++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+ This pricing supplement which is not complete, relates to an effective +
+ Registration Statement under the Securities Act of 1933. We may not sell the +
+ notes until a final pricing supplement is delivered. This pricing supplement +
+ is not an offer to sell these notes in any country or jurisdiction where the +
+ offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Subject to Completion
Preliminary Pricing Supplement
(To Prospectus dated September 5, 1999
and Prospectus Supplement dated June 5, 2001)
September 7, 2001
[LOGO] Bank of America
$____________________
BANK OF AMERICA CORPORATION
NASDAQ-100 INDEX(R)RANGE ACCRUAL NOTES, DUE 2002
Bank of America Corporation Nasdaq-100 Index(R) Range Accrual Notes, due 2002
are our unsecured senior debt securities. Any interest payable on the notes is
determined by reference to the daily closing level of the Nasdaq-100 Index(R)
between the Pricing Date and the Valuation Date as described in this pricing
supplement. The actual benchmarks used to calculate the interest rate are set on
the Pricing Date. The interest rate on the notes will be between 0% and 7.00%
per annum. The principal and interest, if any, will be paid at maturity.
. Pricing Date: September __, 2001 . Minimum
. Denominations: $250,000 and integral multiples
. Issue Date: September __, 2001 of $1,000 in excess thereof.
. Valuation Date: September __, 2002 . Listing: None.
. Maturity Date: September __, 2002
Per Note Total
-------------------------- ----------------------------------
Public Offering Price..................... % $
Agent's Commissions.......................
Proceeds (Before Expenses)................
-------------------------- ----------------------------------
% $
- --------------------------------------------------------------------------------
Our notes are unsecured and are not savings accounts, deposits or other
obligations of a bank. Our notes are not guaranteed by Bank of America, N.A. or
any other bank, are not insured by the Federal Deposit Insurance Corporation or
any other governmental agency and involve investment risks. Potential purchasers
of the notes should consider the information set forth in "Risk Factors"
beginning on page 4.
None of the Securities and Exchange Commission, any state securities commission
or any other regulatory body has approved or disapproved of these notes or
passed upon the adequacy or accuracy of this pricing supplement, the attached
prospectus supplement or attached prospectus. Any representation to the contrary
is a criminal offense.
- --------------------------------------------------------------------------------
We will deliver the notes in book-entry form only through The Depository Trust
Company on or about September ___, 2001 against payment in immediately available
funds.
Bank of America, N.A.
Agent
___________________________________________________
"Nasdaq(R)," "Nasdaq-100 Index(R)," and "Nasdaq-100(R)" are trademarks,
tradenames or service marks owned by The Nasdaq Stock Market, Inc.
SUMMARY
This summary includes questions and answers to help you understand the
notes. You should read carefully this pricing supplement and the entire attached
prospectus supplement and the attached prospectus to understand fully the terms
of the notes.
In particular, you should review carefully the sections entitled "Risk
Factors" in this pricing supplement and in the attached prospectus supplement to
determine whether an investment in the notes is appropriate for you. All of the
information set forth below is qualified in its entirety by the more detailed
explanation contained in this pricing supplement, prospectus supplement and
prospectus.
Are the notes equity or debt securities?
The notes are senior debt securities. However, these notes differ from
traditional debt securities in a few significant ways. You will not receive
regular interest payments. Any interest on the notes will be paid at maturity;
however, you may not receive any interest at all. The interest you receive is
based on the daily closing level of the Nasdaq-100 Index(R) during the period
from, but not including, the Pricing Date to, and including, the Valuation Date
and is subject to the maximum possible interest rate of 7.00% per annum. We
describe the specific terms of the notes in the section entitled "Description of
the Notes."
Do the notes offer any guaranteed return of principal?
Yes. If you hold the notes to maturity, you will receive your full
principal amount. However, if you attempt to sell the notes prior to maturity,
you may find that the market value of the notes is less than the principal
amount of the notes.
How will the interest rate on the notes be calculated?
The rate of interest on the notes is determined by reference to the
daily closing level of the Nasdaq-100 Index(R) over the period beginning on the
Exchange Business Day (defined below) following the Pricing Date and ending on,
and including, the Valuation Date. We call this period the "Calculation Period."
The calculation agent will determine the closing level of the
Nasdaq-100 Index(R) on the Pricing Date and on each Exchange Business Day during
the Calculation Period. The closing level on the Pricing Date is the "Initial
Level." Interest will accrue on the notes so long as the closing levels of the
Nasdaq-100 Index(R) during the Calculation Period are within a range between __%
of the Initial Level, or the "Lower Level," and __% of the Initial Level, or the
"Upper Level." We call this range between the Lower Level and the Upper Level
the "Accrual Range." The Initial Level, the Lower Level, the Upper Level and the
Accrual Range all will be determined on the Pricing Date.
On the Valuation Date, the calculation agent will calculate the rate of
interest to be applied to the principal amount of the notes by determining the
number of days during the Calculation Period that the closing level of the
Nasdaq-100 Index(R) was within the Accrual Range. The interest rate then will be
calculated by multiplying 7.00% per annum by the following fraction:
Number of Range Days
---------------------------------------------
Number of Exchange Business Days
2
An "Exchange Business Day" is any day during the Calculation Period on
which The Nasdaq National Market and the Chicago Board Options Exchange are open
for trading. A "Range Day" is any Exchange Business Day on which the closing
level of the Nasdaq-100 Index(R) is within the Accrual Range.
For example, if the closing level of the Nasdaq-100 Index(R) is within
the Accrual Range for 50% of the Exchange Business Days, the interest rate for
the notes would be 3.50% per annum. The maximum interest rate of 7.00% per annum
will be paid out only if the closing level of the Nasdaq-100 Index(R) is within
the Accrual Range on every Exchange Business Day during the entire Calculation
Period.
A significant rise in the level of the Nasdaq-100 Index(R) during the
Calculation Period is not necessarily beneficial to holders of the notes. During
any period when the closing levels of the Nasdaq-100 Index(R) are above or below
the Accrual Range, the notes do not accrue any interest. You will only benefit
while the closing levels of the Nasdaq-100 Index(R) are within the Accrual
Range.
What is the Nasdaq-100 Index(R)?
The Nasdaq-100 Index(R) is a modified capitalization-weighted index of
100 of the largest and most actively traded stocks of non-financial companies
listed on The Nasdaq National Market tier of the Nasdaq Market System. The
Nasdaq-100 Index(R) was first published in January 1985 and includes companies
across a variety of major industry groups. The Nasdaq-100 Index(R) is
determined, comprised and calculated by The Nasdaq Stock Market, Inc. without
regard to the notes. The Nasdaq-100 Index(R) is described further in the section
entitled "Nasdaq-100 Index(R)."
What is the role of Bank of America, N.A.?
Our affiliate, Bank of America, N.A., is acting as our selling agent in
connection with this offering of notes and is receiving a commission based on
the total principal amount of notes sold. Bank of America, N.A. is not acting as
your fiduciary or advisor. You should make your own investment decision
regarding the notes after consulting with your legal, tax, and other advisers.
You should not rely upon any communication from Bank of America, N.A. in
connection with the notes as investment advice or a recommendation to purchase
notes.
How are the notes being offered?
Bank of America, N.A. is offering the notes to selected potential
investors on a best efforts basis. We have registered the notes with the
Securities and Exchange Commission in the United States. We are not registering
the notes for public distribution in any other jurisdiction. However, Bank of
America, N.A. may solicit offers to purchase the notes from non-United States
investors in reliance on available private placement exemptions. We describe
these exemptions under "Investor Notices."
What is the role of Banc of America Securities LLC?
We have appointed our affiliate, Banc of America Securities LLC, or
"BAS," as calculation agent. The calculation agent determines the interest rate
and all the variables that affect the interest rate.
3
RISK FACTORS
Your investment in the notes involves risks. Your decision to purchase
the notes should be made only after carefully considering the risks of an
investment in the notes, including those discussed below, with your advisors in
light of your particular circumstances. The notes are not an appropriate
investment for you if you are not knowledgeable about the significant elements
of the notes or financial matters in general.
The amount of interest, if any, you will receive is uncertain. The
Initial Level, the Lower Level, the Upper Level, and the Accrual Range, which
are the benchmarks used to determine the interest rate, are set on the Pricing
Date, which is expected to be two Exchange Business Days prior to the Issue
Date.
The notes differ from ordinary debt securities in that the amount of
interest you receive depends on how often the Nasdaq-100 Index(R) closes within
the Accrual Range during the Calculation Period. We cannot assure you that the
Nasdaq-100 Index(R) will ever close within the Accrual Range during the
Calculation Period. Therefore, your yield may be less than the yield you would
earn if you bought a more conventional senior debt security with the same
maturity date or if you invested in the Nasdaq-100 Index(R) stocks directly. At
maturity, you may receive your principal only and no interest. In any event, the
interest rate will never be greater than 7.00% per annum. See "Description of
the Notes--General."
If you attempt to sell the notes prior to maturity you may find that
the market value of the notes, if any, is less than the principal amount of the
notes. Unlike savings accounts, certificates of deposits and other similar
investment products, you have no right to redeem the notes prior to maturity. If
you wish to liquidate your investment in the notes prior to maturity, your only
option would be to sell the notes. As we discuss below, there may be a very
illiquid market for the notes or no market at all. Even if you were able to sell
your notes, there are many factors outside of our control that may affect the
market value of the notes, some of which, but not all, are stated below. Some of
these factors are interrelated in complex ways. As a result, the effect of any
one factor may be offset or magnified by the effect of another factor.
. Nasdaq-100 Index(R). Because the amount of interest payable on
the notes is tied to the closing levels of the Nasdaq-100
Index(R), the market value of the notes will depend
significantly on the level of the Nasdaq-100 Index(R). The
Nasdaq-100 Index(R)is influenced by the operational results,
creditworthiness and dividend rates, if any, of the companies
represented by the component stocks of that index, and by
complex and interrelated political, economic, financial, and
other factors that affect the capital markets generally, the
markets on which the component stocks of that index are traded
and the market segments of which the companies represented by
the component stocks of that index are a part. See "Nasdaq-100
Index(R)." It is impossible to predict the level of the
Nasdaq-100 Index(R)during the Calculation Period.
. Volatility of the Nasdaq-100 Index(R). Volatility is the term
used to describe the size and frequency of market fluctuations.
Volatility of the level of the Nasdaq-100 Index(R) may affect
the market value of the notes. During recent periods, the
Nasdaq-100 Index(R) has experienced high volatility. This
volatility may increase the risk that the Nasdaq-100 Index(R)
will close frequently outside the Accrual Range, thus negatively
affecting the market value of the notes.
4
. Interest Rates. We expect that the market value of the notes
will be affected by changes in interest rates. Generally, if
United States interest rates increase, we expect that the market
value of the notes will decrease. If United States interest
rates decrease, we expect the market value of the notes will
increase. Interest rates also may affect the economy which, in
turn, may affect the level of the Nasdaq-100 Index(R).
The notes will not be listed on any securities exchange, and we cannot
assure you that a trading market for your notes will ever develop or be
maintained. We cannot predict how the notes will trade in the secondary market
or whether such market will be liquid or illiquid. Because the notes have a
relatively high minimum denomination, the number of potential buyers of the
notes in any secondary market may be limited. If you sell your notes prior to
maturity, you may find that the market value of the notes is less than the
principal amount of the notes. Although BAS intends under ordinary market
conditions to indicate prices on the notes on request, there can be no assurance
at which price such a bid would be made. BAS may discontinue buying and selling
the notes on the secondary market at any time.
Hedging activities may affect the interest paid on the notes and the
market value of the notes. Hedging activities by us or one or more of our
affiliates, including Bank of America, N.A. or BAS, may affect the level of the
Nasdaq-100 Index(R) and, accordingly, increase or decrease the market value of
the notes prior to maturity and the amount of interest you would receive at
maturity. In addition, we or one or more of our affiliates, including Bank or
America, N.A. or BAS, may purchase or otherwise acquire a long or short position
in the notes. We or one of our affiliates, including Bank of America, N.A. or
BAS, may hold or resell the notes. Although we have no reason to believe that
any of those activities will have a material impact on the level of the
Nasdaq-100 Index(R), we cannot assure you that these activities will not affect
such level and the market value of the notes prior to maturity or the rate of
interest on the notes.
You have no shareholder rights, no rights to receive any stock of the
Nasdaq-100 Index(R) stocks and are not entitled to dividends or other
distributions on the Nasdaq-100 Index(R) stocks. Investing in the notes will not
make you a holder of any of the Nasdaq-100 Index(R) stocks. You will not have
any voting rights, any rights to receive dividends or other distributions, or
any other rights with respect to the Nasdaq-100 Index(R) stocks. As a result,
the return on your notes will not reflect the return you would realize if you
actually owned the stocks included in the Nasdaq-100 Index(R) and received the
dividends paid or other distributions made on such stocks. Your notes will be
paid in cash, and you will have no right to receive delivery of any Nasdaq-100
Index(R) stocks.
We are not affiliates of any Nasdaq-100 Index(R) stock issuer and are
not responsible for any disclosure by any Nasdaq-100(R) stock issuer. However,
we may currently, or in the future, engage in business with such companies.
Neither we nor any of our affiliates, including Bank of America, N.A. and BAS,
assumes any responsibility for the adequacy or accuracy of any publicly
available information about any Nasdaq-100 Index(R) stock issuer. You should
make your own investigation into the Nasdaq-100 Index(R) and the Nasdaq-100
Index(R) stock issuers. See "Nasdaq-100 Index(R)" below for additional
information about the Nasdaq-100 Index(R).
Neither the Nasdaq-100 Index(R) nor any Nasdaq-100 Index(R) stock
issuer is involved in this offering of the notes or has any obligation of any
sort with respect to the notes. Thus, neither the Nasdaq-100 Index(R) nor the
Nasdaq-100 Index(R) stock issuers have any obligation to take your interests
into consideration for any reason, including taking any corporate actions that
might affect the value of your note.
5
Our business activities may create conflicts of interest with you. We
or one or more of our affiliates, including Bank of America, N.A. or BAS, may
engage in trading activities related to the Nasdaq-100 Index(R) and the
Nasdaq-100 Index(R) stocks that are not for your account or on your behalf.
These trading activities may present a conflict of interest between your
interest in your notes and the interests we and our affiliates may have in our
proprietary accounts, in facilitating transactions, including block trades, for
our other customers and in accounts under our management. These trading
activities, if they influence the level of the Nasdaq-100 Index(R), could be
adverse to your interests as a beneficial owner of the notes.
We and our other affiliates, including Bank of America, N.A. and BAS,
at present or in the future, may engage in business with the issuers of the
Nasdaq-100 Index(R) stocks, including making loans to, equity investments in, or
providing investment banking, asset management or other advisory services to
those companies and their competitors. In connection with these activities, we
may receive information about those companies which we will not divulge to you
or other third parties. Moreover, one or more of our affiliates have published,
and may in the future publish, research reports on one or more of the Nasdaq-100
Index(R) companies. This research is modified from time to time without notice
and may express opinions or provide recommendations that are inconsistent with
purchasing or holding the notes. Any of these activities may affect the market
value of the notes.
There may be potential conflicts of interest between you and the
calculation agent. We have the right to appoint and remove a calculation agent.
Our subsidiary, BAS, has been appointed to act as calculation agent for the
notes and as such, BAS will calculate the interest payable, if any, on the
notes. Under certain circumstances, BAS' role as our subsidiary and its
responsibilities as calculation agent for the notes could give rise to conflicts
of interests.
6
NASDAQ-100 INDEX(R)
All disclosure contained in this pricing supplement regarding the
Nasdaq-100 Index(R), including its make-up, method of calculation and changes in
its components, is derived from publicly available information. That information
reflects the policies of, and is subject to change by, The Nasdaq Stock Market,
Inc., or "Nasdaq(R)," which owns the copyright and all other rights to the
Nasdaq-100 Index(R). Nasdaq(R) has no obligation to continue to publish, or may
discontinue publication of, the Nasdaq-100 Index(R). Neither we nor any of our
affiliates takes any responsibility for the accuracy or completeness of the
information regarding the Nasdaq-100 Index(R).
The Nasdaq-100 Index(R) is a modified capitalization-weighted index of
100 of the largest and most actively traded stocks of non-financial companies
listed on The Nasdaq National Market tier of the Nasdaq(R). The Nasdaq-100
Index(R) was first published in January 1985 and includes companies across a
variety of major industry groups. As of June 30, 2001, the major industry groups
covered in the Nasdaq-100 Index(R) (listed according to their respective
capitalization in the Nasdaq-100 Index(R)) were as follows: computer
software/services (34.2%), computer and office equipment (33.2%),
telecommunications (14.9%), biotechnology (9.9%), retail/wholesale trade (3.4%),
services (2.8%), health care (0.9%), and manufacturing (0.7%). Current
information regarding the market value of the Nasdaq-100 Index(R) is available
from the Nasdaq(R) as well as numerous market information services. The
Nasdaq-100 Index(R) is determined, comprised and calculated by the Nasdaq(R)
without regard to the notes.
The Nasdaq-100 Index(R) share weights of the component securities of
the Nasdaq-100 Index(R) at any time are based upon the total shares outstanding
in each of the 100 Nasdaq-100 Index(R) securities and are additionally subject,
in certain cases, to rebalancing. Accordingly, each underlying stock's influence
on the value of the Nasdaq-100 Index(R) is directly proportional to the value of
its Nasdaq-100 Index(R) share weight.
Computation of the Nasdaq-100 Index(R)
- --------------------------------------
Underlying Stock Eligibility Criteria and Annual Ranking Review
To be eligible for inclusion in the Nasdaq-100 Index(R), a security
must be traded on The Nasdaq National Market tier of the Nasdaq(R) and meet the
following criteria:
. the security must be of a non-financial company;
. only one class of security per issuer is allowed;
. the security may not be issued by an issuer currently in
bankruptcy proceedings;
. the security must have average daily trading volume of at least
100,000 shares per day;
. the security must have "seasoned" on the Nasdaq(R) or another
recognized market (generally, a company is considered to be
seasoned by the Nasdaq(R) if it has been listed on a market for
at least two years; in the case of spin-offs, the operating
history of the spin-off company will be considered);
7
. if a security would otherwise qualify to be in the top 25% of
the issuers included in the Nasdaq-100 Index(R) by market
capitalization, then a one year "seasoning" criteria would
apply;
. if the security is of a foreign issuer, the company must have a
worldwide market value of at least $10 billion, a U.S. market
value of at least $4 billion, and average trading volume on the
Nasdaq(R) of at least 200,000 shares per day; in addition,
foreign securities must be eligible for listed options trading;
and
. the issuer of the security may not have entered into a
definitive agreement or other arrangement that would result in
the security no longer being listed on the Nasdaq(R) within the
next six months.
These Nasdaq-100 Index(R) eligibility criteria may be revised from time
to time by the National Association of Securities Dealers, Inc., the corporate
parent of the Nasdaq(R), without regard to the notes.
The underlying stocks comprising the Nasdaq-100 Index(R) are evaluated
on an annual basis, except under extraordinary circumstances which may result in
an interim evaluation (the "Ranking Review"). Securities listed on Nasdaq(R)
which meet the above eligibility criteria are ranked by market value.
Index-eligible securities which already are in the Nasdaq-100 Index(R) and which
are in the top 150 eligible securities (based on market value) are retained in
the Nasdaq-100 Index(R) provided that such securities were ranked in the top 100
eligible securities as of the previous Ranking Review. Securities not meeting
such criteria are replaced. The replacement securities chosen are those
index-eligible securities not currently in the Nasdaq-100 Index(R) which have
the largest market capitalization. Generally, the list of annual additions and
deletions is publicly announced via a press release in the early part of
December and replacements are made effective after the close of trading on the
third Friday in December. Moreover, if at any time during the year, a Nasdaq-100
Index(R) security is no longer traded on Nasdaq(R), or is otherwise determined
by Nasdaq(R) to become ineligible for continued inclusion in the Nasdaq-100
Index(R), the security will be replaced with the largest market capitalization
security not currently in the Nasdaq-100 Index(R) and meeting the Nasdaq-100
Index(R) eligibility criteria listed above.
In addition to the Ranking Review, the underlying stocks comprising the
Nasdaq-100 Index(R) are monitored every day by Nasdaq(R) with respect to changes
in total shares outstanding arising from secondary offerings, stock repurchases,
conversions, or other corporate actions. Nasdaq(R) has adopted the following
quarterly scheduled weight adjustment procedures with respect to such changes.
If the change in total shares outstanding arising from such corporate action is
greater than or equal to 5.0%, such change is made to the Nasdaq-100 Index(R) on
the evening prior to the effective date of such corporate action or as soon as
practical thereafter. Otherwise, if the change in total shares outstanding is
less than 5.0%, then all such changes are accumulated and made effective at one
time on a quarterly basis after the close of trading on the third Friday in each
of March, June, September and December. In either case, the Nasdaq-100 Index(R)
share weights for such underlying stocks are adjusted by the same percentage
amount by which the total shares outstanding have changed in such Nasdaq-100
Index(R) securities. Ordinarily, whenever there is a change in the Nasdaq-100
Index(R) share weights or a change in a component security included in the
Nasdaq-100 Index(R), Nasdaq(R) adjusts the divisor to assure that there is no
discontinuity in the value of the Nasdaq-100 Index(R) which might otherwise be
caused by any such change.
8
Rebalancing of the Nasdaq-100 Index(R)
The Nasdaq-100 Index(R) is calculated under a "modified
capitalization-weighted" methodology, which is a hybrid between equal weighting
and conventional capitalization weighting. This methodology is expected to: (1)
retain in general the economic attributes of capitalization weighting; (2)
promote portfolio weight diversification (thereby limiting domination of the
Nasdaq-100 Index(R) by a few large stocks); (3) reduce Nasdaq-100 Index(R)
performance distortion by preserving the capitalization ranking of companies;
and (4) reduce market impact on the smallest Nasdaq-100 Index(R) securities from
necessary weight rebalancings.
Under the methodology employed, on a quarterly basis coinciding with
Nasdaq's(R) quarterly scheduled weight adjustment procedures, the underlying
stocks comprising the Nasdaq-100 Index(R) are categorized as either "Large
Stocks" or "Small Stocks" depending on whether their current percentage weights
(after taking into account such scheduled weight adjustments due to stock
repurchases, secondary offerings, or other corporate actions) are greater than,
or less than or equal to, the average percentage weight in the Nasdaq-100
Index(R) (i.e., as a 100-stock index, the average percentage weight in the
Nasdaq-100 Index(R) is 1.0%).
Such quarterly examination will result in a Nasdaq-100 Index(R)
rebalancing if either one or both of the following two weight distribution
requirements are not met: (1) the current weight of the single largest market
capitalization Nasdaq-100 Index(R) security must be less than or equal to 24.0%
and (2) the "collective weight" of those Nasdaq-100 Index(R) securities whose
individual current weights are in excess of 4.5%, when added together, must be
less than or equal to 48.0%. In addition, Nasdaq(R) may conduct a special
rebalancing if it is determined necessary to maintain the integrity of the
Nasdaq-100 Index(R).
If either one or both of these weight distribution requirements are not
met upon quarterly review, or Nasdaq(R) determines that a special rebalancing is
required, a weight rebalancing will be performed. First, relating to weight
distribution requirement (1) above, if the current weight of the single largest
Nasdaq-100 Index(R) security exceeds 24.0%, then the weights of all Large Stocks
will be scaled down proportionately towards 1.0% by enough for the adjusted
weight of the single largest Nasdaq-100 Index(R) security to be set to 20.0%.
Second, relating to weight distribution requirement (2) above, for those
Nasdaq-100 Index(R) securities whose individual current weights or adjusted
weights in accordance with the preceding step are in excess of 4.5%, if their
"collective weight" exceeds 48.0%, then the weights of all Large Stocks will be
scaled down proportionately towards 1.0% by just enough for the "collective
weight," so adjusted, to be set to 40.0%.
The aggregate weight reduction among the Large Stocks resulting from
either or both of the above rescalings will then be redistributed to the Small
Stocks in the following iterative manner. In the first iteration, the weight of
the largest Small Stock will be scaled upwards by a factor which sets it equal
to the average Nasdaq-100 Index(R) weight of 1.0%. The weights of each of the
smaller remaining Small Stocks will be scaled up by the same factor reduced in
relation to each stock's relative ranking among the Small Stocks such that the
smaller the Nasdaq-100 Index(R) security in the ranking, the less the scale-up
of its weight. This is intended to reduce the market impact of the weight
rebalancing on the smallest component securities in the Nasdaq-100 Index(R).
In the second iteration, the weight of the second largest Small Stock,
already adjusted in the first iteration, will be scaled upwards by a factor
which sets it equal to the average index weight of 1.0%. The weights of each of
the smaller remaining Small Stocks will be scaled up by this same factor reduced
in relation to each stock's relative ranking among the Small Stocks such that,
once again, the smaller the stock in the ranking, the less the scale-up of its
weight.
9
Additional iterations will be performed until the accumulated increase
in weight among the Small Stocks exactly equals the aggregate weight reduction
among the Large Stocks from rebalancing in accordance with weight distribution
requirement (1) and/or weight distribution requirement (2).
Then, to complete the rebalancing procedure, once the final percent
weights of each of the Nasdaq-100 Index(R) securities are set, the Nasdaq-100
Index(R) share weights will be determined anew based upon the last sale prices
and aggregate capitalization of the Nasdaq-100 Index(R) at the close of trading
on the Thursday in the week immediately preceding the week of the third Friday
in March, June, September and December. Changes to the Nasdaq-100 Index(R) share
weights will be made effective after the close of trading on the third Friday in
March, June, September and December and an adjustment to the Index divisor will
be made to ensure continuity of the Nasdaq-100 Index(R).
Ordinarily, new rebalanced weights will be determined by applying the
above procedures to the current Nasdaq-100 Index(R) share weights. However,
Nasdaq(R) may from time to time determine rebalanced weights, if necessary, by
instead applying the above procedure to the actual current market capitalization
of the Nasdaq-100 Index(R) components. In such instances, Nasdaq(R) would
announce the different basis for rebalancing prior to its implementation.
10
Historical Data on the Nasdaq-100 Index(R)
- ------------------------------------------
The following table sets forth the level of the Nasdaq-100 Index(R) at
the end of each quarter in the period from March 1987 through June 2001 and for
the third quarter of 2001 through September 4, 2001. These historical data on
the Nasdaq-100 Index(R) are not necessarily indicative of the future performance
of the Nasdaq-100 Index(R) or what the market value of the notes may be. Any
historical upward or downward trend in the level of the Nasdaq-100 Index(R)
during any period set forth below is not an indication that the Nasdaq-100
Index(R) is more or less likely to increase or decrease at any time during the
term of the notes.
