<PAGE>
RULE NO. 424(b)(5)
REGISTRATION NO. 33-54385
PROSPECTUS SUPPLEMENT
(To Prospectus Dated August 22, 1994)
U.S. $2,000,000,000
[LOGO OF BANKAMERICA CORPORATION]
MEDIUM-TERM NOTES, SERIES I
DUE FROM NINE MONTHS TO FIFTY YEARS FROM DATE OF ISSUE
BankAmerica Corporation (the "Corporation") may from time to time offer
pursuant to this Prospectus Supplement its Medium-Term Notes, Series I (the
"Notes"), in an aggregate principal amount of up to U.S. $2,000,000,000, or
the equivalent thereof in other currencies or composite currencies, subject to
reduction as a result of the sale of other securities covered by the
accompanying Prospectus. Each Note shall have a term to Stated Maturity (as
defined herein) from nine months to fifty years from its date of issue and may
be subject to redemption at the option of the Corporation or repayment at the
option of the holder prior to Stated Maturity. Each Note may be denominated in
U.S. dollars, other currencies, ECU or such other composite currencies (the
"Specified Currency") as may be described in a pricing supplement (the
"Pricing Supplement") to this Prospectus Supplement. See "Important Currency
Information" and "Currency Risks".
The Notes may be issued as unsecured Senior Debt or Subordinated Debt.
Subordinated Debt will be subordinated to all Senior Debt. See "Description of
Debt Securities--Subordination" in the accompanying Prospectus. Payment of the
principal of the Subordinated Debt may be accelerated only in the case of
certain events of bankruptcy of the Corporation. See "Description of Debt
Securities--Events of Default" in the accompanying Prospectus.
(Continued on next page)
THE NOTES ARE NOT SAVINGS ACCOUNTS, DEPOSITS OR OTHER OBLIGATIONS OF ANY BANK
OR NONBANK SUBSIDIARY OF THE CORPORATION AND ARE NOT INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, BANK INSURANCE FUND OR ANY OTHER GOVERNMENT
AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT, ANY PRICING SUPPLEMENT
HERETO OR THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
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<TABLE>
<CAPTION>
AGENTS'
DISCOUNT AND PROCEEDS TO THE
PRICE TO PUBLIC(1) COMMISSION(2) CORPORATION(2)(3)
<S> <C> <C> <C>
Per Note................ 100.000% Up to 1.000% Not less than 99.000%
Total(4)................ U.S. $2,000,000,000 Up to U.S. Not less than
$20,000,000 U.S. $1,980,000,000
</TABLE>
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(1) The Notes will be sold at 100% of their principal amount except as may be
provided in the Pricing Supplement hereto.
(2) The Corporation will pay a commission to Salomon Brothers Inc, Merrill
Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, CS First
Boston Corporation, Lehman Brothers, Lehman Brothers Inc. (including its
affiliate Lehman Government Securities Inc.) and Bank of America National
Trust and Savings Association ("Bank of America"), each as Agent
(collectively, the "Agents"), in the form of a discount of up to 1.000% of
the principal amount of any Note sold through such Agent. The Corporation
may also sell Notes to any Agent (other than Bank of America) as principal
at a discount for resale to investors or other purchasers at varying
prices related to prevailing market prices at the time of resale to be
determined by such Agent or, if set forth in the applicable Pricing
Supplement, at a fixed public offering price. The Corporation has agreed
to indemnify each Agent against certain liabilities including liabilities
under the Securities Act of 1933, as amended (the "Securities Act").
(3) Before deducting other expenses payable by the Corporation estimated to be
$1,500,000, including reimbursement of certain of the Agents' expenses.
(4) Or the equivalent thereof in other currencies or composite currencies.
The Notes are being offered on a continuing basis by the Corporation through
the Agents, each of whom (other than Bank of America) has agreed to use
reasonable best efforts to solicit purchases of such Notes. In addition, the
Notes may also be sold to the Agents (other than Bank of America), as
principals, for resale to investors or other purchasers. The Corporation may
otherwise sell the Notes. Unless otherwise specified in the applicable Pricing
Supplement, the Notes will not be listed on any securities exchange, and there
can be no assurance that the Notes offered by this Prospectus Supplement will
be sold or that there will be a secondary market for any of the Notes. The
Corporation reserves the right to withdraw, cancel or modify the offer made
hereby without notice. The Corporation or the Agent who solicits any offer to
purchase may reject such offer in whole or in part. See "Plan of
Distribution".
SALOMON BROTHERS INC
MERRILL LYNCH & CO.
CS FIRST BOSTON
LEHMAN BROTHERS
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
The date of this Prospectus Supplement is August 22, 1994.
<PAGE>
(Continued from cover page)
Each Note will bear interest at a fixed rate or rates (a "Fixed Rate Note"),
which may be zero in the case of certain Notes issued at a price representing a
discount from the principal amount payable at maturity, or at a floating rate
or rates (a "Floating Rate Note") determined by reference to the CD Rate, the
Commercial Paper Rate, the Federal Funds Rate, LIBOR, the Treasury Rate, the
CMT Rate, the Prime Rate or any other Base Rate or interest rate formula set
forth in the Pricing Supplement, as adjusted by the Spread and/or Spread
Multiplier, if any, applicable to such Note. See "Description of Medium-Term
Notes, Series I".
Each Note will be represented by either a global security (a "Global
Security") registered in the name of a nominee of The Depository Trust Company,
as Depositary, or other depositary (the "Depositary"), or a certificate issued
in definitive form (a "Certificated Note"), as set forth in the applicable
Pricing Supplement. Each beneficial interest in a Global Security shall be
referred to herein as a "Book-Entry Note". Beneficial interests in Book-Entry
Notes will be shown on, and transfers thereof will be effected only through,
records maintained by the Depositary and its participants.
Unless otherwise stated in the applicable Pricing Supplement, the Notes will
be issued in denominations of U.S. $1,000 or any larger amount that is an
integral multiple of U.S. $1,000 or, in the case of Notes denominated in a
Specified Currency other than U.S. dollars, in the denominations set forth in
the applicable Pricing Supplement.
Unless otherwise stated in the applicable Pricing Supplement, interest on
each Fixed Rate Note will accrue from its date of issue and will be payable
semi-annually on each April 15 and October 15 and at Maturity (as defined
herein), and interest on each Floating Rate Note will accrue from its date of
issue and will be payable monthly, quarterly, semi-annually or annually, as set
forth in the applicable Pricing Supplement, and at Maturity.
The Specified Currency, any applicable interest rate or interest rate
formula, the issue price, the Stated Maturity, any Interest Payment Dates (as
defined herein), any redemption provisions and any repayment provisions for
each Note and whether such Note will be a Book-Entry Note or a Certificated
Note and will be Senior Debt or Subordinated Debt will be established at the
time of issuance of such Note and set forth therein and in the Pricing
Supplement.
IN CONNECTION WITH THE DISTRIBUTION OF THE NOTES, THE AGENTS MAY OVER-ALLOT
OR EFFECT TRANSACTIONS IN THE NOTES WITH A VIEW TO STABILIZING OR MAINTAINING
THE MARKET PRICE OF THE NOTES AT LEVELS HIGHER THAN THOSE WHICH MIGHT OTHERWISE
PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED
AT ANY TIME.
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BANKAMERICA CORPORATION
The Corporation is a bank holding company registered under the U.S. Bank
Holding Company Act of 1956, as amended (the "BHC Act"), and was incorporated
in the State of Delaware in 1968. The Corporation's principal executive offices
are located at 555 California Street, San Francisco, California 94104
(telephone (415) 622-3530).
Bank of America, a national banking association, became a subsidiary of the
Corporation in 1969. Bank of America began business in San Francisco,
California, as Bank of Italy in 1904 and adopted its present name in 1930.
On April 22, 1992, Security Pacific Corporation ("SPC") was merged with and
into the Corporation. SPC's principal subsidiary, Security Pacific National
Bank, was also merged with and into Bank of America on that date.
The Corporation also owns all of the capital stock of Seafirst Corporation
("Seafirst"), a registered bank holding company, the principal asset of which
is the capital stock of Seattle-First National Bank ("SFNB"). SFNB is a
national banking association headquartered in the State of Washington. The
Corporation acquired Seafirst in 1983.
In addition to the merger with SPC, the Corporation has expanded its presence
in the western United States through several acquisitions beginning in 1989. As
of June 30, 1994, the Corporation's depository subsidiaries operated retail
branches in Alaska, Arizona, Hawaii, Idaho, Nevada, New Mexico, Oregon and
Texas, in addition to California and Washington.
The Corporation has entered into an agreement (the "Agreement") to acquire
Continental Bank Corporation ("Continental") for an estimated 21.5 million
shares of the Corporation's common stock and $948 million in cash, subject to
adjustment in certain circumstances. Based on the Corporation's common stock
closing price on January 27, 1994 (the last trading day before announcement of
the acquisition) of $45.75 per share, as reported on the New York Stock
Exchange composite transaction tape, the value of the common stock and cash to
be issued is approximately $1.9 billion. In addition, each share of
Continental's Adjustable Rate Preferred Stock, Series 1 and 2 that is
outstanding immediately prior to the effective time of the acquisition will be
converted, respectively, into one share of Adjustable Rate Preferred Stock,
Series 1 and 2 of the Corporation, having substantially the same terms. The
closing of the acquisition is subject to the satisfaction of certain conditions
set forth in the Agreement. The parties presently anticipate that the closing
will take place on or about August 31, 1994.
Continental is a Delaware corporation organized in 1968 and is registered as
a bank holding company under the BHC Act and the Illinois Bank Holding Company
Act of 1957. Continental's principal subsidiary is Continental Bank.
Continental engages in four principal activities: (i) business financing,
providing credit in almost every form and helping customers access external
debt markets; (ii) specialized financial and operating services, including cash
management, financial risk-management, trust, investment and private banking
services; (iii) trading in investment, foreign exchange and risk-management
instruments, for customers and its own account; and (iv) equity finance and
investing, as both principal and arranger.
Further information about the acquisition and about Continental and its
subsidiaries is contained in documents incorporated by reference herein. See
"Incorporation of Certain Documents by Reference" in the accompanying
Prospectus. Information about Continental and its subsidiaries has been
supplied by Continental and not by the Corporation, and the Corporation does
not warrant the accuracy or completeness of such information.
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IMPORTANT CURRENCY INFORMATION
Purchasers are required to pay for the Notes in the Specified Currency.
Currently, there are limited facilities in the United States for conversion of
U.S. dollars into foreign currencies and vice versa. Although banks may offer
non-U.S. dollar checking and savings account facilities in the United States,
such accounts are not widely available. However, if requested by a prospective
purchaser of Notes denominated in a Specified Currency other than U.S. dollars,
the Agent soliciting the offer to purchase will arrange for the conversion of
U.S. dollars into such Specified Currency to enable the purchaser to pay for
such Notes. Such requests must be made on or before the fifth Business Day (as
defined below) preceding the date of delivery of the Notes, or by such other
date as determined by the Agent that presents the offer to the Corporation.
Each such conversion will be made by the relevant Agent on such terms and
subject to such conditions, limitations and charges as such Agent may from time
to time establish in accordance with its regular foreign exchange practice. All
costs of exchange will be borne by purchasers of such Notes.
DESCRIPTION OF MEDIUM-TERM NOTES, SERIES I
The information contained herein concerning the Notes should be read in
conjunction with the statements under "Description of Debt Securities" in the
accompanying Prospectus. Capitalized terms not defined herein shall have the
meanings ascribed to such terms in the accompanying Prospectus. The following
description will apply to the Notes unless otherwise specified in the
applicable Pricing Supplement.
GENERAL
The Notes are currently limited to an aggregate principal amount of U.S.
$2,000,000,000 or the equivalent thereof in other currencies or composite
currencies, subject to reduction as a result of the sale of other securities
covered by the accompanying Prospectus. The Corporation may from time to time
increase the authorized principal amount of the Notes. The U.S. dollar
equivalent of Notes denominated in currencies other than U.S. dollars will be
determined by Bank of America, as Exchange Rate Agent (as defined below), on
the basis of the noon buying rate for cable transfers in The City of New York,
as determined by the Federal Reserve Bank of New York (the "Market Exchange
Rate"), for such currencies on the applicable issue dates.
The Notes may be issued under the Senior Indenture or the Subordinated
Indenture. Notes issued under the Senior Indenture will rank pari passu with
all other unsecured Senior Debt of the Corporation. Notes issued under the
Subordinated Indenture will rank pari passu with all other Subordinated Debt of
the Corporation and, together with such other Subordinated Debt, will be
subordinated in right of payment to the prior payment in full of the Senior
Debt of the Corporation. See "Description of Debt Securities--Subordination" in
the accompanying Prospectus. As of June 30, 1994, the Corporation had
approximately $9.8 billion of Senior Debt outstanding.
The Notes will be offered on a continuous basis and will mature at par from
nine months to fifty years from the date of issue, as selected by the purchaser
and agreed to by the Corporation, and may be subject to redemption or repayment
prior to Stated Maturity at the price or prices specified in the applicable
Pricing Supplement. Each Note will bear interest at either (i) a fixed rate or
rates, which may be zero in the case of certain Notes issued at an Issue Price
(as defined below) representing a discount from the principal amount payable at
Stated Maturity (a "Zero-Coupon Note"), or (ii) a floating rate or rates
determined by reference to the interest rate basis or combination of interest
rate bases (each a "Base Rate") specified in the applicable Pricing Supplement
that may be adjusted by a Spread and/or Spread Multiplier (each as defined
below).
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<PAGE>
Each Note will be issued initially as either a Book-Entry Note or a
Certificated Note in fully registered form without coupons. Except as set forth
in the accompanying Prospectus under "Description of Debt Securities--Global
Securities", Book-Entry Notes will not be issuable in certificated form. See
"Book-Entry System" below.
