Filed
Pursuant to Rule 424(b)(5)
Registration No. 333-133852
CALCULATION OF REGISTRATION FEE
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Title of Each Class |
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Amount |
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Proposed |
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Proposed Maximum |
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Amount of |
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of Securities to be |
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to be |
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Maximum Offering |
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Aggregate |
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Registration |
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Registered |
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Registered(1) |
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Price Per Unit |
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Offering Price |
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Fee(2) |
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Depositary Shares
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41,400,000
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$25
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$1,035,000,000
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$31,774.50 |
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(1) |
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Includes 5,400,000 depositary shares that the underwriters have the option to
purchase to cover over-allotments, if any. |
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(2) |
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Calculated in accordance with Rule 457(r) of the Securities Act of 1933.
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36,000,000 Depositary Shares,
Each Representing a 1/1,000th Interest in a
Share of 7.25% Non-Cumulative
Preferred Stock, Series J
Bank of America Corporation is offering 36,000,000 depositary
shares, each representing a 1/1,000th interest in a share
of our perpetual 7.25% Non-Cumulative Preferred Stock,
Series J, $0.01 par value, with a liquidation
preference of $25,000 per share (equivalent to $25 per
depositary share) (the Preferred Stock). Each
depositary share entitles the holder, through the depository, to
a proportional fractional interest in all rights and preferences
of the Preferred Stock represented by the depositary share.
We may redeem the Preferred Stock on any dividend payment date
on or after November 1, 2012, in whole or in part, at a
redemption price equal to $25,000 per share (equivalent to
$25 per depositary share), plus any declared and unpaid
dividends, without accumulation of any undeclared dividends.
We will pay dividends on the Preferred Stock, when, as, and if
declared by our board of directors, quarterly, in arrears, on
February 1, May 1, August 1, and November 1
of each year, beginning on February 1, 2008, at a rate of
7.25% per year (equivalent to $1.8125 per depositary share).
Dividends on the Preferred Stock will not be cumulative.
The depositary shares representing interests in the Preferred
Stock have been approved for listing on the New York Stock
Exchange, subject to notice of issuance, under the symbol
BAC PrJ. We expect trading of the depositary shares
to begin within 30 days after we issue the depositary
shares.
Investing in the depositary shares involves risks. See
Risk Factors beginning on page S-7.
The depositary shares are unsecured and are not savings
accounts, deposits, or other obligations of a bank. The
depositary shares are not guaranteed by Bank of America, N.A. or
any other bank and are not insured by the Federal Deposit
Insurance Corporation or any other governmental agency.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or passed upon the adequacy or accuracy of this
prospectus supplement or the attached prospectus. Any
representation to the contrary is a criminal offense.
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Per Depositary
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Share
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Total
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Public offering
price(1)
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$
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25.0000
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$
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900,000,000
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Underwriting
commissions(2)
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0.7875
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28,350,000
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Proceeds (before
expenses)(1),(2)
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$
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24.2125
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$
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871,650,000
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(1)
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Plus accrued dividends, if any,
from November 20, 2007 to the date of delivery.
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(2)
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For sales to certain institutions,
the underwriting commission will be 1.00%, or $0.25, per
depositary share. To the extent of those sales, the total
underwriting commissions will be less than the total shown
above, and the total proceeds (before expenses) will be more
than the total shown above.
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The underwriters also may purchase up to an additional 5,400,000
depositary shares within 30 days of the date of this
prospectus supplement to cover over-allotments, if any.
We will deliver the depositary shares in book-entry only form
through the facilities of The Depository Trust Company on or
about November 20, 2007.
Sole Book-Runner
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Banc
of America Securities LLC |
Incapital
LLC |
Citi
Merrill Lynch &
Co.
Morgan Stanley
UBS Investment Bank
Wachovia Securities
RBC Capital Markets
Prospectus Supplement to Prospectus dated May 5, 2006
November 14, 2007
TABLE OF
CONTENTS
Prospectus Supplement
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S-3
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S-4
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S-7
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S-10
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S-10
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S-10
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S-12
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S-12
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S-13
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S-14
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S-14
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S-14
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S-19
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S-20
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S-21
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S-21
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S-21
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S-22
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S-22
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S-22
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S-22
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S-23
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S-23
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S-23
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S-23
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S-24
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S-25
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S-26
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S-27
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S-29
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Prospectus
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S-2
ABOUT
THIS PROSPECTUS SUPPLEMENT
This prospectus supplement describes the specific terms of the
Preferred Stock and the related depositary shares, and
supplements the description of our preferred stock and
depositary shares included in the attached prospectus. In
considering an investment in the depositary shares, you should
rely only on the information included or incorporated by
reference in this prospectus supplement and the attached
prospectus. We have not authorized any other person to provide
you with different information. If anyone provides you with
different or inconsistent information, you should not rely on
it. If information in this prospectus supplement is inconsistent
with the attached prospectus, the information in this prospectus
supplement supersedes the information in the attached
prospectus. The delivery of this prospectus supplement, at any
time, does not imply that there has been no change in our
affairs since the date of this prospectus supplement or that the
information in this prospectus supplement or the attached
prospectus is correct as of any time after that date.
This prospectus supplement and the attached prospectus do not
constitute an offer to sell or the solicitation of an offer to
buy the depositary shares in any jurisdiction in which that
offer or solicitation is unlawful. The distribution of this
prospectus supplement and the attached prospectus and the
offering of the depositary shares in some jurisdictions may be
restricted by law. If you have received this prospectus
supplement and the attached prospectus, you should find out
about and observe these restrictions. See
Underwriting.
Unless otherwise indicated or the context requires otherwise,
all references in this prospectus supplement to Bank of
America, the Corporation, we,
us, and our are to Bank of America
Corporation. Capitalized terms used, but not defined, in this
prospectus supplement are defined in the attached prospectus.
We have not taken any action to permit a public offering of
the depositary shares outside the United States or to permit the
possession or distribution of this prospectus supplement and the
attached prospectus outside the United States. Persons outside
the United States who come into possession of this prospectus
supplement and the attached prospectus must inform themselves
about and observe any restrictions relating to the offering of
the depositary shares and the distribution of this prospectus
supplement and the attached prospectus outside of the United
States.
S-3
The following information about the depositary shares and the
Preferred Stock summarizes, and should be read in conjunction
with, the information contained in this prospectus supplement
and in the attached prospectus.
Securities
Offered
We are offering 36,000,000 depositary shares of our
Preferred Stock (41,400,000 depositary shares if the
over-allotment option is exercised in full), with each share of
Preferred Stock having a liquidation preference of
$25,000 per share (equivalent to $25 per depositary
share). Each depositary share represents a
1/1,000th interest in a share of the Preferred Stock. Each
depositary share entitles the holder to a proportional
fractional interest in the Preferred Stock represented by that
depositary share, including dividend, voting, redemption, and
liquidation rights.
We may elect from time to time to issue additional depositary
shares representing interests in the Preferred Stock, without
notice to, or consent from, the existing holders of Preferred
Stock, and all those additional depositary shares would be
deemed to form a single series with the Preferred Stock,
described by this prospectus supplement and the attached
prospectus.
Dividends
We will pay dividends on the Preferred Stock, when, as, and if
declared by our board of directors or a duly authorized
committee of our board, quarterly, in arrears, at a rate of
7.25% per year (equivalent to $1.8125 per depositary share).
Dividends on the Preferred Stock will not be cumulative.
Accordingly, if for any reason our board of directors or a duly
authorized committee of our board does not declare a dividend on
the Preferred Stock for a dividend period prior to the related
dividend payment date, that dividend will not accrue, and we
will have no obligation to pay a dividend for that dividend
period on the quarterly dividend payment date or at any time in
the future, whether or not our board of directors or a duly
authorized committee of our board declares a dividend on the
Preferred Stock or any other series of our preferred stock or
common stock for any future dividend period. A dividend
period is the period from, and including, a dividend
payment date (as defined below) to, but excluding, the next
dividend payment date, except that the initial dividend period
will begin on and include the original issue date of the
depositary shares.
So long as any share of Preferred Stock remains outstanding,
(1) no dividend will be declared and paid or set aside for
payment and no distribution will be declared and made or set
aside for payment on any junior stock (as defined below under
the section Description of the Preferred Stock
Dividends) (other than a dividend payable solely in shares
of junior stock), (2) no shares of junior stock will be
repurchased, redeemed, or otherwise acquired for consideration
by us, directly or indirectly (other than as a result of a
reclassification of junior stock for or into other junior stock,
or the exchange or conversion of one share of junior stock for
or into another share of junior stock, and other than through
the use of the proceeds of a substantially contemporaneous sale
of other shares of junior stock), nor will any monies be paid to
or made available for a sinking fund for the redemption of any
such securities by us, and (3) no shares of parity stock
(as defined below under the section Description of the
Preferred Stock Dividends) will be
repurchased, redeemed, or otherwise acquired for consideration
by us otherwise than pursuant to pro rata offers to purchase
all, or a pro rata portion, of the Preferred Stock and such
parity stock except by conversion into or exchange for shares of
junior stock, during a dividend period, unless, in each case,
the full dividends for the then-current dividend period on all
outstanding shares of the Preferred Stock have been declared and
paid or declared and a sum sufficient for the payment of those
dividends has been set aside. The foregoing limitations do not
apply to purchases or acquisitions of our junior stock pursuant
to any employee or director incentive or
S-4
benefit plan or arrangement (including any of our employment,
severance, or consulting agreement) of ours or of any of our
subsidiaries adopted before or after the date of this prospectus
supplement.
Dividends on the Preferred Stock will not cumulate. Except as
provided below, for so long as any share of Preferred Stock
remains outstanding, we will not declare, pay, or set aside for
payment, dividends on any parity stock unless we have paid in
full, or set aside payment in full, in respect of all dividends
for the then-current dividend period for outstanding shares of
Preferred Stock. To the extent that we declare dividends on the
Preferred Stock and on any parity stock but cannot make full
payment of such declared dividends, we will allocate the
dividend payments on a pro rata basis among the holders of the
shares of Preferred Stock and the holders of any parity stock.
For purposes of calculating the pro rata allocation of partial
dividend payments, we will allocate dividend payments based on
the ratio between the then-current dividend payments due on the
shares of Preferred Stock and the aggregate of the current and
accrued dividends due on any parity stock.
Subject to the conditions described above, and not otherwise,
such dividends (payable in cash, stock, or otherwise), as may be
determined by the board of directors or a duly authorized
committee of our board, may be declared and paid on our common
stock and any other securities ranking equally with or junior to
the Preferred Stock from time to time out of any assets legally
available for such payment, and the holders of the Preferred
Stock shall not be entitled to participate in those dividends.
See Description of the Preferred Stock
Dividends beginning on page S-10 for more information
about the payment of dividends.
Dividend
Payment Dates
Dividends on the Preferred Stock will be payable quarterly,
when, as, and if declared by our board of directors or a duly
authorized committee of our board, on February 1,
May 1, August 1, and November 1 of each year,
beginning on February 1, 2008 (each a dividend
payment date). If any date on which dividends otherwise
would be payable is not a Business Day (as defined below under
Description of the Preferred Stock
Dividends), then the dividend payment date will be the
next succeeding day that is a Business Day, unless that day
falls in the next calendar year, in which case the dividend
payment date will be the immediately preceding Business Day.
Optional
Redemption
The Preferred Stock is perpetual and has no maturity date. We
may redeem the Preferred Stock on any dividend payment date on
or after November 1, 2012, in whole or in part, at a
redemption price equal to $25,000 per share (equivalent to
$25 per depositary share), plus any declared and unpaid
dividends, without accumulation of undeclared dividends.
Redemption of the Preferred Stock is subject to our receipt of
any required prior approval of the Board of Governors of the
Federal Reserve System, or the Federal Reserve
Board, or other regulatory authority. Our redemption of
the Preferred Stock will cause the redemption of the
corresponding depositary shares. Neither the holders of the
Preferred Stock nor the holders of the related depositary shares
will have the right to require redemption.
Liquidation
Rights
In the event of our voluntary or involuntary liquidation,
dissolution, or winding up, the holders of the Preferred Stock
are entitled to receive out of our assets available for
distribution to stockholders, before any distribution of assets
is made to holders of our common stock or any of our other stock
ranking junior to the Preferred Stock as to such distribution, a
liquidating distribution of $25,000 per share (equivalent
to $25 per depositary share), plus any declared and
S-5
unpaid dividends, without accumulation of undeclared dividends.
Distributions will be made only to the extent of our assets
remaining available after satisfaction of all liabilities to
creditors and subject to the rights of holders of any securities
ranking senior to the Preferred Stock and pro rata as to the
Preferred Stock and any other shares of our stock ranking
equally as to such distribution.
Voting
Rights
The holders of depositary shares of the Preferred Stock do not
have voting rights, except in the case of certain dividend
arrearages and except as specifically required by Delaware law.
For more information about voting rights, see Description
of the Preferred Stock Voting Rights on
page S-13 and Description of the Depositary
Shares Voting the Preferred Stock on
page S-22.
Ranking
The Preferred Stock will rank, as to payment of dividends and
distribution of assets upon our liquidation, dissolution, or
winding up, equally with our 7% Cumulative Redeemable Preferred
Stock, Series B (the Series B Preferred
Stock), 6.204% Non-Cumulative Preferred Stock,
Series D (the Series D Preferred Stock),
Floating Rate Non-Cumulative Preferred Stock, Series E (the
Series E Preferred Stock), Floating Rate
Non-Cumulative Preferred Stock, Series F (if and when
issued and outstanding) (the Series F Preferred
Stock), Adjustable Rate Non-Cumulative Preferred Stock,
Series G (if and when issued and outstanding) (the
Series G Preferred Stock), and 6.625%
Non-Cumulative Preferred Stock, Series I (the
Series I Preferred Stock) and senior to our
common stock.
Preemptive
and Conversion Rights
The holders of the depositary shares do not have any preemptive
or conversion rights.
Listing
of Depositary Shares
The depositary shares representing interests in the Preferred
Stock have been approved for listing on the New York Stock
Exchange, subject to notice of issuance, under the symbol
BAC PrJ. We expect trading of the depositary
shares to begin within 30 days after we issue the
depositary shares.
Depository,
Transfer Agent, and Registrar
Computershare Trust Company, N.A. will serve as depository,
transfer agent, and registrar for the Preferred Stock and
transfer agent and registrar for the depositary shares.
S-6
Your investment in the depositary shares involves risks. This
prospectus supplement does not describe all of those risks.
In consultation with your own financial and legal advisors, you
should consider carefully the following risks before deciding
whether an investment in the depositary shares is suitable for
you. The depositary shares are not an appropriate investment for
you if you are not knowledgeable about significant features of
the depositary shares, the Preferred Stock, or financial matters
in general. You should not purchase depositary shares unless you
understand and know that you can bear these investment risks.
You should review carefully the information in this prospectus
supplement and the attached prospectus about the Preferred
Stock, depositary shares, and other securities. For more
information regarding risks that may materially affect our
business and results, please refer to the information under the
caption Item 1A. Risk Factors, in our Annual
Report on
Form 10-K
for the year ended December 31, 2006, which is incorporated
by reference in this prospectus supplement.
You are
making an investment decision about the depositary shares as
well as our Preferred Stock.
As described in this prospectus supplement, we are issuing
fractional interests in shares of our Preferred Stock. Those
fractional interests take the form of depositary shares. The
depository will rely solely on the dividend payments on the
Preferred Stock it receives from us to fund all dividend
payments on the depositary shares. You should review carefully
the information in this prospectus supplement and the attached
prospectus regarding our depositary shares and Preferred Stock.
The
Preferred Stock is an equity security and is subordinate to our
existing and future indebtedness.
The shares of Preferred Stock are our equity interests and do
not constitute indebtedness. This means that the depositary
shares which represent proportional fractional interests in the
shares of Preferred Stock will rank junior to all of our
indebtedness and to other non-equity claims on us and our assets
available to satisfy claims on us, including claims in our
liquidation. Our existing and future indebtedness may restrict
payment of dividends on the Preferred Stock.
Additionally, unlike indebtedness, where principal and interest
customarily are payable on specified due dates, in the case of
preferred stock like the Preferred Stock, (1) dividends are
payable only if declared by our board of directors or a duly
authorized committee of the board and (2) as a corporation,
we are subject to restrictions on dividend payments and
redemption payments out of lawfully available assets. Further,
the Preferred Stock places no restrictions on our business or
operations or on our ability to incur indebtedness or engage in
any transactions, subject only to the limited voting rights
referred to below under Risk Factors Holders
of the Preferred Stock will have limited voting rights.
Also, as a bank holding company, our ability to declare and pay
dividends depends on a number federal regulatory considerations.
The
Preferred Stock may be junior in rights and preferences to our
future preferred stock.
The Preferred Stock may be junior to preferred stock we issue in
the future, which by its terms is expressly senior to the
Preferred Stock. The terms of any of our future preferred stock
expressly senior to the Preferred Stock may restrict dividend
payments on the Preferred Stock, except for dividends payable
solely in shares of the Preferred Stock. Unless full dividends
for all of our outstanding preferred stock senior to the
Preferred Stock have been declared and paid or
S-7
set aside for payment, no dividends will be declared or paid and
no distribution will be made on any shares of the Preferred
Stock, and no shares of the Preferred Stock may be repurchased,
redeemed, or otherwise acquired by us, directly or indirectly,
for consideration. This could result in dividends on the
Preferred Stock not being paid when due to you.
Dividends
on the Preferred Stock are non-cumulative.
Dividends on the Preferred Stock are non-cumulative.
Consequently, if our board of directors or a duly authorized
committee of our board does not authorize and declare a dividend
for any dividend period prior to the related dividend payment
date, holders of the Preferred Stock would not be entitled to
receive a dividend for that dividend period, and the unpaid
dividend will cease to accrue and be payable. We will have no
obligation to pay dividends accrued for a dividend period after
the dividend payment date for that period if our board of
directors or a duly authorized committee of the board has not
declared a dividend before the related dividend payment date,
whether or not dividends on the Preferred Stock or any other
series of our preferred stock or our common stock are declared
for any future dividend period.
Investors
should not expect us to redeem the Preferred Stock on the date
it becomes redeemable or on any particular date after it becomes
redeemable.
The Preferred Stock is a perpetual equity security. This means
that it has no maturity or mandatory redemption date and is not
redeemable at the option of investors, including the holders of
the depositary shares offered by this prospectus supplement. The
Preferred Stock may be redeemed by us at our option, either in
whole or in part, on any dividend payment date on or after
November 1, 2012. Any decision we may make at any time to
propose a redemption of the Preferred Stock will depend upon,
among other things, our evaluation of our capital position, the
composition of our shareholders equity, and general market
conditions at that time.
Our right to redeem the Preferred Stock is subject to
limitations. Under the Federal Reserve Boards risk-based
capital guidelines applicable to bank holding companies, any
redemption of the Preferred Stock is subject to prior approval
of the Federal Reserve Board. We cannot assure you that the
Federal Reserve Board will approve any redemption of the
Preferred Stock that we may propose.
If we are
deferring payments on our outstanding junior subordinated notes
or are in default under the indentures governing those
securities, we will be prohibited from making distributions on
or redeeming the Preferred Stock.
The terms of our outstanding junior subordinated notes prohibit
us from declaring or paying any dividends or distributions on
our preferred stock, including the Preferred Stock, or
redeeming, purchasing, acquiring, or making a liquidation
payment on the Preferred Stock, if we are aware of any event
that would be an event of default under the indenture governing
those junior subordinated notes or at any time when we have
deferred payment of interest on those junior subordinated notes.
An active
trading market for the Preferred Stock and the related
depositary shares does not exist and may not develop.
The Preferred Stock and the related depositary shares are new
issues of securities with no established trading market. The
depositary shares representing interests in the Preferred Stock
have been approved for listing on the New York Stock Exchange,
subject to notice of issuance. Listing of the depositary shares
on the New York Stock Exchange does not guarantee that a trading
market for the depositary shares will develop or, if a trading
market for the depositary shares does develop, the depth or
liquidity of that market or the ability of the holders to sell
their depositary shares. We do not expect that there will be any
separate public trading market for the
S-8
shares of the Preferred Stock except as represented by the
depositary shares. Because the Preferred Stock does not have a
stated maturity date, investors seeking liquidity in the
depositary shares will be limited to selling their depositary
shares in the secondary market.
Holders
of the Preferred Stock will have limited voting
rights.
Holders of the Preferred Stock have no voting rights with
respect to matters that generally require the approval of voting
stockholders. Holders of the Preferred Stock will have voting
rights only as specifically required by Delaware law and as
described below. If dividends on any shares of the Preferred
Stock or any other class or series of preferred stock that ranks
equally with the Preferred Stock as to payment of dividends and
with similar voting rights have not been declared or paid for
the equivalent of six or more quarterly dividend periods,
whether or not for consecutive dividend periods, holders of the
outstanding shares the Preferred Stock, together with holders of
any other series of our preferred stock ranking equally with the
Preferred Stock as to payment of dividends and with similar
voting rights, will be entitled to vote for the election of two
additional directors to our board, subject to the terms and to
the limited extent described under Description of the
Preferred Stock Voting Rights on
page S-13.
Holders of depositary shares must act through the depository to
exercise any voting rights of the Preferred Stock.
Our
ability to pay dividends depends upon the results of operations
of our subsidiaries.
We are a holding company that conducts substantially all of our
operations through our banks and other subsidiaries. As a
result, our ability to make dividend payments on the Preferred
Stock depends primarily upon the receipt of dividends and other
distributions from our subsidiaries. There are various
regulatory restrictions on the ability of our banking
subsidiaries to pay dividends or make other payments to us.
In addition, our right to participate in any distribution of
assets of any of our subsidiaries upon the subsidiarys
liquidation or otherwise, and thus your ability as a holder of
the depositary shares to benefit indirectly from such
distribution, will be subject to the prior claims of creditors
of that subsidiary, except to the extent that any of our claims
as a creditor of such subsidiary may be recognized. As a result,
the depositary shares effectively will be subordinated to all
existing and future liabilities and obligations of our
subsidiaries.
Holders
of depositary shares may be unable to use the dividends received
deduction and may not be eligible for the preferential tax rates
applicable to qualified dividend income.
Distributions paid to corporate U.S. Holders of the
depositary shares out of dividends on the Preferred Stock may be
eligible for the dividends received deduction, and distributions
paid to non-corporate U.S. Holders of the depositary shares
out of those dividends may be subject to tax at the preferential
tax rates applicable to qualified dividend income,
if we have current or accumulated earnings and profits, as
determined for U.S. federal income tax purposes. Although
we presently have accumulated earnings and profits, we may not
have sufficient current or accumulated earnings and profits
during future fiscal years for the distributions on the
Preferred Stock to qualify as dividends for U.S. federal
income tax purposes. If the distributions fail to qualify as
dividends, U.S. Holders would be unable to use the
dividends received deduction and may not be eligible for the
preferential tax rates applicable to qualified dividend
income. If any distributions on the Preferred Stock with
respect to any fiscal year are not eligible for the dividends
received deduction or preferential tax rates applicable to
qualified dividend income because of insufficient
current or accumulated earnings and profits, the market value of
the depositary shares may decline.
S-9
DESCRIPTION
OF THE PREFERRED STOCK
You should read the following description of the Preferred
Stock along with the Description of Preferred Stock
beginning on page 44 of the attached prospectus. This
description of the Preferred Stock is qualified by the
Certificate of Designations relating to the Preferred Stock
(Certificate of Designations), and where this
description is inconsistent with the description of the
Preferred Stock in the Certificate of Designations, the
Certificate of Designations will control.
Shares of the Preferred Stock represent a single series of our
authorized preferred stock. We are offering
36,000,000 depositary shares, representing
36,000 shares of the Preferred Stock, by this prospectus
supplement and the attached prospectus. Holders of the Preferred
Stock have no preemptive rights. Shares of the Preferred Stock,
upon issuance against full payment of the purchase price for the
depositary shares, will be fully paid and nonassessable. The
depository will be the sole holder of shares of the Preferred
Stock. The holders of depositary shares will be required to
exercise their proportional rights in the Preferred Stock
through the depository, as described in Description of the
Depositary Shares on page S-21.
On the date of original issuance, the Preferred Stock will rank
equally with our Series B Preferred Stock, Series D
Preferred Stock, Series E Preferred Stock, Series F
Preferred Stock (if and when issued and outstanding),
Series G Preferred Stock (if and when issued and
outstanding), and Series I Preferred Stock as to payment of
dividends and distribution of assets upon our liquidation,
dissolution or winding up. The Preferred Stock, together with
any other series of our preferred stock, will rank senior to our
common stock, and any of our other stock that is expressly made
junior to our preferred stock, as to payment of dividends and
distribution of assets upon our liquidation, dissolution, or
winding up. We may from time to time, without notice to or
consent from the holders of the Preferred Stock, create and
issue additional shares of preferred stock ranking senior to or
equally with the Preferred Stock as to dividends and
distribution of assets upon our liquidation, dissolution, or
winding up.
The Preferred Stock will not be convertible into, or
exchangeable for, shares of any other class or series of our
stock or other securities and will not be subject to any sinking
fund or our other obligation to redeem or repurchase the
Preferred Stock.
Dividends on shares of the Preferred Stock will not be
mandatory. Holders of the Preferred Stock will be entitled to
receive, when, as, and if declared by our board of directors or
a duly authorized committee of our board, out of our assets
legally available under Delaware law for payment, non-cumulative
cash dividends at a rate per year of 7.25% (equivalent to
$1.8125 per depositary share).
If declared by our board of directors or a duly authorized
committee of our board, we will pay dividends on the Preferred
Stock quarterly, in arrears, on February 1, May 1,
August 1, and November 1 of each year, beginning on
February 1, 2008. We will pay dividends to the holders of
record of shares of the Preferred Stock as they appear on our
stock register on each record date, not exceeding 30 days
before the applicable payment date, as shall be fixed by our
board of directors or a duly authorized committee of our board.
If any date on which dividends otherwise would be payable is not
a Business Day, then the dividend payment date will be the next
succeeding day that is a Business Day, unless that day falls in
the next calendar year, in which case the dividend payment date
will be the immediately preceding Business Day. A Business
Day means any weekday that is not a legal holiday in New
York, New York or Charlotte, North Carolina and is not a day on
which banking institutions in those cities are authorized or
required by law or regulation to be closed.
S-10
Dividends on the Preferred Stock will not be cumulative. If our
board of directors or a duly authorized committee of our board
does not declare a dividend on the Preferred Stock for any
dividend period prior to the related dividend payment date, that
dividend will not accrue, and we will have no obligation to pay
a dividend for that dividend period on the related dividend
payment date or at any future time, whether or not dividends on
the Preferred Stock or any other series of our preferred stock
or common stock are declared for any future dividend period. A
dividend period means the period from, and
including, each dividend payment date to, but excluding, the
next succeeding dividend payment date, except for the initial
dividend period, which will be the period from, and including,
November 20, 2007 to, but excluding, the next succeeding
dividend payment date.
Dividends on the Preferred Stock will accrue from the original
issue date at a rate of 7.25% per year (equivalent to $1.8125
per depositary share) on the liquidation preference amount of
$25,000 per share (equivalent to $25 per depositary
share). If we issue additional shares of the Preferred Stock,
dividends on those additional shares will accrue from the
original issue date of those additional shares at the same rate.
We will calculate dividends on the Preferred Stock on the basis
of a 360-day
year of twelve
30-day
months. Dividends on the Preferred Stock will cease to accrue
after the redemption date, as described below under
Optional Redemption, unless we default
in the payment of the redemption price of the shares of the
Preferred Stock called for redemption.
So long as any share of Preferred Stock remains outstanding,
(1) no dividend will be declared and paid or set aside for
payment and no distribution will be declared and made or set
aside for payment on any junior stock (other than a dividend
payable solely in shares of junior stock), (2) no shares of
junior stock will be repurchased, redeemed, or otherwise
acquired for consideration by us, directly or indirectly (other
than as a result of a reclassification of junior stock for or
into other junior stock, or the exchange or conversion of one
share of junior stock for or into another share of junior stock,
and other than through the use of the proceeds of a
substantially contemporaneous sale of other shares of junior
stock), nor shall any monies be paid to or made available for a
sinking fund for the redemption of any such securities by us,
and (3) no shares of parity stock will be repurchased,
redeemed or otherwise acquired for consideration by us otherwise
than pursuant to pro rata offers to purchase all, or a pro rata
portion, of the Preferred Stock and such parity stock except by
conversion into or exchange for junior stock, during a dividend
period, unless, in each case, the full dividends for the
then-current dividend period on all outstanding shares of the
Preferred Stock have been declared and paid or declared and a
sum sufficient for the payment of those dividends has been set
aside. The foregoing limitations do not apply to purchases or
acquisitions of our junior stock pursuant to any employee or
director incentive or benefit plan or arrangement (including any
of our employment, severance, or consulting agreements) of ours
or of any of our subsidiaries adopted before or after the date
of this prospectus supplement.
Dividends on the Preferred Stock will not cumulate. Except as
provided below, for so long as any share of Preferred Stock
remains outstanding, we will not declare, pay, or set aside for
payment dividends on any parity stock unless we have paid in
full, or set aside payment in full, in respect of all dividends
for the then-current dividend period for outstanding shares of
Preferred Stock. To the extent that we declare dividends on the
Preferred Stock and on any parity stock but cannot make full
payment of such declared dividends, we will allocate the
dividend payments on a pro rata basis among the holders of the
shares of Preferred Stock and the holders of any parity stock.
For purposes of calculating the pro rata allocation of partial
dividend payments, we will allocate dividend payments based on
the ratio between the then-current dividend payments due on the
shares of Preferred Stock and the aggregate of the current and
accrued dividends due on any parity stock.
S-11
As used in this prospectus supplement, junior stock
means our common stock and any other class or series of our
capital stock over which the Preferred Stock has preference or
priority in the payment of dividends or in the distribution of
assets on our liquidation, dissolution, or winding up, and
parity stock means any other class or series of our
capital stock that ranks on a par with the Preferred Stock in
the payment of dividends and in the distribution of assets on
our liquidation, dissolution or winding up. Parity stock
includes our Series B Preferred Stock, Series D
Preferred Stock, Series E Preferred Stock, Series F
Preferred Stock (if and when issued and outstanding),
Series G Preferred Stock (if and when issued and
outstanding), and Series I Preferred Stock described under
Description of the Preferred Stock Authorized
Classes of Preferred Stock beginning on
page S-14.
Subject to the conditions described above, and not otherwise,
dividends (payable in cash, stock, or otherwise), as may be
determined by our board of directors or a duly authorized
committee of our board, may be declared and paid on our common
stock and any other stock ranking equally with or junior to the
Preferred Stock from time to time out of any assets legally
available for such payment, and the holders of the Preferred
Stock will not be entitled to participate in those dividends.
Upon our voluntary or involuntary liquidation, dissolution, or
winding up, the holders of the Preferred Stock are entitled to
receive, out of our assets available for distribution to
stockholders, before any distribution of assets is made to
holders of our common stock or any of our other shares of stock
ranking junior to the Preferred Stock as to distributions upon
our liquidation, dissolution, or winding up, a liquidating
distribution in the amount of $25,000 per share (equivalent
to $25 per depositary share), plus declared and unpaid
dividends, if any, without accumulation of any undeclared
dividends. After payment of this liquidating distribution, the
holders of the Preferred Stock will not be entitled to any
further participation in any distribution of our assets.
Our consolidation or merger with one or more other entities will
not be deemed to be a voluntary or involuntary liquidation,
dissolution, or winding up.
Because we are a holding company, our rights and the rights of
our creditors and our stockholders, including the holders of the
Preferred Stock, to participate in the assets of any of our
subsidiaries upon that subsidiarys liquidation or
recapitalization may be subject to the prior claims of that
subsidiarys creditors, except to the extent that we are a
creditor with recognized claims against the subsidiary.
The Preferred Stock is not subject to any mandatory redemption,
sinking fund, or other similar provisions. However, we may
redeem shares of the Preferred Stock on any dividend payment
date on or after November 1, 2012, in whole or in part, at
a redemption price equal to $25,000 per share (equivalent
to $25 per depositary share), plus declared and unpaid
dividends, if any, up to the redemption date. Dividends will
cease to accrue after the redemption date. Redemption of the
Preferred Stock is subject to our receipt of any required prior
approvals from the Federal Reserve Board or any other regulatory
authority.
If we redeem shares of the Preferred Stock, we will provide
notice by first class mail to the holders of record of the
shares of the Preferred Stock to be redeemed. That notice will
be mailed not less than 30 days and not more than
60 days prior to the date fixed for the redemption. Each
notice of redemption will include a statement setting forth:
(i) the redemption date;
S-12
(ii) the number of shares of the Preferred Stock to be
redeemed and, if less than all the shares held by the holder are
to be redeemed, the number of shares of the Preferred Stock to
be redeemed from the holder;
(iii) the redemption price;
(iv) the place or places where the certificates for those
shares are to be surrendered for payment of the redemption
price; and
(v) that dividends on the shares to be redeemed will cease
to accrue on the redemption date.
Neither the holders of the Preferred Stock nor the holders of
the related depositary shares have the right to require
redemption of the Preferred Stock.
The holders of the Preferred Stock do not have voting rights
other than those described below, except as specifically
required by Delaware law.
Whenever dividends payable on the Preferred Stock or any other
class or series of preferred stock ranking equally with the
Preferred Stock as to payment of dividends and upon which voting
rights equivalent to those described in this paragraph have been
conferred and are exercisable, have not been declared and paid
in an aggregate amount equal, as to any class or series, to at
least six or more quarterly dividend periods, whether or not for
consecutive dividend periods (a Nonpayment), the
holders of outstanding shares of the Preferred Stock voting as a
class with holders of shares of any other series of our
preferred stock ranking equally with the Preferred Stock as to
payment of dividends, and upon which like voting rights have
been conferred and are exercisable, will be entitled to vote for
the election of two additional directors of our board of
directors on the terms set forth below (the Preferred
Stock Directors). Holders of all series of our preferred
stock that are granted these voting rights and that rank equally
with the Preferred Stock will vote as a single class. In the
event that the holders of the shares of the Preferred Stock are
entitled to vote as described in this paragraph, our board of
directors will be increased by two directors, and the holders of
the Preferred Stock will have the right, as members of that
class, as outlined above, to elect two directors at the next
annual meeting of our stockholders, provided that the election
of any Preferred Stock Directors shall not cause us to violate
the corporate governance requirements of the New York Stock
Exchange (or any other exchange on which our securities may be
listed) that listed companies must have a majority of
independent directors, and provided further that at no time
shall our board of directors include more than two Preferred
Stock Directors.
When we have paid full dividends for at least four quarterly
dividend periods following a Nonpayment on the Preferred Stock
and any other series of our preferred stock ranking equally with
the Preferred Stock, the voting rights described above will
terminate, except as expressly provided by law. The voting
rights described above are subject to re-vesting upon each and
every subsequent Nonpayment.
Upon termination of the right of the holders of the Preferred
Stock to vote for Preferred Stock Directors as described above,
the term of office of all Preferred Stock Directors then in
office elected by only those holders will terminate immediately.
