As Filed With the Securities and Exchange Commission on October 4, 2001
Registration Nos. 333- , 333- , 333- , 333- and 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
Under
The Securities Act of 1933
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BANK OF AMERICA CORPORATION DELAWARE 56-0906609
BAC CAPITAL TRUST I DELAWARE Application Pending
BAC CAPITAL TRUST II DELAWARE Application Pending
BAC CAPITAL TRUST III DELAWARE Application Pending
BAC CAPITAL TRUST IV DELAWARE Application Pending
(Exact Name of Registrant as (State or Other Jurisdiction (I.R.S. Employer
Specified in Charter) of Incorporation or Organization) Identification Number)
Bank of America Corporation, Bank of America Corporate Center, Charlotte, North
Carolina 28255
(888) 279-3457
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
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PAUL J. POLKING
Executive Vice President and General Counsel
Bank of America Corporation
Bank of America Corporate Center
Charlotte, North Carolina 28255
(704) 386-5000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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Copies to:
BOYD C. CAMPBELL, JR. JAMES R. TANENBAUM
Smith Helms Mulliss & Moore, L.L.P. Stroock & Stroock & Lavan LLP
201 North Tryon Street 180 Maiden Lane
Charlotte, North Carolina 28202 New York, New York 10038
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Approximate date of commencement of proposed sale to the public: From time to
time after the effective date of this Registration Statement.
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If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: [_]
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, please check the following box: [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of earlier
elective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, please check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [X]
CALCULATION OF REGISTRATION FEE
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Proposed maximum Proposed maximum
Title of each class of Amount to be offering price per aggregate Amount of
securities to be registered registered(1) unit(2) offering price(1)(2) registration fee
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Junior Subordinated Notes of
Bank of America
Corporation(3).............. N/A
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Capital Securities of BAC
Capital Trust I, BAC Capital
Trust II, BAC Capital Trust
III and BAC Capital Trust IV N/A
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Guarantees of Capital
Securities of BAC Capital
Trust I, BAC Capital Trust
II, BAC Capital Trust III
and BAC Capital Trust IV and
certain back-up
undertakings(4)............. N/A
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Total................... $2,000,000,000(1) 100% $2,000,000,000(1) $500,000
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(1)Such amount represents the aggregate liquidation amount of capital
securities that may be issued by any of BAC Capital Trust I, BAC Capital
Trust II, BAC Capital Trust III or BAC Capital Trust IV.
(2)Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457. Such amount is exclusive of accrued interest and
distributions, if any.
(3)The junior subordinated notes of Bank of America Corporation will be issued
in an aggregate principal amount equal to the aggregate liquidation amount
of trust securities issued by the Trusts and will be purchased by BAC
Capital Trust I, BAC Capital Trust II, BAC Capital Trust III or BAC Capital
Trust IV with the proceeds of the sale of the capital securities issued by
such Trust.
(4)No separate consideration will be received for any guarantees. The
guarantees include the rights of holders of the capital securities under the
guarantees and certain back-up undertakings, comprised of obligations of
Bank of America Corporation under the Indenture and any supplemental
indentures, including responsibility for certain costs, expenses, debts and
liabilities of each of BAC Capital Trust I, BAC Capital Trust II, BAC
Capital Trust III and BAC Capital Trust IV, as well as obligations under the
related Declarations of Trust, each as described in the Registration
Statement. The guarantees, when taken together with Bank of America
Corporation's obligations under the junior subordinated notes and the
back-up undertakings, will provide a full and unconditional guarantee, on a
subordinated basis, to the extent the applicable BAC Capital Trust shall
have funds available therefor, by Bank of America Corporation of payments
due on the capital securities of such Trust.
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The Registrants hereby amend this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrants
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act, or until the Registration Statement shall become effective
on such date as the Commission, acting pursuant to said Section 8(a), may
determine.
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SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED OCTOBER 4, 2001
PROSPECTUS
[LOGO] BANK OF AMERICA
$2,000,000,000
Junior Subordinated Notes
BAC Capital Trust I Capital Securities
BAC Capital Trust II guaranteed as set forth herein by
BAC Capital Trust III Bank of America Corporation
BAC Capital Trust IV
This prospectus describes the Bank of America Corporation junior
subordinated notes and the BAC Capital Trust I, BAC Capital Trust II, BAC
Capital Trust III and BAC Capital Trust IV capital securities.
From time to time, each Trust may:
. sell capital securities representing undivided preferred beneficial
interests in the Trust to the public;
. sell common securities representing undivided common beneficial interests
in the Trust to Bank of America Corporation;
. use the proceeds from these sales to buy an equal principal amount of
junior subordinated notes of Bank of America Corporation; and
. regularly distribute the cash payments it receives on the junior
subordinated notes it owns to the holders of its capital and common
securities.
Bank of America Corporation will issue its junior subordinated notes to the
Trusts. These notes may be distributed to holders of capital or common
securities upon dissolution of a Trust. Bank of America Corporation also will
guarantee the payment by each Trust of the capital securities to the extent
described in this prospectus.
The specific terms of the notes and the capital securities, including the
distribution rate and liquidation amount, will be provided in an accompanying
prospectus supplement. You should read this prospectus and the applicable
prospectus supplement carefully before you invest. This prospectus may be used
to offer and sell securities only if accompanied by the prospectus supplement
for those securities.
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Our notes are unsecured. Our notes and the capital securities are not
savings accounts, deposits or other obligations of a bank, 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, including possible loss of principal.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these notes or the capital securities
or passed on the adequacy or accuracy of this prospectus. Any representation to
the contrary is a criminal offense.
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The date of this Prospectus is October , 2001
The information contained in this prospectus is not complete and may be
changed. We may not sell these securities until the registration statement
filed with the Securities and Exchange Commission is effective. This prospectus
is not an offer to sell these securities and we are not soliciting an offer to
buy these securities in any state where the offer or sale is not permitted.
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that Bank of America
Corporation and BAC Capital Trust I, BAC Capital Trust II, BAC Capital Trust
III and BAC Capital Trust IV filed with the Securities Exchange Commission
using a "shelf" registration or continuous offering process. Under this shelf
process, from time to time, a Trust may sell capital securities representing
undivided preferred beneficial interests in the Trust to the public and common
securities representing undivided common beneficial interests in the Trust to
us, in one or more offerings. In turn, the Trust will invest the proceeds from
those sales in our junior subordinated notes.
This prospectus provides you with a general description of the securities
the Trusts may offer. Each time a Trust sells securities, we will provide you
with a prospectus supplement that will contain specific information about the
terms of the securities being offered in that offering. The prospectus
supplement also will include a discussion of any risk factors or other special
considerations applicable to those securities. The prospectus supplement also
may add, update or change information contained in this prospectus. If there is
any inconsistency between the information in this prospectus and the prospectus
supplement, you should rely on the information in the prospectus supplement.
You should read both this prospectus and the applicable prospectus supplement
together with the additional information that is incorporated by reference in
this prospectus. That additional information is described below under the
heading "Where You Can Find More Information."
You should rely only on the information provided in this prospectus and in
the prospectus supplement, including the information incorporated by reference.
Neither we, nor the Trusts, nor any underwriters or agents, have authorized
anyone to provide you with different information. Neither we nor the Trusts are
offering the securities in any state where the offer is not permitted.
Unless otherwise indicated or unless the context requires otherwise, all
references in this prospectus to "Bank of America", "we," "us" or "our," or
similar references, mean Bank of America Corporation.
WHERE YOU CAN FIND MORE INFORMATION
We and the Trusts have filed a registration statement on Form S-3 with the
SEC covering the securities to be offered and sold using this prospectus. You
should refer to this registration statement and its exhibits for additional
information about Bank of America and the Trusts. This prospectus summarizes
material provisions of contracts and other documents that we refer you to.
Because the prospectus may not contain all of the information that you may find
important, you should review the full text of these documents, which we have
included as exhibits to the registration statement.
We also file annual, quarterly and special reports, proxy statements and
other information with the SEC. Our SEC filings are available to the public
over the Internet at the SEC's web site at www.sec.gov. You also 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 Reference Room by calling the SEC at 1-800-SEC-0330.
You also may inspect our filings at the regional office of the SEC located at
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511. You also can 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.
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The SEC allows us to incorporate by reference in this prospectus the
information we file with it. This means that:
. 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
supersede this incorporated information and certain information in this
prospectus.
We incorporate by reference the documents listed below that we have
previously filed with the SEC:
. our annual report on Form 10-K for the year ended December 31, 2000;
. our quarterly reports on Form 10-Q for the quarters ended March 31, 2001
and June 30, 2001;
. our current reports on Form 8-K dated January 16, 2001, January 17, 2001,
January 24, 2001, April 16, 2001, June 5, 2001, June 22, 2001, June 27,
2001, July 16, 2001 and August 15, 2001 (in each case, with the exception
of any information filed pursuant to Item 9 of Form 8-K, which is not
incorporated herein by reference); and
. the description of our common stock which is contained in our registration
statement filed pursuant to Section 12 of the Securities Exchange Act of
1934, as amended, as modified by 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 (except any
information filed pursuant to Item 9 of Form 8-K) until this offering is
completed:
. reports filed under Sections 13(a) and (c) of the Securities Exchange Act;
. definitive proxy or information statements filed under Section 14 of the
Securities Exchange Act in connection with any subsequent stockholders'
meetings; and
. any reports filed under Section 15(d) of the Securities Exchange Act.
You should assume that the information appearing in this prospectus is
accurate as of the date of this prospectus only. Our business, financial
position and results of operations may have changed since that date.
You may request a copy of any filings referred to above (excluding
exhibits), at no cost, by contacting us at the following address:
Bank of America Corporation
Corporate Treasury Division
NC1-007-23-01
100 North Tryon Street
Charlotte, North Carolina 28255
(704) 386-5972
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FORWARD-LOOKING STATEMENTS
This prospectus and all accompanying prospectus supplements contain or
incorporate statements that constitute "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities 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," "estimate," "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 subject 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 any accompanying prospectus supplement. You should not place
undue reliance on any forward-looking statement which speaks only as of the
date made.
BANK OF AMERICA CORPORATION
Bank of America Corporation is a Delaware corporation, a bank holding
company 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
subsidiaries. Through those subsidiaries, we provide a diversified range of
banking and nonbanking financial services and products, primarily throughout
the Mid-Atlantic (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
(California, Idaho and Nevada) regions of the United States and in selected
international 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 Board of Governors of the Federal Reserve System (referred to as
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 conditions and limitations and with the prior approval of
the Office of the Comptroller of the Currency (referred to as the
"Comptroller"). For additional information about various regulatory aspects of
our business, see "--Regulatory Matters" below.
Business Segment Operations
We provide a diversified range of banking and nonbanking financial services
and products through our various subsidiaries. We have reported 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. Certain operating segments have been aggregated into a
single business segment. In the first quarter of 2001, the thirty-year mortgage
portfolio was moved from Consumer and Commercial Banking to a fifth segment,
Corporate Other.
Consumer and Commercial Banking
Consumer and Commercial Banking provides a wide array of products and
services to individuals, small businesses and middle market companies through
multiple delivery channels.
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The major components of Consumer and Commercial Banking 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 4,300
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
accounts, time deposits and IRAs, and credit products such as home equity,
mortgage, personal auto loans and auto leasing. Banking Regions also
includes small business banking providing treasury management, credit
services, community investment, 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, lending and
investing to develop low- and moderate-income communities, student lending
and certain insurance services. Consumer Products also provides auto loans
and retail finance programs to dealerships.
. Commercial Banking
Commercial Banking provides commercial lending and treasury management
services 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
commercial service center and the Internet by accessing Bank of America
Direct.
Asset Management
Asset Management includes the Private Bank, Banc of America Capital
Management and Banc of America Investment Services, Inc. The Private Bank
offers financial solutions to high-net-worth clients and foundations in the
U.S. and internationally by providing customized asset management and credit,
financial advisory, fiduciary, trust and banking services. Banc of America
Capital Management offers management of equity, fixed income, cash and
alternative investments; manages the assets of individuals, corporations,
municipalities, 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
our 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,
lending, 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
geographic regions: U.S. and Canada; Asia; Europe, Middle East and Africa; and
Latin America. Products and services provided include loan origination, 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.
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Global Corporate and Investment Banking offers clients a comprehensive range
of global capabilities through three components: Global Investment Banking,
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
Securities 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 Securities 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 syndications, merger and acquisition advisory
services, private placements and equity derivatives also are provided
through Banc of America Securities LLC.
In addition, Global Investment Banking provides risk management solutions
for our global customer base using interest rate, credit and commodity
derivatives, foreign exchange, fixed income 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
securities in all of the regions in which Global Corporate and Investment
Banking transacts business and is a primary dealer in the U.S., 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, leasing and project finance.
. 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
local, regional, national and global level.
Equity Investments
Equity Investments includes Principal Investing, which is comprised of a
diversified portfolio of investments in 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 U.S. 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 resources. 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.
Corporate Other
The Corporate Other segment consists primarily of certain residential
mortgages originated by the mortgage group (not from retail branch
originations) as these instruments are used for balance sheet and interest rate
risk management. This unit also includes the earnings associated with
unassigned capital, certain expenses that have not been allocated to any other
particular business segment and other corporate transactions.
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Acquisitions and Sales
As part of our operations, we regularly evaluate the potential acquisition
of, and hold discussions with, various financial institutions and other
businesses that are eligible for financial holding company ownership or
control. In addition, we regularly analyze the values of, and submit bids for,
the acquisition of customer-based funds and other liabilities and assets of
suitable financial institutions and other businesses. We also regularly
consider the potential disposition of certain of our assets, branches,
subsidiaries or lines of businesses. As a general rule, we publicly announce
any material acquisitions or dispositions when a definitive agreement has been
reached.
Regulatory Matters
The following discussion describes elements of an extensive regulatory
framework applicable to bank holding companies, financial holding companies and
banks and specific information about us and our subsidiaries. Federal
regulation of banks, bank holding companies and financial holding companies is
intended primarily for the protection of depositors and the Bank Insurance Fund
rather than for the protection of securityholders and creditors.
As a registered bank holding company and a financial holding company, we are
subject to the supervision of, and to regular inspection by, the Federal
Reserve Board. Our banking subsidiaries are organized predominantly as national
banking associations, which are subject to regulation, supervision and
examination by the Comptroller, the Federal Deposit Insurance Corporation
(referred to as the "FDIC"), the Federal Reserve Board and other federal and
state regulatory agencies. In addition to banking laws, regulations and
regulatory agencies, we and our subsidiaries and affiliates are subject to
various other laws and regulations and supervision and examination by other
regulatory agencies, all of which directly or indirectly affect our operations
and management and our ability to make distributions to stockholders.
A financial holding company, and the companies under its control, are
permitted to engage in activities considered "financial in nature" as defined
by the Gramm-Leach-Bliley Act and Federal Reserve Board interpretations
(including, without limitation, insurance and securities activities), and,
therefore, may engage in a broader range of activities than permitted for bank
holding companies and their subsidiaries. A financial holding company may
directly or indirectly engage in activities considered financial in nature,
either de novo or by acquisition, provided the financial holding company gives
the Federal Reserve Board after-the-fact notice of the new activities. The
Gramm-Leach-Bliley Act also permits national banks, such as our bank
subsidiaries, to engage in activities considered financial in nature through a
financial subsidiary, subject to certain conditions and limitations and with
the prior approval of the Comptroller.
Interstate Banking
Bank holding companies (including bank holding companies that also are
financial holding companies) are required to obtain the prior approval of the
Federal Reserve Board before acquiring more than 5% of any class of voting
stock of any bank which is not already majority-owned by the bank holding
company. Pursuant to the Riegle-Neal Interstate Banking and Branching
Efficiency Act of 1994, 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 subject to any state requirement that the
bank has been organized and operating for a minimum period of time, not to
exceed five years, and the requirement that the bank holding company, after the
proposed acquisition, controls no more than 10% of the total amount of deposits
of insured depository institutions in the United States and no more than 30% or
such lesser or greater amount set by state law of such deposits in that state.