Unless otherwise stated in the applicable Pricing Supplement, the authorized
denominations of the Notes denominated in U.S. dollars will be U.S. $1,000 or
any larger amount that is an integral multiple of U.S. $1,000. The authorized
denominations of Notes denominated in a Specified Currency other than U.S.
dollars will be set forth in the applicable Pricing Supplement.
Unless otherwise stated in the applicable Pricing Supplement, "Business Day"
means any day, other than a Saturday or Sunday, that meets each of the
following applicable requirements: the day is (i) not a day on which banking
institutions are authorized or required by law or regulation to be closed in
The City of New York and (ii) if the Note is denominated in a Specified
Currency other than U.S. Dollars or ECU, (a) not a day on which banking
institutions are authorized or required by law or regulation to close in the
principal financial center of the country issuing the Specified Currency and
(b) a day on which banking institutions in such financial center are carrying
out transactions in such Specified Currency and (iii) with respect to LIBOR
Notes, a London Banking Day and (iv) with respect to Notes denominated in ECU,
any day that is designated as an ECU settlement day by the ECU Banking
Association in Paris or otherwise generally regarded in the ECU interbank
market as a day on which ECU payments may be made. "London Banking Day" means
any day on which dealings in deposits in U.S. dollars are transacted in the
London interbank market.
The "Stated Maturity" of a Note is the date specified in the applicable
Pricing Supplement as the fixed date on which the principal of such Note is due
and payable. The "Maturity" of a Note is the date on which the principal of
such Note becomes due and payable, whether at Stated Maturity, by acceleration,
early redemption or repayment or otherwise.
The Pricing Supplement relating to each Note will describe the following
terms: (i) the Specified Currency with respect to such Note (and, if such
Specified Currency is other than U.S. dollars, certain other terms relating to
such Note, including the authorized denominations); (ii) whether such Note is
Senior Debt or Subordinated Debt; (iii) whether such Note is a Fixed Rate Note,
a Floating Rate Note or a Zero Coupon Note; (iv) the price (expressed as a
percentage of the aggregate principal amount thereof) at which such Note will
be issued (the "Issue Price"); (v) the date on which such Note will be issued
(the "Original Issue Date"); (vi) the Stated Maturity and whether and on what
terms the Stated Maturity may be extended at the option of the Holder; (vii) if
such Note is a Fixed Rate Note, the rate or rates per annum at which such Note
will bear interest, if any; (viii) if such Note is a Floating Rate Note, the
Base Rate(s), the Initial Interest Rate, the Interest Reset Period, the
Interest Reset Dates, the Interest Payment Period, the Interest Payment Dates,
the Index Maturity, the Maximum Interest Rate and the Minimum Interest Rate, if
any, and the Spread or Spread Multiplier, if any, (all as defined below) and
any other terms relating to the particular method of calculating the interest
rate for such Note; (ix) whether such Note may be redeemed or repaid prior to
the Stated Maturity and, if so, the provisions relating to such redemption or
repayment; (x) whether such Note will be issued initially as a Book-Entry Note
or a Certificated Note; and (xi) any other terms of such Note not inconsistent
with the provisions of the related Indenture.
PAYMENT OF PRINCIPAL AND INTEREST
The principal of and any premium and interest on Notes are payable by the
Corporation in the Specified Currency. If the Specified Currency for a Note is
other than U.S. dollars, the Corporation will (unless otherwise specified in
the applicable Pricing Supplement) appoint an agent (initially Bank of America)
(the "Exchange Rate Agent") to determine the exchange rate for converting all
payments in respect of such Note into U.S. dollars in the manner described in
the following paragraph.
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Notwithstanding the foregoing, the holder of a Note denominated in a Specified
Currency other than U.S. dollars may (unless otherwise specified in the
applicable Pricing Supplement and the Note) elect to receive all such payments
in the Specified Currency by delivery of a written request to the Paying Agent
(as defined below) not later than 15 calendar days prior to the applicable
payment date. Such election will remain in effect until revoked by written
notice to such Paying Agent received not later than 15 calendar days prior to
the applicable payment date. Until the Notes are paid or payment thereof is
provided for, the Corporation will, at all times, maintain a paying agent (the
"Paying Agent") with an office in The City of New York capable of performing
the duties described herein to be performed by the Paying Agent. The
Corporation has initially appointed Bank of America, c/o BankAmerica National
Trust Company, One World Trade Center, 18th Floor, New York, New York 10048-
1191, Attention: Corporate Trust Operations as Paying Agent. The Corporation
will notify the holders of the Notes in accordance with the appropriate
Indenture of any change in the Paying Agent or its address.
Unless otherwise specified in the Pricing Supplement, in the case of a Note
denominated in a Specified Currency other than U.S. dollars (except for a Note
denominated in ECU for which the exchange rate will be calculated as set forth
in the applicable Pricing Supplement), unless the Holder has elected otherwise,
payment in respect of such a Note shall be made in U.S. dollars based upon the
exchange rate as determined by the Exchange Rate Agent based on the highest
firm bid quotation for U.S. dollars received by such Exchange Rate Agent at
approximately 11:00 A.M., New York City time, on the second Business Day
preceding the applicable payment date (or, if no such rate is quoted on such
date, the last date on which such rate was quoted), from three recognized
foreign exchange dealers in The City of New York selected by the Exchange Rate
Agent and approved by the Corporation for the purchase by the quoting dealer,
for settlement on such payment date, of the aggregate amount of the Specified
Currency payable on such payment date in respect of all Notes denominated in
such Specified Currency. All currency exchange costs will be borne by the
holders of such Notes by deductions from such payments. If no such bid
quotations are available, payments will be made in the Specified Currency,
unless such Specified Currency is unavailable due to the imposition of exchange
controls or to other circumstances beyond the Corporation's control, in which
case payment will be made as described under "Currency Risks--Payment
Currency", below.
With respect to any Global Security representing one or more Book-Entry
Notes, the total amount of any principal, premium, if any, or interest due on
any Interest Payment Date will be made available to the Paying Agent on such
date. The Paying Agent will make such payments to the Depositary in accordance
with the existing arrangements between the Paying Agent and the Depositary. The
Depositary will allocate such payments to each Book-Entry Note represented by
such Global Security and make payments to the owners or holders thereof in
accordance with its existing operating procedures. Neither the Corporation nor
the Paying Agent shall have any responsibility or liability for such payments
by the Depositary. So long as the Depositary or its nominee is the registered
owner of any Global Security, the Depositary or its nominee, as the case may
be, will be considered the sole owner or holder of the Book-Entry Note or Notes
represented by such Global Security for all purposes under the Indenture.
With respect to Certificated Notes, unless otherwise specified in the
applicable Pricing Supplement, payments in U.S. dollars of interest on Notes
(other than interest payable at Maturity) will be made by mailing a check by
first class mail on the applicable Interest Payment Date to the holder at the
address of such holder appearing on the Security Register on the applicable
Record Date. Notwithstanding the foregoing, a holder of U.S. $10,000,000 or
more in aggregate principal amount of Notes of like tenor and terms (or a
holder of the equivalent thereof in a Specified Currency other than U.S.
dollars) shall be entitled to receive such payments in U.S. dollars by wire
transfer of immediately available funds, but only if appropriate payment
instructions have been received in writing by the Paying Agent not less than 15
days prior to the applicable Interest Payment Date. Simultaneously with the
election by any holder to receive payments in a Specified Currency other than
U.S. dollars (as provided above), such holder
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<PAGE>
shall provide appropriate payment instructions to the Paying Agent, and all
such payments will be made in immediately available funds to an account
maintained by the payee with a bank located outside the United States. Unless
otherwise specified in the applicable Pricing Supplement, principal and any
premium and interest payable at Maturity in respect of a Note will be paid in
immediately available funds upon surrender of such Note at the office of the
Paying Agent.
Notwithstanding anything in this Prospectus Supplement to the contrary,
unless otherwise specified in the applicable Pricing Supplement, if a Note has
a redemption price at Stated Maturity that exceeds its Issue Price by at least
0.25% of the redemption price at Stated Maturity, multiplied by the number of
full years from the Original Issue Date to the Stated Maturity for such Note,
the amount payable on such Note in the event of acceleration of Stated Maturity
upon an Event of Default shall be an amount equal to the sum of the aggregate
principal amount of such Note multiplied by the Issue Price (expressed as a
percentage of the aggregate principal amount) plus the original issue discount
accrued from the date of issue to the date of declaration, which accrual shall
be calculated using the "interest method" (computed in accordance with
generally accepted accounting principles in effect on the date of such
payment).
Unless otherwise specified in the applicable Pricing Supplement, the "Record
Date" with respect to any Interest Payment Date (as defined below) shall be the
date 15 calendar days immediately preceding such Interest Payment Date whether
or not such date shall be a Business Day. Interest payable and punctually paid
or duly provided for on any Interest Payment Date will be paid to the person in
whose name a Note is registered at the close of business on the Record Date
next preceding such Interest Payment Date; provided, however, that the first
payment of interest on any Note with an Original Issue Date between a Record
Date and an Interest Payment Date or on an Interest Payment Date will be made
on the Interest Payment Date following the next succeeding Record Date to the
registered owner on such next succeeding Record Date; provided, further, that
interest payable at Maturity will be payable to the person to whom principal
shall be payable.
All percentages resulting from any calculations will be rounded, if
necessary, to the nearest one hundred-thousandth of a percentage point, with
five one-millionths of a percentage point being rounded upwards, and all
currency or currency unit amounts used and resulting from such calculations on
the Notes will be rounded to the nearest one-hundredth of a unit (with .005 of
a unit being rounded upwards).
FIXED RATE NOTES
Each Fixed Rate Note will bear interest from its Original Issue Date, unless
otherwise specified in the applicable Pricing Supplement, at the rate or rates
per annum stated on the face thereof until the principal amount thereof is paid
or made available for payment. Unless otherwise set forth in an applicable
Pricing Supplement, interest on each Fixed Rate Note will be payable semi-
annually each April 15 and October 15 and at Maturity (each an "Interest
Payment Date"). Each payment of interest in respect of an Interest Payment Date
shall include interest accrued to but excluding such Interest Payment Date.
Interest on Fixed Rate Notes will be computed on the basis of a 360-day year of
twelve 30-day months.
If any Interest Payment Date on a Fixed Rate Note falls on a day that is not
a Business Day, the related payment of principal, premium, if any, or interest
will be made on the next succeeding Business Day with the same force and effect
as if made on the date such payment was due, and no additional interest shall
accrue as a result of such delayed payment.
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FLOATING RATE NOTES
Each Floating Rate Note will bear interest from its Original Issue Date,
unless otherwise specified in the applicable Pricing Supplement, at rates
determined by reference to the Base Rate(s) plus or minus the Spread, if any,
and/or multiplied by the Spread Multiplier, if any (each as specified in the
applicable Pricing Supplement) until the principal thereof is paid or made
available for payment. The "Spread" is the number of basis points (one basis
point equals one-hundredth of a percentage point) that may be specified in the
applicable Pricing Supplement as being applicable to such Floating Rate Note,
and the "Spread Multiplier" is the percentage that may be specified in the
applicable Pricing Supplement as being applicable to such Note. Any Floating
Rate Note may also have either or both of the following: (i) a maximum
numerical interest rate limitation, or ceiling, on the rate of interest which
may accrue during any interest period (the "Maximum Interest Rate"); and (ii) a
minimum numerical interest rate limitation, or floor, on the rate of interest
which may accrue during any interest period (the "Minimum Interest Rate"). In
addition, a Floating Rate Note may have an interest rate calculated by adding
or subtracting two or more Base Rates as adjusted. The applicable Pricing
Supplement will designate one or more of the following Base Rates as applicable
to the related Floating Rate Note for each Interest Reset Period (as defined
below): (a) the CD Rate (a "CD Rate Note"), (b) the Commercial Paper Rate (a
"Commercial Paper Rate Note"), (c) the Federal Funds Rate (a "Federal Funds
Rate Note"), (d) LIBOR (a "LIBOR Note"), (e) the Treasury Rate (a "Treasury
Rate Note"), (f) the CMT Rate(a "CMT Rate Note"), (g) the Prime Rate (a "Prime
Rate Note"), (h) one or more fixed rates, or (i) such other Base Rate or
interest rate formula as is set forth in the applicable Pricing Supplement.
The rate of interest on each Floating Rate Note will be reset daily, weekly,
monthly, quarterly, semi-annually or annually (the "Interest Reset Period"), as
specified in the applicable Pricing Supplement. Unless otherwise specified in
the applicable Pricing Supplement and except as provided below, the date or
dates on which interest will be reset (each an "Interest Reset Date") will be,
in the case of Floating Rate Notes which reset daily, each Business Day; in the
case of Floating Rate Notes (other than Treasury Rate Notes) that reset weekly,
Wednesday of each week; in the case of Treasury Rate Notes that reset weekly,
Tuesday of each week; in the case of Floating Rate Notes that reset monthly,
the third Wednesday of each month; in the case of Floating Rate Notes that
reset quarterly, the third Wednesday of March, June, September and December; in
the case of Floating Rate Notes that reset semi-annually, the third Wednesday
of the two months specified in the applicable Pricing Supplement; and in the
case of Floating Rate Notes that reset annually, the third Wednesday of the
month specified in the applicable Pricing Supplement. If any Interest Reset
Date for any Floating Rate Note is not a Business Day, such Interest Reset Date
shall be postponed to the next day that is a Business Day, except, in the case
of a LIBOR Note, if such Business Day is in the next succeeding calendar month,
such Interest Reset Date shall be the immediately preceding Business Day. In
addition, if an auction falls on a day that is an Interest Reset Date for
Treasury Rate Notes, the Interest Reset Date shall be the following day that is
a Business Day.
