-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SyIHwBH2zYZ+OhbQYKKPy7zypNuvvuNcvs9+lqVPsqXh/as2t917LckJb/4ktjZ9 lPaYEJBEqZKJjY6pzGXJtA== 0000950133-97-000592.txt : 19970226 0000950133-97-000592.hdr.sgml : 19970226 ACCESSION NUMBER: 0000950133-97-000592 CONFORMED SUBMISSION TYPE: S-4/A PUBLIC DOCUMENT COUNT: 19 FILED AS OF DATE: 19970225 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MBNA CORP CENTRAL INDEX KEY: 0000870517 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 521713008 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-21181 FILM NUMBER: 97543031 BUSINESS ADDRESS: STREET 1: 1100 NORTH KING STREET CITY: WILMINGTON STATE: DE ZIP: 19884 MAIL ADDRESS: STREET 1: 1100 NORTH KING STREET CITY: WILMINGTON STATE: DE ZIP: 19884 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MBNA CAPITAL C CENTRAL INDEX KEY: 0001026576 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-21181-01 FILM NUMBER: 97543032 BUSINESS ADDRESS: STREET 1: 1100 NORTH KING STRRET CITY: WILMINMGTON STATE: DE ZIP: 19884 MAIL ADDRESS: STREET 1: 1100 NORTH KING STREET CITY: WILMINGTON STATE: DE ZIP: 19884-0764 S-4/A 1 AMENDMENT #1 TO S-4 1 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 25, 1997 REGISTRATION NO. 333-21181 ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------ AMENDMENT NO. 1 TO FORM S-4 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ------------------ MBNA CORPORATION MBNA CAPITAL C (EXACT NAME OF REGISTRANT AS (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) SPECIFIED IN ITS CHARTER) MARYLAND DELAWARE (STATE OR OTHER JURISDICTION (STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION) OF INCORPORATION OR ORGANIZATION) 52-1713008 (I.R.S. EMPLOYER (I.R.S. EMPLOYER IDENTIFICATION NO.) IDENTIFICATION NO.)
WILMINGTON, DELAWARE 19884 (800) 362-6255 (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICE) M. SCOT KAUFMAN EXECUTIVE VICE PRESIDENT, CHIEF FINANCIAL OFFICER AND CHIEF ACCOUNTING OFFICER WILMINGTON, DELAWARE 19884-0864 (800) 362-6255 (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE) Copies to: ------------------ JOHN W. SCHEFLEN JOHN B. TEHAN, ESQ. VINCENT J. PISANO, ESQ. EXECUTIVE VICE PRESIDENT SIMPSON THACHER & BARTLETT SKADDEN, ARPS, SLATE, GENERAL COUNSEL & SECRETARY 425 LEXINGTON AVENUE MEAGHER & FLOM LLP MBNA CORPORATION NEW YORK, NEW YORK 10017 919 THIRD AVENUE WILMINGTON, DELAWARE 19884-0616 (212) 455-2000 NEW YORK, NEW YORK 10022 (800) 362-6255 (212) 735-3000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after this Registration Statement becomes effective and all other conditions to the exchange offer (the "Exchange Offer") described in the enclosed prospectus have been satisfied or waived. If the securities being registered on this form are to be offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. [ ] ------------------ THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE. ================================================================================ 2 PROSPECTUS [MBNA LOGO] MBNA CORPORATION MBNA CAPITAL C OFFER TO EXCHANGE MBNA CAPITAL C 8.25% TRUST ORIGINATED PREFERRED SECURITIES(SM) ("TOPRS(SM)") (LIQUIDATION AMOUNT $25.00 PER PREFERRED SECURITY AND GUARANTEED TO THE EXTENT SET FORTH HEREIN BY MBNA CORPORATION) FOR 6,000,000 SHARES 7.50% CUMULATIVE PREFERRED STOCK, SERIES A CUSIP 55262L209 THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, MARCH 26, 1997, UNLESS THE OFFER IS EXTENDED. MBNA Corporation, a Maryland corporation ("MBNA"), and MBNA Capital C, a Delaware statutory business trust (the "Trust"), hereby offer, upon the terms and subject to the conditions set forth in this Prospectus and the accompanying Letter of Transmittal, to exchange 8.25% Trust Originated Preferred Securities, Series C, representing undivided beneficial ownership interests in the assets of the Trust (the "Preferred Securities"), for any and all shares of MBNA's 7.50% Cumulative Preferred Stock, Series A, $0.01 par value (the "Series A Preferred Stock"), not owned by MBNA (this Prospectus together with the Letter of Transmittal for the Series A Preferred Stock constitute the "Offer"). Exchanges will be made on the basis of one Preferred Security for each share of Series A Preferred Stock, in each case validly tendered and accepted for exchange in the Offer. As of the date of this Prospectus, there are 6,000,000 shares of Series A Preferred Stock outstanding and not owned by MBNA. Concurrently with the issuance of Preferred Securities in exchange for Series A Preferred Stock validly tendered in the Offer, MBNA will deposit in the Trust as trust assets its 8.25% Junior Subordinated Deferrable Interest Debentures, Series C, due 2027 (the "Junior Subordinated Debentures"), having an aggregate principal amount equal to the aggregate stated liquidation amount of the Preferred Securities and the proceeds received upon issuance of the common securities to be issued by the Trust. The Junior Subordinated Debentures will mature on April 15, 2027, which may be (i) shortened to a date not earlier than January 15, 2002 or (ii) extended to a date not later than April 15, 2046 (such date, as so shortened or extended, the "Stated Maturity"), in each case subject to satisfying certain conditions, including, in the event of a shortening of the maturity date, the prior approval of the Board of Governors of the Federal Reserve System (the "Federal Reserve Board"), if such approval is then required under applicable capital guidelines or policies. SEE "RISK FACTORS AND SPECIAL CONSIDERATIONS RELATING TO THE OFFER" STARTING ON PAGE 18 FOR A DISCUSSION OF CERTAIN FACTORS RELATING TO THE PREFERRED SECURITIES THAT SHOULD BE CONSIDERED BY INVESTORS INCLUDING THE PERIOD AND CIRCUMSTANCES DURING AND UNDER WHICH PAYMENTS OF DISTRIBUTIONS ON THE PREFERRED SECURITIES MAY BE DEFERRED AND THE RELATED FEDERAL INCOME TAX CONSEQUENCES. ------------------------ THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR BY ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ------------------------ MERRILL LYNCH & CO. HAS BEEN RETAINED AS DEALER MANAGER TO SOLICIT EXCHANGES OF SERIES A PREFERRED STOCK FOR PREFERRED SECURITIES. SEE "EXCHANGE AGENT AND INFORMATION AGENT-DEALER MANAGER; SOLICITING DEALERS." THE BANK OF NEW YORK HAS BEEN RETAINED AS EXCHANGE AGENT (THE " EXCHANGE AGENT") IN CONNECTION WITH THE OFFER. MORROW & CO., INC. HAS BEEN RETAINED TO ACT AS INFORMATION AGENT TO ASSIST IN CONNECTION WITH THE OFFER. ------------------------ The Dealer Manager for the Offer is: MERRILL LYNCH & CO. The date of this Prospectus is February 27, 1997. (SM) "Trust Originated Preferred Securities" and "TOPrS" are service marks of Merrill Lynch & Co. 3 NONE OF MBNA, THE BOARD OF DIRECTORS OF MBNA, THE TRUSTEES NOR THE TRUST MAKES ANY RECOMMENDATION TO HOLDERS (AS DEFINED HEREIN) OF SERIES A PREFERRED STOCK AS TO WHETHER TO EXCHANGE OR REFRAIN FROM EXCHANGING THEIR SERIES A PREFERRED STOCK IN THE OFFER. HOLDERS OF SERIES A PREFERRED STOCK ARE URGED TO CONSULT THEIR FINANCIAL AND TAX ADVISORS IN MAKING THEIR DECISIONS ON WHAT ACTION TO TAKE IN LIGHT OF THEIR OWN PARTICULAR CIRCUMSTANCES. IN ORDER TO PARTICIPATE IN THE OFFER, HOLDERS OF SERIES A PREFERRED STOCK MUST SUBMIT A LETTER OF TRANSMITTAL AND COMPLY WITH THE OTHER PROCEDURES FOR TENDERING IN ACCORDANCE WITH THE INSTRUCTIONS CONTAINED HEREIN AND IN THE LETTER OF TRANSMITTAL PRIOR TO THE EXPIRATION DATE (AS DEFINED HEREIN). SEE "THE OFFER -- PROCEDURES FOR TENDERING." For a description of the other terms of the Offer, see "The Offer -- Terms of The Offer," "-- Expiration Date; Extensions; Amendments; Termination," and "-- Withdrawal of Tenders." Application will be made to list the Preferred Securities on the New York Stock Exchange, Inc. (the "NYSE"). In order to satisfy the NYSE listing requirements, acceptance of Series A Preferred Stock validly tendered in the Offer is subject to the condition that as of the Expiration Date there be at least 400 record or beneficial holders of at least 1,000,000 Preferred Securities to be issued in exchange for such Series A Preferred Stock (the "Minimum Distribution Condition"), which condition may not be waived. See "The Offer -- Expiration Date; Extensions; Amendments; Termination" and " -- Conditions to the Offer." The Trust expressly reserves the right, in its sole discretion, subject to applicable law, to (i) terminate the Offer, not accept for exchange the Series A Preferred Stock and promptly return the Series A Preferred Stock upon the failure of any condition specified above or in "The Offer -- Conditions to the Offer," (ii) waive any condition to the Offer (other than the Minimum Distribution Condition) and accept all Series A Preferred Stock previously tendered pursuant to the Offer, (iii) extend the Expiration Date of the Offer and retain all Series A Preferred Stock tendered pursuant to the Offer until the Expiration Date (as defined herein), subject, however, to all withdrawal rights of holders, see "The Offer -- Withdrawal of Tenders," (iv) amend the terms of the Offer, (v) modify the form of the consideration to be paid pursuant to the Offer or (vi) not accept for exchange the Series A Preferred Stock at any time on or prior to the Expiration Date, for any reason, including, without limitation, if fewer than 100,000 shares of Series A Preferred Stock would remain outstanding upon acceptance of those tendered (which condition may be waived by the Trust). Any amendment applicable to the Offer will apply to all Series A Preferred Stock tendered pursuant to the Offer. The minimum period during which the Offer must remain open following material changes in the terms of the Offer or the information concerning the Offer, other than a change in the percentage of securities sought or the price, depends upon the facts and circumstances, including the relative materiality of such terms or information. See "The Offer -- Expiration Date; Extensions; Amendments; Termination." MBNA will own directly or indirectly all of the securities representing the undivided beneficial ownership interests in the assets of the Trust represented by the common securities issued by the Trust (the "Common Securities" and, together with the Preferred Securities, the "Trust Securities"). The Trust exists for the sole purpose of (i) issuing (a) the Preferred Securities in exchange for the Series A Preferred Stock validly tendered in the Offer and delivering the Series A Preferred Stock to MBNA in consideration for the deposit by MBNA in the Trust as trust assets of Junior Subordinated Debentures having an aggregate stated principal amount equal to the aggregate stated liquidation amount of the Preferred Securities and (b) the Common Securities to MBNA in exchange for cash and investing the proceeds thereof in an equal aggregate principal amount of the Junior Subordinated Debentures and (ii) engaging in only those other activities as are necessary or incidental thereto. The Preferred Securities and the Common Securities will rank pari passu with each other and will have equivalent terms, except that the holders of the Common Securities will have the exclusive right to appoint, replace or remove the Administrative Trustees (as defined herein) and, if a Debenture Event of Default (as defined herein) occurs and is continuing, (i) the holders of Preferred Securities will have a priority over holders of the Common Securities with respect to payments in respect of distributions and payments upon liquidation, redemption or otherwise and (ii) the holders of a majority in i 4 Liquidation Amount (as defined herein) of the Preferred Securities shall have the right (subject to the terms of the Trust Agreement (as defined herein)) to appoint, replace or remove the Property Trustee (as defined herein) and the Delaware Trustee (as defined herein). See "Prospectus Summary -- Description of the Preferred Securities" and "-- Description of the Junior Subordinated Debentures." Holders of the Preferred Securities will be entitled to receive cumulative cash distributions accruing from the first day following the Expiration Date (the "Accrual Date") and payable quarterly in arrears on the 15th day of January, April, July and October of each year, commencing April 15, 1997, at the annual rate of 8.25% of the Liquidation Amount of $25 per Preferred Security ("Distributions"). In addition, on April 15, 1997 MBNA will make a cash payment to each holder of shares of Series A Preferred Stock accepted for exchange in an amount equal to all of the accumulated and unpaid dividends on such shares of Series A Preferred Stock as of the Expiration Date (the "MBNA Cash Payment Amount"), except that if the Expiration Date is extended so that it occurs after the record date for the payment of dividends on the Series A Preferred Stock and prior to April 15, 1997, then MBNA will not pay the MBNA Cash Payment Amount, but instead on April 15, 1997 will pay full quarterly dividends on the Series A Preferred Stock accepted for exchange to the registered holder thereof on such record date. See "The Offer -- Terms of the Offer." Subject to certain exceptions, as described herein, MBNA has the right to defer payment of interest on the Junior Subordinated Debentures at any time or from time to time for a period not exceeding 20 consecutive quarterly periods with respect to each deferral period (each, an "Extension Period"), provided that no Extension Period may extend beyond the Stated Maturity of the Junior Subordinated Debentures. Upon the termination of any such Extension Period and the payment of all interest then accrued and unpaid (together with interest thereon at the rate of 8.25%, compounded quarterly, to the extent permitted by applicable law), MBNA may elect to begin a new Extension Period subject to the requirements set forth herein. If interest payments on the Junior Subordinated Debentures are so deferred, Distributions on the Preferred Securities will also be deferred and MBNA will not be permitted, subject to certain exceptions described herein, to declare or pay any cash distributions with respect to MBNA's capital stock or debt securities that rank pari passu with or junior to the Junior Subordinated Debentures. During an Extension Period, interest on the Junior Subordinated Debentures will continue to accrue (and the amount of Distributions to which holders of the Preferred Securities are entitled will accumulate) at the rate of 8.25% per annum, compounded quarterly, to the extent permitted by applicable law, from the relevant payment date for such interest, and holders of Preferred Securities will be required to accrue the stated interest on the Junior Subordinated Debentures (in the form of original issue discount ("OID")) for United States federal income tax purposes and, consequently, will be required to include such OID in gross income for such purposes in advance of the receipt of cash attributable to such income. See "Description of the Junior Subordinated Debentures -- Option to Defer Interest Payments" and "Certain United States Federal Income Tax Consequences -- Interest Income and Original Issue Discount." The Junior Subordinated Debentures are unsecured and subordinated to all Senior Debt (as defined herein), which aggregated approximately $1.0 billion at December 31, 1996. Substantially all of MBNA's existing indebtedness constitutes Senior Debt, other than MBNA's 8.278% Junior Subordinated Debentures, Series A, due December 1, 2026 (the "Series A Debentures"), its Floating Rate Junior Subordinated Debentures, Series B, due February 1, 2027 (the "Series B Debentures") and its guarantees of the 8.278% Capital Securities, Series A (the "Series A Capital Securities"), and the Floating Rate Capital Securities, Series B (the "Series B Capital Securities") issued by subsidiary trusts, all of which are pari passu in right of payment with the Junior Subordinated Debentures. Because MBNA is a holding company, the right of MBNA to participate in any distribution of assets of any subsidiary, including MBNA America Bank, National Association, upon such subsidiary's liquidation or reorganization or otherwise, is subject to the prior claims of creditors of that subsidiary, including depositors, except to the extent that MBNA may itself be recognized as a creditor of that subsidiary. Accordingly, the Junior Subordinated Debentures (and therefore the Preferred Securities) will be effectively subordinated to all existing and future liabilities of MBNA's subsidiaries, and holders thereof should only look to the assets of MBNA for payments on the Junior Subordinated Debentures. See "Description of the Junior Subordinated Debentures -- Subordination." MBNA has, through the Guarantee, the Trust Agreement, the Junior Subordinated Debentures and the Indenture (each as defined herein) taken together, fully, irrevocably and unconditionally guaranteed all of the ii 5 Trust's obligations under the Preferred Securities. See "Relationship Between the Preferred Securities, the Junior Subordinated Debentures and the Guarantee -- Full and Unconditional Guarantee." Payments of Distributions and payments on liquidation of the Trust or redemption of the Preferred Securities, but only in each case to the extent of funds held by the Trust, are irrevocably guaranteed by MBNA (the "Guarantee") as and to the extent set forth under "Description of Guarantee." If MBNA does not make interest payments on the Junior Subordinated Debentures held by the Trust, the Trust will have insufficient funds to pay Distributions on the Preferred Securities. The Guarantee does not cover payment of Distributions when the Trust has insufficient funds to pay such Distributions. In such event, a holder of Preferred Securities may institute a legal proceeding directly against MBNA pursuant to the terms of the Indenture to enforce payment of amounts equal to such Distributions to such holder. See "Description of the Junior Subordinated Debentures -- Enforcement of Certain Rights By Holders of Preferred Securities." The obligations of MBNA under the Guarantee and the Indenture are subordinate and junior in right of payment to all Senior Debt of MBNA. The Preferred Securities are subject to mandatory redemption, in whole or in part, upon repayment of Junior Subordinated Debentures at their Stated Maturity or their earlier redemption. Subject to MBNA having received prior approval of the Board of Governors of the Federal Reserve System (the "Federal Reserve") to do so, if then required under applicable capital guidelines or policies, the Junior Subordinated Debentures are redeemable prior to their Stated Maturity at the option of MBNA (i) on or after January 15, 2002, in whole at any time or in part from time to time at a redemption price equal to 100% of the principal amount thereof, plus accrued and unpaid interest through the redemption date (the "Optional Prepayment Price"), or (ii) prior to January 15, 2002, in whole (but not in part), within 90 days following the occurrence of a Special Event (as defined herein) at a redemption price equal to 106.0% of the principal amount thereof from the Accrual Date through January 14, 1998, declining ratably on each January 15th thereafter to 100% on or after, January 15, 2001, plus in any case, accrued and unpaid interest thereon to the redemption date (the "Special Event Prepayment Price," and, together with the Optional Prepayment Price, the "Redemption Price"). If MBNA redeems the Junior Subordinated Debentures, the Trust must redeem a Like Amount (as defined herein) of Trust Securities having an aggregate Liquidation Amount equal to the aggregate principal amount of the Junior Subordinated Debentures so redeemed at a redemption price equal to (i) the Optional Prepayment Price if redeemed on or after January 15, 2002 or (ii) the Special Event Prepayment Price if redeemed prior to January 15, 2002, upon the occurrence of a Special Event. See "Risk Factors and Special Considerations Relating to the Offer," "Description of the Preferred Securities -- Redemption or Exchange." Shares of Series A Preferred Stock which remain outstanding after the Expiration Date will be redeemable at the option of MBNA on or after January 15, 2001 at a redemption price equal to $25 per share of Series A Preferred Stock to be redeemed, plus accrued and unpaid dividends to the date fixed for redemption. MBNA will have the right at any time to terminate the Trust, subject to MBNA having received prior approval of the Federal Reserve to do so if then required under applicable capital guidelines or policies. MBNA has no present intention to take such action, principally because the Junior Subordinated Debentures, unlike the Preferred Securities, would not be considered "Tier 1 Capital" for purposes of the Federal Reserve Board's capital guidelines for bank holding companies. See "Description of the Preferred Securities -- Liquidation Distribution Upon Termination." In the event of the termination of the Trust, after satisfaction of liabilities to creditors of the Trust as required by applicable law, the holders of the Preferred Securities will be entitled to receive a Liquidation Amount of $25 per Preferred Security plus accumulated and unpaid Distributions thereon to the date of payment, which may be in the form of a distribution of such amount in Junior Subordinated Debentures in exchange therefor, subject to certain exceptions. See "Description of the Preferred Securities -- Liquidation Distribution Upon Termination." Application will be made to list the Preferred Securities on the NYSE under the symbol "KRB.PF.C". If Junior Subordinated Debentures are distributed to the holders of Preferred Securities in exchange therefor upon the liquidation of the Trust, MBNA will use its best efforts to list the Junior Subordinated Debentures on the NYSE or such other stock exchanges or automated quotation systems, if any, on which the Preferred Securities are then listed or traded. iii 6 The shares of Series A Preferred Stock are listed and principally traded on the NYSE under the symbol "KRB.PF.A". On February 4, 1997, the last full day of trading prior to the filing of the Registration Statement on Form S-4, of which this Prospectus forms a part, the closing sales price of the Series A Preferred Stock on the NYSE was $26.25 per share. The closing sales price of the Series A Preferred Stock on the NYSE on February 24, 1997 was $26.70 per share. HOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE SERIES A PREFERRED STOCK. To the extent that shares of Series A Preferred Stock are tendered and accepted in the Offer, the terms on which untendered Series A Preferred Stock could subsequently be sold may be adversely affected. To the extent that the aggregate number of shares of Series A Preferred Stock tendered and accepted in the Offer results in (i) the aggregate value of publicly-held shares to be less than $2 million and (ii) the number of outstanding shares of Series A Preferred Stock to be less than 100,000, MBNA would be required to delist the Series A Preferred Stock from the NYSE pursuant to NYSE rules and regulations, and the trading market for untendered Series A Preferred Stock could be adversely affected. In addition, following the Expiration Date, and in accordance with and subject to applicable law, MBNA may from time to time acquire Series A Preferred Stock in the open market, by tender offer, subsequent exchange offer or otherwise. MBNA's decision to make such acquisitions is dependent on many factors, including market conditions in effect at the time of any contemplated acquisition. Accordingly, MBNA cannot predict whether and to what extent it will acquire any additional Series A Preferred Stock and the consideration to be paid therefor. See "Listing and Trading of Preferred Securities and Series A Preferred Stock." MBNA will pay to Soliciting Dealers (as defined herein) designated by the record or beneficial owner, as appropriate, of Series A Preferred Stock a solicitation fee of $0.50 per Preferred Share ($0.25 per Preferred Share with respect to the solicitation of beneficial holders of 10,000 or more shares) validly tendered and accepted for exchange pursuant to the Offer, subject to certain conditions. Soliciting Dealers are not entitled to a solicitation fee for Series A Preferred Stock beneficially owned by such Soliciting Dealer. See "Exchange Agent and Information Agent -- Dealer Manager; Soliciting Dealers." NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE OFFER OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS. IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS SHOULD NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY MBNA, THE TRUST, THE TRUSTEES OR THE DEALER MANAGER. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY EXCHANGE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF MBNA OR THE TRUST SINCE THE RESPECTIVE DATES AS OF WHICH INFORMATION IS GIVEN HEREIN. THE OFFER IS NOT BEING MADE TO (NOR WILL TENDERS BE ACCEPTED FROM OR ON BEHALF OF) HOLDERS OF SERIES A PREFERRED STOCK IN ANY JURISDICTION IN WHICH THE MAKING OF THE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH THE LAWS OF SUCH JURISDICTION. HOWEVER, MBNA AND THE TRUST MAY, AT THEIR DISCRETION, TAKE SUCH ACTION AS THEY MAY DEEM NECESSARY TO MAKE THE OFFER IN ANY SUCH JURISDICTION AND EXTEND THE OFFER TO HOLDERS OF SERIES A PREFERRED STOCK IN SUCH JURISDICTION. IN ANY JURISDICTION THE SECURITIES LAWS OR BLUE SKY LAWS OF WHICH REQUIRE THE OFFER TO BE MADE BY A LICENSED BROKER OR DEALER, THE OFFER IS BEING MADE ON BEHALF OF THE TRUST BY THE DEALER MANAGER OR ONE OR MORE REGISTERED BROKERS OR DEALERS WHICH ARE LICENSED UNDER THE LAWS OF SUCH JURISDICTION. iv 7 TABLE OF CONTENTS
PAGE ---- Available Information................... 1 Incorporation of Certain Documents by Reference............................. 2 Prospectus Summary...................... 3 Risk Factors and Special Considerations Relating to the Offer................. 18 Comparison of Preferred Securities and Series A Preferred Stock.............. 24 MBNA Corporation........................ 26 Ratio of Earnings to Fixed Charges and Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividend Requirements.......................... 27 Capitalization.......................... 28 Accounting Treatment.................... 28 The Trust............................... 29 The Offer............................... 30 Listing and Trading of Preferred Securities and Series A Preferred Stock................................. 39 Transactions and Arrangements Concerning the Offer............................. 39 Fees and Expenses; Transfer Taxes....... 39 Price Range of Series A Preferred Stock................................. 40 Description of the Preferred Securities............................ 40 Description of Guarantee................ 51 Description of the Junior Subordinated Debentures............................ 53 Relationship among the Preferred Securities, the Junior Subordinated Debentures and the Guarantee.......... 60 Description of the Series A Preferred Stock................................. 62 Certain United States Federal Income Tax Consequences.......................... 65 ERISA Considerations.................... 72 Validity of Securities.................. 73 Experts................................. 73
v 8 AVAILABLE INFORMATION This Prospectus constitutes a part of a Registration Statement on Form S-4 (together with all amendments and exhibits thereto, the "Registration Statement") filed by MBNA and the Trust with the Securities and Exchange Commission (the "Commission") under the Securities Act of 1933, as amended (the "Securities Act"), with respect to the securities offered hereby. This Prospectus does not contain all of the information set forth in such Registration Statement, certain parts of which are omitted in accordance with the rules and regulations of the Commission. Reference is made to such Registration Statement and to the exhibits relating thereto for further information with respect to MBNA, the Trust and such securities. Any statements contained herein concerning the provisions of any document filed as an exhibit to the Registration Statement or otherwise filed with the Commission or incorporated by reference herein are not necessarily complete, and, in each instance, reference is made to the copy of such document so filed for a more complete description of the matter involved. Each such statement is qualified in its entirety by such reference. MBNA is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance therewith files reports, proxy statements and other information with the Commission. Reports, proxy statements and other information concerning MBNA can be inspected and copied at prescribed rates at the Commission's Public Reference Room, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, as well as the following Regional Offices of the Commission: 7 World Trade Center, 13th Floor, New York, New York 10048; and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such material may be obtained by mail from the Commission's Public Reference Section, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. If available, such reports and other information may also be accessed through the Commission's electronic data gathering, analysis and retrieval system ("EDGAR") via electronic means, including the Commission's web site on the Internet (http://www.sec.gov). Such reports, proxy statements and other information may also be inspected at the offices of the NYSE, 20 Broad Street, New York, New York 10005. No separate financial statements of the Trust have been included herein. MBNA does not consider that such financial statements would be material to holders of the Preferred Securities because (i) all of the voting securities of the Trust will be owned, directly or indirectly, by MBNA, a reporting company under the Exchange Act, (ii) the Trust has no independent operations but exists for the sole purpose of issuing (a) its Preferred Securities in exchange for Series A Preferred Stock validly tendered in the Offer and delivering such Series A Preferred Stock to MBNA in consideration of the deposit by MBNA as trust assets of Junior Subordinated Debentures having an aggregate stated principal amount equal to the aggregate stated liquidation amount of such Preferred Securities, and (b) its Common Securities to MBNA in exchange for cash and investing the proceeds thereof in an equivalent amount of Junior Subordinated Debentures, and (iii) MBNA's obligations described herein to provide certain indemnities in respect of, and be responsible for, certain costs, expenses, debts and liabilities of the Trust under the Indenture and pursuant to the Trust Agreement, the Guarantee issued by MBNA with respect to Preferred Securities issued by the Trust, the Junior Subordinated Debentures purchased by the Trust, and the Indenture, taken together, constitute a full and unconditional guarantee of payments due on the Preferred Securities. See "Description of Guarantee" and "Description of the Junior Subordinated Debentures." The Trust is not currently subject to the information reporting requirements of the Exchange Act. The Trust will become subject to such requirements upon the effectiveness of the Registration Statement, although it intends to seek and expects to receive exemptions therefrom. 1 9 INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents filed with the Commission by MBNA pursuant to Section 13 of the Exchange Act are incorporated by reference in this Prospectus: (a) MBNA's Annual Report on Form 10-K for the year ended December 31, 1995 as amended by Form 10-K/A-1 provided, however, that the information referred to in Item 402(a)(8) of Regulation S-K promulgated by the Commission shall not be deemed to be specifically incorporated by reference herein. (b) MBNA's Quarterly Reports on Form 10-Q for the quarters ended March 31, 1996, June 30, 1996 and September 30, 1996; (c) MBNA's Current Reports on Form 8-K dated November 26, 1996, November 30, 1996, December 3, 1996, December 5, 1996, December 31, 1996, January 14, 1997 and January 31, 1997; and (d) The description of the Series A Preferred Stock contained in a Registration Statement on Form 8-A dated November 13, 1995, and any amendment or report filed for the purpose of updating such description. Such incorporation by reference shall not be deemed to specifically incorporate by reference the information referred to in Item 402(a)(8) of Regulation S-K. All documents filed by MBNA pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to the termination of this offering shall be deemed to be incorporated by reference in this Prospectus and to be a part hereof from the date of filing of such documents. Any statement contained in this Prospectus or in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained herein or therein (or in any subsequently filed document that also is on or is deemed to be incorporated by reference herein or therein) modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. MBNA will provide without charge to each person to whom a copy of this Prospectus has been delivered, upon the written or oral request of such person, a copy of any or all of the documents referred to above which have been or may be incorporated by reference herein (other than exhibits to such documents unless such exhibits are specifically incorporated by reference in such documents). Requests for such copies should be directed to MBNA Corporation, Wilmington, Delaware 19884-0781, Attention: Investor Relations (800) 362-6255. THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS ARE AVAILABLE UPON REQUEST FROM THE INVESTOR RELATIONS DEPARTMENT, MBNA CORPORATION, WILMINGTON, DELAWARE 19884-0781, ATTENTION: INVESTOR RELATIONS (800) 362-6255. IN ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE BY MARCH 19, 1997. 2 10 PROSPECTUS SUMMARY The following summary does not purport to be complete and is qualified in its entirety by the detailed information contained elsewhere in, or incorporated by reference in, this Prospectus. MBNA CORPORATION MBNA is a registered bank holding company incorporated under the laws of Maryland in 1990. It is the parent corporation of MBNA America Bank, National Association (the "Bank"), a national bank organized in January 1991, as the successor to a national bank organized in 1982. As of December 31, 1996, MBNA had consolidated assets of $17.0 billion, consolidated deposits of $10.2 billion and stockholders' equity of $1.7 billion. The principal asset of MBNA is its equity interest in the Bank. As of December 31, 1996, the Bank and its subsidiaries constituted approximately 92.7% of the consolidated assets of MBNA. Through the Bank, MBNA is one of the world's largest bank credit card lenders and is the leading issuer of affinity credit cards marketed primarily to members of associations and customers of financial institutions. In addition to its credit card lending, MBNA also offers other consumer loans and various deposit products. MBNA generates interest and other income through finance charges assessed on outstanding loan receivables, interchange income, merchant discount fees, credit card fees, loan servicing fees, processing fees, and interest earned on investment securities and money market instruments. MBNA's primary costs are the costs of funding its loan receivables and investment securities, which include interest paid on deposits, short-term borrowings, and long-term debt and bank notes; credit losses; royalties paid to affinity groups and financial institutions; business development and operating expenses; and income taxes. The principal office of MBNA is located in Wilmington, Delaware 19884, and its telephone number is (800) 362-6255. THE TRUST The Trust is a statutory business trust created under Delaware law pursuant to the filing of a certificate of trust with the Secretary of State of the State of Delaware on November 6, 1996 and will be governed by the Trust Agreement executed by MBNA, as Depository, The Bank of New York, as Property Trustee, The Bank of New York (Delaware), as Delaware Trustee, and the Administrative Trustees named therein (the "Trust Agreement"). The Trust's business and affairs are conducted by the Issuer Trustees: The Bank of New York, as Property Trustee, and The Bank of New York (Delaware), as Delaware Trustee, and two individual Administrative Trustees who are employees or officers of or affiliated with MBNA. The Trust exists for the exclusive purposes of (i) issuing (a) its Preferred Securities in exchange for Series A Preferred Stock validly tendered in the Offer and delivering such Series A Preferred Stock to MBNA in consideration of the deposit by MBNA, as trust assets, of Junior Subordinated Debentures having an aggregate stated principal amount equal to the aggregate stated liquidation amount of such Preferred Securities, and (b) its Common Securities to MBNA in exchange for cash and investing the proceeds thereof in an equal aggregate principal amount of Junior Subordinated Debentures and (ii) engaging in only those other activities necessary or incidental thereto (such as registering the transfer of the Trust Securities). Accordingly, the Junior Subordinated Debentures will be the sole assets of the Trust, and payments under the Junior Subordinated Debentures will be the sole revenue of the Trust. All of the Common Securities will be owned by MBNA. The Common Securities will rank pari passu, and payments will be made thereon pro rata, with the Preferred Securities, except that upon the occurrence and continuance of a Debenture Event of Default, the rights of MBNA as holder of the Common Securities to payment in respect of Distributions and payments upon liquidation, redemption or otherwise will be subordinated to the rights of the holders of the Preferred Securities. See "Description of the Preferred Securities -- Subordination of Common Securities." MBNA will acquire Common Securities in an aggregate Liquidation Amount equal to 3% of the total capital of the Trust. The Trust has a term of 55 years, 3 11 but may terminate earlier as provided in the Trust Agreement. The principal executive office of the Trust is Wilmington, Delaware 19884, and its telephone number is (800) 362-6255. See "The Trust." The rights of the holders of the Preferred Securities, including economic rights, rights to information and voting rights, are set forth in the Trust Agreement, the Delaware Business Trust Act and the Trust Indenture Act (as defined herein). See "Description of the Preferred Securities." CERTAIN POTENTIAL BENEFITS AND RISKS TO INVESTORS Prospective investors should carefully review the information contained elsewhere in this Prospectus prior to making a decision regarding the Offer and should particularly consider the following matters: POTENTIAL BENEFITS TO EXCHANGING HOLDERS -- The cash distribution rate on the Preferred Securities will be 75 basis points greater than the dividend rate on the Series A Preferred Stock. See "Comparison of Preferred Securities and Series A Preferred Stock." -- Although the obligations of MBNA under the Junior Subordinated Debentures are unsecured and will be subordinated and junior in right of payment to all Senior Debt of MBNA, they will rank pari passu with MBNA's other general unsecured creditors and will be senior to all capital stock of MBNA now or hereafter issued by MBNA (including the Series A Preferred Stock). -- While no dividends are required to be paid with respect to the Series A Preferred Stock, interest payments on the Junior Subordinated Debentures and therefore distributions on the Preferred Securities may not be deferred for more than 20 consecutive quarterly interest periods. Moreover, during any such Extension Period, MBNA may not, and may not permit any subsidiary of MBNA to (i) declare or pay any dividends or distributions on, or redeem, purchase, acquire or make a liquidation payment with respect to, any of MBNA's capital stock, including the Series A Preferred Stock (ii) make any payment of principal, interest or premium, if any, on or repay, repurchase or redeem any debt securities of MBNA (including other series of junior subordinated debentures) that rank pari passu with or junior in interest to the Junior Subordinated Debentures or (iii) make any guarantee payments with respect to any guarantee by MBNA of the debt securities of any subsidiary of MBNA if such guarantee ranks pari passu with or junior in interest to the Junior Subordinated Debentures, including its guarantees of the Series A Capital Securities and the Series B Capital Securities (other than (a) dividends or distributions in capital stock of MBNA, (b) any declaration of a dividend in connection with the implementation of a stockholders' rights plan or the redemption or repurchase of any such rights pursuant thereto, (c) payments under the Guarantee and (d) purchases of common stock related to the issuance of common stock or rights under any of MBNA's benefit plans for its directors, officers or employees, related to the issuance of common stock or rights under a dividend reinvestment and stock purchase plan, or related to the issuance of common stock (or securities convertible into or exchangeable for common stock) as consideration in an acquisition transaction that was entered into prior to the commencement of such Extension Period). MBNA has no present intention of exercising its right to defer payments of interest on the Junior Subordinated Debentures. However, should MBNA determine to exercise such right in the future, the market price of the Preferred Securities is likely to be affected. See "Description of the Preferred Securities." Dividends on the Series A Preferred Stock accrue whether or not such dividends are declared. See "Description of the Series A Preferred Stock -- Dividends." -- The Series A Preferred Stock is redeemable at the option of MBNA on or after January 15, 2001 at a redemption price equal to $25 per share of Series A Preferred Stock, plus accrued and unpaid dividends to the date fixed for redemption, while the Junior Subordinated Debentures and, as a result, the Preferred Securities, are redeemable in whole or in part on or after January 15, 2002 at a redemption price of 100% of principal amount in the case of the Junior Subordinated Debentures and $25 per Preferred Security in the case of the Preferred Securities, plus in each case accrued and 4 12 unpaid distributions to the date fixed for redemption. The Junior Subordinated Debentures and Preferred Securities will also be redeemable in whole prior to January 15, 2002 at the Special Event Prepayment Price in the event of the occurrence of a Special Event. See "Description of the Preferred Securities -- Redemption or Exchange." -- The Offer will allow MBNA to achieve certain tax efficiencies because, in contrast to dividend payments with respect to the Series A Preferred Stock which are not deductible by MBNA, MBNA will be able to deduct interest payments on the Junior Subordinated Debentures for United States federal income tax purposes. Such tax efficiencies may give rise to an incremental increase in cash flow to MBNA. See "The Offer -- Reason and Purpose of the Offer." -- So long as payments of interest and other payments are made when due on the Junior Subordinated Debentures, such payments will be sufficient to cover cash distributions and other payments made on the Trust Securities because (i) the aggregate principal amount of Junior Subordinated Debentures deposited as trust assets in the Trust will be equal to the sum of (a) the aggregate stated liquidation amount of the Preferred Securities issued by the Trust in exchange for the Series A Preferred Stock accepted in the Offer and (b) the amount of proceeds received by the Trust from the issuance of the Common Securities to MBNA, which proceeds will be used by the Trust to purchase an equal principal amount of Junior Subordinated Debentures, (ii) the interest rate and interest and other payment dates on the Junior Subordinated Debentures will match the distribution rate and distribution and other payment dates for the Trust Securities, (iii) the Indenture provides that MBNA, as issuer of the Junior Subordinated Debentures, shall pay for all debts and obligations (other than payments of interest and principal with respect to the Trust Securities) and all costs and expenses of the Trust, and (iv) the Trust will have no independent operations and will exist for the sole purpose of effecting the Offer and issuing the Trust Securities as described herein and owning and holding the Junior Subordinated Debentures and the Trust Agreement provides that the Trustees shall not permit the Trust to, among other things, engage in any activity that is not consistent with the purposes of the Trust. See "The Trust," "Description of the Preferred Securities," "Description of the Junior Subordinated Debentures" and "Relationship among the Preferred Securities, the Junior Subordinated Debentures and the Guarantee." -- If a Debenture Event of Default occurs and is continuing under the Indenture, then the holders of Preferred Securities would be able to rely on the enforcement by the Property Trustee of its rights as a holder of the Junior Subordinated Debentures against MBNA. If a Debenture Event of Default with respect to the Junior Subordinated Debentures has occurred and is continuing and such event is attributable to the failure of MBNA to pay interest, premium (if any) or principal on such Junior Subordinated Debentures on the date such interest, premium (if any) or principal is due and payable, a holder of Preferred Securities may institute a legal proceeding directly against MBNA for enforcement of payment to such holder of the principal of or interest or premium (if any) on such Junior Subordinated Debentures having a principal amount equal to the aggregate Liquidation Amount of the Preferred Securities of such holder (a "Direct Action"). MBNA may not amend the Indenture to remove the foregoing right to bring a Direct Action without the prior written consent of the holders of all of the Preferred Securities outstanding. If the right to bring a Direct Action is removed, the Trust may become subject to the reporting obligations under the Exchange Act. MBNA shall have the right under the Indenture to set-off any payment made to such holder of Preferred Securities by MBNA in connection with a Direct Action. The holders of the Preferred Securities will not be able to exercise directly any remedies other than those set forth in this paragraph available to the holders of the Junior Subordinated Debentures. See "Description of the Preferred Securities -- Events of Default; Notice." POTENTIAL RISKS TO EXCHANGING HOLDERS -- Participation in the Offer will be a taxable event for holders of Series A Preferred Stock. See "Risk Factors and Special Considerations Relating to the Offer -- Exchange of Series A Preferred Stock for 5 13 Preferred Securities is a Taxable Event" and "Certain United States Federal Income Tax Consequences -- Tax Consequences of the Exchange of Series A Preferred Stock for Preferred Securities." -- Unlike dividends paid on Series A Preferred Stock, distributions made on the Preferred Securities are not eligible for the dividends received deduction currently available to corporate holders. -- The obligations of MBNA under the Guarantee issued by MBNA for the benefit of the holders of Trust Securities are unsecured and subordinate and junior in right of payment to all Senior Debt of MBNA, and rank pari passu with MBNA's other general unsecured creditors. In addition, because MBNA is a holding company, the right of MBNA to participate in any distribution of the assets of any subsidiary, including the Bank, upon such subsidiary's liquidation or reorganization or otherwise is subject to the prior claims of creditors of that subsidiary, including depositors, except to the extent that MBNA may itself be recognized as a creditor of that subsidiary. There are various legal limitations on the extent to which certain of MBNA's subsidiaries may extend credit, pay dividends or otherwise supply funds to, or engage in transactions with, MBNA or certain of its other subsidiaries. Accordingly, the Junior Subordinated Debentures will be effectively subordinated to all existing and future liabilities of MBNA's subsidiaries, and holders of Junior Subordinated Debentures should look only to the assets of MBNA for payments on the Junior Subordinated Debentures. See "MBNA Corporation." None of the Indenture, the Guarantee or the Trust Agreement places any limitation on the amount of secured or unsecured debt, including Senior Debt, that may be incurred by MBNA. See "Description of Guarantee -- Status of the Guarantee" and "Description of Junior Subordinated Debentures." -- If MBNA were to default in its obligation to pay amounts payable on the Junior Subordinated Debentures, the Trust would lack available funds for the payment of distributions or amounts payable on redemption of the Preferred Securities or otherwise. In addition, the interest payment period on the Junior Subordinated Debentures may be extended from time to time under certain circumstances by MBNA, in its sole discretion, for up to 20 consecutive quarters with respect to each extension period, such period not to extend beyond the Stated Maturity of the Junior Subordinated Debentures. See "Risk Factors and Special Considerations Relating to the Offer -- Ranking of Subordinated Obligations Under the Guarantee and Junior Subordinated Debentures" and " -- Option to Extend Interest Payment Period." -- Should MBNA not make interest or other payments on the Junior Subordinated Debentures for any reason, including as a result of MBNA's election to defer payments of interest on the Junior Subordinated Debentures by extending the interest payment period thereon, the Trust will not make distributions or other payments on the Trust Securities. In such an event, holders of the Preferred Securities would not be able to rely on the Guarantee since the Guarantee covers distributions and other payments on the Preferred Securities only if and to the extent that MBNA has made a payment to the Trust of interest or principal on the Junior Subordinated Debentures deposited in the Trust as trust assets. See "Risk Factors and Special Considerations Relating to the Offer -- Rights Under the Guarantee." -- If MBNA elects to defer payments of interest on the Junior Subordinated Debentures by extending the interest period thereon, distributions on the Preferred Securities would also be deferred but the Trust would be required to accrue the stated interest on the Junior Subordinated Debentures (as OID), which would be taxable to beneficial owners of Preferred Securities. As a result, during an Extension Period, beneficial owners of Preferred Securities would include their pro rata share of such OID in gross income in advance of the receipt of cash attributable to such income. See "Risk Factors and Special Considerations Relating to the Offer -- Option to Extend Interest Payment Period" and "Certain United States Federal Income Tax Consequences -- Interest Income and Original Issue Discount." -- Holders of Preferred Securities will have limited voting rights relating only to the modification of the Preferred Securities and the Guarantee and the exercise of the Trust's rights as a holder of Junior Subordinated Debentures and the Guarantee and will not be able under any circumstances to elect 6 14 directors to the Board of Directors of MBNA (the "MBNA Board"). Holders of Preferred Securities will not be entitled to vote to appoint, remove or replace the Property Trustee, the Delaware Trustee or any Administrative Trustee, and such voting rights are vested exclusively in the holder of the Common Securities except, with respect to the Property Trustee and the Delaware Trustee, upon the occurrence of certain events described herein. See "Risk Factors and Special Considerations Relating to the Offer -- Limited Voting Rights" and "Description of the Preferred Securities -- Voting Rights; Amendment of the Trust Agreement." Holders of Series A Preferred Stock also have limited voting rights. However, with certain exceptions, in the event that dividends on any or all shares of series of MBNA's preferred stock, including the Series A Preferred Stock, are in arrears and unpaid for six quarterly dividend periods, whether or not consecutive, the MBNA Board would have to be increased by two directors and the holders of Series A Preferred Stock, together with the holders of all other series of preferred stock then entitled to vote thereon, would be entitled to elect two directors of the expanded MBNA Board. See "Description of the Series A Preferred Stock -- Voting Rights." -- The Series A Preferred Stock is not redeemable prior to January 15, 2001. The Junior Subordinated Debentures and Preferred Securities will be redeemable in whole prior to January 15, 2002 at the Special Event Prepayment Price in the event of the occurrence of a Special Event. See "Description of the Preferred Securities -- Redemption or Exchange" and "Risk Factors and Special Considerations Relating to the Offer -- Special Event -- Redemption." -- MBNA also will have the right at any time to shorten the maturity of the Junior Subordinated Debentures to a date not earlier than January 15, 2002. The exercise of such right is subject to the prior approval of the Federal Reserve Board, if such approval is then required under applicable law, rules, guidelines or policies. MBNA also will have the right to extend the maturity of the Junior Subordinated Debentures to a date no later than April 15, 2046, so long as at the time such election is made and at the time such extension commences (i) MBNA is not in bankruptcy, otherwise insolvent or in liquidation, (ii) MBNA is not in default in the payment of any interest or principal on the Junior Subordinated Debentures, (iii) the Trust is not in arrears on payments of distributions on the Preferred Securities and no deferred distributions on the Preferred Securities are accumulated and (iv) the Junior Subordinated Debentures, or, if the Preferred Securities are rated, the Preferred Securities, are rated at least BBB- by Standard & Poor's Rating Services, at least Baa3 by Moody's Investors Service, Inc. or at least the equivalent by any other nationally recognized statistical rating organization. In the event that MBNA elects to shorten or extend the maturity date of the Junior Subordinated Debentures, it shall give notice to the Debenture Trustee, and the Debenture Trustee shall give notice of such shortening or extension to the holders of the Junior Subordinated Debentures no more than 90 and no less than 30 days prior to the effectiveness thereof. -- While application will be made to list the Preferred Securities on the NYSE, the Preferred Securities are a new issue of securities with no established trading market. In addition, liquidity of the Preferred Securities will be affected by the number of shares of Series A Preferred Stock exchanged in the Offer. See "Risk Factors and Special Considerations Relating to the Offer -- Lack of Established Trading Market for Preferred Securities" and " -- Reduced Trading Market for Series A Preferred Stock." -- MBNA will have the right at any time to liquidate the Trust and cause the Junior Subordinated Debentures held by the Trust to be distributed to the holders of Trust Securities, subject to the prior approval of the Federal Reserve if then required under applicable guidelines or policies. While MBNA will use its best efforts in such a situation to have the Junior Subordinated Debentures listed on the NYSE, there is no guarantee that such listing will take place or that a market will exist for the Junior Subordinated Debentures. See "Risk Factors and Special Considerations Relating to the Offer -- Exchange of Series A Preferred Stock for Preferred Securities is a Taxable Event." 7 15 POTENTIAL RISKS TO NON-EXCHANGING HOLDERS -- The liquidity and trading market for untendered shares of Series A Preferred Stock could be adversely affected to the extent shares of Series A Preferred Stock are tendered and accepted in the Offer. In addition, following the Expiration Date, and in accordance with and subject to applicable law, MBNA may from time to time acquire Series A Preferred Stock in the open market, by tender offer, subsequent exchange offer or otherwise. MBNA's decision to make such acquisitions is dependent on many factors, including market conditions in effect at the time of any contemplated acquisition. Accordingly, MBNA cannot predict whether and to what extent it will acquire any additional Series A Preferred Stock and the consideration to be paid therefor. See "Risk Factors and Special Considerations Relating to the Offer -- Reduced Trading Market for Series A Preferred Stock." -- The Junior Subordinated Debentures and the Guarantee will rank senior in right of payment to the untendered shares of Series A Preferred Stock. See "Risk Factors and Special Considerations Relating to the Offer -- Ranking of Subordinated Obligations Under the Guarantee and Junior Subordinated Debentures." 8 16 THE OFFER REASON AND PURPOSE OF THE OFFER On October 21, 1996, the Federal Reserve Board issued a press release (the "Federal Reserve Press Release") announcing that certain cumulative preferred stock instruments, such as the Preferred Securities, could be included as "Tier 1 Capital" for purposes of the Federal Reserve Board's capital guidelines for bank holding companies ("Tier 1 Capital"), subject to certain limitations. The potential for such Tier 1 Capital treatment, together with MBNA's ability to deduct, for income tax purposes, interest payable on the Junior Subordinated Debentures, could provide MBNA with greater financial flexibility and more cost-effective regulatory capital. TERMS OF THE OFFER Upon the terms and subject to the conditions set forth herein and in the Letter of Transmittal, the Trust hereby offers to exchange Preferred Securities for any and all of the Series A Preferred Stock not owned by MBNA. Exchanges will be made on the basis of one Preferred Security for each share of Series A Preferred Stock validly tendered and accepted for exchange in the Offer. In addition, in the event the record date for the next scheduled dividend payment on the Series A Preferred Stock is after the Expiration Date, MBNA will pay the MBNA Cash Payment Amount on such next scheduled dividend payment date to each holder of Series A Preferred Stock whose shares are validly tendered and accepted for exchange in the Offer. See "The Offer -- Terms of the Offer." EXPIRATION DATE; WITHDRAWALS Upon the terms and conditions of the Offer, the Trust will accept for exchange any and all shares of Series A Preferred Stock validly tendered and not withdrawn prior to 12:00 Midnight, New York City time, on Wednesday, March 26, 1997, or if the Offer is extended by the Trust, in its sole discretion, the latest date and time to which the Offer has been extended (the "Expiration Date"). Tenders of Series A Preferred Stock pursuant to the Offer may be withdrawn at any time prior to the Expiration Date and, unless accepted for exchange by the Trust, may be withdrawn at any time after 40 Business Days (as defined herein) after the date of this Prospectus. A "Business Day" shall mean any day other than Saturday, Sunday or any other day on which banking institutions in New York City (in the State of New York) or in Wilmington (in the State of Delaware) are permitted or required by any applicable law to close. See "The Offer -- Expiration Date; Extensions; Amendments; Termination" and "-- Withdrawal of Tenders." Tenders must be made to the Exchange Agent in order to be valid. CONDITIONS TO THE OFFER; EXTENSIONS; AMENDMENT; TERMINATION Consummation of the Offer is conditioned on, among other things, tenders by a sufficient number of holders of Series A Preferred Stock to meet the Minimum Distribution Condition, which condition may not be waived. See "The Offer -- Conditions to the Offer" and "-- Expiration Date; Extensions; Amendments; Termination." The Trust expressly reserves the right, in its sole discretion, subject to applicable law, to (i) terminate the Offer, and not accept for exchange any Series A Preferred Stock and promptly return the Series A Preferred Stock, upon the failure of any condition specified above or under "The Offer -- Conditions to the Offer," (ii) waive any condition to the Offer (other than the Minimum Distribution Condition) and accept all Series A Preferred Stock previously tendered pursuant to the Offer, (iii) extend the Expiration Date of the Offer and retain all Series A Preferred Stock, tendered pursuant to the Offer under the Expiration Date, subject, however, to all withdrawal rights of holders, see "The Offer -- Withdrawal of Tenders," (iv) amend the terms of the Offer, (v) modify the form of the consideration to be paid pursuant to the Offer, or (vi) not accept for exchange the Series A Preferred Stock at any time on or prior to the Expiration Date, for any reason, including, without limitation, if fewer than 100,000 shares of Series A Preferred Stock would remain outstanding upon acceptance of those tendered (which conditions may be waived by the Trust). Any 9 17 amendment applicable to the Offer will apply to all Series A Preferred Stock tendered pursuant to the Offer. The minimum period during which the Offer must remain open following material changes in the terms of the Offer or the information concerning the Offer, other than a change in the percentage of securities sought or the price, depends upon the facts and circumstances, including the relative materiality of such terms or information. See "The Offer -- Conditions to the Offer" and "-- Expiration Date; Extensions; Amendments; Termination." PROCEDURES FOR TENDERING Each Holder of Series A Preferred Stock wishing to participate in the Offer must (i) properly complete and sign the Letter of Transmittal (or where appropriate, an Agent's Message (as defined herein) or a facsimile thereof (all references in this Prospectus to the Letter of Transmittal shall be deemed to include a facsimile thereof) in accordance with the instructions contained herein and in the Letter of Transmittal, together with any required signature guarantees, and deliver the same to The Bank of New York, as Exchange Agent, at one of its addresses set forth on the back cover page hereof, prior to the Expiration Date and either (a) certificates for the Series A Preferred Stock must be received by the Exchange Agent at such address or (b) such Series A Preferred Stock must be transferred pursuant to the procedures for book-entry transfer described herein and a confirmation of such book-entry transfer must be received by the Exchange Agent, in each case prior to the Expiration Date, or (ii) comply with the guaranteed delivery procedures described herein. See "The Offer -- Procedures for Tendering." IN ORDER TO PARTICIPATE IN THE OFFER, HOLDERS OF SERIES A PREFERRED STOCK MUST SUBMIT THE LETTER OF TRANSMITTAL AND COMPLY WITH THE OTHER PROCEDURES FOR TENDERING IN ACCORDANCE WITH THE INSTRUCTIONS CONTAINED HEREIN AND IN THE LETTER OF TRANSMITTAL PRIOR TO THE EXPIRATION DATE. LETTERS OF TRANSMITTAL, SERIES A PREFERRED STOCK AND ANY OTHER REQUIRED DOCUMENTS SHOULD BE SENT ONLY TO THE EXCHANGE AGENT -- NOT TO MBNA, THE TRUST, THE DEALER MANAGER OR THE INFORMATION AGENT. SPECIAL PROCEDURE FOR BENEFICIAL OWNERS. Any beneficial owner whose shares of Series A Preferred Stock are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and who wishes to tender such Series A Preferred Stock should contact such registered holder promptly and instruct such registered holder to tender on such beneficial owner's behalf. If such beneficial owner wishes to tender on its own behalf, such owner must, prior to completing and executing the Letter of Transmittal and delivering its Series A Preferred Stock, either make appropriate arrangements to register ownership of the Series A Preferred Stock in such owner's name or obtain a properly completed stock power from the registered Holder. The transfer of registered ownership may take considerable time and may not be able to be completed prior to the Expiration Date. See "The Offer -- Procedures for Tendering -- Special Procedure for Beneficial Owners." GUARANTEED DELIVERY PROCEDURES If a holder desires to accept the Offer and time will not permit the Letter of Transmittal or Series A Preferred Stock to reach the Exchange Agent before the Expiration Date or the procedure for book-entry transfer cannot be completed on a timely basis, a tender may be effected in accordance with the guaranteed delivery procedures set forth in "The Offer -- Procedures for Tendering -- Guaranteed Delivery." ACCEPTANCE OF SHARES Upon the terms and subject to the conditions of the Offer, including the Minimum Distribution Condition, the Trust will accept for exchange any and all shares of Series A Preferred Stock validly tendered and not withdrawn prior to the Expiration Date. The Trust expressly reserves the right, in its sole discretion, to delay acceptance for exchange of Series A Preferred Stock tendered under the Offer and the delivery of the 10 18 Preferred Securities with respect to the Series A Preferred Stock accepted for exchange (subject to Rules 13e-4 and 14e-1 under the Exchange Act, which require that MBNA and the Trust consummate the Offer or return the Series A Preferred Stock deposited by or on behalf of the Holders thereof promptly after the termination or withdrawal of the Offer), or to amend, withdraw or terminate the Offer, at any time prior to the Expiration Date for any of the reasons set forth in "The Offer -- Conditions to the Offer" and "-- Expiration Date; Extensions; Amendments; Termination." If the Trust decides, in its sole discretion, to decrease the number of shares of Series A Preferred Stock sought in the Offer or to increase or decrease the consideration offered to holders of Series A Preferred Stock, and if the Offer is scheduled to expire less than ten Business Days from and including the date that notice of such increase or decrease is first published, sent or given in the manner specified in "The Offer -- Terms of the Offer" and "-- Expiration Date; Extensions; Amendments; Termination," then the Offer will remain open for a minimum of ten Business Days from and including the date of such notice. All Series A Preferred Stock not accepted pursuant to the Offer will be returned to the tendering Holders at the Trust's expense as promptly as practicable following the Expiration Date. DELIVERY OF THE PREFERRED SECURITIES Subject to the terms and conditions of the Offer, the delivery of the Preferred Securities to be issued pursuant to the Offer will occur as promptly as practicable following the Expiration Date. See "The Offer -- Terms of the Offer" and " -- Expiration Date; Extensions; Amendments; Termination." DESCRIPTION OF THE PREFERRED SECURITIES The Preferred Securities represent undivided beneficial ownership interests in the assets of the Trust, and Distributions on each Preferred Security will be payable at the annual rate of 8.25% of the stated Liquidation Amount of $25 payable quarterly in arrears on the 15th day of January, April, July and October of each year, to the holders of the Preferred Securities on the relevant record dates. The record dates for the Preferred Securities will be the last day of the month prior to the relevant Distribution Payment date. Distributions will accumulate from the date of original issuance. The first Distribution payment date for the Preferred Securities will be April 15, 1997. In the event that any date on which Distributions are payable on the Preferred Securities is not a Business Day, then payment of the Distributions payable on such date will be made on the next succeeding day that is a Business Day (and without any additional Distributions or other payment in respect of any such delay), except that, if such Business Day is in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case with the same force and effect as if made on the date such payment was originally payable. So long as no Debenture Event of Default has occurred and is continuing, MBNA has the right under the Indenture to defer payment of interest on the Junior Subordinated Debentures at any time or from time to time for a period not exceeding 20 consecutive quarterly periods with respect to each Extension Period, provided, that no Extension Period may extend beyond the Stated Maturity of the Junior Subordinated Debentures. As a consequence of any such deferral of interest payments by MBNA, quarterly Distributions on the Preferred Securities by the Trust also will be deferred during any such Extension Period. Distributions to which holders of the Preferred Securities are entitled will accumulate additional Distributions thereon at the rate per annum of 8.25% thereof, compounded quarterly from the relevant payment date for such Distributions. The term "Distributions" as used herein shall include any such additional Distributions. During any such Extension Period, MBNA may not, and may not permit any subsidiary of MBNA to, (i) declare or pay any dividends or distributions on, or redeem, purchase, acquire or make a liquidation payment with respect to, any of MBNA's capital stock, (ii) make any payment of principal, interest or premium, if any, on or repay, repurchase or redeem any debt securities of MBNA (including other series of junior subordinated debentures) that rank pari passu with or junior in interest to the Junior Subordinated Debentures or (iii) make any guarantee payments with respect to any guarantee by MBNA of the debt securities of any subsidiary of MBNA if such guarantee ranks pari passu with or junior in interest to the Junior Subordinated Debentures, including its guarantees of the Series A Capital Securities and the Series B Capital Securities (other than 11 19 (a) dividends or distributions in capital stock of MBNA, (b) any declaration of a dividend in connection with the implementation of a stockholders' rights plan or the redemption or repurchase of any such rights pursuant thereto, (c) payments under the Guarantee and (d) purchases of common stock related to the issuance of common stock or rights under any of MBNA's benefit plans for its directors, officers or employees, related to the issuance of common stock or rights under a dividend reinvestment and stock purchase plan, or related to the issuance of common stock (or securities convertible into or exchangeable for common stock) as consideration in an acquisition transaction that was entered into prior to the commencement of such Extension Period). Prior to the termination of any such Extension Period, MBNA may further defer the payment of interest on the Junior Subordinated Debentures, provided, that no Extension Period may exceed 20 consecutive quarterly periods or extend beyond the Stated Maturity of the Junior Subordinated Debentures. Upon the termination of any such Extension Period and the payment of all interest then accrued and unpaid (together with any interest thereon at the rate of 8.25%, compounded quarterly, to the extent permitted by applicable law), MBNA may elect to begin a new Extension Period. There is no limitation on the number of times that MBNA may elect to begin an Extension Period. During an Extension Period, holders of Preferred Securities will be required to accrue the stated interest on their pro rata share of the Junior Subordinated Debentures (as OID) for United States federal income tax purposes and, consequently, will be required to include such OID in gross income for such purposes in advance of the receipt of cash attributable to such income. See "Description of the Junior Subordinated Debentures -- Option to Defer Interest Payments" and "Certain United States Federal Income Tax Consequences -- Interest Income and Original Issue Discount." MBNA has no current intention of exercising its right to defer payments of interest by extending the interest payment period on the Junior Subordinated Debentures. Upon the repayment or redemption, in whole or in part, of the Junior Subordinated Debentures, whether at Stated Maturity or upon earlier redemption as provided in the Indenture, the proceeds from such repayment or redemption shall be applied by the Property Trustee to redeem a Like Amount of the Trust Securities, upon not less than 30 nor more than 60 days' notice prior to the date fixed for redemption having an aggregate Liquidation Amount equal to the aggregate principal amount of the Junior Subordinated Debentures so repaid or redeemed at the applicable Redemption Price. See "Description of the Junior Subordinated Debentures -- Optional Redemption." If less than all of the Junior Subordinated Debentures are to be repaid or redeemed on a Redemption Date, then the proceeds from such repayment or redemption shall be allocated to the redemption pro rata of the Preferred Securities and the Common Securities. MBNA has the right, subject to the prior approval of the Federal Reserve if then required under applicable guidelines or policies to redeem the Junior Subordinated Debentures (i) on or after January 15, 2002, in whole at any time or in part from time to time, or (ii) prior to January 15, 2002, in whole (but not in part) within 90 days following the occurrence of a Special Event. A redemption of the Junior Subordinated Debentures would cause a mandatory redemption of Preferred Securities and Common Securities. The Redemption Price with respect to the Junior Subordinated Debentures shall be equal to (i) the Optional Prepayment Price if redeemed on or after January 15, 2002 or (ii) the Special Event Prepayment Price if redeemed prior to January 15, 2002, upon the occurrence of a Special Event. A "Special Event" means a Tax Event or a "Capital Treatment Event" (each as defined herein), as the case may be. A "Tax Event" means the receipt by the Trust or MBNA of an opinion of counsel experienced in such matters to the effect that, as a result of any amendment to, or change (including any announced proposed change) in, the laws (or any regulations thereunder) of the United States or any political subdivision or taxing authority thereof or therein, or as a result of any official administrative pronouncement or judicial decision interpreting or applying such laws or regulations, which amendment or change is effective, or which proposed change, pronouncement or decision is announced, on or after the date of issuance of the Preferred Securities under the Trust Agreement, there is more than an insubstantial risk that (i) the Trust is, or will be within 90 days of the date of such opinion, subject to United States federal income tax with respect to income received or accrued on the Junior Subordinated Debentures, (ii) interest payable by MBNA on the Junior Subordinated Debentures is not, or within 90 days of the date of such opinion, will not be, deductible by 12 20 MBNA, in whole or in part, for United States federal income tax purposes or (iii) the Trust is, or will be within 90 days of the date of the opinion, subject to more than a de minimis amount of other taxes, duties or other governmental charges. A "Capital Treatment Event" means the reasonable determination by MBNA that, as a result of any amendment to, or change (including any proposed change) in, the laws (or any regulations thereunder) of the United States or any political subdivision thereof or therein, or as a result of any official or administrative pronouncement or action or judicial decision interpreting or applying such laws or regulations, which amendment or change is effective, or which proposed change, pronouncement, action or decision is announced, on or after the date of issuance of the Preferred Securities under the Trust Agreement, there is more than an insubstantial risk that MBNA will not be entitled to treat an amount equal to the Liquidation Amount of the Preferred Securities as "Tier 1 Capital" (or the then equivalent thereof) for purposes of the capital adequacy guidelines of the Federal Reserve, as then in effect and applicable to MBNA. MBNA will have the right at any time to terminate the Trust and, after satisfaction of the liabilities to creditors of the Trust as required by applicable law, cause the Junior Subordinated Debentures to be distributed to the holders of the Preferred Securities in exchange therefor upon liquidation of the Trust. Such right is subject to MBNA having received prior approval of the Federal Reserve if then required under applicable capital guidelines or policies. Notice of such liquidation will be mailed to holders of the Preferred Securities not later than 30 days nor more than 60 days prior to such event. Under current United States federal income tax law and interpretations and assuming, as expected, the Trust is treated as a grantor trust, a distribution of Junior Subordinated Debentures in exchange for the Preferred Securities would not be a taxable event to holders of the Preferred Securities. Should there be a change in law, a change in legal interpretation, a Tax Event or other circumstances, however, the distribution could be a taxable event to holders of the Preferred Securities. See "Certain United States Federal Income Tax Consequences -- Distribution of Junior Subordinated Debentures to Holders of Preferred Securities." If MBNA elects neither to redeem the Junior Subordinated Debentures prior to maturity nor to liquidate the Trust and distribute the Junior Subordinated Debentures to holders of the Preferred Securities in exchange therefor, the Preferred Securities will remain outstanding until the Stated Maturity of the Junior Subordinated Debentures. The amount payable on the Preferred Securities in the event of any liquidation of the Trust is $25 per Preferred Securities plus accumulated and unpaid Distributions, which amount may be paid in the form of a distribution of a Like Amount in Junior Subordinated Debentures, subject to certain exceptions. See "Description of the Preferred Securities -- Liquidation Distribution Upon Termination." DESCRIPTION OF THE JUNIOR SUBORDINATED DEBENTURES Concurrently with the issuance of its Preferred Securities in exchange for Series A Preferred Stock accepted in the Offer and the delivery of such Series A Preferred Stock to MBNA in consideration of the deposit by MBNA as trust assets of its Junior Subordinated Debentures having an aggregate stated principal amount equal to the aggregate stated liquidation amount of such Preferred Securities, the Trust will issue its Common Securities to MBNA in exchange for cash and invest the proceeds thereof in an equal aggregate principal amount of Junior Subordinated Debentures. The Junior Subordinated Debentures will bear interest at the annual rate of 8.25% of the principal amount thereof, payable quarterly in arrears on the 15th day of January, April, July and October of each year (each, an "Interest Payment Date"), commencing April 15, 1997, to the person in whose name each Junior Subordinated Debenture is registered on the last day of the month prior to an Interest Payment Date. It is anticipated that, until the liquidation, if any, of the Trust, each Junior Subordinated Debenture will be held by the Property Trustee in trust for the benefit of the holders of the Trust Securities. The amount of interest payable for any period will be computed on the basis of a 360-day year of twelve 30-day months. In the event that any date on which interest is payable on the Junior Subordinated Debentures is not a Business Day, then payment of the interest payable on such date will be made on the next succeeding day that is a Business Day (and without any interest or other payment in respect of any such delay), except that, if such Business Day is in the next succeeding calendar year, such payment 13 21 shall be made on the immediately preceding Business Day, in each case with the same force and effect as if made on the date such payment was originally payable. Accrued interest that is not paid on the applicable Interest Payment Date will bear additional interest on the amount thereof (to the extent permitted by law) at the rate per annum of 8.25% thereof, compounded quarterly from the relevant Interest Payment Date. The term "interest" as used herein shall include quarterly interest payments and interest on quarterly interest payments not paid on the applicable Interest Payment Date, as applicable. The Junior Subordinated Debentures will be issued as a series of junior subordinated deferrable interest debentures under the Indenture. The Junior Subordinated Debentures will mature on April 15, 2027, which date may be shortened to a date not earlier than January 15, 2002 or extended to a date not later than April 15, 2046 as provided herein. So long as no event of default under the Indenture has occurred and is continuing, MBNA has the right under the Indenture at any time or from time to time during the term of the Junior Subordinated Debentures to defer payment of interest on the Junior Subordinated Debentures for a period not exceeding 20 consecutive quarterly periods with respect to each Extension Period, provided, that no Extension Period may extend beyond the Stated Maturity of the Junior Subordinated Debentures. At the end of such Extension Period, MBNA must pay all interest then accrued and unpaid on the Junior Subordinated Debentures (together with interest on such unpaid interest at the annual rate of 8.25%, compounded quarterly from the relevant Interest Payment Date, to the extent permitted by applicable law). During an Extension Period, interest will accrue and holders of Junior Subordinated Debentures (or holders of Preferred Securities while such series is outstanding) will be required to accrue the stated interest on the Junior Subordinated Debentures (as OID) for United States federal income tax purposes and, consequently, such holders will be required to include such OID in gross income for such purposes in advance of the receipt of cash attributable to such income. See "Certain United States Federal Income Tax Consequences -- Interest Income and Original Issue Discount." During any such Extension Period, MBNA may not, and may not permit any subsidiary of MBNA to, (i) declare or pay any dividends or distributions on, or redeem, purchase, acquire or make a liquidation payment with respect to, any of MBNA's capital stock, (ii) make any payment of principal, interest or premium, if any, on or repay, repurchase redeem any debt securities of MBNA (including other series of junior subordinated debentures) that rank pari passu with or junior in interest to the Junior Subordinated Debentures or (iii) make any guarantee payments with respect to any guarantee by MBNA of the debt securities of any subsidiary of MBNA if such guarantee ranks pari passu with or junior in interest to the Junior Subordinated Debentures, including its guarantees of the Series A Capital Securities and the Series B Capital Securities (other than (a) dividends or distributions in capital stock of MBNA, (b) any declaration of a dividend in connection with the implementation of a stockholders' rights plan, or the redemption or repurchase of any such rights pursuant thereto, (c) payments under the Guarantee, and (d) purchases of common stock related to the issuance of common stock or rights under any of MBNA's benefit plans for its directors, officers or employees, related to the issuance of common stock or rights under a dividend reinvestment and stock purchase plan, or related to the issuance of common stock (or securities convertible into or exchangeable for common stock) as consideration in an acquisition transaction that was entered into prior to the commencement of such Extension Period). Prior to the termination of any such Extension Period, MBNA may further defer the payment of interest on the Junior Subordinated Debentures, provided, that no Extension Period may exceed 20 consecutive quarterly periods or extend beyond the Stated Maturity of the Junior Subordinated Debentures. Upon the termination of any such Extension Period and the payment of all interest then accrued and unpaid (together with interest thereon at the rate of 8.25%, compounded quarterly, to the extent permitted by applicable law), MBNA may elect to begin a new Extension Period subject to the above requirements. No interest shall be due and payable during an Extension Period, except at the end thereof. MBNA must give the Property Trustee, the Administrative Trustees and the Debenture Trustee notice of its election to begin such Extension Period at least one Business Day prior to the earlier of (i) the date Distributions on the Trust Securities would have been payable except for the election to begin such Extension Period, (ii) the date the Administrative Trustees are required to give notice to the NYSE, the NASDAQ National Market or other applicable stock exchange or automated quotation system on which the Preferred Securities are then listed or quoted or to holders of Junior Subordinated Debentures of the record date for such Distributions or (iii) the 14 22 date such Distributions are payable, but in any event not less than one Business Day prior to such record date. The Debenture Trustee shall give notice of MBNA's election to begin a new Extension Period to the holders of the Junior Subordinated Debentures. There is no limitation on the number of times that MBNA may elect to begin an Extension Period. See "Description of Junior Subordinated Debentures -- Option to Defer Interest Payments". In the Indenture, MBNA, as borrower, has agreed to pay to the Trust all debts and other obligations (other than with respect to the Trust Securities) and all costs and expenses of the Trust (including costs and expenses relating to the organization of the Trust, the fees and expenses of the Trust's Trustees and the costs and expenses relating to the operation of the Trust) and to pay any and all taxes and all costs and expenses with respect thereto (other than United States withholding taxes) to which the Trust might become subject. See "Description of the Junior Subordinated Debentures -- Trust Expenses and Taxes". Subject to MBNA having received prior approval of the Federal Reserve if then required under applicable capital guidelines or policies, the Junior Subordinated Debentures are redeemable prior to maturity at the option of MBNA (i) on or after January 15, 2002, in whole at any time or in part from time to time or (ii) prior to January 15, 2002, in whole (but not in part) within 90 days following the occurrence of a Special Event. The proceeds of any such redemption will be used by the Trust to redeem the Trust Securities. The Redemption Price with respect to the Junior Subordinated Debentures shall be equal to (i) the Optional Prepayment Price if redeemed on or after January 15, 2002 or (ii) the Special Event Prepayment Price if redeemed prior to January 15, 2002, upon the occurrence of a Special Event. As described under "Description of the Preferred Securities -- Liquidation Distribution Upon Termination," under certain circumstances involving the termination of the Trust, Junior Subordinated Debentures may be distributed to the holders of the Preferred Securities in exchange therefor upon liquidation of the Trust after satisfaction of liabilities to creditors of the Trust as provided by applicable law. It is anticipated that the depositary arrangements for the Junior Subordinated Debentures would be substantially identical to those in effect for the Preferred Securities. If Junior Subordinated Debentures are distributed to the holders of Preferred Securities in exchange therefor upon the liquidation of the Trust, MBNA will use its best efforts to list the Junior Subordinated Debentures on the NYSE or such other stock exchanges or automated quotation system, if any, on which the Preferred Securities are then listed or quoted. There can be no assurance as to the market price of any Junior Subordinated Debentures that may be distributed to the holders of Preferred Securities. CERTAIN TERMS OF GUARANTEE The Guarantee will be qualified as an indenture under the Trust Indenture Act. The Bank of New York will act as Guarantee Trustee (as defined herein) for the purposes of compliance with the provisions of the Trust Indenture Act. The Guarantee Trustee will hold the Guarantee for the benefit of the holders of the Trust Securities. The Guarantee guarantees to the holders of the Trust Securities the following payments, to the extent not paid by the Trust: (i) any accumulated and unpaid Distributions required to be paid on the Trust Securities, to the extent that the Trust has funds on hand available therefor at such time, (ii) the redemption price with respect to any Trust Securities called for redemption, to the extent that the Trust has funds on hand available therefor at such time, and (iii) upon a voluntary or involuntary dissolution, winding up or liquidation of the Trust (unless the Junior Subordinated Debentures are distributed to holders of the Trust Securities), the lesser of (a) the aggregate of the Liquidation Amount and all accumulated and unpaid Distributions to the date of payment, to the extent that the Trust has funds on hand available therefor at such time, and (b) the amount of assets of the Trust remaining available for distribution to holders of the Trust Securities after satisfaction of the liabilities to creditors of the Trust as required by applicable law. The Guarantee will be qualified as an indenture under the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"). The Bank of New York will act as the indenture trustee under the Guarantee (the "Guarantee Trustee") for the purpose of compliance with the Trust Indenture Act and will hold the Guarantee for the benefit of the 15 23 holders of the Trust Securities. The Bank of New York will also act as Debenture Trustee for the Junior Subordinated Debentures and as Property Trustee. The holders of not less than a majority in aggregate Liquidation Amount of the Trust Securities shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Guarantee Trustee in respect of the Guarantee or to direct the exercise of any trust power conferred upon the Guarantee Trustee under the Guarantee. Any holder of the Trust Securities may institute a legal proceeding directly against MBNA to enforce its rights under the Guarantee without first instituting a legal proceeding against the Trust, the Guarantee Trustee or any other person or entity. If MBNA were to default on its obligation to pay amounts payable under the Junior Subordinated Debentures, the Trust would lack funds for the payment of Distributions or amounts payable on redemption of the Trust Securities or otherwise, and, in such event, holders of the Trust Securities would not be able to rely upon the Guarantee for payment of such amounts. Instead, if an event of default under the Indenture shall have occurred and be continuing and such event is attributable to the failure of MBNA to pay interest or premium, if any, on or principal of the Junior Subordinated Debentures on the applicable payment date, then a holder of Preferred Securities may institute a Direct Action. In connection with such Direct Action, MBNA will have a right of set-off under the Indenture to the extent of any payment made by MBNA to such holder of Preferred Securities in the Direct Action. Except as described herein, holders of Preferred Securities will not be able to exercise directly any other remedy available to the holders of the Series A Subordinated Debentures or assert directly any other rights in respect of the Series A Subordinated Debentures. See "Description of the Junior Subordinated Debentures -- Enforcement of Certain Rights by Holders of Preferred Securities," "-- Debenture Events of Default" and "Description of Guarantee." The Trust Agreement provides that each holder of Preferred Securities by acceptance thereof agrees to the provisions of the Guarantee and the Indenture. CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS The exchange of Series A Preferred Stock for Preferred Securities pursuant to the Offer will be a taxable event. The United States federal income tax consequences to holders who exchange their Series A Preferred Stock for Preferred Securities will vary depending on each holder's particular circumstances. See "Certain United States Federal Income Tax Consequences -- Tax Consequences of the Exchange of Series A Preferred Stock for Preferred Securities" for a discussion of the United States federal income tax consequences that may be applicable to holders who exchange shares of their Series A Preferred Stock for Preferred Securities. Unlike dividends paid on Series A Preferred Stock, distributions made on the Preferred Securities are not eligible for the dividends received deduction currently available to corporate holders. In addition, the Preferred Securities may trade at a price that does not fully reflect the value of accrued but unpaid interest with respect to the underlying Junior Subordinated Debentures. ACCOUNTING FOR EXCHANGE The refinancing of the Series A Preferred Stock with the Preferred Securities will decrease MBNA's stockholders' equity and may increase or decrease earnings applicable to common stockholders. The financial statements of the Trust will be consolidated into MBNA's consolidated financial statements, with the Preferred Securities included as part of "Long-Term Debt and Bank Notes" in the consolidated financial statements of MBNA and appropriate disclosure about the Preferred Securities, the Guarantee and the Junior Subordinated Debentures will be included in the notes to the consolidated financial statements. The financial statement notes of MBNA will reflect that the sole asset of the Trust will be the Junior Subordinated Debentures. See "Capitalization" and "Accounting Treatment." Holders of Series A Preferred Stock who do not tender their Series A Preferred Stock in the Offer or whose shares of Series A Preferred Stock are not accepted for exchange will continue to hold such Series A Preferred Stock and will be entitled to all the rights and preferences, and will be subject to all of the limitations, applicable thereto. To the extent that shares of Series A Preferred Stock are tendered and accepted in the Offer, the terms on which untendered shares of Series A Preferred Stock could subsequently be sold could be adversely 16 24 affected. See "Risk Factors and Special Considerations Relating to the Offer -- Reduced Trading Market for Series A Preferred Stock." EXCHANGE AGENT AND INFORMATION AGENT The Bank of New York has been appointed as Exchange Agent in connection with the Offer. Questions and requests for assistance, requests for additional copies of this Prospectus or a Letter of Transmittal and requests for Notices of Guaranteed Delivery should be directed to Morrow & Co., Inc. which has been retained by MBNA and the Trust to act as Information Agent for the Offer. The addresses and telephone numbers of the Exchange Agent and the Information Agent are set forth in "Exchange Agent and Information Agent" and on the outside back cover of this Prospectus. DEALER MANAGER Merrill Lynch, Pierce, Fenner & Smith Incorporated has been retained as Dealer Manager in connection with the Offer. For information regarding fees payable to the Dealer Manager and Soliciting Dealers, see "Exchange Agent and Information Agent -- Dealer Manager; Soliciting Dealers." 17 25 RISK FACTORS AND SPECIAL CONSIDERATIONS RELATING TO THE OFFER Prospective exchanging holders of Series A Preferred Stock who plan to participate in the Offer should carefully consider, in addition to the other information set forth elsewhere in this Prospectus, the following: EXCHANGE OF SERIES A PREFERRED STOCK FOR PREFERRED SECURITIES IS A TAXABLE EVENT The exchange of Series A Preferred Stock for Preferred Securities pursuant to the Offer will be a taxable event. See "Certain United States Federal Income Tax Consequences -- Tax Consequences of the Exchange of Series A Preferred Stock for Preferred Securities." ALL HOLDERS OF SERIES A PREFERRED STOCK ARE ADVISED TO CONSULT THEIR TAX ADVISORS REGARDING THE UNITED STATES FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF THE EXCHANGE OF SERIES A PREFERRED STOCK AND THE ISSUANCE OF PREFERRED SECURITIES. CORPORATE HOLDERS OF PREFERRED SECURITIES NOT ENTITLED TO DIVIDENDS RECEIVED DEDUCTION Unlike dividends paid on Series A Preferred Stock, distributions on the Preferred Securities are not eligible for the dividends received deduction currently available to corporate holders. RANKING OF SUBORDINATED OBLIGATIONS UNDER THE GUARANTEE AND JUNIOR SUBORDINATED DEBENTURES The obligations of MBNA under the Guarantee issued by MBNA for the benefit of the holders of Preferred Securities and under the Junior Subordinated Debentures are unsecured and rank subordinate and junior in right of payment to all Senior Debt of MBNA. Substantially all of MBNA's indebtedness constitutes Senior Debt, other than MBNA's Series A Debentures, its Floating Rate Debentures and its guarantees of the Series A Capital Securities and the Series B Capital Securities, all of which are pari passu in right of payment with the Junior Subordinated Debentures. Because MBNA is a holding company, the right of MBNA to participate in any distribution of the assets of any subsidiary, including the Bank, upon such subsidiary's liquidation or reorganization or otherwise is subject to the prior claims of creditors of that subsidiary, except to the extent that MBNA may itself be recognized as a creditor of that subsidiary. There are various legal limitations on the extent to which certain of MBNA's subsidiaries may extend credit, pay dividends or otherwise supply funds to, or engage in transactions with, MBNA or certain of its other subsidiaries. Accordingly, the Junior Subordinated Debentures will be effectively subordinated to all existing and future liabilities of MBNA's subsidiaries, and holders of Junior Subordinated Debentures should look only to the assets of MBNA for payments on the Junior Subordinated Debentures. See "MBNA Corporation." None of the Indenture, the Guarantee or the Trust Agreement places any limitation on the amount of secured or unsecured debt, including Senior Debt, that may be incurred by MBNA. See "Description of Guarantees -- Status of the Guarantees" and "Description of the Junior Subordinated Debentures -- Subordination." The ability of the Trust to pay amounts due on the Preferred Securities is solely dependent upon MBNA making payments on the Junior Subordinated Debentures as and when required. RIGHTS UNDER THE GUARANTEE The Guarantee will be qualified as an indenture under the Trust Indenture Act. The Bank of New York will act as Guarantee Trustee for the purposes of compliance with the provisions of the Trust Indenture Act. The Guarantee Trustee will hold the Guarantee for the benefit of the holders of the Preferred Securities. The Guarantee guarantees to the holders of the Preferred Securities the following payments, to the extent not paid by the Trust: (i) any accumulated and unpaid Distributions required to be paid on the Preferred Securities, to the extent that the Trust has funds on hand available therefor at such time, (ii) the redemption price with respect to any Preferred Securities called for redemption, to the extent that the Trust has funds on hand available therefor at such time, and (iii) upon a voluntary or involuntary dissolution, winding up or liquidation of the Trust (unless the Junior Subordinated Debentures are distributed to holders of the Trust Securities), the lesser of (a) the aggregate of the Liquidation Amount and all accumulated and unpaid 18 26 Distributions to the date of payment, to the extent that the Trust has funds on hand available therefor at such time, and (b) the amount of assets of the Trust remaining available for distribution to holders of the Trust Securities after satisfaction of the liabilities to creditors of the Trust as required by applicable law. The Guarantee will be qualified as an indenture under the Trust Indenture Act. The Bank of New York will act as the Guarantee Trustee for the purpose of compliance with the Trust Indenture Act and will hold the Guarantee for the benefit of the holders of the Trust Securities. The Bank of New York will also act as Debenture Trustee for the Junior Subordinated Debentures and as Property Trustee. The holders of not less than a majority in aggregate Liquidation Amount of the Preferred Securities shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Guarantee Trustee in respect of the Guarantee or to direct the exercise of any trust power conferred upon the Guarantee Trustee under the Guarantee. Any holder of the Preferred Securities may institute a legal proceeding directly against MBNA to enforce its rights under the Guarantee without first instituting a legal proceeding against the Trust, the Guarantee Trustee or any other person or entity. If MBNA were to default on its obligation to pay amounts payable under the Junior Subordinated Debentures, the Trust would lack funds for the payment of Distributions or amounts payable on redemption of the Preferred Securities or otherwise, and, in such event, holders of the Preferred Securities would not be able to rely upon the Guarantee for payment of such amounts. Instead, if an event of default under the Indenture shall have occurred and be continuing and such event is attributable to the failure of MBNA to pay interest or premium, if any, on or principal of the Junior Subordinated Debentures on the applicable payment date, then a holder of Preferred Securities may institute a Direct Action. In connection with such Direct Action, MBNA will have a right of set-off under the Indenture to the extent of any payment made by MBNA to such holder of Preferred Securities in the Direct Action. Except as described herein, holders of Preferred Securities will not be able to exercise directly any other remedy available to the holders of the Junior Subordinated Debentures or assert directly any other rights in respect of the Junior Subordinated Debentures. See "Description of the Junior Subordinated Debentures -- Enforcement of Certain Rights by Holders of Preferred Securities," "-- Debenture Events of Default" and "Description of Guarantee." The Trust Agreement provides that each holder of Preferred Securities by acceptance thereof agrees to the provisions of the Guarantee and the Indenture. ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF PREFERRED SECURITIES If a Debenture Event of Default with respect to Junior Subordinate Debentures has occurred and is continuing and such event is attributable to the failure of MBNA to pay interest, premium (if any) or principal on such Junior Subordinated Debentures on the date such interest, premium (if any) or principal is due and payable, a holder of Preferred Securities may institute a Direct Action. MBNA may not amend the Indenture to remove the foregoing right to bring a Direct Action without the prior written consent of the holders of all of the Preferred Securities outstanding. If the right to bring a Direct Action is removed, the Trust may become subject to the reporting obligations under the Exchange Act. MBNA shall have the right under the Indenture to set-off any payment made to such holder of Preferred Securities by MBNA in connection with a Direct Action. The holders of the Preferred Securities will not be able to exercise directly any remedies other than those set forth in the preceding paragraph available to the holders of the Junior Subordinated Debentures. See "Description of the Preferred Securities -- Events of Default; Notice." OPTION TO EXTEND INTEREST PAYMENT PERIOD So long as no event of default under the Indenture has occurred or is continuing, MBNA has the right under the Indenture to defer payment of interest on the Junior Subordinated Debentures at any time or from time to time for a period not exceeding 20 consecutive quarterly periods with respect to each Extension Period, provided, that no Extension Period may extend beyond the Stated Maturity of the Junior Subordinated Debentures. As a consequence of any such deferral, quarterly Distributions on the Preferred Securities by the Trust will also be deferred (and the amount of Distributions to which holders of the Preferred Securities are entitled will accumulate additional Distributions thereon at the rate of 8.25% per annum, compounded quarterly from the relevant payment date for such Distributions) during any such Extension Period. During 19 27 any such Extension Period, MBNA may not, and may not permit any subsidiary of MBNA to, (i) declare or pay any dividends or distributions on, or redeem, purchase, acquire or make a liquidation payment with respect to, any of MBNA's capital stock, (ii) make any payment of principal, interest or premium, if any, on or repay, repurchase or redeem any debt securities of MBNA (including other series of junior subordinated debentures) that rank pari passu with or junior in interest to the Junior Subordinated Debentures or (iii) make any guarantee payments with respect to any guarantee by MBNA of the debt securities of any subsidiary of MBNA if such guarantee ranks pari passu with or junior in interest to the Junior Subordinated Debentures, including its guarantees of the Series A Capital Securities and the Series B Capital Securities (other than (a) dividends or distributions in capital stock of MBNA, (b) any declaration of a dividend in connection with the implementation of a stockholders' rights plan or the redemption or repurchase of any such rights pursuant thereto, (c) payments under the Guarantee and (d) purchases of common stock related to the issuance of common stock or rights under any of MBNA's benefit plans for its directors, officers or employees, related to the issuance of common stock or rights under a dividend reinvestment and stock purchase plan, or related to the issuance of common stock (or securities convertible into or exchangeable for common stock) as consideration in an acquisition transaction that was entered into prior to the commencement of such Extension Period). Prior to the termination of any such Extension Period, MBNA may further defer the payment of interest, provided that no Extension Period may exceed 20 consecutive quarterly periods or extend beyond the Stated Maturity of the Junior Subordinated Debentures. Upon the termination of any Extension Period and the payment of all interest then accrued and unpaid (together with interest thereon at the rate of 8.25% per annum, compounded quarterly from the interest payment date for such interest, to the extent permitted by applicable law), MBNA may elect to begin a new Extension Period subject to the above requirements. There is no limitation on the number of times that MBNA may elect to begin an Extension Period. See "Description of the Preferred Securities -- Distributions" and "Description of the Junior Subordinated Debentures -- Option to Defer Interest Payments." The Series A Debentures and the Series B Debentures are pari passu in right of payment with the Junior Subordinated Debentures. As a result, in the event MBNA exercises its right to defer interest on the Series A Debentures or the Series B Debentures, MBNA will be prohibited from making payments on the Junior Subordinated Debentures and, in the event MBNA exercises its right to defer interest on the Junior Subordinated Debentures, MBNA will be prohibited from making payments on the Series A Debentures and the Series B Debentures. Should an Extension Period occur, a holder of Preferred Securities will be required to accrue the stated interest on its pro rata share of the Junior Subordinated Debentures (as OID) for United States federal income tax purposes during such Extension Period and at all times thereafter. As a result, a holder of Preferred Securities will be required to include such OID in gross income for United States federal income tax purposes in advance of the receipt of cash attributable to such income, and will not receive the cash related to such income from the Trust if the holder disposes of the Preferred Securities prior to the record date for the payment of Distributions. See "Certain United States Federal Income Tax Consequences -- Interest Income and Original Issue Discount" and "-- Sales or Redemption of Preferred Securities." MBNA has no current intention of exercising its right to defer payments of interest on the Junior Subordinated Debentures. However, should MBNA elect to exercise such right in the future, the market price of the Preferred Securities is likely to be affected. A holder that disposes of its Preferred Securities during an Extension Period, therefore, might not receive the same return on its investment as a holder that continues to hold its Preferred Securities. SPECIAL EVENT -- REDEMPTION Upon the occurrence and continuation of a Special Event prior to January 15, 2002, MBNA has the right to redeem the Junior Subordinated Debentures in whole (but not in part) at a Redemption Price equal to the Special Event Prepayment Price within 90 days following the occurrence of such Special Event and thereby cause a mandatory redemption of the Preferred Securities. The exercise of such right is subject to MBNA having received prior approval of the Federal Reserve to do so if then required under applicable capital 20 28 guidelines or policies. See "Description of the Preferred Securities -- Redemption or Exchange" and "Description of the Junior Subordinated Debentures - -- Redemption." PROPOSED TAX LEGISLATION Legislation was proposed by the United States Department of the Treasury on February 6, 1997, as part of President Clinton's Fiscal 1998 Budget Proposal (the "Proposed Legislation") that contained a provision which generally would deny the interest deduction for interest paid or accrued on an instrument issued by a corporation that has a weighted average maturity of more than 40 years. The Proposed Legislation also contains a provision which generally would deny an interest deduction for interest paid or accrued on an instrument issued by a corporation that (i) has a maximum term of more than 15 years and (ii) is not shown as indebtedness on the separate balance sheet of the issuer or, where the instrument is issued to a related party (other than a corporation), where the holder or some other related party issues a related instrument that is not shown as indebtedness on the issuer's consolidated balance sheet. For purposes of determining the weighted average maturity or the term of an instrument, any right to extend the maturity of such instrument would be treated as exercised. The above-described provisions were proposed to be effective generally for instruments issued on or after the date of the first Congressional committee action on the Proposed Legislation (as of February 24, 1997, no Congressional committee action has been taken on the Proposed Legislation). If either provision were to apply to the Junior Subordinated Debentures, MBNA would not be able to deduct the interest on the Junior Subordinated Debentures. There can be no assurance that the Proposed Legislation or future legislative or administrative proposals or final legislation will not adversely affect the ability of MBNA to deduct interest on the Junior Subordinated Debentures or otherwise affect the tax treatment of the transactions described herein. If enacted such a change could give rise to a Tax Event, which would permit MBNA, upon approval of the Federal Reserve if then required under applicable guidelines or policies to cause a redemption of the Preferred Securities as described more fully under "Description of the Preferred Securities -- Redemption or Exchange." EXCHANGE OF PREFERRED SECURITIES FOR JUNIOR SUBORDINATED DEBENTURES MBNA will have the right at any time to terminate the Trust and, after satisfaction of liabilities to creditors of the Trust as required by applicable law, cause the Junior Subordinated Debentures to be distributed to the holders of the Preferred Securities in exchange therefor upon liquidation of the Trust. The exercise of such right is subject to MBNA having received prior approval of the Federal Reserve if then required under applicable capital guidelines or policies. See "Description of the Preferred Securities -- Liquidation Distribution Upon Termination." Under current United States federal income tax law and interpretations and assuming, as expected, the Trust is classified as a grantor trust for such purposes, a distribution of the Junior Subordinated Debentures upon a liquidation of the Trust would not be a taxable event to holders of the Preferred Securities. However, if a Tax Event were to occur which would cause the Trust to be subject to United States federal income tax with respect to income received or accrued on the Junior Subordinated Debentures, a distribution of the Junior Subordinated Debentures by the Trust could be a taxable event to the Trust and the holders of the Preferred Securities. See "Certain United States Federal Income Tax Consequences -- Distribution of the Junior Subordinated Debentures to Holders of Preferred Securities." SHORTENING OR EXTENDING THE STATED MATURITY OF THE JUNIOR SUBORDINATED DEBENTURES MBNA will have the right at any time to shorten the maturity of the Junior Subordinated Debentures to a date not earlier than January 15, 2002. The exercise of such right may require the prior approval of the Federal Reserve Board if such approval is then required under applicable law, rules, guidelines or policies. MBNA will also have the right to extend the maturity of the Junior Subordinated Debentures to a date no later than April 15, 2046, so long as at the time such election is made and at the time such extension commences (i) MBNA is not in bankruptcy, otherwise insolvent or in liquidation, (ii) MBNA is not in default in the payment of any interest or principal on the Junior Subordinated Debentures, (iii) the Trust is not in arrears on payments of distributions on the Preferred Securities and no deferred distributions on the 21 29 Preferred Securities are accumulated and (iv) the Junior Subordinated Debentures, or, if the Preferred Securities are rated, the Preferred Securities, are rated at least BBB- by Standard & Poor's Ratings Services, at least Baa3 by Moody's Investors Service, Inc. or at least the equivalent by any other nationally recognized statistical rating organization. MARKET PRICES There can be no assurance as to the market prices for Preferred Securities or Junior Subordinated Debentures that may be distributed in exchange for Preferred Securities upon liquidation of the Trust. Accordingly, the Preferred Securities or the Junior Subordinated Debentures may trade at a discount to the price that the investor paid to purchase the Preferred Securities offered hereby. As a result of the existence of MBNA's right to defer interest payments, the market price of the Preferred Securities (which represent beneficial ownership interests in the Trust) may be more volatile than the market prices of other securities that are not subject to such optional deferrals. See "Description of the Junior Subordinated Debentures." LIMITED VOTING RIGHTS Holders of Preferred Securities generally will have limited voting rights relating only to the modification of the Preferred Securities and the Guarantee and the exercise of the Trust's rights as a holder of Junior Subordinated Debentures and the Guarantee. Holders of Preferred Securities will not be entitled to vote to appoint, remove or replace the Property Trustee, the Delaware Trustee or any Administrative Trustee, and such voting rights are vested exclusively in the holder of the Common Securities except, with respect to the Property Trustee and the Delaware Trustee, upon the occurrence of certain events described herein. The Property Trustee, the Delaware Trustee, the Administrative Trustee and MBNA may amend the Trust Agreement without the consent of holders of Preferred Securities to ensure that the Trust will be classified for United States federal income tax purposes as a grantor trust unless such action materially and adversely affects the interests of such holders. See "Description of the Preferred Securities -- Voting Rights; Amendment of Trust Agreement" and " -- Removal of Issuer Trustees." TRADING PRICE The Preferred Securities may trade at a price that does not fully reflect the value of accrued but unpaid interest with respect to the underlying Junior Subordinated Debentures. See "United States Federal Income Taxation -- Interest Income and Original Issue Discount" and " -- Sales or Redemption of Preferred Securities." CONSEQUENCES OF HIGHLY LEVERAGED TRANSACTION The Indenture does not contain provisions that afford holders of the Junior Subordinated Debentures protection in the event of a highly leveraged transaction, including a change of control, or other similar transactions involving MBNA that may adversely affect such holders. See "Description of the Junior Subordinated Debentures -- General." LACK OF ESTABLISHED TRADING MARKET FOR PREFERRED SECURITIES The Preferred Securities constitute a new issue of securities of the Trust with no established trading market. While application will be made to list the Preferred Securities on the NYSE, there can be no assurance that an active market for the Preferred Securities will develop or be sustained in the future on such exchange. Although the Dealer Manager has indicated to MBNA and the Trust that they intend to make a market in the Preferred Securities following the Expiration Date, as permitted by applicable laws and regulations prior to the commencement of trading on the NYSE, they are not obligated to do so and may discontinue any such market-making at any time without notice. Accordingly, no assurance can be given as to the liquidity of, or trading markets for, the Preferred Securities. In order to satisfy the NYSE listing requirements, acceptance of Series A Preferred Stock validly tendered in the Offer is subject to the Minimum 22 30 Distribution Condition which condition may not be waived by MBNA or the Trust. See "Listing and Trading of Preferred Securities and Series A Preferred Stock." REDUCED TRADING MARKET FOR SERIES A PREFERRED STOCK To the extent shares of Series A Preferred Stock are tendered and accepted in the Offer, the liquidity and trading market for the Series A Preferred Stock to be outstanding following the Offer, and the terms upon which such Series A Preferred Stock could be sold, could be adversely affected. In addition, if the Offer is substantially subscribed, there would be a significant risk that round lot holdings of the Series A Preferred Stock outstanding following the Offer would be limited. Further, following the Expiration Date, and in accordance with and subject to applicable law, MBNA may from time to time acquire Series A Preferred Stock in the open market, by tender offer, subsequent exchange offer or otherwise. MBNA's decision to make such acquisitions is dependent on many factors, including market conditions in effect at the time of any contemplated acquisition. Accordingly, MBNA cannot predict whether and to what extent it will acquire any additional Series A Preferred Stock and the consideration to be paid therefor. See "Listing and Trading of Preferred Securities and Series A Preferred Stock." Under the rules of the NYSE, preferred securities such as the Series A Preferred Stock are subject to delisting if (i) the aggregate value of publicly-held shares is less than $2 million and (ii) the number of publicly-held shares is less than 100,000. There can be no assurance that the Series A Preferred Stock will continue to meet the NYSE listing standards following the Offer. 23 31 COMPARISON OF PREFERRED SECURITIES AND SERIES A PREFERRED STOCK The following is a brief summary of certain terms of the Preferred Securities and the Series A Preferred Stock. For a more complete description of the Preferred Securities, see "Description of the Preferred Securities." For a description of the Junior Subordinated Debentures which will be deposited in the Trust as trust assets and will represent the sole source for the payment of distributions and other payments on the Preferred Securities, see "Description of the Junior Subordinated Debentures." For a description of the Series A Preferred Stock, see "Description of the Series A Preferred Stock."