NASDAQ-100(R) NASDAQ-100(R)
QUARTER-END CLOSING LEVEL QUARTER-END CLOSING LEVEL
March 1987 186.04 March 1994 382.96
June 1987 189.24 June 1994 360.30
September 1987 205.50 September 1994 393.85
December 1987 156.25 December 1994 404.27
March 1988 173.26 March 1995 447.15
June 1988 189.03 June 1995 538.03
September 1988 179.37 September 1995 585.08
December 1988 177.41 December 1995 576.23
March 1989 185.87 March 1996 609.69
June 1989 204.58 June 1996 677.30
September 1989 226.42 September 1996 737.58
December 1989 223.83 December 1996 821.36
March 1990 213.15 March 1997 797.06
June 1990 238.46 June 1997 957.30
September 1990 177.06 September 1997 1097.17
December 1990 200.53 December 1997 990.80
March 1991 264.91 March 1998 1220.66
June 1991 254.19 June 1998 1337.34
September 1991 287.54 September 1998 1345.48
December 1991 330.85 December 1998 1836.01
March 1992 323.05 March 1999 2106.39
June 1992 301.23 June 1999 2296.77
September 1992 313.18 September 1999 2407.90
December 1992 360.18 December 1999 3707.83
March 1993 359.42 March 2000 4397.84
June 1993 366.13 June 2000 3763.79
September 1993 382.71 September 2000 3570.61
December 1993 398.28 December 2000 2341.70
March 2001 1573.25
June 2001 1830.19
11
As of September 4, 2001 1424.12
License Agreement
-----------------
We have entered into an agreement with the Nasdaq(R) providing us and
any of our affiliated or subsidiary companies with a non-exclusive license and,
in exchange for a fee, with the right to use the Nasdaq-100 Index(R), which is
owned and published by the Nasdaq(R), in connection with certain securities,
including the notes.
The license agreement between Nasdaq(R) and us provides that the
following language must be stated in this pricing supplement:
The notes are not sponsored, endorsed, sold or promoted by The Nasdaq Stock
Market, Inc. (including its affiliates) (The Nasdaq Stock Market, Inc., with
its affiliates, are referred to as "Nasdaq(R)"). Nasdaq(R) has not passed on
the legality or suitability of, or the accuracy or adequacy of descriptions
and disclosures relating to, the notes. Nasdaq(R) makes no representation or
warranty, express or implied to the owners of the notes or any member of the
public regarding the advisability of investing in securities generally or in
the notes particularly, or the ability of the Nasdaq-100 Index(R) to track
general stock market performance. Nasdaq's(R) only relationship to us is in
the licensing of the Nasdaq-100(R), Nasdaq-100 Index(R), and Nasdaq(R)
trademarks or service marks, and certain trade names of Nasdaq(R) and the
use of the Nasdaq-100 Index(R), which is determined, composed and calculated
by Nasdaq(R) without regard to us or the notes. Nasdaq(R) has no obligation
to take our needs or your needs into consideration in determining, composing
or calculating the Nasdaq-100 Index(R). Nasdaq(R) is not responsible for and
has not participated in the determination of the timing of, prices at, or
quantities of the notes to be issued or in the determination or calculation
of the equation by which interest on the notes is determined. Nasdaq(R) has
no liability in connection with the administration, marketing or trading of
the notes.
NASDAQ(R) DOES NOT GUARANTEE THE ACCURACY AND/OR UNINTERRUPTED CALCULATION
OF THE NASDAQ-100 INDEX(R) OR ANY DATA INCLUDED THEREIN. NASDAQ(R) MAKES NO
WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY BANK OF
AMERICA CORPORATION, OWNERS OF THE NOTES, OR ANY OTHER PERSON OR ENTITY FROM
THE USE OF THE NASDAQ-100 INDEX(R) OR ANY DATA INCLUDED THEREIN. NASDAQ(R)
MAKES NO EXPRESS OR IMPLIED WARRANTIES AND EXPRESSLY DISCLAIM ALL WARRANTIES
OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT
TO THE NASDAQ-100 INDEX(R) OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING
ANY OF THE FOREGOING, IN NO EVENT SHALL NASDAQ(R) HAVE ANY LIABILITY FOR ANY
LOST PROFITS OR SPECIAL, INCIDENTAL, PUNITIVE, INDIRECT, OR CONSEQUENTIAL
DAMAGES, EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.
12
DESCRIPTION OF THE NOTES
General
The notes are medium-term notes issued under the Senior Indenture,
which is more fully described in the attached prospectus supplement and attached
prospectus. The following description of the notes supplements the description
of the general terms and provisions of the notes and Debt Securities set forth
under the headings "Description of Notes" in the prospectus supplement and
"Description of Debt Securities" in the prospectus. If information in this
pricing supplement is inconsistent with the prospectus supplement or prospectus,
this pricing supplement will supersede those documents.
Certain capitalized terms used herein have the meanings ascribed to
them in the prospectus supplement and prospectus.
The aggregate principal amount of the notes will be $[_____]. However,
we may "reopen" this series of notes and issue additional notes at a later time
or issue additional debt securities or other securities with terms similar to
those of the notes, and such issuances may affect the market value of the notes.
The minimum denominations are $250,000 or integral multiples of $1,000 in excess
thereof. The notes mature on September [__], 2002. See "Description of the
Notes-Market Disruption."
The calculation agent, in its sole discretion, sets the benchmarks used
to calculate the interest rate on the Pricing Date. On the Valuation Date, the
calculation agent determines the interest rate and all the variables related to
the interest rate, including, but not limited to, the number of Exchange
Business Days, the number of Range Days, the closing levels of the Nasdaq-100
Index(R), whether a Market Disruption Event (as defined below) has occurred, or
whether a Successor Index (as defined below) needs to be used.
Prior to maturity, the notes are not redeemable by us or repayable at
the option of any holder. The notes are not subject to any sinking fund. Upon
the occurrence of an Event of Default (as defined in the Senior Indenture) with
respect to the notes, holders may accelerate the maturity of the notes, as
described under "Description of Securities-Events of Default and Acceleration"
in this pricing supplement and "Description of Debt Securities-Events of
Default" in the prospectus.
The notes will be issued in book-entry form only. The CUSIP number for
the notes is __________.
Interest
Any interest on the notes will be paid at maturity. If the Closing
Level of the Nasdaq-100 Index(R) is outside of the Accrual Range for the entire
Calculation Period, you will not receive any interest at all. The minimum
interest rate is 0% per annum, and the maximum interest rate is 7.00% per annum.
Interest, if any, is calculated by applying the interest rate to the
principal amount of the notes. Interest, if any, accrues from, and including,
the Issue Date to, but excluding, the Maturity Date. Interest is computed on the
basis of the actual number of days elapsed in a 360-day year of twelve 30-day
months.
13
The calculation agent determines the interest rate after The Nasdaq
National Market closes on the Valuation Date. The calculation agent determines
the total number of Exchange Business Days and the total number of Range Days in
the Calculation Period. The calculation agent will then determine the interest
rate by multiplying 7.00% per annum by the following fraction:
Number of Range Days
--------------------
Number of Exchange Business Days
Using hypothetical numbers of Exchange Business Days and Range Days,
the following table illustrates examples of interest rates and the associated
total repayment at maturity per $1,000. For the purpose of this table, we assume
that the Maturity Date is exactly one year after the Issue Date.
- -------------------------------------------------------------------------------------------------------------------
Number of Exchange Business Days Number of Range Days Interest Rate Total Repayment, Principal and
Interest, at Maturity
- -------------------------------------------------------------------------------------------------------------------
252 252 7.00% $1,070.00
- -------------------------------------------------------------------------------------------------------------------
252 189 5.25% $1,052.50
- -------------------------------------------------------------------------------------------------------------------
252 126 3.50% $1,035.00
- -------------------------------------------------------------------------------------------------------------------
252 0 0.00% $1,000.00
- -------------------------------------------------------------------------------------------------------------------
Market Disruption
A "Market Disruption Event" means, with respect to the Nasdaq-100
Index(R) or any Successor Index: (1) a suspension, absence, or material
limitation of trading of 20 or more of the securities included in the Nasdaq-100
Index(R) on the primary market for such securities for more than two hours of
trading or during the one-half hour period preceding the close of trading in
such market; or the suspension, absence, or material limitation of trading on
the primary market for trading in futures or options contracts related to the
Nasdaq-100 Index(R) during the one-half hour period preceding the close of
trading in the applicable market, in each case as determined by the calculation
agent in its sole discretion; and (2) a determination by the calculation agent
in its sole discretion that the event described in clause (1) above materially
interfered with our ability or the ability of any of our affiliates, including
Bank of America, N.A., to unwind all or a material portion of any hedge with
respect to the notes.
If a Market Disruption Event occurs on any Exchange Business Day during
the Calculation Period that day shall be considered a "Non-Trading Day," and the
actual closing level of the Nasdaq-100 Index(R) for that day, if any, shall be
disregarded. For any Non-Trading Day, the calculation agent shall substitute a
closing level according to the following procedures. Generally, the calculation
agent will use the closing level of the Nasdaq-100 Index(R) of the next
following Exchange Business Day on which no Market Disruption Event occurs. We
call this method the "look-forward" method. However, if the Valuation Date is a
Non-Trading Day, the calculation agent will use the closing level of the
Nasdaq-100 Index(R) of the first preceding Exchange Business Day on which no
Market Disruption Event occurred. We call this method the "look-back" method.
The calculation agent also will use the look-back method with regard to any
other Non-Trading Day if employing the look-forward method would require the
calculation agent to use a closing level of the Nasdaq-100 Index(R) from a day
beyond the Valuation Date.
Discontinuance of the Nasdaq-100 Index(R); Alteration of Method of Calculation
If Nasdaq(R) discontinues publication of the Nasdaq-100 Index(R) and
Nasdaq(R) or another entity publishes a successor or substitute index that the
calculation agent determines, in its sole discretion, is comparable to the
discontinued Nasdaq-100 Index(R) (such new index being referred to
14
as a "Successor Index"), then the relevant closing levels shall be determined by
reference to the Successor Index at the close of trading on the New York Stock
Exchange, the American Stock Exchange, The Nasdaq National Market, or the
relevant exchange or market for the Successor Index.
If the calculation agent selects a Successor Index, the calculation
agent shall immediately notify us and the Trustee, and the Trustee will provide
written notice of a change to the holders of the notes within three Exchange
Business Days of such selection.
If Nasdaq(R) discontinues publication of the Nasdaq-100 Index(R), and
the calculation agent determines that no Successor Index is available, then the
calculation agent shall calculate the appropriate closing levels. These
calculations by the calculation agent will be in accordance with the formula for
and method of calculating the Nasdaq-100 Index(R) last in effect prior to such
discontinuance. If a Successor Index is selected or the calculation agent
calculates a value as a substitute for the Nasdaq-100 Index(R), such Successor
Index or value will be substituted for the Nasdaq-100 Index(R) for all purposes.
If at any time the method of calculating the Nasdaq-100 Index(R) or a
Successor Index, or the value thereof, is changed in a material respect, or if
the Nasdaq-100 Index(R) or a Successor Index is in any other way modified so
that such index does not, in the opinion of the calculation agent, fairly
represent the value of the Nasdaq-100 Index(R) or such Successor Index had such
changes or modifications not been made, then, from and after such time, the
calculation agent shall make such calculations and adjustments as, in the good
faith judgment of the calculation agent, may be necessary in order to arrive at
a value of a stock index comparable to the Nasdaq-100 Index(R) or such Successor
Index, as the case may be, as if such changes or modifications had not been
made, and calculate the closing levels with reference to the Nasdaq-100 Index(R)
or such Successor Index, as adjusted. Accordingly, if the method of calculating
the Nasdaq-100 Index(R) or a Successor Index is modified so that the value of
such index is a fraction of what it would have been if it had not been modified
(e.g., due to a split in the index), then the calculation agent shall adjust
such index in order to arrive at a value of the Nasdaq-100 Index(R) or such
Successor Index as if it had not been modified (e.g., as if such split had not
occurred).
Same-Day Settlement and Payment
The notes will be delivered in book-entry form only through The
Depository Trust Company against payment by purchasers of the notes in
immediately available funds. We will make principal payments and interest
payments, if any, in immediately available funds so long as the notes are
maintained in book-entry form.
Listing
We do not intend to list the notes on any securities exchange.
15
SUPPLEMENTAL PLAN OF DISTRIBUTION
Our affiliate, Bank of America, N.A., has been appointed as our agent
to solicit offers on a best efforts basis to purchase the notes. ___ Bank of
America, N.A. has become a party to the Distribution Agreement described in the
"Plan of Distribution" on page S-23 of the attached prospectus supplement. As
agent, Bank of America, N.A. will receive a commission of ___% of the principal
amount of each note sold. Each initial purchaser of notes must have an account
with the agent. The agent may charge a purchaser of the notes a nominal account
opening charge of not more than $100.
Bank of America, N.A. is not acting as your fiduciary or advisor. You
should make your own investment decision regarding the notes after consulting
with your legal, tax, and other advisors. You should not rely upon any
communication from Bank of America, N.A. in connection with the notes as
investment advice or a recommendation to purchase notes.
INVESTOR NOTICES
Argentina: The notes have not been registered in Argentina. The Comision
Nacional de Valores of Argentina has not approved the notes, the offering, nor
any document relating to the offering of the notes, including this pricing
supplement. Neither this pricing supplement nor the attached prospectus
supplement or prospectus nor the delivery of such documents constitutes an offer
to sell the notes or an invitation to receive offers to purchase the notes. No
person wishing to offer or acquire the notes shall take any action that would
result in the offering of the notes being deemed a public offering within the
meaning of Argentine Law Nbr. 17.811. In addition, any resale of the notes must
be made in a manner which will not constitute a public offering in Argentina.
Argentinean pension funds and insurance companies may not purchase the notes.
Brazil: The notes have not been registered in Brazil. The Comissao de Valores
Mobiliarios of Brazil has not approved the notes, the offering, nor any document
relating to the offering of the notes, including this pricing supplement.
Neither the notes nor the offering have been registered with the Comissao de
Valores Mobiliarios in Brazil. Persons wishing to offer or acquire the notes
within Brazil should consult with their own counsel as to the applicability of
registration requirements or any exemption therefrom. No action should be taken
by such persons that would result in the offering of the notes being deemed a
public offering under Brazilian law. In addition, any resale of the notes must
be made in a manner which will not constitute a public offering in Brazil. This
offering is not being made to any Brazilian financial institutions, pension
funds, insurance companies, or capitalization companies.
Hong Kong: The notes may not be offered or sold in Hong Kong by means of any
document other than in circumstances which do not constitute an offer to the
public within the meaning of the Companies Ordinance (Cap.32).
Unless a person is permitted to do so under the securities laws of Hong Kong,
such person may not issue or have in his or her possession for the purposes of
issue, and will not issue, or have in his or her possession for the purposes of
issue, any advertisement, invitation or document relating to the notes other
than with respect to notes intended to be disposed of to persons outside Hong
Kong or to be disposed of in Hong Kong only to persons whose business involves
the acquisition, disposal or holding of securities, whether as principal or
agent.
16
Mexico: The notes have not been registered under the Mexican Securities Market
Law or recorded in the Mexican National Securities Registry. No action may be
taken in Mexico that would render the offering of the notes a public offering in
Mexico. No Mexican regulatory authority has approved or disapproved of the notes
or passed on the solvency of the issuer.
Taiwan: The notes may not be sold or publicly offered in Taiwan.
Venezuela: The notes have not been registered with the Comision Nacional de
Valores of Venezuela and are not being publicly offered in Venezuela. No
document relating to the offering of the notes, including this pricing
supplement, shall be deemed to constitute an offer of securities or an offer or
the rendering of any investment advice or securities brokerage services in
Venezuela. Investors wishing to acquire the notes may use only funds located
outside of Venezuela.
UNITED STATES FEDERAL INCOME TAX SUMMARY
The following summary of certain United States federal income tax
consequences of the purchase, ownership, and disposition of the notes is based
upon laws, regulations, rulings, and decisions now in effect, all of which are
subject to change (including changes in effective dates) or possible differing
interpretations. It deals only with initial purchasers of the notes who hold
notes as capital assets and does not deal with persons in special tax
situations, such as financial institutions, insurance companies, regulated
investment companies, dealers in securities or currencies, tax-exempt entities,
persons holding notes in a tax-deferred or tax-advantaged account, persons
holding notes as a hedge, a position in a "straddle" or as part of a
"conversion" transaction for tax purposes, or persons who are required to
mark-to-market for tax purposes. You must consult your own tax advisors
concerning the application of United States federal income tax laws to your
particular situation as well as any consequences of the purchase, ownership and
disposition of the notes arising under the laws of any other jurisdiction.
As used herein, the term "United States Holder" means a beneficial
owner of a note that is for United States federal income tax purposes (1) an
individual who is a citizen or resident of the United States, (2) an entity
which is a corporation or a partnership for United States federal income tax
purposes created or organized in or under the laws of the United States or of
any State thereof (other than a partnership that is not treated as a United
States person under any applicable Treasury regulations), (3) an estate whose
income is subject to United States federal income tax regardless of its source,
(4) a trust if a court within the United States is able to exercise primary
supervision over the administration of the trust and one or more United States
persons have the authority to control all substantial decisions of the trust, or
(5) any other person whose income or gain in respect of the notes is effectively
connected with the conduct of a United States trade or business. Notwithstanding
the preceding sentence, to the extent provided in Treasury regulations, certain
trusts in existence on August 20, 1996, and treated as United States persons
prior to such date, that elect to continue to be treated as United States
persons also will be United States Holders. A "Non-United States Holder" is a
holder that is not a United States Holder.
United States Holders - Income Tax Considerations
- -------------------------------------------------
United States Holders of the notes (which have a term of no more than
one year) will be subject to special rules for holders of short-term debt
obligations. Under those rules, individuals and certain other cash method United
States Holders will include the interest on the notes in income at the time
interest is paid, unless they elect otherwise. In contrast, United States
Holders that report income for federal income tax purposes on the accrual method
and certain other United States
17
Holders, such as banks and dealers in securities, will be required to accrue the
interest, as original issue discount ("OID"), on a straight-line basis, unless
an election is made to accrue the OID on the basis of a constant yield,
compounded daily. The Internal Revenue Service ("IRS") has not issued guidance
describing the proper methodology for calculating OID accrual on either a
straight-line or constant yield basis where the amount of interest to be paid is
contingent. A reasonable accrual methodology would be for a United States Holder
to include in income in a taxable year the amount of interest it would receive
if the notes matured on the last day of such taxable year. Because of the
application of these rules, a United States Holder of a note may be required to
include in income an amount in excess of actual cash payments received for
certain taxable years.
Upon a sale, exchange, or retirement of a note, a United States Holder
generally will recognize taxable gain or loss equal to the difference between
the amount realized on the sale, exchange or retirement and your tax basis in
the note. A United States Holder's tax basis in a note generally will equal the
cost thereof, increased by the amount of interest income you previously accrued
in respect of the note. In the case of a United States Holder that is not
required, and does not elect, to include the interest received on the note in
income currently, any gain realized on a sale, exchange or retirement of the
notes will be ordinary income to the extent the gain does not exceed the amount
of interest that would have accrued on a straight-line or, if elected, constant
yield basis, through the date of sale, exchange or retirement. In addition,
United States Holders that do not elect to include the interest in income
currently will be required to defer deductions for any interest paid on
indebtedness incurred or continued to purchase or carry the notes, in an amount
equal to the deferred interest income, until such time as the deferred interest
is included in income.
United States Holders - Backup Withholding and Information Reporting
- --------------------------------------------------------------------
Generally, payments of principal and interest, and the accrual of OID,
with respect to the notes will be subject to information reporting and possibly
to backup withholding. Information reporting means that the payment is required
to be reported to the holder of the notes and the IRS. Backup withholding means
that we are required to collect and deposit a portion of the payment with the
IRS as a tax payment on your behalf. Backup withholding will be imposed at a
rate of 30.5% for the calendar year ending on December 31, 2001 and will be
reduced to 30% for the 2002 calendar year.
Payments of principal and interest, and the accrual of OID, with
respect to notes held by a United States Holder, other than certain exempt
recipients such as corporations, and proceeds from the sale of notes through the
United States office of a broker will be subject to backup withholding unless
such United States Holder or beneficial owner of the notes supplies us with a
taxpayer identification number and certifies that its taxpayer identification
number is correct or otherwise establish an exemption. In addition, backup
withholding will be imposed on any payment of principal and interest, and the
accrual of OID, with respect to a note held by a United States Holder that is
informed by the United States Secretary of the Treasury that it has not reported
all dividend and interest income required to be shown on its federal income tax
return or that fails to certify that it has not underreported its interest and
dividend income.
Payments of the proceeds from the sale of the notes to or through a
foreign office of a broker, custodian, nominee or other foreign agent acting on
behalf of a holder will not be subject to information reporting or backup
withholding. If, however, such nominee, custodian, agent or broker is, for
United States federal income tax purposes, (1) a United States person, (2) the
government of the United States or the government of any State or political
subdivision of any State (or any agency or instrumentality of any of these
governmental units), (3) a controlled foreign corporation, (4) a foreign
partnership that is either engaged in a United States trade or business or whose
United
18
Stares partners in the aggregate hold more than 50% of the income or capital
interests in the partnership, (5) a foreign person that derives 50% or more of
its gross income for certain periods from the conduct of a trade or business in
the United States or (6) a United States branch of a foreign bank insurance
company such payments will be subject to information reporting, unless (a) such
custodian, nominee, agent, or broker has documentary evidence in its records
that the holder is not a United States person and certain other conditions are
met or (b) the holder otherwise establish an exemption from information
reporting.
A United States Holder that does not provide us with its correct
taxpayer identification number may be subject to penalties imposed by the IRS.
In addition, any amounts withheld under the backup withholding rules will be
allowed as a refund or a credit against such holder's United States federal
income tax liability provided certain required information is furnished to the
IRS.
Non-United States Holders - Income Tax Considerations
- -----------------------------------------------------
Under present United States federal income tax law and subject to the
discussion below concerning backup withholding, the payment by us, or any paying
agent, of principal or interest, including OID, on a note owned by a Non-United
States Holder is not subject to United States federal income or withholding tax
provided that:
(1) such holder does not actually or constructively own 10% or more
of the total combined voting power of all classes of our stock
that are entitled to vote;
(2) such holder is not a controlled foreign corporation that is
related to us through stock ownership;
(3) such holder is not a bank receiving interest on an extension of
credit made pursuant to a loan agreement entered into in the
ordinary course of your trade or business;
(4) the payment is not effectively connected with the conduct of a
trade or business in the United States; and
(5) either (A) such holder provides us (or any paying agent) with a
statement which sets forth its address, and certifies, under
penalties of perjury, that it is not a United States person,
citizen or resident (which certification may be made on an
Internal Revenue Service Form W-8BEN (or successor form)) or (B)
a financial institution holding the note on its behalf
certifies, under penalties of perjury, that such statement has
been received by it and furnishes a copy thereof to us (or any
paying agent).
Payments to Non-United States Holders not meeting the requirements set
forth above and thus subject to withholding of United States federal income tax
may nevertheless be exempt from such withholding if such holder provides us with
a properly executed Internal Revenue Service Form W-8BEN (or successor form)
claiming an exemption from withholding under the benefit of a tax treaty. To
claim benefits under an income tax treaty, a Non-United States Holder must
obtain a taxpayer identification number and certify as to its eligibility under
the appropriate treaty's limitations on benefits article.
Non-United States Holders will not be subject to United States federal
income tax on any gain realized on the sale, exchange, or retirement of a note,
provided that (a) such gain is not effectively connected with a United States
trade or business and (b) in the case of an individual, such holder is
19
not present in the United States for 183 days or more in the taxable year of the
sale or other disposition.
Non-United States Holders - Backup Withholding and Information Reporting
- ------------------------------------------------------------------------
Payments of principal and interest, and the accrual of OID, with
respect to notes and proceeds from the sale of notes held by a Non-United States
Holder will not be subject to backup withholding or information reporting so
long as such holder has certified that it is not a United States person and we
do not have actual knowledge that such certification is false (or it otherwise
establish an exemption). However, if a Non-United States Holder has not
certified that it is not a United States person or we have actual knowledge that
such certification is false (and it has not otherwise established an exemption)
such holder will be subject to backup withholding and information reporting in
the manner described above in "United States Holders - Backup Withholding and
Information Reporting."
ERISA CONSIDERATIONS
A fiduciary of a pension plan or other employee benefit plan (including
a governmental plan, an IRA or a Keogh plan) proposing to invest in the notes
should consider this section carefully.
A fiduciary of an employee benefit plan subject to the Employee
Retirement Income Security Act of 1974, as amended (commonly referred to as
"ERISA") should consider fiduciary standards under ERISA in the context of the
particular circumstances of such plan before authorizing an investment in the
notes. Such fiduciary should consider whether the investment is in accordance
with the documents and instruments governing the plan.
In addition, ERISA and the Internal Revenue Code of 1986, as amended
(the "Code") prohibit certain transactions (referred to as "prohibited
transactions") involving the assets of a plan subject to ERISA or the assets of
an individual retirement account or plan subject to Section 4975 of the Code
(referred to as an "ERISA plan"), on the one hand, and persons who have certain
specified relationships of the plan ("parties in interest" within the meaning of
ERISA or "disqualified persons" within the meaning of the Code), on the other.
If we (or an affiliate) are considered a party in interest or disqualified
person with respect to an ERISA plan, then the investment in notes by the ERISA
plan may give rise to a prohibited transaction. There are several ways by which
we or our affiliates may be considered a party in interest or a disqualified
person with respect to an ERISA plan. For example, if we provide banking or
financial advisory services to an ERISA plan, or act as a trustee or in a
similar fiduciary role for ERISA plan assets, we may be considered a party in
interest or a disqualified person with respect to that ERISA plan.
By purchasing and holding the notes, the person making the decision to
invest on behalf of an ERISA plan is representing that the purchase and holding
of the notes will not result in a prohibited transaction under ERISA or the
Code. Therefore, an ERISA plan should not invest in the notes unless the plan
fiduciary or other person acquiring notes on behalf of the ERISA plan determines
that neither we nor an affiliate is a party in interest or a disqualified person
or, alternatively, than an exemption from the prohibited transaction rules is
available. ___ If an ERISA plan engages in a prohibited transaction, the
transaction may require "correction" and may cause the ERISA plan fiduciary to
incur certain liabilities and the parties in interest or disqualified persons to
be subject to excise taxes.