Interest on each Floating Rate Note will be payable monthly, quarterly, semi-
annually or annually (the "Interest Payment Period") and at Maturity. Except as
provided below or in the applicable Pricing Supplement, the date or dates on
which interest will be payable (each an "Interest Payment Date") will be, in
the case of Floating Rate Notes with a monthly Interest Payment Period, the
third Wednesday of each month; in the case of Floating Rate Notes with a
quarterly Interest Payment Period, the third Wednesday of March, June,
September and December; in the case of Floating Rate Notes with a semi-annual
Interest Payment Period, the third Wednesday of the two months specified in the
applicable Pricing Supplement; and in the case of Floating Rate Notes with an
annual Interest Payment Period, the third Wednesday of the month specified in
the applicable Pricing Supplement, and, in each case, at Maturity. If any
Interest Payment Date (other than an Interest Payment Date occurring on
Maturity) for any Floating Rate Note would otherwise be a day that is not a
Business Day, such Interest Payment Date shall be postponed to the next day
that is a Business Day, except that in the case of a LIBOR Note, if such
Business Day is in the next succeeding calendar month, such Interest Payment
Date shall
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be the immediately preceding Business Day. If an Interest Payment Date
occurring on Maturity of a Floating Rate Note falls on a day that is not a
Business Day, the payment of principal, premium, if any, and interest will not
be made on such Interest Payment Date but will be made on the next succeeding
Business Day, and no interest on such payment shall accrue for the period from
and after such Interest Payment Date to the date of such payment on the next
succeeding Business Day.
Unless otherwise provided in the applicable Pricing Supplement, interest
payments on each Interest Payment Date for Floating Rate Notes will include
accrued interest from and including the Original Issue Date or from and
including the last date in respect of which interest has been paid, as the case
may be, to, but excluding, such Interest Payment Date. Unless otherwise
specified in the applicable Pricing Supplement, accrued interest will be
calculated by multiplying the principal amount of a Floating Rate Note by an
accrued interest factor. This accrued interest factor will be computed by
adding the interest factors calculated for each day in the period for which
accrued interest is being calculated. The interest factor (expressed as a
decimal) for each such day will be computed by dividing the interest rate
applicable to such day by 360 in the case of CD Rate Notes, Commercial Paper
Rate Notes, Federal Funds Rate Notes, LIBOR Notes and Prime Rate Notes, or by
the actual number of days in the year in the case of Treasury Rate Notes and
CMT Rate Notes. Unless otherwise specified in the applicable Pricing
Supplement, if the Base Rate for an applicable Interest Reset Period is a fixed
rate, interest will be calculated on the basis of a 360-day year of twelve 30-
day months. The interest factor for Notes for which the interest rate is
calculated with reference to two or more Base Rates will be calculated in each
period in the manner specified in the applicable Pricing Supplement. Unless
otherwise provided in the applicable Pricing Supplement, the interest rate in
effect on each day will be (a) if such day is an Interest Reset Date, the
interest rate with respect to the Interest Determination Date (as defined
below) pertaining to such Interest Reset Date, or (b) if such day is not an
Interest Reset Date, the interest rate with respect to the Interest
Determination Date pertaining to the next preceding Interest Reset Date,
subject in either case to any Maximum or Minimum Interest Rate limitation
referred to above; provided, however, that the interest rate in effect for the
period from the Original Issue Date to the first Interest Reset Date set forth
in the Pricing Supplement with respect to a Floating Rate Note will be the
"Initial Interest Rate" specified in the applicable Pricing Supplement. The
interest rate on the Floating Rate Notes will in no event be higher than the
maximum rate permitted by California law. Under present California law, there
is no maximum rate applicable to the Notes.
Unless otherwise specified in the applicable Pricing Supplement, the
"Interest Determination Date" pertaining to an Interest Reset Date for CD Rate
Notes, Commercial Paper Rate Notes, Federal Funds Rate Notes, CMT Rate Notes
and Prime Rate Notes, will be the second Business Day next preceding such
Interest Reset Date. Unless otherwise specified in the applicable Pricing
Supplement, the Interest Determination Date pertaining to an Interest Reset
Date for a LIBOR Note will be the second London Banking Day next preceding such
Interest Reset Date. Unless otherwise specified in the applicable Pricing
Supplement, the Interest Determination Date pertaining to an Interest Reset
Date for a Treasury Rate Note will be the day of the week in which such
Interest Reset Date falls on which Treasury bills of the Index Maturity
specified on the face of the Treasury Rate Notes are auctioned. Treasury bills
are normally sold at auction on Monday of each week, unless that day is a legal
holiday, in which case the auction is normally held on the following Tuesday,
except that such auction may be held on the preceding Friday. If, as the result
of a legal holiday, an auction is so held on the preceding Friday, such Friday
will be the Interest Determination Date pertaining to the Interest Reset Date
occurring in the next succeeding week.
Unless otherwise specified in the applicable Pricing Supplement, the
"Calculation Date", where applicable, pertaining to an Interest Determination
Date will be the earlier of (i) the tenth calendar day after such Interest
Determination Date or if any such day is not a Business Day, the next
succeeding Business Day or (ii) the Business Day preceding the applicable
Interest Payment Date or date of maturity or, if applicable, earlier date of
redemption or repayment.
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Unless otherwise specified in the applicable Pricing Supplement, Bank of
America shall be the calculation agent (the "Calculation Agent") with respect
to the Floating Rate Notes. Upon request of the holder of any Floating Rate
Note, the Calculation Agent will provide the interest rate then in effect and,
if determined, the interest rate which will become effective on the next
Interest Reset Date with respect to such Floating Rate Note.
Unless otherwise specified in the applicable Pricing Supplement, on each
Interest Reset Date the rate of interest on a Floating Rate Note shall be the
rate determined in accordance with the provisions of the applicable heading
below.
CD Rate Notes
CD Rate Notes will bear interest at the interest rates (calculated with
reference to the CD Rate and the Spread and/or Spread Multiplier, if any,
applicable to the Interest Reset Period) specified in the CD Rate Notes and in
the applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, "CD Rate"
means, with respect to any Interest Determination Date, the rate on such date
for negotiable certificates of deposit having the Index Maturity designated in
the applicable Pricing Supplement as published by the Board of Governors of the
Federal Reserve System in "Statistical Release H.15(519), Selected Interest
Rates", or any successor publication of the Board of Governors of the Federal
Reserve System ("H.15(519)") under the heading "CDs (Secondary Market)" or, if
not so published by 3:00 p.m., New York City time, on the Calculation Date
pertaining to such Interest Determination Date, the CD Rate will be the rate on
such Interest Determination Date for negotiable certificates of deposit of the
Index Maturity designated in the applicable Pricing Supplement as published by
the Federal Reserve Bank of New York in its daily statistical release,
"Composite 3:30 p.m. Quotations for U.S. Government Securities" ("Composite
Quotations") under the heading "Certificates of Deposit". If neither of such
rates is published by 3:00 p.m., New York City time, on the Calculation Date
pertaining to such Interest Determination Date, then the CD Rate on such
Interest Determination Date will be calculated by the Calculation Agent and
will be the arithmetic mean of the secondary market offered rates as of 10:00
a.m., New York City time, on such Interest Determination Date, of three leading
nonbank dealers in negotiable U.S. dollar certificates of deposit in The City
of New York selected by the Calculation Agent (after consultation with the
Corporation) for negotiable certificates of deposit of major United States
money center banks of the highest credit standing (in the market for negotiable
certificates of deposit) with a remaining maturity closest to the Index
Maturity designated in the Pricing Supplement in a denomination of $5,000,000;
provided, however, that if the dealers selected as aforesaid by the Calculation
Agent are not quoting as mentioned in this sentence, the CD Rate for the
applicable Interest Reset Period will be the same as the CD Rate for the
immediately preceding Interest Reset Period (or, if there was no Interest Reset
Period, the Initial Interest Rate).
CD Rate Notes, as other Notes, are not deposit obligations of a bank and are
not insured by the Federal Deposit Insurance Corporation, Bank Insurance Fund
or any other government agency.
Commercial Paper Rate Notes
Commercial Paper Rate Notes will bear interest at the interest rates
(calculated with reference to the Commercial Paper Rate and the Spread and/or
Spread Multiplier, if any, which is applicable to the Interest Reset Period)
specified in the Commercial Paper Rate Notes and in the applicable Pricing
Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, "Commercial
Paper Rate" means with respect to any Interest Determination Date, the Money
Market Yield (as defined below) of the rate on that date for commercial paper
having the Index Maturity designated in the applicable Pricing Supplement as
published in H.15(519), under the heading "Commercial Paper". In the event that
such rate is not published by 3:00 p.m., New York City time, on the Calculation
Date pertaining to such Interest Determination Date, then the Commercial Paper
Rate shall be the Money Market Yield of the
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rate on that Interest Determination Date for commercial paper having the Index
Maturity designated in the applicable Pricing Supplement as published in
Composite Quotations under the heading "Commercial Paper". If by 3:00 p.m., New
York City time, on such Calculation Date such rate is not yet published in
Composite Quotations, the Commercial Paper Rate for that Interest Determination
Date shall be calculated by the Calculation Agent and shall be the Money Market
Yield of the arithmetic mean of the offered rates of three leading dealers of
commercial paper in The City of New York selected by the Calculation Agent
(after consultation with the Corporation) as of 11:00 a.m., New York City time,
on that Interest Determination Date, for commercial paper having the Index
Maturity designated in the applicable Pricing Supplement placed for an
industrial issuer whose bond rating is "AA", or the equivalent, from a
nationally recognized rating agency; provided, however, that if the dealers
selected as aforesaid by the Calculation Agent are not quoting as mentioned in
this sentence, the Commercial Paper Rate for the applicable Interest Reset
Period will be the same as the Commercial Paper Rate for the immediately
preceding Interest Reset Period (or, if there was no Interest Reset Period, the
Initial Interest Rate).
"Money Market Yield" shall be a yield calculated in accordance with the
following formula:
D X 360
Money Market Yield = ----------- X 100
360-(D X M)
where "D" refers to the per annum rate for commercial paper, quoted on a bank
discount basis and expressed as a decimal; and "M" refers to the actual number
of days in the interest period for which interest is being calculated.
Federal Funds Rate Notes
Federal Funds Rate Notes will bear interest at the interest rates (calculated
with reference to the Federal Funds Rate and the Spread and/or Spread
Multiplier, if any, applicable to the Interest Reset Period) specified in the
Federal Funds Rate Notes and in the applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, "Federal
Funds Rate" means, with respect to any Interest Determination Date, the rate on
that day for Federal Funds as published in H.15(519) under the heading "Federal
Funds (Effective)" or, if not so published by 3:00 p.m., New York City time, on
the Calculation Date pertaining to such Interest Determination Date, the
Federal Funds Rate will be the rate on such Interest Determination Date as
published in Composite Quotations under the heading "Federal Funds/Effective
Rate". If neither of such rates is published by 3:00 p.m., New York City time,
on the Calculation Date pertaining to such Interest Determination Date, the
Federal Funds Rate for such Interest Determination Date will be calculated by
the Calculation Agent and will be the arithmetic mean of the rates for the last
transaction in overnight Federal Funds arranged by three leading brokers of
Federal Funds transactions in The City of New York selected by the Calculation
Agent (after consultation with the Corporation) as of 9:00 a.m., New York City
time, on such Interest Determination Date; provided, however, that if the
brokers selected as aforesaid by the Calculation Agent are not quoting as
mentioned in this sentence, the Federal Funds Rate for the applicable Interest
Reset Period will be the same as the Federal Funds Rate for the immediately
preceding Interest Reset Period (or, if there was no Interest Reset Period, the
Initial Interest Rate).
LIBOR Notes
LIBOR Notes will bear interest at the interest rates (calculated with
reference to LIBOR and the Spread and/or Spread Multiplier, if any, applicable
to the Interest Reset Period) specified in the LIBOR Notes and in the
applicable Pricing Supplement.
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Unless otherwise indicated in the applicable Pricing Supplement, with respect
to a LIBOR Note indexed to the offered rates for U.S. dollar deposits, "LIBOR"
will be determined by the Calculation Agent in accordance with the following
provisions:
(i) With respect to an Interest Determination Date, LIBOR will be either:
(a) if the Designated LIBOR Page specified on the applicable Pricing
Supplement is Telerate Screen Page 3750 (as defined below), the rate for
deposits in U.S. dollars having the Index Maturity designated in the
applicable Pricing Supplement, commencing on the second London Banking Day
immediately following that Interest Determination Date, that appears on the
Telerate Page 3750 as of 11:00 a.m., London time, on that Interest
Determination Date or (b) if the Designated LIBOR Page specified on the
applicable Pricing Supplement is Reuters Screen LIBO Page (as defined
below), the arithmetic mean of the offered rates for deposits in U.S.
dollars having the Index Maturity designated in the applicable Pricing
Supplement, commencing on the second London Banking Day immediately
following such Interest Determination Date, which appear on the Reuters
Screen LIBO Page as of 11:00 a.m., London time, on the Interest
Determination Date. In the case where (a) above applies, if no rate
appears, or in the case where (b) above applies, if fewer than two offered
rates appear, LIBOR in respect of that Interest Determination Date will be
determined as if the parties had specified the rate described in (ii)
below.
