BANK OF AMERICA CORPORATION Filed Pursuant to Rule 424 (b)(2)
Registration No. 333-51367
Pricing Supplement No. 238
(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
S&P 500 MARKET INDEXED LINKED EQUITY SECURITIES DUE NOVEMBER 2004
(LINKED TO THE PERFORMANCE OF THE S&P 500 INDEX)
Aggregate Principal Amount: $ 10,000,000
Aggregate Issue Price: 100% $ 10,000,000
Commission or Discount: 0% $ 0
Proceeds to Corporation: 100% $ 10,000,000
Securities
Offered: S&P 500 Market Indexed Linked Equity Securities, due November
2004 (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.
Agent: Banc of America Securities LLC, as Agent.
Cusip #: 06050MAF4
Form: Book-entry only.
Pricing Date: November 12, 1999.
Settlement Date: November 19, 1999.
Valuation Dates: February 12, 2003, May 12, 2003, August 12, 2003, November 12,
2003, February 12, 2004, May 12, 2004, August 12, 2004 and
November 12, 2004, each subject to adjustment upon the
occurrence of certain Non-Trading Days. See "Description of
the Notes -- Market Disruption."
Maturity Date: November 19, 2004.
Minimum
Denominations: $250,000 and integral multiples of $100,000 in excess thereof.
Interest
Payments: There are no periodic payments of interest on the Notes prior
to maturity.
Participation
Rate: 87%.
Supplemental
Redemption
Amount: The Participation Rate multiplied by the product of (1) the
principal amount of the Note and (2) a fraction the numerator
of which is the Ending S&P Index Value minus the Starting S&P
Index Value and the denominator of which is the Starting S&P
Index Value. However, in no event shall the Supplemental
Redemption Amount be less than zero.
Underlying Index:The S&P 500 Composite Stock Price Index, as published by
Standard & Poor's (the "S&P 500 Index").
S&P Index Value: The level of the S&P 500 Index, or any Successor Index (as
defined herein), as of the regular official weekday close of
trading on the applicable day.
Starting S&P
Index Value: 1396.06.
Ending S&P
Index Value: The arithmetic mean of the S&P Index Values on each of the
Valuation Dates.
Total Repayment: On the Maturity Date, holders of the Notes will receive the
principal amount of the Notes plus the Supplemental Redemption
Amount, if any. See "Description of the Notes Total
Repayment."
May the Notes be
redeemed by the
orporation prior
to maturity? No.
May the Notes be
repaid prior to
maturity at the
option of the
holder? No.
Listing: None.
Calculation
Agent: Banc of America Securities LLC
Investment in the Notes involves certain risks. You should refer to "Risk
Factors" beginning on page 3 of this Pricing Supplement.
"Standard & Poor's(Registered Mark) ", "S&P(Registered Mark) ", "S&P 500(Regis-
tered Mark)", "Standard and Poor's 500", and "500" are trademarks of the
McGraw-Hill Companies, Inc. and have been licensed for use by Bank of America
Corporation (the "Corporation"). The Notes are not sponsored, endorsed, sold
or promoted by Standard & Poor's and Standard & Poor's makes no
representation regarding the advisability of investing in the
Notes.
RISK FACTORS
As described in more detail below, the market price of the
securities may vary considerably prior to maturity due, among
other things, to fluctuations in the level of the S&P 500 Index,
interest rate levels and other events that are difficult to
predict and beyond our control. Prospective investors who
consider purchasing the Notes 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.
The Supplemental Redemption Amount May Be Zero. The
Supplemental Redemption Amount is based on the Ending S&P Index
Value. If the Ending S&P Index Value does not exceed the
Starting S&P Index Value, then you will receive only the
principal amount of the Notes.
Yield on the Notes May Be Lower Than The Yield On A Standard
Debt Security Of Comparable Maturity. You will receive no
periodic payments of interest on the Notes. Your yield will be
based solely on the extent to which the Ending S&P Index Value
exceeds the Starting S&P Index Value. Therefore, your yield may
be less than the yield you would earn if you bought a more
conventional standard senior debt security of the Corporation
with the same maturity date.
Factors Affecting The Trading Value Of The Notes. The
market value of the Notes will be affected by the level of the
S&P 500 Index, the level of interest rates generally and a number
of other factors, some of which, but not all, are stated below.