Whenever the term of office of the Preferred Stock Directors
ends and the related voting rights have expired, the number of
directors automatically will be decreased to the number of
directors as otherwise would prevail.
S-13
Without the consent of the holders of the Preferred Stock, so
long as such action does not adversely affect the interests of
holders of the Preferred Stock, we may amend, alter, supplement,
or repeal any terms of the Preferred Stock for the following
purposes:
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to cure any ambiguity, or to cure, correct, or supplement any
provision contained in the Certificate of Designations for the
Preferred Stock that may be ambiguous, defective, or
inconsistent; or
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to make any provision with respect to matters or questions
relating to the Preferred Stock that is not inconsistent with
the provisions of the Certificate of Designations for the
Preferred Stock.
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Preemptive
and Conversion Rights
The holders of the Preferred Stock do not have any preemptive or
conversion rights.
Outstanding
Preferred Stock
Under our Certificate of Incorporation, we have authority to
issue up to 100,000,000 shares of preferred stock,
$0.01 par value per share. We may issue preferred stock in
one or more series, each with the preferences, designations,
limitations, conversion rights, and other rights as we may
determine.
As of the date of this prospectus supplement, in addition to the
Preferred Stock, we have authorized the following series of our
preferred stock:
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(a)
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35,045 shares of Series B Preferred Stock,
7,739 shares of which were issued and outstanding at
September 30, 2007;
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(b)
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34,500 shares of Series D Preferred Stock,
33,000 shares of which were issued and outstanding at
September 30, 2007;
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(c)
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85,100 shares of Series E Preferred Stock,
81,000 shares of which were issued and outstanding at
September 30, 2007;
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(d)
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7,001 shares of Series F Preferred Stock, no shares of
which were issued and outstanding at September 30, 2007;
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(e)
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8,501 shares of Series G Preferred Stock, no shares of
which were issued and outstanding at September 30, 2007; and
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(f)
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25,300 shares of Series I Preferred Stock, 22,000
shares of which were issued and outstanding at
September 30, 2007.
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As of the date of this prospectus supplement, the aggregate
liquidation preference of all of our outstanding preferred
stock, excluding the Preferred Stock, is $3,400,773,900.
Authorized
Classes of Preferred Stock
The following summary of our Series B Preferred Stock,
Series D Preferred Stock, Series E Preferred Stock,
Series F Preferred Stock, Series G Preferred Stock,
and Series I Preferred Stock is qualified in its entirety
by reference to the descriptions of those securities contained
in our Certificate of Incorporation and the respective
certificate of designations for each series.
A detailed description of the terms of our Series B
Preferred Stock is included in the attached prospectus,
beginning on page 45.
S-14
Preferential Rights. The Series D
Preferred Stock ranks senior to our common stock and ranks
equally with our Series B Preferred Stock, Series E
Preferred Stock, Series F Preferred Stock, Series G
Preferred Stock, and Series I Preferred Stock as to
dividends and distributions on our liquidation, dissolution, or
winding up. Series D Preferred Stock is not convertible
into or exchangeable for any shares of our common stock or any
other class of our capital stock. Holders of the Series D
Preferred Stock do not have any preemptive rights. We may issue
stock with preferences superior or equal to the Series D
Preferred Stock without the consent of the holders of the
Series D Preferred Stock.
Dividends. Holders of the Series D
Preferred Stock are entitled to receive cash dividends, when,
as, and if declared by our board of directors or a duly
authorized committee of our board, at an annual dividend rate
per share of 6.204% on the liquidation preference of
$25,000 per share. Dividends on the Series D Preferred
Stock are non-cumulative and are payable quarterly in arrears.
As long as shares of Series D Preferred Stock remain
outstanding, we cannot declare or pay cash dividends on any
shares of our common stock or other capital stock ranking junior
to the Series D Preferred Stock unless full dividends on
all outstanding shares of Series D Preferred Stock for the
then-current dividend period have been paid in full or declared
and a sum sufficient for the payment thereof set aside. We
cannot declare or pay cash dividends on capital stock ranking
equally with the Series D Preferred Stock for any period
unless full dividends on all outstanding shares of Series D
Preferred Stock for the then-current dividend period have been
paid in full or declared and a sum sufficient for the payment
thereof set aside. If we declare dividends on the Series D
Preferred Stock and on any capital stock ranking equally with
the Series D Preferred Stock but cannot make full payment
of those declared dividends, we will allocate the dividend
payments on a pro rata basis among the holders of the shares of
Series D Preferred Stock and the holders of any capital
stock ranking equally with the Series D Preferred Stock.
Voting Rights. Holders of Series D
Preferred Stock do not have voting rights, except as
specifically required by Delaware law and in the case of certain
dividend arrearages in relation to the Series D Preferred
Stock. If any quarterly dividend payable on the Series D
Preferred Stock is in arrears for six or more quarterly dividend
periods, whether or not for consecutive dividend periods, the
holders of the Series D Preferred Stock will be entitled to
vote as a class, together with the holders of all series of our
preferred stock ranking equally with the Series D Preferred
Stock as to payment of dividends and upon which voting rights
equivalent to those granted to the holders of Series D
Preferred Stock have been conferred and are exercisable, for the
election of two Preferred Stock Directors. When we have paid
full dividends on the Series D Preferred Stock for at least
four quarterly dividend periods following a dividend arrearage
described above, these voting rights will terminate.
Distributions. In the event of our voluntary
or involuntary liquidation, dissolution, or winding up, holders
of Series D Preferred Stock are entitled to receive out of
assets legally available for distribution to stockholders,
before any distribution or payment out of our assets may be made
to or set aside for the holders of our capital stock ranking
junior to the Series D Preferred Stock as to distributions,
a liquidating distribution in the amount of the liquidation
preference of $25,000 per share, plus any declared and
unpaid dividends, without accumulation of any undeclared
dividends, to the date of liquidation. Shares of Series D
Preferred Stock are not subject to a sinking fund.
Redemption. We may redeem the Series D
Preferred Stock, in whole or in part, at our option, on any
dividend payment date for the Series D Preferred Stock on
or after September 14, 2011, at the redemption price equal
to $25,000 per share, plus any accrued and unpaid dividends.
S-15
Preferential Rights. The Series E
Preferred Stock ranks senior to our common stock and ranks
equally with our Series B Preferred Stock, Series D
Preferred Stock, Series F Preferred Stock, Series G
Preferred Stock, and Series I Preferred Stock as to
dividends and distributions on our liquidation, dissolution, or
winding up. Series E Preferred Stock is not convertible
into or exchangeable for any shares of our common stock or any
other class of our capital stock. Holders of the Series E
Preferred Stock do not have any preemptive rights. We may issue
stock with preferences superior or equal to the Series E
Preferred Stock without the consent of the holders of the
Series E Preferred Stock.
Dividends. Holders of the Series E
Preferred Stock are entitled to receive cash dividends when, as,
and if declared by our board of directors or a duly authorized
committee of our board, on the liquidation preference of
$25,000 per share at an annual rate per share equal to the
greater of (a) Three-Month LIBOR plus a spread of 0.35%,
and (b) 4.00%. Dividends on the Series E Preferred
Stock are non-cumulative and are payable quarterly in arrears.
As long as shares of Series E Preferred Stock remain
outstanding, we cannot declare or pay cash dividends on any
shares of our common stock or other capital stock ranking junior
to the Series E Preferred Stock unless full dividends on
all outstanding shares of Series E Preferred Stock for the
then-current dividend period have been paid in full or declared
and a sum sufficient for the payment thereof set aside. We
cannot declare or pay cash dividends on capital stock ranking
equally with the Series E Preferred Stock for any period
unless full dividends on all outstanding shares of Series E
Preferred Stock for the then-current dividend period have been
paid in full or declared and a sum sufficient for the payment
thereof set aside. If we declare dividends on the Series E
Preferred Stock and on any capital stock ranking equally with
the Series E Preferred Stock but cannot make full payment
of those declared dividends, we will allocate the dividend
payments on a pro rata basis among the holders of the shares of
Series E Preferred Stock and the holders of any capital
stock ranking equally with the Series E Preferred Stock.
Voting Rights. Holders of Series E
Preferred Stock do not have voting rights, except as
specifically required by Delaware law and in the case of certain
dividend arrearages in relation to the Series E Preferred
Stock. If any quarterly dividend payable on the Series E
Preferred Stock is in arrears for six or more quarterly dividend
periods, whether or not for consecutive dividend periods, the
holders of the Series E Preferred Stock will be entitled to
vote as a class, together with the holders of all series of our
preferred stock ranking equally with the Series E Preferred
Stock as to payment of dividends and upon which voting rights
equivalent to those granted to the holders of Series E
Preferred Stock have been conferred and are exercisable, for the
election of two Preferred Stock Directors. When we have paid
full dividends on the Series E Preferred Stock for at least
four quarterly dividend periods following a dividend arrearage
described above, these voting rights will terminate.
Distributions. In the event of our voluntary
or involuntary liquidation, dissolution, or winding up, holders
of Series E Preferred Stock are entitled to receive out of
assets legally available for distribution to stockholders,
before any distribution or payment out of our assets may be made
to or set aside for the holders of our capital stock ranking
junior to the Series E Preferred Stock as to distributions,
a liquidating distribution in the amount of the liquidation
preference of $25,000 per share, plus any declared and
unpaid dividends, without accumulation of any undeclared
dividends, to the date of liquidation. Shares of Series E
Preferred Stock are not subject to a sinking fund.
Redemption. We may redeem the Series E
Preferred Stock in whole or in part, at our option, on any
dividend payment date for the Series E Preferred Stock on
or after November 15, 2011, at the redemption price equal
to $25,000 per share, plus any accrued and unpaid dividends.
S-16
Preferential Rights. The Series F
Preferred Stock ranks senior to our common stock and ranks
equally with the Series B Preferred Stock, Series D
Preferred Stock, Series E Preferred Stock, Series G
Preferred Stock, and Series I Preferred Stock as to
dividends and distributions on our liquidation, dissolution, or
winding up. The Series F Preferred Stock is not convertible
into or exchangeable for any shares of our common stock or any
other class of our capital stock. Holders of the Series F
Preferred Stock do not have any preemptive rights. We may issue
stock with preferences superior or equal to the Series F
Preferred Stock without the consent of the holders of the
Series F Preferred Stock.
Dividends. Holders of the Series F
Preferred Stock are entitled to receive cash dividends, when,
as, and if declared by our board of directors or a duly
authorized committee of our board out of funds legally available
for payment, on the liquidation preference of $100,000 per
share of Series F Preferred Stock. Dividends on each share
of Series F Preferred Stock will accrue on the liquidation
preference of $100,000 per share (1) if the
Series F Preferred Stock is issued before March 15,
2012, to, but excluding, March 15, 2012, at a rate per year
equal to Three-Month LIBOR plus a spread of 0.40%, and
(2) thereafter at a rate per year equal to the greater of
(a) Three-Month LIBOR plus a spread of 0.40%, and
(b) 4.00%. Dividends on the Series F Preferred Stock
are non-cumulative and are payable quarterly in arrears. As long
as shares of Series F preferred Stock remain outstanding,
we cannot declare or pay cash dividends on any shares of our
common stock or other capital stock ranking junior to the
Series F Preferred Stock unless full dividends on all
outstanding shares of Series F Preferred Stock for the
then-current dividend period have been paid in full or declared
and a sum sufficient for the payment thereof set aside. We
cannot declare or pay cash dividends on capital stock ranking
equally with the Series F Preferred Stock unless full
dividends on all outstanding shares of Series F Preferred
Stock for the then-current dividend period have been paid in
full or declared and a sum sufficient for the payment thereof
set aside. If we declare dividends on the Series F
Preferred Stock and on any capital stock ranking equally with
the Series F Preferred Stock but cannot make full payment
of those declared dividends, we will allocate the dividend
payments on a pro rata basis among the holders of the shares of
Series F Preferred Stock and the holders of any capital
stock ranking equally with the Series F Preferred Stock.
Voting Rights. Holders of Series F
Preferred Stock do not have voting rights, except as
specifically required by Delaware law.
Distributions. In the event of our voluntary
of involuntary liquidation, dissolution, or winding up, holders
of Series F Preferred Stock are entitled to receive out of
assets legally available for distribution to stockholders,
before any distribution or payment out of our assets may be made
to or set aside for the holders of our capital stock ranking
junior to the Series F Preferred Stock as to distributions,
a liquidating distribution in the amount of the liquidation
preference of $100,000 per share, plus any declared and
unpaid dividends, without accumulation of any undeclared
dividends, to the date of liquidation. Shares of Series F
Preferred Stock are not subject to a sinking fund.
Redemption. We may redeem the Series F
Preferred Stock, in whole or in part, at our option, on any
dividend payment date for the Series F Preferred Stock on
or after the later of March 15, 2012 and the date of
original issuance of the Series F Preferred Stock at the
redemption price equal to $100,000 per share, plus
dividends that have been declared but not paid plus any accrued
and unpaid dividends for the then-current dividend period to the
redemption date.
Preferential Rights. The Series G
Preferred Stock ranks senior to our common stock and ranks
equally with the Series B Preferred Stock, Series D
Preferred Stock, Series E Preferred
S-17
Stock, Series F Preferred Stock, and Series I
Preferred Stock as to dividends and distributions on our
liquidation, dissolution, or winding up. The Series G
Preferred Stock is not convertible into or exchangeable for any
shares of our common stock or any other class of our capital
stock. Holders of the Series G Preferred Stock do not have
any preemptive rights. We may issue stock with preferences
superior or equal to the Series G Preferred Stock without
the consent of the holders of the Series G Preferred Stock.
Dividends. Holders of the Series G
Preferred Stock are entitled to receive cash dividends when, as,
and if declared by our board of directors or a duly authorized
committee thereof out of funds legally available for payment, on
the liquidation preference of $100,000 per share of
Series G Preferred Stock, payable as follows: (1) if
the Series G Preferred Stock is issued before
March 15, 2012, semi-annually in arrears through
March 15, 2012, and (2) from, and including, the later
of March 15, 2012 and the date the Series G Preferred
Stock is issued, quarterly in arrears. Dividends on each share
of Series G Preferred Stock will accrue on the liquidation
preference of $100,000 per share (1) if the
Series G Preferred Stock is issued before March 15,
2012, to, but excluding, March 15, 2012, at a rate per year
equal to 5.63% and (2) thereafter at a rate per year equal
to the greater of (a) Three-Month LIBOR plus a spread of
0.40%, and (b) 4.00%. Dividends on the Series G
Preferred Stock are non-cumulative. As long as shares of
Series G Preferred Stock remain outstanding, we cannot
declare or pay cash dividends on any shares of our common stock
or other capital stock ranking junior to the Series G
Preferred Stock unless full dividends on all outstanding shares
of Series G Preferred Stock for the then-current dividend
period have been paid in full or declared and a sum sufficient
for the payment thereof set aside. We cannot declare or pay cash
dividends on capital stock ranking equally with the
Series G Preferred Stock unless full dividends on all
outstanding shares of Series G Preferred Stock for the
then-current dividend period have been paid in full or declared
and a sum sufficient for the payment thereof set aside. If we
declare dividends on the Series G Preferred Stock and on
any capital stock ranking equally with the Series G
Preferred Stock but cannot make full payment of those declared
dividends, we will allocate the dividend payments on a pro rata
basis among the holders of the shares of Series G Preferred
Stock and the holders of any capital stock ranking equally with
the Series G Preferred Stock.
Voting Rights. Holders of Series G
Preferred Stock do not have voting rights, except as
specifically required by Delaware law.
Distributions. In the event of our voluntary
or involuntary liquidation, dissolution, or winding up, holders
of Series G Preferred Stock are entitled to receive out of
assets legally available for distribution to stockholders,
before any distribution or payment out of our assets may be made
to or set aside for the holders of capital stock ranking junior
to the Series G Preferred Stock as to distributions, a
liquidating distribution in the amount of the liquidation
preference of $100,000 per share, plus any declared and
unpaid dividends, without accumulation of any undeclared
dividends, to the date of liquidation. Shares of Series G
Preferred Stock are not subject to a sinking fund.
Redemption. We may redeem the Series G
Preferred Stock, in whole or in part, at our option, on any
dividend payment date for the Series G Preferred Stock on
or after the later of March 15, 2012 and the date of
original issuance of the Series G Preferred Stock at the
redemption price equal to $100,000 per share, plus
dividends that have been declared but not paid plus any accrued
and unpaid dividends for the then-current dividend period to the
redemption date.
Preferential Rights. The Series I
Preferred Stock ranks senior to our common stock and ranks
equally with our Series B Preferred Stock, Series D
Preferred Stock, Series E Preferred Stock, Series F
Preferred Stock, and Series G Preferred Stock as to
dividends and distributions
S-18
on our liquidation, dissolution, or winding up. Series I
Preferred Stock is not convertible into or exchangeable for any
shares of our common stock or any other class of our capital
stock. Holders of the Series I Preferred Stock do not have
any preemptive rights. We may issue stock with preferences
superior or equal to the Series I Preferred Stock without
the consent of the holders of the Series I Preferred Stock.
Dividends. Holders of the Series I
Preferred Stock are entitled to receive cash dividends, when,
as, and if declared by our board of directors or a duly
authorized committee of our board, at an annual dividend rate
per share of 6.625% on the liquidation preference of
$25,000 per share. Dividends on the Series I Preferred
Stock are non-cumulative and are payable quarterly in arrears.
As long as shares of Series I Preferred Stock remain
outstanding, we cannot declare or pay cash dividends on any
shares of our common stock or other capital stock ranking junior
to the Series I Preferred Stock unless full dividends on
all outstanding shares of Series I Preferred Stock for the
then-current dividend period have been paid in full or declared
and a sum sufficient for the payment thereof set aside. We
cannot declare or pay cash dividends on capital stock ranking
equally with the Series I Preferred Stock for any period
unless full dividends on all outstanding shares of Series I
Preferred Stock for the then-current dividend period have been
paid in full or declared and a sum sufficient for the payment
thereof set aside. If we declare dividends on the Series I
Preferred Stock and on any capital stock ranking equally with
the Series I Preferred Stock but cannot make full payment
of those declared dividends, we will allocate the dividend
payments on a pro rata basis among the holders of the shares of
Series I Preferred Stock and the holders of any capital
stock ranking equally with the Series I Preferred Stock.
Voting Rights. Holders of Series I
Preferred Stock do not have voting rights, except as
specifically required by Delaware law and in the case of certain
dividend arrearages in relation to the Series I Preferred
Stock. If any quarterly dividend payable on the Series I
Preferred Stock is in arrears for six or more quarterly dividend
periods, whether or not for consecutive dividend periods, the
holders of the Series I Preferred Stock will be entitled to
vote as a class, together with the holders of all series of our
preferred stock ranking equally with the Series I Preferred
Stock as to payment of dividends and upon which voting rights
equivalent to those granted to the holders of Series I
Preferred Stock have been conferred and are exercisable, for the
election of two Preferred Stock Directors. When we have paid
full dividends on the Series I Preferred Stock for at least
four quarterly dividend periods following a dividend arrearage
described above, these voting rights will terminate.
Distributions. In the event of our voluntary
or involuntary liquidation, dissolution, or winding up, holders
of Series I Preferred Stock are entitled to receive out of
assets legally available for distribution to stockholders,
before any distribution or payment out of our assets may be made
to or set aside for the holders of our capital stock ranking
junior to the Series I Preferred Stock as to distributions,
a liquidating distribution in the amount of the liquidation
preference of $25,000 per share, plus any declared and
unpaid dividends, without accumulation of any undeclared
dividends, to the date of liquidation. Shares of Series I
Preferred Stock are not subject to a sinking fund.
Redemption. We may redeem the Series I
Preferred Stock, in whole or in part, at our option, on any
dividend payment date for the Series I Preferred Stock on
or after October 1, 2017, at the redemption price equal to
$25,000 per share, plus any accrued and unpaid dividends.
Additional
Classes or Series of Stock
We will have the right to create and issue additional classes or
series of stock ranking senior to, equally with, or junior to
the Preferred Stock as to dividends and distribution of assets
upon
S-19
our liquidation, dissolution, or winding up without the consent
of the holders of the Preferred Stock, or the holders of the
related depositary shares.
Depository,
Transfer Agent, and Registrar
Computershare Trust Company, N.A. will be the depository,
transfer agent, and registrar for the Preferred Stock.
S-20
DESCRIPTION
OF THE DEPOSITARY SHARES
The following description summarizes specific terms and
provisions of the depositary shares relating to our Preferred
Stock. You should read this description of the material terms of
the depositary shares along with the terms that apply generally
to all our preferred stock issued in the form of depositary
shares under Description of Depositary Shares in the
attached prospectus.
We are issuing proportional fractional interests in the
Preferred Stock in the form of depositary shares. Each
depositary share represents a 1/1,000th interest in a share
of the Preferred Stock, and will be evidenced by depositary
receipts, as described under Registration and
Settlement Book-Entry System on
page S-23.
We will deposit the underlying shares of the Preferred Stock
with a depository pursuant to a deposit agreement among us,
Computershare Inc. and its wholly-owned subsidiary Computershare
Trust Company, N.A., collectively acting as depository, and the
holders from time to time of the depositary receipts. Subject to
the terms of the deposit agreement, the depositary shares will
be entitled to all the rights and preferences of the Preferred
Stock, as applicable, in proportion to the applicable fraction
of a share of Preferred Stock those depositary shares represent.
In this prospectus supplement, references to holders
of depositary shares mean those who have depositary shares
registered in their own names on the books maintained by the
depository and not indirect holders who own beneficial interests
in depositary shares registered in the street name of, or issued
in book-entry form through, DTC. You should review the special
considerations that apply to indirect holders described in
Registration and Settlement Book-Entry
System on
page S-23.
Dividends
and Other Distributions
Each dividend on a depositary share will be in an amount equal
to 1/1,000th of the dividend declared on the related share
of the Preferred Stock.
The depository will distribute all dividends and other cash
distributions received on the Preferred Stock to the holders of
record of the depositary receipts in proportion to the number of
depositary shares held by each holder. In the event of a
distribution other than in cash, the depository will distribute
property received by it to the holders of record of the
depositary receipts in proportion to the number of depositary
shares held by each holder, unless the depository determines
that this distribution is not feasible, in which case the
depository may, with our approval, adopt a method of
distribution that it deems practicable, including the sale of
the property and distribution of the net proceeds of that sale
to the holders of the depositary receipts.
If the calculation of a dividend or other cash distribution
results in an amount that is a fraction of a cent and that
fraction is equal to or greater than $0.005, the depository will
round that amount up to the next highest whole cent and will
request that we pay the resulting additional amount to the
depository for the relevant dividend or other cash distribution.
If the fractional amount is less than $0.005, the depository
will disregard that fractional amount.
Record dates for the payment of dividends and other matters
relating to the depositary shares will be the same as the
corresponding record dates for the Preferred Stock.
The amount paid as dividends or otherwise distributable by the
depository with respect to the depositary shares or the
underlying Preferred Stock will be reduced by any amounts
required to be withheld by us or the depository on account of
taxes or other governmental charges. The depository may refuse
to make any payment or distribution, or any transfer, exchange,
or withdrawal of any depositary shares or the shares of the
Preferred Stock until such taxes or other governmental charges
are paid.
S-21
Redemption
of Depositary Shares
If we redeem the Preferred Stock, in whole or in part, as
described above under Description of the Preferred
Stock Redemption, depositary shares also will
be redeemed with the proceeds received by the depository from
the redemption of the Preferred Stock held by the depository.
The redemption price per depositary share will be
1/1,000th of the redemption price per share payable with
respect to the Preferred Stock, plus any declared and unpaid
dividends, without accumulation of undeclared dividends.
If we redeem shares of the Preferred Stock held by the
depository, the depository will redeem, as of the same
redemption date, the number of depositary shares representing
those shares of the Preferred Stock so redeemed. If we redeem
less than all of the outstanding depositary shares, the
depository will select pro rata, or in any other manner
determined by the depository to be fair and equitable, those
depositary shares to be redeemed. In any case, the depository
will redeem depositary shares only in increments of 1,000
depositary shares and multiples thereof. The depository will
mail notice of redemption to record holders of the depositary
receipts not less than 30 and not more than 60 days prior
to the date fixed for redemption of the Preferred Stock and the
related depositary shares.
Voting
the Preferred Stock
Because each depositary share represents a
1/1,000th interest in a share of the Preferred Stock,
holders of depositary receipts will be entitled to
1/1,000th of a vote per depositary share under those
limited circumstances in which holders of the Preferred Stock
are entitled to a vote, as described in Description of the
Preferred Stock Voting Rights on
page S-13.
When the depository receives notice of any meeting at which the
holders of the Preferred Stock are entitled to vote, the
depository will mail the information contained in the notice to
the record holders of the depositary shares relating to the
Preferred Stock. Each record holder of the depositary shares on
the record date, which will be the same date as the record date
for the Preferred Stock, may instruct the depository to vote the
amount of the Preferred Stock represented by the holders
depositary shares. To the extent possible, the depository will
vote the amount of the Preferred Stock represented by depositary
shares in accordance with the instructions it receives. We will
agree to take all reasonable actions that the depository
determines are necessary to enable the depository to vote as
instructed. If the depository does not receive specific
instructions from the holders of any depositary shares
representing the Preferred Stock, it will vote all depositary
shares held by it proportionately with instructions received.
The depositary shares representing interests in the Preferred
Stock have been approved for listing on the New York Stock
Exchange, subject to notice of issuance, under the symbol
BAC PrJ. We expect trading of the depositary
shares on the New York Stock Exchange to begin within
30 days after we issue the depositary shares. Listing the
depositary shares on the New York Stock Exchange does not
guarantee that a trading market will develop or, if a trading
market does develop, the depth of that market or the ability of
holders to sell their depositary shares easily. We do not expect
there will be any separate public trading market for the shares
of the Preferred Stock except as represented by the depositary
shares.
The Preferred Stock will be issued in registered form to the
depository, and the depositary shares will be issued in
book-entry only form through DTC, as described below in
Registration and Settlement Book-Entry
System and in Registration and
Settlement Book-Entry Only Issuance on
page 52 of the attached prospectus. The depository will
forward to the holders of depositary shares all reports,
notices, and communications from us that are delivered to the
depository and that we are required to furnish to the holders of
the Preferred Stock.
S-22
REGISTRATION
AND SETTLEMENT
The depositary shares will be issued in book-entry only form
through the facilities of The Depository Trust Company, or
DTC. This means that we will not issue actual
depositary receipts to each holder of depositary shares, except
in limited circumstances. Instead, the depositary shares will be
in the form of a single global depositary receipt deposited with
and held in the name of DTC, or its nominee. In order to own a
beneficial interest in a depositary receipt, you must be an
organization that participates in DTC or have an account with an
organization that so participates.
Except as described in the attached prospectus, owners of
beneficial interests in the global depositary receipt will not
be entitled to have depositary shares registered in their names,
will not receive or be entitled to receive physical delivery of
the depositary shares in definitive form, and will not be
considered the owners or holders of depositary shares under our
amended and restated certificate of incorporation or the deposit
agreement, including for purposes of receiving any reports or
notices delivered by us. Accordingly, each person owning a
beneficial interest in the depositary receipts must rely on the
procedures of DTC and, if that person is not a participant, on
the procedures of the participant through which that person owns
its beneficial interest, in order to exercise any rights of a
holder of depositary shares.
If we discontinue the book-entry only form system of
registration, we will replace the global depositary receipt with
depositary receipts in certificated form registered in the names
of the beneficial owners. Once depositary receipts in
certificated form are issued, the underlying shares of the
Preferred Stock may be withdrawn from the depository arrangement
upon surrender of depositary receipts at the corporate trust
office of the depository and upon payment of the taxes, charges,
and fees provided for in the deposit agreements. Subject to the
deposit agreement, the holders of depositary receipts will
receive the appropriate number of shares of Preferred Stock and
any money or property represented by the depositary shares.
Only whole shares of the Preferred Stock may be withdrawn. If a
holder holds an amount other than a whole multiple of 1,000
depositary shares, the depository will deliver, along with the
withdrawn shares of the Preferred Stock, a new depositary
receipt evidencing the excess number of depositary shares.
Holders of withdrawn shares of the Preferred Stock will not be
entitled to redeposit those shares or to receive depositary
shares.
As long as the depositary shares are represented by a global
depositary receipt registered in the name of DTC, or its
nominee, the depositary shares will trade in the DTC Same-Day
Funds Settlement System. DTC requires secondary market trading
activity in the depositary shares to settle in immediately
available funds. This requirement may affect trading activity in
the depositary shares.
We will pay dividends, if any, on the Preferred Stock
represented by depositary shares in book-entry form to the
depository. In turn, the depository will deliver the dividends
to DTC in accordance with the arrangements then in place between
the depository and DTC. Generally, DTC will be responsible for
crediting the dividend payments it receives from the depository
to the accounts of DTC participants, and each participant will
be responsible for disbursing the dividend payment for which it
is credited to the holders that it represents. As long as the
depositary shares are represented by a global depositary
receipt, we will make all dividend payments in immediately
available funds.
S-23
In the event depositary receipts are issued in certificated
form, dividends generally will be paid by check mailed to the
holders of the depositary receipts on the applicable record date
at the address appearing on the security register.
Any notices required to be delivered to you will be given by the
depository to DTC for communication to its participants.
If the depositary receipts are issued in certificated form,
notices to you also will be given by mail to the addresses of
the holders as they appear on the security register.
S-24
U.S. FEDERAL
INCOME TAX CONSIDERATIONS
For a brief description of the tax effects of an investment in
the Preferred Stock and the related depositary shares, see
U.S. Federal Income Tax Considerations and
U.S. Federal Income Tax Considerations
Taxation of Common Stock, Preferred Stock, and Depositary
Shares beginning on page 58 and page 72,
respectively, of the attached prospectus.
The Tax Increase Prevention and Reconciliation Act of 2005
extended the application of the maximum 15% tax rate on net
long-term capital gains recognized by non-corporate taxpayers to
taxable years beginning before January 1, 2011.
Accordingly, net long-term capital gain recognized by a
non-corporate U.S. Holder (as defined in the attached
prospectus) of depositary shares in taxable years beginning
before January 1, 2011 generally will be subject to tax at
a maximum rate of 15%.
Dividends received by a non-corporate U.S. Holder in
taxable years beginning before January 1, 2011 that
constitute qualified dividend income generally are
subject to tax at the maximum rate of 15% applicable to net
long-term capital gains, provided that certain holding period
and other requirements are met. Except as described in the
attached prospectus, dividends received by a corporate
U.S. Holder generally will be eligible for the 70%
dividends-received deduction. U.S. Holders should consult
the attached prospectus and their own advisers concerning
distributions received which do not constitute dividends for
U.S. tax purposes. Dividends paid to
Non-U.S. Holders
(as defined in the attached prospectus) generally are subject to
withholding tax at a 30% rate (or lower rate under an applicable
treaty, if any).
S-25
For a brief description of the considerations for employee
benefit and other plans investing in the Preferred Stock through
the depositary shares offered by this prospectus supplement and
the attached prospectus, including a discussion of
considerations if the securities are deemed to be plan
assets for purposes of the Employee Retirement Income
Security Act of 1974, as amended (commonly referred to as
ERISA), and Section 4975 of the Internal
Revenue Code, see ERISA Considerations beginning on
page 82 of the attached prospectus. As discussed in more
detail in that section, purchasers or holders of the depositary
shares or any interest in those securities will be deemed to
have made certain representations regarding their status under
ERISA and should carefully consider these representations before
electing to acquire the depositary shares.
Fiduciaries or other persons considering purchasing the
depositary shares should consult with their counsel regarding
these matters before making any investment decision.
We expect that an investment in the depository shares will
constitute an equity interest and that these
securities will meet the criteria of publicly-offered
securities as described in the attached prospectus.
S-26
We have entered into an underwriting agreement dated
November 14, 2007 with the underwriters named below. In the
underwriting agreement, we agreed to sell to each of the
underwriters, and each of the underwriters agreed to purchase
from us, the number of depositary shares, each representing a
1/1,000th interest in a share of the Preferred Stock, shown
opposite its name below, at the applicable public offering price
on the cover page of this prospectus supplement.
|
|
|
|
|
|
|
Number of
|
|
|
|
Depositary
|
|
Underwriter
|
|
Shares
|
|
|
Banc of America Securities LLC
|
|
|
5,040,000
|
|
Incapital LLC
|
|
|
4,860,000
|
|
Citigroup Global Markets Inc.
|
|
|
4,860,000
|
|
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
|
|
|
4,860,000
|
|
Morgan Stanley & Co. Incorporated
|
|
|
4,860,000
|
|
UBS Securities LLC
|
|
|
4,860,000
|
|
Wachovia Capital Markets, LLC
|
|
|
4,860,000
|
|
RBC Dain Rauscher Inc.
|
|
|
1,800,000
|
|
|
|
|
|
|
Total
|
|
|
36,000,000
|
|
|
|
|
|
|
The obligations of the underwriters under the underwriting
agreement, including their agreement to purchase depositary
shares, are several and not joint. Those obligations also are
subject to the satisfaction of conditions described in the
underwriting agreement. The underwriters have agreed to purchase
all of the depositary shares if any of them are purchased. In
the event of a default by any underwriter, the underwriting
agreement provides that, in certain circumstances,
non-defaulting underwriters may increase their purchase
commitments, or the underwriting agreement may be terminated.
The underwriters initially propose to offer the depositary
shares, in part, directly to the public at the public offering
price set forth on the cover page of this prospectus supplement.
The underwriters may sell the depositary shares to certain
dealers at a price that represents a concession not in excess of
$0.50 per depositary share or, in the case of sales to certain
institutions, a concession not exceeding $0.15 per depositary
share. Any underwriter may allow, and dealers may reallow, a
concession not in excess of $0.35 per depositary share to
certain other dealers or, in the case of sales to certain
institutions, may reallow a concession not exceeding $0.15 per
depositary share. After the initial offering of the depositary
shares, the offering price and these concessions may change.
Our offering expenses, not including underwriting commissions,
are estimated to be $250,000.
We have granted an option to the underwriters, exercisable once
during the
30-day
period after the date of this prospectus supplement, to purchase
up to 5,400,000 additional depositary shares to cover
over-allotments, if any, at the public offering price set forth
on the cover page of this prospectus supplement plus any accrued
dividends. If the underwriters exercise this option in whole or
in part, we will pay underwriting commissions in the same
amounts as described on the cover page of this prospectus
supplement.
Prior to this offering, there has been no public market for the
depositary shares. We do not expect there will be any separate
public trading market for the Preferred Stock except as
represented by the depositary shares. The depositary shares
representing interests in the Preferred Stock have been approved
for listing on the New York Stock Exchange, subject to
S-27
notice of issuance. We expect trading of the depositary shares
to begin within 30 days after we issue the depositary
shares. We do not currently intend to list the depositary shares
on any other securities exchange. The underwriters have advised
us that they presently intend to make a market in the depositary
shares prior to the commencement of trading on the New York
Stock Exchange. However, the underwriters are not obligated to
do so and may discontinue making a market in the depositary
shares at any time without notice.