20
If you are the fiduciary of a pension plan or other ERISA plan, or an
insurance company that is providing investment advice or other features to a
pension plan or other ERISA plan, and you propose to invest in the notes with
the assets of the ERISA plan, you should consult your own legal counsel for
further guidance.
21
[LOGO OF BANK OF AMERICA]
$3,000,000,000
Medium-Term Notes, Series I
We may offer to sell our Bank of America Corporation Medium-Term Notes, Series
I from time to time. Specific terms of the notes are set before each sale and
described in a separate pricing supplement. Terms include:
. Priority: senior or subordinated
. Interest Rate: fixed, floating, original issue discount or amortizing
. Floating rates based on one or more of the following indices:
. CD rate
. CMT rate
. Commercial paper rate
. Federal Funds rate
. LIBOR
. Prime rate
. Treasury rate
. Maturity: nine months or more
. Indexed notes: principal or interest payments linked to the price or perfor-
mance of one or more securities, currencies, goods or other indices
. Redemption and repayment: subject to redemption by us or repaid at the
holder's option
. Minimum denominations of $1,000 or other specified denominations for foreign
currencies
. Payments in U.S. dollars or one or more foreign currencies
Per Note Total
-------- -----
Public Offering Price....... 100% $3,000,000,000
Agent's Discounts and
Commissions................ .125% - .750% $3,750,000 - $22,500,000
----------------- -------------------------------
Proceeds (Before Expenses).. 99.875% - 99.250% $2,996,250,000 - $2,977,500,000
We also may sell notes to agents as principal for resale at varying or fixed
offering prices or through the agents as agents using their best efforts on our
behalf. We also may sell the notes directly to investors.
We do not intend to list the notes on any securities exchange.
- --------------------------------------------------------------------------------
Our notes are unsecured and are not savings accounts, deposits or other obliga-
tions of a bank. Our notes are not guaranteed by Bank of America, N.A. or any
other bank and are not insured by the Federal Deposit Insurance Corporation or
any other governmental agency. Before you purchase notes, you should carefully
read information in the "Risk Factors" section which begins on page S-3.
None of the Securities and Exchange Commission, any state securities commission
or the Commissioner of Insurance of the State of North Carolina has approved or
disapproved of these notes or passed upon the accuracy or adequacy of this pro-
spectus supplement or the attached prospectus. Any representation to the con-
trary is a criminal offense.
- --------------------------------------------------------------------------------
Banc of America Securities LLC
Bear, Stearns & Co. Inc.
Lehman Brothers
Merrill Lynch & Co.
Salomon Smith
Barney
---------------
Prospectus Supplement to Prospectus dated August 5, 1999
June 5, 2001.
TABLE OF CONTENTS
Page
Prospectus Supplement ----
Registration of Notes..................................................... S-3
About this Prospectus Supplement and the Pricing Supplements.............. S-3
Risk Factors.............................................................. S-3
Risks of Indexed Notes................................................... S-3
Factors Affecting the Trading Value of the Notes......................... S-4
Risks on Redemption...................................................... S-5
Currency Risks........................................................... S-5
Credit Ratings........................................................... S-5
Bank of America Corporation............................................... S-6
General.................................................................. S-6
Business Segment Operations.............................................. S-6
Acquisitions and Sales................................................... S-8
Outstanding Debt......................................................... S-8
Description of Notes...................................................... S-8
General.................................................................. S-8
Book-Entry System........................................................ S-9
Paying Agent, Security Registrar, Transfer Agent and Calculation Agent... S-9
Payment of Principal and Interest........................................ S-9
Fixed Rate Notes......................................................... S-10
Floating Rate Notes...................................................... S-10
Interest Reset Dates.................................................... S-11
Interest Determination Dates............................................ S-11
Interest Payments....................................................... S-12
CD Rate Notes........................................................... S-12
CMT Rate Notes.......................................................... S-13
Commercial Paper Rate Notes............................................. S-14
Federal Funds Rate Notes................................................ S-14
LIBOR Notes............................................................. S-15
Prime Rate Notes........................................................ S-16
Treasury Rate Notes..................................................... S-16
Original Issue Discount Notes............................................ S-17
Amortizing Notes......................................................... S-17
Indexed Notes............................................................ S-17
Renewable Notes.......................................................... S-18
Extendible Notes......................................................... S-18
Warrants and Units....................................................... S-19
Redemption............................................................... S-19
Repayment................................................................ S-19
Repurchase............................................................... S-19
United States Taxation.................................................... S-19
United States Holders.................................................... S-20
Non-United States Holders................................................ S-22
Backup Withholding and Information Reporting............................. S-22
State and Local Taxation................................................. S-23
Plan of Distribution...................................................... S-23
Distribution Through Agents.............................................. S-23
Distribution Through Underwriters........................................ S-23
Direct Sales............................................................. S-24
General Information...................................................... S-24
Prospectus
About this Prospectus....................................................... 2
Bank of America Corporation................................................. 3
General.................................................................... 3
Business Segment Operations................................................ 3
Acquisitions and Sales..................................................... 4
Use of Proceeds............................................................. 4
Ratios of Earnings to Fixed Charges
and Ratios of Earnings to Fixed
Charges and Preferred Stock
Dividends.................................................................. 5
Regulatory Matters.......................................................... 6
General.................................................................... 6
Interstate Banking......................................................... 6
Capital and Operational
Requirements.............................................................. 6
Dividends.................................................................. 8
Source of Strength......................................................... 8
Changes in Regulations..................................................... 8
Plan of Distribution........................................................ 8
Description of Debt Securities ............................................. 10
General.................................................................... 10
Reopenings................................................................. 12
Conversion................................................................. 12
Exchange, Registration and Transfer........................................ 12
Payment and Paying Agents.................................................. 12
Subordination.............................................................. 13
Sale or Issuance of Capital Stock of
Banks..................................................................... 13
Waiver of Covenants........................................................ 14
Modification of the Indentures............................................. 14
Meetings and Action by
Securityholders........................................................... 14
Defaults and Rights of Acceleration........................................ 14
Collection of Indebtedness................................................. 15
Notices.................................................................... 15
Concerning the Trustees ................................................... 15
Warrants.................................................................... 16
Description of Debt Warrants............................................... 16
Description of Universal Warrants.......................................... 16
Modification............................................................... 17
Enforceability of Rights of
Warrantholders; Governing Law............................................. 17
Unsecured Obligations...................................................... 17
Description of Units........................................................ 18
Description of Preferred Stock.............................................. 18
General.................................................................... 18
The Preferred Stock........................................................ 18
ESOP Preferred Stock....................................................... 19
Series B Preferred Stock................................................... 21
Series BB Preferred Stock.................................................. 21
Description of Depositary Shares............................................ 22
General.................................................................... 22
Dividends and Other Distributions.......................................... 23
Redemption of Depositary Shares............................................ 23
Voting the Preferred Stock................................................. 23
Amendment and Termination of the
Deposit Agreement......................................................... 24
Changes of Depositary...................................................... 24
Miscellaneous.............................................................. 24
Resignation and Removal of
Depositary................................................................ 24
Description of Common Stock................................................. 24
General.................................................................... 24
Voting and Other Rights.................................................... 25
Dividends.................................................................. 25
Registration and Settlement................................................. 25
The Depository Trust Company............................................... 25
Cedelbank and Euroclear.................................................... 27
Where You Can Find More
Information................................................................ 30
Forward-looking Statements.................................................. 31
Legal Opinions.............................................................. 31
Experts..................................................................... 31
S-2
REGISTRATION OF NOTES
The notes have been registered on registration statements on Form S-3 with
the Securities and Exchange Commission as follows: (a) $616,946,091 under Reg-
istration No. 333-51367, which represents all remaining unissued securities
covered by that registration statement and (b) $2,383,053,909 under Registra-
tion No. 333-83503, which leaves $8,266,946,091 in unissued or unallocated se-
curities covered by that registration statement at the date of this prospectus
supplement. With respect to notes covered by Registration No. 333-51367, the
accompanying prospectus dated August 5, 1999 is being delivered in lieu of the
prospectus dated May 21, 1998, pursuant to Rule 429 under the Securities Act of
1933.
ABOUT THIS PROSPECTUS SUPPLEMENT AND THE PRICING SUPPLEMENTS
We intend to use this prospectus supplement, the attached prospectus and a
related pricing supplement to offer our notes from time to time. You should
read each of these documents before investing in the notes.
This prospectus supplement provides you with certain terms of the notes and
supplements the description of the Debt Securities contained in the attached
prospectus. If information in this prospectus supplement is inconsistent with
the prospectus, this prospectus supplement will supersede the information in
the prospectus.
Each time we issue notes, we will prepare a pricing supplement which will
contain additional terms of the offering and the specific description of the
notes being offered. The pricing supplement also may add, update or change in-
formation in this prospectus supplement or the attached prospectus, including
provisions describing the calculation of interest and the method of making pay-
ments under the terms of a note. A pricing supplement can be quite detailed and
always should be read carefully. The flexibility available to us to set or ne-
gotiate individualized terms for notes means that there will be transactions,
particularly with Indexed Notes, that are quite complex. Often the terms of the
notes differ from the terms described in this prospectus supplement. Any infor-
mation in the pricing supplement that is inconsistent with this prospectus sup-
plement will supersede the information in this prospectus supplement.
---------------
RISK FACTORS
Your investment in the notes involves certain risks. In consultation with
your own financial and legal advisors, you should carefully consider, among
other matters, the following discussion of risks before deciding whether an in-
vestment in the notes is suitable for you. Notes are not an appropriate invest-
ment for you if you are not knowledgeable about the significant elements of the
notes or financial matters in general.
Risks of Indexed Notes
If you invest in notes indexed to one or more interest rate, currency or
other indices or formulas, known as Indexed Notes, you will be subject to sig-
nificant risks not associated with a conventional fixed rate or floating rate
debt security. These risks include fluctuation of the particular indices or
formulas and the possibility that you will receive a lower, or no, amount of
principal, premium or interest and at different times than you expected. We
have no control over a number of matters, including economic, financial and po-
litical events, that are important in determining the existence, magnitude and
longevity of these risks and their results. In addition, if an index or formula
used to determine any amounts payable in respect of the notes contains a multi-
plier or leverage factor, the effect of any change in the particular index or
formula will be magnified. In recent years, values of certain indices and for-
mulas have been volatile and volatility in those and other indices and formulas
may be expected in the future. However, past experience is not necessarily in-
dicative of what may occur in the future.
. Principal Amount. The principal amount of an Indexed Note may or may not
be "principal protected", so the principal amount you will receive at maturity
may be greater than, equal to or less than the original purchase price of the
Indexed Note, and it is possible that no principal will be paid at all.
S-3
. Interest Payments. If the interest rate of an Indexed Note is indexed
(whether or not the principal amount is indexed), then you may receive inter-
est payments that are less than what you would have received had you purchased
a conventional debt security at the same time with the same maturity date, and
it is possible that no interest will be paid at all.
. Leverage. Certain Indexed Notes that we will offer may have interest and
principal payments that increase or decrease at a rate that is greater than
the rate of a favorable or unfavorable movement in the indexed item. For exam-
ple, the formula set forth in the relevant pricing supplement could provide
that a 10% decline in the level of a stock index may result in a 20% reduction
in the principal amount that you will receive at maturity.
. Early Payment. The terms of an Indexed Note may require that the note be
paid prior to its scheduled maturity date. That early payment could result in
a reduction in your anticipated return on your investment.
. Tax Consequences. You should consider the tax consequences of investing
in Indexed Notes. Unless otherwise stated in the pricing supplement, you
should assume that there is no statutory, judicial or administrative authority
that directly addresses the characterization of the Indexed Notes or similar
instruments for United States federal or other income tax purposes. As a re-
sult, the income tax consequences of an investment in Indexed Notes are not
certain. We will not request a ruling from the Internal Revenue Service (the
"IRS") for any of the notes and we cannot assure you that the IRS will agree
with our conclusions in this prospectus supplement or in the pricing supple-
ment.
Factors Affecting the Trading Value of the Notes
The trading market for, and trading value of, your notes may be affected by
a number of factors. Often, the more specific the investment objective or
strategy of the note, the more limited the trading market and the more vola-
tile the price of that note. These factors include:
. the complexity and volatility of the index or formula applicable to your
notes, including any dividend rates or yields of other securities or fi-
nancial instruments applicable to your notes;
. the method of calculating the principal, premium, if any, and interest
of your notes;
. the time remaining to maturity of your notes;
. the aggregate amount of notes outstanding related to your notes;
. any redemption features of your notes;
. the amount of other debt securities linked to the index or formula ap-
plicable to your notes; and
. the level, direction and volatility of market interest rates generally.
In addition, the following factors may also affect trading in your notes:
. Our Hedging Activities. At any time, we or our affiliates may engage in
hedging activity related to the notes or an indexed item in connection with an
Indexed Note which may, in turn, increase or decrease the value of the notes.
In addition, we or our affiliates may acquire a long or short position in the
notes from time to time. All or a portion of these positions may be liquidated
at or about the time of the maturity date of the notes. The aggregate amount
and the composition of such positions are likely to vary over time. We have no
reason to believe that any such activity will have a material impact on the
level of the impacted item, however, there can be no assurance that our activ-
ities or our affiliates' activities will not affect such price.
. Possible Illiquidity of the Secondary Market. We do not intend to list
the notes on any securities exchange and even if the notes are listed at a
later date, we cannot assure that a trading market for your notes ever will
develop or be maintained if developed. Although the agents intend under ordi-
nary market conditions to indicate prices for the notes on request, we cannot
assure you that bids will be made in the future or predict the price at which
such bids will be made.
S-4
. State Law Limits on Interest Paid. New York State laws govern the Inden-
tures and the notes. New York usury laws limit the amount of interest that can
be charged and paid on loans, including debt securities like the notes. Under
present New York law, the maximum permissible rate of interest is 25% per an-
num on a simple interest basis. This limit may not apply to debt securities in
which $2,500,000 or more has been invested. While we believe that a state or
federal court sitting outside of New York may give effect to New York law,
many other states also have laws that regulate the amount of interest that may
be charged to and paid by a borrower. We do not intend to voluntarily claim
the benefits of any laws concerning usurious rates of interest.
Risks on Redemption
If the terms of your notes permit or require redemption prior to maturity,
that redemption may occur at times when prevailing interest rates are rela-
tively low. As a result, you generally will not be able to reinvest the re-
demption proceeds in a comparable security at an effective interest rate as
high as your notes being redeemed.
Currency Risks
If you invest in notes that are denominated or payable in a specified cur-
rency other than the currency in which you normally conduct your business, or
your home country currency, you will be subject to significant risks not asso-
ciated with an investment in a debt security denominated and payable in your
home country currency. These risks include the possibility of material changes
in the exchange rate between your home country currency and the specified cur-
rency and the imposition or modification of exchange controls by the applica-
ble governments. We have no control over the factors that generally affect
these risks, including economic, financial and political events, and the sup-
ply and demand for the applicable currencies. Moreover, if payments on these
type of notes are determined by reference to a formula containing a multiplier
or leverage factor, the effect of any change in the exchange rates between the
applicable currencies will be magnified. This prospectus supplement does not
describe all the risks of an investment in notes denominated in, or paid based
upon, a currency (including a composite currency) other than your home country
currency. If you are considering purchasing these types of notes, you and your
advisors should consider the suitability of an investment in the notes prior
to making an investment decision.
. Exchange Rates. In recent years, exchange rates between certain curren-
cies have been highly volatile and volatility between these currencies or with
other currencies may be expected in the future. Fluctuations between curren-
cies in the past are not necessarily indicative, however, of fluctuations that
may occur in the future. Depreciation of your payment currency would result in
a decrease in the home country currency equivalent yield of your notes, in the
home country currency equivalent value of the principal and any premium pay-
able at maturity or any earlier redemption of your notes and, generally, in
the home country currency equivalent market value of your notes.
. Government Exchange Controls. From time to time, governments impose ex-
change controls that influence exchange rates and could limit the availability
of the specified currency on an interest payment or the maturity date of a
note. It is possible that government exchange controls could restrict or pro-
hibit our payment of principal or interest in the specified currency. Even if
there are no exchange controls, it is possible that the specified currency
will not be available to us to make payment of interest and principal when re-
quired.
Credit Ratings
The credit ratings of our medium-term note program may not reflect the po-
tential impact of all risks related to structure and other factors on any
trading market for, or trading value of, your notes. In addition, real or an-
ticipated changes in our credit ratings will generally affect any trading mar-
ket for, or trading value of, your notes.
S-5
BANK OF AMERICA CORPORATION
General
Bank of America Corporation is a Delaware corporation, a bank holding com-
pany and a financial holding company. Our principal assets are our shares of
stock of Bank of America, N.A. and our other banking and nonbanking subsidiar-
ies. Through those subsidiaries, we provide a diversified range of banking and
nonbanking financial services and products, primarily throughout the Mid-Atlan-
tic (Maryland, Virginia and the District of Columbia), the Midwest (Illinois,
Iowa, Kansas and Missouri), the Southeast (Florida, Georgia, North Carolina,
South Carolina and Tennessee), the Southwest (Arizona, Arkansas, New Mexico,
Oklahoma and Texas), the Northwest (Oregon and Washington) and the West (Cali-
fornia, Idaho and Nevada) regions of the United States and in selected interna-
tional markets.
We, and our subsidiaries, are subject to supervision by various United
States federal and state banking and other regulatory authorities. The Gramm-
Leach-Bliley Act amended a number of federal banking laws. In particular, the
Gramm-Leach-Bliley Act permits a financial holding company, and the companies
under its control, to engage directly or indirectly in activities considered
"financial in nature" (including, without limitation, banking, insurance and
securities activities), either de novo or by acquisition, provided the Federal
Reserve Board is given after-the-fact notice of the new activities. The Gramm-
Leach-Bliley Act also permits national banks to engage in activities considered
financial in nature through a financial subsidiary, subject to certain condi-
tions and limitations and with the prior approval of the Comptroller.
Business Segment Operations
We provide a diversified range of banking and nonbanking financial services
and products through our various subsidiaries. In 2000, we realigned our busi-
ness segments to report the results of our operations through four business
segments: (1) Consumer and Commercial Banking, (2) Asset Management, (3) Global
Corporate and Investment Banking and (4) Equity Investments.
. Consumer and Commercial Banking
Consumer and Commercial Banking provides a wide array of products and serv-
ices to individuals, small businesses and middle market companies through mul-
tiple delivery channels. The major components of Consumer and Commercial Bank-
ing are Banking Regions, Consumer Products and Commercial Banking.
. Banking Regions
Banking Regions serves consumer households in 21 states and the District of
Columbia and overseas through our extensive network of approximately 4,400
banking centers, 13,000 ATMs, telephone and Internet channels on
www.bankofamerica.com. Banking Regions provides a wide array of products and
services, including deposit products such as checking, money market savings ac-
counts, time deposits and IRAs, and credit products such as home equity, mort-
gage, personal auto loans and auto leasing. Banking Regions also includes small
business banking providing treasury management, credit services, community in-
vestment, debit card, e-commerce and brokerage services to over two million
small business relationships across the franchise.
. Consumer Products
Consumer Products provides specialized services such as the origination and
servicing of residential mortgage loans, issuance and servicing of credit
cards, direct banking via the telephone and the Internet, student lending and
certain insurance services. Consumer Products also provides auto loans, retail
finance programs to dealerships and lease financing of new and used cars.
. Commercial Banking
Commercial Banking provides commercial lending and treasury management serv-
ices to middle market companies with annual revenue between $10 million and
$500 million. These services are available through relationship manager teams
as well as through alternative channels such as the telephone via the commer-
cial service center and the Internet by accessing Bank of America Direct.
S-6
. Asset Management
Asset Management includes the Private Bank, Banc of America Capital Manage-
ment and Banc of America Investment Services, Inc. The Private Bank offers fi-
nancial solutions to high-net-worth clients and foundations in the United
States and internationally by providing customized asset management and cred-
it, financial advisory, fiduciary, trust and banking services. Banc of America
Capital Management offers management of equity, fixed income, cash and alter-
native investments; manages the assets of individuals, corporations, munici-
palities, foundations and universities, and public and private institutions;
and provides advisory services to our affiliated family of mutual funds. Banc
of America Investment Services, Inc. provides both full-service and discount
brokerage services through investment professionals located throughout the
franchise and a brokerage web site that provides customers a wide array of
market analyses, investment research and self-help tools, account information
and transaction capabilities.
. Global Corporate and Investment Banking
Global Corporate and Investment Banking provides a broad array of financial
services such as investment banking, trade finance, treasury management, lend-
ing, capital markets, leasing and financial advisory services to domestic and
international corporations, financial institutions and government entities.
Clients are supported through offices in 38 countries in four distinct geo-
graphic regions: United States and Canada; Asia; Europe, Middle East and Afri-
ca; and Latin America. Products and services provided include loan origina-
tion, merger and acquisition advisory services, debt and equity underwriting
and trading, cash management, derivatives, foreign exchange, leasing,
leveraged finance, project finance, real estate finance, senior bank debt,
structured finance and trade services.
Global Corporate and Investment Banking offers clients a comprehensive
range of global capabilities through three components: Global Investment Bank-
ing, Global Credit Products and Global Treasury Services.
. Global Investment Banking
Global Investment Banking includes our investment banking activities and
risk management products. Through a separate subsidiary, Banc of America Secu-
rities LLC, Global Investment Banking underwrites and makes markets in equity
securities, high-grade and high-yield corporate debt securities, commercial
paper, and mortgage-backed and asset-backed securities. Banc of America Secu-
rities LLC also provides correspondent clearing services for other securities
broker/dealers, traditional brokerage services to high-net-worth individuals
and prime-brokerage services. Debt and equity securities research, loan syndi-
cations, merger and acquisition advisory services, private placements and eq-
uity derivatives are also provided through Banc of America Securities LLC.
In addition, Global Investment Banking provides risk management solutions
for our global customer base using interest rate and credit derivatives, for-
eign exchange products, commodity derivatives and mortgage-related products.
In support of these activities, the businesses will take positions in these
products and capitalize on market-making activities. The Global Investment
Banking business also takes an active role in the trading of fixed income se-
curities in all of the regions in which Global Corporate and Investment Bank-
ing transacts business and is a primary dealer in the United States, as well
as in several international locations.
. Global Credit Products
Global Credit Products provides credit and lending services and includes
the corporate industry-focused portfolio, real estate, leasing and project fi-
nance.
. Global Treasury Services
Global Treasury Services provides the technology, strategies and integrated
solutions to help financial institutions, government agencies and public and
private companies of all sizes manage their operations and cash flows on a lo-
cal, regional, national and global level.
S-7
. Equity Investments
Equity Investments includes Principal Investing, which is comprised of a di-
versified portfolio of companies at all stages of the business cycle, from
start up to buyout. Investments are made on both a direct and indirect basis in
the United States and overseas. Direct investing activity focuses on playing an
active role in the strategic and financial direction of the portfolio company
as well as providing broad business experience and access to our global re-
sources. Indirect investments represent passive limited partnership stakes in
funds managed by experienced third party private equity investors who act as
general partners. Equity Investments also includes our strategic technology and
alliances investment portfolio in addition to other parent company investments.
Acquisitions and Sales
As part of our operations, we regularly evaluate the potential acquisition
of, and hold discussions with, various financial institutions and other busi-
nesses that are eligible for financial holding company ownership or control. In
addition, we regularly analyze the values of, and submit bids for, the acquisi-
tion of customer-based funds and other liabilities and assets of suitable fi-
nancial institutions and other businesses. We also regularly consider the po-
tential disposition of certain of our assets, branches, subsidiaries or lines
of businesses. As a general rule, we publicly announce any material acquisi-
tions or dispositions when a definitive agreement has been reached.
Outstanding Debt
At March 31, 2001, we had the following long-term debt outstanding (in mil-
lions):
Senior debt
Bank of America Corporation................... $21,146
Subsidiaries.................................. 25,076
-------
Total senior debt............................ 46,222
-------
Subordinated debt
Bank of America Corporation................... 20,214
Subsidiaries.................................. 608
-------
Total subordinated debt...................... 20,822
-------
Total long-term debt......................... $67,044
=======
Guaranteed Preferred Beneficial Interests in
Junior Subordinated Notes..................... $ 4,955
-------
Also, at March 31, 2001, we had $5.1 billion of commercial paper and other
short-term notes payable outstanding.
DESCRIPTION OF NOTES
The notes are a series of Debt Securities under the Indentures, which are
exhibits to our registration statements. The Indentures are subject to, and
governed by, the Trust Indenture Act.
The following summary of the notes and the Indentures does not purport to be
complete and is qualified in its entirety by reference to the actual notes and
the Indentures. The following description of notes will apply to each note we
offer unless we otherwise specify in the applicable pricing supplement.
General
The notes are our direct, unsecured obligations. The total initial public
offering price of the Senior and Subordinated Medium-Term Notes, Series I, that
may be offered using this prospectus supplement is $3,000,000,000.
S-8
Our senior notes are senior debt securities that rank equally with all of
our other unsecured senior indebtedness. Our subordinated notes are subordi-
nated debt securities that are subordinate and junior in right of payment to
all of our other unsecured senior indebtedness.
Payment of principal of the subordinated notes or of our other subordinated
indebtedness may not be accelerated in the case of a default in the payment of
amounts due under those notes or a default in the terms of our other obliga-
tions under the applicable Indenture.
The Indentures do not limit the aggregate amount of Debt Securities that we
may issue thereunder. Accordingly, we may issue Debt Securities from time to
time in one or more series up to the aggregate initial offering price autho-
rized for the particular series. We also may issue, without the consent of the
registered holders of the notes, medium-term notes that are part of the same
series as the notes or other Debt Securities under the Indentures. The Inden-
tures also allow us to "reopen" or later increase the principal amount of a se-
ries of notes without notice to the holders of the notes by selling additional
notes or other Debt Securities having the same terms as previously issued notes
(other than the date of issuance, the date interest, if any, begins to accrue
and the offering price, which may vary) that will form a single series with the
previously issued notes. The IRS recently issued final regulations addressing
whether additional debt instruments issued in a reopening will be considered
part of the same series as the previously issued debt instrument for United
States federal income tax purposes. See "United States Taxation."
Each note will be offered on a continuous basis and will mature on a Busi-
ness Day nine months or more from the date of issue. A "Business Day" means any
weekday that is (1) not a legal holiday in New York, New York or Charlotte,
North Carolina, (2) not a day on which banking institutions in those cities are
authorized or required by law or regulation to be closed and (3) a London Bank-
ing Day if that note is a LIBOR Note. A "London Banking Day" is any day on
which commercial banks are open for business (including dealings in LIBOR cur-
rency) in London, England.
The notes are not subject to any sinking fund.
