Bank of America Corporation Filed Pursuant to Rule 424 (b)(2)
Registration No. 333-51367
Pricing Supplement No. 230
(To Prospectus dated May 21, 1998
and Prospectus Supplement dated November 16, 1998)
Senior Medium-Term Notes, Series H
Due Nine Months or More From Date of Issue
BANK OF AMERICA CORPORATION
0.25% SERIES H SENIOR BASKET-INDEXED NOTES DUE 2006
(CALLABLE EXCHANGEABLE NOTES LINKED TO THE PERFORMANCE OF A
BASKET CONTAINING COMMON SHARES OF 7 HIGH TECHNOLOGY COMPANIES)
Principal Amount: $ 18,275,000
Issue Price: 100% $ 18,275,000
Commission or Discount: 0% $ 0
Proceeds to Corporation: 100% $ 18,275,000
Securities Offered: Bank of America Corporation 0.25% Series H
Senior Basket-Indexed Notes Due 2006 (the
"Notes"). The Notes are a series of Debt
Securities issued under the terms of the
Senior Indenture described in the Prospectus
and are Senior Debt Securities of Bank of
America Corporation (the "Corporation").
Agent: Banc of America Securities LLC
Cusip #: 06050M-AC-1
Form: Book-entry only.
Pricing Date: August 30, 1999
Settlement Date: September 7, 1999
Original Issue Date: September 7, 1999
Stated Maturity Date: The Notes will mature on September 7,
2006, unless we have exercised the Call
Feature or you have exercised the Exchange
Right.
Termination Date: The date on which the Termination Principal
Repayment occurs, which may be on the Stated
Maturity Date or on an earlier date if we
have
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exercised the Call Feature or you have
exercised the Exchange Right, and subject to
adjustment for the occurrence of certain
Non-Trading Days. See "Description of the
Notes -- Market Disruption."
Face Amount: $1,000
Offering Price: $1,000
Minimum Subscription: $100,000 and integral multiples of
$1,000 in excess thereof.
Interest Payments: The Notes will bear interest from
September 7, 1999, at the rate of 0.25% of
the Face Amount per annum in arrears until
the Termination Date, unless you have
exercised your Exchange Right, in which case
interest will accrue only until the last
Interest Payment Date that precedes the date
on which you notify us that you wish to
exercise your Exchange Right. Interest will
be payable semi-annually on each March 7th
and September 7th, commencing March 7, 2000
(each an "Interest Payment Date"). Interest
will be computed on the basis of the actual
number of days elapsed over a 360-day year of
twelve 30-day months. Each payment of
interest on an Interest Payment Date will
include interest accrued through, but not
including, such Interest Payment Date. If we
have called the Notes and you do not exercise
your Exchange Right, then on the Termination
Date you will receive interest accrued from,
and including, the most recent Interest
Payment Date through, but not including, the
Termination Date. See "Description of the
Notes-- Interest Payments."
Termination Principal
Repayment: If the Termination Date is prior to the Stated
Maturity Date, then on the Termination Date
you will receive the Face Amount of the Note,
unless you have exercised your Exchange
Right. If you have exercised your Exchange
Right, then you will receive cash equal to
the Exchange Value. If the Notes are neither
called by us nor exchanged by you, then on
the Stated Maturity Date you will
automatically receive cash equal to the
greater of (1) the Face Amount or (2) the
Exchange Value. See "Description of the
Notes Termination Principal Repayment."
Exchange Value: For each Face Amount of $1,000, the Exchange
Value will equal 8.163265 Basket Units
multiplied by the Termination Date Value of 1
Basket Unit.
Underlying Security: The Basket Unit.
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Basket Unit: A portfolio of the publicly traded common shares
of 7 high technology companies (each, a
"Basket Company") as listed and
share-weighted in Schedule I. The number of
common shares of each Basket Company included
in the Basket Unit is referred to as the
"Basket Composition". The Basket Composition
is subject to adjustment as a result of
certain dilution events. See "Description of
the Notes--Dilution Adjustments;
Reorganization Events."
Termination Date Value: The arithmetic average of the values of
the Basket Unit over the 5 Trading Days
during the Valuation Period (except when the
Termination Date is the Stated Maturity Date,
in which case there will be only 1 Trading
Day during the Valuation Period). For each
Trading Date during the Valuation Period, the
value of the Basket Unit will equal the
sum-product of (1) the Closing Prices of the
common shares of each of the Basket Companies
multiplied by (2) the number of common shares
of each of the Basket Companies contained in
the Basket Unit.
Valuation Period: The 5 Trading Days (each, a "Valuation Date")
prior to the Termination Date, except when
the Termination Date is the Stated Maturity
Date, in which case there will be only one
Valuation Date, August 30, 2006. The
Valuation Dates are subject to adjustment for
the occurrence of certain Non-Trading Days.
See "Description of the Notes -- Market
Disruption."
Conversion Price: $122.50
Current Price: $100.00
Conversion Ratio: 8.163265 Basket Units, equal to the Face
Amount of the Note divided by the Conversion
Price of $122.50.
Call Feature.
May we redeem the
Notes prior to maturity? Yes. On any Business Day on or after
August 30, 2002, we may notify you that we
intend to redeem the Notes, in whole but not
in part, at the Face Amount (plus accrued and
unpaid interest, if any), effective on the
date that is 15 calendar days after the date
of such announcement (the "Call Feature").
Exchange Right.
Do you have the right to
require that the Notes be
repaid prior to maturity? No, but on any Business Day on or
after August 30, 2001 (but not on or after
August 30, 2006), you may notify us that you
wish to exchange the Notes into cash equal to
the Exchange Value,
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effective on the date
that is 6 Trading Days after the date of such
notification (the "Exchange Right").
Listing: Application will be made to list the Notes on the New
York Stock Exchange. No assurance can be
given that this application will be accepted.
The application will specify the Transfer
Restrictions listed below.
Transfer Restrictions: The Notes may only be transferred in
minimum denominations of $100,000 and in
increments of $1,000 in excess thereof.