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.
S&P 500 Index. The market value of the Notes will depend
substantially on the level of the S&P 500 Index or any
Successor Index. The S&P 500 Index, or any similar index,
will be influenced by the operational results,
creditworthiness and dividend rates, if any, of the
companies represented by the component stocks of that Index,
and by complex and interrelated political, economic,
financial and other factors that affect the capital markets
generally, the markets on which the component stocks of that
index are traded and the market segments of which the
companies represented by the component stocks of that index
are a part. See "S&P 500 Index." It is impossible to
predict whether or to what extent the level of the S&P 500
Index will rise or fall.
Volatility Of The S&P 500 Index. Volatility is the term
used to describe the size and frequency of market
fluctuations. Volatility of the level of the S&P 500 Index
may affect the market value of the Notes. If you choose to
sell your Notes prior to maturity, you may receive less than
100% of the principal amount per Note.
Interest Rates. We expect that the market value of the
Notes will be affected by changes in interest rates
generally.
Dividends. We expect that the market value of the Notes
will be affected by changes in the dividend rates of the
component stocks of the S&P 500 Index.
The Corporation's Credit Ratings. Real or anticipated
changes in our credit ratings may affect the market value of
the Notes.
No Stockholder's Rights. Holders of the Notes will not be
entitled to any rights with respect to any of the component
stocks of the S&P 500 Index (including, without limitation,
voting rights and rights to receive any dividends or other
distributions in respect thereof).
Hedging Activities. Certain hedging activities by us or one
or more of our affiliates may affect the level of the S&P 500
Index and, accordingly, increase or decrease the value of the
Notes. In addition, we and/or one or more of our affiliates may
purchase or otherwise acquire a long or short position in the
Notes, and we may hold and/or one of our affiliates may hold or
resell the Notes. Although we have no reason to believe that any
such activity will have a material impact on the level of the S&P
500 Index, there can be no assurance that these activities will
not affect such level.
Potential Conflicts. While the Notes are outstanding,
certain conflicts of interest may arise regarding our wholly
owned subsidiary, Banc of America Securities LLC ("BAS"), which
will act as the Calculation Agent. As Calculation Agent, BAS
will calculate, or otherwise determine, the S&P 500 Index Values,
whether a Market Disruption Event has occurred and ultimately the
Ending S&P Index Value and the Supplemental Redemption Amount.
In addition, BAS and its affiliates may at various times purchase
and sell and engage in other transactions involving the Notes and
the stocks underlying the S&P 500 Index for their proprietary
accounts and for other accounts under their management. These
transactions may influence the value of the Notes and such stocks
and therefore the value of the Notes and S&P 500 Index.
Affiliates of BAS will also be the counterparties to the hedge of
our obligations under the Notes.
Possible Illiquidity Of The Secondary Market. The Notes
will not be listed on any exchange, and it is not possible to
predict how the Notes will trade in the secondary market or
whether such market will be liquid or illiquid. Although BAS
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.
State Law Limits On Interest Paid. New York State laws
govern the Senior Indenture, as hereinafter defined. New York
usury laws 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 the
benefit of the holders of the Notes and to the extent permitted
by law, we will not voluntarily claim the benefits of any laws
concerning usurious rates of interest.
You should also carefully consider the tax consequences of
investing in the Notes. You should refer to "Certain United
States Federal Income Tax Considerations" below.
S&P 500 INDEX
All disclosure contained in this Pricing Supplement
regarding the S&P 500 Index, including, its make-up, method of
calculation and changes in its components, is derived from
publicly available information prepared by S&P. Neither we nor
BAS takes any responsibility for the accuracy or completeness of
such information.
The S&P 500 Index is published by Standard & Poor's, a
division of the McGraw-Hill Companies, Inc. ("S&P"), and is
intended to provide a performance benchmark for the U.S. equity
markets. The calculation of the value of the S&P 500 Index
(discussed below in further detail) is based on the relative
value of the aggregate Market Value (as defined below) of the
common stocks of 500 companies (the "Component Stocks") as of a
particular time as compared to the aggregate average Market Value
of the common stocks of 500 similar companies during the base
period of the years 1941 through 1943. The "Market Value" of any
Component Stock is the product of the market price per share and
the number of then outstanding shares of such Component Stock.