Book-Entry System
We will issue each note in book-entry form only. This means that we will not
issue actual notes or certificates to each holder. Instead, the notes will be
in the form of a Global Note held in the name of The Depository Trust Company
("DTC"). In order to own a beneficial interest in a note, you must be an insti-
tution that has an account with DTC or have a direct or individual account with
such an institution.
Notes will not be issued in certificated form unless:
. DTC notifies us that it is unwilling or unable to continue as depository
or it otherwise ceases to be a qualified clearing agency and we do not
appoint a successor depository; or
. we make a decision to permit notes to be issued in certificated form and
notify the Trustee of that decision.
No service charge will be made for any registration of transfer or exchange
of notes issued in certificated form, but we may require payment of a sum suf-
ficient to cover any related tax or other governmental charges.
Paying Agent, Security Registrar, Transfer Agent and Calculation Agent
Until the notes are paid, we will maintain a paying agent, security regis-
trar, transfer agent and calculation agent for the notes. Initially, the
Trustee serves in each of these capacities.
Payment of Principal and Interest
We will pay principal, premium, if any, and interest on notes in book-entry
form in accordance with the arrangements then in place between the paying agent
and DTC and its nominee, as holder. We will
S-9
pay interest on notes in certificated form on each interest date other than the
maturity date, if any, by check mailed to the holders of the notes on the ap-
plicable record date at the address appearing on our records. We will pay prin-
cipal, premium, if any, and interest payable at the maturity date of a note in
certificated form by wire transfer of immediately available funds upon surren-
der of the note at the corporate trust office of the applicable Trustee or pay-
ing agent.
The pricing supplement will specify certain terms of the notes being of-
fered, including:
. whether the note is a Fixed Rate Note, a Floating Rate Note, an Original
Issue Discount Note, an Amortizing Note or an Indexed Note;
. the method of determining and paying interest, including the interest
rate basis or bases, the initial interest rate (if any), interest reset
dates, payment dates, the Index Maturity and any maximum or minimum rate
of interest;
. any Spread or Spread Multiplier; and
. the method for the calculation and payment of principal and premium (if
any).
The "Index Maturity" is the period to maturity of the instrument with re-
spect to which the interest rate basis is calculated. The "Spread" is the num-
ber of basis points to be added to or subtracted from the related interest rate
index applicable to a note. The "Spread Multiplier" is the percentage of the
related interest rate basis or bases applicable to a floating rate note by
which the interest rate basis or bases will be multiplied to determine the ap-
plicable interest rate.
Fixed Rate Notes
The pricing supplement for Fixed Rate Notes will describe a fixed interest
rate payable semi-annually in arrears. Interest on Fixed Rate Notes is computed
on the basis of a 360-day year of twelve 30-day months. If the maturity date of
any note or an Interest Payment Date for any Fixed Rate Note is not a Business
Day, principal, premium, if any, and interest for that note is paid on the next
Business Day, and no interest will accrue from and after the maturity date or
Interest Payment Date.
Floating Rate Notes
Each Floating Rate Note will have an interest rate basis or formula, which
may be based on:
. the CD rate;
. the CMT rate;
. the Commercial paper rate;
. the Federal Funds rate;
. LIBOR;
. the Prime rate;
. the Treasury rate; or
. another negotiated interest rate basis or formula.
A description of each of these interest rate bases is included in this pro-
spectus supplement beginning on page S-12.
Upon the request of the beneficial holder of any Floating Rate Note, the
calculation agent will provide the interest rate then in effect and, if differ-
ent, the interest rate that will become effective on the next Interest Reset
Date for that Floating Rate Note.
S-10
Interest Reset Dates. The interest rates on each Floating Rate Note may be
reset daily, weekly, monthly, quarterly, semi-annually or annually (each, an
"Interest Reset Date"), and the period between Interest Reset Dates will be
the "Interest Reset Period." The Interest Reset Dates will be, in the case of
Floating Rate Notes which reset:
. daily -- each Business Day;
. weekly (for notes other than Treasury Rate Notes) -- the Wednesday of
each week;
. weekly (Treasury Rate Notes) -- the Tuesday of each week;
. monthly -- the third Wednesday of each month;
. quarterly -- the third Wednesday of March, June, September and December
of each year;
. semi-annually -- the third Wednesday of each of the two months specified
in the applicable pricing supplement; and
. annually -- the third Wednesday of the month of each year specified in
the applicable pricing supplement;
provided, however, that, the rate of interest on Floating Rate/Fixed Rate
Notes will not reset after the particular Fixed Rate commencement date.
The pricing supplement describes the initial interest rate or interest rate
formula for each note. That rate is effective until the first Interest Reset
Date. After that time, the interest rate will be the rate determined on each
Interest Determination Date. Each time a new interest rate is determined, it
becomes effective on the next Interest Reset Date. However, no change will be
made in the interest rate during the 10 days before the maturity date.
If any Interest Reset Date for any Floating Rate Note does not fall on a
Business Day, that particular Interest Reset Date will be postponed to the
next succeeding Business Day, except that in the case of a Floating Rate Note
for which LIBOR is an applicable Interest Rate Basis and for which that Busi-
ness Day falls in the next succeeding calendar month, the particular Interest
Reset Date will be the immediately preceding Business Day. In addition, in the
case of a Floating Rate Note for which the Treasury Rate is an applicable In-
terest Rate Basis, if the Interest Determination Date falls on an Interest Re-
set Date, the particular Interest Reset Date will be postponed until the next
succeeding Business Day.
Interest Determination Dates. The interest rate applicable to an Interest
Reset Period that commences on the related Interest Reset Date will be deter-
mined by reference to the applicable Interest Rate Basis as of the particular
"Interest Determination Date," which will be:
. with respect to the Federal Funds Rate and the Prime Rate -- the Busi-
ness Day immediately preceding the related Interest Reset Date;
. with respect to the CD Rate, the CMT Rate and the Commercial Paper
Rate -- the second Business Day preceding the related Interest Reset
Date;
. with respect to LIBOR -- the second London Banking Day preceding the re-
lated Interest Reset Date;
. with respect to the Treasury Rate -- the day in the week in which the
related Interest Reset Date falls, on the day Treasury bills are nor-
mally auctioned (i.e., 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 the
auction may be held on the preceding Friday); provided, however, that if
an auction is held on the Friday of the week preceding the related In-
terest Reset Date, the Interest Determination Date will be the preceding
Friday; and
. with respect to an Indexed Note, the interest rate of which is deter-
mined with reference to two or more Interest Rate Bases -- the latest
Business Day that is at least two Business Days before the related In-
terest Reset Date for the applicable Indexed Note on which each interest
rate basis is determined.
S-11
Interest Payments. The interest payment dates will be, in the case of Float-
ing Rate Notes which reset:
. daily, weekly or monthly -- the third Wednesday of each month or on the
third Wednesday of March, June, September and December of each year, as
specified in the pricing supplement;
. quarterly -- the third Wednesday of March, June, September and December
of each year;
. semi-annually -- the third Wednesday of the two months of each year
specified in the pricing supplement;
. annually -- the third Wednesday of the month of each year specified in
the pricing supplement; and
. at maturity, redemption or repurchase.
Each interest payment on a Floating Rate Note will include interest accrued
from, and including, the issue date or the last Interest Payment Date, as the
case may be, to, but excluding, the Interest Payment Date or the maturity date,
as the case may be. However, interest payments on Floating Rate Notes which re-
set daily or weekly will include interest accrued from, and excluding, the last
Regular Record Date to and including, the Regular Record Date for the applica-
ble Interest Payment Date, except that the first interest payment due will in-
clude interest from the issue date and the interest payment due on the maturity
date will include interest accrued to, but excluding, the maturity date.
A "Regular Record Date" is the date on which a note must be held by the
holder in order to receive an interest payment on the next Interest Payment
Date. The record date for any Interest Payment Date is 15 calendar days prior
to that Interest Payment Date.
Interest on a note will be payable beginning on the first Interest Payment
Date after its issue date to holders of record on the corresponding Regular
Record Date. If interest is payable on a day which is not a Business Day, pay-
ment will be postponed to the next Business Day and no additional interest will
accrue in respect of the payment made on that next succeeding Business Day.
However, for LIBOR Notes, if the next Business Day is in the next calendar
month, interest will be paid on the preceding Business Day. If the maturity
date of any Floating Rate Note is not a Business Day, principal, premium, if
any, and interest for that note will be paid on the next Business Day, and no
interest will accrue from and after the maturity date.
Accrued interest on a Floating Rate Note is calculated by multiplying the
principal amount of a note by an accrued interest factor. The accrued interest
factor is the sum of the interest factors calculated for each day in the period
for which accrued interest is being calculated. The interest factor for each
day is computed by dividing the interest rate in effect on that day by (1) the
actual number of days in the year, in the case of Treasury Rate Notes or CMT
Rate Notes, or (2) 360, in the case of other Floating Rate Notes. All percent-
ages resulting from any calculation are rounded to the nearest one hundred-
thousandth of a percentage point, with five one-millionths of a percentage
point rounded upward. For example, 9.876545% (or .09876545) will be rounded to
9.87655% (or .0987655). Dollar amounts used in the calculation are rounded to
the nearest cent (with one-half cent being rounded upward).
CD Rate Notes. The "CD Rate" for any Interest Determination Date is the rate
on that date for negotiable U.S. dollar certificates of deposit having the In-
dex Maturity described in the pricing supplement, as published in H.15(519)
prior to 3:00 P.M., New York City time, on the calculation date for that Inter-
est Determination Date under the heading "CDs (secondary market)".
The following procedures will be followed if the CD Rate cannot be deter-
mined as described above:
. If the above rate is not published in H.15(519) by 3:00 P.M., New York
City time, on the calculation date, the CD Rate will be the rate on that
Interest Determination Date for negotiable U.S. dollar certificates of
deposit of the Index Maturity described in the pricing supplement as
published in H.15 Daily Update, or other recognized electronic source
used for the purpose of displaying the applicable rate, under the cap-
tion "CDs (secondary market)".
S-12
. If that rate is not published by 3:00 P.M., New York City time, on the
calculation date, then the calculation agent will determine the CD Rate
to be the average of the secondary market offered rates as of 10:00
A.M., New York City time, on that Interest Determination Date, quoted by
three leading nonbank dealers of negotiable U.S. dollar certificates of
deposit in New York City for negotiable certificates of deposit in a de-
nomination of $5,000,000 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 de-
scribed in the pricing supplement. The calculation agent will select the
three dealers referred to above.
. If fewer than three dealers are quoting as mentioned above, the CD Rate
will remain the CD Rate then in effect on that Interest Determination
Date.
"H.15(519)" means the weekly publication entitled "Federal Reserve Statisti-
cal Release H.15(519), Selected Interest Rates," or any successor publication
of the Board of Governors of the Federal Reserve System.
"H.15 Daily Update" means the daily update of H.15(519), available through
the internet site of the Board of Governors of the Federal Reserve System at
http://federal reserve.gov/releases/h15/update or any successor site or publi-
cation.
CMT Rate Notes. The "CMT Rate" for any Interest Determination Date is the
rate displayed on the Designated CMT Telerate Page by 3:00 P.M., New York City
time, on the calculation date for that Interest Determination Date under the
caption ".. Treasury Constant Maturities.. Federal Reserve Board Release H.15..
Mondays Approximately 3:45 P.M.,'' under the column for the Index Maturity de-
scribed in the pricing supplement for:
(i) if the Designated CMT Telerate Page is displayed on Bridge Telerate,
Inc. (or any successor service) on page 7051 (or any page as may replace
that page on that service), such Interest Determination Date; or
(ii) if the Designated CMT Telerate Page is displayed on Bridge
Telerate, Inc. (or any successor service) on page 7052 (or any page as may
replace that page on that service) ("Telerate Page 7052"), the week, or the
month ended immediately preceding the week in which the related Interest
Determination Date occurs.
The following procedures will be used if the CMT Rate cannot be determined
as described above:
. If the rate is not displayed on the relevant page by 3:00 P.M., New York
City time, on the calculation date, then the CMT Rate will be the Trea-
sury constant maturity rate for the Index Maturity, as published in
H.15(519).
. If that rate is not published in H.15(519) by 3:00 P.M., New York City
time, on the calculation date, then the CMT Rate will be the Treasury
constant maturity rate (or other United States Treasury rate) for the In-
dex Maturity for the Interest Determination 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 de-
termines to be comparable to the rate formerly displayed on the Desig-
nated CMT Telerate Page and published in H.15(519).
. If that information is not provided by 3:00 P.M., New York City time, on
the calculation date, then the calculation agent will determine the CMT
Rate to be a yield to maturity based on the average of the secondary mar-
ket 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 New York City. The
calculation agent will select five Reference Dealers and will eliminate
the highest quotation (or, in the event of equality, one of the highest
quotations) and the lowest quotation (or, in the event of equality, one
of the lowest quotations), for the most recently issued direct noncalla-
ble fixed rate obligations of the United States ("Treasury Notes") with
an original maturity of approximately the Index Maturity and a remaining
term to maturity of not less than the Index Maturity minus one year.
S-13
. If the calculation agent cannot obtain three Treasury Note quotations,
the calculation agent will determine the CMT Rate to be a yield to matu-
rity based on the average of the secondary market offer side prices as of
approximately 3:30 P.M., New York City time, on the Interest Determina-
tion Date of three Reference Dealers in New York City (selected using the
same method described above) for Treasury Notes with an original maturity
of the number of years that is the next highest to the Index Maturity and
a remaining term to maturity closest to the Index Maturity and in an
amount of at least $100,000,000.
. If three or four, but not five Reference Dealers are quoting as described
above, then the CMT Rate will be based on the average of the offered
rates obtained and neither the highest nor the lowest of those quotations
will be eliminated.
. If fewer than three Reference Dealers selected by the calculation agent
are quoting as described above, the CMT Rate will remain the CMT Rate
then in effect on the Interest Determination Date.
"Designated CMT Telerate Page" means the display page on the Bridge
Telerate, Inc. specified in a pricing supplement (or any other replacement
page displaying Treasury Constant Maturity as reported in H.15(519)). If no
such page is specified in the pricing supplement, the Designated CMT Telerate
Page shall be Telerate Page 7052 for the most recent week.
Commercial Paper Rate Notes. The "Commercial Paper Rate" for any Interest
Determination Date is the Money Market Yield of the rate on that date for com-
mercial paper having the Index Maturity described in the pricing supplement,
as published in H.15(519) prior to 3:00 P.M., New York City time, on the Cal-
culation Date for that Interest Determination Date under the heading "Commer-
cial Paper -- Nonfinancial".
The following procedures will be followed if the Commercial Paper Rate can-
not be determined as described above:
. If the above rate is not published in H.15(519) by 3:00 P.M., New York
City time, on the calculation date, the Commercial Paper Rate will be
the Money Market Yield of the rate on that Interest Determination Date
for commercial paper having the Index Maturity described in the pricing
supplement, as published in H.15 Daily Update, or such other recognized
electronic source used for the purpose of displaying the applicable
rate, under the caption "Commercial Paper--Nonfinancial."
. If that rate is not published in H.15 Daily Update by 3:00 P.M., New
York City time, on the calculation date, then the calculation agent will
determine the Commercial Paper Rate to be the Money Market Yield of the
average of the offered rates of three leading dealers of U.S. dollar
commercial paper in New York City as of 11:00 A.M., New York City time,
on that Interest Determination Date for commercial paper having the In-
dex Maturity described in the pricing supplement placed for an indus-
trial issuer whose bond rating is "Aa", or the equivalent, from a na-
tionally recognized securities rating organization. The calculation
agent will select the three dealers referred to above.
. If fewer than three dealers selected by the calculation agent are quot-
ing as mentioned above, the Commercial Paper Rate will remain the Com-
mercial Paper Rate then in effect on that Interest Determination Date.
"Money Market Yield" is a yield calculated in accordance with the following
formula:
Money Market = D X 360 X 100
-------------
Yield 360 - (D X M)
where "D" refers to the annual rate for commercial paper quoted on a bank dis-
count 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. The "Federal Funds Rate" for any Interest Deter-
mination Date is the rate on that date for Federal Funds, as published in
H.15(519) prior to 3:00 P.M., New York City time, on the calculation date for
that Interest Determination Date under the heading "Federal Funds (Effective)"
and/or displayed on Bridge Telerate, Inc. (or any successor service) on page
120 (or any other page as may replace the specified page on that service)
("Telerate Page 120").
S-14
The following procedures will be followed if the Federal Funds Rate cannot
be determined as described above:
. If the above rate is not published in H.15(519) by 3:00 P.M., New York
City time, on the calculation date or does not appear on Telerate Page
120, the Federal Funds Rate will be the rate on that Interest Determina-
tion Date, as published in H.15 Daily Update, or such other recognized
electronic source for the purposes of displaying the applicable rate, un-
der the caption "Federal Funds (Effective)".
. If that rate is not published in H.15 Daily Update by 3:00 P.M., New York
City time, on the calculation date, then the calculation agent will de-
termine the Federal Funds Rate to be the average of the rates for the
last transaction in overnight federal funds quoted by three leading bro-
kers of Federal Funds transactions in New York City, selected by the cal-
culation agent, as of 9:00 A.M., New York City time, on that Interest De-
termination Date.
. If fewer than three brokers selected by the calculation agent are quoting
as mentioned above, the Federal Funds Rate will be the Federal Funds Rate
in effect on that Interest Determination Date.
LIBOR Notes. On each Interest Determination Date, the calculation agent will
determine LIBOR as follows:
. If "LIBOR Telerate" is specified in the pricing supplement, LIBOR will
be the rate for deposits in the LIBOR currency having the Index Maturity
described in the pricing supplement on the applicable Interest Determi-
nation Date, as such rate appears on the designated LIBOR page as of
11:00 A.M., London time, on that Interest Determination Date.
. If "LIBOR Reuters" is described in the pricing supplement, LIBOR will be
the average of the offered rates for deposits in the LIBOR currency hav-
ing the Index Maturity described in the pricing supplement on the appli-
cable Interest Determination Date, as such rates appear on the desig-
nated LIBOR page as of 11:00 A.M., London time, on that Interest Deter-
mination Date, if at least two such offered rates appear on the desig-
nated LIBOR page.
If the pricing supplement does not specify "LIBOR Telerate" or "LIBOR Reuters,"
the LIBOR Rate will be LIBOR Telerate. In addition, if the designated LIBOR
page by its terms provides only for a single rate, that single rate will be
used regardless of the foregoing provisions requiring more than one rate.
On any Interest Determination Date on which fewer than the required number
of applicable rates appear or no rate appears on the applicable designated LI-
BOR page, the calculation agent will determine LIBOR as follows:
. LIBOR will be determined on the basis of the offered rates at which de-
posits in the LIBOR currency having the Index Maturity described in the
pricing supplement on the Interest Determination Date and in a principal
amount that is representative of a single transaction in that market at
that time are offered by four major banks in the London interbank market
at approximately 11:00 A.M., London time, on the Interest Determination
Date to prime banks in the London interbank market. The calculation agent
will select the four banks and request the principal London office of
each of those banks to provide a quotation of its rate. If at least two
quotations are provided, LIBOR for that Interest Determination Date will
be the average of those quotations.
. If fewer than two quotations are provided as mentioned above, LIBOR will
be the average of the rates quoted by three major banks in the Principal
Financial Center selected by the calculation agent at approximately 11:00
A.M. in the Principal Financial Center, on the Interest Determination
Date for loans to leading European banks in the LIBOR currency having the
Index Maturity designated in the pricing supplement on the Interest De-
termination Date and in a principal amount that is representative for a
single transaction in that market at that time. The calculation agent
will select the three banks referred to above.
. If fewer than three banks selected by the calculation agent are quoting
as mentioned above, LIBOR will remain LIBOR then in effect on the Inter-
est Determination Date.
"Principal Financial Center" is generally the capital city of the country of
the specified LIBOR Currency; however, for U.S. dollars, Australian dollars,
Canadian dollars, Deutsche marks, Italian lire and Swiss francs, the "Principal
Financial Center" is New York, Sydney and (solely in the case of the specified
currency) Melbourne, Toronto, Frankfurt, Milan and Zurich, respectively.
S-15
Prime Rate Notes. The "Prime Rate" for any Interest Determination Date is
the prime rate or base lending rate on that date, as published in H.15(519) by
9:00 A.M., New York City time, on the calculation date for that Interest De-
termination Date under the heading "Bank Prime Loan".
The following procedures will be followed if the Prime Rate cannot be de-
termined as described above:
. If the rate is not published in H.15(519) by 3:00 P.M., New York City
time, on the calculation date, then the Prime Rate will be the rate as
published in H.15 Daily Update, or such other recognized electronic
source used for the purpose of displaying the applicable rate, under the
caption "Bank Prime Loan."
. If the rate described above does not appear in H.15(519), H.15 Daily Up-
date or another recognized electronic source by 3:00 P.M., New York City
time, on the calculation date, then the calculation agent will determine
the Prime Rate based on the rates as they appear on the Reuters screen
US PRIME 1. If at least one rate, but fewer than four rates appear on the
Reuters screen US Prime 1 on the Interest Determination Date, then the
Prime Rate will be the average of the prime rates or base lending 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 the Interest Determination
Date by four major money center banks in New York City selected by the
calculation agent.
. If fewer than two rates appear on the Reuters screen as US Prime 1, then
the Prime Rate will be the average of the Prime Rates furnished in New
York City by the appropriate number of substitute banks or trust compa-
nies (all organized under the United States or any of its states and hav-
ing total equity capital of at least $500,000,000) selected by the calcu-
lation agent, on the Interest Determination Date.
. If the banks selected by the calculation agent are not quoting as men-
tioned above, the Prime Rate will remain the Prime Rate then in effect on
the Interest Determination Date.
"Reuters screen US PRIME 1" means the display designated as page "US PRIME
1" on the Reuters Monitor Money Rates Service (or such other page as may re-
place the US PRIME 1 page on that service for the purpose of displaying prime
rates or base lending rates of major United States banks).
Treasury Rate Notes. The "Treasury Rate" for any Interest Determination
Date is the rate set at the auction of direct obligations of the United States
("Treasury bills") having the Index Maturity described in the pricing supple-
ment, as published in H.15(519) by 3:00 P.M., New York City time, on the cal-
culation date for that Interest Determination Date under the heading "U.S.
Government Securities--Treasury bills--auction average (investment)" and/or
displayed on Bridge Telerate, Inc. (or any successor service) on page 56 (or
any other page as may replace that page on that service) ("Telerate Page 56")
or page 57 (or any other page as may replace that page on that service)
("Telerate Page 57").
The following procedures will be followed if the Treasury Rate cannot be
determined as described above:
. If the rate is not published in H.15(519) by 3:00 P.M., New York City
time, or displayed on Telerate Page 56 or Telerate Page 57 on the calcu-
lation date, the Treasury Rate will be the auction average rate (ex-
pressed 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 on the calculation date.
. If the results of the most recent auction of Treasury bills having the
Index Maturity described in the pricing supplement are not published or
announced as described above by 3:00 P.M., New York City time, on the
calculation date, or if no auction is held on the Interest Determination
Date, then the calculation agent will determine the Treasury Rate to 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
average of the secondary market bid rates, as of approximately 3:30 P.M.,
New York City time, on the Interest Determination Date of three leading
primary United States government securities dealers, selected by the cal-
culation agent, for the issue of Treasury bills with a remaining maturity
closest to the Index Maturity described in the pricing supplement.
. If fewer than three dealers selected by the calculation agent are quoting
as mentioned above, the Treasury Rate will remain the Treasury Rate then
in effect on that Interest Determination Date.
S-16
Original Issue Discount Notes
We may issue original issue discount notes (including zero coupon notes)
("OID Notes") which are notes issued at a discount from the principal amount
payable at the maturity date. There may not be any periodic interest payments
on OID Notes. For these notes, interest normally accrues during the life of the
notes and is paid at the maturity date or upon earlier redemption. Upon an ac-
celeration of the maturity of an OID Note, the amount payable is determined in
accordance with the terms of the note as described in the pricing supplement.
That amount is normally less than the amount payable at the maturity date.
Amortizing Notes
We may issue Amortizing Notes, which are Fixed Rate Notes for which combined
principal and interest payments are made in installments over the life of the
notes. Payments on Amortizing Notes are applied first to interest due and then
to the reduction of the unpaid principal amount. Unless otherwise specified in
the applicable pricing supplement, interest on each Amortizing Note will be
computed on the basis of a 360-day year of twelve 30-day months. The pricing
supplement for an Amortizing Note will include a table setting forth repayment
information.
Indexed Notes
We may issue notes for which the amount of interest or principal that you
will receive will not be known on your date of purchase. Interest or principal
payments for these types of notes, which we call "Indexed Notes", are deter-
mined by reference to securities, financial or non-financial indices, curren-
cies, commodities, interest rates, or composites or baskets of any or all of
the above. Examples of indexed items that may be used include a published stock
index, the common stock price of a publicly traded company, the value of the
U.S. dollar versus the Japanese Yen, or the price of a barrel of West Texas in-
termediate crude oil. The formula for calculating the amount of interest or
principal payments, as well as the indexed item that will be used, will be in-
cluded in the pricing supplement.
The following are examples of types of Indexed Notes:
. Notes with a maturity of seven years that pay zero interest, but provide
a principal payment at maturity equal to the face amount of the notes
plus an additional amount equal to (a) the face amount (or a specified
portion of the face amount) multiplied by (b) the percentage that the
indexed item has increased during the term of the notes.
. Notes with a maturity of five years and a face amount equal to the price
of the common stock of a publicly traded corporation on the issuance
date. You will receive a stated fixed rate of interest that will be sig-
nificantly higher than the dividend yield of that corporation's common
stock as of the date of issuance of the notes. At maturity, you will re-
ceive a principal amount equal to the price of the common stock as of
five business days prior to the maturity date. That principal amount may
be higher or lower than the face amount of the notes. However, no matter
how high the price of the common stock has risen, the principal amount
that you receive on the maturity date may or may not be limited to the
face amount of the notes.
. Notes with a maturity of five years that pay a rate of interest that is
0.40% per year greater than the interest rate that you would earn if at
the same time you had purchased conventional notes issued by us with the
same maturity. In addition, the principal payment at maturity will be
equal to the face amount only if there is no default on any of four in-
vestment grade, publicly traded corporate bonds (each with a different
issuer) that will be specified in the pricing supplement.