(ii) With respect to an Interest Determination Date on which this
provision applies, LIBOR will be determined on the basis of the rates at
which deposits in U.S. dollars are offered by four major banks in the
London interbank market selected by the Calculation Agent (after
consultation with the Corporation) at approximately 11:00 a.m., London
time, on that Interest Determination Date to prime banks in the London
interbank market having the Index Maturity designed in the Pricing
Supplement commencing on the second London Banking Day immediately
following that Interest Determination Date and in a principal amount equal
to an amount of not less than U.S. $1 million that is representative for a
single transaction in such market at such time. The Calculation Agent will
request the principal London office of each of such banks to provide a
quotation of its rate. If at least two such quotations are provided, LIBOR
in respect of that Interest Determination Date will be the arithmetic mean
of such quotations. If fewer than two quotations are provided, LIBOR in
respect of that Interest Determination Date will be the arithmetic mean of
the rates quoted by three major money center banks in The City of New York
selected by the Calculation Agent (after consultation with the Corporation)
at approximately 11:00 a.m., New York City time, on that Interest
Determination Date for loans in U.S. dollars to leading European banks,
having the Index Maturity designated in the applicable Pricing Supplement
commencing on the second London Banking Day immediately following that
Interest Determination Date and in a principal amount equal to an amount of
not less than U.S. $1 million that is representative for a single
transaction in such market at such time; provided, however, that if the
banks selected as aforesaid by the Calculation Agent are not quoting as
mentioned in this sentence, LIBOR for the applicable period will be the
same as LIBOR for the immediately preceding Interest Reset Period (or, if
there was no such Interest Reset Period, the Initial Interest Rate).
"Telerate Page 3750" means the display designated as page "3750" on the
Telerate Service (or such other page as may replace the 3750 page on that
service or such other service or services as may be nominated by the British
Bankers' Association for the purpose of displaying London interbank offered
rates for U.S. dollar deposits). Unless otherwise indicated in the applicable
Pricing Supplement, "Reuters Screen LIBO Page" means the display designated as
Page "LIBO" on the Reuters Monitor Money Rate Service (or such other page as
may replace the LIBO page on that service for the purpose of displaying London
interbank offered rates of major banks). The selection of the Designated LIBOR
Page as the basis for determining LIBOR will be specified in the applicable
Pricing Supplement. If no Designated LIBOR Page is specified in such Pricing
Supplement, LIBOR will be determined as if the Telerate Screen Page 3750 had
been specified as the Designated LIBOR Page.
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Treasury Rate Notes
Treasury Rate Notes will bear interest at the interest rates (calculated with
reference to the Treasury Rate and the Spread and/or Spread Multiplier, if any,
applicable to the Interest Reset Period) specified in the Treasury Notes and in
the applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, "Treasury
Rate" means, with respect to any Interest Determination Date, the rate for the
auction held on such Interest Determination Date of direct obligations of the
United States ("Treasury bills") having the Index Maturity designated in the
applicable Pricing Supplement as published in H.15(519) under the heading "U.S.
Government Securities--Treasury bills--auction average (investment)" or, if not
so published by 3:00 p.m., New York City time, on the Calculation Date
pertaining to such Interest Determination Date, the auction average rate
(expressed as a bond equivalent, on the basis of a year of 365 or 366 days, as
applicable, and applied on a daily basis) as otherwise announced by the United
States Department of the Treasury. In the event that the results of the auction
of Treasury bills having the Index Maturity designated in the applicable
Pricing Supplement are not published or reported as provided above by 3:00
p.m., New York City time, on such Calculation Date or if no such auction is
held in a particular week, then the Treasury Rate shall be calculated by the
Calculation Agent and shall be a yield to maturity (expressed as a bond
equivalent, on the basis of a year of 365 or 366 days, as applicable, and
applied on a daily basis) of the arithmetic mean of the secondary market bid
rates, as of approximately 3:30 p.m., New York City time, on such Interest
Determination Date, of three leading primary United States government
securities dealers selected by the Calculation Agent (after consultation with
the Corporation) for the issue of Treasury bills with a remaining maturity
closest to the Index Maturity designated in the applicable Pricing Supplement;
provided, however, that if the dealers selected as aforesaid by the Calculation
Agent are not quoting as mentioned in this sentence, the Treasury Rate for the
applicable Interest Reset Period will be the same as the Treasury Rate for the
immediately preceding Interest Reset Period (or, if there was no such Interest
Reset Period, the Initial Interest Rate).
CMT Rate Notes
CMT Rate Notes will bear interest at the rates (calculated with reference to
the CMT Rate and the Spread and/or Spread Multiplier, if any, applicable to the
Interest Reset Period) specified in the CMT Rate Notes and in the applicable
Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "CMT Rate"
means, with respect to any Interest Determination Date, the rate displayed on
the Designated CMT Telerate Page (as defined below) under the caption "Treasury
Constant Maturities . . . Federal Reserve Board Release H.15 . . . Mondays
Approximately 3:45 P.M.", under the column for the Designated CMT Maturity
Index (as defined below) for (i) if the Designated CMT Telerate Page is 7055,
the rate on such Interest Determination Date and (ii) if the Designated CMT
Telerate Page is 7052, the week, or the month, as applicable, ended immediately
preceding the week in which the related Interest Determination Date occurs. If
such rate is no longer displayed on the relevant page, or if not displayed by
3:00 p.m., New York City time, on the related Calculation Date, then the CMT
Rate for such Interest Determination Date will be such treasury constant
maturity rate for the Designated CMT Maturity Index as published in the
relevant H.15(519). If such rate is no longer published, or if not published by
3:00 p.m., New York City time, on the related Calculation Date, then the CMT
Rate for such Interest Determination Date will be such treasury constant
maturity rate for the Designated CMT Maturity Index (or other United States
Treasury rate for the Designated CMT Maturity Index) for the Interest
Determination Date with respect to such Interest Reset Date as may then be
published by either the Board of Governors of the Federal Reserve System or the
United States Department of the Treasury that the Calculation Agent determines
to be comparable to the rate formerly displayed on the Designated CMT Telerate
Page and published in the relevant H.15(519). If such information is not
provided by 3:00 P.M., New York City time, on the related Calculation Date,
then the CMT Rate for the Interest Determination Date will be calculated by
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the Calculation Agent and will be a yield to maturity, based on the arithmetic
mean of the secondary market closing offer side prices as of approximately 3:30
p.m., New York City time, on the Interest Determination Date reported,
according to their written records, by three leading primary United States
government securities dealers (each, a "Reference Dealer") in The City of New
York selected by the Calculation Agent (from five such Reference Dealers
selected by the Calculation Agent and eliminating the highest quotation (or, in
the event of equality, one of the highest) and the lowest quotation (or, in the
event of equality, one of the lowest)), for the most recently issued direct
noncallable fixed rate obligations of the United States ("Treasury Notes") with
an original maturity of approximately the Designated CMT Maturity Index and a
remaining term to maturity of not less than such Designated CMT Maturity Index
minus one year. If the Calculation Agent cannot obtain three such Treasury Note
quotations, the CMT Rate for such Interest Determination Date will be
calculated by the Calculation Agent and will be a yield to maturity based on
the arithmetic mean of the secondary market offer side prices as of
approximately 3:30 p.m., New York City time, on the Interest Determination Date
of three Reference Dealers in The City of New York (from five such Reference
Dealers selected by the Calculation Agent and eliminating the highest quotation
(or, in the event of equality, one of the highest) and the lowest quotation
(or, in the event of equality, one of the lowest)), for Treasury Notes with an
original maturity of the number of years that is the next highest to the
Designated CMT Maturity Index and a remaining term to maturity closest to the
Designated CMT Maturity Index and in an amount of at least $100 million. If
three or four (and not five) of such Reference Dealers are quoting as described
above, then the CMT Rate will be based on the arithmetic mean of the offer
prices obtained and neither the highest nor lowest of such quotes will be
eliminated; provided however, that if fewer than three Reference Dealers
selected by the Calculation Agent are quoting as described herein, the CMT Rate
will be the CMT Rate in effect on such Interest Determination Date. If two
Treasury Notes with an original maturity as described in the third preceding
sentence, have remaining terms to maturity equally close to the Designated CMT
Maturity Index, the quotes for the CMT Rate Note with the shorter remaining
term to maturity will be used.
"Designated CMT Telerate Page" means the display on the Dow Jones Telerate
Service on the page designated in the applicable Pricing Supplement (or any
other page as may replace such page on that service for the purpose of
displaying Treasury Constant Maturities as reported in H.15(519)), for the
purpose of displaying Treasury Constant Maturities as reported in H.15(519). If
no such page is specified in the applicable Pricing Supplement, the Designated
CMT Telerate Page shall be 7052, for the most recent week.
"Designated CMT Maturity Index" means the original period to maturity of the
U.S. Treasury securities (either 1, 2, 3, 5, 7, 10, 20, or 30 years) specified
in the applicable Pricing Supplement with respect to which the CMT Rate will be
calculated. If no such maturity is specified in the applicable Pricing
Supplement, the Designated CMT Maturity Index shall be 2 years.
Prime Rate Notes
Unless otherwise indicated in the applicable Pricing Supplement, "Prime Rate
Notes" will bear interest at the interest rates (calculated with reference to
the Prime Rate and the Spread and/or Spread Multiplier, if any, applicable to
the Interest Reset Period) specified in the Prime Rate Notes and in the
applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, "Prime Rate"
means, with respect to any Interest Determination Date, the rate set forth on
such date in H.15(519) under the heading "Bank Prime Loan." In the event that
such rate is not published prior to 9:00 a.m., New York City time, on the
Calculation Date pertaining to such Interest Determination Date, then the Prime
Rate will be determined by the Calculation Agent and will be the arithmetic
mean of the rates of interest publicly announced by each bank that appears on
the Reuters Screen NYMF Page (as defined herein) as such bank's prime rate or
base lending rate as in effect for that Interest Determination Date. If fewer
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than four such rates appear on the Reuters Screen NYMF Page for the Interest
Determination Date, the Prime Rate will be determined by the Calculation Agent
and will be the arithmetic mean of the prime rates quoted on the basis of the
actual number of days in the year divided by a 360-day year as of the close of
business on such Interest Determination Date by at least two major money center
banks in The City of New York selected by the Calculation Agent (after
consultation with the Corporation). If fewer than two such rates are quoted as
aforesaid, the Prime Rate will be determined by the Calculation Agent on the
basis of the rates furnished in The City of New York by one or two, as the case
may be, substitute banks or trust companies organized and doing business under
the laws of the United States, or any State thereof, having total equity
capital of at least U.S. $500,000,000 and being subject to supervision or
examination by federal or state authority, selected by the Calculation Agent
(after consultation with the Corporation) to provide such rate or rates;
provided, however, that if the banks selected as aforesaid are not quoting as
set forth above, the Prime Rate for the applicable Interest Reset Period will
be the same as the Prime Rate for the immediately preceding Interest Reset
Period (or, if there was no such Interest Reset Period, the Initial Interest
Rate). "Reuters Screen NYMF Page" means the display designated as page "NYMF"
on the Reuters Monitor Money Rates Service (or such other page as may replace
the NYMF page on that service for the purpose of displaying the prime rate or
base lending rate of major United States banks).
OTHER PROVISIONS; ADDENDA
Any provisions with respect to the Notes, including the determination of an
interest rate basis, the specification of Base Rate, calculation of the
interest rate applicable to a Note, its Interest Payment Dates or any other
matter relating thereto may be modified by the terms as specified under
"Additional Terms" on the face of the Notes or in an Addendum relating thereto,
if so specified on the face thereof and in the applicable Pricing Supplement.
AMORTIZING NOTES
The Corporation may from time to time offer Notes ("Amortizing Notes") on
which a portion or all the principal amount is payable prior to the Stated
Maturity in accordance with a schedule, by application of a formula, or by
reference to an Index (as defined below). Further information concerning
additional terms and conditions of any Amortizing Notes, including terms for
repayment thereof, will be set forth in the applicable Pricing Supplement.
INDEXED NOTES
Notes ("Indexed Notes") may be issued with the principal amount payable at
Maturity and/or interest to be paid thereon to be determined with reference to
the price or prices of specified commodities or stock, the exchange rate of one
or more specified currencies (including a composite currency such as the
European Currency Unit) relative to an indexed currency, or such other price or
exchange rate as may be specified in such Note (the "Index"), as set forth in
the applicable Pricing Supplement. Holders of such Notes may receive a
principal amount at Maturity that is greater than or less than the face amount
of the Notes depending upon the relative value at Maturity of the specified
indexed item. Information as to the method for determining the principal amount
payable at Maturity, certain historical information with respect to the
specified indexed item and tax considerations associated with investment in
Indexed Notes will be set forth in the applicable Pricing Supplement.
An investment in Indexed Notes which are indexed, as to principal or interest
or both, to one or more values of currencies (including exchange rates between
currencies), commodities or interest rate indices entails significant risks
that are not associated with similar investments in a conventional fixed-rate
debt security. If the interest rate of such a Note is so indexed, it may result
in an interest rate that is less than that payable on a conventional fixed-rate
debt security issued at the same time, including
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the possibility that no interest will be paid, and, if the principal amount of
such a Note is so indexed, the principal amount payable at Maturity may be less
than the original purchase price of such Note if allowed pursuant to the terms
of such Note, including the possibility that no principal will be paid. The
secondary market for such Notes will be affected by a number of factors,
independent of the creditworthiness of the Corporation and the value of the
applicable currency, commodity or interest rate index, including the volatility
of the applicable currency, commodity or interest rate index, the time
remaining to the Maturity of such Notes, the amount outstanding of such Notes
and market interest rates. The value of the applicable currency, commodity or
interest rate index depends on a number of interrelated factors, including
economic, financial and political events, over which the Corporation has no
control. Additionally, if the formula used to determine the principal amount or
interest payable with respect to such Notes contains a multiple or leverage
factor, the effect of any change in the applicable currency, commodity or
interest rate index may be increased. The historical experience of the relevant
currencies, commodities or interest rate indices should not be taken as an
indication of future performance of such currencies, commodities or interest
rate indices during the term of any Note. The credit ratings assigned to the
Corporation's senior or subordinated indebtedness are a reflection of the
Corporation's credit status and, in no way, are a reflection of the potential
impact of the factors discussed above, or any other factors, on the market
value of the Notes. Accordingly, prospective investors should consult their own
financial and legal advisors as to the risks entailed by an investment in such
Notes and the suitability of such Notes in light of their particular
circumstances.