In connection with the offering of the depositary shares, the
underwriters may engage in over-allotment, stabilizing
transactions, and syndicate covering transactions in accordance
with Regulation M under the Securities Exchange Act of
1934, as amended (the Exchange Act). Over-allotment
involves sales in excess of the offering size, which creates a
short position for the underwriters. The underwriters may enter
bids for, and purchase, depositary shares in the open market in
order to stabilize the price of the depositary shares. Syndicate
covering transactions involve purchases of the depositary shares
in the open market after the distribution has been completed in
order to cover short positions. In addition, the underwriting
syndicate may reclaim selling concessions allowed to an
underwriter or a dealer for distributing the depositary shares
in the offering if the syndicate repurchases previously
distributed depositary shares in transactions to cover syndicate
short positions, in stabilization transactions, or otherwise.
These activities may cause the price of the depositary shares to
be higher than it would otherwise be. Those activities, if
commenced, may be discontinued at any time.
The offer and sale of any depositary shares of Banc of America
Securities LLC or any of our other affiliates will comply with
the requirements of Rule 2720 of the Conduct Rules of the
Financial Industry Regulatory Authority, Inc. regarding a member
firms underwriting securities of an affiliate. As required
by Rule 2720, any such offer and sale will not be made to
any discretionary account without the prior approval of the
customer.
We expect that delivery of the depositary shares will be made
against payment on or about November 20, 2007, which is the
fourth Business Day following the date of this prospectus
supplement. Under
Rule 15c6-1
of the Exchange Act, trades in the secondary market generally
are required to settle in three Business Days, unless the
parties to a trade expressly agree otherwise. Accordingly,
purchasers who wish to trade the depositary shares on the date
of this prospectus supplement or the next succeeding Business
Day will be required, by virtue of the fact that the depositary
shares initially will settle in T+4, to specify an alternative
settlement cycle at the time of the trade to prevent a failed
settlement and should consult their own advisor in connection
with that election.
Under the terms of the underwriting agreement, we have agreed to
indemnify the underwriters and certain other persons against
certain liabilities, including liabilities under the Securities
Act, or to contribute in respect of those liabilities.
Banc of America Securities LLC is a broker-dealer and one of our
subsidiaries and our affiliate. Following the initial
distribution of depositary shares, our affiliates, including
Banc of America Securities LLC, may buy and sell the depositary
shares in secondary market transactions as part of their
business as broker-dealers. Any sale will be at negotiated
prices relating to prevailing prices at the time of sale. This
prospectus supplement and attached prospectus may be used by one
or more of our affiliates in connection with offers and sales
related to secondary market transactions in the depositary
shares to the extent permitted by applicable law. Our affiliates
may act as principal or agent in such transactions.
Each of the underwriters or their affiliates provides or has
provided investment or commercial banking services to us from
time to time in the ordinary course of business.
S-28
The validity of the Preferred Stock and the related depositary
shares will be passed upon for us by Helms Mulliss &
Wicker, PLLC, Charlotte, North Carolina, and for the
underwriters by Morrison & Foerster LLP, New York, New
York. Helms Mulliss & Wicker, PLLC regularly performs
legal services for Bank of America. Some members of Helms
Mulliss & Wicker, PLLC performing those legal services
own shares of the Corporations common stock.
S-29
PROSPECTUS
Debt Securities, Warrants,
Units, Purchase Contracts,
Preferred Stock, Depositary
Shares, and Common Stock
We from time to time may offer to sell debt securities,
warrants, purchase contracts, preferred stock, depositary shares
representing fractional interests in preferred stock, and common
stock, as well as units comprised of two or more of these
securities or securities of third parties. The debt securities,
warrants, purchase contracts, and preferred stock may be
convertible into or exercisable or exchangeable for our common
or preferred stock or for debt or equity securities of one or
more other entities. Our common stock is listed on the New York
Stock Exchange and the Pacific Stock Exchange under the symbol
BAC. In addition, our common stock is listed on the
London Stock Exchange, and certain shares are listed on the
Tokyo Stock Exchange.
This prospectus describes the general terms of these securities
and the general manner in which we will offer the securities.
When we sell a particular series of securities, we will prepare
a prospectus supplement describing the offering and the specific
terms of that series of securities. You should read this
prospectus and that prospectus supplement carefully before you
invest.
We may use this prospectus in the initial sale of these
securities. In addition, Banc of America Securities LLC, or any
of our other affiliates, may use this prospectus in a
market-making transaction in any of these securities or similar
securities after their initial sale. Unless you are informed
otherwise in the confirmation of sale, this prospectus is being
used in a market-making transaction.
Potential purchasers of our securities should consider the
information set forth in the Risk Factors section
beginning on page 8.
Our securities are unsecured and 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 may 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
securities or passed upon the adequacy or accuracy of this
prospectus. Any representation to the contrary is a criminal
offense.
Prospectus dated May 5, 2006
TABLE OF
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2
This prospectus is part of a registration statement that we
filed with the Securities and Exchange Commission, or the
SEC, utilizing a shelf registration
process. Under this shelf process, we may, from time to time,
sell any combination of the securities described in this
prospectus or the registration statement in one or more
offerings.
This prospectus provides you with a general description of the
securities we may offer. Each time we sell securities, we will
provide one or more prospectus supplements, pricing supplements,
and/or product supplements that describe the particular
securities offering and the specific terms of the securities
being offered. These documents also may add, update, or change
information contained in this prospectus. In this prospectus,
when we refer to the applicable prospectus
supplement or the accompanying prospectus
supplement, we mean the prospectus supplement or
supplements, including any applicable pricing or product
supplement, that describes the particular securities being
offered to you. If there is any inconsistency between the
information in this prospectus and the applicable prospectus
supplement, you should rely on the information in the prospectus
supplement.
The information in this prospectus is not complete and may be
changed. You should rely only on the information provided in or
incorporated by reference in this prospectus, the accompanying
prospectus supplement, or documents to which we otherwise refer
you. We are not making an offer of these securities in any
jurisdiction where the offer or sale is not permitted. You
should assume that the information appearing in this prospectus
and the accompanying prospectus supplement or supplements, as
well as information we have filed or will file with the SEC and
incorporated by reference in this prospectus, is accurate as of
the date of the applicable document or other date referred to in
that document. Our business, financial condition, and results of
operations may have changed since that date.
Unless we indicate otherwise or unless the context requires
otherwise, all references in this prospectus to Bank of
America, we, us, our,
or similar references are to Bank of America Corporation
excluding its consolidated subsidiaries.
References in this prospectus to $ and
dollars are to the currency of the United States of
America; and references in this prospectus to
and euro are to the currency introduced at the start
of the third stage of the European Economic and Monetary Union
pursuant to Article 109g of the Treaty establishing the
European Community, as amended by the Treaty on European Union,
as amended by the Treaty of Amsterdam.
3
This summary section highlights selected information from this
prospectus. This summary does not contain all the information
that you should consider before investing in the securities we
may offer using this prospectus. To fully understand the
securities we may offer, you should read carefully:
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this prospectus, which explains the general terms of the
securities we may offer;
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the applicable prospectus supplement, which explains the
specific terms of the particular securities we are offering, and
which may update or change the information in this
prospectus; and
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the documents we refer to in Where You Can Find More
Information below for information about us, including our
financial statements.
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Bank of
America Corporation
Bank of America Corporation is a Delaware corporation, a bank
holding company, and a financial holding company. We provide a
diversified range of banking and nonbanking financial services
and products both domestically and internationally. Our
headquarters is located at Bank of America Corporate Center,
100 North Tryon Street, Charlotte, North Carolina 28255,
and our telephone number is
1-866-804-5241.
The
Securities We May Offer
We may offer any of the following securities from time to time:
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debt securities;
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warrants;
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purchase contracts;
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preferred stock;
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depositary shares representing fractional interests in preferred
stock;
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common stock; and
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units, comprised of two or more of any of the securities
referred to above, in any combination.
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When we use the term securities in this prospectus,
we mean any of the securities we may offer with this prospectus,
unless we specifically state otherwise. This prospectus,
including this summary, describes the general terms of the
securities we may offer. Each time we sell securities, we will
provide you with a prospectus supplement that will describe the
offering and the specific terms of the securities being offered.
This prospectus supplement may include a discussion of
additional U.S. federal income tax consequences and any
additional risk factors or other special considerations
applicable to those particular securities.
Debt
Securities
Our debt securities may be either senior or subordinated
obligations in right of payment. Our senior and subordinated
debt securities will be issued under separate indentures, or
contracts, that we have with The Bank of New York, as trustee.
The particular terms of each series of debt securities will be
described in the applicable prospectus supplement.
4
Warrants
We may offer two types of warrants:
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warrants to purchase our debt securities; and
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warrants to purchase or sell, or whose cash value is determined
by reference to the performance, level, or value of, one or more
of the following:
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securities of one or more issuers, including our common or
preferred stock, other securities described in this prospectus,
or the debt or equity securities of third parties;
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one or more currencies, currency units, or composite currencies;
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one or more commodities;
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any other financial, economic, or other measure or instrument,
including the occurrence or non-occurrence of any event or
circumstance; and
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one or more indices or baskets of the items described above.
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For any warrants we may offer, we will describe in the
applicable prospectus supplement the underlying property, the
expiration date, the exercise price or the manner of determining
the exercise price, the amount and kind, or the manner of
determining the amount and kind, of property to be delivered by
you or us upon exercise, and any other specific terms of the
warrants. We will issue warrants under warrant agreements that
we will enter into with one or more warrant agents.
Purchase
Contracts
We may offer purchase contracts requiring holders to purchase or
sell, or whose cash value is determined by reference to the
performance, level, or value of, one or more of the following:
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securities of one or more issuers, including our common or
preferred stock, other securities described in this prospectus,
or the debt or equity securities of third parties;
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one or more currencies, currency units, or composite currencies;
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one or more commodities;
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any other financial, economic, or other measure or instrument,
including the occurrence or non-occurrence of any event or
circumstance; and
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one or more indices or baskets of the items described above.
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For any purchase contracts we may offer, we will describe in the
applicable prospectus supplement the underlying property, the
settlement date, the purchase price or manner of determining the
purchase price and whether it must be paid when the purchase
contract is issued or at a later date, the amount and kind, or
manner of determining the amount and kind, of property to be
delivered at settlement, whether the holder will pledge property
to secure the performance of any obligations the holder may have
under the purchase contract, and any other specific terms of the
purchase contracts.
Units
We may offer units consisting of any combination of two or more
debt securities, warrants, purchase contracts, shares of
preferred stock, depositary shares, and common stock described
in this prospectus as well as securities of third parties. For
any units we may offer, we will describe in the applicable
prospectus supplement the particular securities that comprise
each unit, whether or not the particular securities will be
separable and, if they will be separable, the terms on which
they will be separable, a description of the provisions for the
payment, settlement,
5
transfer, or exchange of the units, and any other specific terms
of the units. We will issue units under unit agreements that we
will enter into with one or more unit agents.
Preferred
Stock and Depositary Shares
We may offer our preferred stock in one or more series. For any
particular series we may offer, we will describe in the
applicable prospectus supplement:
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the specific designation;
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the aggregate number of shares offered;
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the dividend rate and periods, or manner of calculating the
dividend rate and periods, if any;
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the stated value and liquidation preference amount, if any;
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the voting rights, if any;
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the terms on which the series of preferred stock is convertible
into shares of our common stock, preferred stock of another
series, or other securities, if any;
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the redemption terms, if any; and
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any other specific terms of the series.
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We also may offer depositary shares, each of which will
represent a fractional interest in a share or multiple shares of
our preferred stock. We will describe in the applicable
prospectus supplement any specific terms of the depositary
shares. We will issue the depositary shares under deposit
agreements that we will enter into with one or more depositories.
Form of
Securities
Unless we specify otherwise in the applicable prospectus
supplement, we will issue the securities, other than shares of
our common stock, in book-entry only form through one or more
depositories, such as The Depository Trust Company, Euroclear
Bank S.A./N.V., or Clearstream Banking, société
anonyme, Luxembourg, as identified in the applicable prospectus
supplement. We will issue the securities only in registered
form, without coupons, although we may issue the securities in
bearer form if we so specify in the applicable prospectus
supplement. The securities issued in book-entry only form will
be represented by a global security registered in the name of
the specified depository, rather than notes or certificates
registered in the name of each individual investor. Unless we
specify otherwise in the applicable prospectus supplement, each
sale of securities in book-entry form will settle in immediately
available funds through the specified depository.
A global security may be exchanged for actual notes or
certificates registered in the names of the beneficial owners
only if:
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the depository notifies us that it is unwilling or unable to
continue as depository for the global securities or we become
aware that the depository is no longer qualified as a clearing
agency, and we fail to appoint a successor to the depository
within 60 calendar days; or
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we, in our sole discretion, determine that the global securities
will be exchangeable for certificated securities.
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Payment
Currencies
All amounts payable in respect of the securities, including the
purchase price, will be payable in U.S. dollars, unless we
specify otherwise in the applicable prospectus supplement.
6
Listing
We will state in the applicable prospectus supplement whether
the particular securities that we are offering will be listed or
quoted on a securities exchange or quotation system.
Distribution
We may offer the securities in four ways:
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through underwriters;
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through dealers;
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through agents; or
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directly to purchasers.
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The applicable prospectus supplement will include any required
information about the firms we use and the discounts or
commissions we may pay them for their services.
Banc of America Securities LLC, or any of our other affiliates,
may be an underwriter, dealer, or agent for us.
Market-Making
by Our Affiliates
Following the initial distribution of an offering of securities,
Banc of America Securities LLC and other affiliates of ours may
offer and sell those securities in the course of their
businesses as broker-dealers. Banc of America Securities LLC and
any such other affiliates may act as a principal or agent in
these transactions. This prospectus and the applicable
prospectus supplement also will be used in connection with these
market-making transactions. Sales in any of these market-making
transactions will be made at varying prices related to
prevailing market prices and other circumstances at the time of
sale.
If you purchase securities in a market-making transaction, you
will receive information about the price you pay and your trade
and settlement dates in a separate confirmation of sale.
7
This section summarizes some specific risks and investment
considerations with respect to an investment in our securities.
This summary does not describe all of the risks and investment
considerations with respect to an investment in our securities,
including risks and considerations relating to a prospective
investors particular circumstances. For information
regarding risks that may materially affect our business and
results, please refer to the information under the caption
Item 1A. Risk Factors in our annual report on
Form 10-K
for the year ended December 31, 2005, which is incorporated
by reference in this prospectus. Prospective investors should
consult their own financial, legal, tax, and other professional
advisors as to the risks associated with an investment in our
securities and the suitability of the investment for the
investor.
We may issue securities denominated in or whose principal and
interest is payable in a currency other than U.S. dollars.
We refer to these securities as
Non-U.S. Dollar-Denominated
Securities. If you intend to invest in any
Non-U.S. Dollar-Denominated
Securities, you should consult your own financial and legal
advisors as to the currency risks related to your investment.
The
Non-U.S. Dollar-Denominated
Securities are not an appropriate investment for you if you are
not knowledgeable about the significant terms and conditions of
the
Non-U.S. Dollar-Denominated
Securities or financial matters in general. The information in
this prospectus is directed primarily to investors who are
U.S. residents. Investors who are not U.S. residents
should consult their own financial and legal advisors about
currency-related risks arising from their investment.
Non-U.S. Dollar-Denominated
Securities have significant risks that are not associated with a
similar investment in conventional debt securities that are
payable solely in U.S. dollars. These risks include
possible significant changes in rates of exchange between the
U.S. dollar and the specified currency and the imposition
or modification of foreign exchange controls or other conditions
by either the United States or
non-U.S. governments.
These risks generally are influenced by factors over which we
have no control, such as economic and political events and the
supply of and demand for the relevant currencies in the global
markets.
Currency exchange rates. Exchange rates between the
U.S. dollar and other currencies have been highly volatile.
This volatility may continue and could spread to other
currencies in the future. Fluctuations in currency exchange
rates could affect adversely an investment in the
Non-U.S. Dollar-Denominated
Securities. Depreciation of the specified currency against the
U.S. dollar could result in a decrease in the
U.S. dollar-equivalent value of payments on the
Non-U.S. Dollar-Denominated
Securities. That in turn could cause the market value of the
Non-U.S. Dollar-Denominated
Securities to fall.
Changes in currency exchange rates. Except as described
below, we generally will not make any adjustment in or change to
the terms of the
Non-U.S. Dollar-Denominated
Securities for changes in the exchange rate for the specified
currency, including any devaluation, revaluation, or imposition
of exchange or other regulatory controls or taxes, or for other
developments affecting the specified currency, the
U.S. dollar, or any other currency. Consequently, you will
bear the risk that your investment may be affected adversely by
these types of events.
Government policy. Currency exchange rates either can
float or be fixed by sovereign governments. Governments or
governmental bodies, including the European Central Bank, may
intervene in their economies to alter the exchange rate or
exchange characteristics of their currencies. For example, a
central bank may intervene to devalue or revalue a currency or
to replace an existing currency. In addition, a government may
impose regulatory controls or taxes to affect the exchange rate
of its currency. As a result, the yield or payout of a
Non-U.S. Dollar-
8
Denominated Security could be affected significantly and
unpredictably by governmental actions. Changes in exchange rates
could affect the value of the
Non-U.S. Dollar-Denominated
Securities as participants in the global currency markets move
to buy or sell the specified currency or U.S. dollars in
reaction to these developments.
If a governmental authority imposes exchange controls or other
conditions, such as taxes on the transfer of the specified
currency, there may be limited availability of the specified
currency for payment on the
Non-U.S. Dollar-Denominated
Securities at their maturity or on any other payment date. In
addition, the ability of a holder to move currency freely out of
the country in which payment in the currency is received or to
convert the currency at a freely determined market rate could be
limited by governmental actions.
Payments in U.S. dollars. The terms of any
Non-U.S. Dollar-Denominated
Securities may provide that we may have the right to make a
payment in U.S. dollars instead of the specified currency,
if at or about the time when the payment on the
Non-U.S. Dollar-Denominated
Securities comes due, the specified currency is subject to
convertibility, transferability, market disruption, or other
conditions affecting its availability because of circumstances
beyond our control. These circumstances could include the
imposition of exchange controls or our inability to obtain the
specified currency because of a disruption in the currency
markets for the specified currency. The exchange rate used to
make payment in U.S. dollars may be based on limited
information and would involve significant discretion on the part
of our exchange rate agent. As a result, the value of the
payment in U.S. dollars may be less than the value of the
payment you would have received in the specified currency if the
specified currency had been available.
Court judgments. Any
Non-U.S. Dollar-Denominated
Securities typically will be governed by New York law. Under
Section 27 of the New York Judiciary Law, a state court in
the State of New York rendering a judgment on the
Non-U.S. Dollar-Denominated
Debt Securities would be required to render the judgment in the
specified currency. In turn, the judgment would be converted
into U.S. dollars at the exchange rate prevailing on the
date of entry of the judgment. Consequently, in a lawsuit for
payment on the
Non-U.S. Dollar-Denominated
Securities, you would bear currency exchange risk until judgment
is entered, which could be a long time.
In courts outside of New York, you may not be able to obtain
judgment in a specified currency other than U.S. dollars.
For example, a judgment for money in an action based on
Non-U.S. Dollar-Denominated
Securities in many other U.S. federal or state courts
ordinarily would be enforced in the United States only in
U.S. dollars. The date used to determine the rate of
conversion of the specified currency into U.S. dollars will
depend on various factors, including which court renders the
judgment.
Possible Illiquidity of the Secondary Market. We may not
list our securities on any securities exchange. We cannot
predict how these securities will trade in the secondary market
or whether that market will be liquid or illiquid. The number of
potential buyers of our securities in any secondary market may
be limited. Although any underwriters or agents may purchase and
sell our securities in the secondary market from time to time,
these underwriters or agents will not be obligated to do so and
may discontinue making a market for the securities at any time
without giving us notice. We cannot assure you that a secondary
market for any of our securities will develop, or that if one
develops, it will be maintained.
Redemption. The terms of our securities may permit or
require redemption of the securities prior to maturity. That
redemption may occur at a time when prevailing interest rates
are relatively low. As a result, in the case of debt or similar
securities, a holder of the redeemed securities may not be able
to invest the redemption proceeds in a new investment that
yields a similar return.
9
Usury Laws. New York law will govern the debt
securities offered by this prospectus. New York usury laws limit
the amount of interest that can be charged and paid on loans,
including the debt securities. Under current New York law, the
maximum permissible rate of interest is 25% per year on a
simple interest basis. This limit may not apply to debt
securities in which $2,500,000 or more has been invested. While
we believe that a U.S. federal or state court sitting
outside New York may give effect to New York law, many other
states also have laws that regulate the amount of interest that
may be charged to and paid by a borrower. We do not intend to
claim the benefits of any laws concerning usurious rates of
interest.
Credit Ratings. Our credit ratings are an assessment
of our ability to pay our obligations. Consequently, real or
anticipated changes in our credit ratings may affect the trading
value of our securities. However, because the return on our
securities generally depends upon factors in addition to our
ability to pay our obligations, an improvement in these credit
ratings will not reduce the other investment risks, if any,
related to our securities.
Holding Company. We are a holding company, and
therefore we are a separate and distinct legal entity from our
banking and nonbanking subsidiaries. We therefore depend on
dividends, distributions, and other payments from our banking
and nonbanking subsidiaries to fund dividend payments on our
capital stock and to fund all payments on our other obligations,
including our debt obligations. Many of our subsidiaries are
subject to laws that authorize regulatory bodies to block or
reduce the flow of funds from those subsidiaries to us.
Regulatory action of that kind could impede access to funds we
need to make payments on our obligations or dividend payments.
In addition, because we are a holding company, our right to
participate in a distribution of assets upon a subsidiarys
liquidation or reorganization is subject to the prior claims of
the subsidiarys creditors. Therefore, claims of holders of
our securities generally will have a junior position to claims
of creditors of our subsidiaries, including, in the case of our
banking subsidiaries, their depositors.
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BANK
OF AMERICA CORPORATION
Bank of America Corporation is a Delaware corporation, a bank
holding company, and a financial holding company. Bank of
America Corporation was incorporated in 1998 as part of the
merger of BankAmerica Corporation with NationsBank Corporation.
Business
Segment Information
We provide a diversified range of banking and nonbanking
financial services and products in 30 states, the District
of Columbia, and 44 foreign countries. We have historically
provided these services and products through four business
segments: (1) Global Consumer and Small Business
Banking, (2) Global Business and Financial
Services, (3) Global Capital Markets and Investment
Banking, and (4) Global Wealth and Investment
Management. During the third quarter of 2005, we announced
the future combination of Global Business and Financial
Services and Global Capital Markets and Investment
Banking that became effective on January 1, 2006. This
combined segment is called Global Corporate and Investment
Banking.
Regulatory
Considerations
As a financial holding company and a bank holding company, we
are supervised and regulated by The Board of Governors of the
Federal Reserve System, or the Federal Reserve
Board. In addition, our banking and securities
subsidiaries are supervised and regulated by various federal and
state banking and securities regulatory authorities, including
the Office of the Comptroller of the Currency, the Federal
Deposit Insurance Corporation, or the FDIC, and the
SEC. For a discussion of the material elements of the extensive
regulatory framework applicable to financial holding companies,
bank holding companies, and banks, as well as specific
information about us and our subsidiaries, please refer to the
section Government Supervision and Regulation under
the caption Item 1. Business in our annual
report on
Form 10-K
for the fiscal year ended December 31, 2005, and any
subsequent reports that we file with the SEC, which are
incorporated by reference in this prospectus. See Where
You Can Find More Information below for information on how
to obtain a copy of our annual report and any subsequent
reports. This regulatory framework is intended primarily for the
protection of depositors and the federal deposit insurance funds
and not for the protection of security holders and creditors.
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
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 FDICs
loss, subject to certain exceptions.
As part of our operations, we regularly evaluate the potential
acquisition of, and hold discussions with, various financial
institutions and other businesses of a type 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 such 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.
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Unless we describe a different use in the applicable prospectus
supplement, we will use the net proceeds from the sale of the
securities for general corporate purposes. General corporate
purposes include:
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our working capital needs;
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investments in, or extensions of credit to, our banking and
nonbanking subsidiaries;
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the possible acquisitions of other financial institutions or
their assets;
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the possible acquisitions of, or investments in, other
businesses of a type we are permitted to acquire under
applicable law;
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the possible reduction of our outstanding indebtedness; and
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the possible repurchase of our outstanding equity securities.
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Until we designate the use of these net proceeds, we will invest
them temporarily. From time to time, we may engage in additional
financings as we determine appropriate based on our needs and
prevailing market conditions. These additional financings may
include the sale of other securities.
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DESCRIPTION
OF DEBT SECURITIES
We may issue senior or subordinated debt securities. Neither the
senior debt securities nor the subordinated debt securities will
be secured by any of our property or assets. As a result, by
owning a debt security, you are one of our unsecured creditors.
The senior debt securities will constitute part of our senior
debt, will be issued under our senior debt indenture described
below, and will rank on a parity with all of our other unsecured
and unsubordinated debt.
The subordinated debt securities will constitute part of our
subordinated debt, will be issued under our subordinated debt
indenture described below, and will be subordinated in right of
payment to all of our senior indebtedness, as
defined in the subordinated debt indenture. Neither the senior
debt indenture nor the subordinated debt indenture limits our
ability to incur additional senior indebtedness.
The senior debt securities and the subordinated debt securities
each are governed by a document called an indenture, which is a
contract between us and the applicable trustee. Senior debt
securities will be issued under the Indenture dated as of
January 1, 1995 (as supplemented, the Senior
Indenture) between us and The Bank of New York, as
successor trustee, and subordinated debt securities will be
issued under the Indenture dated as of January 1, 1995 (as
supplemented, the Subordinated Indenture) between us
and The Bank of New York, as trustee. The indentures are
substantially identical, except for:
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the covenant described below under Sale or
Issuance of Capital Stock of Banks, which is included only
in the Senior Indenture;
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the provisions relating to subordination described below under
Subordination, which are included only
in the Subordinated Indenture; and
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the events of default described below under
Defaults and Rights of Acceleration,
many of which are not included in the Subordinated Indenture.
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In this prospectus, when we refer to debt
securities, we mean both our senior debt securities and
our subordinated debt securities, and when we refer to the
indenture or the trustee with respect to
any debt securities, we mean the indenture under which those
debt securities are issued and the trustee under that indenture.
The trustee under each indenture has two principal functions:
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First, the trustee can enforce your rights against us if we
default. However, there are limitations on the extent to which
the trustee may act on your behalf, which we describe below
under Collection of Indebtedness.
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Second, the trustee performs administrative duties for us,
including the delivery of interest payments and notices.
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Neither indenture limits the aggregate amount of debt securities
that we may issue or the number of series or the aggregate
amount of any particular series. The indentures and the debt
securities also do not limit our ability to incur other
indebtedness or to issue other securities. This means that we
may issue additional debt securities and other securities at any
time without your consent and without notifying you. In
addition, neither indenture contains provisions protecting
holders against a decline in our credit quality resulting from
takeovers, recapitalizations, the incurrence of additional
indebtedness, or restructuring. If our credit quality declines
as
13
a result of an event of this type, or otherwise, any ratings of
our debt securities then outstanding may be withdrawn or
downgraded.
This section is a summary of the indentures and is subject to
and qualified in its entirety by reference to all the provisions
of the indentures. We have filed the indentures with the SEC as
exhibits to our registration statement, and they are
incorporated in this prospectus by reference. See Where
You Can Find More Information below for information on how
to obtain copies of the indentures. Whenever we refer to the
defined terms of the indentures in this prospectus or in a
prospectus supplement without defining them, the terms have the
meanings given to them in the indentures. You must look to the
indentures for the most complete description of the information
summarized in this prospectus.
Form
and Denomination of Debt Securities
Unless we specify otherwise in the applicable prospectus
supplement, we will issue each debt security in global, or
book-entry, form. Debt securities in book-entry form will be
represented by a global security registered in the name of a
depository. Accordingly, the depository will be the holder of
all the debt securities represented by the global security.
Those who own beneficial interests in a global security will do
so through participants in the depositorys securities
clearance system, and the rights of these indirect owners will
be governed solely by the applicable procedures of the
depository and its participants. We describe the procedures
applicable to book-entry securities below under the heading
Registration and Settlement.
Unless we specify otherwise in the applicable prospectus
supplement, we will issue our debt securities in fully
registered form, without coupons. If we issue a debt security in
bearer form, we will describe the special considerations
applicable to bearer securities in the applicable prospectus
supplement. Some of the features that we describe in this
prospectus may not apply to the bearer securities.
Our debt securities may be denominated, and cash payments with
respect to the debt securities may be made, in U.S. dollars
or in another currency, or in a composite currency, a basket of
currencies, or a currency unit or units. Unless we specify
otherwise in the applicable prospectus supplement, the debt
securities will be denominated, and cash payments with respect
to the debt securities will be made, in U.S. dollars, and
the debt securities ordinarily will be issued in denominations
of $1,000 and multiples of $1,000 in excess of $1,000. If any of
the debt securities are denominated, or if principal, any
premium, interest, and any other amounts payable on any of the
debt securities is payable, in a foreign currency, or in a
composite currency, a basket of currencies, or a currency unit
or units, the specified currency, as well as any additional
investment considerations, risk factors, restrictions, tax
consequences, specific terms, and other information relating to
that issue of debt securities and the specified currency,
composite currency, basket of currencies, or currency unit or
units, may be described in the applicable prospectus supplement.
We describe some of those investment considerations relating to
securities denominated or payable in a currency other than
U.S. dollars above under the heading Risk
Factors.
Different
Series of Debt Securities
We may issue our debt securities from time to time in one or
more series with the same or different maturities. We also may
reopen a series of our debt securities. This means
that we can increase the principal amount of a series of our
debt securities by selling additional debt securities with the
same terms. We may do so without notice to the existing holders
of securities of that series. However, any new securities of
this kind may begin to bear interest at a different date.
This section of the prospectus summarizes the material terms of
the debt securities that are common to all series. We will
describe the financial and other specific terms of the series of
debt
14
securities being offered in the applicable prospectus
supplement. The prospectus supplement also may describe any
differences from the material terms described in this
prospectus. If there are any differences between the applicable
prospectus supplement and this prospectus, the applicable
prospectus supplement will control.
The terms of your series of debt securities as described in the
applicable prospectus supplement may include the following:
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the title and type of the debt securities;
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the principal amount of the debt securities;
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the minimum denominations, if other than $1,000 and multiples of
$1,000 in excess of $1,000;
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the percentage of the stated principal amount at which the debt
securities will be sold and, if applicable, the method of
determining the price;
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the person to whom interest is payable, if other than the owner
of the debt securities;
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the maturity date or dates;
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the interest rate or rates, which may be fixed or variable, and
the method used to calculate that interest;
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any index used to determine the amounts of any payments on the
debt securities and the manner in which those amounts will be
determined;
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the interest payment dates, the regular record dates for the
interest payment dates, and the date interest will begin to
accrue;
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the place or places where payments on the debt securities may be
made and the place or places where the debt securities may be
presented for registration of transfer or exchange;
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any date or dates after which the debt securities may be
redeemed, repurchased, or repaid in whole or in part at our
option or the option of the holder, and the periods, prices,
terms, and conditions of that redemption, repurchase, or
repayment;
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if other than the full principal amount, the portion of the
principal amount of the debt securities that will be payable if
their maturity is accelerated;
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the currency of principal, any premium, interest, and any other
amounts payable on the debt securities, if other than
U.S. dollars;
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if the debt securities will be issued in other than book-entry
form;
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the identification of or method of selecting any interest rate
calculation agents, exchange rate agents, or any other agents
for the debt securities;
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any provisions for the discharge of our obligations relating to
the debt securities by the deposit of funds or
U.S. government obligations;
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any provisions relating to the extension or renewal of the
maturity date of the debt securities;
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whether the debt securities will be listed on any securities
exchange; and
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any other terms of the debt securities that are permitted under
the applicable indenture.
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General. We may issue debt securities that bear interest
at one or more fixed rates of interest, as specified in the
applicable prospectus supplement. We refer to these as
fixed-rate
15
notes. Unless we specify otherwise in the applicable
prospectus supplement, each fixed-rate note will bear interest
from its original issue date or from the most recent date to
which interest on the note has been paid or made available for
payment. Interest will accrue on the principal of a fixed-rate
note at the fixed annual rate stated in the applicable
prospectus supplement, until the principal is paid or made
available for payment or the note is converted or exchanged.
Unless we specify otherwise in the applicable prospectus
supplement, we will pay interest on any fixed-rate note
quarterly, semi-annually, or annually, as applicable, in
arrears, on the days set forth in the applicable prospectus
supplement (each such day being an interest payment
date) and at maturity. Each interest payment due on an
interest payment date or the maturity date will include interest
accrued from and including the most recent interest payment date
to which interest has been paid, or, if no interest has been
paid, from the original issue date, to but excluding the next
interest payment date or the maturity date, as the case may be.
Unless we specify otherwise in the applicable prospectus
supplement, interest on fixed-rate notes will be computed and
paid on the basis of a
360-day year
consisting of twelve
30-day
months. We will make payments on fixed-rate notes as described
below under the heading Payment of Principal,
Interest, and Other Amounts Due.
Amortizing Notes. We also may issue amortizing notes,
which are fixed-rate notes for which combined principal and
interest payments are made in installments over the life of the
debt security. Payments on amortizing notes are applied first to
interest due and then to the reduction of the unpaid principal
amount. The prospectus supplement for an amortizing note will
include a table setting forth repayment information.
General. We may issue debt securities that will bear
interest at a floating rate of interest determined by reference
to one or more interest rate bases, or by reference to one or
more interest rate formulae, referred to as the base
rate. We refer to these debt securities as
floating-rate notes. The base rate may be one or
more of the following:
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the federal funds rate, in which case the debt security will be
a federal funds rate note;
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the London interbank offered rate, in which case the debt
security will be a LIBOR note;
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the euro interbank offered rate, in which case the debt security
will be a EURIBOR note;
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the prime rate, in which case the debt security will be a
prime rate note;
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the treasury rate, in which case the debt security will be a
treasury rate note; or
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any other interest rate formula as may be specified in the
applicable prospectus supplement.
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The interest rate for a floating-rate note will be determined by
reference to:
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the specified base rate based on the index maturity;
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plus or minus the spread, if any; and/or
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multiplied by the spread multiplier, if any.
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For any floating-rate note, the index maturity is
the period to maturity of the instrument for which the interest
rate basis is calculated and will be specified in the applicable
prospectus supplement. The spread is the number of
basis points we specify on the floating-rate note to be added to
or subtracted from the base rate. The spread
multiplier is the percentage we may specify on the
floating-rate note by which the base rate is multiplied in order
to calculate the applicable interest rate.
16
A floating-rate note also may be subject to:
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a maximum interest rate limit, or ceiling, on the interest that
may accrue during any interest period;
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a minimum interest rate limit, or floor, on the interest that
may accrue during any interest period; or
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both.