Subject to certain restrictions, the Riegle-Neal Interstate Banking and
Branching Efficiency Act of 1994 also authorizes banks to merge across state
lines to create interstate branches. This
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act also permits a bank to open new branches in a state in which it does not
already have banking operations if such state enacts a law permitting de novo
branching. We have consolidated our retail subsidiary banks into a single
interstate bank, Bank of America, N.A., headquartered in Charlotte, North
Carolina, with full service branch offices in 21 states and the District of
Columbia. In addition, we operate a limited purpose nationally chartered credit
card bank, Bank of America, N.A. (USA), headquartered in Phoenix, Arizona, and
three nationally chartered banker's banks: Bank of America Oregon, N.A.,
headquartered in Portland, Oregon, Bank of America California, N.A.,
headquartered in Walnut Creek, California, and Bank of America Georgia, N.A.,
headquartered in Atlanta, Georgia.
Changes in Regulations
Proposals to change the laws and regulations governing the banking industry
are frequently introduced in Congress, in state legislatures and before the
various bank regulatory agencies. The likelihood and timing of any proposals or
legislation and the impact they might have on us and our subsidiaries cannot be
determined at this time.
Capital and Operational Requirements
The Federal Reserve Board, the Comptroller and the FDIC have issued
substantially 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 maintain capital above
the minimum levels, whether because of 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% of risk-weighted assets. Tier 3 capital includes subordinated debt
that is unsecured, fully paid, has an original maturity of at least two years,
is not redeemable before maturity without prior approval by the Federal Reserve
Board and includes a lock-in clause precluding payment of either 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 represents qualifying
total capital, at least 50% 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 relative credit
risk. The minimum Tier 1 capital ratio is 4% and the minimum total capital
ratio is 8%. Our Tier 1 and total risk-based capital ratios under these
guidelines at June 30, 2001 were 7.90% and 12.09%, respectively. At June 30,
2001, 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
average total assets. Although the stated minimum ratio is 3%, most banking
organizations are required to maintain ratios of least 100 to 200 basis points
above 3%. Our leverage ratio at June 30, 2001 was 6.50%. We meet our leverage
ratio requirement.
The Federal Deposit Insurance Corporation Improvement Act of 1991, among
other things, identifies five capital categories for insured depository
institutions (well capitalized, adequately capitalized, undercapitalized,
significantly undercapitalized and critically undercapitalized) and requires
the respective federal 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 progressively
more restrictive constraints on operations, management and capital
distributions, depending on the category in which an institution is classified.
Failure to meet the capital guidelines could also subject a banking institution
to capital raising requirements. An "undercapitalized" bank must develop a
capital restoration plan and its
8
parent holding company must guarantee that bank's compliance with the plan. The
liability of the parent holding company under any such guarantee is limited to
the lesser of 5% of the bank's assets at the time it became "undercapitalized"
or the amount needed to comply with the plan. Furthermore, in the event of the
bankruptcy of the parent holding company, such guarantee would take priority
over the parent's general unsecured creditors. In addition, this act requires
the various regulatory agencies to prescribed certain non-capital standards for
safety and soundness relating generally to operations and management, asset
quality and executive compensation and permits regulatory action against a
financial institution that does not meet such standards.
The various regulatory agencies have adopted substantially similar
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. Such regulations establish
various degrees of corrective action to be taken when an institution is
considered undercapitalized. Under the regulations, a 'well capitalized"
institution must have a Tier 1 risk-based capital ratio of at least 6%, a total
risk-based capital ratio of at least 10% and a leverage ratio of at least 5%
and not be subject to a capital directive order. Under these guidelines, each
of our banking subsidiaries is considered well capitalized.
Regulators also must 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 position); and (c) risks from non-traditional activities, as
well as an institution's ability to manage those risks, when determining the
adequacy of an institution's capital. This evaluation will be made as a part of
the institution's regular safety and soundness examination. In addition, we and
any of our banking subsidiaries with significant trading activity must
incorporate a measure for market risk in our regulatory capital calculations.
Distributions
Our funds for cash distributions to our stockholders are derived from a
variety of sources, including cash and temporary investments. The primary
source of these funds, and funds used to pay principal and interest on our
indebtedness (including our obligations in connection with the junior
subordinated notes and our guarantee obligations), is dividends received from
our banking subsidiaries. Each of our banking subsidiaries is subject to
various regulatory policies and requirements relating to the payment of
dividends, including requirements to maintain capital above regulatory
minimums. The appropriate federal regulatory authority is authorized to
determine under certain circumstances relating to the financial condition of a
bank or bank holding company that the payment of dividends would be an unsafe
or unsound practice and to prohibit payment thereof.
In addition, our ability, and the ability of our banking subsidiaries, to
pay dividends may be affected by the various minimum capital requirements and
the capital and non-capital standards established under the Federal Deposit
Insurance Corporation Improvement Act of 1991, as described above. Our right,
and the right of our stockholders and creditors, to participate in any
distribution of the assets or earnings of our subsidiaries is further subject
to the prior claims of creditors of the respective subsidiaries.
Source of Strength
According to Federal Reserve Board policy, bank holding companies are
expected to act as a source of financial strength to each subsidiary bank and
to commit resources to support each such subsidiary. This support may be
required at times when a bank holding company may not be able to provide such
support. Similarly, under the cross-guarantee provisions of the Federal Deposit
Insurance Act, in the event of a loss suffered or anticipated by the
FDIC--either as a result of
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default of a banking subsidiary or related to FDIC assistance provided to a
subsidiary in danger of default--the other banking subsidiaries may be assessed
for the FDIC's loss, subject to certain exceptions.
THE TRUSTS
Each Trust is a statutory business trust formed under Delaware law pursuant
to a declaration of trust, executed by us as sponsor of the Trust and the
trustees of the Trust, and the filing of a certificate of trust with the
Secretary of State of the State of Delaware. The declaration of trust of a
Trust will be amended and restated in its entirety before the Trust issues any
trust securities. The form of amended and restated declaration of trust is
filed as an exhibit to the registration statement of which this prospectus is a
part. When we refer to the "declaration of trust" for a particular Trust in
this prospectus and any prospectus supplement, we are referring to the amended
and restated declaration of trust. The declaration of trust for each Trust will
be qualified as an indenture under the Trust Indenture Act of 1939, as amended.
Each Trust exists exclusively to:
. issue capital securities and common securities (referred to together as
the "trust securities") representing undivided beneficial interests in
the assets of that Trust;
. invest the proceeds from the sale of its trust securities in junior
subordinated notes of Bank of America; and
. engage only in those other activities necessary or incidental thereto.
We will own, directly or indirectly, all of the common securities of each
Trust. These common securities will have an aggregate liquidation amount equal
to at least 3% of the total capital of that Trust. The common securities
generally will rank equally with the capital securities of that Trust, and the
Trust will make payment on its trust securities pro rata. However, upon the
occurrence of an event of default under the Trust's declaration of trust, the
rights of the holders of the common securities to payment in respect of
distributions and payments upon liquidation, redemption and otherwise will be
subordinated to the rights of the holders of the capital securities. See
"Description of Capital Securities--Subordination of Common Securities."
The trustees of a Trust conduct the Trust's business and affairs. Under each
Trust's declaration of trust, initially there are four trustees for that Trust:
. two regular trustees, who are individuals who are employees or officers
of or who are affiliated with us;
. a property trustee, who is a financial institution that is unaffiliated
with us and is the indenture trustee for purposes of complying with the
Trust Indenture Act; and
. the Delaware trustee, who is an entity that maintains its principal
place of business in the State of Delaware.
The property trustee holds title to the junior subordinated notes purchased
by a Trust for the benefit of the holders of the Trust's trust securities. In
such capacity, the property trustee has the power to exercise all rights, power
and privileges under the indenture pursuant to which the junior subordinated
notes are issued. In addition, the property trustee has exclusive control of
the Trust's property account, a segregated non-interest bearing bank account
holding all junior subordinated note payments for the benefit of the holders of
the Trust's trust securities. The property trustee will make payments of
distributions and payments on liquidation, redemption and otherwise to the
holders of its trust securities out of funds in the Trust's property account.
Initially, The Bank of New York, a New York banking corporation, will act as
property trustee of each Trust, and its affiliate, The Bank of New York
(Delaware), will act as the Delaware trustee
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of each Trust. As the holder, directly or indirectly, of all the common
securities of each Trust, we have the right to appoint, remove or replace the
trustees of a Trust and to increase or decrease the number of trustees,
provided that at least one trustee is a Delaware trustee, at least one trustee
is a property trustee, and at least one trustee is a regular trustee.
For purposes of compliance with the Trust Indenture Act, The Bank of New
York also acts as trustee under the guarantee described in this prospectus and
as trustee under the junior subordinated indenture, as we describe under the
headings "Description of the Junior Subordinated Notes" and "Description of
Guarantee." The guarantee trustee holds the guarantee for the benefit of the
holders of a Trust's capital securities.
The rights of the holders of the capital and common securities of a Trust,
including economic rights, rights to information and voting rights, are as set
forth in the Trust's declaration of trust and the Delaware Business Trust Act.
We describe these rights under the heading "Description of the Capital
Securities."
Each Trust has a term of approximately 55 years, from January 1, 2001, but
may terminate earlier as provided in its declaration of trust.
We will pay all costs and expenses related to the organization and operation
of each Trust and the offering of the trust securities.
The principal executive office of each Trust is c/o Bank of America
Corporation, Corporate Treasury Division, Bank of America Corporate Center, 100
North Tryon Street, NC1-007-23-01, Charlotte, North Carolina 28255, telephone
number (704) 386-5972. The office of the Delaware trustee for each Trust in the
State of Delaware is The Bank of New York (Delaware), White Clay Center, Route
273, Newark, Delaware 19711.
USE OF PROCEEDS
Each Trust will use the gross proceeds received from the sale of its
securities to purchase junior subordinated notes from us. Unless we describe a
different use in a prospectus supplement, we will use the net proceeds from the
sale of the junior subordinated notes to a Trust for our 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 of a type
we are eligible to acquire; and
. the possible reduction of outstanding indebtedness or the repurchase or
redemption of our outstanding equity securities.
Until we designate the use of these net proceeds, we will invest them
temporarily. We may, from time to time, engage in additional capital financings
as we deem appropriate based on our needs and prevailing market conditions.
These additional capital financings may include the sale of other notes and
securities.
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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
earnings to fixed charges and preferred stock dividend requirements for each of
the years in the five-year period ended December 31, 2000 and for the six
months ended June 30, 2001 are as follows:
Year Ended
December 31, Six Months
------------------------ Ended
1996 1997 1998 1999 2000 June 30, 2001
---- ---- ---- ---- ---- -------------
Ratio of Earnings to Fixed Charges:
Excluding interest on deposits................. 2.3 2.2 1.8 2.2 1.8 2.1
Including interest on deposits................. 1.5 1.5 1.4 1.6 1.5 1.6
Ratio of Earnings to Fixed Charges and Preferred
Stock Dividends:
Excluding interest on deposits................ 2.2 2.2 1.8 2.2 1.8 2.1
Including interests on deposits............... 1.5 1.5 1.4 1.6 1.5 1.6
The ratio of earnings to fixed charges has been computed by dividing (a)
earnings before income taxes and fixed charges less (b) equity in undistributed
earnings of unconsolidated subsidiaries by fixed charges.
The ratio of earnings to fixed charges and preferred stock dividends has
been computed by dividing (a) earnings before income taxes and fixed charges
less (b) equity in undistributed earnings of unconsolidated subsidiaries by
fixed charges plus preferred stock dividend requirements.
Fixed charges consist of:
. interest expense,
. 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.
DESCRIPTION OF THE CAPITAL SECURITIES
Capital securities will be issued by a Trust pursuant to its declaration of
trust. The terms of the capital securities will include those stated in the
declaration of trust and those made part of the declaration of trust by the
Trust Indenture Act. We have summarized the general terms and provisions of the
capital securities in this section. The prospectus supplement relating to the
offering of a specific series of capital securities will describe the specific
terms of those capital securities. The following summary is not intended to be
complete and is subject to, and qualified in its entirety by reference to, the
applicable declaration of trust, the Delaware Business Trust Act and the Trust
Indenture Act. You should read the Trust's declaration of trust for additional
information before you purchase any capital securities.
General
The declaration of trust authorizes the regular trustees of a Trust to issue
capital securities and common securities on behalf of the Trust. These trust
securities represent undivided beneficial interests in the assets of the Trust.
The capital securities are being sold to the public in
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this offering. The common securities are being sold to us. The common
securities rank equally, and payments will be made on the common securities on
a pro rata basis, with the capital securities, except as set forth under the
heading "--Subordination of Common Securities." A Trust may issue only one
series of capital securities and one series of common securities. The
declaration of trust does not permit the Trust to issue any securities other
than the trust securities or to incur any indebtedness.
Each series of capital securities will be issued in the amount, at the price
and on the terms described in the prospectus supplement relating to the
offering of those capital securities. These terms will mirror the terms of the
corresponding junior subordinated notes to be issued by us and purchased and
held by the Trust, as set forth in the applicable prospectus supplement.
The property trustee will hold title to the junior subordinated notes
purchased by a Trust for the benefit of the holders of the Trust's trust
securities. To the extent described under "Description of Guarantee," we will
guarantee the payment of distributions out of money held by the Trust, and
payments upon redemption of the capital securities or liquidation of the Trust
out of money held by the Trust. However, the guarantee will not cover payment
of distributions or amounts payable on redemption or liquidation when the Trust
does not have available funds on hand to make those payments. In any event of
non-payment by the Trust, holders of the capital securities have the remedies
described below under the heading ''--Declaration Events of of Default and Note
Payment Failures.''
Distributions
Distributions on each series of capital securities:
. will accumulate from the date of original issuance;
. will be cumulative;
. will be payable at the rates and on such dates as specified in the
applicable prospectus supplement.
The distribution rate and the distribution payment dates and other payment
dates for the capital securities will be the same as the interest rate and
interest payment dates and other payment dates on the corresponding junior
subordinated notes. When this prospectus and the applicable prospectus
supplement refer to any payment of distributions, the term "distribution"
includes any interest payable on unpaid distributions unless otherwise stated.
The amount of distributions payable for any period are computed on the basis
of a 360-day year of twelve 30-day months. The amount of distributions payable
for any period shorter than a full distribution period are computed on the
basis of the actual number of days elapsed in a 360-day year of twelve 30-day
months.
Payment of Distributions. Distributions on the capital securities will be
made to the extent that the applicable Trust has funds available in the Trust's
property account to pay the distributions. The sole source of funds available
to holders of capital securities are our payments on the corresponding junior
subordinated notes. If we do not make interest payments on our junior
subordinated notes, the property trustee will not have funds available to pay
distributions on the related capital securities. To the extent a Trust has
funds legally available for the payment of such distributions and cash
sufficient to make such payments, we guarantee the payment of distributions on
the basis set forth under "Description of Guarantee."
Distributions on capital securities are payable to the holders of such
securities as they appear on the register of the applicable Trust on the
relevant record dates. As long as the capital securities remain in book-entry
only form, the record date is one business day before the distribution payment
date. Unless any applicable laws and regulations and the provisions of the
declaration of trust state otherwise, each such payment will be made as
described under the heading "--Book-Entry Only Issuance--The Depository Trust
Company."
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If any capital securities are not in book-entry only form, the record date
is set forth in the applicable prospectus supplement. If a distribution payment
date is not a business day, then payment of the distribution will be made on
the next succeeding business day, without any interest or any other payment in
respect of any such delay. However, if the next succeeding business day is in
the next calendar year, payment of the distribution will be made on the
immediately preceding business day. Unless otherwise specified in the
applicable prospectus supplement, a "business day" is any day other than a day
on which federal or state banking institutions in New York, New York or
Charlotte, North Carolina are authorized or required by law or executive order
or regulation to remain closed.
Deferral of Distributions. We have the right, which we may exercise from
time to time, under the junior subordinated indenture to defer interest
payments on any series of junior subordinated notes for up to the number of
consecutive interest payment periods that we will specify in the applicable
prospectus supplement. We describe this right to defer interest payments on the
junior subordinated notes in more detail under the heading "Description of the
Junior Subordinated Notes--Option to Defer Interest Payments." As a consequence
of that deferral, distributions on the related capital securities would be
deferred by the applicable Trust during the same period. During an extension
period, the amount of distributions due to you would continue to accumulate
and, to the extent permitted by law, such deferred distributions will
themselves also accrue interest compounded at the applicable distribution rate.