Calculation Agent: Banc of America Securities LLC ("BAS")
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RISK FACTORS
As described in more detail below, the trading price of the
Notes may vary considerably prior to the Stated Maturity Date
due, among other things, to fluctuations in the price of the
common shares included in the Basket Unit (the "Basket Shares"),
distributions with respect to the Basket Shares, interest rate
levels and other events that are difficult to predict and beyond
our control. Prospective investors should reach an investment
decision only after carefully considering with their advisors the
suitability of an investment in the Notes in light of their
particular circumstances.
Principal Repayment At Termination May Be Limited To Face
Amount of the Notes. The Conversion Price of the Basket Unit
($122.50) exceeds the Current Price of the Basket Unit ($100.00)
by 22.5%. The Termination Principal Repayment will not be more
than the Face Amount of the Note unless the Termination Date
Value of the Basket Unit is higher than the Conversion Price.
This will be true even if the value of a Basket Unit is higher
than the Conversion Price at some time during the life of the
Notes but later falls below the Conversion Price.
Your Yield May Be Lower Than The Yield On A Standard Debt
Security Of Comparable Maturity. The Termination Principal
Repayment, in addition to the interest payments received on and
prior to the Termination Date, may be less than the return you
could earn on other investments, such as a standard senior
callable debt security issued by us with the same maturity date.
Your investment may not reflect the full opportunity cost to you
when you consider the effect of factors that affect the time
value of money.
Factors Affecting The Trading Value of the Notes. The
market value of the Notes will be affected by the price of the
Basket Shares (and therefore the value of the Basket Unit), the
dividend distributions made to holders of Basket Shares during
the term of the Notes, the level of interest rates and by a
number of other factors. Some of these factors are interrelated
in complex ways. As a result, the effect of any one factor may
be offset or magnified by the effect of another factor. The
following paragraphs describe the expected impact on the market
value of the Notes given a change in one specific factor,
assuming all other conditions remain constant. Nonetheless, it
is important for you to understand that the impact of one of the
factors specified below, such as an increase in interest rates,
may offset some or all of any increase in the trading value of
the Notes attributable to another factor, such as an increase in
the value of the Basket Unit.
Basket Shares. The market value of the Notes will depend
substantially on the price of the Basket Shares. If you
choose to sell your Notes when the value of the Basket Unit
is below the Conversion Price, you may receive less than the
$1,000 Face Amount per Note. It is impossible to predict
whether or to what extent the price of the Basket Shares
will rise or fall. Trading prices of the Basket Shares will
be influenced by the operational results, creditworthiness
and dividend rates of the Basket Companies, and by complex
factors that affect the capital markets generally, the
markets on which the Basket Shares are traded and the market
segments of which the Basket Companies are a part. See "The
Basket Companies" and the publicly available documents that
are referred to in that
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section. Such factors include, but are not limited to, market interest
and yield rates, and the term to maturity of the Notes.
Distributions (Dividends) to Holders of the Basket Shares.
An increase in dividend yields (i.e., the amount of
dividends per Basket Unit divided by the value of a Basket
Unit), when viewed by itself, may be expected to reduce the
trading value of the Notes, and vice versa.
Interest Rates. We expect that the trading value of the
Notes will be affected by changes in interest rates. In
general, if U.S. interest rates increase, we expect that the
trading value of the Notes will decrease. If U.S. interest
rates decrease, we expect the trading value of the Notes
will increase. In addition, interest rates may also affect
the economy which, in turn, will impact the price of the
Basket Shares.
Volatility of the Basket Unit. Volatility is the term used
to describe the size and frequency of market fluctuations.
If the volatility of the value of the Basket Unit increases,
we expect that the trading value of the Notes will increase.
If the volatility of the value of the Basket Unit decreases,
we expect that the trading value of the Notes will decrease.
Time Remaining to Maturity. The Notes may trade at a value
above that which would be expected based on the level of
interest rates and the value of the Basket Unit. This
difference will reflect a "time premium" due to the Exchange
Right. As the time remaining to maturity of the Notes
decreases, however, we expect that this time premium will
decrease.
The Corporation's Credit Ratings. Real or anticipated
changes in our credit ratings may affect the market value of
the Notes.
In general, assuming all relevant factors are held constant,
we expect that the effect on the trading value of the Notes
of a given change in most of the factors listed above will
be less if it occurs later in the term of the Notes than if
it occurs earlier in the term of the Notes, except that no
such generalization can be made with respect to the effect
on the trading value of the Notes of a given increase in the
value of the Basket Unit.
No Stockholder's Rights. You will not be entitled to any
rights with respect to any of the Basket Shares (including,
without limitation, voting rights and rights to receive any
dividends or other distributions in respect thereof).
Potential Conflicts. We have the right to appoint and
remove Calculation Agents. BAS is a subsidiary of us, the issuer
of the Notes. BAS also has been appointed to act as Calculation
Agent for the Notes. Under certain circumstances, BAS's role as
our subsidiary and its responsibilities as Calculation Agent for
the Notes could give rise to conflicts of interests. You should
be aware that because the Calculation Agent is controlled by us,
potential conflicts of interest could arise.
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Our Hedging Activities. Certain hedging activities by us or
one or more of our affiliates may potentially affect the price of
the Basket Shares and, accordingly, increase or decrease the
value of the Notes. From time to time after the initial offering
and prior to the maturity of the Notes, depending on market
conditions (including the market price of the Basket Shares), we
expect that we or one or more of our affiliates may increase or
decrease our initial hedging positions using dynamic hedging
techniques and may take long or short positions in any or all of
the Basket Shares, in listed or over-the-counter options
contracts in, or other derivative or synthetic instruments
related to, the Basket Shares. In addition, we or one or more of
our affiliates may purchase or otherwise acquire a long or short
position in the Notes from time to time and may, in our sole
discretion, hold or resell such Notes. To the extent that we or
one or more of our affiliates have a long hedge position in any
or all of the Basket Shares or options contracts in, or other
derivative or synthetic instruments related to, any or all of the
Basket Shares, we or one or more of our affiliates may liquidate
a portion of our positions at or about the time of the
Termination Date of the Notes. Depending, among other things, on
future market conditions, the aggregate amount and the
composition of such positions are likely to vary over time.