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Unless we specify otherwise in the applicable prospectus
supplement, each floating-rate note will bear interest from its
original issue date or from the most recent date to which
interest on the note has been paid or made available for
payment. Interest will accrue on the principal of a
floating-rate note at the annual rate determined according to
the interest rate formula stated in the applicable prospectus
supplement, until the principal is paid or made available for
payment. Unless we specify otherwise in the applicable
prospectus supplement, we will pay interest on any floating-rate
note monthly, quarterly, semi-annually, or annually, as
applicable, in arrears, on the days set forth in the applicable
prospectus supplement. Unless we specify otherwise in the
applicable prospectus supplement, each interest payment due on
an interest payment date or the maturity date will include
interest accrued from and including the most recent interest
payment date to which interest has been paid, or, if no interest
has been paid, from the original issue date, to but excluding
the next interest payment date or the maturity date, as the case
may be. We will make payments on floating-rate notes as
described below under the heading Payment of
Principal, Interest, and Other Amounts Due.
How Interest Is Reset. The interest rate in effect from
the date of issue to the first interest reset date for a
floating-rate note will be the initial interest rate determined
as described in the applicable prospectus supplement. The
interest rate of each floating-rate note may be reset daily,
weekly, monthly, quarterly, semi-annually, or annually, as we
specify in the applicable prospectus supplement. We refer to the
period during which an interest rate is effective as an
interest period, and the first day of each interest
period as the interest reset date.
The interest determination date for any interest
reset date is the day the calculation agent will refer to when
determining the new interest rate at which a floating rate will
reset. Unless we specify otherwise in the applicable prospectus
supplement, the interest determination date for an interest
reset date will be:
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for a federal funds rate note or a prime rate note, the business
day immediately preceding the interest reset date;
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for a LIBOR note, the second London Banking Day (as defined
below) preceding the interest reset date unless the index
currency is pounds sterling, in which case the interest
determination date will be the interest reset date;
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for a EURIBOR note, the second TARGET Settlement Date (as
defined below) preceding the interest reset date;
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for a treasury rate note, the day of the week in which the
interest reset date falls on which Treasury bills (as described
below) of the applicable index maturity would normally be
auctioned; and
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for a floating-rate note with two or more base rates, the
interest determination date will be the most recent business day
that is at least two business days prior to the applicable
interest reset date on which each applicable base rate is
determinable.
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Treasury bills usually are sold at auction on Monday of each
week, unless that day is a legal holiday, in which case the
auction usually is held on the following Tuesday, except that
the auction may be held on the preceding Friday. If, as a result
of a legal holiday, an auction is held on the preceding Friday,
that preceding Friday will be the interest determination date
pertaining
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to the interest reset date occurring in the next succeeding
week. The treasury rate will be determined as of that date, and
the applicable interest rate will take effect on the applicable
interest reset date.
We will specify the interest reset dates in the applicable
prospectus supplement. If any interest reset date for any
floating-rate note falls on a day that is not a business day for
the floating-rate note, the interest reset date for the
floating-rate note will be postponed to the next day that is a
business day for the floating-rate note. However, unless we
specify otherwise in the applicable prospectus supplement, in
the case of a LIBOR note or a EURIBOR note, if the next business
day is in the next succeeding calendar month, the interest reset
date will be the immediately preceding business day.
Calculation of Interest. Calculations relating to
floating-rate notes will be made by the calculation agent, which
will be an institution that we appoint as our agent for this
purpose. The calculation agent may be one of our affiliates,
including Banc of America Securities LLC or Bank of America,
N.A, and may also be The Bank of New York. We will identify in
the applicable prospectus supplement the calculation agent we
have appointed for a particular series of debt securities as of
its original issue date. We may appoint different calculation
agents from time to time after the original issue date of a
floating-rate note without your consent and without notifying
you of the change. Absent manifest error, all determinations of
the calculation agent will be final and binding on you, the
trustee, and us.
For each floating-rate note, the calculation agent will
determine, on the corresponding calculation or interest
determination date, the interest rate for the applicable
interest period. In addition, the calculation agent will
calculate the amount of interest that has accrued during each
interest period. Unless we specify otherwise in the applicable
prospectus supplement, the calculation date for any interest
determination date will be the date by which the calculation
agent computes the amount of interest owed on a floating-rate
note for the related interest period. Unless we specify
otherwise in the applicable prospectus supplement, the
calculation date pertaining to an interest determination date
will be the earlier of:
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the tenth calendar day after that interest determination date
or, if that day is not a business day, the next succeeding
business day; or
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the business day immediately preceding the applicable interest
payment date, the maturity date, or the date of redemption or
prepayment, as the case may be.
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Accrued interest on a floating-rate note is calculated by
multiplying the principal amount of a note by an accrued
interest factor. This accrued interest factor is the sum of the
interest factors calculated for each day in the period for which
accrued interest is being calculated. Unless we specify
otherwise in the applicable prospectus supplement, the accrued
interest factor will be computed and interest will be paid
(including payments for partial periods) as follows:
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for federal funds rate notes, LIBOR notes, EURIBOR notes, prime
rate notes, or any other floating-rate notes other than treasury
rate notes, the daily interest factor will be computed by
dividing the interest rate in effect on that day by 360; and
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for treasury rate notes, the daily interest factor will be
computed by dividing the interest rate in effect on that day by
365 or 366, as applicable.
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All amounts used in or resulting from any calculation on
floating-rate notes will be rounded to the nearest cent, in the
case of U.S. dollars, or to the nearest corresponding
hundredth of a unit, in the case of a currency other than
U.S. dollars, with one-half cent or one-half of a
corresponding hundredth of a unit or more being rounded upward.
Unless we specify otherwise in the applicable prospectus
supplement, all percentages resulting from any calculation with
respect to a floating-rate note will be rounded, if necessary,
to the nearest one hundred-
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thousandth of a percent, with five one-millionths of a
percentage point rounded upwards, e.g., 9.876545% (or .09876545)
being rounded to 9.87655% (or .0987655).
In determining the base rate that applies to a floating-rate
note during a particular interest period, the calculation agent
may obtain rate quotes from various banks or dealers active in
the relevant market, as described in the descriptions of the
base rates below and/or in the applicable prospectus supplement.
Those reference banks and dealers may include the calculation
agent itself and its affiliates, as well as any underwriter,
dealer, or agent participating in the distribution of the
relevant floating-rate notes and its affiliates, and they may
include our affiliates.
At the request of the holder of any floating-rate note, the
calculation agent will provide the interest rate then in effect
for that floating-rate note and, if already determined, the
interest rate that is to take effect on the next interest reset
date.
LIBOR Notes. Each LIBOR note will bear interest at the
LIBOR base rate, adjusted by any spread or spread multiplier, as
specified in the applicable prospectus supplement. The LIBOR
base rate will be the London interbank offered rate for deposits
in U.S. dollars or any index currency, as specified in the
applicable prospectus supplement.
The calculation agent will determine LIBOR on each interest
determination date as follows:
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If LIBOR Telerate is specified in the applicable
prospectus supplement, LIBOR will be the rate for deposits in
the relevant index currency having the index maturity described
in the applicable prospectus supplement, commencing on the
related interest reset date, as the rate appears on the
designated LIBOR page in the applicable prospectus supplement as
of 11:00 A.M., London time, on that interest determination
date.
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If LIBOR Reuters is specified in the applicable
prospectus supplement, LIBOR will be the arithmetic mean of the
offered rates for deposits in the relevant index currency having
the index maturity described in the applicable prospectus
supplement, commencing on the related interest reset date, as
the rates appear on the designated LIBOR page in the applicable
prospectus supplement as of 11:00 A.M., London time, on
that interest determination date, if at least two offered rates
appear on the designated LIBOR page, except that, if the
designated LIBOR page only provides for a single rate, that
single rate will be used.
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If the applicable prospectus supplement does not specify
LIBOR Telerate or LIBOR Reuters, the
LIBOR rate will be LIBOR Telerate.
If LIBOR Telerate applies and the rate described
above does not appear on that page, or if LIBOR
Reuters applies and fewer than two of the rates described
above appears on that page or no rate appears on any page on
which only one rate normally appears, then the calculation agent
will determine LIBOR as follows:
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The calculation agent will select four major banks in the London
interbank market, after consultation with us. On the interest
determination date, those four banks will be requested to
provide their offered quotations for deposits in the relevant
index currency having an index maturity specified in the
applicable prospectus supplement commencing on the interest
reset date to prime banks in the London interbank market at
approximately 11:00 A.M., London time.
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If at least two quotations are provided, the calculation agent
will determine LIBOR as the arithmetic mean of those quotations.
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If fewer than two quotations are provided, the calculation agent
will select, after consultation with us, three major banks in
New York City. On the interest determination date, those three
banks will be requested to provide their offered quotations for
loans in the relevant index currency having an index maturity
specified in the applicable prospectus
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supplement commencing on the interest reset date to leading
European banks at approximately 11:00 A.M., New York time.
The calculation agent will determine LIBOR as the arithmetic
mean of those quotations.
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If fewer than three New York City banks selected by the
calculation agent are quoting rates, LIBOR for that interest
period will remain LIBOR then in effect on the interest
determination date.
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EURIBOR Notes. Each EURIBOR note will bear interest at
the EURIBOR base rate, adjusted by any spread or spread
multiplier, as specified in the applicable prospectus supplement.
EURIBOR means, for any interest determination date, the rate for
deposits in euro as sponsored, calculated, and published jointly
by the European Banking Federation and ACI The
Financial Market Association, or any company established by the
joint sponsors for purposes of compiling and publishing those
rates, having the index maturity specified in the applicable
prospectus supplement, as that rate appears on the display on
Moneyline Telerate, or any successor service, on page 248
or any other page as may replace page 248 (Telerate
Page 248), as of 11:00 A.M., Brussels time.
The following procedures will be followed if EURIBOR cannot be
determined as described above:
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If no offered rate appears on MoneyLine Telerate Page 248
on an interest determination date at approximately
11:00 A.M., Brussels time, then the calculation agent,
after consultation with us, will select four major banks in the
Euro-zone interbank market to provide a quotation of the rate at
which deposits in euro having the index maturity specified in
the applicable prospectus supplement are offered to prime banks
in the Euro-zone interbank market, and in a principal amount not
less than the equivalent of 1,000,000, that is
representative of a single transaction in euro in that market at
that time. If at least two quotations are provided, EURIBOR will
be the arithmetic average of those quotations.
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If fewer than two quotations are provided, then the calculation
agent, after consultation with us, will select four major banks
in the Euro-zone interbank market to provide a quotation of the
rate offered by them, at approximately 11:00 A.M., Brussels
time, on the interest determination date, for loans in euro to
prime banks in the Euro-zone interbank market for a period of
time equivalent to the index maturity specified in the
applicable prospectus supplement commencing on that interest
reset date and in a principal amount not less than the
equivalent of 1,000,000, that is representative of a
single transaction in euro in that market at that time. If at
least three quotations are provided, EURIBOR will be the
arithmetic average of those quotations.
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If three quotations are not provided, EURIBOR for that interest
determination date will be equal to EURIBOR for the immediately
preceding interest period.
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Euro-zone means the region comprising member states
of the European Union that have adopted the euro as their single
currency.
Treasury Rate Notes. Each treasury rate note will bear
interest at the treasury rate, adjusted by any spread or spread
multiplier, as specified in the applicable prospectus supplement.
The treasury rate for any interest determination
date is the rate set at the auction of direct obligations of the
United States (Treasury bills) having the index
maturity described in the applicable prospectus supplement, as
specified under the caption Investment Rate on the
display on Moneyline Telerate, or any successor service, on
page 56 or any other page as may replace page 56, or
page 57 or any other page as may replace page 57.
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The following procedures will be followed if the treasury rate
cannot be determined as described above:
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If the rate is not displayed on Moneyline Telerate by
3:00 P.M., New York City time, on the related calculation
date, the treasury rate will be the rate of Treasury bills as
published in H.15 Daily Update, or another recognized electronic
source used for the purpose of displaying the applicable rate,
under the caption U.S. Government Securities/Treasury
Bills/Auction High.
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If the alternative rate described in the paragraph immediately
above is not published by 3:00 P.M., New York City time, on
the related calculation date, the treasury rate will be the bond
equivalent yield, as defined below, of the auction rate of the
applicable Treasury bills as announced by the
U.S. Department of the Treasury.
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If the alternative rate described in the paragraph immediately
above is not announced by the U.S. Department of the
Treasury, or if the auction is not held, the treasury rate will
be the bond equivalent yield of the rate on the particular
interest determination date of the applicable Treasury bills as
published in H.15(519) under the caption
U.S. Government Securities/Treasury Bills/Secondary
Market.
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If the alternative rate described in the paragraph immediately
above is not published by 3:00 P.M., New York City time, on
the related calculation date, the treasury rate will be the rate
on the particular interest determination date of the applicable
Treasury bills as published in H.15 Daily Update, or another
recognized electronic source used for the purpose of displaying
the applicable rate, under the caption
U.S. Government Securities/Treasury Bills/Secondary
Market.
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If the alternative rate described in the paragraph immediately
above is not published by 3:00 P.M., New York City time, on
the related calculation date, the treasury rate will be the rate
on the particular interest determination date calculated by the
calculation agent as the bond equivalent yield of the arithmetic
mean of the secondary market bid rates, as of approximately
3:30 P.M., New York City time, on that interest
determination date, of three primary U.S. government
securities dealers, selected by the calculation agent, after
consultation with us, for the issue of Treasury bills with a
remaining maturity closest to the particular index maturity.
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If the dealers selected by the calculation agent are not quoting
as described in the paragraph immediately above, the treasury
rate will be the treasury rate in effect on the particular
interest determination date.
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The bond equivalent yield will be calculated using the following
formula:
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Bond equivalent yield =
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D × N
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× 100
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360(D × M)
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where D refers to the applicable annual rate for
Treasury bills quoted on a bank discount basis and expressed as
a decimal, N refers to 365 or 366, as the case may
be, and M refers to the actual number of days in the
applicable interest period.
H.15(519) means the weekly statistical release
designated as H.15(519), or any successor publication, published
by the Federal Reserve Board.
H.15 Daily Update means the daily update of
H.15(519), available through the website of the Federal Reserve
Board at www.federalreserve.gov/releases/h15/update, or any
successor site or publication.
Federal Funds Rate Notes. Each federal funds rate note
will bear interest at the federal funds rate, adjusted by any
spread or spread multiplier, as specified in the applicable
prospectus supplement.
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The federal funds rate for any interest
determination date is the rate on that date for U.S. dollar
federal funds, as published in H.15(519) prior to
3:00 P.M., New York City time, on the related calculation
date, under the heading Federal Funds (Effective)
and displayed on Moneyline Telerate, or any successor service,
on page 120 or any other page as may replace the specified
page on that service (Telerate Page 120).
The following procedures will be followed if the federal funds
rate cannot be determined as described above:
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If the rate is not published in H.15(519) by 3:00 P.M., New
York City time, on the related calculation date or does not
appear on Telerate Page 120, the federal funds rate will be
the rate on that interest determination date, as published in
H.15 Daily Update, or any other recognized electronic source for
the purposes of displaying the applicable rate, under the
caption Federal Funds (Effective).
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If the alternative rate described above is not published in H.15
Daily Update, or other recognized electronic source for the
purposes of displaying the applicable rate, by 3:00 P.M.,
New York City time, on the related calculation date, then the
calculation agent will determine the federal funds rate to be
the average of the rates for the last transaction in overnight
U.S. dollar federal funds quoted prior to 9:00 A.M.,
New York City time, on that interest determination date, by each
of three leading brokers of U.S. dollar federal funds
transactions in New York City, selected by the calculation
agent, after consultation with us.
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If fewer than three brokers selected by the calculation agent
are quoting as described above, the federal funds rate will be
the federal funds rate then in effect on that interest
determination date.
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Prime Rate Notes. Each prime rate note will bear interest
at the prime rate, as adjusted by any spread or spread
multiplier, as specified in the applicable prospectus supplement.
The prime rate for any interest determination date
is the prime rate or base lending rate on that date, as
published in H.15(519) prior to 3:00 P.M., New York City
time, on the related calculation date, under the heading
Bank Prime Loan.
The following procedures will be followed if the prime rate
cannot be determined as described above:
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If the rate is not published in H.15(519) by 3:00 P.M., New
York City time, on the related calculation date, then the prime
rate will be the rate as published in H.15 Daily Update, or any
other recognized electronic source used for the purpose of
displaying the applicable rate, under the caption Bank
Prime Loan.
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If the alternative rate described above is not published in H.15
Daily Update or another recognized electronic source by
3:00 P.M., New York City time, on the related calculation
date, then the calculation agent will determine the prime rate
to be the arithmetic mean of the rates of interest publicly
announced by each bank that appears on the Reuters screen US
PRIME 1, as defined below, as that banks prime rate
or base lending rate as in effect as of 11:00 A.M., New
York City time, on that interest determination date.
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If fewer than four rates appear on the Reuters screen US PRIME 1
for that interest determination date, by 3:00 P.M., New
York City time, then the calculation agent will determine the
prime rate to be the average of the prime rates or base lending
rates furnished in New York City by three substitute banks or
trust companies (all organized under the laws of the United
States or any of its states and having total equity capital of
at least $500,000,000) selected by the calculation agent, after
consultation with us.
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If the banks selected by the calculation agent are not quoting
as described above, the prime rate will remain the prime rate
then in effect on the interest determination date.
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Reuters screen US PRIME 1 means the display
designated as page US PRIME 1 on the Reuters Monitor
Money Rates Service (or any other page as may replace the US
PRIME 1 page on that service for the purpose of displaying prime
rates or base lending rates of major U.S. banks).
We may issue debt securities that provide that the rate of
return, including the principal, premium (if any), interest, or
other amounts payable (if any), is determined by reference,
either directly or indirectly, to the price or performance of
one or more securities, currencies or composite currencies,
commodities, interest rates, stock indices, or other indices or
formulae, in each case as specified in the applicable prospectus
supplement. We refer to these as indexed notes.
Holders of indexed notes may receive an amount at maturity that
is greater than or less than the face amount of the notes,
depending upon the formula used to determine the amount payable
and the relative value at maturity of the reference asset or
underlying obligation. The value of the applicable index will
fluctuate over time.
An indexed note may provide either for cash settlement or for
physical settlement by delivery of the indexed note or
securities, or other securities of the types listed above. An
indexed note also may provide that the form of settlement may be
determined at our option or the holders option. Some
indexed notes may be convertible, exercisable, or exchangeable
prior to maturity, at our option or the holders option,
for the related securities.
We will specify in the applicable prospectus supplement the
method for determining the principal, premium (if any),
interest, or other amounts payable (if any) in respect of
particular indexed notes, as well as certain historical
information with respect to the specified index or indexed
items, specific risk factors relating to that particular type of
indexed note, and tax considerations associated with an
investment in the indexed notes.
The prospectus supplement for any particular indexed notes also
will identify the calculation agent that will calculate the
amounts payable with respect to the indexed note. The
calculation agent may be one of our affiliates, including Banc
of America Securities LLC or Bank of America, N.A. We may
appoint different calculation agents from time to time after the
original issue date of an indexed note without your consent and
without notifying you of the change. Absent manifest error, all
determinations of the calculation agent will be final and
binding on you, the trustee, and us. Upon request of the holder
of an indexed note, the calculation agent will provide, if
applicable, information relating to the current principal,
premium (if any), rate of interest, interest payable, or other
amounts payable (if any) in connection with the indexed note.
We also may offer indexed amortizing notes, the rate
of amortization and final maturity of which are subject to
periodic adjustment based upon the degree to which an objective
base or index rate such as LIBOR, called a reference
rate, coincides with a specified target rate.
Indexed amortizing notes may provide for adjustment of the
amortization rate either on every interest payment date, or only
on interest payment dates that occur after a specified
lockout date. Each indexed amortizing note will
include an amortization table, specifying the rate at which the
principal of the note is to be amortized following any
applicable interest payment date, based upon the difference
between the reference rate and the target rate. The specific
terms of, and any additional considerations relating to, indexed
amortizing notes will be set forth in the applicable prospectus
supplement.
Floating-Rate/Fixed-Rate/Indexed
Notes
We may issue a debt security with elements of each of the
fixed-rate, floating-rate, and indexed notes described above.
For example, a debt security may bear interest at a fixed rate
for some periods and at a floating rate in others. Similarly, a
debt security may provide for a
23
payment of principal at maturity linked to an index and also may
bear interest at a fixed or floating rate. We will describe the
determination of interest for any of these debt securities in
the applicable prospectus supplement.
Original
Issue Discount Notes
A fixed-rate note, a floating-rate note, or an indexed note may
be an original issue discount note. Original issue discount
notes are debt securities that are issued at a price lower than
their stated principal amount or lower than their minimum
guaranteed repayment amount at maturity. Original issue discount
notes may bear no interest (zero coupon rate notes)
or may bear interest at a rate that is below market rates at the
time of issuance. Upon an acceleration of the maturity of an
original issue discount note, the amount of interest payable
will be determined in accordance with the terms of the note, as
described in the applicable prospectus supplement. That amount
normally is less than the amount payable at the maturity date. A
note issued at a discount to its principal may, for
U.S. federal income tax purposes, be considered an original
issue discount note, regardless of the amount payable upon
redemption or acceleration of maturity. See
U.S. Federal Income Tax Considerations
Taxation of Debt Securities below for a summary of the
U.S. federal income tax consequences of owning an original
issue discount note.
Payment
of Principal, Interest, and Other Amounts Due
Paying Agents. We may appoint one or more financial
institutions to act as our paying agents. Unless we specify
otherwise in the applicable prospectus supplement, the trustee
will act as our sole paying agent, security registrar, and
transfer agent with respect to the debt securities through the
trustees office. That office is currently located at 101
Barclay Street, New York, New York 10286. In addition, in the
case of some of our debt securities, such as debt securities
denominated in euro, that office is expected to be
48th Floor, One Canada Square, London, E14 5AL. At any
time, we may rescind the designation of a paying agent, appoint
a successor paying agent, or approve a change in the office
through which any successor paying agent acts in accordance with
the applicable indenture. In addition, we may decide to act as
our own paying agent with respect to some or all of the debt
securities, and the paying agent may resign.
Payments to Holders and Record Dates for Interest. We
refer to each date on which interest is payable on a debt
security as an interest payment date. Unless we
specify otherwise in the applicable prospectus supplement, the
provisions described in this section will apply to payments on
the debt securities.
Interest payments on the debt securities will be made on each
interest payment date applicable to, and at the maturity date
of, the debt securities. Interest payable at any interest
payment date other than the maturity date will be paid to the
registered holder of the debt security on the regular record
date for that interest payment date, as described below.
However, unless we specify otherwise in the applicable
prospectus supplement, the initial interest payment on a debt
security issued between a regular record date and the interest
payment date immediately following the regular record date will
be made on the second interest payment date following the
original issue date to the holder of record on the regular
record date preceding the second interest payment date. The
principal and interest payable at maturity will be paid to the
holder of the debt security at the close of business on the
maturity date.
Unless we specify otherwise in the applicable prospectus
supplement, the record date for any interest payment for a debt
security in book-entry only form generally will be the business
day prior to the payment date. If the debt security is in a form
that is other than book-entry only, and unless we specify
otherwise in the applicable prospectus supplement, the regular
record date for an interest payment date will be the last day of
the calendar month preceding the interest payment date or the
fifteenth day of the calendar month in which the interest
payment date occurs, as specified in the prospectus supplement,
whether or not that date is a business day.
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Unless we specify otherwise in the applicable prospectus
supplement, if any interest payment date or the maturity date of
a debt security falls on a day that is not a business day, we
will make the required payment on the next business day, and no
additional interest will accrue in respect of the payment made
on the next business day. However, unless we specify otherwise
in the applicable prospectus supplement, for LIBOR notes or
EURIBOR notes, if an interest payment date falls on a date that
is not a business day, and the next business day is in the next
calendar month, the interest payment date will be the
immediately preceding business day.
Unless we specify otherwise in the applicable prospectus
supplement, the term business day means, for any
debt security, a day that meets all the following applicable
requirements:
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for all debt securities, is any weekday that is not a legal
holiday in New York, New York, Charlotte, North Carolina, or any
other place of payment of the debt security, and is not a date
on which banking institutions in those cities are authorized or
required by law or regulation to be closed;
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for any LIBOR note, also is a day on which commercial banks are
open for business (including dealings in the index currency
specified in the applicable prospectus supplement) in London,
England (a London Banking Day);
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for any debt security denominated in euro or any EURIBOR note,
also is a day on which the TransEuropean Automated Real-Time
Gross Settlement Express Transfer, or TARGET, System
or any successor is operating (a TARGET Settlement
Date); and
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for any debt security that has a specified currency other than
U.S. dollars or euro, also is not a day on which banking
institutions generally are authorized or obligated by law,
regulation, or executive order to close in the principal
financial center of the country of the specified currency.
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For purposes of this determination, the principal
financial center is:
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the capital city of the country issuing the specified currency,
except for U.S. dollars, Australian dollars, Canadian
dollars, South African rand, and Swiss francs, for which the
principal financial center is New York, Sydney and
Melbourne, Toronto, Johannesburg, and Zurich,
respectively; or
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the capital city of the country to which the index currency
relates, except for U.S. dollars, Australian dollars,
Canadian dollars, South African rand, and Swiss francs, for
which the principal financial center is New York,
Sydney, Toronto, Johannesburg, and Zurich, respectively.
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Payments Due in U.S. Dollars. Unless we specify
otherwise in the applicable prospectus supplement, we will
follow the practices described in this subsection when we pay
amounts that are due in U.S. dollars.
We will make payments on debt securities in book-entry form in
accordance with arrangements then in place between the paying
agent and the depository or its nominee, as holder. An indirect
owners right to receive those payments will be governed by
the rules and practices of the depository and its participants,
as described below under the heading Registration and
Settlement.
We will pay any interest on debt securities in certificated form
on each interest payment date other than the maturity date by
check mailed to holders of the debt securities on the applicable
record date at the address appearing on our records. We will pay
any principal, premium (if any), interest, and other amounts
payable (if any) at the maturity date of a debt security in
certificated form by wire transfer of immediately available
funds upon surrender of the debt security at the corporate trust
office of the applicable trustee or paying agent.
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Book-entry and other indirect owners should contact their
banks or brokers for information on how they will receive
payments on their debt securities.
Payments Due in Other Currencies. Unless we specify
otherwise in the applicable prospectus supplement, we will
follow the practices described in this subsection when we pay
amounts that are due in a currency other than U.S. dollars.
Unless we specify otherwise in the applicable prospectus
supplement, holders are not entitled to receive payments in
U.S. dollars of an amount due in another currency, either
on a global debt security or a debt security in certificated
form.
We will make payments on
Non-U.S. Dollar
Denominated Debt Securities in book-entry form in the applicable
specified currency in accordance with arrangements then in place
between the paying agent and the depository or its nominee, as
holder. An indirect owners right to receive those payments
will be governed by the rules and practices of the depository
and its participants, as described below under the heading
Registration and Settlement.
We will pay any interest on
Non-U.S. Dollar-Denominated
Debt Securities in certificated form by check mailed to holders
of the debt securities on the applicable record date at the
address appearing on our records. We will pay any principal,
premium (if any), interest, and other amounts payable (if any)
at the maturity date of a
Non-U.S. Dollar-Denominated
Debt Security in certificated form by wire transfer of
immediately available funds upon surrender of the debt security
at the corporate trust office of the applicable trustee or
paying agent.
If we issue a debt security in a specified currency other than
U.S. dollars, unless we specify otherwise in the applicable
prospectus supplement, we will appoint a financial institution
to act as the exchange rate agent. The exchange rate agent will
determine the applicable rate of exchange that would apply to a
payment made in U.S. dollars, if the currency in which we
otherwise would be required to make the applicable payment is
not available. The exchange rate agent may be one of our
affiliates, including Banc of America Securities Limited. We
will identify in the applicable prospectus supplement the
exchange rate agent that we have appointed for a particular debt
security as of its original issue date. We may appoint different
exchange rate agents from time to time after the original issue
date of the debt security without your consent and without
notifying you of the change. All determinations made by the
exchange rate agent will be in its sole discretion unless we
state in the applicable prospectus supplement that any
determination requires our approval. Absent manifest error,
those determinations will be final and binding on you and us.
Book-entry and other indirect owners of a debt security with
a specified currency other than U.S. dollars should contact
their banks or brokers for information about how to receive
payments in the specified currency or in U.S. dollars.
Unless we specify otherwise in the applicable prospectus
supplement, our debt securities will not be entitled to the
benefit of any sinking fund. This means that we will not deposit
money on a regular basis into any separate custodial account to
repay the debt securities.
The applicable prospectus supplement will indicate whether we
may redeem the debt securities prior to their maturity date. If
we may redeem the debt securities prior to maturity, the
applicable prospectus supplement will indicate the redemption
price, the method for redemption, and the date or dates upon
which we may redeem the debt securities. Unless we specify
otherwise in the applicable prospectus supplement, we may redeem
debt securities only on an interest payment date, and the
redemption price will be 100% of the principal amount of the
debt securities to be redeemed, plus any accrued and unpaid
interest.
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Unless we specify otherwise in the applicable prospectus
supplement, we may exercise our right to redeem debt securities
by giving notice to the trustee under the applicable indenture
at least 10 business days but not more than 60 calendar days
before the specified redemption date. The notice will take the
form of a certificate signed by us specifying:
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the date fixed for redemption;
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the redemption price;
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the CUSIP number of the debt securities to be redeemed;
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the amount to be redeemed, if less than all of a series of debt
securities is to be redeemed;
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the place of payment for the debt securities to be
redeemed; and
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that on and after the date fixed for redemption, interest will
cease to accrue on the debt securities to be redeemed.
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So long as a depository is the record holder of the applicable
debt securities to be redeemed, we will deliver any notice of
our election to exercise our redemption right only to that
depository.
The applicable prospectus supplement will indicate whether the
debt securities can be repaid at the holders option prior
to their maturity date. If the debt securities may be repaid
prior to maturity, the applicable prospectus supplement will
indicate the applicable repayment price or prices, the
procedures for repayment, and the date or dates on or after
which the holder can request repayment.
We may purchase at any time and from time to time, through a
subsidiary or affiliate of ours, outstanding debt securities by
tender, in the open market, or by private agreement. We, or our
affiliates, have the discretion to hold or resell any
repurchased debt securities. We also have the discretion to
cancel any repurchased debt securities.
We may issue debt securities that are convertible into, or
exercisable or exchangeable for, at either our option or the
holders option, our preferred stock, depositary shares,
common stock, or other debt securities, or debt or equity
securities of one or more third parties. The applicable
prospectus supplement will describe the terms of any conversion,
exercise, or exchange features, including:
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the periods during which conversion, exercise, or exchange, as
applicable, may be elected;
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the conversion, exercise, or exchange price payable and the
number of shares or amount of our preferred stock, depositary
shares, common stock, or other debt securities, or debt or
equity securities of a third party, that may be issued upon
conversion, exercise, or exchange, and any adjustment
provisions; and
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the procedures for electing conversion, exercise, or exchange,
as applicable.
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Exchange,
Registration, and Transfer
Subject to the terms of the applicable indenture, debt
securities of any series in certificated form may be exchanged
at the option of the holder for other debt securities of the
same series and of an equal aggregate principal amount and type
in any authorized denominations.
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Debt securities in certificated form may be presented for
registration of transfer at the office of the security registrar
or at the office of any transfer agent that we designate and
maintain. The security registrar or the transfer agent will make
the transfer or registration only if it is satisfied with the
documents of title and identity of the person making the
request. There will not be a service charge for any exchange or
registration of transfer of debt securities, but we may require
payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with the
exchange. Unless we specify otherwise in the applicable
prospectus supplement, The Bank of New York, 101 Barclay Street,
New York, New York 10286, will be the authenticating agent,
registrar, and transfer agent for the debt securities issued
under the respective indentures. We may change the security
registrar or the transfer agent or approve a change in the
location through which any security registrar or transfer agent
acts at any time, except that we will be required to maintain a
security registrar and transfer agent in each place of payment
for each series of debt securities. At any time, we may
designate additional transfer agents for any series of debt
securities.
We will not be required to (1) issue, exchange, or register
the transfer of any debt security of any series to be redeemed
for a period of 15 days before those debt securities were
selected for redemption, or (2) exchange or register the
transfer of any debt security that was selected, called, or is
being called for redemption, except the unredeemed portion of
any debt security being redeemed in part.
For a discussion of restrictions on the exchange, registration,
and transfer of book-entry securities, see Registration
and Settlement below.
Our subordinated debt securities are subordinated in right of
payment to all of our senior indebtedness. The
Subordinated Indenture defines senior indebtedness
as any indebtedness for money borrowed, including all of our
indebtedness for borrowed and purchased money, all of our
obligations arising from off-balance sheet guarantees and direct
credit substitutes, and our obligations associated with
derivative products such as interest and foreign exchange rate
contracts and commodity contracts, that was outstanding on the
date we executed the Subordinated Indenture, or was created,
incurred, or assumed after that date, for which we are
responsible or liable as obligor, guarantor, or otherwise, and
all deferrals, renewals, extensions, and refundings of that
indebtedness or obligations, other than the debt securities
issued under the Subordinated Indenture or any other
indebtedness that by its terms is subordinate in right of
payment to any of our other indebtedness. Each prospectus
supplement for a series of subordinated debt securities will
indicate the aggregate amount of our senior indebtedness
outstanding at that time and any limitation on the issuance of
additional senior indebtedness.
If there is a default or event of default under any senior
indebtedness that would allow acceleration of maturity of the
senior indebtedness and that default or event of default is not
remedied, and we and the trustee of the Subordinated Indenture
receive notice of this default from the holders of at least 10%
in principal amount of any kind or category of any senior
indebtedness or if the trustee of the Subordinated Indenture
receives notice from us, then we will not be able to make any
principal, premium, interest, or other payments on the
subordinated debt securities or repurchase our subordinated debt
securities.
If any subordinated debt security is declared due and payable
before the required date or upon a payment or distribution of
our assets to creditors pursuant to a dissolution, winding up,
liquidation, or reorganization, we are required to pay all
principal, premium, interest, or other payments to holders of
senior indebtedness before any holders of subordinated debt are
paid. In addition, if any amounts previously were paid to the
holders of subordinated debt or the trustee of the Subordinated
Indenture, the holders of senior indebtedness will have first
rights to the amounts previously paid.
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Subject to the payment in full of all our senior indebtedness,
the holders of our subordinated debt securities will be
subrogated to the rights of the holders of our senior
indebtedness to receive payments or distributions of our assets
applicable to the senior indebtedness until our subordinated
debt securities are paid in full. For purposes of this
subrogation, the subordinated debt securities will be subrogated
equally and ratably with all our other indebtedness that by its
terms ranks on a parity with our subordinated debt securities
and is entitled to like rights of subrogation.