REDEMPTION
The Pricing Supplement relating to each Note will indicate either that such
Note cannot be redeemed prior to the Stated Maturity or that such Note will be
redeemable at the option of the Corporation on a date or dates specified prior
to the Stated Maturity at a price or prices, set forth in the applicable
Pricing Supplement, together with accrued interest to the date of redemption.
Unless otherwise specified in the applicable Pricing Supplement, the Notes will
not be subject to any sinking fund. The Corporation may redeem any of the Notes
which are redeemable and remain outstanding either in whole or from time to
time in part, upon not less than 30 nor more than 60 days' notice. If less than
all of the Notes with like tenor and terms are to be redeemed, the Notes to be
redeemed shall be selected by the Trustee by such method as the Trustee shall
deem fair and appropriate.
REPAYMENT AND REPURCHASE
The Pricing Supplement relating to each Note will indicate either that such
Note cannot be repaid prior to the Stated Maturity or that the Note will be
repayable at the option of the holder on a date or dates specified prior to the
Stated Maturity at a price or prices set forth in the applicable Pricing
Supplement, together with accrued interest to the date of repayment.
In order for a Note to be repaid, the Paying Agent must receive at its
address indicated above (or such other address of which the Corporation shall
from time to time notify the holders) at least 30 days but not more than 45
days prior to the repayment date (i) the Note with the form entitled "Option to
Elect Repayment" on the reverse of the Note duly completed or (ii) a telegram,
telex, facsimile transmission or a letter from a member of a national
securities exchange or the National Association of Securities Dealers, Inc. or
a commercial bank or trust company in the United States of America setting
forth the name of the holder of the Note, the principal amount of the Note, the
principal amount of the Note to be repaid, the certificate number or a
description of the tenor and terms of the Note, a statement that the option to
elect repayment is being exercised thereby and a guarantee that the Note to be
repaid with the form entitled "Option to Elect Repayment" on the reverse of the
Note duly completed will be received by the Paying Agent not later than five
Business Days after the date of such telegram, telex, facsimile transmission or
letter and such Note and form duly completed are received by the Paying Agent
by such fifth Business Day. Exercise of the repayment option by the holder of a
Note shall be
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irrevocable. The repayment option may be exercised by the holder of a Note for
less than the entire principal amount of the Note provided that the principal
amount of the Note remaining outstanding after repayment is an authorized
denomination.
While the Book-Entry Notes are represented by the Global Securities held by
or on behalf of the Depositary, and registered in the name of the Depositary or
the Depositary's nominee, the option for repayment may be exercised by the
applicable Participant (as defined below) that has an account with the
Depositary, on behalf of the beneficial owners of the Global Security or
Securities representing such Book-Entry Notes, by delivering a written notice
substantially similar to the above mentioned form to the Paying Agent at its
address indicated above (or such other address of which the Corporation shall
from time to time notify the holders), at least 30 days but not more than 45
days prior to the repayment date. Notices of elections from Participants on
behalf of beneficial owners of the Global Security or Securities representing
such Book-Entry Notes to exercise their option to have such Book-Entry Notes
repaid must be received by the Paying Agent by 5:00 p.m., New York City time,
on the last day for giving such notice. In order to ensure that a notice is
received by the Paying Agent on a particular day, the beneficial owner of the
Global Security or Securities representing such Book-Entry Notes must so direct
the applicable Participant before such Participant's deadline for accepting
instructions for that day. Different firms may have different deadlines for
accepting instructions from their customers. Accordingly, beneficial owners of
the Global Security or Securities representing Book-Entry Notes should consult
the participants through which they own their interest therein for the
respective deadlines for such Participants. All notices shall be executed by a
duly authorized officer of such Participant (with signature guaranteed) and
shall be irrevocable. In addition, beneficial owners of the Global Security or
Securities representing Book-Entry Notes shall effect delivery at the time such
notices of election are given to the Depositary by causing the applicable
Participant to transfer such beneficial owner's interest in the Global Security
or Securities representing such Book-Entry Notes, on the Depositary's records,
to the Paying Agent. See "Book-Entry System."
The Corporation may at any time purchase Notes at any price in the open
market or otherwise. Notes so purchased by the Corporation may, at the
discretion of the Corporation, be held, resold or cancelled.
BOOK-ENTRY SYSTEM
Upon issuance, all Book-Entry Notes having the same Specified Currency,
Original Issue Date, rank (senior or subordinated), Maturity Date, redemption
provisions, repayment provisions, Interest Payment Period and Dates and, in the
case of Fixed Rate Notes, interest rate or, in the case of Floating Rate Notes,
Base Rate, Initial Interest Rate, Index Maturity, Interest Reset Period and
Dates, Spread or Spread Multiplier, if any, Minimum Interest Rate, if any, and
Maximum Interest Rate, if any, will be represented by a single Global Security.
Each Global Security representing Book-Entry Notes will be deposited with Bank
of America, as custodian for The Depository Trust Company, New York, New York
("DTC") and registered in the name of DTC's nominee as set forth below. Each
Global Security may be transferred, in whole and not in part, only by DTC to a
nominee of DTC or by a nominee of DTC to DTC or another nominee of DTC or by
DTC or any nominee to a successor depositary or any nominee of such successor.
DTC has advised as follows: it is a limited-purpose trust company organized
under the New York Banking Law, a "banking organization" within the meaning of
the New York Banking Law, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code, and a
"clearing agency" registered pursuant to the provisions of Section 17A of the
Securities Exchange Act of 1934, as amended. DTC holds securities that its
participants ("Participants") deposit with DTC. DTC also facilitates the
settlement among Participants of securities transactions, such as transfers and
pledges, in deposited securities through electronic computerized book-entry
changes in Participants' accounts, thereby eliminating the need for physical
movement of securities
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certificates. "Direct Participants" include securities brokers and dealers,
banks, trust companies, clearing corporations, and certain other organizations.
DTC is owned by a number of its Direct Participants and by the New York Stock
Exchange, Inc., the American Stock Exchange, Inc., and the National Association
of Securities Dealers, Inc. Access to the DTC system is also available to
others such as securities brokers and dealers, banks, and trust companies that
clear through or maintain a custodial relationship with a Direct Participant,
either directly or indirectly ("Indirect Participants"). The Rules applicable
to DTC and its Participants are on file with the Securities and Exchange
Commission.
Purchases of interests in the Global Securities under the DTC system must be
made by or through Direct Participants, which will receive a credit for such
interests on DTC's records. The ownership interest of each actual purchaser of
interests in the Global Securities ("Beneficial Owner") is in turn to be
recorded on the Direct and Indirect Participants' records. Beneficial Owners
will not receive written confirmation from DTC of their purchase, but
Beneficial Owners are expected to receive written confirmations providing
details of the transaction, as well as periodic statements of their holdings,
from the Direct or Indirect Participant through which the Beneficial Owner
entered into the transaction. Transfers of ownership interests in the Global
Securities are to be accomplished by entries made on the books of Participants
acting on behalf of Beneficial Owners. Beneficial Owners will not receive
certificates representing their ownership interests in the Global Securities,
except as described below.
To facilitate subsequent transfers, all Global Securities deposited by
Participants with DTC are registered in the name of DTC's partnership nominee,
Cede & Co. The deposit of Global Securities with DTC and their registration in
the name of Cede & Co. effect no change in beneficial ownership. DTC has no
knowledge of the actual Beneficial Owners of the interests in the Global
Securities; DTC's records reflect only the identity of the Direct Participants
to whose accounts interests in the Global Securities are credited, which may or
may not be the Beneficial Owners. The Participants will remain responsible for
keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct Participants,
by Direct Participants to Indirect Participants, and by Direct Participants and
Indirect Participants to Beneficial Owners will be governed by arrangements
among them, subject to any statutory or regulatory requirements as may be in
effect from time to time.
Redemption notices shall be sent to Cede & Co. If less than all of the
interests in a Global Security are being redeemed, DTC's practice is to
determine by lot the amount of the interest of each Direct Participant in such
Global Security to be redeemed.
Neither DTC nor Cede & Co. will consent or vote with respect to the Global
Securities. Under its usual procedures, DTC mails an Omnibus Proxy to the
issuer as soon as possible after the record date. The Omnibus Proxy assigns
Cede & Co.'s consenting or voting rights to those Direct Participants to whose
accounts interests in the Global Securities are credited on the record date
(identified in a listing attached to the Omnibus Proxy).
Principal and interest payments on the Global Securities will be made to DTC.
DTC's practice is to credit Direct Participants' accounts on the payment date
in accordance with their respective holdings shown on DTC's records unless DTC
has reason to believe that it will not receive payment on the payment date.
Payments by Participants to Beneficial Owners will be governed by standing
instructions and customary practices, as is the case with securities held for
the accounts of customers in bearer form or registered in "street name," and
will be the responsibility of such Participant and not of DTC, the Paying
Agent, or the Corporation, subject to any statutory or regulatory requirements
as may be in effect from time to time. Payment of principal and interest to DTC
is the responsibility of the Corporation or the Paying Agent, disbursement of
such payments to Direct Participants shall be the responsibility of DTC, and
disbursement of such payments to the Beneficial Owners shall be the
responsibility of Direct and Indirect Participants.
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DTC may discontinue providing its services as depository with respect to the
Notes at any time by giving reasonable notice to the Corporation or the Paying
Agent. Under such circumstances, in the event that a successor depository is
not obtained, definitive Note certificates are required to be printed and
delivered.
The Corporation may decide to discontinue use of the system of book-entry
transfers through DTC (or a successor depository).
A Global Security representing all but not part of any Book-Entry Notes
offered hereby is exchangeable for Notes in definitive form of like tenor and
terms if (i) the Depositary notifies the Corporation that it is unwilling or
unable to continue as Depositary for such Global Security or if at any time
such Depositary ceases to be a clearing agency registered as such under the
Securities Exchange Act of 1934, as amended, and the Corporation does not
appoint a successor depositary within 90 days of receipt by the Corporation of
such notice or of the Corporation becoming aware of such ineligibility or (ii)
the Corporation executes and delivers to the applicable Trustee a Corporation
Order that such Global Security shall be exchangeable. The Global Security
exchangeable pursuant to the preceding sentence shall be exchangeable for Notes
issuable in denominations of $1,000 and any integral multiple thereof and
registered in such names as the Depositary holding such Global Security shall
direct. In the event of such exchange, interest and principal on the Notes will
be payable in the manner provided for Certificated Notes.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that the Corporation believes to be reliable,
but the Corporation takes no responsibility for the accuracy thereof.
CURRENCY RISKS
EXCHANGE RATES AND EXCHANGE CONTROLS
An investment in Notes that are denominated in, or the payment of which is
related to the value of, a Specified Currency other than the currency of the
country in which a purchaser is resident or the currency (including any
composite currency) in which a purchaser conducts its business (the "home
currency") entails significant risks that are not associated with a similar
investment in a security denominated in the home currency. Such risks include,
without limitation, the possibility of significant changes in rates of exchange
between the home currency and the Specified Currency and the possibility of the
imposition or modification of foreign exchange controls with respect to the
Specified Currency. Such risks generally depend on factors over which the
Corporation has no control, such as economic and political events and the
supply of and demand for the relevant currencies. In recent years, rates of
exchange for certain currencies have been highly volatile, and such volatility
may be expected in the future. Fluctuations in any particular exchange rate
that have occurred in the past are not necessarily indicative, however, of
fluctuations in the rate that may occur during the term of any Note.
Depreciation of the Specified Currency in which a Note is payable against the
relevant home currency would result in a decrease in the effective yield of
such Note below its coupon rate, and in certain circumstances, could result in
a loss to the investor on a home currency basis. In addition, depending on the
specific terms of a Note, changes in exchange rates relating to any of the
currencies involved may result in a decrease in its effective yield and, in
certain circumstances, could result in a loss to the investor of all or a
substantial portion of the principal of a Note.
Governments have from time to time imposed, and may in the future impose,
exchange controls that could affect exchange rates as well as the availability
of a Specified Currency on an Interest Payment Date or the Maturity Date with
respect to a Note. At present, the Corporation has identified the following
currencies and currency units in which payments of principal and interest on
Notes may be made: Australian Dollars, Canadian Dollars, Danish Kroner, German
Marks, Hong Kong Dollars,
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Italian Lire, New Zealand Dollars, Spanish Pesetas, United States Dollars and
European Currency Units. There can be no assurances that exchange controls will
not restrict or prohibit payments of principal or interest in any such currency
or currency unit. Even if there are no actual exchange controls, it is possible
that on an Interest Payment Date or Maturity Date with respect to any
particular Note, a Specified Currency for such Note would not be available to
the Corporation to make payments of interest and principal then due.
THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS DO NOT DESCRIBE
ALL THE RISKS OF AN INVESTMENT IN NOTES DENOMINATED IN, OR THE PAYMENT OF WHICH
IS RELATED TO THE VALUE OF, A CURRENCY (INCLUDING ANY COMPOSITE CURRENCY) OTHER
THAN A PROSPECTIVE PURCHASER'S HOME CURRENCY, AND THE CORPORATION DISCLAIMS ANY
RESPONSIBILITY TO ADVISE PROSPECTIVE PURCHASERS OF SUCH RISKS AS THEY EXIST AT
THE DATE OF THIS PROSPECTUS SUPPLEMENT OR AS SUCH RISKS MAY CHANGE FROM TIME TO
TIME. PROSPECTIVE PURCHASERS SHOULD CONSULT THEIR OWN FINANCIAL AND LEGAL
ADVISORS AS TO THE RISKS ENTAILED BY AN INVESTMENT IN NOTES DENOMINATED IN
CURRENCIES (INCLUDING COMPOSITE CURRENCIES) OTHER THAN THE PARTICULAR HOME
CURRENCY. SUCH NOTES ARE NOT AN APPROPRIATE INVESTMENT FOR PERSONS WHO ARE
UNSOPHISTICATED WITH RESPECT TO FOREIGN CURRENCY TRANSACTIONS.