SERIES A PREFERRED SECURITIES PREFERRED STOCK ------------------------------------------- ------------------------------------------- Issuer................. The Trust. However, the Trust's assets MBNA. consist solely of the Junior Subordinated Debentures issued by MBNA and the Trust's payment of Distributions and amounts due upon a liquidation of the Trust or a redemption of the Trust Securities is guaranteed on a subordinated basis, as and to the extent described herein, by MBNA. Distribution/Dividend Rate................. 8.25% per annum distribution, payable 7.50% per annum dividend payable on the quarterly in arrears on January 15, April Series A Preferred Stock on January 15, 15, July 15 and October 15 of each year, April 15, July 15 and October 15 of each commencing April 15, 1997 from and year, in each case out of funds legally including the Accrual Date, but only if and available therefor, when, as and if to the extent that interest payments are declared by the MBNA Board. Dividends are made in respect of the Junior Subordinated cumulative. Dividends accrue whether or not Debentures held by the Trust. MBNA has earnings, whether or not there are funds legally available for the payment of such dividends and whether or not such dividends are declared. Interest Accrual....... During any Extension Period on the Junior Accrued but unpaid dividends do not bear Subordinated Debentures, distribution interest. Dividends generally are not payments on the Preferred Securities will included in gross income for United States not be made but would continue to accrue, federal income tax purposes until such and, in the case of distributions in dividends are paid or declared in arrears, would bear interest at the rate of accordance with the beneficial owner's 8.25% per annum, compounded quarterly to regular method of tax accounting. the extent permitted by applicable law. In addition, if MBNA elects to defer payment of interest on the Junior Subordinated Debentures, beneficial owners of the Preferred Securities will be required to include their pro rata share of the stated interest on the Junior Subordinated Debentures in gross income for United States federal income tax purposes (as OID) regardless of their method of tax accounting and in advance of the receipt of cash attributable to such income.
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SERIES A PREFERRED SECURITIES PREFERRED STOCK ------------------------------------------- ------------------------------------------- Maturity/Mandatory and Optional Redemption........... The Preferred Securities will be redeemed No maturity or mandatory redemption. The upon the maturity or earlier redemption of Series A Preferred Stock are redeemable at the Junior Subordinated Debentures, at a the option of MBNA on and after January 15, redemption price equal to $25 per Preferred 2001, in whole or in part, at a redemption Security, plus any accrued and unpaid price equivalent to $25 per Preferred Share distributions to the redemption date, to be redeemed, plus accrued and unpaid including distributions accrued as a result dividends (whether or not declared on a of MBNA's election to defer payments of fully cumulative basis) to the date fixed interest on the Junior Subordinated for redemption. Holders of Series A Debentures. The Junior Subordinated Preferred Stock have no right to require Debentures are redeemable by MBNA, in whole MBNA to redeem the Series A Preferred or in part, from time to time on or after Stock. January 15, 2002, at a redemption price equal to 100% of the principal amount of the Junior Subordinated Debentures, plus accrued and unpaid interest to the date fixed for redemption, or, in whole but not in part, prior to January 15, 2002, at the Special Event Prepayment Price, upon the occurrence of a Special Event. In the event that the Junior Subordinated Debentures are redeemed or upon the repayment of the Junior Subordinated Debentures, upon maturity, upon redemption or otherwise, the proceeds thereof will be promptly applied to redeem the Preferred Securities and the Common Securities. The Junior Subordinated Debentures mature on April 15, 2027, which date may be shortened or extended as provided herein, in each case subject to certain conditions. See "Description of the Preferred Securities -- Redemption or Exchange." Holders of Preferred Securities have no right to require MBNA to redeem the Preferred Securities at the option of the holders. Subordination.......... Subordinated to claims of creditors of the Subordinated to claims of creditors of MBNA Trust, if any. The Preferred Securities and including the Junior Subordinated the Common Securities will have equivalent Debentures, pari passu with MBNA's other terms; provided that if a Debenture Event preferred stock and senior to all other of Default occurs and is continuing, (i) shares of capital stock of MBNA. the holders of the Preferred Securities will have a priority over holders of the Common Securities with respect to payments in respect of distributions and payments upon liquidation, redemption or otherwise and (ii) holders of a majority in Liquidation Amount of Preferred Securities have the right (subject to the terms of the Trust Agreement) to appoint, replace or re- move the Property Trustee and the Delaware Trustee. The Trust is not permitted to issue any securities other than the Trust Securities or to incur any indebtedness. MBNA will pay all fees and expenses related to the Trust and the offering of the Trust Securities. The Junior Subordinated Debentures will rank subordinate in right of payment to all Senior Debt of MBNA. Listing................ Application will be made to list the The Series A Preferred Stock is Stock is Preferred Securities on the NYSE under the listed on the NYSE under the symbol symbol "KRB.PF.C". In order to satisfy the "KRB.PF.A". NYSE listing requirements, acceptance of shares of Series A Preferred Stock validly tendered in the Offer is subject to the Minimum Distribution Condition, which condition may not be waived.
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SERIES A PREFERRED SECURITIES PREFERRED STOCK ------------------------------------------- ------------------------------------------- Dividends Received De- duction.............. Distributions on the Preferred Securities Dividends are eligible for the dividends are not eligible for the dividends received received deduction currently available to deduction currently available to corporate corporate holders. holders. Voting Rights/Enforce- ment................. Holders of Preferred Securities generally If dividends shall be in arrears for six will have limited voting rights relating quarterly dividend periods, whether or not only to the modification of Preferred consecutive, the MBNA Board shall be Securities and the Guarantee and the increased by two directors and holders have exercise of the Trust's rights as a holder the right (together with other classes or of Junior Subordinated Debentures and the series of preferred stock ranking on a Guarantee. Holders of Preferred Securities parity with the Series A Preferred Stock to will not be entitled to vote to appoint, elect two directors. remove or replace the Property Trustee, the Delaware Trustee or any Administrative Trustee, and such voting rights are vested exclusively in the holder of the Common Securities except, with respect to the Property Trustee and the Delaware Trustee, upon the occurrence of certain events described herein. The Property Trustee, the Delaware Trustee, the Administrative Trustees and MBNA may amend the Trust Agreement without the consent of holders of Preferred Securities to ensure that the Trust will be classified for United States federal income tax purposes as a grantor trust unless such action materially and adversely affects the interests of such holders. See "Description of the Preferred Securities -- Voting Rights; Amendment of Trust Agreement" and "-- Removal of Issuer Trustees." See "Description of the Series A Preferred Stock -- Voting Rights."
MBNA CORPORATION MBNA is a registered bank holding company incorporated under the laws of Maryland in 1990. It is the parent corporation of the Bank, a national bank organized in January 1991, as the successor to a national bank organized in 1982. As of December 31, 1996, MBNA had consolidated assets of $17.0 billion, consolidated deposits of $10.2 billion and stockholders' equity of $1.7 billion. The principal asset of MBNA is its equity interest in the Bank. As of December 31, 1996, the Bank and its subsidiaries constituted approximately 92.7% of the consolidated assets of MBNA. Through the Bank, MBNA is one of the world's largest bank credit card lenders and is the leading issuer of affinity credit cards marketed primarily to members of associations and customers of financial institutions. In addition to its credit card lending, MBNA also offers other consumer loans and various deposit products. MBNA generates interest and other income through finance charges assessed on outstanding loan receivables, interchange income, merchant discount fees, credit card fees, loan servicing fees, processing fees, and interest earned on investment securities and money market instruments. MBNA's primary costs are the costs of funding its loan receivables and investment securities, which include interest paid on deposits, short-term borrowings, and long-term debt and bank notes; credit losses; royalties paid to affinity groups and financial institutions; business development and operating expenses; and income taxes. The principal office of MBNA is located in Wilmington, Delaware 19884, and its telephone number is (800) 362-6255. 26 34 RATIO OF EARNINGS TO FIXED CHARGES AND RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDEND REQUIREMENTS The following are the consolidated ratio of earnings to fixed charges and ratio of earnings to combined fixed charges and preferred stock dividend requirements for MBNA for each of the years in the five-year period ended December 31, 1995 and the nine-month period ended September 30, 1996:
NINE MONTHS ENDED YEARS ENDED DECEMBER 31, SEPTEMBER 30, ------------------------------------------- 1996(A) 1995 1994 1993(B) 1992 1991 ------------- ---- ---- ------- ---- ---- Earnings to Fixed Charges: Including Interest on Deposits............... 1.9 2.0 2.4 2.0 2.1 1.6 Excluding Interest on Deposits............... 4.0 4.4 5.7 6.0 15.7 12.9 Earnings to Combined Fixed Charges and Preferred Stock Dividends: Including Interest on Deposits............... 1.8 2.0 2.4 2.0 2.1 1.6 Excluding Interest on Deposits............... 3.6 4.3 5.7 6.0 15.7 12.9
- --------------- (a) Income before income taxes for the nine months ended September 30, 1996, includes a charge of $54.3 million related to the launch of the MBNA Platinum Plus Visa(R) and MasterCard(R)* program. Without the charge, the ratio of earnings to fixed charges, including and excluding interest on deposits, would have been 2.0 and 4.3, respectively, and the ratio of earnings to combined fixed charges and preferred stock dividend requirements, including and excluding interest on deposits, would have been 1.9 and 3.9, respectively. (b) Income before income taxes for 1993 includes a charge of $150.0 million for the termination of a marketing agreement with an independent third-party marketing organization. Without the charge, the ratio of earnings to fixed charges and the ratio of earnings to combined fixed charges and preferred stock dividend requirements, including and excluding interest on deposits, would have been 2.9 and 9.9, respectively. The ratio of earnings to fixed charges is computed by dividing (i) income before income taxes and fixed charges less interest capitalized during such period, net of amortization of previously capitalized interest, by (ii) fixed charges. The ratio of earnings to combined fixed charges and preferred stock dividend requirements is computed by dividing (i) income before income taxes and fixed charges less interest capitalized during such period, net of amortization of previously capitalized interest, by (ii) fixed charges and preferred stock dividend requirements. Fixed charges consist of interest expense on borrowings, including capitalized interest (including or excluding deposits, as the case may be), and the portion of rental expense which is deemed representative of interest. The preferred stock dividend requirements represent the pre-tax earnings which would be required to cover such dividend requirements on MBNA's preferred stock outstanding. MBNA did not have any preferred stock outstanding during the periods prior to 1995 presented above and accordingly there were no preferred stock dividend requirements during such periods. - --------------- * MasterCard(R) and Visa(R) are federally registered servicemarks of MasterCard International Inc. and Visa U.S.A., Inc., respectively. 27 35 CAPITALIZATION The following table sets forth the consolidated capitalization of MBNA and its subsidiaries as of September 30, 1996 and as adjusted to give effect to (i) the issuance of $250 million of Series A Capital Securities, by MBNA Capital A on December 18, 1996, (ii) the issuance of $280 million of Series B Capital Securities, by MBNA Capital B on January 23, 1997, and (iii) the consummation of the exchange of Preferred Securities for Series A Preferred Stock. The following data should be read in conjunction with the consolidated financial statements and notes thereto of MBNA and its subsidiaries incorporated herein by reference.
SEPTEMBER 30, 1996 -------------------------- ACTUAL AS ADJUSTED ---------- ----------- (IN THOUSANDS) Total Long-Term Debt and Bank Notes(a)(b)(c)........................ $3,382,469 $4,062,469 Stockholders' Equity Preferred Stock................................................ 120 60 Common Stock................................................... 2,228 2,228 Additional Paid-in Capital..................................... 621,839 471,899 Retained Earnings.............................................. 980,876 980,876 ---------- ----------- Total Stockholders' Equity................................ 1,605,063 1,455,063 ---------- ----------- Total Capitalization........................................... $4,987,532 $5,517,532 ========= =========
- --------------- (a) On December 18, 1996, MBNA Capital A issued $250.0 million of guaranteed preferred beneficial interests in a registered public offering. MBNA Capital A invested the proceeds of such offering, together with approximately $7.7 million paid by MBNA for MBNA Capital A's common securities, in approximately $257.7 million principal amount of MBNA's Series A Subordinated Debentures. The Series A Subordinated Debentures bear interest at the rate of 8.278% per annum and mature on December 1, 2026. MBNA owns all of the common securities of MBNA Capital A, and the sole assets of MBNA Capital A are the Series A Subordinated Debentures. (b) On January 23, 1997, MBNA Capital B issued $280.0 million of guaranteed preferred beneficial interests in a registered public offering. MBNA Capital B invested the proceeds of such offering, together with approximately $8.6 million paid by MBNA for MBNA Capital B's common securities, in approximately $288.6 million principal amount of MBNA's Series B Subordinated Debentures. The Series B Subordinated Debentures will bear interest at the rate of 0.80% per annum above LIBOR on the Liquidation Amount of $1,000 per Series B Subordinated Debenture and will mature on February 1, 2027. MBNA owns all of the common securities of MBNA Capital B, and the sole assets of MBNA Capital B are the Series B Subordinated Debentures. (c) As described herein, the Trust will issue $150.0 million of guaranteed preferred beneficial interests in a registered public offering, assuming all the Series A Preferred Stock is tendered and accepted for exchange in the Offer. The Trust will invest the proceeds of such offering, together with approximately $4.6 milion paid by MBNA for the Trust's common securities (assuming all the Series A Preferred Stock is tendered and accepted for exchange in the Offer), in approximately $154.6 million principal amount in the Junior Subordinated Debentures. The Junior Subordinated Debentures will bear interest at a rate of 8.25% per annum and will mature on April 15, 2027. MBNA will own all of the common securities of the Trust, and the sole assets of the Trust will be the Junior Subordinated Debentures. ACCOUNTING TREATMENT For financial reporting purposes, the Trust will be treated as a subsidiary of MBNA and, accordingly, the accounts of the Trust will be included in the consolidated financial statements of MBNA. The Preferred Securities will be included in "Long-Term Debt and Bank Notes" in the consolidated balance sheets of MBNA and appropriate disclosures about the Preferred Securities, the Guarantee and the Junior Subordinated Debentures will be included in the notes to the consolidated financial statements. For financial reporting purposes, MBNA will record Distributions payable on the Preferred Securities as an expense in the consolidated statements of income. Future financial reports of MBNA will: (i) present the Preferred Securities issued by other trusts created by MBNA on MBNA's balance sheet as "Long-Term Debt and Bank Notes"; (ii) include in a note to the consolidated financial statements disclosure that the sole assets of the trusts are the Junior Subordinated Debentures (specifying as to each trust the principal amount, interest rate and maturity date of Junior 28 36 Subordinated Debentures held); and (iii) disclose, in a note to the consolidated financial statements, that (a) the trusts are wholly owned, (b) the sole assets of the trusts are the Junior Subordinated Debentures (specifying as to each trust the principal amount, interest rate and maturity date of the Junior Subordinated Debentures held), and (c) the obligations of MBNA under the relevant Junior Subordinated Debentures, indenture, trust agreement and guarantee, in the aggregate, constitute a full and unconditional guarantee by MBNA of such trusts' obligations under the Preferred Securities issued by such trust. THE TRUST The Trust is a statutory business trust created under Delaware law pursuant to (i) a trust agreement executed by MBNA, as Depositor of the Trust, and an Administrative Trustee of such Trust and (ii) the filing of a certificate of trust with the Delaware Secretary of State. The trust agreement will be amended and restated in its entirety substantially in the form filed as an exhibit to the Registration Statement of which this Prospectus forms a part. The Trust Agreement will be qualified as an indenture under the Trust Indenture Act. The Trust exists for the exclusive purposes of (i) issuing (a) its Preferred Securities in exchange for Series A Preferred Stock validly tendered in the Offer and delivering such Series A Preferred Stock to MBNA in consideration of the deposit by MBNA as trust assets of Junior Subordinated Debentures having an aggregate stated principal amount equal to the aggregate stated liquidation amount of such Preferred Securities, and (b) its Common Securities to MBNA in exchange for cash and investing the proceeds thereof in an equal aggregate principal amount of Junior Subordinated Debentures and (ii) engaging in only those other activities necessary or incidental thereto (such as registering the transfer of Trust Securities). Accordingly, the Junior Subordinated Debentures will be the sole assets of the Trust, and payments under the Junior Subordinated Debentures will be the sole revenue of the Trust. All of the Common Securities of the Trust will be owned by MBNA. The Common Securities of the Trust will rank pari passu and payments will be made thereon pro rata, with the Preferred Securities of the Trust, except that upon the occurrence and continuance of Debenture Event of Default, the rights of MBNA as holder of the Common Securities to payment in respect of Distributions and payments upon liquidation or redemption will be subordinated to the rights of the holders of the Preferred Securities of the Trust. See "Description of the Preferred Securities -- Subordination of Common Securities." MBNA will acquire Common Securities in an aggregate Liquidation Amount equal to not less than 3% of the total capital of the Trust. The Trust has a term of approximately 55 years, but may terminate earlier as provided in the Trust Agreement. The Trust's business and affairs are conducted by its trustees, each appointed by MBNA as holder of the Common Securities. The trustees for the Trust will be The Bank of New York, as the Property Trustee, The Bank of New York (Delaware), as the Delaware Trustee, and the Administrative Trustees who are employees or officers of or affiliated with MBNA (collectively, the "Issuer Trustees"). The Bank of New York, as Property Trustee, will act as sole trustee under the Trust Agreement for purposes of compliance with the Trust Indenture Act. The Bank of New York will also act as trustee under the Guarantee and the Indenture. See "Description of Guarantees" and "Description of the Junior Subordinated Debentures." The holder of the Common Securities of the Trust, or the holders of a majority in Liquidation Amount of the Preferred Securities if an event of default under the Trust Agreement for the Trust has occurred and is continuing, will be entitled to appoint, remove or replace the Property Trustee and/or the Delaware Trustee for the Trust. In no event will the holders of the Preferred Securities have the right to vote to appoint, remove or replace the Administrative Trustees; such voting rights are vested exclusively in the holder of the Common Securities. The duties and obligations of the Issuer Trustees are governed by the Trust Agreement. MBNA will pay all fees and expenses related to the Trust and the offering of the Preferred Securities and will pay, directly or indirectly, all ongoing costs, expenses and liabilities of the Trust. The principal executive office of the Trust is Wilmington, Delaware 19884 and its telephone number is (800) 362-6255. THE FOREGOING SUMMARY OF CERTAIN PROVISIONS OF THE TRUST AGREEMENT IS A DISCUSSION OF ALL MATERIAL TERMS OF THE TRUST AGREEMENT, BUT DOES NOT 29 37 PURPORT TO BE COMPLETE AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE TRUST AGREEMENT WHICH HAS BEEN FILED AS AN EXHIBIT TO THE REGISTRATION STATEMENT OF WHICH THIS PROSPECTUS IS A PART. The business address of the Trust is c/o MBNA Corporation, Wilmington, Delaware 19884, telephone number (800) 362-6255. THE OFFER REASON AND PURPOSE OF THE OFFER On October 21, 1996, the Federal Reserve Board issued the Federal Reserve Press Release announcing that certain cumulative preferred instruments, such as the Preferred Securities, as Tier 1 Capital for purposes of the Federal Reserve Board's capital guidelines for bank holding companies, subject to certain limitations. The potential for such Tier 1 Capital treatment, together with MBNA's ability to deduct, for income tax purposes, interest payable on the Junior Subordinated Debentures, could provide MBNA with greater financial flexibility and more cost-effective regulatory capital. GENERAL PARTICIPATION IN THE OFFER IS VOLUNTARY AND HOLDERS OF SERIES A PREFERRED STOCK SHOULD CAREFULLY CONSIDER WHETHER TO ACCEPT. NONE OF MBNA, THE BOARD OF DIRECTORS OF MBNA, THE TRUSTEES NOR THE TRUST MAKES ANY RECOMMENDATION TO HOLDERS AS TO WHETHER TO EXCHANGE OR REFRAIN FROM EXCHANGING THEIR SERIES A PREFERRED STOCK IN THE OFFER. HOLDERS OF SERIES A PREFERRED STOCK ARE URGED TO CONSULT THEIR FINANCIAL AND TAX ADVISORS IN MAKING THEIR DECISIONS ON WHAT ACTION TO TAKE IN LIGHT OF THEIR OWN PARTICULAR CIRCUMSTANCES. SEE "PRICE RANGE OF SERIES A PREFERRED STOCK." Unless the context requires otherwise, the term "Holder" with respect to the Offer means (i) any person in whose name any shares of Series A Preferred Stock are registered on the books of MBNA or (ii) any other person who has obtained a properly completed stock power from the registered holder, or (iii) any person whose Series A Preferred Stock are held of record by a Depository Institution. TERMS OF THE OFFER Upon the terms and subject to the conditions set forth herein and in the Letter of Transmittal, the Trust will exchange Preferred Securities for any and all of the Series A Preferred Stock not owned by MBNA. The Offer will be effected on a basis of one Preferred Security for each Preferred Share validly tendered and accepted for exchange, as applicable. See " -- Procedures for Tendering." In addition, in the event the record date for the next scheduled dividend payment on the Series A Preferred Stock is after the Expiration Date, MBNA will pay the MBNA Cash Payment Amount on such next scheduled dividend payment date to each holder of Series A Preferred Stock whose shares are validly tendered and accepted for exchange pursuant to the Offer. Upon the terms and subject to the conditions set forth herein and in the Letter of Transmittal, the Trust will accept shares of Series A Preferred Stock validly tendered and not withdrawn prior to the Expiration Date and, unless the Offer has been withdrawn or terminated, will deliver Preferred Securities in exchange therefor to tendering Holders of Series A Preferred Stock as promptly as practicable following the Expiration Date. The Trust expressly reserves the right, in its sole discretion, to delay acceptance for exchange of Series A Preferred Stock tendered under the Offer and the delivery of the Preferred Securities with respect to the Series A Preferred Stock accepted for exchange (subject to Rules 13e-4 and 14e-1 under the Exchange Act, which require that MBNA and the Trust consummate the Offer or return the Series A Preferred Stock deposited by or on behalf of the Holders thereof promptly after the termination or withdrawal of the Offer), or to amend, withdraw or terminate the Offer, at any time prior to the Expiration Date for any of the reasons set forth in "-- Conditions to the Offer" and "-- Expiration Date; Extensions; Amendments; Termination." 30 38 In all cases, except to the extent waived by the Trust, delivery of Preferred Securities issued with respect to the Series A Preferred Stock accepted for exchange pursuant to the Offer will be made only after timely receipt by the Exchange Agent of Series A Preferred Stock (or confirmation of book-entry transfer thereof), a properly completed and duly executed Letter of Transmittal and any other documents required thereby. As of the date of this Prospectus, there are 6,000,000 shares of Series A Preferred Stock not owned by MBNA. This Prospectus, together with the applicable Letter of Transmittal, is being sent to all registered Holders on or about the date of this Prospectus. The Trust shall be deemed to have accepted validly tendered Series A Preferred Stock (or defectively tendered Series A Preferred Stock with respect to which the Trust has waived such defect) when, as and if the Trust has given oral or written notice thereof to the Exchange Agent. The Exchange Agent will act as agent for the tendering Holders for the purpose of receiving Series A Preferred Stock from, and remitting Preferred Securities to, tendering Holders who are participating in the Offer. Upon the terms and subject to the conditions of the Offer, delivery of the Preferred Securities to tendering Holders will be made as promptly as practicable following the Expiration Date. If any tendered shares of Series A Preferred Stock are not accepted for exchange because of an invalid tender, the occurrence of certain other events set forth herein or otherwise, unless otherwise requested by the Holder under "Special Delivery Instructions" in the Letter of Transmittal, such Series A Preferred Stock will be returned, without expense, to the tendering Holder thereof, as promptly as practicable after the Expiration Date or the withdrawal or termination of the Offer. Holders of Series A Preferred Stock will not have any appraisal or dissenters' rights under the Maryland General Corporation Law in connection with the Offer. MBNA and the Trust intend to conduct the Offer in accordance with the applicable requirements of the Exchange Act and the rules and regulations of the Commission thereunder. Holders who tender Series A Preferred Stock in the Offer will not be required to pay brokerage commissions or fees or, subject to the instructions in the Letter of Transmittal, transfer taxes with respect to the exchange of Series A Preferred Stock pursuant to the Offer. See "Fees and Expenses; Transfer Taxes." Holders tendering Series A Preferred Stock held in global form shall receive Preferred Securities in global form and Holders tendering Series A Preferred Stock held directly in certificated form shall receive Preferred Securities in certificated form, in each case unless otherwise specified in the Letter of Transmittal. CONDITIONS TO THE OFFER Notwithstanding any other provisions of the Offer, or any extension of the Offer, the Trust will not be required to deliver Preferred Securities in respect of any properly tendered Series A Preferred Stock and may terminate the Offer by oral or written notice to the Exchange Agent and the holders of the Series A Preferred Stock, or, at its option, may modify or otherwise amend the Offer (other than with respect to the Minimum Distribution Condition) with respect to the Series A Preferred Stock if the condition in clause (a) below is not satisfied at or prior to the Expiration Date or if any of the events specified in clauses (b) through (d) occurs at or prior to the exchange date for the Series A Preferred Stock: (a) tenders by a sufficient number of holders of Series A Preferred Stock to satisfy the Minimum Distribution Condition for the Offer; (b) any action has been taken or threatened, or any statute, rule, regulation, judgment, order, stay, decree or injunction has been promulgated, enacted, entered, enforced or deemed applicable to the Offer, by or before any court or governmental regulatory or administrative agency or authority or tribunal, domestic or foreign, which (i) challenges the making of the Offer, or might directly or indirectly prohibit, prevent, restrict or delay consummation of the Offer, or otherwise and adversely affects in any material manner the Offer or (ii) could materially adversely affect the business, condition (financial or otherwise), income, operations, properties, assets, liabilities or prospects of MBNA and its subsidiaries, taken as a whole, or materially impair the contemplated benefits of the Offer to MBNA, including any such action, statute, rule, regulation, judgment, order, stay, decree or injunction which would constitute a Special Event if it occurred after the Expiration Date; 31 39 (c) any event has occurred or is likely to occur affecting the business or financial affairs of MBNA that would or might prohibit, prevent, restrict or delay consummation of the Offer or that will, or is reasonably likely to, materially impair the contemplated benefits of the Offer or might be material to holders of Series A Preferred Stock in deciding whether to accept the Offer; and (d) any of the following events shall have occurred (i) any general suspension of or limitation on trading in securities on the NYSE or in the over-the-counter market (whether or not mandatory), (ii) any significant adverse change in the price of the Series A Preferred Stock or in the United States securities or financial markets, (iii) a material impairment in the trading market for debt or equity securities on the NYSE or in the over-the-counter market (whether or not mandatory), (iv) a declaration of a banking moratorium or any suspension of payments in respect of banks by federal or state authorities in the United States (whether or not mandatory), (v) a commencement of a war, armed hostilities or other national or international crisis directly or indirectly relating to the United States, (vi) any limitation (whether or not mandatory) by any governmental authority on, or other event having a reasonable likelihood of affecting, the extension of credit by banks or other lending institutions in the United States, or (vii) any significant adverse change in United States securities or financial markets generally or in the case of any of the foregoing existing at the time of the commencement of the Offer, a material acceleration or worsening thereof. The foregoing conditions are for the sole benefit of the Trust and, except for the Minimum Distribution Condition, may be waived by the Trust, in whole or in part, in their sole discretion. Any determination made by the Trust concerning an event, development or circumstance described or referred to above will be final and binding on all parties. EXPIRATION DATE; EXTENSIONS; AMENDMENTS; TERMINATION The Offer will expire on the Expiration Date. The Trust expressly reserves the right, as to the Offer, in its sole discretion, subject to applicable law, to (i) terminate the Offer, and not accept for exchange any Series A Preferred Stock and promptly return such Series A Preferred Stock upon the failure of any of the conditions specified above in "-- Conditions to the Offer," (ii) waive any condition to the Offer (other than the Minimum Distribution Condition) and accept all Series A Preferred Stock previously tendered pursuant to the Offer, (iii) extend the Expiration Date of the Offer and retain all Series A Preferred Stock tendered pursuant to the Offer until the Expiration Date, subject, however, to all withdrawal rights of holders, see "-- Withdrawal of Tenders," (iv) amend the terms of the Offer, (v) modify the form of the consideration to be paid pursuant to the Offer, or (vi) not accept for exchange the Series A Preferred Stock at any time on or prior to the Expiration Date, for any reason, including, without limitation, if fewer than 100,000 of the Series A Preferred Stock would remain outstanding upon acceptance of those tendered (which condition may be waived by the Trust). Any amendment applicable to the Offer will apply to all Series A Preferred Stock tendered pursuant to the Offer. During any extension of the Offer, all Series A Preferred Stock previously tendered pursuant to the Offer and not withdrawn will remain subject to the Offer. If the Trust makes a material change in the terms of the Offer, the Trust will extend the Offer. The minimum period for which the Offer must remain open following material changes in the terms of the Offer or the information concerning the Offer, other than a change in the amount of Series A Preferred Stock sought for exchange or an increase or decrease in the consideration offered to Holders of Series A Preferred Stock, will depend upon the facts and circumstances, including the relative materiality of the change or information. With respect to a decrease in the number of Series A Preferred Stock sought in the Offer or an increase or decrease in the consideration offered to Holders of the Series A Preferred Stock, if required, the Offer will remain open for a minimum of ten (10) Business Days following public announcement of such change. In the case of any amendment, withdrawal or termination of the Offer, a public announcement will be issued no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Date of the Offer. If the Trust withdraws or terminates the Offer, it will give immediate notice to the Exchange Agent, and the Series A Preferred Stock theretofore tendered pursuant to the Offer will be returned promptly to the tendering Holders thereof. See "-- Withdrawal of Tenders." In order to satisfy the NYSE listing 32 40 requirements, acceptance of Series A Preferred Stock validly tendered in the Offer is subject to the Minimum Distribution Condition, which condition may not be waived. PROCEDURES FOR TENDERING The tender of Series A Preferred Stock by a Holder thereof pursuant to one of the procedures set forth below will constitute an agreement between such Holder and the Trust in accordance with the terms and subject to the conditions set forth herein and in the related Letter of Transmittal and the Trust's right to terminate or withdraw the Offer at any time for any reason. EACH HOLDER OF SERIES A PREFERRED STOCK WISHING TO PARTICIPATE IN THE OFFER MUST (I) PROPERLY COMPLETE AND SIGN THE LETTER OF TRANSMITTAL IN ACCORDANCE WITH THE INSTRUCTIONS CONTAINED HEREIN AND IN THE LETTER OF TRANSMITTAL (EXCEPT WHEN AN AGENT'S MESSAGE IS APPROPRIATE AND UTILIZED), TOGETHER WITH ANY REQUIRED SIGNATURE GUARANTEES, AND DELIVER THE SAME TO THE EXCHANGE AGENT AT ONE OF ITS ADDRESSES SET FORTH ON THE BACK COVER PAGE HEREOF PRIOR TO THE EXPIRATION DATE AND EITHER (A) CERTIFICATES FOR THE SERIES A PREFERRED STOCK MUST BE RECEIVED BY THE EXCHANGE AGENT AT SUCH ADDRESS OR (B) SUCH SERIES A PREFERRED STOCK MUST BE TRANSFERRED PURSUANT TO THE PROCEDURES FOR BOOK-ENTRY TRANSFER DESCRIBED BELOW AND A CONFIRMATION OF SUCH BOOK-ENTRY TRANSFER MUST BE RECEIVED BY THE EXCHANGE AGENT, IN EACH CASE PRIOR TO THE EXPIRATION DATE, OR (II) COMPLY WITH THE GUARANTEED DELIVERY PROCEDURES DESCRIBED BELOW. LETTERS OF TRANSMITTAL, SERIES A PREFERRED STOCK AND ANY OTHER REQUIRED DOCUMENTS SHOULD BE SENT ONLY TO THE EXCHANGE AGENT, NOT TO THE TRUST, MBNA, THE DEALER MANAGER OR THE INFORMATION AGENT. Special Procedure for Beneficial Owners. Any beneficial owner whose shares of Series A Preferred Stock are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and who wishes to tender such Series A Preferred Stock should contact such registered Holder promptly and instruct such registered Holder to tender on such beneficial owner's behalf. If such beneficial owner wishes to tender on its own behalf, such owner must, prior to completing and executing the Letter of Transmittal and delivering its Series A Preferred Stock, either make appropriate arrangements to register ownership of the Series A Preferred Stock in such owner's name or obtain a properly completed stock power from the registered Holder. The transfer of registered ownership may take considerable time and may not be able to be completed prior to the Expiration Date. THE METHOD OF DELIVERY OF SERIES A PREFERRED STOCK AND ALL OTHER DOCUMENTS IS AT THE ELECTION AND RISK OF THE HOLDER. IF SENT BY MAIL, IT IS RECOMMENDED THAT (1) REGISTERED MAIL, RETURN RECEIPT REQUEST, BE USED, (2) INSURANCE BE OBTAINED, AND (3) THE MAILING BE MADE SUFFICIENTLY IN ADVANCE OF THE EXPIRATION DATE TO PERMIT DELIVERY TO THE EXCHANGE AGENT ON OR BEFORE THE EXPIRATION DATE. Signature Guarantees. If tendered shares of Series A Preferred Stock are registered in the name of the signer of the Letter of Transmittal and the Preferred Securities to be issued in exchange therefor are to be issued (and any untendered Series A Preferred Stock are to be reissued) in the name of the registered Holder, the signature of such signer need not be guaranteed. If the tendered shares of Series A Preferred Stock are registered in the name of someone other than the signer of the Letter of Transmittal, or if Preferred Securities issued in exchange therefor are to be issued in the name of any person other than the signer of the Letter of Transmittal, such tendered Series A Preferred Stock must be endorsed or accompanied by written instructions of transfer in form satisfactory to the Trust and duly executed by the registered Holder, and the signature on the endorsement or instrument of transfer must be guaranteed by a financial institution (including most banks, savings and loans associations and brokerage houses) that is a participant in the Security Transfer Agents Medallion Program or the Stock Exchange Medallion Program (any of the foregoing hereinafter referred to as 33 41 an "Eligible Institution"). If the Preferred Securities and/or the shares of Series A Preferred Stock are not exchanged or are to be delivered to an address other than that of the registered Holder appearing on the register for the Series A Preferred Stock, the signature in the Letter of Transmittal must be guaranteed by an Eligible Institution. Book-Entry Transfer. The Trust understands that the Exchange Agent will make a request promptly after the date of this Prospectus to establish accounts with respect to the Series A Preferred Stock at a Depository Institution for the purpose of facilitating the Offer, and subject to the establishment thereof, any financial institution that is a participant in a Depository Institution's system may make book-entry delivery of Series A Preferred Stock by causing the Depository Institution to transfer such Series A Preferred Stock into the Exchange Agent's account with respect to the Series A Preferred Stock in accordance with such Depository Institution's Automated Tender Offer Program ("ATOP") procedures for such book-entry transfers. However, the exchange for the Series A Preferred Stock so tendered will only be made after timely confirmation (a "Book-Entry Confirmation") of such Book-Entry Transfer of Series A Preferred Stock into the Exchange Agent's account, and timely receipt by the Exchange Agent of an Agent's Message (as such term is defined in the next paragraph) and any other documents required by the Letter of Transmittal. The term "Agent's Message" means a message, transmitted by a Depository Institution and received by the Exchange Agent and forming a part of a Book-Entry Confirmation, which states that such Depository Institution has received an express acknowledgment from such participant tendering Series A Preferred Stock that is the subject to such Book-Entry Confirmation, that such participant has received and agrees to be bound by the terms of the Letter of Transmittal, and that the Trust may enforce such agreement against such participant. Guaranteed Delivery. If a Holder desires to participate in the Offer and time will not permit a Letter of Transmittal or Series A Preferred Stock to reach the Exchange Agent before the Expiration Date or the procedure for book-entry transfer cannot be completed on a timely basis, a tender may be effected if the Exchange Agent has received at one of its addresses on the back cover page hereof prior to the Expiration Date, a letter, telegram or facsimile transmission from an Eligible Institution setting forth the name and address of the tendering Holder, the name(s) in which the shares of Series A Preferred Stock are registered and, if the shares of Series A Preferred Stock are held in certificated form, the certificate numbers of the Series A Preferred Stock to be tendered, and stating that the tender is being made thereby and guaranteeing that within three NYSE trading days after the date of execution of such letter, telegram or facsimile transmission by the Eligible Institution, the Series A Preferred Stock in proper form for transfer, together with a properly completed and duly executed Letter of Transmittal (and any other required documents), or, in the case of a Depository Institution, an Agent's Message, will be delivered by such Eligible Institution. Unless the Series A Preferred Stock being tendered by the above-described method are deposited with the Exchange Agent within the time period set forth above (accompanied or preceded by a properly completed Letter of Transmittal and any other required documents) or, in the case of a Depository Institution, in accordance with such Depository Institution's ATOP procedures (along with a Letter of Transmittal or an Agent's Message) is received, the Trust may, at its option, reject the tender. In addition to the copy being transmitted herewith, copies of a Notice of Guaranteed Delivery which may be used by Eligible Institutions for the purposes described in this paragraph are available from the Exchange Agent and the Information Agent. Miscellaneous. All questions as to the validity, form, eligibility (including time of receipt) and acceptance for exchange of any tender of Series A Preferred Stock will be determined by the Trust, whose determination will be final and binding. The Trust reserves the absolute right to reject any or all tenders not in proper form or the acceptance for exchange of which may, in the opinion of the Trust's counsel, be unlawful. The Trust also reserves the absolute right to waive any defect or irregularity in the tender of any Series A Preferred Stock, and the Trust's interpretation of the terms and conditions of the Offer (including the instructions in the applicable Letter of Transmittal) will be final and binding. None of the Trust, MBNA, the Exchange Agent, the Dealer Manager, the Information Agent or any other person will be under any duty to give notification of any defects or irregularities in tenders or incur any liability for failure to give any such notification. 34 42 Tenders of Series A Preferred Stock involving any irregularities will not be deemed to have been made until such irregularities have been cured or waived. Series A Preferred Stock received by the Exchange Agent that are not validly tendered and as to which the irregularities have not been cured or waived will be returned by the Exchange Agent to the tendering Holder (or in the case of Series A Preferred Stock tendered by book-entry transfer into the Exchange Agent's account at a Depository Institution, such Series A Preferred Stock will be credited to an account maintained at the Depository Institution designated by the participant therein who so delivered such Series A Preferred Stock), unless otherwise requested by the Holder in the Letter of Transmittal, as promptly as practicable after the Expiration Date or the withdrawal or termination of the Offer. LETTER OF TRANSMITTAL The Letter of Transmittal contains, among other things, the following terms and conditions, which are part of the Offer. The party tendering the Series A Preferred Stock for exchange (the "Transferor") exchanges, assigns and transfers the Series A Preferred Stock to the Trust, and irrevocably constitutes and appoints the Exchange Agent as the Transferor's agent and attorney-in-fact to cause such Series A Preferred Stock to be assigned, transferred and exchanged. The Transferor represents and warrants that it has full power and authority to tender, exchange, assign and transfer such Series A Preferred Stock and to acquire Preferred Securities issuable upon the exchange of such tendered Series A Preferred Stock and that, when such Transferor's shares of Series A Preferred Stock are accepted for exchange, the Trust will acquire good and unencumbered title to such tendered Series A Preferred Stock, free and clear of all liens, restrictions, charges and encumbrances and not subject to any adverse claim. The Transferor also warrants that it will, upon request, execute and deliver any additional documents deemed by the Trust to be necessary or desirable to complete the exchange, assignment and transfer of tendered Series A Preferred Stock or transfer ownership of such Series A Preferred Stock on the account books maintained by the Depository Institution. All authority conferred by the Transferor will survive the death, bankruptcy or incapacity of the Transferor and every obligation of the Transferor shall be binding upon the heirs, legal representatives, successors, assigns, executors and administrators of such Transferor. WITHDRAWAL OF TENDERS Tenders of Series A Preferred Stock pursuant to the Offer may be withdrawn at any time prior to the Expiration Date and, unless accepted for exchange by the Trust, may be withdrawn at any time after 40 Business Days after the date of this Prospectus. To be effective, a written notice of withdrawal delivered by mail, hand delivery or facsimile transmission must be timely received by the Exchange Agent at one of its addresses set forth on the back cover page hereof. The method of notification is at the risk and election of the Holder. Any such notice of withdrawal must specify (i) the Holder named in the Letter of Transmittal as having tendered Series A Preferred Stock to be withdrawn, (ii) if the shares of Series A Preferred Stock are held in certificated form, the certificate numbers of the Series A Preferred Stock to be withdrawn, (iii) that such Holder is withdrawing his election to have such Series A Preferred Stock exchanged and (iv) the name of the registered Holder of such Series A Preferred Stock. In addition, the notice of withdrawal must be signed by the Holder in the same manner as the original signature on the Letter of Transmittal (including any required signature guarantees) or be accompanied by evidence satisfactory to the Trust that the person withdrawing the tender has succeeded to the beneficial ownership of the Series A Preferred Stock being withdrawn. The Exchange Agent will return the properly withdrawn Series A Preferred Stock promptly following receipt of notice of withdrawal. If shares of Series A Preferred Stock have been tendered pursuant to the procedure for book-entry transfer, any notice of withdrawal must specify the name and number of the account at a Depository Institution to be credited with the withdrawn Series A Preferred Stock and otherwise comply with such Depository Institution procedures. All questions as to the validity of notice of withdrawal, including time of receipt, will be determined by the Trust, and such determination will be final and binding on all parties. Withdrawals of tenders of Series A Preferred Stock may not be rescinded and any Series A Preferred Stock withdrawn will thereafter be deemed not validly tendered for purposes of the Offer. Properly withdrawn Series A Preferred Stock, however, may be 35 43 retendered by following the procedures therefor described elsewhere herein at any time prior to the Expiration Date. See "-- Procedures for Tendering." Upon the terms and subject to the conditions of the Offer, including the Minimum Distribution Condition, the Trust will accept for exchange any and all Series A Preferred Stock that have been validly tendered and not withdrawn prior to the Expiration Date. The Trust expressly reserves the right, in its sole discretion, to delay acceptance for exchange of Series A Preferred Stock tendered under the Offer and the delivery of the Preferred Securities with respect to the Series A Preferred Stock accepted for exchange (subject to Rules 13e-4 and 14e-1 under the Exchange Act, which require that MBNA and the Trust consummate the Offer or return the Series A Preferred Stock deposited by or on behalf of the Holders thereof promptly after the termination or withdrawal of the Offer), or to amend, withdraw or terminate the Offer, at any time prior to the Expiration Date for any of the reasons set forth in "-- Conditions to the Offer" and "-- Expiration Date; Extensions; Amendments; Termination." If the Trust decides, in its sole discretion, to decrease the number of shares of Series A Preferred Stock sought in the Offer or to increase or decrease the consideration offered to Holders of Series A Preferred Stock, and if the Offer is scheduled to expire less than ten (10) Business Days from and including the date that notice of such increase or decrease is first published, sent or given in the manner specified in "-- Expiration Date; Extensions; Amendments; Termination," then the Offer will be extended for a minimum of ten (10) Business Days from and including the date of such notice. All Series A Preferred Stock not accepted pursuant to the Offer will be returned to the tendering Holders at the Trust's expense as promptly as practicable following the Expiration Date. 36 44 EXCHANGE AGENT AND INFORMATION AGENT The Bank of New York has been appointed as Exchange Agent for the Offer. The Exchange Agent is: THE BANK OF NEW YORK By Hand or Overnight Courier: By Mail (Registered or The Bank of New York Certified Mail Recommended): Tender & Exchange Department The Bank of New York 101 Barclay Street Tender & Exchange Department Receive and Deliver Window P.O. Box 11248 New York, New York 10286 Church Street Station New York, New York 10286-1248
By Facsimile: (For Eligible Institutions Only) (212) 815-6213 Confirm Receipt by Telephone: (800) 507-9357 Morrow & Co., Inc. has been retained as the Information Agent to assist in connection with the Offer. Questions and requests for assistance regarding the Offer, requests for additional copies of this Prospectus, the Letter of Transmittal and requests for Notice of Guaranteed Delivery may be directed to the Information Agent. The Information Agent is: MORROW & CO., INC. 909 Third Avenue 20th Floor New York, New York 10022 (212) 754-8000 (800) 566-9061 (Toll-Free) Banks and Brokerage Firms, Please Call: (800) 662-5200 (Toll-Free) MBNA will pay the Exchange Agent and Information Agent reasonable and customary fees for their services and will reimburse them for all their reasonable out-of-pocket expenses in connection therewith. 37 45 DEALER MANAGER; SOLICITING DEALERS Merrill Lynch, Pierce, Fenner & Smith Incorporated, as Dealer Manager, has agreed to solicit exchanges of Series A Preferred Stock for Preferred Securities. The maximum fee payable by MBNA to the Dealer Manager is approximately $750,000 plus any amount that the Dealer Manager may be entitled to pursuant to the next paragraph. MBNA will also reimburse the Dealer Manager for certain reasonable out-of-pocket expenses in connection with the Offer and will indemnify the Dealer Manager against certain liabilities, including liabilities under the Securities Act. The Dealer Manager engages in transactions with, and from time to time has performed services for, MBNA, including acting as underwriter for the issuance of the Series A Preferred Stock. MBNA will pay to a Soliciting Dealer a solicitation fee of $0.50 per share of Series A Preferred Stock ($0.25 per share of Series A Preferred Stock with respect to the solicitation of beneficial holders of 10,000 or more shares) validly tendered and accepted for exchange pursuant to the Offer. As used in this Prospectus, "Soliciting Dealer" includes (i) any broker or dealer in securities, including the Dealer Manager in its capacity as a broker or dealer, who is a member of any national securities exchange or of the National Association of Securities Dealers, Inc. (the "NASD"), (ii) any foreign broker or dealer not eligible for membership in the NASD who agrees to conform to the NASD's Rules of Fair Practice in soliciting tenders outside the United States to the same extent as though it were an NASD member, or (iii) any bank or trust company, any one of whom has solicited and obtained a tender pursuant to the Offer. No solicitation fee shall be payable to a Soliciting Dealer with respect to the tender of shares of Series A Preferred Stock by the Holder unless the Letter of Transmittal accompanying such tender designates such Soliciting Dealer as such in the box captioned "Solicited Tenders." Soliciting Dealers will include any of the organizations described in clauses (i), (ii) and (iii) above even when the activities of such organizations in connection with the Offer consist solely of forwarding to clients materials relating to the Offer, including this Prospectus and the Letter of Transmittal, and tendering Series A Preferred Stock as directed by beneficial owners thereof. No Soliciting Dealer is required to make any recommendation to holders of Series A Preferred Stock as to whether to tender or refrain from tendering in the Offer. No assumption is made, in making payment to any Soliciting Dealer, that its activities in connection with the Offer included any activities other than those described above, and for all purposes in connection with the Offer included any activities other than those described above, and for all purposes noted in all materials relating to the Offer, the term "solicit" shall be deemed to mean no more than "processing shares tendered" or "forwarding to customers materials regarding the Offer." If tendered shares of Series A Preferred Stock are being delivered by book-entry transfer made to an account maintained by the Exchange Agent with Depository Institutions, the Soliciting Dealer must return a Notice of Solicited Tenders (included in the materials provided to brokers and dealers) to the Exchange Agent within three trading days after the Expiration Date in order to receive a solicitation fee. No solicitation fee shall be payable to a Soliciting Dealer in respect of shares of Series A Preferred Stock (i) beneficially owned by such Soliciting Dealer or (ii) registered in the name of such Administrative Dealer unless such shares of Series A Preferred Stock are being held by such Soliciting Dealer as nominee and such shares of Series A Preferred Stock are being tendered for the benefit of one or more beneficial owners identified on the Letter of Transmittal or the Notice of Solicited Tenders. No solicitation fee shall be payable to the Soliciting Dealer with respect to the tender of Series A Preferred Stock by the Holder of record, for the benefit of the beneficial owner, unless the beneficial owner has designated such Soliciting Dealer. No solicitation fee shall be payable to a Soliciting Dealer if such Soliciting Dealer is required for any reason to transfer any portion of such fee to a tendering Holder (other than itself). No broker, dealer, bank, trust company or fiduciary shall be deemed to be the agent of MBNA, the Trust, the Trustees, the Exchange Agent, the Information Agent or the Dealer Manager for purposes of the Offer. Other than as described above, MBNA will not pay any solicitation fees to any broker, dealer, bank, trust company or other person for any Series A Preferred Stock exchanged in connection with the Offer. MBNA will reimburse such persons for customary handling and mailing expenses incurred in connection with the Offer. 38 46 LISTING AND TRADING OF PREFERRED SECURITIES AND SERIES A PREFERRED STOCK The Preferred Securities constitute a new issue of securities of the Trust with no established trading market. While application will be made to list the Preferred Securities on the NYSE, there can be no assurance that an active market for the Preferred Securities will develop or be sustained in the future on such exchange. Although the Dealer Manager has indicated to the Trust that it intends to make a market in the Preferred Securities following the Expiration Date as permitted by applicable laws and regulations prior to the commencement of trading on the NYSE, it is not obligated to do so and may discontinue any such market-making at any time without notice. Accordingly, no assurance can be given as to the liquidity of, or trading markets for, the Preferred Securities. In order to satisfy the NYSE listing requirements, acceptance of Series A Preferred Stock validly tendered in the Offer is subject to the Minimum Distribution Condition, which condition may not be waived. To the extent that a certain number of shares of Series A Preferred Stock are tendered and accepted in the Offer and/or the number of holders of Series A Preferred Stock is reduced to below certain levels, MBNA, pursuant to NYSE rules and regulations, would be required to delist the Series A Preferred Stock from the NYSE, and the trading market for untendered Series A Preferred Stock could be adversely affected. Although the possibility exists that the Series A Preferred Stock may be delisted from the NYSE, MBNA does not believe that the Offer is likely to cause the Series A Preferred Stock to be delisted from the NYSE. However, following the Expiration Date, and in accordance with and subject to applicable law, MBNA may from time to time acquire Series A Preferred Stock in the open market, by tender offer, subsequent exchange offer or otherwise. MBNA's decision to make such acquisitions is dependent on many factors, including market conditions in effect at the time of any contemplated acquisition. Accordingly, MBNA cannot predict whether and to what extent it may acquire any additional Series A Preferred Stock and the consideration to be paid therefor. In addition, if the Offer is substantially subscribed, there would be a significant risk that round lot holdings of Series A Preferred Stock outstanding following the Offer would be limited. See "Risk Factors and Special Considerations Relating to the Offer -- Lack of Established Trading Market for Preferred Securities" and " -- Reduced Trading Market for Series A Preferred Stock." TRANSACTIONS AND ARRANGEMENTS CONCERNING THE OFFER Except as described herein, there are no contracts, arrangements, understandings or relationships in connection with the Offer between MBNA or any of its directors or executive officers, the Trust or the Trustees and any person with respect to any securities of MBNA or the Trust, including the Junior Subordinated Debentures, the Series A Preferred Stock and the Preferred Securities. FEES AND EXPENSES; TRANSFER TAXES The expenses of soliciting tenders of the Series A Preferred Stock will be borne by MBNA. For compensation to be paid to the Dealer Manager and Soliciting Dealers, see "The Exchange Agent and Information Agent -- Dealer Manager; Soliciting Dealers." The total cash expenditures to be incurred in connection with the Offer, other than fees payable to the Dealer Manager and Soliciting Dealers, but including the expenses of the Dealer Manager, printing, accounting and legal fees, and the fees and expenses of the Exchange Agent, the Information Agent, the Property Trustee and the Delaware Trustee, are estimated to be approximately $250,000. MBNA will pay all transfer taxes, if any, applicable to the exchange of Series A Preferred Stock pursuant to the Offer. If, however, certificates representing Preferred Securities or Series A Preferred Stock not tendered or accepted for exchange are to be delivered to, or are to be issued in the name of, any person other than the registered holder of the Series A Preferred Stock tendered or if a transfer tax is imposed for any reason other than the exchange of Series A Preferred Stock pursuant to the Offer, then the amount of any such transfer taxes (whether imposed on the registered Holder or any other persons) will be payable by the tendering Holder. If satisfactory evidence of payment of such taxes or exemption therefrom is not submitted with the Letter of Transmittal, the amount of such transfer taxes will be billed directly to such tendering Holder. 39 47 PRICE RANGE OF SERIES A PREFERRED STOCK The shares of Series A Preferred Stock are listed and principally traded on the NYSE. The following table sets forth, for each period shown, the high and low sales prices of the Series A Preferred Stock as reported on the NYSE Composite Tape. The shares of Series A Preferred Stock were issued on November 14, 1995. For recent closing prices of the Series A Preferred Stock, see the cover page of this Prospectus.
SERIES A PREFERRED STOCK -------------------------------------- DIVIDENDS DECLARED HIGH LOW PER PREFERRED SHARE ------ ------ ------------------- 1996 1st Quarter............................. $25.13 $24.13 $.46875 2nd Quarter............................. 25.00 23.88 .46875 3rd Quarter............................. 24.63 24.00 .46875 4th Quarter............................. 26.75 24.38 .46875
DESCRIPTION OF THE PREFERRED SECURITIES Pursuant to the terms of the Trust Agreement for the Trust, the Trustees on behalf of the Trust will issue the Preferred Securities and the Common Securities. The Preferred Securities will represent beneficial ownership interests in the assets of the Trust and the holders thereof will be entitled to a preference in certain circumstances with respect to Distributions and amounts payable on redemption or liquidation over the Common Securities of such Trust, as well as other benefits as described in the Trust Agreement. The summary of certain provisions of the Preferred Securities and Trust Agreement, which summarizes the material terms thereof, does not purport to be complete and is subject to, and is qualified in its entirety by reference to, all the provisions of the Trust Agreement, including the definitions therein of certain terms, and the Trust Indenture Act, to each of which is hereby made. Wherever particular defined terms of the Trust Agreement (as amended or supplemented from time to time) are referred to herein, such defined terms are incorporated herein or therein by reference. The form of the Trust Agreement has been filed as an exhibit to the Registration Statement of which this Prospectus forms a part. GENERAL The Preferred Securities of the Trust will rank pari passu, and payments will be made thereon pro rata, with the Common Securities of the Trust except as described under "-- Subordination of Common Securities." Legal title to the Junior Subordinated Debentures will be held by the Property Trustee in trust for the benefit of the holders of the Preferred Securities and Common Securities. The guarantee agreement executed by MBNA for the benefit of the holders of the Trust Securities will be a guarantee on a subordinated basis with respect to the Trust Securities but will not guarantee payment of Distributions or amounts payable on redemption or liquidation of such Trust Securities when the Trust does not have funds on hand available to make such payments. See "Description of Guarantee." DISTRIBUTIONS Distributions on the Preferred Securities will be cumulative, will accumulate from the date of original issuance and will be payable the 15th day of January, April, July and October of each year, commencing April 15, 1997. In the event that any date on which Distributions are payable on the Preferred Securities is not a Business Day (as defined below), payment of the Distribution payable on such date will be made on the next succeeding day that is a Business Day (and without any interest or other payment in respect to any such delay) except that, if such Business Day is in the next succeeding calendar year, payment of such Distribution shall be made on the immediately preceding Business Day, in either case with the same force and effect as if made on such date (each date on which Distributions are payable in accordance with the foregoing, a "Distribution Date"). A "Business Day" shall mean any day other than a Saturday or a Sunday, or a day on which banking institutions in the City of New York are authorized or required by law or executive order to 40 48 remain closed or a day on which the corporate trust office of the Property Trustee or the Debenture Trustee is closed for business. The Preferred Securities represent beneficial ownership interests in the asset of Trust, and the Distributions on each Preferred Security will be payable at a rate per annum of 8.25% of the stated liquidation amount of $25 per Preferred Security. Distributions in arrears for more than one quarter will bear interest thereon at the rate per annum of 8.25% compounded quarterly. The amount of Distributions payable for any period will be computed on the basis of a 360-day year of twelve 30-day months. The term "Distributions" as used herein includes any such additional Distributions unless otherwise stated. MBNA has the right under the Indenture to defer the payment of interest at any time or from time to time on the Junior Subordinated Debentures for up to 20 consecutive quarterly interest payment periods, provided that no Extension Period may extend beyond the Stated Maturity of the Junior Subordinated Debentures. As a consequence of any such deferral, Distributions on the Preferred Securities would be deferred (but would continue to accumulate additional Distributions thereon at a rate per annum of 8.25% of the liquidation amount of $25 per Preferred Security during any such Extension Period. During such Extension Period, MBNA may not, and may not permit any subsidiary of MBNA to, (i) declare or pay any dividends or distributions on, or redeem, purchase, acquire or make a liquidation payment with respect to, any of the MBNA's capital stock, (ii) make any payment of principal, interest or premium, if any, on or repay, repurchase or redeem any debt securities of MBNA (including other series of junior subordinated debentures) that rank pari passu with or junior in interest to the Junior Subordinated Debentures or (iii) make any guarantee payments with respect to any guarantee by MBNA of debt securities of any subsidiary of MBNA if such guarantee ranks pari passu with or junior in interest to the Junior Subordinated Debentures, including its guarantees of the Series A Capital Securities and the Series B Capital Securities issued by subsidiary trusts (other than (a) dividends or distributions in capital stock of MBNA, (b) any declaration of a dividend in connection with the implementation of a stockholders' rights plan, or the issuance of stock under any such plan in the future or the redemption or repurchase of any such rights pursuant thereto, (c) payments under the Guarantee and (d) purchases of common stock related to the issuance of common stock or rights under any of the MBNA's benefit plans for its directors, officers or employees related to the issuance of common stock or rights under a dividend reinvestment and stock purchase plan, or related to the issuance of common stock (or securities convertible into or exchangeable for common stock) as consideration in an acquisition transaction that was entered into prior to the commencement of such Extension Period). The revenue of the Trust available for distribution to holders of its Preferred Securities will be limited to payments under the Junior Subordinated Debentures in which the Trust will invest the proceeds from the issuance and sale of its Trust Securities. See "Description of the Junior Subordinated Debentures." If MBNA does not make interest payments on such Junior Subordinated Debentures, the Property Trustee will not have funds available to pay Distributions on the Preferred Securities. The payment of Distributions (if and to the extent the Trust has funds legally available for the payment of such Distributions and cash sufficient to make such payments) is guaranteed by MBNA on the basis set forth herein under "Description of Guarantee." Distributions on the Preferred Securities will be payable to the holders thereof as they appear on the register of the Trust on the relevant record dates, which shall be the last day of the month prior to the Distribution Payment date. REDEMPTION OR EXCHANGE Mandatory Redemption. Upon the repayment or redemption, in whole or in part, of any Junior Subordinated Debentures, whether at maturity or upon earlier redemption as provided in the Indenture, the proceeds from such repayment or redemption shall be applied by the Property Trustee to redeem a Like Amount (as defined below) of the Trust Securities, upon not less than 30 nor more than 60 days notice. See "Description of the Junior Subordinated Debentures -- Redemption." If less than all Junior Subordinated Debentures are to be repaid or redeemed on a Redemption Date, then the proceeds from such repayment or redemption shall be allocated to the redemption pro rata of the Preferred Securities and the Common Securities. 41 49 MBNA will have the right to redeem the Junior Subordinated Debentures (i) on or after January 15, 2002, in whole at any time or in part from time to time at the Optional Prepayment Price or (ii) at any time, in whole (but not in part), upon the occurrence of a Special Event at the Special Event Prepayment Price, subject to receipt of prior approval by the Federal Reserve if then required under applicable capital guidelines or policies. In the case of a redemption following a Special Event as described under (ii) above, the Special Event Prepayment Price shall equal (i) 106.0% of the principal amount of the Junior Subordinated Debentures if prepaid during the period commencing on the Accrual Date through and including January 14, 1998, and (ii) the percentage of the principal amount of the Junior Subordinated Debentures specified below, if prepaid during the 12-month period beginning January 15th of the redemption period indicated below plus in each case, accrued and unpaid interest thereon to the date of prepayment:
REDEMPTION PERIOD PERCENTAGE - ---------------------------------------- ---------- January 15, 1998 - January 14, 1999..... 104.5% ---------- January 15, 1999 - January 14, 2000..... 103.0 ---------- January 15, 2000 - January 14, 2001..... 101.5 ---------- January 15, 2001 and thereafter......... 100.0
Following such redemption all Trust Securities shall be redeemed by the Trust at a redemption price equal to the Special Event Prepayment Price. A "Special Event" means a Tax Event or a Capital Treatment Event, as the case may be. A "Tax Event" means the receipt by the Trust or MBNA of an opinion of counsel experienced in such matters to the effect that, as a result of any amendment to, or change (including any announced proposed change) in, the laws (or any regulations thereunder) of the United States or any political subdivision or taxing authority thereof or therein, or as a result of any official administrative pronouncement or judicial decision interpreting or applying such laws or regulations, which amendment or change is effective, or which proposed change, pronouncement or decision is announced, on or after the date of issuance of the Preferred Securities under the Trust Agreement, there is more than an insubstantial risk that (i) the Trust is, or will be within 90 days of the date of such opinion, subject to United States federal income tax with respect to income received or accrued on the Junior Subordinated Debentures, (ii) interest payable by MBNA on the Junior Subordinated Debentures is not, or within 90 days of the date of such opinion, will not be, deductible by MBNA, in whole or in part, for United States federal income tax purposes or (iii) the Trust is, or will be within 90 days of the date of the opinion, subject to more than a de minimis amount of other taxes, duties or other governmental charges. A "Capital Treatment Event" means the reasonable determination by MBNA that, as a result of any amendment to, or change (including any proposed change) in, the laws (or any regulations thereunder) of the United States or any political subdivision thereof or therein, or as a result of any official or administrative pronouncement or action or judicial decision interpreting or applying such laws or regulations, which amendment or change is effective, or which proposed change, pronouncement, action or decision is announced, on or after the date of issuance of the Preferred Securities under the Trust Agreement, there is more than an insubstantial risk that MBNA will not be entitled to treat an amount equal to the Liquidation Amount of the Preferred Securities as "Tier 1 Capital" (or the then equivalent thereof) for purposes of the capital adequacy guidelines of the Federal Reserve, as then in effect and applicable to MBNA. Distribution of Junior Subordinated Debentures. Subject to MBNA having received prior approval of the Federal Reserve to do so if then required under applicable capital guidelines or policies of the Federal Reserve, MBNA has the right at any time to liquidate the Trust and, after satisfaction of the liabilities of creditors of the Trust as provided by applicable law, cause such Junior Subordinated Debentures to be distributed to the holders of the Preferred Securities and Common Securities in exchange therefor upon liquidation of the Trust. 42 50 Special Event Redemption. If a Tax Event or Capital Treatment Event in respect of the Preferred Securities and Common Securities shall occur and be continuing, MBNA has the right to redeem the Junior Subordinated Debentures in whole (but not in part) and thereby cause a mandatory redemption of the Preferred Securities and Common Securities in whole (but not in part) at the Redemption Price within 90 days following the occurrence of such Tax Event or Capital Treatment Event. In the event a Tax Event or Capital Treatment Event in respect of the Preferred Securities and Common Securities has occurred and is continuing and MBNA does not elect to redeem the Junior Subordinated Debentures and thereby cause a mandatory redemption of such Preferred Securities and Common Securities or to liquidate the Trust and cause the Junior Subordinated Debentures to be distributed to holders of the Preferred Securities and Common Securities in exchange therefor upon liquidation of the Trust as described above, the Preferred Securities will remain outstanding. "Like Amount" means (i) with respect to a redemption of the Trust Securities having a Liquidation Amount (as defined below) equal to that portion of the principal amount of Junior Subordinated Debentures to be contemporaneously redeemed in accordance with the Indenture, allocated to the Common Securities and to the Preferred Securities pro rata based upon the relative Liquidation Amounts of such classes and the proceeds of which will be used to pay the Redemption Price of such Trust Securities, and (ii) with respect to a distribution of Junior Subordinated Debentures to holders of Trust Securities in exchange therefor in connection with a dissolution or liquidation of the Trust, Junior Subordinated Debentures having a principal amount equal to the Liquidation Amount of the Trust Securities of the holder to whom such Junior Subordinated Debentures would be distributed. "Liquidation Amount" means the stated amount of $25 per Trust Security. After the liquidation date fixed for any distribution of Junior Subordinated Debentures for Preferred Securities (i) such Preferred Securities will no longer be deemed to be outstanding, (ii) the depository or its nominee, as the record holder of such Preferred Securities, will receive a registered global certificate or certificates representing the Junior Subordinated Debentures to be delivered upon such distribution and (iii) any certificates representing such Preferred Securities not held by the Depository or its nominee will be deemed to represent the Junior Subordinated Debentures having a principal amount equal to the stated Liquidation Amount of such Preferred Securities, and bearing accrued and unpaid interest in an amount equal to the accrued and unpaid Distributions on such Preferred Securities until such certificates are presented to the Administrative Trustees or their agent for transfer or reissuance. Possible Tax Law Changes. Legislation was proposed by the United States Department of the Treasury on February 6, 1997, as part of President Clinton's Fiscal 1998 Budget Proposal (the "Proposed Legislation") that contained a provision which generally would deny the interest deduction for interest paid or accrued on an instrument issued by a corporation that has a weighted average maturity of more than 40 years. The Proposed Legislation also contains a provision which generally would deny an interest deduction for interest paid or accrued on an instrument issued by a corporation that (i) has a maximum term of more than 15 years and (ii) is not shown as indebtedness on the separate balance sheet of the issuer or, where the instrument is issued to a related party (other than a corporation), where the holder or some other related party issues a related instrument that is not shown as indebtedness on the issuer's consolidated balance sheet. For purposes of determining the weighted average maturity or the term of an instrument, any right to extend the maturity of such instrument would be treated as exercised. The above-described provisions were proposed to be effective generally for instruments issued on or after the date of the first Congressional committee action on the Proposed Legislation (as of February 24, 1997, no Congressional committee action has been taken on the Proposed Legislation). If either provision were to apply to the Junior Subordinated Debentures, MBNA would not be able to deduct the interest on the Junior Subordinated Debentures. There can be no assurance that the Proposed Legislation or future legislative or administrative proposals or final legislation will not adversely affect the ability of MBNA to deduct interest on the Junior Subordinated Debentures or otherwise affect the tax treatment of the transactions described herein. If enacted such a change could give rise to a Tax Event, which would permit MBNA, upon approval of the Federal Reserve if then required under applicable guidelines or policies to cause a redemption of the Preferred Securities as described more fully under "Description of the Preferred Securities -- Redemption or Exchange." 43 51 REDEMPTION PROCEDURES Preferred Securities redeemed on each Redemption Date shall be redeemed at the Redemption Price with the applicable proceeds from the contemporaneous redemption of the Junior Subordinated Debentures. Redemptions of the Preferred Securities shall be made and the Redemption Price shall be payable on each Redemption Date only to the extent that the Trust has funds on hand available for the payment of such Redemption Price. See also "-- Subordination of Common Securities." If the Trust gives a notice of redemption in respect of its Preferred Securities, then, by 12:00 noon, New York City time, on the Redemption Date, to the extent funds are available, the Property Trustee will deposit irrevocably with the depository funds sufficient to pay the applicable Redemption Price and will give the Depository irrevocable instructions and authority to pay the Redemption Price to the holders of such Preferred Securities. With respect to Preferred Securities in certificate form, the Property Trustee, to the extent funds are available, will irrevocably deposit with the paying agent for such Preferred Securities funds sufficient to pay the Redemption Price and will give such paying agent irrevocable instructions and authority to pay the Redemption Price to the holders thereof upon surrender of their certificates evidencing such Preferred Securities. Notwithstanding the foregoing, Distributions payable on or prior to the Redemption Date for any Preferred Securities called for redemption shall be payable to the holders of such Preferred Securities on the relevant record dates for the related Distribution Dates. If notice of redemption shall have been given and funds deposited as required, then upon the date of such deposit, all rights of the holders of such Preferred Securities so called for redemption will cease, except the right of the holders of such Preferred Securities to receive the Redemption Price, but without interest on such Redemption Price, and such Preferred Securities will cease to be outstanding. In the event that any date fixed for redemption of Preferred Securities is not a Business Day, then payment of the Redemption Price payable on such date will be made on the next succeeding day which is a Business Day (and without any interest or other payment in respect of any such delay), except that, if such Business Day falls in the next calendar year, such payment will be made on the immediately preceding Business Day. In the event that payment of the Redemption Price in respect of Preferred Securities called for redemption is improperly withheld or refused and not paid either by the Trust or by MBNA pursuant to the Guarantee as described under "Description of Guarantee," Distributions on such Preferred Securities will continue to accrue at a rate of 8.25% of the Liquidation Amount of $25 per Preferred Security, from the Redemption Date originally established by the Trust for such Preferred Securities to the date such Redemption Price is actually paid, in which case the actual payment date will be the date fixed for redemption for purposes of calculating the Redemption Price. Subject to applicable law (including, without limitation, United States federal securities law), MBNA or its subsidiaries may at any time and from time to time purchase outstanding Preferred Securities by tender, in the open market or by private agreement. If less than all of the Preferred Securities and Common Securities issued by the Trust are to be redeemed on a Redemption Date, then the aggregate Liquidation Amount of such Preferred Securities and Common Securities to be redeemed shall be allocated pro rata to the Preferred Securities and the Common Securities based upon the relative Liquidation Amounts of such classes. The particular Preferred Securities to be redeemed shall be selected on a pro rata basis not more than 60 days prior to the Redemption Date by the Property Trustee from the outstanding Preferred Securities not previously called for redemption, by such method as the Property Trustee shall deem fair and appropriate and which may provide for the selection for redemption of portions (equal to $25 or an integral multiple of $25 in excess thereof) of the Liquidation Amount of Preferred Securities of a denomination larger than $25. The Property Trustee shall promptly notify the trust registrar in writing of the Preferred Securities selected for redemption and, in the case of any Preferred Securities selected for partial redemption, the Liquidation Amount thereof to be redeemed. For all purposes of each Trust Agreement, unless the context otherwise requires, all provisions relating to the redemption of Preferred Securities shall relate, in the case of any Preferred Securities redeemed or to be redeemed only in part, to the portion of the aggregate Liquidation Amount of Preferred Securities which has been or is to be redeemed. Unless the Trust defaults in payment of the Redemption Price, on and after the Redemption Date additional Distributions will cease to accumulate on such Preferred Securities or portions thereof called for redemption. 44 52 Notice of any redemption will be mailed at least 30 days but not more than 60 days before the Redemption Date to each holder of Trust Securities to be redeemed at its registered address. SUBORDINATION OF COMMON SECURITIES Payment of Distributions on, and the Redemption Price of, the Trust's Preferred Securities and Common Securities, as applicable, shall be made pro rata based on the Liquidation Amount of such Preferred Securities and Common Securities; provided, however, that if on any Distribution Date or Redemption Date a Debenture Event of Default shall have occurred and be continuing, no payment of any Distribution on, or Redemption Price of, any of the Common Securities, and no other payment on account of the redemption, liquidation or other acquisition of such Common Securities shall be made unless payment in full in cash of all accumulated and unpaid Distributions on all of the Trust's outstanding Preferred Securities for all Distribution periods terminating on or prior thereto or in the case of payment of the Redemption Price the full amount of such Redemption Price on all of the Trust's outstanding Preferred Securities then called for redemption shall have been made or provided for, and all funds available to the Property Trustee shall first be applied to the payment in full in cash of all Distributions on, or Redemption Price of, the Trust's Preferred Securities then due and payable. In the case of any event of default under the Trust Agreement resulting from a Debenture Event of Default, MBNA as holder of the Trust's Common Securities will be deemed to have waived any right to act with respect to any such event of default under the Trust Agreement until the effect of all such events of default with respect to the Preferred Securities have been cured, waived or otherwise eliminated. Until all such events of default under the Trust Agreement with respect to the Preferred Securities have been so cured, waived or otherwise eliminated, the Property Trustee shall act solely on behalf of the holders of such Preferred Securities and not on behalf of MBNA as holder of the Trust's Common Securities, and only the holders of such Preferred Securities will have the right to direct the Property Trustee to act on their behalf. LIQUIDATION DISTRIBUTION UPON TERMINATION Pursuant to the Trust Agreement, the Trust shall automatically terminate upon expiration of its term and shall terminate on the first to occur of: (i) certain events of bankruptcy, dissolution or liquidation of MBNA; (ii) the distribution of a Like Amount of the Junior Subordinated Debentures to the holders of its Trust Securities, if MBNA, as Depositor, has given written direction to the Property Trustee to terminate the Trust (subject to MBNA having received prior approval of the Federal Reserve if so required under applicable capital guidelines or policies); (iii) redemption of all of the Trust's Preferred Securities as described under "-- Redemption or Exchange -- Mandatory Redemption"; and (iv) the entry of an order for the dissolution of the Trust by a court of competent jurisdiction. If an early termination occurs as described in clause (i), (ii) or (iv) above, the Trust shall be liquidated by the Issuer Trustees as expeditiously as the Issuer Trustees determine to be possible by distributing, after satisfaction of liabilities to creditors of the Trust as provided by applicable law, to the holders of such Trust Securities in exchange therefor a Like Amount of the Junior Subordinated Debentures, unless such distribution is determined by the Property Trustee not to be practical, in which event such holders will be entitled to receive out of the assets of the Trust available for distribution to holders after satisfaction of liabilities to creditors of the Trust as provided by applicable law, an amount equal to, in the case of holders of Preferred Securities, the aggregate of the Liquidation Amount plus accrued and unpaid Distributions thereon to the date of payment (such amount being the "Liquidation Distribution"). If such Liquidation Distribution can be paid only in part because the Trust has insufficient assets available to pay in full the aggregate Liquidation Distribution, then the amounts payable directly by the Trust on its Preferred Securities shall be paid on a pro rata basis. The holder(s) of the Trust's Common Securities will be entitled to receive distributions upon any such liquidation pro rata with the holders of its Preferred Securities, except that if a Debenture Event of Default has occurred and is continuing, the Preferred Securities shall have a priority over the Common Securities. EVENTS OF DEFAULT; NOTICE Any one of the following events constitutes an "Event of Default" under the Trust Agreement with respect to the Preferred Securities issued thereunder (whatever the reason for such Event of Default and 45 53 whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body): (i) the occurrence of a Debenture Event of Default under the Indenture (see "Description of the Junior Subordinated Debentures -- Debenture Events of Default"); or (ii) default by the Property Trustee in the payment of any Distribution when it becomes due and payable, and continuation of such default for a period of 30 days; or (iii) default by the Property Trustee in the payment of any Redemption Price of any Trust Security when it becomes due and payable; or (iv) default in the performance, or breach, in any material respect, of any covenant or warranty of the Issuer Trustees in such Trust Agreement (other than a covenant or warranty a default in the performance of which or the breach of which is dealt with in clause (ii) or (iii) above), and continuation of such default or breach for a period of 90 days after there has been given, by registered or certified mail, to the defaulting Issuer Trustee or Trustees by the holders of at least 25% in aggregate Liquidation Amount of the outstanding Preferred Securities of the Trust, a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a "Notice of Default" under such Trust Agreement; or (v) the occurrence of certain events of bankruptcy or insolvency with respect to the Property Trustee and the failure by MBNA to appoint a successor Property Trustee within 90 days thereof. Within five Business Days after the occurrence of any Event of Default actually known to the Property Trustee, the Property Trustee shall transmit notice of such Event of Default to the holders of the Preferred Securities, the Administrative Trustees and MBNA, as Depositor, unless such Event of Default shall have been cured or waived. MBNA as Depositor, and the Administrative Trustees are required to file annually with the Property Trustee a certificate as to whether or not they are in compliance with all the conditions and covenants applicable to them under the Trust Agreement. If a Debenture Event of Default has occurred and is continuing, the Preferred Securities shall have a preference over the Common Securities as described above. See "-- Subordination of Common Securities" and "-- Liquidation Distribution Upon Termination." The existence of an Event of Default does not entitle the holders of Preferred Securities to accelerate the maturity thereof. REMOVAL OF ISSUER TRUSTEES Unless a Debenture Event of Default shall have occurred and be continuing, the Issuer Trustees may be removed at any time by the holder of the Common Securities. If a Debenture Event of Default has occurred and is continuing, the Property Trustee and the Delaware Trustee may be removed by the holders of a majority in Liquidation Amount of the outstanding Preferred Securities. In no event will the holders of the Preferred Securities have the right to vote to appoint, remove or replace the Administrative Trustees, which voting rights are vested exclusively in MBNA as the holder of the Common Securities. No resignation or removal of an Issuer Trustee and no appointment of a successor trustee shall be effective until the acceptance of appointment by the successor trustee in accordance with the provisions of the applicable Trust Agreement. CO-TRUSTEES AND SEPARATE PROPERTY TRUSTEE Unless an Event of Default shall have occurred and be continuing, at any time or from time to time, for the purpose of meeting the legal requirements of the Trust Indenture Act or of any jurisdiction in which any part of the trust property may at the time be located, MBNA, as the holder of the Common Securities, and the Administrative Trustees shall have power to appoint one or more persons either to act as a co-trustee, jointly with the Property Trustee, of all or any part of such trust property, or to act as separate trustee of any such property, in either case with such powers as may be provided in the instrument of appointment, and to vest in such person or persons in such capacity any property, title, right or power deemed necessary or 46 54 desirable, subject to the provisions of the applicable Trust Agreement. In case a Debenture Event of Default has occurred and is continuing, the Property Trustee alone shall have power to make such appointment. MERGER OR CONSOLIDATION OF ISSUER TRUSTEES Any person into which the Property Trustee, the Delaware Trustee or any Administrative Trustee that is not a natural person may be merged or converted or with which it may be consolidated, or any person resulting from any merger, conversion or consolidation to which such Trustee shall be a party, or any person succeeding to all or substantially all the corporate trust business of such Trustee, shall be the successor of such Trustee under each Trust Agreement, provided such person shall be otherwise qualified and eligible. MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF THE TRUST The Trust may not merge with or into, consolidate, amalgamate, or be replaced by, or convey, transfer or lease its properties and assets substantially as an entirety to any corporation or other person, except as described below. The Trust may, at the request of MBNA, with the consent of the Administrative Trustees and without the consent of the holders of the Preferred Securities, merge with or into, consolidate, amalgamate, or be replaced by, or convey, transfer or lease its properties and assets substantially as an entirety to, a trust organized as such under the laws of any State; provided, that (i) such successor entity either (a) expressly assumes all of the obligations of the Trust with respect to the Preferred Securities or (b) substitutes for the Preferred Securities other securities having substantially the same terms as the Preferred Securities (the "Successor Securities") so long as the Successor Securities rank the same as the Preferred Securities in priority with respect to distributions and payments upon liquidation, redemption and otherwise, (ii) MBNA expressly appoints a trustee of such successor entity possessing the same powers and duties as the Property Trustee as the holder of the Junior Subordinated Debentures, (iii) the Successor Securities are listed, or any Successor Securities will be listed upon notification of issuance, on any national securities exchange or other organization on which the Preferred Securities are then listed, if any, (iv) such merger, consolidation, amalgamation, replacement, conveyance, transfer or lease does not cause the Preferred Securities to be downgraded by any nationally recognized statistical rating organization which gives ratings on the Preferred Securities, (v) such merger, consolidation, amalgamation, replacement. conveyance, transfer or lease does not adversely affect the rights, preferences and privileges of the holders of the Preferred Securities (including any Successor Securities) in any material respect, (vi) such successor entity has a purpose substantially identical to that of the Trust, (vii) prior to such merger, consolidation, amalgamation, replacement, conveyance, transfer or lease, MBNA has received an opinion from independent counsel to the Trust experienced in such matters to the effect that (a) such merger, consolidation, amalgamation, replacement, conveyance, transfer or lease does not adversely affect the rights, preferences and privileges of the holders of the Preferred Securities (including any Successor Securities) in any material respect, and (b) following such merger, consolidation, amalgamation, replacement, conveyance, transfer or lease, neither the Trust nor such successor entity will be required to register as an investment company under the Investment Company Act of 1940, as amended (the "Investment Company Act"), and (viii) MBNA or any permitted successor or assignee owns all of the Common Securities of such successor entity and guarantees the obligations of such successor entity under the Successor Securities at least to the extent provided by the Guarantee. Notwithstanding the foregoing, the Trust shall not, except with the consent of holders of 100% in Liquidation Amount of the Preferred Securities, consolidate, amalgamate, merge with or into, or be replaced by or convey, transfer or lease its properties and assets substantially as an entirety to any other entity or permit any other entity to consolidate, amalgamate, merge with or into, or replace it if such consolidation, amalgamation, merger, replacement, conveyance, transfer or lease would cause the Trust or the successor entity to be classified as other than a grantor trust for United States federal income tax purposes. VOTING RIGHTS; AMENDMENT OF THE TRUST AGREEMENT Except as provided below and under "Description of Guarantee -- Amendments and Assignment" and as otherwise required by law and the Trust Agreement, the holders of the Preferred Securities will have no voting rights. 47 55 The Trust Agreement may be amended from time to time by MBNA, the Property Trustee, the Delaware Trustee and the Administrative Trustees, without the consent of the holders of the Preferred Securities (i) to cure any ambiguity, correct or supplement any provisions in the Trust Agreement that may be inconsistent with any other provision, or to make any other provisions with respect to matters or questions arising under the Trust Agreement, which shall not be inconsistent with the other provisions of the Trust Agreement, or (ii) to modify, eliminate or add to any provisions of the Trust Agreement to such extent as shall be necessary to ensure that the Trust will be classified for United States federal income tax purposes as a grantor trust at all times that any Trust Securities are outstanding or to ensure that the Trust will not be required to register as an "investment company" under the Investment Company Act; provided, however, that in the case of either clause (i) or clause (ii), such action shall not adversely affect in any material respect the interests of any holder of Preferred Securities, and any amendments of the Trust Agreement shall become effective when notice thereof is given to the holders of Trust Securities. The Trust Agreement may be amended by the Issuer Trustees and MBNA with (i) the consent of holders representing not less than a majority (based upon Liquidation Amounts) of the outstanding Trust Securities, and (ii) receipt by the Issuer Trustees of an opinion of counsel to the effect that such amendment or the exercise of any power granted to the Issuer Trustees in accordance with such amendment will not affect the Trust's status as a grantor trust for United States federal income tax purposes or the Trust's exemption from status as an "investment company" under the Investment Company Act, provided that without the consent of each holder of Trust Securities, such Trust Agreement may not be amended to (i) change the amount or timing of any Distribution on the Trust Securities or otherwise adversely affect the amount of any Distribution required to be made in respect of the Trust Securities as of a specified date or (ii) restrict the right of a holder of Trust Securities to institute suit for the enforcement of any such payment on or after such date. So long as any Junior Subordinated Debentures are held by the Property Trustee, the Issuer Trustees shall not (i) direct the time, method and place of conducting any proceeding for any remedy available to the Debenture Trustee, or executing any trust or power conferred on the Property Trustee with respect to the Junior Subordinated Debentures, (ii) waive any past default that is waivable under the Indenture, (iii) exercise any right to rescind or annul a declaration that the principal of all the Junior Subordinated Debentures shall be due and payable or (iv) consent to any amendment, modification or termination of the Indenture or such Junior Subordinated Debentures, where such consent shall be required, without, in each case, obtaining the prior approval of the holders of a majority in aggregate Liquidation Amount of all outstanding Preferred Securities; provided, however, that where a consent under the Indenture would require the consent of each holder of Junior Subordinated Debentures affected thereby, no such consent shall be given by the Property Trustee without the prior consent of each holder of the Preferred Securities. The Issuer Trustees shall not revoke any action previously authorized or approved by a vote of the holders of the Preferred Securities except by subsequent vote of the holders of the Preferred Securities. The Property Trustee shall notify each holder of Preferred Securities of any notice of default with respect to the Junior Subordinated Debentures. In addition to obtaining the foregoing approvals of the holders of the Preferred Securities, prior to taking any of the foregoing actions, the Issuer Trustees shall obtain an opinion of counsel experienced in such matters to the effect that such action would not cause the Trust to be classified as other than a grantor trust for United States federal income tax purposes. Any required approval of holders of Preferred Securities may be given at a meeting of holders of Preferred Securities convened for such purpose or pursuant to written consent. The Property Trustee will cause a notice of any meeting at which holders of Preferred Securities are entitled to vote, or of any matter upon which action by written consent of such holders is to be taken, to be given to each holder of record of Preferred Securities in the manner set forth in the Trust Agreement. No vote or consent of the holders of Preferred Securities will be required for the Trust to redeem and cancel its Preferred Securities in accordance with the applicable Trust Agreement. Notwithstanding that holders of Preferred Securities are entitled to vote or consent under any of the circumstances described above, any of the Preferred Securities that are owned by MBNA, the Issuer Trustees or any affiliate of MBNA or any Issuer Trustees, shall, for purposes of such vote or consent, be treated as if they were not outstanding. 48 56 BOOK-ENTRY; DELIVERY AND FORM Preferred Securities will be issued in fully registered form. Investors may elect to hold their Preferred Securities directly or, subject to the rules and procedures of a Depository Institution described below, hold their interest in a global certificate (the "Preferred Securities Global Certificate") registered in the name of a Depository Institution or its nominee. However, tendering holders of Series A Preferred Stock held in global form shall initially receive an interest in the Preferred Securities Global Certificate and tendering holders of Series A Preferred Stock held directly in certificated form shall initially receive Preferred Securities in certificated form, in each case unless otherwise specified in the Letter of Transmittal. See "The Offer -- Procedures for Tendering." The laws of some jurisdictions require that certain purchasers of securities take physical delivery of securities in definitive form. Such laws may impair the ability to transfer beneficial interest in a global Preferred Securities. A Depository Institution holds securities that its participants ("Participants") deposit with the Depository Institution. A Depository Institution also facilitates the settlement among Participants of securities transactions, such as transfers and pledges, in deposited securities through electronic computerized book-entry changes in Participants' accounts, thereby eliminating the need for physical movement of securities certificates. Direct Participants include securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations ("Direct Participants"). A Depository Institution is owned by a number of its Direct Participants and by the NYSE, the American Stock Exchange, Inc., and the NASD. Access to the Depository Institution's system is also available to others such as securities brokers and dealers, banks and trust companies that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). The rules applicable to a Depository Institution and its Participants are on file with the Commission. Upon issuance of a Preferred Securities Global Certificate, the Depository Institution will credit on its book-entry registration and transfer system the number of Preferred Securities represented by such Preferred Securities Global Certificate to the accounts of institutions that have accounts with the Depository Institution. Ownership of beneficial interests in a Preferred Securities Global Certificate will be limited to Participants or persons that may hold interests through Participants. The ownership interest of each actual purchaser of each Preferred Security ("Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from the Depository Institution of their purchases, but Beneficial Owners are expected to receive written confirmations providing details of the transactions, as well as periodic statements of their holdings, from the Direct or Indirect Participants through which the Beneficial Owners purchased Preferred Securities. Transfers of ownership interests in the Preferred Securities are to be accomplished by entries made on the books of Participants acting on behalf of Beneficial Owners. A Depository Institution has no knowledge of the actual Beneficial Owners of the Preferred Securities; a Depository Institution's records reflect only the identity of the Direct Participants to whose accounts such Preferred Securities are credited, which may or may not be the Beneficial Owners. The Participants will remain responsible for keeping account of their holdings on behalf of their customers. So long as a Depository Institution, or its nominee, is the owner of a Preferred Securities Global Certificate, a Depository Institution or such nominee, as the case may be, will be considered the sole owner and holder of record of the Preferred Securities represented by such Preferred Securities Global Certificate for all purposes. Conveyance of notices and other communications by a Depository Institution to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Redemption notices shall be sent to the Depository Institution. If less than all of the Preferred Securities are being redeemed, the Depository Institution will reduce pro rata (subject to adjustment to eliminate 49 57 fractional Preferred Securities) the amount of interest of each Direct Participant in the Preferred Securities to be redeemed. Although voting with respect to the Preferred Securities is limited, in those instances in which a vote is required, the Depository Institution will not consent or vote with respect to Preferred Securities. Under its usual procedures, the Depository Institution would mail an Omnibus Proxy to the Trust as soon as possible after the record date. The Omnibus Proxy assigns the Depository Institution's consenting or voting rights to those Direct Participants to whose accounts the Preferred Securities are credited on the record date (identified in a listing attached to the Omnibus Proxy). Distribution payments on the Preferred Securities represented by a Preferred Securities Global Certificate will be made by the Trust to the Depository Institution. The Depository Institution's practice is to credit Direct Participants' accounts on the relevant payment date in accordance with their respective holdings shown on a Depository Institution's records unless the Depository Institution has reason to believe that it will not receive payments on such payment date. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices and will be the responsibility of such participants and not of a Depository Institution, the Trust or MBNA, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of distributions to a Depository Institution is the responsibility of the Trust, disbursement of such payments to Direct Participants is the responsibility of the Depository Institution, and disbursement of such payments to the Beneficial Owners is the responsibility of Direct and Indirect Participants. A Depository Institution may discontinue providing its services as securities depository with respect to the Preferred Securities at any time by giving reasonable notice to the Trust. Under such circumstances, if a successor securities depository is not obtained, Preferred Security certificates will be required to be printed and delivered. Additionally, the Trust may decide to discontinue use of the system of book-entry transfers through the Depository Institution (or a successor depository). In that event, certificates for the Preferred Securities will be printed and delivered. The information in this section concerning the Depository Institution and the Depository Institution's book-entry system has been obtained from sources that the Trust and MBNA believe to be reliable, but the Trust and MBNA take no responsibility for the accuracy thereof. PAYMENT AND PAYING AGENCY Payments in respect of the Preferred Securities shall be made to the Depository, which shall credit the relevant accounts at the Depository on the applicable Distribution Dates or such payments shall be made by check mailed to the address of the holder entitled thereto as such address shall appear on the Register. The paying agent (the "Paying Agent") shall initially be the Property Trustee and any co-paying agent chosen by the Property Trustee and acceptable to the Administrative Trustees and MBNA. The Paying Agent shall be permitted to resign as Paying Agent upon 30 days' written notice to the Property Trustee and MBNA. In the event that the Property Trustee shall no longer be the Paying Agent, the Administrative Trustees shall appoint a successor (which shall be a bank or trust company acceptable to the Administrative Trustees and MBNA) to act as Paying Agent. REGISTRAR AND TRANSFER AGENT The Property Trustee will act as registrar and transfer agent for the Preferred Securities. Registration of transfers of Preferred Securities will be effected without charge by or on behalf of the Trust, but upon payment of any tax or other governmental charges that may be imposed in connection with any transfer or exchange. The Trust will not be required to register or cause to be registered the transfer of their Preferred Securities after such Preferred Securities have been called for redemption. 50 58 INFORMATION CONCERNING THE PROPERTY TRUSTEE The Property Trustee, other than during the occurrence and continuance of an Event of Default, undertakes to perform only such duties as are specifically set forth in the Trust Agreement and, after such Event of Default, must exercise the same degree of care and skill as a prudent person would exercise or use in the conduct of his or her own affairs. Subject to this provision, the Property Trustee is under no obligation to exercise any of the powers vested in it by the Trust Agreement at the request of any holder of Preferred Securities unless it is offered reasonable indemnity against the costs, expenses and liabilities that might be incurred thereby. If no Event of Default has occurred and is continuing and the Property Trustee is required to decide between alternative courses of action, construe ambiguous provisions in the Trust Agreement or is unsure of the application of any provision of the Trust Agreement, and the matter is not one on which holders of Preferred Securities are entitled under the Trust Agreement to vote, then the Property Trustee shall take such action as is directed by MBNA and if not so directed, shall take such action as it deems advisable and in the best interests of the holders of the Trust Securities and will have no liability except for its own bad faith, negligence or willful misconduct. MISCELLANEOUS The Administrative Trustees are authorized and directed to conduct the affairs of and to operate the Trust in such a way that the Trust will not be deemed to be an "investment company" required to be registered under the Investment Company Act or classified as other than a grantor trust for United States federal income tax purposes and so that the Junior Subordinated Debentures will be treated as indebtedness of MBNA for United States federal income tax purposes. In this connection, MBNA and the Administrative Trustees are authorized to take any action, not inconsistent with applicable law, the certificate of trust of the Trust or the Trust Agreement, that MBNA and the Administrative Trustees determine in their discretion to be necessary or desirable for such purposes, as long as such action does not materially adversely affect the interests of the holders of the Preferred Securities. Holders of the Preferred Securities have no preemptive or similar rights. The Trust may not borrow money or issue debt or mortgage or pledge any of its assets. GOVERNING LAW The Trust Agreement and the Preferred Securities will be governed by, and constructed in accordance with, the internal laws of the State of Delaware. DESCRIPTION OF GUARANTEE A Guarantee will be executed and delivered by MBNA concurrently with the issuance by the Trust of its Trust Securities for the benefit of the holders from time to time of such Trust Securities. The Bank of New York will act as trustee under the Guarantee for the purposes of compliance with the Trust Indenture Act and the Guarantee will be qualified as an indenture under the Trust Indenture Act. This summary of certain provisions of the Guarantees which summarizes the material terms thereof does not purport to be complete and is subject to, and qualified in its entirety by reference to, all of the provisions of the Guarantee, including the definitions therein of certain terms, and the Trust Indenture Act, to each of which reference is hereby made. The form of Guarantee has been filed as an exhibit to the Registration Statement of which this Prospectus forms a part. Reference in this summary to Trust Securities means the Trust Securities to which the Guarantee relates. The Guarantee Trustee will hold the Guarantee for the benefit of the holders of the Trust Securities. GENERAL MBNA will irrevocably agree to pay in full on a subordinated basis, to the extent set forth herein, the Guarantee Payments (as defined below) to the holders of Trust Securities, as and when due, regardless of any defense, right of set-off or counterclaim that the Trust may have or assert other than the defense of payment. 51 59 The following payments with respect to the Trust Securities, to the extent not paid by or on behalf of the Trust (the "Guarantee Payments"), will be subject to the Guarantee: (i) any accumulated and unpaid Distributions required to be paid on Trust Securities, to the extent that the Trust has funds on hand available therefor at such time, (ii) the Redemption Price with respect to any Trust Securities called for redemption to the extent that the Trust has funds on hand available therefor at such time, or (iii) upon a voluntary or involuntary dissolution, winding up or liquidation of the Trust (unless the Junior Subordinated Debentures are distributed to holders of the Trust Securities in exchange therefor), the lesser of (a) the Liquidation Distribution and (b) the amount of assets of the Trust remaining available for distribution to holders of Trust Securities after satisfaction of liabilities to creditors of the Trust as required by applicable law. MBNA's obligation to make a Guarantee Payment may be satisfied by direct payment of the required amounts by MBNA to the holders of the applicable Trust Securities or by causing the Trust to pay such amounts to such holders. The Guarantee will be an irrevocable guarantee on a subordinated basis of the Trust's obligations under the Trust Securities, but will apply only to the extent that such Trust has funds sufficient to make such payments, and is not a guarantee of collection. If MBNA does not make interest payments on the Junior Subordinated Debentures held by the Trust, the Trust will not be able to pay Distributions on the Trust Securities and will not have funds legally available therefor. The Guarantee will rank subordinate and junior in right of payment to all Senior Debt of MBNA. See "-- Status of the Guarantee." Because MBNA is a holding company, the right of MBNA to participate in any distribution of assets of any subsidiary upon such subsidiary's liquidation or reorganization or otherwise, is subject to the prior claims of creditors of that subsidiary, except to the extent MBNA may itself be recognized as a creditor of that subsidiary. Accordingly, MBNA's obligations under the Guarantee will be effectively subordinated to all existing and future liabilities of MBNA's subsidiaries, and claimants should look only to the assets of MBNA for payments thereunder. The Guarantee does not limit the incurrence or issuance of other secured or unsecured debt of MBNA, including Senior Debt, whether under the Indenture, any other existing indenture or any other indenture that MBNA may enter into in the future or otherwise. MBNA has, through the Guarantee, the Trust Agreement, the Junior Subordinated Debentures and the Indenture taken together, fully, irrevocably and unconditionally guaranteed all of the Trust's obligations under the Preferred Securities. No single document standing alone or operating in conjunction with fewer than all of the other documents constitutes such guarantee. It is only the combined operation of these documents that has the effect of providing a full, irrevocable and unconditional guarantee of the Trust's obligations under the Preferred Securities. See "Relationship among the Preferred Securities, the Junior Subordinated Debentures and the Guarantee." STATUS OF THE GUARANTEE The Guarantee will constitute an unsecured obligation of MBNA and will rank subordinate and junior in right of payment to all Senior Debt of MBNA in the same manner as the Junior Subordinated Debentures. The Guarantee will rank pari passu with all other Guarantees issued by MBNA. The Guarantee will constitute a guarantee of payment and not of collection (i.e., the guaranteed party may institute a legal proceeding directly against the Guarantor to enforce its rights under the Guarantee without first instituting a legal proceeding against any other person or entity). The Guarantee will be held for the benefit of the holders of the Trust Securities. The Guarantee will not be discharged except by payment of the Guarantee Payments in full to the extent not paid by the Trust or upon distribution to the holders of the Trust Securities of the Junior Subordinated Debentures. None of the Guarantees places a limitation on the amount of additional Senior Debt that may be incurred by MBNA. MBNA expects from time to time to incur additional indebtedness constituting Senior Debt. AMENDMENTS AND ASSIGNMENT Except with respect to any changes which do not materially adversely affect the rights of holders of the Preferred Securities (in which case no vote will be required), the Guarantee may not be amended without the prior approval of the holders of not less than a majority of the aggregate Liquidation Amount of such 52 60 outstanding Preferred Securities. The manner of obtaining any such approval will be as set forth under "Description of the Preferred Securities -- Voting Rights; Amendment of the Trust Agreement." All guarantees and agreements contained in the Guarantee shall bind the successors, assigns, receivers, trustees and representatives of MBNA and shall inure to the benefit of the holders of the Preferred Securities then outstanding. EVENTS OF DEFAULT An event of default under the Guarantee will occur upon the failure of MBNA to perform any of its payment or other obligations thereunder. The holders of not less than a majority in aggregate Liquidation Amount of the Preferred Securities have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Guarantee Trustee in respect of such Guarantee or to direct the exercise of any trust or power conferred upon the Guarantee Trustee under such Guarantee. Any holder of the Preferred Securities may institute a legal proceeding directly against MBNA to enforce its rights under the Guarantee without first instituting a legal proceeding against the Trust, the Guarantee Trustee or any other person or entity. MBNA, as guarantor, is required to file annually with the Guarantee Trustee a certificate as to whether or not MBNA is in compliance with all the conditions and covenants applicable to it under MBNA. INFORMATION CONCERNING THE GUARANTEE TRUSTEE The Guarantee Trustee, other than during the occurrence and continuance of a default by MBNA in performance of the Guarantee, undertakes to perform only such duties as are specifically set forth in the Guarantee and, after default with respect to the Guarantee, must exercise the same degree of care and skill as a prudent person would exercise or use in the conduct of his or her own affairs. Subject to this provision, the Guarantee Trustee is under no obligation to exercise any of the powers vested in it by any Guarantee at the request of any holder of any Preferred Securities unless it is offered reasonable indemnity against the costs, expenses and liabilities that might be incurred thereby. TERMINATION OF THE GUARANTEE The Guarantee will terminate and be of no further force and effect upon full payment of the Redemption Price of the Trust Securities, upon full payment of the amounts payable upon liquidation of the Trust or upon distribution of Junior Subordinated Debentures to the holders of the Trust Securities in exchange therefor. The Guarantee will continue to be effective or will be reinstated, as the case may be, if at any time any holder of the Trust Securities must restore payment of any sums paid under such Trust Securities or the Guarantee. GOVERNING LAW The Guarantee will be governed by and construed in accordance with the laws of the State of New York. DESCRIPTION OF THE JUNIOR SUBORDINATED DEBENTURES The Junior Subordinated Debentures are to be issued as a series of debentures under a Junior Subordinated Indenture, as supplemented from time to time, between MBNA and The Bank of New York as Debenture Trustee. This summary of certain terms and provisions of the Junior Subordinated Debentures, Debentures and the Indenture, which summarizes the material provisions thereof, does not purport to be complete and is subject to, and is qualified in its entirety by reference to, the Indenture, the form of which is filed as an exhibit to the Registration Statement of which this Prospectus forms a part, and to the Trust Indenture Act, to each of which reference is hereby made. The Indenture is qualified under the Trust Indenture Act. Whenever particular defined terms of the Indenture are referred to herein, such defined terms are incorporated herein or therein by reference. 53 61 GENERAL The Junior Subordinated Debentures will rank pari passu with all other series of junior subordinated debentures issued under the Indenture, including the Series A Debentures and the Series B Debentures, and will be unsecured and subordinate and junior in right of payment to the extent and in the manner set forth in the Indenture to all Senior Debt as defined below) of MBNA. See "-- Subordination." The entire principal amount of the Junior Subordinated Debentures will mature and become due and payable, together with accrued and unpaid interest thereon, if any, on April 15, 2027, subject to the right of MBNA to shorten the maturity date to a date no earlier than January 15, 2002 or to extend the maturity date to a date no later than April 15, 2046, subject in each case to certain conditions. Because MBNA is a holding company, the right of MBNA to participate in any distribution of assets of any subsidiary, including the Bank, upon such subsidiary's liquidation or reorganization or otherwise is subject to the prior claims of creditors of the subsidiary, except to the extent MBNA may itself be recognized as a creditor of that subsidiary. Accordingly, the Junior Subordinated Debentures will be effectively subordinated to all existing and future liabilities of MBNA's subsidiaries, and holders of Junior Subordinated Debentures should look only to the assets of MBNA for payments on the Junior Subordinated Debentures. The Indenture does not limit the incurrence or issuance of other secured or unsecured debt of MBNA, including Senior Debt, whether under the Indenture, any other existing indenture or any other indenture that MBNA may enter into in the future or otherwise. See "-- Subordination". PAYMENT AND PAYING AGENTS Payment of principal of and premium, if any, and any interest on Junior Subordinated Debentures will be made at the office of the Debenture Trustee in the City of New York or at the office of such paying agent or paying agents as MBNA may designate from time to time, except that at the option of MBNA payment of any interest may be made (i) except in the case of global Junior Subordinated Debentures, by check mailed to the address of the person entitled thereto as such address shall appear in the securities register or (ii) by transfer to an account maintained by the person entitled thereto as specified in the securities register, provided that proper transfer instructions have been received by the Regular Record Date. Payment of any interest on Junior Subordinated Debentures will be made to the person in whose name such Junior Subordinated Debenture is registered at the close of business on the Regular Record Date for such interest, except in the case of defaulted interest. MBNA may at any time designate additional paying agents or rescind the designation of any paying agent. Any moneys deposited with the Debenture Trustee or any paying agent, or then held by MBNA in trust, for the payment of the principal of and premium, if any, or interest on any Junior Subordinated Debenture and remaining unclaimed for two years after such principal and premium, if any, or interest has become due and payable shall, at the request of MBNA, be repaid to MBNA and the holder of such Junior Subordinated Debenture shall thereafter look, as a general unsecured creditor, only to MBNA for payment thereof. OPTION TO DEFER INTEREST PAYMENTS MBNA will have the right at any time and from time to time during the term of the Junior Subordinated Debentures to defer payment of interest for up to 20 consecutive quarterly interest payment periods, subject to the terms, conditions and covenants, specified herein, provided that such Extension Period may not extend beyond the Stated Maturity of such Junior Subordinated Debentures. OPTIONAL REDEMPTION Junior Subordinated Debentures will not be subject to any sinking fund. 54 62 MBNA has the right to redeem the Junior Subordinated Debentures (i) on or after January 15, 2002, subject to the prior approval of the Federal Reserve if then required under applicable guidelines or policies, in whole at any time or in part from time to time, at the Optional Prepayment Price, or (ii) prior to January 15, 2002, in whole (but not in part) within 90 days following the occurrence of a Special Event at the Special Event Prepayment Price equal to (i) 106.0% of the principal amount of the Junior Subordinated Debentures if prepaid during the period commencing on the Accrual Date through and including January 14, 1998 and (ii) the percentage of the principal amount of the Junior Subordinated Debentures specified below, if prepaid during the 12-month period beginning January 15th of the redemption period indicated below plus, in each case, accrued interest thereon to but excluding the date of prepayment:
REDEMPTION PERIOD PERCENTAGE - ---------------------------------------- ---------- January 15, 1998 - January 14, 1999..... 104.5% ---------- January 15, 1999 - January 14, 2000..... 103.0 ---------- January 15, 2000 - January 14, 2001..... 101.5 ---------- January 15, 2001 and thereafter......... 100.0
Following such redemption, all Trust Securities shall be redeemed by the Trust at a redemption price equal to the Special Event Prepayment Price. A "Special Event" means a Tax Event or a Capital Treatment Event, as the case may be. A "Tax Event" means the receipt by the Trust or MBNA of an opinion of counsel experienced in such matters to the effect that, as a result of any amendment to, or change (including any announced proposed change) in, the laws (or any regulations thereunder) of the United States or any political subdivision or taxing authority thereof or therein, or as a result of any official administrative pronouncement or judicial decision interpreting or applying such laws or regulations, which amendment or change is effective, or which proposed change, pronouncement or decision is announced, on or after the date of issuance of the Preferred Securities under the Trust Agreement, there is more than an insubstantial risk that (i) the Trust is, or will be within 90 days of the date of such opinion, subject to United States federal income tax with respect to income received or accrued on the Junior Subordinated Debentures, (ii) interest payable by MBNA on the Junior Subordinated Debentures is not, or within 90 days of the date of such opinion, will not be, deductible by MBNA, in whole or in part, for United States federal income tax purposes or (iii) the Trust is, or will be within 90 days of the date of the opinion, subject to more than a de minimis amount of other taxes, duties or other governmental charges. A "Capital Treatment Event" means the reasonable determination by MBNA that, as a result of any amendment to, or change (including any proposed change) in, the laws (or any regulations thereunder) of the United States or any political subdivision thereof or therein, or as a result of any official or administrative pronouncement or action or judicial decision interpreting or applying such laws or regulations, which amendment or change is effective, or which proposed change, pronouncement, action or decision is announced, on or after the date of issuance of the Preferred Securities under the Trust Agreement, there is more than an insubstantial risk that MBNA will not be entitled to treat an amount equal to the Liquidation Amount of the Preferred Securities as "Tier 1 Capital" (or the then equivalent thereof) for purposes of the capital adequacy guidelines of the Federal Reserve, as then in effect and applicable to MBNA. Notice of any redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each holder of Junior Subordinated Debentures to be redeemed at its registered address. Unless MBNA defaults in payment of the redemption price, on and after the redemption date interest ceases to accrue on such Junior Subordinated Debentures or portions thereof called for redemption. 55 63 OPTION TO CHANGE MATURITY DATE MBNA will have the right at any time to shorten the maturity of the Junior Subordinated Debentures to a date not earlier than January 15, 2002. The exercise of such right is subject to the prior approval of the Federal Reserve Board if such approval is then required under applicable capital guidelines or policies. MBNA will also have the right to extend the maturity of the Junior Subordinated Debentures to a date no later than April 15, 2046, so long as at the time such election is made and at the time such extension commences (i) MBNA is not in bankruptcy, otherwise insolvent or in liquidation, (ii) MBNA is not in default in the payment of any interest or principal on the Junior Subordinated Debentures, (iii) the Trust is not in arrears on payments of distributions on the Preferred Securities and no deferred distributions on the Preferred Securities are accumulated and (iv) the Junior Subordinated Debentures, or, if the Preferred Securities are rated, the Preferred Securities, are rated at least BBB- by Standard & Poor's Ratings Services, at least Baa3 by Moody's Investors Service, Inc. or at least the equivalent by any other nationally recognized statistical rating organization. In the event that MBNA elects to shorten or extend the maturity date of the Junior Subordinated Debentures, it shall give notice to the Debenture Trustee, and the Debenture Trustee shall give notice of such shortening or extension to the holders of the Junior Subordinated Debentures no more than 90 and no less than 30 days prior to the effectiveness thereof. RESTRICTIONS ON CERTAIN PAYMENTS MBNA will covenant, as to the Junior Subordinated Debentures, that it will not, and will not permit any subsidiary of MBNA to, (i) declare or pay any dividends or distributions on, or redeem, purchase, acquire or make a liquidation payment with respect to, any of MBNA's capital stock, (ii) make any payment of principal, interest or premium, if any, on or repay or repurchase or redeem any debt securities of MBNA (including other series of junior subordinated debentures) that rank pari passu with or junior in interest to the Junior Subordinated Debentures or (iii) make any guarantee payments with respect to any guarantee by MBNA of the debt securities of any subsidiary of MBNA if such guarantee ranks pari passu with or junior in interest to the Junior Subordinated Debentures, including its guarantees of the Series A Capital Securities and the Series B Capital Securities (other than (a) dividends or distributions in capital stock of MBNA, (b) any declaration of a dividend in connection with the implementation of a stockholders' rights plan, or the redemption or repurchase of any such rights pursuant thereto, (c) payments under any Guarantee with respect to the series of Preferred Securities and (d) purchases of common stock related to the issuance of common stock or rights under any of MBNA's benefit plans for its directors, officers or employees, related to the issuance of common stock or rights under a dividend reinvestment and stock purchase plan, or related to the issuance of common stock (or securities convertible into or exchangeable for common stock) as consideration in an acquisition transaction that was entered into prior to the commencement of such Extension Period) if at such time (i) there shall have occurred any event of which MBNA has actual knowledge (a) that with the giving of notice or the lapse of time, or both, would constitute an "Event of Default" under the Indenture with respect to the Junior Subordinated Debentures and (b) in respect of which MBNA shall not have taken reasonable steps to cure, (ii) if such Junior Subordinated Debentures are held by the Trust, MBNA shall be in default with respect to its payment of any obligations under the Guarantee relating to such Preferred Securities or (iii) MBNA shall have given notice of its selection of an Extension Period as provided in the Indenture and shall not have rescinded such notice, or such Extension Period, or any extension thereof, shall be continuing. MODIFICATION OF INDENTURE From time to time MBNA and the Debenture Trustee may, without the consent of the holders of any series of junior subordinated debentures issued under the Indenture, including the Junior Subordinated Debentures, amend, waive or supplement the Indenture for specified purposes, including, among other things, curing ambiguities, defects or inconsistencies (provided that any such action does not materially adversely affect the interest of the holders of any series of junior subordinated debentures or, the holders of any preferred securities, the proceeds of which are invested in any such series of junior subordinated debentures with corresponding terms ("related preferred securities"), including the Preferred Securities, so long as they 56 64 remain outstanding) and qualifying, or maintaining the qualification of, the Indenture under the Trust Indenture Act. The Indenture contains provisions permitting MBNA and the Debenture Trustee, with the consent of the holders of not less than a majority in principal amount of each outstanding series of junior subordinated debentures affected, to modify the Indenture in a manner adversely affecting the rights of the holders of any series of junior subordinated debentures in any material respect; provided, that no such modification may, without the consent of the holder of each outstanding junior subordinated debenture so affected, (i) change the stated maturity of any series of junior subordinated debentures, or reduce the principal amount thereof, or reduce the rate or extend the time of payment of interest thereon or (ii) reduce the percentage of principal amount of junior subordinated debentures of any series, the holders of which are required to consent to any such modification of the Indenture, and so long as any related preferred securities remain outstanding, including the Preferred Securities, (a) no such modification may be made that adversely affects the holders of such related preferred securities in any material respect, and no termination of the Indenture may occur, and no waiver of any event of default or compliance with any covenant under the Indenture may be effective, without the prior consent of the holders of at least a majority of the aggregate Liquidation Amount of all related preferred securities affected unless and until the principal of the corresponding junior subordinated debentures and all accrued and unpaid interest thereon have been paid in full and certain other conditions have been satisfied, and (b) where a consent under the Indenture would require the consent of each holder of corresponding junior subordinated debentures, no such consent shall be given by the Property Trustee without the prior consent of each holder of related preferred securities. In addition, MBNA and the Debenture Trustee may execute, without the consent of any holder of junior subordinated debentures, any supplemental Indenture for the purpose of creating any new series of junior subordinated debentures. DEBENTURE EVENTS OF DEFAULT The Indenture provides that any one or more of the following described events with respect to the Junior Subordinated Debentures that has occurred and is continuing constitutes a "Debenture Event of Default" with respect to such Junior Subordinated Debentures: (i) failure for 30 days to pay any interest on such Junior Subordinated Debentures when due (subject to the deferral of any interest payment in the case of an Extension Period); or (ii) failure to pay any principal or premium, if any, on the Junior Subordinated Debentures when due, whether at maturity or upon redemption; or (iii) failure to observe or perform in any material respect certain other covenants contained in the Indenture for 90 days after written notice to MBNA from the Debenture Trustee or the holders of at least 25% in aggregate outstanding principal amount of Junior Subordinated Debentures; or (iv) certain events in bankruptcy, insolvency or reorganization of MBNA. The holders of a majority in aggregate outstanding principal amount of junior subordinated debentures of each series affected have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Debenture Trustee. The Debenture Trustee or the holders of not less than 25% in aggregate outstanding principal amount of junior subordinated debentures of each series affected may declare the principal due and payable immediately upon a Debenture Event of Default with respect to such series, and, should the Debenture Trustee or such holders of the junior subordinated debentures fail to make such declaration, the holders of at least 25% in aggregate Liquidation Amount of the related preferred securities shall have such right. The holders of a majority in aggregate outstanding principal amount of junior subordinated debentures of each series affected may annul such declaration with respect to such series. Should the holders of such junior subordinated debentures fail to annul such declaration, the holders of a majority in aggregate Liquidation Amount of related preferred securities affected shall have such right. The holders of a majority in aggregate outstanding principal amount of each series of the junior subordinated debentures affected thereby may, on behalf of the holders of all the junior subordinated debentures of such series, waive any default, except a default in the payment of principal or interest (unless 57 65 such default has been cured and a sum sufficient to pay all matured installments of interest, premium (if any) and principal due with respect to such series otherwise than by acceleration has been deposited with the Debenture Trustee) or a default in respect of a covenant or provision which under the Indenture cannot be modified or amended without the consent of the holder of each outstanding junior subordinated debenture of such series. Should the holders of junior subordinated debentures fail to annul such declaration and waive such default, the holders of a majority in aggregate Liquidation Amount of the series of related preferred securities affected shall have such right. MBNA is required to file annually with the Debenture Trustee a certificate as to whether or not MBNA is in compliance with all the conditions and covenants applicable to it under the Indenture. In case a Debenture Event of Default shall occur and be continuing as to a series of junior subordinated debentures, the Property Trustee for the related preferred securities will have the right to declare the principal of and the interest on such junior subordinated debentures, and any other amounts payable under the Indenture, to be forthwith due and payable and to enforce its other rights as a creditor with respect to such junior subordinated debentures. ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF PREFERRED SECURITIES If a Debenture Event of Default has occurred and is continuing and such event is attributable to the failure of MBNA to pay interest, premium (if any) or principal on such Junior Subordinated Debentures on the date such interest, premium (if any) or principal is due and payable, a holder of Preferred Securities may institute a Direct Action. MBNA may not amend the Indenture to remove the foregoing right to bring a Direct Action without the prior written consent of the holders of all of the Preferred Securities outstanding. If the right to bring a Direct Action is removed, the Trust may become subject to the reporting obligations under the Exchange Act. MBNA shall have the right under the Indenture to set-off any payment made to such holder of Preferred Securities by MBNA in connection with a Direct Action. The holders of the Preferred Securities will not be able to exercise directly any remedies other than those set forth in the preceding paragraph available to the holders of the Junior Subordinated Debentures. See "Description of the Preferred Securities -- Events of Default; Notice." CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS The Indenture provides that MBNA may consolidate with or merge into any other person or convey, transfer or lease its properties and assets substantially as an entirety to any person, provided that (i) in case MBNA consolidates with or merges into another person or conveys or transfers its properties and assets substantially as an entirety to any person, the successor person is organized under the laws of the United States or any state or the District of Columbia, and such successor person expressly assumes MBNA's obligations on the Junior Subordinated Debentures issued under the Indenture; (ii) immediately after giving effect thereto, no Debenture Event of Default, and no event which, after notice or lapse of time or both, would become a Debenture Event of Default, shall have occurred and be continuing; (iii) in the case of Junior Subordinated Debentures, such transaction is permitted under the Trust Agreement and Guarantee and does not give rise to any breach or violation of the Trust Agreement or Guarantee, and (iv) certain other conditions as prescribed by the Indenture are met. The general provisions of the Indenture do not afford holders of the Junior Subordinated Debentures protection in the event of a highly leveraged or other transaction involving MBNA that may adversely affect holders of the Junior Subordinated Debentures. SATISFACTION AND DISCHARGE The Indenture provides that when, among other things, all Junior Subordinated Debentures not previously delivered to the Debenture Trustee for cancellation (i) have become due and payable or (ii) will become due and payable at their Stated Maturity within one year, and MBNA deposits or causes to be deposited with the Debenture Trustee funds, in trust, for the purpose and in an amount in the currency or currencies in which the Junior Subordinated Debentures are payable sufficient to pay and discharge the entire 58 66 indebtedness on the Junior Subordinated Debentures not previously delivered to the Debenture Trustee for cancellation, for the principal (and premium, if any) and interest to the date of the deposit or to the Stated Maturity, as the case may be, then the Indenture will cease to be of further effect (except as to MBNA's obligations to pay all other sums due pursuant to the Indenture and to provide the officer's certificates and opinions of counsel described therein), and MBNA will be deemed to have satisfied and discharged the Indenture. SUBORDINATION In the Indenture, MBNA has covenanted and agreed the Junior Subordinated Debentures issued thereunder will be subordinate and junior in right of payment to all Senior Debt to the extent provided in the Indenture. Upon any payment or distribution of assets of MBNA upon any liquidation, dissolution, winding up, reorganization, assignment for the benefit of creditors, marshaling of assets or any bankruptcy, insolvency, debt restructuring or similar proceedings in connection with any insolvency or bankruptcy proceeding of MBNA, the holders of Senior Debt will first be entitled to receive payment in full of principal of (and premium, if any) and interest, if any, on such Senior Debt before the holders of Junior Subordinated Debentures or the Property Trustee on behalf of the holders of Trust Securities, will be entitled to receive or retain any payment in respect of the principal of (and premium, if any) or interest, if any, on the Junior Subordinated Debentures; provided, however, that holders of Senior Debt shall not be entitled to receive payment of any such amounts to the extent that such holders would be required by the subordination provisions of such Senior Debt to pay such amounts over to the obligees on trade accounts payable or other liabilities arising in the ordinary course of MBNA's business. In the event of the acceleration of the maturity of any Junior Subordinated Debentures, the holders of all Senior Debt outstanding at the time of such acceleration will first be entitled to receive payment in full of all amounts due thereon (including any amounts due upon acceleration) before the holders of Junior Subordinated Debentures will be entitled to receive or retain any payment in respect of the principal of or premium, if any, or interest, if any, on the Junior Subordinated Debentures; provided, however, that holders of Senior Debt shall not be entitled to receive payment of any such amounts to the extent that such holders would be required by the subordination provisions of such Senior Debt to pay such amounts over to the obligees on trade accounts payable or other liabilities arising in the ordinary course of MBNA's business. No payments on account of principal or premium, if any, or interest in respect of the Junior Subordinated Debentures may be made if there shall have occurred and be continuing a default in any payment with respect to Senior Debt or an event of default with respect to any Senior Debt resulting in the acceleration of the maturity thereof, or if any judicial proceeding shall be pending with respect to any such default. "Debt" means with respect to any person, whether recourse is to all or a portion of the assets of such person and whether or not contingent, (i) every obligation of such person for money borrowed; (ii) every obligation of such person evidenced by bonds, debentures, notes or other similar instruments, including obligations incurred in connection with the acquisition of property, assets or businesses; (iii) every reimbursement obligation of such person with respect to letters of credit, bankers' acceptances or similar facilities issued for the account of such person; (iv) every obligation of such person issued or assumed as the deferred purchase price of property or services (but excluding trade accounts payable or accrued liabilities arising in the ordinary course of business); (v) every capital lease obligation of such person; (vi) every obligation of such person for claims in respect of derivative products such as interest and foreign exchange rate contracts, commodity contracts and similar arrangements; and (vii) and every obligation of the type referred to in clauses (i) through (vi) of another person and all dividends of another person the payment of which, in either case, such person has guaranteed or is responsible or liable, directly or indirectly, as obligor or otherwise. "Senior Debt" means the principal of and premium, if any, and interest, if any (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization relating to MBNA whether or not such claim for post-petition interest is allowed in such proceeding), on Debt, whether incurred on or prior to the date of the Indenture or thereafter incurred, unless, in the instrument creating or evidencing the same or pursuant to which the same is outstanding, it is provided that such obligations are not superior in right of 59 67 payment to the Junior Subordinated Debentures or to other Debt which is pari passu with, or subordinated to, the Junior Subordinated Debentures; provided, however, that Senior Debt shall not be deemed to include (i) any other series of junior subordinated debentures issued under the Indenture including the Series A Debentures and Series B Debentures which are pari passu in right of payment with the Junior Subordinated Debentures, (ii) any Debt of MBNA which when incurred and without respect to any election under Section 1111 (b) of the United States Bankruptcy Code of 1978, as amended, was without recourse to MBNA, (iii) any Debt of MBNA to any of its subsidiaries, (iv) any guarantees by MBNA of the debt securities of any subsidiary of MBNA if such guarantee ranks pari passu with or junior in interest to the Junior Subordinated Debentures, including its guarantees of the Series A Capital Securities and the Series B Capital Securities, (v) Debt to any employee of MBNA, (vi) Debt which by its terms is subordinated to trade accounts payable or accrued liabilities arising in the ordinary course of business to the extent that payments made to the holders of such Debt by the holders of the Junior Subordinated Debentures as a result of the subordination provisions of the Indenture would be greater than such payments otherwise would have been as a result of any obligation of such holders of such Debt to pay amounts over to the obligees on such trade accounts payable or accrued liabilities arising in the ordinary course of business as a result of subordination provisions to which such Debt is subject, and (vii) any other debt securities issued pursuant to the Indenture. The Indenture places no limitation on the amount of Senior Debt that may be incurred by MBNA. MBNA expects from time to time to incur additional indebtedness and other obligations constituting Senior Debt. TRUST EXPENSES AND TAXES In the Indenture, MBNA, as borrower, has agreed to pay to the Trust all debts and other obligations (other than with respect to the Trust Securities) and all costs and expenses of the Trust (including costs and expenses relating to the organization of the Trust, the fees and expenses of the related Issuer Trustees and the costs and expenses relating to the operation of the Trust) and the offering of the Preferred Securities, and to pay any and all taxes, duties, assessments or other similar governmental charges (other than United States withholding taxes), and all costs and expenses with respect to the foregoing, to which the Trust might become subject. INFORMATION CONCERNING THE DEBENTURE TRUSTEE The Debenture Trustee shall have and be subject to all the duties and responsibilities specified with respect to an indenture trustee under the Trust Indenture Act. Subject to such provisions, the Debenture Trustee is under no obligation to exercise any of the powers vested in it by the Indenture at the request of any holder of Junior Subordinated Debentures, unless offered reasonable indemnity by such holder against the costs, expenses and liabilities which might be incurred thereby. The Debenture Trustee is not required to expend or risk its own funds or otherwise incur personal financial liability in the performance of its duties if the Debenture Trustee reasonably believes that repayment or adequate indemnity is not reasonably assured to it. GOVERNING LAW The Indenture and the Junior Subordinated Debentures will be governed by, and construed in accordance with, the internal laws of the State of New York. RELATIONSHIP AMONG THE PREFERRED SECURITIES, THE JUNIOR SUBORDINATED DEBENTURES AND THE GUARANTEE FULL AND UNCONDITIONAL GUARANTEE Payments of Distributions and other amounts due on the Preferred Securities (to the extent the Trust has funds available for the payment of such Distributions) are irrevocably guaranteed by MBNA as and to the extent set forth under "Description of Guarantee." Taken together, MBNA's obligations under each series of Junior Subordinated Debentures, the Indenture, the Trust Agreement, and the Guarantee provide, in the 60 68 aggregate, a full, irrevocable and unconditional guarantee of payments of distributions and other amounts due on the Preferred Securities. No single document standing alone or operating in conjunction with fewer than all of the other documents constitutes such guarantee. It is only the combined operation of these documents that has the effect of providing a full, irrevocable and unconditional guarantee of the Trust's obligations under the Preferred Securities. If and to the extent that MBNA does not make payments on the Junior Subordinated Debentures, the Trust will not pay Distributions or other amounts due on the Preferred Securities. The Guarantee does not cover payment of Distributions when the Trust does not have sufficient funds to pay such Distributions. In such event, the remedy of a holder of Preferred Securities is to institute a legal proceeding directly against MBNA pursuant to the terms of the Indenture for enforcement of payment of amounts equal to such Distributions to such holder. The obligations of MBNA under the Guarantee are subordinate and junior in right of payment to all Senior Debt of MBNA. SUFFICIENCY OF PAYMENTS As long as payments of interest and other payments are made when due on the Junior Subordinated Debentures, such payments will be sufficient to cover Distributions and other payments due on the Preferred Securities, primarily because (i) the aggregate principal amount of Junior Subordinated Debentures will be equal to the sum of the aggregate stated Liquidation Amount of the Preferred Securities and Common Securities; (ii) the interest rate and interest and other payment dates on the Junior Subordinated Debentures will match the Distribution rate and Distribution and other payment dates for the Preferred Securities; (iii) MBNA shall pay for all and any costs, expenses and liabilities of the Trust except the Trust's obligations to holders of its Preferred Securities or other similar interests of the Trust's under such Preferred Securities or such other similar interests, as the case may be; and (iv) the Trust Agreement further provides that the Trust will not engage in any activity that is not consistent with the limited purposes of such Trust. Notwithstanding anything to the contrary in the Indenture, MBNA has the right to setoff any payment it is otherwise required to make thereunder with and to the extent MBNA has theretofore made, or is concurrently on the date of such payment making, a payment under the Guarantee. ENFORCEMENT RIGHTS OF HOLDERS OF PREFERRED SECURITIES A holder of any Preferred Security may institute a legal proceeding directly against MBNA to enforce its rights under the Guarantee without first instituting a legal proceeding against the Guarantee Trustee, the Trust or any other person or entity. A default or event of default under any Senior Debt of MBNA would not constitute a default or Event of Default under the Indenture. However, in the event of payment defaults under, or acceleration of Senior Debt of MBNA, the subordination provisions of the Indenture provide that no payments may be made in respect of the Junior Subordinated Debentures until such Senior Debt has been paid in full or any payment default thereunder has been cured or waived. Failure to make required payments on the Junior Subordinated Debentures would constitute an Event of Default under the Indenture. LIMITED PURPOSE OF THE TRUST The Trust's Preferred Securities evidence a beneficial ownership interest in the Trust, and the Trust exists for the sole purpose of (i) issuing (a) its Preferred Securities in exchange for Series A Preferred Stock validly tendered in the Offer and delivering such Series A Preferred Stock to MBNA in consideration of the deposit by MBNA as trust assets Junior Subordinated Debentures having an aggregate stated principal amount equal to the aggregate stated liquidation amount of such Preferred Securities, and (b) its Common Securities to MBNA in exchange for cash and investing the proceeds thereof in an equal aggregate principal amount of Junior Subordinated Debentures and (ii) engaging in only those other activities necessary or incidental thereto (such as registering the transfer of the Trust Securities). Taken together, MBNA's obligations under the Junior Subordinated Debentures, the Indenture, the Trust Agreement and the Guarantee provide, in the aggregate, a full, irrevocable and unconditional guarantee of payments of Distributions and other amounts due on the Preferred Securities. See "-- Full and Unconditional Guarantee." 61 69 RIGHTS UPON TERMINATION Upon any voluntary or involuntary termination, winding-up or liquidation of the Trust involving the liquidation of the Junior Subordinated Debentures, the holders of the Preferred Securities will be entitled to receive, out of the assets held by the Trust legally available therefor, the Liquidation Distribution in cash. See "Description of the Preferred Securities -- Liquidation Distribution Upon Termination." Upon any voluntary or involuntary liquidation or bankruptcy of MBNA, the Property Trustee, as holder of the Junior Subordinated Debentures, would be a subordinated creditor of MBNA, subordinated in right of payment to all Senior Debt as set forth in the Indenture, but entitled to receive payment in full of principal and interest, before any stockholders of MBNA receive payments or distributions. Since MBNA is the guarantor under the Guarantee and has agreed to pay for all costs, expenses and liabilities of the Trust (other than the Trust's obligations to the holders of its Preferred Securities), the positions of a holder of such Preferred Securities and a holder of the Junior Subordinated Debentures relative to other creditors and to stockholders of MBNA in the event liquidation or bankruptcy of MBNA are expected to be substantially the same. DESCRIPTION OF THE SERIES A PREFERRED STOCK The description of certain provisions of the Series A Preferred Stock set forth below does not purport to be complete and is subject to and qualified in its entirety by reference to MBNA's charter filed with the Securities and Exchange Commission. As used herein, the term "Board of Directors" includes any duly authorized committee of the Board of Directors. GENERAL MBNA's charter authorizes the issuance of 720,000,000 shares of stock, of which 700,000,000 shares are classified as common stock and 20,000,000 shares are classified as Preferred Stock. The charter authorizes MBNA's Board of Directors to classify Preferred Stock into one or more series and to set the terms of each series. The charter also authorizes the Board of Directors to reclassify authorized but unissued shares of common stock as Preferred Stock or other classes of stock. Pursuant to this authority, the Board of Directors had classified 6,000,000 shares of Preferred Stock as shares of 7.50% Cumulative Preferred Stock, Series A, and has set the preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends, qualifications, and terms and conditions of redemption as described below. The Board of Directors is authorized to set the terms of and to approve the issuance of additional series of Preferred Stock, including without limitation, MBNA's Adjustable Rate Preferred Stock, Series B ("Series B Preferred Stock"). RANK With respect to dividend rights and rights on liquidation, winding up and dissolution, the Series A Preferred Stock rank (i) senior to all classes of common stock of MBNA and to all equity securities issued by MBNA, the terms of which specifically provide that such equity securities will rank junior to the Series A Preferred Stock (such common stock and such other equity securities being collectively referred to as the "Junior Securities"); (ii) on a parity with all equity securities issued by MBNA the terms of which specifically provide that such equity securities will rank on a parity with the Preferred Stock (collectively referred to as the "Parity Securities"), including, without limitation, MBNA's Series B Preferred Stock; and (iii) junior to all equity securities issued by MBNA the terms of which specifically provide that such equity securities will rank senior to the Series A Preferred Stock ("Senior Securities"). As of the date of this Prospectus, there are no outstanding shares of equity stock of MBNA which constitute Parity Securities (other than the Series B Preferred Stock) or Senior Securities. DIVIDENDS Holders of shares of Series A Preferred Stock will be entitled to receive, as, if and when declared by the Board of Directors of MBNA out of assets of MBNA legally available for payment, cash dividends, which shall be fully cumulative from the date of original issue, at the annual rate of $1.875 per share. Dividends on 62 70 the Series A Preferred Stock will be payable quarterly, as, if and when declared by the Board of Directors of MBNA, on April 15, July 15, October 15 and January 15 of each year at such annual rate. If a dividend payment date is not a business day, dividends (if declared) on the Series A Preferred Stock will be paid on the immediately succeeding business day, without interest. A dividend period with respect to a dividend payment date is the period commencing on the immediately preceding dividend payment date and ending on the day immediately prior to the next succeeding dividend payment date. Each dividend will be payable to holders of record as they appear on the stock books of MBNA on such record dates as shall be fixed by the Board of Directors of MBNA and shall be not more than 60 days preceding the payment date of such dividend. The right of the holders of the Series A Preferred Stock to receive dividends is fully cumulative and, accordingly, all dividends not paid, whether or not declared, will accumulate without interest until declared and paid, which declaration and payment may be for all or part of the then accumulated dividends. MBNA's ability to pay dividends on its Series A Preferred Stock, including the Series A Preferred Stock, is subject to policies established by the Federal Reserve Board. No dividends may be declared or paid or funds set apart for the payment of dividends on any Junior Securities unless full cumulative dividends for all dividend periods terminating on or prior to the date of such declaration or payment shall have been paid or declared and a sum sufficient for the payment thereof set apart for payment on the Series A Preferred Stock. If dividends are not paid in full upon the Preferred Stock and any Parity Securities, all dividends declared upon shares of Series A Preferred Stock and any Parity Securities will be declared pro rata so that the amount of dividends declared per share on the Series A Preferred Stock and any Parity Securities will in all cases bear to each other the same ratio that accrued dividends per share on the shares of Series A Preferred Stock and such Parity Securities bear to each other. If, for any dividend period, full dividends on a cumulative basis on any share or shares of Series A Preferred Stock or full dividends on any outstanding Parity Securities have not been paid, no dividends will be declared or paid or set aside for payment or other distribution declared or made upon any Junior Securities, nor will any Junior Securities be redeemed, purchased or otherwise acquired for any consideration (or any moneys be paid or made available for a sinking fund for the redemption of any shares of any such Junior Securities (except by conversion into or exchange for other Junior Securities)). The amount of any dividends payable for any period greater or less than a full dividend period shall be computed on the basis of a 360-day year consisting of twelve 30-day months and the actual number of days elapsed in any period less than one month. VOTING RIGHTS Whenever dividends on the Series A Preferred Stock shall be in arrears for six full quarterly dividend periods, the holders of outstanding shares of the Series A Preferred Stock (voting as a class with holders of all Parity Securities upon which like voting rights have been conferred and are exercisable) will be entitled to vote for the election of two additional directors on the terms set forth below. Such voting rights will continue until all past dividends accumulated on the Series A Preferred Stock shall have been paid in full. Upon payment in full of such dividends such voting rights shall terminate, subject to re-vesting in the event of each and every subsequent default in the payment of dividends as aforesaid. Holders of all series of Parity Securities which are granted such voting rights will vote as a class, each holder of shares of the Series A Preferred Stock will have one vote for each share of stock held and each holder of each other series of Parity Securities will have such number of votes, if any, for each share of stock held as may be granted to such holder. If the holders of shares of the Series A Preferred Stock or any other class of Parity Securities become entitled to vote as described in this paragraph, the Board of Directors will be increased by two directors, and the holders of the Series A Preferred Stock and the holders of Parity Securities entitled to vote will have the exclusive right, voting as a class as described above, to elect two directors at the next annual meeting of shareholders of MBNA. Upon termination of the right of the holders of the Series A Preferred Stock and of the holders of any Parity Securities entitled to vote as described above to vote for directors as described above, the term of office of all directors then in office elected by such holders will terminate immediately. Whenever the term of office 63 71 of the directors elected by such holders ends and the related special voting rights expire, the number of directors automatically will be decreased to such number as otherwise would apply. So long as any shares of Series A Preferred Stock remain outstanding, MBNA will not, without the affirmative vote of at least two-thirds of the votes entitled to be cast by holders of shares of the Series A Preferred Stock, (i) voting as a class with holders of all Parity Securities upon which like voting rights have been conferred, authorize, create or issue, or increase the authorized or issued amount, of any Senior Securities; (ii) amend, alter or repeal, whether by merger, consolidation, share exchange, or otherwise, MBNA's charter so as to adversely affect the preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends, qualifications and terms and conditions of the Series A Preferred Stock or the holders thereof; provided, however, that any increase in the amount of the shares of Series A Preferred Stock or the creation and issuance of other series of Preferred Stock, in each case constituting Parity Securities, will not be deemed to adversely affect such rights, preferences, privileges or voting powers. The foregoing voting provisions will not apply if all outstanding shares of Series A Preferred Stock have been redeemed. Such voting provisions shall also not apply from and after the redemption date if notice has been given to effect such a redemption in accordance with the provisions set forth below under "-- Redemption." CONVERSION RIGHTS Shares of the Series A Preferred Stock are not convertible into any other securities of MBNA. RIGHTS UPON LIQUIDATION In the event of any voluntary or involuntary liquidation, dissolution or winding up of MBNA, the holders of the Series A Preferred Stock will be entitled to receive out of assets of MBNA available for distribution to the shareholders, before any distribution of assets is made to any holder of Junior Securities, including common stock, a liquidating distribution in the amount of $25 per share plus an amount equal to accrued and unpaid dividends (whether or not declared). If upon any voluntary or involuntary liquidation, dissolution or winding up of MBNA, the amounts payable with respect to the Series A Preferred Stock and any other Parity Securities are not paid in full, all distributions to holders of the Series A Preferred Stock and any Parity Securities will be paid pro rata so that the amount of distributions per share on the Series A Preferred Stock and any Parity Securities will in all cases bear to each other the same ratio that the stated liquidation preference per share on the shares of Series A Preferred Stock and such Parity Securities bear to each other. REDEMPTION The Series A Preferred Stock is not subject to any mandatory redemption, sinking fund or other similar provisions, and the holders of the Series A Preferred Stock have no right to require redemption of the Series A Preferred Stock. Prior to January 15, 2001, the Series A Preferred Stock is not redeemable. On and after such date, shares of Series A Preferred Stock will be redeemable, in whole or in part, at the option of MBNA, at any time and from time to time upon not less than thirty nor more than sixty days' notice, at $25 per share of Series A Preferred Stock plus accrued and unpaid dividends (whether or not declared) on a fully cumulative basis to the date fixed for redemption. Under current regulations, any such redemption may be effected only with the prior approval of the Federal Reserve Board. If less than all outstanding shares of the Series A Preferred Stock are to be redeemed, the selection of the shares to be redeemed shall be determined by lot or pro rata as may be determined by the Board of Directors or by any other method determined by the Board of Directors to be equitable. From and after the redemption date (unless default be made by MBNA in providing for the payment of the redemption price), dividends shall cease to accrue on the shares of the Series A Preferred Stock called for redemption and all rights of the holders thereof (except the right to receive the redemption price) shall cease. 64 72 TRANSFER AGENT AND REGISTRAR The Bank of New York is the transfer agent, registrar, dividend disbursing agent and redemption agent for the Series A Preferred Stock. CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES In the opinion of Simpson Thacher & Bartlett, in its capacity as special tax counsel to the Company and the Trust ("Tax Counsel"), the following summary accurately describes the material United States federal income tax consequences that may be relevant to (i) the exchange of shares of Series A Preferred Stock for Preferred Securities and the MBNA Cash Payment Amount, if any, (the "Exchange") and (ii) the receipt, ownership and disposition of Preferred Securities. Unless otherwise stated, this summary deals only with the beneficial owners of Series A Preferred Stock ("shareholders") who are United States persons (as defined below) that hold their Series A Preferred Stock as a capital asset (as defined in Section 1221 of the Internal Revenue Code of 1986, as amended (the "Code")) and who receive their Preferred Securities in the Exchange and will hold such Preferred Securities as capital assets. As used herein, a "United States person" means (i) a person that is a citizen or resident of the United States, (ii) a corporation, partnership or other entity created or organized in or under the laws of the United States or any political subdivision thereof, (iii) an estate the income of which is subject to United States federal income taxation regardless of its source or (iv) a trust if a court within the United States is able to exercise primary supervision over the administration of such trust and one or more United States fiduciaries have the authority to control all the substantial decisions of such trust. The tax treatment of a shareholder may vary depending on his, her or its particular situation. This summary does not address all of the United States federal income tax consequences that may be relevant to a particular shareholder or to shareholders that may be subject to special tax treatment under the Code, such as banks, real estate investment trusts, regulated investment companies, insurance companies, dealers in securities or currencies, tax-exempt investors, persons holding Series A Preferred Stock or Preferred Securities as part of a hedging or conversion transaction or a straddle, persons whose "functional currency" is not the United States dollar or persons who own five percent or more of the stock of MBNA or any class thereof. In addition, this summary does not include any description of any United States federal alternative minimum tax consequences or the tax laws of any state, local or foreign jurisdiction that may be applicable to a shareholder or to a holder of Preferred Securities. This summary is based on the Code, the Treasury regulations promulgated thereunder and administrative and judicial interpretations thereof, all as of the date hereof and all of which are subject to change, possibly on a retroactive basis. The authorities on which this summary is based are subject to various interpretations, and the opinions of Tax Counsel are not binding on the Internal Revenue Service ("IRS") or the courts, either of which could take a contrary position. Moreover, no rulings have been or will be sought from the IRS with respect to the transactions described herein. Accordingly, there can be no assurance that the IRS will not challenge the opinions expressed herein or that a court would not sustain such a challenge. Nevertheless, Tax Counsel has advised that it is of the view that, if challenged, the opinions expressed herein would be sustained by a court with jurisdiction in a properly presented case. ALL HOLDERS OF SERIES A PREFERRED STOCK ARE ADVISED TO CONSULT THEIR TAX ADVISORS AS TO THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE EXCHANGE AND OF THE OWNERSHIP AND DISPOSITION OF PREFERRED SECURITIES IN LIGHT OF THEIR PARTICULAR CIRCUMSTANCES, AS WELL AS THE EFFECT OF ANY STATE, LOCAL OR OTHER TAX LAWS. TAX CONSEQUENCES OF THE EXCHANGE OF SERIES A PREFERRED STOCK FOR PREFERRED SECURITIES Tax Consequences of the Exchange The Exchange will be a taxable transaction for United States federal income tax purposes. The United States federal income tax consequences of this transaction to an exchanging shareholder (an "Exchanging Shareholder") will vary depending on such Exchanging Shareholder's particular circumstances and whether, based on such circumstances, such Exchanging Shareholder will qualify for capital gain treatment under 65 73 Section 302 of the Code. Exchanging Shareholders who will not actually or constructively own shares of any class of MBNA stock following the Exchange will qualify for capital gain treatment under Section 302 of the Code and, thus, will recognize gain or loss on the Exchange in an amount equal to the difference between (i) the sum of (x) the MBNA Cash Payment Amount, if any, received by such Exchanging Shareholder and (y) the fair market value, as of the Expiration Date, of such Exchanging Shareholder's pro rata share of the Junior Subordinated Debentures (as represented by the fair market value of the Preferred Securities received by such Exchanging Shareholder in the Exchange) (the sum of (x) and (y) is referred to hereinafter as the "Distribution Amount") and (ii) such Exchanging Shareholder's adjusted tax basis in the Series A Preferred Stock surrendered in the Exchange. Such gain or loss will be capital gain or loss, and will be treated as long-term capital gain or loss if the Exchanging Shareholder held the Series A Preferred Stock surrendered in the Exchange for more than one year. Subject to certain limited exceptions, capital losses cannot be applied to offset ordinary income for United States federal income tax purposes. Exchanging Shareholders who will actually or constructively own shares of any class of MBNA stock following the Exchange are advised to consult their own tax advisors regarding the tax consequences of the Exchange to them, including the possibility that receipt of the Distribution Amount will be treated as a dividend (which will be taxable as ordinary income) for United States federal income tax purposes. Constructive Ownership In determining whether an Exchanging Shareholder will qualify for capital gain treatment under Section 302 of the Code, an Exchanging Shareholder must take into account not only the Series A Preferred Stock and any other MBNA stock that such shareholder actually owns, but also shares of Series A Preferred Stock or other MBNA stock which the Exchanging Shareholder will be considered to "constructively" own under Section 318 of the Code. Under Section 318 of the Code, an Exchanging Shareholder may be considered to constructively own (i) shares of Series A Preferred Stock or other MBNA stock actually owned, and in some cases constructively owned, by certain related individuals or entities, and (ii) shares of Series A Preferred Stock or other MBNA stock which the Exchanging Shareholder has the right to acquire by exercise of an option or pursuant to conversion or other similar rights. Contemporaneous dispositions or acquisitions of shares of Series A Preferred Stock or other MBNA stock by an Exchanging Shareholder or related individuals or entities also may be deemed to be part of a single, integrated transaction and, therefore, taken into account in determining whether an Exchanging Shareholder will qualify for capital gain treatment under Section 302 of the Code. Non-United States Exchanging Shareholders In order to avoid the adverse tax consequences that may result from its failure to withhold United States federal withholding taxes on the Distribution Amount, MBNA will withhold (or will cause the Exchange Agent to withhold) United States federal income tax in an amount equal to 30% of the Distribution Amount payable to a Non-United States Exchanging Shareholder unless MBNA (or the Exchange Agent) determines that (i) a reduced rate of withholding is applicable pursuant to a United States tax treaty or (ii) an exemption from such withholding tax is applicable because such gross proceeds are effectively connected with the conduct of a trade or business by the Non-United States Exchanging Shareholder within the United States. (Such withholding obligation may cause MBNA (or the Exchange Agent) to sell some portion of the Preferred Securities that otherwise would have been distributed to a Non-United States Exchanging Shareholder in the Exchange.) For purposes of this discussion, a "Non-United States Exchanging Shareholder" means any Exchanging Shareholder who is not a "United States person" (as defined above). Absent definite knowledge to the contrary, MBNA (or the Exchange Agent) will determine whether a Non-United States Exchanging Shareholder is not a United States person by reference to such shareholder's mailing address. A Non-United States Exchanging Shareholder may be eligible to obtain a refund of such withholding tax, or a portion thereof, if such Non-United States Exchanging Shareholder (i) qualifies for capital gain treatment under Section 302 of the Code, (ii) is entitled to a reduced rate of withholding pursuant to a United States tax treaty and MBNA withheld at a higher rate, or (iii) is otherwise able to establish that no withholding tax or a reduced amount of withholding tax was due with respect to the Exchange. Non-United States Exchanging Shareholders are urged to consult their own tax advisors regarding the application of 66 74 United States federal income tax withholding, including eligibility for a withholding tax reduction or exemption and the refund procedures. Backup Withholding ANY EXCHANGING SHAREHOLDER WHO FAILS TO COMPLETE AND SIGN THE SUBSTITUTE FORM W-9 THAT IS INCLUDED IN THE APPLICABLE LETTER OF TRANSMITTAL (OR, IN THE CASE OF A NON-UNITED STATES EXCHANGING SHAREHOLDER, THE IRS FORM W-8 OBTAINABLE FROM THE EXCHANGE AGENT) MAY BE SUBJECT TO A REQUIRED UNITED STATES FEDERAL INCOME TAX BACKUP WITHHOLDING OF 31% OF THE DISTRIBUTION AMOUNT PAYABLE TO SUCH EXCHANGING SHAREHOLDER PURSUANT TO THE EXCHANGE. To prevent backup United States federal income tax withholding with respect to the Distribution Amount received pursuant to the Exchange, an Exchanging Shareholder who is a United States person must provide the Exchange Agent with the Exchanging Shareholder's correct taxpayer identification number and certify that the Exchanging Shareholder is not subject to backup withholding of United States federal income tax by completing the Substitute Form W-9 included in the applicable Letter of Transmittal. Certain Exchanging Shareholders (including, among others, all corporations and certain Non-United States Exchanging Shareholders) are exempt from United States backup withholding. For a corporate Exchanging Shareholder to qualify for such exemption, such corporate Exchanging Shareholder must provide the Exchange Agent with a properly completed and executed Substitute Form W-9 attesting to its exempt status. In order for a Non-United States Exchanging Shareholder to qualify as an exempt recipient, the Non-United States Exchanging Shareholder must submit an IRS Form W-8, Certificate of Foreign Status, signed under penalties of perjury, attesting to that Non-United States Exchanging Shareholder's exempt foreign status. A copy of an IRS Form W-8 may be obtained from the Exchange Agent. Unless an Exchanging Shareholder provides the appropriate certification, the Exchange Agent will withhold an amount equal to 31% of the Distribution Amount that otherwise would have been distributed to such Exchanging Shareholder. (Such withholding obligation may cause the Exchange Agent to sell some portion of the Preferred Securities that otherwise would have been distributed to an Exchanging Shareholder.) The amount of any backup withholding that is deducted from the Distribution Amount will be allowed as a credit against such Exchanging Shareholder's United States federal income tax liability and may entitle such Exchanging Shareholder to a refund, provided that the required information is furnished to the IRS. TAXATION OF THE PREFERRED SECURITIES Classification of the Trust In connection with the issuance of the Preferred Securities, Tax Counsel is of the opinion that, under current law and assuming compliance with the terms of the Trust Agreement, the Trust will be classified as a grantor trust and not as an association taxable as a corporation for United States federal income tax purposes. As a result, each beneficial owner of Preferred Securities (a "Securityholder") will be treated as owning an undivided beneficial interest in the Junior Subordinated Debentures. Accordingly, each Securityholder will be required to include in its gross income its pro rata share of the interest income or OID paid or accrued on the Junior Subordinated Debentures. See "-- Interest Income and Original Issue Discount." Classification of the Junior Subordinated Debentures MBNA, the Trust and the holders of the Trust Securities (by acceptance of a beneficial interest in a Trust Security) will agree to treat the Junior Subordinated Debentures as indebtedness for all United States tax purposes. In connection with the issuance of the Junior Subordinated Debentures, Tax Counsel is of the opinion that, under current law, and based on certain representations, facts and assumptions set forth in such opinion, the Junior Subordinated Debentures will be classified as indebtedness for United States federal income tax purposes. 67 75 Interest Income and Original Issue Discount The Junior Subordinated Debentures will be considered to have been issued with OID (within the meaning of Section 1273(a) of the Code) if the "issue price" of the Junior Subordinated Debentures is less than the "stated redemption price at maturity" of the Junior Subordinated Debentures by an amount that is greater than the product of .25% of such "stated redemption price at maturity" and the number of complete years to maturity (e.g., 30 years) of the Junior Subordinated Debentures (such product is referred to herein as the "De Minimis OID Amount"). The "issue price" of the Junior Subordinated Debentures will be equal to the fair market value of the Junior Subordinated Debentures as of the Expiration Date. The "stated redemption price at maturity" of the Junior Subordinated Debentures will be equal to the sum of all the payments to be made on the Junior Subordinated Debentures, other than payments of "qualified stated interest." The stated interest on the Junior Subordinated Debentures should be considered "qualified stated interest" under the applicable Treasury regulations (the "Treasury Regulations") because MBNA believes that the likelihood of it exercising its option to defer payment of the stated interest on the Junior Subordinated Debentures is remote inasmuch as the exercise of such deferral option would, under the terms of the Junior Subordinated Debentures, prohibit MBNA from making any distributions with respect to its capital stock until such interest is paid. Accordingly, (i) the Junior Subordinated Debentures will not be considered to have been issued with OID unless the aggregate stated principal amount of the Junior Subordinated Debentures exceeds the aggregate fair market value of the Junior Subordinated Debentures, as of the Expiration Date, by more than the De Minimis OID Amount, and (ii), except as set forth below, a Securityholder generally will include in income its pro rata share of the stated interest on the Junior Subordinated Debentures at the time such stated interest is paid or accrued in accordance with such Securityholder's regular method of tax accounting. If, however, the aggregate stated principal amount of the Junior Subordinated Debentures exceeds the aggregate fair market value of the Junior Subordinated Debentures, as of the Expiration Date, by more than the De Minimis OID Amount, the Junior Subordinated Debentures will be considered to have issued with OID for United States federal income tax purposes and Securityholders will be required to accrue their pro rata share of such excess (as OID) on a daily economic accrual basis (using the constant-yield-to-maturity method of accrual described in Section 1272(a) of the Code) regardless of their regular method of tax accounting. Consequently, Securityholders would be required to include the amount of such excess in income for United States federal income tax purposes in advance of receipt of the cash attributable to such income. In addition, if MBNA exercises its right to defer payments of stated interest on the Junior Subordinated Debentures, the Securityholders also will be required to accrue the stated interest (together with any OID, or if the Junior Subordinated Debentures are not considered to have been issued with OID, the De Minimis OID Amount, if any, on the Junior Subordinated Debentures) as OID on a daily economic accrual basis. Any amount of OID included in a Securityholder's gross income will increase such Securityholder's adjusted tax basis in its Preferred Securities, and the amount of Distributions received by a Securityholder with respect to such Preferred Securities (other than Distributions received with respect to payments of qualified stated interest on the Securityholder's pro rata share of the Junior Subordinated Debentures) will reduce the adjusted tax basis of such Preferred Securities. Moreover, if the Junior Subordinated Debentures are not considered to have been issued with OID (i.e., because the aggregate fair market value of the Junior Subordinated Debentures, as of the Expiration Date, is not less than the aggregate stated principal amount of the Junior Subordinated Debentures by an amount in excess of the De Minimis OID Amount) and MBNA exercises its right to defer payments of interest on the Junior Subordinated Debentures, the Junior Subordinated Debentures will become OID instruments at such time and all holders of the Junior Subordinated Debentures, and, consequently, all Securityholders, will be required to accrue their pro rata share of OID (which will include both the stated interest and the De Minimis OID Amount, if any, on the Junior Subordinated Debentures) on a daily economic accrual basis during the Extension Period even though MBNA will not pay the stated interest on the Junior Subordinated Debentures until the end of the Extension Period, and even though some Securityholders may use the cash method of tax 68 76 accounting. In addition, the Junior Subordinated Debentures will be taxed thereafter as OID instruments for as long as they remain outstanding. Thus, even after the end of an Extension Period, all Securityholders would be required to continue to include the stated interest (and the De Minimis OID Amount, if any) on the Junior Subordinated Debentures in income on a daily economic accrual basis, regardless of their method of tax accounting and in advance of receipt of the cash attributable to such income. In this instance, under the OID economic accrual rules, a Securityholder would accrue an amount of interest income each year that approximates the stated interest payments called for under the terms of the Junior Subordinated Debentures, and actual cash payments of stated interest on the Junior Subordinated Debentures would not be reported separately as taxable income. Any amount of OID included in a Securityholder's gross income (whether or not during an Extension Period) with respect to a Preferred Security will increase such Securityholder's adjusted tax basis in such Preferred Security, and the amount of Distributions received by such Securityholder in respect of such accrued OID will reduce the adjusted tax basis of such Preferred Security. The Treasury Regulations described above have not been addressed in any rulings or other interpretations by the IRS, and it is possible that the IRS could take a contrary position. If the IRS were to assert successfully that the stated interest on the Junior Subordinated Debentures was OID regardless of whether MBNA exercises its right to defer payments of interest on such debentures, all Securityholders would be required to include such stated interest in income on a daily economic accrual basis as described above. Corporate Securityholders will not be entitled to dividends-received deductions with respect to any income recognized with respect to the Preferred Securities. Amortization of Bond Premium If the fair market value of the Junior Subordinated Debentures, as of the Expiration Date, exceeds the aggregate stated principal amount of the Junior Subordinated Debentures, the Junior Subordinated Debentures will not be considered to have been issued with OID and such excess will be considered "amortizable bond premium." A Securityholder generally may elect to amortize its pro rata share of such bond premium over the term of the Junior Subordinated Debentures (e.g., 30 years) on a daily economic accrual basis (using the constant-yield-to-maturity method described above). The amount of such bond premium that is amortized in any taxable year will be treated as a reduction of the Securityholder's pro rata share of the interest income (or OID) on the Junior Subordinated Debentures. If a Securityholder does not make an election to amortize such bond premium, the amount of such bond premium will reduce the gain (or increase the loss) recognized by the Securityholder upon a taxable disposition of its Preferred Securities (or Junior Subordinated Debentures). If a Securityholder makes an election to amortize its pro rata share of bond premium on an economic accrual basis, such election will apply to all debt instruments held or subsequently acquired by such Securityholder on or after the first day of the first taxable year to which such election applies and such election may not be revoked without the consent of the IRS. Distribution of Junior Subordinated Debentures to Holders of Preferred Securities Under current law, a distribution by the Trust of the Junior Subordinated Debentures as described under the caption "Description of the Preferred Securities -- Liquidation Distribution Upon Termination" will be non-taxable and will result in the Securityholder receiving directly its pro rata share of the Junior Subordinated Debentures previously held indirectly through the Trust, with a holding period and aggregate tax basis equal to the holding period and aggregate tax basis such Securityholder had in its Preferred Securities immediately before such distribution. If, however, the liquidation of the Trust were to occur because the Trust is subject to United States federal income tax with respect to income accrued or received on the Junior Subordinated Debentures, the distribution of Junior Subordinated Debentures to Securityholders by the Trust would be a taxable event to the Trust and each Securityholder and a Securityholder would recognize gain or loss as if the Securityholder had exchanged its Preferred Securities for the Junior Subordinated Debentures it received upon the liquidation of the Trust. A Securityholder will accrue interest in respect of Junior Subordinated Debentures received from the Trust in the manner described above under "-- Interest Income and Original Issue Discount." 69 77 Sales or Redemption of Preferred Securities Gain or loss will be recognized by a Securityholder on a sale of Preferred Securities (including a redemption for cash) in an amount equal to the difference between the amount realized by the Securityholder on the sale or redemption of the Preferred Securities (except to the extent that such amount realized is characterized as a payment in respect of accrued but unpaid interest on such Securityholder's allocable share of the Junior Subordinated Debentures that such Securityholder has not included in gross income previously) and the Securityholder's adjusted tax basis in the Preferred Securities sold or redeemed. Such gain or loss generally will be taxable as long-term capital gain or loss if the Securityholder held the Preferred Securities that it sold or redeemed for more than one year. Subject to certain limited exceptions, capital losses cannot be applied to offset ordinary income for United States federal income tax purposes. Non-United States Holders As used herein, the term "Non-United States Holder" means any Securityholder that is not a United States person (as defined above). As discussed above, the Preferred Securities will be treated as evidence of an undivided beneficial ownership interest in the Junior Subordinated Debentures. See "-- Classification of the Trust." Thus, under present United States federal income tax law, and subject to the discussion below concerning backup withholding: (a) no withholding of United States federal income tax will be required with respect to the payment by the Trust or MBNA (or any paying agent of either the Trust or MBNA (a "Paying Agent")) of principal or interest (which for purposes of this discussion includes any OID) with respect to the Preferred Securities (or on the Junior Subordinated Debentures), to a Non-United States Holder, provided (i) that the beneficial owner of the Preferred Securities ("Beneficial Owner") does not actually or constructively own 10% or more of the total combined voting power of all classes of stock of MBNA entitled to vote within the meaning of section 871(h)(3) of the Code and the regulations thereunder, (ii) the Beneficial Owner is not a controlled foreign corporation that is related to MBNA through stock ownership, (iii) the Beneficial Owner is not a bank whose receipt of interest with respect to the Preferred Securities (or on the Junior Subordinated Debentures) is described in section 881(c)(3)(A) of the Code and (iv) the Beneficial Owner satisfies the statement requirement (described generally below) set forth in section 871(h) and section 881(c) of the Code and the regulations thereunder; and (b) no withholding of United States federal income tax will be required with respect to any gain realized by a Non-United States Holder upon the sale or other disposition of the Preferred Securities (or the Junior Subordinated Debentures). To satisfy the requirement referred to in (a)(iv) above, the Beneficial Owner, or a financial institution holding the Preferred Securities on behalf of such owner, must provide, in accordance with specified procedures, to the Trust or a Paying Agent, a statement to the effect that the Beneficial Owner is not a United States person (as defined above). Pursuant to current temporary Treasury regulations, these requirements will be met if (1) the Beneficial Owner provides his name and address, and certifies, under penalties of perjury, that it is not a United States Person (which certification may be made on an IRS Form W-8 (or successor form)) or (2) a financial institution holding the Preferred Securities on behalf of the Beneficial Owner certifies, under penalties of perjury, that such statement has been received by it and furnishes the Trust or a Paying Agent with a copy thereof. If a Non-United States Holder cannot satisfy the requirements of the "portfolio interest" exception described in (a) above, payments of interest made to such Non-United States Holder will be subject to a 30% withholding tax unless the Beneficial Owner provides the Trust (or MBNA or a Paying Agent, as the case may be), with a properly executed (1) IRS Form 1001 (or successor form) claiming an exemption from, or a reduction of, such withholding tax under the benefit of an applicable United States tax treaty or (2) IRS Form 4224 (or successor form) stating that interest paid with respect to the Preferred Securities (or on the Junior Subordinated Debentures) is not subject to withholding tax because it is effectively connected with the Beneficial Owner's conduct of a trade or business in the United States. 70 78 If a Non-United States Holder is engaged in a trade or business in the United States and interest with respect to the Preferred Securities (or on the Junior Subordinated Debentures) is effectively connected with the conduct of such trade or business, the Non-United States Holder, although exempt from the withholding tax discussed above, will be subject to United States federal income tax on such interest income on a net income basis in the same manner as if it were a United States person. In addition, if such Non-United States Holder is a foreign corporation, it may be subject to a branch profits tax equal to 30% of its effectively connected earnings and profits for the taxable year, subject to adjustments. For this purpose, such interest income would be included in such foreign corporation's effectively connected earnings and profits. Any gain realized upon the sale or other disposition of the Preferred Securities (or the Junior Subordinated Debentures) generally will not be subject to United States federal income tax unless (i) such gain is effectively connected with a trade or business carried on in the United States by the Non-United States Holder, (ii) in the case of a Non-United States Holder who is an individual, such individual is present in the United States for 183 days or more in the taxable year of such sale, exchange or retirement, and certain other conditions are met, or (iii) in the case of any gain representing accrued interest on the Junior Subordinated Debentures, the requirements described above are not satisfied. As discussed below, legislation has been proposed that would deny an interest deduction to MBNA for the interest payable on the Junior Subordinated Debentures. Such Proposed Legislation also may cause the Junior Subordinated Debentures to be classified as equity (rather than indebtedness) of MBNA for United States federal income purposes and, thus, cause the income derived from the Junior Subordinated Debentures to be characterized as dividend, rather than interest, income for such purposes. Dividend income is not eligible for the "portfolio interest" exception described in (a) above. Therefore, if the Proposed Legislation is enacted, income derived by a Non-United States Holder on the Preferred Securities may be subject to the 30% United States federal withholding tax described above unless a reduction or elimination of such tax was available under an applicable United States tax treaty or such dividend income was effectively connected with a trade or business carried on in the United States by such Non-United States Holder. There can be no assurance that the Proposed Legislation or future legislative or administrative proposals or final legislation will not adversely affect the characterization of income paid on the Preferred Securities (or the Junior Subordinated Debentures) or otherwise adversely affect a Non-United States Holder. See "-- Possible Tax Law Changes". Backup Withholding Tax and Information Reporting The amount of interest (or OID, if any) accrued with respect to the Preferred Securities (or on the Junior Subordinated Debentures) held of record by United States Persons (other than corporations and other exempt Securityholders) will be reported to the Internal Revenue Service. Backup withholding at a rate of 31% will apply to payments of interest (or OID, if any) to nonexempt United States persons unless the Securityholder furnishes its taxpayer identification number in the manner prescribed in applicable Treasury regulations, certifies that such number is correct, certifies as to no loss of exemption from backup withholding and meets certain other conditions. Payment of the proceeds from the disposition of Preferred Securities (or Junior Subordinated Debentures) to or through the United States office of a broker is subject to information reporting and backup withholding unless the holder or beneficial owner establishes an exemption from information reporting and backup withholding. Any amounts withheld from a Securityholder under the backup withholding rules will be allowed as a refund or a credit against such Securityholder's United States federal income tax liability, provided the required information is furnished to the Internal Revenue Service. It is anticipated that income on the Preferred Securities will be reported to holders on an IRS Form 1099, which will be mailed to holders of the Preferred Securities by January 31 following each calendar year. 71 79 Possible Tax Law Changes Legislation was proposed by the United States Department of the Treasury on February 6, 1997, as part of President Clinton's Fiscal 1998 Budget Proposal (the "Proposed Legislation") that contained a provision which generally would deny the interest deduction for interest paid or accrued on an instrument issued by a corporation that has a weighted average maturity of more than 40 years. The Proposed Legislation also contains a provision which generally would deny an interest deduction for interest paid or accrued on an instrument issued by a corporation that (i) has a maximum term of more than 15 years and (ii) is not shown as indebtedness on the separate balance sheet of the issuer or, where the instrument is issued to a related party (other than a corporation), where the holder or some other related party issues a related instrument that is not shown as indebtedness on the issuer's consolidated balance sheet. For purposes of determining the weighted average maturity or the term of an instrument, any right to extend the maturity of such instrument would be treated as exercised. The above-described provisions were proposed to be effective generally for instruments issued on or after the date of the first Congressional committee action on the Proposed Legislation (as of February 24, 1997, no Congressional committee action has been taken on the Proposed Legislation). If either provision were to apply to the Junior Subordinated Debentures, MBNA would not be able to deduct the interest on the Junior Subordinated Debentures. There can be no assurance that the Proposed Legislation or future legislative or administrative proposals or final legislation will not adversely affect the ability of MBNA to deduct interest on the Junior Subordinated Debentures or otherwise affect the tax treatment of the transactions described herein. If enacted such a change could give rise to a Tax Event, which would permit MBNA, upon approval of the Federal Reserve if then required under applicable guidelines or policies to cause a redemption of the Preferred Securities as described more fully under "Description of the Preferred Securities -- Redemption or Exchange." ERISA CONSIDERATIONS A fiduciary of a pension, profit-sharing or other employee benefit plan subject to ERISA should consider the fiduciary standards of ERISA in the context of the plan's particular circumstances before authorizing an investment in the Preferred Securities. Among other factors, the fiduciary should consider whether such an investment is in accordance with the documents governing the plan and whether an investment is appropriate for the plan in view of its overall investment policy and the composition and diversification of its portfolio. Other provisions of ERISA and the Code prohibit an employee benefit plan from engaging in certain transactions involving "plan assets" with parties which are "parties in interest" under ERISA or "disqualified persons" under the Code with respect to the plan. Therefore, a fiduciary of an employee benefit plan should also consider whether an investment in the Preferred Securities might constitute or give rise to a prohibited transaction under ERISA and the Code. If the assets of the Trust were deemed to be plan assets of employee benefit plans that are holders of the Preferred Securities, the plan's investments in the Preferred Securities might be deemed to constitute a delegation under ERISA of the duty to manage plan assets by a fiduciary investing in Preferred Securities, and certain transactions involving the operation of the Trust might be deemed to constitute prohibited transactions under ERISA and the Code. The U.S. Department of Labor (the "DOL") has issued a final regulation with regard to whether the underlying assets of an entity in which employee benefit plans acquire equity interests would be deemed to be plan assets. The regulation provides that the underlying assets of an entity will not be considered to be plan assets if the equity interests acquired by employee benefit plans are "publicly-offered securities" -- that is, they are (1) widely held (i.e., owned by more than 100 investors independent of MBNA and of each other), (2) freely transferable and (3) sold as part of an offering pursuant to an effective registration statement under the Securities Act and then timely registered under Section 12(b) or 12(9) of the Exchange Act. It is expected that the Preferred Securities will meet the criteria of "publicly-offered securities" above. MBNA expects (although no assurances can be given) that the Preferred Securities will be held by at least 100 independent investors at the conclusion of the offer to exchange. 72 80 Even if the Trust were deemed to be "plan assets" of employee benefit plans that are holders of the Preferred Securities of the Trust, there are five class exemptions issued by the DOL which would apply to exempt certain transactions involving assets of the Trust from the prohibited transaction provisions of ERISA and the Code -- Prohibited Transaction Exemption 84-14, for certain transactions determined by qualified professional asset managers, Prohibited Transaction Exemption 90-1, for certain transactions involving insurance company pooled separate accounts, Prohibited Transaction Exemption 91-38, for certain transactions involving bank collective investment funds, Prohibited Transaction Exemption 95-60 for certain transactions involving insurance company general accounts, and Prohibited Transaction Exemption 96-23, for certain transactions determined by in house asset managers. MBNA and certain of its affiliates might be considered parties in interest or disqualified persons with respect to certain employee benefit plans, such as plans for which MBNA serves as trustee. Special caution should be exercised before such an employee plan benefit purchases Preferred Securities in such circumstances. Due to the complexity of these rules and the penalties imposed upon persons involved in prohibited transactions, it is important that an employee benefit plan considering the purchase of Preferred Securities consult with its counsel regarding the consequences under ERISA of the acquisition and ownership of Preferred Securities. Employee benefit plans which are governmental plans (as defined in Section 3(32) of ERISA) and certain church plans (as defined in Section 3(33) of ERISA) generally are not subject to ERISA requirements. VALIDITY OF SECURITIES Certain matters of Delaware law relating to the validity of the Preferred Securities, the enforceability of the Trust Agreement and the formation of the Trust will be passed upon by Richards, Layton & Finger, special Delaware counsel to MBNA and the Trust. The validity of the Guarantee and the Junior Subordinated Debentures will be passed upon for MBNA by Simpson Thacher & Bartlett (a partnership which includes professional corporations) and for the Dealer Manager by Skadden, Arps, Slate, Meagher & Flom LLP, New York, New York. Simpson Thacher & Bartlett and Skadden, Arps, Slate, Meagher & Flom LLP, New York, New York will rely on the opinion of John W. Scheflen, Executive Vice President, General Counsel and Secretary of MBNA as to matters of Maryland law and the opinion of Richards, Layton & Finger as to matters of Delaware law. Certain matters relating to United States federal income tax considerations described in this Prospectus Supplement will be passed upon for MBNA by Simpson Thacher & Bartlett. Mr. Scheflen owns beneficially in excess of 100,000 shares of common stock of MBNA, including options exercisable within sixty days under MBNA's 1991 Long Term Incentive Plan. Richards, Layton & Finger regularly performs legal services for MBNA and its subsidiaries. EXPERTS The consolidated financial statements of MBNA Corporation incorporated by reference in MBNA Corporation's Annual Report (Form 10-K) for the year ended December 31, 1995, have been audited by Ernst & Young LLP, independent auditors, as set forth in their report thereon incorporated by reference therein and incorporated herein by reference. Such consolidated financial statements are incorporated herein by reference in reliance upon such report given upon the authority of such firm as experts in accounting and auditing. 73 81 Facsimile copies of Letters of Transmittal will be accepted, Letters of Transmittal, certificates representing Series A Preferred Stock and any other required document should be sent by each Holder of Series A Preferred Stock or his broker, dealer, commercial bank, trust company or other nominee to the Exchange Agent at one of the addresses as set forth below: The Exchange Agent is: THE BANK OF NEW YORK By Hand or Overnight Courier: By Mail (Registered or Certified Mail The Bank of New York Recommended): Tender & Exchange Department The Bank of New York 101 Barclay Street Tender & Exchange Department Receive and Deliver Window P.O. Box 11248 New York, New York 10286 Church Street Station New York, New York 10286-1248
By Facsimile: (For Eligible Institutions Only) (212) 815-6213 Confirm Receipt by Telephone: (800) 507-9357 Morrow & Co., Inc. has been retained as the Information Agent to assist in connection with the Offer. Questions and requests for assistance regarding the Offer, requests for additional copies of this Prospectus, the Letters of Transmittal and requests for Notice of Guaranteed Delivery may be directed to the Information Agent. The Information Agent is: MORROW & CO., INC. 909 Third Avenue 20th Floor New York, New York 10022 (212) 754-8000 (800) 566-9061 (Toll-Free) Banks and Brokerage Firms, Please Call: (800) 662-5200 (Toll-Free) Any questions or requests for assistance or additional copies of this Prospectus, the Letter of Transmittal or for copies of the Notice of Guaranteed Delivery may be directed to the Information Agent at its telephone number and location set forth above. You may also contact your broker, dealer, commercial bank or trust company or other nominee for assistance concerning the Offer. The Dealer Manager for the Offer is: MERRILL LYNCH & CO. World Financial Center North Tower -- Seventh Floor New York, New York 10281 (888) ML4-TNDR (Toll-Free) (888) 654-8637 (Toll-Free) 82 PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (a) Exhibits A list of exhibits included as part of this Registration Statement is set forth in an Exhibit Index which immediately precedes such exhibits. (b) The following financial statement schedules are filed as part of this Registration Statement: None. All other schedules are omitted because they are not applicable, or not required, or because the required information is included in the Financial Statements of the Registrant or Notes thereto. II-1 83 SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT HAS DULY CAUSED THIS AMENDMENT TO THE REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF WILMINGTON, STATE OF DELAWARE, ON FEBRUARY 25, 1997. MBNA CORPORATION By: /s/ VERNON H.C. WRIGHT ---------------------------------- Name: Vernon H.C. Wright Title: Executive Vice President and Chief Corporate Finance Officer PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES INDICATED ON FEBRUARY 25, 1997.
SIGNATURE TITLE - --------------------------------------------- ---------------------------------------------- * Chairman and Chief Executive Officer and - --------------------------------------------- Director Alfred Lerner * President and Director - --------------------------------------------- Charles M. Cawley * Executive Vice President, Chief Financial - --------------------------------------------- Officer and Chief Accounting Officer and M. Scot Kaufman Treasurer (principal financial and accounting officer) * Director - --------------------------------------------- James H. Berick, Esq. * Director - --------------------------------------------- Randolph D. Lerner, Esq. * Director - --------------------------------------------- Stuart L. Markowitz, M.D. * Director - --------------------------------------------- Michael Rosenthal, Ph.D. *By: /s/ JOHN W. SCHEFLEN Attorney-in-fact ---------------------------------------- John W. Scheflen
II-2 84 SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT HAS DULY CAUSED THIS AMENDMENT TO THE REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF WILMINGTON, STATE OF DELAWARE, ON FEBRUARY 25, 1997. MBNA CAPITAL C By: MBNA Corporation, as Depositor By: /s/ JOHN W. SCHEFLEN ---------------------------------- John W. Scheflen II-3 85 INDEX OF EXHIBITS 1 -- Form of Dealer Manager Agreement. 4(c) -- Indenture between MBNA Corporation and The Bank of New York, as Trustee. 4(d)(3) -- Certificate of Trust of MBNA Capital C, formerly known as MBNA Capital III.* 4(e)(3) -- Trust Agreement of MBNA Capital C, formerly known as MBNA Capital III.* 4(e)(4) -- Amended and Restated Trust Agreement dated as of February 24, 1997. 4(f)(3) -- Form of Amended and Restated Trust Agreement to be used in connection with the issuance of the Preferred Securities. 4(g)(3) -- Form of Preferred Security (included in Exhibit 4(f)(3)). 4(h)(3) -- Form of Guarantee. 4(i) -- Form of Junior Subordinated Debenture (included in Exhibit 4(c)). 5(a) -- Opinion of John W. Scheflen. 5(b) -- Opinion of Richards, Layton & Finger. 8 -- Tax Opinion of Simpson Thacher & Bartlett. 12 -- Statement regarding Computation of Ratio of Earnings to Fixed Charges and Ratio of Earnings to Fixed Charges and Preferred Stock Dividends.* 23(a) -- Consent of Ernst & Young L.L.P. 23(b) -- Consent of John W. Scheflen (included in Exhibit 5(a)). 23(c) -- Consent of Richards, Layton & Finger (included in Exhibit 5(b)). 24 -- Powers of Attorney for MBNA (included on signature page). 25(a) -- Form T-1 Statement of Eligibility of the Bank of New York to act as trustee under the Junior Subordinated Indenture.* 25(d) -- Form T-1 Statement of Eligibility of the Bank of New York to act as trustee under the Amended and Restated Trust Agreement of MBNA Capital C, formerly known as MBNA Capital III.* 25(i) -- Form T-1 Statement of Eligibility of the Bank of New York to act as trustee under the Guarantee for the benefit of the holders of Preferred Securities of MBNA Capital C, formerly known as MBNA Capital III.* 99(a) -- Form of Letter of Transmittal. 99(b) -- Form of Notice of Guaranteed Delivery. 99(c) -- Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees. 99(d) -- Form of Letter to Clients. 99(e) -- Form of Exchange Agent Agreement. 99(f) -- Form of Information Agent Agreement. 99(g) -- Form of Letter to Holders of Series A Preferred Stock. 99(h) -- Form of Questions and Answers Regarding Preferred Securities. 99(i) -- Form of Notice of Offer to Exchange.