Although we have no reason to believe that any such activities
will have a material impact on the price of the Basket Shares,
there can be no assurance that our activities or those of one or
more of our affiliates will not affect such prices.
Dilution of Basket Shares; Partial Tender or Exchange
Offers. The Basket Composition is subject to adjustment for
certain events arising from share splits and combinations, share
distributions, extraordinary cash distributions and certain other
actions of any of the Basket Companies that modify its capital
structure. See "Description of the Notes--Dilution Adjustments;
Reorganization Events." The Basket Composition is not adjusted
for other events, such as an equity offering by any of the Basket
Companies, that may adversely affect the price of such Basket
Shares and thereby adversely affect the price of Notes. There
can be no assurance that the Basket Companies will not make
offerings of Basket Shares in the future or as to the amount of
such offerings, if any. Additionally, the Termination Principal
Repayment is not adjusted for certain events such as the
occurrence of a partial tender or exchange offer for Basket
Shares by a Basket Company or any third party, which may affect
the market value of the Notes.
No Affiliation Between the Corporation and The Basket
Companies. We are not affiliated with any of the Basket
Companies, and believe that we have no direct knowledge of any
event that would have a material adverse effect on any of the
Basket Companies or on the price of the Basket Shares. None of
the Basket Companies are involved in the offering of Notes, and
none of them have any obligations with respect to the Notes,
including any obligation to take the needs of you or us into
consideration for any reason. None of the Basket Companies will
receive any of the proceeds of the offering of the Notes made
hereby, and none of them are responsible for or have participated
in the determination of the timing of, prices for, or quantities
of, the Notes to be issued or in the determination or calculation
of the Termination Principal Repayment. None of the Basket
Companies are involved with the administration, marketing or
trading of the Notes, and none of them have any obligations with
respect to the Termination Principal Repayment to be paid to you.
Possible Illiquidity of the Secondary Market. Although
application will be made to
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list the Notes on the New York Stock Exchange, it is not possible to
predict how the Notes will trade in the secondary market or whether
such market will be liquid or illiquid. Such liquidity may be affected
by the requirement that the Notes be traded in lots no smaller than
$100,000. Although the Agent intends under ordinary market conditions to
indicate prices on the Notes on request, there can be no assurance at
which price such a bid would be made. The price given, if any,
will be affected by many factors including, but not limited to,
the prices of the Basket Shares, the volatilities of the Basket
Shares, the dividend yields of the Basket Shares, the general
level of interest rates, the time to maturity and our cost of
unwinding any related hedging activity or any funding
arrangement.
State Law Limits on Interest Paid. New York State laws
govern the Senior Indenture under which the Notes are being
issued. New York has certain usury laws that limit the amount of
interest that can be charged and paid on loans, which includes
debt securities like the Notes. Under present New York law, the
maximum rate of interest is 25% per annum on a simple interest
basis. This limit may not apply to debt securities in which
$2,500,000 or more has been invested. While we believe that New
York law would be given effect by a state or Federal court
sitting outside of New York, many other states also have laws
that regulate the amount of interest that may be charged to and
paid by a borrower. We promise, for your benefit and to the
extent permitted by law, not to voluntarily claim the benefits of
any laws concerning usurious rates of interest.
Tax Consequences. Investors should consider the tax
consequences of investing in the Notes. No statutory, judicial
or administrative authority directly addresses the
characterization of the Notes or instruments similar to the Notes
for United States federal income tax purposes. As a result,
significant aspects of the United States federal income tax
consequences of an investment in the Notes are not certain. No
ruling is being requested from the Internal Revenue Service (the
"Service") with respect to the Notes and no assurance can be
given that the IRS will agree with the conclusions expressed
herein. See "Certain United States Federal Income Tax
Considerations" in this Pricing Supplement and "United States
Taxation" in the Prospectus Supplement.
THE BASKET COMPANIES
According to publicly available documents, each of the
Basket Companies is subject to the informational requirements of
the Securities Exchange Act of 1934, as amended. Accordingly,
each of the Basket Companies files reports, proxy statements and
other information with the Securities and Exchange Commission.
Copies of such reports, proxy statements and other information
may be inspected and copied at certain offices of the SEC at the
addresses listed under "Available Information" in the
accompanying Prospectus. To the best of our knowledge, based
upon currently available public documents, as of the date of this
Pricing Supplement, each of the Basket Companies are eligible to
use Form S-3 under the Securities Act of 1933, as amended, for
securities offerings.
This Pricing Supplement relates only to the Notes offered
hereby and does not relate to the Basket Companies. All
disclosures contained in this Pricing Supplement regarding the
Basket Companies are derived from the publicly available
documents described in the preceding
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paragraph. Neither we nor the Agent has participated in the preparation
of such documents, verified either the accuracy or the completeness of the
information concerning the Basket Companies included therein or
made any due diligence inquiry with respect to the Basket
Companies in connection with the offering of the Notes. Thus,
there can be no assurance that all events occurring prior or
subsequent to the date hereof (including events that would affect
the accuracy or completeness of the publicly available documents
described in the preceding paragraph) that would affect the
trading price of any of the Basket Shares have been or will be
publicly disclosed and neither we nor the Agent makes any
representation as to the accuracy or completeness of such
documents. Because the Termination Principal Repayment is
related to the trading price of the Basket Shares, such events,
if any, would also affect the trading price of the Notes. We do
not intend to furnish to you subsequent information with respect
to the Basket Companies. Neither we, the Agent, nor any of our
respective affiliates makes any representation to you as to the
performance of any of the Basket Shares.
We or one or more of our affiliates may currently or from
time to time engage in business with one or more of the Basket
Companies including the extension of loans, the making of equity
investments or the provision of advisory services, including
merger and acquisition advisory services. In the course of such
business, we or our affiliates may acquire non-public information
with respect to one or more of the Basket Companies, none of
which will be available to you. One or more of our affiliates
may publish research reports with respect to one or more of the
Basket Companies; and those reports might be expected to have an
impact on the trading value of the common shares of those
companies.