Pricing Supplements relating to Notes denominated in a Specified Currency
other than the U.S. dollars may contain information concerning historical
exchange rates for such Specified Currency against the U.S. dollar, a
description of the currency and any exchange controls affecting such currency.
PAYMENT CURRENCY
Except as set forth below, if payment on a Note is required to be made in a
foreign currency and such currency is unavailable due to the imposition of
exchange controls or other circumstances beyond the Corporation's control, or
is no longer used by the government of the country issuing such currency or for
the settlement of transactions by public institutions in that country or within
the international banking community, then all payments due on that due date
with respect to such Note shall be made in U.S. dollars. The amount so payable
on any date in such foreign currency shall be converted into U.S. dollars at a
rate determined by the Exchange Rate Agent on the basis of the most recently
available Market Exchange Rate or as otherwise indicated in an applicable
Pricing Supplement.
If payment on a Note is required to be made in ECU and ECU is unavailable due
to the imposition of exchange controls or other circumstances beyond the
Corporation's control, or is no longer used in the European Monetary System,
all payments due on that due date with respect to the Notes shall be made in
U.S. dollars. The amount so payable on any date in ECU shall be converted into
U.S. dollars, at a rate determined by the Exchange Rate Agent as of the second
Business Day prior to the date on which such payment is due on the following
basis. The component currencies of the ECU for this purpose (the "Components")
shall be the currency amounts which were components of the ECU as of the last
date on which the ECU was used in the European Monetary System. The equivalent
of the ECU in U.S. dollars shall be calculated by aggregating the U.S. dollar
equivalents of the Components. The U.S. dollar equivalent of each of the
Components shall be determined by the Exchange Rate Agent on the basis of the
most recently available Market Exchange Rate, or as otherwise indicated in the
applicable Pricing Supplement.
If the official unit of any component currency is altered by way of
combination or subdivision, the number of units of that currency as a Component
shall be divided or multiplied in the same proportion. If two or more component
currencies are consolidated into a single currency, the amounts of those
currencies as Components shall be replaced by an amount in such single currency
equal to the sum of the amounts of the consolidated component currencies
expressed in such single currency. If any
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component currency is divided into two or more currencies, the amount of that
currency as a Component shall be replaced by amounts of such two or more
currencies, each of which shall have a value on the date of division equal to
the amount of the former component currency divided by the number of currencies
into which that currency was divided.
All determinations referred to above made by the Exchange Rate Agent shall be
at its sole discretion (except to the extent expressly provided herein that any
determination is subject to approval by the Corporation) and, in the absence of
manifest error, shall be conclusive for all purposes and binding on holders of
the Notes and the Exchange Rate Agent shall have no liability therefor.
FOREIGN CURRENCY JUDGMENTS
The Notes will be governed by and construed in accordance with the laws of
the State of California. Courts in the United States customarily have not
rendered judgments for money damages denominated in any currency other than the
U.S. dollar. Under California law, where an action is based upon an obligation
denominated in a currency other than U.S. dollars, the judgment may be stated
in that foreign currency or may be stated in U.S. dollars based on a rate of
exchange prevailing on the banking day next preceding the date the judgment is
paid.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
In the opinion of Raymond W. McKee, Esq., an Assistant Treasurer of the
Corporation and a Senior Vice President of and the General Tax Counsel for Bank
of America, who has acted as tax counsel to the Corporation, the following
summary correctly describes certain United States federal income tax
consequences of the ownership of Notes as of the date hereof. This summary is
based on the Internal Revenue Code of 1986, as amended (the "Code"), as well as
final, temporary and proposed Treasury regulations and administrative and
judicial decisions. Legislative, judicial and administrative changes may occur,
possibly with retroactive effect, affecting the accuracy of the statements set
forth herein. This summary does not purport to address all federal income tax
matters that may be relevant to particular purchasers of Notes. For example, it
generally is addressed only to original purchasers of the Notes, deals only
with Notes held as capital assets within the meaning of Section 1221 of the
Code, and does not address tax consequences of holding Notes that may be
relevant to investors in special tax situations, such as life insurance
companies, tax-exempt organizations, dealers in securities or currencies, Notes
held as a hedge or as part of a hedging, straddle or conversion transaction or
holders whose "functional currency" (as defined in Code section 985) is not the
United States dollar (a "nonfunctional currency"). In the event the Corporation
issues Indexed Notes, the applicable Pricing Supplement will describe relevant
federal income tax consequences. Persons considering the purchase of Notes
should consult their own tax advisors concerning the application of United
States federal income tax laws, as well as the laws of any state, local or
foreign taxing jurisdictions, to their particular situations. Additional United
States federal income tax consequences applicable to particular Notes may be
set forth in the applicable Pricing Supplement.
PAYMENT OF INTEREST
Except as set forth below, interest on a Note will be taxable to a holder as
ordinary interest income at the time it accrues or is received, in accordance
with the holder's method of accounting for tax purposes. Special rules
governing the treatment of Notes issued at an original issue discount are
described under "Original Issue Discount" below. Additional United States
federal income tax consequences applicable to particular Notes issued at an
original issue discount may be set forth in the applicable Pricing Supplement.
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ORIGINAL ISSUE DISCOUNT
The following is a summary of the principal federal income tax consequences
of the ownership of Notes issued at an original issue discount. It is based in
part upon the rules governing original issue discount that are set forth in
Code sections 1271 through 1275 and in Treasury regulations thereunder (the
"OID Regulations"). The OID Regulations were issued as final Treasury
regulations on January 27, 1994, and they adopted, with certain changes, the
proposed Treasury regulations on the same subjects that were published in the
Federal Register on December 22, 1992. The following summary is also based in
part upon certain proposed Treasury regulations relating to contingent payment
debt instruments released by the Internal Revenue Service in 1986 and modified
in 1991 (the "Proposed Regulations"). Proposed Treasury regulations are subject
to modification through the adoption of final regulations, and the Internal
Revenue Service has provided no assurance that any final regulations will be
consistent with the Proposed Regulations or that taxpayers may rely upon the
Proposed Regulations for guidance prior to the issuance of any final
regulations. On January 19, 1993, the Internal Revenue Service released a form
of proposed Treasury regulations substantially revising the Proposed
Regulations. However, on January 22, 1993, these revised rules were suspended
prior to their publication in the Federal Register. It is uncertain when or if
those suspended rules again will be formally proposed and published in the
Federal Register, and if formally proposed, whether they will remain in
substantially the same form. The following summary disregards those suspended
rules.
A Note which has an issue price of less than its "stated redemption price at
maturity" generally will be issued at an original issue discount for federal
income tax purposes. The issue price of a Note generally is the first price at
which a substantial amount of the issue of Notes is sold to the public
(excluding bond houses, brokers, or similar persons acting in the capacity of
underwriters or wholesalers). The "stated redemption price at maturity" is the
total amount of all payments provided by the Note other than "qualified stated
interest" payments; qualified stated interest generally is stated interest that
is unconditionally payable at least annually either at a single fixed rate, or,
to the extent described below, at a "qualifying variable rate." A Note will be
considered to have de minimis original issue discount if the excess of its
stated redemption price at maturity over its issue price is less than the
product of 0.25 percent of the stated redemption price at maturity and the
number of complete years to maturity (or the "weighted average maturity" in the
case of a Note that provides for payment of an amount other than qualified
stated interest before maturity). Holders of Notes having de minimis original
issue discount generally must include a proportionate amount of each payment of
stated principal in income as a payment received in retirement of the Note.
Holders of Notes issued at an original issue discount that is not de minimis
original issue discount and that mature more than one year from the date of
issuance will be required to include such original issue discount in gross
income for federal income tax purposes as it accrues, in advance of receipt of
the cash attributable to such income. Original issue discount accrues based on
a compounded, constant yield to maturity; accordingly, holders of Notes issued
at an original issue discount will be required to include in income
increasingly greater amounts of original issue discount in successive accrual
periods. The annual amount of original issue discount includable in income by
the initial holder of a Note issued at an original issue discount will equal
the sum of the daily portions of the original issue discount with respect to
the Note for each day on which such holder held the Note during the taxable
year. Generally, the daily portions of the original issue discount are
determined by allocating to each day in an accrual period the ratable portion
of the original issue discount allocable to such accrual period. The term
"accrual period" means an interval of time with respect to which the accrual of
original issue discount is measured, and which may vary in length over the term
of the Note provided that each accrual period is no longer than one year and
each scheduled payment of principal or interest occurs at the beginning or end
of an accrual period. The amount of original issue discount allocable to an
accrual period will be the excess of (a) the product of the "adjusted issue
price" of the Note at the commencement of such accrual period and its "yield to
maturity" over (b) the amount of any qualified stated interest payments
allocable to the accrual period. The "adjusted issue price" of the Note at the
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beginning of the first accrual period is its issue price, and, on any day
thereafter, it is the sum of the issue price and the amount of the original
issue discount previously includable in the gross income of any holder (without
regard to any acquisition premium), reduced by the amount of any payment other
than a payment of qualified stated interest previously made with respect to the
Note; the OID Regulations provide a special rule for determining the original
issue discount allocable to an accrual period if an interval between payments
of qualified stated interest contains more than one accrual period. The "yield
to maturity" of the Note is the yield to maturity computed on the basis of a
constant interest rate, compounding at the end of each accrual period; such
constant yield, however, must take into account the length of the particular
accrual period. If all accrual periods are of equal length except for an
initial or an initial and final shorter accrual period(s), the amount of
original issue discount allocable to the initial period may be computed using
any reasonable method; the original issue discount allocable to the final
accrual period is in any event the difference between the amount payable at
maturity (other than a payment of qualified stated interest) and the adjusted
issue price at the beginning of the final accrual period.
For purposes of calculating the yield and maturity of a Note subject to an
issuer or holder right to accelerate principal repayment, such call or put
option is presumed exercised if the yield on the Note would be less or more,
respectively, than it would be if the option were not exercised. The effect of
this rule generally may be to accelerate or defer the inclusion of original
issue discount in the income of a holder whose Note is subject to a put or a
call option, as compared to a Note that does not have such an option. If any
such option presumed to be exercised is not in fact exercised, the Note is
treated as reissued on the date of presumed exercise for an amount equal to its
adjusted issue price on that date for purposes of redetermining such Note's
yield and maturity and any related subsequent accruals of original issue
discount.
The OID Regulations describe certain categories of variable rate debt
instruments which bear interest at a "qualifying variable rate." As a threshold
matter, the issue price of the variable rate debt instrument may not exceed the
total noncontingent principal payments by more than the product of such
noncontingent principal payments and the lesser of (i) 15 percent or (ii) the
product of 1.5 percent and the number of complete years in the debt
instrument's term (or its weighted average maturity in the case of an
installment obligation). The debt instrument further must provide for stated
interest paid or compounded at least annually at (i) one or more "qualified
floating rates," (ii) a single fixed rate and one or more "qualified floating
rates," (iii) a single "objective rate," or (iv) a single fixed rate and a
single objective rate that is a "qualified inverse floating rate." A qualified
floating rate or objective rate must be set at a "current value" of that rate;
a "current value" is the value of the variable rate on any day that is no
earlier than three months prior to the first day on which that value is in
effect and no later than one year following that day. A "qualified floating
rate" is a variable rate whose variations can reasonably be expected to measure
contemporaneous variations in the cost of newly borrowed funds in the currency
in which the debt instrument is denominated. A qualified floating rate may be
multiplied by a fixed, positive multiple not exceeding 1.35, which may be
increased or decreased by a fixed rate. Certain combinations of rates
constitute a single qualified floating rate, including (i) interest stated at a
fixed rate for an initial period of less than one year followed by a qualified
floating rate if the value of the floating rate at the issue date is intended
to approximate the fixed rate, and (ii) two or more qualified floating rates
that can reasonably be expected to have approximately the same values
throughout the term of the debt instrument. A combination of such rates is
conclusively presumed to be a single qualified floating rate if the values of
all rates on the issue date are within 0.25 percentage points of each other. A
variable rate that is subject to an interest rate cap, floor, "governor" or
similar restriction on rate adjustment may be a qualified floating rate only if
such restriction is fixed throughout the term of the debt instrument, or is not
reasonably expected as of the issue date to cause the yield on the debt
instrument to differ significantly from its expected yield absent the
restriction. An "objective rate" is a rate (other than a qualified floating
rate) determined using a single formula fixed for the life of the debt
instrument, which is based on (i) one or more qualified floating rates
(including a multiple or inverse of a
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qualified floating rate), (ii) one or more rates each of which would be a
qualified floating rate for a debt instrument denominated in a foreign
currency, (iii) the yield or changes in price of one or more items of "actively
traded" personal property, (iv) a combination of the foregoing objective rates,
or (v) a rate designated by the Internal Revenue Service. However, a variable
rate is not an objective rate if it is reasonably expected that the average
value of the rate during the first half of the debt instrument's term will
differ significantly from the average value of such rate during the final half
of its term. A combination of interest stated at a fixed rate for an initial
period of less than one year followed by an objective rate is treated as a
single objective rate if the value of the objective rate at the issue date is
intended to approximate the fixed rate; such a combination of rates is
conclusively presumed to be a single objective rate if the objective rate on
the issue date does not differ from the fixed rate by more than 0.25 percentage
points. An objective rate is a qualified inverse floating rate if it is equal
to a fixed rate reduced by a qualified floating rate, the variations in which
can reasonably be expected to inversely reflect contemporaneous variations in
the cost of newly borrowed funds (disregarding permissible rate caps, floors,
governors and similar restrictions such as are discussed above).