The 500 companies are not the 500 largest companies listed on the
New York Stock Exchange ("NYSE") and not all 500 companies are
listed on such exchange. S&P chooses companies for inclusion in
the S&P 500 Index with an aim of achieving a distribution by
broad industry groupings that approximates the distribution of
these groupings in the common stock population of the U.S. equity
market. S&P may from time to time, in its sole discretion, add
companies to, or delete companies from, the S&P 500 Index to
achieve the objectives stated above. Relevant criteria employed
by S&P include the viability of the particular company, the
extent to which that company represents the industry group to
which it is assigned, the extent to which the company's common
stock is widely held and the Market Value and trading activity of
the common stock of that company.
The S&P 500 Index is calculated using a base-weighted
aggregate methodology: the level of the Index reflects the total
Market Value of all 500 Component Stocks relative to the S&P 500
Index's base period of 1941-43 (the "Base Period"). An indexed
number is used to represent the results of this calculation in
order to make the value easier to work with and track over time.
The actual total Market Value of the Component Stocks during
the Base Period has been set equal to an indexed value of 10.
This is often indicated by the notation 1941-43=10. In practice,
the daily calculation of the S&P 500 Index is computed by
dividing the total Market Value of the Component Stocks by a
number called the Index Divisor. By itself, the Index Divisor is
an arbitrary number. However, in the context of the calculation
of the S&P 500 Index, it is the only link to the original base
period value of the S&P 500 Index. The Index Divisor keeps the
S&P 500 Index comparable over time and is the manipulation point
for all adjustments to the S&P 500 Index ("Index Maintenance").
Index Maintenance includes monitoring and completing the
adjustments for company additions and deletions, share changes,
stock splits, stock dividends, and stock price adjustments due to
company restructurings or spin-offs.
To prevent the value of the S&P 500 Index from changing due
to corporate actions, all corporate actions which affect the
total Market Value of the S&P 500 Index require an Index Divisor
adjustment. By adjusting the Index Divisor for the change in
total Market Value, the value of the S&P 500 Index remains
constant. This helps maintain the value of the S&P 500 Index as
an accurate barometer of stock market performance and ensures
that the movement of the S&P 500 Index does not reflect the
corporate actions of individual companies in the S&P 500 Index.
All Index Divisor adjustments are made after the close of trading
and after the calculation of the closing value of the S&P 500
Index. Some corporate actions, such as stock splits and stock
dividends, require simple changes in the common shares
outstanding and the stock prices of the companies in the S&P 500
Index and do not require Index Divisor adjustments.
The table below summarizes the types of S&P 500 Index
Maintenance adjustments and indicates whether or not an Index
Divisor adjustment is required.
Type of Corporate Adjustment Factor Divisor
Action Adjustment
Required
----------------- ------------------ -------------
Stock split Shares Outstanding multiplied
(i.e. 2x1) by 2; Stock Price divided by 2 No
Share issuance Shares Outstanding plus newly
(i.e. Change >5%) issued Shares Yes
Share Shares Outstanding minus Repurchased
repurchase Shares Yes
(i.e. Change >5%)
Special cash Share Price minus Special Dividend Yes
dividends Share
Company change Add new company Market Value minus old
Company Market Value Yes
Rights offering Price of parent company minus Price of
Rights divided by Right Ratio Yes
Spin-Offs Price of parent company minus Price of
Spin-Off Co. divided by Share Exchange
Ratio Yes
Stock splits and stock dividends do not affect the Index
Divisor of the S&P 500 Index, because following a split or
dividend both the stock price and number of shares outstanding
are adjusted by S&P so that there is no change in the Market
Value of the Component Stock. All stock split and dividend
adjustments are made after the close of trading on the day before
the ex-date.
Each of the corporate events exemplified in the table
requiring an adjustment to the Index Divisor has the effect of
altering the Market Value of the Component Stock and consequently
of altering the aggregate Market Value of the Component Stocks
(the "Post-Event Aggregate Market Value"). In order that the
level of the S&P 500 Index (the "Pre-Event Index Value") not be
affected by the altered Market Value (whether increased or
decreased) of the affected Component Stock, a new Index Divisor
("New Divisor") is derived as follows:
Post-Event Aggregate Market Value
New Divisor = Pre-Event Index Value x
Post-Event Aggregate Market Value
----------------------------------
New Divisor = Pre-Event Index Value
A large part of the S&P Index Maintenance process
involves tracking the changes in the number of shares outstanding
of each of the S&P 500 Index companies. Four times a year, on a
Friday shortly prior to the end of each calendar quarter, the
share totals of companies in the S&P 500 Index are updated as
required by any changes in the number of shares outstanding.