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DESCRIPTION OF THE NOTES
General
The Notes are medium-term notes to be issued as part of a
series of Debt Securities under the Senior Indenture, which is
more fully described in the accompanying Prospectus and
Prospectus Supplement. The following description of the terms of
the Notes supplements, and to the extent inconsistent with the
Prospectus and the Prospectus Supplement replaces, the
description of the general terms and provisions of the Notes and
Debt Securities under the headings "Description of Notes" in the
Prospectus Supplement and "Description of Debt Securities" in the
Prospectus. The Notes are "Senior Debt Securities" as defined in
the Prospectus. Capitalized terms not otherwise defined below
have the meanings as defined in the accompanying Prospectus and
Prospectus Supplement.
The aggregate Face Amount of Notes to be issued will be
$18,275,000. The Corporation in the future may, however,
"reopen" the issue of Notes and issue additional Notes at a later
time or issue additional Debt Securities or other securities with
terms similar to those of the Notes, and such issuances may
affect the trading value of the Notes.
Notes will be issued in book-entry form only. Except under
limited circumstances described in the accompanying Prospectus
and Prospectus Supplements, Notes in certificated form will not
be issued.
The Face Amount of each Note will be $1,000. The Notes will
mature on September 7, 2006, unless the Corporation has exercised
the Call Feature or the holder has exercised the Exchange Right.
The Termination Date will be the date on which the Termination
Principal Repayment occurs.
Interest Payments
The Notes will bear interest from September 7, 1999, at the
rate of 0.25% of the Face Amount per annum in arrears until the
Termination Date, unless the holder has exercised its Exchange
Right, in which case interest will accrue only until the last
Interest Payment Date that precedes the date on which the holder
notifies the Corporation that it wishes to exercise its Exchange
Right. Interest will be payable semi-annually on each March 7th
and September 7th, commencing March 7th, 2000 (each an "Interest
Payment Date"). Interest will be computed on the basis of the
actual number of days elapsed over a 360-day year of twelve
30-day months. Each payment of interest on an Interest Payment
Date will include interest accrued through but not including such
Interest Payment Date. If the Notes are called by the
Corporation and the holder does not exercise its Exchange Right,
then on the Termination Date the holder shall receive interest
accrued from and including the most recent Interest Payment Date
through but not including the Termination Date. The interest
payable on each Note on each Interest Payment Date will, subject
to certain exceptions provided in the Senior Indenture described
in the Prospectus, be paid to the person in whose name such Note
is registered on the close of business on the Regular Record Date
(as defined in the Prospectus Supplement).
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Termination Principal Repayment
If the Termination Date is prior to the Stated Maturity
Date, then on the Termination Date the holder will receive the
Face Amount of the Note, unless the holder has exercised the
Exchange Right, in which case the holder will receive cash equal
to the Exchange Value. If the Notes are neither called by the
Corporation nor exchanged by the holder, then on the Stated
Maturity Date the holder will automatically receive cash equal to
the greater of (1) the Face Amount or (2) the Exchange Value.
For each Face Value of $1,000, the Exchange Value shall
equal 8.163265 Basket Units multiplied by the Termination Date
Value of one (1) Basket Unit. The Termination Date Value will be
the arithmetic average of the values of the Basket Unit over the
5 Trading Days during the Valuation Period (except when the
Termination Date is the Stated Maturity Date, in which case there
will be only 1 Trading Day during the Valuation Period). For
each Trading Date during the Valuation Period, the value of the
Basket Unit will equal the sum-product of (1) the Closing Prices
of the common shares of each of the Basket Companies multiplied
by (2) the number of common shares of each of the Basket
Companies that are contained in the Basket Unit. The Valuation
Period shall consist of the 5 Trading Days prior to the
Termination Date, except when the Termination Date is the Stated
Maturity Date, in which case there will be only one Valuation
Date, August 30, 2006. The Valuation Period and the Termination
Date are subject to adjustment upon the occurrence of certain
Non-Trading Days. See "Description of the Notes--Market
Disruption."
Call Feature
On any Business Day on or after August 30, 2002, the
Corporation may notify the holders of the Notes that it intends
to call the Notes, in whole but not in part, at the Face Amount
(plus any accrued and unpaid interest) on the date that is 15
calendar days after the date of such announcement.
Exchange Right
On any Business Day on or after August 30, 2001 (but not on
or after August 30, 2006), the holders of the Notes may notify
the Corporation that they wish to exchange the Notes into cash
equal to the Exchange Value effective on the date that is 6
Trading Days after the date of such notification.
Additional Definitions
The "Closing Price" of any security on any date of
determination means (a) the closing price or last reported price
of such security on the New York Stock Exchange ("NYSE") on such
date or (b) if such security is not listed for trading on the
NYSE, the last quoted bid price of such security on such other
national securities exchange or association that is the primary
market for the trading of such security. For the purposes of any
calculations that may be required under "Description of the Notes
- -- Dilution Adjustments; Reorganization Events," the price
referred in
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clause (b) above will be the average of the closing bid price and the
closing offer price.
A "Trading Day" is defined as a Business Day on which the
security the Closing Price of which is being determined (a) is
not suspended from trading on any national securities exchange or
association at the close of business and (b) has traded at least
once on the national securities exchange or association that is
the primary market for the trading of such security.
"Business Day" with respect to the Notes means any day that
is not a Saturday, a Sunday or a day on which the New York Stock
Exchange, the American Stock Exchange, NASDAQ, any other national
securities exchange, or banking institutions or trust companies
in New York, New York or Charlotte, North Carolina are authorized
or obligated by law or executive order to close.