- --------------- * Incorporated by reference to the Exhibit with the same exhibit number to MBNA's Registration Statement on Form S-3 (No. 333-15435). EX-1 2 FORM OF DEALER MANAGER AGREEMENT 1 Exhibit 1 DEALER MANAGER AGREEMENT February , 1997 MERRILL LYNCH & CO. MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED Merrill Lynch World Headquarters North Tower World Financial Center New York, New York 10281-1329 Ladies and Gentlemen: MBNA Capital C (the "Trust"), a statutory business trust organized under the Business Trust Act (the "Delaware Act") of the State of Delaware (Chapter 38, Title 12 of the Delaware Code, 12 Del. C. (Section) 3801 et. seq.), pursuant to the Amended and Restated Declaration of Trust of the Trust, to be dated as of the Exchange Date (as defined herein) (the "Declaration"), among MBNA Corporation (the "Company"), as Sponsor, The Bank of New York, as property trustee (the "Property Trustee"), The Bank of New York (Delaware), as Delaware trustee (the "Delaware Trustee"), and ___________________, _______________ and _______________, as regular trustees (the "Regular Trustees" and together with the Property Trustee and the Delaware Trustee, the "Trustees"), and the holders from time to time of undivided beneficial ownership interests in the assets of the Trust, proposes to issue its % Trust Originated Preferred Securities* ("TOPrS(sm)"), Series C (the "Preferred Securities"), in exchange for up to 6,000,000 shares (the "Target Securities") of 7.50% Cumulative Preferred Stock, Series A ("the Series A Preferred Stock"), of the Company. The Preferred Securities will be guaranteed (the "Guarantee") by the Company to the extent described in the Prospectus (as hereinafter defined). The exchange described above is herein referred to as the "Exchange Offer" and any exchange of Preferred Securities for Target Securities pursuant to the Exchange Offer is herein referred to as an "Exchange". In connection with the Exchange Offer, the Company will deposit in the Trust as trust assets its % Junior Subordinated Deferrable Interest Debentures, Series C, due 2027 (the "Debentures") as set - -------- *(sm) "Trust Originated Preferred Securities" and "TOPrS" are service marks of Merrill Lynch & Co., Inc. 2 forth in the Prospectus, to be issued pursuant to an Indenture, dated April , 1997, between the Company and The Bank of New York, as trustee (the "Indenture Trustee"), as supplemented by a Supplemental Indenture to be dated as of the Exchange Date (the "Supplemental Indenture"), between the Company and the Indenture Trustee (collectively, the "Indenture"). Each of the Company and the Trust hereby confirms its agreement with Merrill Lynch & Co. (the "Dealer Manager") as follows: 1. Registration Statement, Prospectus and Offering Materials. The Company and the Trust have prepared and filed with the Securities and Exchange Commission (the "Commission"), under the Securities Act of 1933, as amended (the "Securities Act"), and the rules and regulations of the Commission promulgated thereunder (the "Securities Act Regulations"), a registration statement on Form S-4 covering the registration of the Preferred Securities, the Guarantee and the Debentures, including the related preliminary prospectus, and will prepare and file, on or prior to the effective date of such registration statement, amendments to such registration statement, including a final prospectus. Each prospectus used before the time such registration statement becomes effective is herein called a "preliminary prospectus". Such registration statement, including the exhibits thereto and any documents incorporated by reference therein, as amended at the time it becomes effective or as thereafter amended or supplemented from time to time, is herein called the "Registration Statement". The final prospectus included in the Registration Statement (including any documents incorporated in the prospectus by reference) is herein called the "Prospectus", except that if the final prospectus furnished to the Dealer Manager for use in connection with the Exchange Offer differs from the prospectus set forth in the Registration Statement (whether or not such prospectus is required to be filed pursuant to Rule 424 (b)), the term "Prospectus" shall refer to the final prospectus furnished to the Dealer Manager for such use. The terms "supplement" and "amendment" or "amend" as used herein with respect to the Prospectus shall include all documents deemed to be incorporated by reference in the Prospectus that are filed subsequent to the date of the Prospectus and prior to the termination of the Exchange Offer by the Company and the Trust with the Commission pursuant to the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder (collectively, the "Exchange Act"). The Registration Statement, Prospectus and the related letters from the Dealer Manager to securities brokers, dealers, commercial banks, trust companies and other nominees, letters to beneficial owners of Target Securities, letters of transmittal (the "Letters of Transmittal"), notices of guaranteed delivery (the "Notices of Guaranteed Delivery") and any newspaper announcements, press releases and other offering materials and information the Company may use or prepare, approve or authorize for use in connection with the Exchange Offer, as amended or supplemented from time to time, are herein collectively referred to as the "Offering Materials". 2 3 2. Exchange Offer; Agreement to Act as Dealer Manager. (a) The Company and the Trust intend to commence the Exchange Offer as soon as practicable after the Registration Statement becomes effective under the Securities Act by publicly announcing its commencement and by mailing, or causing to be mailed on its behalf, copies of the Prospectus, the related Letters of Transmittal and such of the other Offering Materials as is required or as the Company and the Trust elect to each holder of Target Securities (the date of the commencement of such distribution being herein called the "Commencement Date"). (b) The Company hereby retains the Dealer Manager to advise the Company and the Trust with respect to the terms and timing of the Exchange Offer and to assist them in the preparation of the Offering Materials and retains and authorizes the Dealer Manager to act as dealer manager and to assist the Company and the Trust with the solicitation of Exchanges (each a "Solicitation" and collectively the "Solicitations"). On the basis of the representations and warranties and agreements of the Company and the Trust herein contained and subject to and in accordance with the terms and conditions hereof and of the Offering Materials, the Dealer Manager agrees to advise the Company and the Trust with respect to the terms and timing of the Exchange Offer, to assist them in the preparation of the Offering Materials, to act as dealer manager in connection with the Exchange Offer and to assist the Company and the Trust with the Solicitations. The Dealer Manager agrees to use its reasonable best efforts to solicit Exchanges. (c) The Company shall furnish the Dealer Manager, or cause the transfer agent or registrar for the Target Securities (respectively, the "Transfer Agent" and "Registrar") to furnish the Dealer Manager, as soon as practicable after the date hereof (to the extent not previously furnished), with cards or lists in reasonable quantities or copies thereof showing the names of persons who were the holders of record or, to the extent available to the Company, the beneficial owners of the Target Securities as of a recent date, together with their addresses, and the number of shares of Target Securities held by them. Additionally, the Company shall use its reasonable best efforts to update, or to cause the Transfer Agent or Registrar to update, such information from time to time during the term of this Agreement as may be reasonably requested by the Dealer Manager. Except as otherwise provided herein, the Dealer Manager agrees to use such information only in connection with the Solicitations. The Dealer Manager shall act hereunder as an independent contractor and nothing herein contained shall make the Dealer Manager an agent of the Company or any of its subsidiaries or the Trust in connection with any Solicitation. Nothing contained in this Agreement shall constitute the Dealer Manager a partner of or joint venturer with the Company or any of its subsidiaries or the Trust. (d) The Company and the Trust authorize the Dealer Manager to use the Offering Materials in connection with the Solicitations and for such period of time as any Offering Materials are required by law to be delivered in connection therewith. The Dealer Manager shall not have any obligation to cause any Offering Materials to be transmitted generally to the holders of the Target Securities. The Dealer Manager agrees not to give 3 4 any written information and not to make any representations to holders of the Target Securities in connection with any Solicitation other than as contained in the Offering Materials. (e) The Company and the Trust authorize the Dealer Manager to communicate with any information agent (the "Information Agent") or exchange agent (the "Exchange Agent") appointed by the Company and/or the Trust to act in such capacity in connection with the Exchange Offer with respect to matters relating to the Exchange Offer. (f) The Company and the Trust agree that any reference to the Dealer Manager in any Offering Materials or in any newspaper announcement or press release or other public document or communication is subject to the Dealer Manager's prior consent. 3. Compensation. (a) The Company hereby agrees to pay to the Dealer Manager for services rendered and to be rendered by them in connection with the Exchange Offer a fee (the "Management Fee") equal to $____ per share of Target Securities validly submitted for exchange and not withdrawn in connection with the Exchange Offer. The Management Fee shall be paid only if the Exchange Offer is consummated, and shall be paid within one week of the consummation of the Exchange Offer. (b) The Company agrees to pay, or cause to be paid to, each soliciting dealer (including the Dealer Manager acting as a soliciting dealer) whose name has been inserted in the space provided in the Letter of Transmittal for that purpose a fee (the "Soliciting Dealer Fee") equal to $___ per share of Target Securities ($___ per share of Target Securities with respect to the solicitation of beneficial holders of 10,000 or more shares) validly submitted for exchange and not withdrawn in connection with the Exchange Offer; provided, however, that no such fee shall be paid with respect to Target Securities tendered, directly or indirectly, by soliciting dealers for their own account and such fee shall not be remitted, in whole or in part, to the beneficial owner of such Target Securities. The Soliciting Dealer Fee shall be paid only if the Exchange Offer is consummated and shall be paid to the soliciting dealers within one week of the consummation of the Exchange Offer. 4. Expenses, Reimbursement. The Company agrees to reimburse the Dealer Manager directly for all of its reasonable out-of-pocket expenses incurred in connection with the Exchange Offer, including, without limitation, the reasonable fees and expenses of the law firm acting as legal counsel for the Dealer Manager. 5. Certain Covenants of the Trust and the Company. Each of the Company and the Trust covenants jointly and severally with the Dealer Manager: (a) To use reasonable efforts to cause the Registration Statement, including any post-effective amendment thereto, to become effective and will notify the Dealer Manager as soon as practicable and, if requested by the Dealer Manager, will 4 5 confirm the notice in writing, (i) when any post-effective amendment to the Registration Statement shall have become effective, or any supplement to the Prospectus or any amended Prospectus or any amended or additional Offering Materials shall have been filed, (ii) of the receipt of any comments from the Commission relating to the Exchange Offer, (iii) of any request by the Commission to amend the Registration Statement or amend or supplement the Prospectus or the other Offering Materials or for additional information relating to the Exchange Offer and (iv) of (A) the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or (B) the issuance by the Commission of any order preventing or suspending the use of any of the Offering Materials or (C) the suspension of the qualification of the Preferred Securities for offering or sale in connection with the Exchange Offer in any jurisdiction or (D) the institution or threatening of any proceedings for any of such purposes or (E) the occurrence of any event which could cause the Company or the Trust to withdraw, rescind, terminate or modify the Exchange Offer or would permit the Company or the Trust to exercise any right not to accept the Target Securities tendered pursuant to the Exchange Offer. The Company and the Trust will make every reasonable effort to prevent the issuance of any such stop order, the issuance of any order preventing or suspending such use and the suspension of any such qualification and, if any such order is issued or qualification suspended, to obtain the lifting of such order or suspension at the earliest practicable time. (b) Prior to the termination of the Exchange Offer, before amending or supplementing the Registration Statement or the Prospectus, to furnish copies of drafts to, and consult with, the Dealer Manager and its counsel within a reasonable time in advance of filing with the Commission of any amendment or supplement to the Registration Statement, the Prospectus or the other Offering Materials. Neither the Company nor the Trust shall file any such amendment or supplement to which the Dealer Manager shall reasonably object in writing; provided, however, that the foregoing shall not apply to any of the Company's filings with the Commission required to be filed pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act, copies of which such filings the Company will cause to be delivered to the Dealer Manager promptly after being transmitted for filing with the Commission. (c) To furnish promptly to the Dealer Manager, without charge, one signed copy of the Registration Statement, all amendments thereto and any other filing with the Commission in connection with the Exchange Offer, whether filed before or after the Registration Statement becomes effective. (d) To furnish promptly to the Dealer Manager, without charge, from time to time until the effective date of the Registration Statement, as many copies of each preliminary prospectus as the Dealer Manager may request, and the Company and the Trust hereby consent to the use of such copies for purposes permitted by the Securities Act and the Exchange Act. The Company will furnish promptly to the Dealer Manager, without charge, as soon as the Registration Statement shall have become effective and during the 5 6 period mentioned in the second sentence of paragraph (e) below such number of copies of the Prospectus and the other Offering Materials (as supplemented or amended) as the Dealer Manager may request and will cause all amendments and supplements filed with the Commission to be distributed to holders of Target Securities as may be required by the Securities Act and the Exchange Act. (e) To comply in all material respects with the Securities Act, the Exchange Act and the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), in connection with the Offering Materials, the Exchange Offer and the transactions contemplated hereby and thereby, as applicable. If at any time when the Prospectus is required by the Securities Act or the Exchange Act to be delivered in connection with any Solicitation or Exchange any event shall occur or condition shall exist as a result of which it is necessary, in the reasonable opinion of counsel for the Dealer Manager or counsel for the Company and the Trust, to amend the Registration Statement or amend or supplement the Prospectus or any other Offering Materials in order that the Prospectus or such other Offering Materials will not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements in the Prospectus or such other Offering Materials, in the light of the circumstances under which they were made, not misleading or if, in the reasonable opinion of either such counsel, it shall be necessary to amend the Registration Statement or amend or supplement the Prospectus or any other Offering Materials to comply with the requirements of the Securities Act or the Exchange Act, the Company and the Trust will promptly prepare, file with the Commission, subject to Section 5(b) of this Agreement, and furnish, at its own expense, to the Dealer Manager and to the dealers (whose names and address will be furnished to the Company by the Dealer Manager) to which Preferred Securities may have been exchanged, such amendment or supplement as may be necessary to correct such untrue statement or omission or to make the Registration Statement or the Prospectus or such other Offering Materials comply with such requirements. (f) To endeavor, in cooperation with the Dealer Manager, to qualify the Preferred Securities for offering and sale in connection with the Exchange Offer under the applicable securities or Blue Sky laws of such jurisdictions as the Company and the Trust may elect and to maintain such qualifications in effect for such time as may be required for the consummation of the Exchange Offer; provided, however, that neither the Company nor the Trust shall be obligated to file any general consent to service of process or to qualify as a foreign corporation or as a dealer in securities in any jurisdiction in which it is not so qualified or to subject itself to taxation in respect of doing business in any jurisdiction in which it is not otherwise so subject; provided, further, that the Dealer Manager shall not be obligated to solicit tenders in jurisdictions where the Preferred Securities are not qualified for offer and sale. The Company and the Trust will file such statements and reports as may be required by the laws of each jurisdiction in which the Preferred Securities have been qualified as above provided. 6 7 (g) To make generally available to the holders of the Preferred Securities and the Debentures as soon as practicable, but in any event not later than 45 days after the end of the fiscal quarter of the Company during which the first anniversary of the effective date of the Registration Statement occurs (or 90 days in case the period covered corresponds to a fiscal year of the Company) an earnings statement of the Company (in form complying with the provisions of Rule 158 of the Securities Act) covering such twelve-month period. (h) To use its reasonable best efforts to effect the listing of the Preferred Securities on the New York Stock Exchange, Inc. (the "NYSE"), subject to official notice of issuance, as soon as practicable after the date hereof. (i) To timely file any report or other document required to be filed by the Company or the Trust with the Commission pursuant to Section 13, 14 or 15 of the Exchange Act during the period of time referred to in the second sentence of Section 5(e) hereof. (j) Subject to Section 4(a) of this Agreement, to pay all costs and expenses incurred in connection with the performance of its obligations in connection with this Agreement and the Solicitations including, without limitation, (i) the preparation, printing and filing of the Registration Statement (including financial statements and exhibits), as originally filed and as amended, the preliminary prospectuses, the Prospectus and the other Offering Materials and any amendments or supplements to any of the foregoing, and the cost of furnishing copies thereof to the Dealer Manager, (ii) the preparation and distribution of this Agreement and any Blue Sky surveys and the printing of certificates for the Preferred Securities, (iii) the distribution of the Offering Materials to the holders of the Target Securities, (iv) the fees and disbursements of counsel to the Company and the Trust, counsel to the Dealer Manager and the Company's and the Trust's accountants, (v) the qualification of the Preferred Securities under the applicable securities laws in accordance with Section 5(f) of this Agreement and any filing for review of the Exchange Offer with the National Association of Securities Dealers, Inc. (the "NASD") (including filing fees and fees and disbursements of counsel for the Dealer Manager in connection with such filing with the NASD), (vi) the fees and expenses of the Transfer Agent, the Registrar, the Trustees, the Indenture Trustee (as defined herein), the trustee under the Guarantee (the "Guarantee Trustee"), the Information Agent and the Exchange Agent and (vii) all other costs and expenses incident to the Solicitations incurred by the Trust and the Company and its subsidiaries. The Company agrees to pay all of the aforementioned costs and expenses whether or not the Exchange Offer is consummated. (k) To advise or cause the Exchange Agent to advise the Dealer Manager at 5:00 P.M., New York City time, or as promptly as practicable thereafter, daily (or more frequently if requested), by telephone or facsimile transmission, as of 4:00 P.M. on such day with respect to Target Securities tendered as follows: 7 8 (i) the number of shares of Target Securities validly tendered represented by certificates physically held by the Exchange Agent (or for which the Exchange Agent has received confirmation of receipt of book-entry transfer of such Target Securities into the Exchange Agent's account at a Depository Institution (as defined in the Prospectus) pursuant to the procedures set forth in the Exchange Offer) on such day; (ii) the number of shares of Target Securities represented by Notices of Guaranteed Delivery on such day; (iii) the number of shares of Target Securities properly withdrawn on such day; (iv) the cumulative number of shares of Target Securities in categories (i) through (iii) above. On the day following such oral communication, the Company shall furnish or cause the Exchange Agent to furnish to the Dealer Manager a written report confirming the above information which has been communicated orally. The Company shall furnish or cause the Exchange Agent to furnish to the Dealer Manager such reasonable information on the tendering holders of Targeted Securities as may be requested from time to time. (l) To give the Dealer Manager notice of any change of the expiration time of the Exchange Offer (the "Expiration Time"). 6. Representations and Warranties of the Company and the Trust. Each of the Company and the Trust jointly and severally represent and warrant to and agrees with the Dealer Manager that: (a) Compliance with Registration Requirements. Each prospectus filed as part of the Registration Statement as originally filed or as part of any amendment thereto, or filed pursuant to Rule 424 of the Securities Act, will comply when so filed, in all material respects, as to form with the Securities Act, the Exchange Act and the Trust Indenture Act; the Registration Statement at the time it becomes effective and the Prospectus and any other Offering Materials, on the Commencement Date and on the date on which the Company commences delivery of the Preferred Securities for exchange of the Target Securities pursuant to the Exchange Offer (such date, the "Exchange Date"), will comply, in all material respects, as to form with the Securities Act and the Exchange Act; each part of the Registration Statement when such part becomes effective will not contain, and each such part, as amended, if applicable, will not contain, any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; and as of the Commencement Date and the Exchange Date, none of the Prospectus or the other Offering Materials or any amendments or supplements to such Offering Materials will contain any untrue statement of a material fact or omit to state a 8 9 material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that the representations and warranties set forth in this Section 6(a) shall not apply to statements or omissions made in reliance upon and in conformity with information furnished in writing to the Trust or the Company by the Dealer Manager expressly for use in the Registration Statement, Prospectus, any other Offering Materials or any amendments or supplements to any of the foregoing. (b) Incorporated Documents. The documents incorporated by reference or deemed to be incorporated by reference in the Registration Statement and the Prospectus, when they became effective or were filed with the Commission, as the case may be, conformed in all material respects to the requirements of the Securities Act or the Exchange Act, as applicable, and the rules and regulations of the Commission thereunder, and none of such documents contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading; and any further documents so filed and incorporated by reference or deemed to be incorporated by reference in the Registration Statement and the Prospectus or any further amendment or supplement thereto, when such documents become effective or are filed with the Commission, as the case may be, will conform in all material respects to the requirements of the Securities Act or the Exchange Act, as applicable, and the rules and regulations of the Commission thereunder, and will not contain an untrue statement or a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; provided, however, that the representations and warranties set forth in this Section 6(b) shall not apply to any statements or omissions made in reliance upon and in conformity with information furnished in writing to the Trust or the Company by the Dealer Manager expressly for use in the Registration Statement and the Prospectus as amended or supplemented. (c) No Material Adverse Change in Business. Since the respective dates as of which information is given in the Registration Statement and the Prospectus, except as otherwise stated therein, (A) there has been no material adverse change in the condition, financial or otherwise, or in the earnings, business affairs or business prospects of the Trust, or of the Company and its subsidiaries considered as one enterprise, whether or not arising in the ordinary course of business (a "Material Adverse Effect"), (B) there have been no transactions entered into by the Trust, or by the Company or any of its subsidiaries, other than those in the ordinary course of business, which are material with respect to the Trust, or to the Company and its subsidiaries considered as one enterprise, (C) except for regular dividends, there has been no dividend or distribution of any kind declared, paid or made by the Company on any class of its capital stock and (D) there has been no material increase in the long-term debt of the Company, except such increases as are set forth in the Prospectus. 9 10 (d) Good Standing of the Company. The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Maryland, with power and authority (corporate and other) to own its properties and conduct its business as described in the Prospectus. (e) Good Standing of Significant Subsidiaries. Each subsidiary of the Company which is a significant subsidiary, as defined in Rule 405 of Regulation C of the regulations promulgated under the Securities Act (each, a "Significant Subsidiary") has been duly incorporated and is validly existing as a corporation in good standing under the laws of its jurisdiction of incorporation except for MBNA America Bank, National Association (the "Bank") and any other national bank subsidiary, each of which has been duly organized and is validly existing as a national bank under the laws of the United States, with power and authority (corporate and other) to own its properties and to conduct its business as described in the Prospectus. (f) Foreign Qualification. The Company and each Significant Subsidiary has been duly qualified as a foreign corporation for the transaction of business and is in good standing under the laws of each other jurisdiction in which it owns or leases properties or conducts any business so as to require qualification. (g) Authorized Capitalization. The Company has an authorized capitalization as set forth in the Prospectus, and all of the issued shares of capital stock of the Company have been duly and validly authorized and issued and are fully paid and non-assessable. (h) Existence of Trust. The Trust has been duly created and is validly existing as a business trust in good standing under the Delaware Act, with power and authority to own, lease and operate its properties and conduct its business as described in the Prospectus, and is not required to be authorized to do business in any other jurisdiction; all the outstanding beneficial ownership interests in the assets of the Trust have been duly and validly authorized and issued, are fully paid and non-assessable and conform to the descriptions thereof contained in the Prospectus; and the Trust is and will be treated as a "grantor trust" for federal income tax purposes under existing law. (i) Preferred Securities. The Preferred Securities have been duly and validly authorized, and, when the Preferred Securities are issued and delivered pursuant to this Agreement, such Preferred Securities will be duly and validly issued and fully paid and non-assessable beneficial interests in the Trust entitled to the benefits provided by the Declaration; the Preferred Securities conform to the description thereof contained in the Registration Statement and the Preferred Securities will conform to the description thereof contained in the Prospectus as amended or supplemented with respect to such Preferred Securities; 10 11 (j) Common Securities. The Common Securities of the Trust have been duly authorized and when issued and delivered by the Trust to the Company against payment therefor as set forth in the Declaration, will be duly and validly issued and non-assessable beneficial interests in the Trust and will conform to the description thereof contained in the Prospectus; (k) Authorization of Company Agreements. The Guarantee, the Declaration, the Debentures and the Indenture (the Guarantee, the Declaration, the Debentures and the Indenture being collectively referred to as the "Company Agreements") have each been duly authorized and when validly executed and delivered by the Company and, in the case of the Guarantee, by the Guarantee Trustee (as defined in the Guarantee), in the case of the Declaration, by the Trustees (as defined in the Declaration) and, in the case of the Indenture, by the Trustee named therein (the "Debenture Trustee"), and, in the case of the Debentures, when validly issued by the Company and duly authenticated and delivered by the Debenture Trustee against payment therefore as contemplated by the Company Agreements, will constitute valid and legally binding obligations of the Company, enforceable in accordance with their respective terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, equitable principles (regardless of whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing; the Debentures are entitled to the benefits of the Indenture; and the Company Agreements, which will be in substantially the form filed as an exhibit to the Registration Statement, will conform to the descriptions thereof in the Prospectus as amended or supplemented; (l) Absence of Defaults and Conflicts by the Company. The issuance by the Company of the Guarantee and the Debentures; the compliance by the Company with all of the provisions of this Agreement, the Guarantee and the Debentures; the execution, delivery and performance by the Company of the Company Agreements; and the consummation of the transactions contemplated herein and therein, will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the Company is a party or by which the Company is bound or to which any of the material propertY or assets of the Company is subject, nor will such action result in any violation of the provisions of the Certificate of Incorporation or By-laws of the Company or any statute or any order, rule or regulation of any court or governmental agency or body (including, without limitation, the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation) having Jurisdiction over the Company or any of its properties; and no consent, approval, authorization, order, registration or qualification of or with any such court or governmental agency or body is required for the issue of the Guarantee or the Debentures or the consummation by the Company of the other transactions contemplated by this Agreement or the Company Agreements, except such as have been or will have been, prior to the Commencement Date and the Exchange Date, respectively, obtained under the Act of the 11 12 Trust Indenture Act and such consents, approvals, authorizations, registrations or qualifications as may be required under state securities or Blue Sky laws in connection with the issuance by the Company of the Guarantee and the Debentures; (m) Absence of Defaults or Conflicts by the Trust. The issue and sale of the Preferred Securities by the Trust; the compliance by the Trust with all of the provisions of this Agreement and the Preferred Securities; the purchase of the Debentures by the Trust; the execution, delivery and performance by the Trust of the Declaration and the consummation of the transactions contemplated herein and therein, will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which such Trust is a party or by which such Trust is bound or to which any of the material property or assets of such Trust is subject, nor will such action result in any violation of the provisions of the Declaration or any statute or any order, rule or regulation of any court or governmental agency or body having jurisdiction over such Trust or any of its properties; and no consent, approval, authorization, order, registration or qualification of or with any such court or governmental agency or body is required for the issue and sale of the Preferred Securities and the Common Securities by such Trust, the purchase of the Debentures by the such Trust or the consummation by such Trust of the transactions contemplated by this Agreement or the Declaration, except such as have been, or will have been, prior to the Commencement Date and the Exchange Date, respectively, obtained under the Act and the Trust Indenture Act and such consents, approvals, authorizations, registrations or qualifications as may be required under state securities or Blue Sky laws in connection with the purchase and distribution of the Preferred Securities; (n) Absence of Proceedings. Other than as set forth in the Prospectus, there are no legal or governmental proceedings pending to which the Trust, the Company or any of its subsidiaries is a party or of which any property of the Company or any of its subsidiaries is the subject, which, if determined adversely to the Trust, the Company or any of its subsidiaries, would individually or in the aggregate have a material adverse effect on the consolidated financial position, stockholders' equity (or net assets, as the case may be) or results of operations of the Trust, or the Company and its subsidiaries; and, to the best of the Trust's and the Company's knowledge, no such proceedings are threatened or contemplated by governmental authorities or threatened by others; (o) Compliance with Laws. Each of the Company, the Bank and the Trust is in substantial compliance with, and conducts its business in substantial conformity with, all applicable laws and governmental regulations. (p) Select Sections of Registration Statement. The statements set forth in (i) the Prospectus under the captions "Description of the Junior Subordinated Debentures", "Description of the Preferred Securities", "Description of Guarantee", "Relationship Among the Preferred Securities, the Junior Subordinated Debentures and the Guarantee" and 12 13 "Description of the Series A Preferred Stock", insofar as they constitute a summary of the terms of the Preferred Securities, Debentures, the Guarantee, the Indenture, the Declaration and the Series A Preferred Stock, fairly summarize the information required to be disclosed therein. (q) Investment Company Act. Neither the Company nor the Trust is, and after giving effect to the consummation of the Exchange Offer as herein contemplated and the application of the net proceeds therefrom as described in the Prospectus neither will be, an "investment company" or an entity "controlled" by an "investment company" as such terms are defined in the Investment Company Act of 1940, as amended (the "1940 Act"). 7. Indemnification and Contribution. (a) Each of the Company and the Trust jointly and severally agrees: (A) to indemnify and hold the Dealer Manager harmless against any loss, damage, expense, liability or claim (i) which (1) with respect to the Registration Statement, is caused by any untrue statement or alleged untrue statement of a material fact contained therein or which is caused by the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, or (2) with respect to the Offering Materials or in any amendment or supplement thereto, is caused by any untrue statement or alleged untrue statement of a material fact contained in such Offering Materials or which is caused by the omission or alleged omission to state therein a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, except, in any such case, as to the Dealer Manager insofar as such loss, damage, expense, liability or claim is caused by any such untrue statement or omission or alleged untrue statement or omission based upon information relating to the Dealer Manager furnished to the Company or the Trust in writing by the Dealer Manager expressly for use in the Registration Statement or in such Offering Materials or (ii) which arises out of or is based upon a withdrawal, rescission or modification of or a failure to make or consummate the Exchange Offer; and (B) to indemnify and hold the Dealer Manager harmless against any other loss, damage, expense, liability or claim which otherwise arises out of or is related to this Agreement or the Exchange Offer or the services provided by the Dealer Manager in connection with this Agreement or the Exchange Offer, except to the extent any such loss, damage, expense, liability or claim referred to in this clause (B) is found by a final judgment of a court of competent jurisdiction to have resulted from the Dealer Manager's gross negligence, bad faith or willful misconduct. The Company and the Trust each jointly and severally agree to indemnify and hold the Dealer Manager harmless against and reimburse the Dealer Manager for any and all reasonable expenses (including reasonable legal fees and expenses) as such expenses are incurred by it in connection with investigating, preparing for or defending against any such loss, damage, expense, liability or claim, whether or not resulting in any liability, whether or not such person is a named party in connection therewith and whether or not such loss, damage, expense, liability or claim results from action initiated or brought by or on behalf of the Company or any of its subsidiaries (including the Trust), and any amount paid in settlement of any litigation, commenced or 13 14 threatened, or of any claim whatsoever as set forth herein if such settlement is effected with the prior written consent of the Company; provided, however, with respect to clause (B) above, that neither the Company nor the Trust shall be liable for any of the foregoing expenses and any amounts previously paid shall be promptly repaid to the extent that any loss, damage, liability or claim is found by a final judgment of a court of competent jurisdiction to have resulted from the Dealer Manager's gross negligence, bad faith or willful misconduct. In the event that you become involved in any capacity in any action, proceeding or investigation brought by or against any person, including stockholders of the Company, in connection with any matter referred to in this Agreement or arising out of the Exchange Offer for which you would be entitled to indemnification pursuant to the preceding sentence, the Company and the Trust also agree to indemnify and hold you harmless against and to reimburse you for any amount paid in settlement of any litigation commenced or threatened or of any claim whatsoever as set forth herein if such settlement is effected with the written consent of the Company and the Trust, which shall not be unreasonably withheld. The Company and the Trust also agree that the Dealer Manager shall not have any liability (whether direct or indirect, in tort, contract or otherwise) to the Company or any of its subsidiaries (including the Trust) or its or their security holders or creditors related to or arising out of this Agreement or the Exchange Offer or the services provided by the Dealer Manager in connection with this Agreement or the Exchange Offer, except (i) for failure to perform its obligations under this Agreement, (ii) to the extent such liability is found by a final judgment of a court of competent jurisdiction to have resulted from the Dealer Manager's gross negligence, bad faith or willful misconduct or (iii) as expressly provided in the next succeeding paragraph. The Dealer Manager agrees to indemnify and hold harmless the Company and the Trust to the same extent as the foregoing indemnity from the Company and the Trust to the Dealer Manager contained in Section 7(a)(A)(i) above, but only with reference to information relating to the Dealer Manager furnished to the Company in writing by the Dealer Manager expressly for use in the Registration Statement or the Offering Materials. (b) Promptly after receipt by a person indemnified under this Section 7 of notice of any suit, action, proceeding or investigation with respect to which an indemnified party may be entitled to indemnification hereunder, such indemnified person shall notify the person against whom such indemnity may be sought in writing of the commencement or the written assertion thereof; but the omission so to notify such indemnifying person shall not relieve such indemnifying person from any liability which it may have to such indemnified person unless the indemnifying person has been materially prejudiced by such omission. Following such notification, such indemnifying person may elect in writing to assume the defense of such suit, action, proceeding or investigation and, upon such election, such indemnifying person shall not be liable for any legal costs subsequently incurred by such indemnified person (other than reasonable costs of investigation and providing evidence) in connection therewith, unless (i) such indemnifying person has failed to provide counsel reasonably satisfactory to such indemnified person in 14 15 a timely manner, (ii) counsel which has been provided by such indemnifying person reasonably determines that its representation of such indemnified person would present it with a conflict of interest or (iii) such indemnified person reasonably determines that there may be legal defenses available to it which are different from or in addition to those available to such indemnifying person. In the event of a determination pursuant to clause (i), (ii) or (iii) above, such indemnified person shall be entitled to retain separate counsel of their choice and the fees and expenses of such separate counsel shall be borne by such indemnifying person. Such indemnifying person shall not in any event be liable for the fees and expenses of more than one separate firm of attorneys (in addition to any local counsel) for the Dealer Manager in any one action or group of related actions, except as provided in the immediately preceding sentence. Whether or not such indemnifying person shall have assumed the defense of any suit, action, proceeding or investigation, the Company, the Trust and the Dealer Manager agree to cooperate in the defense thereof and shall furnish such records, information and testimony, and attend such conferences, discovery proceedings, hearings, trials and appeals, as may be reasonably requested in connection therewith. (c) If the indemnification provided for in this Section 7 is unavailable to or insufficient to hold harmless an indemnified person to the extent provided under subsection (a) above in respect of any losses, damages, expenses, liabilities or claims referred to therein, then the indemnifying person shall contribute to the amount paid or payable by such indemnified person as a result of such losses, damages, expenses, liabilities or claims (i) in such proportion as is appropriate to reflect the relative benefits received by the Company and its subsidiaries (including the Trust) on the one hand and the Dealer Manager on the other from the Exchange Offer or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) but also the relative fault of the Company and its subsidiaries (including the Trust) on the one hand and the Dealer Manager on the other in connection with any statements or omissions or any other matters which resulted in such losses, damages, expenses, liabilities or claims, as well as any other relevant equitable considerations. The relative benefits received by the Company and its subsidiaries (including the Trust) on the one hand and the Dealer Manager on the other shall be deemed to be in the same proportion as the maximum aggregate liquidation preference of the Preferred Securities issuable pursuant to the Exchange Offer bears to the maximum amount of fees payable to the Dealer Manager pursuant to Section 3 hereof (less any expenses payable by the Dealer Manager to the Company pursuant to Section 4 hereof). The relative fault of the Company and its subsidiaries (including the Trust) on the one hand and the Dealer Manager on the other (i) in the case of any untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact, shall be determined by reference to, among other things, whether such statement or omission relates to information supplied by the Company or any of its subsidiaries (including the Trust) or their affiliates or the Dealer Manager, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission and (ii) in the case of any other action or omission, shall be determined by reference to, among other 15 16 things, whether such action or omission was taken or omitted to be taken by the Company or any of its subsidiaries (including the Trust) or their affiliates or by the Dealer Manager, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such action or omission. The Company and the Dealer Manager agree that it would not be just and equitable if contribution pursuant to this subsection (c) were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in this subsection (c). Notwithstanding the provisions of this Section 7(c), the Dealer Manager shall not be required to contribute any amount in excess of the fee paid to the Dealer Manager pursuant to Section 3 hereof (less any expenses payable by the Dealer Manager to the Company pursuant to Section 4 hereof). No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. 8. Conditions to Dealer Manager's Obligations. The obligations of the Dealer Manager hereunder are subject as of the Commencement Date and as of the Exchange Date to the accuracy of the representations and warranties of the Company and the Trust contained herein or in certificates of any officer of the Company or Trustee of the Trust delivered pursuant to the provisions hereof, to the performance, in all material respects, by the Company and the Trust of their obligations hereunder to be performed, and to the following additional conditions: (a) On the Commencement Date and the Exchange Date, the Registration Statement shall have become effective under the Securities Act; no stop order suspending the effectiveness of the Registration Statement shall be in effect, and no proceedings for such purpose shall be pending before or, to the Company's or the Trust's knowledge, threatened by the Commission. (b) On the Commencement Date and the Exchange Date, since the respective dates as of which information is given in the Prospectus as amended or supplemented, there shall not have occurred any material adverse change, or any development involving a prospective material adverse change, in the condition, financial or otherwise, or in the earnings, business affairs or business prospects of the Company and its subsidiaries considered as one enterprise whether or not arising in the ordinary course of business. (c) The Dealer Manager shall have received on the Commencement Date and the Exchange Date a certificate, dated such date and signed by an executive officer of the Company, to the effect (i) set forth in clause (b) above, (ii) that the representations and warranties of the Company contained in this Agreement are true and correct with the same force and effect as though expressly made as of such date (except for representations and warranties which by their terms speak as of a different date or dates), (iii) that the Company has complied in all material respects with all of the agreements and satisfied all of the 16 17 conditions on its part to be performed or satisfied on or before such date and (iv) no stop order suspending the effectiveness of the Registration Statement has been issued and no proceedings for that purpose have been instituted or are pending or are, to the best of the Company's knowledge, threatened by the Commission. The officer signing and delivering such certificate may rely upon the best of such officer's knowledge as to proceedings threatened. (d) On the Commencement Date and the Exchange Date, there shall not have been since the respective dates as of which information is given in the Prospectus, any material adverse change, or any development involving a prospective material adverse change, in the condition, financial or otherwise, or in the earnings or business affairs of the Trust. (e) The Dealer Manager shall have received on the Commencement Date and the Exchange Date a certificate, dated such date and signed by a Regular Trustee of the Trust, to the effect (i) set forth in clause (d) above, (ii) that the representations and warranties of the Trust contained in this Agreement are true and correct with the same force and effect as though expressly made as of such date (except for representations and warranties which by their terms speak as of a different date or dates), (iii) that the Trust has complied in all material respects with all of the agreements and satisfied all of the conditions on its part to be performed or satisfied on or before such date and (iv) no stop order suspending the effectiveness of the Registration Statement has been issued and no proceedings for that purpose have been instituted or are pending or are, to the best of the Trust's knowledge, threatened by the Commission. The Regular Trustee signing and delivering such certificate may rely upon knowledge as to proceedings threatened. (f) John W. Scheflen, Executive Vice President and General Counsel of the Company or other counsel for the Company satisfactory to the Dealer Manager shall have furnished to the Dealer Manager their written opinions, dated the Commencement Date and the Exchange Date, respectively, in form and substance satisfactory to the Dealer Manager, to the effect that: (i) The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation, with power and authority (corporate and other) to own its properties and conduct its business as described in the Prospectus; (ii) Each Significant Subsidiary of the Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of its jurisdiction of incorporation, except for the Bank and any other national bank subsidiary, which has been duly organized and is validly existing under the laws of the United States, with power and authority (corporate and other) to own its properties and conduct its business as described in the Prospectus (such counsel being entitled to rely in respect of the opinion 17 18 in this clause upon opinions of local counsel and in respect of matters of fact upon certificates of officers of the Company or its subsidiaries, provided that such counsel shall state that he believes that both you and he are justified in relying upon such opinions and certificates); (iii) The Company and each Significant Subsidiary has been duly qualified as a foreign corporation for the transaction of business and is in good standing under the laws of each other jurisdiction in which it owns or leases properties or conducts any business so as to require qualification, or is subject to no material liability or disability by reason of failure to be so qualified in any such jurisdiction (such counsel being entitled to rely in respect of the opinion in this clause upon opinions of local counsel and in respect of matters of fact upon certificates of officers of the Company or its subsidiaries, provided that such counsel shall state that they believe that both you and they are justified in relying upon such opinions and certificates); (iv) The Company has an authorized capitalization as set forth in the Prospectus as amended or supplemented, and all of the issued shares of capital stock of the Company have been duly and validly authorized and issued and are fully paid and non-assessable; (v) To such counsel's knowledge and other than as set forth in the Prospectus, there are no legal or governmental proceedings pending to which the Company or any of its subsidiaries is a party or of which any property of the Company or any of its subsidiaries is the subject which, if determined adversely to the Company or any of its subsidiaries, would individually or in the aggregate have a material adverse effect on the consolidated financial position, stockholders' equity or results of operations of the Company and its subsidiaries; to such counsel's knowledge, there are no legal or governmental proceedings pending to which the Trust is a party or of which any property of the Trust is the subject; and to such counsel's knowledge, no such proceedings are threatened or contemplated by governmental authorities or threatened by others; (vi) This Agreement has been duly authorized, executed and delivered by the Company; (vii) The issuance by the Company of the Guarantee and the Debentures, the compliance by the Company with all of the provisions of this Agreement, the execution, delivery and performance by the Company of each of the Guarantee, the Declaration, the Debentures and the Indenture and the consummation of the transactions herein and therein contemplated will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument known to such counsel to which the Company is a party or by which the Company is bound or to which any of the property or assets of the Company is subject; nor will such actions result in any violation 18 19 of the provisions of the Certificate of Incorporation or By-laws of the Company or any statute or any order, rule or regulation known to such counsel of any court or governmental agency or body (including, without limitation, the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation) having jurisdiction over the Company or any of its properties; and (viii) The Registration Statement, as of its effective date, and the Prospectus, as of its date, (other than the financial statements and related schedules and other financial data therein and the Form T-1 Statements of Eligibility and Qualification of the Trustees, as to which such counsel need express no opinion) comply as to form in all material respects with requirements of the Act and the Trust Indenture Act and the rules and regulations thereunder; although he has not independently verified and does not assume any responsibility for the accuracy, completeness or fairness of the statements contained in the Registration Statement or the Prospectus, he has no reason to believe that, as of its effective date, the Registration Statement or any further amendment thereto made by the Designated Trust or the Company (other than the financial statements and related schedules and other financial data therein and the Form T-1 Statements of Eligibility and Qualification of the Trustees, as to which such counsel need express no opinion) contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading or that, as of its date, the Prospectus or any amendment or supplement thereto made by the Trust or the Company (other than the financial statements and related schedules and other financial data therein and the Form T-1 Statements of Eligibility and Qualification of the Trustees, as to which such counsel need express no opinion) contained an untrue statement of a material fact or omitted to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading or that, as of the Commencement Date and the Exchange Date, respectively, either the Registration Statement or the Prospectus or any amendment or supplement thereto made by the Trust or the Company (other than the financial statements and related schedules and other financial data therein and the Form T-1 Statements of Eligibility and Qualification of the Trustees, as to which such counsel need express no opinion) contains an untrue statement of a material fact or omits to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; and he does not know of any contracts or other documents of a character required to be filed as an exhibit to the Registration Statement or required to be incorporated by reference into the Prospectus or required to be described in the Registration Statement or the Prospectus which are not filed or incorporated by reference or described as required. In giving such opinion, such counsel may rely as to all matters governed by the laws of the State of New York, on the opinion delivered pursuant to Section 8(g) hereof by Simpson Thacher & Bartlett. 19 20 (g) Simpson Thacher & Bartlett, counsel for the Company, shall have furnished to the Dealer Manager their written opinions, dated the Commencement Date and the Exchange Date, respectively, in form and substance satisfactory to the Dealer Manager, to the effect that: (i) The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Maryland; (ii) This Agreement has been duly authorized, executed and delivered by the Company; (iii) No consent, approval, authorization, order, registration or qualification of or with any such court or governmental agency or body is required for the issue and sale of the Preferred Securities being delivered at the Exchange Date, as the case may be, or the issuance of the Guarantee and the Debentures or the consummation by the Trust or the Company of the transactions contemplated by this Agreement and each of the Guarantee, the Declaration, the Debentures and the Indenture, except such as have been obtained under the Act and the Trust Indenture Act and such consents, approvals, authorizations, registrations or qualifications as may be required under state securities or Blue Sky laws in connection with the purchase and distribution of the Preferred Securities by the Underwriters or the issuance of the Guarantee and Debentures by the Company; (iv) The statements set forth in the Prospectus under the captions "Description of the Junior Subordinated Debentures", "Description of the Preferred Securities", "Description of Guarantee" and "Relationship Among the Preferred Securities, the Junior Subordinated Debentures and the Guarantee", insofar as they purport to constitute summaries of certain terms of the Preferred Securities and each of the Guarantee, the Declaration, the Debentures and the Indenture, in each case constitute accurate summaries of each of the Guarantee, the Declaration, the Debentures and the Indenture and of the terms of such securities, as set forth in each of the Guarantee, the Declaration, the Debentures and the Indenture, in all material respects; (v) The Debentures are in the form prescribed in or pursuant to the Indenture, have been duly and validly authorized by the Company by all necessary corporate action and, when completed, executed and authenticated as specified in or pursuant to the Indenture and issued and delivered against payment therefore as specified in each of the Guarantee, the Declaration, the Debentures and the Indenture, will be valid and legally binding obligations of the Company, enforceable in accordance with their terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, to general equitable principles (whether considered in a proceeding in equity or at law) and by an implied covenant of good faith and fair dealing; 20 21 (vi) The Indenture, the Guarantee and the Declaration have each been duly authorized, executed and delivered by the Company and, assuming due authorization, execution and delivery by the Debenture Trustee (in the case of the Indenture), by the Guarantee Trustee (in the case of the Guarantee) and by the Trustees (in the case of the Declaration) constitute valid and legally binding obligations of the Company, enforceable in accordance with their respective terms, subject to bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, to general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing; and the Indenture, the Guarantee and the Declaration have been duly qualified under the Trust Indenture Act; (vii) The Trust is not an "investment company" or an entity "controlled" by an "investment company", as such terms are defined in the Investment Company Act of 1940, as amended; and (viii) Such counsel has been advised by the Commission that the Registration Statement was declared effective and that; to such counsel's knowledge, no stop order suspending effectiveness of the Registration Statement has been issued by the Commission and no proceeding for that purpose is pending or threatened by the Commission. (ix) The Registration Statement, as of its effective date, and the Prospectus, as of its date, (other than the financial statements and related schedules and other financial data therein and the Form T-1 Statements of Eligibility and Qualification of the Trustees, as to which such counsel need express no opinion), comply as to form in all material respects with requirements of the Act and the Trust Indenture Act and the rules and regulations thereunder; although they have not independently verified and do not assume any responsibility for the accuracy, completeness or fairness of the statements contained in the Registration Statement or the Prospectus, except for those referred to in the opinion in subsection (iii) of this Section 8(g), they have no reason to believe that, as of its effective date, the Registration Statement or any amendment thereto made by the Trust or the Company (other than the financial statements and related schedules and other financial data therein and the Form T-1 Statements of Eligibility and Qualification of the Trustees, as to which such counsel need express no opinion), contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading or that, as of its date, the Prospectus or any amendment or supplement thereto made by the Trust or the Company (other than the financial statements and related schedules and other financial data therein and the Form T-1 Statements of Eligibility and Qualification of the Trustees, as to which such counsel need express no opinion), contained an untrue statement of a material fact or omitted to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading or that, as of the Commencement Date and the Exchange Date, 21 22 respectively, either the Registration Statement or the Prospectus or any amendment or supplement thereto made by the Trust or the Company (other than the financial statements and related schedules and other financial data therein and the Form T-1 Statements of Eligibility and Qualification of the Trustees, as to which such counsel need express no opinion), contains an untrue statement of a material fact or omits to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; and they do not know of any contracts or other documents of a character required to be filed as an exhibit to the Registration Statement or required to be incorporated by reference into the Prospectus or required to be described in the Registration Statement or the Prospectus which are not filed or incorporated by reference or described as required. In giving such opinion, such counsel may rely as to all matters governed by the laws of the State of Maryland, on the opinion delivered pursuant to Section 8(f) hereof by John W. Scheflen. (h) Special Delaware Counsel to the Trust and the Company satisfactory to the Dealer Manager, shall have furnished to you, the Company and the Trust their written opinion, dated the Commencement Date and the Exchange Date, respectively, in form and substance satisfactory to you, to the effect that (i) The Trust has been duly created and is validly existing in good standing as a business trust under the Delaware Act, and all filings required under the laws of the State of Delaware with respect to the creation and valid existence of the Trust as a business trust have been made; (ii) Under the Delaware Act and the Declaration, the Trust has the power and authority to own property and conduct its business, all as described in the Prospectus: (iii) The Declaration constitutes a valid and legally binding obligation of the Company and the Trustees, enforceable against the Company and the Trustees in accordance with its terms, subject, as to enforcement, to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles; (iv) Under the Delaware Act and the Declaration, the Trust has the power and authority to (a) execute and deliver, and to perform its obligations under, this Agreement and (b) issue and perform its obligations under the Preferred Securities and the Common Securities of the Trust; (v) Under the Delaware Act and the Declaration, the execution and delivery by the Trust of this Agreement, and the performance by the Trust of its obligations 22 23 thereunder and thereunder, have been duly authorized by all necessary action on the part of the Trust; (vi) The Preferred Securities have been duly authorized by the Declaration and are duly and validly issued and, subject to the qualifications set forth herein, fully paid and non-assessable beneficial interests in the Trust and are entitled to the benefits provided by the Declaration; the Securityholders, as beneficial owners of the Trust, will be entitled to the same limitation of personal liability extended to stockholders of private corporations for profit organized under the General Corporation Law of the State of Delaware; provided that such counsel may note that the Securityholders may be obligated, pursuant to the Declaration, to (a) provide indemnity and/or security in connection with and pay taxes or governmental charges arising from transfers or exchanges of Securities certificates and the issuance of replacement Securities certificates and (b) provide security and indemnity in connection with requests of or directions to the Property Trustee (as defined in the Declaration) to exercise its rights and remedies under the Declaration; (vii) The Common Securities of the Trust have been duly authorized by the Declaration and are validly issued and represent beneficial interests in the Trust; (viii) Under the Delaware Act and the Declaration, the issuance of the Preferred Securities and the Common Securities of the Trust is not subject to preemptive rights; (ix) The issuance and sale by the Trust of Preferred Securities and the Common Securities of the Trust, the execution, delivery and performance by the Trust of this Agreement, the consummation by the Trust of the transactions contemplated thereby and compliance by the Trust with its obligations thereunder will not violate (a) any of the provisions of the Certificate of Trust of the Trust or the Declaration, or (b) any applicable Delaware law or administrative regulation; (x) Assuming that the Trust derives no income from or connected with services provided within the State of Delaware and has no assets, activities (other than maintaining the Delaware Trustee and the filing of documents with the Secretary of State of the State of Delaware) or employees in the State of Delaware, no authorization, approval, consent or order of any Delaware court or governmental authority or agency is required to be obtained by the Trust solely in connection with the issuance and sale of the Preferred Securities and the Common Securities of the Trust. (in rendering the opinion expressed in this paragraph (x), such counsel need express no opinion concerning the securities laws of the State of Delaware); and (xi) Assuming that the Trust derives no income from or connected with services provided within the State of Delaware and has no assets, activities (other than maintaining the Delaware Trustee and the filing of documents with the Secretary of State of 23 24 the State of Delaware) or employees in the State of Delaware, the Securityholders (other than those holders of the Securities who reside or are domiciled in the State of Delaware) will have no liability for income taxes imposed by the State of Delaware solely as a result of their participation in the Trust, and the Trust will not be liable for any income tax imposed by the State of Delaware. (i) Tax counsel for the Trust and the Company satisfactory to the Dealer Manager shall have furnished to you their written opinion, dated the Commencement Date and the Exchange Date, respectively, in form and substance satisfactory to you, to the effect that such firm confirms its opinion set forth in the Prospectus under the caption "Certain Federal Income Tax Consequences"; (j) The Dealer Manager shall have received the favorable opinion of Skadden, Arps, Slate, Meagher & Flom LLP, counsel for the Dealer Manager, dated as of the Commencement Date and the Exchange Date, with respect to the validity of the Preferred Securities, the Registration Statement, the Prospectus and other related matters as the Dealer Manager may reasonably require. In giving such opinion such counsel may rely, as to all matters governed by the laws of jurisdictions other than the law of the State of New York and Delaware, and the federal law of the United States, upon the opinions of counsel satisfactory to the Dealer Manager. Such counsel may also state that, insofar as such opinion involves factual matters, they have relied, to the extent they deem proper, upon certificates of officers of the Company, trustees of the Trust and certificates of public officials. (k) On the Commencement Date, the Dealer Manager shall have received from the Company's independent public accountants, in form and substance reasonably satisfactory to the Dealer Manager and dated as of such date, containing statements and information of the type ordinarily included in accountants' "comfort letters" to dealer manager with respect to the financial statements and certain financial information contained in or incorporated by reference into the Prospectus. (l) At the Exchange Date, the Dealer Manager shall have received from the Company's independent public accountants, in form and substance reasonably satisfactory to the Dealer Manager and dated as of such dates, to the effect that such accountants reaffirm the statements made in the letter furnished pursuant to Section 8(j). (m) At the Exchange Date, the Preferred Securities shall have been duly listed, subject to official notice of issuance, on the NYSE. (n) By the Exchange Date, the Company shall have entered into appropriate agreements with the Information Agent and the Exchange Agent for purposes of the Exchange Offer. 24 25 9. Termination. (a) This Agreement shall terminate upon the earliest to occur of (i) the Exchange Date, (ii) the date on which the Dealer Manager gives notice to the Company and the Trust that any of the conditions specified in Section 8 have not been fulfilled as of any date such conditions are required to be fulfilled pursuant to Section 8 or (iii) the date on which the Company terminates or withdraws the Exchange Offer for any reason (the earliest to occur of clauses (i), (ii) or (iii) being referred to as the "Termination Date"). (b) Notwithstanding termination of this Agreement pursuant to subsection (a) of this Section 9, the obligations of the Company to compensate and/or reimburse, as applicable, the Dealer Manager pursuant to Section 3, 4 or 5, the representations and warranties contained in Section 6 and the provisions of Section 7 shall survive any termination of this Agreement. 10. Notices. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given if mailed or transmitted by any standard form of telecommunication. Notices to the Dealer Manager shall be directed to it at Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, World Financial Center, North Tower, New York, New York 10281-1201, Attention: Syndicate Operations; notices to the Trust shall be directed to it at The Bank of New York, 101 Barclay Street, 21st Floor, New York, New York 10286, Attention: Corporate Trust Administrator and notices to the Company shall be directed to it at MBNA Corporation, Wilmington, Delaware 19884, Attention: General Counsel. 11. Tombstone. The Company and the Trust acknowledge that the Dealer Manager may, with the prior review and approval of the Company, which approval shall not be unreasonably withheld, place an announcement in such newspapers and periodicals as the Dealer Manager may choose, stating that the Dealer Manager is or was acting as dealer manager and financial advisor to the Company and the Trust in connection with the Exchange Offer. The costs relating to any such tombstone shall be borne by the Dealer Manager. 12. Survival of Certain Provisions. The representations, warranties, indemnities and agreements of the Company and the Trust will remain operative and in full force and effect regardless of any investigation made by or on behalf of the Dealer Manager or any affiliate or controlling person thereof and, subject to Section 9(b), will survive the consummation of the Exchange Offer. 13. Governing Law. This Agreement shall be construed in accordance with and governed by the internal laws of the State of New York. 25 26 14. Counterparts. This Agreement may be executed in one or more counterparts, and by different parties hereto on separate counterparts, each of which counterparts, when so executed and delivered, shall be deemed to be an original and all of which counterparts, taken together, shall constitute one and the same Agreement. 15. Successors. This Agreement is made solely for the benefit of the Dealer Manager, the Company and the Trust and, to the extent expressed, the parties indemnified pursuant to Section 7, and no other persons shall acquire or have any right under or by virtue of this Agreement. Nothing in this Agreement, expressed or implied, is intended to confer on any person other than the parties hereto or their respective successors and assigns, and, to the extent expressly set forth herein, the parties indemnified pursuant to Section 7 hereof, any rights or remedies under or by reason of this Agreement. Without limiting the generality of the foregoing, the parties acknowledge that nothing in this Agreement, expressed or implied, is intended to confer on holders of the securities of the Trust, the Company or any of its subsidiaries or creditors of the Company or any of its subsidiaries or the respective successors and assigns of such creditors, any rights or remedies under or by reason of this Agreement. 26 27 If the foregoing is in accordance with your understanding of our agreement, please sign and return to us a counterpart hereof, whereupon this instrument will become a binding agreement among the Company, the Trust and the Dealer Manager in accordance with its terms. Very truly yours, MBNA CORPORATION. By: MBNA CAPITAL C By:________________________ Name: Title: Regular Trustee By:________________________ Name: Title: Regular Trustee Confirmed and accepted as of the date first above written: MERRILL LYNCH & CO. MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED By:________________________________________ Authorized Signatory 27 EX-4.C 3 INDENTURE BETWEEN MBNA AND THE BANK OF NEW YORK 1 EXHIBIT 4(c) - -------------------------------------------------------------------------------- MBNA CORPORATION TO THE BANK OF NEW YORK TRUSTEE ----------------------------- JUNIOR SUBORDINATED INDENTURE DATED AS OF DECEMBER 18, 1996 ----------------------------- - -------------------------------------------------------------------------------- 2 MBNA CORPORATION Reconciliation and tie between the Trust Indenture Act of 1939 (including cross-references to provisions of Sections 310 to and including 317 which, pursuant to Section 318(c) of the Trust Indenture Act of 1939, as amended by the Trust Reform Act of 1990, are a part of and govern the Indenture whether or not physically contained therein) and the Junior Subordinated Indenture, dated as of December 18, 1996.
Trust Indenture Indenture ACT SECTION SECTION - --------------- --------- Section 310 (a) (1), (2) and (5). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.9 (a) (3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable (a) (4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable (b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.10 (c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable Section 311 (a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.13(a) (b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.13(b) (b) (2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.3(a) (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.3(a) (2) Section 312 (a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2(a) (b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2(b) (c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2(c) Section 313 (a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.3(a) (b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.3(b) (c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.3(a), 7.3(b) (d). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.3(c) Section 314 (a) (1), (2) and (3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.4 (a) (4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.5 (b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable (c) (1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2 (c) (2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2 (c) (3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable (d). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable (e). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2 (f). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable Section 315 (a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1(a) (b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.3(a) (6) (c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1(b)
3 TRUST INDENTURE INDENTURE ACT SECTION SECTION - --------------- --------- (d). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1(c) (d) (1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1(a) (1) (d) (2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1(c) (2) (d) (3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1(c) (3) (e). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.14 Section 316 (a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1 (a) (1) (A). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.12 (a) (1) (B). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.13 (a) (2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable (b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.8 (c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.4(f) Section 317 (a) (1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3 (a) (2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.4 (b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.3 Section 318 (a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.7
- ---------------- Note: This reconciliation and tie shall not, for any purpose, be deemed to be a part of the Junior Subordinated Indenture. 4 TABLE OF CONTENTS
Page ---- ARTICLE I DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION . . . . . 1 SECTION 1.1. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 SECTION 1.2. Compliance Certificate and Opinions. . . . . . . . . . . . . . . . . . . . . 9 SECTION 1.3. Forms of Documents Delivered to Trustee. . . . . . . . . . . . . . . . . . 10 SECTION 1.4. Acts of Holders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 SECTION 1.5. Notices, Etc. to Trustee and Company. . . . . . . . . . . . . . . . . . . . 12 SECTION 1.6. Notice to Holders; Waiver. . . . . . . . . . . . . . . . . . . . . . . . . 13 SECTION 1.7. Conflict with Trust Indenture Act. . . . . . . . . . . . . . . . . . . . . 13 SECTION 1.8. Effect of Headings and Table of Contents. . . . . . . . . . . . . . . . . . 13 SECTION 1.9. Successors and Assigns. . . . . . . . . . . . . . . . . . . . . . . . . . . 13 SECTION 1.10. Separability Clause. . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 SECTION 1.11 Benefits of Indenture. . . . . . . . . . . . . . . . . . . . . . . . . . . 13 SECTION 1.12. Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 SECTION 1.13. Non-Business Days. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 ARTICLE II SECURITY FORMS . . . . . . . . . . . . . . . 14 SECTION 2.1. Forms Generally. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 SECTION 2.2. Form of Face of Security. . . . . . . . . . . . . . . . . . . . . . . . . . 15 SECTION 2.3. Form of Reverse of Security. . . . . . . . . . . . . . . . . . . . . . . . 18 SECTION 2.4. Additional Provisions Required in Global Security. . . . . . . . . . . . . 21 SECTION 2.5. Form of Trustee's Certificate of Authentication. . . . . . . . . . . . . . 21 ARTICLE III THE SECURITIES . . . . . . . . . . . . . . . 22 SECTION 3.1. Title and Terms. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 SECTION 3.2. Denominations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 SECTION 3.3. Execution, Authentication, Delivery and Dating. . . . . . . . . . . . . . . 24 SECTION 3.4. Temporary Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 SECTION 3.5. Registration, Transfer and Exchange. . . . . . . . . . . . . . . . . . . . 26 SECTION 3.6. Mutilated, Destroyed, Lost and Stolen Securities. . . . . . . . . . . . . . 28 SECTION 3.7. Payment of Interest; Interest Rights Preserved. . . . . . . . . . . . . . 29 SECTION 3.8. Persons Deemed Owners. . . . . . . . . . . . . . . . . . . . . . . . . . . 30 SECTION 3.9. Cancellation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
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Page ---- SECTION 3.10. Computation of Interest. . . . . . . . . . . . . . . . . . . . . . . . . . 31 SECTION 3.11. Deferrals of Interest Payment Dates. . . . . . . . . . . . . . . . . . . . 31 SECTION 3.12. Right of Set-Off. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 SECTION 3.13. Agreed Tax Treatment. . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 SECTION 3.14. Shortening or Extension of Stated Maturity. . . . . . . . . . . . . . . . . 32 SECTION 3.15. CUSIP Numbers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 ARTICLE IV SATISFACTION AND DISCHARGE . . . . . . . . . . . . 33 SECTION 4.1. Satisfaction and Discharge of Indenture. . . . . . . . . . . . . . . . . . 33 SECTION 4.2. Application of Trust Money. . . . . . . . . . . . . . . . . . . . . . . . . 34 ARTICLE V REMEDIES . . . . . . . . . . . . . . . . . 34 SECTION 5.1. Events of Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 SECTION 5.2. Acceleration of Maturity; Rescission and Annulment. . . . . . . . . . . . . 35 SECTION 5.3. Collection of Indebtedness and Suits for Enforcement by Trustee. . . . . . . 37 SECTION 5.4. Trustee May File Proofs of Claim. . . . . . . . . . . . . . . . . . . . . . 38 SECTION 5.5. Trustee May Enforce Claims Without Possession of Securities. . . . . . . . . 39 SECTION 5.6. Application of Money Collected. . . . . . . . . . . . . . . . . . . . . . . 39 SECTION 5.7. Limitation on Suits. . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 SECTION 5.8. Unconditional Right of Holders to Receive Principal, Premium and Interest; Direct Action by Holders of Preferred Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 SECTION 5.9. Restoration of Rights and Remedies. . . . . . . . . . . . . . . . . . . . . 40 SECTION 5.10. Rights and Remedies Cumulative. . . . . . . . . . . . . . . . . . . . . . . 41 SECTION 5.11. Delay or Omission Not Waiver. . . . . . . . . . . . . . . . . . . . . . . . 41 SECTION 5.12. Control by Holders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 SECTION 5.13. Waiver of Past Defaults. . . . . . . . . . . . . . . . . . . . . . . . . . 41 SECTION 5.14. Undertaking for Costs. . . . . . . . . . . . . . . . . . . . . . . . . . . 42 SECTION 5.15. Waiver of Usury, Stay or Extension Laws. . . . . . . . . . . . . . . . . . 42 ARTICLE VI THE TRUSTEE . . . . . . . . . . . . . . . . 43 SECTION 6.1. Certain Duties and Responsibilities. . . . . . . . . . . . . . . . . . . . 43 SECTION 6.2. Notice of Defaults. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
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Page ---- SECTION 6.3. Certain Rights of Trustee. . . . . . . . . . . . . . . . . . . . . . . . . 44 SECTION 6.4. Not Responsible for Recitals or Issuance of Securities. . . . . . . . . . . 45 SECTION 6.5. May Hold Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 SECTION 6.6. Money Held in Trust. . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 SECTION 6.7. Compensation and Reimbursement. . . . . . . . . . . . . . . . . . . . . . . 46 SECTION 6.8. Disqualification; Conflicting Interests. . . . . . . . . . . . . . . . . . 46 SECTION 6.9. Corporate Trustee Required; Eligibility. . . . . . . . . . . . . . . . . . 47 SECTION 6.10. Resignation and Removal; Appointment of Successor. . . . . . . . . . . . . 47 SECTION 6.11. Acceptance of Appointment by Successor. . . . . . . . . . . . . . . . . . . 49 SECTION 6.12. Merger, Conversion, Consolidation or Succession to Business. . . . . . . . . 50 SECTION 6.13. Preferential Collection of Claims Against Company. . . . . . . . . . . . . 50 SECTION 6.14. Appointment of Authenticating Agent. . . . . . . . . . . . . . . . . . . . 50 ARTICLE VII HOLDER'S LISTS AND REPORTS BY TRUSTEE AND COMPANY . . . . . . . . . . . . . . . . 52 SECTION 7.1. Company to Furnish Trustee Names and Addresses of Holders. . . . . . . . . . 52 SECTION 7.2. Preservation of Information, Communications to Holders. . . . . . . . . . . 52 SECTION 7.3. Reports by Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 SECTION 7.4. Reports by Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 ARTICLE VIII CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE . . . . . . 53 SECTION 8.1. Company May Consolidate, Etc., Only on Certain Terms. . . . . . . . . . . . 53 SECTION 8.2. Successor Corporation Substituted. . . . . . . . . . . . . . . . . . . . . 54 ARTICLE IX SUPPLEMENTAL INDENTURES . . . . . . . . . . . . 55 SECTION 9.1. Supplemental Indentures without Consent of Holders. . . . . . . . . . . . . 55 SECTION 9.2. Supplemental Indentures with Consent of Holders. . . . . . . . . . . . . . 56 SECTION 9.3. Execution of Supplemental Indentures . . . . . . . . . . . . . . . . . . . . 57 SECTION 9.4. Effect of Supplemental Indentures. . . . . . . . . . . . . . . . . . . . . 57 SECTION 9.5. Conformity with Trust Indenture Act. . . . . . . . . . . . . . . . . . . . 57 SECTION 9.6. Reference in Securities to Supplemental Indentures. . . . . . . . . . . . . 58
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Page ---- ARTICLE X COVENANTS . . . . . . . . . . . . . . . . 58 SECTION 10.1. Payment of Principal, Premium and Interest. . . . . . . . . . . . . . . . . 58 SECTION 10.2. Maintenance of Office or Agency. . . . . . . . . . . . . . . . . . . . . . 58 SECTION 10.3. Money for Security Payments to be Held in Trust. . . . . . . . . . . . . . 59 SECTION 10.4. Statement as to Compliance. . . . . . . . . . . . . . . . . . . . . . . . . 60 SECTION 10.5. Waiver of Certain Covenants. . . . . . . . . . . . . . . . . . . . . . . . 60 SECTION 10.6. Payment of Trust Costs and Expenses. . . . . . . . . . . . . . . . . . . . 60 SECTION 10.7. Additional Covenants. . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 SECTION 10.8. Calculation of Original Issue Discount. . . . . . . . . . . . . . . . . . . 62 ARTICLE XI REDEMPTION OF SECURITIES . . . . . . . . . . . . . 62 SECTION 11.1. Applicability of This Article. . . . . . . . . . . . . . . . . . . . . . . 62 SECTION 11.2. Election to Redeem; Notice to Trustee. . . . . . . . . . . . . . . . . . . 62 SECTION 11.3. Selection of Securities to be Redeemed. . . . . . . . . . . . . . . . . . . 62 SECTION 11.4. Notice of Redemption. . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 SECTION 11.5. Deposit of Redemption Price. . . . . . . . . . . . . . . . . . . . . . . . 64 SECTION 11.6. Payment of Securities Called for Redemption. . . . . . . . . . . . . . . . 64 SECTION 11.7. Right of Redemption of Securities Initially Issued to a Trust. . . . . . . 64 ARTICLE XII SINKING FUNDS . . . . . . . . . . . . . . . 65 SECTION 12.1. Applicability of Article. . . . . . . . . . . . . . . . . . . . . . . . . . 65 SECTION 12.2. Satisfaction of Sinking Fund Payments with Securities. . . . . . . . . . . 65 SECTION 12.3. Redemption of Securities for Sinking Fund. . . . . . . . . . . . . . . . . 65 ARTICLE XIII SUBORDINATION OF SECURITIES . . . . . . . . . . . . 67 SECTION 13.1. Securities Subordinate to Senior Debt. . . . . . . . . . . . . . . . . . . 67 SECTION 13.2. Payment Over of Proceeds Upon Dissolution, Etc. . . . . . . . . . . . . . . 67 SECTION 13.3. Prior Payment to Senior Debt Upon Acceleration of Securities . . . . . . . . 68 SECTION 13.4. No Payment When Senior Debt in Default. . . . . . . . . . . . . . . . . . . 69 SECTION 13.5. Payment Permitted If No Default. . . . . . . . . . . . . . . . . . . . . . 70 SECTION 13.6. Subrogation to Rights of Holders of Senior Debt. . . . . . . . . . . . . . 70
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Page ---- SECTION 13.7. Provisions Solely to Define Relative Rights. . . . . . . . . . . . . . . . . 71 SECTION 13.8. Trustee to Effectuate Subordination. . . . . . . . . . . . . . . . . . . . . 71 SECTION 13.9. No Waiver of Subordination Provisions. . . . . . . . . . . . . . . . . . . . 71 SECTION 13.10. Notice to Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 SECTION 13.11. Reliance on Judicial Order or Certificate of Liquidating Agent . . . . . . . 72 SECTION 13.12. Trustee Not Fiduciary for Holders of Senior Debt . . . . . . . . . . . . . . 73 SECTION 13.13. Rights of Trustee as Holder of Senior Debt; Preservation of Trustee's Rights 73 SECTION 13.14. Article Applicable to Paying Agents. . . . . . . . . . . . . . . . . . . . . 73 SECTION 13.15. Certain Conversions or Exchanges Deemed Payment. . . . . . . . . . . . . . . 73 SECTION 13.16. Trust Moneys Not Subordinated. . . . . . . . . . . . . . . . . . . . . . . . 73
- v - 9 JUNIOR SUBORDINATED INDENTURE, dated as of December 18, 1996, between MBNA CORPORATION, a Maryland corporation (hereinafter called the "Company") having its principal office at Wilmington, Delaware 19884, and THE BANK OF NEW YORK, a New York banking corporation, as Trustee (hereinafter called the "Trustee"). RECITALS OF THE COMPANY The Company has duly authorized the execution and delivery of this Indenture to provide for the issuance from time to time of its unsecured junior subordinated debt securities in one or more series (hereinafter called the "Securities") of substantially the tenor hereinafter provided, including, without limitation, Securities issued to evidence loans made to the Company of the proceeds from the issuance from time to time by one or more business trusts (each a "Trust," and, collectively, the "Trusts") of preferred beneficial ownership interests in such Trusts (the "Preferred Securities") and common beneficial ownership interests in such Trusts (the "Common Securities" and, collectively with the Preferred Securities, the "Trust Securities"), and to provide the terms and conditions upon which the Securities are to be authenticated, issued and delivered. All things necessary to make the Securities, when executed by the Company and authenticated and delivered hereunder and duly issued by the Company, the valid obligations of the Company, and to make this Indenture a valid agreement of the Company, enforceable in accordance with their and its terms, have been done. NOW THEREFORE, THIS INDENTURE WITNESSETH: For and in consideration of the premises and the purchase of the Securities by the Holders thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of the Securities or of any series thereof, as follows: ARTICLE I DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION Section 1.1. Definitions. For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires: (1) The terms defined in this Article have the meanings assigned to them in this Article, and include the plural as well as the singular; (2) All other terms used herein which are defined in the Trust Indenture Act, either directly or by reference therein, have the meanings assigned to them therein; (3) All accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles, and the term "generally accepted accounting principles" with respect to any computation required or permitted hereunder shall 10 2 mean such accounting principles which are generally accepted at the date or time of such computation; provided, that when two or more principles are so generally accepted, it shall mean that set of principles consistent with those in use by the Company; and (4) The words "herein," "hereof" and "hereunder" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision. "Act" when used with respect to any Holder has the meaning specified in Section 1.4. "Additional Interest" means the interest, if any, that shall accrue on any interest on the Securities of any series the payment of which has not been made on the applicable Interest Payment Date and which shall accrue at the rate per annum specified or determined as specified in such Security from the applicable Interest Payment Date. "Administrative Trustee" means, in respect of any Trust, each Person identified as an "Administrative Trustee" in the related Trust Agreement, solely in such Person's capacity as Administrative Trustee of such Trust under such Trust Agreement and not in such Person's individual capacity, or any successor administrative trustee appointed as therein provided. "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person; provided, however, no Trust to which Securities have been issued shall be deemed to be an Affiliate of the Company. For the purposes of this definition, "control" when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. "Authenticating Agent" means any Person authorized by the Trustee pursuant to Section 6.14 to act on behalf of the Trustee to authenticate Securities of one or more series. "Board of Directors" means either the board of directors of the Company or any committee of that board duly authorized to act hereunder. "Board Resolution" means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by the Board of Directors, or such committee of the Board of Directors or officers of the Company to which authority to act on behalf of the Board of Directors has been delegated, and to be in full force and effect on the date of such certification, and delivered to the Trustee. "Business Day" means any day other than (i) a Saturday or Sunday, (ii) a day on which banking institutions in The City of New York are authorized or required by law or executive order to remain closed or (iii) a day on which the Corporate Trust Office of the Trustee, or, with respect to the Securities of a series initially issued to a Trust, the principal office of the Property Trustee under the related Trust Agreement, is closed for business. 11 3 "Capital Treatment Event" with respect to a Trust means the reasonable determination by the Company that, as a result of any amendment to, or change (including any proposed change) in, the laws (or any regulations thereunder) of the United States or any political subdivision thereof or therein, or as a result of any official or administrative pronouncement or action or judicial decision interpreting or applying such laws or regulations, which amendment or change is effective, or which proposed change, pronouncement, action or decision is announced, on or after the date of issuance of the Preferred Securities of such Trust, there is more than an insubstantial risk that the Company will not be entitled to treat an amount equal to the Liquidation Amount (as defined in the related Trust Agreement) of such Preferred Securities as "Tier 1 Capital" (or the then equivalent thereof) for purposes of the capital adequacy guidelines of the Federal Reserve, as then in effect and applicable to the Company. "Commission" means the Securities and Exchange Commission, as from time to time constituted, created under the Exchange Act, or if at any time after the execution of this Indenture such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties at such time. "Common Securities" has the meaning specified in the first recital of this Indenture. "Common Stock" means the common stock, par value $0.01 per share, of the Company. "Company" means the Person named as the "Company" in the first paragraph of this Indenture until a successor Person shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Company" shall mean such successor Person. "Company Request" and "Company Order" mean, respectively, the written request or order signed in the name of the Company by the Chairman of the Board of Directors, the Vice Chairman of the Board of Directors, its President or a Vice President, and by its Controller, an Assistant Controller, its Secretary or an Assistant Secretary of the Company, and delivered to the Trustee. "Corporate Trust Office" means the principal office of the Trustee at which at any particular time its corporate trust business shall be administered, which at the date hereof is 101 Barclay Street, Floor 21 West, New York, New York 10286. "corporation" includes a corporation, association, company, joint-stock company or business trust. "Debt" means, with respect to any Person, whether recourse is to all or a portion of the assets of such Person and whether or not contingent, (i) every obligation of such Person for money borrowed; (ii) every obligation of such Person evidenced by bonds, debentures, notes or other similar instruments, including obligations incurred in connection with the acquisition of property, assets or businesses; (iii) every reimbursement obligation of such Person with respect to letters of credit, bankers' acceptances or similar facilities issued for the account of such Person; (iv) every obligation of such Person issued or assumed as the deferred purchase price of property or services (but excluding trade accounts payable or accrued liabilities arising in the 12 4 ordinary course of business); (v) every capital lease obligation of such Person; (vi) every obligation of such Person for claims in respect of derivative products, including interest rate, foreign exchange rate and commodity forward contracts, options and swaps and similar arrangements; and (vii) every obligation of the type referred to in clauses (i) through (vi) of another Person and all dividends of another Person the payment of which, in either case, such Person has guaranteed or is responsible or liable for, directly or indirectly, as obligor or otherwise. "Defaulted Interest" has the meaning specified in Section 3.7. "Depositary" means, with respect to the Securities of any series issuable or issued in whole or in part in the form of one or more Global Securities, the Person designated as Depositary by the Company pursuant to Section 3.1 with respect to such series (or any successor thereto). "Discount Security" means any security which provides for an amount less than the principal amount thereof to be due and payable upon a declaration of acceleration of the Maturity thereof pursuant to Section 5.2. "Distributions," with respect to the Trust Securities issued by a Trust, means amounts payable in respect of such Trust Securities as provided in the related Trust Agreement and referred to therein as "Distributions." "Dollar" means the currency of the United States of America that, as at the time of payment, is legal tender for the payment of public and private debts. "Event of Default" unless otherwise specified in the supplemental indenture creating a series of Securities has the meaning specified in Article V. "Exchange Act" means the Securities Exchange Act of 1934 and any statute successor thereto, in each case as amended from time to time. "Expiration Date" has the meaning specified in Section 1.4(f). "Extension Period" has the meaning specified in Section 3.11. "Federal Reserve" means the Board of Governors of the Federal Reserve System, as from time to time constituted, or if at any time after the execution of this Indenture the Federal Reserve is not existing and performing the duties now assigned to it, then the body performing such duties at such time. "Global Security" means a Security in the form prescribed in Section 2.4 evidencing all or part of a series of Securities, issued to the Depositary or its nominee for such series and registered in the name of such Depositary or its nominee. 13 5 "Guarantee", with respect to the Trust Securities issued by a Trust, means the guarantee by the Company of Distributions on such Trust Securities to the extent provided in the Guarantee Agreement. "Guarantee Agreement", with respect to the Trust Securities issued by a Trust, means the Guarantee Agreement substantially in the form attached hereto as Annex C, or substantially in such form as may be specified as contemplated by Section 3.1 with respect to the Securities of any series, in each case as amended from time to time. "Holder" means a Person in whose name a Security is registered in the Securities Register. "Indenture" means this instrument as originally executed or as it may from time to time be supplemented or amended by one or more indentures supplemental hereto entered into pursuant to the applicable provisions hereof and shall include the terms of each particular series of Securities established as contemplated by Section 3.1. "Interest Payment Date" means as to each series of Securities the Stated Maturity of an installment of interest on such Securities. "Junior Subordinated Payment" has the meaning specified in Section 13.2. "Maturity" when used with respect to any Security means the date on which the principal of such Security becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration, call for redemption or otherwise. "Moody's" means Moody's Investors Service, Inc. or any successor thereof. "Notice of Default" means a written notice of the kind specified in Section 5.1(3). "Officers' Certificate" means a certificate signed by the Chairman of the Board of Directors , a Vice Chairman of the Board of Directors, the President or a Vice President, and by the Controller, an Assistant Controller, the Secretary or an Assistant Secretary of the Company, and delivered to the Trustee. "Opinion of Counsel" means a written opinion of counsel, who may be counsel for the Company, and who shall be acceptable to the Trustee. "Original Issue Date" with respect to a Security means the date of issuance specified as such in such Security. "Outstanding" means, when used in reference to any Securities, as of the date of determination, all Securities theretofore authenticated and delivered under this Indenture, except: (i) Securities theretofore canceled by the Trustee or delivered to the Trustee for cancellation; 14 6 (ii) Securities for whose payment or redemption price money in the necessary amount has been theretofore deposited with the Trustee or any Paying Agent in trust for the Holders of such Securities; and (iii) Securities in substitution for or in lieu of which other Securities have been authenticated and delivered or which have been paid pursuant to Section 3.6, unless proof satisfactory to the Trustee is presented that any such Securities are held by Holders in whose hands such Securities are valid, binding and legal obligations of the Company; provided, however, that in determining whether the Holders of the requisite principal amount of Outstanding Securities have given any request, demand, authorization, direction, notice, consent or waiver hereunder, Securities owned by the Company or any other obligor upon the Securities or any Affiliate of the Company or such other obligor shall be disregarded and deemed not to be Outstanding, except that, in determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Securities which the Trustee actually knows to be so owned shall be so disregarded. Securities so owned which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to such Securities and that the pledgee is not the Company or any other obligor upon the Securities or any Affiliate of the Company or such other obligor. Upon the written request of the Trustee, the Company shall furnish to the Trustee promptly an Officers' Certificate listing and identifying all Securities, if any, known by the Company to be owned or held by or for the account of the Company or any other obligor on the Securities or any Affiliate of the Company or such obligor, and, subject to the provisions of Section 6.1, the Trustee shall be entitled to accept such Officers' Certificate as conclusive evidence of the facts therein set forth and of the fact that all Securities not listed therein are Outstanding for the purpose of any such determination. "Paying Agent" means the Trustee or any Person authorized by the Company to pay the principal of (or premium, if any) or interest on any Securities on behalf of the Company. "Person" means any individual, corporation, partnership, joint venture, trust, unincorporated organization or government or any agency or political subdivision thereof. "Place of Payment" means, with respect to the Securities of any series, the place or places where the principal of (and premium, if any) and interest on the Securities of such series are payable pursuant to Sections 3.1 and 3.11. "Predecessor Security" of any particular Security means every previous Security evidencing all or a portion of the same debt as that evidenced by such particular Security; and, for the purposes of this definition, any Security authenticated and delivered under Section 3.6 in lieu of a lost, destroyed or stolen Security shall be deemed to evidence the same debt as the lost, destroyed or stolen Security. "Preferred Securities" has the meaning specified in the first recital of this Indenture. "Proceeding" has the meaning specified in Section 13.2. 15 7 "Property Trustee" means, in respect of any Trust, the commercial bank or trust company identified as the "Property Trustee" in the related Trust Agreement, solely in its capacity as Property Trustee of such Trust under such Trust Agreement and not in its individual capacity, or its successor in interest in such capacity, or any successor property trustee appointed as therein provided. "Redemption Date," when used with respect to any Security to be redeemed, means the date fixed for such redemption by or pursuant to this Indenture. "Redemption Price," when used with respect to any Security to be redeemed, means the price at which it is to be redeemed pursuant to this Indenture. "Regular Record Date" for the interest payable on any Interest Payment Date with respect to the Securities of a series means, unless otherwise provided pursuant to Section 3.1 with respect to Securities of a series, (i) in the case of Securities of a series represented by one or more Global Securities, the Business Day next preceding such Interest Payment Date and (ii) in the case of Securities of a series not represented by one or more Global Securities, the date which is fifteen days next preceding such Interest Payment Date (whether or not a Business Day). "Responsible Officer" when used with respect to the Trustee means any officer of the Trustee assigned by the Trustee from time to time to administer its corporate trust matters. "Rights Plan" means a plan of the Company providing for the issuance by the Company to all holders of its Common Stock of rights entitling the holders thereof to subscribe for or purchase shares of Common Stock or any class or series of preferred stock of the Company, which rights (i) are deemed to be transferred with such shares of Common Stock, (ii) are not exercisable and (iii) are also issued in respect of future issuances of Common Stock, in each case until the occurrence of a specified event or events. "S&P" means Standard & Poor's Ratings Services, a division of McGraw Hill, or any successor thereof. "Securities" or "Security" means any debt securities or debt security, as the case may be, authenticated and delivered under this Indenture. "Securities Register" and "Securities Registrar" have the respective meanings specified in Section 3.5. "Senior Debt" means the principal of (and premium, if any) and interest, if any (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization relating to the Company whether or not such claim for post-petition interest is allowed in such proceeding), on Debt of the Company, whether incurred on or prior to the date of this Indenture or thereafter incurred, unless, in the instrument creating or evidencing the same or pursuant to which the same is outstanding, it is provided that such obligations are not superior in right of payment to the Securities or to other Debt which is pari passu with, or subordinated to, the Securities, provided, however, that Senior Debt shall not be deemed to include (a) any Debt of 16 8 the Company which, when incurred and without respect to any election under Section 1111(b) of the Bankruptcy Reform Act of 1978, was without recourse to the Company, (b) any Debt of the Company to any of its Subsidiaries, (c) Debt to any employee of the Company, (d) Debt which by its terms is subordinated to trade accounts payable or accrued liabilities arising in the ordinary course of business to the extent that payments made to the holders of such Debt by the holders of the Securities as a result of the subordination provisions of this Indenture would be greater than such payments otherwise would have been (absent giving effect to this clause (d)) as a result of any obligation of such holders of such Debt to pay amounts over to the obligees on such trade accounts payable or accrued liabilities arising in the ordinary course of business as a result of subordination provisions to which such Debt is subject, and (e) any Securities. "Special Record Date" for the payment of any Defaulted Interest means a date fixed by the Trustee pursuant to Section 3.7. "Stated Maturity" when used with respect to any Security or any installment of principal thereof or interest thereon means the date specified pursuant to the terms of such Security as the date on which the principal of such Security or such installment of interest is due and payable, in the case of such principal, as such date may be shortened or extended as provided pursuant to the terms of such Security and this Indenture. "Subsidiary" means a corporation more than 50% of the outstanding voting stock of which is owned, directly or indirectly, by the Company or by one or more other Subsidiaries, or by the Company and one or more other Subsidiaries. For purposes of this definition, "voting stock" means stock which ordinarily has voting power for the election of directors, whether at all times or only so long as no senior class of stock has such voting power by reason of any contingency. "Tax Event" with respect to a Trust means the receipt by such Trust of an Opinion of Counsel (as defined in the relevant Trust Agreement) experienced in such matters to the effect that, as a result of any amendment to, or change (including any announced proposed change) in, the laws (or any regulations thereunder) of the United States or any political subdivision or taxing authority thereof or therein, or as a result of any official administrative pronouncement or judicial decision interpreting or applying such laws or regulations, which amendment or change is effective, or which proposed change, pronouncement or decision is announced, on or after the date of issuance of the Preferred Securities of such Trust, there is more than an insubstantial risk that (i) such Trust is, or will be within 90 days of the date of such Opinion of Counsel, subject to United States federal income tax with respect to income received or accrued on the corresponding series of Securities issued by the Company to such Trust, (ii) interest payable by the Company on such corresponding series of Securities is not, or within 90 days of the date of such Opinion of Counsel, will not be, deductible by the Company, in whole or in part, for United States federal income tax purposes or (iii) such Trust is, or will be within 90 days of the date of such Opinion of Counsel, subject to more than a de minimis amount of other taxes, duties or other governmental charges. "Trust" has the meaning specified in the first recital of this Indenture. 17 9 "Trust Agreement", with respect to a Trust, means a Trust Agreement substantially in the form attached hereto as Annex A, as amended by the form of Amended and Restated Trust Agreement substantially in the form attached hereto as Annex B, or substantially in such form as may be specified as contemplated by Section 3.1 with respect to the Securities of any series, in each case as amended from time to time. "Trustee" means the Person named as the "Trustee" in the first paragraph of this instrument until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Trustee" shall mean or include each Person who is then a Trustee hereunder and, if at any time there is more than one such Person, "Trustee" as used with respect to the Securities of any series shall mean the Trustee with respect to Securities of that series. "Trust Indenture Act" means the Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbb), as amended and as in effect on the date as of this Indenture, except as provided in Section 9.5. "Trust Securities" has the meaning specified in the first recital of this Indenture. "Vice President", when used with respect to the Company means any duly appointed vice president, whether or not designated by a number or a word or words added before or after the title "vice president." Section 1.2. Compliance Certificate and Opinions. Upon any application or request by the Company to the Trustee to take any action under any provision of this Indenture, the Company shall furnish to the Trustee an Officers' Certificate stating that all conditions precedent (including covenants, compliance with which constitutes a condition precedent), if any, provided for in this Indenture relating to the proposed action have been complied with and an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent (including covenants compliance with which constitute a condition precedent), if any, have been complied with, except that in the case of any such application or request as to which the furnishing of such documents is specifically required by any provision of this Indenture relating to such particular application or request, no additional certificate or opinion need be furnished. Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (other than the certificates provided pursuant to Section 10.5) shall include: (1) a statement that each individual signing such certificate or opinion has read such covenant or condition and the definitions herein relating thereto; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; 18 10 (3) a statement that, in the opinion of each such individual, he has made or caused to be made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with. Section 1.3. Forms of Documents Delivered to Trustee. In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents. Any certificate or opinion of an officer of the Company may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer or counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to the matters upon which such certificate or opinion is based are erroneous. Any Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Company stating that the information with respect to such factual matters is in the possession of the Company, unless such counsel rendering such Opinion of Counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters are erroneous. Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions, or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument. Section 1.4. Acts of Holders. (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given to or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by an agent or proxy duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments is or are delivered to the Trustee, and, where it is hereby expressly required, to the Company. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent or proxy shall be sufficient for any purpose of this Indenture and (subject to Section 6.1) conclusive in favor of the Trustee and the Company, if made in the manner provided in this Section. 19 11 (b) The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by the certificate of any notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof. Where such execution is by a Person acting in a capacity other than his individual capacity, such certificate or affidavit shall also constitute sufficient proof of his authority. (c) The fact and date of the execution by any Person of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner which the Trustee deems sufficient and in accordance with such reasonable rules as the Trustee may determine. (d) The ownership of Securities shall be proved by the Securities Register. (e) Any request, demand, authorization, direction, notice, consent, waiver or other action by the Holder of any Security shall bind every future Holder of the same Security and the Holder of every Security issued upon the transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, omitted or suffered to be done by the Trustee or the Company in reliance thereon, whether or not notation of such action is made upon such Security. (f) The Company may set any day as a record date for the purpose of determining the Holders of Outstanding Securities entitled to give, make or take any request, demand, authorization, direction, notice, consent, waiver or other action provided or permitted by this Indenture to be given, made or taken by Holders of Securities of such series, provided that the Company may not set a record date for, and the provisions of this paragraph shall not apply with respect to, the giving or making of any notice, declaration, request or direction referred to in the next paragraph. If any record date is set pursuant to this paragraph, the Holders of the relevant Outstanding Securities on such record date, and no other Holders, shall be entitled to take the relevant action, whether or not such Holders remain Holders after such record date, provided that no such action shall be effective hereunder unless taken on or prior to the applicable Expiration Date by Holders of the requisite principal amount of the relevant Outstanding Securities on such record date. Nothing in this paragraph shall be construed to prevent the Company from setting a new record date for any action for which a record date has previously been set pursuant to this paragraph (whereupon the record date previously set shall automatically and with no action by any Person be cancelled and of no effect), and nothing in this paragraph shall be construed to render ineffective any action taken by Holders of the requisite principal amount of the relevant Outstanding Securities on the date such action is taken. Promptly after any record date is set pursuant to this paragraph, the Company, at its own expense, shall cause notice of such record date, the proposed action by Holders and the applicable Expiration Date to be given to the Trustee in writing and to each Holder of the relevant Securities in the manner set forth in Section 1.6. The Trustee may set any day as a record date for the purpose of determining the Holders of Outstanding Securities entitled to join in the giving or making of (i) any Notice of Default, (ii) any declaration of acceleration referred to in Section 5.2, (iii) any request to institute proceedings referred to in Section 5.7(2) or (iv) any direction referred to in Section 5.12, in each 20 12 case with respect to the relevant Securities. If any record date is set pursuant to this paragraph, the Holders of the relevant Outstanding Securities on such record date, and no other Holders, shall be entitled to join in such notice, declaration, request or direction, whether or not such Holders remain Holders after such record date, provided that no such action shall be effective hereunder unless taken on or prior to the applicable Expiration Date by Holders of the requisite principal amount of the relevant Outstanding Securities on such record date. Nothing in this paragraph shall be construed to prevent the Trustee from setting a new record date for any action for which a record date has previously been set pursuant to this paragraph (whereupon the record date previously set shall automatically and with no action by any Person be cancelled and of no effect), and nothing in this paragraph shall be construed to render ineffective any action taken by Holders of the requisite principal amount of the relevant Outstanding Securities on the date such action is taken. Promptly after any record date is set pursuant to this paragraph, the Trustee, at the Company's expense, shall cause notice of such record date, the proposed action by Holders and the applicable Expiration Date to be given to the Company in writing and to each Holder of the relevant Securities in the manner set forth in Section 1.6. With respect to any record date set pursuant to this Section, the party hereto which sets such record date may designate any day as the "Expiration Date" and from time to time may change the Expiration Date to any earlier or later day, provided that no such change shall be effective unless notice of the proposed new Expiration Date is given to the other party hereto in writing, and to each Holder of the relevant Outstanding Securities in the manner set forth in Section 1.6, on or prior to the existing Expiration Date. If an Expiration Date is not designated with respect to any record date set pursuant to this Section, the party hereto which set such record date shall be deemed to have initially designated the 180th day after such record date as the Expiration Date with respect thereto, subject to its right to change the Expiration Date as provided in this paragraph. Notwithstanding the foregoing, no Expiration Date shall be later than the 180th day after the applicable record date. (g) Without limiting the foregoing, a Holder entitled hereunder to take any action hereunder with regard to any particular Security may do so with regard to all or any part of the principal amount of such Security or by one or more duly appointed agents each of which may do so pursuant to such appointment with regard to all or any part of such principal amount. Section 1.5. Notices, Etc. to Trustee and Company. Any request, demand, authorization, direction, notice, consent, waiver or Act of Holders or other document provided or permitted by this Indenture to be made upon, given or furnished to, or filed with, (1) the Trustee by any Holder, any holder of Preferred Securities or the Company shall be sufficient for every purpose hereunder if made, given, furnished or filed in writing to or with the Trustee at its Corporate Trust Office, or (2) the Company by the Trustee, any Holder or any holder of Preferred Securities shall be sufficient for every purpose (except as otherwise provided in Section 5.1) hereunder if in writing and mailed, first class, postage prepaid, to the Company addressed to it at the address of 21 13 its principal office specified in the first paragraph of this instrument or at any other address previously furnished in writing to the Trustee by the Company. Section 1.6. Notice to Holders; Waiver. Where this Indenture provides for notice to Holders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first class postage prepaid, to each Holder affected by such event, at the address of such Holder as it appears in the Securities Register, not later than the latest date, and not earlier than the earliest date, prescribed for the giving of such notice. In any case where notice to Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. Section 1.7. Conflict with Trust Indenture Act. If any provision of this Indenture limits, qualifies or conflicts with the duties imposed by any of Sections 310 to 317, inclusive, of the Trust Indenture Act through operation of Section 318(c) thereof, such imposed duties shall control. Section 1.8. Effect of Headings and Table of Contents. The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof. Section 1.9. Successors and Assigns. All covenants and agreements in this Indenture by the Company shall bind its successors and assigns, whether so expressed or not. Section 1.10. Separability Clause. In case any provision of this Indenture or in the Securities shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. Section 1.11 Benefits of Indenture. Nothing in this Indenture or in the Securities, express or implied, shall give to any Person, other than the parties hereto and their successors and assigns, the holders of Senior Debt, the Holders of the Securities and, to the extent expressly provided in Sections 5.2, 5.8, 5.9, 5.11, 22 14 5.13, 9.1 and 9.2, the holders of Preferred Securities, any benefit or any legal or equitable right, remedy or claim under this Indenture. Section 1.12. Governing Law. THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES THEREOF. Section 1.13. Non-Business Days. In any case where any Interest Payment Date, Redemption Date or Stated Maturity of any Security shall not be a Business Day, then (notwithstanding any other provision of this Indenture or the Securities) payment of interest or principal (and premium, if any) need not be made on such date, but may be made on the next succeeding Business Day (and no interest shall accrue for the period from and after such Interest Payment Date, Redemption Date or Stated Maturity, as the case may be, until such next succeeding Business Day) except that, if such Business Day is in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day (in each case with the same force and effect as if made on the Interest Payment Date or Redemption Date or at the Stated Maturity). ARTICLE II SECURITY FORMS SECTION 2.1. FORMS GENERALLY. The Securities of each series and the Trustee's certificate of authentication shall be in substantially the forms set forth in this Article, or in such other form or forms as shall be established by or pursuant to a Board Resolution or in one or more indentures supplemental hereto, in each case with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be required to comply with applicable tax laws or the rules of any securities exchange or automated quotation system on which the Securities may be listed or traded or as may, consistently herewith, be determined by the officers executing such Securities, as evidenced by their execution of the Securities. If the form of Securities of any series is established by action taken pursuant to a Board Resolution, a copy of an appropriate record of such action shall be certified by the Secretary or an Assistant Secretary of the Company and delivered to the Trustee at or prior to the delivery of the Company Order contemplated by Section 3.3 with respect to the authentication and delivery of such Securities. The Trustee's certificates of authentication shall be substantially in the form set forth in this Article. 23 15 The definitive Securities shall be typewritten, printed, lithographed or engraved or produced by any combination of these methods, if required by any securities exchange or automated quotation system on which the Securities may be listed or traded, on a steel engraved border or steel engraved borders or may be produced in any other manner permitted by the rules of any securities exchange or automated quotation system on which the Securities may be listed or traded, all as determined by the officers executing such Securities, as evidenced by their execution of such securities. Section 2.2. Form of Face of Security. This Security is not a deposit and is not insured by the Federal Deposit Insurance Corporation or any other governmental agency. MBNA CORPORATION CUSIP ____ __% JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES No. $ MBNA CORPORATION, a corporation organized and existing under the laws of the state of Maryland (hereinafter called the "Company", which term includes any successor corporation under the Indenture hereinafter referred to), for value received, hereby promises to pay to , or registered assigns, the principal sum of Dollars on __________ __, ____[; provided that the Company may, subject to certain conditions set forth in Section 3.14 of the Indenture, (i) shorten the Stated Maturity of the principal of this Security to a date not earlier than __________, and (ii) extend the Stated Maturity of the principal of this Security at any time on one or more occasions, but in no event to a date later than __________]. The Company further promises to pay interest on said principal sum from , or from the most recent interest payment date (each such date, an "Interest Payment Date") on which interest has been paid or duly provided for, [monthly] [quarterly] [semi-annually] [if applicable, insert - (subject to deferral as set forth herein)] in arrears on [insert applicable Interest Payment Dates] of each year, commencing , , at the rate of % per annum, until the principal hereof shall have become due and payable, [if applicable, insert plus Additional Interest, if any,] until the principal hereof is paid or duly provided for or made available for payment [if applicable, insert -and on any overdue principal and (without duplication and to the extent that payment of such interest is enforceable under applicable law) on any overdue installment of interest at the rate of % per annum, compounded [monthly] [quarterly] [semi-annually]. The amount of interest payable for any period shall be computed on the basis of twelve 30-day months and a 360-day year. The amount of interest payable for any partial period shall be computed on the basis of the number of days elapsed in a 360-day year of twelve 30-day months. In the event that any date on which interest is payable on this Security is not a Business Day, then a payment of the interest payable on such date will be made on the next succeeding day which is a Business Day (and without any interest or other payment in respect of any such delay), except that, if such Business Day is in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case with the same force and effect as if made on the date the payment was originally payable. A "Business Day" shall mean any day other than (i) a Saturday or Sunday, (ii) a day on which banking institutions in The City 24 16 of New York are authorized or required by law or executive order to remain closed or (iii) a day on which the Corporate Trust Office of the Trustee [if applicable, insert, or the principal office of the Property Trustee under the Trust Agreement hereinafter referred to for MBNA Capital _,] is closed for business. The interest installment so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in the Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities is registered at the close of business on the Regular Record Date for such interest installment, which shall be the [insert definition of Regular Record Dates]. Any such interest installment not so punctually paid or duly provided for shall forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Securities of this series not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange or automated quotation system on which the Securities of this series may be listed or traded, and upon such notice as may be required by such exchange or self-regulatory organization, all as more fully provided in said Indenture. [If applicable, insert - So long as no Event of Default has occurred and is continuing, the Company shall have the right at any time during the term of this Security to defer payment of interest on this Security, at any time or from time to time, for up to consecutive [monthly] [quarterly] [semi-annual] interest payment periods with respect to each deferral period (each an "Extension Period"), and at the end of which the Company shall pay all interest then accrued and unpaid (together with Additional Interest thereon to the extent permitted by applicable law); provided, however, that no Extension Period shall extend beyond the Stated Maturity of the principal of this Security; provided, further, that during any such Extension Period, the Company shall not, and shall not permit any Subsidiary of the Company to, (i) declare or pay any dividends or distributions on or redeem, purchase, acquire or make a liquidation payment with respect to, any of the Company's capital stock or (ii) make any payment of principal of or interest or premium, if any, on or repay, repurchase or redeem any debt security of the Company that ranks pari passu with or junior in interest to this Security or (iii) make any guarantee payments with respect to any guarantee by the Company of the debt securities of any Subsidiary of the Company if such guarantee ranks pari passu with or junior in interest to this Security (other than (a) dividends or distributions in the Company's capital stock, (b) any declaration of a dividend in connection with the implementation of a Rights Plan or the redemption or repurchase of any rights distributed pursuant to a Rights Plan, (c) payments under the Guarantee with respect to any Trust Security relating to this Security, and (d) purchases of Common Stock related to the issuance of Common Stock or rights under any of the Company's benefit plans for its directors, officers or employees, related to the issuance of Common Stock or rights under a dividend reinvestment and stock purchase plan, or related to the issuance of Common Stock (or securities convertible into or exchangeable for Common Stock) as consideration in an acquisition transaction that was entered into prior to the commencement of such Extension Period). Prior to the termination of any such Extension Period, the Company may further defer the payment of interest, provided that no Extension Period shall exceed __ consecutive [months] [quarters] [semi-annual] periods or extend beyond the Stated Maturity of the principal of this Security. Upon the termination of any such Extension Period and upon the payment of all accrued and 25 17 unpaid interest and any Additional Interest then due, the Company may elect to begin a new Extension Period, subject to the above requirements. No interest shall be due and payable during an Extension Period except at the end thereof. The Company shall give the Holder of this Security and the Trustee notice of its election to begin any Extension Period at least one Business Day prior to the next succeeding Interest Payment Date on which interest on this Security would be payable but for such deferral [if applicable, insert - or, with respect to the Securities issued to a Trust, so long as such Securities are held by such Trust, prior to the earlier of (i) the next succeeding date on which Distributions on the Preferred Securities would be payable but for such deferral or (ii) the date the Administrative Trustees are required to give notice to any securities exchange or other applicable self-regulatory organization or to holders of such Preferred Securities of the record date or the date such Distributions are payable, but in any event not less than one Business Day prior to such record date]]. Payment of principal of (and premium, if any) and interest on this Security will be made at the office or agency of the Company maintained for that purpose in the United States, in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts [if applicable, insert -; provided, however, that at the option of the Company payment of interest may be made (i) by check mailed to the address of the Person entitled thereto as such address shall appear in the Securities Register or (ii) by wire transfer in immediately available funds at such place and to such account as may be designated in writing at least 15 days before the relevant Interest Payment Date by the Person entitled thereto as specified in the Securities Register]. The indebtedness evidenced by this Security is, to the extent provided in the Indenture, subordinate and subject in right of payments to the prior payment in full of all Senior Debt, and this Security is issued subject to the provisions of the Indenture with respect thereto. Each Holder of this Security, by accepting the same, (a) agrees to and shall be bound by such provisions, (b) authorizes and directs the Trustee on his behalf to take such actions as may be necessary or appropriate to effectuate the subordination so provided and (c) appoints the Trustee his attorney-in-fact for any and all such purposes. Each Holder hereof, by his acceptance hereof, waives all notice of the acceptance of the subordination provisions contained herein and in the Indenture by each holder of Senior Debt, whether now outstanding or hereafter incurred, and waives reliance by each such holder upon said provisions. Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. 26 18 IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed under its corporate seal. MBNA CORPORATION By: ------------------------------------- [Chief Executive Officer, President or Vice President] Attest: - ------------------------------------------------- [Secretary or Assistant Secretary] Section 2.3. Form of Reverse of Security. This Security is one of a duly authorized issue of securities of the Company (herein called the "Securities"), issued and to be issued in one or more series under a Junior Subordinated Indenture, dated as of December [__], 1996 (herein called the "Indenture"), between the Company and The Bank of New York, as Trustee (herein called the "Trustee", which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Trustee, the Company and the Holders of the Securities, and of the terms upon which the Securities are, and are to be, authenticated and delivered. This Security is one of the series designated on the face hereof [, limited in aggregate principal amount to $ ]. All terms used in this Security that are defined in the Indenture [if applicable, insert -or in the Amended and Restated Trust Agreement, dated as of _______ __, 1996, as amended (the "Trust Agreement"), for [MBNA Capital ,] among MBNA Corporation, as Depositor, and the Trustees named therein, shall have the meanings assigned to them in the Indenture [if applicable, insert -or the Trust Agreement, as the case may be]. [If applicable, insert--The Company may at any time, at its option, on or after _________, ____, and subject to the terms and conditions of Article XI of the Indenture, redeem this Security in whole at any time or in part from time to time, without premium or penalty, at a redemption price equal to 100% of the principal amount thereof plus accrued and unpaid interest [if applicable, insert -including Additional Interest, if any,] to the Redemption Date.] [If applicable, insert -Upon the occurrence and during the continuation of a Tax Event or a Capital Treatment Event in respect of a Trust, the Company may, at its option, at any time within 90 days of the occurrence of such Tax Event or Capital Treatment Event redeem this Security, in whole but not in part, subject to the provisions of Section 11.7 and the other provisions of Article XI of the Indenture, at a redemption price equal to 100% of the principal 27 19 amount thereof plus accrued and unpaid interest, including Additional Interest, if any, to the Redemption Date.] In the event of redemption of this Security in part only, a new Security or Securities of this series for the unredeemed portion hereof will be issued in the name of the Holder hereof upon the cancellation hereof. The Indenture contains provisions for satisfaction and discharge of the entire indebtedness of this Security upon compliance by the Company with certain conditions set forth in the Indenture. The Indenture permits, with certain exceptions as therein provided, the Company and the Trustee at any time to enter into a supplemental indenture or indentures for the purpose of modifying in any manner the rights and obligations of the Company and of the Holders of the Securities, with the consent of the Holders of not less than a majority in principal amount of the Outstanding Securities of all series to be affected by such supplemental indenture. The Indenture also contains provisions permitting Holders of specified percentages in principal amount of the Securities of all series at the time Outstanding, on behalf of the Holders of all Securities of such series, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security. [If the Security is not a Discount Security, -As provided in and subject to the provisions of the Indenture, if an Event of Default with respect to the Securities of this series at the time Outstanding occurs and is continuing, then and in every such case the Trustee or the Holders of not less than 25% in principal amount of the Outstanding Securities of this series may declare the principal amount of all the Securities of this series to be due and payable immediately, by a notice in writing to the Company (and to the Trustee if given by Holders), provided that, in the case of the Securities of this series issued to a Trust, if upon an Event of Default, the Trustee or the Holders of not less than 25% in principal amount of the Outstanding Securities of this series fails to declare the principal of all the Securities of this series to be immediately due and payable, the holders of at least 25% in aggregate Liquidation Amount of the Preferred Securities then outstanding shall have such right by a notice in writing to the Company and the Trustee; and upon any such declaration the principal amount of and the accrued interest (including any Additional Interest) on all the Securities of this series shall become immediately due and payable, provided that the payment of principal and interest (including any Additional Interest) on such Securities shall remain subordinated to the extent provided in Article XIII of the Indenture.] [If the Security is a Discount Security, -As provided in and subject to the provisions of the Indenture, if an Event of Default with respect to the Securities of this series at the time Outstanding occurs and is continuing, then and in every such case the Trustee or the Holders of not less than such portion of the principal amount as may be specified in the terms of this series may declare an amount of principal of the Securities of this series to be due and payable 28 20 immediately, by a notice in writing to the Company (and to the Trustee if given by Holders), provided that, in the case of the Securities of this series issued to a Trust, if upon an Event of Default, the Trustee or the Holders of not less than 25% in principal amount of the Outstanding Securities of this series fails to declare the principal of all the Securities of this series to be immediately due and payable, the holders of at least 25% in aggregate Liquidation Amount of the Preferred Securities then outstanding shall have such right by a notice in writing to the Company and the Trustee. Such amount shall be equal to - insert formula for determining the amount. Upon any such declaration, such amount of the principal of and the accrued interest (including any Additional Interest) on all the Securities of this series shall become immediately due and payable, provided that the payment of principal and interest (including any Additional Interest) on such Securities shall remain subordinated to the extent provided in Article XIII of the Indenture. Upon payment (i) of the amount of principal so declared due and payable and (ii) of interest on any overdue principal and overdue interest (in each case to the extent that the payment of such interest shall be legally enforceable), all of the Company's obligations in respect of the payment of the principal of and interest, if any, on this Security shall terminate.] No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of (and premium, if any) and interest on this Security at the times, place and rate, and in the coin or currency, herein prescribed. As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security is registrable in the Securities Register, upon surrender of this Security for registration of transfer at the office or agency of the Company maintained under Section 10.2 of the Indenture duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Securities Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Securities of this series, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees. No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. Prior to due presentment of this Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. The Securities of this series are issuable only in registered form without coupons in denominations of $ and any integral multiple thereof. As provided in the Indenture and subject to certain limitations therein set forth, Securities of this series are exchangeable for a like aggregate principal amount of Securities of such series of a different authorized denomination, as requested by the Holder surrendering the same. The Company and, by its acceptance of this Security or a beneficial interest therein, the Holder of, and any Person that acquires a beneficial interest in, this Security agree that for United 29 21 States federal, state and local tax purposes it is intended that this Security constitute indebtedness. THE INDENTURE AND THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES THEREOF. Section 2.4. Additional Provisions Required in Global Security. Any Global Security issued hereunder shall, in addition to the provisions contained in Sections 2.2 and 2.3, bear a legend in substantially the following form: "This Security is a Global Security within the meaning of the Indenture hereinafter referred to and is registered in the name of a Depositary or a nominee of a Depositary. This Security is exchangeable for Securities registered in the name of a person other than the Depositary or its nominee only in the limited circumstances described in the Indenture and may not be transferred except as a whole by the Depositary to a nominee of the Depositary or by a nominee of the Depositary to the Depositary or another nominee of the Depositary." Section 2.5. Form of Trustee's Certificate of Authentication. This is one of the Securities referred to in the within mentioned Indenture. Dated: THE BANK OF NEW YORK as Trustee By: ---------------------------------- Authorized Signatory 30 22 ARTICLE III THE SECURITIES Section 3.1. Title and Terms. The aggregate principal amount of Securities which may be authenticated and delivered under this Indenture is unlimited. The Securities may be issued from time to time in one or more series. The following matters shall be established in or pursuant to a Board Resolution, and set forth in an Officers' Certificate, or established in one or more indentures supplemental hereto, prior to the issuance of Securities of a series: (a) the title of the Securities of such series, which shall distinguish the Securities of the series from all other Securities; (b) the limit, if any, upon the aggregate principal amount of the Securities of such series which may be authenticated and delivered under this Indenture (except for Securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Securities of the series pursuant to Section 3.4, 3.5, 3.6, 9.6 or 11.6 and except for any Securities which, pursuant to the last paragraph of Section 3.3, are deemed never to have been authenticated and delivered hereunder); provided, however, that the authorized aggregate principal amount of such series may be increased above such amount by a Board Resolution to such effect; (c) the Stated Maturity or Maturities on which the principal of the Securities of such series is payable or the method of determination thereof; (d) the rate or rates, if any, at which the Securities of such series shall bear interest, if any, the rate or rates and extent to which Additional Interest, if any, shall be payable in respect of any Securities of such series, the Interest Payment Dates on which such interest shall be payable, the right, pursuant to Section 3.11 or as otherwise set forth therein, of the Company to defer or extend an Interest Payment Date, and the Regular Record Date for the interest payable on any Interest Payment Date or the method by which any of the foregoing shall be determined; (e) the place or places where the principal of (and premium, if any) and interest on the Securities of such series shall be payable, the place or places where the Securities of such series may be presented for registration of transfer or exchange, and the place or places where notices and demands to or upon the Company in respect of the Securities of such series may be made; (f) the period or periods within which, or the date or dates on which, if any, the price or prices at which and the terms and conditions upon which the Securities of such series may be redeemed, in whole or in part, at the option of the Company; 31 23 (g) the obligation or the right, if any, of the Company to redeem, repay or purchase the Securities of such series pursuant to any sinking fund, amortization or analogous provisions or upon the happening of a specified event, or at the option of a Holder thereof, and the period or periods within which, the price or prices at which, the currency or currencies (including currency unit or units) in which and the other terms and conditions upon which Securities of the series shall be redeemed, repaid or purchased, in whole or in part, pursuant to such obligation; (h) the denominations in which any Securities of such series shall be issuable, if other than denominations of $25 and any integral multiple thereof; (i) if other than Dollars, the currency or currencies (including currency unit or units) in which the principal of (and premium, if any) and interest, if any, on the Securities of the series shall be payable, or in which the Securities of the series shall be denominated; (j) the additions, modifications or deletions, if any, in the Events of Default or covenants of the Company set forth herein with respect to the Securities of such series; (k) if other than the principal amount thereof, the portion of the principal amount of Securities of such series that shall be payable upon declaration of acceleration of the Maturity thereof; (l) the additions or changes, if any, to this Indenture with respect to the Securities of such series as shall be necessary to permit or facilitate the issuance of the Securities of such series in bearer form, registrable or not registrable as to principal, and with or without interest coupons; (m) any index or indices used to determine the amount of payments of principal of and premium, if any, on the Securities of such series or the manner in which such amounts will be determined; (n) whether the Securities of the series, or any portion thereof, shall initially be issuable in the form of a temporary Global Security representing all or such portion of the Securities of such series and provisions for the exchange of such temporary Global Security for definitive Securities of such series; (o) if applicable, that any Securities of the series shall be issuable in whole or in part in the form of one or more Global Securities and, in such case, the respective Depositaries for such Global Securities, the form of any legend or legends which shall be borne by any such Global Security in addition to or in lieu of that set forth in Section 2.4 and any circumstances in addition to or in lieu of those set forth in Section 3.5 in which any such Global Security may be exchanged in whole or in part for Securities registered, and any transfer of such Global Security in whole or in part may be registered, in the name or names of Persons other than the Depositary for such Global Security or a nominee thereof; (p) the appointment of any Paying Agent or Agents for the Securities of such series; 32 24 (q) the terms of any right to convert or exchange Securities of such series into any other securities or property of the Company, and the additions or changes, if any, to this Indenture with respect to the Securities of such series to permit or facilitate such conversion or exchange; (r) the form or forms of the Trust Agreement, Amended and Restated Trust Agreement and Guarantee Agreement, if different from the forms attached hereto as Annexes A, B and C, respectively; (s) the relative degree, if any, to which the Securities of the series shall be senior to or be subordinated to other series of Securities in right of payment, whether such other series of Securities are Outstanding or not; and (t) any other terms of the Securities of such series (which terms shall not be inconsistent with the provisions of this Indenture). All Securities of any one series shall be substantially identical except as to denomination and except as may otherwise be provided herein or in or pursuant to such Board Resolution and set forth in such Officers' Certificate or in any such indenture supplemental hereto. If any of the terms of the Securities of any series are established by action taken pursuant to a Board Resolution, a copy of an appropriate record of such action shall be certified by the Secretary or an Assistant Secretary of the Company and delivered to the Trustee at or prior to the delivery of the Officers' Certificate setting forth the terms of the series. The Securities shall be subordinated in right of payment to Senior Debt as provided in Article XIII. Section 3.2. Denominations. The Securities of each series shall be in registered form without coupons and shall be issuable in denominations of $25 and any integral multiple thereof, unless otherwise specified as contemplated by Section 3.1. Section 3.3. Execution, Authentication, Delivery and Dating. The Securities shall be executed on behalf of the Company by its Chief Executive Officer, President or one of its Vice Presidents under its corporate seal reproduced or impressed thereon and attested by its Secretary or one of its Assistant Secretaries. The signature of any of these officers on the Securities may be manual or facsimile. Securities bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Securities or did not hold such offices at the date of such Securities. At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Securities 33 25 of any series executed by the Company to the Trustee for authentication, together with a Company Order for the authentication and delivery of such Securities, and the Trustee in accordance with the Company Order shall authenticate and make such Securities available for delivery. If the form or terms of the Securities of the series have been established by or pursuant to one or more Board Resolutions as permitted by Sections 2.1 and 3.1, in authenticating such Securities, and accepting the additional responsibilities under this Indenture in relation to such Securities, the Trustee shall be entitled to receive, and (subject to Section 6.1) shall be fully protected in relying upon, an Opinion of Counsel stating, (1) if the form of such Securities has been established by or pursuant to Board Resolution as permitted by Section 2.1, that such form has been established in conformity with the provisions of this Indenture; (2) if the terms of such Securities have been established by or pursuant to Board Resolution as permitted by Section 3.1, that such terms have been established in conformity with the provisions of this Indenture; (3) that such Securities, when authenticated and delivered by the Trustee and issued by the Company in the manner and subject to any conditions specified in such Opinion of Counsel, will constitute valid and legally binding obligations of the Company enforceable in accordance with their terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles; and (4) that all laws and requirements in respect of the execution and delivery by the Company of such Securities have been complied with. If such form or terms have been so established, the Trustee shall not be required to authenticate such Securities if the issue of such Securities pursuant to this Indenture will affect the Trustee's own rights, duties or immunities under the Securities and this Indenture or otherwise in a manner which is not reasonably acceptable to the Trustee. Notwithstanding the provisions of Section 3.1 and of the preceding paragraph, if all Securities of a series are not to be originally issued at one time, it shall not be necessary to deliver the Officers' Certificate otherwise required pursuant to Section 3.1 or the Company Order and Opinion of Counsel otherwise required pursuant to such preceding paragraph at or prior to the authentication of each Security of such series if such documents are delivered at or prior to the authentication upon original issuance of the first Security of such series to be issued. Each Security shall be dated the date of its authentication. No Security shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose, unless there appears on such Security a certificate of authentication substantially in the form provided for herein executed by the Trustee by the manual signature of one of its authorized signatories, and such certificate upon any Security shall be conclusive evidence, and the only evidence, that such Security has been duly authenticated and delivered hereunder. 34 26 Notwithstanding the foregoing, if any Security shall have been authenticated and delivered hereunder but never issued and sold by the Company, and the Company shall deliver such Security to the Trustee for cancellation as provided in Section 3.9, for all purposes of this Indenture such Security shall be deemed never to have been authenticated and delivered hereunder and shall not be entitled to the benefits of this Indenture. Section 3.4. Temporary Securities. Pending the preparation of definitive Securities of any series, the Company may execute, and upon Company Order the Trustee shall authenticate and make available for delivery, temporary Securities which are printed, lithographed, typewritten, mimeographed or otherwise produced, in any authorized denomination, substantially of the tenor of the definitive Securities of such series in lieu of which they are issued and with such appropriate insertions, omissions, substitutions and other variations as the officers executing such Securities may determine, as evidenced by their execution of such Securities. If temporary Securities of any series are issued, the Company will cause definitive Securities of such series to be prepared without unreasonable delay. After the preparation of definitive Securities, the temporary Securities shall be exchangeable for definitive Securities upon surrender of the temporary Securities at the office or agency of the Company designated for that purpose without charge to the Holder. Upon surrender for cancellation of any one or more temporary Securities, the Company shall execute and the Trustee shall authenticate and make available for delivery in exchange therefor one or more definitive Securities of the same series, of any authorized denominations having the same Original Issue Date and Stated Maturity and having the same terms as such temporary Securities. Until so exchanged, the temporary Securities of any series shall in all respects be entitled to the same benefits under this Indenture as definitive Securities of such series. Section 3.5. Registration, Transfer and Exchange. The Company shall cause to be kept at the Corporate Trust Office of the Trustee a register in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration of Securities and of transfers of Securities. Such register is herein sometimes referred to as the "Securities Register." The Trustee is hereby appointed "Securities Registrar" for the purpose of registering Securities and transfers of Securities as herein provided. Upon surrender for registration of transfer of any Security at the office or agency of the Company designated for that purpose the Company shall execute, and the Trustee shall authenticate and make available for delivery, in the name of the designated transferee or transferees, one or more new Securities of the same series of any authorized denominations, of a like aggregate principal amount, of the same Original Issue Date and Stated Maturity and having the same terms. At the option of the Holder, Securities may be exchanged for other Securities of the same series of any authorized denominations, of a like aggregate principal amount, of the same Original Issue Date and Stated Maturity and having the same terms, upon surrender of the 35 27 Securities to be exchanged at such office or agency. Whenever any Securities are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and make available for delivery, the Securities which the Holder making the exchange is entitled to receive. All Securities issued upon any transfer or exchange of Securities shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Securities surrendered upon such transfer or exchange. Every Security presented or surrendered for transfer or exchange shall (if so required by the Company or the Securities Registrar) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Company and the Securities Registrar, duly executed by the Holder thereof or his attorney duly authorized in writing. No service charge shall be made to a Holder for any transfer or exchange of Securities, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any transfer or exchange of Securities. The provisions of Clauses (1), (2), (3) and (4) below shall apply only to Global Securities: (1) Each Global Security authenticated under this Indenture shall be registered in the name of the Depositary designated for such Global Security or a nominee thereof and delivered to such Depositary or a nominee thereof or custodian therefor, and each such Global Security shall constitute a single Security for all purposes of this Indenture. (2) Notwithstanding any other provision in this Indenture, no Global Security may be exchanged in whole or in part for Securities registered, and no transfer of a Global Security in whole or in part may be registered, in the name of any Person other than the Depositary for such Global Security or a nominee thereof unless (A) such Depositary (i) has notified the Company that it is unwilling or unable to continue as Depositary for such Global Security or (ii) has ceased to be a clearing agency registered under the Exchange Act at a time when the Depositary is required to be so registered to act as depositary, in either case unless the Company has approved a successor Depositary within 90 days, (B) there shall have occurred and be continuing an Event of Default with respect to such Global Security, (C) the Company in its sole discretion determines that such Global Security will be so exchangeable or transferable or (D) there shall exist such circumstances, if any, in addition to or in lieu of the foregoing as have been specified for this purpose as contemplated by Section 3.1. (3) Subject to Clause (2) above, any exchange of a Global Security for other Securities may be made in whole or in part, and all Securities issued in exchange for a Global Security or any portion thereof shall be registered in such names as the Depositary for such Global Security shall direct. (4) Every Security authenticated and delivered upon registration of transfer of, or in exchange for or in lieu of, a Global Security or any portion thereof, whether 36 28 pursuant to this Section, Section 3.4, 3.6, 9.6 or 11.6 or otherwise, shall be authenticated and delivered in the form of, and shall be, a Global Security, unless such Security is registered in the name of a Person other than the Depositary for such Global Security or a nominee thereof. Neither the Company nor the Trustee shall be required, pursuant to the provisions of this Section, (a) to issue, transfer or exchange any Security of any series during a period beginning at the opening of business 15 days before the mailing of notice of redemption of Securities pursuant to Article XI and ending at the close of business on the day of such mailing or (b) to transfer or exchange any Security so selected for redemption in whole or in part, except, in the case of any Security to be redeemed in part, any portion thereof not to be redeemed. Section 3.6. Mutilated, Destroyed, Lost and Stolen Securities. If any mutilated Security is surrendered to the Trustee together with such security or indemnity as may be required by the Company or the Trustee to save each of them harmless, the Company shall execute and the Trustee shall authenticate and make available for delivery in exchange therefor a new Security of the same issue and series of like tenor and principal amount, having the same Original Issue Date and Stated Maturity and bearing the same interest rate as such mutilated Security, and bearing a number not contemporaneously outstanding. If there shall be delivered to the Company and to the Trustee (i) evidence to their satisfaction of the destruction, loss or theft of any Security, and (ii) such security or indemnity as may be required by them to save each of them harmless, then, in the absence of notice to the Company or the Trustee that such Security has been acquired by a bona fide purchaser, the Company shall execute and upon its request the Trustee shall authenticate and make available for delivery, in lieu of any such destroyed, lost or stolen Security, a new Security of the same issue and series of like tenor and principal amount, having the same Original Issue Date and Stated Maturity and bearing the same interest rate as such destroyed, lost or stolen Security, and bearing a number not contemporaneously outstanding. In case any such mutilated, destroyed, lost or stolen Security has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Security, pay such Security. Upon the issuance of any new Security under this Section, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith. Every new Security issued pursuant to this Section in lieu of any destroyed, lost or stolen Security shall constitute an original additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Security shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Securities of that series duly issued hereunder. 37 29 The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities. Section 3.7. Payment of Interest; Interest Rights Preserved. Interest on any Security of any series which is payable, and is punctually paid or duly provided for, on any Interest Payment Date, shall be paid to the Person in whose name that Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest in respect of Securities of such series, except that, unless otherwise provided in the Securities of such series, interest payable on the Stated Maturity of the principal of a Security shall be paid to the Person to whom principal is paid. The initial payment of interest on any Security of any series which is issued between a Regular Record Date and the related Interest Payment Date shall be payable as provided in such Security or in the Board Resolution pursuant to Section 3.1 with respect to the related series of Securities. At the option of the Company, interest on any series of Securities may be paid (i) by check mailed to the address of the Person entitled thereto as it shall appear on the Securities Register of such series or (ii) by wire transfer in immediately available funds at such place and to such account as designated by the Person entitled thereto as specified in the Securities Register of such series. Any interest on any Security which is payable, but is not timely paid or duly provided for, on any Interest Payment Date for Securities of such series (herein called "Defaulted Interest"), shall forthwith cease to be payable to the registered Holder on the relevant Regular Record Date by virtue of having been such Holder, and such Defaulted Interest may be paid by the Company, at its election in each case, as provided in Clause (1) or (2) below: (1) The Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Securities of such series in respect of which interest is in default (or their respective Predecessor Securities) are registered at the close of business on a Special Record Date for the payment of such Defaulted Interest, which shall be fixed in the following manner. The Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Security and the date of the proposed payment, and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this Clause provided. Thereupon the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 days and not less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company of such Special Record Date and, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first class, postage prepaid, to each Holder of a Security of such series at the address of such Holder as it appears in the Securities Register not less than 10 days prior to such Special Record Date. The Trustee may, in its discretion, in the name and at the expense of the Company, cause a similar notice to be published at least once in a newspaper, customarily published in the 38 30 English language on each Business Day and of general circulation in the Borough of Manhattan, The City of New York, but such publication shall not be a condition precedent to the establishment of such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been mailed as aforesaid, such Defaulted Interest shall be paid to the Persons in whose names the Securities of such series (or their respective Predecessor Securities) are registered on such Special Record Date and shall no longer be payable pursuant to the following Clause (2). (2) The Company may make payment of any Defaulted Interest in any other lawful manner not inconsistent with the requirements of any securities exchange or automated quotation system on which the Securities of the series in respect of which interest is in default may be listed or traded and, upon such notice as may be required by such exchange (or by the Trustee if the Securities are not listed), if, after notice given by the Company to the Trustee of the proposed payment pursuant to this Clause, such payment shall be deemed practicable by the Trustee. Any interest on any Security which is deferred or extended pursuant to Section 3.11 shall not be Defaulted Interest for the purposes of this Section 3.7. Subject to the foregoing provisions of this Section, each Security delivered under this Indenture upon transfer of or in exchange for or in lieu of any other Security shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Security. Section 3.8. Persons Deemed Owners. The Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name any Security is registered as the owner of such Security for the purpose of receiving payment of principal of and (subject to Section 3.7) any interest on such Security and for all other purposes whatsoever, whether or not such Security be overdue, and neither the Company, the Trustee nor any agent of the Company or the Trustee shall be affected by notice to the contrary. Section 3.9. Cancellation. All Securities surrendered for payment, redemption, transfer or exchange shall, if surrendered to any Person other than the Trustee, be delivered to the Trustee, and any such Securities and Securities surrendered directly to the Trustee for any such purpose shall be promptly canceled by it. The Company may at any time deliver to the Trustee for cancellation any Securities previously authenticated and delivered hereunder which the Company may have acquired in any manner whatsoever, and all Securities so delivered shall be promptly canceled by the Trustee. No Securities shall be authenticated in lieu of or in exchange for any Securities canceled as provided in this Section, except as expressly permitted by this Indenture. All canceled Securities shall be returned by the Trustee to the Company and destroyed by the Company. 39 31 Section 3.10. Computation of Interest. Except as otherwise specified as contemplated by Section 3.1 for Securities of any series, interest on the Securities of each series for any period shall be computed on the basis of a 360-day year of twelve 30-day months and interest on the Securities of each series for any partial period shall be computed on the basis of the number of days elapsed in a 360-day year of twelve 30-day months. Section 3.11. Deferrals of Interest Payment Dates. If specified as contemplated by Section 2.1 or Section 3.1 with respect to the Securities of a particular series, so long as no Event of Default has occurred and is continuing, the Company shall have the right, at any time during the term of such series, from time to time to defer the payment of interest on such Securities for such period or periods as may be specified as contemplated by Section 3.1 (each, an "Extension Period"). No Extension Period shall end on a date other than an Interest Payment Date. At the end of any such Extension Period the Company shall pay all interest then accrued and unpaid on the Securities (together with Additional Interest thereon, if any, at the rate specified for the Securities of such series to the extent permitted by applicable law) to the Persons in whose names that Securities are registered at the close of business on the Regular Record Date with respect to the Interest Payment Date at the end of such Extension Period; provided, however, that no Extension Period shall extend beyond the Stated Maturity of the principal of the Securities of such series; provided, further, that during any such Extension Period, the Company shall not, and shall not permit any Subsidiary to, (i) declare or pay any dividends or distributions on, or redeem, purchase, acquire or make a liquidation payment with respect to, any of the Company's capital stock, (ii) make any payment of principal of or interest or premium, if any, on or repay, repurchase or redeem any debt security of the Company that ranks pari passu with or junior in interest to the Securities of such series or (iii) make any guarantee payments with respect to any guarantee by the Company of the debt securities of any Subsidiary of the Company that by their terms rank pari passu with or junior in interest to the securities of such series (other than (a) dividends or distributions in the Company's capital stock, (b) any declaration of a dividend in connection with the implementation of a Rights Plan, or the redemption or repurchase of any rights distributed pursuant to a Rights Plan, (c) payments under the Guarantee with respect to such Security, and (d) purchases of Common Stock related to the issuance of Common Stock or rights under any of the Company's benefit plans for its directors, officers or employees, related to the issuance of Common Stock or rights under a dividend reinvestment and stock purchase plan, or related to the issuance of Common Stock (or securities convertible into or exchangeable for Common Stock) as consideration in an acquisition transaction that was entered into prior to the commencement of such Extension Period). Prior to the termination of any such Extension Period, the Company may further defer the payment of interest, provided that no Extension Period shall exceed the period or periods specified in such Securities or extend beyond the Stated Maturity of the principal of such Securities. Upon termination of any Extension Period and upon the payment of all accrued and unpaid interest and any Additional Interest then due on any Interest Payment Date, the Company may elect to begin a new Extension Period, subject to the above requirements. No interest shall be due and payable during an Extension Period, except at the end thereof. The Company shall give the Holders of the Securities of such series and the Trustee written notice 40 32 of its election to begin any such Extension Period at least one Business Day prior to the next succeeding Interest Payment Date on which interest on Securities of such series would be payable but for such deferral or, with respect to the Securities of a series issued to a Trust, so long as such Securities are held by such Trust, prior to the earlier of (i) the next succeeding date on which Distributions on the Preferred Securities of such Trust would be payable but for such deferral or (ii) the date the Administrative Trustees of such Trust are required to give notice to any securities exchange or other applicable self-regulatory organization or to holders of such Preferred Securities of the record date or the date such Distributions are payable, but in any event not less than one Business Day prior to such record date. The Trustee shall promptly give notice, in the name and at the expense of the Company, of the Company's election to begin any such Extension Period to the Holders of the Outstanding Securities of such series. Section 3.12. Right of Set-Off. With respect to the Securities of a series issued to a Trust, notwithstanding anything to the contrary in this Indenture, the Company shall have the right to set-off any payment it is otherwise required to make thereunder in respect of any such Security to the extent the Company has theretofore made, or is concurrently on the date of such payment making, a payment under the Guarantee relating to such Security or under Section 5.8 of this Indenture. Section 3.13. Agreed Tax Treatment. Each Security issued hereunder shall provide that the Company and, by its acceptance of a Security or a beneficial interest therein, the Holder of, and any Person that acquires a beneficial interest in, such Security intend that such Security constitutes indebtedness and agree to treat such Security as indebtedness for United States federal, local and state tax purposes. Section 3.14. Shortening or Extension of Stated Maturity. If specified as contemplated by Section 2.1 or Section 3.1 with respect to the Securities of a particular series, the Company shall have the right to (i) shorten the Stated Maturity of the principal of the Securities of such series at any time to any date not earlier than the first date on which the Company has the right to redeem the Securities of such series, and (ii) extend the Stated Maturity of the principal of the Securities of such series at any time at its election for one or more periods, but in no event to a date later than the 49th anniversary of the Original Issue Date of the Securities of such series; provided that, if the Company elects to exercise its right to extend the Stated Maturity of the principal of the Securities of such series pursuant to clause (ii), above, at the time such election is made and at the time of extension (A) the Company is not in bankruptcy, otherwise insolvent or in liquidation, (B) the Company is not in default in the payment of any interest or principal on such Securities, (C) in the case of any series of Securities held by a Trust, such Trust is not in arrears on payments of Distributions on the Preferred Securities issued by such Trust and no deferred Distributions are accumulated and (D) such Securities are rated not less than BBB- by S&P or Baa3 by Moody's or the equivalent by any other nationally recognized statistical rating organization. In the event the Company elects to 41 33 shorten or extend the Stated Maturity of the Series A Subordinated Debentures, it shall give written notice to the Trustee, and the Trustee shall give notice of such shortening or extension to the Holders, no less than 30 and no more than 60 days prior to the effectiveness thereof. Section 3.15. CUSIP Numbers. The Company in issuing the Securities may use "CUSIP" numbers (if then generally in use), and, if so, the Trustee shall use "CUSIP" numbers in notices of redemption as a convenience to Holders; provided that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Securities or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Securities, and any such redemption shall not be affected by any defect in or omission of such numbers. The Company will promptly notify the Trustee of any change in the CUSIP numbers. ARTICLE IV SATISFACTION AND DISCHARGE Section 4.1. Satisfaction and Discharge of Indenture. This Indenture shall, upon Company Request, cease to be of further effect (except as to any surviving rights of registration of transfer or exchange of Securities herein expressly provided for and as otherwise provided in this Section 4.1) and the Trustee, on demand of and at the expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture, when (1) either (A) all Securities theretofore authenticated and delivered (other than (i) Securities which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 3.6 and (ii) Securities for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust, as provided in Section 10.3) have been delivered to the Trustee for cancellation; or (B) all such Securities not theretofore delivered to the Trustee for cancellation (i) have become due and payable, or (ii) will become due and payable at their Stated Maturity within one year of the date of deposit, or 42 34 (iii) are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company, and the Company, in the case of Clause (B) (i), (ii) or (iii) above, has deposited or caused to be deposited with the Trustee as trust funds in trust for such purpose an amount in the currency or currencies in which the Securities of such series are payable sufficient to pay and discharge the entire indebtedness on such Securities not theretofore delivered to the Trustee for cancellation, for principal (and premium, if any) and interest (including any Additional Interest) to the date of such deposit (in the case of Securities which have become due and payable) or to the Stated Maturity or Redemption Date, as the case may be; (2) the Company has paid or caused to be paid all other sums payable hereunder by the Company; and (3) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with. Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Company to the Trustee under Section 6.7, the obligations of the Company to any Authenticating Agent under Section 6.14 and, if money shall have been deposited with the Trustee pursuant to subclause (B) of clause (1) of this Section, the obligations of the Trustee under Section 4.2 and the last paragraph of Section 10.3 shall survive. Section 4.2. Application of Trust Money. Subject to the provisions of the last paragraph of Section 10.3, all money deposited with the Trustee pursuant to Section 4.1 shall be held in trust and applied by the Trustee, in accordance with the provisions of the Securities and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of the principal (and premium, if any) and interest for the payment of which such money or obligations have been deposited with or received by the Trustee. ARTICLE V REMEDIES Section 5.1. Events of Default. "Event of Default", wherever used herein with respect to the Securities of any series, means any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any 43 35 judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body): (1) default in the payment of any interest upon any Security of that series, including any Additional Interest in respect thereof, when it becomes due and payable, and continuance of such default for a period of 30 days (subject to the deferral of any interest payment date in the case of an Extension Period); or (2) default in the payment of the principal of (or premium, if any, on) any Security of that series at its Maturity; or (3) default in the performance, or breach, in any material respect, of any covenant or warranty of the Company in this Indenture with respect to that series (other than a covenant or warranty a default in the performance of which or the breach of which is elsewhere in this Section specifically dealt with), and continuance of such default or breach for a period of 90 days after there has been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in principal amount of the Outstanding Securities of that series a written notice specifying such default or breach and requiring it to be remedied; or (4) the entry of a decree or order by a court having jurisdiction in the premises adjudging the Company a bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Company under any applicable federal or state bankruptcy, insolvency, reorganization or other similar law, or appointing a receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of the Company or of any substantial part of its property or ordering the winding up or liquidation of its affairs, and the continuance of any such decree or order unstayed and in effect for a period of 60 consecutive days; or (5) the institution by the Company of proceedings to be adjudicated a bankrupt or insolvent, or the consent by it to the institution of bankruptcy or insolvency proceedings against it, or the filing by it of a petition or answer or consent seeking reorganization or relief under any applicable federal or state bankruptcy, insolvency, reorganization or other similar law, or the consent by it to the filing of any such petition or to the appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of the Company or of any substantial part of its property, or the making by it of an assignment for the benefit for creditors, or the admission by it in writing of its inability to pay its debts generally as they become due and its willingness to be adjudicated a bankrupt, or the taking of corporate action by the Company in furtherance of any such action; or (6) any other Event of Default provided with respect to Securities of that series. Section 5.2. Acceleration of Maturity; Rescission and Annulment. If an Event of Default (other than an Event of Default specified in Section 5.1(4) or 5.1(5)) with respect to Securities of any series at the time Outstanding occurs and is continuing, 44 36 then and in every such case the Trustee or the Holders of not less than 25% in principal amount of the Outstanding Securities of that series may declare the principal amount (or, if the Securities of that series are Discount Securities, such portion of the principal amount as may be specified in the terms of that series) of all the Securities of that series to be due and payable immediately, by a notice in writing to the Company (and to the Trustee if given by Holders), provided that, in the case of the Securities of a series issued to a Trust, if, upon an Event of Default, the Trustee or the Holders of not less than 25% in principal amount of the Outstanding Securities of that series fail to declare the principal amount (or, if the Securities of that series are Discount Securities, such portion of the principal amount as may be specified in the terms of that series) of all the Securities of that series to be immediately due and payable, the holders of at least 25% in aggregate liquidation amount of the corresponding series of Preferred Securities then outstanding shall have such right by a notice in writing to the Company and the Trustee; and upon any such declaration such principal amount (or specified portion thereof) of and the accrued interest (including any Additional Interest) on all the Securities of such series shall become immediately due and payable. Payment of principal and interest (including any Additional Interest) on such Securities shall remain subordinated to the extent provided in Article XIII notwithstanding that such amount shall become immediately due and payable as herein provided. If an Event of Default specified in Section 5.1(4) or 5.1(5) with respect to Securities of any series at the time Outstanding occurs, the principal amount of all the Securities of that series (or, if the Securities of that series are Discount Securities, such portion of the principal amount of such Securities as may be specified by the terms of that series) shall automatically, and without any declaration or other action on the part of the Trustee or any Holder, become immediately due and payable. At any time after such a declaration of acceleration with respect to Securities of any series has been made and before a judgment or decree for payment of the money due has been obtained by the Trustee as hereinafter in this Article provided, the Holders of a majority in principal amount of the Outstanding Securities of that series, by written notice to the Company and the Trustee, may rescind and annul such declaration and its consequences if: (1) the Company has paid or deposited with the Trustee a sum sufficient to pay: (A) all overdue installments of interest (including any Additional Interest) on all Securities of that series, (B) the principal of (and premium, if any, on) any Securities of that series which have become due otherwise than by such declaration of acceleration and interest thereon at the rate borne by the Securities, and (C) all sums paid or advanced by the Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel; and (2) all Events of Default with respect to Securities of that series, other than the non-payment of the principal of Securities of that series which has become due solely by such acceleration, have been cured or waived as provided in Section 5.13; 45 37 provided that, in the case of Securities of a series held by a Trust, if the Holders of at least a majority in principal amount of the Outstanding Securities of that series fails to rescind and annul such declaration and its consequences, the holders of a majority in aggregate Liquidation Amount (as defined in the Trust Agreement under which such Trust is formed) of the related series of Preferred Securities then outstanding shall have such right by written notice to the Company and the Trustee, subject to the satisfaction of the conditions set forth in Clauses (1) and (2) above of this Section 5.2. No such rescission shall affect any subsequent default or impair any right consequent thereon. Section 5.3. Collection of Indebtedness and Suits for Enforcement by Trustee. The Company covenants that if: (1) default is made in the payment of any installment of interest (including any Additional Interest) on any Security when such interest becomes due and payable and such default continues for a period of 30 days, or (2) default is made in the payment of the principal of (and premium, if any, on) any Security at the Maturity thereof, the Company will, upon demand of the Trustee, pay to the Trustee, for the benefit of the Holders of such Securities, the whole amount then due and payable on such Securities for principal, including any sinking fund payment or analogous obligations (and premium, if any) and interest (including any Additional Interest); and, in addition thereto, all amounts owing the Trustee under Section 6.7. If the Company fails to pay such amounts forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, may institute a judicial proceeding for the collection of the sums so due and unpaid, and may prosecute such proceeding to judgment or final decree, and may enforce the same against the Company or any other obligor upon the Securities and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Company or any other obligor upon the Securities, wherever situated. If an Event of Default with respect to Securities of any series occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders of Securities of such series by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy. 46 38 Section 5.4. Trustee May File Proofs of Claim. In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to the Company or any other obligor upon the Securities or the property of the Company or of such other obligor or their creditors, (a) the Trustee (irrespective of whether the principal of the Securities of any series shall then be due and payable as therein expressed or by declaration of acceleration or otherwise and irrespective of whether the Trustee shall have made any demand on the Company for the payment of overdue principal (and premium, if any) or interest (including any Additional Interest)) shall be entitled and empowered, by intervention in such proceeding or otherwise, (i) to file and prove a claim for the whole amount of principal (or, if the Securities of that series are Discount Securities, such portion of the principal amount as may be due and payable pursuant to a declaration in accordance with Section 5.2) (and premium, if any) and interest (including any Additional Interest) owing and unpaid in respect to the Securities and to file such other papers or documents as may be necessary or advisable and to take any and all actions as are authorized under the Trust Indenture Act in order to have the claims of the Holders and any predecessor to the Trustee under Section 6.7 allowed in any such judicial proceedings; and (ii) in particular, the Trustee shall be authorized to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same in accordance with Section 5.6; and (b) any custodian, receiver, assignee, trustee, liquidator, sequestrator (or other similar official) in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee for distribution in accordance with Section 5.6, and in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due to it and any predecessor Trustee under Section 6.7. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Securities or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding; provided, however, that the Trustee may, on behalf of the Holders, vote for the election of a trustee in bankruptcy or similar official and be a member of a creditors' or other similar committee. 47 39 Section 5.5. Trustee May Enforce Claims Without Possession of Securities. All rights of action and claims under this Indenture or the Securities may be prosecuted and enforced by the Trustee without the possession of any of the Securities or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of all the amounts owing the Trustee and any predecessor Trustee under Section 6.7, its agents and counsel, be for the ratable benefit of the Holders of the Securities in respect of which such judgment has been recovered. Section 5.6. Application of Money Collected. Any money or property collected or to be applied by the Trustee with respect to a series of Securities pursuant to this Article shall be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such money or property on account of principal (or premium, if any) or interest (including any Additional Interest), upon presentation of the Securities and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid: FIRST: To the payment of all amounts due the Trustee and any predecessor Trustee under Section 6.7; SECOND: Subject to Article XIII, to the payment of the amounts then due and unpaid upon such series of Securities for principal (and premium, if any) and interest (including any Additional Interest), in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such series of Securities for principal (and premium, if any) and interest (including any Additional Interest), respectively, then to the payment of any obligations under Section 10.6 hereof; and THIRD: The balance, if any, to the Person or Persons entitled thereto. Section 5.7. Limitation on Suits. No Holder of any Securities of any series shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture or for the appointment of a receiver, assignee, trustee, liquidator, sequestrator (or other similar official) or for any other remedy hereunder, unless: (1) such Holder has previously given written notice to the Trustee of a continuing Event of Default with respect to the Securities of that series; (2) the Holders of not less than 25% in principal amount of the Outstanding Securities of that series shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder; 48 40 (3) such Holder or Holders have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities to be incurred in compliance with such request; (4) the Trustee for 60 days after its receipt of such notice, request and offer of security or indemnity has failed to institute any such proceeding; and (5) no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders of a majority in principal amount of the Outstanding Securities of that series; it being understood and intended that no one or more of such Holders shall have any right in any manner whatever by virtue of, or by availing itself of, any provision of this Indenture to affect, disturb or prejudice the rights of any other Holders of Securities, or to obtain or to seek to obtain priority or preference over any other of such Holders or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all such Holders. Section 5.8. Unconditional Right of Holders to Receive Principal, Premium and Interest; Direct Action by Holders of Preferred Securities. Notwithstanding any other provision in this Indenture, the Holder of any Security shall have the right which is absolute and unconditional to receive payment of the principal of (and premium, if any) and (subject to Section 3.7) interest (including any Additional Interest) on such Security on the respective Stated Maturities expressed in such Security (or, in the case of redemption, on the Redemption Date) and to institute suit for the enforcement of any such payment, and such right shall not be impaired without the consent of such Holder. In the case of Securities of a series held by a Trust, any holder of the corresponding series of Preferred Securities held by such Trust shall have the right, upon the occurrence of an Event of Default described in Section 5.1(1) or 5.1(2), to institute a suit directly against the Company for enforcement of payment to such holder of principal of (or premium, if any) and (subject to Section 3.7) interest (including any Additional Interest) on the Securities having a principal amount equal to the aggregate Liquidation Amount (as defined in the Trust Agreement under which such Trust is formed) of such Preferred Securities of the corresponding series held by such holder. Section 5.9. Restoration of Rights and Remedies. If the Trustee, any Holder or any holder of Preferred Securities has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee, such Holder or such holder of Preferred Securities, then and in every such case the Company, the Trustee, the Holders and such holder of Preferred Securities shall, subject to any determination in such proceeding, be restored severally and respectively to their former positions hereunder, and thereafter all rights and remedies of the Trustee, the Holders and the holders of Preferred Securities shall continue as though no such proceeding had been instituted. 49 41 Section 5.10. Rights and Remedies Cumulative. Except as otherwise provided in the last paragraph of Section 3.6, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. Section 5.11. Delay or Omission Not Waiver. No delay or omission of the Trustee, any Holder of any Security or any holder of any Preferred Security to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article or by law to the Trustee or to the Holders and the right and remedy given to the holders of Preferred Securities by Section 5.8 may be exercised from time to time, and as often as may be deemed expedient, by the Trustee, the Holders or the holders of Preferred Securities, as the case may be. Section 5.12. Control by Holders. The Holders of a majority in principal amount of the Outstanding Securities of any series shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee, with respect to the Securities of such series, provided that: (1) such direction shall not be in conflict with any rule of law or with this Indenture, (2) the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction, and (3) subject to the provisions of Section 6.1, the Trustee shall have the right to decline to follow such direction if a Responsible Officer or Officers of the Trustee shall, in good faith, determine that the proceeding so directed would be unjustly prejudicial to the Holders not joining in any such direction or would involve the Trustee in personal liability. Section 5.13. Waiver of Past Defaults. The Holders of not less than a majority in principal amount of the Outstanding Securities of any series and, in the case of any Securities of a series issued to a Trust, the holders of a majority in Liquidation Amount (as defined in the relevant Trust Agreement) of Preferred Securities issued by such Trust may waive any past default hereunder and its consequences with respect to such series except a default: 50 42 (1) in the payment of the principal of (or premium, if any) or interest (including any Additional Interest) on any Security of such series (unless all Events of Default with respect to Securities of that series, other than the non-payment of the principal of Securities of that series which has become due solely by such acceleration, have been cured or annulled as provided in Section 5.3 and the Company has paid or deposited with the Trustee a sum sufficient to pay all overdue installments of interest (including any Additional Interest) on all Securities of that series, the principal of (and premium, if any, on) any Securities of that series which have become due otherwise than by such declaration of acceleration and interest thereon at the rate borne by the Securities, and all sums paid or advanced by the Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel), or (2) in respect of a covenant or provision hereof which under Article IX cannot be modified or amended without the consent of the Holder of each Outstanding Security of such series affected. Any such waiver shall be deemed to be on behalf of the Holders of all the Securities of such series or, in the case of a waiver by holders of Preferred Securities issued by such Trust, by all holders of Preferred Securities issued by such Trust. Upon any such waiver, such default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon. Section 5.14. Undertaking for Costs. All parties to this Indenture agree, and each Holder of any Security by his acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys' fees and expenses, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section shall not apply to any suit instituted by the Trustee, to any suit instituted by any Holder, or group of Holders, holding in the aggregate more than 10% in principal amount of the Outstanding Securities of any series, or to any suit instituted by any Holder for the enforcement of the payment of the principal of (or premium, if any) or interest (including any Additional Interest) on any Security on or after the respective Stated Maturities expressed in such Security. Section 5.15. Waiver of Usury, Stay or Extension Laws. The Company covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any usury, stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such 51 43 law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted. ARTICLE VI THE TRUSTEE Section 6.1. Certain Duties and Responsibilities. (a) Except during the continuance of an Event of Default, (1) the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and (2) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; but in the case of any such certificates or opinions which by any provisions hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture. (b) In case an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of his own affairs. (c) No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct except that (1) this Subsection shall not be construed to limit the effect of Subsection (a) of this Section; (2) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts; and (3) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of Holders pursuant to Section 5.12 relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture with respect to the Securities of such series. 52 44 (d) No provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if there shall be reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. (e) Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section. Section 6.2. Notice of Defaults. Within 90 days after actual knowledge by a Responsible Officer of the Trustee of the occurrence of any default hereunder with respect to the Securities of any series, the Trustee shall transmit by mail to all Holders of Securities of such series, as their names and addresses appear in the Securities Register, notice of such default, unless such default shall have been cured or waived; provided, however, that, except in the case of a default in the payment of the principal of (or premium, if any) or interest (including any Additional Interest) on any Security of such series, the Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee or a trust committee of directors and/or Responsible Officers of the Trustee in good faith determines that the withholding of such notice is in the interests of the Holders of Securities of such series; and provided, further, that, in the case of any default of the character specified in Section 5.1(3), no such notice to Holders of Securities of such series shall be given until at least 30 days after the occurrence thereof. For the purpose of this Section, the term "default" means any event which is, or after notice or lapse of time or both would become, an Event of Default with respect to Securities of such series. Section 6.3. Certain Rights of Trustee. Subject to the provisions of Section 6.1: (a) the Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, Security or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) any request or direction of the Company mentioned herein shall be sufficiently evidenced by a Company Request or Company Order and any resolution of the Board of Directors may be sufficiently evidenced by a Board Resolution; (c) whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officers' Certificate; 53 45 (d) the Trustee may consult with counsel of its selection and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon; (e) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders pursuant to this Indenture, unless such Holders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction; (f) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, indenture, Security or other paper or document, but the Trustee in its discretion may make such inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney; (g) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder; and (h) the Trustee shall not be liable for any action taken, suffered, or omitted to be taken by it in good faith and reasonably believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Indenture. Section 6.4. Not Responsible for Recitals or Issuance of Securities. The recitals contained herein and in the Securities, except the Trustee's certificates of authentication, shall be taken as the statements of the Company, and neither the Trustee nor any Authenticating Agent assumes any responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Securities. Neither the Trustee nor any Authenticating Agent shall be accountable for the use or application by the Company of the Securities or the proceeds thereof. Section 6.5. May Hold Securities. The Trustee, any Authenticating Agent, any Paying Agent, any Securities Registrar or any other agent of the Company, in its individual or any other capacity, may become the owner or pledgee of Securities and, subject to Sections 6.8 and 6.13, may otherwise deal with the Company with the same rights it would have if it were not Trustee, Authenticating Agent, Paying Agent, Securities Registrar or such other agent. 54 46 Section 6.6. Money Held in Trust. Money held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law. The Trustee shall be under no liability for interest on any money received by it hereunder except as otherwise agreed in writing with the Company. Section 6.7. Compensation and Reimbursement. The Company, as borrower, agrees (1) to pay to the Trustee from time to time such compensation as shall be agreed in writing between the Company and the Trustee for all services rendered by it hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); (2) to reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Indenture (including the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to its negligence or bad faith; and (3) to indemnify each of the Trustee and any predecessor Trustee for, and to hold it harmless against, any and all loss, liability, damage, claim or expense (including the reasonable compensation and the expenses and disbursements of its agents and counsel) incurred without negligence or bad faith, arising out of or in connection with the acceptance or administration of this trust or the performance of its duties hereunder, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder. This indemnification shall survive the termination of this Agreement. To secure the Company's payment obligations in this Section, the Company and the Holders agree that the Trustee shall have a lien prior to the Securities on all money or property held or collected by the Trustee. Such lien shall survive the satisfaction and discharge of this Indenture. When the Trustee incurs expenses or renders services after an Event of Default specified in Section 5.1(4) or (5) occurs, the expenses and the compensation for the services are intended to constitute expenses of administration under the Bankruptcy Reform Act of 1978 or any successor statute. Section 6.8. Disqualification; Conflicting Interests. The Trustee for the Securities of any series issued hereunder shall be subject to the provisions of Section 310(b) of the Trust Indenture Act. Nothing herein shall prevent the Trustee from filing with the Commission the application referred to in the second to last paragraph of said Section 310(b). 55 47 Section 6.9. Corporate Trustee Required; Eligibility. There shall at all times be a Trustee hereunder which shall be (a) a corporation organized and doing business under the laws of the United States of America or of any state or territory or the District of Columbia, authorized under such laws to exercise corporate trust powers and subject to supervision or examination by federal, state, territorial or District of Columbia authority, or (b) a corporation or other Person organized and doing business under the laws of a foreign government that is permitted to act as Trustee pursuant to a rule, regulation or order of the Commission, authorized under such laws to exercise corporate trust powers, and subject to supervision or examination by authority of such foreign government or a political subdivision thereof substantially equivalent to supervision or examination applicable to United States institutional trustees, in either case having a combined capital and surplus of at least $50,000,000, subject to supervision or examination by federal or state authority. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of the aforesaid supervising or examining authority, then, for the purposes of this Section, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this Article. Neither the Company nor any Person directly or indirectly controlling, controlled by or under common control with the Company shall serve as Trustee for the Securities of any series issued hereunder. Section 6.10. Resignation and Removal; Appointment of Successor. (a) No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become effective until the acceptance of appointment by the successor Trustee under Section 6.11. (b) The Trustee may resign at any time with respect to the Securities of one or more series by giving written notice thereof to the Company. If an instrument of acceptance by a successor Trustee shall not have been delivered to the Trustee within 30 days after the giving of such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee with respect to the Securities of such series. (c) The Trustee may be removed at any time with respect to the Securities of any series by Act of the Holders of a majority in principal amount of the Outstanding Securities of such series, delivered to the Trustee and to the Company. If an instrument of acceptance by a successor Trustee shall not have been delivered to the Trustee within 30 days after such removal, the Trustee being removed may petition any court of competent jurisdiction for the appointment of a successor Trustee with respect to the Securities of such series. 56 48 (d) If at any time: (1) the Trustee shall fail to comply with Section 6.8 after written request therefor by the Company or by any Holder who has been a bona fide Holder of a Security for at least six months, or (2) the Trustee shall cease to be eligible under Section 6.9 and shall fail to resign after written request therefor by the Company or by any such Holder, or (3) the Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of the Trustee or of its property shall be appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, then, in any such case, (i) the Company, acting pursuant to the authority of a Board Resolution, may remove the Trustee with respect to all Securities, or (ii) subject to Section 5.14, any Holder who has been a bona fide Holder of a Security for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee with respect to all Securities and the appointment of a successor Trustee or Trustees. (e) If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any cause with respect to the Securities of one or more series, the Company, by a Board Resolution, shall promptly appoint a successor Trustee with respect to the Securities of that or those series. If, within one year after such resignation, removal or incapability, or the occurrence of such vacancy, a successor Trustee with respect to the Securities of any series shall be appointed by Act of the Holders of a majority in principal amount of the Outstanding Securities of such series delivered to the Company and the retiring Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance of such appointment, become the successor Trustee with respect to the Securities of such series and supersede the successor Trustee appointed by the Company. If no successor Trustee with respect to the Securities of any series shall have been so appointed by the Company or the Holders and accepted appointment in the manner hereinafter provided, any Holder who has been a bona fide Holder of a Security for at least six months may, subject to Section 5.14, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee with respect to the Securities of such series. (f) The Company shall give notice of each resignation and each removal of the Trustee with respect to the Securities of any series and each appointment of a successor Trustee with respect to the Securities of any series by mailing written notice of such event by first-class mail, postage prepaid, to the Holders of Securities of such series as their names and addresses appear in the Securities Register. Each notice shall include the name of the successor Trustee with respect to the Securities of such series and the address of its Corporate Trust Office. 57 49 Section 6.11. Acceptance of Appointment by Successor. (a) In case of the appointment hereunder of a successor Trustee with respect to all Securities, every such successor Trustee so appointed shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on the request of the Company or the successor Trustee, such retiring Trustee shall, upon payment of its charges, execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder. (b) In case of the appointment hereunder of a successor Trustee with respect to the Securities of one or more (but not all) series, the Company, the retiring Trustee and each successor Trustee with respect to the Securities of one or more series shall execute and deliver an indenture supplemental hereto wherein each successor Trustee shall accept such appointment and which (1) shall contain such provisions as shall be necessary or desirable to transfer and confirm to, and to vest in, each successor Trustee all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series to which the appointment of such successor Trustee relates, (2) if the retiring Trustee is not retiring with respect to all Securities, shall contain such provisions as shall be deemed necessary or desirable to confirm that all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series as to which the retiring Trustee is not retiring shall continue to be vested in the retiring Trustee, and (3) shall add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, it being understood that nothing herein or in such supplemental indenture shall constitute such Trustees co-trustees of the same trust and that each such Trustee shall be trustee of a trust or trusts hereunder separate and apart from any trust or trusts hereunder administered by any other such Trustee; and upon the execution and delivery of such supplemental indenture the resignation or removal of the retiring Trustee shall become effective to the extent provided therein and each such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts, and duties of the retiring Trustee with respect to the Securities of that or those series to which the appointment of such successor Trustee relates; but, on request of the Company or any successor Trustee, such retiring Trustee shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder with respect to the Securities of that or those series to which the appointment of such successor Trustee relates. (c) Upon request of any such successor Trustee, the Company shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all rights, powers and trusts referred to in paragraph (a) or (b) of this Section, as the case may be. (d) No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this Article. 58 50 Section 6.12. Merger, Conversion, Consolidation or Succession to Business. Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all of the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided such corporation shall be otherwise qualified and eligible under this Article, without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Securities shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such authentication and deliver the Securities so authenticated, and in case any Securities shall not have been authenticated, any successor to the Trustee may authenticate such Securities either in the name of any predecessor Trustee or in the name of such successor Trustee, and in all cases the certificate of authentication shall have the full force which it is provided anywhere in the Securities or in this Indenture that the certificate of the Trustee shall have. Section 6.13. Preferential Collection of Claims Against Company. If and when the Trustee shall be or become a creditor of the Company (or any other obligor upon the Securities), the Trustee shall be subject to the provisions of the Trust Indenture Act regarding the collection of claims against the Company (or any such other obligor). Section 6.14. Appointment of Authenticating Agent. The Trustee may appoint an Authenticating Agent or Agents with respect to one or more series of Securities which shall be authorized to act on behalf of the Trustee to authenticate Securities of such series issued upon original issue and upon exchange, registration of transfer or partial redemption thereof or pursuant to Section 3.6, and Securities so authenticated shall be entitled to the benefits of this Indenture and shall be valid and obligatory for all purposes as if authenticated by the Trustee hereunder. Wherever reference is made in this Indenture to the authentication and delivery of Securities by the Trustee or the Trustee's certificate of authentication, such reference shall be deemed to include authentication and delivery on behalf of the Trustee by an Authenticating Agent. Each Authenticating Agent shall be acceptable to the Company and shall at all times be a corporation organized and doing business under the laws of the United States of America, or of any state or territory or the District of Columbia, authorized under such laws to act as Authenticating Agent, having a combined capital and surplus of not less than $50,000,000 and subject to supervision or examination by federal or state authority. If such Authenticating Agent publishes reports of condition at least annually, pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this Section the combined capital and surplus of such Authenticating Agent shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time an Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, such Authenticating Agent shall resign immediately in the manner and with the effect specified in this Section. 59 51 Any corporation into which an Authenticating Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which such Authenticating Agent shall be a party, or any corporation succeeding to all or substantially all of the corporate trust business of an Authenticating Agent shall be the successor Authenticating Agent hereunder, provided such corporation shall be otherwise eligible under this Section, without the execution or filing of any paper or any further act on the part of the Trustee or the Authenticating Agent. An Authenticating Agent may resign at any time by giving written notice thereof to the Trustee and to the Company. The Trustee may at any time terminate the agency of an Authenticating Agent by giving written notice thereof to such Authenticating Agent and to the Company. Upon receiving such a notice of resignation or upon such a termination, or in case at any time such Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, the Trustee may appoint a successor Authenticating Agent which shall be acceptable to the Company and shall give notice of such appointment in the manner provided in Section 1.6 to all Holders of Securities of the series with respect to which such Authenticating Agent will serve. Any successor Authenticating Agent upon acceptance of its appointment hereunder shall become vested with all the rights, powers and duties of its predecessor hereunder, with like effect as if originally named as an Authenticating Agent. No successor Authenticating Agent shall be appointed unless eligible under the provision of this Section. The Company agrees to pay to each Authenticating Agent from time to time reasonable compensation for its services under this Section. If an appointment with respect to one or more series is made pursuant to this Section, the Securities of such series may have endorsed thereon, in addition to the Trustee's certificate of authentication, an alternative certificate of authentication in the following form: This is one of the Securities referred to in the within mentioned Indenture. Dated: /s/ THE BANK OF NEW YORK --------------------------------------- As Trustee By: ------------------------------------ As Authenticating Agent By: ------------------------------------ Authorized Officer 60 52 ARTICLE VII HOLDER'S LISTS AND REPORTS BY TRUSTEE AND COMPANY Section 7.1. Company to Furnish Trustee Names and Addresses of Holders. The Company will furnish or cause to be furnished to the Trustee: (a) semi-annually, not more than 15 days after January 15 and July 15 in each year, a list, in such form as the Trustee may reasonably require, of the names and addresses of the Holders as of such January 1 and July 1, and (b) at such other times as the Trustee may request in writing, within 30 days after the receipt by the Company of any such request, a list of similar form and content as of a date not more than 15 days prior to the time such list is furnished, excluding from any such list names and addresses received by the Trustee in its capacity as Securities Registrar. Section 7.2. Preservation of Information, Communications to Holders. (a) The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Holders contained in the most recent list furnished to the Trustee as provided in Section 7.1 and the names and addresses of Holders received by the Trustee in its capacity as Securities Registrar. The Trustee may destroy any list furnished to it as provided in Section 7.1 upon receipt of a new list so furnished. (b) The rights of Holders to communicate with other Holders with respect to their rights under this Indenture or under the Securities, and the corresponding rights and privileges of the Trustee, shall be as provided in the Trust Indenture Act. (c) Every Holder of Securities, by receiving and holding the same, agrees with the Company and the Trustee that neither the Company nor the Trustee nor any agent of either of them shall be held accountable by reason of the disclosure of information as to the names and addresses of the Holders made pursuant to the Trust Indenture Act. Section 7.3. Reports by Trustee. (a) The Trustee shall transmit to Holders such reports concerning the Trustee and its actions under this Indenture as may be required pursuant to the Trust Indenture Act at the times and in the manner provided pursuant thereto. If required by Section 313(a) of the Trust Indenture Act, the Trustee shall, within sixty days after each May 15 following the date of this Indenture deliver to Holders a brief report, dated as of such May 15, which complies with the provisions of such Section 313(a). 61 53 (b) A copy of each such report shall, at the time of such transmission to Holders, be filed by the Trustee with each stock exchange upon which any Securities are listed and also with the Commission. The Company will promptly notify the Trustee when any Securities are listed on any stock exchange. Section 7.4. Reports by Company. The Company shall file with the Trustee and with the Commission, and transmit to Holders, such information, documents and other reports, and such summaries thereof, as may be required pursuant to the Trust Indenture Act at the times and in the manner provided in the Trust Indenture Act; provided that any such information, documents or reports required to be filed with the Commission pursuant to Section 13 or Section 15(d) of the Exchange Act shall be filed with the Trustee within 15 days after the same is required to be filed with the Commission. The Company also shall comply with the other provisions of Trust Indenture Act Section 314(a). Delivery of such reports, information and documents to the Trustee is for informational purposes only and the Trustee's receipt of such shall not constitute constructive notice of any information contained therein, including the Company's compliance with any of its covenants hereunder (as to which the Trustee is entitled to rely exclusively on Officers' Certificates). ARTICLE VIII CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE Section 8.1. Company May Consolidate, Etc., Only on Certain Terms. The Company shall not consolidate with or merge into any other Person or convey, transfer or lease its properties and assets substantially as an entirety to any Person, and no Person shall consolidate with or merge into the Company or convey, transfer or lease its properties and assets substantially as an entirety to the Company, unless: (1) in case the Company shall consolidate with or merge into another Person or convey, transfer or lease its properties and assets substantially as an entirety to any Person, the Person formed by such consolidation or into which the Company is merged or the Person which acquires by conveyance or transfer, or which leases, the properties and assets of the Company substantially as an entirety shall be a corporation, partnership or trust organized and existing under the laws of the United States of America or any State or the District of Columbia and shall expressly assume (i) by an indenture supplemental hereto, executed and delivered to the Trustee, in form satisfactory to the Trustee, the due and punctual payment of the principal of (and premium, if any) and interest (including any Additional Interest) on all the Securities and the performance of every covenant of this Indenture on the part of the Company to be performed or observed, (ii) any obligations of the Company under any Trust Agreement and (iii) any obligations of the Company under any Guarantee Agreement; 62 54 (2) immediately after giving effect to such transaction, no Event of Default, and no event which, after notice or lapse of time, or both, would become an Event of Default, shall have happened and be continuing; (3) in the case of the Securities of a series held by a Trust, such consolidation, merger, conveyance, transfer or lease is permitted under the related Trust Agreement and Guarantee and does not give rise to any breach or violation of the related Trust Agreement or Guarantee; and (4) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger, conveyance, transfer or lease and any such supplemental indenture complies with this Article and that all conditions precedent herein provided for relating to such transaction have been complied with; and the Trustee, subject to Section 6.1, may rely upon such Officers' Certificate and Opinion of Counsel as conclusive evidence that such transaction complies with this Section 8.1. SECTION 8.2. SUCCESSOR CORPORATION SUBSTITUTED. Upon any consolidation or merger by the Company with or into any other Person, or any conveyance, transfer or lease by the Company of its properties and assets substantially as an entirety to any Person in accordance with Section 8.1, the successor Person formed by such consolidation or into which the Company is merged or to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor Person had been named as the Company herein; and in the event of any such conveyance, transfer or lease the Company shall be discharged from all obligations and covenants under the Indenture and the Securities and may be dissolved and liquidated. Such successor Person may cause to be signed, and may issue either in its own name or in the name of the Company, any or all of the Securities issuable hereunder which theretofore shall not have been signed by the Company and delivered to the Trustee; and, upon the written order of such successor Person instead of the Company and subject to all the terms, conditions and limitations in this Indenture prescribed, the Trustee shall authenticate and shall make available for delivery any Securities which previously shall have been signed and delivered by the officers of the Company to the Trustee for authentication pursuant to such provisions and any Securities which such successor Person thereafter shall cause to be signed and delivered to the Trustee on its behalf for the purpose pursuant to such provisions. All the Securities so issued shall in all respects have the same legal rank and benefit under this Indenture as the Securities theretofore or thereafter issued in accordance with the terms of this Indenture as though all of such Securities had been issued at the date of the execution hereof. In case of any such consolidation, merger, sale, conveyance or lease, such changes in phraseology and form may be made in the Securities thereafter to be issued as may be appropriate. 63 55 ARTICLE IX SUPPLEMENTAL INDENTURES Section 9.1. Supplemental Indentures without Consent of Holders. Without the consent of any Holders, the Company, when authorized by a Board Resolution, and the Trustee, at any time and from time to time, may enter into one or more indentures supplemental hereto, in form reasonably satisfactory to the Trustee, for any of the following purposes: (1) to evidence the succession of another Person to the Company, and the assumption by any such successor of the covenants of the Company herein and in the Securities contained; or (2) to convey, transfer, assign, mortgage or pledge any property to or with the Trustee or to surrender any right or power herein conferred upon the Company; or (3) to establish the form or terms of Securities of any series as permitted by Sections 2.1 or 3.1; or (4) to add to the covenants of the Company for the benefit of the Holders of all or any series of Securities (and if such covenants are to be for the benefit of less than all series of Securities, stating that such covenants are expressly being included solely for the benefit of such series) or to surrender any right or power herein conferred upon the Company; or (5) to add any additional Events of Default for the benefit of the Holders of all or any series of Securities (and if such additional Events of Default are to be for the benefit of less than all series of Securities, stating that such additional Events of Default are expressly being included solely for the benefit of such series); or (6) to change or eliminate any of the provisions of this Indenture, provided that any such change or elimination shall become effective only when there is no Security Outstanding of any series created prior to the execution of such supplemental indenture which is entitled to the benefit of such provision; or (7) to cure any ambiguity, to correct or supplement any provision herein which may be defective or inconsistent with any other provision herein, or to make any other provisions with respect to matters or questions arising under this Indenture, provided that such action pursuant to this clause (7) shall not adversely affect the interest of the Holders of Securities of any series in any material respect or, in the case of the Securities of a series issued to a Trust and for so long as any of the corresponding series of Preferred Securities issued by such Trust shall remain outstanding, the holders of such Preferred Securities; or (8) to evidence and provide for the acceptance of appointment hereunder by a successor Trustee with respect to the Securities of one or more series and to add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration 64 56 of the trusts hereunder by more than one Trustee, pursuant to the requirements of Section 6.11(b); or (9) to comply with the requirements of the Commission in order to effect or maintain the qualification of this Indenture under the Trust Indenture Act. Section 9.2. Supplemental Indentures with Consent of Holders. With the consent of the Holders of not less than a majority in principal amount of the Outstanding Securities of each series affected by such supplemental indenture, by Act of said Holders delivered to the Company and the Trustee, the Company, when authorized by a Board Resolution, and the Trustee may enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of modifying in any manner the rights of the Holders of Securities of such series under this Indenture; provided, however, that no such supplemental indenture shall, without the consent of the Holder of each Outstanding Security affected thereby, (1) except to the extent permitted by Section 3.11 or as otherwise specified as contemplated by Section 2.1 or Section 3.1 with respect to the deferral of the payment of interest on the Securities of any series, change the Stated Maturity of the principal of, or any installment of interest (including any Additional Interest) on, any Security, or reduce the principal amount thereof or the rate of interest thereon or reduce any premium payable upon the redemption thereof, or reduce the amount of principal of a Discount Security that would be due and payable upon a declaration of acceleration of the Maturity thereof pursuant to Section 5.2, or change the place of payment where, or the coin or currency in which, any Security or interest thereon is payable, or impair the right to institute suit for the enforcement of any such payment on or after the Stated Maturity thereof (or, in the case of redemption, on or after the Redemption Date), or (2) reduce the percentage in principal amount of the Outstanding Securities of any series, the consent of whose Holders is required for any such supplemental indenture, or the consent of whose Holders is required for any waiver (of compliance with certain provisions of this Indenture or certain defaults hereunder and their consequences) provided for in this Indenture, or (3) modify any of the provisions of this Section, Section 5.13 or Section 10.5, except to increase any such percentage or to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each Security affected thereby; or (4) modify the provisions in Article XIII of this Indenture with respect to the subordination of Outstanding Securities of any series in a manner adverse to the Holders thereof; provided, further, that, in the case of the Securities of a series issued to a Trust, so long as any of the corresponding series of Preferred Securities issued by such Trust remains outstanding, (i) no such amendment shall be made that adversely affects the holders of such Preferred Securities in any material respect, and no termination of this Indenture shall occur, and no waiver of any Event of Default or compliance with any covenant under this Indenture shall be effective, without the prior consent of the holders of at least a majority of the aggregate Liquidation 65 57 Amount (as defined in the Trust Agreement under which such Trust is organized) of such Preferred Securities then outstanding unless and until the principal (and premium, if any) of the Securities of such series and all accrued and, subject to Section 3.7, unpaid interest (including any Additional Interest) thereon have been paid in full and (ii) no amendment shall be made to Section 5.8 of this Indenture that would impair the rights of the holders of Preferred Securities provided therein without the prior consent of the holders of each Preferred Security then outstanding unless and until the principal (and premium, if any) of the Securities of such series and all accrued and (subject to Section 3.7) unpaid interest (including any Additional Interest) thereon have been paid in full. A supplemental indenture that changes or eliminates any covenant or other provision of this Indenture that has expressly been included solely for the benefit of one or more particular series of Securities or Preferred Securities, or which modifies the rights of the Holders of Securities or holders of Preferred Securities of such series with respect to such covenant or other provision, shall be deemed not to affect the rights under this Indenture of the Holders of Securities or holders of Preferred Securities of any other series. It shall not be necessary for any Act of Holders under this Section to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof. Section 9.3. Execution of Supplemental Indentures. In executing or accepting the additional trusts created by any supplemental indenture permitted by this Article or the modifications thereby of the trusts created by this Indenture, the Trustee shall be entitled to receive, and (subject to Section 6.1) shall be fully protected in relying upon, an Officers' Certificate and an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture, and that all conditions precedent have been complied with. The Trustee may, but shall not be obligated to, enter into any such supplemental indenture which affects the Trustee's own rights, duties or immunities under this Indenture or otherwise. Section 9.4. Effect of Supplemental Indentures. Upon the execution of any supplemental indenture under this Article, this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of Securities theretofore or thereafter authenticated and delivered hereunder shall be bound thereby. Section 9.5. Conformity with Trust Indenture Act. Every supplemental indenture executed pursuant to this Article shall conform to the requirements of the Trust Indenture Act as then in effect. 66 58 Section 9.6. Reference in Securities to Supplemental Indentures. Securities authenticated and delivered after the execution of any supplemental indenture pursuant to this Article may, and shall if required by the Company, bear a notation in form approved by the Company as to any matter provided for in such supplemental indenture. If the Company shall so determine, new Securities of any series so modified as to conform, in the opinion of the Company, to any such supplemental indenture may be prepared and executed by the Company and authenticated and delivered by the Trustee in exchange for Outstanding Securities of such series. ARTICLE X COVENANTS Section 10.1. Payment of Principal, Premium and Interest. The Company covenants and agrees for the benefit of each series of Securities that it will duly and punctually pay the principal of (and premium, if any) and interest (including Additional Interest) on the Securities of that series in accordance with the terms of such Securities and this Indenture. Section 10.2. Maintenance of Office or Agency. The Company will maintain in each Place of Payment for any series of Securities, an office or agency where Securities of that series may be presented or surrendered for payment and an office or agency where Securities of that series may be surrendered for transfer or exchange and where notices and demands to or upon the Company in respect of the Securities of that series and this Indenture may be served. The Company initially appoints the Trustee, acting through its Corporate Trust Office, as its agent for said purposes. The Company will give prompt written notice to the Trustee of any change in the location of any such office or agency. If at any time the Company shall fail to maintain such office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee, and the Company hereby appoints the Trustee as its agent to receive all such presentations, surrenders, notices and demands. The Company may also from time to time designate one or more other offices or agencies where the Securities may be presented or surrendered for any or all of such purposes, and may from time to time rescind such designations; provided, however, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in each Place of Payment for Securities of any series for such purposes. The Company will give prompt written notice to the Trustee of any such designation and any change in the location of any such office or agency. 67 59 Section 10.3. Money for Security Payments to be Held in Trust. If the Company shall at any time act as its own Paying Agent with respect to any series of Securities, it will, on or before each due date of the principal of (and premium, if any) or interest on any of the Securities of such series, segregate and hold in trust for the benefit of the Persons entitled thereto a sum sufficient to pay the principal (and premium, if any) or interest so becoming due until such sums shall be paid to such Persons or otherwise disposed of as herein provided, and will promptly notify the Trustee of its failure so to act. Whenever the Company shall have one or more Paying Agents, it will, prior to 10:00 a.m. New York City time on each due date of the principal of or interest on any Securities, deposit with a Paying Agent a sum sufficient to pay the principal (and premium, if any) or interest so becoming due, such sum to be held in trust for the benefit of the Persons entitled to such principal and premium (if any) or interest, and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee of its failure so to act. The Company will cause each Paying Agent other than the Trustee to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this Section, that such Paying Agent will: (1) hold all sums held by it for the payment of the principal of (and premium, if any) or interest (including Additional Interest) on Securities in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as herein provided; (2) give the Trustee notice of any default by the Company (or any other obligor upon the Securities) in the making of any payment of principal (and premium, if any) or interest (including Additional Interest); (3) at any time during the continuance of any such default, upon the written request of the Trustee, forthwith pay to the Trustee all sums so held in trust by such Paying Agent; and (4) comply with the provisions of the Trust Indenture Act applicable to it as a Paying Agent. The Company may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by Company Order direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by the Company or such Paying Agent; and, upon such payment by the Company or any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such money. Any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of (and premium, if any) or interest (including Additional Interest) on any Security and remaining unclaimed for two years after such principal 68 60 (and premium, if any) or interest has become due and payable shall (unless otherwise required by mandatory provision of applicable escheat or abandoned or unclaimed property law) be paid on Company Request to the Company, or (if then held by the Company) shall (unless otherwise required by mandatory provision of applicable escheat or abandoned or unclaimed property law) be discharged from such trust; and the Holder of such Security shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be published once, in a newspaper published in the English language, customarily published on each Business Day and of general circulation in the Borough of Manhattan, The City of New York, notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such publication, any unclaimed balance of such money then remaining will be repaid to the Company. Section 10.4. Statement as to Compliance. The Company shall deliver to the Trustee, within 120 days after the end of each calendar year of the Company ending after the date hereof, an Officers' Certificate, one of the signatories of which shall be the principal executive, principal financial or principal accounting officer of the Company, covering the preceding calendar year, stating whether or not to the best knowledge of the signers thereof the Company is in default in the performance, observance or fulfillment of or compliance with any of the terms, provisions, covenants and conditions of this Indenture, and if the Company shall be in default, specifying all such defaults and the nature and status thereof of which they may have knowledge. For the purpose of this Section 10.4, compliance shall be determined without regard to any grace period or requirement of notice provided pursuant to the terms of this Indenture. Section 10.5. Waiver of Certain Covenants. The Company may omit in any particular instance to comply with any covenant or condition provided pursuant to Section 3.1, 9.1(3) or 9.1(4) with respect to the Securities of any series, if before or after the time for such compliance the Holders of at least a majority in principal amount of the Outstanding Securities of such series shall, by Act of such Holders, either waive such compliance in such instance or generally waive compliance with such covenant or condition, but no such waiver shall extend to or affect such covenant or condition except to the extent so expressly waived, and, until such waiver shall become effective, the obligations of the Company in respect of any such covenant or condition shall remain in full force and effect. Section 10.6. Payment of Trust Costs and Expenses. Since each Trust is being formed solely to facilitate an investment in the Securities, the Company, in its capacity as the issuer of the Securities, hereby covenants to pay all debts and obligations (other than with respect to the Preferred Securities and Common Securities) and all costs and expenses of each Trust (including, but not limited to, all costs and expenses relating to the organization of the Trust, the fees and expenses of the relevant Trustees and all costs and 69 61 expenses relating to the operation of the Trust) and to pay any and all taxes, duties, assessments or governmental charges of whatever nature (other than withholding taxes) imposed on any Trust by the United States, or any other taxing authority, so that the net amounts received and retained by such Trust and the Property Trustee after paying such expenses will be equal to the amounts such Trust and the Property Trustee would have received had no such costs or expenses been incurred by or imposed on such Trust. The obligations of the Company to pay all debts, obligations, costs and expenses of each Trust shall constitute additional indebtedness hereunder and shall survive the satisfaction and discharge of this Indenture. Section 10.7. Additional Covenants. The Company covenants and agrees with each Holder of Securities of each series that it shall not, and it shall not permit any Subsidiary of the Company to, (i) declare or pay any dividends or distributions on, or redeem purchase, acquire or make a liquidation payment with respect to, any shares of the Company's capital stock, or (ii) make any payment of principal of or interest or premium, if any, on or repay, repurchase or redeem any debt securities of the Company that rank pari passu with or junior in interest to the Securities of such series or (iii) make any guarantee payments with respect to any guarantee by the Company of debt securities of any subsidiary of the Company if such guarantee ranks pari passu with or junior in interest to the Securities (other than (a) dividends or distributions in the Company's capital stock, (b) any declaration of a dividend in connection with the implementation of a Rights Plan or the redemption or repurchase of any rights distributed pursuant to a Rights Plan, (c) payments under the Guarantee with respect to the Securities of such Series, and (d) purchases of Common Stock related to the issuance of Common Stock or rights under any of the Company's benefit plans for its directors, officers or employees, related to the issuance of common stock or rights under a dividend reinvestment and stock purchase plan, or related to the issuance of Common Stock (or securities convertible into or exchangeable for Common Stock) as consideration in an acquisition transaction that was entered into prior to the commencement of such Extension Period) if at such time (x) there shall have occurred any event of which the Company has actual knowledge that (A) with the giving of notice or the lapse of time or both, would constitute an Event of Default with respect to the Securities of such series and (B) in respect of which the Company shall not have taken reasonable steps to cure, (y) if the Securities of such series are held by a Trust, the Company shall be in default with respect to its payment of any obligations under the Guarantee relating to the Preferred Securities issued by such Trust or (z) the Company shall have given notice of its election to begin an Extension Period with respect to the Securities of such series as provided herein and shall not have rescinded such notice, or such Extension Period, or any extension thereof, shall be continuing. The Company also covenants with each Holder of Securities of a series issued to a Trust (i) to maintain directly or indirectly 100% ownership of the Common Securities of such Trust; provided, however, that any permitted successor of the Company hereunder may succeed to the Company's ownership of such Common Securities, (ii) not to voluntarily terminate, wind-up or liquidate such Trust, except (a) in connection with a distribution of the Securities of such series to the holders of the Trust Securities of such Trust in liquidation of such Trust or (b) in connection with certain mergers, consolidations or amalgamations permitted by the related Trust Agreement and (iii) to use its reasonable efforts, consistent with the terms and provisions of such 70 62 Trust Agreement, to cause such Trust to remain classified as a grantor trust and not an association taxable as a corporation for United States federal income tax purposes. Section 10.8. Calculation of Original Issue Discount. The Company shall file with the Trustee promptly at the end of each calendar year a written notice specifying the amount of original issue discount (including daily rates and accrual periods) accrued on Outstanding Securities as of the end of such year, if any. ARTICLE XI REDEMPTION OF SECURITIES Section 11.1. Applicability of This Article. Redemption of Securities of any series (whether by operation of a sinking fund or otherwise) as permitted or required by any form of Security issued pursuant to this Indenture shall be made in accordance with such form of Security and this Article; provided, however, that if any provision of any such form of Security shall conflict with any provision of this Article, the provision of such form of Security shall govern. Except as otherwise set forth in the form of Security for such series, each Security of such series shall be subject to partial redemption only in the amount of $25 or, in the case of the Securities of a series issued to a Trust, $25, or integral multiples thereof. Section 11.2. Election to Redeem; Notice to Trustee. The election of the Company to redeem any Securities shall be evidenced by or pursuant to a Board Resolution. In case of any redemption at the election of the Company of the Securities, the Company shall, not less than 45 nor more than 60 days prior to the Redemption Date (unless a shorter notice shall be satisfactory to the Trustee), notify the Trustee of such date and of the principal amount of Securities of that series to be redeemed. In the case of any redemption of Securities prior to the expiration of any restriction on such redemption provided in the terms of such Securities, the Company shall furnish the Trustee with an Officers' Certificate and an Opinion of Counsel evidencing compliance with such restriction. Section 11.3. Selection of Securities to be Redeemed. If less than all the Securities of any series are to be redeemed (unless all the Securities of such series and of a specified tenor are to be redeemed or unless such redemption affects only a single Security), the particular Securities to be redeemed shall be selected not more than 60 days prior to the Redemption Date by the Trustee, from the Outstanding Securities of such series not previously called for redemption, by lot or such other method as the Trustee shall deem fair and appropriate and which may provide for the selection for redemption of a portion of the principal amount of any Security of such series, provided that the unredeemed portion of the 71 63 principal amount of any Security shall be in an authorized denomination (which shall not be less than the minimum authorized denomination) for such Security. If less than all the Securities of such series and of a specified tenor are to be redeemed (unless such redemption affects only a single Security), the particular Securities to be redeemed shall be selected not more than 60 days prior to the Redemption Date by the Trustee, from the Outstanding Securities of such series and specified tenor not previously called for redemption in accordance with the preceding sentence. The Trustee shall promptly notify the Company in writing of the Securities selected for partial redemption and the principal amount thereof to be redeemed. For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Securities shall relate, in the case of any Security redeemed or to be redeemed only in part, to the portion of the principal amount of such Security which has been or is to be redeemed. If the Company shall so direct, Securities registered in the name of the Company, any Affiliate or any Subsidiary thereof shall not be included in the Securities selected for redemption. Section 11.4. Notice of Redemption. Notice of redemption shall be given by first-class mail, postage prepaid, mailed not later than the thirtieth day, and not earlier than the sixtieth day, prior to the Redemption Date, to each Holder of Securities to be redeemed, at the address of such Holder as it appears in the Securities Register. With respect to Securities of each series to be redeemed, each notice of redemption shall identify the Securities to be redeemed (including CUSIP number, if a CUSIP number has been assigned to such Securities of such Series) and shall state: (a) the Redemption Date; (b) the Redemption Price; (c) if less than all Outstanding Securities of such particular series and having the same terms are to be redeemed, the identification (and, in the case of partial redemption, the respective principal amounts) of the particular Securities to be redeemed; (d) that on the Redemption Date, the Redemption Price will become due and payable upon each such Security or portion thereof, and that interest thereon, if any, shall cease to accrue on and after said date; (e) the place or places where such Securities are to be surrendered for payment of the Redemption Price; and (f) that the redemption is for a sinking fund, if such is the case. Notice of redemption of Securities to be redeemed at the election of the Company shall be given by the Company or, at the Company's request, by the Trustee in the name and at the expense of the Company and shall not be irrevocable. The notice if mailed in the manner herein 72 64 provided shall be conclusively presumed to have been duly given, whether or not the Holder receives such notice. In any case, a failure to give such notice by mail or any defect in the notice to the Holder of any Security designated for redemption as a whole or in part shall not affect the validity of the proceedings for the redemption of any other Security. Section 11.5. Deposit of Redemption Price. Prior to 10:00 a.m. New York City time on the Redemption Date specified in the notice of redemption given as provided in Section 11.4, the Company will deposit with the Trustee or with one or more Paying Agents (or if the Company is acting as its own Paying Agent, the Company will segregate and hold in trust as provided in Section 10.3) an amount of money sufficient to pay the Redemption Price of, and any accrued interest (including Additional Interest) on, all the Securities which are to be redeemed on that date. Section 11.6. Payment of Securities Called for Redemption. If any notice of redemption has been given as provided in Section 11.4, the Securities or portion of Securities with respect to which such notice has been given shall become due and payable on the date and at the place or places stated in such notice at the applicable Redemption Price. On presentation and surrender of such Securities at a Place of Payment in said notice specified, the said securities or the specified portions thereof shall be paid and redeemed by the Company at the applicable Redemption Price, together with accrued interest (including any Additional Interest) to the Redemption Date; provided, however, that, unless otherwise specified as contemplated by Section 3.1, installments of interest whose Stated Maturity is on or prior to the Redemption Date will be payable to the Holders of such Securities, or one or more Predecessor Securities, registered as such at the close of business on the relevant Record Dates according to their terms and the provisions of Section 3.7. Upon presentation of any Security redeemed in part only, the Company shall execute and the Trustee shall authenticate and make available for delivery to the Holder thereof, at the expense of the Company, a new Security or Securities of the same series, of authorized denominations, in aggregate principal amount equal to the unredeemed portion of the Security so presented and having the same Original Issue Date, Stated Maturity and terms. If a Global Security is so surrendered, such new Security will also be a new Global Security. If any Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal of and premium, if any, on such Security shall, until paid, bear interest from the Redemption Date at the rate prescribed therefor in the Security. Section 11.7. Right of Redemption of Securities Initially Issued to a Trust. In the case of the Securities of a series initially issued to a Trust, except as otherwise established pursuant to Section 3.1 for the Securities of a Series, the Company, at its option, may redeem such Securities (i) on or after the date five years after the Original Issue Date of such Securities, in whole at any time or in part from time to time, or (ii) upon the occurrence and during the continuation of a Tax Event or a Capital Treatment Event, at any time within 90 days 73 65 following the occurrence of such Tax Event or Capital Treatment Event in respect of such Trust, in whole (but not in part), in each case at a Redemption Price equal to 100% of the principal amount thereof. ARTICLE XII SINKING FUNDS Section 12.1. Applicability of Article. The provisions of this Article shall be applicable to any sinking fund for the retirement of Securities of any series except as otherwise specified as contemplated by Section 3.1 for such Securities. The minimum amount of any sinking fund payment provided for by the terms of any Securities of any series is herein referred to as a "mandatory sinking fund payment", and any sinking fund payment in excess of such minimum amount which is permitted to be made by the terms of such Securities of any series is herein referred to as an "optional sinking fund payment". If provided for by the terms of any Securities of any series, the cash amount of any sinking fund payment may be subject to reduction as provided in Section 12.2. Each sinking fund payment shall be applied to the redemption of Securities of any series as provided for by the terms of such Securities. Section 12.2. Satisfaction of Sinking Fund Payments with Securities. In lieu of making all or any part of a mandatory sinking fund payment with respect to any Securities of a series in cash, the Company may at its option, at any time no more than 16 months and no less than 30 days prior to the date on which such sinking fund payment is due, deliver to the Trustee Securities of such series (together with the unmatured coupons, if any, appertaining thereto) theretofore purchased or otherwise acquired by the Company, except Securities of such series that have been redeemed through the application of mandatory or optional sinking fund payments pursuant to the terms of the Securities of such series, accompanied by a Company Order instructing the Trustee to credit such obligations and stating that the Securities of such series were originally issued by the Company by way of bona fide sale or other negotiation for value; provided that the Securities to be so credited have not been previously so credited. The Securities to be so credited shall be received and credited for such purpose by the Trustee at the redemption price for such Securities, as specified in the Securities so to be redeemed, for redemption through operation of the sinking fund and the amount of such sinking fund payment shall be reduced accordingly. Section 12.3. Redemption of Securities for Sinking Fund. Not less than 60 days prior to each sinking fund payment date for any series of Securities, the Company will deliver to the Trustee an Officers' Certificate specifying the amount of the next ensuing sinking fund payment for such Securities pursuant to the terms of such Securities, the portion thereof, if any, which is to be satisfied by payment of cash in the currency in which the 74 66 Securities of such series are payable (except as provided pursuant to Section 3.1) and the portion thereof, if any, which is to be satisfied by delivering and crediting Securities pursuant to Section 12.2 and will also deliver to the Trustee any Securities to be so delivered. Such Officers' Certificate shall be irrevocable and upon its delivery the Company shall be obligated to make the cash payment or payments therein referred to, if any, on or before the succeeding sinking fund payment date. In the case of the failure of the Company to deliver such Officers' Certificate (or, as required by this Indenture, the Securities and coupons, if any, specified in such Officers' Certificate), the sinking fund payment due on the succeeding sinking fund payment date for such series shall be paid entirely in cash and shall be sufficient to redeem the principal amount of the Securities of such series subject to a mandatory sinking fund payment without the right to deliver or credit securities as provided in Section 12.2 and without the right to make the optional sinking fund payment with respect to such series at such time. Any sinking fund payment or payments (mandatory or optional) made in cash plus any unused balance of any preceding sinking fund payments made with respect to the Securities of any particular series shall be applied by the Trustee (or by the Company if the Company is acting as its own Paying Agent) on the sinking fund payment date on which such payment is made (or, if such payment is made before a sinking fund payment date, on the sinking fund payment date immediately following the date of such payment) to the redemption of Securities of such series at the Redemption Price specified in such Securities with respect to the sinking fund. Any sinking fund moneys not so applied or allocated by the Trustee (or, if the Company is acting as its own Paying Agent, segregated and held in trust by the Company as provided in Section 10.3) for such series and together with such payment (or such amount so segregated) shall be applied in accordance with the provisions of this Section 12.3. Any and all sinking fund moneys with respect to the Securities of any particular series held by the Trustee (or if the Company is acting as its own Paying Agent, segregated and held in trust as provided in Section 10.3) on the last sinking fund payment date with respect to Securities of such series and not held for the payment or redemption of particular Securities of such series shall be applied by the Trustee (or by the Company if the Company is acting as its own Paying Agent), together with other moneys, if necessary, to be deposited (or segregated) sufficient for the purpose, to the payment of the principal of the Securities of such series at Maturity. The Trustee shall select the Securities to be redeemed upon such sinking fund payment date in the manner specified in Section 11.3 and cause notice of the redemption thereof to be given in the name of and at the expense of the Company in the manner provided in Section 11.4. Such notice having been duly given, the redemption of such Securities shall be made upon the terms and in the manner stated in Section 11.6. On or before each sinking fund payment date, the Company shall pay to the Trustee (or, if the Company is acting as its own Paying Agent, the Company shall segregate and hold in trust as provided in Section 10.3) in cash a sum in the currency in which Securities of such series are payable (except as provided pursuant to Section 3.1) equal to the principal and any interest accrued to the Redemption Date for Securities or portions thereof to be redeemed on such sinking fund payment date pursuant to this Section 12.3. Neither the Trustee nor the Company shall redeem any Securities of a series with sinking fund moneys or mail any notice of redemption of Securities of such series by operation of the sinking fund for such series during the continuance of a default in payment of interest, if any, on any Securities of such series or of any Event of Default (other than an Event of Default 75 67 occurring as a consequence of this paragraph) with respect to the Securities of such series, except that if the notice of redemption shall have been provided in accordance with the provisions hereof, the Trustee (or the Company, if the Company is then acting as its own Paying Agent) shall redeem such Securities if cash sufficient for that purpose shall be deposited with the Trustee (or segregated by the Company) for that purpose in accordance with the terms of this Article XII. Except as aforesaid, any moneys in the sinking fund for such series at the time when any such default or Event of Default shall occur and any moneys thereafter paid into such sinking fund shall, during the continuance of such default or Event of Default, be held as security for the payment of the Securities and coupons, if any, of such series; provided, however, that in case such default or Event of Default shall have been cured or waived herein, such moneys shall thereafter be applied on the next sinking fund payment date for the Securities of such series on which such moneys may be applied pursuant to the provisions of this Section 12.3. ARTICLE XIII SUBORDINATION OF SECURITIES Section 13.1. Securities Subordinate to Senior Debt. The Company covenants and agrees, and each Holder of a Security, by its acceptance thereof, likewise covenants and agrees, that, to the extent and in the manner hereinafter set forth in this Article, the payment of the principal of (and premium, if any) and interest (including any Additional Interest) on each and all of the Securities are hereby expressly made subordinate and subject in right of payment to the prior payment in full of all Senior Debt. Section 13.2. Payment Over of Proceeds Upon Dissolution, Etc. In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to the Company (each such event, if any, herein sometimes referred to as a "Proceeding"), then the holders of Senior Debt shall be entitled to receive payment in full of all amounts due or to become due on such Senior Debt, or provision shall be made for such payment in cash or cash equivalents or otherwise in a manner satisfactory to the holders of Senior Debt, before the Holders of the Securities are entitled to receive or retain any payment or distribution of any kind or character, whether in cash, property or securities (including any payment or distribution which may be payable or deliverable by reason of the payment of any other Debt of the Company (including any series of the Securities) subordinated to the payment of the Securities, such payment or distribution being hereinafter referred to as a "Junior Subordinated Payment"), on account of principal of (or premium, if any) or interest (including any Additional Interest) on the Securities or on account of the purchase or other acquisition of Securities by the Company or any Subsidiary and to that end the holders of Senior Debt shall be entitled to receive, for application to the payment thereof, any payment or distribution of any kind or character, whether in cash, property or securities, including any Junior Subordinated Payment, which may be payable or deliverable in respect of the Securities in any such Proceeding; provided, however, that holders of Senior Debt shall not be entitled to receive payment of any such amounts to the extent that 76 68 such holders would be required by the subordination provisions of such Senior Debt to pay such amounts over to the obligees on trade accounts payable or other liabilities arising in the ordinary course of the Company's business. In the event that, notwithstanding the foregoing provisions of this Section, the Trustee or the Holder of any Security shall have received any payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities, including any Junior Subordinated Payment, before all amounts due or to become due on all Senior Debt are paid in full or payment thereof is provided for in cash or cash equivalents or otherwise in a manner satisfactory to the holders of Senior Debt, and if such fact shall, at or prior to the time of such payment or distribution, have been made known to the Trustee or, as the case may be, such Holder, then and in such event such payment or distribution shall be paid over or delivered forthwith to the trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee, agent or other Person making payment or distribution of assets of the Company for application to the payment of all amounts due or to become due on all Senior Debt remaining unpaid, to the extent necessary to pay all amounts due or to become due on all Senior Debt in full, after giving effect to any concurrent payment or distribution to or for the holders of Senior Debt; provided, however, that holders of Senior Debt shall not be entitled to receive payment of any such amounts to the extent that such holders would be required by the subordination provisions of such Senior Debt to pay such amounts over to the obligees on trade accounts payable or other liabilities arising in the ordinary course of the Company's business. For purposes of this Article only, the words "any payment or distribution of any kind or character, whether in cash, property or securities" shall not be deemed to include shares of stock of the Company as reorganized or readjusted, or securities of the Company or any other corporation provided for by a plan of reorganization or readjustment which securities are subordinated in right of payment to all then outstanding Senior Debt to substantially the same extent as the Securities are so subordinated as provided in this Article. The consolidation of the Company with, or the merger of the Company into, another Person or the liquidation or dissolution of the Company following the sale of all or substantially all of its properties and assets as an entirety to another Person upon the terms and conditions set forth in Article VIII shall not be deemed a Proceeding for the purposes of this Section if the Person formed by such consolidation or into which the Company is merged or the Person which acquires by sale such properties and assets as an entirety, as the case may be, shall, as a part of such consolidation, merger or sale, comply with the conditions set forth in Article VIII. Section 13.3. Prior Payment to Senior Debt Upon Acceleration of Securities. In the event that any Securities are declared due and payable before their Stated Maturity, then and in such event the holders of the Senior Debt outstanding at the time such Securities so become due and payable shall be entitled to receive payment in full of all amounts due on or in respect of such Senior Debt (including any amounts due upon acceleration), or provision shall be made for such payment in cash or cash equivalents or otherwise in a manner satisfactory to the holders of Senior Debt, before the Holders of the Securities are entitled to receive any payment or distribution of any kind or character, whether in cash, properties or securities (including any Junior Subordinated Payment) by the Company on account of the principal of (or 77 69 premium, if any) or interest (including any Additional Interest) on the Securities or on account of the purchase or other acquisition of Securities by the Company or any Subsidiary; provided, however, that nothing in this Section shall prevent the satisfaction of any sinking fund payment in accordance with this Indenture or as otherwise specified as contemplated by Section 3.1 for the Securities of any series by delivering and crediting pursuant to Section 12.2 or as otherwise specified as contemplated by Section 3.1 for the Securities of any series Securities which have been acquired (upon redemption or otherwise) prior to such declaration of acceleration; provided further, however, that holders of Senior Debt shall not be entitled to receive payment of any such amounts to the extent that such holders would be required by the subordination provisions of such Senior Debt to pay such amounts over to the obligees on trade accounts payable or other liabilities arising in the ordinary course of the Company's business. In the event that, notwithstanding the foregoing, the Company shall make any payment to the Trustee or the Holder of any Security prohibited by the foregoing provisions of this Section, and if such fact shall, at or prior to the time of such payment, have been made known to the Trustee or, as the case may be, such Holder, then and in such event such payment shall be paid over and delivered forthwith to the Company. The provisions of this Section shall not apply to any payment with respect to which Section 13.2 would be applicable. Section 13.4. No Payment When Senior Debt in Default. (a) In the event and during the continuation of any default in the payment of principal of (or premium, if any) or interest on any Senior Debt, or in the event that any event of default with respect to any Senior Debt shall have occurred and be continuing and shall have resulted in such Senior Debt becoming or being declared due and payable prior to the date on which it would otherwise have become due and payable, unless and until such event of default shall have been cured or waived or shall have ceased to exist and such acceleration shall have been rescinded or annulled, or (b) in the event any judicial proceeding shall be pending with respect to any such default in payment or such event or default, then no payment or distribution of any kind or character, whether in cash, properties or securities (including any Junior Subordinated Payment) shall be made by the Company on account of principal of (or premium, if any) or interest (including any Additional Interest), if any, on the Securities or on account of the purchase or other acquisition of Securities by the Company or any Subsidiary, in each case unless and until all amounts due or to become due on such Senior Debt are paid in full; provided, however, that nothing in this Section shall prevent the satisfaction of any sinking fund payment in accordance with this Indenture or as otherwise specified as contemplated by Section 3.1 for the Securities of any series by delivering and crediting pursuant to Section 12.2 or as otherwise specified as contemplated by Section 3.1 for the Securities of any series Securities which have been acquired (upon redemption or otherwise) prior to such default in payment or event of default; provided further, however, that holders of Senior Debt shall not be entitled to receive payment of any such amounts to the extent that such holders would be required by the subordination provisions of such Senior Debt to pay such amounts over to the obligees on trade accounts payable or other liabilities arising in the ordinary course of the Company's business. 