After the totals are updated, the Index Divisor is adjusted to
compensate for the net change in the total Market Value of the
Index. In addition, any changes over 5% in the current common
shares outstanding for the S&P 500 Index companies are carefully
reviewed on a weekly basis, and when appropriate, an immediate
adjustment is made to the Index Divisor.
Historical Data On The S&P 500 Index
The following table sets forth the closing values of the S&P
500 Index on the last business day of each year from 1947 through
1988, as published by S&P. You should not consider the
historical experience of the S&P 500 Index to be an indication of
future performance. We cannot guarantee that the value of the
S&P 500 Index will not decline and thereby reduce the
Supplemental Redemption Amount that may be payable to you at
maturity or otherwise.
YEAR-END VALUE OF THE S&P 500 INDEX
Year Closing Year Closing Year Closing Year Closing Year Closing
Value Value Value Value Value
1947 15.30 1956 46.67 1965 92.43 1974 68.56 1983 164.93
1948 15.20 1957 39.99 1966 80.33 1975 90.19 1984 167.24
1949 16.79 1958 55.21 1967 96.47 1976 107.46 1985 211.28
1950 20.43 1959 59.89 1968 103.86 1977 95.10 1986 242.17
1951 23.77 1960 58.11 1969 92.06 1978 96.11 1987 247.08
1952 26.57 1961 71.55 1970 92.15 1979 107.94 1988 277.72
1953 24.81 1962 63.10 1971 102.09 1980 135.76
1954 35.98 1963 75.02 1972 118.05 1981 122.55
1955 45.48 1964 84.75 1973 97.55 1982 140.64
The following table sets forth the level of the S&P 500
Index at the end of each month from January 1989 through October
1999. You should not consider the historical data on the S&P 500
Index to be necessarily indicative of the future performance of
the S&P 500 Index or what the value of the Notes may be. Any
historical upward or downward trend in the level of the S&P 500
Index during any period set forth below is not any indication
that the S&P 500 Index is more or less likely to increase or
decrease at any time during the term of the Notes.
Month-End Closing Month-End Closing
Level Level
---------- --------- ---------- ---------
1989: 1990:
January 297.47 January 329.08
February 288.86 February 331.89
March 294.87 March 339.94
April 309.64 April 330.80
May 320.52 May 361.23
June 317.98 June 358.02
July 346.08 July 356.15
August 351.45 August 322.56
September 349.15 September 306.05
October 340.36 October 304.00
November 345.99 November 322.22
December 353.40 December 330.22
1991: 1992:
January 343.93 January 408.79
February 367.07 February 412.70
March 375.22 March 403.69
April 375.34 April 414.95
May 389.83 May 415.35
June 371.16 June 408.14
July 387.81 July 424.22
August 395.43 August 414.03
September 387.86 September 417.80
October 392.45 October 418.68
November 375.22 November 431.35
December 417.09 December 435.71
1993: 1994:
January 438.78 January 481.61
February 443.38 February 467.14
March 451.67 March 445.77
April 440.19 April 450.91
May 450.19 May 456.51
June 450.53 June 444.27
July 448.13 July 458.26
August 463.56 August 475.50
September 458.93 September 462.71
October 467.83 October 472.35
November 461.79 November 453.69
December 466.45 December 459.27
1995: 1996:
January 470.42 January 636.02
February 487.39 February 640.43
March 500.71 March 645.50
April 514.71 April 654.17
May 533.40 May 669.12
June 544.75 June 670.63
July 562.06 July 639.95
August 561.88 August 651.99
September 584.41 September 687.31
October 581.50 October 705.27
November 605.37 November 757.02
December 615.93 December 740.74
1997: 1998:
January 786.16 January 980.28
February 790.82 February 1049.34
March 757.12 March 1101.75
April 801.34 April 1111.75
May 848.28 May 1090.82
June 885.14 June 1133.84
July 954.29 July 1120.67
August 899.47 August 957.28
September 947.28 September 1017.01
October 914.62 October 1098.67
November 955.40 November 1163.63
December 970.43 December 1229.23
1999:
January 1279.64
February 1238.33
March 1286.37
April 1335.18
May 1301.84
June 1372.71
July 1328.72
August 1320.41
September 1282.71
October 1362.93
License Agreement
We have entered into an agreement with S&P providing us and
any of our affiliated or subsidiary companies with a
non-exclusive license and, in exchange for a fee, with the right
to use the S&P 500 Index, which is owned and published by S&P, in
connection with certain securities, including the Notes. The
license agreement provides that the following language must be
stated in this Pricing Supplement:
"The Notes are not sponsored, endorsed, sold or promoted by
S&P. S&P makes no representation or warranty, express or