Termination Principal Repayment-Examples
The following table illustrates, for a range of hypothetical
Termination Date Values of the Basket Unit, (1) the total amount
payable at maturity for each $1,000 Face Amount of Notes and (2)
the pre-tax annualized rate of return to holders of Notes:
Termination Total Annualized
Current Date Conversion Exchange Principal Rate of
Value Value Ratio Value Repayment Return*
- -------- ------------ ---------- -------- --------- ----------
100.00 55.00 8.163265 448.98 1000.00 0.25%
100.00 77.50 8.163265 632.65 1000.00 0.25%
100.00 100.00 8.163265 816.33 1000.00 0.25%
100.00 122.50 8.163265 1000.00 1000.00 0.25%
100.00 145.00 8.163265 1183.67 1183.67 2.65%
100.00 167.50 8.163265 1367.35 1367.35 4.74%
100.00 190.00 8.163265 1551.02 1551.02 6.58%
100.00 212.50 8.163265 1734.69 1734.69 8.22%
100.00 235.00 8.163265 1918.37 1918.37 9.71%
100.00 257.50 8.163265 2102.04 2102.04 11.08%
100.00 280.00 8.163265 2285.71 2285.71 12.34%
100.00 302.50 8.163265 2469.39 2469.39 13.51%
100.00 325.00 8.163265 2653.06 2653.06 14.60%
100.00 347.50 8.163265 2836.73 2836.73 15.62%
* Calculated on a semi-annual basis, assumes that the Termination Date is
the Stated Maturity Date and includes the interest payments of 0.25% per
annum payable semi-annually.
Market Disruption
If any Valuation Date is not a Trading Day (a "Non-Trading
Day"), then the Valuation Period will be extended to include as
many Trading Days as are necessary so that the Valuation Period
contains 5 Trading Days. In such event, the Termination Date
will also be extended until the first Business Day following the
last day of the extended Valuation Period. If the Termination
Date is the Stated Maturity Date and the Valuation Date (August
30, 2006) is a Non-Trading Day, then the Valuation Date will be
the next Trading Day. In the event that none
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of the days beginning on the Valuation Date and ending on the day before the
Stated Maturity Date are Trading Days, then the Stated Maturity
Date will not be extended and the Calculation Agent will be
solely responsible for the determination of the Termination Date
Value of the Basket Unit.
Dilution Adjustments; Reorganization Events
The Basket Composition is subject to adjustment if one or
more of the Basket Companies, with respect to its common shares:
(1) distributes additional common shares (as to each
Basket Company, its "Common Shares"),
(2) subdivides or splits the number of outstanding
Common Shares,
(3) consolidates its outstanding Common Shares into a
smaller number of Common Shares,
(4) issues any Common Shares by reclassification of
its other shares (other than a reclassification upon a
Reorganization Event described below),
(5) issues rights or warrants to all holders of Common
Shares entitling them to subscribe for or purchase
additional Common Shares at a price per unit less than the
market price of the Common Shares (other than rights to
purchase Common Shares pursuant to a plan for the
reinvestment of distributions or interest) or
(6) pays a dividend or makes a distribution to all
holders of Common Shares or evidences of its indebtedness or
other assets (including without limitation, an Extraordinary
Cash Dividend (as defined below) or a spin-off, but
excluding (A) any dividends or distributions referred to in
clause (1) above, (B) any Common Shares issued pursuant to a
reclassification referred to in clause (4) above or (C) any
cash dividends other than any Extraordinary Cash Dividends
(as defined below)) or issues, to all holders of Common
Shares, rights or warrants to subscribe for or purchase any
of its securities (other than those referred to in clause
(5) above).
In the case of the events referred to in clauses (1), (2),
(3) and (4) above, the Basket Composition shall be adjusted so
that the holder of a Note will be entitled to receive, upon
exercise of the Exchange Right, cash equal to the Exchange Value
that is calculated based on the number of Common Shares (or, in
the case of a reclassification referred to in clause (4) above,
the number of Common Shares issued pursuant thereto) that the
holder would have owned or been entitled to receive immediately
following such event had the Exchange Right been exercised
immediately prior to such event or any record date with respect
thereto.
In the case of the event referred to in clause (5) above,
the Basket Composition shall be adjusted by multiplying the
number of Basket Company Common Shares immediately prior to the
ex-date of the issuance of the rights or warrants referred to in
clause (5) above by the fraction
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described in the next 2 sentences. The numerator will be the sum of
(A) the number of Basket Company Common Shares outstanding on the
ex-date of the issuance of such rights or warrants, plus (B) the number of
additional Basket Company Common Shares offered for subscription
or purchase pursuant to such rights or warrants. The denominator
will be the sum of (A) the number of Basket Company Common Shares
outstanding on the ex-date of the issuance of such rights or
warrants, plus (B) the number of additional Basket Company Common
Shares equal in value to the aggregate offering price of the
total number of such rights or warrants, based on the market
price of the Basket Company Common Shares. This market price
will be the Closing Price per share of Basket Company Common
Shares on the Trading Day immediately prior to the ex-date of the
issuance of such rights or warrants; provided, however, that if
none of the 20 calendar days prior to such date are a Trading
Day, then such market price shall be determined by the
Calculation Agent. To the extent that Common Shares are not
delivered after the expiration of such rights or warrants, the
Basket Composition shall be readjusted to reflect the number of
Common Shares actually delivered.
In the case of the event referred to in clause (6) above,
the Basket Composition will be adjusted by multiplying the number
of Basket Company Common Shares (in effect on the ex-date with
respect to such dividend or distribution referred to in clause
(6) above) by the fraction described in the next 3 sentences.
The numerator will be the market price of the Basket Company
Market Shares on the ex-date for the determination of
stockholders entitled to receive the dividend or distribution
referred to in clause (6) above. The market price will be the
Closing Price per share of Basket Company Common Shares on the
Trading Day immediately prior to such ex-date; provided, however,
that if none of the 20 calendar days prior to such ex-date are a
Trading Day, then such market price will be determined by the
Calculation Agent. The denominator will be such market price per
share of Basket Company Market Shares less the fair market value
(as determined by the Calculation Agent) as of such ex-date of
the portion of the assets or evidences of indebtedness so
distributed or of such subscription rights or warrants applicable
to one share of Basket Company Market Shares.