Any deferred distributions and the interest accrued on those distributions will
be paid to you on the distribution payment date that follows the end of the
extension period.
Redemption of Capital Securities
A Trust will redeem its capital securities upon the maturity or prepayment
of the corresponding junior subordinated notes.
Once we receive any required prior approval by the Federal Reserve Board, we
have the right to prepay any series of junior subordinated notes:
. on or after a date specified in the applicable prospectus supplement, in
whole at any time or in part from time to time; or
. at any time, in whole but not in part, within 90 days after the occurrence
of a tax event, investment company event or capital treatment event (each
as described below);
in either case, as further described under the heading "Description of Junior
Subordinated Notes--Prepayment."
The applicable prospectus supplement may prescribe a method for extending
the maturity date of a series of junior subordinated notes which would, in
turn, extend the redemption date of the corresponding trust securities.
Upon the payment of a series of junior subordinated notes at the stated
maturity, the property trustee will apply the proceeds from the payment to
redeem all outstanding related trust securities at the redemption price. The
property trustee will apply the proceeds from a prepayment of junior
subordinated notes, whether in whole or in part, to redeem related trust
securities having an aggregate liquidation amount equal to the aggregate
principal amount of junior subordinated notes we have prepaid. The redemption
price of the trust securities will equal the aggregate liquidation amount of
such trust securities, plus accumulated but unpaid distributions to the
redemption date and the related amount of the premium, if any, paid by us upon
the concurrent payment or prepayment of such corresponding junior subordinated
notes. If less than all of any series of corresponding junior subordinated
notes are to be paid or prepaid on a redemption date, then the proceeds from
the payment or prepayment, including the amount of any premium, will be
allocated pro rata to the redemption of the related capital securities and
14
common securities based on the relative liquidation amounts of such classes,
except as set forth under the heading "--Subordination of Common Securities."
If less than all of a series of capital securities are to be redeemed, then
such capital securities will be redeemed on a ratable basis as described under
the heading "--Book-Entry Only Issuance--The Depository Trust Company."
Special Event Redemption. If a tax event, an investment company event or a
capital treatment event occurs and continues, and we obtain any required
regulatory approval, we may prepay the junior subordinated notes, in whole but
not in part, in cash within 90 days following the occurrence of that event.
This would cause a mandatory redemption of the related trust securities in
whole, but not in part, as described above.
"Tax event" means that:
. we have received an opinion of a nationally recognized independent tax
counsel experienced in such matters which states that, as a result of
any
(a)amendment to, or change (including any announced prospective change)
in, the laws or associated regulations of the United States or any
political subdivision or taxing authority of the United States; or
(b)official administrative pronouncement or judicial decision
interpreting or applying such laws or regulations, which amendment or
change is effective or such pronouncement or decision is announced on
or after the date of original issuance of the capital securities;
there is more than an insubstantial risk that interest payable on the
junior subordinated notes held by a Trust is not, or within 90 days of
the date of such amendment, change, pronouncement or decision will not
be, deductible, in whole or in part, by us for United States federal
income tax purposes; or
. the regular trustees of a Trust have been informed by a nationally
recognized independent counsel experienced in such matters that it
cannot deliver an opinion that states that the holders of the Trust's
trust securities will not recognize any gain or loss for United States
federal income tax purposes as a result of the dissolution of the Trust
and the distribution of the corresponding junior subordinated notes.
"Investment company event" means that a Trust has received an opinion of
counsel experienced in such matters which states that, as a result of the
occurrence of a change in law or regulation or a change in interpretation or
application of law or regulation by any legislative body, court, governmental
agency or regulatory authority, which change is in either case effective on or
after the date the Trust's capital securities are issued, the Trust is or will
be considered an investment company that is required to be registered under the
Investment Company Act of 1940, as amended.
"Capital treatment event" means our reasonable determination that, as a
result of
. any amendment to, or change (including any announced prospective change)
in, the laws or associated regulations of the United States or any
political subdivision of the United States, which is effective on or after
the date the related capital securities are issued, or
. any official or administrative pronouncement or action or judicial
decision interpreting or applying such laws or regulations that is
announced on or after the date the related capital securities are issued,
there is more than an insubstantial risk that we will not be able to treat the
capital securities as Tier 1 capital for purposes of the capital adequacy
guidelines of the Federal Reserve Board.
Redemption Procedures. A Trust may redeem fewer than all of its outstanding
capital securities only if all accrued and unpaid distributions have been paid
on all capital securities for all distribution periods terminating on or prior
to the redemption date.
15
If a Trust gives a notice of redemption of its capital securities, and we
have paid the property trustee a sufficient amount of cash in connection with
the prepayment or maturity of the corresponding junior subordinated notes,
then, by 12:00 noon, New York City time, on the redemption date, the property
trustee will deposit irrevocably with the depositary funds sufficient to pay
the applicable redemption price to the holders of such capital securities. The
Trust also will give the depositary irrevocable instructions and authority to
pay the redemption price to the holders of the capital securities. If such
capital securities are no longer in book-entry form, the property trustee, to
the extent funds are available, will pay the applicable redemption price by
check mailed to the addresses of the holders of such capital securities as they
appear in the register.
Once a Trust has given a redemption notice and the Trust deposits the
required funds, then:
. distributions with respect to the capital securities being redeemed will
cease to accrue; and
. all rights of the holders of such capital securities will cease, except
the right of the holders of such capital securities to receive the
redemption price on the redemption date, but without interest on such
redemption price.
If any date fixed for redemption of capital securities is not a business day,
then payment of the redemption price will be made on the next succeeding
business day, without any interest or any other payment in respect of any such
delay. However, if the next succeeding business day is in the next calendar
year, payment will be made on the immediately preceding business day.
If payment of the redemption price for any capital securities is improperly
withheld or refused and not paid either by the applicable Trust or by us
pursuant to the guarantee as described under "Description of Guarantee,"
distributions on such capital securities will continue to accrue at the then
applicable rate from the original redemption date to the date such redemption
price is actually paid. In this case, the actual payment date will be the
redemption date for purposes of calculating the redemption price.
We may, at any time and from time to time, purchase outstanding capital
securities by tender, in the open market or by private agreement.
Subordination of Common Securities
Payment of distributions on, the redemption price of and the liquidation
distribution in respect of, capital securities and common securities ordinarily
are made pro rata based on the aggregate liquidation amount of such capital
securities and common securities. However, upon any event of default under the
applicable declaration of trust, the rights of the holders of the common
securities to receive payment of periodic distributions and payments upon
liquidation and redemption and other payments are subordinated to the rights to
payment of the holders of the capital securities.
In the case of any event of default under a declaration of trust, we, as the
holder of the Trust's common securities, will be deemed to have waived such
events of default under the declaration of trust until such events of default
with respect to the Trust's capital securities have been cured, waived or
otherwise eliminated. Until all events of default with respect to the capital
securities have been so cured, waived or otherwise eliminated, the property
trustee will act solely on behalf of the holders of such capital securities and
not on our behalf, and only the holders of the capital securities will have the
right to direct the property trustee to act on their behalf.
Distribution of Junior Subordinated Notes
We have the right at any time to dissolve a Trust. Upon dissolution and
after satisfaction of the liabilities of creditors of the Trust as provided by
applicable law, the Trust will cause the junior subordinated notes held by the
Trust to be distributed to the holders of its capital securities in an
aggregate stated principal amount equal to the aggregate stated liquidation
amount of the capital securities then outstanding. This may require the prior
approval of the Federal Reserve Board.
16
After the date for any distribution of junior subordinated notes upon
dissolution of a Trust:
. the capital securities of the Trust will no longer be deemed to be
outstanding;
. the depositary or its nominee, as the record holder of the capital
securities, will receive a registered global certificate or certificates
representing the corresponding junior subordinated notes to be delivered
upon such distribution; and
. any certificates representing such capital securities not held by the
depositary or its nominee will be deemed to represent the corresponding
junior subordinated notes having an aggregate principal amount equal to
the aggregate stated liquidation amount of, with an interest rate
identical to the distribution rate of, such capital securities, and
bearing accrued and unpaid interest in an amount equal to the accrued and
unpaid distributions on such capital securities, until such certificates
are so surrendered for transfer or reissuance.
Liquidation Distribution Upon Dissolution
This prospectus describes any voluntary or involuntary dissolution,
winding-up or termination of a Trust as a "liquidation." If a liquidation of a
Trust occurs, after satisfaction of the Trust's liabilities to creditors, the
holders of the capital securities are entitled to receive, out of the assets of
the Trust, distributions equal to the aggregate liquidation amount of such
capital securities, plus accrued and unpaid distributions to the date of
payment. However, the holders of the capital securities will not receive such
distribution if Bank of America instead distributes pro rata to the holders of
the trust securities of a Trust the junior subordinated notes held by the
Trust, as described above under, ''--Distribution of Junior Subordinated
Notes."
If a liquidation distribution can be paid only in part because the Trust has
insufficient assets available to pay the distribution in full, then the amounts
payable directly by the Trust on the capital securities will be paid on a pro
rata basis. The holders of the Trust's common securities will be entitled to
receive distributions upon such liquidation on a ratable basis with the holders
of the capital securities, except in the limited circumstances described above
under the heading "--Subordination of Common Securities."
Pursuant to its declaration of trust, a Trust shall dissolve:
. on the expiration of its term;
. upon the bankruptcy of Bank of America;
. upon the filing of a certificate of dissolution or its equivalent with
respect to Bank of America;
. upon the consent of the holders of at least a majority in aggregate
liquidation amount of the trust securities voting together as a single
class to dissolve the Trust;
. upon the revocation of the charter of Bank of America and the expiration
of 90 days after the date of revocation without a reinstatement thereof;
. at the election of Bank of America at any time and upon the distribution
of the junior subordinated notes held by the Trust to the holders of the
corresponding capital securities;
. upon the entry of a decree of judicial dissolution of the holder of the
common securities, Bank of America or the Trust; or
. upon the redemption of all of the Trust's trust securities.
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Events of Default, Payment Failures, Waivers and Notice
An event of default under a Trust's declaration of trust occurs when there
is an event of default under the junior subordinated indenture. These events of
default are described below under the heading ''Description of Junior
Subordinated Notes--Events of Default, Waiver and Notice.'' If an event of
default occurs and continues, then under the declaration of trust the rights of
the holders of the common securities will be subordinate to the rights of the
holders of the capital securities to the extent described under the heading
''--Subordination of Common Securities.''
The holders of capital securities do not have any specific rights under the
declaration of trust upon the occurrence of an event of default. The property
trustee under the Trust holds the related junior subordinated notes issued
under the junior subordinated indenture, and if an event of default occurs and
continues, the property trustee, as the sole holder of the notes, will have the
right under the junior subordinated indenture to declare the principal of and
interest on the notes to be immediately due and payable.
The rights of holders of junior subordinated notes (including the property
trustee, as a holder), and in certain circumstances the holders of the capital
securities, upon an event of default under the junior subordinated indenture
are described below under the heading ''Description of Junior Subordinated
Notes--Events of Default, Waiver and Notice.''
A default by us in payment obligations with respect to the junior
subordinated notes does not constitute an event of default for purposes of the
junior subordinated indenture and, therefore, does not constitute an event of
default under the declaration of trust. However, if we fail to pay the
principal of, or premium, if any, or interest on, a series of junior
subordinated notes on the date such interest, principal or premium is otherwise
payable (or in the case of redemption, the redemption date) and such failure
continues (referred to as a ''note payment failure''), a holder of the related
capital securities may bring a direct action against us. A holder may institute
such a proceeding without first (1) directing the property trustee to enforce
the terms of the junior subordinated notes or (2) suing us to enforce the
property trustee's rights under the junior subordinated notes. In connection
with such a direct action, the holders of the common securities will be
subrogated to the rights of the holder of the capital securities to the extent
we make any payments. This means that if a holder of capital securities already
had received payment of a distribution that was the basis of the direct action,
then we, as holder of the common securities, will be entitled to payment of
that amount. The holders of capital securities will not be able to exercise
directly any other remedy available to holders of the junior subordinated
notes.
Under the declaration of trust, the holders of a majority in liquidation
amount of capital securities may waive events of default with respect to the
capital securities. If the underlying event of default under the junior
subordinated indenture may not be waived, then the event of default under the
declaration of trust may not be waived. Furthermore, if the waiver of the
underlying event of default under the indenture requires the consent or vote of
more than a majority in principal amount of the corresponding junior
subordinated notes (referred to as a "super majority"), then only the same
super majority of holders of the capital securities may waive the event of
default under the declaration of trust.
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A waiver of an event of default under the junior subordinated indenture by
the property trustee, as holder of the junior subordinated notes, constitutes a
waiver of the corresponding event of default under the declaration of trust. In
addition, a waiver of an event of default with respect to capital securities
under the declaration of trust waives the event of default with respect to the
common securities for all purposes under the declaration of trust, to the
extent described under the heading "--Subordination of Common Securities."
The property trustee is required to notify all holders of the capital
securities of any events of default or note payment failures.
We and each Trust are required to file annually with the property trustee an
officers' certificate as to our respective compliance with all conditions and
covenants under the applicable declaration of trust.
Voting Rights
The holders of the capital securities have no voting rights, except as
described below and except as provided under the heading "Description of
Guarantee--Amendment and Assignment" and as otherwise required by law and the
declaration of trust.
The holders of a majority in aggregate liquidation amount of the capital
securities have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the property trustee or exercising
any trust or power of the property trustee under the declaration of trust,
including the right to direct the property trustee, as holder of the junior
subordinated notes, to:
(1)exercise the remedies available to it under the junior subordinated
indenture as the holder of the junior subordinated notes;
(2)waive any past indenture event of default that is waivable under the
junior subordinated indenture;
(3)exercise any right to rescind or annul a declaration that the principal
of all the related series of junior subordinated notes shall be due and
payable; or
(4)consent to any amendment, modification or termination of the junior
subordinated indenture where such consent is required.
Except for directing the time, method and place of conducting a proceeding for
a remedy available to the property trustee, the property trustee will not take
any actions at the direction of the holders of capital securities unless the
property trustee receives an opinion of tax counsel to the effect that, as a
result of such action, the Trust will not be classified as other than a grantor
trust for United States federal income tax purposes.
Where a consent or action under the junior subordinated indenture requires
the consent or act of holders of a super majority of the junior subordinated
notes, then only a super majority of holders of the capital securities may
direct the property trustee to give such consent or take such action.
If the property trustee's consent is required under the junior subordinated
indenture for any amendment, modification or termination of the junior
subordinated indenture or the related series of junior subordinated notes, the
property trustee is required to request the written direction of the holders of
the trust securities, and the property trustee will vote as directed by a
majority in liquidation amount of the trust securities voting together as a
single class. Where any amendment, modification or termination under the junior
subordinated indenture requires the consent of a super majority, however, the
property trustee may only give such consent at the direction of the holders of
the same super majority of the holders of the trust securities. The property
trustee is not required to take any such action in accordance with the
directions of the holders of the trust securities unless the property trustee
has obtained a tax opinion to the effect described above.
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The holders of the capital securities are entitled to vote on certain
modifications or amendments to the declaration of trust, as more particularly
described below under "--Modification of the Declaration of Trust."
Any required approval or direction of holders of capital securities may be
given at a separate meeting of holders of capital securities convened for such
purpose, at a meeting of all of the holders of trust securities or by written
consent. The regular trustees will mail to each holder of record of capital
securities a notice of any meeting at which such holders are entitled to vote,
or of any matter upon which action by written consent of such holders is to be
taken. Each such notice will include the following information:
. the date of such meeting or the date by which such action is to be taken;
. a description of any resolution proposed for adoption or for which written
consent is sought; and
. instructions for the delivery of proxies or consents.
No vote or consent of the holders of capital securities is required for a
Trust to redeem and cancel capital securities or distribute junior subordinated
notes in accordance with the Trust's declaration of trust.
Despite the fact that holders of capital securities are entitled to vote or
consent under the circumstances described above, any of the capital securities
that are owned by us or any entity directly or indirectly controlling or
controlled by, or under direct or indirect common control with, us will not be
entitled to vote or consent. Instead, these capital securities will be treated
for such purpose as if they were not outstanding.
The procedures by which holders of capital securities may exercise their
voting rights are described under the heading "--Book-Entry Only Issuance--The
Depository Trust Company."