78 70 In the event that, notwithstanding the foregoing, the Company shall make any payment to the Trustee or the Holder of any Security prohibited by the foregoing provisions of this Section, and if such fact shall, at or prior to the time of such payment, have been made known to the Trustee or, as the case may be, such Holder, then and in such event such payment shall be paid over and delivered forthwith to the Company. The provisions of this Section shall not apply to any payment with respect to which Section 13.2 would be applicable. Section 13.5. Payment Permitted If No Default. Nothing contained in this Article or elsewhere in this Indenture or in any of the Securities shall prevent (a) the Company, at any time except during the pendency of any Proceeding referred to in Section 13.2 or under the conditions described in Sections 13.3 and 13.4, from making payments at any time of principal of (and premium, if any) or interest (including Additional Interest) on the Securities, or (b) the application by the Trustee of any money deposited with it hereunder to the payment of or on account of the principal of (and premium, if any) or interest (including any Additional Interest) on the Securities or the retention of such payment by the Holders, if, at the time of such application by the Trustee, it did not have knowledge that such payment would have been prohibited by the provisions of this Article. Section 13.6. Subrogation to Rights of Holders of Senior Debt. Subject to the payment in full of all amounts due or to become due on all Senior Debt, or the provision for such payment in cash or cash equivalents or otherwise in a manner satisfactory to the holders of Senior Debt, the Holders of the Securities shall be subrogated to the extent of the payments or distributions made to the holders of such Senior Debt pursuant to the provisions of this Article (equally and ratably with the holders of all indebtedness of the Company which by its express terms is subordinated to Senior Debt of the Company to substantially the same extent as the Securities are subordinated to the Senior Debt and is entitled to like rights of subrogation by reason of any payments or distributions made to holders of such Senior Debt) to the rights of the holders of such Senior Debt to receive payments and distributions of cash, property and securities applicable to the Senior Debt until the principal of (and premium, if any) and interest (including Additional Interest) on the Securities shall be paid in full. For purposes of such subrogation, no payments or distributions to the holders of the Senior Debt of any cash, property or securities to which the Holders of the Securities or the Trustee would be entitled except for the provisions of this Article, and no payments over pursuant to the provisions of this Article to the holders of Senior Debt by Holders of the Securities or the Trustee, shall, as among the Company, its creditors other than holders of Senior Debt, and the Holders of the Securities, be deemed to be a payment or distribution by the Company to or on account of the Senior Debt. 79 71 Section 13.7. Provisions Solely to Define Relative Rights. The provisions of this Article are and are intended solely for the purpose of defining the relative rights of the Holders of the Securities on the one hand and the holders of Senior Debt on the other hand. Nothing contained in this Article or elsewhere in this Indenture or in the Securities is intended to or shall (a) impair, as between the Company and the Holders of the Securities, the obligations of the Company, which are absolute and unconditional, to pay to the Holders of the Securities the principal of (and premium, if any) and interest (including any Additional Interest) on the Securities as and when the same shall become due and payable in accordance with their terms; or (b) affect the relative rights against the Company of the Holders of the Securities and creditors of the Company other than their rights in relation to the holders of Senior Debt; or (c) prevent the Trustee or the Holder of any Security from exercising all remedies otherwise permitted by applicable law upon default under this Indenture including, without limitation, filing and voting claims in any Proceeding, subject to the rights, if any, under this Article of the holders of Senior Debt to receive cash, property and securities otherwise payable or deliverable to the Trustee or such Holder. Section 13.8. Trustee to Effectuate Subordination. Each Holder of a Security by his or her acceptance thereof authorizes and directs the Trustee on his or her behalf to take such action as may be necessary or appropriate to acknowledge or effectuate the subordination provided in this Article and appoints the Trustee his or her attorney-in-fact for any and all such purposes. Section 13.9. No Waiver of Subordination Provisions. No right of any present or future holder of any Senior Debt to enforce subordination as herein provided shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Company or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by the Company with the terms, provisions and covenants of this Indenture, regardless of any knowledge thereof that any such holder may have or be otherwise charged with. Without in any way limiting the generality of the immediately preceding paragraph, the holders of Senior Debt may, at any time and from to time, without the consent of or notice to the Trustee or the Holders of the Securities, without incurring responsibility to the Holders of the Securities and without impairing or releasing the subordination provided in this Article or the obligations hereunder of the Holders of the Securities to the holders of Senior Debt, do any one or more of the following: (i) change the manner, place or terms of payment or extend the time of payment of, or renew or alter, Senior Debt, or otherwise amend or supplement in any manner Senior Debt or any instrument evidencing the same or any agreement under which Senior Debt is outstanding; (ii) sell, exchange, release or otherwise deal with any property pledged, mortgaged or otherwise securing Senior Debt; (iii) release any Person liable in any manner for the collection of Senior Debt; and (iv) exercise or refrain from exercising any rights against the Company and any other Person. 80 72 Section 13.10. Notice to Trustee. The Company shall give prompt written notice to the Trustee of any fact known to the Company which would prohibit the making of any payment to or by the Trustee in respect of the Securities. Notwithstanding the provisions of this Article or any other provision of this Indenture, the Trustee shall not be charged with knowledge of the existence of any facts which would prohibit the making of any payment to or by the Trustee in respect of the Securities, unless and until the Trustee shall have received written notice thereof from the Company or a holder of Senior Debt or from any trustee, agent or representative therefor; provided, however, that if the Trustee shall not have received the notice provided for in this Section at least two Business Days prior to the date upon which by the terms hereof any monies may become payable for any purpose (including, without limitation, the payment of the principal of (and premium, if any) or interest (including any Additional Interest) on any Security), then, anything herein contained to the contrary notwithstanding, the Trustee shall have full power and authority to receive such monies and to apply the same to the purpose for which they were received and shall not be affected by any notice to the contrary which may be received by it within two Business Days prior to such date. Subject to the provisions of Section 6.1, the Trustee shall be entitled to rely on the delivery to it of a written notice by a Person representing himself to be a holder of Senior Debt (or a trustee therefor) to establish that such notice has been given by a holder of Senior Debt (or a trustee therefor). In the event that the Trustee determines in good faith that further evidence is required with respect to the right of any Person as a holder of Senior Debt to participate in any payment or distribution pursuant to this Article, the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of Senior Debt held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and any other facts pertinent to the rights of such Person under this Article, and if such evidence is not furnished, the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment. Section 13.11. Reliance on Judicial Order or Certificate of Liquidating Agent. Upon any payment or distribution of assets of the Company referred to in this Article, the Trustee, subject to the provisions of Section 6.1, and the Holders of the Securities shall be entitled to rely upon any order or decree entered by any court of competent jurisdiction in which such Proceeding is pending, or a certificate of the trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit of creditors, agent or other Person making such payment or distribution, delivered to the Trustee or to the Holders of Securities, for the purpose of ascertaining the Persons entitled to participate in such payment or distribution, the holders of the Senior Debt and other indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article. 81 73 Section 13.12. Trustee Not Fiduciary for Holders of Senior Debt. The Trustee, in its capacity as trustee under this Indenture, shall not be deemed to owe any fiduciary duty to the holders of Senior Debt and shall not be liable to any such holders if it shall in good faith mistakenly pay over or distribute to Holders of Securities or to the Company or to any other Person cash, property or securities to which any holders of Senior Debt shall be entitled by virtue of this Article or otherwise. With respect to the holders of Senior Debt, the Trustee undertakes to perform or to observe only such of its covenants or obligations as are specifically set forth in this Article and no implied covenants or obligations with respect to holders of Senior Debt shall be read into this Indenture against the Trustee. Section 13.13. Rights of Trustee as Holder of Senior Debt; Preservation of Trustee's Rights. The Trustee in its individual capacity shall be entitled to all the rights set forth in this Article with respect to any Senior Debt which may at any time be held by it, to the same extent as any other holder of Senior Debt, and nothing in this Indenture shall deprive the Trustee of any of its rights as such holder. Nothing in this Article shall apply to claims of, or payments to, the Trustee under or pursuant to Section 6.7. Section 13.14. Article Applicable to Paying Agents. In case at any time any Paying Agent other than the Trustee shall have been appointed by the Company and be then acting hereunder, the term "Trustee" as used in this Article shall in such case (unless the context otherwise requires) be construed as extending to and including such Paying Agent within its meaning as fully for all intents and purposes as if such Paying Agent were named in this Article in addition to or in place of the Trustee. Section 13.15. Certain Conversions or Exchanges Deemed Payment. For the purposes of this Article only, (a) the issuance and delivery of junior securities upon conversion or exchange of Securities shall not be deemed to constitute a payment or distribution on account of the principal of (or premium, if any) or interest (including any Additional Interest) on Securities or on account of the purchase or other acquisition of Securities, and (b) the payment, issuance or delivery of cash, property or securities (other than junior securities) upon conversion or exchange of a Security shall be deemed to constitute payment on account of the principal of such security. For the purposes of this Section, the term "junior securities" means (i) shares of any stock of any class of the Company and (ii) securities of the Company which are subordinated in right of payment to all Senior Debt which may be outstanding at the time of issuance or delivery of such securities to substantially the same extent as, or to a greater extent than, the Securities are so subordinated as provided in this Article. Section 13.16. Trust Moneys Not Subordinated. Notwithstanding anything contained herein to the contrary, payments from money held in trust under Article IV by the Trustee for the payment of principal of, premium, if any, and 82 74 interest on the Securities shall not be subordinated to the prior payment of any Senior Debt of the Company or subject to the restrictions set forth in this Article XIII and none of the Holders shall be obligated to pay over any such amount to the Company or any holder of Senior Debt of the Company or any other creditor of the Company. 83 75 * * * * This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed, all as of the day and year first above written. MBNA CORPORATION By: -------------------------------------- Name: Title: THE BANK OF NEW YORK as Trustee By: --------------------------------------- Name: Title: EX-4.E.4 4 AMEND. & RESTATED TRUST AGREEMENT DATED 2/24/97 1 EXHIBIT 4(f)(3) AMENDED AND RESTATED TRUST AGREEMENT among MBNA CORPORATION, as Depositor, THE BANK OF NEW YORK, as Property Trustee, THE BANK OF NEW YORK (DELAWARE), as Delaware Trustee, and THE ADMINISTRATIVE TRUSTEES NAMED HEREIN Dated as of [______] [__], 1997 MBNA CAPITAL C 2 MBNA Capital C Certain Sections of this Trust Agreement relating to Sections 310 through 318 of the Trust Indenture Act of 1939:
Trust Indenture Trust Agreement Act Section Section - --------------- ------------ (Section) 310 (a)(1)................................................................. 8.7 (a)(2)................................................................. 8.7 (a)(3)................................................................. 8.9 (a)(4)................................................................. 2.7(a)(ii) (b).................................................................... 8.8 (Section) 311 (a).................................................................... 8.13 (b).................................................................... 8.13 (Section) 312 (a).................................................................... 5.7 (b).................................................................... 5.7 (c).................................................................... 5.7 (Section) 313 (a).................................................................... 8.14(a) (a)(4)................................................................. 8.14(b) (b).................................................................... 8.14(a) (c).................................................................... 10.10 (d).................................................................... 8.14(b) (Section) 314 (a).................................................................... 8.15 (b).................................................................... Not Applicable (c)(1)................................................................. 8.16 (c)(2)................................................................. 8.16 (c)(3)................................................................. Not Applicable (d).................................................................... Not Applicable (e).................................................................... 1.1, 8.16 (Section) 315 (a).................................................................... 8.1(a), 8.3(a) (b).................................................................... 8.2, 10.10 (c).................................................................... 8.1(a) (d).................................................................... 8.1, 8.3 (e).................................................................... Not Applicable (Section) 316 (a).................................................................... Not Applicable (a)(1)(A).............................................................. Not Applicable (a)(1)(B).............................................................. Not Applicable (a)(2)................................................................. Not Applicable (b).................................................................... 5.14 (c).................................................................... 6.7 (Section) 317 (a)(1)................................................................. Not Applicable (a)(2)................................................................. Not Applicable (b).................................................................... 5.9 (Section) 318 (a).................................................................... 10.11
- ---------- Note: This reconciliation and tie sheet shall not, for any purpose, be deemed to be a part of the Trust Agreement. EX-4.F.3 5 AMEND. & RESTATED TRUST AGREEMENT FOR PREF. SECUR. 1 EXHIBIT 4(f)(3) AMENDED AND RESTATED TRUST AGREEMENT among MBNA CORPORATION, as Depositor, THE BANK OF NEW YORK, as Property Trustee, THE BANK OF NEW YORK (DELAWARE), as Delaware Trustee, and THE ADMINISTRATIVE TRUSTEES NAMED HEREIN Dated as of [______] [__], 1997 MBNA CAPITAL C 2 MBNA Capital C Certain Sections of this Trust Agreement relating to Sections 310 through 318 of the Trust Indenture Act of 1939:
Trust Indenture Trust Agreement Act Section Section - --------------- ------------ (Section) 310 (a)(1)................................................................. 8.7 (a)(2)................................................................. 8.7 (a)(3)................................................................. 8.9 (a)(4)................................................................. 2.7(a)(ii) (b).................................................................... 8.8 (Section) 311 (a).................................................................... 8.13 (b).................................................................... 8.13 (Section) 312 (a).................................................................... 5.7 (b).................................................................... 5.7 (c).................................................................... 5.7 (Section) 313 (a).................................................................... 8.14(a) (a)(4)................................................................. 8.14(b) (b).................................................................... 8.14(a) (c).................................................................... 10.10 (d).................................................................... 8.14(b) (Section) 314 (a).................................................................... 8.15 (b).................................................................... Not Applicable (c)(1)................................................................. 8.16 (c)(2)................................................................. 8.16 (c)(3)................................................................. Not Applicable (d).................................................................... Not Applicable (e).................................................................... 1.1, 8.16 (Section) 315 (a).................................................................... 8.1(a), 8.3(a) (b).................................................................... 8.2, 10.10 (c).................................................................... 8.1(a) (d).................................................................... 8.1, 8.3 (e).................................................................... Not Applicable (Section) 316 (a).................................................................... Not Applicable (a)(1)(A).............................................................. Not Applicable (a)(1)(B).............................................................. Not Applicable (a)(2)................................................................. Not Applicable (b).................................................................... 5.14 (c).................................................................... 6.7 (Section) 317 (a)(1)................................................................. Not Applicable (a)(2)................................................................. Not Applicable (b).................................................................... 5.9 (Section) 318 (a).................................................................... 10.11
- ---------- Note: This reconciliation and tie sheet shall not, for any purpose, be deemed to be a part of the Trust Agreement. 3
TABLE OF CONTENTS ARTICLE I DEFINED TERMS.............................................1 SECTION 1.1 Definitions. ..............................................................1 ARTICLE II CONTINUATION OF THE TRUST..................................... 10 SECTION 2.1 Name. ................................................................... 10 SECTION 2.2 Office of the Delaware Trustee; Principal Place of Business. ............ 10 SECTION 2.3 Initial Contribution of Trust Property; Organizational Expenses. ........ 10 SECTION 2.4 Issuance of the Preferred Securities. ................................... 10 SECTION 2.5 Issuance of the Common Securities; Subscription and Purchase of Debentures. ....................................................... 11 SECTION 2.6 Declaration of Trust. ................................................... 11 SECTION 2.7 Authorization to Enter into Certain Transactions. ....................... 11 SECTION 2.8 Assets of Trust. ........................................................ 15 SECTION 2.9 Title to Trust Property. ................................................ 15 ARTICLE III PAYMENT ACCOUNT.......................................... 15 SECTION 3.1 Payment Account. ........................................................ 15 ARTICLE IV DISTRIBUTIONS; REDEMPTION..................................... 16 SECTION 4.1 Distributions. .......................................................... 16 SECTION 4.2 Redemption. ............................................................. 17 SECTION 4.3 Subordination of Common Securities. ..................................... 19 SECTION 4.4 Payment Procedures. ..................................................... 19 SECTION 4.5 Tax Returns and Reports. ................................................ 19 SECTION 4.6 Payment of Expenses of the Trust. ....................................... 20 SECTION 4.7 Payments under Indenture or Pursuant to Direct Actions................... 20 ARTICLE V TRUST SECURITIES CERTIFICATES................................... 20 SECTION 5.1 Initial Ownership. ...................................................... 20
i 4 PAGE SECTION 5.2 The Trust Securities Certificates. ...................................... 20 SECTION 5.3 Execution and Delivery of Trust Securities Certificates. ................ 21 SECTION 5.4 Registration of Transfer and Exchange of Preferred Securities Certificates....................................................... 21 SECTION 5.5 Mutilated, Destroyed, Lost or Stolen Trust Securities Certificates. ..... 22 SECTION 5.6 Persons Deemed Securityholders. ......................................... 23 SECTION 5.7 Access to List of Securityholders' Names and Addresses. ................. 23 SECTION 5.8 Maintenance of Office or Agency. ........................................ 23 SECTION 5.9 Appointment of Paying Agent. ............................................ 23 SECTION 5.10 Ownership of Common Securities by Depositor. ............................ 24 SECTION 5.11 Book-Entry Preferred Securities Certificates; Common Securities Certificate. ........................................... 24 SECTION 5.12 Notices to Clearing Agency. ............................................. 25 SECTION 5.13 Definitive Preferred Securities Certificates. ........................... 25 SECTION 5.14 Rights of Securityholders. .............................................. 26 SECTION 5.15 CUSIP Numbers............................................................ 28 ARTICLE VI ACTS OF SECURITYHOLDERS; MEETINGS; VOTING............................. 28 SECTION 6.1 Limitations on Voting Rights. ........................................... 28 SECTION 6.2 Notice of Meetings. ..................................................... 29 SECTION 6.3 Meetings of Preferred Securityholders. .................................. 29 SECTION 6.4 Voting Rights. .......................................................... 30 SECTION 6.5 Proxies, etc. ........................................................... 30 SECTION 6.6 Securityholder Action by Written Consent. ............................... 31 SECTION 6.7 Record Date for Voting and Other Purposes. .............................. 31 SECTION 6.8 Acts of Securityholders. ................................................ 31 SECTION 6.9 Inspection of Records. .................................................. 32 ARTICLE VII REPRESENTATIONS AND WARRANTIES................................... 32 SECTION 7.1 Representations and Warranties of the Property Trustee and the Delaware........................................................... 32 SECTION 7.2 Representations and Warranties of Depositor. ............................ 33 ARTICLE VIII THE TRUSTEES............................................ 34 SECTION 8.1 Certain Duties and Responsibilities. .................................... 34 SECTION 8.2 Certain Notices. ........................................................ 36 SECTION 8.3 Certain Rights of Property Trustee. ..................................... 36 SECTION 8.4 Not Responsible for Recitals or Issuance of Securities. ................. 38
ii 5
PAGE SECTION 8.5 May Hold Securities. .................................................... 38 SECTION 8.6 Compensation; Indemnity; Fees. .......................................... 38 SECTION 8.7 Corporate Property Trustee Required; Eligibility of Trustees. ........... 39 SECTION 8.8 Conflicting Interests. .................................................. 40 SECTION 8.9 Co-Trustees and Separate Trustee. ....................................... 40 SECTION 8.10 Resignation and Removal; Appointment of Successor. ...................... 42 SECTION 8.11 Acceptance of Appointment by Successor. ................................. 43 SECTION 8.12 Merger, Conversion, Consolidation or Succession to Business. ............ 44 SECTION 8.13 Preferential Collection of Claims Against Depositor or Trust. ........... 44 SECTION 8.14 Reports by Property Trustee. ............................................ 45 SECTION 8.15 Reports to the Property Trustee. ........................................ 45 SECTION 8.16 Evidence of Compliance with Conditions Precedent. ....................... 45 SECTION 8.17 Number of Trustees. ..................................................... 45 SECTION 8.18 Delegation of Power. .................................................... 46 ARTICLE IX TERMINATION, LIQUIDATION AND MERGER................................ 46 SECTION 9.1 Termination Upon Expiration Date. ....................................... 46 SECTION 9.2 Early Termination. ...................................................... 46 SECTION 9.3 Termination. ............................................................ 47 SECTION 9.4 Liquidation. ............................................................ 47 SECTION 9.5 Mergers, Consolidations, Amalgamations or Replacements of the Trust. ............................................................ 49 ARTICLE X MISCELLANEOUS PROVISIONS...................................... 50 SECTION 10.1 Limitation of Rights of Securityholders. ................................ 50 SECTION 10.2 Liability of the Common Securityholder................................... 50 SECTION 10.3 Amendment. .............................................................. 50 SECTION 10.4 Consolidation, Merger, Conveyance, Transfer or Lease..................... 51 SECTION 10.5 Separability. ........................................................... 51 SECTION 10.6 Governing Law............................................................ 52 SECTION 10.7 Payments Due on Non-Business Day. ....................................... 52 SECTION 10.8 Successors. ............................................................. 52 SECTION 10.9 Headings. ............................................................... 52 SECTION 10.10 Reports, Notices and Demands. ........................................... 52 SECTION 10.11 Agreement Not to Petition. .............................................. 53 SECTION 10.12 Trust Indenture Act; Conflict with Trust Indenture Act. ................. 53 SECTION 10.13 Acceptance of Terms of Trust Agreement, Guarantee and Indenture. ........ 54 SECTION 10.14 Counterparts............................................................. 55
iii 6 THIS CERTIFICATE IS NOT TRANSFERABLE TO ANY PERSON CERTIFICATE NUMBER: NUMBER OF COMMON SECURITIES: C-1 CERTIFICATE EVIDENCING COMMON SECURITIES OF MBNA CAPITAL C [__]% COMMON SECURITIES (LIQUIDATION AMOUNT $25 PER COMMON SECURITY) MBNA Capital C, a statutory business trust created under the laws of the State of Delaware (the "Trust"), hereby certifies that MBNA Corporation (the "Holder") is the registered owner of [_____] common securities of the Trust representing undivided beneficial ownership interests of the Trust and designated the [__]% Common Securities (Liquidation Amount $25 per Common Security) (the "Common Securities"). In accordance with Section 5.10 of the Trust Agreement (as defined below) the Common Securities are not transferable and any attempted transfer hereof shall be void. The designations, rights, privileges, restrictions, preferences and other terms and provisions of the Common Securities are set forth in, and this certificate and the Common Securities represented hereby are issued and shall in all respects be subject to the terms and provisions of, the Amended and Restated Trust Agreement of the Trust dated as of [________], 1997, as the same may be amended from time to time (the "Trust Agreement") including the designation of the terms of the Common Securities as set forth therein. The Trust will furnish a copy of the Trust Agreement to the Holder without charge upon written request to the Trust at its principal place of business or registered office. Upon receipt of this certificate, the Holder is bound by the Trust Agreement and is entitled to the benefits thereunder and by acceptance hereof agrees to the provisions of (i) the Guarantee Agreement entered into by MBNA Corporation, a Maryland corporation ("MBNA") and The Bank of New York, a New York banking corporation ("The Bank of New York"), as guarantee trustee, dated as of [_______], 1997, and (ii) the Junior Subordinated Indenture entered into by MBNA and The Bank of New York, as trustee, dated as of December 18, 1996. iv 7 IN WITNESS WHEREOF, one of the Administrative Trustees of the Trust has executed this certificate. MBNA CAPITAL C By: ------------------------------ Name: Administrative Trustee This is one of the Common Securities referred to in the within mentioned Trust Agreement. v 8 [This Preferred Security is a Global Certificate within the meaning of the Trust Agreement hereinafter referred to and is registered in the name of The Depository Trust Company (the "Depository") or a nominee of the Depository. This Preferred Security is exchangeable for Preferred Securities registered in the name of a person other than the Depository or its nominee only in the limited circumstances described in the Trust Agreement and no transfer of this Preferred Security (other than a transfer of this Preferred Security as a whole by the Depository to a nominee of the Depository or by a nominee of the Depository to the Depository or another nominee of the Depository) may be registered except in limited circumstances. Unless this Preferred Security is presented by an authorized representative of the Depository (55 Water Street, New York) to MBNA Capital C or its agent for registration of transfer, exchange or payment, and any Preferred Security issued is registered in the name of Cede & Co. or such other name as requested by an authorized representative of The Depository Trust Company (and any payment hereon is made to Cede & Co. or to such other entity as is requested by an authorized representative of the Depository), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein.] CERTIFICATE NUMBER: NUMBER OF PREFERRED SECURITIES: P-1 [ ] CUSIP NO. [ ] CERTIFICATE EVIDENCING PREFERRED SECURITIES OF MBNA CAPITAL C [__]% TRUST ORIGINATED PREFERRED SECURITIES, SERIES C (LIQUIDATION AMOUNT $25 PER PREFERRED SECURITY) MBNA Capital C, a statutory business trust created under the laws of the State of Delaware (the "Trust"), hereby certifies that Cede & Co.(the "Holder") is the registered owner of [ ] (000,000) preferred securities of the Trust representing an undivided beneficial ownership interest in the assets of the Trust and designated the MBNA Capital C [__]% Trust Originated Preferred Securities, Series C (Liquidation Amount $25 per Preferred Security) (the "Preferred Securities"). The Preferred Securities are transferable on the books and records of the Trust, in person or by a duly authorized attorney, upon surrender of this certificate duly endorsed and in proper form for transfer as provided in Section 5.4 of the Trust Agreement (as defined below). The designations, rights, privileges, restrictions, preferences and other terms and provisions of the Preferred Securities are set forth in, and this certificate and the Preferred Securities represented hereby are issued and shall in all respects be subject to, the vi 9 terms and provisions of, the Amended and Restated Trust Agreement of the Trust dated as of [_________], 1997, as the same may be amended from time to time (the "Trust Agreement") including the designation of the terms of Preferred Securities as set forth therein. The Holder is entitled to the benefits of the Guarantee Agreement entered into by MBNA Corporation, a Maryland corporation ("MBNA"), and The Bank of New York, a New York banking corporation ("The Bank of New York"), as guarantee trustee, dated as of [________], 1997 (the "Guarantee"), to the extent provided therein. The Trust will furnish a copy of the Trust Agreement and the Guarantee to the Holder without charge upon written request to the Trust at its principal place of business or registered office. Upon receipt of this certificate, the Holder is bound by the Trust Agreement and is entitled to the benefits thereunder and by acceptance hereof agrees to the provisions of (i) the Guarantee and (ii) the Junior Subordinated Indenture entered into by MBNA and The Bank of New York, as trustee, dated as of December 18, 1996. vii 10 IN WITNESS WHEREOF, one of the Administrative Trustees of the Trust has executed this certificate. MBNA CAPITAL C By: ------------------------------ Name: Administrative Trustee This is one of the Securities referred to in the within mentioned Trust Agreement. Date of Authentication: [_____________], 1997 THE BANK OF NEW YORK, as Property Trustee By: --------------------------------- Name: Title: viii 11 ASSIGNMENT FOR VALUE RECEIVED, the undersigned assigns and transfers this Preferred Security to: (Insert assignee's social security or tax identification number) (Insert address and zip code of assignee) and irrevocably appoints agent to transfer this Preferred Securities Certificate on the books of the Trust. The agent may substitute another to act for him or her. Date: Signature: (Sign exactly as your name appears on the other side of this Preferred Security Certificate) The signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions with membership in an approved signature guarantee medallion program), pursuant to S.E.C. Rule 17Ad-15. ix 12 AMENDED AND RESTATED TRUST AGREEMENT, dated as of [______] [__], 1997, among (i) MBNA Corporation, a Maryland corporation (including any successors or assigns, the "Depositor"), (ii) The Bank of New York, a New York banking corporation, as property trustee (in such capacity, the "Property Trustee" and, in its separate corporate capacity and not in its capacity as Property Trustee, the "Bank"), (iii) The Bank of New York (Delaware), a banking corporation organized under the laws of the State of Delaware, as Delaware trustee (the "Delaware Trustee"), (iv) M. Scot Kaufman, an individual, and John W. Scheflen an individual, each of whose address is c/o MBNA Corporation, Wilmington, Delaware 19884 (each an "Administrative Trustee" and collectively the "Administrative Trustees") (the Property Trustee, the Delaware Trustee and the Administrative Trustees referred to collectively as the "Trustees") and (v) the several Holders, as hereinafter defined. WITNESSETH WHEREAS, the Depositor and the Delaware Trustee have heretofore duly declared and established a business trust pursuant to the Delaware Business Trust Act by the entering into that certain Trust Agreement, dated as of November 4, 1996 (the "Original Trust Agreement"), and by the execution and filing with the Secretary of State of the State of Delaware of the Certificate of Trust, filed on November 6, 1996, attached as Exhibit A (the "Certificate of Trust"); and WHEREAS, the parties thereto amended and restated the Original Trust Agreement by entering into the Amended and Restated Trust Agreement of the Trust, dated as of December 11, 1996 (the "Restated Agreement"); and WHEREAS, the Depositor and the Trustees desire to amend and restate the Restated Agreement in its entirety as set forth herein to provide for, among other things, (i) the issuance of the Common Securities by the Trust to the Depositor, (ii) the issuance of the Preferred Securities by the Trust in exchange for the Series A Preferred Stock validly tendered in the Offer and (iii) the acquisition by the Trust from the Depositor of all of the right, title and interest in the Debentures; NOW THEREFORE, in consideration of the agreements and obligations set forth herein and for other good and valuable consideration, the sufficiency of which is hereby acknowledged, each party, for the benefit of the other parties and for the benefit of the Securityholders, hereby amends and restates the Restated Agreement in its entirety and agrees as follows: ARTICLE I DEFINED TERMS SECTION 1.1 Definitions. For all purposes of this Trust Agreement, except as otherwise expressly provided or unless the context otherwise requires: 13 2 (a) the terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular; (b) all other terms used herein that are defined in the Trust Indenture Act, either directly or by reference therein, have the meanings assigned to them therein; (c) unless the context otherwise requires, any reference to an "Article" or a "Section" refers to an Article or a Section, as the case may be, of this Trust Agreement; and (d) the words "herein", "hereof" and "hereunder" and other words of similar import refer to this Trust Agreement as a whole and not to any particular Article, Section or other subdivision. "Act" has the meaning specified in Section 6.8. "Additional Amount" means, with respect to Trust Securities of a given Liquidation Amount and/or a given period, the amount of Additional Interest (as defined in the Indenture) paid by the Depositor on a Like Amount of Debentures for such period. "Administrative Trustee" means each of the individuals identified as an "Administrative Trustee" in the preamble to this Trust Agreement solely in such individual's capacity as Administrative Trustee of the Trust formed and continued hereunder and not in such individual's individual capacity, or such Administrative Trustee's successor in interest in such capacity, or any successor trustee appointed as herein provided. "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, "control" when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. "Bank" has the meaning specified in the preamble to this Trust Agreement. "Bankruptcy Event" means, with respect to any Person: (a) the entry of a decree or order by a court having jurisdiction in the premises judging such Person as bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjudication or composition of or in respect of such Person under any applicable federal or state bankruptcy, insolvency, reorganization or other similar law, or appointing a receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of such Person or of any substantial part of its property or ordering the winding up or liquidation of its affairs, and the continuance of any such decree or order unstayed and in effect for a period of 60 consecutive days; or 14 3 (b) the institution by such Person of proceedings to be adjudicated as a bankrupt or insolvent, or the consent by it to the institution of bankruptcy or insolvency proceedings against it, or the filing by it of a petition or answer or consent seeking reorganization or relief under any applicable federal or state bankruptcy, insolvency, reorganization or other similar law, or the consent by it to the filing of any such petition or to the appointment of a receiver, liquidator, assignee, trustee, sequestrator (or similar official) of such Person or of any substantial part of its property, or the making by it of an assignment for the benefit of creditors, or the admission by it in writing of its inability to pay its debts generally as they become due and its willingness to be adjudicated as bankrupt, or the taking of corporate action by such Person in furtherance of any such action. "Bankruptcy Laws" has the meaning specified in Section 10.11. "Book-Entry Preferred Securities Certificates" means a beneficial interest in the Preferred Securities Certificates, ownership and transfers of which shall be made through book entries by a Clearing Agency as described in Section 5.11. "Business Day" means a day other than (a) a Saturday or Sunday, (b) a day on which banking institutions in the City of New York are authorized or required by law or executive order to remain closed, or (c) a day on which the Property Trustee's Corporate Trust Office or the Corporate Trust Office of the Debenture Trustee is closed for business. "Capital Treatment Event" means the reasonable determination by the Depositor that, as a result of any amendment to, or change (including any proposed change) in, the laws (or any regulations thereunder) of the United States or any political subdivision thereof or therein, or as a result of any official or administrative pronouncement or action or judicial decision interpreting or applying such laws or regulations, which amendment or change is effective, or which proposed change, pronouncement, action or decision is announced, on or after the date of issuance of the Preferred Securities hereunder, there is more than an insubstantial risk that the Depositor will not be entitled to treat an amount equal to the Liquidation Amount of the Preferred Securities as "Tier 1 Capital" (or the then equivalent thereof) for purposes of the capital adequacy guidelines of the Federal Reserve, as then in effect and applicable to the Depositor. "Certificate Depository Agreement" means the agreement among the Trust, the Depositor and The Depository Trust Company, as the initial Clearing Agency, dated as of the Closing Date, relating to the Trust Securities Certificates, substantially in the form attached as Exhibit B, as the same may be amended and supplemented from time to time. "Certificate of Trust" has the meaning specified in the recitals hereof, as amended from time to time. "Clearing Agency" means an organization registered as a "clearing agency" pursuant to Section 17A of the Securities Exchange Act of 1934, as amended. The Depository Trust Company will be the initial Clearing Agency. 15 4 "Clearing Agency Participant" means a broker, dealer, bank, other financial institution or other Person for whom from time to time a Clearing Agency effects book-entry transfers and pledges of securities deposited with the Clearing Agency. "Closing Date" means the date of execution and delivery of this Trust Agreement. "Code" means the Internal Revenue Code of 1986, as amended. "Commission" means the Securities and Exchange Commission, as from time to time constituted, created under the Securities Exchange Act of 1934, as amended, or, if at any time after the execution of this instrument such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties at such time. "Common Securities Certificate" means a certificate evidencing ownership of Common Securities, substantially in the form attached as Exhibit C. "Common Security" means an undivided beneficial ownership interest in the assets of the Trust, having a Liquidation Amount of $25 and having the rights provided therefor in this Trust Agreement, including the right to receive Distributions and a Liquidation Distribution as provided herein. "Corporate Trust Office" means (i) when used with respect to the Property Trustee, the principal office of the Property Trustee located in New York, New York, and (ii) when used with respect to the Debenture Trustee, the principal office of the Debenture Trustee located in New York, New York. "Dealer Manager Agreement" means the Dealer Manager Agreement between the Depositor and Merilll Lynch & Co. dated [____________], 1997. "Debenture Event of Default" means an "Event of Default" as defined in the Indenture. "Debenture Redemption Date" means, with respect to any Debentures to be redeemed under the Indenture, the date fixed for redemption under the Indenture. "Debenture Tax Event" means a "Tax Event" as defined in the Indenture. "Debenture Trustee" means The Bank of New York, a New York banking corporation, as trustee under the Indenture, and any successor trustee appointed as provided therein. "Debentures" means the $[___________] aggregate principal amount of the Depositor's [__]% Junior Subordinated Deferrable Interest Debentures, Series C, issued pursuant to the Indenture. 16 5 "Definitive Preferred Securities Certificates" means either or both (as the context requires) of (a) Preferred Securities Certificates issued as Book-Entry Preferred Securities Certificates as provided in Section 5.11(a) and (b) Preferred Securities Certificates issued in certificated, fully registered form as provided in Section 5.13. "Delaware Business Trust Act" means Chapter 38 of Title 12 of the Delaware Code, 12 Del. C. 3801, et seq., as it may be amended from time to time. "Delaware Trustee" means the Person identified as the "Delaware Trustee" in the preamble to this Trust Agreement solely in its capacity as Delaware Trustee of the Trust formed and continued hereunder and not in its individual capacity, or its successor in interest in such capacity, or any successor trustee appointed as herein provided. "Depositor" has the meaning specified in the preamble to this Trust Agreement. "Distribution Date" has the meaning specified in Section 4.1(a). "Distributions" means amounts payable in respect of the Trust Securities as provided in Section 4.1. "Early Termination Event" has the meaning specified in Section 9.2. "Event of Default" means any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body): (a) the occurrence of a Debenture Event of Default; or (b) default by the Property Trustee in the payment of any Distribution when it becomes due and payable, and continuation of such default for a period of 30 days; or (c) default by the Property Trustee in the payment of any Redemption Price of any Trust Security when it becomes due and payable; or (d) default in the performance, or breach, in any material respect, of any covenant or warranty of the Trustees in this Trust Agreement (other than a covenant or warranty a default in the performance or breach of which is dealt with in clause (b) or (c) above) and continuation of such default or breach for a period of 90 days after there has been given, by registered or certified mail, to the defaulting Trustee or Trustees by the Holders of at least 25% in aggregate Liquidation Amount of the Outstanding Preferred Securities, a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a "Notice of Default" hereunder; or (e) the occurrence of a Bankruptcy Event with respect to the Property Trustee and the failure by the Depositor to appoint a successor Property Trustee within 90 days thereof. 17 6 "Exchange Agent" means the Bank of New York, a New York banking corporation. "Expiration Date" has the meaning specified in Section 9.1. "Federal Reserve" means the Board of Governors of the Federal Reserve System, as from time to time constituted, or if at any time after the execution of this Trust Agreement the Federal Reserve is not existing and performing the duties now assigned to it, then the body performing such duties at such time. "Guarantee" means the Guarantee Agreement executed and delivered by the Depositor and The Bank of New York, as trustee, contemporaneously with the execution and delivery of this Trust Agreement, for the benefit of the Holders of the Trust Securities, as amended from time to time. "Indenture" means the Junior Subordinated Indenture, dated as of December 18, 1996, between the Depositor and the Debenture Trustee, as trustee, as amended or supplemented from time to time. "Lien" means any lien, pledge, charge, encumbrance, mortgage, deed of trust, adverse ownership interest, hypothecation, assignment, security interest or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever. "Like Amount" means (a) with respect to a redemption of Trust Securities, Trust Securities having a Liquidation Amount equal to the principal amount of Debentures to be contemporaneously redeemed in accordance with the Indenture the proceeds of which will be used to pay the Redemption Price of such Trust Securities, and (b) with respect to a distribution of Debentures to Holders of Trust Securities in connection with a dissolution or liquidation of the Trust, Debentures having a principal amount equal to the Liquidation Amount of the Trust Securities of the Holder to whom such Debentures are distributed. "Liquidation Amount" means the stated amount of $25 per Trust Security. "Liquidation Date" means the date on which Debentures are to be distributed to Holders of Trust Securities in connection with a termination and liquidation of the Trust pursuant to Section 9.4(a). "Liquidation Distribution" has the meaning specified in Section 9.4(d). "1940 Act" means the Investment Company Act of 1940, as amended. "Offer" means the offer by the Trust to exchange the Preferred Securities for any and all shares of the Series A Preferred Stock. "Officers' Certificate" means a certificate signed by the Chairman and Chief Executive Officer, President or a Vice President, and by the Treasurer, an Associate Treasurer, an Assistant Treasurer, the Controller, the Secretary or an Assistant Secretary, of 18 7 the Depositor, and delivered to the appropriate Trustee. One of the officers signing an Officers' Certificate given pursuant to Section 8.16 shall be the principal executive, financial or accounting officer of the Depositor. Any Officers' Certificate delivered with respect to compliance with a condition or covenant provided for in this Trust Agreement shall include: (a) a statement that each officer signing the Officers' Certificate has read the covenant or condition and the definitions relating thereto; (b) a brief statement of the nature and scope of the examination or investigation undertaken by each officer in rendering the Officers' Certificate; (c) a statement that each such officer has made such examination or investigation as, in such officer's opinion, is necessary to enable such officer to express an informed opinion as to whether or not such covenant or condition has been complied with; and (d) a statement as to whether, in the opinion of each such officer, such condition or covenant has been complied with. "Opinion of Counsel" means a written opinion of counsel, who may be counsel for the Trust, the Property Trustee or the Depositor, and who shall be reasonably acceptable to the Property Trustee. "Original Trust Agreement" has the meaning specified in the recitals to this Trust Agreement. "Outstanding" when used with respect to Trust Securities, means, as of the date of determination, all Trust Securities theretofore executed and delivered under this Trust Agreement, except: (a) Trust Securities theretofore cancelled by the Securities Registrar or delivered to the Securities Registrar for cancellation; (b) Trust Securities for whose payment or redemption money in the necessary amount has been theretofore deposited with the Property Trustee or any Paying Agent for the Holders of such Trust Securities; provided that, if such Trust Securities are to be redeemed, notice of such redemption has been duly given pursuant to this Trust Agreement; and (c) Trust Securities which have been paid or in exchange for or in lieu of which other Trust Securities have been executed and delivered pursuant to this Trust Agreement, including pursuant to Sections 5.4, 5.5, 5.11 and 5.13; provided, however, that in determining whether the Holders of the requisite Liquidation Amount of the Outstanding Preferred Securities have given any request, demand, authorization, direction, notice, consent or waiver hereunder, Preferred Securities owned by the Depositor, any Trustee or any Affiliate of the Depositor or any Trustee shall be disregarded and deemed not to be Outstanding, except that (a) in determining whether any 19 8 Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Preferred Securities that such Trustee actually knows to be so owned shall be so disregarded and (b) the foregoing shall not apply at any time when all of the outstanding Preferred Securities are owned by the Depositor, one or more of the Trustees and/or any such Affiliate. Preferred Securities so owned which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Administrative Trustees the pledgee's right so to act with respect to such Preferred Securities and that the pledgee is not the Depositor or any Affiliate of the Depositor. "Owner" means each Person who is the beneficial owner of a Book-Entry Preferred Securities Certificate as reflected in the records of the Clearing Agency or, if a Clearing Agency Participant is not the beneficial owner, then as reflected in the records of a Person maintaining an account with such Clearing Agency (directly or indirectly, in accordance with the rules of such Clearing Agency). "Paying Agent" means any paying agent or co-paying agent appointed pursuant to Section 5.9 and shall initially be the Bank. "Payment Account" means a segregated non-interest-bearing corporate trust account maintained by the Property Trustee with the Bank in its corporate trust department for the benefit of the Securityholders in which all amounts paid in respect of the Debentures will be held and from which the Property Trustee, through the Paying Agent, shall make payments to the Securityholders in accordance with Sections 4.1 and 4.2. "Person" means any individual, corporation, partnership, joint venture, trust, limited liability company or corporation, unincorporated organization or government or any agency or political subdivision thereof. "Preferred Security" means an undivided beneficial ownership interest in the assets of the Trust, having a Liquidation Amount of $25 and having the rights provided therefor in this Trust Agreement, including the right to receive Distributions and a Liquidation Distribution as provided herein. "Preferred Securities Certificate" means a certificate evidencing ownership of Preferred Securities, substantially in the form attached as Exhibit D. "Property Trustee" means the Person identified as the "Property Trustee" in the preamble to this Trust Agreement solely in its capacity as Property Trustee of the Trust heretofore created and continued hereunder and not in its individual capacity, or its successor in interest in such capacity, or any successor property trustee appointed as herein provided. "Redemption Date" means, with respect to any Trust Security to be redeemed, the date fixed for such redemption by or pursuant to this Trust Agreement; provided that each Debenture Redemption Date and the stated maturity of the Debentures shall be a Redemption Date for a Like Amount of Trust Securities. 20 9 "Redemption Price" means, with respect to any Trust Security, the Liquidation Amount of such Trust Security, plus accumulated and unpaid Distributions to the Redemption Date, plus the related amount of the premium, if any, paid by the Depositor upon the concurrent redemption of a Like Amount of Debentures, allocated on a pro rata basis (based on Liquidation Amounts) among the Trust Securities. "Relevant Trustee" shall have the meaning specified in Section 8.10. "Securities Register" and "Securities Registrar" have the respective meanings specified in Section 5.4. "Securityholder" or "Holder" means a Person in whose name a Trust Security or Trust Securities is registered in the Securities Register; any such Person shall be a beneficial owner within the meaning of the Delaware Business Trust Act; provided, however, that in determining whether the Holders of the requisite amount of Preferred Securities have voted on any matter provided for in this Trust Agreement, then for the purpose of any such determination, so long as Definitive Preferred Securities Certificates have not been issued, the term Securityholders or Holders as used herein shall refer to the Owners. "Series A Preffered Stock" means the Depositor's 7.50% Cumulative Preferred Stock Series A, $0.01 par value. "Tax Event" means the receipt by the Trust or the Depositor of an Opinion of Counsel experienced in such matters to the effect that, as a result of any amendment to, or change (including any announced proposed change) in, the laws (or any regulations thereunder) of the United States or any political subdivision or taxing authority thereof or therein, or as a result of any official administrative pronouncement or judicial decision interpreting or applying such laws or regulations, which amendment or change is effective, or which proposed change, pronouncement or decision is announced, on or after the date of issuance of the Preferred Securities under this Trust Agreement, there is more than an insubstantial risk that (i) the Trust is, or will be within 90 days after the date of such Opinion of Counsel, subject to United States federal income tax with respect to income received or accrued on the Debentures, (ii) interest payable by the Depositor on the Debentures is not, or within 90 days after the date of such Opinion of Counsel, will not be, deductible by the Depositor, in whole or in part, for United States federal income tax purposes or (iii) the Trust is, or will be within 90 days after the date of such Opinion of Counsel, subject to more than a de minimis amount of other taxes, duties or other governmental charges. "Trust" means the Delaware business trust created and continued hereby and identified on the cover page to this Trust Agreement. "Trust Agreement" means this Amended and Restated Trust Agreement, as the same may be modified, amended or supplemented in accordance with the applicable provisions hereof, including (i) all exhibits hereto and (ii) for all purposes of this Trust Agreement and any such modification, amendment or supplement, the provisions of the Trust Indenture Act 21 10 that are deemed to be a part of and govern this Trust Agreement and any such modification, amendment or supplement, respectively. "Trust Indenture Act" means the Trust Indenture Act of 1939 as in force at the date as of which this instrument was executed; provided, however, that in the event the Trust Indenture Act of 1939 is amended after such date, "Trust Indenture Act" means, to the extent required by any such amendment, the Trust Indenture Act of 1939 as so amended. "Trust Property" means (a) the Debentures, (b) any cash on deposit in, or owing to, the Payment Account and (c) all proceeds and rights in respect of the foregoing. "Trust Security" means any one of the Common Securities or the Preferred Securities. "Trust Securities Certificate" means any one of the Common Securities Certificates or the Preferred Securities Certificates. "Trustees" means, collectively, the Property Trustee, the Delaware Trustee and the Administrative Trustees. ARTICLE II CONTINUATION OF THE TRUST SECTION 2.1 Name. The Trust continued hereby shall be known as "MBNA Capital C," as such name may be modified from time to time by the Administrative Trustees following written notice to the Holders of Trust Securities and the other Trustees, in which name the Trustees engage in the transactions contemplated hereby, make and execute contracts and other instruments on behalf of the Trust and sue and be sued. SECTION 2.2 Office of the Delaware Trustee; Principal Place of Business. The address of the Delaware Trustee in the State of Delaware is c/o The Bank of New York (Delaware), White Clay Center, Route 273, Newark, Delaware 19711, Attention: Corporate Trust Department or such other address in the State of Delaware as the Delaware Trustee may designate by written notice to the Securityholders and the Depositor. The principal executive office of the Trust is c/o MBNA Corporation, Wilmington, Delaware 19884. SECTION 2.3 Initial Contribution of Trust Property; Organizational Expenses. The Property Trustee acknowledges receipt in trust from the Depositor in connection with the Original Trust Agreement of the sum of $10, which constituted the initial Trust Property. The Depositor shall pay organizational expenses of the Trust as they arise or shall, 22 11 upon request of any Trustee, promptly reimburse such Trustee for any such expenses paid by such Trustee. The Depositor shall make no claim upon the Trust Property for the payment of such expenses. SECTION 2.4 Issuance of the Preferred Securities. Contemporaneously with the execution and delivery of this Trust Agreement, an Administrative Trustee, on behalf of the Trust, shall execute in accordance with Section 5.2 and deliver to the Exchange Agent, Preferred Securities Certificates, registered in such names as the Depositor shall instruct the Administrative Trustee, in an aggregate amount of [________] Preferred Securities having an aggregate Liquidation Amount of $[________], against receipt of an aggregate amount of [_______] of Series A Preferred Stock, which Stock such Administrative Trustee shall promptly deliver to the Property Trustee. SECTION 2.5 Issuance of the Common Securities; Subscription and Purchase of Debentures. Contemporaneously with the execution and delivery of this Trust Agreement, an Administrative Trustee, on behalf of the Trust, shall execute in accordance with Section 5.2 and deliver to the Depositor Common Securities Certificates, registered in the name of the Depositor, in an aggregate amount of [______] Common Securities having an aggregate Liquidation Amount of $[______] against payment by the Depositor of an aggregate purchase price therefor of $[______], which amount such Administrative Trustee shall promptly deliver to the Property Trustee. Contemporaneously therewith, an Administrative Trustee, on behalf of the Trust, shall subscribe to and purchase from the Depositor Debentures, registered in the name of the Trust and having an aggregate principal amount equal to $[___________], and, in satisfaction of the purchase price for such Debentures, the Property Trustee, on behalf of the Trust, shall deliver to the Depositor the sum of $[_____] (being the sum of the amounts delivered to the Property Trustee pursuant to (i) the second sentence of Section 2.4 and (ii) the first sentence of this Section 2.5). SECTION 2.6 Declaration of Trust. The exclusive purposes and functions of the Trust are (a) to issue and sell Trust Securities, (b) to use the proceeds from such sale to acquire the Debentures and (c) to engage in those activities necessary or incidental thereto. The Depositor hereby appoints the Trustees as trustees of the Trust, to have all the rights, powers and duties to the extent set forth herein, and the Trustees hereby accept such appointment. The Property Trustee hereby declares that it will hold the Trust Property in trust upon and subject to the conditions set forth herein for the benefit of the Trust and the Securityholders. The Administrative Trustees shall have all rights, powers and duties set forth herein and in accordance with applicable law with respect to accomplishing the purposes of the Trust. The Delaware Trustee shall not be entitled to exercise any powers, nor shall the Delaware Trustee have any of the duties and responsibilities, of the Property Trustee or the Administrative Trustees set forth herein. The Delaware Trustee shall be one of the Trustees of the Trust for the sole and limited purpose of fulfilling the requirements of Section 3807 of the Delaware Business Trust Act. 23 12 SECTION 2.7 Authorization to Enter into Certain Transactions. (a) The Trustees shall conduct the affairs of the Trust in accordance with the terms of this Trust Agreement. Subject to the limitations set forth in paragraph (b) of this Section, Article VIII and in accordance with the following provisions (i) and (ii), the Trustees shall have the authority to enter into all transactions and agreements determined by the Trustees to be appropriate in exercising the authority, express or implied, otherwise granted to the Trustees under this Trust Agreement, and to perform all acts in furtherance thereof, including without limitation, the following: (i) As among the Trustees, each Administrative Trustee shall have the power and authority to act on behalf of the Trust with respect to the following matters: (A) the issuance and exchange or sale of the Trust Securities; (B) to cause the Trust to enter into, and to execute, deliver and perform on behalf of the Trust, the Certificate Depository Agreement, the Dealer Manager Agreement, and such other agreements as may be necessary or desirable in connection with the purposes and function of the Trust; (C) assisting in the registration of the Preferred Securities under the Securities Act of 1933, as amended, and under state securities or blue sky laws, and the qualification of this Trust Agreement as a trust indenture under the Trust Indenture Act; (D) assisting in the listing, if any, of the Preferred Securities upon such national securities exchange or exchanges or automated quotation system or systems as shall be determined by the Depositor and the registration of the Preferred Securities under the Securities Exchange Act of 1934, as amended, and the preparation and filing of all periodic and other reports and other documents pursuant to the foregoing; (E) the sending of notices (other than notices of default) and other information regarding the Trust Securities and the Debentures to the Securityholders in accordance with this Trust Agreement; (F) the appointment of a Paying Agent and Securities Registrar in accordance with this Trust Agreement; (G) registering transfer of the Trust Securities in accordance with this Trust Agreement; (H) to the extent provided in this Trust Agreement, the winding up of the affairs of and liquidation of the Trust and the execution and filing of the certificate of cancellation with the Secretary of State of the State of Delaware; and 24 13 (I) the taking of any action incidental to the foregoing as the Trustees may from time to time determine is necessary or advisable to give effect to the terms of this Trust Agreement for the benefit of the Securityholders (without consideration of the effect of any such action on any particular Securityholder). (ii) As among the Trustees, the Property Trustee shall have the power, duty and authority to act on behalf of the Trust with respect to the following matters: (A) the establishment of the Payment Account; (B) the receipt of the Debentures; (C) the collection of interest, principal and any other payments made in respect of the Debentures in the Payment Account; (D) the distribution through the Paying Agent of amounts owed to the Securityholders in respect of the Trust Securities; (E) the exercise of all of the rights, powers and privileges of a holder of the Debentures; (F) the sending of notices of default and other information regarding the Trust Securities and the Debentures to the Securityholders in accordance with this Trust Agreement; (G) the distribution of the Trust Property in accordance with the terms of this Trust Agreement; (H) to the extent provided in this Trust Agreement, the winding up of the affairs of and liquidation of the Trust and the execution and filing of the certificate of cancellation with the Secretary of State of the State of Delaware; (I) after an Event of Default (other than under paragraph (b), (c), (d) or (e) of the definition of such term if such Event of Default is by or with respect to the Property Trustee) the taking of any action incidental to the foregoing as the Property Trustee may from time to time determine is necessary or advisable to give effect to the terms of this Trust Agreement and protect and conserve the Trust Property for the benefit of the Securityholders (without consideration of the effect of any such action on any particular Securityholder); and (J) except as otherwise provided in this Section 2.7(a)(ii), the Property Trustee shall have none of the duties, liabilities, powers or the authority of the Administrative Trustees set forth in Section 2.7(a)(i). (b) So long as this Trust Agreement remains in effect, the Trust (or the Trustees acting on behalf of the Trust) shall not undertake any business, activities or transaction except as 25 14 expressly provided herein or contemplated hereby. In particular, the Trustees shall not (i) acquire any investments or engage in any activities not authorized by this Trust Agreement, (ii) sell, assign, transfer, exchange, mortgage, pledge, set-off or otherwise dispose of any of the Trust Property or interests therein, including to Securityholders, except as expressly provided herein, (iii) take any action that would cause the Trust to fail or cease to qualify as a "grantor trust" for United States federal income tax purposes, (iv) incur any indebtedness for borrowed money or issue any other debt, (v) take or consent to any action that would result in the placement of a Lien on any of the Trust Property, (vi) invest any proceeds received by the Trust from holding the Debentures, but shall distribute all such proceeds to Holders of Trust Securities pursuant to the terms of this Trust Agreement and of the Securities; (vii) acquire any assets other than the Trust Property; (viii) possess any power or otherwise act in such a way as to vary the Trust Property; (ix) possess any power or otherwise act in such a way as to vary the terms of the Securities in any way whatsoever (except to the extent expressly authorized in this Trust Agreement or by the terms of the Trust Securities); or (x) issue any securities or other evidences of beneficial ownership of, or beneficial interest in, the Trust other than the Trust Securities. The Administrative Trustees shall defend all claims and demands of all Persons at any time claiming any Lien on any of the Trust Property adverse to the interest of the Trust or the Securityholders in their capacity as Securityholders. (c) In connection with the issue and exchange of the Preferred Securities, the Depositor shall have the right and responsibility to assist the Trust with respect to, or effect on behalf of the Trust, the following (and any actions taken by the Depositor in furtherance of the following prior to the date of this Trust Agreement are hereby ratified and confirmed in all respects): (i) the preparation and filing by the Trust with the Commission and the execution on behalf of the Trust of a registration statement on the appropriate form in relation to the Preferred Securities, including any amendments thereto; (ii) the determination of the states in which to take appropriate action to qualify or register for sale all or part of the Preferred Securities and the determination of any and all such acts, other than actions which must be taken by or on behalf of the Trust, and the advice to the Trustees of actions they must take on behalf of the Trust, and the preparation for execution and filing of any documents to be executed and filed by the Trust or on behalf of the Trust, as the Depositor deems necessary or advisable in order to comply with the applicable laws of any such states; (iii) the preparation for filing by the Trust and execution on behalf of the Trust of an application to the New York Stock Exchange or any other national stock exchange or the NASDAQ National Market or any other automated quotation system for listing upon notice of issuance of any Preferred Securities and filing with such exchange or self regulatory organization such notifications and documents as may be necessary from time to time to maintain such listing; 26 15 (iv) the negotiation of the terms of, and the execution and delivery of, the Dealer Manager Agreement providing for the exchange of the Preferred Securities for the Series A Preferred Stock; and (v) the taking of any other actions necessary or desirable to carry out any of the foregoing activities. (d) Notwithstanding anything herein to the contrary, the Administrative Trustees are authorized and directed to conduct the affairs of the Trust and to operate the Trust so that the Trust will not be deemed to be an "investment company" required to be registered under the 1940 Act, or fail to be classified as a grantor trust for United States federal income tax purposes and so that the Debentures will be treated as indebtedness of the Depositor for United States federal income tax purposes. In this connection, the Depositor and the Administrative Trustees are authorized to take any action, not inconsistent with applicable law, the Certificate of Trust or this Trust Agreement, that each of the Depositor and any Administrative Trustee determines in its discretion to be necessary or desirable for such purposes, as long as such action does not adversely affect in any material respect the interests of the Holders of the Preferred Securities. SECTION 2.8 Assets of Trust. The assets of the Trust shall consist solely of the Trust Property. SECTION 2.9 Title to Trust Property. Legal title to all Trust Property shall be vested at all times in the Property Trustee (in its capacity as such) and shall be held and administered by the Property Trustee for the benefit of the Trust and the Securityholders in accordance with this Trust Agreement. ARTICLE III PAYMENT ACCOUNT SECTION 3.1 Payment Account. (a) On or prior to the Closing Date, the Property Trustee shall establish the Payment Account. The Property Trustee and any agent of the Property Trustee shall have exclusive control and sole right of withdrawal with respect to the Payment Account for the purpose of making deposits in and withdrawals from the Payment Account in accordance with this Trust Agreement. All monies and other property deposited or held from time to time in the Payment Account shall be held by the Property Trustee in the Payment Account for the exclusive benefit of the Securityholders and for distribution as herein provided, including (and subject to) any priority of payments provided for herein. 27 16 (b) The Property Trustee shall deposit in the Payment Account, promptly upon receipt, all payments of principal of or interest or premium on, and any other payments or proceeds with respect to, the Debentures. Amounts held in the Payment Account shall not be invested by the Property Trustee. ARTICLE IV DISTRIBUTIONS; REDEMPTION SECTION 4.1 Distributions. (a) The Trust Securities represent undivided beneficial ownership interests in the Trust Property, and Distributions (including of Additional Amounts) will be made on the Trust Securities at the rate and on the dates that payments of interest (including of Additional Interest, as defined in the Indenture) are made on the Debentures. Accordingly: (i) Distributions on the Trust Securities shall be cumulative, and will accumulate whether or not there are funds of the Trust available for the payment of Distributions. Distributions shall accrue from [________] [__], 1997, and, except in the event (and to the extent) that the Depositor exercises its right to defer the payment of interest on the Debentures pursuant to the Indenture, shall be payable quarterly in arrears on [the fifteenth day of January, April, July and October of each year, commencing on July 15, 1997]. If any date on which a Distribution is otherwise payable on the Trust Securities is not a Business Day, then the payment of such Distribution shall be made on the next succeeding day that is a Business Day (and without any interest or other payment in respect of any such delay) except that, if such Business Day is in the next succeeding calendar year, payment of such Distribution shall be made on the immediately preceding Business Day, in each case with the same force and effect as if made on such date (each date on which Distributions are payable in accordance with this Section 4.1(a), a "Distribution Date"). (ii) Assuming payments of interest on the Debentures are made when due (and before giving effect to Additional Amounts, if applicable), Distributions on the Trust Securities shall be payable at a rate of [__]% per annum of the Liquidation Amount of the Trust Securities. The amount of Distributions shall be computed on the basis of the number of days elapsed in a 360-day year of twelve 30-day months. The amount of Distributions payable for any period shall include the Additional Amounts, if any. (iii) Distributions on the Trust Securities shall be made by the Property Trustee from the Payment Account and shall be payable on each Distribution Date only to the extent that the Trust has funds then on hand and available in the Payment Account for the payment of such Distributions. 28 17 (b) Distributions on the Trust Securities with respect to a Distribution Date shall be payable to the Holders thereof as they appear on the Securities Register for the Trust Securities on the relevant record date, which shall be the [first day of the month in which the relevant Distribution Date occurs] (whether or not such record date is a Business Day). SECTION 4.2 Redemption. (a) On each Debenture Redemption Date and on the stated maturity of the Debentures, the Trust will be required to redeem a Like Amount of Trust Securities at the Redemption Price. (b) Notice of redemption shall be given by the Property Trustee by first-class mail, postage prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption Date to each Holder of Trust Securities to be redeemed, at such Holder's address appearing in the Security Register. All notices of redemption shall state: (i) the Redemption Date; (ii) the Redemption Price; (iii) the CUSIP number; (iv) if less than all the Outstanding Trust Securities are to be redeemed, the identification and the total Liquidation Amount of the particular Trust Securities to be redeemed; (v) that on the Redemption Date the Redemption Price will become due and payable upon each such Trust Security to be redeemed and that Distributions thereon will cease to accrue on and after said date; and (vi) the place and address where the Holders shall surrender their Preferred Securities Certificates. (c) The Trust Securities redeemed on each Redemption Date shall be redeemed at the Redemption Price with the proceeds from the contemporaneous redemption or payment at stated maturity of Debentures. Redemptions of the Trust Securities shall be made and the Redemption Price shall be payable on each Redemption Date only to the extent that the Trust has funds then on hand and available in the Payment Account for the payment of such Redemption Price. (d) If the Property Trustee gives a notice of redemption in respect of any Preferred Securities, then, by 12:00 noon, New York City time, on the Redemption Date, subject to Section 4.2(c), the Property Trustee will, with respect to Preferred Securities in book-entry-only form, irrevocably deposit with the Clearing Agency for such Preferred Securities funds sufficient to pay the applicable Redemption Price and will give such Clearing Agency irrevocable instructions and authority to pay the Redemption Price to the Owners thereof. 29 18 With respect to the Preferred Securities that are not in book-entry-only form, the Property Trustee, subject to Section 4.2(c), will irrevocably deposit with the Paying Agent funds sufficient to pay the applicable Redemption Price and will give the Paying Agent irrevocable instructions and authority to pay the Redemption Price to the Holders thereof upon surrender of their Preferred Securities Certificates. Notwithstanding the foregoing, Distributions payable on or prior to the Redemption Date for any Trust Securities called for redemption shall be payable to the Holders of such Trust Securities as they appear on the Securities Register for the Trust Securities on the relevant record dates for the related Distribution Dates. If notice of redemption shall have been given and funds deposited as required, then upon the date of such deposit, all rights of Securityholders holding Trust Securities so called for redemption will cease, except the right of such Securityholders to receive the Redemption Price and any Distribution payable on or prior to the Redemption Date, but without interest thereon, and such Trust Securities will cease to be outstanding. In the event that any date on which any Redemption Price is payable is not a Business Day, then payment of the Redemption Price payable on such date will be made on the next succeeding day that is a Business Day (and without any interest or other payment in respect of any such delay), except that, if such Business Day falls in the next calendar year, such payment will be made on the immediately preceding Business Day, in each case, with the same force and effect as if made on such date. In the event that payment of the Redemption Price in respect of any Trust Securities called for redemption is improperly withheld or refused and not paid either by the Trust or by the Depositor pursuant to the Guarantee, Distributions on such Trust Securities will continue to accrue, at the then applicable rate, from the Redemption Date originally established by the Trust for such Trust Securities to the date such Redemption Price is actually paid, in which case the actual payment date will be the date fixed for redemption for purposes of calculating the Redemption Price. (e) Payment of the Redemption Price on the Trust Securities shall be made to the recordholders thereof as they appear on the Securities Register for the Trust Securities on the relevant record date, which shall be fifteen days prior to the relevant Redemption Date. (f) Subject to Section 4.3(a), if less than all the Outstanding Trust Securities are to be redeemed on a Redemption Date, then the aggregate Liquidation Amount of Trust Securities to be redeemed shall be allocated on a pro rata basis (based on Liquidation Amounts) among the Common Securities and the Preferred Securities. The particular Preferred Securities to be redeemed shall be selected on a pro rata basis (based upon Liquidation Amounts) not more than 60 days prior to the Redemption Date by the Property Trustee from the Outstanding Preferred Securities not previously called for redemption, by such method (including, without limitation, by lot) as the Property Trustee shall deem fair and appropriate and which may provide for the selection for redemption of portions (equal to $25 or an integral multiple of $25 in excess thereof) of the Liquidation Amount of Preferred Securities of a denomination larger than $25. The Property Trustee shall promptly notify the Security Registrar in writing of the Preferred Securities selected for redemption and, in the case of any Preferred Securities selected for partial redemption, the Liquidation Amount thereof to be redeemed. For all purposes of this Trust Agreement, unless the context otherwise requires, all provisions relating to the redemption of Preferred Securities shall relate, in the case of any Preferred Securities 30 19 redeemed or to be redeemed only in part, to the portion of the Liquidation Amount of Preferred Securities that has been or is to be redeemed. SECTION 4.3 Subordination of Common Securities. (a) Payment of Distributions (including Additional Amounts, if applicable) on, and the Redemption Price of, the Trust Securities, as applicable, shall be made, subject to Section 4.2(f), pro rata among the Common Securities and the Preferred Securities based on the Liquidation Amount of the Trust Securities; provided, however, that if on any Distribution Date or Redemption Date any Event of Default resulting from a Debenture Event of Default shall have occurred and be continuing, no payment of any Distribution (including Additional Amounts, if applicable) on, or Redemption Price of, any Common Security, and no other payment on account of the redemption, liquidation or other acquisition of Common Securities, shall be made unless payment in full in cash of all accumulated and unpaid Distributions (including Additional Amounts, if applicable) on all Outstanding Preferred Securities for all Distribution periods terminating on or prior thereto, or in the case of payment of the Redemption Price the full amount of such Redemption Price on all Outstanding Preferred Securities then called for redemption, shall have been made or provided for, and all funds immediately available to the Property Trustee shall first be applied to the payment in full in cash of all Distributions (including Additional Amounts, if applicable) on, or the Redemption Price of, Preferred Securities then due and payable. (b) In the case of the occurrence of any Event of Default resulting from any Debenture Event of Default, the Holder of Common Securities will be deemed to have waived any right to act with respect to any such Event of Default under this Trust Agreement until the effect of all such Events of Default with respect to the Preferred Securities have been cured, waived or otherwise eliminated. Until any such Event of Default under this Trust Agreement with respect to the Preferred Securities has been so cured, waived or otherwise eliminated, the Property Trustee shall act solely on behalf of the Holders of the Preferred Securities and not the Holder of the Common Securities, and only the Holders of the Preferred Securities will have the right to direct the Property Trustee to act on their behalf. SECTION 4.4 Payment Procedures. Payments of Distributions (including Additional Amounts, if applicable) in respect of the Preferred Securities shall be made by check mailed to the address of the Person entitled thereto as such address shall appear on the Securities Register or, with respect to Preferred Securities held by a Clearing Agency, such Distributions shall be made to the Clearing Agency in immediately available funds, which shall credit the relevant Persons' accounts at such Clearing Agency on the applicable Distribution Dates. Payments in respect of the Common Securities shall be made in such manner as shall be mutually agreed in writing between the Property Trustee and the Common Securityholder. SECTION 4.5 Tax Returns and Reports. 31 20 The Administrative Trustees shall prepare (or cause to be prepared), at the Depositor's expense, and file all United States federal, state and local tax and information returns and reports required to be filed by or in respect of the Trust. In this regard, the Administrative Trustees shall (a) prepare and file (or cause to be prepared and filed) the appropriate Internal Revenue Service Form required to be filed in respect of the Trust in each taxable year of the Trust and (b) prepare and furnish (or cause to be prepared and furnished) to each Securityholder the appropriate Internal Revenue Service form and the information required to be provided on such form. The Administrative Trustees shall provide the Depositor and the Property Trustee with a copy of all such returns and reports promptly after such filing or furnishing. The Trustees shall comply with United States federal withholding and backup withholding tax laws and information reporting requirements with respect to any payments to Securityholders under the Trust Securities. SECTION 4.6 Payment of Expenses of the Trust. (a) Pursuant to Section 10.6 of the Indenture, the Depositor, as borrower, has agreed to pay to the Trust, and reimburse the Trust for, the full amount of any costs, expenses or liabilities of the Trust (other than obligations of the Trust to pay the holders of any Trust Securities or other similar interests in the Trust the amounts due such Holders pursuant to the terms of the Trust Securities or such other similar interests, as the case may be), including without limitation, any taxes, duties or other governmental charges of whatever nature (other than United States withholding taxes) imposed on the Trust by the United States or any other taxing authority. Such payment obligation includes any such costs, expenses or liabilities of the Trust that are required by applicable law to be satisfied in connection with a termination of such Trust. (b) Upon receipt by the Trust of the amounts described in subsection 4.6(a), the Trust shall promptly pay any taxes, duties or other governmental charges of whatever nature (other than United States withholding taxes) imposed on the Trust by the United States or any other taxing authority. SECTION 4.7 Payments under Indenture or Pursuant to Direct Actions. Any amount payable hereunder to any Holder of Preferred Securities shall be reduced by the amount of any corresponding payment such Holder (or an Owner with respect to the Holder's Preferred Securities) has directly received pursuant to Section 5.8 of the Indenture or Section 5.14 of this Trust Agreement. ARTICLE V TRUST SECURITIES CERTIFICATES SECTION 5.1 Initial Ownership. 32 21 Upon the creation of the Trust and the contribution by the Depositor pursuant to Section 2.3 and until the issuance of the Trust Securities, and at any time during which no Trust Securities are outstanding, the Depositor shall be the sole beneficial owner of the Trust. SECTION 5.2 The Trust Securities Certificates. The Preferred Securities Certificates shall be issued in minimum denominations of $25 Liquidation Amount and integral multiples of $25 in excess thereof, and the Common Securities Certificates shall be issued in denominations of $25 Liquidation Amount and integral multiples thereof. The Trust Securities Certificates shall be (i) executed on behalf of the Trust by manual or facsimile signature of at least one Administrative Trustee and, if executed on behalf of the Trust by facsimile, countersigned by a transfer agent or its agent and (ii) authenticated by the Property Trustee by manual or facsimile signature of an authorized signatory thereof and, if executed by such authorized signatory of the Property Trustee by facsimile, countersigned by a transfer agent or its agent. Trust Securities Certificates bearing the manual signatures of individuals who were, at the time when such signatures shall have been affixed, authorized to sign on behalf of the Trust or the Property Trustee or, if executed on behalf of the Trust or the Property Trustee by facsimile, countersigned by a transfer agent or its agent, shall be validly issued and entitled to the benefits of this Trust Agreement, notwithstanding that such individuals or any of them shall have ceased to be so authorized prior to the delivery of such Trust Securities Certificates or did not hold such offices at the date of delivery of such Trust Securities Certificates. A transferee of a Trust Securities Certificate shall become a Securityholder, and shall be entitled to the rights and subject to the obligations of a Securityholder hereunder, upon due registration of such Trust Securities Certificate in such transferee's name pursuant to Sections 5.4, 5.11 and 5.13. SECTION 5.3 Execution and Delivery of Trust Securities Certificates. On the Closing Date, the Administrative Trustees shall cause Trust Securities Certificates, in an aggregate Liquidation Amount as provided in Sections 2.4 and 2.5, to be executed on behalf of the Trust and delivered to or upon the written order of the Depositor, signed by its chairman of the board, its president, any executive vice president or any vice president, treasurer or assistant treasurer or controller without further corporate action by the Depositor, in authorized denominations. SECTION 5.4 Registration of Transfer and Exchange of Preferred Securities Certificates. The Depositor shall keep or cause to be kept, at the office or agency maintained pursuant to Section 5.8, a register or registers for the purpose of registering Trust Securities Certificates and transfers and exchanges of Preferred Securities Certificates (the "Securities Register") in which the transfer agent and registrar designated by the Depositor (the "Securities Registrar"), subject to such reasonable regulations as it may prescribe, shall provide for the registration of Preferred Securities Certificates and Common Securities Certificates (subject to Section 5.10 in the case of the Common Securities Certificates) and 33 22 registration of transfers and exchanges of Preferred Securities Certificates as herein provided. The Bank shall be the initial Securities Registrar. Upon surrender for registration of transfer of any Preferred Securities Certificate at the office or agency maintained pursuant to Section 5.8, the Administrative Trustees or any one of them shall execute on behalf of the Trust (and if executed on behalf of the Trust by a facsimile signature, such certificate shall be countersigned by a transfer agent or its agent) and deliver, in the name of the designated transferee or transferees, one or more new Preferred Securities Certificates in authorized denominations of a like aggregate Liquidation Amount dated the date of execution by such Administrative Trustee or Trustees. The Securities Registrar shall not be required to register the transfer of any Preferred Securities that have been called for redemption during a period beginning at the opening of business 15 days before the day of the mailing of a notice of redemption and ending at the close of business on the day of such mailing. At the option of a Holder, Preferred Securities Certificates may be exchanged for other Preferred Securities Certificates in authorized denominations of the same class and of a like aggregate Liquidation Amount upon surrender of the Preferred Securities Certificates to be exchanged at the office or agency maintained pursuant to Section 5.8. Every Preferred Securities Certificate presented or surrendered for registration of transfer or exchange shall be accompanied by a written instrument of transfer in form satisfactory to an Administrative Trustee and the Securities Registrar duly executed by the Holder or his attorney duly authorized in writing. Each Preferred Securities Certificate surrendered for registration of transfer or exchange shall be cancelled and subsequently disposed of by an Administrative Trustee or the Securities Registrar in accordance with such Person's customary practice. No service charge shall be made for any registration of transfer or exchange of Preferred Securities Certificates, but the Securities Registrar may require payment of a sum sufficient to cover any tax or governmental charge that may be imposed in connection with any transfer or exchange of Preferred Securities Certificates. SECTION 5.5 Mutilated, Destroyed, Lost or Stolen Trust Securities Certificates. If (a) any mutilated Trust Securities Certificate shall be surrendered to the Securities Registrar, or if the Securities Registrar shall receive evidence to its satisfaction of the destruction, loss or theft of any Trust Securities Certificate and (b) there shall be delivered to the Securities Registrar and the Administrative Trustees such security or indemnity as may be required by them to save each of them harmless, then in the absence of notice that such Trust Securities Certificate shall have been acquired by a bona fide purchaser, the Administrative Trustees, or any one of them, on behalf of the Trust shall execute by manual or facsimile signature and, if executed on behalf of the Trust by facsimile signature, such certificate shall be countersigned by a transfer agent, and make available for delivery, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Trust Securities Certificate, a new Trust Securities Certificate of like class, tenor and denomination. In connection with the issuance of 34 23 any new Trust Securities Certificate under this Section, the Administrative Trustees or the Securities Registrar may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection therewith. Any duplicate Trust Securities Certificate issued pursuant to this Section shall constitute conclusive evidence of an undivided beneficial interest in the Trust Property, as if originally issued, whether or not the lost, stolen or destroyed Trust Securities Certificate shall be found at any time. SECTION 5.6 Persons Deemed Securityholders. The Trustees or the Securities Registrar shall treat the Person in whose name any Trust Securities Certificate shall be registered in the Securities Register as the owner of such Trust Securities Certificate for the purpose of receiving Distributions and for all other purposes whatsoever, and neither the Trustees nor the Securities Registrar shall be bound by any notice to the contrary. SECTION 5.7 Access to List of Securityholders' Names and Addresses. Each Holder and each Owner shall be deemed to have agreed not to hold the Depositor, the Property Trustee or the Administrative Trustees accountable by reason of the disclosure of its name and address, regardless of the source from which such information was derived. SECTION 5.8 Maintenance of Office or Agency. The Administrative Trustees shall maintain an office or offices or agency or agencies where Preferred Securities Certificates may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Trustees in respect of the Trust Securities Certificates may be served. The Administrative Trustees initially designate The Bank of New York, 101 Barclay Street, Floor 21 West, New York, New York 10286 Attn: Corporate Trust Administration, as its principal corporate trust office for such purposes. The Administrative Trustees shall give prompt written notice to the Depositor, the Property Trustee and to the Securityholders of any change in the location of the Securities Register or any such office or agency. SECTION 5.9 Appointment of Paying Agent. The Paying Agent shall make Distributions to Securityholders from the Payment Account and shall report the amounts of such Distributions to the Property Trustee and the Administrative Trustees. Any Paying Agent shall have the revocable power to withdraw funds from the Payment Account for the purpose of making the Distributions referred to above. The Administrative Trustees may revoke such power and remove the Paying Agent if such Trustees determine in their sole discretion that the Paying Agent shall have failed to perform its obligations under this Trust Agreement in any material respect. The Paying Agent shall initially be the Bank, and any co-paying agent chosen by the Bank, and acceptable to the Administrative Trustees and the Depositor. Any Person acting as Paying Agent shall be permitted to resign as Paying Agent upon 30 days' written notice to the Administrative 35 24 Trustees, the Property Trustee and the Depositor. In the event that the Bank shall no longer be the Paying Agent or a successor Paying Agent shall resign or its authority to act be revoked, the Administrative Trustees shall appoint a successor that is acceptable to the Property Trustee and the Depositor to act as Paying Agent (which shall be a bank or trust company). The Administrative Trustees shall cause such successor Paying Agent or any additional Paying Agent appointed by the Administrative Trustees to execute and deliver to the Trustees an instrument in which such successor Paying Agent or additional Paying Agent shall agree with the Trustees that as Paying Agent, such successor Paying Agent or additional Paying Agent will hold all sums, if any, held by it for payment to the Securityholders in trust for the benefit of the Securityholders entitled thereto until such sums shall be paid to such Securityholders. The Paying Agent shall return all unclaimed funds to the Property Trustee and upon resignation or removal of a Paying Agent such Paying Agent shall also return all funds in its possession to the Property Trustee. The provisions of Sections 8.1, 8.3 and 8.6 herein shall apply to the Bank also in its role as Paying Agent, for so long as the Bank shall act as Paying Agent and, to the extent applicable, to any other paying agent appointed hereunder, and any Paying Agent shall be bound by the requirements with respect to paying agents of securities issued pursuant to the Trust Indenture Act. Any reference in this Agreement to the Paying Agent shall include any co-paying agent unless the context requires otherwise. SECTION 5.10 Ownership of Common Securities by Depositor. On the Closing Date, the Depositor shall acquire and retain beneficial and record ownership of the Common Securities. To the fullest extent permitted by law, other than a transfer in connection with a consolidation or merger of the Depositor into another Person, or any conveyance, transfer or lease by the Depositor of its properties and assets substantially as an entirety to any Person, pursuant to Section 8.1 of the Indenture, any attempted transfer of the Common Securities shall be void. The Administrative Trustees shall cause each Common Securities Certificate issued to the Depositor to contain a legend stating "THIS CERTIFICATE IS NOT TRANSFERABLE TO ANY PERSON". SECTION 5.11 Book-Entry Preferred Securities Certificates; Common Securities Certificate. (a) The Preferred Securities Certificates, upon original issuance, will be issued in the form of a typewritten Preferred Securities Certificate or Certificates representing Book-Entry Preferred Securities Certificates, to be delivered to The Depository Trust Company, the initial Clearing Agency, by, or on behalf of, the Trust and, in accordance with Section 5.13, in the form of printed, lithographed or engraved Preferred Securities Certificates in certificated, fully registered form. The Book-Entry Preferred Securities Certificate or Certificates shall initially be registered on the Securities Register in the name of Cede & Co., the nominee of the initial Clearing Agency. With respect to any Book-Entry Preferred Securities Certificate: (i) the provisions of this Section 5.11(a) shall be in full force and effect; 36 25 (ii) the Securities Registrar and the Trustees shall be entitled to deal with the Clearing Agency for all purposes of this Trust Agreement relating to the Book-Entry Preferred Securities Certificates (including the payment of the Liquidation Amount of and Distributions on the Preferred Securities evidenced by Book-Entry Preferred Securities Certificates and the giving of instructions or directions to Owners of Preferred Securities evidenced by Book-Entry Preferred Securities Certificates) as the sole Holder of Preferred Securities evidenced by Book-Entry Preferred Securities Certificates and shall have no obligations to the Owners thereof; (iii) to the extent that the provisions of this Section 5.11 conflict with any other provisions of this Trust Agreement, the provisions of this Section 5.11 shall control; and (iv) the rights of the Owners of the Book-Entry Preferred Securities Certificates shall be exercised only through the Clearing Agency and shall be limited to those established by law and agreements between such Owners and the Clearing Agency and/or the Clearing Agency Participants. Pursuant to the Certificate Depository Agreement the initial Clearing Agency will make book-entry transfers among the Clearing Agency Participants and receive and transmit payments on the Book-Entry Preferred Securities to such Clearing Agency Participants. (b) A single Common Securities Certificate representing the Common Securities shall be issued to the Depositor in the form of a definitive Common Securities Certificate. SECTION 5.12 Notices to Clearing Agency. To the extent that a notice or other communication to the Owners is required under this Trust Agreement, with respect to any Owners holding Book-Entry Preferred Securities Certificates, the Trustees shall give all such notices and communications specified herein to be given to Owners to the Clearing Agency, and shall have no obligations to the Owners. SECTION 5.13 Definitive Preferred Securities Certificates. (a) The Definitive Preferred Securities Certificates shall be printed, lithographed or engraved or may be produced in any other manner as is reasonably acceptable to the Administrative Trustees that meets the requirements of any stock exchange or automated quotation system on which the Preferred Securities are then listed or approved for trading, as evidenced by the execution thereof by the Administrative Trustees or any one of them. The Trustees shall recognize the Holders of the Definitive Preferred Securities Certificates as Securityholders. (b) If (x) the Depositor or the Clearing Agency advises the Trustees in writing that the Clearing Agency is no longer willing or able to properly discharge its responsibilities with respect to the Book-Entry Preferred Securities Certificates, and the Depositor is unable to locate a qualified successor, or if at anytime the Clearing Agency ceases to be a clearing agency registered under the Securities Exchange Act of 1934, as amended, at a time when the 37 26 Clearing Agency is required to be so registered to act as such depositary or (y) the Depositor at its option advises the Trustees in writing that it elects to terminate the book-entry system through the Clearing Agency, then the Administrative Trustees shall notify other Trustees and the Clearing Agency, and the Clearing Agency, in accordance with its customary rules and procedures, shall notify all Clearing Agency Participants for whom it holds Preferred Securities of the occurrence of any such event and of the availability of the Definitive Preferred Securities Certificates to Owners of such class or classes, as applicable, requesting the same. Upon surrender to the Administrative Trustees of the typewritten Preferred Securities Certificate or Certificates representing the Book-Entry Preferred Securities Certificates by the Clearing Agency, accompanied by registration instructions, the Administrative Trustees, or any one of them, shall execute the Definitive Preferred Securities Certificates in accordance with the instructions of the Clearing Agency or, if executed on behalf of the Trust by facsimile, countersigned by a transfer agent or its agent. Neither the Securities Registrar nor the Trustees shall be liable for any delay in delivery of such instructions and may conclusively rely on, and shall be protected in relying on, such instructions. SECTION 5.14 Rights of Securityholders. (a) The legal title to the Trust Property is vested exclusively in the Property Trustee (in its capacity as such) in accordance with Section 2.9, and the Securityholders shall not have any right or title therein other than the undivided beneficial ownership interest in the assets of the Trust conferred by their Trust Securities and they shall have no right to call for any partition or division of property, profits or rights of the Trust except as described below. The Trust Securities shall be personal property giving only the rights specifically set forth therein and in this Trust Agreement. The Trust Securities shall have no preemptive or similar rights and when issued and delivered to Securityholders against payment of the purchase price therefor will be fully paid and nonassessable by the Trust. The Holders of the Trust Securities, in their capacities as such, shall be entitled to the same limitation of personal liability extended to stockholders of private corporations for profit organized under the General Corporation Law of the State of Delaware. (b) For so long as any Preferred Securities remain Outstanding, if, upon a Debenture Event of Default, the Debenture Trustee fails or the holders of not less than 25% in principal amount of the outstanding Debentures fail to declare the principal of all of the Debentures to be immediately due and payable, the Holders of at least 25% in Liquidation Amount of the Preferred Securities then Outstanding shall have such right by a notice in writing to the Depositor and the Debenture Trustee; and upon any such declaration such principal amount of and the accrued interest on all of the Debentures shall become immediately due and payable as set forth in the Indenture, provided that the payment of principal, premium and interest on such Debentures shall remain subordinated to the extent provided in the Indenture. At any time after such a declaration of acceleration with respect to the Debentures has been made and before a judgment or decree for payment of the money due has been obtained by the Debenture Trustee as in the Indenture provided, the Holders of a majority in Liquidation Amount of the Preferred Securities, by written notice to the Property Trustee, the 38 27 Depositor and the Debenture Trustee, may rescind and annul such declaration and its consequences if: (i) the Depositor has paid or deposited with the Debenture Trustee a sum sufficient to pay (A) all overdue installments of interest (including any Additional Interest (as defined in the Indenture)) on all of the Debentures, (B) the principal of (and premium, if any, on) any Debentures which have become due otherwise than by such declaration of acceleration and interest thereon at the rate borne by the Debentures, and (C) all sums paid or advanced by the Debenture Trustee under the Indenture and the reasonable compensation, expenses, disbursements and advances of the Debenture Trustee and the Property Trustee, their agents and counsel; and (ii) all Events of Default with respect to the Debentures, other than the non-payment of the principal of the Debentures which has become due solely by such acceleration, have been cured or waived as provided in Section 5.13 of the Indenture. The holders of a majority in aggregate Liquidation Amount of the Preferred Securities may, on behalf of the Holders of all the Preferred Securities, waive any past default under the Indenture, except a default in the payment of principal, premium or interest (unless all Events of Default with respect to the Debentures, other than the non-payment of the principal of the Debentures which has become due solely by such acceleration, have been cured or annulled as provided in Section 5.3 of the Indenture and the Company has paid or deposited with the Debenture Trustee a sum sufficient to pay all overdue installments of interest (including any Additional Interest (as defined in the Indenture)) on the Debentures, the principal of (and premium, if any, on) any Debentures which have become due otherwise than by such declaration of acceleration and interest thereon at the rate borne by the Debentures, and all sums paid or advanced by the Debenture Trustee under the Indenture and the reasonable compensation, expenses, disbursements and advances of the Debenture Trustee and the Property trustee, their agents and counsel) or a default in respect of a covenant or provision which under the Indenture cannot be modified or amended without the consent of the holder of each outstanding Debenture. No such rescission shall affect any subsequent default or impair any right consequent thereon. Upon receipt by the Property Trustee of written notice declaring such an acceleration, or rescission and annulment thereof, by Holders of the Preferred Securities, a record date shall be established for determining Holders of Outstanding Preferred Securities entitled to join in such notice, which record date shall be at the close of business on the day the Property Trustee receives such notice. The Holders of Outstanding Preferred Securities on such record date, or their duly designated proxies, and only such Persons, shall be entitled to join in such notice, whether or not such Holders remain Holders after such record date; provided, that, 39 28 unless such declaration of acceleration, or rescission and annulment, as the case may be, shall have become effective by virtue of the requisite percentage having joined in such notice prior to the day which is 90 days after such record date, such notice of declaration of acceleration, or rescission and annulment, as the case may be, shall automatically and without further action by any Holder be canceled and of no further effect. Nothing in this paragraph shall prevent a Holder, or a proxy of a Holder, from giving, after expiration of such 90-day period, a new written notice of declaration of acceleration, or rescission and annulment thereof, as the case may be, that is identical to a written notice which has been canceled pursuant to the proviso to the preceding sentence, in which event a new record date shall be established pursuant to the provisions of this Section 5.14(b). (c) For so long as any Preferred Securities remain Outstanding, to the fullest extent permitted by law and subject to the terms of this Trust Agreement and the Indenture, upon a Debenture Event of Default specified in Section 5.1(1) or 5.1(2) of the Indenture, any Holder of Preferred Securities shall have the right to institute a proceeding directly against the Depositor, pursuant to Section 5.8 of the Indenture, for enforcement of payment to such Holder of the principal amount of or premium or interest on Debentures having a principal amount equal to the Liquidation Amount of the Preferred Securities of such Holder (a "Direct Action"). Except as set forth in Section 5.14(b) and this Section 5.14(c), the Holders of Preferred Securities shall have no right to exercise directly any right or remedy available to the holders of, or in respect of, the Debentures. SECTION 5.15 CUSIP Numbers. The Administrative Trustees in issuing the Preferred Securities may use "CUSIP" numbers (if then generally in use), and, if so, the Property Trustee shall use "CUSIP" numbers in notices of redemption as a convenience to Holders; provided that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Preferred Securities or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Preferred Securities, and any such redemption shall not be affected by any defect in or omission of such numbers. The Administrative Trustees will promptly notify the Property Trustee of any change in the CUSIP numbers. ARTICLE VI ACTS OF SECURITYHOLDERS; MEETINGS; VOTING SECTION 6.1 Limitations on Voting Rights. (a) Except as provided in this Section, in Sections 5.14, 8.10 and 10.3 and in the Indenture and as otherwise required by law, no Holder of Preferred Securities shall have any right to vote or in any manner otherwise control the administration, operation and management of the Trust or the obligations of the parties hereto, nor shall anything herein set forth, or contained in the terms of the Trust Securities Certificates, be construed so as to 40 29 constitute the Securityholders from time to time as partners or members of an association. (b) So long as any Debentures are held by the Property Trustee, the Trustees shall not (i) direct the time, method and place of conducting any proceeding for any remedy available to the Debenture Trustee, or executing any trust or power conferred on the Debenture Trustee with respect to such Debentures, (ii) waive any past default which is waiveable under Section 5.13 of the Indenture, (iii) exercise any right to rescind or annul a declaration that the principal of all the Debentures shall be due and payable or (iv) consent to any amendment, modification or termination of the Indenture or the Debentures, where such consent shall be required, without, in each case, obtaining the prior approval of the Holders of at least a majority in Liquidation Amount of all Outstanding Preferred Securities, provided, however, that where a consent under the Indenture would require the consent of each holder of Debentures affected thereby, no such consent shall be given by the Property Trustee without the prior written consent of each Holder of Preferred Securities. The Trustees shall not revoke any action previously authorized or approved by a vote of the Holders of Preferred Securities, except by a subsequent vote of the Holders of Preferred Securities. The Property Trustee shall notify all Holders of the Preferred Securities of any notice of default received from the Debenture Trustee with respect to the Debentures. In addition to obtaining the foregoing approvals of the Holders of the Preferred Securities, prior to taking any of the foregoing actions, the Administrative Trustees shall, at the expense of the Depositor, obtain an Opinion of Counsel experienced in such matters to the effect that such action shall not cause the Trust to fail to be classified as a grantor trust for United States federal income tax purposes. (c) If any proposed amendment to the Trust Agreement provides for, or the Trustees otherwise propose to effect, (i) any action that would adversely affect in any material respect the powers, preferences or special rights of the Preferred Securities, whether by way of amendment to this Trust Agreement or otherwise, or (ii) the dissolution, winding-up or termination of the Trust, other than pursuant to the terms of this Trust Agreement, then the Holders of Outstanding Preferred Securities as a class will be entitled to vote on such amendment or proposal and such amendment or proposal shall not be effective except with the approval of the Holders of at least a majority in Liquidation Amount of the Outstanding Preferred Securities. Notwithstanding any other provision of this Trust Agreement, no amendment to this Trust Agreement may be made if, as a result of such amendment, it would cause the Trust to fail to be classified as a grantor trust for United States federal income tax purposes. SECTION 6.2 Notice of Meetings. Notice of all meetings of the Preferred Securityholders, stating the time, place and purpose of the meeting, shall be given by the Property Trustee pursuant to Section 10.10 to each Preferred Securityholder of record, at his registered address, at least 15 days and not more than 90 days before the meeting. At any such meeting, any business properly before the meeting may be so considered whether or not stated in the notice of the meeting. Any adjourned meeting may be held as adjourned without further notice. SECTION 6.3 Meetings of Preferred Securityholders. 41 30 No annual meeting of Securityholders is required to be held. The Administrative Trustees, however, shall call a meeting of Preferred Securityholders to vote on any matter upon the written request of the Preferred Securityholders of record of 25% of the Outstanding Preferred Securities (based upon their Liquidation Amount) and the Administrative Trustees or the Property Trustee may, at any time in their discretion, call a meeting of Preferred Securityholders to vote on any matters as to which Preferred Securityholders are entitled to vote. Preferred Securityholders of record of 50% of the Outstanding Preferred Securities (based upon their Liquidation Amount), present in person or by proxy, shall constitute a quorum at any meeting of Preferred Securityholders. If a quorum is present at a meeting, an affirmative vote by the Preferred Securityholders of record present, in person or by proxy, holding more than a majority of the Outstanding Preferred Securities (based upon their Liquidation Amount) held by holders of record of Outstanding Preferred Securities present, either in person or by proxy, at such meeting shall constitute the action of the Preferred Securityholders, unless this Trust Agreement requires a greater number of affirmative votes. SECTION 6.4 Voting Rights. Securityholders shall be entitled to one vote for each $25 of Liquidation Amount represented by their Trust Securities in respect of any matter as to which such Securityholders are entitled to vote. SECTION 6.5 Proxies, etc. At any meeting of Securityholders, any Securityholder entitled to vote thereat may vote by proxy, provided that no proxy shall be voted at any meeting unless it shall have been placed on file with the Administrative Trustees, or with such other officer or agent of the Trust as the Administrative Trustees may direct, for verification prior to the time at which such vote shall be taken. Pursuant to a resolution of the Property Trustee, proxies may be solicited in the name of the Property Trustee or one or more officers of the Property Trustee. Only Securityholders of record shall be entitled to vote. When Trust Securities are held jointly by several Persons, any one of them may vote at any meeting in person or by proxy in respect of such Trust Securities, but if more than one of them shall be present at such meeting in person or by proxy, and such joint owners or their proxies so present disagree as to any vote to be cast, such vote shall not be received in respect of such Trust Securities. A proxy purporting to be executed by or on behalf of a Securityholder shall be deemed valid unless challenged at or prior to its exercise, and the burden of proving invalidity shall rest on the challenger. No proxy shall be valid more than three years after its date of execution. 42 31 SECTION 6.6 Securityholder Action by Written Consent. Any action which may be taken by Securityholders at a meeting may be taken without a meeting if Securityholders holding more than a majority of all Outstanding Trust Securities (based upon their Liquidation Amount) entitled to vote in respect of such action (or such larger proportion thereof as shall be required by any express provision of this Trust Agreement) shall consent to the action in writing. SECTION 6.7 Record Date for Voting and Other Purposes. For the purposes of determining the Securityholders who are entitled to notice of and to vote at any meeting or by written consent, or to participate in any Distribution on the Trust Securities in respect of which a record date is not otherwise provided for in this Trust Agreement, or for the purpose of any other action, the Administrative Trustees may from time to time fix a date, not more than 90 days prior to the date of any meeting of Securityholders or the payment of a Distribution or other action, as the case may be, as a record date for the determination of the identity of the Securityholders of record for such purposes. SECTION 6.8 Acts of Securityholders. Any request, demand, authorization, direction, notice, consent, waiver or other action provided or permitted by this Trust Agreement to be given, made or taken by Securityholders or Owners may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Securityholders or Owners in person or by an agent duly appointed in writing; and, except as otherwise expressly provided herein, such action shall become effective when such instrument or instruments are delivered to an Administrative Trustee. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the Securityholders or Owners signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Trust Agreement and (subject to Section 8.1) conclusive in favor of the Trustees, if made in the manner provided in this Section. The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by a certificate of a notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof. Where such execution is by a signer acting in a capacity other than his individual capacity, such certificate or affidavit shall also constitute sufficient proof of his authority. The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner which any Trustee receiving the same deems sufficient. The ownership of Preferred Securities shall be proved by the Securities Register. 