An "Extraordinary Cash Dividend" will mean, for any one-year
period, all cash distributions on the Basket Company Market
Shares during such period to the extent the distributions exceed,
on a per share basis, 10% of the average Closing Prices of the
Basket Company Market Shares over such period (less any such
distributions for which an adjustment to the number of Basket
Company Common Shares in the Basket Unit was previously made).
All adjustments to the Conversion Ratio will be calculated to the
nearest 1/10,000th of a Basket Company Common Share (or, if there
is not a nearest 1/10,000th of a share, to the next lower
1/10,000th of a share). In the case of the reclassification of
any Basket Company Common Shares into any equity interest of the
Basket Company other than the number of Basket Company Common
Shares in the Basket Unit, such equity interest shall be deemed
Basket Company Common Shares solely to determine the number of
Basket Company Common Shares in the Basket Unit. Each such
adjustment to the Basket Composition shall be made successively.
In the event of (A) any consolidation or merger of either a
Basket Company or any surviving entity or subsequent surviving
entity of such Basket Company (a "Basket Company Successor"),
with or into another entity (other than a merger or consolidation
in which the Basket Company is the continuing corporation and in
which the Basket Company Common Shares
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outstanding immediately prior to the merger or consolidation are not
exchanged for cash, securities or other property of the Basket Company
or another corporation or limited partnership), (B) any sale, transfer,
lease or conveyance to another corporation of the property of the
Basket Company or any Basket Company Successor as an entirety or
substantially as an entirety, (C) any statutory exchange of
securities of the Basket Company or any Basket Company Successor
with another corporation or limited partnership (other than in
connection with a merger or acquisition) or (D) any liquidation,
dissolution or winding up of the Basket Company or any Basket
Company Successor (any such event, a "Reorganization Event"),
each holder of Notes will receive on the Termination Date, an
Exchange Value based upon an adjusted valuation of the Basket
Unit. For the purpose of calculating the value of the affected
Basket Company Common Shares, such value will be adjusted to
reflect: (1) for any cash received in any such Reorganization
Event, the amount of cash received per unit of Basket Company
Common Shares, (2) for any property other than cash or securities
received in any such Reorganization Event, an amount equal to the
market value on the Termination Date of such property received
per share of Basket Company Common Shares as determined by the
Calculation Agent and (3) for any securities received in any such
Reorganization Event, an amount equal to the average Closing
Price per share of such securities during the Valuation Period
(subject to adjustment as provided under "Description of Notes
Market Disruption Event") multiplied by the number of such
securities received for each share of Basket Company Common
Shares. For the purpose of clause (3), Closing Price will be the
last quoted bid price for any security that is not traded on the
NYSE.
No adjustments will be made for certain other events, such
as an offering of Basket Company Common Shares by a Basket
Company for cash or in connection with acquisitions.
The Calculation Agent shall, within ten Business Days
following the occurrence of an event that requires an adjustment
to the Basket Composition or the occurrence of a Reorganization
Event (or, in either case, if the Calculation Agent is not aware
of such occurrence, as soon as practicable after becoming so
aware), provide written notice to the Trustee and to each holder
of the Notes of the occurrence of such event including a
statement in reasonable detail describing the method by which the
adjustment to the Basket Composition or change in the
consideration to be received by holders of the Notes following
the Reorganization Event was determined and the revised Basket
Composition or consideration, as the case may be.
Except as otherwise provided herein, the Calculation Agent
will be solely responsible for the determination and calculation
of (and the determination of any method for calculating) the
Basket Composition and any dividends, distributions, numbers of
shares, other securities or other property or assets (including
cash) in connection with any of the events described in this
section ("Dilution Adjustments; Reorganization Events"), and its
determinations and calculations will be conclusive.
Events of Default and Acceleration
In case an Event of Default, as defined in the Senior
Indenture, with respect to the Notes will have occurred and is
continuing, the holders may direct the Senior Trustee to
accelerate the maturity of the Notes. The amount payable to a
holder of the Notes upon any acceleration
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permitted under the Senior Indenture will be equal to: (1) the Face
Amount of the Notes (which shall be paid to such holder in cash), unless such
holder exercises the Exchange Right, in which case such holder
will receive the Exchange Value plus (2) an additional amount, if
any, of interest calculated to the date of payment of the Face
Amount. See "Description of the Notes Interest Payments."
Same-Day Settlement and Payment
The Notes will be delivered in book-entry form only through
The Depositary Trust Company against payment by purchasers of the
Notes in immediately available funds. We will make payments of
interest and the Termination Principal Repayment in immediately
available funds so long as the Notes are maintained in book-entry
form.
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CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following summary of certain United States federal
income tax consequences of the purchase, ownership and
disposition of the Notes is based upon laws, regulations, rulings
and decisions now in effect, all of which are subject to change
(including changes in effective dates) or possible differing
interpretations. It deals only with initial purchasers who are
"United States Holders", as defined below, and who hold Notes as
capital assets and does not deal with persons in special tax
situations, such as financial institutions, insurance companies,
regulated investment companies, dealers in securities or
currencies, tax-exempt entities, persons holding Notes in a
tax-deferred or tax-advantaged account, persons holding Notes as
a hedge, a position in a "straddle" or as part of a "conversion"
transaction for tax purposes, persons who are required to
mark-to-market for tax purposes or persons whose functional
currency is not the U.S. dollar. The discussion assumes that
the Notes constitute true indebtedness for United States federal
income tax purposes. If the Notes did not constitute true
indebtedness, the tax consequences described below would be
materially different. Persons considering the purchase of Notes
must consult their own tax advisors concerning the application of
United States federal income tax laws to their particular
situations as well as any consequences of the purchase, ownership
and disposition of the Notes arising under the laws of any other
jurisdiction.