Modification of the Declaration Of Trust
A declaration of trust may be modified and amended if approved by a majority
of the regular trustees, and in certain circumstances, the property trustee and
the Delaware trustee. If, however, any proposed amendment provides for, or the
regular trustees otherwise propose to effect:
(1)any action that would adversely affect the preferences or special rights
of the trust securities, whether by way of amendment to the declaration
of trust or otherwise, or
(2)the dissolution, winding-up or termination of the Trust other than
pursuant to the terms of the declaration of trust,
then the holders of the trust securities voting together as a single class will
be entitled to vote on such amendment or proposal. Such amendment or proposal
shall not be effective except with the approval of holders of at least a
majority in liquidation amount of the trust securities affected thereby. If,
however, any amendment or proposal referred to in clause (1) above would
adversely affect only the capital securities or only the common securities,
then only holders of the affected class will be entitled vote on such amendment
or proposal, and the amendment or proposal shall not be effective except with
the approval of holders of a majority in liquidation amount of such class of
trust securities.
Notwithstanding the foregoing, no amendment or modification may be made to
the declaration of trust if that amendment or modification would:
. cause the Trust to be classified for United States federal income tax
purposes as other than a grantor trust;
20
. reduce or otherwise adversely affect the powers of the property trustee;
or
. cause the Trust to be deemed an "investment company" required to be
registered under the Investment Company Act of 1940.
Mergers or Consolidations of the Trusts
A Trust may not consolidate or merge with or into, or be replaced by, or
convey, transfer or lease its properties and assets substantially as an
entirety, to us or any other person, except as described below. Such Trust may,
with the consent of the regular trustees but without the consent of the holders
of the applicable trust securities, the property trustee or the Delaware
trustee, consolidate or merge with or into, or be replaced by, a trust
organized as such under the laws of any state if:
. the successor entity, if not the Trust, either:
. expressly assumes all of the obligations of such Trust with respect to
the trust securities, or
. substitutes for the trust securities other securities having
substantially the same terms as the trust securities, so long as the
successor securities rank the same as the trust securities in priority
with respect to distributions and payments upon liquidation, redemption
and otherwise;
. we, as issuer of the junior subordinated notes, expressly acknowledge a
trustee of such successor entity possessing the same powers and duties as
the property trustee as the holder of the corresponding junior
subordinated notes;
. the capital securities or any successor securities are listed, or any
successor securities will be listed upon notification of issuance, on any
national or international securities exchange or with another
organization, if any, on which the capital securities are then listed or
quoted;
. such merger, consolidation or replacement does not cause the capital
securities, including any successor securities, to be downgraded by any
nationally recognized statistical rating organization;
. such merger, consolidation or replacement does not adversely affect the
rights, preferences and privileges of the holders of the trust securities,
including any successor securities, in any material respect, other than in
connection with any dilution of the holders' interest in the new entity;
. such successor entity has a purpose identical to that of such Trust;
. prior to such merger, consolidation or replacement, we have received an
opinion of counsel to the Trust to the effect that:
. such merger, consolidation or replacement does not adversely affect the
rights, preferences and privileges of the holders of the trust
securities, including any successor securities, in any material respect,
other than in connection with any dilution of the holders' interest in
the new entity;
. following such merger, consolidation or replacement, neither the Trust
nor such successor entity will be required to register as an investment
company under the Investment Company Act of 1940; and
. following such merger, consolidation or replacement, the Trust or the
successor entity will continue to be classified as a grantor trust for
United States federal income tax purposes; and
21
. we guarantee the obligations of such successor entity under the successor
securities at least to the extent provided by the guarantees of the trust
securities.
Notwithstanding the foregoing, a Trust may not, except with the consent of
holders of 100% in liquidation amount of its trust securities, consolidate,
merge with or into, or be replaced by any other entity or permit any other
entity to consolidate, merge with or into, or replace it if such consolidation,
merger or replacement would cause the Trust or the successor entity to be
classified as other than a grantor trust for United States federal income tax
purposes.
Book-Entry Only Issuance--The Depository Trust Company
Description of the Global Certificates. The capital securities will be
issued only in book-entry form and shall be represented by one or more global
certificates. DTC will act as securities depositary for the capital securities,
and the global certificates will be registered in the name of Cede & Co. (DTC's
nominee).
DTC Procedures. 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
corporation" within the meaning of the New York Uniform Commercial Code, and a
"clearing agency" registered pursuant to the provisions of Section 17A of the
Securities Exchange Act. DTC holds securities that its participants deposit
with DTC. DTC also facilitates the settlement among participants of securities
transactions, such as transfers and pledges, in deposited securities through
electronic computerized book-entry changes in participants' accounts, thereby
eliminating the need for physical movement of securities certificates.
Participants in DTC include securities brokers and dealers, banks, trust
companies, clearing corporations and certain other organizations. DTC is owned
by a number of its participants and by the New York Stock Exchange, the
American Stock Exchange LLC, and the National Association of Securities
Dealers, Inc. Access to the DTC system is also available to others such as
securities brokers and dealers, banks and trust companies that clear through or
maintain a custodial relationship with a participant, either directly or
indirectly. The rules applicable to DTC and its participants are on file with
the SEC.
Purchases of the capital securities within the DTC system must be made by or
through participants, which will receive a credit for the capital securities on
DTC's records. The ownership interest of each beneficial owner of the capital
securities is in turn to be recorded on the participants' and indirect
participants' records. Beneficial owners will not receive written confirmation
from DTC of their purchases, but beneficial owners are expected to receive
written confirmations providing details of the transactions, as well as
periodic statements of their holdings, from the participants or indirect
participants through which the beneficial owners purchase capital securities.
Transfers of ownership interest in the capital securities are to be
accomplished by entries made on the books of participants and indirect
participants acting on behalf of beneficial owners. Beneficial owners will not
receive certificates representing their ownership interests in the capital
securities, except in the event that use of the book-entry system for the
capital securities is discontinued.
DTC has no knowledge of the actual beneficial owners of the capital
securities. DTC's records reflect only the identity of the participants to
whose accounts the capital securities are credited, which may or may not be the
beneficial owners. The participants and indirect participants will remain
responsible for keeping account of their holdings on behalf of their customers.
So long as DTC, or its nominee, is the registered owner or holder of a
global certificate, DTC or such nominee, as the case may be, will be considered
the sole owner or holder of the capital securities for all purposes under the
applicable declaration of trust and the capital securities. No beneficial owner
of an interest in a global certificate will be able to transfer that interest
except in accordance with DTC's applicable procedures, in addition to those
provided for under the applicable declaration of trust.
22
DTC has advised us that it will take any action permitted to be taken by a
holder of the capital securities, including the presentation of the capital
securities for exchange as described below, only at the direction of one or
more participants to whose account the DTC interests in the global certificates
are credited and only in respect of such portion of the aggregate liquidation
amount of the capital securities as to which the participant or participants
has or have given the direction. Also, if there is an event of default under
the capital securities, DTC will exchange the global certificates for
certificated securities, which it will distribute to its participants in
accordance with its customary procedures.
Conveyance of notices and other communications by DTC to participants, by
participants to indirect participants, and by participants and indirect
participants to beneficial owners will be governed by arrangements among them,
subject to any statutory or regulatory requirements as may be in effect from
time to time.
Redemption notices in respect of the capital securities held in book-entry
form will be sent to Cede & Co. If less than all of the capital securities are
being redeemed, DTC will determine by lot the amount of interest of each
participant to be redeemed.
Although voting with respect to the capital securities is limited, in those
cases where a vote is required, neither DTC nor Cede & Co. will itself consent
or vote with respect to the capital securities. Under its usual procedures, DTC
would mail an omnibus proxy to the applicable Trust as soon as possible after
the record date. The omnibus proxy assigns Cede & Co.'s consenting or voting
rights to those participants to whose accounts the capital securities are
allocated on the record date identified in a listing attached to the omnibus
proxy.
Distributions on the capital securities held in book-entry form will be made
to DTC in immediately available funds. DTC's practice is to credit
participants' accounts on the relevant payment date in accordance with their
respective holdings shown on DTC's records unless DTC has reason to believe
that it will not receive payments on the payment date. Payments by participants
and indirect participants to beneficial owners will be governed by standing
instructions and customary practices and will be the responsibility of the
participants and indirect participants and not of DTC, or any other party,
subject to any statutory or regulatory requirements as may be in effect from
time to time. Payment of any distributions to DTC is the responsibility of the
applicable Trust, disbursement of those payments to participants is the
responsibility of DTC, and disbursement of those payments to the beneficial
owners is the responsibility of participants and indirect participants.
Normally, a beneficial owner of an interest in a global certificate is not
entitled to receive physical delivery of the capital securities. Accordingly,
each beneficial owner must rely on the procedures of DTC to exercise any rights
under the capital securities.
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in the global certificates among participants of DTC,
DTC is under no obligation to perform or continue to perform such procedures,
and such procedures may be discontinued at any time. Neither Bank of America
nor any Trust will have any responsibility for the performance by DTC or its
participants or indirect participants under the rules and procedures governing
DTC. DTC may discontinue providing its services as securities depositary with
respect to the capital securities at any time by giving notice to the
applicable Trust. If a successor securities depositary is not obtained, the
capital securities certificates are required to be printed and delivered to the
property trustee. Additionally, the applicable Trust, with our consent, may
discontinue use of the system of book-entry transfers through DTC or any
successor depositary. In each of the above circumstances, we will appoint a
paying agent with respect to the capital securities.
The laws of some jurisdictions require that certain purchasers of securities
take physical delivery of securities in definitive form. These laws may impair
the ability to acquire, hold or transfer beneficial interests in the global
capital securities as represented by a global certificate.
23
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
responsibility for the accuracy of the information.
Registrar, Transfer Agent and Paying Agent
Unless otherwise specified in the applicable prospectus supplement, The Bank
of New York will act as registrar, transfer agent and paying agent for the
capital securities.
Registration of transfers of capital securities will be effected without
charge by or on behalf of the applicable Trust, but upon payment of, and the
giving of any indemnity as the Trust or we may require with respect to, any tax
or other governmental charges that may be imposed in connection with any
transfer or exchange. A Trust may not register or cause to be registered the
transfer of its capital securities after such capital securities have been
called for redemption.
Information Concerning the Property Trustee
Other than during the occurrence and continuance of an event of default
under a declaration of trust, the property trustee undertakes to perform only
the duties that are specifically set forth in the applicable declaration of
trust. After an event of default under a declaration of trust, the property
trustee must exercise the same degree of care and skill in the exercise of its
rights and powers as a prudent person would exercise in the conduct of his or
her own affairs under the circumstances. Subject to this provision, the
property trustee is under no obligation to exercise any of the rights or powers
vested in it by the applicable declaration of trust at the request of any
holder of capital securities unless such holder offers indemnity reasonably
satisfactory to the property trustee against the costs, expenses and
liabilities that might be incurred. However, the holders of the capital
securities will not be required to offer any indemnity if such holders, by
exercising their voting rights, direct the property trustee to take any action
following an event of default under the declaration of trust.
We and certain of our affiliates have from time to time maintained deposit
accounts and conducted other banking transactions with the property trustee and
its affiliated entities in the ordinary course of business. The property
trustee also serves as trustee for certain series of our outstanding
indebtedness under other indentures.
Governing Law
The declarations of trust will be governed by and construed in accordance
with the internal laws of the State of Delaware.
24
DESCRIPTION OF THE JUNIOR SUBORDINATED NOTES
We may issue junior subordinated notes from time to time in one or more
series under a base indenture between us and The Bank of New York, as indenture
trustee, and a supplement to the base indenture in the form of a supplemental
indenture or a resolution of our Board of Directors or of a special committee
formed by our Board of Directors. With respect to any particular series of
junior subordinated notes, the term "indenture" or "junior subordinated
indenture" used in this prospectus is deemed to include any such supplement to
the base indenture with respect to that series. The terms of the junior
subordinated notes will include those stated in the junior subordinated
indenture and those made part of that indenture by reference to the Trust
Indenture Act.
The Trusts will invest the proceeds from the issuance and sale of the trust
securities in the junior subordinated notes. We have summarized the general
terms and provisions of the notes in this section. The prospectus supplement
for a specific series of capital securities also describes the specific terms
of the related series of junior subordinated notes offered through that
prospectus supplement. The following summary is not intended to be complete and
is subject to, and qualified in its entirety by reference to, the junior
subordinated indenture and the Trust Indenture Act. You should read the junior
subordinated indenture for additional information before you purchase any
capital securities. The base indenture and the form of supplemental indenture
are filed as exhibits to the registration statement of which this prospectus is
a part.
General
The junior subordinated notes are our direct unsecured obligations. The
notes may be issued from time to time in one or more series we establish under
the junior subordinated indenture and are subordinated as described below under
the heading "--Subordination." Neither the junior subordinated indenture nor
any other agreement limits the principal amount of junior subordinated notes or
other indebtedness that we may issue.
Under circumstances involving the dissolution of a Trust, the related series
of junior subordinated notes may be distributed to the holders of the trust
securities in liquidation of that Trust, provided that any required regulatory
approval is obtained. Only one series of junior subordinated notes will be
issued to a Trust or the property trustee of the Trust in connection with the
issuance of trust securities by the Trust.
The prospectus supplement relating to the particular series of junior
subordinated notes will include specific terms relating to the offering. These
terms will include some or all of the following:
. the title and type of the notes;
. the aggregate principal amount of the notes of that series;
. the percentage of their principal amount at which the notes will be
issued;
. the date or dates the notes mature and the method for determining a
maturity date, as well as any right to shorten or extend any maturity
date;
. with respect to interest:
. the interest rate or rates on the notes, which may be fixed or variable,
or the method used to calculate that interest;
. the date interest will begin to accrue;
. the record and interest payment dates for the notes; and
. the right to extend the interest payment periods and the duration of
such extension;
25
. the place or places where:
. we can make payments on the notes;
. the notes can be surrendered for registration of transfer or exchange;
and
. notices and demands can be given to us relating to the notes and under
the junior subordinated indenture;
. any optional redemption provisions that would permit us or the holders of
notes to elect redemption of the notes before their final maturity;
. any provisions for a sinking purchase or analogous fund;
. the form of the notes and the terms and provisions relating to such form;
and
. any other specific terms of the notes.
When we use the term "holder" in this prospectus as to a registered note, we
mean the person in whose name the note is registered in the security register.
Subordination
The junior subordinated notes are subordinate to all of our existing and
future Senior Obligations, as defined below. This means that no payment of
principal (including redemption payments), premium, if any, or interest on the
junior subordinated notes may be made if:
. any principal, premium, interest or any other payment due on any of our
Senior Obligations has not been paid when due and such default continues;
or
. the maturity of any of our Senior Obligations has been accelerated because
of a default.
Upon any distribution of our assets to creditors upon any dissolution,
winding-up, liquidation or reorganization of Bank of America, whether voluntary
or involuntary or in bankruptcy, insolvency, receivership or similar
proceedings, all amounts due on all Senior Obligations must be paid in full
before the holders of junior subordinated notes are entitled to receive or
retain any payment.
If we violate the junior subordinated indenture by making a payment to
holders of the junior subordinated notes in violation of the provisions
described above, then the holders of the junior subordinated notes will be
deemed to have received the payments or distributions in trust for the benefit
of, and will have to pay or transfer the payments to, the holders of the Senior
Obligations outstanding at the time.
Because of the subordination, if we become insolvent, holders of Senior
Obligations may receive more, ratably, and holders of the junior subordinated
notes having a claim pursuant to those notes may receive less, ratably, than
our other creditors. This type of subordination will not prevent an event of
default from occurring under the junior subordinated indenture in connection
with the junior subordinated notes.
The rights of the holders of the junior subordinated notes are subrogated to
the rights of holders of our Senior Obligations to receive payments or
distributions until the junior subordinated notes are paid in full. Such Senior
Obligations shall continue to be Senior Obligations and be entitled to the
benefits of the subordination provisions regardless of any amendment,
modification or waiver of any term of such Senior Obligations.