If a Note bears interest at a "qualifying variable rate," the OID Regulations
specify rules for determining the amount of qualified stated interest and the
amount and accrual of any original issue discount. If the Note bears interest
that is unconditionally payable at least annually at a single qualified
floating rate or objective rate, all stated interest is treated as qualified
stated interest. The accrual of any original issue discount is determined by
assuming the Note bears interest at a fixed interest rate equal to the issue
date value of the qualified floating rate or qualified inverse floating rate,
or equal to the reasonably expected yield for the Note in the case of any other
objective rate. If the Note bears interest at a qualifying variable rate other
than a single qualified floating rate, the amount and accrual of original issue
discount generally are determined by (i) determining a fixed rate substitute
for each variable rate as described in the preceding sentence, (ii) determining
the amount of qualified stated interest and original issue discount by assuming
the Note bears interest at such substitute fixed rates, and (iii) making
appropriate adjustments to the qualified stated interest and original issue
discount so determined for actual interest rates under the Note. However, if
such qualifying variable rate includes a fixed rate, the Note first is treated
for purposes of applying clause (i) of the preceding sentence as if it provided
for an assumed qualified floating rate (or qualified inverse floating rate if
the actual variable rate is such) in lieu of the fixed rate; the assumed
variable rate would be a rate that would cause the Note to have approximately
the same fair market value.
Variable rate debt instruments that do not bear interest at a "qualifying
variable rate" will be treated as contingent payment debt instruments. Interest
on such instruments could be includable in income as it becomes fixed under the
Proposed Regulations, or according to rules similar to those described above
for variable rate debt instruments, or according to some other method.
Additionally, under the Proposed Regulations, debt instruments that provide for
one or more contingent payments determined in any part by reference to the
value of publicly traded property may in certain circumstances be bifurcated
into a noncontingent debt instrument and a separate instrument characterized in
accordance with its economic substance. These rules may require allocation of
the issue price of such a Note among the instruments, with the result that the
issue price of the portion of the Note treated as a debt instrument may be less
than its stated redemption price at maturity, which in turn could require
annual accruals of original issue discount with respect to such portion. It is
unclear whether and the extent to which any aspect of these bifurcation rules
might apply to the Notes. Persons purchasing Floating Rate Notes should consult
their tax advisors concerning the applicability of the Proposed Regulations to
such Notes.
In general, an individual or other cash method holder of a Note that matures
one year or less from the date of its issuance (a "Short-term Note") is not
required to accrue original issue discount for federal income tax purposes
unless the holder elects to do so. Holders who report income for federal income
tax purposes on the accrual method and certain other holders, including banks,
regulated investment
S-24
<PAGE>
companies and dealers in securities, are required to include original issue
discount on such Notes on a straight-line basis, unless an election is made to
accrue the original issue discount according to a constant interest method
based on daily compounding. In the case of a holder who is not required and
does not elect to include original issue discount in income currently, any gain
realized on the sale, exchange or retirement of such a Note will be ordinary
income to the extent of the original issue discount accrued on a straight-line
basis (or, if elected, according to a constant interest method based on daily
compounding) through the date of sale, exchange or retirement. In addition,
such non-electing holders who are not subject to the current inclusion
requirement described in this paragraph will be required to defer deductions
for any interest paid on indebtedness incurred or continued to purchase or
carry such Notes in an amount not exceeding the deferred interest income, until
such deferred interest income is realized.
EXTENDIBLE MATURITY NOTES
A holder of a Note with a Stated Maturity that may be extended at the option
of the holder (an "Extendible Maturity Note") will determine yield and maturity
of the Note depending upon whether the option to extend is treated as
exercised. The option to extend shall be treated as exercised if the resulting
yield on the Extendible Maturity Note would be greater than it would be if the
option to extend were not exercised. Correspondingly, the option to extend
shall be treated as not exercised if the resulting yield on the Extendible
Maturity Note would be equal to or greater than it would be if the option to
extend were exercised. An Extendible Maturity Note will not be considered to
have original issue discount if the difference between the Note's stated
redemption price at maturity determined under the foregoing rules and its issue
price is less than 0.25 percent of the stated redemption price at maturity as
so determined multiplied by the number of complete years to maturity (or, the
weighted average maturity, if applicable), as so determined.
In addition, there is a possibility that a holder of an Extendible Maturity
Note that elects to extend the Stated Maturity may be treated for federal
income tax purposes as having exchanged such Note (the "Old Note") for a new
Note with revised terms (the "New Note"). If the holder is treated as having
exchanged the Old Note for the New Note, such exchange may be treated as either
a taxable exchange or a tax-free recapitalization, possibly on the day of the
agreement to exercise the option even though the extension may not be
immediately effective, with differing consequences under the original issue
discount rules. On the other hand, if the holder is not treated as exchanging
the Old Note for the New Note, no gain or loss will be recognized as a result
thereof.
Holders of Notes should consult their own tax advisors regarding the tax
consequences of holding and disposing of the Extendible Maturity Notes,
including the decision whether to elect to extend the Stated Maturity.
PREMIUM AND MARKET DISCOUNT
If a holder purchases a Note (other than a Short-term Note) for an amount
that is less than the Note's stated redemption price at maturity, or, in the
case of a Note issued at an original issue discount, less than its adjusted
issue price (as defined above) as of the date of purchase, the amount of the
difference will be treated as "market discount" for federal income tax
purposes. Market discount generally will be de minimis and hence disregarded,
however, if it is less than the product of 0.25 percent of the stated
redemption price at maturity of the Note and the number of remaining complete
years to maturity (or weighted average maturity in the case of Notes paying any
amount other than qualified state interest prior to maturity). Under the market
discount rules, a holder is required to treat any principal payment on, or any
gain on the sale, exchange, retirement or other disposition of, a Note as
ordinary income to the extent of any accrued market discount which has not
previously been included in income. If such Note is disposed of in a nontaxable
transaction (other than certain specified nonrecognition transactions), accrued
market discount will be includable as ordinary income to the
S-25
<PAGE>
holder as if such holder had sold the Note at its then fair market value. In
addition, the holder may be required to defer, until the maturity of the Note
or its earlier disposition in a taxable transaction, the deduction of all or a
portion of the interest expense on any indebtedness incurred or continued to
purchase or carry such Note.
Market discount is considered to accrue ratably during the period from the
date of acquisition to the maturity of a Note, unless the holder elects to
accrue on a constant interest basis. A holder of a Note may elect to include
market discount in income currently as it accrues (on either a ratable or
constant interest basis), in which case the rule described above regarding
deferral of interest deductions will not apply. This election to include market
discount currently applies to all market discount obligations acquired during
or after the first taxable year to which the election applies, and may not be
revoked without the consent of the Internal Revenue Service.
A holder who purchases a Note issued at an original issue discount for an
amount exceeding its adjusted issue price (as defined above) will be considered
to have purchased such Note with "acquisition premium." The amount of original
issue discount which such holder must include in gross income with respect to
such Note will be reduced in the proportion that such excess bears to the
original issue discount remaining to be accrued as of the Note's acquisition.
A holder who acquires a Note for an amount that is greater than its stated
redemption price at maturity will be considered to have purchased such Note at
a premium, and may elect to amortize such premium using a constant interest
method, generally over the remaining term of the Note. Any such election shall
apply to all debt instruments (other than debt instruments the interest on
which is excludable from gross income) held at the beginning of the first
taxable year to which the election applies or thereafter acquired, and is
irrevocable without consent of the Internal Revenue Service.
CONSTANT YIELD ELECTION
A holder of a Note may elect to include in income all interest, discount and
premium based on a constant yield method determined with respect to such
holder's basis. If such election is made with respect to a Note having market
discount, such holder will be deemed to have elected currently to include
market discount on a constant interest basis with respect to all debt
instruments having market discount acquired during the year of election or
thereafter. If made with respect to a Note having amortizable bond premium,
such holder will be deemed to have made an election to amortize premium
generally with respect to debt instruments having amortizable bond premium held
by the taxpayer during the year of election or thereafter.
SALE AND RETIREMENT OF THE NOTES
Upon the sale, exchange or retirement of a Note, a holder will recognize
taxable gain or loss equal to the difference between the amount realized from
the sale, exchange or retirement and the holder's adjusted tax basis in the
Note. Such gain or loss generally will be capital gain or loss, except to the
extent of any accrued market discount (see "Premium and Market Discount"
above), such capital gain or loss will be long term capital gain or loss if the
Note has been held for more than one year. A holder's adjusted tax basis in a
Note will equal the cost of the Note, increased by any original issue discount
or market discount includable in taxable income by the holder with respect to
such Note, and reduced by any amortizable bond premium applied to reduce
interest on a Note, any principal payments received by the holder, and in the
case of Notes issued at an original issue discount, any other payments not
constituting qualified stated interest (as defined above).
Special rules regarding the treatment of gain realized with respect to Short-
term Notes issued at an original issue discount are described under "Original
Issue Discount" above.
S-26
<PAGE>
NONFUNCTIONAL CURRENCY NOTES
The following is a summary of the principal federal income tax consequences
to a holder of the ownership of a Note denominated in a Specified Currency
other than the United States dollar ("Nonfunctional Currency Notes"). Persons
considering the purchase of Nonfunctional Currency Notes should consult their
own tax advisors with regard to the application of the United States federal
income tax laws to their particular situations, as well as any consequences
arising under the laws of any other taxing jurisdictions.
In general, if a payment of interest with respect to a Note is made in a
nonfunctional currency, the amount includable in the income of the holder will
be the United States dollar value of the nonfunctional currency payment based
on the exchange rate in effect on the date of receipt or, in the case of an
accrual basis holder, based on the average exchange rate in effect during the
interest accrual period (or, with respect to an accrual period that spans two
taxable years, the partial period within the taxable year), in either case
regardless of whether the payment is in fact converted into United States
dollars. Upon receipt of an interest payment (including a payment attributable
to accrued but unpaid interest upon the sale or retirement of the Nonfunctional
Currency Note) in a nonfunctional currency, an accrual basis holder will
recognize ordinary income or loss measured by the difference between such
average exchange rate and the exchange rate in effect on the date of receipt.
Accrual basis holders may determine the United States dollar value of any
interest income accrued in a nonfunctional currency under an alternative
method, as described below as the "spot accrual convention."
A holder will have a tax basis in any nonfunctional currency received on the
sale, exchange or retirement of the Nonfunctional Currency Note equal to the
United States dollar value of such nonfunctional currency, determined at the
time of such sale, exchange or retirement. Any gain or loss realized by a
holder on a sale or other disposition of nonfunctional currency (including its
exchange for United States dollars or its use to purchase Nonfunctional
Currency Notes) will be ordinary income or loss.
A holder's tax basis in a Nonfunctional Currency Note, and the amount of any
subsequent adjustments to such holder's tax basis, will be the United States
dollar value of the nonfunctional currency amount paid for such Nonfunctional
Currency Note, or the nonfunctional currency amount of the adjustment,
determined on the date of such purchase or adjustment increased by the amount
of any original issue discount included in the holder's income with respect to
the Nonfunctional Currency Note and reduced by the amount of any interest
payments on the Nonfunctional Currency Note that are not qualified stated
interest payments and by the amount of any amortizable bond premium applied to
reduce interest on the Nonfunctional Currency Note. A holder who converts
United States dollars to a nonfunctional currency and immediately uses that
currency to purchase a Nonfunctional Currency Note denominated in the same
currency normally will not recognize gain or loss in connection with such
conversion and purchase. However, a holder who purchases a Nonfunctional
Currency Note with previously owned nonfunctional currency will recognize gain
or loss in an amount equal to the difference, if any, between such holder's tax
basis in the nonfunctional currency and the United States dollar fair market
value of the Nonfunctional Currency Note on the date of purchase.
For purposes of determining the amount of any gain or loss recognized by a
holder on the sale, exchange or retirement of a Nonfunctional Currency Note (as
described above in the section "Sale and Retirement of the Notes"), the amount
realized upon such sale, exchange or retirement will be the United States
dollar value of the nonfunctional currency received, determined on the sale,
exchange or retirement.
Gain or loss realized upon the sale, exchange or retirement of a
Nonfunctional Currency Note which is attributable to fluctuations in currency
exchange rates will be treated as ordinary income or loss. Gain or loss
attributable to fluctuations in exchange rates will be calculated by
multiplying the original purchase price paid by the holder (expressed in the
relevant nonfunctional currency) by the
S-27
<PAGE>
change in the relevant exchange rate (expressed in dollars per unit or relevant
nonfunctional currency) between the date on which the holder acquired the
Nonfunctional Currency Note and the date on which the holder received payment
in respect of the sale, exchange or retirement of the Nonfunctional Currency
Note. Such nonfunctional currency gain or loss will be recognized only to the
extent of the total gain or loss realized by a holder on the sale, exchange or
retirement of the Nonfunctional Currency Note.
Original issue discount on a Note which is also a Nonfunctional Currency Note
is to be determined for any accrual period in the relevant nonfunctional
currency and then translated into the holder's functional currency on the basis
of the average exchange rate in effect during such accrual period. If the
interest accrual period spans two taxable years, the original issue discount
accruing within each year's portion of the accrual period is to be translated
into United States dollars on the basis of the average exchange rate for the
partial period within the taxable year. A holder may elect to translate
original issue discount (and, in the case of an accrual basis holder, accrued
interest) into United States dollars at the exchange rate in effect on the last
day of an accrual period for the original issue discount or interest, or in the
case of an accrual period that spans two taxable years, at the exchange rate in
effect on the last day of the partial period within the taxable year (the "spot
accrual convention"). Additionally if a payment of original issue discount or
interest is actually received within five business days of the last day of the
accrual period or taxable year, an electing holder may instead translate such
original issue discount or accrued interest into United States dollars at the
exchange rate in effect on the day of actual receipt. Any such election will
apply to all debt instruments held by the holder at the beginning of the first
taxable year to which the election applies or thereafter acquired by the
holder, and will be irrevocable without the consent of the Internal Revenue
Service.