Sale
or Issuance of Capital Stock of Banks
The Senior Indenture prohibits the issuance, sale, or other
disposition of capital stock, or securities convertible into or
options, warrants, or rights to acquire capital stock, of any
Principal Subsidiary Bank (as defined below) or of any
subsidiary which owns shares of capital stock, or securities
convertible into or options, warrants, or rights to acquire
capital stock, of any Principal Subsidiary Bank, with the
following exceptions:
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sales of directors qualifying shares;
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sales or other dispositions for fair market value, if, after
giving effect to the disposition and to conversion of any shares
or securities convertible into capital stock of a Principal
Subsidiary Bank, we would own at least 80% of each class of the
capital stock of that Principal Subsidiary Bank;
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sales or other dispositions made in compliance with an order of
a court or regulatory authority of competent jurisdiction;
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any sale by a Principal Subsidiary Bank of additional shares of
its capital stock, securities convertible into shares of its
capital stock, or options, warrants, or rights to subscribe for
or purchase shares of its capital stock, to its stockholders at
any price, so long as before that sale we owned, directly or
indirectly, securities of the same class and immediately after
the sale, we owned, directly or indirectly, at least as great a
percentage of each class of securities of the Principal
Subsidiary Bank as we owned before the sale of additional
securities; and
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any issuance of shares of capital stock, or securities
convertible into or options, warrants, or rights to subscribe
for or purchase shares of capital stock, of a Principal
Subsidiary Bank or any subsidiary which owns shares of capital
stock, or securities convertible into or options, warrants, or
rights to acquire capital stock, of any Principal Subsidiary
Bank, to us or our wholly owned subsidiary.
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A Principal Subsidiary Bank is defined in the Senior
Indenture as any bank with total assets equal to more than 10%
of our total consolidated assets. As of the date of this
prospectus, Bank of America, N.A. is our only Principal
Subsidiary Bank.
Limitation
on Mergers and Sales of Assets
Each 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 assets. These
transactions are permitted if:
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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 that indenture; and
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immediately after the transaction, we (or any successor company)
are not in default in the performance of any covenant or
condition under that indenture.
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Upon any consolidation, merger, sale, or transfer of this kind,
the resulting or acquiring entity will be substituted for us in
the applicable indenture with the same effect as if it had been
an original party to that indenture. As a result, the successor
entity may exercise our rights and powers under the indenture.
The holders of a majority in principal amount of the debt
securities of all affected series then outstanding under the
indenture may waive compliance with some of the covenants or
conditions of that indenture.
Modification
of the Indentures
We and the trustee may modify the applicable indenture and the
rights of the holders of the debt securities with the consent of
the holders of at least
662/3%
of the aggregate principal amount of all series of debt
securities under that indenture affected by the modification.
However, no modification may extend the fixed maturity of,
reduce the principal amount or redemption premium of, or reduce
the rate of, or extend the time of payment of, interest on, any
debt security without the consent of each holder affected by the
modification. No modification may reduce the percentage of debt
securities that is required to consent to modification of an
indenture without the consent of all holders of the debt
securities outstanding under that indenture.
In addition, we and the trustee may execute supplemental
indentures in some circumstances without the consent of any
holders of outstanding debt securities.
For purposes of determining the aggregate principal amount of
the debt securities outstanding at any time in connection with
any request, demand, authorization, direction, notice, consent,
or waiver under the applicable indenture, (1) the principal
amount of any debt security issued with original issue discount
is that amount that would be due and payable at that time upon
an event of default, and (2) the principal amount of a debt
security denominated in a foreign currency or currency unit is
the U.S. dollar equivalent on the date of original issuance
of the debt security.
Meetings
and Action by Securityholders
The trustee may call a meeting in its discretion, or upon
request by us or the holders of at least 10% in principal amount
of a series of outstanding debt securities, by giving notice. If
a meeting of holders is duly held, any resolution raised or
decision taken in accordance with the indenture will be binding
on all holders of debt securities of that series.
Defaults
and Rights of Acceleration
The Senior Indenture defines an event of default for a series of
senior debt securities as any one of the following events:
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our failure to pay principal or any premium when due on any
securities of that series;
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our failure to pay interest on any securities of that series,
within 30 calendar days after the interest becomes due;
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our breach of any of our other covenants contained in the senior
debt securities of that series or in the Senior Indenture, that
is not cured within 90 calendar days after written notice to us
by the trustee of the Senior Indenture, or to us and the trustee
of the Senior Indenture by the holders of at least 25% in
principal amount of all senior debt securities then outstanding
under the Senior Indenture and affected by the breach; and
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specified events involving our bankruptcy, insolvency, or
liquidation.
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The Subordinated Indenture defines an event of default only as
our bankruptcy under U.S. federal bankruptcy laws.
If an event of default occurs and is continuing, either the
trustee or the holders of 25% in principal amount of the debt
securities outstanding under the applicable indenture (or, in
the case of an event of default under the Senior Indenture with
respect to a series of senior debt securities, the holders of
25% in principal amount of the outstanding debt securities of
all series affected) may declare the principal amount, or, if
the debt securities are issued with original issue discount, a
specified portion of the principal amount, of all debt
securities (or the debt securities of all series affected, as
the case may be) to be due and payable immediately. The holders
of a majority in principal amount of the debt securities then
outstanding (or of the series affected, as the case may be), in
some circumstances, may annul the declaration of acceleration
and waive past defaults.
Payment of principal of the subordinated debt securities may not
be accelerated in the case of a default in the payment of
principal, any premium, interest, or any other amounts or the
performance of any of our other covenants.
Collection
of Indebtedness
If we fail to pay the principal of (or, under the Senior
Indenture, any premium on) any debt securities, or if we are
over 30 calendar days late on an interest payment on the debt
securities, the applicable trustee can demand that we pay to it,
for the benefit of the holders of those debt securities, the
amount which is due and payable on those debt securities,
including any interest incurred because of our failure to make
that payment. If we fail to pay the required amount on demand,
the trustee may take appropriate action, including instituting
judicial proceedings against us.
In addition, a holder of a debt security also may file suit to
enforce our obligation to make payment of principal, any
premium, interest, or other amounts due on that debt security
regardless of the actions taken by the trustee.
The holders of a majority in principal amount of each series of
the debt securities then outstanding under an indenture may
direct the time, method, and place of conducting any proceeding
for any remedy available to the trustee under that indenture,
but the trustee will be entitled to receive from the holders a
reasonable indemnity against expenses and liabilities.
We are required periodically to file with the trustees a
certificate stating that we are not in default under any of the
terms of the indentures.
Payment
of Additional Amounts
If we so specify in the applicable prospectus supplement, and
subject to the exceptions and limitations set forth below, we
will pay to the beneficial owner of any debt security that is a
non-U.S. person
additional amounts to ensure that every net payment on that debt
security will not be less, due to the payment of
U.S. withholding tax, than the amount then otherwise due
and payable. For this purpose, a net payment on a
debt security means a payment by us or any paying agent,
including payment of principal and interest, after deduction for
any present or future tax, assessment, or other governmental
charge of the United States (other than a territory or
possession). These additional amounts will constitute additional
interest on the debt security. For this purpose,
U.S. withholding tax means a withholding tax of the United
States, other than a territory or possession.
However, notwithstanding our obligation, if so specified, to pay
additional amounts, we will not be required to pay additional
amounts in any of the circumstances described in items
(1) through (13) below, unless we specify otherwise in
the applicable prospectus supplement.
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(1)
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Additional amounts will not be payable if a payment on a debt
security is reduced as a result of any tax, assessment, or other
governmental charge that is imposed or withheld solely by reason
of the beneficial owner of the debt security:
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having a relationship with the United States as a citizen,
resident, or otherwise;
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having had such a relationship in the past; or
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being considered as having had such a relationship.
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(2)
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Additional amounts will not be payable if a payment on a debt
security is reduced as a result of any tax, assessment, or other
governmental charge that is imposed or withheld solely by reason
of the beneficial owner of the debt security:
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being treated as present in or engaged in a trade or business in
the United States;
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being treated as having been present in or engaged in a trade or
business in the United States in the past;
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having or having had a permanent establishment in the United
States; or
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having or having had a qualified business unit which has the
U.S. dollar as its functional currency.
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(3)
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Additional amounts will not be payable if a payment on a debt
security is reduced as a result of any tax, assessment, or other
governmental charge that is imposed or withheld solely by reason
of the beneficial owner of the debt security being or having
been a:
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personal holding company;
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foreign personal holding company;
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private foundation or other tax-exempt organization;
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passive foreign investment company;
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controlled foreign corporation; or
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corporation which has accumulated earnings to avoid
U.S. federal income tax.
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(4)
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Additional amounts will not be payable if a payment on a debt
security is reduced as a result of any tax, assessment, or other
governmental charge that is imposed or withheld solely by reason
of the beneficial owner of the debt security owning or having
owned, actually or constructively, 10% or more of the total
combined voting power of all classes of our stock entitled to
vote.
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(5)
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Additional amounts will not be payable if a payment on a debt
security is reduced as a result of any tax, assessment, or other
governmental charge that is imposed or withheld solely by reason
of the beneficial owner of the debt security being a bank
extending credit under a loan agreement entered into in the
ordinary course of business.
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For purposes of items (1) through (5) above,
beneficial owner includes, without limitation, a
holder and a fiduciary, settlor, partner, member, shareholder,
or beneficiary of the holder if the holder is an estate, trust,
partnership, limited liability company, corporation, or other
entity, or a person holding a power over an estate or trust
administered by a fiduciary holder.
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(6)
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Additional amounts will not be payable to any beneficial owner
of a debt security that is:
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A fiduciary;
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A partnership;
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A limited liability company;
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Another fiscally transparent entity; or
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Not the sole beneficial owner of the debt security, or any
portion of the debt security.
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However, this exception to the obligation to pay additional
amounts will apply only to the extent that a beneficiary or
settlor in relation to the fiduciary, or a beneficial owner,
partner, or member of the partnership, limited liability
company, or other fiscally transparent entity, would not have
been entitled to the payment of an additional amount had the
beneficiary, settlor, beneficial owner, partner, or member
received directly its beneficial or distributive share of the
payment.
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(7)
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Additional amounts will not be payable if a payment on a debt
security is reduced as a result of any tax, assessment, or other
governmental charge that is imposed or withheld solely by reason
of the failure of the beneficial owner of the debt security or
any other person to comply with applicable certification,
identification, documentation, or other information reporting
requirements. This exception to the obligation to pay additional
amounts will apply only if compliance with such requirements is
required as a precondition to exemption from such tax,
assessment, or other governmental charge by statute or
regulation of the United States or by an applicable income tax
treaty to which the United States is a party.
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(8)
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Additional amounts will not be payable if a payment on a debt
security is reduced as a result of any tax, assessment, or other
governmental charge that is collected or imposed by any method
other than by withholding from a payment on a debt security by
us or any paying agent.
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(9)
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Additional amounts will not be payable if a payment on a debt
security is reduced as a result of any tax, assessment, or other
governmental charge that is imposed or withheld by reason of a
change in law, regulation, or administrative or judicial
interpretation that becomes effective more than 15 days
after the payment becomes due or is duly provided for, whichever
occurs later.
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(10)
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Additional amounts will not be payable if a payment on a debt
security is reduced as a result of any tax, assessment, or other
governmental charge that is imposed or withheld by reason of the
presentation by the beneficial owner of a debt security for
payment more than 30 days after the date on which such
payment becomes due or is duly provided for, whichever occurs
later.
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(11)
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Additional amounts will not be payable if a payment on a debt
security is reduced as a result of any:
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estate tax;
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inheritance tax;
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gift tax;
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sales tax;
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excise tax;
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transfer tax;
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wealth tax;
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personal property tax; or
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any similar tax, assessment, or other governmental charge.
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(12)
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Additional amounts will not be payable if a payment on a debt
security is reduced as a result of any tax, assessment, or other
governmental charge required to be withheld by
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any paying agent from a payment of principal or interest on the
applicable security if such payment can be made without such
withholding by any other paying agent.
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(13)
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Additional amounts will not be payable if a payment on a debt
security is reduced as a result of any combination of items
(1) through (12) above.
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Except as specifically provided in this section, we will not be
required to make any payment of any tax, assessment, or other
governmental charge imposed by any government, political
subdivision, or taxing authority of that government.
For purposes of determining whether the payment of additional
amounts is required, the term U.S. person means
any individual who is a citizen or resident of the United
States; any corporation, partnership, or other entity created or
organized in or under the laws of the United States; any estate
if the income of such estate falls within the federal income tax
jurisdiction of the United States regardless of the source of
that income; and any trust if a U.S. court is able to
exercise primary supervision over its administration and one or
more U.S. persons have the authority to control all of the
substantial decisions of the trust. Additionally, for this
purpose,
non-U.S. person
means a person who is not a U.S. person, and United
States means the United States of America, including each
state of the United States and the District of Columbia, its
territories, its possessions, and other areas within its
jurisdiction.
Redemption
for Tax Reasons
If we so specify in the applicable prospectus supplement, we may
redeem the debt securities in whole, but not in part, at any
time before maturity, after giving not less than 30 nor more
than 60 calendar days notice to the trustee under the
applicable indenture and to the holders of the debt securities,
if we have or will become obligated to pay additional amounts,
as described above under Payment of Additional
Amounts, as a result of any change in, or amendment to,
the laws or regulations of the United States or any political
subdivision or any authority of the United States having power
to tax, or any change in the application or official
interpretation of such laws or regulations, which change or
amendment becomes effective on or after the date of the
applicable prospectus supplement for the issuance of those debt
securities.
Before we publish any notice of redemption for tax reasons, we
will deliver to the trustee under the indenture a certificate
signed by our chief financial officer or a senior vice president
stating that we are entitled to redeem the debt securities and
that the conditions precedent to redemption have occurred.
Unless we specify otherwise in the applicable prospectus
supplement, any debt securities redeemed for tax reasons will be
redeemed at 100% of their principal amount together with
interest accrued up to, but excluding, the redemption date.
Defeasance
and Covenant Defeasance
If we so specify in the applicable prospectus supplement, the
provisions for full defeasance and covenant defeasance described
below will apply to the debt securities if certain conditions
are satisfied.
Full Defeasance. If there is a change in the
U.S. federal tax law, as described below, we can legally
release ourselves from all payment and other obligations on any
debt securities. This is called full defeasance. For us to do
so, each of the following must occur:
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We must deposit in trust for the benefit of the holders of those
debt securities a combination of money and U.S. government
or U.S. government agency notes or bonds that will generate
enough cash to make interest, principal, and any other payments
on those debt securities at their due dates;
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There must be a change in current U.S. federal tax law or
an Internal Revenue Service ruling that lets us make the above
deposit without causing the holders to be taxed on the debt
securities any differently than if we did not make the deposit
and repaid the debt securities ourselves. Under current
U.S. federal tax law, the deposit and our legal release
from your debt security would be treated as though we took back
your debt security and gave you your share of the cash and notes
or bonds deposited in trust. In that event, you could recognize
gain or loss on your debt security; and
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We must deliver to the trustee under the indenture a legal
opinion of our counsel confirming the tax law treatment
described above.
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If we ever fully defeased your debt security, you would have to
rely solely on the trust deposit for payments on your debt
security. You would not be able to look to us for payment in the
event of any shortfall.
Covenant Defeasance. Under current U.S. federal tax
law, we can make the same type of deposit described above and be
released from any restrictive covenants relating to your debt
security. This is called covenant defeasance. In that event, you
would lose the protection of those restrictive covenants. In
order to achieve covenant defeasance for the debt securities, we
must do both of the following:
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We must deposit in trust for the benefit of the holders of those
debt securities a combination of money and U.S. government
or U.S. government agency notes or bonds that will generate
enough cash to make interest, principal, and any other payments
on those debt securities on their due dates; and
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We must deliver to the trustee under the indenture a legal
opinion of our counsel confirming that under current
U.S. federal income tax law we may make the above deposit
without causing the holders to be taxed on the debt securities
any differently than if we did not make the deposit and repaid
the debt securities ourselves.
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If we achieve covenant defeasance with respect to your debt
security, you can still look to us for repayment of your debt
security in the event of any shortfall in the trust deposit. You
should note, however, that if one of the remaining events of
default occurred, such as our bankruptcy, and your debt security
became immediately due and payable, there may be a shortfall.
Depending on the event causing the default, you may not be able
to obtain payment of the shortfall.
We will provide the holders with any required notices by
first-class mail to the addresses of the holders as they appear
in the security register. So long as a depository is the record
holder of a series of debt securities with respect to which a
notice is given, we will deliver the notice only to that
depository.
We and certain of our affiliates have from time to time
maintained deposit accounts and conducted other banking
transactions with The Bank of New York and its affiliates in the
ordinary course of business. We expect to continue these
business transactions. The Bank of New York also serves as
trustee for a number of series of our outstanding indebtedness
under other indentures.
The indentures and the debt securities will be governed by New
York law.
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We may issue warrants that are either debt warrants or universal
warrants. We may offer warrants separately or as part of a unit,
as described below under the heading Description of
Units.
We may issue warrants in any amounts or in as many distinct
series as we determine. We will issue each series of warrants
under a separate warrant agreement to be entered into between us
and a warrant agent to be designated in the applicable
prospectus supplement. When we refer to a series of warrants, we
mean all warrants issued as part of the same series under the
applicable warrant agreement.
This section describes some of the general terms and provisions
of the warrants. We will describe the specific terms of a series
of warrants and the applicable warrant agreement in the
applicable prospectus supplement. The following description and
any description of the warrants in the applicable prospectus
supplement may not be complete and is subject to and qualified
in its entirety by reference to the terms and provisions of the
applicable warrant agreement. A form of the warrant agreement
reflecting the particular terms and provisions of a series of
offered warrants will be filed with the SEC in connection with
the offering and incorporated by reference in the registration
statement and this prospectus. See Where You Can Find More
Information below for information on how to obtain copies
of any warrant agreements.
Description
of Debt Warrants
Debt warrants are rights for the purchase of debt securities. If
debt warrants are offered, the prospectus supplement will
describe the terms of the debt warrants and the warrant
agreement relating to the debt warrants, including the following:
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the offering price;
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the designation, aggregate stated principal amount, and terms of
the debt securities purchasable upon exercise of the debt
warrants;
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the currency, currency unit, or composite currency in which the
price for the debt warrants is payable;
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if applicable, the designation and terms of the debt securities
with which the debt warrants are issued, and the number of debt
warrants issued with each security;
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if applicable, the date on and after which the debt warrants and
the related debt securities will be separately transferable;
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the principal amount of debt securities purchasable upon
exercise of a debt warrant and the price at which, and the
currency, currency units, or composite currency based on or
relating to currencies in which, the principal amount of debt
securities may be purchased upon exercise;
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the dates the right to exercise the debt warrants will commence
and expire and, if the debt warrants are not continuously
exercisable, any dates on which the debt warrants are not
exercisable;
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any circumstances that will cause the debt warrants to be deemed
to be automatically exercised;
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if applicable, a discussion of the U.S. federal income tax
consequences;
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whether the debt warrants or related securities will be listed
on any securities exchange;
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whether the debt warrants will be issued in global or
certificated form;
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the name of the warrant agent;
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a description of the terms of any warrant agreement to be
entered into between us and a bank or trust company, as warrant
agent, governing the debt warrants; and
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any other terms of the debt warrants which are permitted under
the warrant agreement.
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Description
of Universal Warrants
Universal warrants are rights for the purchase or sale of, or
whose cash value is determined by reference to the performance,
level, or value of, one or more of the following:
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securities of one or more issuers, including our common or
preferred stock or other securities described in this
prospectus, or the debt or equity securities of third parties;
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one or more currencies, currency units, or composite currencies;
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one or more commodities;
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any other financial, economic, or other measure or instrument,
including the occurrence or non-occurrence of any event or
circumstance; and
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one or more indices or baskets of the items described above.
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We refer to each type of property described above as
warrant property.
We may satisfy our obligations, if any, and the holder of a
universal warrant may satisfy its obligations, if any, with
respect to any universal warrants by delivering:
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the warrant property;
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the cash value of the warrant property; or
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the cash value of the warrants determined by reference to the
performance, level, or value of the warrant property.
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The applicable prospectus supplement will describe what we may
deliver to satisfy our obligations, if any, and what the holder
of a universal warrant may deliver to satisfy its obligations,
if any, with respect to any universal warrants.
If universal warrants are offered, the applicable prospectus
supplement will describe the terms of the universal warrants and
the warrant agreement, including the following:
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the offering price;
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the title and aggregate number of the universal warrants;
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the nature and amount of the warrant property that the universal
warrants represent the right to buy or sell;
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whether the universal warrants are put warrants or call
warrants, including in either case whether the warrants may be
settled by means of net cash settlement or cashless exercise;
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the price at which the warrant property may be purchased or
sold, the currency, and the procedures and conditions relating
to exercise;
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whether the exercise price of the universal warrant may be paid
in cash or by exchange of the warrant property or both, the
method of exercising the universal warrants, and whether
settlement will occur on a net basis or a gross basis;
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the dates on which the right to exercise the universal warrants
will commence and expire;
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if applicable, a discussion of the U.S. federal income tax
consequences;
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whether the universal warrants or underlying securities will be
listed on any securities exchange;
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whether the universal warrants will be issued in global or
certificated form;
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the name of the warrant agent;
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a description of the terms of any warrant agreement to be
entered into between us and a bank or trust company, as warrant
agent, governing the universal warrants; and
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any other terms of the universal warrants which are permitted
under the warrant agreement.
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We and the warrant agent may amend the terms of any warrant
agreement and the warrants without the consent of the holders of
the warrants to cure any ambiguity, to correct any inconsistent
provision, or in any other manner we deem necessary or desirable
and which will not affect adversely the interests of the
holders. In addition, we may amend the warrant agreement and the
terms of the warrants with the consent of the holders of a
majority of the outstanding unexercised warrants affected.
However, any modification to the warrants cannot change the
exercise price, reduce the amounts receivable upon exercise,
cancellation, or expiration, shorten the time period during
which the warrants may be exercised, or otherwise materially and
adversely affect the rights of the holders of the warrants or
reduce the percentage of outstanding warrants required to modify
or amend the warrant agreement or the terms of the warrants,
without the consent of the affected holders.
Enforceability
of Rights of Warrantholders; No Trust Indenture Act
Protection
The warrant agent will act solely as our agent and will not
assume any obligation or relationship of agency or trust with
the holders of the warrants. Any record holder or beneficial
owner of a warrant, without anyone elses consent, may
enforce by appropriate legal action, on his or her own behalf,
his or her right to exercise the warrant in accordance with its
terms. A holder of a warrant will not be entitled to any of the
rights of a holder of the debt securities or other securities or
warrant property purchasable upon the exercise of the warrant,
including any right to receive payments on those securities or
warrant property or to enforce any covenants or rights in the
relevant indenture or any other agreement, before exercising the
warrant.
No warrant agreement will be qualified as an indenture, and no
warrant agent will be required to qualify as a trustee, under
the Trust Indenture Act of 1939. Therefore, holders of warrants
issued under a warrant agreement will not have the protection of
the Trust Indenture Act of 1939 with respect to their warrants.
Any warrants we issue will be our unsecured contractual
obligations. Claims of holders of our warrants generally will
have a junior position to claims of creditors of our
subsidiaries including, in the case of our banking subsidiaries,
their depositors.
DESCRIPTION
OF PURCHASE CONTRACTS
We may issue purchase contracts in any amounts and in as many
distinct series as we determine. We may offer purchase contracts
separately or as part of a unit, as described below under the
heading Description of Units. When we refer to a
series of purchase contracts, we
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mean all purchase contracts issued as part of the same series
under the applicable purchase contract.
This section describes some of the general terms and provisions
applicable to all purchase contracts. We will describe the
specific terms of a series of purchase contracts in the
applicable prospectus supplement. The following description and
any description of the purchase contracts in the applicable
prospectus supplement may not be complete and is subject to and
qualified in its entirety by reference to the terms and
provisions of the applicable purchase contract. A form of the
purchase contract reflecting the particular terms and provisions
of a series of offered purchase contracts will be filed with the
SEC in connection with the offering and incorporated by
reference in the registration statement and this prospectus. See
Where You Can Find More Information below for
information on how to obtain copies of any purchase contracts.
Purchase
Contract Property
We may issue purchase contracts for the purchase or sale of, or
whose cash value is determined by reference or linked to the
performance, level, or value of, one or more of the following:
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securities of one or more issuers, including our common or
preferred stock, other securities described in this prospectus,
or the debt or equity securities of third parties;
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one or more currencies, currency units, or composite currencies;
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one or more commodities;
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any other financial, economic, or other measure or instrument,
including the occurrence or non-occurrence of any event or
circumstance; and
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one or more indices or baskets of the items described above.
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We refer to each type of property described above as a
purchase contract property.
Each purchase contract will obligate:
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the holder to purchase or sell, and us to sell or purchase, on
specified dates, one or more purchase contract properties at a
specified price or prices; or
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the holder or us to settle the purchase contract with a cash
payment determined by reference to the value, performance, or
level of one or more purchase contract properties, on specified
dates and at a specified price or prices.
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No holder of a purchase contract will, as such, have any rights
of a holder of the purchase contract property purchasable under
or referenced in the contract, including any rights to receive
payments on that property.
Information
in Prospectus Supplement
If we offer purchase contracts, the applicable prospectus
supplement will describe the terms of the purchase contracts,
including the following:
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the purchase date or dates;
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if other than U.S. dollars, the currency or currency unit
in which payment will be made;
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the specific designation and aggregate number of, and the price
at which we will issue, the purchase contracts;
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whether the purchase contract obligates the holder to purchase
or sell, or both purchase and sell, one or more purchase
contract properties, and the nature and amount of each of those
properties, or the method of determining those amounts;
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the purchase contract property or cash value, and the amount or
method for determining the amount of purchase contract property
or cash value, deliverable under each purchase contract;
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whether the purchase contract is to be prepaid or not and the
governing document for the contract;
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the price at which the purchase contract is settled, and whether
the purchase contract is to be settled by delivery of, or by
reference or linkage to the value, performance, or level of, the
purchase contract properties;
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any acceleration, cancellation, termination, or other provisions
relating to the settlement of the purchase contract;
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if the purchase contract property is an index, the method of
providing for a substitute index or indices or otherwise
determining the amount payable;
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if the purchase contract property is an index or a basket of
securities, a description of the index or basket of securities;
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whether, following the occurrence of a market disruption event
or force majeure event (as defined in the applicable prospectus
supplement), the settlement delivery obligation or cash
settlement value of a purchase contract will be determined on a
different basis than under normal circumstances;
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whether the purchase contract will be issued as part of a unit
and, if so, the other securities comprising the unit and whether
any unit securities will be subject to a security interest in
our favor as described below;
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if applicable, a discussion of the U.S. federal income tax
consequences;
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the identities of any depositories and any paying, transfer,
calculation, or other agents for the purchase contracts;
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whether the purchase contract will be issued in global or
certificated form;
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any securities exchange or quotation system on which the
purchase contracts or any securities deliverable in settlement
of the purchase contracts may be listed; and
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any other terms of the purchase contracts and any terms required
by or advisable under applicable laws and regulations.
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Prepaid
Purchase Contracts; Applicability of Indenture
Purchase contracts may require holders to satisfy their
obligations under the purchase contracts at the time they are
issued. We refer to these contracts as prepaid purchase
contracts. In certain circumstances, our obligation to
settle a prepaid purchase contract on the relevant settlement
date may constitute our senior debt securities or our
subordinated debt securities. Accordingly, prepaid purchase
contracts may be issued under the Senior Indenture or the
Subordinated Indenture, which are described above under the
heading Description of Debt Securities.
Non-Prepaid
Purchase Contracts; No Trust Indenture Act Protection
Some purchase contracts do not require holders to satisfy their
obligations under the purchase contracts until settlement. We
refer to these contracts as non-prepaid purchase
contracts. The holder of a non-prepaid purchase contract
may remain obligated to perform under the contract for a
substantial period of time.
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Non-prepaid purchase contracts will be issued under a unit
agreement, if they are issued in units, or under some other
document, if they are not. We describe unit agreements generally
under the heading Description of Units below. We
will describe the particular governing document that applies to
your non-prepaid purchase contracts in the applicable prospectus
supplement.
Non-prepaid purchase contracts will not be our senior debt
securities or subordinated debt securities and will not be
issued under one of our indentures, unless we specify otherwise
in the applicable prospectus supplement. Consequently, no
governing documents for non-prepaid purchase contracts will be
qualified as indentures, and no third party will be required to
qualify as a trustee with regard to those contracts, under the
Trust Indenture Act of 1939. Therefore, holders of
non-prepaid purchase contracts will not have the protection of
the Trust Indenture Act of 1939.
Pledge
by Holders to Secure Performance
If we so specify in the applicable prospectus supplement, the
holders obligations under the purchase contract and
governing document will be secured by collateral. In that case,
the holder, acting through the unit agent as its
attorney-in-fact,
if applicable, will pledge the items described below to a
collateral agent that we will identify in the applicable
prospectus supplement, which will hold them, for our benefit, as
collateral to secure the holders obligations. We refer to
this as the pledge and all the items described below
as the pledged items. Unless we specify otherwise in
the applicable prospectus supplement, the pledge will create a
security interest in the holders entire interest in and to:
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any other securities included in the unit, if the purchase
contract is part of a unit, and/or any other property specified
in the applicable prospectus supplement;
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all additions to and substitutions for the pledged items;
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all income, proceeds, and collections received in respect of the
pledged items; and
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all powers and rights owned or acquired later with respect to
the pledged items.
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The collateral agent will forward all payments and proceeds from
the pledged items to us, unless the payments and proceeds have
been released from the pledge in accordance with the purchase
contract and the governing document. We will use the payments
and proceeds from the pledged items to satisfy the holders
obligations under the purchase contract.
Settlement
of Purchase Contracts That Are Part of Units
Unless we specify otherwise in the applicable prospectus
supplement, where purchase contracts issued together with debt
securities as part of a unit require the holders to buy purchase
contract property, the unit agent may apply principal payments
from the debt securities in satisfaction of the holders
obligations under the related purchase contract as specified in
the applicable prospectus supplement. The unit agent will not so
apply the principal payments if the holder has delivered cash to
meet its obligations under the purchase contract. If the holder
is permitted to settle its obligations by cash payment, the
holder may be permitted to do so by delivering the debt
securities in the unit to the unit agent as provided in the
governing document. If the holder settles its obligations in
cash rather than be delivering the debt security that is part of
the unit, that debt security will remain outstanding, if the
maturity extends beyond the relevant settlement date and, as
more fully described in the applicable prospectus supplement,
the holder will receive that debt security or an interest in the
relevant global debt security.
Book-entry and other indirect owners should consult their
banks or brokers for information on how to settle their purchase
contracts.
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Failure
of Holder to Perform Obligations
If the holder fails to settle its obligations under a
non-prepaid purchase contract as required, the holder will not
receive the purchase contract property or other consideration to
be delivered at settlement. Holders that fail to make timely
settlement also may be obligated to pay interest or other
amounts.
The purchase contracts are our unsecured contractual
obligations. Claims of holders of our purchase contracts
generally will have a junior position to claims of creditors of
our subsidiaries including, in the case of our banking
subsidiaries, their depositors.
We may issue units from time to time in such amounts and in as
many distinct series as we determine.
We will issue each series of units under a unit agreement to be
entered into between us and a unit agent to be designated in the
applicable prospectus supplement. When we refer to a series of
units, we mean all units issued as part of the same series under
the applicable unit agreement.
This section describes some of the general terms and provisions
applicable to all the units. We will describe the specific terms
of a series of units and the applicable unit agreement in the
applicable prospectus supplement. The following description and
any description of the units in the applicable prospectus
supplement may not be complete and is subject to and qualified
in its entirety by reference to the terms and provisions of the
applicable unit agreement. A form of the unit agreement
reflecting the particular terms and provisions of a series of
offered units will be filed with the SEC in connection with the
offering and incorporated by reference in the registration
statement and this prospectus. See Where You Can Find More
Information below for information on how to obtain copies
of any unit agreements.
We may issue units consisting of any combination of two or more
securities described in this prospectus or securities of third
parties, in any combination. Each unit will be issued so that
the holder of the unit is also the holder of each security
included in the unit. Thus, the holder of a unit will have the
rights and obligations of a holder of each included security.
The unit agreement under which a unit is issued may provide that
the securities included in the unit may not be held or
transferred separately, at any time or at any time before a
specified date.
If units are offered, the applicable prospectus supplement will
describe the terms of the units, including the following:
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the designation and aggregate number of, and the price at which
we will issue, the units;
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the terms of the units and of the securities comprising the
units, including whether and under what circumstances the
securities comprising the units may or may not be held or
transferred separately;
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the name of the unit agent;
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a description of the terms of any unit agreement to be entered
into between us and a bank or trust company, as unit agent,
governing the units;
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if applicable, a discussion of the U.S. federal income tax
consequences;
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whether the units will be listed on any securities
exchange; and
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a description of the provisions for the payment, settlement,
transfer, or exchange of the units.
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Unit
Agreements: Prepaid, Non-Prepaid, and Other
If a unit includes one or more purchase contracts, and all those
purchase contracts are prepaid purchase contracts, we will issue
the unit under a prepaid unit agreement. Prepaid
unit agreements will reflect the fact that the holders of the
related units have no further obligations under the purchase
contracts included in their units. If a unit includes one or
more non-prepaid purchase contracts, we will issue the unit
under a non-prepaid unit agreement. Non-prepaid unit
agreements will reflect the fact that the holders have payment
or other obligations under one or more of the purchase contracts
comprising their units. We may also issue units under other
kinds of unit agreements, which will be described in the
applicable prospectus supplement, if applicable.
Each holder of units issued under a non-prepaid unit agreement
will:
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be bound by the terms of each non-prepaid purchase contract
included in the holders units and by the terms of the unit
agreement with respect to those contracts; and
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appoint the unit agent as its authorized agent to execute,
deliver, and perform on the holders behalf each
non-prepaid purchase contract included in the holders
units.
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Any unit agreement for a unit that includes a non-prepaid
purchase contract also will include provisions regarding the
holders pledge of collateral and special settlement
provisions. These are described above under the heading
Description of Purchase Contracts.
A unit agreement also may serve as the governing document for a
security included in a unit. For example, a non-prepaid purchase
contract that is part of a unit may be issued under and governed
by the relevant unit agreement.
We and the unit agent may amend the terms of any unit agreement
and the units without the consent of the holders to cure any
ambiguity, to correct any inconsistent provision, or in any
other manner we deem necessary or desirable and which will not
affect adversely the interests of the holders. In addition, we
may amend the unit agreement and the terms of the units with the
consent of the holders of a majority of the outstanding
unexpired units affected. However, any modification to the units
that materially and adversely affects the rights of the holders
of the units, or reduces the percentage of outstanding units
required to modify or amend the unit agreement or the terms of
the units, requires the consent of the affected holders.
Enforceability
of Rights of Unitholders; No Trust Indenture Act
Protection
The unit agent will act solely as our agent and will not assume
any obligation or relationship of agency or trust with the
holders of the units. Except as described below, any record
holder of a unit, without anyone elses consent, may
enforce his or her rights as holder under any security included
in the unit, in accordance with the terms of the included
security and the indenture, warrant agreement, unit agreement,
or purchase contract under which that security is issued. We
describe these terms in other sections of this prospectus
relating to debt securities, warrants, and purchase contracts.