26
Except as described below, the term "Senior Obligations" means, with respect
to Bank of America:
(1)the principal, any premium and interest with respect to
. indebtedness of Bank of America for money borrowed (whether or not
such indebtedness is denominated as senior or subordinated); and
. indebtedness evidenced by securities, debentures, bonds or other
similar instruments (whether or not denominated as senior or
subordinated) issued by Bank of America;
(2)all capital lease obligations of Bank of America;
(3)all obligations of Bank of America issued or assumed as the deferred
purchase price of property, all conditional sale obligations of Bank of
America and all obligations of Bank of America under any title retention
agreement (but excluding trade accounts payable arising in the ordinary
course of business);
(4)all obligations of Bank of America for the reimbursement on any letter
of credit, banker's acceptance or similar credit transaction;
(5)all obligations of Bank of America arising from off-balance sheet
guarantees by Bank of America and direct credit substitutes and
obligations of Bank of America associated with derivative products such
as interest and foreign exchange rate contracts, commodity contracts,
swap agreements (including interest rate and foreign exchange swap
agreements), cap agreements, floor agreements, collar agreements,
interest rate agreements, foreign exchange rate agreements, options,
commodity futures contracts and commodity option contracts;
(6)all obligations and financial instruments of the type referred to in
clauses (1)-(5) above of other persons for the payment of which Bank of
America is responsible or liable as obligor, guarantor or otherwise; and
(7)all obligations of the type referred to in clauses (1)-(6) above of
other persons secured by any lien on any property or asset of Bank of
America (whether or not such obligation is assumed by Bank of America).
However, the term "Senior Obligations" does not include:
. any such indebtedness that by its terms is subordinated to or ranks
equally with the junior subordinated notes; and
. any indebtedness between or among Bank of America or our affiliates,
including all other debt securities and guarantees in respect of those
debt securities, issued to (a) any other Trust or a trustee of such
Trust or (b) any other trust, or a trustee of such trust, partnership
or other entity affiliated with Bank of America that is a financing
vehicle of Bank of America (a "financing entity") in connection with
the issuance by such financing entity of capital securities or other
securities that rank equally with, or junior to, the capital
securities.
Additional Interest
If at any time a Trust is required to pay any taxes, duties, assessments or
governmental charges of whatever nature, other than withholding taxes, imposed
by the United States or any other domestic taxing authority, then we will be
required to pay additional interest on the related junior subordinated notes.
The amount of any additional interest will be an amount sufficient so that the
net amounts received and retained by the Trust and the property trustee after
paying any such taxes, duties, assessments or other governmental charges will
be equal to the amounts that such Trust would have received and retained had no
such taxes, duties, assessments or other governmental charges been imposed.
This means that the Trust will be in the same position it would have been in if
it did not have to pay such taxes, duties, assessments or other charges.
27
Form, Exchange, Registration, Transfer and Payment
The applicable prospectus supplement will identify the denominations in
which the junior subordinated notes will be issued. No service charge will be
made for any transfer or exchange of the junior subordinated notes. However,
either we or the debt trustee may require payment of a sum sufficient to cover
any tax, fee or other government charge that is payable in connection with any
such transfer or exchange.
Unless we state otherwise in the applicable prospectus supplement,
principal, premium, if any, or any interest will be payable, and the junior
subordinated notes may be surrendered for payment, transfer or exchange, at the
offices of The Bank of New York, as paying and authenticating agent. However,
at our option we may pay interest by check mailed to the person entitled to
such interest at such person's address as it appears on the security register.
Option to Defer Interest Payments
We have the right under the junior subordinated indenture to defer interest
payments on any series of the junior subordinated notes from time to time by
extending the interest payment period for up to a number of consecutive
interest payment periods that we will specify in the applicable prospectus
supplement. We refer to this period as an "extension period." No extension
period may extend beyond the stated maturity of the corresponding junior
subordinated notes. At the end of an extension period, we shall pay all
interest then accrued and unpaid, including any additional interest as
described under the heading "--Additional Interest," together with compounded
interest at the rate specified for the junior subordinated notes to the extent
permitted by law. Any special considerations applicable to any such notes will
be described in the applicable prospectus supplement.
Unless otherwise specified in the applicable prospectus supplement, if we
exercise our deferral right, then during any extension period, we may not
engage in certain transactions with respect to our capital stock, as more
particularly described below under the heading "--Certain Covenants of Bank of
America".
We may extend an extension period prior to the end of such extension period,
so long as the period as extended, does not exceed the maximum number of
consecutive interest payment periods we specify in the prospectus supplement.
In addition, following the termination of an extension period and the payment
of all deferred distributions and accrued interest, we may begin a new
extension period, which must comply with the above requirements. No interest
shall be due and payable during an extension period, except at the end of such
period. However, we may prepay at any time all or any portion of the interest
accrued during an extension period.
Prepayment
Unless otherwise specified in the applicable prospectus supplement, the
junior subordinated notes are not subject to any sinking fund and are not
redeemable at the option of the holder. Unless otherwise specified in the
applicable prospectus supplement, we may, at our option and subject to receipt
of prior approval by the Federal Reserve Board, if required, prepay the junior
subordinated notes of any series in whole at any time or in part from time to
time. If the junior subordinated notes of any series may be prepaid only on or
after a specified date or upon the satisfaction of additional conditions, the
applicable prospectus supplement will specify such date or describe such
conditions. Except as otherwise specified in the applicable prospectus
supplement, the prepayment price for any junior subordinated note so prepaid
will equal 100% of the principal amount of such junior subordinated note plus
accrued and unpaid interest to the redemption date.
28
Except as otherwise specified in the applicable prospectus supplement, we
may, at our option and subject to receipt of prior approval by the Federal
Reserve Board, if required, prepay a series of junior subordinated notes in
whole, but not in part, at any time within 90 days after the occurrence of a
tax event, investment company event or capital treatment event, each as
described under the heading "Description of Capital Securities--Redemption of
Capital Securities" above, at a prepayment price equal to 100% of the principal
amount of such junior subordinated notes then outstanding plus accrued and
unpaid interest to the prepayment date.
Notice of any prepayment will be mailed at least 30 days but not more than
60 days before the redemption date to each holder of junior subordinated notes
to be prepaid as it appears in the security register. Unless we default in
payment of the prepayment price, on and after the prepayment date, interest
will cease to accrue on such junior subordinated notes or the portions of such
notes called for prepayment.
Certain Covenants of Bank of America
If (1) we shall have exercised our right to defer payments of interest on a
series of junior subordinated notes, as described under the heading "--Option
to Defer Interest Payments," or (2) junior subordinated notes of a series are
held by a Trust and remain outstanding and either:
. there shall have occurred and be continuing an event of default under the
Junior Subordinated Indenture, or any note payment failure; or
. we shall be in default relating to our payment of any obligations under
the guarantees relating to that Trust;
then we shall not:
. declare or pay any dividend on, make any distribution with respect to, or
redeem, purchase, acquire or make a liquidation payment with respect to,
any shares of our capital stock or make any guarantee payment with respect
to the foregoing (other than (1) purchases or acquisitions of our shares
of common stock in connection with the satisfaction by us of our
obligations under any employee benefit plans, (2) as a result of a
reclassification of our capital stock or the exchange or conversion of one
class or series of our capital stock for another class or series of our
capital stock or (3) the purchase of fractional interests in shares of our
capital stock pursuant to an acquisition or the conversion or exchange
provisions of our capital stock or the security being converted or
exchanged); or
. make any payment of interest, principal or premium, if any, on or repay,
repurchase or redeem any debt securities (including guarantees) issued by
us that rank equally with or junior to the junior subordinated notes.
In addition, if junior subordinated notes are issued to a Trust or a trustee
of the Trust in connection with the issuance of the Trust's trust securities,
then as long as such trust securities remain outstanding, we will:
. maintain 100% direct or indirect ownership of the common securities of
that Trust, unless a permitted successor of Bank of America succeeds to
our ownership of such common securities;
. use our reasonable efforts to cause that Trust to:
. remain a statutory business trust, except in connection with the
distribution of corresponding junior subordinated notes to the holders
of the trust securities in liquidation of such Trust, the redemption of
all of the trust securities of the Trust, or certain mergers,
consolidations or amalgamations, each as permitted by the Trust's
declaration of trust; and
29
. otherwise continue not to be treated as an association taxable as a
corporation or partnership for United States federal income tax
purposes; and
. use our reasonable efforts to cause each holder of such trust securities
to be treated as owning an undivided beneficial interest in the
corresponding junior subordinated notes.
Limitation on Mergers and Sales of Assets
The junior subordinated indenture generally permits a consolidation or
merger between us and another entity. It also permits the sale or transfer by
us of all or substantially all of our property and assets. These transactions
are permitted if:
. the resulting or acquiring entity, if other than us, is organized and
existing under the laws of the United States or any state or the District
of Columbia and expressly assumes all of our obligations under the junior
subordinated indenture and the respective guarantees; and
. immediately after the transaction, we or any successor company are not in
default in the performance of any covenant.
Upon any such consolidation, merger or transfer, the resulting or acquiring
entity will be substituted for us in such indenture with the same effect as if
it had been an original party to the indenture. As a result, such successor
entity may exercise our rights and powers under the junior subordinated
indenture, and we will be released from all our liabilities and obligations
under such indenture and under the junior subordinated notes.
Events of Default, Waiver and Notice
The junior subordinated indenture provides that the following events, if
they have occurred and are continuing, are events of default relating to a
series of junior subordinated notes:
. certain events involving the bankruptcy, insolvency or reorganization of
Bank of America; or
. as long as the junior subordinated notes are held by a Trust or a trustee
of the Trust, the voluntary or involuntary dissolution, winding up or
other termination of that Trust, except in connection with the (1)
distribution of the junior subordinated notes to the holders of the
Trust's trust securities in liquidation of their interests in the Trust,
(2) the redemption of all of the outstanding trust securities of the
Trust, or (3) certain mergers, consolidations or amalgamations, each as
permitted by the Trust's declaration of trust.
A default by us in payment obligations with respect to the junior subordinated
notes or under the related guarantees does not constitute an event of default
for purposes of the junior subordinated indenture. The holders of capital
securities have certain rights to sue us directly upon a note payment failure,
as described under the heading "Description of the Capital Securities--Events
of Default, Note Payment Failures, Waiver and Notice."
If an event of default under the junior subordinated indenture occurs and
continues, either the indenture trustee or the holders of at least 25% in
aggregate principal amount of the outstanding junior subordinated notes of that
series may declare the principal of and all accrued but unpaid interest on such
junior subordinated notes to be due and payable immediately. The holders of a
majority in aggregate outstanding principal amount of such series of junior
subordinated notes (or all series, as applicable) may annul such declaration in
certain circumstances and waive such default. As long as the series of notes is
held by a property trustee under a Trust for the benefit of the Trust's trust
securities, the property trustee, as sole holder of the notes, will have the
right to exercise these rights and may be directed in such exercise by the
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holders of the capital securities. See "Description of the Capital
Securities--Events of Default, Note Payment Failures, Waiver and Notice" and
"--Voting Rights."
Prior to a declaration of acceleration, the holders of a majority in
aggregate principal amount of such series of junior subordinated notes
generally may waive on behalf of the holders of all such notes any default or
event of default under the junior subordinated indenture other than:
. a default in the payment of principal of, premium, if any, or interest on
such junior subordinated notes;
. a default in respect of covenants that cannot be modified or amended
without the consent of each holder of such junior subordinated notes
affected; or
. a default in respect of certain other covenants described above under the
heading "--Certain Covenants of Bank of America."
However, as long as the notes are held by a property trustee under a Trust for
the benefit of the holders of the Trust's trust securities, any such waiver or
modification requires the consent of the holders of at least a majority in
liquidation preference (or, if the waiver or modification requires the consent
of each holder of junior subordinated notes, then each holder) of the related
trust securities.
The holders of a majority in aggregate principal amount of the outstanding
junior subordinated notes of any and all series affected generally shall have
the right to direct the time, method and place of conducting any proceeding for
any remedy available to or exercising any power of the indenture trustee under
the junior subordinated indenture. However, the holders of such notes must
offer to the indenture trustee reasonable indemnity against expenses and
liabilities. As long as a series of notes is held by a property trustee under a
Trust for the benefit of the Trust's trust securities, the property trustee, as
sole holder of the notes, will have the right to exercise these rights and may
be directed in such exercise by the holders of the capital securities. See
"Description of the Capital Securities--Voting Rights."
Subject to the subordination provisions, described under the heading
"--Subordination," the right of any holder of junior subordinated notes
(including the property trustee) to receive payment of the principal of and
premium, if any, and interest on such junior subordinated notes on or after the
due dates therefor, or to institute suit for the enforcement of any such
payment provisions, shall not be impaired or affected without the consent of
such holder.
An event of default under the junior subordinated indenture is an event of
default under the related declaration of trust, and the waiver of an event of
default under the indenture is a waiver under the related declaration of trust.
These provisions are more particularly described under the heading "Description
of the Capital Securities--Events of Default, Note Payment Failures, Waiver and
Notice."
The indenture trustee is required to notify all holders of the junior
subordinated notes of any events of default or note payment failures.
We are required to file an officers' certificate with the debt trustee each
year that states, to the knowledge of the certifying officer, whether or not
any defaults exist under the terms of the junior subordinated indenture.
Modification of Junior Subordinated Indenture
Under the junior subordinated indenture, our rights and obligations and the
rights of holders of the junior subordinated notes may be modified or amended
with the consent of the holders of at least a majority in aggregate principal
amount of the outstanding junior subordinated notes of all
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series affected by the modification or amendment, acting as one class. However,
no such modification or amendment may, without the consent of the holders of
each junior subordinated note affected thereby:
. extend the fixed maturity of any junior subordinated note, except as set
forth in the terms of the particular series of junior subordinated notes;
. reduce the rate or extend the time of payment of interest on such junior
subordinated note;
. reduce the principal amount of or any premium on any junior subordinated
note;
. reduce any amount payable on redemption of any junior subordinated note;
. make the principal of, or interest or premium on, such junior subordinated
notes payable in any coin or currency other than that provided in such
junior subordinated notes;
. impair or affect the right of any holder of such junior subordinated notes
to institute suit for the payment of such notes or the right of
prepayment, if any, at the option of the holder; or
. reduce the percentage of outstanding junior subordinated notes required to
consent to a modification or amendment of the junior subordinated
indenture.
If the junior subordinated notes are held by a Trust or the property trustee
of such Trust, no modification of the junior subordinated indenture will be
effective until the holders of a majority in liquidation preference of the
Trust's trust securities have consented to such modification. If the consent of
the holder of each outstanding junior subordinated note is required for such
modification, such modification shall not be effective until each holder of
related trust securities has consented to such modification.
We and the indenture trustee may enter into, without the consent of any
holder of junior subordinated notes, any supplemental indenture under the
junior subordinated indenture, to create any new series of junior subordinated
notes or make any change in the indenture that does not materially adversely
affect the rights of any holder of junior subordinated notes.
Defeasance and Discharge
The junior subordinated indenture provides that, if no event of default
under the indenture has occurred and is continuing, we (a) will be discharged
from our obligations with respect to a series of junior subordinated notes and
(b) need not comply with certain restrictive covenants of that indenture
(including those described under the heading "--Certain Covenants of Bank of
America") if, in each case, we deposit with the debt trustee, in trust, money
or United States government obligations sufficient to pay all of the principal
of, and premium, if any, and any interest on, the notes of that series, on the
dates the payments are due under the junior subordinated indenture and the
terms of such notes.
To exercise this option, we are required to deliver to the indenture trustee
an opinion of counsel that states that:
. the deposit and related defeasance would not cause the holders of the
junior subordinated notes of such series to recognize income, gain or loss
for United States federal income tax purposes, which opinion must be
accompanied by a private letter ruling to that effect received by us from
the IRS or a revenue ruling pertaining to a comparable form of transaction
to that effect published by the IRS; and
. if the junior subordinated notes of that series are listed on any national
securities exchange, such notes will not be delisted as a result of the
deposit and related defeasance.
The obligations under the junior subordinated indenture to register the
transfer or exchange of junior subordinated notes, to replace stolen, lost or
mutilated junior subordinated notes and to maintain paying agents and hold
monies for payment in trust will continue, even if we exercise our defeasance
and discharge option.