implied, to the holders of the Notes or any member of the public
regarding the advisability of investing in securities generally
or in the Notes particularly or the ability of the S&P 500 Index
to track general stock market performance. S&P's only
relationship to the Corporation (other than transactions entered
into in the ordinary course of business) is the licensing of
certain trademarks and trade names of S&P and of the S&P 500
Index which is determined, composed and calculated by S&P without
regard to the Corporation or the Notes. S&P has no obligation to
take the needs of the Corporation or the holders of the Notes
into consideration in determining, composing or calculating the
S&P 500 Index. S&P is not responsible for, and has not
participated in, the determination of the timing of the sale of
the Notes, prices at which the Notes are to initially be sold, or
quantities, of the Notes to be issued or in the determination, or
calculation of the equation by which the Notes are to be
converted into cash. S&P has no obligation or liability in
connection with the administration, marketing or trading of the
Notes.
Standard & Poor's ("S&P") does not guarantee the accuracy
and/or the completeness of the S&P 500 Index or any data included
therein. S&P makes no warranty, express or implied, as to
results to be obtained by the Corporation, BAS, holders of the
Notes, or any other person or entity from the use of the S&P 500
Index or any data included therein in connection with the rights
licensed under the license agreement described herein or for any
other use. S&P makes no express or implied warranties, and
hereby expressly disclaims all warranties or merchantability or
fitness for a particular purpose with respect to the S&P 500
Index or any data included therein. Without limiting any of the
foregoing, in no event shall S&P have any liability for any
special, punitive, indirect or consequential damages (including
lost profits), even if notified of the possibility of such
damages."
DESCRIPTION OF THE NOTES
General
The Notes are medium-term notes issued as a 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 therewith replaces,
the description of the general terms and provisions of the Notes
and Debt Securities set forth 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 used herein have the meanings ascribed
thereto in the accompanying Prospectus and Prospectus Supplement.
The aggregate initial principal amount of Notes to be issued
will be $10,000,000. The Notes will mature on November 19, 2004.
In the future we may "reopen" the issue of Notes without notice
to the holders of the Notes and issue additional S&P 500 Market
Indexed Linked Equity Securities Due November 2004. We may also
issue additional Debt Securities or other securities with terms
similar to those of the Notes, and such issuances may affect the
market value of the Notes.
The Notes will be issued in book-entry form only. Except
under the limited circumstances described in the accompanying
Prospectus and Prospectus Supplement, notes in certificated form
will not be issued.
Interest Payments
There are no periodic payments of interest on the Notes
prior to maturity.
Total Repayment
On the Maturity Date, holders will receive the principal
amount of the Notes plus the Supplemental Redemption Amount, if
any. The Supplemental Redemption Amount will be equal to the
Participation Rate multiplied by the product of (1) the principal
amount of the Notes and (2) a fraction the numerator of which
shall be the Ending S&P Index Value minus the Starting S&P Index
Value and the denominator of which shall be the Starting S&P
Index Value. However, in no event shall the Supplemental
Redemption Amount be less than zero.
The Starting S&P Index Value equals 1396.06. The Ending S&P
Index Value will be determined by the Calculation Agent and will
equal the arithmetic mean of the S&P Index Values on each of the
Valuation Dates, or if any such day is not a Trading Day, on the
next Trading Day. If a Market Disruption Event has occurred on
any Valuation Date, the applicable S&P Index will be the S&P
Index Value on the first Trading Day following that Valuation
Date on which a Market Disruption Event has not occurred. If a
Market Disruption Events occurs on each of the first four
Business Days following the original Valuation Date, then the S&P
Index Value will equal the closing value of the S&P 500 Index on
the Trading Date immediately following the fourth Business Day,
regardless of whether a Market Disruption Event occurs on such
Trading Day.