Notwithstanding the foregoing, a unit agreement may limit or
otherwise affect the ability of a holder of units issued under
that agreement to enforce his or her rights, including any right
to bring legal action, with respect to those units or any
included securities, other than debt securities. We will
describe any limitations of this kind in the applicable
prospectus supplement.
No unit agreement will be qualified as an indenture, and no unit
agent will be required to qualify as a trustee under the Trust
Indenture Act of 1939. Therefore, holders of units issued under
a unit agreement will not have the protection of the Trust
Indenture Act of 1939 with respect to their units.
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The units are our unsecured contractual obligations. Claims of
holders of our units generally will have a junior position to
claims of creditors of our subsidiaries including, in the case
of our banking subsidiaries, their depositors.
DESCRIPTION
OF PREFERRED STOCK
Under our Amended and Restated Certificate of Incorporation, we
have authority to issue 100,000,000 shares of preferred
stock, par value $.01 per share. We may issued preferred
stock in one or more series, each with the preferences,
designations, limitations, conversion rights, and other rights
as we may determine. We have authorized and issued:
(a) 35,045 shares of 7% Cumulative Redeemable
Preferred Stock, Series B (the Series B
Preferred Stock), 7,739 shares of which were issued
and outstanding at March 31, 2006;
(b) 690,000 shares of 6.75% Perpetual Preferred Stock
(the 6.75% Perpetual Preferred Stock),
382,450 shares of which were issued and outstanding at
March 31, 2006; and
(c) 805,000 shares of Fixed/Adjustable Rate Cumulative
Preferred Stock (the Fixed/Adjustable Rate Cumulative
Preferred Stock), 700,000 shares of which were issued
and outstanding at March 31, 2006.
General. Any preferred stock sold under this prospectus
will have the general dividend, voting, and liquidation
preference rights stated below unless we specify otherwise in
the applicable prospectus supplement. The applicable prospectus
supplement for a series of preferred stock will describe the
specific terms of those shares, including, where applicable:
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the title and stated value of the preferred stock;
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the aggregate number of shares of preferred stock offered;
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the offering price or prices of the preferred stock;
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the dividend rate or rates or method of calculation, the
dividend period, and the dates dividends will be payable;
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whether dividends are cumulative or noncumulative, and, if
cumulative, the date the dividends will begin to cumulate;
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the dividend and liquidation preference rights of the preferred
stock relative to any existing or future series of our preferred
stock;
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the dates the preferred stock become subject to redemption at
our option, and any redemption terms;
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any redemption or sinking fund provisions;
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whether the preferred stock will be issued in other than
book-entry form;
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whether the preferred stock will be listed on any securities
exchange;
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any rights on the part of the stockholder or us to convert the
preferred stock into shares of our common stock or any other
security; and
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any additional voting, liquidation, preemptive, and other
rights, preferences, privileges, limitations, and restrictions.
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Dividends. The holders of our preferred stock will be
entitled to receive when, as, and if declared by our board of
directors, cash dividends at those rates as will be fixed by our
board of directors, subject to the terms of our Amended and
Restated Certificate of Incorporation. All dividends will be
paid out of funds that are legally available for this purpose.
Unless we specify otherwise in the applicable prospectus
supplement, whenever dividends on any non-voting preferred stock
are in arrears for six quarterly dividend periods (whether or
not consecutive), holders of the non-voting preferred stock will
have the right to elect two additional directors to serve on our
board of directors, and these two additional directors will
continue to serve until the dividend arrearage is eliminated.
Voting. The holders of our preferred stock will have no
voting rights except:
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each share of Series B Preferred Stock is entitled to one
vote per share;
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as required by applicable law; or
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as specifically approved by us for that particular series.
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Liquidation Preference. In the event of our voluntary or
involuntary dissolution, liquidation, or winding up, the holders
of any series of our preferred stock will be entitled to
receive, after distributions to holders of any series or class
of our capital stock ranking superior, an amount equal to the
stated or liquidation value of the shares of the series plus an
amount equal to accrued and unpaid dividends. If the assets and
funds to be distributed among the holders of our preferred stock
will be insufficient to permit full payment to the holders, then
the holders of our preferred stock will share ratably in any
distribution of our assets in proportion to the amounts that
they otherwise would receive on their shares of our preferred
stock if the shares were paid in full.
Authorized
Classes of Preferred Stock
The following summary of our Series B Preferred Stock,
6.75% Perpetual Preferred Stock, and Fixed/Adjustable Rate
Cumulative Preferred Stock is qualified in its entirety by
reference to the description of these securities contained in
our Certificate of Incorporation and the respective certificate
of designation for each series.
Series B
Preferred Stock
Preferential Rights. The Series B Preferred Stock
ranks senior to our common stock and ranks equally with our
6.75% Perpetual Preferred Stock and Fixed/Adjustable Rate
Cumulative Preferred Stock as to dividends and distributions on
liquidation. Series B Preferred Stock is not convertible
into or exchangeable for any shares of our common stock or any
other class of capital stock. We may issue stock with
preferences superior or equal to the Series B Preferred
Stock without the consent of the holders of the Series B
Preferred Stock.
Dividends. Holders of shares of Series B Preferred
Stock are entitled to receive, when and as declared by our board
of directors, cumulative cash dividends at an annual dividend
rate per share of 7.00% of the stated value per share of
Series B Preferred Stock. The stated value per share of the
Series B Preferred Stock is $100. Dividends are payable
quarterly. We cannot declare or pay cash dividends on any shares
of our common stock unless full cumulative dividends on the
Series B Preferred Stock have been paid or declared and
funds sufficient for the payment have been set apart.
Voting Rights. Each share of Series B Preferred
Stock has equal voting rights, share for share, with each share
of our common stock.
Distributions. In the event of our voluntary or
involuntary dissolution, liquidation, or winding up, the holders
of the Series B Preferred Stock are entitled to receive,
after payment of the full liquidation preference on shares of
any class of our preferred stock ranking superior to
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the Series B Preferred Stock, but before any distribution
on shares of our common stock, liquidating dividends of
$100 per share plus accumulated dividends.
Redemption. Shares of Series B Preferred Stock are
redeemable, in whole or in part, at the option of the holders,
at the redemption price of $100 per share plus accumulated
dividends, provided that (1) full cumulative dividends have
been paid, or declared, and funds sufficient for payment set
apart, upon any class or series of our preferred stock ranking
superior to the Series B Preferred Stock; and (2) we
are not then in default or in arrears on any sinking fund or
analogous fund or call for tenders obligation or agreement for
the purchase of any class or series of our preferred stock
ranking superior to the Series B Preferred Stock.
6.75%
Perpetual Preferred Stock
Preferential Rights. The 6.75% Perpetual Preferred Stock
ranks senior to our common stock and ranks equally with our
Series B Preferred Stock and Fixed/Adjustable Rate
Cumulative Preferred Stock as to dividends and distributions on
liquidation.
Dividends. Holders of shares of 6.75% Perpetual Preferred
Stock are entitled to receive dividends at the rate of
6.75% per annum, payable quarterly, before we may declare
or pay any dividend on our common stock or our junior preferred
stock. The dividends on the 6.75% Perpetual Preferred Stock are
cumulative. If the Internal Revenue Code of 1986, as amended,
referred to as the Internal Revenue Code, is amended
to reduce the percentage of the dividend payable on preferred
stock that may be deducted by corporate stockholders (the
Dividends Received Deduction), which currently is
70%, we will increase the amount of dividends payable on the
6.75% Perpetual Preferred Stock for dividend payments made on or
after the date of enactment of that amendment.
Voting Rights. Holders of the 6.75% Perpetual Preferred
Stock have no voting rights, except as required by law and to
the extent the consent of the holders of the 6.75% Perpetual
Preferred Stock at the time outstanding is necessary to
authorize, effect, or validate any amendment, alteration, or
repeal of any provision of our Amended and Restated Certificate
of Incorporation or to create any series of stock with dividend
rights or liquidation preferences ranking greater than the 6.75%
Perpetual Preferred Stock. If any quarterly dividend payable on
the 6.75% Perpetual Preferred Stock is in arrears for six full
quarterly dividend periods or more, the holders of the 6.75%
Perpetual Preferred Stock will be entitled to vote together as a
group, to the exclusion of the holders of any other series of
preferred stock or our common stock, at our next annual meeting
of stockholders for the election of directors and at each
subsequent meeting of stockholders for the election of
directors, until all dividends in arrears have been paid or
declared and set apart for payment, for two directors. Each
director elected by the holders of the 6.75% Perpetual Preferred
Stock shall continue to serve as a director until the dividend
arrearage is eliminated.
Distributions. In the event of our voluntary or
involuntary dissolution, liquidation, or winding up, holders of
the 6.75% Perpetual Preferred Stock are entitled to receive out
of assets available for distribution to stockholders an amount
equal to $250 per share plus an amount equal to accrued and
unpaid dividends up to and including the date of distribution,
and no more, before any distribution will be made to the holders
of any class of our stock ranking junior to the 6.75% Perpetual
Preferred Stock as to the distribution of assets. In determining
whether payment of a distribution must be made to the holders of
the 6.75% Perpetual Preferred Stock, any merger, consolidation,
or purchase or sale of assets by us will not be deemed a
dissolution, liquidation, or winding up of such affairs. Shares
of 6.75% Perpetual Preferred Stock are not subject to a sinking
fund.
Redemption. We may redeem the 6.75% Perpetual Preferred
Stock, in whole or in part, at our option, on and after
April 15, 2006, at $250 per share, plus accrued and
unpaid dividends, if any.
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So long as any shares of 6.75% Perpetual Preferred Stock are
outstanding, we may not redeem any shares of our common stock or
any other class of our preferred stock ranking junior to or on a
parity with the 6.75% Perpetual Preferred Stock, unless we have
paid full cumulative dividends on all outstanding shares of the
6.75% Perpetual Preferred Stock for all past dividend payment
periods. Further, if any dividends on the 6.75% Perpetual
Preferred Stock are in arrears, we may not redeem any shares of
the 6.75% Perpetual Preferred Stock, unless we simultaneously
redeem all outstanding shares of the 6.75% Perpetual Preferred
Stock, except pursuant to a purchase or exchange offer made on
the same terms to holders of all outstanding shares of the 6.75%
Perpetual Preferred Stock.
Fixed/Adjustable
Rate Cumulative Preferred Stock
Preferential Rights. The Fixed/Adjustable Rate Cumulative
Preferred Stock ranks senior to our common stock and ranks
equally with our Series B Preferred Stock and 6.75%
Perpetual Preferred Stock as to dividends and distributions on
liquidation.
Dividends. Holders of shares of the Fixed/Adjustable Rate
Cumulative Preferred Stock are entitled to receive dividends at
a rate per annum equal to 0.50% plus the highest of the Treasury
Bill Rate, the Ten Year Constant Maturity Rate, and the Thirty
Year Constant Maturity Rate, as each term is defined in the
certificate of designation establishing the Fixed/Adjustable
Rate Cumulative Preferred Stock, computed on the basis of the
issue price of the Fixed/Adjustable Rate Cumulative Preferred
Stock of $250 per share, payable quarterly out of the funds
legally available for the payment of dividends, before we may
declare or pay any dividend on our common stock or junior
preferred stock. The applicable rate per annum for any dividend
period beginning on or after April 1, 2006 will not be less
than 7.00% nor greater than 13.00%.
The dividends on the Fixed/Adjustable Rate Cumulative Preferred
Stock are cumulative. If the Internal Revenue Code is amended to
reduce the Dividends Received Deduction, we will increase the
amount of dividends that will be payable on the Fixed/Adjustable
Rate Cumulative Preferred Stock for dividend payments made on or
after the date of enactment of that amendment.
Voting Rights. Holders of the Fixed/Adjustable Rate
Cumulative Preferred Stock have no voting rights, except as
required by law and to the extent the consent of the holders of
the Fixed/Adjustable Rate Cumulative Preferred Stock at the time
outstanding is necessary to authorize, effect, or validate any
amendment, alteration, or repeal of any provision of our Amended
and Restated Certificate of Incorporation or to create any
series of stock with dividend rights or liquidation preferences
ranking greater than the Fixed/Adjustable Rate Cumulative
Preferred Stock. If any quarterly dividend payable on the
Fixed/Adjustable Rate Cumulative Preferred Stock is in arrears
for six full quarterly dividend periods or more, the holders of
the Fixed/Adjustable Rate Cumulative Preferred Stock will be
entitled to vote together as a group, to the exclusion of the
holders of any other preferred stock or our common stock, at our
next annual meeting of stockholders for the election of
directors and at each subsequent meeting of stockholders for the
election of directors, until all dividends in arrears have been
paid or declared and set apart for payment, for two directors.
Each director elected by the holders of the Fixed/Adjustable
Rate Cumulative Preferred Stock shall continue to serve as a
director until the dividend arrearage is eliminated.
Distributions. In the event of our voluntary or
involuntary dissolution, liquidation, or winding up, holders of
the Fixed/Adjustable Rate Cumulative Preferred Stock are
entitled to receive out of assets available for distribution to
stockholders an amount equal to $250 per share plus an
amount equal to accrued and unpaid dividends up to and including
the date of distribution, and no more, before any distribution
will be made to the holders of any class of our stock ranking
junior to the Fixed/Adjustable Rate Cumulative Preferred Stock
as to the distribution of assets. In determining whether payment
of a distribution must be made to the holders of
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the Fixed/Adjustable Rate Cumulative Preferred Stock, any
merger, consolidation, or purchase or sale of assets by us will
not be deemed a dissolution, liquidation, or winding up of such
affairs. Shares of Fixed/Adjustable Rate Cumulative Preferred
Stock are not subject to a sinking fund.
Redemption. We may redeem the Fixed/Adjustable Rate
Cumulative Preferred Stock, in whole or in part, at our option,
on and after April 1, 2006, at $250 per share, plus
accrued and unpaid dividends, if any.
So long as any shares of Fixed/Adjustable Rate Cumulative
Preferred Stock are outstanding, we may not redeem any shares of
Fixed/Adjustable Rate Cumulative Preferred Stock, our common
stock, or any other class of our preferred stock ranking junior
to or on a parity with the Fixed/Adjustable Rate Cumulative
Preferred Stock, unless we have paid full cumulative dividends
on all outstanding shares of Fixed/Adjustable Rate Cumulative
Preferred Stock for all past dividend payment periods. Further,
if any dividends on the Fixed/Adjustable Rate Cumulative
Preferred Stock are in arrears, we may not redeem any shares of
Fixed/Adjustable Rate Cumulative Preferred Stock, unless we
simultaneously redeem all outstanding shares of Fixed/Adjustable
Rate Cumulative Preferred Stock, except pursuant to a purchase
or exchange offer made on the same terms to holders of all
outstanding shares of Fixed/Adjustable Rate Cumulative Preferred
Stock.
DESCRIPTION
OF DEPOSITARY SHARES
We may offer depositary receipts evidencing depositary shares,
each of which will represent a fractional interest in shares of
preferred stock, rather than full shares of these securities. We
will deposit shares of preferred stock of each series
represented by depositary shares under a deposit agreement
between us and a U.S. bank or trust company that we will
select (the depository).
This section describes some of the general terms and provisions
applicable to all depositary shares. We will describe the
specific terms of a series of depositary shares and the deposit
agreement in the applicable prospectus supplement. The following
description and any description of the depositary shares in the
applicable prospectus supplement may not be complete and is
subject to and qualified in its entirety by reference to the
terms and provisions of the applicable deposit agreement and
depositary receipts. Forms of the deposit agreement and
depositary receipts reflecting the particular terms and
provisions of a series of offered depositary shares will be
filed with the SEC in connection with the offering and
incorporated by reference in the registration statement and this
prospectus. See Where You Can Find More Information
below for information on how to obtain copies of any deposit
agreements and depositary receipts.
Terms
of the Depositary Shares
Depositary receipts issued under the deposit agreement will
evidence the depositary shares. Depositary receipts will be
distributed to those persons purchasing depositary shares
representing fractional shares of preferred stock in accordance
with the terms of the offering. Subject to the terms of the
deposit agreement, each holder of a depositary share will be
entitled, in proportion to the fractional interest of a share of
preferred stock represented by the applicable depositary share,
to all the rights and preferences of the preferred stock being
represented, including dividend, voting, redemption, conversion,
and liquidation rights, all as will be set forth in the
applicable prospectus supplement relating to the depositary
shares being offered.
Pending the preparation of definitive depositary receipts, the
depository, upon our written order, may issue temporary
depositary receipts. The temporary depositary receipts will be
substantially identical to, and will have all the rights of, the
definitive depositary receipts, but
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will not be in definitive form. Definitive depositary receipts
will be prepared thereafter and temporary depositary receipts
will be exchanged for definitive depositary receipts at our
expense.
Withdrawal
of Preferred Stock
Unless the depositary shares have been called for redemption, a
holder of depositary shares may surrender his or her depositary
receipts at the principal office of the depository, pay any
charges, and comply with any other terms as provided in the
deposit agreement for the number of shares of preferred stock
underlying the depositary shares. A holder of depositary shares
who withdraws shares of preferred stock will be entitled to
receive whole shares of preferred stock on the basis set forth
in the applicable prospectus supplement relating to the
depositary shares being offered.
However, unless we specify otherwise in the applicable
prospectus supplement, holders of whole shares of preferred
stock will not be entitled to deposit those shares under the
deposit agreement or to receive depositary receipts for those
shares after the withdrawal. If the depositary shares
surrendered by the holder in connection with the withdrawal
exceed the number of depositary shares that represent the number
of whole shares of preferred stock to be withdrawn, the
depository will deliver to the holder at the same time a new
depositary receipt evidencing the excess number of depositary
shares.
Dividends
and Other Distributions
The depository will distribute all cash dividends or other cash
distributions received in respect of the preferred stock to the
record holders of depositary shares relating to that preferred
stock in proportion to the number of depositary shares owned by
those holders. However, the depository will distribute only the
amount that can be distributed without attributing to any holder
of depositary shares a fraction of one cent. Any balance that is
not distributed will be added to and treated as part of the next
sum received by the depository for distribution to record
holders.
If there is a distribution other than in cash, the depository
will distribute property it receives to the record holders of
depositary shares who are entitled to that property. However, if
the depository determines that it is not feasible to make this
distribution of property, the depository, with our approval, may
sell that property and distribute the net proceeds to the
holders of the depositary shares.
Redemption
of Depositary Shares
If a series of preferred stock which relates to depositary
shares is redeemed, the depositary shares will be redeemed from
the proceeds received by the depository from the redemption, in
whole or in part, of that series of preferred stock. Unless we
specify otherwise in the applicable prospectus supplement, the
depository will mail notice of redemption at least 30 and not
more than 45 calendar days before the date fixed for redemption
to the record holders of the depositary shares to be redeemed at
their addresses appearing in the depositorys books. The
redemption price per depositary share will be equal to the
applicable fraction of the redemption price per share payable on
that series of the preferred stock.
Whenever we redeem preferred stock held by the depository, the
depository will redeem as of the same redemption date the number
of depositary shares representing the preferred stock redeemed.
If less than all of the depositary shares are redeemed, the
depositary shares redeemed will be selected by lot or pro rata
or by any other equitable method as the depository may decide.
After the date fixed for redemption, the depositary shares
called for redemption will no longer be deemed to be
outstanding. At that time, all rights of the holder of the
depositary shares
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will cease, except the right to receive any money or other
property they become entitled to receive upon surrender to the
depository of the depositary receipts.
Voting
the Deposited Preferred Stock
Any voting rights of holders of the depositary shares are
directly dependent on the voting rights of the underlying
preferred stock, which customarily have limited voting rights.
Upon receipt of notice of any meeting at which the holders of
the preferred stock held by the depository are entitled to vote,
the depository will mail the information contained in the notice
of meeting to the record holders of the depositary shares
relating to the preferred stock. Each record holder of
depositary shares on the record date, which will be the same
date as the record date for the preferred stock, will be
entitled to instruct the depository as to the exercise of the
voting rights pertaining to the amount of preferred stock
underlying the holders depositary shares. The depository
will endeavor, insofar as practicable, to vote the amount of
preferred stock underlying the depositary shares in accordance
with these instructions. We will agree to take all action which
may be deemed necessary by the depository to enable the
depository to do so. The depository will not vote any shares of
preferred stock except to the extent it receives specific
instructions from the holders of depositary shares representing
that number of shares of preferred stock.
Amendment
and Termination of the Deposit Agreement
The form of depositary receipt evidencing the depositary shares
and any provision of the deposit agreement may be amended by
agreement between us and the depository. However, any amendment
which materially and adversely alters the rights of the existing
holders of depositary shares will not be effective unless the
amendment has been approved by the record holders of at least a
majority of the depositary shares then outstanding. Either we or
the depository may terminate a deposit agreement if all of the
outstanding depositary shares have been redeemed or if there has
been a final distribution in respect of our preferred stock in
connection with our liquidation, dissolution, or winding up.
We will pay all transfer and other taxes, assessments, and
governmental charges arising solely from the existence of the
depository arrangements. We will pay the fees of the depository
in connection with the initial deposit of the preferred stock
and any redemption of the preferred stock. Holders of depositary
receipts will pay transfer and other taxes, assessments, and
governmental charges and any other charges as are expressly
provided in the deposit agreement to be for their accounts. The
depository may refuse to effect any transfer of a depositary
receipt or any withdrawals of preferred stock evidenced by a
depositary receipt until all taxes, assessments, and
governmental charges with respect to the depositary receipt or
preferred stock are paid by their holders.
The depository will forward to the holders of depositary shares
all of our reports and communications which are delivered to the
depository and which we are required to furnish to the holders
of our preferred stock.
Neither we nor the depository will be liable if we are prevented
or delayed by law or any circumstance beyond our control in
performing our obligations under the deposit agreement. All of
our obligations as well as the depositorys obligations
under the deposit agreement are limited to performance in good
faith of our respective duties set forth in the deposit
agreement, and neither of us will be obligated to prosecute or
defend any legal proceeding relating to any depositary shares or
preferred stock unless provided with satisfactory indemnity. We,
and the
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depository, may rely upon written advice of counsel or
accountants, or information provided by persons presenting
preferred stock for deposit, holders of depositary shares, or
other persons believed to be competent and on documents believed
to be genuine.
Resignation
and Removal of Depository
The depository may resign at any time by delivering to us notice
of its election to do so, and we may remove the depository at
any time. Any resignation or removal will take effect only upon
the appointment of a successor depository and the successor
depositorys acceptance of the appointment. Any successor
depository must be a U.S. bank or trust company.
DESCRIPTION
OF COMMON STOCK
The following summary of our common stock is qualified in its
entirety by reference to the description of the common stock
incorporated by reference in this prospectus.
We are authorized to issue 7,500,000,000 shares of common
stock, par value $.01 per share, of which approximately
4.6 billion shares were outstanding on March 31, 2006.
Our common stock trades on the New York Stock Exchange and on
the Pacific Exchange under the symbol BAC. Our
common stock also is listed on the London Stock Exchange, and
certain shares are listed on the Tokyo Stock Exchange. As of
March 31, 2006, approximately 556 million shares were
reserved for issuance in connection with our various employee
and director benefit plans, the conversion of our outstanding
convertible securities, and for other purposes. After taking
into account the reserved shares, there were approximately
2.3 billion authorized shares of our common stock available
for issuance as of March 31, 2006.
Holders of our common stock are entitled to one vote per share.
There are no cumulative voting rights. In general, a majority of
votes cast on a matter is sufficient to take action upon routine
matters, including the election of directors. However,
(1) amendments to our Amended and Restated Certificate of
Incorporation must be approved by the affirmative vote of the
holders of a majority of the outstanding shares of each class
entitled to vote thereon as a class, and (2) a merger,
dissolution, or the sale of all or substantially all of our
assets must be approved by the affirmative vote of the holders
of a majority of the voting power of the then outstanding voting
shares.
In the event of our liquidation, holders of our common stock
will be entitled to receive pro rata any assets legally
available for distribution to stockholders, subject to any prior
rights of any preferred stock then outstanding.
Our common stock does not have any preemptive rights, redemption
privileges, sinking fund privileges, or conversion rights. All
the outstanding shares of our common stock are, and upon proper
conversion of any preferred stock, all of the shares of our
common stock into which those shares are converted will be,
validly issued, fully paid, and nonassessable.
Computershare Trust Company, N.A. is the transfer agent and
registrar for our common stock.
Subject to the preferential rights of any holders of any
outstanding series of preferred stock, the holders of our common
stock are entitled to receive dividends or distributions,
whether payable in cash or otherwise, as our board of directors
may declare out of funds legally available for payments. Stock
dividends, if any are declared, may be paid from our authorized
but unissued shares.
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REGISTRATION
AND SETTLEMENT
Unless we specify otherwise in the applicable prospectus
supplement, we will issue the securities in registered, and not
bearer, form. This means that our obligation runs to the holder
of the security named on the face of the security. Each debt
security, warrant, purchase contract, unit, share of preferred
stock, and depositary share issued in registered form will be
represented either by a certificate issued in definitive form to
a particular investor or by one or more global securities
representing the entire issuance of securities.
We refer to those persons who have securities registered in
their own names, on the books that we or the trustee, warrant
agent, or other agent maintain for this purpose, as the
holders of those securities. These persons are the
legal holders of the securities. We refer to those who,
indirectly through others, own beneficial interests in
securities that are not registered in their own names as
indirect owners of those securities. As we discuss below,
indirect owners are not legal holders, and investors in
securities issued in global, or book-entry, form or in street
name will be indirect owners.
Unless we specify otherwise in the applicable prospectus
supplement, we will issue each security other than our common
stock in global, or book-entry, form. This means that we will
not issue actual notes or certificates to investors. Instead, we
will issue global securities in registered form representing the
entire issuance of securities. Each global security will be
registered in the name of a financial institution or clearing
system that holds the global security as depository on behalf of
other financial institutions that participate in that
depositorys book-entry system. These participating
institutions, in turn, hold beneficial interests in the global
securities on behalf of themselves or their customers.
Because securities issued in global form are registered in the
name of the depository, we will recognize only the depository as
the holder of the securities. This means that we will make all
payments on the securities, including deliveries of any property
other than cash, to the depository. The depository passes along
the payments it receives from us to its participants, which in
turn pass the payments along to their customers who are the
beneficial owners. The depository and its participants are not
obligated to pass these payments along under the terms of the
securities. Instead, they do so under agreements they have made
with one another or with their customers.
As a result, investors will not own securities issued in
book-entry form directly. Instead, they will own beneficial
interests in a global security, through a bank, broker, or other
financial institution that participates in the depositorys
book-entry system or holds an interest through a participant in
the depositorys book-entry system. As long as the
securities are issued in global form, investors will be indirect
owners, and not holders, of the securities. The depository will
not have knowledge of the actual beneficial owners of the
securities.
Certificates
in Registered Form
In the future, we may cancel a global security or we may issue
securities initially in non-global, or certificated, form. We do
not expect to exchange global securities for actual notes or
certificates registered in the names of the beneficial owners of
the global securities representing the securities unless:
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the depository notifies us that it is unwilling or unable to
continue as depository for the global securities, or we become
aware that the depository has ceased to be a clearing agency
registered under the Securities Exchange Act of 1934, and in any
case we fail to appoint a successor to the depository within 60
calendar days; or
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we, in our sole discretion, determine that the global securities
will be exchangeable for certificated securities.
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When we issue actual notes or certificates registered in the
names of the beneficial owners, investors may choose to hold
their securities in their own names or in street name.
Securities held by an investor in street name would be
registered in the name of a bank, broker, or other financial
institution that the investor chooses, and the investor would
hold only a beneficial interest in those securities through an
account that he or she maintains at that institution.
For securities held in street name, we will recognize only the
intermediary banks, brokers, and other financial institutions in
whose names the securities are registered as the holders of
those securities, and we will make all payments on those
securities, including deliveries of any property other than
cash, to them. These institutions pass along the payments they
receive to their customers who are the beneficial owners, but
only because they agree to do so in their customer agreements or
because they are legally required to do so. Investors who hold
securities in street name will be indirect owners, not holders,
of those securities.
Our obligations, as well as the obligations of the trustee under
any indenture and the obligations, if any, of any warrant
agents, unit agents, depository for depositary shares, and any
other third parties employed by us, the trustee, or any of those
agents, run only to the holders of the securities. We do not
have obligations to investors who hold beneficial interests in
global securities, who hold the securities in street name, or
who hold the securities by any other indirect means. This will
be the case whether an investor chooses to be an indirect owner
of a security or has no choice because we are issuing the
securities only in global form. For example, once we make a
payment or give a notice to the holder, we have no further
responsibility for that payment or notice even if that holder is
required, under agreements with depository participants or
customers or by law, to pass it along to the indirect owners,
but does not do so. Similarly, if we want to obtain the approval
of the holders for any purpose, such as to amend the indenture
for a series of debt securities or the warrant agreement for a
series of warrants or the unit agreement for a series of units
or to relieve us of the consequences of a default or of our
obligation to comply with a particular provision of an
indenture, we would seek the approval only from the holders, and
not the indirect owners, of the relevant securities. Whether and
how the holders contact the indirect owners is up to the holders.
When we refer to you in this prospectus, we mean
those who invest in the securities being offered by this
prospectus, whether they are the holders or only indirect owners
of those securities. When we refer to your
securities in this prospectus, we mean the securities in
which you will hold a direct or indirect interest.
Special
Considerations for Indirect Owners
If you hold securities through a bank, broker, or other
financial institution, either in book-entry form or in street
name, you should check with your own institution to find out:
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how it handles payments on your securities and notices;
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whether you can provide contact information to the registrar to
receive copies of notices directly;
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whether it imposes fees or charges;
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whether and how you can instruct it to exercise any rights to
purchase or sell warrant property under a warrant or purchase
contract property under a purchase contract or to exchange or
convert a security for or into other property;
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how it would handle a request for the holders consent, if
required;
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whether and how you can instruct it to send you the securities
registered in your own name so you can be a holder, if that is
permitted at any time;
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how it would exercise rights under the securities if there were
a default or other event triggering the need for holders to act
to protect their interests; and
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if the securities are in book-entry form, how the
depositorys rules and procedures will affect these matters.
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Depositories
for Global Securities
Each security issued in book-entry form will be represented by a
global security that we deposit with and register in the name of
one or more financial institutions or clearing systems, or their
nominees, which we will select. A financial institution or
clearing system that we select for this purpose is called the
depository for that security. A security usually
will have only one depository, but it may have more.
Each series of securities will have one or more of the following
as the depositories:
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The Depository Trust Company, New York, New York, which is known
as DTC;
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a financial institution holding the securities on behalf of
Euroclear Bank S.A./N.V., as operator of the Euroclear system,
which is known as Euroclear;
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a financial institution holding the securities on behalf of
Clearstream Banking, société anonyme, Luxembourg,
which is known as Clearstream, Luxembourg; and
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any other clearing system or financial institution that we
identify in the applicable prospectus supplement.
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The depositories named above also may be participants in one
anothers systems. For example, if DTC is the depository
for a global security, investors may hold beneficial interests
in that security through Euroclear or Clearstream, Luxembourg as
DTC participants.
We will name the depository or depositories for your securities
in the applicable prospectus supplement. If no depository is
named, the depository will be DTC.
The
Depository Trust Company
The following is based on information furnished to us by DTC:
DTC will act as securities depository for the securities. The
securities will be issued as fully-registered securities
registered in the name of Cede & Co., which is
DTCs partnership nominee, or any other name as may be
requested by an authorized representative of DTC. Generally, one
fully registered global security will be issued for each issue
of the securities, each in the aggregate principal amount of the
issue, and will be deposited with DTC. If, however, the
aggregate principal amount of any issue exceeds
$500 million, one certificate will be issued with respect
to each $500 million of principal amount, and an additional
certificate will be issued with respect to any remaining
principal amount of the issue.
DTC, the worlds largest depository, 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 under Section 17A of the Securities Exchange Act
of 1934. DTC holds and provides asset servicing for over two
million issues of U.S. and
non-U.S. equity,
corporate, and municipal debt issues, and money market
instruments from over 85 countries that its direct participants
deposit with DTC. DTC also facilitates the post-trade settlement
among direct participants of sales and other securities
transactions in deposited securities through
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electronic computerized book-entry transfers and pledges between
direct participants accounts. This eliminates the need for
physical movement of certificates representing securities.
Direct participants include both U.S. and
non-U.S. securities
brokers and dealers, banks, trust companies, clearing
corporations, and certain other organizations. DTC is a
wholly-owned subsidiary of The Depository Trust &
Clearing Corporation (DTCC). DTCC, in turn, is owned
by a number of direct participants of DTC and members of the
National Securities Clearing Corporation, Government Securities
Clearing Corporation, MBS Clearing Corporation, and Emerging
Markets Clearing Corporation, also subsidiaries of DTCC, as well
as by The New York Stock Exchange, Inc., 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 both U.S. and
non-U.S. securities
brokers and dealers, banks, trust companies, and clearing
corporations that clear through or maintain a custodial
relationship with a direct participant, either directly or
indirectly (indirect participants). The DTC rules
applicable to its participants are on file with the SEC. More
information about DTC can be found at www.dtcc.com.
Purchases of the securities under the DTC system must be made by
or through direct participants, which will receive a credit for
the securities on DTCs records. The beneficial interest of
each actual purchaser of each security is in turn to be recorded
on the direct and indirect participants records.
Beneficial owners will not receive written confirmation from DTC
of their purchase. A beneficial owner, however, is expected to
receive written confirmations providing details of the
transaction, as well as periodic statements of its holdings,
from the direct or indirect participant through which the
beneficial owner entered into the transaction. Transfers of
beneficial ownership interests in the securities are to be
accomplished by entries made on the books of direct and indirect
participants acting on behalf of beneficial owners. Beneficial
owners will not receive certificates representing their
beneficial ownership interests in the securities, except if the
use of the book-entry system for the securities is discontinued.
To facilitate subsequent transfers, all securities deposited by
direct participants with DTC are registered in the name of
DTCs partnership nominee, Cede & Co., or such
other name as may be requested by an authorized representative
of DTC. The deposit of securities with DTC and their
registration in the name of Cede & Co. or such other
DTC nominee do not effect any change in beneficial ownership.
DTC has no knowledge of the actual beneficial owners of the
securities; DTCs records reflect only the identity of the
direct participants to whose accounts such securities are
credited, which may or may not be the beneficial owners. The
direct and indirect participants will remain responsible for
keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to direct
participants, by direct participants to indirect participants,
and by direct 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. Beneficial owners of securities may wish to take
certain steps to ensure timely transmission to them of notices
of significant events with respect to the securities, such as
redemptions, tenders, defaults, and proposed amendments to the
documents under which the securities are issued. For example, a
beneficial owner of securities may wish to ascertain that the
direct or indirect participant holding the securities for its
benefit has agreed to obtain and transmit notices to beneficial
owners.
None of DTC, Cede & Co., or any other DTC nominee will
consent or vote with respect to the securities unless authorized
by a direct participant in accordance with DTCs
procedures. Under its usual procedures, DTC mails an omnibus
proxy to us as soon as possible after the regular record date.
