Not to Exceed Three Month -- --
LIBOR + .50%
Collateral Interest -- $70,550,000 --
A-II-3
# Series/Class Issuance Date Investor Interest Certificate Rate Scheduled Payment Date Termination Date
- - -------------------- ------------- ----------------- -------------------------- ---------------------- ----------------
44 Series 1999-D 6/3/99
Class A -- $425,000,000 One Month LIBOR + .19% June 2006 November 2008
Class B -- $37,500,000 6.50% June 2006 November 2008
Collateral Interest -- $37,500,000 -- -- --
45 Series 1999-E 7/7/99
Class A -- $850,000,000 One Month LIBOR + .125% June 2002 June 2004
Class B -- $75,000,000 One Month LIBOR + .32% June 2002 June 2004
Collateral Interest -- $75,000,000 -- -- --
46 Series 1999-F 8/3/99
Class A -- $509,400,000 Three Month LIBOR - .125% August 2004 January 2007
Class B -- $44,950,000 Not to Exceed Three Month August 2004 January 2007
LIBOR + .50%
Collateral Interest -- $44,950,000 -- -- --
47 Series 1999-G 7/29/99
Class A -- $637,500,000 6.35% July 2004 December 2006
Class B -- $56,250,000 6.60% July 2004 December 2006
Collateral Interest -- $56,250,000 -- -- --
48 Series 1999-H 8/18/99
Class A -- $850,000,000 Three Month LIBOR + .21% April 2004 September 2006
Class B -- $75,000,000 Three Month LIBOR + .48% April 2004 September 2006
Collateral Interest -- $75,000,000 -- -- --
49 Series 1999-I 9/8/99
Class A -- $637,500,000 6.40% August 2002 January 2005
Class B -- $56,250,000 6.70% August 2002 January 2005
Collateral Interest -- $56,250,000 -- -- --
50 Series 1999-J 9/23/99
Class A -- $850,000,000 7.00% September 2009 February 2012
Class B -- $75,000,000 7.40% September 2009 February 2012
Collateral Interest -- $75,000,000 -- -- --
51 Series 1999-K 10/27/99
Class A -- $2,300,000,000 -- October 2002 March 2005
Collateral Interest -- $200,000,000 -- -- --
52 Series 1999-L 11/5/99
Class A -- $637,500,000 One Month LIBOR + .25% October 2006 March 2009
Class B -- $56,250,000 One Month LIBOR + .53% October 2006 March 2009
Collateral Interest -- $56,250,000 -- -- --
53 Series 1999-M 12/1/99
Class A -- $425,000,000 6.60% November 2004 April 2007
Class B -- $37,500,000 6.80% November 2004 April 2007
Collateral Interest -- $37,500,000 -- -- --
54 Series 2000-A 3/8/00
Class A -- $637,500,000 7.35% February 2005 July 2007
Class B -- $56,250,000 7.55% February 2005 July 2007
Collateral interest -- $56,250,000 -- -- --
55 Series 2000-B 3/28/00
Class A -- $637,500,000 One Month LIBOR + .115% February 2003 July 2005
Class B -- $56,250,000 One Month LIBOR + .30% February 2003 July 2005
Collateral Interest -- $56,250,000 -- -- --
56 Series 2000-C 4/13/00
Class A -- $1,275,000,000 One Month LIBOR + .16% February 2005 July 2007
Class B -- $112,500,000 One Month LIBOR + .375% February 2005 July 2007
Collateral Interest -- $112,500,000 -- -- --
57 Series 2000-D 5/11/00
Class A -- $722,500,000 One Month LIBOR + .20% April 2007 September 2009
Class B -- $63,750,000 One Month LIBOR + .43% April 2007 September 2009
Collateral Interest -- $63,750,000 -- -- --
58 Series 2000-E 6/1/00
Class A -- $500,000,000 7.80% May 2010 October 2012
Class B -- $45,000,000 8.15% May 2010 October 2012
Collateral Interest -- $45,000,000 -- -- --
59 Series 2000-F 6/23/00
Class A -- $750,000,000 Three Month LIBOR + .125% June 2005 November 2007
Class B -- $66,200,000 Three Month LIBOR + .35% June 2005 November 2007
Collateral Interest -- $66,200,000 -- -- --
A-II-4
# Series/Class Issuance Date Investor Interest Certificate Rate Scheduled Payment Date Termination Date
- --- --------------------- ------------- ----------------- ------------------------- ---------------------- ----------------