Miscellaneous Definitions
A "Trading Day" is defined as a Business Day on which
trading is generally conducted on the New York Stock Exchange,
the American Stock Exchange, Inc., NASDAQ NMS, the Chicago
Mercantile Exchange, the Chicago Board of Options Exchange and
the over-the-counter market for equity securities in the United
States.
"Business Day" with respect to the Notes means any day that
is neither a Saturday, a Sunday nor a day on which the New York
Stock Exchange, the American Stock Exchange, NASDAQ NMS, 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.
"Market Disruption Event" means, with respect to the S&P 500
Index: (i) a suspension, absence or material limitation of
trading of 100 or more of the securities included in the S&P 500
Index on the primary market for such securities for more than two
hours of trading or during the one-half hour period preceding the
close of trading in such market; or the suspension, absence or
material limitation of trading on the primary market for trading
in futures or options contracts related to the S&P 500 Index
during the one-half hour period preceding the close of trading in
the applicable market, in each case as determined by the
Calculation Agent in its sole discretion; and (ii) a
determination by the Calculation Agent in its sole discretion
that the event described in clause (i) above materially
interfered with the ability of the Corporation or any of its
affiliates to unwind all or a material portion of any hedge with
respect to the Notes.
Total Repayment-Examples
The following table illustrates, for a range of hypothetical
Ending S&P Index Values, (i) the total amount payable at maturity
for each $1,000 principal amount of Notes, (ii) the total rate of
return to holders of Notes and (iii) the pre-tax annualized rate
of return to holders of Notes:
Supplemental Annualized
Starting S&P Ending S&P Redemption Total Total Rate of
Index Value Index Value Amounta* Repayment Return Return**
- ------------ ----------- ------------ ----------- -------- -----------
1396.06 2792.12 $870.00 $1870.00 87.00% 12.92%
1396.06 1396.06 0.00 1000.00 0.00% 0.00%
1396.06 698.03 0.00 1000.00 0.00% 0.00%
_________________
* 87% of (1) the principal amount multiplied by (2) a fraction
the numerator of which is the amount by which the Ending S&P
Index Value exceeds the Starting S&P Index Value and the
denominator of which is the Starting S&P Index Value.
** Calculated on a semi-annual basis. Represents a pre-tax
return.
Market Disruption
If any Valuation Date is not a Trading Day or is a Trading
Day on which a Market Disruption Event occurs (a "Non-Trading
Day"), then such Valuation Date will instead be the next Trading
Day. If the next Trading Day would occur after the original
stated Maturity Date, the maturity of the Notes will be extended
until such next Trading Day.
Events of Default and Acceleration
Upon the occurrence of an Event of Default with respect to
the Notes, holders of the Notes may accelerate the maturity of
the Notes.
In case an Event of Default, as defined in the Senior
Indenture, with respect to the Notes shall have occurred and be
continuing, the amount payable to a holder of the Notes upon any
acceleration permitted under the Senior Indenture will equal the
principal amount of the Notes plus the Supplemental Redemption
Amount, if any, calculated as though the date of early repayment
was the Maturity Date of the Notes and the day five days earlier
was the date the Ending S&P Index Value was to be determined.
Discontinuance of the S&P 500 Index; Alteration of Method of
Calculation
If S&P discontinues publication of the S&P 500 Index and S&P
or another entity publishes a successor or substitute index that
the Calculation Agent determines, in its sole discretion, is
comparable to the discontinued S&P 500 Index (such index being
referred to herein as a "Successor Index"), then the relevant S&P
Index Value shall be determined by reference to the Successor
Index at the close of trading on the New York Stock Exchange, the
American Stock Exchange, the NASDAQ National Market ("NASDAQ
NMS") or the relevant exchange or market for the Successor Index
on any relevant Valuation Date.
Upon any selection by the Calculation Agent of a Successor
Index, the Calculation Agent shall immediately notify the
Corporation and the Trustee, and the Trustee shall provide
written notice thereof to the holders of the Notes within three
Trading Days of such selection.