The omnibus proxy assigns Cede & Co.s consenting
or voting rights to those direct participants to whose accounts
the securities are credited on the regular record date. These
participants are identified in a listing attached to the omnibus
proxy.
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We will make dividend payments or any payments of principal, any
premium, interest, or other amounts on the securities in
immediately available funds directly to Cede & Co., or
any other nominee as may be requested by an authorized
representative of DTC. DTCs practice is to credit direct
participants accounts upon DTCs receipt of funds and
corresponding detail information from us, on the applicable
payment date in accordance with their respective holdings shown
on DTCs records. Payments by participants to beneficial
owners will be governed by standing instructions and customary
practices, as is the case with securities held for the accounts
of customers in bearer form or registered in street name. These
payments will be the responsibility of these participants and
not of DTC or its nominee, us, the trustee, or any other agent
or party, subject to any statutory or regulatory requirements
that may be in effect from time to time. Payment of dividends or
principal and any premium or interest to Cede & Co.,
or any other nominee as may be requested by an authorized
representative of DTC, is our responsibility. Disbursement of
the payments to direct participants is the responsibility of
DTC, and disbursement of the payments to the beneficial owners
is the responsibility of the direct or indirect participants.
We will send any redemption notices to DTC. If less than all of
the securities of a series are being redeemed, DTCs
practice is to determine by lot the amount of the interest of
each direct participant in the issue to be redeemed.
A beneficial owner must give any required notice of its election
to have its securities repurchased through the participant
through which it holds its beneficial interest in the security
to the applicable trustee or tender agent. The beneficial owner
shall effect delivery of its securities by causing the direct
participant to transfer its interest in the securities on
DTCs records. The requirement for physical delivery of
securities in connection with an optional tender or a mandatory
purchase will be deemed satisfied when the ownership rights in
the securities are transferred by the direct participant on
DTCs records and followed by a book-entry credit of
tendered securities to the applicable trustee or agents
DTC account.
DTC may discontinue providing its services as depository for the
securities at any time by giving us reasonable notice. If this
occurs, and if a successor securities depository is not
obtained, we will print and deliver certificated securities.
The information in this section concerning DTC and DTCs
book-entry system has been obtained from sources that we believe
to be reliable, but we take no responsibility for its accuracy.
Clearstream,
Luxembourg and Euroclear
Euroclear and Clearstream, Luxembourg are securities clearance
systems in Europe that clear and settle securities transactions
between their participants through electronic, book-entry
delivery of securities against payment. Clearstream, Luxembourg
is incorporated under the laws of Luxembourg. Euroclear is
incorporated under the laws of Belgium.
Euroclear and Clearstream, Luxembourg may be depositories for a
global security sold or traded outside the United States. In
addition, if DTC is the depository for a global security,
Euroclear and Clearstream, Luxembourg may hold interests in the
global security as participants in DTC. As long as any global
security is held by Euroclear or Clearstream, Luxembourg as
depository, you may hold an interest in the global security only
through an organization that participates, directly or
indirectly, in Euroclear or Clearstream, Luxembourg. If
Euroclear or Clearstream, Luxembourg is the depository for a
global security and there is no depository in the United States,
you will not be able to hold interests in that global security
through any securities clearance system in the United States.
Payments, deliveries, transfers, exchanges, notices, and other
matters relating to the securities made through Euroclear or
Clearstream, Luxembourg must comply with the rules
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and procedures of those systems. Those systems could change
their rules and procedures at any time. We have no control over
those systems or their participants, and we take no
responsibility for their activities. Transactions between
participants in Euroclear or Clearstream, Luxembourg, on one
hand, and participants in DTC, on the other hand, when DTC is
the depository, also would be subject to DTCs rules and
procedures.
Investors will be able to make and receive through Euroclear and
Clearstream, Luxembourg payments, deliveries, transfers,
exchanges, notices, and other transactions involving any
securities held through those systems only on days when those
systems are open for business. Those systems may not be open for
business on days when banks, brokers, and other institutions are
open for business in the United States. In addition, because of
time-zone differences, U.S. investors who hold their
interests in the securities through these systems and wish to
transfer their interests, or to receive or make a payment or
delivery or exercise any other right with respect to their
interests, on a particular day may find that the transaction
will not be effected until the next business day in Luxembourg
or Brussels, as applicable. Thus, investors who wish to exercise
rights that expire on a particular day may need to act before
the expiration date. In addition, investors who hold their
interests through both DTC and Euroclear or Clearstream,
Luxembourg may need to make special arrangements to finance any
purchases or sales of their interests between the United States
and European clearing systems, and those transactions may settle
later than would be the case for transactions within one
clearing system.
Special
Considerations for Global Securities
As an indirect owner, an investors rights relating to a
global security will be governed by the account rules of the
depository and those of the investors financial
institution or other intermediary through which it holds its
interest (e.g., Euroclear or Clearstream, Luxembourg, if DTC is
the depository), as well as general laws relating to securities
transfers. We do not recognize this type of investor or any
intermediary as a holder of securities. Instead, we deal only
with the depository that holds the global security.
If securities are issued only in the form of a global security,
an investor should be aware of the following:
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an investor cannot cause the securities to be registered in his
or her own name, and cannot obtain physical certificates for his
or her interest in the securities, except in the special
situations described above;
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an investor will be an indirect holder and must look to his or
her own bank or broker for payments on the securities and
protection of his or her legal rights relating to the
securities, as we describe above under Legal
Holders;
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an investor may not be able to sell interests in the securities
to some insurance companies and other institutions that are
required by law to own their securities in certificated form;
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an investor may not be able to pledge his or her interest in a
global security in circumstances where certificates representing
the securities must be delivered to the lender or other
beneficiary of the pledge in order for the pledge to be
effective;
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the depositorys policies will govern payments, deliveries,
transfers, exchanges, notices, and other matters relating to an
investors interest in a global security, and those
policies may change from time to time;
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we, the trustee, any warrant agents, and any unit or other
agents will not be responsible for any aspect of the
depositorys policies, actions, or records of ownership
interests in a global security;
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we, the trustee, any warrant agents, and any unit or other
agents do not supervise the depository in any way;
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the depository will require that those who purchase and sell
interests in a global security within its book-entry system use
immediately available funds, and your broker or bank may require
you to do so as well; and
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financial institutions that participate in the depositorys
book-entry system and through which an investor holds his or her
interest in the global securities, directly or indirectly, also
may have their own policies affecting payments, deliveries,
transfers, exchanges, notices, and other matters relating to the
securities. Those policies may change from time to time. For
example, if you hold an interest in a global security through
Euroclear or Clearstream, Luxembourg, when DTC is the
depository, Euroclear or Clearstream, Luxembourg, as applicable,
will require those who purchase and sell interests in that
security through them to use immediately available funds and
comply with other policies and procedures, including deadlines
for giving instructions as to transactions that are to be
effected on a particular day. There may be more than one
financial intermediary in the chain of ownership for an
investor. We do not monitor and are not responsible for the
policies or actions or records of ownership interests of any of
those intermediaries.
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Registration,
Transfer, and Payment of Certificated Securities
If we ever issue securities in certificated form, those
securities may be presented for registration of transfer at the
office of the registrar or at the office of any transfer agent
we designate and maintain. The registrar or transfer agent will
make the transfer or registration only if it is satisfied with
the documents of title and identity of the person making the
request. There will not be a service charge for any exchange or
registration of transfer of the securities, but we may require
payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with the
exchange. At any time we may change transfer agents or approve a
change in the location through which any transfer agent acts. We
also may designate additional transfer agents for any securities
at any time.
We will not be required to issue, exchange, or register the
transfer of any security to be redeemed for a period of 15
calendar days before the selection of the securities to be
redeemed. In addition, we will not be required to exchange or
register the transfer of any security that was selected, called,
or is being called for redemption, except the unredeemed portion
of any security being redeemed in part.
We will pay amounts payable on any certificated securities at
the offices of the paying agents we may designate from time to
time.
U.S. FEDERAL
INCOME TAX CONSIDERATIONS
The following is a summary of the material U.S. federal
income tax considerations of the acquisition, ownership, and
disposition of certain of the debt securities, preferred stock,
depositary shares representing fractional interests in preferred
stock, and common stock that we are offering. The following
discussion is not exhaustive of all possible tax considerations.
This summary is based upon the Internal Revenue Code of 1986, as
amended (the Code), regulations promulgated under
the Code by the U.S. Treasury Department (including
proposed and temporary regulations), rulings, current
administrative interpretations and official pronouncements of
the Internal Revenue Service (the IRS), and judicial
decisions, all as currently in effect and all of which are
subject to differing interpretations or to change, possibly with
retroactive effect. No assurance can be given that the IRS would
not assert, or that a court would not sustain, a position
contrary to any of the tax consequences described below.
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This summary is for general information only, and does not
purport to discuss all aspects of U.S. federal income
taxation that may be important to a particular holder in light
of its investment or tax circumstances or to holders subject to
special tax rules, such as: partnerships, subchapter
S corporations, or other pass-through entities, banks,
financial institutions, tax-exempt entities, insurance
companies, regulated investment companies, real estate
investment trusts, trusts and estates, dealers in securities or
currencies, traders in securities that have elected to use the
mark-to-market
method of accounting for their securities, persons holding the
debt securities, preferred stock, depositary shares, or common
stock as part of an integrated investment, including a
straddle, hedge, constructive
sale, or conversion transaction, persons
(other than
Non-U.S. Holders)
whose functional currency for tax purposes is not the
U.S. dollar, and persons subject to the alternative minimum
tax provisions of the Code. This summary does not include any
description of the tax laws of any state or local governments,
or of any foreign government, that may be applicable to a
particular holder. This summary also may not apply to all forms
of debt securities, preferred stock, depositary shares, or
common stock that we may issue. If the tax consequences
associated with a particular form of debt security, preferred
stock, common stock, or depositary share are different than
those described below, they will be described in the applicable
prospectus supplement.
This summary is directed solely to holders that, except as
otherwise specifically noted, will purchase the debt securities,
preferred stock, depositary shares, or common stock offered in
this prospectus upon original issuance and will hold such
securities as capital assets within the meaning of
Section 1221 of the Code, which generally means as property
held for investment.
You should consult your own tax advisor concerning the
U.S. federal income and estate tax consequences to you of
acquiring, owning, and disposing of these securities, as well as
any tax consequences arising under the laws of any state, local,
foreign, or other tax jurisdiction and the possible effects of
changes in U.S. federal or other tax laws.
As used in this prospectus, the term
U.S. Holder means a beneficial owner of the
debt securities, preferred stock, depositary shares, or common
stock offered in this prospectus that is for U.S. federal
income tax purposes:
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a citizen or resident of the United States;
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a corporation (including an entity treated as a corporation for
U.S. federal income tax purposes) created or organized in
or under the laws of the United States or of any state of the
United States or the District of Columbia;
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an estate the income of which is subject to U.S. federal
income taxation regardless of its source; or
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any trust if a court within the United States is able to
exercise primary supervision over the administration of the
trust and one or more United States persons have the authority
to control all substantial decisions of the trust.
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Notwithstanding the preceding paragraph, to the extent provided
in Treasury regulations, some trusts in existence on
August 20, 1996, and treated as United States persons prior
to that date, that elect to continue to be treated as United
States persons also will be U.S. Holders. As used in this
prospectus, the term
Non-U.S. Holder
is a holder that is not a U.S. Holder.
If an entity or arrangement treated as a partnership for
U.S. federal income tax purposes holds the debt securities,
preferred stock, depositary shares, or common stock offered in
this prospectus, the U.S. federal income tax treatment of a
partner generally will depend upon the status of the partner and
the activities of the partnership and accordingly, this summary
does not apply to partnerships. A partner of a partnership
holding the debt securities, preferred stock, depositary shares,
or common stock should consult its own tax advisor regarding the
U.S. federal
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income tax consequences to the partner of the acquisition,
ownership, and disposition by the partnership of the debt
securities, preferred stock, depositary shares, or common stock.
Taxation
of Debt Securities
This subsection describes the material U.S. federal income
tax consequences of the acquisition, ownership, and disposition
of the debt securities offered in this prospectus, other than
the debt securities described below under
Convertible, Renewable, Extendible, Indexed,
and Other Debt Securities, which will be described in the
applicable prospectus supplement. This subsection is directed
solely to holders that, except as otherwise specifically noted,
will purchase the debt securities offered in this prospectus
upon original issuance at the issue price, as defined below.
Consequences
to U.S. Holders
The following is a summary of the material U.S. federal
income tax consequences that will apply to U.S. Holders of
debt securities.
Payment of Interest. Except as described below in the
case of interest on a debt security issued with original issue
discount, as defined below under Consequences
to U.S. Holders Original Issue Discount,
interest on a debt security generally will be included in the
income of a U.S. Holder as interest income at the time it
is accrued or is received in accordance with the
U.S. Holders regular method of accounting for
U.S. federal income tax purposes and will be ordinary
income.
Original Issue Discount. Some of our debt securities may
be issued with original issue discount (OID).
U.S. Holders of debt securities issued with OID, other than
short-term debt securities with a maturity of one year or less
from its date of issue, will be subject to special tax
accounting rules, as described in greater detail below. For tax
purposes, OID is the excess of the stated redemption price
at maturity of a debt instrument over its issue
price. The stated redemption price at maturity
of a debt security is the sum of all payments required to be
made on the debt security other than qualified stated
interest payments, as defined below. The issue
price of a debt security is generally the first offering
price to the public at which a substantial amount of the issue
was sold (ignoring sales to bond houses, brokers, or similar
persons or organizations acting in the capacity of underwriters,
placement agents, or wholesalers). The term qualified
stated interest generally means stated interest that is
unconditionally payable in cash or property (other than debt
instruments of the issuer), or that is treated as constructively
received, at least annually at a single fixed rate or, under
certain circumstances, at a variable rate. If a debt security
bears interest during any accrual period at a rate below the
rate applicable for the remaining term of the debt security (for
example, debt securities with teaser rates or interest
holidays), then some or all of the stated interest may not be
treated as qualified stated interest.
A U.S. Holder of a debt security with a maturity of more
than one year from its date of issue that has been issued with
OID (an OID debt security) is generally required to
include any qualified stated interest payments in income as
interest at the time it is accrued or is received in accordance
with the U.S. Holders regular accounting method for
tax purposes, as described above under
Consequences to U.S. Holders
Payment of Interest. A U.S. Holder of an OID debt
security is generally required to include in income the sum of
the daily accruals of the OID for the debt security for each day
during the taxable year (or portion of the taxable year) in
which the U.S. Holder held the OID debt security,
regardless of such holders regular method of accounting.
Thus, a U.S. Holder may be required to include OID in
income in advance of the receipt of some or all of the related
cash payments. The daily portion is determined by allocating the
OID for each day of the accrual period. An accrual period may be
of any length and the accrual periods may even vary in length
over the term of the OID debt security, provided that
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each accrual period is no longer than one year and each
scheduled payment of principal or interest occurs either on the
first day of an accrual period or on the final day of an accrual
period. The amount of OID allocable to an accrual period is
equal to the excess of: (1) the product of the
adjusted issue price of the OID debt security at the
beginning of the accrual period and its yield to maturity
(computed generally on a constant yield method and compounded at
the end of each accrual period, taking into account the length
of the particular accrual period) over (2) the amount of
any qualified stated interest allocable to the accrual period.
OID allocable to a final accrual period is the difference
between the amount payable at maturity, other than a payment of
qualified stated interest, and the adjusted issue price at the
beginning of the final accrual period. Special rules will apply
for calculating OID for an initial short accrual period. The
adjusted issue price of an OID debt security at the
beginning of any accrual period is the sum of the issue price of
the OID debt security plus the amount of OID allocable to all
prior accrual periods reduced by any payments received on the
OID debt security that were not qualified stated interest. Under
these rules, a U.S. Holder generally will have to include
in income increasingly greater amounts of OID in successive
accrual periods.
If the excess of the stated redemption price at
maturity of a debt security over its issue
price is less than
1/4 of
1% of the debt instruments stated redemption price at
maturity multiplied by the number of complete years from its
issue date to its maturity, or weighted average maturity in the
case of debt securities with more than one principal payment
(de minimis OID), the debt security is
not treated as issued with OID. A U.S. Holder generally
must include the de minimis OID in income at the
time payments, other than qualified stated interest, on the debt
securities are made in proportion to the amount paid (unless the
U.S. Holder makes the election described below under
Consequences to U.S. Holders
Election to Treat All Interest as Original Issue
Discount). Any amount of de minimis OID that
is included in income in this manner will be treated as capital
gain.
Additional rules applicable to debt securities with OID that are
denominated in or determined by reference to a currency other
than the U.S. dollar are described under
Consequences to U.S. Holders
Non-U.S. Dollar
Denominated Debt Securities below.
Variable Rate Debt Securities. In the case of a debt
security that is a variable rate debt security, special rules
apply. In general, if a debt security qualifies for treatment as
a variable rate debt instrument under Treasury
regulations and provides for stated interest that is
unconditionally payable at least annually at a variable rate
that, subject to certain exceptions, is a single qualified
floating rate or objective rate, each as
defined below, all stated interest on the debt security is
treated as qualified stated interest. In that case, both the
debt securitys yield to maturity and
qualified stated interest will be determined, solely
for purposes of calculating the accrual of OID, if any, as
though the debt security will bear interest in all periods
throughout its term at a fixed rate generally equal to the rate
that would be applicable to interest payments on the debt
security on its date of issue or, in the case of an objective
rate (other than a qualified inverse floating rate),
the rate that reflects the yield to maturity that is reasonably
expected for the debt security. A U.S. Holder of a variable
rate debt instrument would then recognize OID, if any, that is
calculated based on the debt securitys assumed yield to
maturity. If the interest actually accrued or paid during an
accrual period exceeds or is less than the assumed fixed
interest, the qualified stated interest or OID allocable to that
period is increased or decreased under rules set forth in
Treasury regulations. Special rules apply for determining the
amount of OID for other variable rate debt instruments, such as
instruments with more than one qualified floating rate or
instruments with a single fixed rate and one or more qualified
floating rates.
A debt security will qualify as a variable rate debt instrument
if the debt securitys issue price does not exceed the
total noncontingent principal payments by more than the lesser
of: (i) .015 multiplied by the product of the total
noncontingent principal payments and the number of complete
years to maturity from the issue date, or (ii) 15% of the
total noncontingent principal
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payments; and the debt security provides for stated interest,
compounded or paid at least annually, only at one or more
qualified floating rates, a single fixed rate and one or more
qualified floating rates, a single objective rate, or a single
fixed rate and a single objective rate that is a qualified
inverse floating rate. Generally, a rate is a qualified floating
rate if variations in the rate can reasonably be expected to
measure contemporaneous fluctuations in the cost of newly
borrowed funds in the currency in which the debt instrument is
denominated. If a debt security provides for two or more
qualified floating rates that are within 0.25 percentage
points of each other on the issue date or can reasonably be
expected to have approximately the same values throughout the
term of the debt security, the qualified floating rates together
constitute a single qualified floating rate. Generally, an
objective rate is a rate that is determined using a single fixed
formula that is based on objective financial or economic
information such as one or more qualified floating rates. An
objective rate is a qualified inverse floating rate if that rate
is equal to a fixed rate minus a qualified floating rate and
variations in the rate can reasonably be expected to inversely
reflect contemporaneous variations in the qualified floating
rate.
A variable rate debt security generally will not qualify for
treatment as a variable rate debt instrument if,
among other circumstances:
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the variable rate of interest is subject to one or more minimum
or maximum rate floors or ceilings or one or more governors
limiting the amount of increase or decrease in each case which
are not fixed throughout the term of the debt security and which
are reasonably expected as of the issue date to cause the rate
in some accrual periods to be significantly higher or lower than
the overall expected return on the debt security determined
without the floor, ceiling, or governor;
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in the case of certain debt securities, it is reasonably
expected that the average value of the variable rate during the
first half of the term of the debt security will be either
significantly less than or significantly greater than the
average value of the rate during the final half of the term of
the debt security; or
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the value of the rate on any date during the term of the debt
security is set earlier than three months prior to the first day
on which that value is in effect or later than one year
following that first day.
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In these situations, as well as others, the debt security
generally will be subject to taxation under rules applicable to
contingent payment debt instruments. U.S. Holders should
consult with their own tax advisors regarding the specific
U.S. federal income tax considerations with respect to
these debt securities.
Acquisition Premium. If a U.S. Holder purchases an
OID debt security for an amount greater than its adjusted issue
price (as determined above) at the purchase date and less than
or equal to the sum of all amounts, other than qualified stated
interest, payable on the OID debt security after the purchase
date, the excess is acquisition premium. Under these
rules, in general, the amount of OID which must be included in
income for the debt security for any taxable year (or any
portion of a taxable year in which the debt security is held)
will be reduced (but not below zero) by the portion of the
acquisition premium allocated to the period. The amount of
acquisition premium allocated to each period is determined by
multiplying the OID that otherwise would have been included in
income by a fraction, the numerator of which is the excess of
the cost over the adjusted issue price of the OID debt security
and the denominator of which is the excess of the OID debt
securitys stated redemption price at maturity over its
adjusted issue price.
If a U.S. Holder purchases an OID debt security for an
amount less than its adjusted issue price (as determined above)
at the purchase date, any OID accruing with respect to that OID
debt security will be required to be included in income and, to
the extent of the difference between the purchase amount and the
OID debt securitys adjusted issue price, the OID debt
62
security will be treated as having market discount.
See Consequences to
U.S. Holders Market Discount below.
Amortizable Bond Premium. If a U.S. Holder purchases
a debt security (including an OID debt security) for an amount
in excess of the sum of all amounts payable on the debt security
after the purchase date, other than qualified stated interest,
such holder will be considered to have purchased such debt
security with amortizable bond premium equal in
amount to such excess. A U.S. Holder may elect to amortize
such premium as an offset to interest income using a constant
yield method over the remaining term of the debt security based
on the U.S. Holders yield to maturity with respect to
the debt security.
A U.S. Holder generally may use the amortizable bond
premium allocable to an accrual period to offset interest
required to be included in the U.S. Holders income
under its regular method of accounting with respect to the debt
security in that accrual period. If the amortizable bond premium
allocable to an accrual period exceeds the amount of interest
allocable to such accrual period, such excess would be allowed
as a deduction for such accrual period, but only to the extent
of the U.S. Holders prior interest inclusions on the
debt security that have not been offset previously by bond
premium. Any excess is generally carried forward and allocable
to the next accrual period.
If a debt security may be redeemed by us prior to its maturity
date, the amount of amortizable bond premium will be based on
the amount payable at the applicable redemption date, but only
if use of the redemption date (in lieu of the stated maturity
date) results in a smaller amortizable bond premium for the
period ending on the redemption date. In addition, special rules
limit the amortization of bond premium in the case of
convertible debt securities.
An election to amortize bond premium applies to all taxable debt
obligations held by the U.S. Holder at the beginning of the
first taxable year to which the election applies and thereafter
acquired by the U.S. Holder and may be revoked only with
the consent of the IRS. Generally, a holder may make an election
to include in income its entire return on a debt security
(i.e., the excess of all remaining payments to be
received on the debt security over the amount paid for the debt
security by such holder) in accordance with a constant yield
method based on the compounding of interest, as discussed below
under Consequences to
U.S. Holders Election to Treat All Interest as
Original Issue Discount. If a holder makes such an
election for a debt security with amortizable bond premium, such
election will result in a deemed election to amortize bond
premium for all of the holders debt instruments with
amortizable bond premium and may be revoked only with the
permission of the IRS.
A U.S. Holder that elects to amortize bond premium will be
required to reduce its tax basis in the debt security by the
amount of the premium amortized during its holding period. OID
debt securities purchased at a premium will not be subject to
the OID rules described above.
If a U.S. Holder does not elect to amortize bond premium,
the amount of bond premium will be included in its tax basis in
the debt security. Therefore, if a U.S. Holder does not
elect to amortize bond premium and it holds the debt security to
maturity, the premium generally will be treated as capital loss
when the debt security matures.
Market Discount. If a U.S. Holder purchases a
debt security for an amount that is less than its stated
redemption price at maturity, or, in the case of an OID debt
security, its adjusted issue price, such holder will be
considered to have purchased the debt security with market
discount. Any payment, other than qualified stated
interest, or any gain on the sale, exchange, retirement, or
other disposition of a debt security with market discount
generally will be treated as ordinary interest income to the
extent of the market discount not previously included in income
that accrued on the debt security during such holders
holding period. In general, market discount is treated as
accruing on a straight-line basis over the term of the debt
security unless an election is made to accrue the market
discount under a constant yield method. In addition, a
U.S. Holder
63
may be required to defer, until the maturity of the debt
security or its earlier disposition in a taxable transaction,
the deduction of a portion of the interest paid on any
indebtedness incurred or maintained to purchase or carry the
debt security in an amount not exceeding the accrued market
discount on the debt security.
A U.S. Holder may elect to include market discount in
income currently as it accrues (on either a straight-line or
constant yield basis), in lieu of treating a portion of any gain
realized on a sale, exchange, retirement, or other disposition
of the debt security as ordinary income. If an election is made
to include market discount on a current basis, the interest
deduction deferral rule described above will not apply. If a
U.S. Holder makes such an election, it will apply to all
market discount debt instruments acquired by such holder on or
after the first day of the first taxable year to which the
election applies. The election may not be revoked without the
consent of the IRS. U.S. Holders should consult with their
own tax advisors before making this election.
If the difference between the stated redemption price at
maturity of a debt security or, in the case of an OID debt
security, its adjusted issue price, and the amount paid for the
debt security is less than
1/4
of 1% of the debt instruments stated redemption price at
maturity or, in the case of an OID debt security, its adjusted
issue price, multiplied by the number of remaining complete
years to the debt securitys maturity (de
minimis market discount), the debt security is not
treated as issued with market discount.
Generally, a holder may make an election to include in income
its entire return on a debt security (i.e., the excess of
all remaining payments to be received on the debt security over
the amount paid for the debt security by such holder) in
accordance with a constant yield method based on the compounding
of interest, as discussed below under
Consequences to U.S. Holders
Election to Treat All Interest as Original Issue Discount.
If a holder makes such an election for a debt security with
market discount, the holder will be required to include market
discount in income currently as it accrues on a constant yield
basis for all market discount debt instruments acquired by such
holder on or after the first day of the first taxable year to
which the election applies, and such election may be revoked
only with the permission of the IRS.
Election to Treat All Interest as Original Issue
Discount. A U.S. Holder may elect to include in income
all interest that accrues on a debt security using the
constant-yield method applicable to OID described above, subject
to certain limitations and exceptions. For purposes of this
election, interest includes stated interest, acquisition
discount, OID, de minimis OID, market discount,
de minimis market discount, and unstated interest,
as adjusted by any amortizable bond premium or acquisition
premium, each as described herein. If this election is made for
a debt security, then, to apply the constant-yield method:
(i) the issue price of the debt security will equal its
cost, (ii) the issue date of the debt security will be the
date it was acquired, and (iii) no payments on the debt
security will be treated as payments of qualified stated
interest. A U.S. Holder must make this election for the
taxable year in which the debt security was acquired, and may
not revoke the election without the consent of the IRS.
U.S. Holders should consult with their own tax advisors
before making this election.
Debt Securities That Trade Flat. We
expect that certain debt securities will trade in the secondary
market with accrued interest. However, we may issue debt
securities with terms and conditions that would make it likely
that such debt securities would trade flat in the
secondary market, which means that upon a sale of a debt
security a U.S. Holder would not be paid an amount that
reflects the accrued but unpaid interest with respect to such
debt security. Nevertheless, for U.S. federal income tax
purposes, a portion of the sales proceeds equal to the interest
accrued with respect to such debt security from the last
interest payment date to the sale date must be treated as
interest income rather than as an amount realized upon the sale.
Accordingly, a U.S. Holder that sells such a debt security
between interest payment dates would be required to recognize
interest income and, in certain circumstances, would recognize a
capital loss (the deductibility of which is subject to
limitations) on the sale of the debt security.
64
Concurrently, a U.S. Holder that purchases such a debt
security between interest payment dates would not be required to
include in income that portion of any interest payment received
that is attributable to interest that accrued prior to the
purchase. Such payment is treated as a return of capital which
reduces the U.S. Holders remaining cost basis in the
debt security. However, interest that accrues after the purchase
date is included in income in the year received or accrued
(depending on the U.S. Holders accounting method).
U.S. Holders that purchase such debt securities between
interest payment dates should consult their own tax advisors
concerning such holders adjusted tax basis in the debt
security and whether such debt securities should be treated as
having been purchased with market discount, as described above.
Short-Term Debt Securities. Some of our debt securities
may be issued with maturities of one year or less from the date
of issue, which we refer to as short-term debt securities.
Treasury regulations provide that no payments of interest on a
short-term debt security are treated as qualified stated
interest. Accordingly, in determining the amount of discount on
a short-term debt security, all interest payments, including
stated interest, are included in the short-term debt
securitys stated redemption price at maturity.
In general, individual and certain other U.S. Holders using
the cash basis method of tax accounting are not required to
include accrued discount on short-term debt securities in income
currently unless they elect to do so, but they may be required
to include any stated interest in income as the interest is
received. However, a cash basis U.S. Holder will be
required to treat any gain realized on a sale, exchange, or
retirement of the short-term debt security as ordinary income to
the extent such gain does not exceed the discount accrued with
respect to the short-term debt security, which will be
determined on a straight-line basis unless the holder makes an
election to accrue the discount under the constant-yield method,
through the date of sale or retirement. In addition, a cash
basis U.S. Holder that does not elect to currently include
accrued discount in income will be not allowed to deduct any of
the interest paid or accrued on any indebtedness incurred or
maintained to purchase or carry a short-term debt security (in
an amount not exceeding the deferred income), but instead will
be required to defer deductions for such interest until the
deferred income is realized upon the maturity of the short-term
debt security or its earlier disposition in a taxable
transaction. Notwithstanding the foregoing, a cash-basis
U.S. Holder of a short-term debt security may elect to
include accrued discount in income on a current basis. If this
election is made, the limitation on the deductibility of
interest described above will not apply.
A U.S. Holder using the accrual method of tax accounting
and some cash basis holders (including banks, securities
dealers, regulated investment companies, and certain trust
funds) generally will be required to include accrued discount on
a short-term debt security in income on a current basis, on
either a straight-line basis or, at the election of the holder,
under the constant-yield method based on daily compounding.
Regardless of whether a U.S. Holder is a cash-basis or
accrual-basis holder, the holder of a short-term debt security
may elect to include accrued acquisition discount
with respect to the short-term debt security in income on a
current basis. Acquisition discount is the excess of the
remaining redemption amount of the short-term debt security at
the time of acquisition over the purchase price. Acquisition
discount will be treated as accruing on a straight-line basis
or, at the election of the holder, under a constant yield method
based on daily compounding. If a U.S. Holder elects to
include accrued acquisition discount in income, the rules for
including OID will not apply. In addition, the market discount
rules described above will not apply to short-term debt
securities.
Sale, Exchange, or Retirement of Debt
Securities. Upon the sale, exchange, retirement, or
other disposition of a debt security, a U.S. Holder will
recognize gain or loss equal to the difference between the
amount realized upon the sale, exchange, retirement, or other
disposition (less an amount equal to any accrued interest not
previously included in income if the debt
65
security is disposed of between interest payment dates, which
will be included in income as interest income for
U.S. federal income tax purposes) and the
U.S. Holders adjusted tax basis in the debt security.
The amount realized by the U.S. Holder will include the
amount of any cash and the fair market value of any other
property received for the debt security. A
U.S. Holders adjusted tax basis in a debt security
generally will be the cost of the debt security to such
U.S. Holder, increased by any OID, market discount, de
minimis OID, de minimis market discount, or any
discount with respect to a short-term debt security previously
included in income with respect to the debt security, and
decreased by the amount of any premium previously amortized to
reduce interest on the debt security and the amount of any
payment (other than a payment of qualified stated interest)
received in respect of the debt security.
Except as discussed above with respect to market discount, or as
described below with respect to
Non-U.S. Dollar
Denominated Debt Securities, gain or loss realized on the sale,
exchange, retirement, or other disposition of a debt security
generally will be capital gain or loss and will be long-term
capital gain or loss if the debt security has been held for more
than one year. Net long-term capital gain recognized by a
non-corporate U.S. Holder before January 1, 2009
generally is subject to tax at a maximum rate of 15%. The
ability of U.S. Holders to deduct capital losses is subject
to limitations under the Code.
Reopenings. Treasury regulations provide specific
rules regarding whether additional debt instruments issued in a
reopening will be considered part of the same issue, with the
same issue price and yield to maturity, as the original debt
instruments for U.S. federal income tax purposes. Except as
provided otherwise in an applicable prospectus supplement, we
expect that additional debt securities issued by us in any
reopening will be issued such that they will be considered part
of the original issuance to which they relate.
Debt Securities Subject to Contingencies Including Optional
Redemption. Certain of the debt securities may provide for
an alternative payment schedule or schedules applicable upon the
occurrence of a contingency or contingencies, other than a
remote or incidental contingency, whether such contingency
relates to payments of interest or of principal. In addition,
certain of the debt securities may contain provisions permitting
them to be redeemed prior to their stated maturity at our option
and/or at the option of the holder. Debt securities containing
these features may be subject to rules that differ from the
general rules discussed herein. U.S. Holders considering
the purchase of debt securities with these features should
carefully examine the applicable prospectus supplement and
should consult their own tax advisors regarding the
U.S. federal income tax consequences to a U.S. Holder
of the ownership and disposition of such debt securities since
the U.S. federal income tax consequences with respect to
OID will depend, in part, on the particular terms and features
of the debt securities.
Non-U.S. Dollar
Denominated Debt Securities. Additional considerations apply
to a U.S. Holder of a debt security payable in a currency
other than U.S. dollars (foreign currency). We
refer to these securities as
Non-U.S. Dollar
Denominated Debt Securities. In the case of payments of
interest, U.S. Holders using the cash method of accounting
for U.S. federal income tax purposes will be required to
include in income the U.S. dollar value of the foreign
currency payment on a
Non-U.S. Dollar
Denominated Debt Security (other than OID or market discount)
when the payment of interest is received. The U.S. dollar
value of the foreign currency payment is determined by
translating the foreign currency received at the spot rate for
such foreign currency on the date the payment is received,
regardless of whether the payment is in fact converted to
U.S. dollars at that time. The U.S. dollar value will
be the U.S. Holders tax basis in the foreign currency
received. A U.S. Holder will not recognize foreign currency
exchange gain or loss with respect to the receipt of such
payment.