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Book-Entry and Settlement
If junior subordinated notes are distributed to holders of capital
securities in liquidation of such holders' interests in a Trust, the junior
subordinated notes previously registered in the name of the property trustee on
behalf of the Trust will be re-registered in the form of one or more global
certificates in the name of the depositary or its nominee. Each global
certificate is referred to as a "global security." Except under the limited
circumstances described below, junior subordinated notes represented by a
global security will not be exchangeable for, and will not otherwise be
issuable as, junior subordinated notes in definitive form. The global
securities described above may not be transferred except by the depositary to a
nominee of the depositary or by a nominee of the depositary to the depositary
or another nominee of the depositary or to a successor depositary or its
nominee.
Except as provided below, owners of beneficial interests in such a global
security will not be entitled to receive physical delivery of junior
subordinated notes in definitive form and will not be considered the holders,
as defined in the junior subordinated indenture, of such global security for
any purpose under the junior subordinated indenture. A global security
representing junior subordinated notes is only exchangeable for another global
security of like denomination to be registered in the name of the depositary or
its nominee or to a successor depositary or its nominee. This means that each
beneficial owner must rely on the procedures of the depositary, or if such
person is not a participant, on the procedures of the participant through which
such person owns its interest, to exercise any rights of a holder under the
indenture. If junior subordinated notes are distributed to holders of capital
securities in liquidation of such holders' interests in a Trust, DTC will act
as securities depositary for the junior subordinated notes.
As of the date of this prospectus, the description in this prospectus of
DTC's book-entry system and DTC's practices as they relate to purchases,
transfers, notices and payments relating to the capital securities apply in all
material respects to any debt obligations represented by one or more global
securities held by DTC. We may appoint a successor to DTC or any successor
depositary in the event DTC or such successor depositary is unable or unwilling
to continue as a depositary for the global securities. For a description of DTC
and the specific terms of the depositary arrangements, see "Description of the
Capital Securities -- Book-Entry Only Issuance -- The Depository Trust
Company."
Governing Law
The junior subordinated indenture and the junior subordinated notes will be
governed by, and construed in accordance with, the internal laws of the State
of New York.
The Indenture Trustee
We and certain of our affiliates have from time to time maintained deposit
accounts and conducted other banking transactions with the indenture trustee
and its affiliated entities in the ordinary course of business. The indenture
trustee also serves as trustee for certain series of our outstanding
indebtedness under other indentures.
Miscellaneous
Bank of America will pay all costs and expenses of the Trust, including
those related to:
. the offering, sale and issuance of trust securities and the related junior
subordinated notes;
. the organization, maintenance and dissolution and the operation of each
Trust;
. the retention of the debt trustee and the trustees under each declaration
of trust;
. indemnification obligations under a declaration of trust;
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. all taxes (other than United States withholding taxes relating to a
Trust); and
. the enforcement by the property trustee of the rights of the holders of
the respective capital securities.
We have the right at all times to assign any of our respective rights or
obligations under the junior subordinated indenture to a direct or indirect
wholly-owned subsidiary of Bank of America. If we assign any of our rights or
obligations, however, we will remain liable for all of their respective
obligations. Subject to this right of assignment, the junior subordinated
indenture will be binding upon and inure to the benefit of the parties to such
indenture and their respective successors and assigns. The parties to the
junior subordinated indenture may not otherwise assign such indenture.
DESCRIPTION OF GUARANTEE
Set forth below is a summary of information concerning the guarantee that we
will execute and deliver for the benefit of the holders of a series of capital
securities when a Trust issues its trust securities. Each guarantee will be
qualified as an indenture under the Trust Indenture Act. The Bank of New York
will act as the guarantee trustee. The terms of the guarantee will be those set
forth in the guarantee and those made part of the guarantee by the Trust
Indenture Act. The guarantee trustee will hold the guarantee for the benefit of
the holders of the related capital securities. The following summary is not
intended to be complete and is subject to, and qualified in its entirety by
reference to, the provisions of the guarantee and the Trust Indenture Act. The
form of guarantee is filed as an exhibit to the registration statement of which
this prospectus is a part.
General
A guarantee is held by the guarantee trustee for the benefit of the holders
of the capital securities. Under each guarantee, we will irrevocably and
unconditionally agree to pay when due the holders of the capital securities
issued by a particular Trust, the following payments, which are referred to as
"guarantee payments," without duplication:
. any accrued and unpaid distributions that are required to be paid on the
capital securities, to the extent such Trust has funds available for
distributions;
. the redemption price, plus all accrued and unpaid distributions, relating
to any capital securities called for redemption by such Trust, to the
extent such Trust has funds available for redemptions; and
. upon a voluntary or involuntary dissolution, winding-up or termination of
such Trust, other than in connection with the distribution of junior
subordinated notes held by such Trust to the holders of capital
securities, the lesser of:
. the aggregate of the liquidation amount and all accrued and unpaid
distributions on the capital securities to the date of payment, to the
extent such Trust has funds available for liquidations; and
. the amount of assets of such Trust remaining available for distribution
to holders of the capital securities in liquidation of such Trust.
The redemption price and liquidation amount will be fixed at the time the
capital securities are issued and will be described in the applicable
prospectus supplement relating to the offering of such capital securities.
Our obligation to make a guarantee payment may be satisfied by direct
payment of the required amounts to the holders of capital securities or by
causing the applicable Trust to pay such amounts to such holders.
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A guarantee will not apply to any payment of distributions except to the
extent the related Trust has funds available for such payments. If we do not
make interest payments on the junior subordinated notes held by a Trust, the
Trust will not pay distributions on its capital securities and will not have
funds available for such payments. See "--Status of the Guarantee" below. In
such case, holders of the capital securities would not be able to rely on the
related guarantee for payment of these amounts.
A guarantee, when taken together with our obligations under the junior
subordinated notes held by the related Trust, the junior subordinated indenture
and the applicable declaration of trust, including our obligations to pay
costs, expenses, debts and liabilities of that Trust (other than those relating
to trust securities), will provide a full and unconditional guarantee on a
subordinated basis of payments due on the capital securities.
Unless otherwise specified in the applicable prospectus supplement, we will
also agree separately to irrevocably and unconditionally guarantee the
obligations of each Trust with respect to the common securities issued by that
Trust to the same extent as the capital securities guarantees. However, if an
event of default under the junior subordinated indenture has occurred and is
continuing, holders of capital securities shall have priority over holders of
common securities with respect to payments under the respective guarantees.
Covenants of Bank of America
In each guarantee, we will covenant that, so long as any capital securities
issued by the applicable Trust remain outstanding, if any event has occurred
that would constitute an event of default under such guarantee or an event of
default or non-payment event under the related declaration of trust, or during
an extension of the interest period, then:
. we shall not declare or pay any dividend on, make any distributions with
respect to, or redeem, purchase, acquire or make a liquidation payment
with respect to, any of our capital stock or make any guarantee payment
with respect to the foregoing, other than:
. purchases or acquisitions of shares of our common stock in connection
with the satisfaction by us of our obligations under any employee
benefit plans;
. as a result of a reclassification of our capital stock or the exchange
or conversion of one class or series of our capital stock for another
class or series of our capital stock; or
. the purchase of fractional interests in shares of our capital stock
pursuant to an acquisition or the conversion or exchange provisions of
our capital stock or the security being converted or exchanged; and
. we shall not make any payment of interest, principal or any premium on or
repay, repurchase or redeem any debt securities (including guarantees)
issued by us that rank equally with or junior to the junior subordinated
notes held by such Trust.
Amendment and Assignment
A guarantee may be amended only with the prior approval of the holders of at
least a majority in liquidation amount of the outstanding capital securities of
the applicable Trust. No vote will be required, however, for any changes that
do not adversely affect the rights of holders of such capital securities.
Termination of the Guarantees
A guarantee will terminate as to the capital securities of the applicable
Trust upon:
. full payment of the redemption price of all such capital securities;
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. the distribution of the corresponding junior subordinated notes to the
holders of such capital securities; or
. full payment of the amounts payable in accordance with the applicable
declaration of trust upon liquidation of the Trust.
A guarantee will continue to be effective or will be reinstated, as the case
may be, if at any time any holder of related capital securities must restore
payment of any sums paid under the related capital securities or the guarantee.
Events of Default
An event of default under a guarantee will occur if we fail to perform any
payment obligation or other obligation under such guarantee. The holders of a
majority in liquidation amount of the related capital securities may waive, on
behalf of all holders of such capital securities, any past event of default.
The holders of a majority in liquidation amount of the related capital
securities have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the guarantee trustee in respect of
the applicable guarantee or to direct the exercise of any trust or power
conferred upon the guarantee trustee under such guarantee. If the guarantee
trustee fails to enforce its rights under a guarantee, any holder of related
capital securities may institute a legal proceeding directly against us to
enforce the guarantee trustee's rights and our obligations under the applicable
guarantee, without first instituting a legal proceeding against such Trust, the
guarantee trustee or any other person or entity.
Status of the Guarantees
Each guarantee will constitute an unsecured obligation of Bank of America
and will rank:
. subordinate and junior in right of payment to all our other liabilities,
including contingent liabilities;
. equally with the most senior preferred or preference stock now or
hereafter issued by us and with any guarantee now or hereafter entered
into by us with respect to (a) any preferred or preference stock of any of
our affiliates and (b) any other guarantee of an affiliate's trust
preferred or similar capital securities; and
. senior to our common stock.
The terms of each series of capital securities provide that each holder of
such capital securities by acceptance of such securities agrees to the
subordination provisions and other terms of the related guarantee.
Each guarantee will constitute a guarantee of payment and not of collection.
This means that the guaranteed party may sue the guarantor to enforce its
rights under the guarantee without suing any other person or entity. A
guarantee will be discharged only by payment of the guarantee payments in full
to the extent not paid by the applicable Trust or upon the distribution of the
related junior subordinated notes.
Information Concerning the Guarantee Trustee
Prior to the occurrence of an event of default relating to a guarantee, the
guarantee trustee is required to perform only the duties that are specifically
set forth in such guarantee. Following the occurrence and during the
continuance of an event of default, the guarantee trustee will exercise the
same degree of care and skill as a prudent person would exercise under the
circumstances in the conduct of his or her own affairs. Provided that the
foregoing requirements have been met, the
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guarantee trustee is under no obligation to exercise any of the powers vested
in it by the guarantee, unless offered reasonable indemnity against the costs,
expenses and liabilities which might be incurred thereby.
We and certain of our affiliates have from time to time maintained deposit
accounts and conducted other banking transactions with the guarantee trustee
and its affiliated entities in the ordinary course of business. The guarantee
trustee also serves as trustee for certain series of our outstanding
indebtedness under other indentures.
Governing Law
The guarantees will be governed by and construed in accordance with the
internal laws of the state of New York.
EFFECT OF OBLIGATIONS UNDER THE
JUNIOR SUBORDINATED NOTES AND THE GUARANTEE
The sole purpose of a Trust is to issue the trust securities and to invest
the proceeds in the corresponding junior subordinated notes. As long as
payments of interest and other payments are made when due on the applicable
series of junior subordinated notes, those payments will be sufficient to cover
the distributions and payments due on the related trust securities. This is due
to the following factors:
. the aggregate principal amount of such junior subordinated notes will be
equal to the sum of the aggregate stated liquidation amount of such trust
securities;
. the interest rate and the interest and other payment dates on such junior
subordinated notes will be the same as the distribution rate and
distribution and other payment dates for such trust securities;
. under the junior subordinated indenture, we will pay, and the applicable
Trust will not be obligated to pay, directly or indirectly, all costs,
expenses, debts and obligations of such Trust, other than those relating
to such trust securities; and
. the applicable declaration of trust further provides that the regular
trustees may not cause or permit the Trust to engage in any activity that
is not consistent with the purposes of the Trust.
We guarantee payments of distributions and other payments due on capital
securities of the Trust only to the extent that funds are available in a Trust.
If we do not make interest or other payments on the applicable series of junior
subordinated notes, the related Trust will not have sufficient funds to pay
distributions or other payments on the capital securities. The guarantee does
not apply to any payment of distributions unless and until such Trust has
sufficient funds for the payment of such distributions.
A holder of capital securities may institute a direct action against us if
we fail to make interest or other payments on the junior subordinated notes
when due, taking account of any extension period. A direct action may be
brought without first:
. directing the property trustee to enforce the terms of the corresponding
junior subordinated notes, or
. suing us to enforce the property trustee's rights under such junior
subordinated notes.
In connection with such direct action, we will be subrogated to the rights of
such holder of capital securities under the applicable declaration of trust to
the extent of any payment made by us to such holder of capital securities.
Consequently, we will be entitled to payment of amounts that a holder of
capital securities receives in respect of an unpaid distribution to the extent
that such holder has already received payment relating to such unpaid
distribution from such Trust.
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The guarantee trustee will enforce the capital securities guarantees on
behalf of the holders of the capital securities. If we fail to make payments
under a guarantee, the holders of the related capital securities may direct the
guarantee trustee to enforce its rights under such guarantee. If the guarantee
trustee fails to enforce the guarantee, any holder of related capital
securities may directly sue us to enforce the guarantee trustee's rights under
the guarantee. Such holder need not first sue the applicable Trust, the
guarantee trustee, or any other person or entity. A holder of capital
securities may also directly sue us to enforce such holder's right to receive
payment under the guarantee. Such holder need not first direct the guarantee
trustee to enforce the terms of the guarantee or sue such Trust or any other
person or entity.
UNITED STATES FEDERAL INCOME TAXATION
The following is a general discussion of the material United States federal
income tax considerations that may be relevant to a beneficial owner of capital
securities. The summary is based on laws, regulations, rulings and decisions
now in effect, all of which are subject to change, possibly with retroactive
effect. This summary deals only with a beneficial owner of capital securities
that purchases the capital securities upon original issuance and who will hold
the capital securities as capital assets. This summary does not address tax
considerations applicable to investors to whom special tax rules may apply,
such as banks, tax-exempt entities, insurance companies, regulated investment
companies, common trust funds, dealers in securities or currencies, persons
that will hold the capital securities as part of an integrated investment,
including a straddle or conversion transaction, comprised of a capital security
and one or more other positions or United States holders (as defined below)
that have a functional currency other than the U.S. dollar.
For purposes of this discussion, a "United States holder" is a beneficial
owner of capital securities that is a citizen or resident of the United States,
a corporation, partnership or other entity created or organized in or under the
laws of the United States, any state thereof or the District of Columbia, an
estate the income of which is subject to United States federal income taxation
regardless of its source or a trust if a United States court is able to
exercise primary supervision over the trust's administration and one or more
United States persons have the authority to control all of the trust's
substantial decisions. The term "non-United States holder" means a beneficial
owner of capital securities that is not a United States holder.
Investors should consult their own tax advisors in determining the tax
consequences to them of purchasing, holding and disposing of capital
securities, including the application to their particular situation of the
United States federal income tax considerations discussed below, as well as the
application of state, local, foreign or other tax laws.
Classification of the Junior Subordinated Notes
In connection with the issuance of the junior subordinated notes, Stroock &
Stroock & Lavan LLP, special tax counsel to Bank of America and the Trusts,
will render its opinion generally to the effect that, under then current law
and assuming full compliance with the terms of the indenture and other relevant
documents, and based on the facts and assumptions contained in such opinion,
the junior subordinated notes held by the Trusts will be classified for United
States federal income tax purposes as indebtedness of Bank of America.
Classification of the Trusts
In connection with the issuance of the capital securities, Stroock & Stroock
& Lavan LLP will render its opinion generally to the effect that, under then
current law and assuming full compliance with the terms of the declaration, the
indenture and other relevant documents, and based on the facts and assumptions
contained in such opinion, each Trust will be classified for
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United States federal income tax purposes as a grantor trust and not as an
association taxable as a corporation. Accordingly, for United States federal
income tax purposes, each holder of capital securities of a Trust generally
will be considered the owner of an undivided interest in the junior
subordinated notes owned by such Trust, and each holder will be required to
include in its gross income, in accordance with its method of accounting, all
interest or original issue discount ("OID") earned, and any gain recognized,
with respect to its allocable share of the junior subordinated notes.