If S&P discontinues publication of the S&P 500 Index prior
to, and such discontinuance is continuing on, any Valuation Date
and the Calculation Agent determines that no Successor Index is
available at such time, then on such Valuation Date the
Calculation Agent shall determine the S&P Index Value. The S&P
Index Value shall be computed by the Calculation Agent in
accordance with the formula for and method of calculating the S&P
500 Index last in effect prior to such discontinuance, using the
closing price (or, if trading in the relevant securities has been
materially suspended or materially limited, its good faith
estimate of the closing price that would have prevailed but for
such suspension or limitation) on such Valuation Date of each
security most recently comprising the S&P 500 Index. If a
Successor Index is selected or the Calculation Agent calculates a
value as a substitute for the S&P 500 Index, such Successor Index
or value will be substituted for the S&P 500 Index for all
purposes, including for purposes of determining whether a Market
Disruption Event exists.
If at any time the method of calculating the S&P 500 Index
or a Successor Index, or the value thereof, is changed in a
material respect, or if the S&P 500 Index or a Successor Index is
in any other way modified so that such index does not, in the
opinion of the Calculation Agent, fairly represent the value of
the S&P 500 Index or such Successor Index had such changes or
modifications not been made, then, from and after such time, the
Calculation Agent shall, at the close of business in New York
City on any Valuation Date, make such calculations and
adjustments as, in the good faith judgment of the Calculation
Agent, may be necessary in order to arrive at a value of a stock
index comparable to the S&P 500 Index or such Successor Index, as
the case may be, as if such changes or modifications had not been
made, and calculate the S&P Index Value with reference to the S&P
500 Index or such Successor Index, as adjusted. Accordingly, if
the method of calculating the S&P 500 Index or a Successor Index
is modified so that the value of such index is a fraction of what
it would have been if it had not been modified (e.g. due to a
split in the index), then the Calculation Agent shall adjust such
index in order to arrive at a value of the S&P 500 Index or such
Successor Index as if it had not been modified (e.g., as if such
split had not occurred).
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
principal and any Supplemental Redemption Amount in immediately
available funds so long as the Notes are maintained in book-entry
form.
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. This 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 the 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 herein, the term "United States Holder" means a
beneficial owner of a Note that is for United States federal
income tax purposes (i) an individual who is a citizen or
resident of the United States, (ii) 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), (iii) an estate whose income is subject to
United States federal income tax regardless of its source, (iv) 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 (v) 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.
Accruals of Original Issue Discount ("OID") on the Notes
The Notes will be treated as "contingent payment debt
instruments" for United States federal income tax purposes
subject to taxation under the "noncontingent bond method." 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 Corporation for determining
interest accruals and adjustments in respect of a Note. A United
States Holder which 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.
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). For example, if a hedge is available, the
comparable yield is the yield on the synthetic fixed rate debt
instrument that would result if the hedge is integrated with the
contingent payment debt instrument. If a hedge is not available,
but similar fixed rate debt instruments of the issuer trade at a
price that reflects a spread above a benchmark rate, the
comparable yield in the sum of the value of the benchmark rate on
the issue date and the spread.
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 held 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 in respect of 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 (x) 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 (y) the amount of any projected payments on
the Note for previous accrual periods. Because of the
application of the OID rules, it is possible that a United States
Holder of a Note would 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) in
respect of a Note for a taxable year. A negative adjustment
(i.e., the excess of projected payments over actual payments) in
respect of a Note for a taxable year () will first reduce the
amount of interest on the Note that a United States Holder would
otherwise be required to include in income in the taxable year
and () 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 of the Code. Any negative adjustment
in excess of the amounts described above in (i) and (ii) will be
carried forward to offset future interest income on 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 thereof, 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
with respect to 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 such 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 in respect of 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 long-term or short-term capital loss (depending upon the
United States Holder's holding period for the Note).
Backup Withholding and Information Reporting
The Corporation 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 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% with respect to interest
on, or proceeds from the sale, exchange, or retirement of, a Note
unless such holder () is a corporation or comes within certain
other exempt categories and, when required, demonstrates this
fact or () 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 does not provide
the Corporation 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 with respect to
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.