If you purchase an Indexed Note, you may receive a principal amount at matu-
rity that is greater than or less than the note's face amount, and an interest
rate that is greater than or less than the interest rate that you would have
earned if you had instead purchased a conventional debt security issued by us
at the same time with the same maturity. The amount of interest and principal
that you will receive will depend on the structure of the Indexed Note and the
level of the specified indexed item throughout the term of the Indexed Note and
at maturity. Specific information pertaining to the method of determining the
interest
S-17
payments and the principal amount will be described in the pricing supplement,
as well as additional risk factors unique to the Indexed Note, certain histor-
ical information for the specified indexed item and certain additional United
States federal tax considerations.
Renewable Notes
We may issue renewable notes which are notes which will automatically renew
at their maturity date unless the holder of the renewable note elects to ter-
minate the automatic extension feature by giving notice in the manner de-
scribed in the pricing supplement.
The holder of the renewable note must give notice of termination at least
15 but not more than 30 days prior to the renewal date. The holder of a renew-
able note may terminate the automatic extension for less than all of their re-
newable notes only if the terms of the note specifically permit partial termi-
nation. An election to terminate the automatic extension of any portion of the
renewable note is not revocable and will be binding on the holder of the note.
If the holder elects to terminate the automatic extension of the maturity of
the note, the holder will become entitled to the principal and interest ac-
crued up to the renewal date. The pricing supplement will identify a final ma-
turity date beyond which the maturity date cannot be renewed.
If a note is represented by a Global Note, DTC or its nominee will be the
holder of the note and therefore will be the only entity that can exercise a
right to terminate the automatic extension of a note. In order to ensure that
DTC or its nominee will timely exercise a right to terminate the automatic ex-
tension provisions of a particular note, the beneficial owner of the note must
instruct the broker or other DTC participant through which it holds an inter-
est in the note to notify DTC of its desire to terminate the automatic exten-
sion of the note. Different firms have different cut-off times for accepting
instructions from their customers and, accordingly, each beneficial owner
should consult the broker or other participant through which it holds an in-
terest in a note to ascertain the cut-off time by which an instruction must be
given for delivery of timely notice to DTC or its nominee.
Extendible Notes
We may issue extendible notes which are notes for which the stated maturity
date may be extended at our option for one or more whole year periods, up to
but not beyond a final maturity date described in the pricing supplement.
We may exercise our option to extend the extendible note by notifying the
applicable Trustee (or any duly appointed paying agent) at least 45 but not
more than 60 days prior to the then effective maturity date. If we elect to
extend the extendible note, the Trustee (or paying agent) will mail (at least
40 days prior to the maturity date) a notice to the registered holder of the
extendible note informing the holder of our election, the new maturity date
and any updated terms. Upon the mailing of such notice, the maturity of the
extendible note will be extended automatically as set forth in the notice.
However, we may, not later than 20 days prior to the maturity date of an
extendible note (or, if such date is not a Business Day, on the immediately
succeeding Business Day), at our option, establish a higher interest rate, in
the case of a Fixed Rate Note, or a higher Spread and/or Spread Multiplier, in
the case of a Floating Rate Note, for the extension period by mailing or caus-
ing the applicable Trustee (or paying agent) to mail notice of such higher in-
terest rate or higher Spread and/or Spread Multiplier to the holder of the
note. The notice will be irrevocable.
If we elect to extend the maturity of an extendible note, the holder of the
note will have the option to instead elect repayment of the note by us on the
then effective maturity date. In order for an extendible note to be repaid on
the maturity date, we must receive, at least 15 but not more than 30 days
prior to the maturity date:
(1) the note with the form "Option to Elect Repayment" on the reverse of
the note duly completed; or
(2) 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
setting forth the name of the holder of the note, the principal amount of
the
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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, together with the duly completed form entitled "Op-
tion to Elect Repayment" on the reverse of the note, will be received by
the applicable Trustee (or paying agent) not later than the fifth Business
Day after the date of the telegram, telex, facsimile transmission or let-
ter; provided, however, that the telegram, telex, facsimile transmission or
letter shall only be effective if the note and form duly completed are re-
ceived by the applicable Trustee (or paying agent) by that fifth Business
Day. The option may be exercised by the holder of an extendible note for
less than the aggregate principal amount of the note then outstanding if
the principal amount of the note remaining outstanding after repayment is
an authorized denomination.
If a note is represented by a Global Note, DTC or its nominee will be the
holder of that note and therefore will be the only entity that can exercise a
right to repayment. To ensure that DTC or its nominee timely exercises a right
to repayment with respect to a particular note, the beneficial owner of that
note must instruct the broker or other participant through which it holds an
interest in the note to notify DTC of its desire to exercise a right to repay-
ment. Different firms have different cut-off times for accepting instructions
from their customers and, accordingly, each beneficial owner should consult the
broker or other participant through which it holds an interest in a note to de-
termine the cut-off time by which an instruction must be given for timely no-
tice to be delivered to DTC or its nominee.
Warrants and Units
We may issue notes paired with Warrants and with Units (which may consist of
a combination of notes, other Debt Securities and Warrants). A description of
the Warrants and Units to be issued with notes will be included in the pricing
supplement.
Redemption
The pricing supplement will indicate whether we may redeem the notes prior
to their stated maturity date. If we may redeem the notes prior to their stated
maturity date, the pricing supplement will describe the redemption price and
method for redemption.
Repayment
The pricing supplement will indicate whether the notes can be repaid at the
holder's option prior to their stated maturity date. If the notes may be repaid
prior to maturity, the pricing supplement will indicate the cost to repay the
notes and the procedure for repayment.
Repurchase
We may at any time purchase notes at any price or prices in the open market
or otherwise. If we purchase notes in this manner, we have the discretion to
either hold, resell or surrender the notes to the applicable Trustee for can-
cellation.
UNITED STATES TAXATION
The following is a summary of the principal United States federal income tax
consequences relating to your purchase, ownership and sale of notes. It is
based upon the relevant laws and rules which are now in effect and as they are
currently interpreted. However, these laws and rules may be changed at any
time. This discussion does not deal with the federal tax consequences applica-
ble to all categories of investors. In particular, the discussion does not deal
with those of you who may be in special tax situations, such as dealers in se-
curities, insurance companies, financial institutions or tax-exempt entities.
It does not include any description of the tax laws of any state or local gov-
ernments, or of any foreign government, that may be applicable to the notes or
to you as holders of the notes. This summary also may not apply to all forms of
notes that we may issue. If the tax consequences associated with a particular
form of note are different than those described below, they will be discussed
in the pricing supplement relating to that note.
S-19
The federal income tax discussion that appears below is included in this
prospectus supplement for your general information. Some or all of the discus-
sion may not apply to you depending upon your particular situation. You should
consult your tax advisor for the tax consequences to you of owning and dispos-
ing of the notes, including the tax consequences under state, local, foreign
and other tax laws and the possible effects of changes in federal or other tax
laws.
This discussion is divided into four sections. The section entitled "United
States Holders," applies to you only if you are a "United States person." If
you are a United States person, you should read the section entitled "United
States Holders". If you are not a United States person, you should read the
section captioned "Non-United States Holders". All of you should read the sec-
tion entitled "Backup Withholding and Information Reporting," and the section
entitled "State and Local Taxation".
United States Holders
Payment of Interest
Interest on a note generally is taxable to you as ordinary income at the
time you accrue or receive the interest in accordance with your accounting
method for tax purposes. However, special rules apply to the treatment of in-
terest on a note that is issued with "Original Issue Discount." These special
rules are described below in the subsections entitled "Original Issue Dis-
count."
Purchase, Sale and Retirement of Notes
Upon the sale, exchange, retirement or other disposition of a note, you will
recognize gain or loss equal to the difference between the amount you realize
from the disposition and your tax basis in the note.
Your tax basis in a note initially is your cost for the note. This amount is
increased by any "original issue discount" or "market discount" previously in-
cluded by you in income for the note and is decreased by the amount of any
"bond premium" you previously amortized, and the amount of any payment (other
than a payment of "qualified stated interest") you have received for the note.
Gain or loss realized by you on the sale, exchange, retirement or other dispo-
sition of a note generally will be a long-term capital gain or loss if the note
has been held for more than one year. However, any gain that represents market
discount that you have not previously included in income will instead be ordi-
nary income. The terms "market discount" and "bond premium" are defined in the
next two paragraphs. "Original issue discount" and "qualified stated interest"
are discussed in the subsection below entitled "Original Issue Discount".
If your tax basis for a note is less than its principal amount, the note may
have "market discount." In general, if you realize gain on the disposition or
repayment of principal of a note, that gain is treated as ordinary income
rather than capital gain to the extent of the market discount accrued while you
held the note. However, you instead may elect to accrue market discount into
income on a current basis. If you elect to accrue market discount currently,
the election will apply to all market discount obligations you acquired during
the first taxable year for which you made the election. Once you make that
election, you may not revoke it without the consent of the IRS. Market discount
will be treated as accruing on a straight-line basis or, at your election,
based on a constant interest method. You should be aware that if you do not
elect to include market discount on a current basis, you may be required to de-
fer the deduction of all or a portion of the interest expense on any indebted-
ness you incur or purchase or carry any note having market discount until the
maturity date of the note, or until you dispose of the note in a taxable trans-
action.
If your tax basis for a note is greater than its principal amount, the note
may have "bond premium." You may elect to amortize that bond premium as an off-
set to the interest income you report over the remaining life of the note under
a constant interest method. However, if we may redeem the note at a price
greater than its principal amount, special rules would apply that could require
you to defer the amortization of some bond premium until later in the term of
the note. If you do not elect to amortize bond premium, the bond premium is a
capital loss when the bond matures or when you sell it.
S-20
If a note provides for contingent payments (as in the case of certain In-
dexed Notes), special rules may apply to the treatment of the note. Under those
rules, any gain you realize when you sell or dispose of a note will be ordinary
income if the contingencies relating to the payments are unresolved at the time
of disposition and some or all of any loss may be ordinary. Different rules
also may apply to the treatment of market discount, premium and the calculation
of your tax basis for the note. If a note will provide for contingent payments,
these rules will be discussed in greater detail in the pricing supplement.
Original Issue Discount
Some of your notes may be issued with original issue discount ("OID"). For
tax purposes, OID is the excess of the "stated redemption price at maturity" of
a debt instrument over its "issue price", if that excess equals or exceeds 1/4
of 1% of the debt instrument's stated redemption price at maturity multiplied
by the number of complete years from its issue date to its maturity or weighted
average maturity in the case of installment obligations (the "OID de minimis
amount"). The "stated redemption price at maturity" of a note is the sum of all
payments required to be made on the note other than "qualified stated interest"
payments. The "issue price" of a note is generally the first offering price to
the public at which a substantial amount of the debt instrument is sold. The
term "qualified stated interest" generally means stated interest that is uncon-
ditionally payable in cash or property (other than debt instruments of the is-
suer), or that is treated as constructively received, at least annually at a
single fixed rate or, under certain conditions in connection with the special
rules relating to Floating Rate Notes, at a variable rate. If a note bears in-
terest during any accrual period at a rate below the rate applicable for the
remaining term of the note (for example, notes with teaser rates or interest
holidays), and if the greater of either the reduction in interest on that note
or the excess of the stated principal amount over its issue price exceeds the
OID de minimis amount, then some or all of the stated interest will not be
qualified stated interest.
You are required to include qualified stated interest payments in income as
interest when you accrue or receive those payments (in accordance with your ac-
counting method for tax purposes). If you hold a note with OID (an "OID Note")
with a maturity of more than one year, you may be required to include OID in
income before you receive the associated cash payment, regardless of your ac-
counting method for tax purposes. If you are an initial purchaser of an OID
Note, the amount of the OID you should include in income is the sum of the
daily accruals of the OID for the note for each day during the taxable year (or
portion of the taxable year) in which you held the OID Note. The daily portion
is determined by allocating the OID for each day of the accrual period. An ac-
crual period may be of any length and the accrual periods may even vary in
length over the term of the OID Note, provided that each accrual period is no
longer than one year and each scheduled payment of principal or interest occurs
either on the first day of an accrual period or on the final day of an accrual
period. The amount of OID allocable to an accrual period is equal to the dif-
ference between (1) the product of the "adjusted issue price" of the OID Note
at the beginning of the accrual period and its yield to maturity (computed gen-
erally on a constant yield method and compounded at the end of each accrual pe-
riod, taking into account the length of the particular accrual period) and (2)
the amount of any qualified stated interest allocable to the accrual period.
The "adjusted issue price" of an OID Note at the beginning of any accrual pe-
riod is the sum of the issue price of the OID Note plus the amount of OID allo-
cable to all prior accrual periods reduced by any payments you received on the
note that were not qualified stated interest. Under these rules, you will gen-
erally have to include in income increasingly greater amounts of OID in succes-
sive accrual periods.
If you are not an initial purchaser of an OID Note and you purchase an OID
Note for greater than its adjusted issue price as of the purchase date and less
than or equal to the sum of all amounts payable on the OID Note after the pur-
chase date other than payments of qualified stated interest, you will have pur-
chased the OID Note at an "acquisition premium." Under the acquisition premium
rules, the amount of OID which you must include in your gross income for the
note for any taxable year (or any portion of a taxable year in which you hold
the note) will be reduced (but not below zero) by the portion of the acquisi-
tion premium allocated to the period.
Instead of reporting under your normal accounting method, you may elect to
include in gross income all interest that accrues on a note by using the con-
stant yield method applicable to OID, subject to certain limitations and excep-
tions. For purposes of this election, interest includes stated interest, acqui-
sition dis-
S-21
count, OID, de minimis OID market discount, de minimis market discount and un-
stated interest, as adjusted by any amortizable bond premium or acquisition
premium.
Renewable Notes, Floating Rate Notes, Extendible Notes and Indexed Notes
Special United States federal income tax rules for Renewable Notes, Float-
ing Rate Notes, Extendible Notes or Indexed Notes will be discussed in the
pricing supplements.
Reopenings
The IRS recently issued final regulations regarding whether additional debt
instruments issued in a reopening will be considered part of the same issue,
with the same issue price and yield to maturity, as the original debt instru-
ments for tax purposes. The new regulations apply to reopenings after March
12, 2001. Except as provided in a pricing supplement, we expect that addi-
tional notes issued by us in any reopening after March 12, 2001 will be issued
such that they will be considered part of the original issuance to which they
relate.
Non-United States Holders
This section discusses the principal United States tax consequences appli-
cable to Non-United States Holders of purchasing, owning and selling notes.
Principal (and premium, if any) and interest payments, including any OID,
that you receive from us or our agent generally will not be subject to United
States federal withholding tax. However, interest, including any OID, may be
subject to a 30% withholding tax (or less under an applicable treaty, if any)
if (1) you actually or constructively own 10% or more of the total combined
voting power of all classes of our stock entitled to vote, (2) you are a con-
trolled foreign corporation for United States tax purposes that is related to
us (directly or indirectly) through stock ownership, (3) you are a bank ex-
tending credit pursuant to a loan agreement in the ordinary course of your
trade or business or (4) either (A) you do not certify to us or our agent, un-
der penalties of perjury, that you are a Non-United States person and provide
your name and address, or (B) a securities clearing organization, bank or
other financial institution that holds customer securities in the ordinary
course of its trade or business (a "financial institution") and holds the note
does not certify to us or our agent under penalties of perjury that either it
or another financial institution has received the required statement from you
certifying that you are a Non-United States person and furnishes us with a
copy of the statement.
If you are in a trade or business in the United States and interest, in-
cluding any OID, on the note is effectively connected with the conduct of your
trade or business, you may be subject to United States federal income tax on
that interest and any OID in the same manner as if you were a United States
person. You should read the material under the heading "United States Hold-
ers," for a description of the United States tax consequences of purchasing,
owning and selling notes. If you are a foreign corporation, you may also be
subject to a branch profits tax equal to 30% of your effectively connected
earnings and profits for the taxable year, subject to certain adjustments. In-
stead of the certification described in the preceding paragraph, if you have
effectively connected interest income you must provide the payer with a prop-
erly executed IRS Form W-8ECI to claim an exemption from United States federal
withholding tax.
You will not be subject to United States federal income tax or withholding
taxes on any capital gain or market discount you realize upon retirement or
disposition of a note if (1) the gain is not effectively connected with a
United States trade or business carried on by you, and (2) you are an individ-
ual, and you are not present in the United States for 183 days or more in the
taxable year of the retirement or disposition.
Backup Withholding and Information Reporting
The payment of principal and interest and the accrual of OID, if any, are
generally subject to information reporting and possibly to "backup withhold-
ing" at a rate of 31%. Information reporting means that the payment is re-
quired to be reported to you and to the IRS. Backup withholding means that the
payor is required to collect and deposit 31% of your payment with the IRS as a
tax payment on your behalf.
S-22
If you are a United States person (other than a corporation or certain ex-
empt organizations), you may be subject to backup withholding if you do not
supply an accurate taxpayer identification number and certify that your tax-
payer identification number is correct. You may also be subject to backup with-
holding if the United States Secretary of the Treasury determines that you have
not reported all interest and dividend income required to be shown on your fed-
eral income tax return or if you do not certify that you have not underreported
your interest and dividend income. If you are not a United States person,
backup withholding and information reporting will not apply to payments made to
you if you have provided the required certification that you are a Non-United
States person, as described under the heading "Non-United States Holders," or
you otherwise establish an exemption (provided that the payor does not have ac-
tual knowledge that you are a United States person or that the conditions of
any exemption are not satisfied).
In addition, payments of the proceeds from the sale of a note to or through
a foreign office of a broker or the foreign office of a custodian, nominee or
other dealer acting on your behalf generally will not be subject to information
reporting or backup withholding. However, if the broker, custodian, nominee or
other dealer is a United States person, the government of the United States or
the government of any State or political subdivision of any State (or any
agency or instrumentality of any of these governmental units), a controlled
foreign corporation for United States tax purposes, a foreign partnership that
is either engaged in a United States trade or business or whose United States
partners in the aggregate hold more than 50% of the income or capital interest
in the partnership, a foreign person 50% or more of whose gross income for a
certain period is effectively connected with a United States trade or business,
or a United States branch of a foreign bank or insurance company, information
reporting (but not backup withholding) will generally be required with respect
to payments made to you unless the broker has documentation of your foreign
status and the broker has no actual knowledge to the contrary (or you otherwise
establish an exemption from information reporting).
Payment of the proceeds from a sale of a note to or through the United
States office of a broker is subject to information reporting and backup with-
holding, unless you certify as to your non-United States status or otherwise
establish an exemption from information reporting and backup withholding.
Any amounts withheld from your payment under the backup withholding rules
would be refundable or allowable as a credit against your United States federal
income tax liability.
State and Local Taxation
You may be subject to state or local taxation in various state or local ju-
risdictions, including those in which you transact business or reside. It is
important that you consult your own tax advisor regarding the effect of state
and local tax laws on the purchase, ownership or sale of the notes.
PLAN OF DISTRIBUTION
We may sell the notes (1) through agents who solicit offers to purchase the
notes, (2) through agents purchasing as principal and acting as underwriters or
dealers or (3) directly to investors.
Distribution Through Agents
We may sell the notes on a continuing basis through agents that become par-
ties to a Distribution Agreement, a form of which is filed as an exhibit to our
registration statements (the "Distribution Agreement"). Each agent's obliga-
tions are separate and several from those of any other agent. Each agent will
use best efforts when requested by us to solicit purchases of the notes. We
will pay each agent a commission to be negotiated at the time of sale. The com-
mission may range from .125% to .750% of the principal amount of each note sold
through that agent. We will receive from 99.875% to 99.250% of the principal
amount of each note, before deducting a portion of the aggregate offering ex-
penses of approximately $600,000.
Distribution Through Underwriters
We also may sell notes to any agent, acting as principal, for its own ac-
count or for resale to one or more investors or other purchasers, including
other broker-dealers.
The agents may sell any notes they have purchased as principal to any dealer
at a discount. The discount allowed to any dealer will not be in excess of the
discount to be received by the agent from us. Any
S-23
note sold to an agent as principal is purchased by that agent at a price equal
to 100% of the principal amount of that note less a percentage ranging from
.125% to .750% of that principal amount. The notes may be resold by the agent
to investors and other purchasers from time to time in one or more transac-
tions, including negotiated transactions, at a fixed public offering price or
at varying prices determined at the time of sale, or the notes may be resold to
certain dealers as described above. After the initial public offering of any
notes, the public offering price and discount may be changed.
Direct Sales
We may sell notes directly to investors, without the involvement of any
agent or underwriter. In this case, we would not be obligated to pay any com-
mission or discount in connection with the sale.
General Information
The name of any agents or other persons through which we sell any notes, as
well as any commissions or discounts payable to those agents or other persons,
will be set forth in the pricing supplement. As of the date of this prospectus
supplement, the agents include Banc of America Securities LLC, Bear, Stearns &
Co. Inc., Lehman Brothers Inc., Merrill Lynch, Pierce, Fenner & Smith Incorpo-
rated and Salomon Smith Barney Inc.
We will have the sole right to accept offers to purchase notes and may, in
our absolute discretion, reject any proposed purchase of notes in whole or in
part. Each agent will have the right, in its discretion reasonably exercised,
to reject in whole or in part any proposed purchase of notes through it.
Any agent, underwriter or dealer that participates in the offering of the
notes may be an "underwriter" within the meaning of the Securities Act. We have
agreed to indemnify each agent and certain other persons against certain lia-
bilities, including liabilities under the Securities Act. We have also agreed
to reimburse the agents for certain expenses.
We also may accept offers to purchase notes through additional agents on
substantially the same terms and conditions (including commissions) as would
apply to purchases by agents under the Distribution Agreement.
We do not intend to list the notes on any securities exchange. The agents
have advised us that they may purchase and sell the notes in the secondary mar-
ket from time to time. However, no agent is obligated to do so and any agent
may discontinue making a market in the notes at any time without notice. No as-
surance can be given as to the existence or liquidity of any secondary market
for the notes.
In connection with certain offerings of the notes purchased by one or more
agents as principal on a fixed offering price basis, agents may engage in
overallotment, stabilizing transactions and syndicate covering transactions in
accordance with Regulation M under the United States Securities Exchange Act of
1934. Overallotment involves sales in excess of the offering size, which create
a short position for the agents. A short position may be reduced by buying
notes in the open market. Stabilizing transactions involve bids to purchase the
notes in the open market for the purpose of pegging, fixing or maintaining the
price of the notes. Syndicate covering transactions involve purchases of the
notes in the open market after the distribution has been completed in order to
cover short positions. Stabilizing transactions and syndicate covering transac-
tions may cause the price of the notes to be higher than it would otherwise be
in the absence of those transactions. Those activities, if commenced, may be
discontinued at any time.
The offer and sale of any notes by Banc of America Securities LLC or any of
our other affiliates will comply with the requirements of Rule 2720 of the Con-
duct Rules of the National Association of Securities Dealers, Inc. regarding a
member firm's underwriting securities of an affiliate. As required by Rule
2720, any such offer and sale will not be made to any discretionary account
without the prior approval of the customer.
Following any initial distribution of the notes, our affiliates may offer
and sell the notes in the course of their business as a broker-dealer and may
act as principal, agent or remarketing agent. This prospectus supplement may be
delivered in connection with effecting such transactions. Any such sales will
be made at negotiated prices relating to prevailing market prices at the time
of sale.
Each of the agents or their affiliates provides or has provided investment
or commercial banking services to us from time to time in the ordinary course
of our business.
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PROSPECTUS
[LOGO OF BANK OF AMERICA]
Bank of America Corporate Center
Charlotte, North Carolina 28255
(704) 386-5000
$15,000,000,000
Debt Securities, Warrants, Units, Preferred Stock,
Depositary Shares and Common Stock
We may offer and sell from time to time up to $15,000,000,000 (or the U.S.
dollar equivalent) of:
. debt securities
. warrants to purchase our debt securities or securities of other unaffili-
ated issuers
. a combination of securities issued in the form of units
. preferred stock
. fractional interests in preferred stock represented by depositary shares
. common stock.
We may also issue common stock upon conversion, exchange or exercise of any of
the securities listed above.
When we sell a particular series of securities, we will prepare a prospectus
supplement describing the offering and terms of that series of securities. You
should read this prospectus and that prospectus supplement carefully. The
securities described in this prospectus may be denominated in U.S. dollars or a
foreign currency as described in the prospectus supplement.
- --------------------------------------------------------------------------------
Our debt securities are unsecured and are not savings accounts, deposits or
other obligations of a bank. The securities are not guaranteed by any bank and
are not insured by the Federal Deposit Insurance Corporation or any other
governmental agency.
Neither the Securities and Exchange Commission, any state securities commission
nor the Commissioner of Insurance of the State of North Carolina has approved
or disapproved the securities to be issued under this prospectus or determined
if this prospectus is accurate or adequate. Any representation to the contrary
is a criminal offense.
- --------------------------------------------------------------------------------
The date of this prospectus is August 5, 1999.
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the
SEC using a "shelf" registration or continuous offering process. We may from
time to time sell any combination of the securities described in this prospec-
tus in one or more offerings up to a total dollar amount of $15,000,000,000 or
the equivalent of this amount in foreign currencies or foreign currency units.
This prospectus provides you with a general description of the securities
we may offer. Each time we sell securities we will provide you with a prospec-
tus supplement containing specific information about the terms of the securi-
ties being offered. The prospectus supplement which contains specific informa-
tion about the terms of the securities being offered will also include a dis-
cussion of certain U.S. federal income tax consequences and any risk factors
or other special considerations applicable to those securities. The prospectus
supplement may also add, update or change information in this prospectus. If
there is any inconsistency between the information in the prospectus and the
prospectus supplement, you should rely on the information in the prospectus
supplement. You should read both this prospectus and any prospectus supplement
together with additional information described under the heading "Where You
Can Find More Information" beginning on page 32 of this prospectus.
You should rely only on the information provided in this prospectus and in
any prospectus supplement including the information incorporated by reference.
Neither we, nor any underwriters or agents, have authorized anyone to provide
you with different information. We are not offering the securities in any
state where the offer is not permitted. You should not assume that the infor-
mation in this prospectus, or any supplement to this prospectus, is accurate
at any date other than the date indicated on the cover page of these docu-
ments.
Unless otherwise indicated or unless the context requires otherwise, all
references in this prospectus to "we," "us," "our," or similar references mean
Bank of America Corporation.
2
BANK OF AMERICA CORPORATION
General
Bank of America Corporation is the successor issuer to NationsBank Corpora-
tion ("NationsBank"). On September 25, 1998, NationsBank was reincorporated
from North Carolina to Delaware. On September 30, 1998, BankAmerica Corpora-
tion, a Delaware corporation ("BA"), was merged with and into NationsBank,
with NationsBank as the surviving corporation in the merger. Upon completion
of the merger, NationsBank changed its name to "BankAmerica Corporation." On
April 28, 1999, we changed the name of our company to "Bank of America
Corporation."