United States Holders
Interest Income and OID. Under the terms of the junior subordinated
debenture, Bank of America has the ability to defer payments of interest on the
junior subordinated notes by extending the interest payment period. However, if
that option is exercised, Bank of America would be prevented from declaring or
paying dividends on its stock and from making any payments on debt securities
that rank pari passu with or junior to the junior subordinated notes. Under
applicable Treasury regulations, a "remote" contingency that stated interest
will not be timely paid will be ignored in determining whether a debt
instrument is issued with OID. Because of the payments limitations described in
the second preceding sentence, Bank of America believes, and this discussion
assumes, that the likelihood Bank of America will exercise its option to defer
payments is remote within the meaning of the regulations. Accordingly, the
junior subordinated notes will not be treated as having been issued with OID
and each holder of capital securities should include in gross income such
holder's allocable share of interest on the junior subordinated notes in
accordance with such holder's method of tax accounting. It should be noted,
however, that no rulings or other guidance has been issued by the Internal
Revenue Service ("IRS") addressing the meaning of the term "remote" as used in
these Treasury regulations. Thus, it is possible that the IRS could take a
position contrary to the interpretation described above.
In contrast, if the option to defer any payment of interest was determined
not to be "remote," or if Bank of America exercised such option, the junior
subordinated notes would be treated as issued with OID. In that case, all
stated interest (or remaining stated interest, if the deferral option was
exercised) on the junior subordinated notes would be treated as OID and would
have to be included in a United States holder's taxable income on an economic
accrual basis without regard to whether any cash payments were received and
without regard to such holder's method of tax accounting. Consequently, during
an extension period, a holder of capital securities would be required to
include OID in gross income even though Bank of America would not make any
actual cash payments.
Because income on the capital securities will constitute interest or OID,
corporate holders of capital securities are not entitled to a
dividends-received deduction for any income received or accrued on the capital
securities.
Receipt of Junior Subordinated Notes or Cash Upon Liquidation of Trusts.
Under certain circumstances described in this prospectus, junior subordinated
notes may be distributed to holders in exchange for capital securities upon the
liquidation of the Trusts. See "Description of the Capital Securities --
Liquidation Distribution Upon Dissolution." Under current law, such a
distribution would be treated, for United States federal income tax purposes,
as a non-taxable event to each United States holder, and each United States
holder would receive an aggregate tax basis in the junior subordinated notes
received that is equal to such holder's aggregate tax basis in the capital
securities exchanged. A United States holder's holding period in the junior
subordinated notes received in liquidation of the Trusts would include the
period during which the capital securities were held by such holder.
Under certain circumstances described in this prospectus, the junior
subordinated notes may be redeemed for cash and the proceeds of such redemption
distributed by the Trusts to holders in
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redemption of their capital securities. Under current law, such a redemption
would, for United States federal income tax purposes, constitute a taxable
disposition of the redeemed capital securities. Accordingly, a United States
holder could recognize gain or loss as if it had sold such redeemed capital
securities for cash. See "Description of the Capital Securities" and "United
States Federal Income Taxation -- Sales of Capital Securities."
Sales of Capital Securities. A United States holder that sells capital
securities will be considered to have disposed of all or part of its ratable
share of the junior subordinated notes. Such a United States holder will
recognize gain or loss equal to the difference between its adjusted tax basis
in the capital securities and the amount realized on the sale of such capital
securities. Assuming that Bank of America does not exercise its option to defer
payment of interest on the junior subordinated notes and that the junior
subordinated notes are not deemed to be issued with OID, a United States
holder's adjusted tax basis in the capital securities generally will be its
initial purchase price. If the junior subordinated notes are deemed to be
issued with OID, a United States holder's tax basis in the capital securities
generally will be its initial purchase price, increased by OID previously
includible in such United States holder's gross income to the date of
disposition and decreased by distributions or other payments received on the
capital securities since and including the date that the junior subordinated
notes were deemed to be issued with OID. Such gain or loss generally will be a
capital gain or loss, except to the extent of any accrued interest relating to
such United States holder's ratable share of the junior subordinated notes
required to be included in income, and generally will be a long-term capital
gain or loss if the capital securities have been held for more than one year.
If Bank of America exercises its option to defer payment of interest on the
junior subordinated notes, the capital securities may trade at a price that
does not fully reflect the accrued but unpaid interest relating to the
underlying junior subordinated notes. In the event of such a deferral, a United
States holder who disposes of its capital securities between record dates for
payments of distributions will be required to include in income as ordinary
income accrued but unpaid interest on the junior subordinated notes to the date
of disposition and to add such amount to the adjusted tax basis of its capital
securities. To the extent the selling price is less than the holder's adjusted
tax basis, such holder will recognize a capital loss. Capital losses generally
cannot be applied to offset ordinary income for United States federal income
tax purposes.
Information Reporting and Backup Withholding. Generally, income on the
capital securities will be reported to the IRS and to holders on Forms
1099-INT, which forms should be mailed to holders of capital securities by
January 31 following each calendar year. In addition, United States holders may
be subject to a 30.5% backup withholding tax (to be reduced gradually to 28%
effective 2006 and increased to 31% effective 2011) on such payments if they do
not provide their taxpayer identification numbers to the trustee in the manner
required, fail to certify that they are not subject to backup withholding tax,
or otherwise fail to comply with applicable backup withholding tax rules.
United States holders may also be subject to information reporting and backup
withholding tax with respect to the proceeds from a sale, exchange, retirement
or other taxable disposition of the capital securities.
Non-United States Holders
Under current United States federal income tax law, payments of principal
and interest, including OID, with respect to a capital security that are made
to a non-United States holder will not be subject to withholding of United
States federal income tax, provided that:
. the holder of the capital security does not actually or constructively
own 10% or more of the total combined voting power of all classes of
stock of Bank of America entitled to vote;
. the holder of the capital security is not a controlled foreign
corporation related to Bank of America through stock ownership;
40
. the holder of the capital security is not a bank receiving interest on
an extension of credit made pursuant to a loan agreement entered into in
the ordinary course of its trade or business; and
. the holder of the capital security provides a statement signed under
penalties of perjury that includes its name and address and certifies
that it is a non-United States holder in compliance with applicable
requirements and satisfies documentary evidence requirements for
establishing that it is a non-United States holder.
Moreover, a non-United States holder will not be subject to United States
federal income tax on gain realized on the sale, exchange, retirement or other
taxable disposition of a capital security, unless, in the case of an
individual, such holder is present in the United States for 183 days or more in
the taxable year of the retirement or disposition and certain other conditions
are met. However, a non-United States holder that is subject to United States
federal income taxation on a net income basis generally will be taxable under
the same rules that govern the taxation of a United States holder receiving or
accruing interest on a capital security or realizing or recognizing gain or
loss on the sale, exchange, retirement or other taxable disposition of a
capital security. Special rules might also apply to a non-United States holder
that is a qualified resident of a country with which the United States has an
income tax treaty.
United States information reporting requirements and backup withholding tax
will not apply to payments on a capital security if the beneficial owner (1)
certifies its non-United States status under penalties of perjury and also
satisfies documentary evidence requirements for establishing that it is a
non-United States person, or (2) otherwise establishes an exemption. In
addition, information reporting requirements and backup withholding tax will
not apply to any payment of the proceeds of the sale of a capital security
effected outside the United States by a foreign office of a foreign broker,
provided that such broker derives less than 50% of its gross income for
particular periods from the conduct of a trade or business in the United
States, is not a controlled foreign corporation for United States federal
income tax purposes, and is not a foreign partnership that, at any time during
its taxable year is 50% or more, by income or capital interest, owned by United
States holders or is engaged in the conduct of a United States trade or
business. Backup withholding tax will also not apply to the payment of the
proceeds of the sale of a capital security effected outside the United States
by a foreign office of any other foreign or any U.S. broker. However,
information reporting requirements will be applicable to such payment unless
(1) such broker has documentary evidence in its records that the beneficial
owner is a non-United States person and other conditions are met or (2) the
beneficial owner otherwise establishes an exemption.
Information reporting requirements and backup withholding tax will apply to
the payment of the proceeds of a sale of a capital security by the United
States office of a broker, unless the beneficial owner certifies its non-United
States person status under penalties of perjury or otherwise establishes an
exemption.
For purposes of applying the above rules for non-United States holders to a
person or entity that is treated as fiscally transparent, e.g., nominees,
partnerships and certain trusts, the holder means each of the ultimate
beneficial owners of the capital securities. In addition, the fiscally
transparent person or entity will be required to provide the payor with a
properly completed and executed IRS Form W-8IMY.
THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED
FOR GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A
HOLDER'S PARTICULAR SITUATION. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS
RELATING TO THE TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND
DISPOSITION OF THE CAPITAL SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER
STATE, LOCAL, FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN
UNITED STATES FEDERAL OR OTHER TAX LAWS.
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PLAN OF DISTRIBUTION
We and the Trusts may sell the securities offered under this prospectus 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 underwriting 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 exchange or
exchanges, the identity of any exchange.
Securities may be purchased to be reoffered to the public through
underwriting 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 offering 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 prospectus supplement, the obligations of the underwriters to
purchase the securities 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.
We and the Trusts 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. Unless otherwise indicated in the prospectus supplement, the agent
will be acting on a best efforts basis during the appointment period.
We and the Trusts may sell directly to, and solicit orders from,
institutional investors or others who may be deemed to be underwriters as
defined in 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 purchase
by one or more firms including our affiliates, acting as principal for their
accounts or as our agent.
Any underwriter or agent participating in the distribution of the securities
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 or a Trust and any profit realized by them
on the sale or resale of the securities may be considered to be underwriting
discounts 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
securities 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 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 underwriters, 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
securities above independent market levels. The underwriters are not required
to engage in these activities, and may end any of these activities at any time.
42
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 or a Trust, underwriters and agents
may be entitled to indemnification by us against certain civil liabilities,
including liabilities under the Securities Act, or to contribution for payments
the underwriters or agents may be required to make.
Banc of America Securities LLC is a broker-dealer and one of our
subsidiaries and, as such, an affiliate of the Trusts. Each initial offering
and any remarketing of securities involving Banc of America Securities LLC or
any of our other affiliates will be conducted in compliance with the
requirements of Rule 2720 of the Conduct Rules of the National Association of
Securities Dealers, Inc. regarding the offer and sale of securities of an
affiliate. Following the initial distribution of securities, our affiliates,
including Banc of America Securities LLC, may buy and sell the securities 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 related to secondary
market transactions in the securities to the extent permitted by applicable
law. Any of our affiliates may act as principal or agent in such transactions.
Neither Banc of America Securities LLC nor any other member of the National
Association of Securities Dealers, Inc. will execute a transaction in the
securities in a discretionary account without specific prior written approval
of that customer.
The underwriters, agents and their affiliates may engage in financial or
other business transactions with us and our subsidiaries in the ordinary course
of business.
The maximum underwriting concession or discount to be received by any member
of the National Association of Securities Dealers, Inc. or independent
broker-dealer will not be greater than eight percent of the initial gross
proceeds of the securities sold.
LEGAL MATTERS
Certain matters of Delaware law relating to the validity of the capital
securities will be passed upon on behalf of the Trusts by Richards, Layton &
Finger, P.A., special Delaware counsel to the Trusts. The validity of the
junior subordinated notes and the guarantees and certain matters relating
thereto will be passed upon for Bank of America by Smith Helms Mulliss & Moore,
L.L.P. and for the underwriters by Stroock & Stroock & Lavan LLP. Certain
United States federal income tax matters will be passed upon for Bank of
America and the Trusts by Stroock & Stroock & Lavan LLP, special tax counsel to
Bank of America and the Trusts. Smith Helms Mulliss & Moore, L.L.P. and Stroock
& Stroock & Lavan LLP will rely on the opinion of Richards, Layton & Finger,
P.A. as to matters of Delaware law. As of the date of this prospectus, certain
members of Smith Helms Mulliss & Moore, L.L.P. beneficially owned less than
one-tenth of 1% of our outstanding shares of common stock.
EXPERTS
Our consolidated financial statements incorporated in this prospectus by
reference to our annual report on Form 10-K for the year ended December 31,
2000 have been incorporated in reliance on the report of PricewaterhouseCoopers
LLP, independent accountants, given on the authority of said firm as experts in
auditing and accounting.
43
PART II.
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The estimated expenses, other than underwriting or broker-dealer fees,
discounts and commissions, in connection with the offering are as follows:
Securities Act Registration Fee $ 500,000
NASD Fee....................... 30,000
Printing and Engraving Expenses 350,000
Legal Fees and Expenses........ 450,000
Accounting Fees and Expenses... 100,000
Blue Sky Fees and Expenses..... 30,000
Trustee Fees................... 350,000
Rating Agency Fees and Expenses 120,000
Miscellaneous.................. 25,000
----------
$1,955,000
==========
Item 15. Indemnification of Directors and Officers
Subsection (a) of Section 145 of the Delaware General Corporation Law (the
"DGCL") empowers a corporation to indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by
reason of the fact that such person is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by such person in connection with such action,
suit or proceeding if such person acted in good faith and in a manner such
person reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his or her conduct was unlawful. Subsection (b) of
Section 145 of the DGCL empowers a corporation to indemnify any person who was
or is a party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that such person acted in any of
the capacities set forth above, against expenses (including attorneys' fees)
actually and reasonably incurred by such person in connection with the defense
or settlement of such action or suit if such person acted in accordance with
the above standards, except that no indemnification may be made in respect to
any claim, issue or matter as to which such person shall have been adjudged to
be liable to the corporation unless and only to the extent that the Court of
Chancery or the court in which the action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnification for such expenses which the Court of Chancery or such other
court shall deem proper.
Section 145 of the DGCL further provides that, to the extent that a director
or officer of a corporation has been successful on the merits or otherwise in
defense of any action, suit or proceeding referred to in subsections (a) and
(b) of Section 145, or in the defense of any claim, issue or matter therein,
such person shall be indemnified against expenses (including attorneys' fees)
actually and reasonably incurred by him or her in connection therewith; and
that
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indemnification provided by, or granted pursuant to, Section 145 shall not be
deemed exclusive of any other rights to which those seeking indemnification may
be entitled. Section 145 further empowers the corporation to purchase and
maintain insurance on behalf of any person who is or was a director, officer,
employee or agent of the corporation or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against any liability
asserted against him or her and incurred by him or her in any such capacity, or
arising out of such person's status as such, whether or not the corporation
would have the power to indemnify such person against such liabilities under
Section 145 of the DGCL.
Section 102(b)(7) of the DGCL permits a corporation's certificate of
incorporation to contain a provision eliminating or limiting the personal
liability of a director to the corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director; provided that such
provision shall not eliminate or limit the liability of a director for (i) any
breach of the director's duty of loyalty to the corporation or its
stockholders; (ii) acts or omissions not in good faith or which involved
intentional misconduct or a knowing violation of the law; (iii) willful or
negligent unlawful payment of a dividend or stock purchase or redemption; or
(iv) any transaction from which the director derived an improper personal
benefit.
The Restated Certificate of Incorporation of Bank of America Corporation
(the "Corporation") eliminates the ability to recover monetary damages against
directors of the Corporation for breach of fiduciary duty to the fullest extent
permitted by the DGCL. In accordance with the provisions of the DGCL, the
Bylaws of the Corporation provide that, in addition to the indemnification of
directors and officers otherwise provided by the DGCL, the Corporation shall,
under certain circumstances, indemnify its directors, executive officers and
certain other designated officers against any and all liability and litigation
expense, including reasonable attorneys' fees, arising out of their status or
activities as directors and officers, except for liability or litigation
expense incurred on account of activities that were at the time known or
believed by such director or officer to be in conflict with the best interests
of the Corporation. Pursuant to such Bylaws and as authorized by statute, the
Corporation may also maintain, and does maintain, insurance on behalf of its
directors and officers against liability asserted against such persons in such
capacity whether or not such directors or officers have the right to
indemnification pursuant to the Bylaws or otherwise.
In addition, pursuant to the Agreement and Plan of Reorganization dated as
of April 10, 1998 (the "Merger Agreement") between the Corporation, formerly
NationsBank Corporation ("NationsBank") and the former BankAmerica Corporation
("old BankAmerica"), for six years after September 30, 1998 (the date of the
consummation of the merger of old BankAmerica with and into the Corporation
(the "Merger")), the Corporation will indemnify directors, officers and
employees of old BankAmerica, NationsBank, or any of their respective
subsidiaries against certain liabilities in connection with such persons'
status as such or in connection with the Merger Agreement or any of the
transactions contemplated thereby. Pursuant to the Merger Agreement, the
Corporation will also, for six years after September 30, 1998 and with respect
to events occurring prior to the consummation of the Merger, honor all rights
to indemnification and limitations of liability existing in favor of the
foregoing persons as provided in the governing documents of NationsBank, old
BankAmerica or their respective subsidiaries.