60 Series 2000-G 7/20/00
Class A -- $637,500,000 Three Month LIBOR + .13% July 2005 December 2007
Class B -- $56,250,000 Three Month LIBOR + .40% July 2005 December 2007
Collateral Interest -- $56,250,000 -- -- --
61 Series 2000-H 8/23/00
Class A -- $595,000,000 One Month LIBOR + .25% August 2010 January 2013
Class B -- $52,500,000 One Month LIBOR + .60% August 2010 January 2013
Collateral Interest -- $52,500,000 -- -- --
62 Series 2000-I 9/8/00
Class A -- $850,000,000 6.90% August 2005 January 2008
Class B -- $75,000,000 7.15% August 2005 January 2008
Collateral Interest -- $75,000,000 -- -- --
63 Series 2000-J 10/12/00
Class A Swiss Francs -- CHF 1,000,000,000 4.125%
Class A -- $568,990,043 Three Month LIBOR + .21% October 17, 2007 March 17, 2010
Class B -- $50,250,000 One Month LIBOR + .44% October 2007 March 17, 2010
Collateral Interest -- $50,250,000 -- -- --
64 Series 2000-K 11/21/00
Class A -- $637,500,000 Three Month LIBOR + .11% October 2005 March 2008
Class B -- $56,250,000 Three Month LIBOR + .375% October 2005 March 2008
Collateral Interest -- $56,250,000 -- -- --
65 Series 2000-L 12/13/00
Class A -- $425,000,000 6.50% November 2007 April 2010
Class B -- $37,500,000 One Month LIBOR + .50% November 2007 April 2010
Collateral Interest -- $37,500,000 -- -- --
66 Series 2000-Z 3/30/00
Class A -- $0 Commercial Paper Index -- --
Class B -- $0 Commercial Paper Index -- --
Collateral Interest -- -- -- -- --
67 Series 2001-A 2/20/01
Class A -- $1,062,500,000 One Month LIBOR + .15% February 2006 July 2008
Class B -- $93,750,000 One Month LIBOR + .45% February 2006 July 2008
Collateral Interest -- $93,750,000 -- -- --
68 Series 2001-B 3/8/01
Class A -- $637,500,000 One Month LIBOR + .26% March 2011 August 2013
Class B -- $56,250,000 One Month LIBOR + .60% March 2011 August 2013
Collateral Interest -- $56,250,000 -- -- --
69 Series 2001-C 4/25/01
Class A -- $675,000,000 Three Month LIBOR - .125% April 2011 September 2013
Class B -- $60,000,000 One Month LIBOR + .62% April 2011 September 2013
Collateral Interest -- $60,000,000 -- -- --
A-II-5
MBNA Credit Card Master Note Trust
Issuer
[LOGO OF MBNA AMERICA]
MBNA America Bank, National Association
Originator of the Issuer
MBNAseries
$1,000,000,000
Class A(2001-1) Notes
----------------
PROSPECTUS SUPPLEMENT
----------------
Underwriters
Lehman Brothers
Banc of America Securities LLC
Banc One Capital Markets, Inc.
Barclays Capital
Credit Suisse First Boston
Deutsche Banc Alex. Brown
JPMorgan
Merrill Lynch & Co.
Salomon Smith Barney
You should rely only on the information contained or
incorporated by reference in this prospectus supplement and
the accompanying prospectus. We have not authorized anyone to
provide you with different information.
We are not offering the notes in any state where the offer is
not permitted.
We do not claim the accuracy of the information in this
prospectus supplement and the accompanying prospectus as of
any date other than the dates stated on their respective
covers.
Dealers will deliver a prospectus supplement and prospectus
when acting as underwriters of the notes and with respect to
their unsold allotments or subscriptions. In addition, until
the date which is 90 days after the date of this prospectus
supplement, all dealers selling the notes will deliver a
prospectus supplement and prospectus.
This document is printed entirely on recycled paper.
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