We are a multi-bank holding company registered under the Bank Holding Com-
pany Act of 1956. Our principal assets are the shares of stock of Bank of
America, N.A. and our other banking and nonbanking subsidiaries. Through those
subsidiaries, we provide a diverse range of banking and nonbanking financial
services and products throughout the United States and in selected interna-
tional markets.
We, and our subsidiaries, are subject to supervision by United States fed-
eral and state banking and other regulatory authorities.
Business Segment Operations
We report the results of our operations through four business segments: (1)
Consumer Banking, (2) Commercial Banking, (3) Global Corporate and Investment
Banking and (4) Principal Investing and Asset Management.
Our Consumer Banking segment provides comprehensive retail banking services
to individuals and small businesses through multiple delivery channels, in-
cluding approximately 4,700 banking centers and 14,000 automated teller ma-
chines. These banking centers and automated teller machines are located prin-
cipally throughout our franchise and serve approximately 30 million households
in 21 states and the District of Columbia. This segment also provides special-
ized services such as the origination and servicing of residential mortgage
loans, issuance and servicing of credit cards, direct banking via telephone
and personal computer, student lending and certain insurance services. The
consumer finance component provides mortgage, home equity and automobile loans
to consumers, retail finance programs to dealers and lease financing to pur-
chasers of new and used cars.
Our Commercial Banking segment provides a wide range of commercial banking
services for businesses with annual revenues of up to $500 million. Services
provided include commercial lending, treasury and cash management services,
asset-backed lending and factoring. Also included in this segment are our com-
mercial finance operations which provide: equipment loans and leases, loans
for debt restructuring, mergers and working capital, real estate and
healthcare financing and inventory financing to manufacturers, distributors
and dealers.
Our Global Corporate and Investment Banking segment provides a broad array
of financial and investment banking products such as capital-raising products,
trade finance, treasury management, investment banking, capital markets, leas-
ing and financial advisory services to domestic and international corpora-
tions, financial institutions and government entities. Clients are supported
through offices in 37 countries in four distinct geographic regions: United
States and Canada; Asia; Europe, Middle East and Africa; and Latin America.
Products and services provided include loan origination, cash management, for-
eign exchange, leasing, leveraged finance, project finance, real estate, se-
nior bank debt, structured finance and trade services. Our Global Corporate
and Investment Banking segment also provides commercial banking services for
businesses with annual revenues of $500 million or more. Through a separate
subsidiary, Banc of America
3
Securities LLC, Global Corporate and Investment Banking is a primary dealer of
United States Government securities, underwrites and makes markets in equity
securities, and underwrites and deals in high-grade and high-yield corporate
debt securities, commercial paper, mortgage-backed and asset-backed securities,
federal agencies securities and municipal securities. Debt and equity securi-
ties research, loan syndications, mergers and acquisitions advisory services
and private placements are also provided through Banc of America Securities
LLC. Additionally, our Global Corporate and Investment Banking segment is a
market maker in derivative products, which include swap agreements, option con-
tracts, forward settlement contracts, financial futures and other derivative
products in certain interest rate, foreign exchange, commodity and equity mar-
kets. In support of these activities, Global Corporate and Investment Banking
takes positions in securities to support client demands and for its own ac-
count.
Our Principal Investing and Asset Management segment includes Asset Manage-
ment which provides asset management, banking and trust services for high net
worth clients both in the United States and internationally through the Private
Bank. In addition, this segment provides full service and discount brokerage,
investment advisory and investment management, as well as advisory services for
our affiliated family of mutual funds. The Principal Investing area includes
direct equity investments in businesses and investments in general partnership
funds.
Acquisitions and Sales
As part of our operations, we regularly evaluate the potential acquisition
of, and hold discussions with, various financial institutions and other busi-
nesses that are eligible for bank holding company ownership or control. In ad-
dition, we regularly analyze the values of, and submit bids for, the acquisi-
tion of customer-based funds and other liabilities and assets of such financial
institutions and other businesses. We also regularly consider the potential
disposition of certain of our assets, branches, subsidiaries or lines of busi-
ness. As a general rule, we publicly announce any material acquisitions or dis-
positions when a definitive agreement has been reached.
USE OF PROCEEDS
Unless we describe a different use in a prospectus supplement, we will use
net proceeds from the sale of the securities for general corporate purposes.
General corporate purposes include:
. our working capital needs;
. investments in, or extensions of credit to, our banking and nonbanking
subsidiaries;
. the possible acquisitions of other financial institutions or their assets
or liabilities;
. the possible acquisitions of or investments in other businesses; and
. the possible reduction of outstanding indebtedness or the repurchase of
our outstanding equity securities.
We will temporarily invest the net proceeds pending its use. We may, from
time to time, engage in additional capital financings as we determine appropri-
ate based on our needs and prevailing market conditions.
4
RATIOS OF EARNINGS TO FIXED CHARGES AND RATIOS OF EARNINGS TO FIXED CHARGES AND
PREFERRED STOCK DIVIDENDS
Our consolidated ratio of earnings to fixed charges and our ratio of earn-
ings to fixed charges and preferred stock dividend requirements for each of the
years in the five year period ended December 31, 1998 and for the three months
ended March 31, 1999 are as follows:
Year Ended
December 31, Three Months
------------------------ Ended
1994 1995 1996 1997 1998 March 31, 1999
---- ---- ---- ---- ---- --------------
Ratio of Earnings to Fixed Charges:
Excluding interest on deposits....... 2.4 2.3 2.3 2.2 1.8 2.3
Including interest on deposits....... 1.6 1.5 1.6 1.6 1.4 1.6
Ratio of Earnings to Combined Fixed
Charges and Preferred Stock Divi-
dends:
Excluding interest on deposits....... 2.2 2.1 2.2 2.2 1.8 2.3
Including interest on deposits....... 1.6 1.5 1.5 1.5 1.4 1.6
. The consolidated ratio of earnings to fixed charges is calculated as fol-
lows:
net income before taxes + fixed charges - equity in undistributed earn-
ings or losses of unconsolidated subsidiaries
fixed charges
. The consolidated ratio of earnings to combined fixed charges and pre-
ferred stock dividends is calculated as follows:
net income before taxes + fixed charges - equity in undistributed earn-
ings or losses of unconsolidated subsidiaries
fixed charges + preferred stock dividend requirements
Fixed charges consist of:
. interest expense, which we calculate excluding interest on deposits in
one case and including that interest in the other,
. amortization of debt discount and appropriate issuance costs, and
. one-third (the amount deemed to represent an appropriate interest factor)
of net rent expense under lease commitments.
Preferred stock dividend requirements represent dividend requirements on the
outstanding preferred stock adjusted to reflect the pre-tax earnings that would
be required to cover such dividend requirements.
5
REGULATORY MATTERS
The following discussion describes elements of an extensive regulatory
framework applicable to bank holding companies and banks and specific informa-
tion about us and our subsidiaries. Federal regulation of banks and bank hold-
ing companies is intended primarily for the protection of depositors and the
Bank Insurance Fund rather than stockholders or creditors.
General
As a bank holding company, we are subject to the supervision of the Board
of Governors of the Federal Reserve System. Our bank subsidiaries are subject
to supervision and examination by applicable federal agencies, principally the
Office of the Comptroller of the Currency. Because bank deposits are insured
by the Federal Deposit Insurance Corporation ("FDIC"), our bank subsidiaries
are also subject to that agency's regulations. In addition to the impact of
regulation, commercial banks are affected significantly by the actions of the
Federal Reserve Board as it attempts to control the money supply and credit
availability to influence the economy.
As a bank holding company, we are also subject to regulation under the Bank
Holding Company Act of 1956 (the "BHCA"), and to the BHCA's examination and
reporting requirements. Under the BHCA, bank holding companies generally may
not acquire direct or indirect ownership or control of more than five percent
of the voting shares or substantially all of the assets of any company, in-
cluding a bank, without the prior approval of the Federal Reserve Board. In
addition, bank holding companies are prohibited under the BHCA from engaging
in nonbanking activities other than those that the Federal Reserve Board has
determined are closely related to banking.
Interstate Banking
Pursuant to the Riegle-Neal Interstate Banking and Branching Efficiency Act
of 1994 (the "Interstate Banking and Branching Act"), a bank holding company
may acquire banks in states other than its home state without regard to the
permissibility of such acquisitions under state law, but is subject to any
state requirement that the banks have been organized and operating for a mini-
mum period of time, not to exceed five years, and the requirement that the
bank holding company, before or after the proposed acquisition, controls no
more than 10 percent of the total amount of deposits of insured depository in-
stitutions in the United States and no more than 30 percent, or such lesser or
greater amount set by state law, of such deposits in that state.
The Interstate Banking and Branching Act also authorizes, subject to cer-
tain restrictions, banks to merge across state lines and to create interstate
branches. The Interstate Banking and Branching Act also permits a bank to open
new branches in a state in which it does not already have banking operations
if the state enacts a law permitting such branching. To the extent permitted
under these laws, we plan to consolidate our banking subsidiaries, other than
our limited purpose credit card bank, into a single bank. As of July 23, 1999,
we operate one interstate bank, Bank of America, N.A., headquartered in Char-
lotte, North Carolina, with domestic offices primarily in Arizona, Arkansas,
California, Florida, Georgia, Idaho, Illinois, Iowa, Kansas, Maryland, Missou-
ri, Nevada, New Mexico, North Carolina, Oklahoma, Oregon, South Carolina, Ten-
nessee, Texas, Virginia, Washington and the District of Columbia. We also op-
erate separate banks in Arizona and California. In addition, we have a federal
savings bank headquartered in Portland, Oregon with branch offices in several
states. As previously described, we regularly evaluate merger and acquisition
opportunities and anticipate that we will continue that practice.
Capital and Operational Requirements
The Federal Reserve Board, the Comptroller and the FDIC have issued sub-
stantially similar risk-based and leverage capital guidelines applicable to
United States banking organizations. In addition, these regulatory agencies
may from time to time require that a banking organization
6
maintain capital above the minimum levels, based on its financial condition or
actual or anticipated growth. The Federal Reserve Board risk-based guidelines
define a three-tier capital framework. Tier 1 capital consists of common and
qualifying preferred shareholders' equity, less certain intangibles and other
adjustments. Tier 2 capital consists of preferred stock not qualifying as Tier
1 capital, subordinated and other qualifying debt and the allowance for credit
losses up to 1.25 percent of risk weighted assets. Tier 3 capital includes sub-
ordinated debt that is unsecured, fully paid, has an original maturity of at
least two years, is not redeemable before maturity without the prior approval
by the Federal Reserve and includes a lock-in clause precluding payment of ei-
ther interest or principal if the payment would cause the issuing bank's risk-
based capital ratio to fall or remain below the required minimum. The sum of
Tier 1 and Tier 2 capital less investments in unconsolidated subsidiaries rep-
resents qualifying total capital, at least 50 percent of which must consist of
Tier 1 capital. Risk-based capital ratios are calculated by dividing Tier 1 and
total capital by risk-weighted assets. Assets and off-balance sheet exposures
are assigned to one of four categories of risk-weights, based primarily on rel-
ative credit risk. The minimum Tier 1 capital ratio is 4 percent and the mini-
mum total capital ratio is 8 percent. Our Tier 1 and total risk-based capital
ratios under these guidelines at March 31, 1999 were 7.40 percent and 11.17
percent, respectively. At March 31, 1999, we did not have any subordinated debt
that qualified as Tier 3 capital.
The leverage ratio is determined by dividing Tier 1 capital by adjusted
quarterly average total assets. Although the stated minimum ratio is 3 percent,
most banking organizations are required to maintain ratios of at least 100 to
200 basis points above 3 percent. Our leverage ratio at March 31, 1999 was 6.47
percent. We believe that we meet the leverage ratio requirement.
The Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA"), among other things, identifies five capital categories for insured
depository institutions (well capitalized, adequately capitalized, undercapi-
talized, significantly undercapitalized and critically undercapitalized) and
requires the respective Federal bank regulatory agencies to implement systems
for "prompt corrective action" for insured depository institutions that do not
meet minimum capital requirements within such categories. This act imposes pro-
gressively more constraints on operations, management and capital distribu-
tions, depending on the category in which an institution is classified. Failure
to meet the capital guidelines could also subject a banking institution to cap-
ital raising requirements. In addition, this act requires the various regula-
tory agencies to prescribe certain non-capital standards for safety and sound-
ness relating generally to operations and management, asset quality and execu-
tive compensation and permits regulatory action against a financial institution
that does not meet such standards.
Banking regulatory agencies have adopted regulations that define the five
capital categories identified by this act, using the total risk-based capital,
Tier 1 risk-based capital and leverage capital ratios as the relevant capital
measures. Under those regulations, a "well capitalized" institution must have a
Tier 1 capital ratio of at least 6 percent, a total capital ratio of at least
10 percent and a leverage ratio of at least 5 percent and not be subject to a
capital directive order. Under these guidelines, our banks are considered well
capitalized.
Banking agencies have also adopted final regulations which mandate that reg-
ulators take into consideration (a) concentrations of credit risk; (b) interest
rate risk (when the interest rate sensitivity of an institution's assets does
not match the sensitivity of its liabilities or its off-balance-sheet posi-
tion); (c) risks from non-traditional activities, as well as an institution's
ability to manage those risks; and (d) market risk in connection with trading
activity, when determining the adequacy of an institution's capital. That eval-
uation will be made as a part of the institution's regular safety and soundness
examination.
7
Dividends
Our funds for cash dividends to stockholders are derived from a variety of
sources, including cash and temporary investments. The primary source of such
funds, however, is dividends received from our banks. Those subsidiaries are
subject to various regulatory policies and requirements relating to the payment
of dividends, including requirements to maintain capital above regulatory mini-
mums. The appropriate federal regulatory authority is authorized to determine
under certain circumstances relating to the financial condition of the bank or
bank holding company that the payment of dividends would be an unsafe or un-
sound practice and to prohibit payment. The ability to pay dividends also may
be affected by the various minimum capital requirements and the capital and
non-capital standards established under FDICIA. Our rights, and the rights of
our stockholders and creditors, to participate in any distribution of the as-
sets or earnings of our banks is further subject to the prior claims of credi-
tors of those entities.
Source of Strength
According to Federal Reserve Board policy, a bank holding company is ex-
pected to act as a source of financial strength to its subsidiary banks and to
commit resources to support its subsidiary banks. This support may be required
at times when we are not able to provide such support. Similarly, the cross-
guaranty provisions of the Federal Deposit Insurance Act provides that if the
FDIC suffers or anticipates a loss as a result of a default by one of our bank-
ing or thrift subsidiaries or by providing assistance to a subsidiary in danger
of default, then the other bank or thrift subsidiaries may be assessed for the
FDIC's loss.
Changes in Regulations
Proposals to change the laws and regulations governing the banking industry
are frequently introduced in Congress, in the state legislatures and before the
various bank regulatory agencies. At the present time, Congress is considering
legislation that would increase the permissible scope of securities and insur-
ance activities in which a bank holding company or its affiliates may engage.
We cannot determine the likelihood and timing of any such proposals or legisla-
tion and the impact they might have on us and our subsidiaries.
PLAN OF DISTRIBUTION
We may sell securities to or through underwriters or dealers, through agents
or directly to other purchasers. The underwriters, dealers or agents may be
Banc of America Securities LLC or any of our other affiliates. Each prospectus
supplement will state the terms of the securities to be offered, including the
names of any underwriters or agents, the public offering or purchase price of
the securities and the net proceeds we will receive from the sale, any under-
writing discounts and other items constituting underwriters' compensation, any
discounts and commissions allowed or paid to dealers, any commissions allowed
or paid to agents, and if the securities will be listed on a securities ex-
change or exchanges, the identity of any exchange.
Securities may be purchased to be reoffered to the public through underwrit-
ing syndicates led by one or more managing underwriters, or through one or more
underwriters acting alone. The underwriters may acquire the securities for
their own account and may resell the securities from time to time in one or
more transactions, including negotiated transactions, at a fixed public offer-
ing price or varying prices determined at the time of sale. If an underwriting
syndicate is used, we will list the managing underwriter or underwriters on the
cover page of the prospectus supplement. Unless otherwise stated in the pro-
spectus supplement, the obligations of the underwriters to purchase the securi-
ties will be subject to certain conditions and each of the underwriters will be
obligated to purchase all of its securities if any are purchased. Any initial
public offering price and any discounts or concessions allowed or reallowed or
paid to dealers may be changed from time to time.
8
We may offer and sell securities through agents from time to time. We will
name any agent involved in the offer and sale of any securities and describe
any commissions payable by us to the agent in the prospectus supplement. Un-
less otherwise indicated in the prospectus supplement, the agent will be act-
ing on a best efforts basis during the appointment period.
We may sell directly to, and solicit offers from, institutional investors
or others who may be deemed to be underwriters as defined in the Securities
Act of 1933 (the "Securities Act") for any resale of the securities. We will
describe the terms of any such sales in the prospectus supplement.
Securities may be sold in connection with a remarketing after their pur-
chase by one or more firms including our affiliates, acting as principal for
their accounts or as our agent.
We may authorize underwriters, dealers or agents to solicit offers by cer-
tain institutions to purchase debt securities from us pursuant to delayed de-
livery contracts providing for payment and delivery at a future date. The type
of security, the amount, the price and other significant terms of such delayed
delivery contracts will be described in the prospectus supplement. Institu-
tions that may be solicited include commercial and savings banks, insurance
companies, pension funds, investment companies, educational and charitable in-
stitutions and others, all as approved by us. The obligations of any purchaser
under any such contract will not be subject to any conditions except that (1)
the purchase of the debt securities will not at the time of delivery be pro-
hibited under the laws of the jurisdiction to which the purchaser is subject,
and (2) if the debt securities are also being sold to underwriters acting as
principals for their own account, the underwriters must have purchased the
debt securities not sold for delayed delivery. The underwriters and other such
persons will not have any responsibility for the validity or performance of
such contracts.
Any underwriter or agent participating in the distribution of the securi-
ties may be considered to be an underwriter, as that term is defined in the
Securities Act, of the securities being offered and sold. Any discounts or
commissions received by them from us and any profit realized by them on the
sale or resale of the securities may be considered to be underwriting dis-
counts and commissions under the Securities Act.
To facilitate offering the securities, the underwriters may engage in
transactions that stabilize, maintain or otherwise affect the price of the se-
curities or any other securities the prices of which may be used to determine
payments on such securities. Specifically, the underwriters may overallot in
connection with the offering, creating a short position in the securities for
their own accounts. In addition, to cover overallotments or to stabilize the
price of the securities or of any other securities, the underwriters may bid
for, and purchase, the securities or any other securities in the open market.
Finally, in any offering of the securities through a syndicate of underwrit-
ers, the underwriting syndicate may reclaim selling concessions allowed to an
underwriter or a dealer for distributing the securities in the offering if the
syndicate repurchases previously distributed securities in transactions to
cover syndicate short positions, in stabilization transactions or otherwise.
Any of these activities may stabilize or maintain the market price of the se-
curities above independent market levels. The underwriters are not required to
engage in these activities, and may end any of these activities at any time.
Since any series of securities offered and sold pursuant to this prospectus
may be a new issue with no established trading market, there may not be a
liquid trading market for the security.
Under agreements entered into with us, underwriters and agents may be enti-
tled to indemnification by us against certain civil liabilities, including li-
abilities under the Securities Act, or to contribution for payments the under-
writers or agents may be required to make.
9
Banc of America Securities LLC is a broker-dealer and one of our subsidiar-
ies. Each initial offering and any remarketing of securities involving Banc of
America Securities LLC or any of our other affiliates will be conducted in com-
pliance with the requirements of Rule 2720 of the Conduct Rules of the National
Association of Securities Dealers, Inc. regarding the offer and sale of securi-
ties of an affiliate. Following the initial distribution of securities, our af-
filiates, including Banc of America Securities LLC, may buy and sell the secu-
rities in secondary market transactions as part of their business as a broker-
dealer. Any sale will be at negotiated prices relating to prevailing prices at
the time of sale. This prospectus and related prospectus supplements may be
used by one or more of our affiliates in connection with offers and sales re-
lated to secondary market transactions in the securities to the extent permit-
ted by applicable law. Any of our affiliates may act as principal or agent in
such transactions. Banc of America Securities LLC will not execute a transac-
tion in the securities in a discretionary account without specific prior writ-
ten approval of that customer.
DESCRIPTION OF DEBT SECURITIES
We will issue any senior debt securities under an Indenture dated as of Jan-
uary 1, 1995 (the "Senior Indenture") between us and U.S. Bank Trust National
Association, as successor Trustee to BankAmerica National Trust Company (the
"Senior Trustee"). We will issue any subordinated debt securities under an In-
denture dated as of January 1, 1995 (the "Subordinated Indenture") between us
and The Bank of New York, Trustee (the "Subordinated Trustee"). We refer to the
Senior Indenture and the Subordinated Indenture collectively as the "Inden-
tures" and the Senior Trustee and Subordinated Trustee collectively as the
"Trustees."
The following summaries of certain significant provisions of the Indentures
are not complete and are qualified in their entirety by the provisions of the
applicable Indentures, which are exhibits to the Registration Statement and are
incorporated herein by reference. Whenever defined terms are used, but not de-
fined in this prospectus, the terms have the meanings given to them in the In-
dentures.
General
The total amount of securities that may be offered and sold using this pro-
spectus is limited to the aggregate initial offering price of the securities
registered under the Registration Statement. Neither Indenture limits the
amount of debt securities that may be issued.
Debt securities are our direct unsecured obligations and are not obligations
of our subsidiaries. The senior debt securities of each series rank equally
with all of our other unsecured senior debt. The subordinated debt securities
of each series are subordinate and junior in right of payment to our Senior In-
debtedness.
We will issue the debt securities in fully registered form without coupons.
The debt securities may be denominated in U.S. dollars or in another currency
or currency unit. Any debt securities that are denominated in U.S. dollars will
be issued in denominations of $1,000 or a multiple thereof unless otherwise
provided in the prospectus supplement. If any of the debt securities are denom-
inated in a foreign currency or currency unit, or if principal or any premium
or interest on any of the debt securities is payable in any foreign currency or
currency unit, the authorized denominations, as well as any investment consid-
erations, restrictions, tax consequences, specific terms and other information
relating to such issue of debt securities and such foreign currency or currency
unit, will be stated in the prospectus supplement.
We may issue debt securities in one or more series with the same or differ-
ent maturities. We may issue debt securities which provide for an amount less
than the stated principal amount to be paid upon an acceleration of its matu-
rity (each an "Original Issue Discount Security"). Original Issue Discount Se-
curities may bear no interest or may bear interest at a rate which at the
10
time of issuance is below market rates and will be sold at a discount below
their stated principal amount. Certain debt securities may be deemed to be is-
sued with original issue discount for United States Federal income tax purpos-
es. If we issue debt securities with original issue discount, we will discuss
the Federal tax implications in the prospectus supplement.
Each prospectus supplement will describe the terms of any debt securities
we issue. The terms may include:
. the title and type of the debt securities;
. any limit on the aggregate principal amount of the debt securities;
. the person to whom interest is payable if other than the owner of the
debt securities;
. the date or dates on which the principal of the debt securities will be
payable;
. the interest rate or rates, which may be fixed or variable, and the
method used to calculate that interest;
. the interest payment dates, the regular record dates for the interest
payment date, and the date interest will begin to accrue;
. the place or places where payments may be made on the debt securities and
the place or places where the debt securities may be presented for regis-
tration of transfer or exchange;
. any date or dates after which the debt securities may be redeemed or pur-
chased in whole or in part at our option or the option of the noteholder
pursuant to any sinking fund or other redemption provision and the peri-
ods, prices, terms and conditions of such redemption or purchase;
. if other than the full principal amount, the portion of the principal
amount of the debt securities that will be payable upon declaration or
acceleration of the maturity;
. the currency of principal and any premium and interest payments on the
debt securities, if other than U.S. currency;
. any index used to determine the amount of principal, premium and interest
payments on the debt securities;
. if the debt securities will be issued in other than book-entry form;
. the identification or method of selecting any interest rate calculation
agents, exchange rate calculation agents or any other agents for the debt
securities;
. if either the defeasance (Section 14.02) or covenant defeasance (Section
14.03) sections of the Indentures are not applicable to the debt securi-
ties; and
. any provision relating to the extension or renewal of the maturity date
of the debt securities.
Our ability to make payments of principal and any premium and interest on
the debt securities may be affected by the ability of our bank and nonbank
subsidiaries to pay dividends. Their ability, as well as our ability, to pay
dividends in the future is and could be influenced by bank regulatory require-
ments and capital guidelines. See "Regulatory Matters."
Neither Indenture contains provisions protecting noteholders against a de-
cline in credit quality resulting from takeovers, recapitalizations, the
incurrence of additional indebtedness or our restructuring. If our credit
quality declines as a result of such an event, or otherwise, the ratings of
any debt securities then outstanding may be withdrawn or downgraded.
11
Reopenings
We have the ability to "reopen," or later increase, the principal amount of
a series of debt securities offered and sold by us without notice to the note-
holders by selling additional debt securities with the same terms.
Conversion
We may issue debt securities that are convertible, at either our or the
noteholder's option, into our preferred stock, depositary shares, common stock
or other debt securities. If this is the case, the prospectus supplement will
describe that conversion ability and its terms such as:
. the periods during which conversion may be elected;
. the conversion price payable and the number of shares or amount of pre-
ferred stock, depositary shares, common stock or other debt securities
that may be purchased upon conversion, and any adjustment provisions; and
. the procedures for electing conversion.
Exchange, Registration and Transfer
Subject to the terms of the applicable Indenture, debt securities of any se-
ries, other than debt securities issued in book-entry form, may be exchanged at
the option of the noteholder for other debt securities of the same series and
of an equal aggregate principal amount and type in any authorized denomina-
tions.
Debt securities may be presented for registration of transfer at the office
of the security registrar or at the office of any transfer agent designated and
maintained by us. The prospectus supplement will include the name of the trans-
fer agent. The security registrar or transfer agent will make the transfer or
registration only if it is satisfied with the documents of title and identity
of the person making the request. There will not be a service charge for any
exchange or registration of transfer of debt securities, but we may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with the exchange. At any time we may change
transfer agents or approve a change in the location through which any transfer
agent acts, except that we will be required to maintain a transfer agent in
each place of payment for the series. At any time, we may designate additional
transfer agents for any series of debt securities.
We will not be required to (1) issue, exchange or register the transfer of
any debt security of any series to be redeemed for a period of 15 days after
the selection of the debt securities to be redeemed; or (2) exchange or regis-
ter the transfer of any debt security that was selected, called or is being
called for redemption, except the unredeemed portion of any debt security being
redeemed in part.