43 32 Any request, demand, authorization, direction, notice, consent, waiver or other Act of the Securityholder of any Trust Security shall bind every future Securityholder of the same Trust Security and the Securityholder of every Trust Security issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, omitted or suffered to be done by the Trustees or the Trust in reliance thereon, whether or not notation of such action is made upon such Trust Security. Without limiting the foregoing, a Securityholder entitled hereunder to take any action hereunder with regard to any particular Trust Security may do so with regard to all or any part of the Liquidation Amount of such Trust Security or by one or more duly appointed agents each of which may do so pursuant to such appointment with regard to all or any part of such Liquidation Amount. If any dispute shall arise between the Securityholders and the Administrative Trustees or among such Securityholders or Trustees with respect to the authenticity, validity or binding nature of any request, demand, authorization, direction, consent, waiver or other Act of such Securityholder or Trustee under this Article VI, then the determination of such matter by the Property Trustee shall be conclusive with respect to such matter. SECTION 6.9 Inspection of Records. Upon reasonable notice to the Administrative Trustees and the Property Trustee, the records of the Trust shall be open to inspection by Securityholders during normal business hours for any purpose reasonably related to such Securityholder's interest as a Securityholder. ARTICLE VII REPRESENTATIONS AND WARRANTIES SECTION 7.1 Representations and Warranties of the Property Trustee and the Delaware Trustee. The Property Trustee and the Delaware Trustee, each severally on behalf of and as to itself, hereby represents and warrants for the benefit of the Depositor and the Securityholders that: (a) the Property Trustee is a New York banking corporation duly organized, validly existing and in good standing under the laws of the State of New York; (b) the Property Trustee has full corporate power, authority and legal right to execute, deliver and perform its obligations under this Trust Agreement and has taken all necessary action to authorize the execution, delivery and performance by it of this Trust Agreement; (c) the Delaware Trustee is a Delaware banking corporation duly organized, validly existing and in good standing in the State of Delaware; 44 33 (d) the Delaware Trustee has full corporate power, authority and legal right to execute, deliver and perform its obligations under this Trust Agreement and has taken all necessary action to authorize the execution, delivery and performance by it of this Trust Agreement; (e) this Trust Agreement has been duly authorized, executed and delivered by the Property Trustee and the Delaware Trustee and constitutes the valid and legally binding agreement of each of the Property Trustee and the Delaware Trustee enforceable against each of them in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles; (f) the execution, delivery and performance of this Trust Agreement has been duly authorized by all necessary corporate or other action on the part of the Property Trustee and the Delaware Trustee and does not require any approval of stockholders of the Property Trustee and the Delaware Trustee and such execution, delivery and performance will not (i) violate the charter or by-laws of the Property Trustee or the Delaware Trustee, (ii) violate any provision of, or constitute, with or without notice or lapse of time, a default under, or result in the creation or imposition of, any Lien on any properties included in the Trust Property pursuant to the provisions of, any indenture, mortgage, credit agreement, license or other agreement or instrument to which the Property Trustee or the Delaware Trustee is a party or by which it is bound, or (iii) violate any law, governmental rule or regulation of the State of New York or the State of Delaware, as the case may be, governing the banking, trust or general powers of the Property Trustee or the Delaware Trustee (as appropriate in context) or any order, judgment or decree applicable to the Property Trustee or the Delaware Trustee; (g) neither the authorization, execution or delivery by the Property Trustee or the Delaware Trustee of this Trust Agreement nor the consummation of any of the transactions by the Property Trustee or the Delaware Trustee (as appropriate in context) contemplated herein or therein requires the consent or approval of, the giving of notice to, the registration with or the taking of any other action with respect to any governmental authority or agency under any existing New York or Delaware law governing the banking, trust or general powers of the Property Trustee or the Delaware Trustee, as the case may be; and (h) there are no proceedings pending or, to the best of each of the Property Trustee's and the Delaware Trustee's knowledge, threatened against or affecting the Property Trustee or the Delaware Trustee in any court or before any governmental authority, agency or arbitration board or tribunal which, individually or in the aggregate, would materially and adversely affect the Trust or would question the right, power and authority of the Property Trustee or the Delaware Trustee, as the case may be, to enter into or perform its obligations as one of the Trustees under this Trust Agreement. SECTION 7.2 Representations and Warranties of Depositor. The Depositor hereby represents and warrants for the benefit of the Securityholders that: 45 34 (a) the Trust Securities Certificates issued at the Closing Date on behalf of the Trust have been duly authorized and will have been, duly and validly executed, issued and delivered by the Trustees pursuant to the terms and provisions of, and in accordance with the requirements of, this Trust Agreement and the Securityholders will be, as of such date, entitled to the benefits of this Trust Agreement; and (b) there are no taxes, fees or other governmental charges payable by the Trust (or the Trustees on behalf of the Trust) under the laws of the State of Delaware or any political subdivision thereof in connection with the execution, delivery and performance by the Property Trustee or the Delaware Trustee, as the case may be, of this Trust Agreement. ARTICLE VIII THE TRUSTEES SECTION 8.1 Certain Duties and Responsibilities. (a) The duties and responsibilities of the Trustees shall be as provided by this Trust Agreement and, in the case of the Property Trustee, by the Trust Indenture Act. Notwithstanding the foregoing, no provision of this Trust Agreement shall require the Trustees to expend or risk their own funds or otherwise incur any financial liability in the performance of any of their duties hereunder, or in the exercise of any of their rights or powers, if they shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to them. Whether or not therein expressly so provided, every provision of this Trust Agreement relating to the conduct or affecting the liability of or affording protection to the Trustees shall be subject to the provisions of this Section. Nothing in this Trust Agreement shall be construed to release an Administrative Trustee from liability for its own gross negligent action, its own gross negligent failure to act, or its own willful misconduct. To the extent that, at law or in equity, an Administrative Trustee has duties (including fiduciary duties) and liabilities relating thereto to the Trust or to the Securityholders, such Administrative Trustee shall not be liable to the Trust or to any Securityholder for such Trustee's good faith reliance on the provisions of this Trust Agreement. The Administrative Trustees shall not be liable for the default or misconduct of the Property Trustee or the Delaware Trustee. The provisions of this Trust Agreement, to the extent that they restrict the duties and liabilities of the Administrative Trustees otherwise existing at law or in equity, are agreed by the Depositor and the Securityholders to replace such other duties and liabilities of the Administrative Trustees. No provision of this Trust Agreement shall be deemed to impose any duty or obligation on any Administrative Trustee to perform any act or acts or exercise any right, power, duty or obligation conferred or imposed on it, in any jurisdiction in which it shall be illegal, or in which such Administrative Trustee shall be unqualified or incompetent in accordance with applicable law, to perform any such act or acts, or to exercise any such right, power, duty or obligation. No permissive power or authority available to any Administrative Trustee shall be construed to be a duty. 46 35 (b) All payments made by the Property Trustee or a Paying Agent in respect of the Trust Securities shall be made only from the revenue and proceeds from the Trust Property and only to the extent that there shall be sufficient revenue or proceeds from the Trust Property to enable the Property Trustee or a Paying Agent to make payments in accordance with the terms hereof. Each Securityholder, by its acceptance of a Trust Security, agrees that it will look solely to the revenue and proceeds from the Trust Property to the extent legally available for distribution to it as herein provided and that the Trustees are not personally liable to it for any amount distributable in respect of any Trust Security or for any other liability in respect of any Trust Security. This Section 8.1(b) does not limit the liability of the Trustees expressly set forth elsewhere in this Trust Agreement or, in the case of the Property Trustee, in the Trust Indenture Act. (c) No provision of this Trust Agreement shall be construed to relieve the Property Trustee from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that: (i) the Property Trustee shall not be liable for any error of judgment made in good faith by an authorized officer of the Property Trustee, unless it shall be proved that the Property Trustee was negligent in ascertaining the pertinent facts; (ii) the Property Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of not less than a majority in Liquidation Amount of the Trust Securities relating to the time, method and place of conducting any proceeding for any remedy available to the Property Trustee, or exercising any trust or power conferred upon the Property Trustee under this Trust Agreement; (iii) the Property Trustee's sole duty with respect to the custody, safe keeping and physical preservation of the Debentures and the Payment Account shall be to deal with such property in a similar manner as the Property Trustee deals with similar property for its own account, subject to the protections and limitations on liability afforded to the Property Trustee under this Trust Agreement and the Trust Indenture Act; (iv) the Property Trustee shall not be liable for any interest on any money received by it except as it may otherwise agree in writing with the Depositor; and money held by the Property Trustee need not be segregated from other funds held by it except in relation to the Payment Account maintained by the Property Trustee pursuant to Section 3.1 and except to the extent otherwise required by law; and (v) the Property Trustee shall not be responsible for monitoring the compliance by the Administrative Trustees or the Depositor with their respective duties under this Trust Agreement, nor shall the Property Trustee be liable for the default or misconduct of the Administrative Trustees or the Depositor. 47 36 SECTION 8.2 Certain Notices. Within five Business Days after the occurrence of any Event of Default actually known to the Property Trustee, the Property Trustee shall transmit, in the manner and to the extent provided in Section 10.10, notice of such Event of Default to the Securityholders, the Administrative Trustees and the Depositor, unless such Event of Default shall have been cured or waived. Within five Business Days after the receipt of notice of the Depositor's exercise of its right to defer the payment of interest on the Debentures pursuant to the Indenture, the Administrative Trustee shall transmit, in the manner and to the extent provided in Section 10.10, notice of such exercise to the Securityholders and the Property Trustee, unless such exercise shall have been revoked. SECTION 8.3 Certain Rights of Property Trustee. Subject to the provisions of Section 8.1: (a) the Property Trustee may rely and shall be protected in acting or refraining from acting in good faith upon any resolution, Opinion of Counsel, certificate, written representation of a Holder or transferee, certificate of auditors or any other certificate, statement, instrument, opinion, report, notice, request, consent, order, appraisal, bond, debenture, note, other evidence of indebtedness or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) if (i) in performing its duties under this Trust Agreement the Property Trustee is required to decide between alternative courses of action or (ii) in construing any of the provisions of this Trust Agreement the Property Trustee finds the same ambiguous or inconsistent with any other provisions contained herein or (iii) the Property Trustee is unsure of the application of any provision of this Trust Agreement, then, except as to any matter as to which the Preferred Securityholders are entitled to vote under the terms of this Trust Agreement, the Property Trustee shall deliver a notice to the Depositor requesting written instructions of the Depositor as to the course of action to be taken and the Property Trustee shall take such action, or refrain from taking such action, as the Property Trustee shall be instructed in writing to take, or to refrain from taking, by the Depositor; provided, however, that if the Property Trustee does not receive such instructions of the Depositor within ten Business Days after it has delivered such notice, or such reasonably shorter period of time set forth in such notice (which to the extent practicable shall not be less than two Business Days), it may, but shall be under no duty to, take or refrain from taking such action not inconsistent with this Trust Agreement as it shall deem advisable and in the best interests of the Securityholders, in which event the Property Trustee shall have no liability except for its own bad faith, negligence or willful misconduct; (c) any direction or act of the Depositor or the Administrative Trustees contemplated by this Trust Agreement shall be sufficiently evidenced by an Officers' Certificate; 48 37 (d) whenever in the administration of this Trust Agreement, the Property Trustee shall deem it desirable that a matter be established before undertaking, suffering or omitting any action hereunder, the Property Trustee (unless other evidence is herein specifically prescribed) may, in the absence of bad faith on its part, request and rely upon an Officers' Certificate which, upon receipt of such request, shall be promptly delivered by the Depositor or the Administrative Trustees; (e) the Property Trustee shall have no duty to see to any recording, filing or registration of any instrument (including any financing or continuation statement or any filing under tax or securities laws) or any rerecording, refiling or reregistration thereof; (f) the Property Trustee may consult with counsel of its selection (which counsel may be counsel to the Depositor or any of its Affiliates, and may include any of its employees) and the advice of such counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon and in accordance with such advice, such counsel may be counsel to the Depositor or any of its Affiliates, and may include any of its employees; the Property Trustee shall have the right at any time to seek instructions concerning the administration of this Trust Agreement from any court of competent jurisdiction; (g) the Property Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Trust Agreement at the request or direction of any of the Securityholders pursuant to this Trust Agreement, unless such Securityholders shall have offered to the Property Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction; (h) the Property Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, approval, bond, debenture, note or other evidence of indebtedness or other paper or document, unless requested in writing to do so by one or more Securityholders, but the Property Trustee may make such further inquiry or investigation into such facts or matters as it may see fit; (i) the Property Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through its agents or attorneys, provided that the Property Trustee shall be responsible for its own negligence or recklessness with respect to selection of any agent or attorney appointed by it hereunder; (j) whenever in the administration of this Trust Agreement the Property Trustee shall deem it desirable to receive written instructions with respect to enforcing any remedy or right or taking any other action hereunder the Property Trustee (i) may request written instructions from the Holders of the Trust Securities which written instructions may only be given by the Holders of the same proportion in Liquidation Amount of the Trust Securities as would be entitled to direct the Property Trustee under the terms of the Trust Securities in respect of such remedy, right or action, (ii) may refrain from enforcing such remedy or right or taking 49 38 such other action until such written instructions are received, and (iii) shall be protected in acting in accordance with such written instructions; and (k) except as otherwise expressly provided by this Trust Agreement, the Property Trustee shall not be under any obligation to take any action that is discretionary under the provisions of this Trust Agreement. No provision of this Trust Agreement shall be deemed to impose any duty or obligation on the Property Trustee to perform any act or acts or exercise any right, power, duty or obligation conferred or imposed on it, in any jurisdiction in which it shall be illegal, or in which the Property Trustee shall be unqualified or incompetent in accordance with applicable law, to perform any such act or acts, or to exercise any such right, power, duty or obligation. No permissive power or authority available to the Property Trustee shall be construed to be a duty. SECTION 8.4 Not Responsible for Recitals or Issuance of Securities. The recitals contained herein and in the Trust Securities Certificates shall be taken as the statements of the Trust, and the Trustees do not assume any responsibility for their correctness. The Trustees shall not be accountable for the use or application by the Depositor of the proceeds of the Debentures. SECTION 8.5 May Hold Securities. Any Trustee or any other agent of any Trustee or the Trust, in its individual or any other capacity, may become the owner or pledgee of Trust Securities and, subject to Sections 8.8 and 8.13, except as provided in the definition of the term "Outstanding" in Article I, may otherwise deal with the Trust with the same rights it would have if it were not a Trustee or such other agent. SECTION 8.6 Compensation; Indemnity; Fees. Pursuant to Section 10.6 of the Indenture, the Depositor, as borrower, agrees: (a) to pay to the Trustees from time to time such compensation as shall be agreed in writing with the Depositor for all services rendered by them hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); (b) except as otherwise expressly provided herein, to reimburse the Trustees upon request for all reasonable expenses, disbursements and advances incurred or made by the Trustees in accordance with any provision of this Trust Agreement (including the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to its negligence or bad faith; and 50 39 (c) to the fullest extent permitted by applicable law, to indemnify and hold harmless (i) each Trustee, (ii) any Affiliate of any Trustee, (iii) any officer, director, shareholder, employee, representative or agent of any Trustee, and (iv) any employee or agent of the Trust or its Affiliates, (referred to herein as an "Indemnified Person") from and against any and all loss, damage, liability, tax, penalty, expense or claim of any kind or nature whatsoever incurred by such Indemnified Person by reason of the creation, operation or termination of the Trust or any act or omission performed or omitted by such Indemnified Person in good faith on behalf of the Trust and in a manner such Indemnified Person reasonably believed to be within the scope of authority conferred on such Indemnified Person by this Trust Agreement, except that no Indemnified Person shall be entitled to be indemnified in respect of any loss, damage or claim incurred by such Indemnified Person by reason of negligence, bad faith, or willful or intentional misconduct with respect to such acts or omissions. When the Property Trustee incurs expenses or renders services in connection with an Event of Default specified in Section 5.1(4) or Section 5.1(5) of the Indenture, the expenses (including the reasonable charges and expenses of its counsel) and the compensation for the services are intended to constitute expenses of administration under any applicable federal or state bankruptcy, insolvency or other similar law. The provisions of this Section 8.6 shall survive the termination of this Trust Agreement. No Trustee may claim any lien or charge on any Trust Property as a result of any amount due pursuant to this Section 8.6. The Depositor and any Trustee (in the case of the Property Trustee, subject to Section 8.8 hereof) may engage in or possess an interest in other business ventures of any nature or description, independently or with others, similar or dissimilar to the business of the Trust, and the Trust and the Holders of Trust Securities shall have no rights by virtue of this Trust Agreement in and to such independent ventures or the income or profits derived therefrom, and the pursuit of any such venture, even if competitive with the business of the Trust, shall not be deemed wrongful or improper. Neither the Depositor, nor any Trustee, shall be obligated to present any particular investment or other opportunity to the Trust even if such opportunity is of a character that, if presented to the Trust, could be taken by the Trust, and the Depositor or any Trustee shall have the right to take for its own account (individually or as a partner or fiduciary) or to recommend to others any such particular investment or other opportunity. Any Trustee may engage or be interested in any financial or other transaction with the Depositor or any Affiliate of the Depositor, or may act as depository for, trustee or agent for, or act on any committee or body of holders of, securities or other obligations of the Depositor or its Affiliates. SECTION 8.7 Corporate Property Trustee Required; Eligibility of Trustees. (a) There shall at all times be a Property Trustee hereunder with respect to the Trust Securities. The Property Trustee shall be a Person that is eligible pursuant to the Trust Indenture Act to act as such and has a combined capital and surplus of at least $50,000,000. If any such Person publishes reports of condition at least annually, pursuant to law or to the 51 40 requirements of its supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such Person shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Property Trustee with respect to the Trust Securities shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this Article. (b) There shall at all times be one or more Administrative Trustees hereunder with respect to the Trust Securities. Each Administrative Trustee shall be either a natural person who is at least 21 years of age or a legal entity that shall act through one or more persons authorized to bind that entity. (c) There shall at all times be a Delaware Trustee with respect to the Trust Securities. The Delaware Trustee shall either be (i) a natural person who is at least 21 years of age and a resident of the State of Delaware or (ii) a legal entity with its principal place of business in the State of Delaware and that otherwise meets the requirements of applicable Delaware law that shall act through one or more persons authorized to bind such entity. SECTION 8.8 Conflicting Interests. If the Property Trustee has or shall acquire a conflicting interest within the meaning of the Trust Indenture Act, the Property Trustee shall either eliminate such interest or resign, to the extent and in the manner provided by, and subject to the provisions of, the Trust Indenture Act and this Trust Agreement. SECTION 8.9 Co-Trustees and Separate Trustee. Unless an Event of Default shall have occurred and be continuing, at any time or times, for the purpose of meeting the legal requirements of the Trust Indenture Act or of any jurisdiction in which any part of the Trust Property may at the time be located, the Depositor and the Administrative Trustees, by agreed action of the majority of such Trustees, shall have power to appoint, and upon the written request of the Administrative Trustees, the Depositor shall for such purpose join with the Administrative Trustees in the execution, delivery, and performance of all instruments and agreements necessary or proper to appoint, one or more Persons approved by the Property Trustee either to act as co-trustee, jointly with the Property Trustee, of all or any part of such Trust Property, or to the extent required by law to act as separate trustee of any such property, in either case with such powers as may be provided in the instrument of appointment, and to vest in such Person or Persons in the capacity aforesaid, any property, title, right or power deemed necessary or desirable, subject to the other provisions of this Section. If the Depositor does not join in such appointment within 15 days after the receipt by it of a request so to do, or in case a Debenture Event of Default has occurred and is continuing, the Property Trustee alone shall have power to make such appointment. Any co-trustee or separate trustee appointed pursuant to this Section shall either be (i) a natural person who is at least 21 years of age and a resident of the United States or (ii) a legal entity with its principal place of business in the United States that shall act through one or more persons authorized to bind such entity. 52 41 Should any written instrument from the Depositor be required by any co-trustee or separate trustee so appointed for more fully confirming to such co-trustee or separate trustee such property, title, right, or power, any and all such instruments shall, on request, be executed, acknowledged and delivered by the Depositor. Every co-trustee or separate trustee shall, to the extent permitted by law, but to such extent only, be appointed subject to the following terms, namely: (a) The Trust Securities shall be executed and delivered and all rights, powers, duties, and obligations hereunder in respect of the custody of securities, cash and other personal property held by, or required to be deposited or pledged with, the Trustees specified hereunder shall be exercised solely by such Trustees and not by such co-trustee or separate trustee. (b) The rights, powers, duties, and obligations hereby conferred or imposed upon the Property Trustee in respect of any property covered by such appointment shall be conferred or imposed upon and exercised or performed by the Property Trustee or by the Property Trustee and such co-trustee or separate trustee jointly, as shall be provided in the instrument appointing such co-trustee or separate trustee, except to the extent that under any law of any jurisdiction in which any particular act is to be performed, the Property Trustee shall be incompetent or unqualified to perform such act, in which event such rights, powers, duties and obligations shall be exercised and performed by such co-trustee or separate trustee. (c) The Property Trustee at any time, by an instrument in writing executed by it, with the written concurrence of the Depositor, may accept the resignation of or remove any co-trustee or separate trustee appointed under this Section, and, in case a Debenture Event of Default has occurred and is continuing, the Property Trustee shall have power to accept the resignation of, or remove, any such co-trustee or separate trustee without the concurrence of the Depositor. Upon the written request of the Property Trustee, the Depositor shall join with the Property Trustee in the execution, delivery and performance of all instruments and agreements necessary or proper to effectuate such resignation or removal. A successor to any co-trustee or separate trustee so resigned or removed may be appointed in the manner provided in this Section. (d) No co-trustee or separate trustee hereunder shall be personally liable by reason of any act or omission of the Property Trustee or any other trustee hereunder. (e) The Property Trustee shall not be liable by reason of any act of a co-trustee or separate trustee. (f) Any Act of Holders delivered to the Property Trustee shall be deemed to have been delivered to each such co-trustee and separate trustee. 53 42 SECTION 8.10 Resignation and Removal; Appointment of Successor. No resignation or removal of any Trustee (the "Relevant Trustee") and no appointment of a successor Trustee pursuant to this Article shall become effective until the acceptance of appointment by the successor Trustee in accordance with the applicable requirements of Section 8.11. Subject to the immediately preceding paragraph, the Relevant Trustee may resign at any time. The Property Trustee and the Delaware Trustee shall give written notice thereof to the Securityholders and the Administrative Trustee shall give notice thereof to the Depositor. If the instrument of acceptance by the successor Trustee required by Section 8.11 shall not have been delivered to the Relevant Trustee within 30 days after the giving of such notice of resignation, the Relevant Trustee may petition, at the expense of the Trust, any court of competent jurisdiction for the appointment of a successor Relevant Trustee. Unless a Debenture Event of Default shall have occurred and be continuing, any Trustee may be removed at any time by Act of the Common Securityholder. If a Debenture Event of Default shall have occurred and be continuing, the Property Trustee or the Delaware Trustee, or both of them, may be removed at such time by Act of the Holders of a majority in Liquidation Amount of the Preferred Securities, delivered to the Relevant Trustee (in its individual capacity and on behalf of the Trust). An Administrative Trustee may be removed by the Common Securityholder at any time. If the instrument of acceptance by the successor Trustee required by Section 8.11 shall not have been delivered to the Relevant Trustee within 30 days after such removal, the Relevant Trustee may petition, at the expense of the Trust, any court of competent jurisdiction for the appointment of a successor Relevant Trustee. If any Trustee shall resign, be removed or become incapable of acting as Trustee, or if a vacancy shall occur in the office of any Trustee for any cause, at a time when no Debenture Event of Default shall have occurred and be continuing, the Common Securityholder, by Act of the Common Securityholder delivered to the retiring Trustee, shall promptly appoint a successor Trustee or Trustees, and the retiring Trustee shall comply with the applicable requirements of Section 8.11. If the Property Trustee or the Delaware Trustee shall resign, be removed or become incapable of continuing to act as the Property Trustee or the Delaware Trustee, as the case may be, at a time when a Debenture Event of Default shall have occurred and be continuing, the Preferred Securityholders, by Act of the Securityholders of a majority in Liquidation Amount of the Preferred Securities then Outstanding delivered to the retiring Relevant Trustee, shall promptly appoint a successor Relevant Trustee or Trustees, and such successor Trustee shall comply with the applicable requirements of Section 8.11. If an Administrative Trustee shall resign, be removed or become incapable of acting as Administrative Trustee, at a time when a Debenture Event of Default shall have occurred and be continuing, the Common Securityholder by Act of the Common Securityholder delivered to the Administrative Trustee shall promptly appoint a successor Administrative Trustee or Administrative Trustees and such successor Administrative Trustee or Trustees shall comply with the applicable requirements of Section 8.11. If no successor Relevant Trustee shall have been so appointed by the Common Securityholder or the Preferred Securityholders and accepted appointment in the manner required by Section 8.11, any Securityholder who has 54 43 been a Securityholder of Trust Securities for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Relevant Trustee. The Property Trustee shall give notice of each resignation and each removal of a Trustee (other than an Administrative Trustee) and each appointment of a successor Trustee (other than an Administrative Trustee) to all Securityholders in the manner provided in Section 10.10 and shall give notice to the Depositor. Each notice shall include the name of the successor Relevant Trustee and the address of its Corporate Trust Office if it is the Property Trustee. Notwithstanding the foregoing or any other provision of this Trust Agreement, in the event any Administrative Trustee or a Delaware Trustee who is a natural person dies or becomes, in the opinion of the Depositor, incompetent or incapacitated, the vacancy created by such death, incompetence or incapacity may be filled by (a) the unanimous act of the remaining Administrative Trustees if there are at least two of them or (b) otherwise by the Depositor (with the successor in each case being a Person who satisfies the eligibility requirement for Administrative Trustees or Delaware Trustee, as the case may be, set forth in Section 8.7). SECTION 8.11 Acceptance of Appointment by Successor. In case of the appointment hereunder of a successor Relevant Trustee, the retiring Relevant Trustee and each successor Relevant Trustee with respect to the Trust Securities shall execute and deliver an amendment hereto wherein each successor Relevant Trustee shall accept such appointment and which (a) shall contain such provisions as shall be necessary or desirable to transfer and confirm to, and to vest in, each successor Relevant Trustee all the rights, powers, trusts and duties of the retiring Relevant Trustee with respect to the Trust Securities and the Trust and (b) shall add to or change any of the provisions of this Trust Agreement as shall be necessary to provide for or facilitate the administration of the Trust by more than one Relevant Trustee, it being understood that nothing herein or in such amendment shall constitute such Relevant Trustees co-trustees and upon the execution and delivery of such amendment the resignation or removal of the retiring Relevant Trustee shall become effective to the extent provided therein and each such successor Relevant Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Relevant Trustee; but, on written request of the Trust or any successor Relevant Trustee such retiring Relevant Trustee shall duly assign, transfer and deliver to such successor Relevant Trustee all Trust Property, all proceeds thereof and money held by such retiring Relevant Trustee hereunder with respect to the Trust Securities and the Trust. Upon written request of any such successor Relevant Trustee, the Trust shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Relevant Trustee all such rights, powers and trusts referred to in the first or second preceding paragraph, as the case may be. 55 44 No successor Relevant Trustee shall accept its appointment unless at the time of such acceptance such successor Relevant Trustee shall be qualified and eligible under this Article. SECTION 8.12 Merger, Conversion, Consolidation or Succession to Business. Any Person into which the Property Trustee or the Delaware Trustee may be merged or converted or with which it may be consolidated, or any Person resulting from any merger, conversion or consolidation to which such Relevant Trustee shall be a party, or any Person succeeding to all or substantially all the corporate trust business of such Relevant Trustee, shall be the successor of such Relevant Trustee hereunder, provided such Person shall be otherwise qualified and eligible under this Article, without the execution or filing of any paper or any further act on the part of any of the parties hereto. SECTION 8.13 Preferential Collection of Claims Against Depositor or Trust. In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other similar judicial proceeding relative to the Trust or any other obligor upon the Trust Securities or the property of the Trust or of such other obligor or their creditors, the Property Trustee (irrespective of whether any Distributions on the Trust Securities shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Property Trustee shall have made any demand on the Trust for the payment of any past due Distributions) shall be entitled and empowered, to the fullest extent permitted by law, by intervention in such proceeding or otherwise: (a) to file and prove a claim for the whole amount of any Distributions owing and unpaid in respect of the Trust Securities and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Property Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Property Trustee, its agents and counsel) and of the Holders allowed in such judicial proceeding, and (b) to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Property Trustee and, in the event the Property Trustee shall consent to the making of such payments directly to the Holders, to pay to the Property Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Property Trustee, its agents and counsel, and any other amounts due the Property Trustee. Nothing herein contained shall be deemed to authorize the Property Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement adjustment or compensation affecting the Trust Securities or the rights of any Holder thereof or to authorize the Property Trustee to vote in respect of the claim of any Holder in any such proceeding. 56 45 SECTION 8.14 Reports by Property Trustee. (a) The Property Trustee shall transmit to Securityholders such reports concerning the Property Trustee and its actions under this Trust Agreement as may be required pursuant to the Trust Indenture Act at the times and in the manner provided pursuant thereto. If required by Section 313(a) of the Trust Indenture Act, the Property Trustee shall, within sixty days after each May 15 following the date of this Trust Agreement deliver to Securityholders a brief report, dated as of such May 15, which complies with the provisions of such Section 313(a). (b) A copy of each such report shall, at the time of such transmission to Holders, be filed by the Property Trustee with each national stock exchange, the Nasdaq National Market or such other interdealer quotation system or self-regulatory organization upon which the Trust Securities are listed or traded, if any, with the Commission and with the Depositor. The Depositor will promptly notify the Property Trustee of any such listing or trading. SECTION 8.15 Reports to the Property Trustee. The Depositor and the Administrative Trustees on behalf of the Trust shall provide to the Property Trustee such documents, reports and information as required by Section 314 of the Trust Indenture Act (if any) and the compliance certificate required by Section 314(a) of the Trust Indenture Act in the form, in the manner and at the times required by Section 314 of the Trust Indenture Act. Delivery of such reports, information and documents to the Property Trustee is for informational purposes only and the Property Trustee's receipt of such shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Trust's compliance with any of its covenants hereunder (as to which the Property Trustee is entitled to rely exclusively on Officers' Certificates). SECTION 8.16 Evidence of Compliance with Conditions Precedent. Each of the Depositor and the Administrative Trustees on behalf of the Trust shall provide to the Property Trustee such evidence of compliance with any conditions precedent, if any, provided for in this Trust Agreement that relate to any of the matters set forth in Section 314 (c) of the Trust Indenture Act. Any certificate or opinion required to be given by an officer pursuant to Section 314(c)(1) of the Trust Indenture Act shall be given in the form of an Officers' Certificate. SECTION 8.17 Number of Trustees. (a) The number of Trustees shall be four, provided that the Holder of all of the Common Securities by written instrument may increase or decrease the number of Administrative Trustees. The Property Trustee and the Delaware Trustee may be the same Person. 57 46 (b) If a Trustee ceases to hold office for any reason and the number of Administrative Trustees is not reduced pursuant to Section 8.17(a), or if the number of Trustees is increased pursuant to Section 8.17(a), a vacancy shall occur. The vacancy shall be filled with a Trustee appointed in accordance with Section 8.10. (c) The death, resignation, retirement, removal, bankruptcy, incompetence or incapacity to perform the duties of a Trustee shall not operate to dissolve, terminate or annul the Trust. Whenever a vacancy in the number of Administrative Trustees shall occur, until such vacancy is filled by the appointment of an Administrative Trustee in accordance with Section 8.10, the Administrative Trustees in office, regardless of their number (and notwithstanding any other provision of this Agreement), shall have all the powers granted to the Administrative Trustees and shall discharge all the duties imposed upon the Administrative Trustees by this Trust Agreement. SECTION 8.18 Delegation of Power. (a) Any Administrative Trustee may, by power of attorney consistent with applicable law, delegate to any other natural person over the age of 21 his or her power for the purpose of executing any documents contemplated in Section 2.7(a), including any registration statement or amendment thereto filed with the Commission, or making any other governmental filing; and (b) The Administrative Trustees shall have power to delegate from time to time to such of their number or to the Depositor the doing of such things and the execution of such instruments either in the name of the Trust or the names of the Administrative Trustees or otherwise as the Administrative Trustees may deem expedient, to the extent such delegation is not prohibited by applicable law or contrary to the provisions of this Trust Agreement, as set forth herein. ARTICLE IX TERMINATION, LIQUIDATION AND MERGER SECTION 9.1 Termination Upon Expiration Date. Unless earlier terminated, the Trust shall automatically terminate on December 31, 2051 (the "Expiration Date"), following the distribution of the Trust Property in accordance with Section 9.4. SECTION 9.2 Early Termination. The first to occur of any of the following events is an "Early Termination Event": (a) the occurrence of a Bankruptcy Event in respect of, or the dissolution or liquidation of, the Depositor or the Holder of the Common Securities; 58 47 (b) the written direction to the Property Trustee from the Depositor at any time to terminate the Trust and, after satisfaction of liabilities to creditors of the Trust as provided by applicable law, distribute Debentures to Securityholders in exchange for the Preferred Securities (which direction is optional and wholly within the discretion of the Depositor); (c) the redemption of all of the Preferred Securities in connection with the redemption of all of the Debentures; and (d) the entry of an order for dissolution of the Trust by a court of competent jurisdiction. SECTION 9.3 Termination. The respective obligations and responsibilities of the Trustees and the Trust created and continued hereby shall terminate upon the latest to occur of the following: (a) the distribution by the Property Trustee to Securityholders upon the liquidation of the Trust pursuant to Section 9.4, or upon the redemption of all of the Trust Securities pursuant to Section 4.2, of all amounts required to be distributed hereunder upon the final payment of the Trust Securities; (b) the payment of any expenses owed by the Trust; and (c) the discharge of all administrative duties of the Administrative Trustees, including the performance of any tax reporting obligations with respect to the Trust or the Securityholders. SECTION 9.4 Liquidation. (a) If an Early Termination Event specified in clause (a), (b) or (d) of Section 9.2 occurs or upon the Expiration Date, the Trust shall be liquidated by the Trustees as expeditiously as the Trustees determine to be possible by distributing, after satisfaction or the making of reasonable provisions for the payment of liabilities to creditors of the Trust as provided by applicable law, to each Securityholder a Like Amount of Debentures, subject to Section 9.4(d). Notice of liquidation shall be given by the Property Trustee by first-class mail, postage prepaid mailed not later than 30 nor more than 60 days prior to the Liquidation Date to each Holder of Trust Securities at such Holder's address appearing in the Securities Register. All notices of liquidation shall: (i) state the CUSIP Number of the Trust Securities; (ii) state the Liquidation Date; (iii) state that from and after the Liquidation Date, the Trust Securities will no longer be deemed to be Outstanding and any Trust Securities Certificates not surrendered for exchange will be deemed to represent a Like Amount of Debentures; and (iv) provide such information with respect to the mechanics by which Holders may exchange Trust Securities Certificates for Debentures, or if Section 9.4(d) 59 48 applies receive a Liquidation Distribution, as the Administrative Trustees or the Property Trustee shall deem appropriate. (b) Except where Section 9.2(c) or 9.4(d) applies, in order to effect the liquidation of the Trust and distribution of the Debentures to Securityholders, the Property Trustee shall establish a record date for such distribution (which shall be not more than 45 days prior to the Liquidation Date) and, either itself acting as exchange agent or through the appointment of a separate exchange agent, shall establish such procedures as it shall deem appropriate to effect the distribution of Debentures in exchange for the Outstanding Trust Securities Certificates. (c) Except where Section 9.2(c) or 9.4(d) applies, after the Liquidation Date, (i) the Trust Securities will no longer be deemed to be Outstanding, (ii) certificates representing a Like Amount of Debentures will be issued to Holders of Trust Securities Certificates, upon surrender of such certificates to the Administrative Trustees or their agent for exchange, (iii) the Depositor shall use its best efforts to have the Debentures listed on the New York Stock Exchange or on such other exchange, interdealer quotation system or self-regulatory organization as the Preferred Securities are then listed or traded, (iv) any Trust Securities Certificates not so surrendered for exchange will be deemed to represent a Like Amount of Debentures, accruing interest at the rate provided for in the Debentures from the last Distribution Date on which a Distribution was made on such Trust Securities Certificates until such certificates are so surrendered (and until such certificates are so surrendered, no payments of interest or principal will be made to Holders of Trust Securities Certificates with respect to such Debentures) and (v) all rights of Securityholders holding Trust Securities will cease, except the right of such Securityholders to receive Debentures upon surrender of Trust Securities Certificates. (d) In the event that, notwithstanding the other provisions of this Section 9.4, whether because of an order for dissolution entered by a court of competent jurisdiction or otherwise, distribution of the Debentures in the manner provided herein is determined by the Property Trustee not to be practical, the Trust Property shall be liquidated, and the Trust shall be dissolved, wound-up or terminated, by the Property Trustee. In such event, on the date of the dissolution, winding-up or other termination of the Trust, Securityholders will be entitled to receive out of the assets of the Trust available for distribution to Securityholders, after satisfaction of liabilities to creditors of the Trust as provided by applicable law, an amount equal to the Liquidation Amount per Trust Security plus accumulated and unpaid Distributions thereon to the date of payment (such amount being the "Liquidation Distribution"). If, upon any such dissolution, winding up or termination, the Liquidation Distribution can be paid only in part because the Trust has insufficient assets available to pay in full the aggregate Liquidation Distribution, then, subject to the next succeeding sentence, the amounts payable by the Trust on the Trust Securities shall be paid on a pro rata basis (based upon Liquidation Amounts). The Holder of the Common Securities will be entitled to receive Liquidation Distributions upon any such dissolution, winding-up or termination pro rata (determined as aforesaid) with Holders of Preferred Securities, except that, if a Debenture Event of Default has occurred and is continuing, the Preferred Securities shall have a priority over the Common Securities. 60 49 SECTION 9.5 Mergers, Consolidations, Amalgamations or Replacements of the Trust. The Trust may not merge with or into, consolidate, amalgamate, or be replaced by, or convey, transfer or lease its properties and assets substantially as an entirety to any corporation or other Person, except pursuant to this Article IX. At the request of the Depositor, with the consent of the Administrative Trustees and without the consent of the Holders of the Preferred Securities, the Property Trustee or the Delaware Trustee, the Trust may merge with or into, consolidate, amalgamate, or be replaced by or convey, transfer or lease its properties and assets substantially as an entirety to a trust organized as such under the laws of any State; provided, that (i) such successor entity either (a) expressly assumes all of the obligations of the Trust with respect to the Preferred Securities or (b) substitutes for the Preferred Securities other securities having substantially the same terms as the Preferred Securities (the "Successor Securities") so long as the Successor Securities rank the same as the Preferred Securities rank in priority with respect to distributions and payments upon liquidation, redemption and otherwise, (ii) the Depositor expressly appoints a trustee of such successor entity possessing the same powers and duties as the Property Trustee as the holder of the Debentures, (iii) the Successor Securities are listed or traded, or any Successor Securities will be listed upon notification of issuance, on any national securities exchange or other organization on which the Preferred Securities are then listed or traded, if any, (iv) such merger, consolidation, amalgamation, replacement, conveyance, transfer or lease does not cause the Preferred Securities (including any Successor Securities) to be downgraded by any nationally recognized statistical rating organization, (v) such merger, consolidation, amalgamation, replacement, conveyance, transfer or lease does not adversely affect the rights, preferences and privileges of the holders of the Preferred Securities (including any Successor Securities) in any material respect, (vi) such successor entity has a purpose identical to that of the Trust, (vii) prior to such merger, consolidation, amalgamation, replacement, conveyance, transfer or lease, the Depositor has received an Opinion of Counsel to the effect that (a) such merger, consolidation, amalgamation, replacement, conveyance, transfer or lease does not adversely affect the rights, preferences and privileges of the holders of the Preferred Securities (including any Successor Securities) in any material respect, and (b) following such merger, consolidation, amalgamation, replacement, conveyance, transfer or lease, neither the Trust nor such successor entity will be required to register as an investment company under the 1940 Act and (viii) the Depositor owns all of the common securities of such successor entity and guarantees the obligations of such successor entity under the Successor Securities at least to the extent provided by the Guarantee. Notwithstanding the foregoing, the Trust shall not, except with the consent of Holders of 100% in Liquidation Amount of the Preferred Securities, consolidate, amalgamate, merge with or into, or be replaced by or convey, transfer or lease its properties and assets substantially as an entirety to any other Person or permit any other Person to consolidate, amalgamate, merge with or into, or replace it if such consolidation, amalgamation, merger, replacement, conveyance, transfer or lease would cause the Trust or the successor entity to be classified as other than a grantor trust for United States federal income tax purposes. 61 50 ARTICLE X MISCELLANEOUS PROVISIONS SECTION 10.1 Limitation of Rights of Securityholders. The death, incapacity, liquidation, dissolution, termination or bankruptcy of any Person having an interest, beneficial or otherwise, in Trust Securities shall not operate to terminate this Trust Agreement, nor entitle the legal representatives or heirs of such Person or any Securityholder for such Person, to claim an accounting, take any action or bring any proceeding in any court for a partition or winding up of the arrangements contemplated hereby, nor otherwise affect the rights, obligations and liabilities of the parties hereto or any of them. SECTION 10.2 Liability of the Common Securityholder. The Holder of the Common Securities shall be liable for all of the debts and obligations of the Trust (other than with respect to the Trust Securities) to the extent not satisfied out of the Trust's assets. SECTION 10.3 Amendment. (a) This Trust Agreement may be amended from time to time by the Property Trustee, the Delaware Trustee, the Administrative Trustees and the Depositor, without the consent of any Securityholders, (i) to cure any ambiguity, correct or supplement any provision herein which may be inconsistent with any other provision herein, or to make any other provisions with respect to matters or questions arising under this Trust Agreement, which shall not be inconsistent with the other provisions of this Trust Agreement, or (ii) to modify, eliminate or add to any provisions of this Trust Agreement to such extent as shall be necessary to ensure that the Trust will be classified for United States federal income tax purposes as a grantor trust at all times that any Trust Securities are outstanding or to ensure that the Trust will not be required to register as an investment company under the 1940 Act; provided, however, that in the case of clause (i) or clause (ii), such action shall not adversely affect in any material respect the interests of any Securityholder, and any amendments of this Trust Agreement shall become effective when notice thereof is given to the Securityholders. (b) Except as provided in Section 10.3(c) hereof, any provision of this Trust Agreement may be amended by the Trustees and the Depositor with (i) the consent of Trust Securityholders representing not less than a majority (based upon Liquidation Amounts) of the Trust Securities then Outstanding and (ii) receipt by the Trustees of an Opinion of Counsel to the effect that such amendment or the exercise of any power granted to the Trustees in accordance with such amendment will not affect the Trust's status as a grantor trust for United States federal income tax purposes or the Trust's exemption from status of an investment company under the 1940 Act. 62 51 (c) In addition to and notwithstanding any other provision in this Trust Agreement, without the consent of each affected Securityholder (such consent being obtained in accordance with Section 6.3 or 6.6 hereof), this Trust Agreement may not be amended to (i) change the amount or timing of any Distribution on the Trust Securities or otherwise adversely affect the amount of any Distribution required to be made in respect of the Trust Securities as of a specified date or (ii) restrict the right of a Securityholder to institute suit for the enforcement of any such payment on or after such date; notwithstanding any other provision herein, without the unanimous consent of the Securityholders (such consent being obtained in accordance with Section 6.3 or 6.6 hereof), this paragraph (c) of this Section 10.3 may not be amended. (d) Notwithstanding any other provisions of this Trust Agreement, no Trustee shall enter into or consent to any amendment to this Trust Agreement which would cause the Trust to fail or cease to qualify for the exemption from status of an investment company under the 1940 Act or fail or cease to be classified as a grantor trust for United States federal income tax purposes. (e) Notwithstanding anything in this Trust Agreement to the contrary, without the consent of the Depositor, this Trust Agreement may not be amended in a manner which imposes any additional obligation on the Depositor. (f) In the event that any amendment to this Trust Agreement is made, the Administrative Trustees shall promptly provide to the Depositor a copy of such amendment. (g) Neither the Property Trustee nor the Delaware Trustee shall be required to enter into any amendment to this Trust Agreement which affects its own rights, duties or immunities under this Trust Agreement. The Property Trustee shall be entitled to receive an Opinion of Counsel and an Officers' Certificate stating that any amendment to this Trust Agreement is in compliance with this Trust Agreement. SECTION 10.4 Consolidation, Merger, Conveyance, Transfer or Lease. The Depositor shall not consolidate with or merge into any other Person or convey, transfer or lease its properties and assets substantially as an entirety to any Person, and no Person shall consolidate with or merge into the Depositor or convey, transfer or lease its properties and assets substantially as an entirety to the Depositor, unless it has complied with the terms of Section 8.1 of the Indenture. SECTION 10.5 Separability. In case any provision in this Trust Agreement or in the Trust Securities Certificates shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. 63 52 SECTION 10.6 Governing Law. THIS TRUST AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF EACH OF THE SECURITYHOLDERS, THE TRUST AND THE TRUSTEES WITH RESPECT TO THIS TRUST AGREEMENT AND THE TRUST SECURITIES SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF DELAWARE (WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES). SECTION 10.7 Payments Due on Non-Business Day. If the date fixed for any payment on any Trust Security shall be a day that is not a Business Day, then such payment need not be made on such date but may be made on the next succeeding day that is a Business Day (except as otherwise provided in Sections 4.1(a) and 4.2(d)), with the same force and effect as though made on the date fixed for such payment, and no interest shall accrue thereon for the period after such date. SECTION 10.8 Successors. This Trust Agreement shall be binding upon and shall inure to the benefit of any successor to the Depositor, the Trust or the Relevant Trustee, including any successor by operation of law. Except in connection with a consolidation, merger or sale involving the Depositor that is permitted under Article Eight of the Indenture and pursuant to which the assignee agrees in writing to perform the Depositor's obligations hereunder, the Depositor shall not assign its obligations hereunder. SECTION 10.9 Headings. The Article and Section headings are for convenience only and shall not affect the construction of this Trust Agreement. SECTION 10.10 Reports, Notices and Demands. Any report, notice, demand or other communication which by any provision of this Trust Agreement is required or permitted to be given or served to or upon any Securityholder or the Depositor may be given or served in writing by deposit thereof, first-class postage prepaid, in the United States mail, hand delivery or facsimile transmission, in each case, addressed, (a) in the case of a Preferred Securityholder, to such Preferred Securityholder as such Securityholder's name and address may appear on the Securities Register; and (b) in the case of the Common Securityholder or the Depositor, to MBNA Corporation, Wilmington, Delaware 19884, Attention: Vernon H.C. Wright, facsimile no.: (302) 456-8348. Such notice, demand or other communication to or upon a Securityholder shall be deemed to have been sufficiently given or made, for all purposes, upon hand delivery, mailing or transmission. 64 53 Any notice, demand or other communication which by any provision of this Trust Agreement is required or permitted to be given or served to or upon the Trust, the Property Trustee, the Delaware Trustee or the Administrative Trustees shall be given in writing addressed (until another address is published by the Trust) as follows: (a) with respect to the Property Trustee to The Bank of New York, 101 Barclay Street, New York, New York 10286, Attention: Corporate Trust Administration; (b) with respect to the Delaware Trustee, to The Bank of New York (Delaware), White Clay Center, Route 273, Newark, Delaware, with a copy to the Property Trustee at the address set forth in Clause (a); and (c) with respect to the Administrative Trustees, to them at the address above for notices to the Depositor, marked "Attention Administrative Trustees of MBNA Capital C." Such notice, demand or other communication to or upon the Trust or the Property Trustee shall be deemed to have been sufficiently given or made only upon actual receipt of the writing by the Trust or the Property Trustee. SECTION 10.11 Agreement Not to Petition. Each of the Trustees and the Depositor agree for the benefit of the Securityholders that, until at least one year and one day after the Trust has been terminated in accordance with Article IX, they shall not file, or join in the filing of, a petition against the Trust under any bankruptcy, insolvency, reorganization or other similar law (including, without limitation, the United States Bankruptcy Code) (collectively, "Bankruptcy Laws") or otherwise join in the commencement of any proceeding against the Trust under any Bankruptcy Law. In the event the Depositor takes action in violation of this Section 10.11, the Property Trustee agrees, for the benefit of Securityholders, that at the expense of the Depositor, it shall file an answer with the bankruptcy court or otherwise properly contest the filing of such petition by the Depositor against the Trust or the commencement of such action and raise the defense that the Depositor has agreed in writing not to take such action and should be stopped and precluded therefrom and such other defenses, if any, as counsel for the Trustee or the Trust may assert. The provisions of this Section 10.11 shall survive the termination of this Trust Agreement. SECTION 10.12 Trust Indenture Act; Conflict with Trust Indenture Act. (a) This Trust Agreement is subject to the provisions of the Trust Indenture Act that are required or deemed to be part of this Trust Agreement and shall, to the extent applicable, be governed by such provisions. (b) The Property Trustee shall be the only Trustee which is a trustee for the purposes of the Trust Indenture Act. (c) If any provision hereof limits, qualifies or conflicts with another provision hereof which is required or deemed to be included in this Trust Agreement by any of the provisions of the Trust Indenture Act, such required or deemed provision shall control. If any provision of this Trust Agreement modifies or excludes any provision of the Trust Indenture Act which may be so modified or excluded, the latter provision shall be deemed to apply to this Trust Agreement as so modified or excluded, as the case may be. 65 54 (d) The application of the Trust Indenture Act to this Trust Agreement shall not affect the nature of the Trust Securities as equity securities representing undivided beneficial interests in the assets of the Trust. SECTION 10.13 Acceptance of Terms of Trust Agreement, Guarantee and Indenture. THE RECEIPT AND ACCEPTANCE OF A TRUST SECURITY OR ANY INTEREST THEREIN BY OR ON BEHALF OF A SECURITYHOLDER OR ANY BENEFICIAL OWNER, WITHOUT ANY SIGNATURE OR FURTHER MANIFESTATION OF ASSENT, SHALL CONSTITUTE THE UNCONDITIONAL ACCEPTANCE BY THE SECURITYHOLDER AND ALL OTHERS HAVING A BENEFICIAL INTEREST IN SUCH TRUST SECURITY OF ALL THE TERMS AND PROVISIONS OF THIS TRUST AGREEMENT AND AGREEMENT TO THE SUBORDINATION PROVISIONS AND OTHER TERMS OF THE GUARANTEE AND THE INDENTURE, AND SHALL CONSTITUTE THE AGREEMENT OF THE TRUST, SUCH SECURITYHOLDER AND SUCH OTHERS THAT THE TERMS AND PROVISIONS OF THIS TRUST AGREEMENT SHALL BE BINDING, OPERATIVE AND EFFECTIVE AS BETWEEN THE TRUST AND SUCH SECURITYHOLDER AND SUCH OTHERS. 66 55 SECTION 10.14 Counterparts. This Trust Agreement may contain more than one counterpart of the signature page and this Trust Agreement may be executed by the affixing of the signature of each of the Trustees of one of such counterpart signature pages. All of such counterpart signature pages shall be read as though one, and they shall have the same force and effect as though all of the signers had signed a single signature page. MBNA CORPORATION By: --------------------------------------- Name: Title: THE BANK OF NEW YORK, as Property Trustee By: --------------------------------------- Name: Title: THE BANK OF NEW YORK (DELAWARE), as Delaware Trustee By: --------------------------------------- Name: Title: ------------------------------------------ M. SCOT KAUFMAN as Administrative Trustee ------------------------------------------ JOHN W. SCHEFLEN as Administrative Trustee 67 EXHIBIT A 68 EXHIBIT B 69 EXHIBIT C 70 EXHIBIT D EX-4.H.3 6 FORM OF GUARANTEE 1 EXHIBIT 4(h)(3) - -------------------------------------------------------------------------------- GUARANTEE AGREEMENT BETWEEN MBNA CORPORATION (AS GUARANTOR) AND THE BANK OF NEW YORK (AS TRUSTEE) DATED AS OF [_______] [__], 1997 - -------------------------------------------------------------------------------- 2 CROSS-REFERENCE TABLE*
Section of Trust Indenture Act Section of of 1939, as amended Guarantee Agreement - ------------------- ------------------- 310(a)...................................................4.1(a) 310(b)...................................................4.1(c), 2.8 310(c)...................................................Inapplicable 311(a)...................................................2.2(b) 311(b)...................................................2.2(b) 311(c)...................................................Inapplicable 312(a)...................................................2.2(a) 312(b)...................................................2.2(b) 313......................................................2.3 314(a)...................................................2.4 314(b)...................................................Inapplicable 314(c)...................................................2.5 314(d)...................................................Inapplicable 314(e)...................................................1.1, 2.5, 3.2 314(f)...................................................2.1, 3.2 315(a)...................................................3.1(d) 315(b)...................................................2.7 315(c)...................................................3.1 315(d)...................................................3.1(d) 316(a)...................................................1.1, 2.6, 5.4 316(b)...................................................5.3 316(c)...................................................8.2 317(a)...................................................Inapplicable 317(b)...................................................Inapplicable 318(a)...................................................2.1(b) 318(b)...................................................2.1 318(c)...................................................2.1(a)
- ---------------- * This Cross-Reference Table does not constitute part of the Guarantee Agreement and shall not affect the interpretation of any of its terms or provisions. 3 TABLE OF CONTENTS
Page ---- ARTICLE I. DEFINITIONS..................................................... 1 Section 1.1. Definitions................................................................................................ 1 ARTICLE II. TRUST INDENTURE ACT................................................ 4 Section 2.1. Trust Indenture Act; Application .......................................................................... 4 Section 2.2. List of Holders............................................................................................ 4 Section 2.3. Reports by the Guarantee Trustee........................................................................... 4 Section 2.4. Periodic Reports to the Guarantee Trustee.................................................................. 4 Section 2.5. Evidence of Compliance with Conditions Precedent........................................................... 5 Section 2.6. Events of Default; Waiver.................................................................................. 5 Section 2.7. Event of Default; Notice................................................................................... 5 Section 2.8. Conflicting Interests...................................................................................... 5 ARTICLE III. POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE.............................................. 6 Section 3.1. Powers and Duties of the Guarantee Trustee................................................................. 6 Section 3.2. Certain Rights of Guarantee Trustee........................................................................ 7 Section 3.3. Indemnity.................................................................................................. 9 ARTICLE IV. GUARANTEE TRUSTEE................................................. 9 Section 4.1. Guarantee Trustee: Eligibility............................................................................. 9 Section 4.2. Appointment, Removal and Resignation of the Guarantee Trustee.............................................. 9 ARTICLE V. GUARANTEE.....................................................10 Section 5.1. Guarantee..................................................................................................10 Section 5.2. Waiver of Notice and Demand................................................................................10 Section 5.3. Obligations Not Affected...................................................................................10 Section 5.4. Rights of Holders..........................................................................................11 Section 5.5. Guarantee of Payment.......................................................................................11 Section 5.6. Subrogation................................................................................................12 Section 5.7. Independent Obligations....................................................................................12 ARTICLE VI. COVENANTS AND SUBORDINATION............................................12 Section 6.1. Subordination..............................................................................................12 Section 6.2. Pari Passu Guarantees......................................................................................12
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Page ---- ARTICLE VII. TERMINATION...................................................13 Section 7.1. Termination................................................................................................13 ARTICLE VIII. MISCELLANEOUS..................................................13 Section 8.1. Successors and Assigns.....................................................................................13 Section 8.2. Amendments.................................................................................................13 Section 8.3. Notices....................................................................................................13 Section 8.4. Consolidation, Merger, Conveyance, Transfer or Lease.......................................................14 Section 8.5. Benefit....................................................................................................15 Section 8.6. Interpretation.............................................................................................15 Section 8.7. Governing Law..............................................................................................15
- ii - 5 GUARANTEE AGREEMENT This GUARANTEE AGREEMENT, dated as of [__________], 1997, is executed and delivered by MBNA CORPORATION, a Maryland corporation (the "Guarantor") having its principal office at Wilmington, Delaware 19884, and THE BANK OF NEW YORK, a New York banking corporation, as trustee (the "Guarantee Trustee"), for the benefit of the Holders (as defined herein) from time to time of the Preferred Securities and Common Securities (each as defined herein and together, the "Securities") of MBNA Capital C, a Delaware statutory business trust (the "Issuer"). WHEREAS, pursuant to an Amended and Restated Trust Agreement, dated as of [__________], 1997 (the "Trust Agreement"), among the Guarantor, as Depositor, the Property Trustee and the Delaware Trustee named therein, the Administrative Trustees named therein and the Holders from time to time of undivided beneficial interests in the assets of the Issuer, the Issuer is issuing $[____________] aggregate Liquidation Amount (as defined in the Trust Agreement) of its [____]% Trust Originated Preferred Securities, Liquidation Amount $25 per preferred security) (the "Preferred Securities") representing preferred undivided beneficial interests in the assets of the Issuer and having the terms set forth in the Trust Agreement; WHEREAS, the Preferred Securities will be issued by the Issuer and the proceeds thereof, together with the proceeds from the issuance of the Issuer's Common Securities (as defined herein), will be used to purchase the Debentures (as defined in the Trust Agreement) of the Guarantor which will be deposited with The Bank of New York, as Property Trustee under the Trust Agreement, as trust assets; and WHEREAS, as incentive for the Holders to purchase Securities the Guarantor desires irrevocably and unconditionally to agree, to the extent set forth herein, to pay to the Holders of the Securities the Guarantee Payments (as defined herein) and to make certain other payments on the terms and conditions set forth herein. NOW, THEREFORE, in consideration of the purchase by each Holder of Securities, which purchase the Guarantor hereby agrees shall benefit the Guarantor, the Guarantor executes and delivers this Guarantee Agreement for the benefit of the Holders from time to time of the Securities. ARTICLE I. DEFINITIONS SECTION 1.1. Definitions. As used in this Guarantee Agreement, the terms set forth below shall, unless the context otherwise requires, have the following meanings. Capitalized or otherwise defined terms used but not otherwise defined herein shall have the meanings assigned to such terms in the Trust Agreement as in effect on the date hereof. 6 2 "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person; provided, however, that an Affiliate of the Guarantor shall not be deemed to be an Affiliate of the Issuer. For the purposes of this definition, "control" when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. "Board of Directors" means either the board of directors of the Guarantor or any committee of that board duly authorized to act hereunder. "Common Securities" means the securities representing common undivided beneficial interests in the assets of the Issuer. "Event of Default" means a default by the Guarantor on any of its payment or other obligations under this Guarantee Agreement; provided, however, that, except with respect to a default in payment of any Guarantee Payments, the Guarantor shall have received notice of default and shall not have cured such default within 90 days after receipt of such notice. "Guarantee Payments" means the following payments or distributions, without duplication, with respect to the Securities, to the extent not paid or made by or on behalf of the Issuer: (i) any accumulated and unpaid Distributions (as defined in the Trust Agreement) required to be paid on the Securities, to the extent the Issuer shall have funds on hand available therefor at such time, (ii) the redemption price, including all accrued and unpaid Distributions to the date of redemption (the"Redemption Price"), with respect to any Securities called for redemption by the Issuer, to the extent the Issuer shall have funds on hand available therefor at such time, and (iii) upon a voluntary or involuntary termination, winding up or liquidation of the Issuer, unless Debentures are distributed to the Holders, the lesser of (a) the aggregate of the Liquidation Amount plus accrued and unpaid Distributions to the date of payment and (b) the amount of assets of the Issuer remaining available for distribution to Holders in liquidation of the Issuer after satisfaction of liabilities to creditors of the Issuer as required by applicable law (in either case, the "Liquidation Distribution"). "Guarantee Trustee" means The Bank of New York, until a Successor Guarantee Trustee has been appointed and has accepted such appointment pursuant to the terms of this Guarantee Agreement, and thereafter means each such Successor Guarantee Trustee. "Holder" means any holder, as registered on the books and records of the Issuer, of any Securities; provided, however, that in determining whether the holders of the requisite percentage of Securities have given any request, notice, consent or waiver hereunder, "Holder" shall not include the Guarantor, the Guarantee Trustee, or any Affiliate of the Guarantor or the Guarantee Trustee. "Indenture" means the Junior Subordinated Indenture dated as of December 18, 1996, as supplemented and amended between the Guarantor and The Bank of New York, as trustee. 7 3 "List of Holders" has the meaning specified in Section 2.2(a). "Majority in aggregate Liquidation Amount of the Securities" means, except as provided by the Trust Indenture Act, a vote by the Holder(s), voting separately as a class, of more than 50% of the aggregate Liquidation Amount of all then outstanding Securities issued by the Issuer. "Officers' Certificate" means, with respect to any Person, a certificate signed by the Chairman or a Vice Chairman of the Board of Directors of such Person or the President or a Vice President of such Person, and by the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary of such Person, and delivered to the Guarantee Trustee. Any Officers' Certificate delivered with respect to compliance with a condition or covenant provided for in this Guarantee Agreement shall include: (a) a statement that each officer signing the Officers' Certificate has read the covenant or condition and the definitions relating thereto; (b) a brief statement of the nature and scope of the examination or investigation undertaken by each officer in rendering the Officers' Certificate; (c) a statement that each officer has made such examination or investigation as, in such officer's opinion, is necessary to enable such officer to express an informed opinion as to whether or not such covenant or condition has been complied with; and (d) a statement as to whether, in the opinion of each officer, such condition or covenant has been complied with. "Person" means a legal person, including any individual, corporation, estate, partnership, joint venture, association, joint stock company, limited liability company, trust, unincorporated association, or government or any agency or political subdivision thereof, or any other entity of whatever nature. "Responsible Officer" when used with respect to the Guarantee Trustee means any officer of the Guarantee Trustee assigned by the Guarantee Trustee from time to time to administer its corporate trust matters. "Successor Guarantee Trustee" means a successor Guarantee Trustee possessing the qualifications to act as Guarantee Trustee under Section 4.1. "Trust Indenture Act" means the Trust Indenture Act of 1939, as amended. 8 4 ARTICLE II. TRUST INDENTURE ACT SECTION 2.1. Trust Indenture Act; Application. (a) This Guarantee Agreement is subject to the provisions of the Trust Indenture Act that are required to be part of this Guarantee Agreement and shall, to the extent applicable, be governed by such provisions. (b) If and to the extent that any provision of this Guarantee Agreement limits, qualifies or conflicts with the duties imposed by Sections 310 to 317, inclusive, of the Trust Indenture Act, such imposed duties shall control. SECTION 2.2. List of Holders. (a) The Guarantor will furnish or cause to be furnished to the Guarantee Trustee: (i) semi-annually, not more than 15 days after January 15 and July 15 in each year, a list, in such form as the Guarantee Trustee may reasonably require, of the names and addresses of the Holders as of such January 1 and July 1, and (ii) at such other times as the Guarantee Trustee may request in writing, within 30 days after the receipt by the Guarantor of any such request, a list of similar form and content as of a date not more than 15 days prior to the time such list is furnished, excluding from any such list names and addresses received by the Guarantee Trustee in its capacity as Securities Registrar. (b) The Guarantee Trustee shall comply with its obligations under Section 311(a), Section 311(b) and Section 312(b) of the Trust Indenture Act. SECTION 2.3. Reports by the Guarantee Trustee. The Guarantee Trustee shall transmit to Holders such reports concerning the Guarantee Trustee and its actions under this Guarantee Agreement as may be required pursuant to the Trust Indenture Act at the times and in the manner provided pursuant thereto. If required by Section 313(a) of the Trust Indenture Act, the Guarantee Trustee shall, within sixty days after each May 15 following the date of this Guarantee Agreement deliver to Holders a brief report, dated as of such May 15, which complies with the provisions of such Section 313(a). SECTION 2.4. Periodic Reports to the Guarantee Trustee. The Guarantor shall provide to the Guarantee Trustee, the Securities and Exchange Commission and the Holders such documents, reports and information, if any, as required by Section 314 of the Trust Indenture Act and the compliance certificate required by Section 314 9 5 of the Trust Indenture Act, in the form, in the manner and at the times required by Section 314 of the Trust Indenture Act. Delivery of such reports, information and documents to the Guarantee Trustee is for informational purposes only and the Guarantee Trustee's receipt of such shall not constitute constructive notice of any information contained therein, including the Guarantor's compliance with any of its covenants hereunder (as to which the Guarantee Trustee is entitled to rely exclusively on Officers' Certificates). SECTION 2.5. Evidence of Compliance with Conditions Precedent. The Guarantor shall provide to the Guarantee Trustee such evidence of compliance with such conditions precedent, if any, provided for in this Guarantee Agreement that relate to any of the matters set forth in Section 314(c) of the Trust Indenture Act. Any certificate or opinion required to be given by an officer pursuant to Section 314(c)(1) may be given in the form of an Officers' Certificate. SECTION 2.6. Events of Default; Waiver. The Holders of a Majority in aggregate Liquidation Amount of the Securities may, by vote, on behalf of the Holders, waive any past Event of Default and its consequences. Upon such waiver, any such Event of Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Guarantee Agreement, but no such waiver shall extend to any subsequent or other default or Event of Default or impair any right consequent therefrom. SECTION 2.7. Event of Default; Notice. (a) The Guarantee Trustee shall, within 90 days after the occurrence of an Event of Default, transmit by mail, first class postage prepaid, to the Holders, notices of all Events of Default actually known to the Guarantee Trustee, unless such defaults have been cured before the giving of such notice, provided, that, except in the case of a default in the payment of a Guarantee Payment, the Guarantee Trustee shall be protected in withholding such notice if and so long as the Board of Directors, the executive committee or a trust committee of directors and/or Responsible Officers of the Guarantee Trustee in good faith determines that the withholding of such notice is in the interests of the Holders. (b) The Guarantee Trustee shall not be deemed to have knowledge of any Event of Default unless the Guarantee Trustee shall have received written notice, or a Responsible Officer charged with the administration of this Guarantee Agreement shall have obtained written notice, of such Event of Default. SECTION 2.8. Conflicting Interests. The Trust Agreement shall be deemed to be specifically described in this Guarantee Agreement for the purposes of clause (i) of the first proviso contained in Section 310(b) of the Trust Indenture Act. 10 6 ARTICLE III. POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE SECTION 3.1. Powers and Duties of the Guarantee Trustee. (a) This Guarantee Agreement shall be held by the Guarantee Trustee for the benefit of the Holders, and the Guarantee Trustee shall not transfer this Guarantee Agreement to any Person except a Holder exercising his or her rights pursuant to Section 5.4(iv) or to a Successor Guarantee Trustee on acceptance by such Successor Guarantee Trustee of its appointment to act as Successor Guarantee Trustee. The right, title and interest of the Guarantee Trustee shall automatically vest in any Successor Guarantee Trustee, upon acceptance by such Successor Guarantee Trustee of its appointment hereunder, and such vesting and cessation of title shall be effective whether or not conveyancing documents have been executed and delivered pursuant to the appointment of such Successor Guarantee Trustee. (b) If an Event of Default has occurred and is continuing, the Guarantee Trustee shall enforce this Guarantee Agreement for the benefit of the Holders. (c) The Guarantee Trustee, before the occurrence of any Event of Default and after the curing of all Events of Default that may have occurred, shall undertake to perform only such duties as are specifically set forth in this Guarantee Agreement, and no implied covenants shall be read into this Guarantee Agreement against the Guarantee Trustee. In case an Event of Default has occurred (that has not been cured or waived pursuant to Section 2.6), the Guarantee Trustee shall exercise such of the rights and powers vested in it by this Guarantee Agreement, and use the same degree of care and skill in its exercise thereof, as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs. (d) No provision of this Guarantee Agreement shall be construed to relieve the Guarantee Trustee from liability for its own negligent action, its own negligent failure to act or its own willful misconduct, except that: (i) prior to the occurrence of any Event of Default and after the curing or waiving of all such Events of Default that may have occurred: (A) the duties and obligations of the Guarantee Trustee shall be determined solely by the express provisions of this Guarantee Agreement, and the Guarantee Trustee shall not be liable except for the performance of such duties and obligations as are specifically set forth in this Guarantee Agreement; and (B) in the absence of bad faith on the part of the Guarantee Trustee, the Guarantee Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any certificates or opinions furnished to the Guarantee Trustee and conforming to the requirements of this Guarantee Agreement; but in the case of any such certificates or opinions that by any provision hereof or of the Trust Indenture Act are specifically required to be furnished to the Guarantee Trustee, the Guarantee Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Guarantee Agreement; 11 7 (ii) the Guarantee Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer of the Guarantee Trustee, unless it shall be proved that the Guarantee Trustee was negligent in ascertaining the pertinent facts upon which such judgment was made; (iii) the Guarantee Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of not less than a Majority in aggregate Liquidation Amount of the Securities relating to the time, method and place of conducting any proceeding for any remedy available to the Guarantee Trustee, or exercising any trust or power conferred upon the Guarantee Trustee under this Guarantee Agreement; and (iv) no provision of this Guarantee Agreement shall require the Guarantee Trustee to expend or risk its own funds or otherwise incur personal financial liability in the performance of any of its duties or in the exercise of any of its rights or powers, if the Guarantee Trustee shall have reasonable grounds for believing that the repayment of such funds or liability is not reasonably assured to it under the terms of this Guarantee Agreement or adequate indemnity against such risk or liability is not reasonably assured to it. SECTION 3.2. Certain Rights of Guarantee Trustee. (a) Subject to the provisions of Section 3.1: (i) The Guarantee Trustee may rely and shall be fully protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document reasonably believed by it to be genuine and to have been signed, sent or presented by the proper party or parties. (ii) Any direction or act of the Guarantor contemplated by this Guarantee Agreement shall be sufficiently evidenced by an Officers' Certificate unless otherwise prescribed herein. (iii) Whenever, in the administration of this Guarantee Agreement, the Guarantee Trustee shall deem it desirable that a matter be proved or established before taking, suffering or omitting to take any action hereunder, the Guarantee Trustee (unless other evidence is herein specifically prescribed) may, in the absence of bad faith on its part, request and rely upon an Officers' Certificate which, upon receipt of such request from the Guarantee Trustee, shall be promptly delivered by the Guarantor. (iv) The Guarantee Trustee may consult with legal counsel of its selection, and the advice or opinion of such legal counsel with respect to legal matters shall be full and complete authorization and protection in respect of any action taken, suffered or omitted to be taken by it hereunder in good faith and in accordance with such advice or opinion. Such legal counsel may be legal counsel to the Guarantor or any of its Affiliates and may 12 8 be one of its employees. The Guarantee Trustee shall have the right at any time to seek instructions concerning the administration of this Guarantee Agreement from any court of competent jurisdiction. (v) The Guarantee Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Guarantee Agreement at the request or direction of any Holder, unless such Holder shall have provided to the Guarantee Trustee such adequate security and indemnity as would satisfy a reasonable person in the position of the Guarantee Trustee, against the costs, expenses (including attorneys' fees and expenses) and liabilities that might be incurred by it in complying with such request or direction, including such reasonable advances as may be requested by the Guarantee Trustee; provided that, nothing contained in this Section 3.2(a)(v) shall be taken to relieve the Guarantee Trustee, upon the occurrence of an Event of Default, of its obligation to exercise the rights and powers vested in it by this Guarantee Agreement. (vi) The Guarantee Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Guarantee Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit. (vii) The Guarantee Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through its agents or attorneys, and the Guarantee Trustee shall not be responsible for any misconduct or negligence on the part of any such agent or attorney appointed with due care by it hereunder. (viii) Whenever in the administration of this Guarantee Agreement the Guarantee Trustee shall deem it desirable to receive written instructions with respect to enforcing any remedy or right or taking any other action hereunder, the Guarantee Trustee (A) may request written instructions from the Holders, (B) may refrain from enforcing such remedy or right or taking such other action until such written instructions are received, and (C) shall be protected in acting in accordance with such written instructions. (ix) The Guarantee Trustee shall not be liable for any action taken, suffered, or omitted to be taken by it in good faith and reasonably believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Guarantee Agreement. (b) No provision of this Guarantee Agreement shall be deemed to impose any duty or obligation on the Guarantee Trustee to perform any act or acts or exercise any right, power, duty or obligation conferred or imposed on it in any jurisdiction in which it shall be illegal, or in which the Guarantee Trustee shall be unqualified or incompetent in accordance with applicable law, to perform any such act or acts or to exercise any such right, power, duty or obligation. No permissive power or authority available to the Guarantee Trustee shall be construed to be a duty to act in accordance with such power and authority. 13 9 SECTION 3.3. Indemnity. The Guarantor agrees to indemnify the Guarantee Trustee for, and to hold it harmless against, any loss, liability or expense incurred without negligence or bad faith on the part of the Guarantee Trustee, arising out of or in connection with the acceptance or administration of this Guarantee Agreement, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder. ARTICLE IV. GUARANTEE TRUSTEE SECTION 4.1. Guarantee Trustee: Eligibility. (a) There shall at all times be a Guarantee Trustee which shall: (i) not be an Affiliate of the Guarantor; and (ii) be a Person that is eligible pursuant to the Trust Indenture Act to act as such and has a combined capital and surplus of at least $50,000,000, and shall be a corporation meeting the requirements of Section 310(a) of the Trust Indenture Act. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of the supervising or examining authority, then, for the purposes of this Section and to the extent permitted by the Trust Indenture Act, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. (b) If at any time the Guarantee Trustee shall cease to be eligible to so act under Section 4.1(a), the Guarantee Trustee shall immediately resign in the manner and with the effect set out in Section 4.2(c). (c) If the Guarantee Trustee has or shall acquire any "conflicting interest" within the meaning of Section 310(b) of the Trust Indenture Act, the Guarantee Trustee and Guarantor shall in all respects comply with the provisions of Section 310(b) of the Trust Indenture Act. SECTION 4.2. Appointment, Removal and Resignation of the Guarantee Trustee. (a) Subject to Section 4.2(b), the Guarantee Trustee may be appointed or removed without cause at any time by the Guarantor. (b) The Guarantee Trustee shall not be removed until a Successor Guarantee Trustee has been appointed and has accepted such appointment by written instrument executed by such Successor Guarantee Trustee and delivered to the Guarantor. If an instrument of acceptance by a Successor Guarantee Trustee shall not have been delivered to the Guarantee Trustee within 30 days after such removal, the Guarantee Trustee being removed may petition any court of competent jurisdiction for the appointment of a Successor Guarantee Trustee. 14 10 (c) The Guarantee Trustee appointed hereunder shall hold office until a Successor Guarantee Trustee shall have been appointed or until its removal or resignation. The Guarantee Trustee may resign from office (without need for prior or subsequent accounting) by an instrument in writing executed by the Guarantee Trustee and delivered to the Guarantor, which resignation shall not take effect until a Successor Guarantee Trustee has been appointed and has accepted such appointment by instrument in writing executed by such Successor Guarantee Trustee and delivered to the Guarantor and the resigning Guarantee Trustee. (d) If no Successor Guarantee Trustee shall have been appointed and accepted appointment as provided in this Section 4.2 within 60 days after delivery to the Guarantor of an instrument of resignation, the resigning Guarantee Trustee may petition, at the expense of the Guarantor, any court of competent jurisdiction for appointment of a Successor Guarantee Trustee. Such court may thereupon, after prescribing such notice, if any, as it may deem proper, appoint a Successor Guarantee Trustee. ARTICLE V. GUARANTEE SECTION 5.1. Guarantee. The Guarantor irrevocably and unconditionally agrees to pay in full to the Holders the Guarantee Payments (without duplication of amounts theretofore paid by or on behalf of the Issuer), as and when due, regardless of any defense, right of set-off or counterclaim which the Issuer may have or assert. The Guarantor's obligation to make a Guarantee Payment may be satisfied by direct payment of the required amounts by the Guarantor to the Holders or by causing the Issuer to pay such amounts to the Holders. SECTION 5.2. Waiver of Notice and Demand. The Guarantor hereby waives notice of acceptance of the Guarantee Agreement and of any liability to which it applies or may apply, presentment, demand for payment, any right to require a proceeding first against the Guarantee Trustee, Issuer or any other Person before proceeding against the Guarantor, protest, notice of nonpayment, notice of dishonor, notice of redemption and all other notices and demands. SECTION 5.3. Obligations Not Affected. The obligations, covenants, agreements and duties of the Guarantor under this Guarantee Agreement shall in no way be affected or impaired by reason of the happening from time to time of any of the following: (a) the release or waiver, by operation of law or otherwise, of the performance or observance by the Issuer of any express or implied agreement, covenant, term or condition relating to the Securities to be performed or observed by the Issuer; 15 11 (b) the extension of time for the payment by the Issuer of all or any portion of the Distributions (other than an extension of time for payment of Distributions that results from the extension of any interest payment period on the Debentures as provided in the Indenture), Redemption Price, Liquidation Distribution or any other sums payable under the terms of the Securities or the extension of time for the performance of any other obligation under, arising out of, or in connection with, the Securities; (c) any failure, omission, delay or lack of diligence on the part of the Holders to enforce, assert or exercise any right, privilege, power or remedy conferred on the Holders pursuant to the terms of the Securities, or any action on the part of the Issuer granting indulgence or extension of any kind; (d) the voluntary or involuntary liquidation, dissolution, sale of any collateral, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition or readjustment of debt of, or other similar proceedings affecting, the Issuer or any of the assets of the Issuer; (e) any invalidity of, or defect or deficiency in, the Securities; (f) the settlement or compromise of any obligation guaranteed hereby or hereby incurred; or (g) any other circumstance whatsoever that might otherwise constitute a legal or equitable discharge or defense of a guarantor, it being the intent of this Section 5.3 that the obligations of the Guarantor hereunder shall be absolute and unconditional under any and all circumstances. There shall be no obligation of the Holders to give notice to, or obtain the consent of, the Guarantor with respect to the happening of any of the foregoing. SECTION 5.4. Rights of Holders. The Guarantor expressly acknowledges that: (i) this Guarantee Agreement will be deposited with the Guarantee Trustee to be held for the benefit of the Holders; (ii) the Guarantee Trustee has the right to enforce this Guarantee Agreement on behalf of the Holders; (iii) the Holders of a Majority in liquidation preference of the Securities have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Guarantee Trustee in respect of this Guarantee Agreement or exercising any trust or power conferred upon the Guarantee Trustee under this Guarantee Agreement; and (iv) any Holder may institute a legal proceeding directly against the Guarantor to enforce its rights under this Guarantee Agreement, without first instituting a legal proceeding against the Guarantee Trustee, the Issuer or any other Person. SECTION 5.5. Guarantee of Payment This Guarantee Agreement creates a guarantee of payment and not of collection. This Guarantee Agreement will not be discharged except by payment of the Guarantee Payments in 16 12 full (without duplication of amounts theretofore paid by the Issuer) or upon distribution of Debentures to Holders as provided in the Trust Agreement. SECTION 5.6. Subrogation. The Guarantor shall be subrogated to all (if any) rights of the Holders against the Issuer in respect of any amounts paid to the Holders by the Guarantor under this Guarantee Agreement and shall have the right to waive payment by the Issuer pursuant to Section 5.1; provided, however, that the Guarantor shall not (except to the extent required by mandatory provisions of law) be entitled to enforce or exercise any rights which it may acquire by way of subrogation or any indemnity, reimbursement or other agreement, in all cases as a result of payment under this Guarantee Agreement, if, at the time of any such payment, any amounts are due and unpaid under this Guarantee Agreement. If any amount shall be paid to the Guarantor in violation of the preceding sentence, the Guarantor agrees to hold such amount in trust for the Holders and to pay over such amount to the Holders. SECTION 5.7. Independent Obligations. The Guarantor acknowledges that its obligations hereunder are independent of the obligations of the Issuer with respect to the Securities and that the Guarantor shall be liable as principal and as debtor hereunder to make Guarantee Payments pursuant to the terms of this Guarantee Agreement notwithstanding the occurrence of any event referred to in subsections (a) through (g), inclusive, of Section 5.3 hereof. ARTICLE VI. COVENANTS AND SUBORDINATION SECTION 6.1. Subordination. The obligations of the Guarantor under this Guarantee Agreement will constitute unsecured obligations of the Guarantor and will rank subordinate and junior in right of payment to all Senior Debt (as defined in the Indenture) of the Guarantor, except those made pari passu or subordinate to such obligations expressly by their terms. in the same manner as set forth in Article XIII of the Indenture. SECTION 6.2. Pari Passu Guarantees. The obligations of the Guarantor under this Guarantee Agreement shall rank pari passu with the obligations of the Guarantor under any similar Guarantee Agreements issued by the Guarantor on behalf of the holders of preferred securities issued by any Trust (as defined in the Indenture). 17 13 ARTICLE VII. TERMINATION SECTION 7.1. Termination. This Guarantee Agreement shall terminate and be of no further force and effect upon (i) full payment of the Redemption Price of all Securities, (ii) the distribution of Debentures to the Holders in exchange for all of the Securities or (iii) full payment of the amounts payable in accordance with the Trust Agreement upon liquidation of the Issuer. Notwithstanding the foregoing, this Guarantee Agreement will continue to be effective or will be reinstated, as the case may be, if at any time any Holder must restore payment of any sums paid with respect to Securities or this Guarantee Agreement. ARTICLE VIII. MISCELLANEOUS SECTION 8.1. Successors and Assigns. All guarantees and agreements contained in this Guarantee Agreement shall bind the successors, assigns, receivers, trustees and representatives of the Guarantor and shall inure to the benefit of the Holders of the Securities then outstanding. Except in connection with a consolidation, merger or sale involving the Guarantor that is permitted under Article VIII of the Indenture and pursuant to which the successor or assignee agrees in writing to perform the Guarantor's obligations hereunder, the Guarantor shall not assign its obligations hereunder. SECTION 8.2. Amendments. Except with respect to any changes which do not adversely affect the rights of the Holders or the Guarantee Trustee in any material respect (in which case no consent of the Holders or the Guarantee Trustee, as the case may be, will be required), this Guarantee Agreement may only be amended with the prior approval of the Holders of not less than a Majority in Liquidation Amount of all the outstanding Securities and of the Guarantee Trustee. The provisions of Article VI of the Trust Agreement concerning meetings of the Holders shall apply to the giving of such approval. SECTION 8.3. Notices. Any notice, request or other communication required or permitted to be given hereunder shall be in writing, duly signed by the party giving such notice, and delivered, telecopied or mailed by first class mail as follows: (a) if given to the Guarantor, to the address set forth below or such other address, facsimile number or to the attention of such other Person as the Guarantor may give notice to the Holders: 18 14 MBNA Corporation Wilmington, Delaware 19884 Facsimile No.: 302-456-8348 Attention: Vernon H.C. Wright (b) if given to the Issuer, in care of the Guarantee Trustee, at the Issuer's (and the Guarantee Trustee's) address set forth below or such other address as the Guarantee Trustee on behalf of the Issuer may give notice to the Holders: MBNA Capital C c/o MBNA Corporation Wilmington, Delaware 19884 Facsimile No.: 302-456-8348 Attention: Vernon H.C. Wright with a copy to: The Bank of New York 101 Barclay Street, Floor 21 West New York, New York 10286 Facsimile No.: 212-815-5915 Attention: Corporate Trust Administration (c) if given to any Holder, at the address set forth on the books and records of the Issuer. All notices hereunder shall be deemed to have been given when received in person, telecopied with receipt confirmed, or mailed by first class mail, postage prepaid, except that if a notice or other document is refused delivery or cannot be delivered because of a changed address of which no notice was given, such notice or other document shall be deemed to have been delivered on the date of such refusal or inability to deliver. SECTION 8.4. Consolidation, Merger, Conveyance, Transfer or Lease. The Guarantor shall not consolidate with or merge into any other Person or convey, transfer or lease its properties and assets substantially as an entirety to any Person, and no Person shall consolidate with or merge into the Guarantor or convey, transfer or lease its properties and assets substantially as an entirety to the Guarantor, unless it has complied with the terms of Section 8.1 of the Indenture. 19 15 SECTION 8.5. Benefit. This Guarantee Agreement is solely for the benefit of the Holders and is not separately transferable from the Securities. SECTION 8.6. Interpretation. In this Guarantee Agreement, unless the context otherwise requires: (a) capitalized terms used in this Guarantee Agreement but not defined in the preamble hereto have the respective meanings assigned to them in Section 1.1; (b) a term defined anywhere in this Guarantee Agreement has the same meaning throughout; (c) all references to "the Guarantee Agreement" or "this Guarantee Agreement" are to this Guarantee Agreement as modified, supplemented or amended from time to time; (d) all references in this Guarantee Agreement to Articles and Sections are to Articles and Sections of this Guarantee Agreement unless otherwise specified; (e) a term defined in the Trust Indenture Act has the same meaning when used in this Guarantee Agreement unless otherwise defined in this Guarantee Agreement or unless the context otherwise requires; (f) a reference to the singular includes the plural and vice versa; and (g) the masculine, feminine or neuter genders used herein shall include the masculine, feminine and neuter genders. SECTION 8.7. Governing Law. THIS GUARANTEE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES THEREOF. 20 16 This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. THIS GUARANTEE AGREEMENT is executed as of the day and year first above written. MBNA CORPORATION By: -------------------------------- Name: Title: THE BANK OF NEW YORK as Guarantee Trustee By: -------------------------------- Name: Title: EX-5.A 7 OPINION OF JOHN W. SCHEFLEN 1 EXHIBIT 5(A) February 25, 1997 MBNA Corporation Wilmington, Delaware 19884 This opinion is delivered in connection with Amendment No. 1 to the Registration Statement on Form S-4 (the "Registration Statement") filed under the Securities Act of 1933, as amended (the "Act"), by MBNA Corporation, a Maryland corporation ("MBNA"), and MBNA Capital C, a Delaware business trust (the "Trust", and together with MBNA, the "Registrants"), in connection with the registration under the Act of (i) Trust originated preferred securities of the Trust (the "Preferred Securities"), (ii) junior subordinated deferable interest debentures, due 2027, (the "Debentures") to be issued by MBNA pursuant to the offer (the "Offer") by MBNA and the Trust to exchange the Preferred Securities for any and all of MBNA's 7.50% Cumulative Preferred Stock, Series A (the "Preferred Stock") not owned by MBNA. The Debentures will be issued in accordance with the provisions of a junior subordinated indenture (the "Indenture") between MBNA and the Bank of New York, as trustee (the "Trustee"). The Preferred Securities will be guaranteed by MBNA (the "Guarantee") in the manner and to the extent set forth in the Guarantee Agreement (the "Guarantee Agreement") to be executed by MBNA and the Bank of New York, as guarantee trustee (the "Guarantee Trustee"). I, as Executive Vice President, Secretary and General Counsel, have examined: (i) the Registration Statement; (ii) the Indenture, as filed as an exhibit to the Registration Statement, and (iii) the Guarantee Agreement, as filed as an exhibit to the Registration Statement. In addition, I have examined, and have relied as to matters of fact upon, originals or copies, certified or otherwise identified to my satisfaction, of such corporate records, agreements, documents and other instruments and such certificates or comparable documents of public officials and of officers and representatives of MBNA, and have made such other and further investigations, as I have deemed relevant and necessary as a basis for the opinions hereinafter set forth. In such examination, I have assumed the genuineness of all signatures, the legal capacity of natural persons, the authenticity of all documents submitted to me as originals, the conformity to original documents of all documents submitted to me as certified or photostatic copies, and the authenticity of the originals of such latter documents. I have also assumed that the Registration Statement, and any applicable amendments thereto (including post-effective amendments), will have become effective under the Act at the time of issuance, offering and sale of any such Preferred Securities, Debentures or the Guarantee. 2 2 Based upon the foregoing, and subject to the qualifications and limitations stated herein, it is my opinion that: 1. With respect to the Debentures to be issued under the Indenture, when (i) such Indenture has been duly authorized and validly executed and delivered by MBNA and by the Trustee, (ii) the Board of Directors of MBNA (the "Board") has taken all necessary corporate action to approve the issuance and specific terms of such Debentures, and (iii) such Debentures have been duly executed, authenticated, issued and delivered in accordance with the provisions of such Indenture upon payment of the consideration therefor as contemplated by the Registration Statement, such Debentures will constitute valid and legally binding obligations of MBNA. 2. With respect to the Guarantee to be issued under the Guarantee Agreement, when (i) the Guarantee Agreement has been duly authorized and validly executed and delivered by MBNA and by the Guarantee Trustee, (ii) the Board has taken all necessary corporate action to approve the issuance and specific terms of the Guarantee and (iii) the Guarantee has been duly executed, authenticated, issued and delivered in accordance with the provisions of the Guarantee Agreement, the Guarantee will constitute a valid and legally binding obligation of MBNA. 3. My opinions set forth in paragraphs 1 and 2 above are subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing. I am admitted to the Bar of the State of Maryland and do not express any opinion herein as to the law of any jurisdiction other than the laws of the State of Maryland and the federal laws of the United States of America. For the purposes of the opinions set forth herein, I have assumed that the laws of the State of New York are the same as the laws of the State of Maryland. I hereby consent to the filing of this opinion letter as an exhibit to the Registration Statement and to the reference to me under the caption "Validity of Securities" in the Prospectus Supplement forming a part of the Registration Statement. In giving such consent, I do not thereby admit that I am in the category of persons whose consent is required under Section 7 of the Act. Very truly yours, /s/ JOHN W. SCHEFLEN John W. Scheflen EX-5.D 8 OPINION OF RICHARDS, LAYTON & FINGER 1 [RICHARDS, LAYTON & FINGER LETTERHEAD] February 25, 1997 MBNA Corporation MBNA Capital C c/o MBNA Corporation Wilmington, Delaware 19884 Re: MBNA Capital C Ladies and Gentlemen: We have acted as special Delaware counsel for MBNA Corporation, a Maryland corporation (the "Company"), and MBNA Capital C, a Delaware business trust (the "Trust"), in connection with the matters set forth herein. At your request, this opinion is being furnished to you. For purposes of giving the opinions hereinafter set forth, our examination of documents has been limited to the examination of originals or copies of the following: (a) The Certificate of Trust of the Trust (which was originally named "MBNA Capital III"), dated as of November 4, 1996, as filed in the office of the Secretary of State of the State of Delaware (the "Secretary of State") on November 6, 1996; (b) The Trust Agreement of the Trust, dated November 4, 1996, by and between the Corporation, as depositor, and John W. Scheflen, as trustee of the Trust; 2 MBNA Capital C February 25, 1997 Page 2 (c) The Restated Certificate of Trust of the Trust (whose name was changed thereby to "MBNA Capital C"), dated as of December 11, 1996 (the "Certificate"), as filed in the office of the Secretary of State on December 11, 1996; (d) The Amended and Restated Trust Agreement of the Trust, dated as of December 11 1996, between the Corporation, as depositor, and John W. Scheflen, as trustee of the Trust; (e) The registration statement (the "Initial Registration Statement") on Form S-4 (Registration No. 333-21181), filed by the Company and the Trust with the Securities and Exchange Commission (the "SEC") on February 5, 1997, as amended by Amendment No. 1 to the Initial Registration Statement, including a related preliminary prospectus (the "Prospectus"), relating to the Trust Originated Preferred Securities of the Trust representing beneficial ownership interests in the Trust (each, a "Preferred Security" and collectively, the "Preferred Securities"), as proposed to be filed by the Company and the Trust with the SEC on or about February 25, 1997 ("Amendment No. 1") (the Initial Registration Statement as amended by Amendment No. 1 being hereinafter referred to as the "Registration Statement"); (f) A form of Amended and Restated Trust Agreement of the Trust, to be entered into by and among the Company, as depositor, the trustees named therein, and the holders, from time to time, of beneficial ownership interests in the Trust, attached as an exhibit to the Registration Statement (the "Trust Agreement"); and (g) A Certificate of Good Standing for the Trust, dated February 25, 1997, obtained from the Secretary of State. Initially capitalized terms used herein and not otherwise defined are used as defined in the Trust Agreement. For purposes of this opinion, we have not reviewed any documents other than the documents listed above, and we have assumed that there exists no provision in any document that we have not reviewed that bears upon or is inconsistent with the opinions stated herein. We have conducted no independent factual investigation of our own but rather have relied solely upon the foregoing documents, the statements and information set forth therein and the additional matters recited or assumed herein, all of which we have assumed to be true, complete and accurate in all material respects. With respect to all documents examined by us, we have assumed (i) the authenticity of all documents submitted to us as authentic originals, (ii) the conformity 3 MBNA Capital C February 25, 1997 Page 3 with the originals of all documents submitted to us as copies or forms, and (iii) the genuineness of all signatures. For purposes of this opinion, we have assumed (i) that the Trust Agreement constitutes the entire agreement among the parties thereto with respect to the subject matter thereof, including with respect to the creation, operation and termination of the Trust, and that the Trust Agreement and the Certificate are in full force and effect and have not been amended, (ii) except to the extent provided in paragraph 1 below, the due creation or due organization or due formation, as the case may be, and valid existence in good standing of each party to the documents examined by us under the laws of the jurisdiction governing its creation, organization or formation, (iii) the legal capacity of natural persons who are parties to the documents examined by us, (iv) that each of the parties to the documents examined by us has the power and authority to execute and deliver, and to perform its obligations under, such documents, (v) the due authorization, execution and delivery by all parties thereto of all documents examined by us, (vi) the receipt by each Person to whom a Preferred Security is to be issued by the Trust (collectively, the "Preferred Security Holders") of a Preferred Securities Certificate for such Preferred Security and the payment for the Preferred Security acquired by it, in accordance with the Trust Agreement and the Registration Statement, and (vii) that the Preferred Securities are issued and sold to the Preferred Security Holders in accordance with the Trust Agreement and the Registration Statement. We have not participated in the preparation of the Registration Statement and assume no responsibility for its contents. This opinion is limited to the laws of the State of Delaware (excluding the securities laws of the State of Delaware), and we have not considered and express no opinion on the laws of any other jurisdiction, including federal laws and rules and regulations relating thereto. Our opinions are rendered only with respect to Delaware laws and rules, regulations and orders thereunder which are currently in effect. Based upon the foregoing, and upon our examination of such questions of law and statutes of the State of Delaware as we have considered necessary or appropriate, and subject to the assumptions, qualifications, limitations and exceptions set forth herein, we are of the opinion that: 1. The Trust has been duly created and is validly existing in good standing as a business trust under the Delaware Business Trust Act, 12 Del. C. Section 3801, et seq. 4 MBNA Capital C February 25, 1997 Page 4 2. When issued and sold, the Preferred Securities will represent valid and, subject to the qualifications set forth in paragraph 3 below, fully paid and nonassessable undivided beneficial interests in the assets of the Trust. 3. The Preferred Security Holders, as beneficial owners of the Trust, will be entitled to the same limitation of personal liability extended to stockholders of private corporations for profit organized under the General Corporation Law of the State of Delaware. We note that the Preferred Security Holders may be obligated to make payments as set forth in the Trust Agreement. We consent to the filing of this opinion with the SEC as an exhibit to the Registration Statement. In addition, we hereby consent to the use of our name under the heading "Validity of Securities" in the Prospectus. In giving the foregoing consents, we do not thereby admit that we come within the category of Persons whose consent is required under Section 7 of the Securities Act of 1933, as amended, or the rules and regulations of the SEC thereunder. Except as stated above, without our prior written consent, this opinion may not be furnished or quoted to, or relied upon by, any other Person for any purpose. Very truly yours, /s/ Richards, Layton & Finger MIL/DAF/sc EX-8 9 TAX OPINION OF SIMPSON, THACHER & BARTLETT 1 EXHIBIT 8 February 25, 1997 Re: Exchange of Trust-Originated Preferred Securities, Series C, for MBNA Corporation 7.50% Cumulative Preferred Stock, Series A MBNA Corporation Wilmington, Delaware 19884 MBNA Capital C c/o MBNA Corporation Wilmington, Delaware 19884 Ladies and Gentlemen: We have acted as special tax counsel ("Tax Counsel") to MBNA Corporation, a Maryland corporation (the "Corporation"), and MBNA Capital C, a statutory business trust organized under the Business Trust Act of the State of Delaware (the "Trust"), in connection with the preparation and filing by the Corporation and the Trust with the Securities and Exchange Commission (the "Commission") of a Registration Statement on Form S-4 (Registration No. 333-21181 (as amended, the "Registration Statement")) under the Securities Act of 1933, as amended, and with respect to: (i) the issuance of up to $150,000,000 of Trust-Originated Preferred Securities (the "Preferred Securities") in exchange (the "Exchange") for up to 6,000,000 shares of the Corporation's outstanding 7.50% Cumulative Preferred Stock, Series A (the "Series A Preferred Stock"); (ii) the issuance of the Junior Subordinated Debentures by the Corporation, pursuant to Junior Subordinated Indenture (the "Indenture") between the Corporation and 2 -2- February 25, 1997 The Bank of New York, a New York banking corporation, as trustee (in such capacity, the "Indenture Trustee"), to the Trust in exchange for the Series A Preferred Stock acquired by the Trust pursuant to the Exchange; and (iii) the issuance and sale of the Common Securities (the "Common Securities" and together with the Preferred Securities, the "Trust Securities") to the Corporation pursuant to the Trust's Amended and Restated Declaration of Trust (the "Declaration") between the Corporation, as Depositor, The Bank of New York, as Property Trustee, The Bank of New York (Delaware), as Delaware Trustee, and the Administrative Trustees named therein. The Preferred Securities will be offered to holders of the Series A Preferred Stock in exchange therefor pursuant to the Registration Statement. The Trust Securities are guaranteed by the Corporation with respect to the payment of distributions and payments upon liquidation, redemption and otherwise pursuant to, and to the extent set forth in, the Guarantee Agreement (the "Guarantee") between the Corporation and The Bank of New York, as trustee (in such capacity, the "Guarantee Trustee"), for the benefit of the holders of the Trust Securities. All capitalized terms used in this opinion letter and not otherwise defined herein shall have the meaning ascribed to such terms in the Registration Statement. In delivering this opinion letter, we have reviewed and relied upon: (i) the Registration Statement; (ii) a form of the Indenture; (iii) a form of the Junior Subordinated Debentures; (iv) a form of the Declaration; (v) a form of the Guarantee; and (vi) forms of the Trust Securities. The forms of documents that we have reviewed (and 3 -3- February 25, 1997 relied upon) are the forms of such documents that were filed as exhibits to the Registration Statement. In addition, we have relied upon certain other statements and representations contained in the Corporation's letter of representation attached hereto as Exhibit A. We also have examined and relied upon originals or copies, certified or otherwise identified to our satisfaction, of such records of the Corporation and the Trust and such other documents, certificates and records as we have deemed necessary or appropriate as a basis for the opinions set forth herein. In our examination of such material, we have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as originals and the conformity to original documents of all copies of documents submitted to us. In addition, we also have assumed that the transactions related to the issuance of the Junior Subordinated Debentures and the Securities will be consummated in accordance with the terms of the documents and forms of documents described herein . On the basis of the foregoing and assuming that the Trust was formed and will be maintained in compliance with the terms of the Declaration, we hereby confirm (i) our opinions set forth in the Registration Statement under the caption "Certain United States Federal Income Tax Consequences" and (ii) that, subject to the qualifications set forth therein, the discussion set forth in the Registration Statement under such caption is an accurate summary of the United States federal income tax matters described therein. We express no opinion with respect to the transactions referred to herein or in the Registration Statement other than as expressly set forth herein. Moreover, we note 4 -4- February 25, 1997 that there is no authority directly on point dealing with securities such as the Preferred Securities or transactions of the type described herein and that our opinion is not binding on the Internal Revenue Service ("IRS") or the courts, either of which could take a contrary position. Nevertheless, we believe that if challenged, the opinions we express herein would be sustained by a court with jurisdiction in a properly presented case. Our opinion is based upon the Code, the Treasury regulations promulgated thereunder and other relevant authorities and law, all as in effect on the date hereof. Consequently, future changes in the law may cause the tax treatment of the transactions referred to herein to be materially different from that described above. We are admitted to practice law only in the State of New York and the opinions we express herein are limited solely to matters governed by the federal law of the United States. We hereby consent to the use of this opinion for filing as Exhibit 8 to the Registration Statement and the use of our name in the Registration Statement under the captions "Certain United States Federal Income Tax Consequences" and "Validity of Securities". Very truly yours, /s/ SIMPSON THACHER & BARTLETT SIMPSON THACHER & BARTLETT 5 Exhibit A [MBNA Corporation Letterhead] February 25, 1997 Simpson Thacher & Bartlett 425 Lexington Avenue New York, New York 10017 Ladies and Gentlemen: In connection with the Registration Statement on Form S-4 (Registration No. 333-01181 (as amended, the "Registration Statement") related to the issuance of up to $150,000,000 of 8.25% Trust-Originated Preferred Securities, Series C (the "Preferred Securities") by MBNA Capital C, a statutory business trust formed under the laws of the State of Delaware (the "Trust"), in exchange (the "Exchange") for up to 6,000,000 shares of MBNA Corporation's outstanding 7.50% Cumulative Preferred Stock, Series A (the "Series A Preferred Stock"), Simpson Thacher & Bartlett, special tax counsel to the Trust and MBNA Corporation, a Maryland corporation (the "Corporation"), will render its opinion (the "Tax Opinion") with respect to certain material United States federal income tax consequences related to the Exchange and the issuance of the Preferred Securities. In connection with the issuance of the Tax Opinion, the undersigned, an officer of the Corporation, recognizing that Simpson Thacher & Bartlett will rely on this certificate in delivering the Tax Opinion, hereby certifies as of the date hereof as to the matters set forth in paragraphs one through six hereof, to the best of his or her knowledge and belief after due inquiry and investigation as to such matters. (Capitalized terms used and not otherwise defined herein shall have the same meanings ascribed to such terms in the Registration Statement.) 1. The Corporation and the Trust intend to create a debtor-creditor relationship between the Corporation, as debtor, and the Trust, as a creditor, upon the issuance and sale of the Junior Subordinated Debentures 6 -7- February 25, 1997 to the Trust by the Corporation, and the Corporation will (i) record and at all times continue to reflect the Junior Subordinated Debentures as indebtedness on its separate books and records for financial accounting purposes and (ii) treat the Junior Subordinated Debentures as indebtedness for all United States tax purposes. 2. The sole assets of the Trust will be the Junior Subordinated Debentures. 3. The Corporation has no present intent to exercise its right to defer payments of interest by extending the interest payment period on the Junior Subordinated Debentures. 4. The Corporation believes that the likelihood that it would exercise its right to defer payments of interest by extending the interest payment period on the Junior Subordinated Debentures at any time during which the Junior Subordinated Debentures are outstanding is remote because of the restrictions that would be imposed on the Corporation's ability to pay dividends on its outstanding capital stock in the event it elected to defer payments of interest on the Junior Subordinated Debentures. 5. The Preferred Securities issued by the Trust are expected to be rated "investment grade" by at least one nationally recognized statistical credit rating agency. 6. The Corporation expects that it will be able to cause its wholly-owned subsidiaries to pay dividends to the Corporation in amounts and at times 7 -8- February 25, 1997 sufficient to enable the Corporation to make timely payments of interest and principal on the Junior Subordinated Debentures. The Corporation acknowledges that if any of the foregoing certifications is inaccurate, the Tax Opinion may not accurately describe the proper United States federal income tax treatment of the Junior Subordinated Debentures or the Preferred Securities and the discussion set forth in the Registration Statement under the caption "Certain United States Federal Income Tax Consequences" may not accurately describe the United States federal income tax consequences of the transactions described in the Registration Statement. The Corporation will promptly and timely notify Simpson Thacher & Bartlett if it discovers that any of the above certifications ceases to be true, correct or complete. Very truly yours, MBNA CORPORATION /s/ Vernon H.C. Wright ------------------------ By: Vernon H.C. Wright Title: Executive Vice President EX-23.A 10 CONSENT OF ERNST & YOUNG L.L.P. 1 EXHIBIT 23(A) Consent of Ernst & Young LLP We consent to the reference to our firm under the caption "Experts" in the Registration Statement on Form S_4 and related Prospectus of MBNA Corporation and MBNA Capital C, for the registration of _____% Trust-Originated Preferred Securities and to the incorporation by reference therein of our report dated January 17, 1996 with respect to the consolidated financial statements of MBNA Corporation incorporated by reference in its Annual Report (Form 10-K) for the year ended December 31, 1995, filed with the Securities and Exchange Commission. /s/ Ernst & Young LLP Baltimore, Maryland January 31, 1997 EX-99.A 11 FORM OF LETTER OF TRANSMITTAL 1 LETTER OF TRANSMITTAL TO TENDER SHARES OF 7.50% CUMULATIVE PREFERRED STOCK, SERIES A (THE "SERIES A PREFERRED SHARES") (CUSIP 55262L209) OF MBNA CORPORATION PURSUANT TO THE OFFER BY MBNA CAPITAL C TO EXCHANGE ITS 8.25% TRUST ORIGINATED PREFERRED SECURITIES(SM) ("TOPRS(SM)") FOR ANY AND ALL OUTSTANDING SERIES A PREFERRED SHARES THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, MARCH 26, 1997, UNLESS THE OFFER IS EXTENDED THE EXCHANGE AGENT FOR THE OFFER IS: THE BANK OF NEW YORK BY HAND OR BY MAIL (REGISTERED OR CERTIFIED OVERNIGHT COURIER: MAIL RECOMMENDED): The Bank of New York The Bank of New York Tender & Exchange Department Tender & Exchange Department 101 Barclay Street P.O. Box 11248 Receive and Deliver Window Church Street Station New York, New York 10286 New York, New York 10286-1248
BY FACSIMILE: (For Eligible Institutions Only) (212) 815-6213 CONFIRM RECEIPT BY TELEPHONE: (800) 507-9357 MORROW & CO., INC. HAS BEEN RETAINED AS THE INFORMATION AGENT TO ASSIST IN CONNECTION WITH THE OFFER. REQUESTS FOR ASSISTANCE REGARDING COMPLETION OF THIS LETTER OF TRANSMITTAL MAY BE DIRECTED TO THE INFORMATION AGENT AS FOLLOWS: MORROW & CO., INC., 909 3RD AVENUE, NEW YORK, NEW YORK 10022, (800) 566-9061 (TOLL-FREE), BANKS AND BROKERS (800) 662-5200 (TOLL-FREE). - --------------- (SM) "Trust Originated Preferred Securities" and "TOPrS" are service marks of Merrill Lynch & Co. 2 DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED. Subject to the terms and conditions set forth in the Prospectus and herein, MBNA Capital C (the "Trust") will accept for exchange any and all Series A Preferred Shares validly tendered and not withdrawn. This Letter of Transmittal is to be completed by holders of Series A Preferred Shares, either if certificates for Series A Preferred Shares are to be forwarded herewith or, unless an Agent's Message (as defined in the accompanying Prospectus of MBNA Corporation ("MBNA") and the Trust (as amended or supplemented (including documents incorporated by reference), the "Prospectus")) is utilized, if tenders of Series A Preferred Shares are to be made by book-entry transfer into the account of The Bank of New York, as Exchange Agent (the "Exchange Agent"), at The Depository Trust Company ("DTC") pursuant to the procedures described under "The Offer -- Procedures for Tendering" in the Prospectus. Holders of Series A Preferred Shares who tender Series A Preferred Shares by book-entry transfer are referred to herein as "Book-Entry Shareholders." Any holder of Series A Preferred Shares who submits this Letter of Transmittal and tenders Series A Preferred Shares in accordance with the instructions contained herein prior to the Expiration Date (as defined in the Prospectus) will thereby have directed the Trust to deliver its 8.25% Trust Originated Preferred Securities(SM) ("TOPrS(SM)") (the "Preferred Securities") in exchange for such holder's Series A Preferred Shares and in consideration of the deposit by MBNA with the Trust as trust assets of its 8.25% Junior Subordinated Deferrable Interest Debentures, Series C, due 2027 (the "Junior Subordinated Debentures") as set forth in the Prospectus. Tenders of Series A Preferred Shares pursuant to this Letter of Transmittal are subject to withdrawal as described in the Prospectus under the caption "The Offer -- Withdrawal of Tenders."