As used in this pricing supplement, the term "United States
Holder" means a beneficial owner of a Note that is for United
States federal income tax purposes (1) an individual who is a
citizen or resident of the United States, (2) an entity which is
a corporation or a partnership for United States federal income
tax purposes created or organized in or under the laws of the
United States or of any State thereof (other than a partnership
that is not treated as a United States person under any
applicable Treasury regulations), (3) an estate whose income is
subject to United States federal income tax regardless of its
source, (4) a trust if a court within the United States is able
to exercise primary supervision over the administration of the
trust and one or more United States persons have the authority to
control all substantial decisions of the trust, or (5) any other
person whose income or gain in respect of the Notes is
effectively connected with the conduct of a United States trade
or business. Notwithstanding the preceding sentence, to the
extent provided in Treasury regulations, certain trusts in
existence on August 20, 1996, and treated as United States
persons prior to such date, that elect to continue to be treated
as United States persons also will be United States Holders.
Interest and Original Issue Discount ("OID")
Since the amount payable on the Notes will depend upon the
Termination Date Value of a Basket Unit, the Notes will be
treated as "contingent payment debt instruments" for United
States federal income tax purposes. As a result, the Notes will
generally be subject to the OID provisions of the Code and the
Treasury regulations issued thereunder. Pursuant to such
Treasury regulations, a United States Holder will be required to
report OID or interest income based on a "comparable yield" and a
"projected payment schedule", as described below, established by
the Company for determining interest accruals and adjustments in
respect of a Note. A United States Holder who does not use the
"comparable yield" and/or follow the "projected payment schedule"
to calculate its OID and interest income on a Note must timely
disclose and justify the use of other estimates to the Internal
Revenue Service.
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A "comparable yield" with respect to a contingent payment
debt instrument generally is the yield at which the issuer could
issue a fixed rate debt instrument with terms similar to those of
the contingent payment debt instrument (taking into account for
this purpose the level of subordination, term, timing of payments
and general market conditions, but ignoring any adjustments for
liquidity or the riskiness of the contingencies with respect to
the debt instrument).
A "projected payment schedule" with respect to a contingent
payment debt instrument is generally a series of expected
payments the amount and timing of which would produce a yield to
maturity on such debt instrument equal to the comparable yield.
The "comparable yield" and "the projected payment schedule" may
be obtained by contacting John E. Mack, Senior Vice President,
Bank of America Corporation, Bank of America Corporate Center,
100 North Tryon Street, NC1-007-23-01, Charlotte, North Carolina
28255, Telephone: 704-386-5972. Investors should be aware that
this information is not calculated or provided for any purposes
other than the determination of a United States holder's interest
accruals and adjustments in respect of the Notes. The
Corporation makes no representations regarding the actual amounts
of payments on the Notes.
Based on the comparable yield and the issue price of the
Notes, a United States Holder of a Note (regardless of accounting
method) will be required to accrue as OID the sum of the daily
portions of interest on the Note for each day in the taxable year
on which the holder holds the Note, adjusted upward or downward
to reflect the difference, if any, between the actual and
projected amount of any contingent payments on the Note (as set
forth below). The daily portions of interest for a Note are
determined by allocating to each day in an accrual period the
ratable portion of interest on the Note that accrues in the
accrual period. The amount of interest on a Note that accrues in
an accrual period is the product of the comparable yield on the
Note (adjusted to reflect the length of the accrual period) and
the adjusted issue price of the Note at the beginning of the
accrual period. The adjusted issue price of a Note at the
beginning of the first accrual period will equal its issue price
and for any accrual period thereafter will be equal to (1) the
sum of the issue price of such Note and any interest previously
accrued thereon by a holder (disregarding any positive or
negative adjustments) minus (2) the amount of any projected
payments on the Note for previous accrual periods. Because of
the application of the OID rules, it is likely that a United
States holder of a Note will be required to include interest
income or OID in excess of actual cash payments received for
certain taxable years.
A United States Holder will be required to recognize
interest income equal to the amount of any positive adjustment
(i.e., the excess of actual payments over projected payments) for
a Note for a taxable year. A negative adjustment (i.e., the
excess of projected payments over actual payments) for a Note for
a taxable year (1) will first reduce the amount of interest for
the Note that a United States Holder would otherwise be required
to include in income in the taxable year and (2) to the extent of
any excess, will give rise to an ordinary loss equal to that
portion of such excess as does not exceed the excess of () the
amount of all previous interest inclusions under the Note over ()
the total amount of the United States Holder's net negative
adjustments treated as ordinary loss on the Note in prior taxable
years. A net negative adjustment is not subject to the two
percent floor limitation imposed on miscellaneous deductions
under Section 67
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of the Code. Any negative adjustment in excess
of the amounts described above in (1) and (2) will be carried
forward to offset future interest income for the Note or to
reduce the amount realized on a sale, exchange or retirement of
the Note. Where a United States Holder purchases a Note at a
price other than the issue price, the difference between the
purchase price and the issue price generally will be treated as a
positive or negative adjustment, as the case may be, and
allocated to the daily portions of interest or projected payments
for the Note over its remaining term.
Sale, Exchange or Retirement
Upon a sale, exchange or retirement of a Note, a United
States Holder will generally recognize taxable gain or loss equal
to the difference between the amount realized on the sale,
exchange or retirement and the holder's tax basis in the Note. A
United States Holder's tax basis in a Note will equal the cost
thereof, increased by the amount of interest income previously
accrued by the holder for the Note (disregarding any positive or
negative adjustments) and decreased by the amount of all prior
projected payments in respect of the Note. A United States
Holder generally will treat any gain as interest income, and any
loss as ordinary loss to the extent of the excess of previous
interest inclusions over the total negative adjustments
previously taken into account as ordinary losses, and the balance
as capital loss.