If the holder of a Nonfunctional Currency Note has not elected to include
market discount in income currently as it accrues, the amount of accrued market
discount must be determined in the nonfunctional currency and translated into
United States dollars using the spot exchange rate in effect on the date
principal is paid or the Nonfunctional Currency Note is sold, exchanged,
retired or otherwise disposed of. If the holder has elected to include market
discount in income currently as it accrues, the amount of market discount which
accrues during any accrual period will be required to be determined in units of
nonfunctional currency and translated into United States dollars on the basis
of the average exchange rate in effect during such accrual period.
The Internal Revenue Service may treat, or the holder meeting certain
requirements may elect to treat, a Nonfunctional Currency Note and a spot
contract, futures contract, forward contract, series of futures or forward
contracts, a currency swap contract, or similar financial instrument entered
into by the purchaser of the Nonfunctional Currency Note, that permits the
calculation of a yield to maturity in the currency which the holder will
receive under such contract (a "hedge"), as a single transaction that creates a
"synthetic debt instrument" subject to the original issue discount provisions
described above. If a hedge is entered into after the date the Nonfunctional
Currency Note is acquired, exchange gain or loss shall be realized on the
Nonfunctional Currency Note determined solely by reference to changes in the
exchange rates between the date the Nonfunctional Currency Note was acquired
and the hedge was entered into and recognized on the date that the
Nonfunctional Currency Note matures or is otherwise disposed of. Disposition or
termination of the hedge will generally result in the Nonfunctional Currency
Note being treated as sold for its fair market value on the date the hedge is
disposed of or terminated, and disposition or termination of the Nonfunctional
Currency Note will generally result in the hedge being treated as sold for its
fair market value on the date the Nonfunctional Currency Note is disposed of or
terminated. Any gain or loss (including gain or loss resulting from factors
other than movements in exchange rates) from the identification date of the
synthetic debt instrument to such deemed sale is realized and recognized on the
date of such deemed sale. Alternatively, the offsetting positions may be
subject to the straddle rules of section 1092 of the Code. Holders should
consult their tax advisors concerning the tax effect of holding Nonfunctional
Currency Notes and any offsetting positions.
S-28
<PAGE>
BACKUP WITHHOLDING AND INFORMATION REPORTING
A 31 percent "backup" withholding tax and certain information reporting
requirements may apply to payments of principal, premium and interest
(including any original issue discount) made to, and the proceeds of
disposition of a Note by, certain holders. Backup withholding will apply only
if (i) the holder fails to furnish the holder's Taxpayer Identification Number
("TIN") to the payor, (ii) the Internal Revenue Service notifies the payor that
the holder has furnished an incorrect TIN, (iii) the Internal Revenue Service
notifies the payor that the holder has failed to report properly payments of
interest and dividends or (iv) under certain circumstances, the taxpayer fails
to certify, under penalty of perjury, that the taxpayer has both furnished a
correct TIN and not been notified by the Internal Revenue Service that the
taxpayer is subject to backup withholding for failure to report interest and
dividend payments. Backup withholding will not apply with respect to payments
made to certain exempt recipients, such as corporations and financial
institutions. Holders should consult their tax advisers regarding their
qualification for exemption from backup withholding and the procedure for
obtaining such an exemption.
The amount of any backup withholding from a payment to a holder will be
allowed as a credit against such holder's federal income tax liability and may
entitle such holder to a refund, provided that the required information is
furnished to the Internal Revenue Service.
NON-UNITED STATES HOLDERS
A "non-United States Holder" is any person other than (i) a citizen or
resident of the United States, (ii) a corporation or partnership organized in
or under the laws of the United States, any state thereof or the District of
Columbia, or (iii) an estate or trust the income of which is includible in
gross income for United States federal income tax purposes regardless of its
source. A non-United States Holder generally will not be subject to United
States federal withholding tax with respect to payments on Notes, provided that
(1) such holder does not actually or constructively own 10% or more of the
total combined voting power of all classes of stock of the Corporation entitled
to vote, (2) such holder is not for United States federal income tax purposes a
controlled foreign corporation related to the Corporation through stock
ownership, (3) the beneficial owner of the Note certifies under penalties of
perjury as to its status as a non-United States holder and complies with
applicable identification procedures, and (4) such payment is not a payment of
"contingent interest" described in Code section 871(h)(4). In certain
circumstances, the above-described certification can be provided by a bank or
other financial institution. In addition, a non-United States holder of a Note
generally will not be subject to United States federal income tax on any gain
realized upon the sale, retirement or other disposition of a Note, unless such
holder is an individual who is present in the United States for 183 days or
more during the taxable year of such sale, retirement or other disposition. If
a non-United States holder of a Note is engaged in a trade or business in the
United States and income or gain from the Note is effectively connected with
the conduct of such trade or business, the non-United States holder will be
exempt from the withholding tax discussed above if the appropriate
certification has been provided, but will generally be subject to regular
United States income tax on such income and gain in the same manner as if it
were a United States holder. In addition, if such non-United States holder is a
foreign corporation, it may be subject to a branch profits tax equal to 30
percent of its effectively connected earnings and profits for the taxable year,
subject to adjustments.
Backup withholding will not apply to payments of principal, premium, if any,
and interest made to a non-United States holder by the Corporation on a Note
with respect to which the holder has provided the required certification under
penalties of perjury of its non-United States holder status or has otherwise
established an exemption, provided in each case that the Corporation or its
Paying Agent, as the case may be, does not have actual knowledge that the payee
is a United States person. Payments on the sale, exchange or other disposition
of a Note to or through a foreign office of a broker will not be subject to
backup withholding. However, if such broker is a United States person, a
controlled foreign corporation for United States tax purposes or a foreign
person 50 percent or more of whose gross
S-29
<PAGE>
income is derived from its conduct of a United States trade or business for a
specified three-year period, information reporting will be required unless the
broker has in its records documentary evidence that the beneficial owner is not
a United States person and certain other conditions are met or the beneficial
owner otherwise establishes an exemption. Payments to or through the United
States office of a broker will be subject to backup withholding and information
reporting unless the holder certifies under penalties of perjury to its non-
United States holder status or otherwise establishes an exemption.
Non-United States holders should consult their tax advisors regarding the
application of United States federal income tax laws, including information
reporting and backup withholding, to their particular situations.
PLAN OF DISTRIBUTION
The Notes are being offered on a continuous basis by the Corporation through
Salomon Brothers Inc, Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner &
Smith Incorporated, CS First Boston Corporation, Lehman Brothers, Lehman
Brothers Inc. (including its affiliate Lehman Government Securities Inc.) and
Bank of America (the "Agents"), each of whom (other than Bank of America) has
agreed to use reasonable best efforts to solicit purchases of the Notes. The
Corporation will pay each Agent a commission of up to 1.000% of the principal
amount of each Note sold through such Agent, depending upon maturity of the
Note. The Corporation may sell Notes to any Agent (other than Bank of America),
as principal, at a discount for resale to investors or other purchasers at
varying prices related to prevailing market prices at the time of resale to be
determined by such Agent, or, if set forth in the applicable Pricing
Supplement, at a fixed public offering price. The Corporation may also
otherwise sell the Notes. In the case of sales made directly by the
Corporation, no commission will be payable. The Corporation has agreed to
reimburse the Agents for certain expenses.
Bank of America, as an Agent of the Corporation, will solicit purchases of
the Notes only from customers which it has reason to believe are sophisticated
institutional investors and only in denominations of U.S. $100,000 or any
larger amount that is an integral multiple of U.S. $1,000. Bank of America will
have no obligation to purchase Notes from the Corporation and will bear no
credit risk with respect to the Notes.
The Corporation will have the sole right to accept offers to purchase Notes
and may reject any proposed purchase of Notes in whole or in part. Each Agent
will have the right, in its discretion reasonably exercised, to reject any
offer to purchase Notes received by it in whole or in part.
In addition, the Agents (other than Bank of America) may offer the Notes they
have purchased as principal to other dealers. The Agents may sell Notes to any
dealer at a discount and, unless otherwise specified in the applicable Pricing
Supplement, such discount allowed to any dealer will not be in excess of the
discount to be received by such Agent from the Corporation. Unless otherwise
indicated in the applicable Pricing Supplement, any Note sold to an Agent as
principal will be purchased by such Agent at a price equal to 100% of the
principal amount thereof less a percentage equal to the commission applicable
to any agency sale of a Note of identical maturity, and may be resold by the
Agent to investors and other purchasers as described above. After the initial
public offering of Notes to be resold to investors and other purchasers, the
public offering price (in the case of Notes to be resold at a fixed public
offering price), concession and discount may be changed.
No Note will have an established trading market when issued. Unless otherwise
specified in the applicable Pricing Supplement, the Notes will not be listed on
any securities exchange. Each Agent (other than Bank of America) may make a
market in the Notes, but such Agent is not obligated to do so and may
discontinue any market-making at any time without notice. There can be no
assurance of a secondary market for any Notes, or that the Notes will be sold.
S-30
<PAGE>
Salomon Brothers Inc, Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner &
Smith Incorporated, CS First Boston Corporation, Lehman Brothers, Lehman
Brothers Inc. (including its affiliate Lehman Government Securities Inc.) and
certain affiliates thereof, may engage in transactions with and perform
services for the Corporation and its affiliates in the ordinary course of
business. Bank of America is a wholly-owned subsidiary of the Corporation and
regularly engages in transactions with and performs services for the
Corporation and its affiliates in the ordinary course of business.
Application has been made to the Board of Governors of the Federal Reserve
System for BA Securities, Inc. ("BASI"), a wholly-owned subsidiary of the
Corporation, to acquire corporate debt underwriting powers (the "Application").
Upon approval of the Application, the Corporation contemplates that BASI will
replace Bank of America as an Agent for the Notes. In that capacity, BASI will
serve on the same terms and conditions as the other Agents (other than Bank of
America), and shall agree to use reasonable best efforts to solicit purchases
of the Notes, will be able to purchase Notes as principal and sell them to any
dealer at a discount, will not be prohibited from soliciting purchases of the
Notes from persons other than sophisticated institutional investors, will be
able to sell Notes in denominations of U.S. $1,000 or any larger amount that is
an integral multiple thereof and may, but will not be under any obligation to,
make a market in the Notes. BASI may from time to time engage in other
transactions with, and perform services for, the Corporation and its affiliates
in the ordinary course of business. Any offer or sale of the Notes by BASI will
comply with the requirements of Schedule E of the By-Laws of the National
Association of Securities Dealers, Inc. (the "NASD") regarding underwriting
securities of an affiliate. BASI will not execute a transaction in the Notes in
a discretionary account without the prior written specific approval of BASI's
customer. Upon approval of the Application, this Prospectus Supplement and
Prospectus and any relating Pricing Supplement may be used by BASI in
connection with offers and sales related to secondary market transactions in
the Notes. BASI may act as principal or agent in such transactions. Such sales
will be made at prices related to prevailing market prices at the time of sale.
The Corporation has agreed to indemnify each Agent against certain
liabilities, including liabilities under the Act or to contribute to payments
such Agent may be required to make in respect thereof. Each Agent may be deemed
to be an "underwriter" within the meaning of the Securities Act.
S-31
<PAGE>
[RECYCLE LOGO APPEARS HERE]
<PAGE>
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY IN-
FORMATION OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS SUPPLEMENT (INCLUDING THE ACCOMPANYING PRICING SUPPLEMENT) AND THE
PROSPECTUS, IN CONNECTION WITH THE OFFER CONTAINED HEREIN, AND, IF GIVEN OR
MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE CORPORATION OR BY ANY OF THE AGENTS. NEITHER THE
DELIVERY OF THIS PROSPECTUS SUPPLEMENT (INCLUDING THE ACCOMPANYING PRICING
SUPPLEMENT) AND THE PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AF-
FAIRS OF THE CORPORATION SINCE THE DATE AS OF WHICH INFORMATION IS GIVEN IN
THIS PROSPECTUS SUPPLEMENT (INCLUDING THE ACCOMPANYING PRICING SUPPLEMENT) AND
THE PROSPECTUS. THIS PROSPECTUS SUPPLEMENT (INCLUDING THE ACCOMPANYING PRICING
SUPPLEMENT) AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER OR SOLICITATION BY
ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHO-
RIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALI-
FIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLIC-
ITATION.
----------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
PROSPECTUS SUPPLEMENT
<S> <C>
BankAmerica Corporation.................................................... S-3
Important Currency Information............................................. S-4
Description of Medium-Term Notes,
Series I.................................................................. S-4
Currency Risks............................................................. S-19
Certain United States Federal Income Tax Consequences...................... S-21
Plan of Distribution....................................................... S-30
PROSPECTUS
Available Information...................................................... 2
Incorporation of Certain Documents by Reference............................ 2
BankAmerica Corporation.................................................... 3
Ratio of Earnings to Fixed Charges......................................... 5
Use of Proceeds............................................................ 5
Description of Debt Securities............................................. 5
Description of Capital Securities.......................................... 17
Description of Preferred Shares............................................ 18
Description of Depositary Shares........................................... 25
Description of Common Stock................................................ 29
Description of Securities Warrants......................................... 31
Risk Factors Relating to the Currency Warrants............................. 34
Description of Currency Warrants........................................... 34
Plan of Distribution....................................................... 36
Legal Matters.............................................................. 37
Experts.................................................................... 37
</TABLE>
U.S. $2,000,000,000
[LOGO OF BANKAMERICA CORPORATION]
MEDIUM-TERM NOTES,
SERIES I
DUE FROM NINE MONTHS TO
FIFTY YEARS FROM DATE OF ISSUE
SALOMON BROTHERS INC
MERRILL LYNCH & CO.
CS FIRST BOSTON
LEHMAN BROTHERS
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
PROSPECTUS SUPPLEMENT
DATED AUGUST 22, 1994