Pursuant to the Merger Agreement, for six years after September 30, 1998,
the Corporation will also use its best efforts to cause the directors and
officers of old BankAmerica and NationsBank to be covered by a directors' and
officers' liability insurance policy with respect to acts or omissions
occurring prior to the consummation of the Merger.
The foregoing is only a general summary of certain aspects of Delaware law
dealing with indemnification of directors and officers and does not purport to
be complete. It is qualified in its
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entirety by reference to the relevant statutes which contain detailed specific
provisions regarding the circumstances under which and the persons for whose
benefit indemnification shall or may be made.
The respective Declarations of Trust of BAC Capital Trust I, BAC Capital
Trust II, BAC Capital Trust III and BAC Capital Trust IV (each a "Trust" and
together the "Trusts") provide that to the fullest extent permitted by
applicable law, the Corporation shall indemnify each of the regular trustees of
the respective Trust, any affiliate of any such regular trustee, any officer,
director, shareholder, member, partner, employee, representative or agent of
any such regular trustee, or any employee or agent of the Trust or its
affiliates (each a "Company Indemnified Person"), who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the Trust) by reason of the fact
that he is or was a Company Indemnified Person against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or proceeding
if he acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the Trust, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. The Declarations of Trust also provide that, to the fullest
extent permitted by applicable law, expenses (including reasonable attorneys'
fees and expenses) incurred by a Company Indemnified Person in defending such a
civil, criminal, administrative or investigative action, suit or proceeding
shall be paid by the Corporation in advance of the final disposition of such
action, suit or proceeding upon receipt of an undertaking by or on behalf of
such Company Indemnified Person to repay such amount if it shall ultimately be
determined that he is not entitled to be indemnified by the Corporation as
authorized in the Declaration of Trust. The Declarations of Trust further
provide that no Company Indemnified Person, the Delaware Trustee (as defined
therein), any affiliate of the Delaware Trustee, and any officers, directors,
shareholders, members, partners, employees, representatives, nominees,
custodians or agents of the Delaware Trustee (collectively, with a Company
Indemnified Person, an "Indemnified Person"), shall not be liable, responsible
or accountable in damages or otherwise to the Trust or any Covered Person (as
defined therein) for any loss, damage or claim incurred by reason of any act or
omission performed or omitted by such Indemnified Person in good faith on
behalf of the Trust and in a manner such Indemnified Person reasonably believed
to be within the scope of the authority conferred on such Indemnified Person by
the Declaration of Trust or by law, except that an Indemnified Person shall be
liable for any such loss, damage or claim incurred by reason of such
Indemnified Person's gross negligence or willful misconduct with respect to
such acts or omissions.
In addition, certain sections of the form of Underwriting Agreement filed as
an Exhibit hereto provide for indemnification of the Corporation and the Trusts
and their directors and officers by the underwriters or agents against certain
liabilities, including certain liabilities under the Securities Act. From time
to time similar provisions have been contained in other agreements relating to
other securities of the Corporation.
Item 16. List of Exhibits
1.1 Form of Underwriting Agreement for offering of capital securities*
4.1 Certificate of Trust of BAC Capital Trust I
4.2 Certificate of Trust of BAC Capital Trust II
4.3 Certificate of Trust of BAC Capital Trust III
4.4 Certificate of Trust of BAC Capital Trust IV
4.5 Declaration of Trust of BAC Capital Trust I
4.6 Declaration of Trust of BAC Capital Trust II
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4.7. Declaration of Trust of BAC Capital Trust III
4.8 Declaration of Trust of BAC Capital Trust IV
4.9 Form of Amended and Restated Declaration of Trust for each BAC Capital Trust
4.10 Indenture between Bank of America Corporation and The Bank of New York, as Trustee
4.11 Form of Supplemental Indenture to be used in connection with the issuance of Junior
Subordinated Notes
4.12 Form of Preferred Security (included in 4.9 above)
4.13 Form of Junior Subordinated Note (included in 4.11 above)
4.14 Form of Guarantee with respect to Capital Securities issued by the respective BAC Capital
Trusts
5.1 Opinion of Smith Helms Mulliss & Moore, L.L.P.
5.2 Opinion of Richards, Layton & Finger, P.A.
8.1 Opinion of Stroock & Stroock & Lavan LLP
12.1 Calculation of Ratios of Earnings to Fixed Charges, incorporated herein by reference to
Exhibit 12(a) to the Registrant's Quarterly Report on Form 10-Q for the quarter ended
June 30, 2001 (File No. 1-6523)
12.2 Calculation of Ratios of Earnings to Fixed Charges and Preferred Stock Dividends,
incorporated herein by reference to Exhibit 12(b) to the Registrant's Quarterly Report on
Form 10-Q for the quarter ended June 30, 2001 (File No. 1-6523)
23.1 Consent of PricewaterhouseCoopers LLP
23.2 Consent of Smith Helms Mulliss & Moore, L.L.P. (included in Exhibit 5.1)
23.3 Consent of Richards, Layton & Finger, P.A. (included in Exhibit 5.2)
23.4 Consent of Stroock & Stroock & Lavan LLP (included in Exhibit 8.1)
24.1 Power of Attorney
24.2 Certified Resolutions
25.1 Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The Bank of
New York, as Indenture Trustee under the Indenture
25.2 Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The Bank of
New York, as Property Trustee under the Amended and Restated Declaration of Trust of
BAC Capital Trust I
25.3 Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The Bank of
New York, as Property Trustee under the Amended and Restated Declaration of Trust of
BAC Capital Trust II
25.4 Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The Bank of
New York, as Property Trustee under the Amended and Restated Declaration of Trust of
BAC Capital Trust III
25.5 Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The Bank of
New York, as Property Trustee under the Amended and Restated Declaration of Trust of
BAC Capital Trust IV
25.6 Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The Bank of
New York, as Guarantee Trustee under the Capital Securities Guarantee of Bank of
America Corporation for the benefit of the holders of Capital Securities of BAC Capital
Trust I
25.7 Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The Bank of
New York, as Preferred Guarantee Trustee under the Capital Securities Guarantee of Bank
of America Corporation for the benefit of the holders of Capital Securities of BAC Capital
Trust II
25.8 Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The Bank of
New York, as Preferred Guarantee Trustee under the Capital Securities Guarantee of Bank
of America Corporation for the benefit of the holders of Capital Securities of BAC Capital
Trust III
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25.9 Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The Bank of
New York, as Preferred Guarantee Trustee under the Capital Securities Guarantee of Bank
of America Corporation for the benefit of the holders of Capital Securities of BAC Capital
Trust IV
99.1 Provisions of Delaware General Corporation Law relating to indemnification of directors
and officers, incorporated herein by reference to Exhibit 99.1 of the Registrant's
Registration Statement on Form S-3 (Registration No. 333-83503)
--------
* To be filed by amendment
Item 17. Undertakings.
Each of the undersigned Registrants hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to the Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective Registration Statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement.
provided, however, that paragraphs (1)(i) and (1)(ii) above do not apply
if the Registration Statement is on Form S-3 or Form S-8 and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by the Registrant pursuant to Section 13
or Section 15(d) of the Exchange Act that are incorporated by reference in
the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned Registrants hereby undertake that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act that is incorporated by reference in the Registration Statement
shall be deemed to be a new registration statement relating to the securities
offered herein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-5
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of a Registrant
pursuant to the foregoing provisions, or otherwise, the Registrants have been
advised that in the opinion of the Commission such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by a Registrant of expenses incurred or
paid by a director, officer or controlling person of a Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, that Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.
Each Registrant hereby undertakes (1) to use its best efforts to distribute
prior to the opening of bids, to prospective bidders, underwriters, and
dealers, a reasonable number of copies of a prospectus which at that time meets
the requirements of Section 10(a) of the Securities Act, and relating to the
securities offered at competitive bidding, as contained in the Registration
Statement, together with any supplements thereto, and (2) to file an amendment
to the Registration Statement reflecting the results of bidding, the terms of
the reoffering and related matters to the extent required by the applicable
form, not later than the first use, authorized by any Registrant after the
opening of bids, of a prospectus relating to the securities offered at
competitive bidding, unless no further public offering of such securities by
any Registrant and no reoffering of such securities by the purchasers is
proposed to be made.
Each Registrant hereby undertakes to file an application for the purpose of
determining the eligibility of the trustee to act under subsection (a) of
Section 310 of the Trust Indenture Act of 1939, as amended, in accordance with
the rules and regulations prescribed by the Commission under Section 305(b)(2)
of the Trust Indenture Act.
The undersigned Registrants hereby undertake that:
(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrants pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new Registration Statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-6
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Charlotte, North Carolina, on October 4, 2001.
BANK OF AMERICA CORPORATION
By: * KENNETH D. LEWIS
-----------------------------------
Kenneth D. Lewis
Chairman of the Board, Chief
Executive Officer and President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
* KENNETH D. LEWIS Chairmanof the Board, Chief October 4, 2001
--------------------- Executive Officer, President
Kenneth D. Lewis and Director (Principal
Executive Officer)
* JAMES H. HANCE. JR. ViceChairman, Chief Financial October 4, 2001
--------------------- Officer and Director
James H. Hance, Jr. (Principal Financial Officer)
* MARC D. OKEN ExecutiveVice President and October 4, 2001
--------------------- Principal Financial Executive
Marc D. Oken (Principal Accounting
Officer)
* JOHN R. BELK Director October 4, 2001
---------------------
John R. Belk
* CHARLES W. COKER Director October 4, 2001
---------------------
Charles W. Coker
* FRANK DOWD, IV Director October 4, 2001
---------------------
Frank Dowd, IV
--------------------- Director , 2001
Kathleen Feldstein
* PAUL FULTON Director October 4, 2001
---------------------
Paul Fulton
--------------------- Director , 2001
Donald E. Guinn
II-7
Signature Title Date
--------- ----- ----
* C. RAY HOLMAN Director October 4, 2001
----------------------
C. Ray Holman
* WALTER E. MASSEY Director October 4, 2001
----------------------
Walter E. Massey
* C. STEVEN MCMILLAN Director October 4, 2001
----------------------
C. Steven McMillan
* PATRICIA E. MITCHELL Director October 4, 2001
----------------------
Patricia E. Mitchell
* O. TEMPLE SLOAN, JR. Director October 4, 2001
----------------------
O. Temple Sloan, Jr.
* MEREDITH R. SPANGLER Director October 4, 2001
----------------------
Meredith R. Spangler
---------------------- Director , 2001
Ronald Townsend
* PETER V. UEBERROTH Director October 4, 2001
----------------------
Peter V. Ueberroth
* JACKIE M. WARD Director October 4, 2001
----------------------
Jackie M. Ward
* VIRGIL R. WILLIAMS Director October 4, 2001
----------------------
Virgil R. Williams
/S/ CHARLES M. BERGER
*By: __________________________________________________________________________
Charles M. Berger
Attorney-in-Fact
II-8
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto authorized,
in the City of Charlotte, North Carolina, on October 4, 2001.
BAC CAPITAL TRUST I
By: /s/ James T. Houghton
-----------------------------------
James T. Houghton
Regular Trustee
By: /s/ Karen A. Gosnell
-----------------------------------
Karen A. Gosnell
Regular Trustee
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto authorized,
in the City of Charlotte, North Carolina, on October 4, 2001.
BAC CAPITAL TRUST II
By: /s/ James T. Houghton
-----------------------------------
James T. Houghton
Regular Trustee
By: /s/ Karen A. Gosnell
-----------------------------------
Karen A. Gosnell
Regular Trustee
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto authorized,
in the City of Charlotte, North Carolina, on October 4, 2001.
BAC CAPITAL TRUST III
By: /s/ James T. Houghton
-----------------------------------
James T. Houghton
Regular Trustee
By: /s/ Karen A. Gosnell
-----------------------------------
Karen A. Gosnell
Regular Trustee
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto authorized,
in the City of Charlotte, North Carolina, on October 4, 2001.
BAC CAPITAL TRUST IV
By: /s/ James T. Houghton
-----------------------------------
James T. Houghton
Regular Trustee
By: /s/ Karen A. Gosnell
-----------------------------------
Karen A. Gosnell
Regular Trustee
II-9
EXHIBIT INDEX
Exhibit
Number Description
------ -----------
1.1 Form of Underwriting Agreement for offering of capital securities*
4.1 Certificate of Trust of BAC Capital Trust I
4.2 Certificate of Trust of BAC Capital Trust II
4.3 Certificate of Trust of BAC Capital Trust III
4.4 Certificate of Trust of BAC Capital Trust IV
4.5 Declaration of Trust of BAC Capital Trust I
4.6 Declaration of Trust of BAC Capital Trust II
4.7 Declaration of Trust of BAC Capital Trust III
4.8 Declaration of Trust of BAC Capital Trust IV
4.9 Form of Amended and Restated Declaration of Trust for each BAC Capital Trust
4.10 Indenture between Bank of America Corporation and The Bank of New York, as Trustee
4.11 Form of Supplemental Indenture to be used in connection with the issuance of Junior
Subordinated Notes
4.12 Form of Preferred Security (included in 4.9 above)
4.13 Form of Junior Subordinated Note (included in 4.11 above)
4.14 Form of Guarantee with respect to Capital Securities issued by the respective BAC
Capital Trusts
5.1 Opinion of Smith Helms Mulliss & Moore, L.L.P.
5.2 Opinion of Richards, Layton & Finger, P.A.
8.1 Opinion of Stroock & Stroock & Lavan LLP
12.1 Calculation of Ratios of Earnings to Fixed Charges, incorporated herein by reference to
Exhibit 12(a) to the Registrant's Quarterly Report on Form 10-Q for the quarter ended
June 30, 2001 (File No. 1-6523)
12.2 Calculation of Ratios of Earnings to Fixed Charges and Preferred Stock Dividends,
incorporated herein by reference to Exhibit 12(b) to the Registrant's Quarterly Report on
Form 10-Q for the quarter ended June 30, 2001 (File No. 1-6523)
23.1 Consent of PricewaterhouseCoopers LLP
23.2 Consent of Smith Helms Mulliss & Moore, L.L.P. (included in Exhibit 5.1)
23.3 Consent of Richards, Layton & Finger, P.A. (included in Exhibit 5.2)
23.4 Consent of Stroock & Stroock & Lavan LLP (included in Exhibit 8.1)
24.1 Power of Attorney
24.2 Certified Resolutions
25.1 Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The Bank
of New York, as Indenture Trustee under the Indenture
25.2 Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The Bank
of New York, as Property Trustee under the Amended and Restated Declaration of Trust
of BAC Capital Trust I
25.3 Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The Bank
of New York, as Property Trustee under the Amended and Restated Declaration of Trust
of BAC Capital Trust II
25.4 Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The Bank
of New York, as Property Trustee under the Amended and Restated Declaration of Trust
of BAC Capital Trust III
25.5 Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The Bank
of New York, as Property Trustee under the Amended and Restated Declaration of Trust
of BAC Capital Trust IV
25.6 Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The Bank
of New York, as Guarantee Trustee under the Capital Securities Guarantee of Bank of
America Corporation for the benefit of the holders of Capital Securities of BAC Capital
Trust I
Exhibit
Number Description
------ -----------
25.7 Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The Bank
of New York, as Preferred Guarantee Trustee under the Capital Securities Guarantee of
Bank of America Corporation for the benefit of the holders of Capital Securities of BAC
Capital Trust II
25.8 Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The Bank
of New York, as Preferred Guarantee Trustee under the Capital Securities Guarantee of
Bank of America Corporation for the benefit of the holders of Capital Securities of BAC
Capital Trust III
25.9 Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The Bank
of New York, as Preferred Guarantee Trustee under the Capital Securities Guarantee of
Bank of America Corporation for the benefit of the holders of Capital Securities of BAC
Capital Trust IV
99.1 Provisions of Delaware General Corporation Law relating to indemnification of directors
and officers, incorporated herein by reference to Exhibit 99.1 of the Registrant's
Registration Statement on Form S-3 (Registration No. 333-83503)
--------
* to be filed by amendment