Alternative Treatment of the Notes
The IRS may contend that the Notes should be characterized
under a different approach than that described above and should
not be treated as contingent payment debt instruments for federal
income tax purposes. In such event, the nature, timing and
character of any income, gain or loss realized by a United States
Holder from an investment in the Notes may be significantly
different from that discussed above. For example, the IRS may
contend that each Note should be treated as a unit (the "Unit")
consisting of (1) a debt instrument (the "Debt Instrument") with
a fixed principal amount unconditionally payable at maturity and
bearing interest at the stated interest rate on the Notes and (2)
cash settlement options (the "Options") pursuant to which the
United States Holder has the right to execute each Option and
receive an amount of cash equal to the appreciation, if any,
between $122.50 and the Termination Date Value of the Basket
Unit. Under this treatment, a United States Holder of a Note
will be required to include in income payments denominated as
interest (and not as OID) that are made with respect to a Note in
accordance with such United States Holder's regular method of tax
accounting. Furthermore, a United States Holder of a Note will
be required to allocate the purchase price paid by such holder to
acquire the Note between the two components of the Unit, the Debt
Instrument and the Options, based on their relative fair market
values (as determined on the purchase date). The portion of the
total purchase price allocated by the United States Holder to
each component of the Unit will generally constitute such
holder's initial tax basis for each component of the Unit.
Accordingly, because the Face Amount of the Notes exceeds the
portion of the purchase price allocated to the Debt Instrument,
the United States Holder will be deemed to have acquired the Debt
Instrument with OID (to the extent of such excess) and generally
will be required to include such OID in income on a daily basis
as it accrues. In addition, upon the sale or other disposition
of the Notes prior to maturity, a United States Holder generally
will be required to allocate the total amount realized by such
holder (other than amounts representing accrued and unpaid
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interest) between the two components of the Unit, the Debt
Instrument and the Options, based on their relative fair market
values (as determined on the date of sale or other disposition).
Thus, upon a sale or other disposition of a Note, a United States
Holder will generally be required to recognize taxable gain or
loss with respect to each such component in an amount equal to
the difference, if any, between the portion of the total amount
realized allocated to each such component and the United States
Holder's adjusted tax basis in each such component. Any such
gain or loss will generally be treated as long-term capital gain
or loss if the United States Holder has held the Note for more
than one year at the time of the sale or other disposition.
Upon exercise of the holder's Exchange Right, a United
States Holder will be treated as having sold the Debt Instrument
and the Option in separate transactions. The amount realized on
the sale of the Debt Instrument will be equal to the principal
amount of the Note. The amount realized on the sale of each
Option will be equal to the appreciation, if any, between the
Conversion Price ($122.50) and the Termination Date Value of the
Basket Unit. Thus, a United States Holder will be required to
recognize taxable gain or loss with respect to each sale in an
amount equal to the difference, if any, between the amount
realized with respect to each such sale and the United States
Holder's adjusted tax basis in the respective components. Any
such gain or loss will generally be treated as long-term capital
gain or loss if the United States Holder has held the Note for
more than one year at the time of the sale or other disposition.
Alternatively, if a United States Holder allows the Options to
lapse unexercised (e.g., the Corporation exercises the Call
Feature and the United States Holder does not exercise its
Exchange Right), the United States Holder generally will have a
capital loss equal to such holder's tax basis in the Options.
On the Stated Maturity Date, a United States Holder will be
required to recognize gain or loss with respect to the Debt
Instrument in an amount equal to the difference, if any, between
the Face Amount of the Note and the holder's adjusted tax basis
in the Debt Instrument. In addition, if on the Stated Maturity
Date a United States Holder receives the Exchange Value, the
holder will be required to recognize gain in an amount equal to
the difference between (1) the amount received in respect of the
Options (i.e., the excess of the Exchange Value over the Face
Amount of the Note) and (2) such holder's tax basis in the
Options. Any such gain or loss will be long-term capital gain or
loss if the United States Holder has held the Note for more than
one year. Alternatively, if a United States Holder only receives
the Face Amount of the Note, the holder generally will have a
capital loss equal to such holder's tax basis in the Options.
Backup Withholding and Information Reporting
The Company will report to its United States Holders and to
the Internal Revenue Service (the "Service") the amount of
"reportable payments" (which includes the amount of interest paid
and OID which accrues during each calendar year) and the amount
of tax withheld, if any, with respect to the Notes. Under the
backup withholding rules, a United States Holder may be subject
to backup withholding at the rate of 31% for interest on, or
proceeds from the sale, exchange, or retirement of, a Note unless
such holder (1) is a corporation or comes within certain other
exempt categories and, when required, demonstrates this fact or
(2) provides a taxpayer identification number, certifies as to no
loss of exemption from backup withholding, and otherwise complies
with the applicable requirements of the backup withholding rules.
A United States Holder that
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does not provide the Company with its correct taxpayer identification
number also may be subject to penalties imposed by the Service. Any
amount paid as backup withholding will be creditable against the United
States Holder's income tax liability and may entitle the Holder to a refund,
provided the required information is provided to the Service.
Treasury regulations (the "Final Withholding Regulations"),
which are generally effective for payments made after December
31, 2000, consolidate and modify the current certification
requirements and means by which a holder generally may claim
exemption from the United States federal income tax withholding
and provide certain presumptions regarding the status of holders
when payments to the holders cannot be reliably associated with
appropriate documentation provided to the payor. All United
States Holders should consult their tax advisors regarding the
application of the Final Withholding Regulations.
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Schedule I
Bank of America Corporation 0.25% Series H Senior Basket-Indexed
Notes Due 2006
Basket Composition
Basket Value on Pricing Date Number
Company Ticker % Pricing Date Price Setting of Shares*
Symbol Weight
Texas Instruments
Incorporated TXN 18% 18.00 80.3750 0.22395
Sun Microsystems,
Inc. SUNW 18% 18.00 75.6250 0.23802
International Business
Machines Corp. IBM 18% 18.00 123.3750 0.14590
Oracle Corporation ORCL 18% 18.00 36.5000 0.49315
12 Technologies Inc. ITWO 11% 11.00 31.5000 0.34921
Rambus Inc. RMBS 11% 11.00 102.9375 0.10686
Wind River Systems,
Inc. WIND 6% 6.00 16.3125 0.36782
Total 100% 100.00
* Calculated in each case by dividing the Value on the Pricing
Date by the Pricing Date Price Setting.