- --------------------------------------------------------------------------------------------------------- DESCRIPTION OF SERIES A PREFERRED SHARES BEING TENDERED - --------------------------------------------------------------------------------------------------------- NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) SERIES A PREFERRED SHARES TENDERED (PLEASE FILL IN EXACTLY AS NAME(S) APPEAR(S) ON CERTIFICATE(S)) (ATTACH ADDITIONAL SIGNED LIST IF NECESSARY) - --------------------------------------------------------------------------------------------------------- TOTAL NUMBER OF SHARES REPRESENTED CERTIFICATE BY NUMBER OF SHARES NUMBER(S) CERTIFICATE(S)* TENDERED** --------------------------------------------------- --------------------------------------------------- --------------------------------------------------- --------------------------------------------------- --------------------------------------------------- --------------------------------------------------- --------------------------------------------------- --------------------------------------------------- TOTAL SHARES - ---------------------------------------------------------------------------------------------------------
* Need not be completed by shareholders tendering by book-entry transfer. ** Unless otherwise indicated, the holder will be deemed to have tendered the full number of Series A Preferred Shares represented by the tendered certificates. See Instruction 4. - -------------------------------------------------------------------------------- 3 [ ] CHECK HERE IF TENDERED SERIES A PREFERRED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO THE EXCHANGE AGENT'S ACCOUNT AT DTC AND COMPLETE THE FOLLOWING: Name of Tendering Institution Transaction Code No. [ ] CHECK HERE IF TENDERED SERIES A PREFERRED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE THE FOLLOWING: Name(s) of Tendering Shareholder(s) Date of Execution of Notice of Guaranteed Delivery Name of Institution which Guaranteed Delivery If delivery is by book-entry transfer at DTC: Name of Tendering Institution Account No. Transaction Code No. 4 SOLICITED TENDERS (SEE INSTRUCTION 11) MBNA will pay to any Soliciting Dealer, as defined in Instruction 11, a solicitation fee of $0.50 per Series A Preferred Share ($0.25 per Series A Preferred Share with respect to solicitation of beneficial holders of 10,000 shares or more) validly tendered and accepted for exchange pursuant to the Offer (as herein defined). The undersigned represents that the Soliciting Dealer which solicited and obtained this tender is: Name of Firm:_________________________________________________________________ (PLEASE PRINT) Name of Individual Broker or Financial Consultant:____________________________ Identification Number (if known):_____________________________________________ Address:______________________________________________________________________ ______________________________________________________________________________ (INCLUDE ZIP CODE) The acceptance of compensation by such Soliciting Dealer will constitute a representation by it that: (i) it has complied with the applicable requirements of the Securities Exchange Act of 1934 and the applicable rules and regulations thereunder in connection with such solicitations; (ii) it is entitled to such compensation for such solicitation under the terms and conditions of the Offer (unless the undersigned is not being compensated for such solicitation); (iii) in soliciting tenders of Series A Preferred Shares, it has used no soliciting materials other than those furnished by MBNA and the Trust; and (iv) if it is a foreign broker or dealer not eligible for membership in the National Association of Securities Dealers, Inc. (the "NASD"), it has agreed to conform to the NASD's Rules of Fair Practice in making solicitations outside the United States to the same extent as though it were an NASD member. If tendered Series A Preferred Shares are being delivered by book-entry transfer made to an account maintained by the Exchange Agent with DTC, the Soliciting Dealer must return a Notice of Solicited Tenders to the Exchange Agent to receive a solicitation fee. SOLICITING DEALERS ARE NOT ENTITLED TO A FEE FOR SERIES A PREFERRED SHARES BENEFICIALLY OWNED BY SUCH SOLICITING DEALER. 5 NOTE: SIGNATURES MUST BE PROVIDED BELOW PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY Ladies and Gentlemen: The undersigned hereby tenders to MBNA Capital C, a Delaware statutory business trust (the "Trust"), shares of 7.50% Cumulative Preferred Stock, Series A (the "Series A Preferred Shares") of MBNA Corporation ("MBNA"), pursuant to the offer by the Trust to exchange its 8.25% Trust Originated Preferred Securities(SM) ("TOPrS(SM)") (the "Preferred Securities") for any and all Series A Preferred Shares, upon the terms and subject to the conditions set forth in the Prospectus, receipt of which is hereby acknowledged, and in this Letter of Transmittal (which, together with the Prospectus, constitute the "Offer"). Subject to and effective upon acceptance for exchange of the Series A Preferred Shares tendered herewith, the undersigned hereby exchanges, assigns and transfers to or upon the order of the Trust all right, title and interest in and to all the Series A Preferred Shares that are being tendered hereby and irrevocably constitutes and appoints the Exchange Agent the true and lawful agent and attorney-in-fact of the undersigned with respect to such Series A Preferred Shares, with full power of substitution (such power of attorney being deemed to be an irrevocable power coupled with an interest), to (a) deliver certificates for such Series A Preferred Shares or transfer ownership of such Series A Preferred Shares on the account books maintained by DTC, together, in any such case, with all accompanying evidences of transfer and authenticity, to the Exchange Agent for the account of the Trust, (b) present such Series A Preferred Shares for transfer on the books of MBNA and (c) receive all benefits and otherwise exercise all rights of beneficial ownership of such Series A Preferred Shares, all in accordance with the terms of the Offer. The undersigned hereby represents and warrants that the undersigned has full power and authority to tender, exchange, assign and transfer the Series A Preferred Shares tendered hereby and to acquire Preferred Securities issuable upon the exchange of such tendered Series A Preferred Shares and that, when the undersigned's Series A Preferred Shares are accepted for exchange, the Trust will acquire good and unencumbered title to such tendered Series A Preferred Shares, free and clear of all liens, restrictions, charges and encumbrances and not subject to any adverse claim. The undersigned will, upon request, execute and deliver any additional documents deemed by the Trust to be necessary or desirable to complete the exchange, assignment and transfer of tendered Series A Preferred Shares or transfer ownership of such Series A Preferred Shares. All authority herein conferred or agreed to be conferred shall survive the death, bankruptcy or incapacity of the undersigned and every obligation of the undersigned hereunder shall be binding upon the heirs, legal representatives, successors, assigns, executors and administrators of the undersigned. Except as stated in the Offer, this tender is irrevocable. The undersigned understands that tenders of Series A Preferred Shares pursuant to any one of the procedures described in "The Offer -- Procedures for Tendering" in the Prospectus and in the instructions hereto will constitute agreements between the undersigned and the Trust upon the terms and subject to the conditions of the Offer. Unless otherwise indicated under "Special Exchange Instructions," please cause Preferred Securities to be issued, and return any Series A Preferred Shares not tendered or not accepted for exchange, in the name(s) of the undersigned (and, in the case of Series A Preferred Shares tendered by book-entry transfer, by credit to the account at DTC). Similarly, unless otherwise indicated under "Special Delivery Instructions," please mail any certificates for Series A Preferred Shares not tendered or not accepted for exchange (and accompanying documents, as appropriate), and any certificates for Series A Preferred Shares, to the undersigned at the address shown below the undersigned's signature(s). If both "Special Exchange Instructions" and "Special Delivery Instructions" are completed, please cause Preferred Securities to be issued, and return any Series A Preferred Shares not tendered or not accepted for exchange, in the name(s) of, and deliver any certificates for such Series A Preferred Shares to, the person(s) so indicated (and in the case of Series A Preferred Shares tendered by book-entry transfer, by credit to the account at DTC). The undersigned recognizes that the Trust has no obligation, pursuant to the "Special Exchange Instructions," to transfer any Series A Preferred Shares from the name of the registered holder(s) thereof if the Trust does not accept for exchange any of the Series A Preferred Shares so tendered. 6 SPECIAL EXCHANGE INSTRUCTIONS (SEE INSTRUCTIONS 1, 5, 6, AND 7) To be completed ONLY if certificates for Preferred Securities, or certificates for Series A Preferred Shares not tendered or not accepted for exchange, are to be issued in the name of someone other than the undersigned. Issue [ ] certificates for Preferred Securities in the name of: [ ] certificates for Series A Preferred Shares to: Name: (PLEASE PRINT) Address: - --------------------------------------------------------- - --------------------------------------------------------- (INCLUDE ZIP CODE) Taxpayer Identification No.: SPECIAL DELIVERY INSTRUCTIONS (SEE INSTRUCTIONS 1, 5 AND 7) To be completed ONLY if certificates for Preferred Securities, or certificates for Series A Preferred Shares not tendered or not accepted for exchange, are to be mailed to someone other than the undersigned, or to the undersigned at an address other than that shown below the undersigned's signature(s). Mail [ ] certificates for Series A Preferred Shares to: [ ] certificates for Preferred Securities to: Name: (PLEASE PRINT) Address: - --------------------------------------------------------- - --------------------------------------------------------- (INCLUDE ZIP CODE) Taxpayer Identification No.: 7 HOLDER(S) OF SERIES A PREFERRED SHARES SIGN HERE (PLEASE COMPLETE SUBSTITUTE FORM W-9 BELOW) X __ X __ SIGNATURE(S) OF OWNER(S) Dated Name(s) (PLEASE PRINT) Capacity (full title) Address (INCLUDE ZIP CODE) Area Code and Telephone No. (Must be signed by registered holder(s) exactly as name(s) appear(s) on certificate(s) for Series A Preferred Shares or on a security position listing or by person(s) authorized to become registered holder(s) by certificates and documents transmitted herewith. If signature is by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or other person acting in a fiduciary or representative capacity, please set forth full title and see Instruction 5.) GUARANTEE OF SIGNATURE(S) (SEE INSTRUCTIONS 1 AND 5) Authorized Signature Name Title Address Name of Firm Area Code and Telephone Number Dated __________________ , 1997 8 INSTRUCTIONS FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER To complete the Letter of Transmittal, you must do the following: - Fill in the box entitled "Description of Series A Preferred Shares Being Tendered" and the two subsequent boxes, if applicable. - Sign and date the Letter of Transmittal in the box entitled "Holder(s) of Series A Preferred Shares Sign Here." - Fill in and sign in the box entitled "Substitute Form W-9." In completing the Letter of Transmittal, you may (but are not required to) also do the following: - If you want certificates for Preferred Securities, or certificates for Series A Preferred Shares not tendered or not accepted for exchange, to be issued in the name of a third party, complete the box entitled "Special Exchange Instructions." - If you want certificates for Preferred Securities, or certificates for Series A Preferred Shares not tendered or not accepted for exchange, to be mailed to a third party, or to be delivered to an address other than that appearing under your signature, complete the box entitled "Special Delivery Instructions." If you complete the box entitled "Special Exchange Instructions" or "Special Delivery Instructions," you must have your signature guaranteed by an Eligible Institution (as defined in Instruction 1 below) unless the Letter of Transmittal is signed by an Eligible Institution. 1. GUARANTEE OF SIGNATURES. No signature guarantee is required on this Letter of Transmittal (i) if tendered Series A Preferred Shares are registered in the name(s) of the undersigned and the Preferred Securities to be issued in exchange therefor are to be issued (and any Series A Preferred Shares not tendered or not accepted for exchange are to be returned) in the name of the registered holder(s) (which term, for the purposes described herein, shall include any participant in DTC whose name appears on a security listing as the owner of Series A Preferred Shares) and (ii) such holder(s) have not completed the instruction entitled "Special Exchange Instructions" or "Special Delivery Instructions" on this Letter of Transmittal. If the tendered Series A Preferred Shares are registered in the name(s) of someone other than the undersigned or if the Preferred Securities to be issued in exchange therefor are to be issued (or Series A Preferred Shares not tendered or not accepted for exchange are to be returned) in the name of any other person, such tendered Series A Preferred Shares must be endorsed or accompanied by written instruments of transfer in form satisfactory to the Trust and duly executed by the registered holder, and the signature on the endorsement or instrument of transfer must be guaranteed by a financial institution (including most banks, savings and loan associations and brokerage houses) that is a participant in the Security Transfer Agents Medallion Program or the Stock Exchange Medallion Program (any of the foregoing hereinafter referred to as an "Eligible Institution"). See Instruction 5. 2. DELIVERY OF LETTER OF TRANSMITTAL AND SERIES A PREFERRED SHARES. This Letter of Transmittal is to be completed by holders of Series A Preferred Shares either if certificates are to be forwarded herewith or, unless an Agent's Message (as defined in the Prospectus) is utilized, if tenders are to be made pursuant to the procedure for tender by book-entry transfer set forth under "The Offer--Procedures for Tendering" in the Prospectus. Certificates for Series A Preferred Shares, or timely confirmation (a "Book-Entry Confirmation") of a book-entry transfer of such Series A Preferred Shares into the Exchange Agent's account at DTC, as well as this Letter of Transmittal (or a facsimile hereof), properly completed and duly executed, with any required signature guarantees, or an Agent's Message in the case of a book-entry delivery, and any other documents required by this Letter of Transmittal, must be received by the Exchange Agent at one of its addresses set forth herein prior to the Expiration Date. If a holder of Series A Preferred Shares desires to participate in the Offer and time will not permit this Letter of Transmittal or Series A Preferred Shares to reach the Exchange Agent before the Expiration Date or the procedure for book-entry transfer cannot be completed on a timely basis, a tender may be effected if the Exchange Agent has received at one of the addresses set forth herein prior to the Expiration Date, a letter, telegram or facsimile transmission from an Eligible Institution setting forth the name and address of the tendering Holder, the name(s) in which the Series A Preferred Shares are registered and, if the Series A Preferred Shares are held in certificated form, the certificate numbers of the Series A Preferred Shares to be tendered, and stating that the tender is being made thereby and guaranteeing that within three New York Stock Exchange, Inc. ("NYSE") trading days after the date of execution of such letter, telegram or facsimile transmission by the Eligible Institution, the Series A Preferred Shares in proper form for transfer together with a properly completed and duly executed Letter of Transmittal (and any other required documents), or a confirmation of book-entry transfer of such Series A Preferred Shares into the Exchange Agent's account at DTC, will be delivered by 9 such Eligible Institution. Unless the Series A Preferred Shares being tendered by the above-described method are deposited with the Exchange Agent within the time period set forth above (accompanied or preceded by a properly completed Letter of Transmittal and any other required documents) or a confirmation of book-entry transfer of such Series A Preferred Shares into the Exchange Agent's account at DTC in accordance with DTC's Automated Tender Offer Program ("ATOP") procedures is received, the Trust may, at its option, reject the tender. THE METHOD OF DELIVERY OF SERIES A PREFERRED SHARES AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH DTC, IS AT THE OPTION AND RISK OF THE TENDERING SHAREHOLDER. IF CERTIFICATES FOR SERIES A PREFERRED SHARES ARE SENT BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY. No alternative, conditional or contingent tenders will be accepted, and no fractional Series A Preferred Shares will be accepted for exchange. By executing this Letter of Transmittal (or facsimile hereof), the tendering holder waives any right to receive any notice of the acceptance of the Series A Preferred Shares for exchange. 3. INADEQUATE SPACE. If the space provided herein is inadequate, the certificate numbers and/or the number of Series A Preferred Shares should be listed on a separate signed schedule attached hereto. 4. PARTIAL TENDERS (NOT APPLICABLE TO BOOK-ENTRY SHAREHOLDERS). If fewer than all the Series A Preferred Shares represented by any certificate delivered to the Exchange Agent are to be tendered, fill in the number of Series A Preferred Shares which are to be tendered in the box entitled "Number of Shares Tendered." In such case, a new certificate for the remainder of the Series A Preferred Shares represented by the old certificate will be sent to the person(s) signing this Letter of Transmittal, unless otherwise provided in the appropriate box on this Letter of Transmittal, as promptly as practicable following the Expiration Date. All Series A Preferred Shares represented by certificates delivered to the Exchange Agent will be deemed to have been tendered unless otherwise indicated. 5. SIGNATURES ON LETTER OF TRANSMITTAL; STOCK POWERS AND ENDORSEMENTS. If this Letter of Transmittal is signed by the registered holder(s) of the Series A Preferred Shares tendered hereby, the signature(s) must correspond with the name(s) as written on the face of the certificates without alteration, enlargement or any change whatsoever. If any of the Series A Preferred Shares tendered hereby are held of record by two or more persons, all such persons must sign this Letter of Transmittal. If any of the Series A Preferred Shares tendered hereby are registered in different names on different certificates, it will be necessary to complete, sign and submit as many separate Letters of Transmittal as there are differed registrations of certificates. If this Letter of Transmittal is signed by the registered holder(s) of the Series A Preferred Shares tendered hereby, no endorsements of certificates or separate stock powers are required unless Preferred Securities issued in exchange therefor are to be issued, or Series A Preferred Shares not tendered or not exchanged are to be returned, in the name of any person other than the registered holder(s). Signatures on any such certificates or stock powers must be guaranteed by an Eligible Institution. If this Letter of Transmittal is signed by a person other than the registered holder(s) of the Series A Preferred Shares tendered hereby, certificates must be endorsed or accompanied by appropriate stock powers, in either case, signed exactly as the name(s) of the registered holder(s) appear(s) on the certificates for such Series A Preferred Shares. Signature(s) on any such certificates or stock powers must be guaranteed by an Eligible Institution. If this Letter of Transmittal or any certificate or stock power is signed by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or other person acting in a fiduciary or representative capacity, such person should so indicate when signing, and proper evidence satisfactory to the Trust of the authority of such person so to act must be submitted. 6. STOCK TRANSFER TAXES. MBNA will pay all stock transfer taxes, if any, applicable to the exchange of any Series A Preferred Shares pursuant to the Offer. If, however, certificates representing Preferred Securities or Series A Preferred Shares not tendered or accepted for exchange are to be delivered to, or are to be issued in the name of, any person other than the registered holder of the Series A Preferred Shares tendered or if a transfer tax is imposed for any reason other than the exchange of 10 Series A Preferred Shares pursuant to the Offer, then the amount of any such transfer taxes (whether imposed on the registered holder or any other persons) will be payable by the tendering holder. If satisfactory evidence of payment of such taxes or exemption therefrom is not submitted with this Letter of Transmittal, the amount of such transfer taxes will be billed directly to such tendering holder. 7. SPECIAL EXCHANGE AND DELIVERY INSTRUCTIONS. If certificates representing Preferred Securities are to be issued in the name of, or any Series A Preferred Shares not tendered or not accepted for exchange are to be issued or to be returned to, a person other than the person(s) signing this Letter of Transmittal or any certificates for Preferred Securities or certificates for Series A Preferred Shares not tendered or not accepted for exchange are to be mailed to someone other than the person(s) signing this Letter of Transmittal or to the person(s) signing this Letter of Transmittal at an address other than that shown above, the appropriate boxes on this Letter of Transmittal should be completed. 8. SUBSTITUTE FORM W-9. Under the federal income tax laws, the Trust may be required to withhold 31% of the amount of any payments made and/or the fair market value of any Preferred Securities to be distributed to a holder of Series A Preferred Shares in exchange therefor pursuant to the Offer or with respect to the amount of any payments made to certain holders of Preferred Securities. In order to avoid such backup withholding, each tendering holder, and, if applicable, each other payee, must provide such holder's or payee's correct taxpayer identification number and certify, under penalties of perjury, that such holder or payee is not subject to such backup withholding by completing the Substitute Form W-9 set forth below under "Important Tax Information." In general, if a tendering holder or payee is an individual, the taxpayer identification number is the Social Security number of such individual. If the Trust (or the Exchange Agent) is not provided with the correct taxpayer identification numbers, the tendering holder or payee may be subject to a $50 penalty imposed by the Internal Revenue Service. Certain tendering holders or payees (including, among others, all corporations and certain foreign individual(s)) are not subject to these backup withholding and reporting requirements. In order to satisfy the Trust (or the Exchange Agent) that a foreign individual qualifies as an exempt recipient, such tendering holder or payee must submit a statement, signed under penalties of perjury, attesting to that individual's exempt foreign status. Such statements must be made on an IRS Form W-8, a copy of which can be obtained from the Exchange Agent. For further information concerning backup withholding and instructions for completing the Substitute Form W-9 (including how to obtain a taxpayer identification number if you do not have one and/or how to complete the Substitute Form W-9 if the Series A Preferred Shares being tendered are held in more than one name and/or the Preferred Securities will be held in more than one name), consult the enclosed Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9. 9. WAIVER OF CONDITIONS. The conditions of the Offer may be waived by the Trust from time to time in accordance with, and subject to the limitations described in, the Prospectus, provided that acceptance of Series A Preferred Shares validly tendered in the Offer is subject to the condition that as of the Expiration Date there be at least 400 record or beneficial holders of at least 1,000,000 Preferred Securities to be issued in exchange for such Series A Preferred Shares, which condition may not be waived. 10. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Requests for assistance or additional copies of the Prospectus and this Letter of Transmittal may be obtained from the Information Agent, the Dealer Manager or the Exchange Agent at their respective addresses or telephone numbers set forth below. 11. SOLICITED TENDERS. MBNA will pay to a Soliciting Dealer (as defined herein) a solicitation fee of $0.50 per Series A Preferred Share ($0.25 per Series A Preferred Share with respect to the solicitation of beneficial holders of 10,000 or more shares) validly tendered and accepted for exchange pursuant to the Offer. For purposes of this Instruction 11, "Soliciting Dealer" includes (i) any broker or dealer in securities, including the Dealer Manager in their capacity as dealer or broker, who is a member of any national securities exchange or of the National Association of Securities Dealers, Inc. (the "NASD"), (ii) any foreign broker or dealer not eligible for membership in the NASD who agrees to conform to the NASD's Rules of Fair Practice in soliciting tenders outside the United States to the same extent as though it were an NASD member, or (iii) any bank or trust company, any one of whom has solicited and obtained a tender pursuant to the Offer. No such fee shall be payable to a Soliciting Dealer in respect of Series A Preferred Shares registered in the name of such Soliciting Dealer unless such Series A Preferred Shares are held by such Soliciting Dealer as nominee and such Series A Preferred Shares are being tendered for the benefit of one or more beneficial owners identified on the Letter of 11 Transmittal or on the Notice of Solicited Tenders (included in the materials provided to brokers and dealers). No solicitation fee shall be payable to a Soliciting Dealer with respect to the tender of Series A Preferred Shares unless the Letter of Transmittal accompanying such tender designates such Soliciting Dealer as such in the box captioned "Solicited Tenders." If tendered Series A Preferred Shares are being delivered by book-entry transfer made to an account maintained by the Exchange Agent with DTC, the Soliciting Dealer must return a Notice of Solicited Tenders to the Exchange Agent within three NYSE trading days after the Expiration Date in order to receive a solicitation fee. No solicitation fee shall be payable to a Soliciting Dealer in respect of Series A Preferred Shares (i) beneficially owned by such Soliciting Dealer or (ii) registered in the name of such Soliciting Dealer unless such Series A Preferred Shares are held by such Soliciting Dealer as nominee and such Series A Preferred Shares are being tendered for the benefit of one or more beneficial owners identified on the Letter of Transmittal or the Notice of Solicited Tenders. No solicitation fee shall be payable to the Soliciting Dealer with respect to the tender of Series A Preferred Shares by the holder of record, for the benefit of the beneficial owner, unless the beneficial owner has designated such Soliciting Dealer. 12. LOST, STOLEN OR DESTROYED CERTIFICATES FOR SERIES A PREFERRED SHARES. Any holder of Series A Preferred Shares whose certificate(s) for such shares have been lost, stolen or destroyed should contact either the Exchange Agent or Information Agent at their respective addresses shown on the back page of this Letter of Transmittal for special instructions. 13. IRREGULARITIES. All questions as to the number of Series A Preferred Shares to be accepted, the validity, form, eligibility (including time of receipt) and acceptance of any tender of Series A Preferred Shares will be determined by MBNA, in its sole discretion, which determination shall be final and binding. MBNA reserves the absolute right to reject any or all tenders made pursuant to the Offer determined by it not to be in appropriate form or the acceptance of or payment for any Series A Preferred Shares which would, in the opinion of MBNA's counsel, be unlawful. MBNA also reserves the absolute right to waive any of the conditions set forth in the Offer or any defect or irregularity in any tender with respect to any particular Series A Preferred Shares or any particular shareholder, and MBNA's interpretation of the terms and conditions of the Offer (including these instructions) will be final and binding. Tenders will not be deemed to have been made until all defects and irregularities have been cured or waived prior to the Expiration Date or such times as MBNA shall determine. Neither MBNA, the Exchange Agent, the Information Agent, the Dealer Manager nor any other person will be obligated to give notice of defects or irregularities in tenders, nor shall any of them incur any liability for failure to give any such notice. IMPORTANT TAX INFORMATION Under United States federal income tax law, a tendering holder is required to provide the Trust (as payor) with such holder's correct taxpayer identification number ("TIN") on Substitute Form W-9 below. If the tendering holder is an individual, the TIN is his or her social security number. If the Trust is not provided with the correct TIN, payments that are made to such tendering holder or other payee and the fair market value of the Preferred Securities that otherwise would be distributed to such tendering shareholder pursuant to the Offer, and payments that are made in respect to the Preferred Securities may be subject to 31% backup withholding. Certain tendering holders (including, among others, all corporations and certain foreign individuals) are not subject to these backup withholding and information reporting requirements. In order for a foreign individual to qualify as an exempt recipient, the tendering holder must submit an IRS Form W-8, signed under penalties of perjury, attesting to that individual's exempt status. An IRS Form W-8 can be obtained from the Exchange Agent. See the enclosed "Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9" for more instructions. If backup withholding applies, the Trust is required to withhold 31% of (i) the sum of (x) any payments made to a tendering holder or other payee and (y) the fair market value of the Preferred Securities that would be distributed to such tendering shareholder pursuant to the offer, and (ii) any payments that are made in respect to the Preferred Securities. Such withholding obligation may cause MBNA (or the Exchange Agent) to sell some portion of the Preferred Securities that otherwise would have been distributed to a tendering holder. Backup withholding is not an additional tax. Rather, the tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld, provided that the required information is given to the Internal Revenue Service. If withholding results in an overpayment of taxes, a refund may be obtained from the Internal Revenue Service. The box in Part 3 of the Substitute Form W-9 may be checked if the tendering holder has not been issued a TIN and has applied for a TIN or intends to apply for a TIN in the near future. If the box in Part 3 is checked, the tendering holder or other payee must also complete the Certificate of Awaiting Taxpayer Identification Number below in order to avoid 12 backup withholding. Notwithstanding that the box in Part 3 is checked and the Certificate of Awaiting Taxpayer Identification Number is completed, the Trust will withhold 31% of (i) all payments made prior to the time properly certified TIN is provided to the Trust and (ii) of the Preferred Securities that otherwise would be distributed to such holder. However, such amounts and/or Preferred Securities will be refunded to each tendering holder if a TIN is provided to the Trust (or the Exchange Agent) within 60 days. A tendering holder is required to give the Trust (or the Exchange Agent) the TIN (e.g., social security number or employer identification number) of the record owner of the Series A Preferred Shares or of the last transferee appearing on the transfers attached to, or endorsed on, the Series A Preferred Shares. If the Series A Preferred Shares are in more than one name or are not in the name of the actual owner, consult the enclosed "Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9" for additional guidance on which number to report. 13 PAYER'S NAME: THE BANK OF NEW YORK - -------------------------------------------------------------------------------------------------------------------------------- SUBSTITUTE PART 1 -- PLEASE PROVIDE YOUR TIN IN SOCIAL SECURITY NUMBER THE BOX AT RIGHT AND CERTIFY BY OR EMPLOYER FORM W-9 SIGNING AND DATING BELOW. IDENTIFICATION NUMBER --------------------------------- -------------------------------------------------------------------------------------------- PART 2 -- Check the box if you are NOT subject to backup withholding under the provisions DEPARTMENT OF THE of Section 3406(a)(1)(C) of the Internal Revenue Code because (1) you are exempt from TREASURY, INTERNAL backup withholding, (2) you have not been notified that you are subject to backup REVENUE SERVICE withholding as a result of failure to report all interest or dividends or (3) the Internal Revenue Service has notified you that you are no longer subject to backup withholding [ ] -------------------------------------------------------------------------------------------- CERTIFICATION: UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT THE INFORMATION PROVIDED ON THIS PAYER'S REQUEST FOR FORM IS TRUE, CORRECT, AND COMPLETE. TAXPAYER IDENTIFICATION SIGNATURE______________________________________ PART 3 NUMBER (TIN) AND AWAITING CERTIFICATION DATE___________________________________________ TIN [ ] - -------------------------------------------------------------------------------------------------------------------------------
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 3 OF SUBSTITUTE FORM W-9. CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER I certify under penalties of perjury that a taxpayer identification number has not been issued to me, and either (a) I have mailed or delivered an application to receive a taxpayer identification number to the appropriate Internal Revenue Service Center or Social Security Administration Office or (b) I intend to mail or deliver an application in the near future. I understand that 31% of all reportable payments made to me will be withheld until I provide a number and that if such number is provided to you within sixty (60) days, such withheld amounts will be refunded. SIGNATURE__________________________________________ DATE_______________________ NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS. EX-99.B 12 FORM OF NOTICE OF GUARANTEED DELIVERY 1 NOTICE OF GUARANTEED DELIVERY This form, or a form substantially equivalent to this form, must be used to accept the Offer (as defined below) if (i) certificates for shares of 7.50% Cumulative Preferred Stock, Series A (the "Series A Preferred Shares"), of MBNA Corporation ("MBNA"), cannot be delivered to the Exchange Agent by the Expiration Date (as defined in the Prospectus of MBNA and MBNA Capital C dated February 27, 1997 (the "Prospectus")), (ii) the procedure for book-entry transfer of Series A Preferred Shares (as set forth in the Prospectus) cannot be completed by the Expiration Date or (iii) the Letter of Transmittal (or a facsimile thereof) and all other required documents cannot be delivered to the Exchange Agent prior to the Expiration Date (as defined in the Prospectus). This form, properly completed and duly executed, may be delivered by hand, facsimile transmission or mail to the Exchange Agent. See the Prospectus. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, MARCH 26, 1997, UNLESS THE OFFER IS EXTENDED. THE EXCHANGE AGENT FOR THE OFFER IS: THE BANK OF NEW YORK BY HAND OR BY MAIL (REGISTERED OR OVERNIGHT COURIER: CERTIFIED MAIL RECOMMENDED): The Bank of New York The Bank of New York Tender & Exchange Department Tender & Exchange Department 101 Barclay Street P.O. Box 11248 Receive and Deliver Window Church Street Station New York, New York 10286 New York, New York 10286-1248
BY FACSIMILE: (For Eligible Institutions Only) (212) 815-6213 CONFIRM RECEIPT BY TELEPHONE: (800) 507-9357 DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION NUMBER TO A NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. 2 LADIES AND GENTLEMEN: The undersigned hereby tenders to MBNA Capital C (the "Trust"), upon the terms and subject to the conditions set forth in the Prospectus and the related Letter of Transmittal (which together constitute the "Offer"), receipt of which is hereby acknowledged, the number of Series A Preferred Shares set forth below, pursuant to the guaranteed delivery procedure set forth in the Prospectus: Number of Series A Preferred Shares Tendered: Certificate Nos. (if available): Check if Series A Preferred Shares will be tendered by book-entry transfer effected by The Depository Trust Company: [ ] Name of Tendering Institution: Account Number SIGN HERE X (Signature(s)) (Name(s)) (Please print) (Address(es)) (City, state and zip code) (Area code and telephone number) [PLEASE SEE REVERSE SIDE] 3 THE FOLLOWING GUARANTEE MUST BE COMPLETED - -------------------------------------------------------------------------------- GUARANTEE OF DELIVERY (NOT TO BE USED FOR SIGNATURE GUARANTEE) The undersigned, a firm that is a member of a registered national securities exchange or the National Association of Securities Dealers, Inc., or a commercial bank or trust company having an office, branch or agency in the United States, guarantees (i) that the above named person(s) "own(s)" the Series A Preferred Shares tendered hereby within the meaning of Rule 14e-4 under the Securities Exchange Act of 1934, as amended, (b) that such tender of Series A Preferred Shares complies with Rule 14e-4 and (c) to deliver to the Exchange Agent either the Series A Preferred Shares tendered hereby, in proper form for transfer, or confirmation of the book-entry transfer of the Series A Preferred Shares tendered hereby into the account of the Exchange Agent at The Depository Trust Company, together with a properly completed and duly executed Letter(s) of Transmittal (or facsimile(s) thereof), with any required signature guarantees (or an Agent's Message (as defined in the Prospectus)) and any other required documents within three (3) New York Stock Exchange trading days after the date of execution of this Notice. -------------------------------------------------------------- -------------------------------------------------------------- Name of Firm Authorized Signature -------------------------------------------------------------- Name: Address (Please Type fo Print) -------------------------------------------------------------- Title: City, State and Zip Code Telephone Number: Dated: - -------------------------------------------------------------------------------- DO NOT SEND CERTIFICATES FOR SERIES A PREFERRED SHARES WITH THIS NOTICE OF GUARANTEED DELIVERY. CERTIFICATES FOR SERIES A PREFERRED SHARES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL. EX-99.C 13 FORM OF LETTER TO BROKERS, DEALERS, ETC. 1 MBNA CAPITAL C OFFER TO EXCHANGE ITS 8.25% TRUST ORIGINATED PREFERRED SECURITIES(SM)("TOPRS(SM)") (LIQUIDATION AMOUNT $25 PER PREFERRED SECURITY AND GUARANTEED TO THE EXTENT SET FORTH IN THE PROSPECTUS BY MBNA CORPORATION) FOR ANY AND ALL OUTSTANDING SHARES OF 7.50% CUMULATIVE PREFERRED STOCK, SERIES A (CUSIP 55262L209) OF MBNA CORPORATION THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, MARCH 26, 1997, UNLESS THE OFFER IS EXTENDED February 27, 1997 To Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees: We have been appointed by MBNA Corporation, a Maryland corporation ("MBNA"), and MBNA Capital C, a Delaware statutory business trust (the "Trust"), to act as Dealer Manager in connection with the offer by the Trust to exchange, upon the terms and subject to the conditions set forth in the Prospectus referred to below and the related Letter of Transmittal (which together constitute the "Offer"), its 8.25% Trust Originated Preferred Securities(SM) ("TOPrS(SM)") (the "Preferred Securities") for any and all shares of 7.50% Cumulative Preferred Stock, Series A (the "Series A Preferred Shares"), of MBNA, not owned by MBNA, that are validly tendered and accepted for exchange pursuant to the Offer. In connection with the Offer, MBNA will deposit in the Trust as trust assets it 8.25% Junior Subordinated Deferrable Interest Debentures, Series C, due 2027 as set forth in the Prospectus referred to below. Pursuant to the Offer, exchanges will be made on the basis of one Preferred Security for each Series A Preferred Share validly tendered and accepted for exchange in the Offer. The Trust will accept for exchange all Series A Preferred Shares validly tendered and not withdrawn, upon the terms and subject to the conditions of the Offer described in the Prospectus dated February 27, 1997 (the "Prospectus"). For your information and for forwarding to your clients for whom you hold Series A Preferred Shares registered in your name or in the name of your nominee, we are enclosing the following documents: 1. Prospectus; 2. Letter of Transmittal for your use and for the information of your clients, together with Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 providing information relating to backup federal income tax withholding; 3. Notice of Guaranteed Delivery to be used to accept the Offer if the Series A Preferred Shares and all other required documents cannot be delivered to the Exchange Agent by the Expiration Date (as defined in the Prospectus), or the book-entry transfer of the Series A Preferred Shares cannot be completed by the Expiration Date; - --------------- (SM)"Trust Originated Preferred Securities" and "TOPrS" are service marks of Merrill Lynch & Co. 2 4. A form of letter that may be sent to your clients for whose accounts you hold Series A Preferred Shares registered in your name or in the name of your nominee, with space provided for obtaining such clients' instructions and designation of Soliciting Dealer with regard to the Offer; 5. A letter from the Executive Vice President and Chief Corporate Finance Officer of MBNA to holders of Series A Preferred Shares that may be sent to your clients; 6. A Question and Answer pamphlet that may be sent to your clients; and 7. A return envelope addressed to The Bank of New York, the Exchange Agent. WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, MARCH 26, 1997, UNLESS THE OFFER IS EXTENDED NONE OF MBNA, THE BOARD OF DIRECTORS OF MBNA, THE TRUSTEES OR THE TRUST MAKES ANY RECOMMENDATION TO HOLDERS OF SERIES A PREFERRED SHARES AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING IN THE OFFER. HOLDERS OF SERIES A PREFERRED SHARES ARE URGED TO CONSULT THEIR FINANCIAL AND TAX ADVISORS IN MAKING THEIR DECISIONS ON WHAT ACTION TO TAKE IN LIGHT OF THEIR OWN PARTICULAR CIRCUMSTANCES. MBNA will pay a solicitation fee of $0.50 per Series A Preferred Share ($0.25 per Series A Preferred Share with respect to solicitation of beneficial holders of 10,000 or more shares) for any Series A Preferred Shares validly tendered and accepted for exchange and exchanged pursuant to the Offer and covered by a Letter of Transmittal which designates, as having solicited and obtained the tender, the name of (i) any broker or dealer in securities, including the Dealer Manager in its capacity as a broker or dealer, which is a member of any national securities exchange or of the National Association of Securities Dealers, Inc. (the "NASD"), (ii) any foreign broker or dealer not eligible for membership in the NASD which agrees to conform to the NASD's Rules of Fair Practice in soliciting tenders outside the United States to the same extent as though it were an NASD member, or (iii) any bank or trust company (each of which is referred to herein as a "Soliciting Dealer"). No solicitation fee shall be payable to a Soliciting Dealer with respect to the tender of Series A Preferred Shares by a holder unless the Letter of Transmittal accompanying such tender designates such Soliciting Dealer as such in the box captioned "Solicited Tenders." Soliciting Dealers will include any of the organizations described in clauses (i), (ii) and (iii) above even when the activities of such organizations in connection with the Offer consist solely of forwarding to clients materials relating to the Offer, including the Prospectus and Letter of Transmittal, and tendering Series A Preferred Shares as directed by beneficial owners thereof. No Soliciting Dealer is required to make any recommendation to holders of Series A Preferred Shares as to whether to tender or refrain from tendering in the Offer. No assumption is made, in making payment to any Soliciting Dealer, that its activities in connection with the Offer included any activities other than those described above, and for all purposes noted in all materials relating to the Offer, the term "solicit" shall be deemed to mean no more than "processing shares tendered" or "forwarding to customers materials regarding the Offer." If tendered Series A Preferred Shares are being delivered by book-entry transfer made to an account maintained by the Exchange Agent with The Depository Trust Company, the Soliciting Dealer must return a Notice of Solicited Tenderers to the Exchange Agent within three New York Stock Exchange trading days after the Expiration Date in order to receive a solicitation fee. Such Notice of Solicited Tenders is attached hereto on page 4. No solicitation fee shall be payable to a Soliciting Dealer in respect of Series A Preferred Shares (i) beneficially owned by such Soliciting Dealer or (ii) registered in the name of such Soliciting Dealer unless such Series A Preferred Shares are held by such Soliciting Dealer as nominee and such Series A Preferred Shares are being tendered for the benefit of one or more beneficial owners identified on the Letter of Transmittal or the Notice of Solicited Tenders. No solicitation fee shall be payable to the Soliciting Dealer with respect to the tender of Series A Preferred Shares by the holder of record, for the benefit of the beneficial owner, unless the beneficial owner has designated such Soliciting Dealer. No solicitation fee shall be payable to a Soliciting Dealer if such Soliciting Dealer is required for any reason to transfer any portion of such fee to a tendering holder (other than itself). No broker, dealer, bank, trust company or fiduciary shall be deemed to be the agent of MBNA, the Trust, the Trustees, the Exchange Agent, the Information Agent or the Dealer Manager for purposes of the Offer. 3 MBNA will, upon request, reimburse brokers, dealers, commercial banks and trust companies for reasonable and necessary costs and expenses incurred by them in forwarding materials to their customers. MBNA will pay all stock transfer taxes applicable to the acceptance of Series A Preferred Shares pursuant to the Offer, subject to Instruction 6 of the Letter of Transmittal. Soliciting Dealers should take care to ensure proper record-keeping to document their entitlement to any solicitation fee. Any inquiries you may have with respect to the Offer should be addressed to, and additional copies of the enclosed materials may be obtained from, the Information Agent or the undersigned at the addresses and telephone numbers set forth below. Very truly yours, MERRILL LYNCH & CO. NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU THE AGENT OF MBNA, THE TRUST, THE TRUSTEES OF THE TRUST, THE DEALER MANAGER, THE INFORMATION AGENT OR THE EXCHANGE AGENT, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE DOCUMENTS ENCLOSED HEREWITH AND THE STATEMENTS CONTAINED THEREIN. 4 MBNA CAPITAL C NOTICE OF SOLICITED TENDERS List below the number of Series A Preferred Shares whose tender you have solicited. All Series A Preferred Shares beneficially owned by a beneficial owner, whether in one account or several, and in however many capacities, must be aggregated for purposes of completing the tables below. Any questions as to what constitutes beneficial ownership should be directed to the Exchange Agent. If the space below is inadequate, list the Series A Preferred Shares on a separate signed schedule and affix the list to this Notice of Solicited Tenders. ALL NOTICE OF SOLICITED TENDERS SHOULD BE RETURNED TO THE EXCHANGE AGENT WITHIN THREE NYSE TRADING DAYS AFTER THE EXPIRATION DATE AT THE ADDRESS SET FORTH ON THE BACK COVER OF THE PROSPECTUS. ALL QUESTIONS CONCERNING THE NOTICES OF SOLICITED TENDERS SHOULD BE DIRECTED TO THE INFORMATION AGENT AT THE TELEPHONE NUMBER SET FORTH BELOW. NOTICE MAY BE FAXED TO THE EXCHANGE AGENT AT (212) 815-6213, CONFIRMATION NUMBER (212) 815-6173. ENCLOSE ADDITIONAL PAGES AS NEEDED. BENEFICIAL HOLDERS OF FEWER THAN 10,000 SERIES A PREFERRED SHARES
- ---------------------------------------------------------------------------------------------------------- TENDER SHARES -------------------------------------------------------------- NUMBER OF DTC SHARES PARTICIPANT BENEFICIAL OWNERS TENDERED VOI NUMBER NUMBER - ---------------------------------------------------------------------------------------------------------- Beneficial Owner No. 1 - ---------------------------------------------------------------------------------------------------------- Beneficial Owner No. 2 - ---------------------------------------------------------------------------------------------------------- Beneficial Owner No. 3 - ---------------------------------------------------------------------------------------------------------- Beneficial Owner No. 4 - ---------------------------------------------------------------------------------------------------------- Beneficial Owner No. 5 - ---------------------------------------------------------------------------------------------------------- Beneficial Owner No. 6 - ---------------------------------------------------------------------------------------------------------- Beneficial Owner No. 7 - ---------------------------------------------------------------------------------------------------------- Beneficial Owner No. 8 - ---------------------------------------------------------------------------------------------------------- Beneficial Owner No. 9 - ---------------------------------------------------------------------------------------------------------- Beneficial Owner No. 10 - ---------------------------------------------------------------------------------------------------------- Total - ----------------------------------------------------------------------------------------------------------
5 BENEFICIAL HOLDERS OF 10,000 OR MORE SERIES A PREFERRED SHARES
- ---------------------------------------------------------------------------------------------------------- TENDER SHARES ---------------------------------------------------------- NUMBER OF DTC SHARES PARTICIPANT BENEFICIAL OWNERS TENDERED VOI NUMBER NUMBER - ---------------------------------------------------------------------------------------------------------- Beneficial Owner No. 1 - ---------------------------------------------------------------------------------------------------------- Beneficial Owner No. 2 - ---------------------------------------------------------------------------------------------------------- Beneficial Owner No. 3 - ---------------------------------------------------------------------------------------------------------- Beneficial Owner No. 4 - ---------------------------------------------------------------------------------------------------------- Beneficial Owner No. 5 - ---------------------------------------------------------------------------------------------------------- Beneficial Owner No. 6 - ---------------------------------------------------------------------------------------------------------- Beneficial Owner No. 7 - ---------------------------------------------------------------------------------------------------------- Beneficial Owner No. 8 - ---------------------------------------------------------------------------------------------------------- Beneficial Owner No. 9 - ---------------------------------------------------------------------------------------------------------- Beneficial Owner No. 10 - ---------------------------------------------------------------------------------------------------------- Total - ----------------------------------------------------------------------------------------------------------
All questions as to the validity, form and eligibility (including time of receipt) of Notices of Solicited Tenders will be determined by the Exchange Agent, in its sole discretion, which determination will be final and binding. Neither the Exchange Agent nor any other person will be under any duty to give notification of any defects or irregularities in any Notice of Solicited Tenders or incur any liability for failure to give such notification. 6 The undersigned hereby confirms that: (i) it has complied with the applicable requirements of the Securities Exchange Act of 1934, and the applicable rules and regulations thereunder, in connection with such solicitation; (ii) it is entitled to such compensation for such solicitation under the terms and conditions of the Prospectus (unless the undersigned is not being compensated for such solicitation); (iii) in soliciting tenders of Series A Preferred Shares, it has used no soliciting materials other than those furnished by MBNA or the Trust; and (iv) if it is a foreign broker or dealer not eligible for membership in the NASD, it has agreed to conform to the NASD's Rules of Fair Practice in making solicitations outside the United States to the same extent as though it were a NASD member. - ------------------------------------------------------ ------------------------------------------------------ PRINT FIRM NAME ADDRESS - ------------------------------------------------------ ------------------------------------------------------ AUTHORIZED SIGNATURE CITY, STATE, ZIP CODE - ------------------------------------------------------ ------------------------------------------------------ AREA CODE AND TELEPHONE NUMBER ATTENTION
DO NOT SEND STOCK CERTIFICATES WITH THIS FORM. YOUR STOCK CERTIFICATES MUST BE SENT WITH THE LETTER OF TRANSMITTAL. - -------------------------------------------------------------------------------- SOLICITATION FEE PAYMENT INSTRUCTIONS Issue check to: Name (PLEASE PRINT) Address (INCLUDE ZIP CODE) (TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NO.) - -------------------------------------------------------------------------------- 7 THE INFORMATION AGENT FOR THE OFFER IS: MORROW & CO., INC. 909 Third Avenue 20th Floor New York, New York 10022 (212) 754-8000 (800) 566-9061 (Toll-Free) Banks and Brokerage Firms, Please Call: (800) 662-5200 (Toll-Free) THE DEALER MANAGER FOR THE OFFER IS: MERRILL LYNCH & CO. World Financial Center North Tower -- Seventh Floor New York, New York 10281 (888) ML4-TNDR (Toll-Free) (888) 654-8637 (Toll-Free) THE EXCHANGE AGENT FOR THE OFFER IS: THE BANK OF NEW YORK Tender and Exchange Department 101 Barclay Street New York, NY 10286 (800) 507-9357 EX-99.D 14 FORM OF LETTER TO CLIENTS 1 MBNA CAPITAL C OFFER TO EXCHANGE ITS 8.25% TRUST ORIGINATED PREFERRED SECURITIES(SM) ("TOPRS(SM)") (LIQUIDATION AMOUNT $25 PER PREFERRED SECURITY AND GUARANTEED TO THE EXTENT SET FORTH IN THE PROSPECTUS BY MBNA CORPORATION) FOR ANY AND ALL OUTSTANDING SHARES OF 7.50% CUMULATIVE PREFERRED STOCK, SERIES A (CUSIP 55262L209) OF MBNA CORPORATION - -------------------------------------------------------------------------------- THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, MARCH 26, 1997, UNLESS THE OFFER IS EXTENDED - -------------------------------------------------------------------------------- February 27, 1997 To Our Clients: Enclosed for your consideration are the Prospectus dated February 27, 1997 (the "Prospectus") and the Letter of Transmittal (which together constitute the "Offer") in connection with the Offer by MBNA Capital C, a Delaware statutory business trust (the "Trust"), to exchange its 8.25% Trust Originated Preferred Securities(SM) ("TOPrS(SM)") (the "Preferred Securities"), for any and all shares of 7.50% Cumulative Preferred Stock, Series A (the "Series A Preferred Shares"), of MBNA Corporation, a Maryland corporation ("MBNA"), not owned by MBNA, that are validly tendered and accepted for exchange pursuant to the Offer. In connection with the Offer, MBNA will deposit in the Trust as trust assets its 8.25% Junior Subordinated Deferrable Interest Debentures, Series C, due 2027 as set forth in the Prospectus. Pursuant to the Offer, exchanges will be made on the basis of one Preferred Security for each Series A Preferred Share validly tendered and accepted for exchange in the Offer. The Trust will accept for exchange Series A Preferred Shares validly tendered and not withdrawn, upon the terms and subject to the conditions of the Offer. We are the holder of record of Series A Preferred Shares held for your account. A tender of such Series A Preferred Shares can be made only by us as the holder of record and pursuant to your instructions. The Letter of Transmittal is furnished to you for your information only and cannot be used by you to tender Series A Preferred Shares held by us for your account. We request instructions as to whether you wish us to tender any or all of the Series A Preferred Shares held by us for your account, upon the terms and subject to the conditions set forth in the Prospectus and the Letter of Transmittal. We also request that you designate, in the box captioned "Soliciting Tenders," any Soliciting Dealer who solicited your tender of Series A Preferred Shares. Your attention is called to the following: 1. The Offer and withdrawal rights expire at 12:00 Midnight, New York City time, on Wednesday, March 26, 1997, unless the Offer is extended. - --------------- (SM)"Trust Originated Preferred Securities" and "TOPrS" are service marks of Merrill Lynch & Co. 2 2. Consummation of the Offer is conditioned on, among other things, tenders by a sufficient number of holders of Series A Preferred Shares such that there be at least 400 record or beneficial holders of at least 1,000,000 Preferred Securities to be issued in exchange for such Series A Preferred Shares (the "Minimum Distribution Condition"), which condition may not be waived. 3. The Trust expressly reserves the right, in its sole discretion, subject to applicable law, to (i) terminate the Offer and not accept for exchange any Series A Preferred Shares and promptly return all Series A Preferred Shares upon the failure of any of the conditions specified above and in "The Offer -- Conditions to the Offer" in the Prospectus, (ii) waive any condition to the Offer (other than the Minimum Distribution Condition) and accept all Series A Preferred Shares previously tendered pursuant to the Offer, (iii) extend the Expiration Date of the Offer and retain all Series A Preferred Shares tendered pursuant to such Offer until the Expiration Date, subject, however, to all withdrawal rights of holders, see "The Offer -- Withdrawal of Tenders" in the Prospectus, (iv) amend the terms of the Offer, (v) modify the form of the consideration to be paid pursuant to the Offer, or (vi) not accept for exchange Series A Preferred Shares at any time on or prior to the Expiration Date, for any reason, including, without limitation, if fewer than 100,000 Series A Preferred Shares would remain outstanding upon acceptance of those tendered (which condition may be waived by the Trust). Any amendment applicable to the Offer will apply to all Series A Preferred Shares tendered pursuant to the Offer. The minimum period during which the Offer must remain open following material changes in the terms of the Offer or the information concerning the Offer, other than a change in the amount of Series A Preferred Shares sought for exchange or an increase or decrease in the consideration offered to holders of Series A Preferred Shares, depends upon the facts and circumstances, including the relative materiality of such terms or information. See "The Offer -- Expiration Date; Extensions; Amendments; Termination" in the Prospectus. 4. Tendering shareholders will not pay brokerage fees or commissions, solicitation fees or, subject to Instruction 6 of the Letter of Transmittal, any stock transfer taxes applicable to the exchange of Series A Preferred Shares pursuant to the Offer. Please note that a Question and Answer Pamphlet regarding the Preferred Securities is enclosed for your information. If your wish to have us tender any or all of your Series A Preferred Shares, please so instruct us by completing, executing, detaching and returning to us the instructions form on the detachable part hereof. An envelope to return your instructions to us is enclosed. If you authorize tender of your Series A Preferred Shares, all such Series A Preferred Shares will be tendered unless otherwise specified on the detachable part hereof. Your instructions should be forwarded to us in ample time to permit us to submit a tender on your behalf by the Expiration Date. THE OFFER IS NOT BEING MADE TO, NOR WILL TENDERS BE ACCEPTED FROM OR ON BEHALF OF, HOLDERS OF SERIES A PREFERRED SHARES IN ANY JURISDICTION IN WHICH THE MAKING OF THE OFFER OR ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH THE LAWS OF SUCH JURISDICTION. IN THOSE JURISDICTIONS THE LAWS OF WHICH REQUIRE THAT THE OFFER BE MADE BY A LICENSED BROKER OR DEALER, THE OFFER SHALL BE DEEMED TO BE MADE ON BEHALF OF THE TRUST BY MERRILL LYNCH & CO. OR ONE OR MORE REGISTERED BROKERS OR DEALERS LICENSED UNDER THE LAWS OF SUCH JURISDICTION. 3 INSTRUCTIONS WITH RESPECT TO THE OFFER The undersigned acknowledge(s) receipt of your letter and the enclosed Prospectus dated February 27, 1997 and the Letter of Transmittal in connection with the Offer by the Trust to exchange its Preferred Securities for any and all Series A Preferred Shares of MBNA that are validly tendered and accepted for exchange. Pursuant to the Offer, exchanges will be made on the basis of one Preferred Security for each Series A Preferred Share validly tendered and accepted for exchange in the Offer. This will instruct you to tender the number of Series A Preferred Shares indicated below held by you for the account of the undersigned, upon the terms and subject to the conditions set forth in the Prospectus and the Letter of Transmittal. [ ] By checking this box, all Series A Preferred Shares held by you for our account, including fractional shares, will be tendered in the Offer. If fewer than all Series A Preferred Shares are to be tendered, we have checked the box below and indicated the aggregate number of Series A Preferred Shares to be tendered by you. [ ] shares* - --------------- * Unless otherwise indicated, it will be assumed that all Series A Preferred Shares held by us for your account are to be tendered. SIGN HERE Signature(s):________________________________________________________________ Name(s):_____________________________________________________________________ Address:_____________________________________________________________________ _____________________________________________________________________________ Social Security or Taxpayer ID No.:__________________________________________ Dated:_______________________________________________________________________ (SEE OTHER SIDE) 4 PLEASE DESIGNATE IN THE BOX BELOW ANY SOLICITING DEALER WHO SOLICITED YOUR TENDER. SOLICITED TENDERS The undersigned represents that the Soliciting Dealer who solicited and obtained this tender is: Name of Firm: (Please print) Name of Individual Broker or Financial Consultant: Identification Number (if known): Address: - -------------------------------------------------------------------------------- (Include zip code) SIGN HERE X - ------------------------------------------------- --------------------------------------------------- X - ------------------------------------------------- --------------------------------------------------- Signature(s) Print name(s) and address(es) here Dated ---------------------------
EX-99.E 15 FORM OF EXCHANGE AGENT AGREEMENT 1 EXHIBIT 99(e) ___________, 199__ EXCHANGE AGENT AGREEMENT The Bank of New York Corporate Trust Trustee Administration 101 Barclay Street - 21st Floor New York, New York 10286 Ladies and Gentlemen: ___________________________ (the "Company") proposes to make an offer (the "Exchange Offer") to exchange its ___________________________ (the "Old Securities") for its ___________________________ (the "New Securities"). The terms and conditions of the Exchange Offer as currently contemplated are set forth in a prospectus, dated ___________, 199__ (the "Prospectus"), proposed to be distributed to all record holders of the Old Securities. The Old Securities and the New Securities are collectively referred to herein as the "Securities". The Company hereby appoints The Bank of New York to act as exchange agent (the "Exchange Agent") in connection with the Exchange Offer. References hereinafter to "you" shall refer to The Bank of New York. The Exchange Offer is expected to be commenced by the Company on or about _____________, 199_. The Letter of Transmittal accompanying the Prospectus (or in the case of book entry securities, the ATOP system) is to be used by the holders of the Old Securities to accept the Exchange Offer and contains instructions with respect to the delivery of certificates for Old Securities tendered in connection therewith. The Exchange Offer shall expire at 5:00 P.M., New York City time, on _____________, 199__ or on such later date or time to which the Company may extend the Exchange Offer (the "Expiration Date"). Subject to the terms and conditions set forth in the Prospectus, the Company expressly reserves the right to extend the Exchange Offer from time to time and may extend the Exchange Offer by giving oral (confirmed in writing) or written notice to you before 9:00 A.M., New York City time, on the business day following the previously scheduled Expiration Date. [The Company expressly reserves the right to amend or terminate the Exchange Offer, and not to accept for exchange any Old Securities not theretofore accepted for exchange, upon the occurrence of any of the conditions of the Exchange Offer specified in the Prospectus under the caption ["The Exchange Offer -- Certain Conditions to the Exchange Offer."] The Company will give oral (confirmed in writing) or written notice of any amendment, termination or nonacceptance to you as promptly as practicable.] 2 2 In carrying out your duties as Exchange Agent, you are to act in accordance with the following instructions: 1. You will perform such duties and only such duties as are specifically set forth in the section of the Prospectus captioned ["The Exchange Offer"] or as specifically set forth herein; provided, however, that in no way will your general duty to act in good faith be discharged by the foregoing. 2. You will establish an account with respect to the Old Securities at The Depository Trust Company (the "Book-Entry Transfer Facility") for purposes of the Exchange Offer within two business days after the date of the Prospectus, and any financial institution that is a participant in the Book-Entry Transfer Facility's systems may make book-entry delivery of the Old Securities by causing the Book-Entry Transfer Facility to transfer such Old Securities into your account in accordance with the Book-Entry Transfer Facility's procedure for such transfer. 3. You are to examine each of the Letters of Transmittal and certificates for Old Securities (or confirmation of book-entry transfer into your account at the Book-Entry Transfer Facility) and any other documents delivered or mailed to you by or for holders of the Old Securities to ascertain whether: (i) the Letters of Transmittal and any such other documents are duly executed and properly completed in accordance with instructions set forth therein and (ii) the Old Securities have otherwise been properly tendered. In each case where the Letter of Transmittal or any other document has been improperly completed or executed or any of the certificates for Old Securities are not in proper form for transfer or some other irregularity in connection with the acceptance of the Exchange Offer exists, you will endeavor to inform the presenters of the need for fulfillment of all requirements and to take any other action as may be necessary or advisable to cause such irregularity to be corrected. 4. With the approval of the President, Senior Vice President, Executive Vice President, or any Vice President of the Company (such approval, if given orally, to be confirmed in writing) or any other party designated by such an officer in writing, you are authorized to waive any irregularities in connection with any tender of Old Securities pursuant to the Exchange Offer. 5. Tenders of Old Securities may be made only as set forth in the Letter of Transmittal and in the section of the Prospectus captioned ["The Exchange Offer -- Procedures for Tendering Old Securities"], and Old Securities shall be considered properly tendered to you only when tendered in accordance with the procedures set forth therein. Notwithstanding the provisions of this paragraph 5, Old Securities which the President, Senior Vice President, Executive Vice President, or any Vice President of the Company shall approve 3 3 as having been properly tendered shall be considered to be properly tendered (such approval, if given orally, shall be confirmed in writing). 6. You shall advise the Company with respect to any Old Securities received subsequent to the Expiration Date and accept its instructions with respect to disposition of such Old Securities. 7. You shall accept tenders: (a) in cases where the Old Securities are registered in two or more names only if signed by all named holders; (b) in cases where the signing person (as indicated on the Letter of Transmittal) is acting in a fiduciary or a representative capacity only when proper evidence of his or her authority so to act is submitted; and (c) from persons other than the registered holder of Old Securities provided that customary transfer requirements, including any applicable transfer taxes, are fulfilled. You shall accept partial tenders of Old Securities where so indicated and as permitted in the Letter of Transmittal and deliver certificates for Old Securities to the transfer agent for split-up and return any untendered Old Securities to the holder (or such other person as may be designated in the Letter of Transmittal) as promptly as practicable after expiration or termination of the Exchange Offer. 8. Upon satisfaction or waiver of all of the conditions to the Exchange Offer, the Company will notify you (such notice if given orally, to be confirmed in writing) of its acceptance, promptly after the Expiration Date, of all Old Securities properly tendered and you, on behalf of the Company, will exchange such Old Securities for New Securities and cause such Old Securities to be cancelled. Delivery of New Securities will be made on behalf of the Company by you at the rate of $1,000 principal amount of New Securities for each $1,000 principal amount of the corresponding series of Old Securities tendered promptly after notice (such notice if given orally, to be confirmed in writing) of acceptance of said Old Securities by the Company; provided, however, that in all cases, Old Securities tendered pursuant to the Exchange Offer will be exchanged only after timely receipt by you of certificates for such Old Securities (or confirmation of book-entry transfer into your account at the Book-Entry Transfer Facility), a properly completed and duly executed Letter of Transmittal (or facsimile thereof) with any required signature guarantees and any other required documents. You shall issue New Securities only in denominations of $1,000 or any integral multiple thereof. 9. Tenders pursuant to the Exchange Offer are irrevocable, except that, subject to the terms and upon the con- 4 4 ditions set forth in the Prospectus and the Letter of Trans mittal, Old Securities tendered pursuant to the Exchange Offer may be withdrawn at any time prior to the Expiration Date. 10. The Company shall not be required to exchange any Old Securities tendered if any of the conditions set forth in the Exchange Offer are not met. Notice of any decision by the Company not to exchange any Old Securities tendered shall be given (and confirmed in writing) by the Company to you. 11. If, pursuant to the Exchange Offer, the Company does not accept for exchange all or part of the Old Securities tendered because of an invalid tender, the occurrence of certain other events set forth in the Prospectus under the caption ["The Exchange Offer -- Certain Conditions to the Exchange Offer"] or otherwise, you shall as soon as practicable after the expiration or termination of the Exchange Offer return those certificates for unaccepted Old Securities (or effect appropriate book-entry transfer), together with any related required documents and the Letters of Transmittal relating thereto that are in your possession, to the persons who deposited them. 12. All certificates for reissued Old Securities, unaccepted Old Securities or for New Securities shall be forwarded by (a) first-class certified mail, return receipt requested under a blanket surety bond protecting you and the Company from loss or liability arising out of the non-receipt or non-delivery of such certificates or (b) by registered mail insured separately for the replacement value of each of such certificates. 13. You are not authorized to pay or offer to pay any concessions, commissions or solicitation fees to any broker, dealer, bank or other persons or to engage or utilize any person to solicit tenders. 14. As Exchange Agent hereunder you: (a) shall have no duties or obligations other than those specifically set forth herein or as may be subsequently agreed to in writing by you and the Company; (b) will be regarded as making no representations and having no responsibilities as to the validity, sufficiency, value or genuineness of any of the certificates or the Old Securities represented thereby deposited with you pursuant to the Exchange Offer, and will not be required to and will make no representation as to the validity, value or genuineness of the Exchange Offer; (c) shall not be obligated to take any legal action hereunder which might in your reasonable judgment involve any expense or liability, unless you shall have been furnished with reasonable indemnity; 5 5 (d) may reasonably rely on and shall be protected in acting in reliance upon any certificate, instrument, opinion, notice, letter, telegram or other document or security delivered to you and reasonably believed by you to be genuine and to have been signed by the proper party or parties; (e) may reasonably act upon any tender, statement, request, comment, agreement or other instrument whatsoever not only as to its due execution and validity and effectiveness of its provisions, but also as to the truth and accuracy of any information contained therein, which you shall in good faith believe to be genuine or to have been signed or represented by a proper person or persons; (f) may rely on and shall be protected in acting upon written or oral instructions from any officer of the Company; (g) may consult with your counsel with respect to any questions relating to your duties and responsibilities and the advice or opinion of such counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted to be taken by you hereunder in good faith and in accordance with the advice or opinion of such counsel; and (h) shall not advise any person tendering Old Securities pursuant to the Exchange Offer as to the wisdom of making such tender or as to the market value or decline or appreciation in market value of any Old Securities. 15. You shall take such action as may from time to time be requested by the Company or its counsel (and such other action as you may reasonably deem appropriate) to furnish copies of the Prospectus, Letter of Transmittal and the Notice of Guaranteed Delivery (as defined in the Prospectus) or such other forms as may be approved from time to time by the Company, to all persons requesting such documents and to accept and comply with telephone requests for information relating to the Exchange Offer, provided that such information shall relate only to the procedures for accepting (or withdrawing from) the Exchange Offer. The Company will furnish you with copies of such documents at your request. All other requests for information relating to the Exchange Offer shall be directed to the Company, Attention:_____________. 16. You shall advise by facsimile transmission or telephone, and promptly thereafter confirm in writing to ___________________ of the Company and such other person or persons as it may request, daily (and more frequently during the week immediately preceding the Expiration Date and if otherwise requested) up to and including the Expiration Date, as to the number of Old Securities which have been tendered pursuant to the Exchange Offer and the items received by you pursuant to this Agreement, separately reporting and giving cumulative totals as to items properly received and items improperly received. In addition, you will also inform, and cooperate in making available to, the Company 6 6 or any such other person or persons upon oral request made from time to time prior to the Expiration Date of such other information as it or he or she reasonably requests. Such cooperation shall include, without limitation, the granting by you to the Company and such person as the Company may request of access to those persons on your staff who are responsible for receiving tenders, in order to ensure that immediately prior to the Expiration Date the Company shall have received information in sufficient detail to enable it to decide whether to extend the Exchange Offer. You shall prepare a final list of all persons whose tenders were accepted, the aggregate principal amount of Old Securities tendered, the aggregate principal amount of Old Securities accepted and deliver said list to the Company. 17. Letters of Transmittal and Notices of Guaranteed Delivery shall be stamped by you as to the date and the time of receipt thereof and shall be preserved by you for a period of time at least equal to the period of time you preserve other records pertaining to the transfer of securities. You shall dispose of unused Letters of Transmittal and other surplus materials by returning them to the Company. 18. You hereby expressly waive any lien, encumbrance or right of set-off whatsoever that you may have with respect to funds deposited with you for the payment of transfer taxes by reasons of amounts, if any, borrowed by the Company, or any of its subsidiaries or affiliates pursuant to any loan or credit agreement with you or for compensation owed to you hereunder. 19. For services rendered as Exchange Agent hereunder, you shall be entitled to such compensation as set forth on Schedule I attached hereto. 20. You hereby acknowledge receipt of the Prospectus and the Letter of Transmittal and further acknowledge that you have examined each of them. Any inconsistency between this Agreement, on the one hand, and the Prospectus and the Letter of Transmittal (as they may be amended from time to time), on the other hand, shall be resolved in favor of the latter two documents, except with respect to the duties, liabilities and indemnification of you as Exchange Agent, which shall be controlled by this Agreement. 21. The Company covenants and agrees to indemnify and hold you harmless in your capacity as Exchange Agent hereunder against any loss, liability, cost or expense, including attorneys' fees and expenses, arising out of or in connection with any act, omission, delay or refusal made by you in reliance upon any signature, endorsement, assignment, certificate, order, request, notice, instruction or other instrument or document reasonably believed by you to be valid, genuine and sufficient and in accepting any tender or effecting any transfer of Old Securities reasonably believed by you in good faith to be authorized, and in delaying or refusing in good faith to accept any tenders or effect any transfer of Old Securities; provided, however, that the Company 7 7 shall not be liable for indemnification or otherwise for any loss, liability, cost or expense to the extent arising out of your gross negligence or willful misconduct. In no case shall the Company be liable under this indemnity with respect to any claim against you unless the Company shall be notified by you, by letter or cable or by facsimile confirmed by letter, of the written assertion of a claim against you or of any other action commenced against you, promptly after you shall have received any such written assertion or notice of commencement of action. The Company shall be entitled to participate at its own expense in the defense of any such claim or other action, and, if the Company so elects, the Company shall assume the defense of any suit brought to enforce any such claim. In the event that the Company shall assume the defense of any such suit, the Company shall not be liable for the fees and expenses of any additional counsel thereafter retained by you so long as the Company shall retain counsel satisfactory to you to defend such suit. 22. You shall arrange to comply with all requirements under the tax laws of the United States, including those relating to missing Tax Identification Numbers, and shall file any appropriate reports with the Internal Revenue Service. The Company understands that you are required to deduct 31% on payments to holders who have not supplied their correct Taxpayer Identification Number or required certification. Such funds will be turned over to the Internal Revenue Service in accordance with applicable regulations. 23. You shall deliver or cause to be delivered, in a timely manner to each governmental authority to which any transfer taxes are payable in respect of the exchange of Old Securities, your check in the amount of all transfer taxes so payable, and the Company shall reimburse you for the amount of any and all transfer taxes payable in respect of the exchange of Old Securities; provided, however, that you shall reimburse the Company for amounts refunded to you in respect of your payment of any such transfer taxes, at such time as such refund is received by you. 24. This Agreement and your appointment as Exchange Agent hereunder shall be construed and enforced in accordance with the laws of the State of New York applicable to agreements made and to be performed entirely within such state, and without regard to conflicts of law principles, and shall inure to the benefit of, and the obligations created hereby shall be binding upon, the successors and assigns of each of the parties hereto. 25. This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. 26. In case any provision of this Agreement shall be invalid, illegal or unenforceable, the validity, legality and 8 8 enforceability of the remaining provisions shall not in any way be affected or impaired thereby. 27. This Agreement shall not be deemed or construed to be modified, amended, rescinded, cancelled or waived, in whole or in part, except by a written instrument signed by a duly authorized representative of the party to be charged. This Agreement may not be modified orally. 28. Unless otherwise provided herein, all notices, requests and other communications to any party hereunder shall be in writing (including facsimile or similar writing) and shall be given to such party, addressed to it, at its address or telecopy number set forth below: 9 9 If to the Company: --------------------------- --------------------------- --------------------------- Facsimile: ------------------ Attention: ------------------ If to the Exchange Agent: The Bank of New York 101 Barclay Street Floor 21 West New York, New York 10286 Facsimile: (212) 815-5915 Attention: Corporate Trust Trustee Administration 29. Unless terminated earlier by the parties hereto, this Agreement shall terminate 90 days following the Expiration Date. Notwithstanding the foregoing, Paragraphs 19, 21 and 23 shall survive the termination of this Agreement. Upon any termination of this Agreement, you shall promptly deliver to the Company any certificates for Securities, funds or property then held by you as Exchange Agent under this Agreement. 30. This Agreement shall be binding and effective as of the date hereof. 10 10 Please acknowledge receipt of this Agreement and confirm the arrangements herein provided by signing and returning the enclosed copy. CORPORATION - --------------- By: ------------------------------ Name: Title: Accepted as of the date first above written: THE BANK OF NEW YORK, as Exchange Agent By: ------------------------------ Name: Title: 11 SCHEDULE I FEES EX-99.F 16 FORM OF INFORMATION AGENT AGREEMENT 1 EXHIBIT 99(f) Date Contact Company Address Dear _________________: This letter will serve as the agreement under which you will retain us to act as Information Agent in connection with your Tender Offer to shareholders of ________________. The services we will perform on your behalf will include the consultation and preparation in connection with your Offer, the delivery of material to brokers, banks, nominees and institutions, and holders of record, acting as Information Agent in connection with your Offer, receiving calls from shareholders, and telephoning holders of record and non-objecting beneficial owners (NOBOs). For the above services our fee will be $_______. One half the fee ($_______) is earned and due upon the signing of this agreement; in addition, an advance against disbursements of $_________ is due as well. The balance of our fee will be payable upon the initial expiration of the Offer. Additional disbursements incurred by us on your behalf will be payable monthly or upon the expiration of the Offer. Included in our disbursements will be our charges for the telephone solicitation of holders of record and non-objecting beneficial owners (NOBOs). Our charge for this service will be $5.00 per shareholder, such charge will include labor, directory assistance and all related telephone expenses. This agreement covers the period from ___________ through _________. Thereafter, this agreement may be extended for a monthly fee of $__________. You shall retain Morrow & Co. for the production and placement of all advertising copy approved by you or your legal counsel for use relating to the tender offer. The rates charged by Morrow & Co. to you will be the regular open-line rates charged by the selected newspaper for the section the advertisement runs in. You recognize that the material to be published is your sole property and is not the opinion of Morrow & Co. All advertising shall be at your sole authorization and instruction. 2 2 You agree to indemnify and hold us harmless against any loss, damage, expense (including reasonable legal fees and expenses), liability or claim relating to or arising out of our performance of this agreement except where we, or our employees fail to comply with this agreement; provided, however, that you shall not be obliged to indemnify us or hold us harmless against any such loss, damage, expense, liability, or claim, which results from gross negligence, bad faith or willful misconduct on our part or of any of our employees. At your election you may assume the defense of any such action. We shall advise you in writing of any such liability or claim promptly after receipt of any notice of any action or claim for which we may be entitled to indemnification hereunder. This agreement shall be construed and enforced in accordance with the laws of the State of New York and shall inure to the benefit of, and the obligations created hereby shall be binding upon, the successors and assigns of the parties hereto. If any provision of this agreement shall be held illegal, invalid or unenforceable by any court, this agreement shall be construed and enforced as if that provision had not been contained herein and shall be deemed an agreement among us to the full extent permitted by applicable law. For a service charge of $5.00 per check, we will process and prepare checks for Broker/Nominee invoices submitted for their mailing of your materials. A statement listing each of the Broker/Nominee invoices will be furnished by us for your review and payment. Please acknowledge receipt of this agreement and confirm the arrangements herein provided by signing and returning the enclosed copy to the undersigned, whereupon this agreement and your acceptance of the terms and conditions herein provided shall constitute a binding agreement among us. Accepted: Very truly yours, --------------- MORROW & CO., INC. By: By: ------------------------ ---------------------- Title: Title: ---------------------- -------------------- Date: ----------------------- 3 2/10/97 Page 3 - -------------------------------------------------------------------------------- MORROW & COMPANY, INC. 909 THIRD AVENUE ACCOUNTING DEPT. - 20TH FLOOR NEW YORK, NY 10022-4799 Date: - ------------- No. - --------------- TO: - -------------------------------------------------------------------------------- - ---------- RE: --------------------- One half the fee due and payable as per agreement dated . - ---------------- $ ------------ Advance against disbursements. $ ------------ AMOUNT DUE $ 4 2/10/97 Page 4 - -------------------------------------------------------------------------------- EX-99.G 17 FORM OF LETTER TO HOLDERS OF SERIES A PREF. STOCK 1 [MBNA LOGO] February 27, 1997 Dear Preferred Stockholder: A special purpose trust (the "Trust") formed by MBNA Corporation ("MBNA") is offering to exchange its 8.25% Trust Originated Preferred Securities (the "Preferred Securities") for any and all shares of 7.50% Cumulative Preferred Stock, Series A (the "Series A Preferred Shares"), of MBNA. The exchange will be made on the basis of one Preferred Security for one Series A Preferred Share. Enclosed for your consideration are a Prospectus dated February 27, 1997 (the "Prospectus") and a Letter of Transmittal (collectively, the "Offer"). These enclosures contain detailed information concerning the Offer, including its terms and conditions, its purpose, the procedures for tendering Series A Preferred Shares in exchange for Preferred Securities and information relating to certain tax consequences of exchanging Series A Preferred Shares for Preferred Securities under the Offer. Please read the enclosed information carefully before deciding whether or not you wish to tender your Series A Preferred Shares for exchange. Subject to the terms and conditions of the Offer, all of the Series A Preferred Shares that are properly tendered (and are not withdrawn) will be exchanged for Preferred Securities. In reviewing the enclosed material, please bear in mind the following: - The Offer and withdrawal rights will expire at 12:00 Midnight, New York City time, on Wednesday, March 26, 1997, unless the Offer is extended. The Bank of New York, as exchange agent (the "Exchange Agent") must receive the certificates representing your Series A Preferred Shares and the Letter of Transmittal (or the Notice of Guaranteed Delivery, if applicable) by that time. - The exchange of Series A Preferred Shares for Preferred Securities under the Offer is a taxable transaction under present United States federal income tax laws. In addition, your ownership and disposition of Preferred Securities may have different tax consequences than your ownership and disposition of Series A Preferred Shares. You should consult your own tax advisor regarding the tax consequences to you of the exchange and the ownership and disposition of Preferred Securities, including the application and effect of United States federal, state, local and foreign tax laws. - Consummation of the Offer is conditioned on, among other things, tenders by a sufficient number of holders of Series A Preferred Shares such that there be at least 400 record or beneficial holders of at least 1,000,000 Preferred Securities to be issued in exchange for such Series A Preferred Shares, which condition may not be waived. Although MBNA's Board of Directors (the "Board") has authorized the Offer, neither the Board nor MBNA makes any recommendation as to whether you should tender all or any of your Series A Preferred Shares for exchange in the Offer. You should make your own decision as to whether to tender Series A Preferred Shares and, if so, how many Series A Preferred Shares to tender. The offer makes good economic sense for MBNA. Replacing the Series A Preferred Shares with Preferred Securities will improve MBNA's after-tax cash flow. The cash flow benefit arises because interest payable by MBNA to the Preferred Securities' trust is deductible for federal income tax purposes, while the dividends payable by MBNA on the Series A Preferred Shares are not. I encourage you to read the enclosed materials carefully. If, after reviewing the information set forth in the Prospectus and Letter of Transmittal, you wish to tender Series A Preferred Shares for exchange in the 2 Offer, please either follow the instructions contained in the Prospectus and Letter of Transmittal or contact your broker, dealer, commercial bank, trust company or other nominee to effect the tender for you. If you need additional information or assistance in connection with the Offer, please contact the Information Agent, Morrow & Co., Inc., whose toll-free telephone number is (800) 566-9061, or the Dealer Manager, whose telephone number is set forth on the back cover of the Prospectus. Very truly yours, /s/ VERNON H.C. WRIGHT Vernon H.C. Wright Executive Vice President and Chief Corporate Finance Officer EX-99.H 18 FORM OF QUESTIONS & ANSWERS RE: PREF. SECURITIES 1 EXCHANGE OFFER QUESTIONS & ANSWERS [MBNA LOGO] 2 QUESTIONS AND ANSWERS RELATING TO THE OFFER (THE "OFFER") BY MBNA CAPITAL C (THE "TRUST") TO EXCHANGE ITS 8.25% TRUST ORIGINATED PREFERRED SECURITIES(SM) ("TOPRS(SM)") (THE "PREFERRED SECURITIES") FOR ANY AND ALL SHARES OF 7.50% CUMULATIVE PREFERRED STOCK, SERIES A (THE "SERIES A PREFERRED SHARES"), OF MBNA CORPORATION ("MBNA") - -------------------------------------------------------------------------------- THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, MARCH 26, 1997, UNLESS THE OFFER IS EXTENDED - -------------------------------------------------------------------------------- Please note that the following information does not purport to be complete and is subject in all respects to the provisions of, and is qualified in its entirety by reference to, the Prospectus dated February 27, 1997 (the "Prospectus") and the accompanying Letter of Transmittal (which together constitute the "Offer"). Please refer to the Prospectus for details of the Offer and defined terms used herein. Q: WHAT ARE THE TERMS OF THE OFFER? A: The Trust will exchange one Preferred Security for each Series A Preferred Share validly tendered and accepted for exchange. See "The Offer" in the Prospectus. Q: WHAT ARE PREFERRED SECURITIES? A: Preferred Securities represent undivided beneficial ownership interests in the Trust's assets, which assets consist solely of 8.25% Junior Subordinated Deferrable Interest Debentures, Series C, due April 15, 2027 (the "Junior Subordinated Debentures") issued by MBNA to the Trust. Preferred Securities pay quarterly distributions corresponding to the interest rate and the payment dates on the Junior Subordinated Debentures. See "Description of the Preferred Securities" and "Description of the Junior Subordinated Debentures" in the Prospectus. Q: WHAT IS THE PURPOSE OF THE OFFER? A: The principal purpose is to refinance the Series A Preferred Shares with the Preferred Securities to achieve certain tax efficiencies and to preserve flexibility with respect to future financing. The refinancing will permit MBNA to deduct interest payable on the Junior Subordinated Debentures for United States federal income tax purposes, while the dividends payable on the Series A Preferred Shares are not deductible. Q: WILL THE PREFERRED SECURITIES BE LISTED ON THE NEW YORK STOCK EXCHANGE? A: MBNA will apply to list the Preferred Securities on the New York Stock Exchange under the ticker symbol "KRB.PF.C". Q: HOW ARE THE PREFERRED SECURITIES GUARANTEED? A: Payments of dividends on the Preferred Securities and on liquidation or redemption are guaranteed on a subordinated basis by MBNA, but only if and to the extent payments have been made on the Junior Subordinated Debentures. See "Description of the Preferred Securities Guarantee" in the Prospectus. - --------------- (SM )"Trust Originated Preferred Securities" and "TOPrS" are service marks of Merrill Lynch & Co. 3 Q: ARE THE REDEMPTION PROVISIONS OF THE PREFERRED SECURITIES DIFFERENT FROM THOSE OF THE SERIES A PREFERRED SHARES? A: Yes. While the Series A Preferred Shares have no maturity date, the Preferred Securities will be redeemed following repayment of the Junior Subordinated Debentures upon their maturity, which will be April 15, 2027, unless (i) shortened to a date not earlier than January 15, 2002, or (ii) extended to a date not later than April 15, 2046, in each case subject to certain conditions (as so shortened or extended, the "Stated Maturity"). In addition, the Series A Preferred Shares are redeemable at the option of MNBA in whole or in part at any time on or after January 15, 2001 at a redemption price equal to $25 per Series A Preferred Share, plus accrued and unpaid dividends to the date fixed for redemption. The Junior Subordinated Debentures are redeemable, in whole or in part, at the option of MBNA on or after January 15, 2002 at a redemption price equal to 100% of the aggregate principal amount thereof or (ii) in whole but not in part, prior to January 15, 2002, upon the occurrence of a Special Event at a redemption price equal to 106.0% of the principal amount thereof from the Expiration Date through January 15, 1998, declining ratably on each January 16th thereafter to 100% on or after January 16, 2000, plus, in either case, accrued and unpaid distributions to the date of redemption. If the Junior Subordinated Debentures are redeemed by MBNA, the Trust must redeem Preferred Securities on a pro rata basis with an aggregate liquidation amount equal to the aggregate principal amount of the Junior Subordinated Debentures so redeemed. See "Risk Factors and Special Considerations Relating to the Offer," "Comparison of Preferred Securities and Series A Preferred Shares," "Description of the Preferred Securities," and "Description of the Junior Subordinated Debentures" in the Prospectus. DISTRIBUTION AND DIVIDEND MATTERS Q: HOW DOES THE DISTRIBUTION RATE ON THE PREFERRED SECURITIES COMPARE TO THE DIVIDEND RATE ON THE SERIES A PREFERRED SHARES? A: The distribution rate on the Preferred Securities is 8.25% per annum, while the dividend rate for the Series A Preferred Shares is 7.50% per annum. Q: WILL DISTRIBUTIONS ON THE PREFERRED SECURITIES BE PAID ON THE SAME SCHEDULE AS DIVIDENDS ON THE SERIES A PREFERRED SHARES? A: Yes. Distributions on the Preferred Securities will be paid on January 15, April 15, July 15 and October 15. Q: THE NEXT SCHEDULED DIVIDEND PAYMENT DATE ON THE SERIES A PREFERRED SHARES IS APRIL 15, 1997. WILL THE AMOUNT OF THAT DIVIDEND ON SERIES A PREFERRED SHARES THAT ARE EXCHANGED IN THE OFFER BE PAID TO EXCHANGING HOLDERS FOR THE PERIOD PRIOR TO THE EXCHANGE? A: Yes. On April 15, 1997 MBNA will make a cash payment to each holder of Series A Preferred Shares accepted for exchange in an amount equal to all of the accumulated and unpaid dividends on such Series A Preferred Shares as of the Expiration Date (the "MBNA Cash Payment Amount"), except that if the Expiration Date is extended so that it occurs after the record date for the payment of dividends on the Series A Preferred Shares and prior to April 15, 1997, then MBNA will not pay the MBNA Cash Payment Amount, but instead on April 15, 1997 will pay full quarterly dividends on the Series A Preferred Shares accepted for exchange to the registered holder thereof on such record date. See "Description of the Preferred Securities -- Distributions" in the Prospectus. Q: EXPLAIN THE 20 QUARTER DIVIDEND DEFERRAL PROVISION OF THE PREFERRED SECURITIES. A: Quarterly interest payments on the Junior Subordinated Debentures may be deferred, at the option of MBNA, for one or more periods of up to 20 consecutive quarters each, provided that an Extension Period may not extend beyond the Stated Maturity of the Junior Subordinated Debentures. In the case of any such deferral, distributions on the Preferred Securities will be similarly deferred. See "Description of the Preferred Securities -- Distributions" in the Prospectus. Quarterly dividend payments on the Series A Preferred Shares 4 are payable only if declared by MBNA's Board of Directors and such dividends may be deferred indefinitely. The Series A Preferred Shares have no maturity date. Deferred Preferred Securities distributions continue to accrue and, if in arrears, compound quarterly at a rate equal to 8.25% per annum. However, while dividends on the Series A Preferred Shares accrue if dividends are suspended, there is no such compounding feature. During such a deferral, the Trust will continue to accrue interest income (as original issue discount) in respect of the Junior Subordinated Debentures which will be taxable to beneficial owners of Preferred Securities. As a result, beneficial owners of Preferred Securities during such a deferral will be required to include their pro rata share of the interest in gross income in advance of the receipt of cash attributable to such income. Dividends on the Series A Preferred Shares generally are not included in gross income by a holder until such dividends are paid or accrued in accordance with such holder's regular method of tax accounting. TAX ISSUES Q: WILL THE EXCHANGE OF PREFERRED SECURITIES FOR SERIES A PREFERRED SHARES CONSTITUTE A TAXABLE EVENT? A: Yes. MBNA recommends that each holder read the section entitled "Certain United States Federal Income Tax Consequences" in the Prospectus and consult their own tax advisor. Q: WHAT WILL BE THE INITIAL TAX BASIS FOR THE PREFERRED SECURITIES? A: The initial tax basis of Preferred Securities acquired in the Offer will be equal to the fair market value of the Preferred Securities on the Expiration Date of the Offer. See "Certain United States Federal Income Tax Consequences" in the Prospectus. Q: HOW WILL DISTRIBUTIONS ON THE PREFERRED SECURITIES BE REPORTED TO THE IRS? A: Distributions on the Preferred Securities will be reported on a Form 1099. Q: CORPORATE HOLDERS CAN CLAIM THE DIVIDENDS RECEIVED DEDUCTION ON DIVIDENDS ON THE SERIES A PREFERRED SHARES. ARE DISTRIBUTIONS ON THE PREFERRED SECURITIES ELIGIBLE FOR THAT DEDUCTION? A: No. PROCEDURES FOR EXCHANGING SERIES A PREFERRED SHARES Q: IF SERIES A PREFERRED SHARES ARE REGISTERED IN MY NAME, HOW DO I PARTICIPATE IN THE OFFER? A: You should have received a package consisting of this Question and Answer sheet and the following documents: - Letter from the Executive Vice President and Chief Corporate Finance Officer of MBNA. - Prospectus dated February 27, 1997. - Letter of Transmittal (printed on blue paper) bearing a pre-printed label with your account name and address. 5 - Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9. - Notice of Guaranteed Delivery. - Return envelope addressed to The Bank of New York, the Exchange Agent in the Offer. If, after reviewing these materials carefully, you decide to participate in the Offer, complete the Letter of Transmittal and send it with your certificate(s) representing Series A Preferred Shares to The Bank of New York, as Exchange Agent, at either of the addresses shown on the Letter of Transmittal. It is recommended that you use registered or certified mail. Holders of record may also contact their broker to exchange their Series A Preferred Shares on their behalf. If you cannot deliver your certificate(s) to the Exchange Agent before the Expiration Date, then you must arrange for your broker to guarantee delivery of your Series A Preferred Shares. See "The Offer -- Procedures for Tendering" in the Prospectus. Q: IF MY SERIES A PREFERRED SHARES ARE HELD BY A BROKER OR BANK FOR MY ACCOUNT, HOW DO I PARTICIPATE IN THE OFFER? A: If your Series A Preferred Shares are held by a broker or bank for your account, you should have received a package from them as holder of record containing, along with this Question and Answer sheet, the following: - Letter from the Executive Vice President and Chief Corporate Finance Officer of MBNA. - Prospectus dated February 27, 1997. - Letter of Transmittal (for information only). - Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9. - Notice of Guaranteed Delivery. - Cover letter or notice from your broker or bank. If you decide to participate in the Offer, you must contact your broker or bank to tender your Series A Preferred Shares on your behalf. See "The Offer -- Procedures for Tendering -- Special Procedure for Beneficial Owners" in the Prospectus. Q: ONCE I HAVE TENDERED MY SERIES A PREFERRED SHARES, OR INSTRUCTED MY BROKER OR BANK TO TENDER THEM ON MY BEHALF, MAY I WITHDRAW THEM FROM THE OFFER? A: Yes, tenders of Series A Preferred Shares may be withdrawn at any time prior to the Expiration Date and, unless accepted for exchange by the Trust, may be withdrawn at any time after 40 business days from the date of the Prospectus. See "The Offer -- Withdrawal of Tenders" in the Prospectus. Q: WHEN DOES THE OFFER EXPIRE? A: At 12:00 midnight, New York City time, on Wednesday, March 26, 1997, unless extended by the Trust. The Trust may also amend or terminate the Offer as described in the Prospectus. FOR ADDITIONAL DETAILS, OR IF YOU HAVE ANY QUESTIONS, PLEASE CALL THE INFORMATION AGENT, MORROW & CO., INC. (800) 566-9061 (TOLL-FREE) OR BANKS AND BROKERAGE FIRMS, PLEASE CALL: (800) 662-5200 (TOLL-FREE) EX-99.I 19 FORM OF NOTICE OF OFFER TO EXCHANGE 1 THIS IS NEITHER AN OFFER TO EXCHANGE OR SELL NOR A SOLICITATION OF AN OFFER TO EXCHANGE OR BUY ANY OF THESE SECURITIES. THE OFFER IS MADE ONLY BY THE PROSPECTUS AND THE LETTER OF TRANSMITTAL AND THE OFFER IS NOT BEING MADE TO, NOR WILL TENDERS BE ACCEPTED FROM OR ON BEHALF OF, HOLDERS OF THE SECURITIES IN ANY JURISDICTION IN WHICH THE MAKING OR ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH THE SECURITIES OR BLUE SKY LAWS OF SUCH JURISDICTION. IN ANY JURISDICTION WHERE THE SECURITIES OR BLUE SKY LAWS REQUIRE THE OFFER TO BE MADE BY A LICENSED BROKER OR DEALER, THE OFFER IS BEING MADE ON BEHALF OF THE TRUST BY MERRILL LYNCH & CO. OR ONE OR MORE OTHER BROKERS OR DEALERS WHICH ARE LICENSED UNDER THE LAWS OF SUCH JURISDICTION. NOTICE OF EXCHANGE OFFER TO HOLDERS OF [MBNA LOGO] SHARES OF 7.50% CUMULATIVE PREFERRED STOCK, SERIES A MBNA Capital C, a Delaware statutory business trust (the "Trust"), is offering, upon the terms and subject to the conditions set forth in its Prospectus dated February 27, 1997 (the "Prospectus") and the accompanying Letter of Transmittal (the "Letter of Transmittal" which, together with the Prospectus, constitute the "Offer"), to exchange its 8.25% Trust Originated Preferred Securities(SM) ("TOPrS(SM)") (the "Preferred Securities") for any and all shares of 7.50% Cumulative Preferred Stock, Series A (the "Series A Preferred Shares"), of MBNA Corporation, a Maryland corporation ("MBNA"), not owned by MBNA. Exchanges will be made on the basis of one Preferred Security for each Series A Preferred Share validly tendered and accepted for exchange in the Offer. In connection with the Offer, MBNA will deposit in the Trust as trust assets its 8.25% Junior Subordinated Debentures, Series C, due 2027, as set forth in the Prospectus. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, MARCH 26, 1997, UNLESS THE OFFER IS EXTENDED. NONE OF MBNA, THE BOARD OF DIRECTORS OF MBNA, THE TRUSTEES OR THE TRUST MAKES ANY RECOMMENDATION TO HOLDERS OF SERIES A PREFERRED SHARES AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING IN THE OFFER. HOLDERS OF SERIES A PREFERRED SHARES ARE URGED TO CONTACT THEIR FINANCIAL AND TAX ADVISORS IN MAKING THEIR DECISION ON WHAT ACTION TO TAKE IN LIGHT OF THEIR OWN PARTICULAR CIRCUMSTANCES. Upon the terms and subject to the conditions of the Offer described in the Prospectus, the Trust will accept for exchange Series A Preferred Shares validly tendered and not withdrawn prior to 12:00 midnight, New York City time, on Wednesday, March 26, 1997, or if the Offer is extended by the Trust, in its sole - --------------- (SM) "Trust Originated Preferred Securities" and "TOPrS" are service marks of Merrill Lynch & Co. 2 discretion, the latest date and time to which the Offer has been extended (the "Expiration Date"). Tenders of Series A Preferred Shares pursuant to the Offer may be withdrawn at any time prior to the Expiration Date and, unless accepted for exchange by the Trust, may be withdrawn at any time after 40 business days after the date of the Prospectus. 3 Consummation of the Offer is conditioned on, among other things, tenders by a sufficient number of holders of Series A Preferred Shares such that, as of the Expiration Date, there be at least 400 record or beneficial owners of at least 1,000,000 Preferred Securities to be issued in exchange for such Series A Preferred Shares (the "Minimum Distribution Condition"), which condition may not be waived. The Trust expressly reserves the right, in its sole discretion, subject to applicable law, to (i) terminate the Offer, and not accept for exchange any Series A Preferred Shares and promptly return all Series A Preferred Shares upon the failure of any of the conditions specified above or in "The Offer -- Conditions to the Offer" in the Prospectus, (ii) waive any condition to the Offer (other than the Minimum Distribution Condition) and accept all Series A Preferred Shares previously tendered pursuant to the Offer, (iii) extend the Expiration Date of the Offer and retain all Series A Preferred Shares tendered pursuant to the Offer until the Expiration Date, subject, however, to all withdrawal rights of holders, see "The Offer -- Withdrawal of Tenders" in the Prospectus, (iv) amend the terms of the Offer, (v) modify the form of the consideration to be paid pursuant to the Offer or (vi) not accept for exchange Series A Preferred Shares at any time on or prior to the Expiration Date, for any reason, including, without limitation, if fewer than 100,000 Series A Preferred Shares would remain outstanding upon acceptance of those tendered (which condition may be waived by the Trust). Any amendment applicable to the Offer will apply to all Series A Preferred Shares tendered pursuant to the Offer. The minimum period during which the Offer must remain open following material changes in the terms of the Offer or the information concerning the Offer, other than a change in the percentage of securities sought or the price, depends upon the facts and circumstances, including the relative materiality of such terms or information. See "The Offer -- Expiration Date; Extensions; Amendments; Termination" in the Prospectus. The purpose of the Offer is to refinance the Series A Preferred Shares with the Preferred Securities to achieve certain tax efficiencies while preserving MBNA's flexibility with respect to future financing. The Prospectus and Letter of Transmittal contain important information which should be read before any action is taken by holders of Series A Preferred Shares. Tenders may be made only by a properly completed and executed Letter of Transmittal and in conformance with the terms thereof and of the Prospectus. The information contained in the Prospectus, the Letter of Transmittal and the other offering documents is hereby incorporated in this notice by reference. MBNA will pay to Soliciting Dealers (as defined in the Prospectus) designated by the record or beneficial owner, as appropriate, of Series A Preferred Shares a solicitation fee of $0.50 per Series A Preferred Share ($0.25 per Series A Preferred Share with respect to the solicitation of beneficial holders of 10,000 or more shares) validly tendered and accepted for exchange pursuant to the Offer, subject to certain conditions. Soliciting Dealers are not entitled to a solicitation fee for Series A Preferred Shares beneficially owned by such Soliciting Dealer. The information required to be disclosed by paragraph (d)(1) of Rule 13e-4 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended, is contained in the Prospectus and is incorporated herein by reference. The Prospectus and the related Letter of Transmittal are first being sent to holders of Series A Preferred Shares on February 27, 1997, and are being furnished to brokers, dealers, banks and similar persons whose names, or names of whose nominees, appear on the lists of holders of the Series A Preferred Shares or, if applicable, who are listed as participants in a clearing agency's security position listing for subsequent transmittal to beneficial owners of Series A Preferred Shares. Any questions or requests for assistance may be directed to the Information Agent and the Dealer Manager at the addresses and telephone numbers set forth below. Requests for copies of the Prospectus, the Letter of Transmittal or the Notice of Guaranteed Delivery may be directed to Morrow & Co., Inc., the Information Agent, at (800) 566-9061, and copies will be forwarded promptly at MBNA's expense. Shareholders may also contact their broker, dealer, commercial bank or trust company for assistance concerning the Offer. 4 THE INFORMATION AGENT FOR THE OFFER IS: MORROW & CO., INC. 909 Third Avenue 20th Floor New York, New York 10022 (212) 754-8000 (800) 566-9061 (Toll-Free) Banks and Brokerage Firms, Please Call: (800) 662-5200 (Toll-Free) THE DEALER MANAGER FOR THE OFFER IS: MERRILL LYNCH & CO. World Financial Center North Tower-Seventh Floor New York, New York 10281 (888) ML4-TNDR (Toll-Free) (888) 654-8637 (Toll-Free) February 27, 1997 -----END PRIVACY-ENHANCED MESSAGE-----