For a discussion of restrictions on the exchange, registration and transfer
of Global Securities, see "Registration and Settlement."
Payment and Paying Agents
The principal and any premium and interest on debt securities will be paid
at the offices of the paying agents we may designate from time to time. In ad-
dition, at our option, payment of any interest may be made by check mailed to
the address of the noteholder as recorded in the security register. Interest on
a debt security on any interest payment date generally will be paid to the per-
son in whose name the debt security is registered at the close of business on
the regular record date for that payment. For a discussion of payment of prin-
cipal, premium or interest on Global Securities, see "Registration and Settle-
ment."
12
We have initially designated the principal corporate trust offices of the
Trustees in the City of New York as the places where the debt securities may be
presented for payment. At any time we may change paying agents or the desig-
nated payment office. Any other paying agents for the debt securities of each
series will be named in the prospectus supplement.
Subordination
The subordinated debt securities will be subordinated in right of payment to
all our Senior Indebtedness. The Subordinated Indenture defines "Senior Indebt-
edness" as any indebtedness for money borrowed, including all of our indebted-
ness for borrowed and purchased money, all of our obligations arising from off-
balance sheet guarantees and direct credit substitutes, and our obligations as-
sociated with derivative products such as interest and foreign exchange rate
contracts and commodity contracts, that were outstanding on the date we exe-
cuted the Subordinated Indenture, or were created, incurred or assumed after
that date and all deferrals, renewals, extensions and refundings of that in-
debtedness or obligations unless the instrument creating or evidencing the in-
debtedness provides that the indebtedness is subordinate in right of payment to
any of our other indebtedness. Each prospectus supplement for a series of sub-
ordinated debt securities will indicate the aggregate amount of our Senior In-
debtedness outstanding at that time and any limitation on the issuance of addi-
tional Senior Indebtedness.
If there is a default or event of default on any Senior Indebtedness that is
not remedied and we and the Subordinated Trustee receive notice of this from
the holders of at least 10% in principal amount of any kind or category of any
Senior Indebtedness or if the Subordinated Trustee receives notice from us, we
will not be able to make any principal, premium or interest payments on the
subordinated debt securities or repurchase our subordinated debt securities.
If we repay any subordinated debt security before the required date or in
connection with a distribution of our assets to creditors pursuant to a disso-
lution, winding up, liquidation or reorganization, any principal, premium or
interest will be paid to holders of Senior Indebtedness before any holders of
Subordinated Indebtedness are paid. In addition, if such amounts were previ-
ously paid to the holders of Subordinated Debt or the Subordinated Trustee, the
holders of Senior Debt shall have first rights to such amounts previously paid.
Until all Senior Indebtedness is paid in full, the holders of subordinated
debt securities will be subrogated to the rights of the holders of Senior In-
debtedness to receive payments or distributions of our assets.
Sale or Issuance of Capital Stock of Banks
The Senior Indenture prohibits the issuance, sale or other disposition of
capital stock, or securities convertible into or options, warrants or rights to
acquire capital stock, of any Principal Subsidiary Bank (as defined below) or
of any subsidiary which owns shares of capital stock, or securities convertible
into or options, warrants or rights to acquire capital stock, of any Principal
Subsidiary Bank, with the following exceptions:
. sales of directors' qualifying shares;
. sales or other dispositions for fair market value, if, after giving ef-
fect to the disposition and to conversion of any shares or securities
convertible into capital stock of a Principal Subsidiary Bank, we would
own at least 80% of each class of the capital stock of such Principal
Subsidiary Bank;
. sales or other dispositions made in compliance with an order of a court
or regulatory authority of competent jurisdiction;
. any sale by a Principal Subsidiary Bank of additional shares of its capi-
tal stock, securities convertible into shares of its capital stock, or
options, warrants or rights to subscribe for
13
or purchase shares of its capital stock, to its shareholders at any
price, so long as before such sale we owned, directly or indirectly, se-
curities of the same class and immediately after the sale, we owned, di-
rectly or indirectly, at least as great a percentage of each class of se-
curities of the Principal Subsidiary Bank as we owned before such sale of
additional securities; and
. any issuance of shares of capital stock, or securities convertible into
or options, warrants or rights to subscribe for or purchase shares of
capital stock, of a Principal Subsidiary Bank or any subsidiary which
owns shares of capital stock, or securities convertible into or options,
warrants or rights to acquire capital stock, of any Principal Subsidiary
Bank, to us or our wholly owned subsidiary.
A Principal Subsidiary Bank is defined in the Senior Indenture as any Bank
with total assets equal to more than 10% of our total consolidated assets. At
present, Bank of America, N.A. is our only Principal Subsidiary Bank.
Waiver of Covenants
The holders of a majority in principal amount of the debt securities of all
series affected that are outstanding under the Indenture may waive compliance
with certain covenants or conditions of the Indentures.
Modification of the Indentures
We and the applicable Trustee may modify the Indenture with the consent of
the holders of at least 66 2/3% of the aggregate principal amount of the debt
securities of all series at the time outstanding under that Indenture and af-
fected thereby, voting as one class. However, no modification will extend the
fixed maturity of, reduce the principal amount or redemption premium of, or re-
duce the rate of or extend the time of payment of interest on, any debt secu-
rity without the consent of each noteholder. No modification will reduce the
percentage of debt securities which is required to consent to modification
without the consent of all holders of the debt securities outstanding.
In addition, we and the Trustee may execute supplemental indentures in cer-
tain limited circumstances without the consent of any holders of outstanding
debt securities.
In determining whether the holders of the required principal amount of the
debt securities outstanding have given any request, demand, authorization, di-
rection, notice, consent or waiver thereunder, (a) the principal amount of an
Original Issue Discount Security that will be deemed to be outstanding will be
the amount of the principal thereof that would be due and payable at such time
upon an event of default, and (b) the principal amount of a debt security de-
nominated in a foreign currency or currency unit will be the U.S. dollar equiv-
alent on the date of original issuance of the debt security.
Meetings and Action by Securityholders
The Trustee may call a meeting in its discretion or upon request by us or
the holders of at least 10% in principal amount of the debt securities out-
standing of such series upon the giving of notice. If a meeting of noteholders
is duly held, any resolution raised or decision taken will be binding on all
holders of debt securities of that series.
Defaults and Rights of Acceleration
The Subordinated Indenture defines an event of default as our bankruptcy un-
der Federal bankruptcy laws. The Senior Indenture defines an event of default
as any one of the following events:
. our failure to pay principal or premium when due on any securities of a
series;
14
. our failure to pay interest on any securities of a series, within 30 days
after the interest becomes due;
. our breach of any of our other covenants contained in the senior debt
securities or the Senior Indenture, that is not cured within 90 days
after written notice to us by the Senior Trustee, or to us and the Senior
Trustee by the holders of at least 25% in principal amount of all senior
debt securities then outstanding under the Senior Indenture and affected
thereby; and
. certain events involving our bankruptcy, insolvency or liquidation.
If an event of default occurs and is continuing, either the Trustee or the
holders of 25% in principal amount of the outstanding debt securities of that
series may declare the principal amount or, if the debt securities are Origi-
nal Issue Discount Debt Securities, a specified portion of the principal
amount of all debt securities of that series to be due and payable immediate-
ly. The holders of a majority in principal amount of the debt securities then
outstanding or of such series affected may annul the declaration of an event
of default and waive past defaults.
Payment of principal of the subordinated debt securities may not be accel-
erated in the case of a default in the payment of principal or any premium or
interest or the performance of any of our other covenants.
Collection of Indebtedness
If we fail to pay principal or premium on the debt securities or if we are
over 30 days late on an interest payment on the debt securities, the appropri-
ate Trustee can demand that we pay to it, for the benefit of the noteholders,
the amount which is due and payable on the debt securities including any in-
terest incurred because of our failure to make that payment. If we fail to pay
the required amount on demand, the Trustee may take appropriate action, in-
cluding instituting judicial proceedings. Further, the noteholder may also in-
stitute suit to enforce our obligation to make payment of principal, premium
or interest due on any debt security regardless of the actions taken by the
Trustee.
The holders of a majority in principal amount of the debt securities then
outstanding under an Indenture may direct the time, method and place of con-
ducting any proceeding for any remedy available to the Trustee under that In-
denture but the Trustee will be entitled to receive from the holders reason-
able indemnity against expenses and liabilities.
Periodically, we are required to file with the Trustees a certificate stat-
ing that we are not in default with any of the terms of the Indentures.
Notices
We will provide noteholders any required notices by first-class mail to the
addresses of the holders as they appear in the security register.
Concerning the Trustees
We and our subsidiaries have from time to time maintained deposit accounts
and conducted other banking transactions with The Bank of New York and U.S.
Bank Trust National Association, and their affiliated entities in the ordinary
course of business. Each of the Trustees also serves as trustee for certain
series of our outstanding indebtedness under other indentures.
15
WARRANTS
Description of Debt Warrants
We may issue warrants to purchase debt securities ("Debt Warrants"). Debt
Warrants may be issued independently or together with any of our other securi-
ties and may be attached to or separate from such securities. Debt Warrants
will be issued under warrant agreements with a warrant agent designated in the
prospectus supplement. The following summary of provisions of the warrant
agreement and form of Debt Warrant is not complete and is subject to, and is
qualified in its entirety by reference to, all the provisions of the warrant
agreement and the Debt Warrant. Any warrant agreement will be filed as an ex-
hibit to or incorporated by reference in the Registration Statement.
If Debt Warrants are offered, the prospectus supplement will describe the
terms of the Debt Warrants and the warrant agreement relating to the Debt War-
rants, including the following:
. the offering price;
. the designation, aggregate principal amount and terms of the debt securi-
ties purchasable upon exercise of the Debt Warrants;
. the currency or currency unit in which the price for the Debt Warrants
may be payable;
. if applicable, the designation and terms of the securities with which the
Debt Warrants are issued and the number of Debt Warrants issued with each
such security;
. if applicable, the date on and after which the Debt Warrants and the re-
lated securities will be separately transferable;
. the principal amount of debt securities purchasable upon exercise of a
Debt Warrant and the price at which, and currency or currency units based
on or relating to currencies in which, the principal amount of debt secu-
rities may be purchased upon such exercise;
. the dates the right to exercise the Debt Warrants will commence and ex-
pire and if the Debt Warrants are not continuously exercisable any dates
the Debt Warrants are not exercisable;
. if applicable, a discussion of certain Federal income tax consequences;
. whether the Debt Warrants or related securities will be listed on any se-
curities exchange;
. whether the Debt Warrants will be issued in global or definitive form;
and
. the warrant agent.
Description of Universal Warrants
We may issue warrants ("Universal Warrants") to buy or sell securities of an
entity unaffiliated with us, to buy a basket of such securities, to buy an in-
dex or indices of securities or any combination of those securities, to buy or
sell currencies or currency units, or to buy and sell commodities (collective-
ly, the "Exercise Items").
Universal Warrants may be issued independently or together with other secu-
rities offered by any prospectus supplement and may be attached to or separate
from the other securities. The Universal Warrants will be issued under warrant
agreements we will enter into with a warrant agent who will be designated in
the prospectus supplement. The following summary of certain provisions of the
form of Universal Warrant agreement and the Universal Warrants is not complete
and is subject to, and is qualified in its entirety by reference to, all the
provisions of the Universal Warrant agreement. Any Universal Warrant agreement
will be filed as an exhibit to or incorporated by reference in the registration
statement.
16
If Universal Warrants are offered, the prospectus supplement will describe
the terms of the Universal Warrants and the warrant agreement, including the
following:
. the offering price;
. the title and aggregate number of such Universal Warrants;
. the nature and amount of the Exercise Items that such Universal Warrants
represent the right to buy or sell;
. whether the Universal Warrants are put warrants or call warrants;
. the price at which the Exercise Item may be purchased or sold and the
procedures and conditions relating to exercise;
. whether the exercise price or the Universal Warrant may be paid in cash
or by exchange of the Exercise Item or both;
. the dates the right to exercise the Universal Warrants will commence and
expire;
. if applicable, a discussion of certain Federal income tax consequences;
. whether the Universal Warrants or related securities will be listed on
any securities exchange;
. whether the Universal Warrants will be issued in global or definitive
form;
. the warrant agent; and
. any other terms of the Universal Warrants.
Modification
We and the warrant agent may amend the terms of any warrant agreement and
the warrants without the consent of the holders for the purpose of curing any
ambiguity or correcting any inconsistent provision therein or in any other man-
ner we deem necessary or desirable and which will not adversely affect the in-
terests of the holders in any respect. In addition, we may amend the warrant
agreement and the terms of the warrants with the consent of the owners of a ma-
jority of the outstanding unexercised warrants affected. However, any modifica-
tion to the warrants cannot change the exercise price, reduce the amounts re-
ceivable upon exercise cancellation or expiration, shorten the time period dur-
ing which the warrants may be exercised or otherwise materially and adversely
affect the rights of the owners of the warrants or reduce the percentage of
outstanding warrants required to modify or amend the warrant agreement or the
terms of the warrants, without the consent of the affected owners.
Enforceability of Rights of Warrantholders; Governing Law
The warrant agent will act solely as our agent and will not assume any obli-
gation or relationship of agency or trust with the holders of the Warrants. Any
record holder or beneficial owner of a warrant may, without anyone else's con-
sent, enforce by appropriate legal action, on its own behalf, its right to ex-
ercise the warrant in the manner provided therein or in the warrant agreement.
A warrantholder will not be entitled to any of the rights of a holder of the
debt securities or other securities purchasable upon the exercise of the war-
rant before exercising the warrant.
Unsecured Obligations
The warrants are our unsecured contractual obligations and will rank equally
with all of our other unsecured contractual obligations and our unsecured and
unsubordinated debt. Since most of our assets are owned by our subsidiaries,
our rights and the rights of our creditors, including warrantholders, to par-
ticipate in the distribution of assets of any subsidiary upon that subsidiary's
liquidation or recapitalization will be subject to the prior claims of that
subsidiary's creditors.
17
DESCRIPTION OF UNITS
Units will consist of one or more warrants and debt securities or any com-
bination thereof. If Units are offered, the prospectus supplement will de-
scribe the terms of the Units, including the following:
. all terms of Units and of the warrants and debt securities, or any combi-
nation thereof, comprising the Units, including whether and under what
circumstances the securities comprising the Units may or may not be
traded separately;
. a description of the terms of any agreement to be entered into between us
and a bank or trust company as unit agent governing the Units; and
. a description of the provisions for the payment, settlement, transfer or
exchange of the Units.
DESCRIPTION OF PREFERRED STOCK
General
We have 100,000,000 shares of preferred stock authorized and may issue such
preferred stock in one or more series, each with such preferences, designa-
tions, limitations, conversion rights and other rights as we may determine. We
have designated:
(a) 3,000,000 shares of ESOP Convertible Preferred Stock, Series C (the
"ESOP Preferred Stock") of which 1,887,729 shares were issued and outstanding
at March 31, 1999;
(b) 35,045 shares of 7% Cumulative Redeemable Preferred Stock, Series B
(the "Series B Preferred Stock"), of which 8,771 shares were issued and out-
standing at March 31, 1999; and
(c) 20,000,000 shares of $2.50 Cumulative Convertible Preferred Stock
Series BB (the "Series BB Preferred Stock"), of which 5,539 shares were issued
and outstanding at March 31, 1999.
The Preferred Stock
General. Any preferred stock sold pursuant to this prospectus will have the
general dividend, voting and liquidation preference rights stated below unless
otherwise provided in the prospectus supplement. Reference is made to the pro-
spectus supplement for specific terms, including, where applicable:
. the title and stated value of the preferred stock;
. the aggregate number of shares of preferred stock offered;
. the price at which the preferred stock will be issued;
. the dividend rates or method of calculation, the dividend period and the
dates dividends will be payable;
. whether dividends will be cumulative or noncumulative, and if cumulative,
the date the dividends will begin to cumulate;
. the dates the preferred stock will be subject to redemption at our op-
tion, and any redemption terms;
. any mandatory redemption or sinking fund provisions;
. any rights on the part of the stockholder or us to convert the preferred
stock into shares of another security; and
18
. any additional voting, liquidation, preemptive and other rights, prefer-
ences, privileges, limitations and restrictions.
The description of certain provisions of the preferred stock stated below
and in the prospectus supplement is not complete and is qualified in its en-
tirety by reference to the description in our Amended and Restated Certificate
of Incorporation, which will describe the terms of the offered preferred stock
and be filed with the SEC at or before the time of sale of that preferred
stock.
In addition, we may elect to offer depositary shares evidenced by depository
receipts representing a fractional interest in a share of a particular series
of the preferred stock issued and deposited with a Depositary.
The preferred stock ranks senior to our common stock as to the payment of
dividends and the distribution of our assets on liquidation, dissolution and
winding up. The dividend and liquidation preference rights of the preferred
stock relative to any existing or future series of our preferred stock will be
stated in the prospectus supplement.
The preferred stock, when issued, will be fully paid and nonassessable.
Dividends. The holders of the preferred stock will be entitled to receive
when, as and if declared by us, cash dividends at such rates as will be speci-
fied in the prospectus supplement. All dividends will be paid out of our funds
that are legally available for such purpose. We will not pay dividends on our
other shares nor will we redeem or otherwise acquire for any other considera-
tion or pay into any sinking fund if dividends on any series of preferred stock
are in arrears.
Voting. The holders of preferred stock will not have voting rights, except
as required by applicable law or as specifically approved by us and described
in the prospectus supplement, with regard to matters submitted to a general
vote of our stockholders.
Liquidation Preference. In the event of our voluntary or involuntary liqui-
dation, dissolution or winding up, the holders of any series of preferred stock
will be entitled to receive, after distributions to holders of any series or
class of our capital stock, as may be stated in the prospectus supplement, an
amount equal to the appropriate stated or liquidation value of the shares of
the series plus an amount equal to accrued and unpaid dividends, if any,
through the date of the payment. If the assets and funds to be distributed
among the holders of such preferred stock will be insufficient to permit the
payment to such holders of the full amount due, then the holders of the pre-
ferred stock will share ratably in any distribution of our assets in proportion
to the amounts which otherwise would be payable on the shares held by them upon
the distribution if all amounts payable on the shares were paid in full.
The following summary of the ESOP Preferred Stock, Series B Preferred Stock
and Series BB Preferred Stock is qualified in its entirety by reference to the
description of these securities contained in our Amended and Restated Certifi-
cate of Incorporation.
ESOP Preferred Stock
All shares of ESOP Preferred Stock are held by the trustee under the
NationsBank Corporation Retirement Savings Plan (the "ESOP"). The ESOP Pre-
ferred Stock ranks senior to our common stock, but ranks junior to the Series B
Preferred Stock and Series BB Preferred Stock as to dividends and distribution
on liquidation. Shares of the ESOP Preferred Stock are convertible into common
stock at a conversion rate of 1.68 shares of common stock per share of ESOP
Preferred Stock, subject to certain customary anti-dilution adjustments.
Preferential Rights. The ESOP Preferred Stock does not have preemptive or
preferential rights to purchase or subscribe for shares of our capital stock of
any class and is not subject to
19
any sinking fund obligations or other obligations to repurchase or retire the
series, except as discussed below.
Dividends. The ESOP Preferred Stock is entitled to an annual dividend, sub-
ject to certain adjustments, of $3.30 per share, payable semiannually. Unpaid
dividends accumulate on the date they first became payable, without interest.
While any shares of ESOP Preferred Stock are outstanding, we may not declare,
pay or set apart for payment any dividend on any other series of stock ranking
equally with the ESOP Preferred Stock as to dividends unless declared and
paid, or set apart for payment like dividends on the ESOP Preferred Stock for
all dividend payment periods ending on or before the dividend payment date for
such parity stock, ratably in proportion to their respective amounts of accu-
mulated and unpaid dividends. We generally may not declare, pay or set apart
for payment any dividends, except for, among other things, dividends payable
solely in shares of stock ranking junior to the ESOP Preferred Stock as to
dividends or upon liquidation, or, make any other distribution on, or make
payment on account of the purchase, redemption or other retirement of, any
other class or series of our capital stock ranking junior to the ESOP Pre-
ferred stock as to dividends or upon liquidation, until full cumulative divi-
dends on the ESOP Preferred Stock have been declared and paid or set apart for
payment when due.
Voting Rights. The holder of the ESOP Preferred Stock is entitled to vote
on all matters submitted to a vote of the holders of common stock and votes
together with the holders of common stock as one class. Except as otherwise
required by applicable law, the holder of the ESOP Preferred Stock has no spe-
cial voting rights. To the extent that the holder of the shares is entitled to
vote, each share is entitled to the number of votes equal to the number of
shares of common stock into which the shares of ESOP Preferred Stock could be
converted on the record date for determining the stockholders entitled to
vote, rounded to the nearest whole vote.
Distributions. In the event of our voluntary or involuntary dissolution,
liquidation or winding-up, the holder of the ESOP Preferred Stock will be en-
titled to receive out of our assets available for distribution to stockhold-
ers, subject to the rights of the holders of any Preferred Stock ranking se-
nior to or equally with the ESOP Preferred Stock as to distributions upon liq-
uidation, dissolution or winding-up but before any amount will be paid or dis-
tributed among the holders of common stock or any other shares ranking junior
to the ESOP Preferred Stock as to such distributions, liquidating distribu-
tions of $42.50 per share plus all accrued and unpaid dividends thereon to the
date fixed for distribution. If, upon our voluntary or involuntary dissolu-
tion, liquidation or winding-up, the amounts payable on ESOP Preferred Stock
and any other stock ranking equally therewith as to any such distribution are
not paid in full, the holder of the ESOP Preferred Stock and the other stock
will share ratably in any distribution of assets in proportion to the full re-
spective preferential amounts to which they are entitled. After payment of the
full amount of the liquidating distribution to which it is entitled, the
holder of the ESOP Preferred Stock will not be entitled to any further distri-
bution of our assets. Any merger, consolidation or purchase or sale of assets
by us will not be deemed to be a dissolution, liquidation or winding-up of our
affairs.
Redemption. The ESOP Preferred Stock is redeemable, in whole or in part, at
our option, at any time. The redemption price for the shares of the ESOP Pre-
ferred Stock, which may be paid in cash or shares of common stock, will be
$42.50 per share. The redemption price also must include all accrued and un-
paid dividends to the date of redemption. If the ESOP Preferred Stock is
treated as Tier 1 capital for bank regulatory purposes, the approval of the
Federal Reserve Board may be required to redeem the ESOP Preferred Stock.
In addition, we are required to redeem shares of the ESOP Preferred Stock
at the option of the holder of the shares to the extent necessary either to
provide for distributions required to be
20
made under the ESOP or to make payments of principal, interest or premium due
and payable on any indebtedness incurred by the holder of the shares for the
benefit of the ESOP.
Series B Preferred Stock
Preferential Rights. We may, without the consent of holders of Series B
Preferred Stock, issue preferred stock with superior or equal rights or
preferences. The shares of the Series B Preferred Stock rank prior to the ESOP
Preferred Stock and the common stock.
Dividends. Holders of shares of Series B Preferred Stock are entitled to re-
ceive, when and as declared by our Board cumulative cash dividends at an annual
dividend rate per share of 7% of the stated value thereof, out of any funds le-
gally available for such purpose. The dividend is payable quarterly. Dividends
on Series B Preferred Stock are cumulative, and we cannot declare or pay cash
dividends on any shares of common stock unless full cumulative dividends on the
Series B Preferred Stock have been paid or declared and funds sufficient for
the payment have been set apart.
Voting Rights. Each share of Series B Preferred Stock has equal voting
rights, share for share, with each share of our common stock.
Distributions. In the event of our dissolution, liquidation or winding up,
the holders of Series B Preferred Stock are entitled to receive, after payment
of the full liquidation preference on shares of any class of preferred stock
ranking superior to the Series B Preferred Stock, but before any distribution
on shares of our common stock, liquidating dividends of $100 per share plus
accumulated dividends.
Redemption. Shares of Series B Preferred Stock are redeemable, in whole or
in part, at the option of the holders thereof, at the redemption price of $100
per share plus accumulated dividends, provided that (i) full cumulative
dividends have been paid, or declared and funds sufficient for payment set
apart, upon any class or series of preferred stock ranking superior to Series B
Preferred Stock; and (ii) are not then in default or arrears on any sinking
fund or analogous fund or call for tenders obligation or agreement for the
purchase or any class or series of preferred stock ranking superior to the
Series B Preferred Stock.
Series BB Preferred Stock
Preferential Rights. The shares of Series BB Preferred Stock rank before Se-
ries B Preferred Stock, ESOP Preferred Stock and common stock as to dividends
and upon liquidation.
Dividends. Holders of the Series BB Preferred Stock are entitled to receive,
when and as declared by our Board, cash dividends at the rate of $2.50 per
annum per share, out of our assets legally available for payment. Dividends are
payable quarterly on January 1, April 1, July 1, and October 1 of each year.
Dividends on the Series BB Preferred Stock are cumulative from January 1, 1998.
Voting Rights. Holders of Series BB Preferred Stock have no voting rights
except as required by law and, if any quarterly dividend payable on the Series
BB Preferred Stock is in arrears, the holders of Series BB Preferred Stock will
be entitled to vote together with the holders of our common stock at our next
meeting of stockholders and at each subsequent meeting of stockholders unless
all dividends in arrears have been paid or declared and set apart for payment
before the date of such meeting. In those cases where holders of Series BB Pre-
ferred Stock are entitled to vote, each holder will be entitled to cast the
number of votes equal to the number of whole shares of our common stock into
which his or her Series BB Preferred Stock is then convertible.
Conversion Rights. Subject to the terms and conditions stated below, the
holders of shares of Series BB Preferred Stock have the right, at their option,
to convert such shares at any time through September 16, 1999 into fully paid
and nonassessable shares of common stock at the rate of 6.17215 shares of our
common stock for each share of Series BB Preferred Stock surrendered for con-
version. The conversion rate is subject to adjustment from time to time.
21
Distributions. In the event of our voluntary or involuntary liquidation,
dissolution or winding up, the holders of Series BB Preferred Stock will be en-
titled to receive out of our assets available for distribution to stockholders
an amount equal to $25 per share plus an amount equal to accrued and unpaid
dividends to and including the date of such distribution, and no more, before
any distribution will be made to the holders of any class of our stock ranking
junior to the Series BB Preferred Stock as to the distribution of assets. Any
merger, consolidation or purchase or sale of assets by us will not be deemed a
liquidation, dissolution or winding up of our affairs. Shares of Series BB Pre-
ferred Stock are not subject to a sinking fund.
Redemption. On June 23, 1999, our board of directors voted to redeem the Se-
ries BB Preferred Stock on October 1, 1999, at a redemption price of $25 per
share plus accrued and unpaid dividends to the redemption date.
DESCRIPTION OF DEPOSITARY SHARES
General
We may, at our option, offer fractional shares of preferred stock, rather
than full shares of such securities. If such option is exercised, we will issue
receipts for depositary shares to the public. Each receipt will represent a
fractional interest in a share of a particular series of the preferred stock,
as stated in a prospectus supplement.
The particular terms of the preferred stock offered and the extent, if any,
to which the general provisions may apply to the depositary shares will be de-
scribed in the prospectus supplement. The general descriptions below and in any
prospectus supplement are not complete and are subject to and qualified in
their entirety by reference to the deposit agreement and the depositary re-
ceipts, the forms of which are incorporated by reference in the Registration
Statement and the definitive forms of which will be filed with the SEC at the
time of sale of the depositary shares.
The shares of any series of preferred stock represented by depositary shares
will be deposited under a deposit agreement between us and a bank or trust com-
pany selected by us having its principal office in the United States and having
a combined capital and surplus of at least $5,000,000 (the "Depositary"). Sub-
ject to the terms of the deposit agreement, each owner of a Depositary Share
will be entitled, in proportion to the applicable fraction of a share of pre-
ferred stock represented by such Depositary Share, to all the rights and pref-
erences of the preferred stock represented thereby, including dividend, voting,
redemption, conversion and liquidation rights.
The depositary shares will be evidenced by depositary receipts issued
pursuant to the deposit agreement. Depositary receipts will be distributed to
those persons purchasing the fractional shares of preferred stock in accordance
with the terms of the offering.
Pending the preparation of definitive engraved depositary receipts, the De-
positary may, upon our written order, issue temporary depositary receipts. The
temporary depositary receipts will be substantially identical to, and will have
all rights of, the definitive depositary receipts but will not be in definitive
form. Definitive depositary receipts will be prepared thereafter and temporary
depositary receipts will be exchanged for definitive depositary receipts at our
expense.
Upon the surrender of depositary receipts at the principal office of the De-
positary and upon payment by the holder of the charges provided in the deposit
agreement and subject to the terms thereof, a holder of depositary shares is
entitled to have the Depositary deliver to such holder the number of full
shares of the preferred stock underlying the depositary shares evidenced by the
surrendered depositary receipts. A holder of shares of preferred stock thus
withdrawn will not thereafter be entitled to receive depositary shares in ex-
cess of the number of depositary
22
shares representing the number of full shares of preferred stock to be with-
drawn. The Depositary will deliver to such holder at the same time a new depos-
itary receipt evidencing such excess number of depositary shares.
Dividends and Other Distributions
The Depositary will distribute all cash dividends or other cash
distributions received pursuant to the preferred stock to the record holders of
depositary shares relating to that preferred stock in proportion to the number
of depositary shares owned by the holders. However, the Depositary will
distribute only the amount that can be distributed without attributing to any
holder of depositary shares a fraction of one cent. Any balance that is not
distributed will be added to and treated as part of the next sum received by
the Depositary for distribution to record holders.
If there is a distribution other than in cash, the Depositary will
distribute property it receives to the record holders of depositary shares who
are entitled thereto, unless the Depositary determines that it is not feasible
to make such distribution, in which case the Depositary, with our approval, may
sell such property and distribute the net proceeds to such holders.
Redemption of Depositary Shares
If a series of preferred stock depositary shares is subject to redemption,
the depositary shares will be redeemed from the proceeds received by the
Depositary from the redemption, in whole or in part, of that series of
preferred stock held by the Depositary. The Depositary will mail notice of
redemption at least 30 and not more than 45 days before the date fixed for
redemption to the record holders of the depositary shares to be redeemed at
their addresses appearing in the Depositary's books. The redemption price per
depositary share will be equal to the applicable fraction of the redemption
price per share payable on such series of the preferred stock. Whenever we
redeem preferred stock held by the Depositary, the Depositary will redeem as of
the same redemption date the number of depositary shares representing the
preferred stock redeemed. If less than all the depositary shares are redeemed,
the depositary shares redeemed will be selected by lot or pro rata as
determined by the Depositary.
After the date fixed for redemption, the depositary shares called for re-
demption will no longer be deemed to be outstanding and all rights of the
holder of the depositary shares will cease, except the right to receive the
monies payable upon redemption and any money or other property the holders of
such depositary shares were entitled to receive upon such redemption upon sur-
render to the Depositary of the depositary receipts evidencing the depositary
shares.
Voting the Preferred Stock
Any voting rights of holders of the depositary shares are directly dependent
on the voting rights of the underlying voting preferred stock. Upon receipt of
notice of any meeting at which the holders of the preferred stock held by the
Depositary are entitled to vote, the Depositary will mail the information con-
tained in the notice of meeting to the record holders of the depositary shares
relating to such preferred stock. Each record holder of depositary shares on
the record date, which will be the same date as the record date for the pre-
ferred stock, will be entitled to instruct the Depositary as to the exercise of
the voting rights pertaining to the amount of preferred stock underlying such
holder's depositary shares. The Depositary will endeavor, insofar as practica-
ble, to vote the amount of preferred stock underlying the depositary shares in
accordance with such instructions, and we will agree to take all action which
may be deemed necessary by the Depositary to enable the Depositary to do so.
The Depositary will abstain from voting preferred stock if it does not receive
specific instructions from the holders of depositary shares relating to such
preferred stock.
23
Amendment and Termination of the Deposit Agreement
The form of depositary receipt evidencing the depositary shares and any pro-
vision of the Deposit Agreement may at any time be amended by agreement between
us and the Depositary. However, any amendment which materially and adversely
alters the rights of the existing holders of depositary shares will not be ef-
fective unless the amendment has been approved by the record holders of at
least a majority of the depositary shares then outstanding. Either we or the
Depositary may terminate a Deposit Agreement if all outstanding depositary
shares have been redeemed or if there has been a final distribution in respect
of the preferred stock in connection with our liquidation, dissolution or wind-
ing up.
Changes of Depositary
We will pay all transfer and other taxes and governmental charges arising
solely from the existence of the depositary arrangements. We will pay charges
of the Depositary in connection with the initial deposit of the preferred stock
and any redemption of the preferred stock. Holders of depositary shares will
pay other transfer and other taxes and governmental charges and such other
charges as are expressly provided in the Deposit Agreement to be for their ac-
counts.
Miscellaneous
The Depositary will forward to the holders of depositary shares all of our
reports and communications which are delivered to the Depositary and which we
are required to furnish to the holders of the preferred stock.
We, and the Depositary, will not be liable if we are prevented or delayed by
law or any circumstance beyond our control in performing our obligations under
the Deposit Agreement. All of our obligations under the Deposit Agreement are
limited to performance in good faith of our respective duties thereunder and
neither of us will be obligated to prosecute or defend any legal proceeding in
respect of any depositary shares or preferred stock unless provided with
satisfactory indemnity. We, and the Depositary, may rely upon written advice of
counsel or accountants, or information provided by persons presenting preferred
stock for deposit, holders of depositary shares or other persons believed to be
competent and on documents believed to be genuine.
Resignation and Removal of Depositary
The Depositary may resign at any time by delivering to us notice of its
election to do so, and we may at any time remove the Depositary, any
resignation or removal will take effect only upon the appointment of a
successor Depositary and the successor Depositary's acceptance of such
appointment. Any successor Depositary must be a bank or trust company having
its principal office in the United States and having a combined capital and
surplus of at least $5,000,000.
DESCRIPTION OF COMMON STOCK
The following summary of our common stock is qualified in its entirety by
reference to the description of the common stock incorporated herein by refer-
ence.
General
We are authorized to issue 5,000,000,000 shares of common stock, of which
approximately 1.7 billion shares were outstanding on March 31, 1999. The common
stock trades on the New York Stock Exchange and on the Pacific Exchange under
the symbol "BAC." The common stock is also listed on the London Stock Exchange,
and certain shares are listed on the Tokyo Stock Exchange. As of March 31,
1999, 308 million shares were reserved for issuance in connection with various
of our employee and director benefit plans and our Dividend Reinvestment and
24
Stock Purchase Plan and the conversion of our outstanding convertible securi-
ties and for other purposes. After taking into account the reserved shares,
there were approximately 2.9 billion authorized shares of common stock avail-
able for issuance as of March 31, 1999.
Voting and Other Rights
Holders of common stock are entitled to one vote per share. In general, a
majority of votes cast on a matter is sufficient to take action upon routine
matters. However, (i) amendments to our Amended and Restated Certificate of
Incorporation must be approved by the affirmative vote of the holders of a ma-
jority of the outstanding shares of each class entitled to vote thereon as a
class, and (ii) a merger or dissolution or the sale of all or substantially
all of our assets, must be approved by the affirmative vote of the holders of
a majority of the voting power of the outstanding voting shares. Directors are
elected by a plurality of the votes cast, and stockholders do not have the
right to cumulate their votes in the election of directors.
In the event of our liquidation, holders of common stock will be entitled
to receive pro rata any assets legally available for distribution to stock-
holders, subject to any prior rights of any preferred stock then outstanding.
Our common stock does not have any preemptive rights, redemption privi-
leges, sinking fund privileges or conversion rights. All the outstanding
shares of common stock are, and upon proper conversion of any preferred stock,
all of the shares of our common stock into which such shares are converted
will be, validly issued, fully paid and nonassessable.
ChaseMellon Shareholder Services, L.L.C. is the transfer agent and regis-
trar for our common stock.
Dividends
The holders of our common stock are entitled to receive dividends or dis-
tributions as our Board may declare out of funds legally available for such
payments. Our payment of dividends is subject to the restrictions of Delaware
law applicable to the declaration of dividends by a corporation. A corporation
generally may not authorize and pay dividends if, after giving effect thereto,
it would be unable to meet its debts as they become due in the usual course of
business or if the corporation's total assets would be less than the sum of
its total liabilities plus the amount that would be needed, if it were to be
dissolved at the time of distribution, to satisfy claims upon dissolution of
stockholders who have preferential rights superior to the rights of the hold-
ers of its common stock. In addition, the payment of dividends to stockholders
is subject to any prior rights of outstanding preferred stock. Stock divi-
dends, if any are declared, may be paid from our authorized but unissued
shares.
REGISTRATION AND SETTLEMENT
The Depository Trust Company
Unless otherwise specified in a prospectus supplement, the debt securities
we offer will be issued only in book-entry form represented by global securi-
ties in registered form (a "Global Security"). The Global Security will be
held through DTC, as depositary, and registered in the name of Cede & Co., as
nominee of DTC. Accordingly, Cede & Co. will be the holder of record of the
securities.
Beneficial interests in the Global Security will be shown on, and transfers
will be effected through, records maintained by DTC. Transfers of ownership
interests in the securities will be accomplished by making entries in DTC par-
ticipants' books acting on behalf of beneficial owners. Beneficial owners of
these securities will not receive certificates representing their ownership
interest, unless the use of the book-entry system is discontinued.
So long as DTC or its nominee is the registered owner of a Global Security,
DTC or its nominee, as the case may be, will be the sole holder of the
securities represented thereby for all
25
purposes under the applicable Indenture or warrant or unit agreement. Except as
otherwise provided below, the beneficial owners of the securities will not be
entitled to receive physical delivery of the certificated security and will not
be considered the holders for any purpose under the applicable Indenture or
agreement. Accordingly, each beneficial owner must rely on the procedures of
DTC and, if such beneficial owner is not a DTC participant, on the procedures
of the DTC participant through which such beneficial owner owns its interest in
order to exercise any rights of a holder under such security or the applicable
Indenture or agreement. The laws of some jurisdictions require that certain
purchasers of securities take physical delivery of such securities in
certificated form. Such limits and laws may impair the ability to transfer
beneficial interests in the securities.
The following is based on information furnished by DTC:
DTC will act as securities depository for certain securities. Those se-
curities will be issued as fully registered securities registered in the
name of Cede & Co. (DTC's partnership nominee). One Global Security will be
issued for all of the principal amount of the securities, but if any series
exceeds an aggregate principal amount of $200,000,000, certificates will be
issued in increments of up to $200,000,000.
DTC 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 corpora-
tion" 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 (the "Exchange Act"). DTC
holds securities that its participants deposit with it. DTC also facili-
tates the settlement among its participants of securities transactions,
such as transfers and pledges, in deposited securities through electronic
book-entry changes in the participants' accounts, thereby eliminating the
need for physical movement of securities certificates. Direct participants
of DTC 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 Securi-
ties Dealers, Inc. Access to DTC's system is also available to others such
as securities brokers and dealers, banks and trust companies that clear
through or maintain a custodial relationship with a direct participant, ei-
ther directly or indirectly. The rules applicable to DTC and its partici-
pants are on file with the SEC.
Purchases of securities under DTC's system must be made by or through
direct participants, which will receive a credit for the securities on
DTC's records. The ownership interest of each actual purchaser, the benefi-
cial owner, of each security represented by a Global Security is in turn to
be recorded on the records of direct and indirect participants. Beneficial
owners will not receive written confirmation from DTC of their purchase,
but beneficial owners are expected to receive written confirmations provid-
ing details of the transaction, as well as periodic statements of their
holdings, from the direct or indirect participants through which the bene-
ficial owner entered into the transaction. The participants will remain re-
sponsible for keeping account of their holdings on behalf of their custom-
ers.
Conveyance of notices and other communications by DTC to its direct par-
ticipants, by direct participants to indirect participants, and by direct
and indirect participants to Beneficial Owners will be governed by arrange-
ments among them, subject to any statutory or regulatory requirements as
may be in effect from time to time.
Neither DTC nor Cede & Co. will consent or vote with respect to the se-
curities. DTC assigns its right to consent or vote to its direct partici-
pants.
26
Principal and any premium or interest payments on the securities will be
made in immediately available funds to DTC. DTC's practice is to credit di-
rect participants' accounts on the applicable 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 such date. Payments by par-
ticipants to beneficial owners will be governed by standing instructions
and customary practices, as is the case with securities held for the ac-
counts of customers in bearer form or registered in "street name," and will
be the responsibility of such participant and not of DTC or any other par-
ty, subject to any statutory or regulatory requirements that may be in ef-
fect from time to time. Payment of principal and any premium or interest to
DTC is our responsibility, disbursement of such payments to direct partici-
pants is the responsibility of DTC, and disbursement of such payments to
the beneficial owners is the responsibility of the direct or indirect par-
ticipant.
Redemption notices will be sent to Cede & Co. If less than all of the
securities are being redeemed, DTC's practice is to determine by lot the
amount of the interest of each direct participant in such issue to be re-
deemed.
DTC may discontinue providing its services as securities depository for
the securities at any time by giving us reasonable notice. Under such cir-
cumstances, if a successor securities depository is not obtained, certifi-
cated securities are required to be printed and delivered.
Management of DTC is aware that some computer applications and systems
for processing data that are dependent upon calendar dates, including dates
before, on, and after January 1, 2000, may encounter "Year 2000 problems."
DTC has informed its participants and other members of the financial commu-
nity that it has developed and is implementing a program so that its sys-
tems, which relate to the timely payment of distributions (including prin-
cipal and interest payments) to securityholders, book-entry deliveries and
settlement of trades within DTC, continue to function appropriately. This
program includes a technical assessment and a remediation plan, each of
which is complete. Additionally, DTC's plan includes a testing phase, which
is expected to be completed within appropriate time frames.
However, DTC's ability to perform its services properly is also depen-
dent upon other parties, such as issuers and their agents, as well as the
DTC participants, third party vendors from whom DTC licenses software and
hardware and on whom DTC relies for information or the provision of servic-
es, including telecommunication and electrical utility service providers.
DTC has informed the financial community that it is contacting, and will
continue to contact, third party vendors from whom DTC acquires services
to: (a) impress upon them the importance of such services being Year 2000
compliant; and (b) determine the extent of their efforts for Year 2000
remediation (and, as appropriate, testing) of their services. In addition,
DTC is in the process of developing such contingency plans as it deems
appropriate.
The information in this section concerning DTC and DTC's system has been
obtained from sources that we believe to be reliable, but we take no re-
sponsibility for the accuracy thereof.
Cedelbank and Euroclear
Securities of a series issued in book-entry form and sold or traded outside
the United States may be represented by one or more Global Securities held
through Cedelbank, societe anonyme ("Cedelbank"), or Morgan Guaranty Trust Com-
pany of New York, Brussels office, as operator of the Euroclear System (the
"Euroclear Operator" or "Euroclear"), European international clearing systems.
Cedelbank and Euroclear hold omnibus positions on behalf of Cedelbank partici-
pants and Euroclear participants, respectively, on the books of their respec-
tive depositaries, which in
27
turn hold such positions in customers' securities accounts in the deposita-
ries' names on the books of DTC.
Transfers between Cedelbank participants and Euroclear participants occur
in compliance with their rules and operating procedures. Cross-market trans-
fers between persons holding directly or indirectly through DTC in the United
States, on the one hand, and directly or indirectly through Cedelbank partici-
pants or Euroclear participants, on the other, will be handled by DTC in ac-
cordance with DTC rules on behalf of a European international clearing system
by its depositary; however, cross-market transactions will require delivery of
instructions to the European international clearing system by the counterparty
in such system in accordance with its rules and procedures and within its es-
tablished deadlines. A European international clearing system will, if the
transaction meets its settlement requirements, deliver instructions to its de-
positary to take action to carry out final settlement on its behalf by deliv-
ering or receiving securities in DTC, and making or receiving in accordance
with normal procedures for same-day funds settlement applicable to DTC.
Cedelbank participants and Euroclear participants may not deliver instructions
directly to the depositaries.
Because of time-zone differences, credits for securities in Cedelbank or
Euroclear as a result of a transaction with a DTC participant will be made
during the subsequent securities settlement processing, and will be dated the
business day following the DTC settlement date; those credits or any transac-
tions in those securities settled during processing will be reported to the
relevant Cedelbank participant or Euroclear participant on that business day.
Cash received in Cedelbank or Euroclear as a result of sales of securities by
or through a Cedelbank participant or a Euroclear participant to a DTC partic-
ipant will be received with value on the DTC settlement date but will be
available in the relevant Cedelbank or Euroclear cash account only as of the
business day following settlement in DTC.
Cedelbank is incorporated under the laws of Luxembourg as a depositary.
Cedelbank holds securities for its participating organizations and facilitates
the clearance and settlement of securities transactions between its partici-
pants through electronic book-entry changes in accounts of those participants,
thereby eliminating the need for physical movement of certificates. Transac-
tions may be settled by Cedelbank in any of 28 currencies, including United
States dollars. Cedelbank provides to its participants services for safekeep-
ing, administration, clearance and settlement of internationally traded secu-
rities and securities lending and borrowing. Cedelbank interfaces with domes-
tic markets in several countries. As a depository, Cedelbank is subject to
regulation by the Luxembourg Monetary Institute. Cedelbank participants con-
sist of recognized financial institutions around the world, including under-
writers, securities brokers and dealers, banks, trust companies, clearing cor-
porations and certain other organizations and may include the underwriters or
agents with respect to a particular series of securities. Indirect access to
Cedelbank is also available to other entities that clear through or maintain a
custodial relationship with a Cedelbank participant.
The Euroclear System was created in 1968 to hold securities for partici-
pants of the Euroclear System and to clear and settle transactions between
Euroclear participants through simultaneous electronic book-entry delivery
against payment, thereby eliminating the need for physical movement of certif-
icates and any risk from lack of simultaneous transfers of securities and
cash. Transactions now may be settled by Euroclear in any of 32 currencies,
including United States dollars. The Euroclear System includes various other
services, including securities lending and borrowing and interfaces with do-
mestic markets in several countries generally similar to the arrangements for
cross-market transfers with DTC described above. The Euroclear System is oper-
ated by the Euroclear Operator, under contract with Euroclear Clearance Sys-
tem, S.C., a Belgian cooperative corporation (the "Cooperative"). All opera-
tions are conducted by the Euroclear Operator, and all Euroclear securities
clearance accounts and Euroclear cash accounts are accounts with the Euroclear
Operator, not the Cooperative. The Cooperative establishes pol-
28
icy for the Euroclear System on behalf of Euroclear participants. Euroclear
participants include banks (including central banks), securities brokers and
dealers and other professional financial intermediaries and may include the un-
derwriters or agents for a particular series of securities. Indirect access to
the Euroclear System is also available to other firms that clear through or
maintain a custodial relationship with a Euroclear participant.
The Euroclear Operator is the Brussels branch of a New York banking corpora-
tion that is a member bank of the Federal Reserve System. As such, it is regu-
lated and examined by the Federal Reserve Board and the New York State Banking
Department, as well as the Belgian Banking Commission.
Securities clearance accounts and cash accounts with the Euroclear Operator
are governed by the Terms and Conditions Governing Use of Euroclear and the re-
lated Operating Procedures of the Euroclear Systems and applicable Belgian law
(collectively, the "Terms and Conditions"). The Terms and Conditions govern
transfers of securities and cash within the Euroclear System, withdrawal of se-
curities and cash from the Euroclear System and receipts of payments with
respect to securities in the Euroclear System. All securities in the Euroclear
System are held on a fungible basis without attribution of specific certifi-
cates to specific securities clearance accounts. The Euroclear Operator acts
under the Terms and Conditions only on behalf of Euroclear participants and has
no record of or relations with persons holding through Euroclear participants.
Distributions for securities of a series held through Cedelbank or Euroclear
will be credited to the cash accounts of Cedelbank participants or Euroclear
participants in accordance with the relevant system's rules and procedures.
Distributions are subject to tax reporting in accordance with relevant United
States tax laws and regulations. The applicable prospectus supplement will de-
scribe selected income tax consequences to foreign investors. Cedelbank or the
Euroclear Operator, will take any other action permitted to be taken by a
holder of securities under the applicable Indenture, warrant agreement or unit
agreement on behalf of a Cedelbank participant or a Euroclear participant only
in accordance with its relevant rules and procedures and subject to its respec-
tive depositary's ability to carry out those actions on its behalf through DTC.
Although Cedelbank and Euroclear have established these procedures to facil-
itate transfers of applicable securities among participants of DTC, Cedelbank
and Euroclear, they are under no obligation to perform or continue to perform
those procedures, and those procedures may be discontinued at any time.
29
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any document that we file at
the Public Reference Room of the SEC at 450 Fifth Street, N.W., Washington,
D.C. 20549. You may obtain information on the operation of the Public Refer-
ence Room by calling the SEC at 1-800-SEC-0330. You may also inspect our fil-
ings at the regional offices of the SEC located at 7 World Trade Center, New
York, New York 10048 and Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661 or over the Internet at the SEC's home page at
http://www.sec.gov. You can also inspect reports and other information we file
at the offices of the New York Stock Exchange, Inc., 20 Broad Street, New
York, New York 10005.
The SEC allows us to incorporate by reference the information we file with
it, which means:
. incorporated documents are considered part of this prospectus;
. we can disclose important information to you by referring you to those
documents; and
. information that we file with the SEC will automatically update and su-
persede this incorporated information.
We incorporate by reference the documents listed below which were filed
with the SEC under the Exchange Act:
. our annual report on Form 10-K for the year ended December 31, 1998;
. our quarterly report on Form 10-Q for the period ended March 31, 1999;
. our current reports on Form 8-K dated January 19, 1999, February 2, 1999,
April 19, 1999, April 28, 1999, June 9, 1999, June 23, 1999, July 8, 1999
and July 23, 1999; and
. the description of our common stock which is contained in our registra-
tion statement filed pursuant to Section 12 of the Exchange Act, as modi-
fied on our current report on Form 8-K dated September 25, 1998.
We also incorporate by reference each of the following documents that we
will file with the SEC after the date of this prospectus:
. reports filed under Sections 13(a) and (c) of the Exchange Act;
. definitive proxy or information statements filed under Section 14 of the
Exchange Act in connection with any subsequent stockholders' meetings;
and
. any reports filed under Section 15(d) of the Exchange Act.
You should assume that the information appearing in this prospectus is ac-
curate as of the date of this prospectus only. Our business, financial posi-
tion and results of operations may have changed since that date.
You may request a copy of any filings referred to above (excluding exhib-
its), at no cost, by contacting us at the following address:
John E. Mack
Senior Vice President
Bank of America Corporation
Corporate Treasury Division
NC1-007-23-01
100 North Tryon Street
Charlotte, North Carolina 28255
(704) 386-5972
30
FORWARD-LOOKING STATEMENTS
This prospectus and accompanying prospectus supplements contain or incorpo-
rate statements that constitute "forward-looking statements" within the mean-
ing of Section 27A of the Securities Act and Section 21E of the Exchange Act.
Those statements can be identified by the use of forward-looking language such
as "will likely result," "may," "are expected to," "is anticipated," "esti-
mate," "projected," "intends to," or other similar words. Our actual results,
performance or achievements could differ materially from the results expressed
in, or implied by, those forward-looking statements. Those statements are sub-
ject to certain risks and uncertainties, including but not limited to, certain
risks described in the prospectus supplement. When considering those forward-
looking statements, you should keep in mind these risks, uncertainties and
other cautionary statements made in this prospectus and the prospectus supple-
ment. You should not place undue reliance on any forward-looking statement
which speaks only as of the date made.
LEGAL OPINIONS
The legality of the securities will be passed upon for us by Smith Helms
Mulliss & Moore, L.L.P., Charlotte, North Carolina, and for the underwriters
or agents by Stroock & Stroock & Lavan LLP, New York, New York. As of the date
of this prospectus, certain members of Smith Helms Mulliss & Moore, L.L.P.,
beneficially owned approximately 160,000 shares of our common stock.
EXPERTS
Our consolidated financial statements incorporated by reference to our An-
nual Report on Form 10-K for the year ended December 31, 1998 have been incor-
porated in reliance on the report of PricewaterhouseCoopers LLP, independent
accountants, given on the authority of that firm as experts in auditing and
accounting.
31
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You should rely only on the information incorporated by reference or provided
in this prospectus supplement, the attached prospectus and the related pricing
supplement. We have not authorized anyone to provide you with different infor-
mation. We are not offering the securities in any state where the offer is not
permitted. You should not assume that the information in this prospectus sup-
plement and the attached prospectus is accurate as of any date other than the
date on the front of this document.
Our affiliates, including Banc of America Securities LLC, will deliver this
prospectus supplement, the attached prospectus and the related pricing supple-
ment for offers and sales in the secondary market.
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[LOGO OF BANK OF AMERICA]
$3,000,000,000
Medium-Term Notes,
Series I
--------------
PROSPECTUS SUPPLEMENT
--------------
Banc of America Securities LLC
Bear, Stearns & Co. Inc.
Lehman Brothers
Merrill Lynch & Co.
Salomon Smith Barney
June 5, 2001
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