U.S. Holders using the accrual method of accounting for
U.S. federal income tax purposes will be required to
include in income the U.S. dollar value of the amount of
interest income that has accrued and is otherwise required to be
taken into account with respect to a
Non-U.S. Dollar
66
Denominated Debt Security during an accrual period. The
U.S. dollar value of the accrued income will be determined
by translating the income at the average rate of exchange for
the accrual period or, with respect to an accrual period that
spans two taxable years, at the average rate for the partial
period within the taxable year. A U.S. Holder may elect,
however, to translate the accrued interest income using the
exchange rate on the last day of the accrual period or, with
respect to an accrual period that spans two taxable years, using
the exchange rate on the last day of the taxable year. If the
last day of an accrual period is within five business days of
the date of receipt of the accrued interest, a U.S. Holder
may translate the interest using the exchange rate on the date
of receipt. The above election will apply to all other debt
obligations held by the U.S. Holder and may not be changed
without the consent of the IRS. U.S. Holders should consult
their own tax advisors before making the above election. Upon
receipt of an interest payment (including, upon the sale of the
debt security, the receipt of proceeds which include amounts
attributable to accrued interest previously included in income),
the holder will recognize foreign currency exchange gain or loss
in an amount equal to the difference between the
U.S. dollar value of such payment (determined by
translating the foreign currency received at the spot rate for
such foreign currency on the date such payment is received) and
the U.S. dollar value of the interest income previously
included in income with respect to such payment. This gain or
loss will be treated as ordinary income or loss.
OID on a debt security that is also a
Non-U.S. Dollar
Denominated Debt Security will be determined for any accrual
period in the applicable foreign currency and then translated
into U.S. dollars, in the same manner as interest income
accrued by a holder on the accrual basis, as described above
(regardless of such holders regular method of accounting).
A U.S. Holder will recognize foreign currency exchange gain
or loss when OID is paid (including, upon the sale of such debt
security, the receipt of proceeds which include amounts
attributable to OID previously included in income) to the extent
of the difference between the U.S. dollar value of such
payment (determined by translating the foreign currency received
at the spot rate for such foreign currency on the date such
payment is received) and the U.S. dollar value of the
accrued OID (determined in the same manner as for accrued
interest). For these purposes, all receipts on a debt security
will be viewed: (i) first, as the receipt of any stated
interest payment called for under the terms of the debt
security, (ii) second, as receipts of previously accrued
OID (to the extent thereof), with payments considered made for
the earliest accrual periods first, and (iii) third, as the
receipt of principal.
The amount of market discount on
Non-U.S. Dollar
Denominated Debt Securities includible in income generally will
be determined by translating the market discount determined in
the foreign currency into U.S. dollars at the spot rate on
the date the
Non-U.S. Dollar
Denominated Debt Security is retired or otherwise disposed of.
If a U.S. Holder elected to accrue market discount
currently, then the amount which accrues is determined in the
foreign currency and then translated into U.S. dollars on
the basis of the average exchange rate in effect during such
accrual period. A U.S. Holder will recognize foreign
currency exchange gain or loss with respect to market discount
which is accrued currently using the approach applicable to the
accrual of interest income as described above.
Amortizable bond premium on a
Non-U.S. Dollar
Denominated Debt Security will be computed in the applicable
foreign currency. If a U.S. Holder elected to amortize the
premium, the amortizable bond premium will reduce interest
income in the applicable foreign currency. At the time bond
premium is amortized, foreign currency exchange gain or loss
will be realized based on the difference between spot rates at
such time and the time of acquisition of the
Non-U.S. Dollar
Denominated Debt Security. If a U.S. Holder does not elect
to amortize bond premium, the bond premium computed in the
foreign currency must be translated into U.S. dollars at
the spot rate on the maturity date and such bond premium will
constitute a capital loss which may be offset or eliminated by
foreign currency exchange gain.
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If a U.S. Holder purchases a
Non-U.S. Dollar
Denominated Debt Security with previously owned foreign
currency, foreign currency exchange gain or loss (which will be
treated as ordinary income or loss) will be recognized in an
amount equal to the difference, if any, between the tax basis in
the foreign currency and the U.S. dollar fair market value
of the foreign currency used to purchase the
Non-U.S. Dollar
Denominated Debt Security, determined on the date of purchase.
Upon the sale, exchange, retirement, or other taxable
disposition of a
Non-U.S. Dollar
Denominated Debt Security, a U.S. Holder will recognize
gain or loss equal to the difference between the amount realized
upon the sale, exchange, retirement, or other disposition (less
an amount equal to any accrued and unpaid interest not
previously included in income, which will be treated as a
payment of interest for U.S. federal income tax purposes)
and the adjusted tax basis in the
Non-U.S. Dollar
Denominated Debt Security. The adjusted tax basis in a
Non-U.S. Dollar
Denominated Debt Security will equal the amount paid for the
Non-U.S. Dollar
Denominated Debt Security, increased by the amounts of any
market discount or OID previously included in income with
respect to the
Non-U.S. Dollar
Denominated Debt Security and reduced by any amortized
acquisition or other premium and any principal payments received
in respect of the
Non-U.S. Dollar
Denominated Debt Security. The amount of any payment in or
adjustments measured by foreign currency will be equal to the
U.S. dollar value of the foreign currency on the date of
the purchase or adjustment. The amount realized will be based on
the U.S. dollar value of the foreign currency on the date
the payment is received or the
Non-U.S. Dollar
Denominated Debt Security is disposed of (or deemed disposed of
as a result of a material change in the terms of the debt
security). If, however, a
Non-U.S. Dollar
Denominated Debt Security is traded on an established securities
market and the U.S. Holder uses the cash basis method of
tax accounting, the U.S. dollar value of the amount
realized will be determined by translating the foreign currency
payment at the spot rate of exchange on the settlement date of
the purchase or sale. A U.S. Holder that uses the accrual
basis method of tax accounting may elect the same treatment with
respect to the purchase and sale of
Non-U.S. Dollar
Denominated Debt Securities traded on an established securities
market, provided that the election is applied consistently.
Except with respect to market discount as discussed above, and
the foreign currency rules discussed below, gain or loss
recognized upon the sale, exchange, retirement, or other taxable
disposition of a
Non-U.S. Dollar
Denominated Debt Security will be capital gain or loss and will
be long-term capital gain or loss if at the time of sale,
exchange, retirement, or other disposition, the
Non-U.S. Dollar
Denominated Debt Security has been held for more than one year.
Net long-term capital gain recognized by a non-corporate
U.S. Holder before January 1, 2009 generally is
subject to tax at a maximum rate of 15%. The ability of
U.S. Holders to deduct capital losses is subject to
limitations under the Code.
A portion of the gain or loss with respect to the principal
amount of a
Non-U.S. Dollar
Denominated Debt Security may be treated as foreign currency
exchange gain or loss. Foreign currency exchange gain or loss
will be treated as ordinary income or loss. For these purposes,
the principal amount of the
Non-U.S. Dollar
Denominated Debt Security is the purchase price for the
Non-U.S. Dollar
Denominated Debt Security calculated in the foreign currency on
the date of purchase, and the amount of exchange gain or loss
recognized is equal to the difference between (i) the
U.S. dollar value of the principal amount determined on the
date of the sale, exchange, retirement or other disposition of
the
Non-U.S. Dollar
Denominated Debt Security and (ii) the U.S. dollar
value of the principal amount determined on the date the foreign
currency debt security was purchased. The amount of foreign
currency exchange gain or loss will be limited to the amount of
overall gain or loss realized on the disposition of the
Non-U.S. Dollar
Denominated Debt Security.
The tax basis in foreign currency received as interest on a
Non-U.S. Dollar
Denominated Debt Security will be the U.S. dollar value of
the foreign currency determined at the spot rate in effect on
the date the foreign currency is received. The tax basis in
foreign currency received on the sale, exchange, retirement, or
other disposition of a
Non-U.S. Dollar
Denominated Debt
68
Security will be equal to the U.S. dollar value of the
foreign currency, determined at the time of the sale, exchange,
retirement or other disposition. As discussed above, if the
Non-U.S. Dollar
Denominated Debt Securities are traded on an established
securities market, a cash basis U.S. Holder (or, upon
election, an accrual basis U.S. Holder) will determine the
U.S. dollar value of the foreign currency by translating
the foreign currency received at the spot rate of exchange on
the settlement date of the sale, exchange, retirement, or other
disposition. Accordingly, in such case, no foreign currency
exchange gain or loss will result from currency fluctuations
between the trade date and settlement date of a sale, exchange,
retirement, or other disposition. Any gain or loss recognized on
a sale, exchange, retirement, or other disposition of foreign
currency (including its exchange for U.S. dollars or its
use to purchase debt securities) will be ordinary income or loss.
For special treatment of
Non-U.S. Dollar
Denominated Debt Securities that are also contingent payment
debt securities, see the applicable prospectus supplement.
Consequences
to
Non-U.S. Holders
The following is a summary of certain U.S. federal income
tax consequences that will apply to
Non-U.S. Holders
of debt securities.
Payments of Interest. Under current U.S. federal
income tax law and subject to the discussion below concerning
backup withholding, principal (and premium, if any) and interest
payments, including any OID, that are received from us or our
agent and that are not effectively connected with the conduct by
the
Non-U.S. Holder
of a trade or business within the United States, or a permanent
establishment maintained in the United States if certain tax
treaties apply, generally will not be subject to
U.S. federal income or withholding tax except as provided
below. Interest, including any OID, may be subject to a 30%
withholding tax (or less under an applicable treaty, if any) if:
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a
Non-U.S. Holder
actually or constructively owns 10% or more of the total
combined voting power of all classes of our stock entitled to
vote;
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a
Non-U.S. Holder
is a controlled foreign corporation for
U.S. federal income tax purposes that is related to us
(directly or indirectly) through stock ownership;
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a
Non-U.S. Holder
is a bank extending credit under a loan agreement in the
ordinary course of its trade or business;
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the interest payments on the debt security are determined by
reference to the income, profits, changes in the value of
property or other attributes of the debtor or a related party
(other than payments that are based on the value of a security
or index of securities that are, and will continue to be,
actively traded within the meaning of Section 1092(d) of
the Code, and that are not nor will be a United States
real property interest as described in
Section 897(c)(1) or 897(g) of the Code); or
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the
Non-U.S. Holder
does not satisfy the certification requirements described below.
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In the case of debt securities in registered form, a
Non-U.S. Holder
generally will satisfy the certification requirements if either:
(A) the
Non-U.S. Holder
certifies to us or our agent, under penalties of perjury, that
it is a non-United States person and provides its name and
address (which certification may generally be made on an IRS
Form W-8BEN, or a successor form), or (B) a securities
clearing organization, bank, or other financial institution that
holds customer securities in the ordinary course of its trade or
business (a financial institution) and holds the
debt security certifies to us or our agent under penalties of
perjury that either it or another financial institution has
received the required statement from the
Non-U.S. Holder
certifying that it is a non-United States person and furnishes
us with a copy of the statement.
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Special rules apply with respect to compliance with certain
restrictions and procedures relating to the offer, sale, and
delivery of and payments on bearer debt securities. We generally
will issue debt securities only in registered form, without
coupons, although we may issue debt securities in bearer form,
in which case we will so specify the applicable restrictions and
procedures in the applicable prospectus supplement.
Payments not meeting the requirements set forth above and thus
subject to withholding of U.S. federal income tax may
nevertheless be exempt from withholding (or subject to
withholding at a reduced rate) if the
Non-U.S. Holder
provides us with a properly executed IRS Form W-8BEN (or
successor form) claiming an exemption from, or reduction in,
withholding under the benefit of a tax treaty, or IRS
Form W-8ECI (or other applicable form) stating that
interest paid on the debt securities is not subject to
withholding tax because it is effectively connected with the
conduct of a trade or business within the United States as
discussed below. To claim benefits under an income tax treaty, a
Non-U.S. Holder
must obtain a taxpayer identification number and certify as to
its eligibility under the appropriate treatys limitations
on benefits article. In addition, special rules may apply to
claims for treaty benefits made by
Non-U.S. Holders
that are entities rather than individuals. A
Non-U.S. Holder
that is eligible for a reduced rate of U.S. federal
withholding tax pursuant to an income tax treaty may obtain a
refund of any excess amounts withheld by filing an appropriate
claim for refund with the IRS.
Additional Payments. If the amount or timing of any
payments on a debt security is contingent, the interest payments
on the debt security may be treated as contingent
interest under Section 871(h)(4) of the Code, in
which case such interest may not be eligible for the exemption
from U.S. federal income and withholding tax, as described
above (other than for a holder that otherwise claims an
exemption from, or reduction in, withholding under the benefit
of an income tax treaty). In certain circumstances, if specified
in the applicable prospectus supplement, we will pay to a
Non-U.S. Holder
of any debt security additional amounts to ensure that every net
payment on that debt security will not be less, due to the
payment of U.S. federal withholding tax, than the amount
then otherwise due and payable. See Description of Debt
Securities Payment of Additional Amounts
above. However, because the likelihood that such payments will
be made is remote, we do not believe that, because of these
potential additional payments, the interest on the debt
securities should be treated as contingent interest.
Sale, Exchange, or Retirement of Debt Securities. A
Non-U.S. Holder
generally will not be subject to U.S. federal income or
withholding tax on any capital gain or market discount realized
on the sale, exchange, retirement, or other disposition of debt
securities, provided that: (a) the gain is not effectively
connected with the conduct of a trade or business within the
United States, or a permanent establishment maintained in the
United States if certain tax treaties apply, and (b) in the
case of a
Non-U.S. Holder
that is an individual, the
Non-U.S. Holder
is not present in the United States for 183 days or more in
the taxable year of the sale, exchange, or other disposition of
the debt security. An individual
Non-U.S. Holder
who is present in the United States for 183 days or more in
the taxable year of sale, exchange, or other disposition of a
debt security, and if certain other conditions are met, will be
subject to U.S. federal income tax at a rate of 30% on the
gain realized on the sale, exchange, or other disposition of
such debt security.
Income Effectively Connected with a Trade or Business within
the United States. If a
Non-U.S. Holder
of a debt security is engaged in the conduct of a trade or
business within the United States and if interest (including any
OID) on the debt security, or gain realized on the sale,
exchange, or other disposition of the debt security, is
effectively connected with the conduct of such trade or business
(and, if certain tax treaties apply, is attributable to a
permanent establishment maintained by the
Non-U.S. Holder
in the United States), the
Non-U.S. Holder,
although exempt from U.S. federal withholding tax (provided
that the certification requirements discussed above are
satisfied), generally will be subject to U.S. federal
income tax on such interest (including any OID) or gain on a net
income basis in the same manner as if it were a
U.S. Holder.
Non-U.S. holders
should read the material under the heading
Consequences to
70
U.S. Holders, for a description of the
U.S. federal income tax consequences of acquiring, owning,
and disposing of debt securities. In addition, if such
Non-U.S. Holder
is a foreign corporation, it may also be subject to a branch
profits tax equal to 30% (or such lower rate provided by an
applicable U.S. income tax treaty) of a portion of its
earnings and profits for the taxable year that are effectively
connected with its conduct of a trade or business in the United
States, subject to certain adjustments.
Convertible,
Renewable, Extendible, Indexed, and Other Debt
Securities
Special U.S. federal income tax rules are applicable to
certain other debt securities, including contingent
Non-U.S. Dollar
Denominated Debt Securities, debt securities that may be
convertible into or exercisable or exchangeable for our common
or preferred stock or other securities or debt or equity
securities of one or more third parties, debt securities the
payments on which are determined or partially determined by
reference to any index and other debt securities that are
subject to the rules governing contingent payment obligations
which are not subject to the rules governing variable rate debt
securities, any renewable and extendible debt securities and any
debt securities providing for the periodic payment of principal
over the life of the debt security. The material
U.S. federal income tax considerations with respect to
these debt securities will be discussed in the applicable
pricing supplement.
Backup
Withholding and Information Reporting
In general, in the case of a U.S. Holder, other than
certain exempt holders, we and other payors are required to
report to the IRS all payments of principal, any premium, and
interest on the debt security, and the accrual of OID on an OID
debt security. In addition, we and other payors generally are
required to report to the IRS any payment of proceeds of the
sale of a debt security before maturity. Additionally, backup
withholding generally will apply to any payments, including
payments of OID, if a U.S. Holder fails to provide an
accurate taxpayer identification number and certify that the
taxpayer identification number is correct, the U.S. Holder
is notified by the IRS that it has failed to report all interest
and dividends required to be shown on its U.S. federal
income tax returns or a U.S. Holder does not certify that
it has not underreported its interest and dividend income. If
applicable, backup withholding will be imposed at a rate of 28%.
This rate is scheduled to increase to 31% after 2010.
In the case of a
Non-U.S. Holder,
backup withholding and information reporting will not apply to
payments made if the
Non-U.S. Holder
provides the required certification that it is not a United
States person, or the
Non-U.S. Holder
otherwise establishes an exemption, provided that the payor or
withholding agent does not have actual knowledge that the holder
is a United States person, or that the conditions of any
exemption are not satisfied.
In addition, payments of the proceeds from the sale of a debt
security to or through a foreign office of a broker or the
foreign office of a custodian, nominee, or other dealer acting
on behalf of a holder generally will not be subject to
information reporting or backup withholding. However, if the
broker, custodian, nominee, or other dealer is a United States
person, the government of the United States or the government of
any state or political subdivision of any state, or any agency
or instrumentality of any of these governmental units, a
controlled foreign corporation for U.S. federal income tax
purposes, a foreign partnership that is either engaged in a
trade or business within the United States or whose United
States partners in the aggregate hold more than 50% of the
income or capital interest in the partnership, a foreign person
50% or more of whose gross income for a certain period is
effectively connected with a trade or business within the United
States, or a United States branch of a foreign bank or insurance
company, information reporting (but not backup withholding)
generally will be required with respect to payments made to a
holder unless the broker, custodian, nominee, or other dealer
has documentation of the holders foreign status and the
broker, custodian, nominee, or other dealer has no actual
knowledge to the contrary.
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Payment of the proceeds from a sale of a debt security to or
through the United States office of a broker is subject to
information reporting and backup withholding, unless the holder
certifies as to its non-United States person status or otherwise
establishes an exemption from information reporting and backup
withholding.
Any amounts withheld under the backup withholding rules will be
allowed as a refund or a credit against a holders
U.S. federal income tax liability provided the required
information is furnished to the IRS.
Taxation
of Common Stock, Preferred Stock, and Depositary
Shares
This subsection describes the material U.S. federal income
tax consequences of the acquisition, ownership, and disposition
of the common stock, preferred stock, and depositary shares
offered in this prospectus.
Taxation
of Holders of Depositary Shares
For U.S. federal income tax purposes, holders of depositary
shares generally will be treated as if they were the holders of
the preferred stock represented by such depositary shares.
Accordingly, such holders will be entitled to take into account,
for U.S. federal income tax purposes, income and deductions
to which they would be entitled if they were holders of such
preferred stock, as described more fully below. Exchanges of
preferred stock for depositary shares and depositary shares for
preferred stock generally will not be subject to
U.S. federal income taxation.
Consequences
to U.S. Holders
The following is a summary of certain U.S. federal income
tax consequences that will apply to U.S. Holders of our
common stock, preferred stock, and depositary shares.
Distributions on Common Stock, Preferred Stock, and
Depositary Shares. Distributions made to U.S. Holders
out of our current or accumulated earnings and profits, as
determined for U.S. federal income tax purposes, will be
included in the income of a U.S. Holder as dividend income
and will be subject to tax as ordinary income. Dividends
received by a non-corporate U.S. Holder in taxable years
beginning before January 1, 2009 that constitute
qualified dividend income are generally subject to
tax at a maximum rate of 15% applicable to net long-term capital
gains, provided that certain holding period and other
requirements are met. Dividends received by a corporate
U.S. Holder, except as described in the next subsection,
generally will be eligible for the 70% dividends-received
deduction.
Distributions in excess of our current and accumulated earnings
and profits will not be taxable to a U.S. Holder to the
extent that the distributions do not exceed the
U.S. Holders adjusted tax basis in the shares, but
rather will reduce the adjusted tax basis of such shares. To the
extent that distributions in excess of our current and
accumulated earnings and profits exceed the
U.S. Holders adjusted tax basis in the shares, such
distributions will be included in income as capital gain upon
the sale or exchange of the shares. In addition, a corporate
U.S. Holder will not be entitled to the dividends-received
deduction on this portion of a distribution.
We will notify holders of our shares after the close of our
taxable year as to the portions of the distributions
attributable to that year that constitute ordinary income,
qualified dividend income, and nondividend distributions, if any.
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Limitations on Dividends-Received Deduction. A corporate
U.S. Holder may not be entitled to take the 70%
dividends-received deduction in all circumstances. Prospective
corporate investors in our common stock, preferred stock, or
depositary shares should consider the effect of:
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Section 246A of the Code, which reduces the
dividends-received deduction allowed to a corporate
U.S. Holder that has incurred indebtedness that is
directly attributable to an investment in portfolio
stock, which may include our common stock, preferred stock, and
depositary shares;
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Section 246(c) of the Code, which, among other things,
disallows the dividends-received deduction in respect of any
dividend on a share of stock that is held for less than the
minimum holding period (generally, for common stock, at least
46 days during the 90 day period beginning on the date
which is 45 days before the date on which such share
becomes ex-dividend with respect to such dividend); and
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Section 1059 of the Code, which, under certain
circumstances, reduces the basis of stock for purposes of
calculating gain or loss in a subsequent disposition by the
portion of any extraordinary dividend (as defined
below) that is eligible for the dividends-received deduction.
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Extraordinary Dividends. A corporate U.S. Holder
will be required to reduce its tax basis (but not below zero) in
our common stock, preferred stock, or depositary shares by the
nontaxed portion of any extraordinary dividend if
the stock was not held for more than two years before the
earliest of the date such dividend is declared, announced, or
agreed. Generally, the nontaxed portion of an extraordinary
dividend is the amount excluded from income by operation of the
dividends-received deduction. An extraordinary dividend
generally would be a dividend that:
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in the case of common stock, equals or exceeds 10% of the
corporate U.S. Holders adjusted tax basis in the
common stock, treating all dividends having ex-dividend dates
within an 85 day period as one dividend; or
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in the case of preferred stock, equals or exceeds 5% of the
corporate U.S. Holders adjusted tax basis in the
preferred stock, treating all dividends having ex-dividend dates
within an 85 day period as one dividend; or
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exceeds 20% of the corporate U.S. Holders adjusted
tax basis in the stock, treating all dividends having
ex-dividend dates within a 365 day period as one dividend.
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In determining whether a dividend paid on stock is an
extraordinary dividend, a corporate U.S. Holder may elect
to substitute the fair market value of the stock for its tax
basis for purposes of applying these tests if the fair market
value as of the day before the ex-dividend date is established
to the satisfaction of the Secretary of the Treasury. An
extraordinary dividend also includes any amount treated as a
dividend in the case of a redemption that is either non-pro rata
as to all stockholders or in partial liquidation of the company,
regardless of the stockholders holding period and
regardless of the size of the dividend. Any part of the nontaxed
portion of an extraordinary dividend that is not applied to
reduce the corporate U.S. Holders tax basis as a
result of the limitation on reducing its basis below zero would
be treated as capital gain and would be recognized in the
taxable year in which the extraordinary dividend is received.
Corporate U.S. Holders should consult with their own tax
advisors with respect to the possible application of the
extraordinary dividend provisions of the Code to the ownership
or disposition of common stock, preferred stock, or depositary
shares in their particular circumstances.
Sale, Exchange, or other Taxable Disposition. Upon the
sale, exchange, or other taxable disposition of our common
stock, preferred stock, or depositary shares (other than by
redemption or repurchase by us), a U.S. Holder generally
will recognize gain or loss equal to the difference between the
amount realized upon the sale, exchange, or other taxable
disposition and the U.S. Holders adjusted tax basis
in the shares. The amount realized by the U.S. Holder will
73
include the amount of any cash and the fair market value of any
other property received upon the sale, exchange, or other
taxable disposition of the shares. A U.S. Holders tax
basis in a share generally will be equal to the cost of the
share to such U.S. Holder, which may be adjusted for
certain subsequent events (for example, if the U.S. Holder
receives a nondividend distribution, as described above). Gain
or loss realized on the sale, exchange, or other taxable
disposition of our common stock, preferred stock, or depositary
shares generally will be capital gain or loss and will be
long-term capital gain or loss if the shares have been held for
more than one year. Net long-term capital gain recognized by a
non-corporate U.S. Holder before January 1, 2009
generally is subject to tax at a maximum rate of 15%. The
ability of U.S. Holders to deduct capital losses is subject
to limitations under the Code.
Redemption or Repurchase of Common Stock, Preferred Stock, or
Depositary Shares. If we are permitted to and redeem or
repurchase a U.S. Holders common stock, preferred
stock, or depositary shares, the redemption or repurchase
generally would be a taxable event for U.S. federal income
tax purposes. A U.S. Holder would be treated as if it had
sold its shares if the redemption or repurchase:
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results in a complete termination of the U.S. holders
stock interest in us;
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is substantially disproportionate with respect to the
U.S. Holder; or
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is not essentially equivalent to a dividend with respect to the
U.S. Holder, in each case as determined under the Code.
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In determining whether any of these tests has been met, shares
of stock considered to be owned by a U.S. Holder by reason
of certain constructive ownership rules set forth in
Section 318 of the Code, as well as shares actually owned,
must be taken into account.
If we redeem or repurchase a U.S. Holders shares in a
redemption or repurchase that meets one of the tests described
above, the U.S. Holder generally would recognize taxable
gain or loss equal to the sum of the amount of cash and fair
market value of property (other than our stock or the stock of a
successor to us) received less the U.S. Holders tax
basis in the shares redeemed or repurchased. This gain or loss
generally would be long-term capital gain or capital loss if the
shares have been held for more than one year.
If a redemption or repurchase does not meet any of the tests
described above, a U.S. Holder generally will be taxed on
the cash and fair market value of the property received as a
dividend to the extent paid out of our current and accumulated
earnings and profits. Any amount in excess of our current or
accumulated earnings and profits would first reduce the
U.S. holders tax basis in the shares and thereafter
would be treated as capital gain. If a redemption or repurchase
is treated as a distribution that is taxable as a dividend, the
U.S. Holders tax basis in the redeemed or repurchased
shares would be transferred to the remaining shares of our stock
that the U.S. Holder owns, if any.
Special rules apply if we redeem our common stock, preferred
stock, or depositary shares for our debt securities. We will
discuss any special U.S. federal income tax considerations
in the applicable prospectus supplement if we have the option to
redeem our common stock, preferred stock, or depositary shares
for our debt securities.
Consequences
to
Non-U.S. Holders
The following is a summary of certain U.S. federal income
tax consequences that will apply to
Non-U.S. Holders
of our common stock, preferred stock, and depositary shares.
Distributions on Common Stock, Preferred Stock, and
Depositary Shares. Distributions made to
Non-U.S. Holders
out of our current or accumulated earnings and profits, as
determined for U.S. federal income tax purposes, and that
is not effectively connected with the conduct by the
Non-U.S. Holder
of a trade or business within the United States, or a permanent
establishment
74
maintained in the United States if certain tax treaties apply,
generally will be subject to U.S. federal income and
withholding tax at a rate of 30% (or lower rate under an
applicable treaty, if any). Payments subject to withholding of
U.S. federal income tax may nevertheless be exempt from
withholding (or subject to withholding at a reduced rate) if the
Non-U.S. Holder
provides us with a properly executed IRS Form W-8BEN (or
successor form) claiming an exemption from, or reduction in,
withholding under the benefit of a tax treaty, or IRS
Form W-8ECI (or other applicable form) stating that a
dividend paid on our shares is not subject to withholding tax
because it is effectively connected with the conduct of a trade
or business within the United States, as discussed below.
To claim benefits under an income tax treaty, a
Non-U.S. Holder
must certify to us or our agent, under penalties of perjury,
that it is a non-United States person and provide its name and
address (which certification may generally be made on an IRS
Form W-8BEN, or a successor form), obtain a taxpayer
identification number, and certify as to its eligibility under
the appropriate treatys limitations on benefits article.
In addition, special rules may apply to claims for treaty
benefits made by
Non-U.S. Holders
that are entities rather than individuals. A
Non-U.S. Holder
that is eligible for a reduced rate of U.S. federal
withholding tax under an income tax treaty may obtain a refund
of any excess amounts withheld by filing an appropriate claim
for refund with the IRS.
Sale, Exchange, or other Taxable Disposition. A
Non-U.S. Holder
generally will not be subject to U.S. federal income or
withholding tax on any capital gain realized on the sale,
exchange, or other taxable disposition of our common stock,
preferred stock, or depositary shares, provided that:
(a) the gain is not effectively connected with the conduct
of a trade or business within the United States, or a permanent
establishment maintained in the United States if certain tax
treaties apply, (b) in the case of a
Non-U.S. Holder
that is an individual, the
Non-U.S. Holder
is not present in the United States for 183 days or more in
the taxable year of the sale, exchange, or other disposition of
the shares, and (c) we are not nor have we been a
United States real property holding corporation for
U.S. federal income tax purposes. An individual
Non-U.S. Holder
who is present in the United States for 183 days or more in
the taxable year of sale, exchange, or other disposition of our
common stock, preferred stock, or depositary shares, and if
certain other conditions are met, will be subject to
U.S. federal income tax at a rate of 30% on the gains
realized on the sale, exchange, or other disposition of such
shares.
We would not be treated as a United States real property
holding corporation if less than 50% of our assets
throughout a prescribed testing period consist of interests in
real property located within the United States, excluding, for
this purpose, interests in real property solely in a capacity as
a creditor. Even if we are treated as a United States real
property holding corporation, a
Non-U.S. Holders
sale of our common stock, preferred stock, or depositary shares
nonetheless generally will not be subject to U.S. federal
income or withholding tax, provided that (a) our stock
owned is of a class that is regularly traded, as
defined by applicable Treasury regulations, on an established
securities market, and (b) the selling
Non-U.S. Holder
held, actually or constructively, 5% or less of our outstanding
stock of that class at all times during the five-year period
ending on the date of disposition.
To the extent we are or have been a United States real
property holding corporation for U.S. federal income
tax purposes and a
Non-U.S. Holder
held, directly or indirectly, at any time during the five-year
period ending on the date of disposition, more than 5% of the
class of stock and the
non-U.S. Holder
was not eligible for any treaty exemption, any gain on the sale
of our common stock, preferred stock, or depositary shares would
be treated as effectively connected with a trade or business
within the United States, the treatment of which is described
below, and the purchaser of the stock could be required to
withhold 10% of the purchase price and remit such amount to the
IRS.
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We believe that we are not currently, and do not anticipate
becoming, a United States real property holding
corporation for U.S. federal income tax purposes.
Income Effectively Connected with a Trade or Business within
the United States. If a
Non-U.S. Holder
of our common stock, preferred stock, or depositary shares is
engaged in the conduct of a trade or business within the United
States and if dividends on the shares, or gain realized on the
sale, exchange, or other disposition of the shares, are
effectively connected with the conduct of such trade or business
(and, if certain tax treaties apply, is attributable to a
permanent establishment maintained by the
Non-U.S. Holder
in the United States), the
Non-U.S. Holder,
although exempt from U.S. federal withholding tax (provided
that the certification requirements discussed above are
satisfied), generally will be subject to U.S. federal
income tax on such dividends or gain on a net income basis in
the same manner as if it were a U.S. Holder.
Non-U.S. Holders
should read the material under the heading
Consequences to U.S. Holders above
for a description of the U.S. federal income tax
consequences of acquiring, owning, and disposing of our common
stock, preferred stock, or depositary shares. In addition, if
such
Non-U.S. Holder
is a foreign corporation, it may also be subject to a branch
profits tax equal to 30% (or such lower rate provided by an
applicable U.S. income tax treaty) of a portion of its
earnings and profits for the taxable year that are effectively
connected with its conduct of a trade or business in the United
States, subject to certain adjustments.
Backup
Withholding and Information Reporting
In general, in the case of a U.S. Holder, other than
certain exempt holders, we and other payors are required to
report to the IRS all payments of dividends on our common stock,
preferred stock, or depositary shares. In addition, we and other
payors generally are required to report to the IRS any payment
of proceeds of the sale of common stock, preferred stock, or
depositary shares. Additionally, backup withholding generally
will apply to any dividend payment and to proceeds received on a
sale or exchange if a U.S. Holder fails to provide an
accurate taxpayer identification number and certify that the
taxpayer identification number is correct, the U.S. Holder
is notified by the IRS that it has failed to report all
dividends required to be shown on its U.S. federal income
tax returns, or the U.S. Holder does not certify that it
has not underreported its interest and dividend income. If
applicable, backup withholding will be imposed at a rate of 28%.
This rate is scheduled to increase to 31% after 2010.
In the case of a
Non-U.S. Holder,
backup withholding and information reporting will not apply to
payments made if the
Non-U.S. Holder
provides the required certification that it is not a United
States person, as described above, or the
Non-U.S. Holder
otherwise establishes an exemption, provided that the payor or
withholding agent does not have actual knowledge that the holder
is a United States person, or that the conditions of any
exemption are not satisfied.
In addition, payments of the proceeds from the sale of our
common stock, preferred stock, or depositary shares to or
through a foreign office of a broker or the foreign office of a
custodian, nominee, or other dealer acting on behalf of a holder
generally will not be subject to information reporting or backup
withholding. However, if the broker, custodian, nominee, or
other dealer is a United States person, the government of the
United States or the government of any state or political
subdivision of any state, or any agency or instrumentality of
any of these governmental units, a controlled foreign
corporation for U.S. federal income tax purposes, a foreign
partnership that is either engaged in a trade or business within
the United States or whose United States partners in the
aggregate hold more than 50% of the income or capital interest
in the partnership, a foreign person 50% or more of whose gross
income for a certain period is effectively connected with a
trade or business within the United States, or a United States
branch of a foreign bank or insurance company, information
reporting (but not backup withholding) generally will be
required with respect to payments made to a holder unless the
broker, custodian, nominee, or other dealer has documentation of
the holders foreign status and the broker, custodian,
nominee, or other dealer has no actual knowledge to the contrary.
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Payment of the proceeds from a sale of our common stock,
preferred stock, or depositary shares to or through the United
States office of a broker is subject to information reporting
and backup withholding, unless the holder certifies as to its
non-United States person status or otherwise establishes an
exemption from information reporting and backup withholding.
Any amounts withheld under the backup withholding rules will be
allowed as a refund or a credit against a holders
U.S. federal income tax liability provided the required
information is furnished to the IRS.
Convertible
Preferred Stock and Other Equity Securities
Special U.S. federal income tax rules are applicable to
certain other of our equity securities, including preferred
stock convertible into or exercisable or exchangeable for our
common stock or other securities. The material U.S. federal
income tax considerations with respect to these securities will
be discussed in the applicable pricing supplement. Investors
should consult with their own tax advisors regarding the
specific U.S. federal income tax considerations with
respect to these securities.
The applicable prospectus supplement will contain a discussion
of any special U.S. federal income tax considerations with
respect to the acquisition, ownership, and disposition of
warrants offered in this prospectus, including any tax
considerations relating to the specific terms of the warrants.
Investors considering the purchase of warrants we are offering
should carefully examine the applicable prospectus supplement
regarding the special U.S. federal income tax
considerations, if any, of the acquisition, ownership, and
disposition of the warrants.
Investors should consult with their own tax advisors
regarding the U.S. federal income tax consequences and the
tax consequences of any other taxing jurisdiction relating to
the ownership and disposition of warrants we are offering in
light of their investment or tax circumstances.
Taxation
of Purchase Contracts
The applicable prospectus supplement will contain a discussion
of any special U.S. federal income tax considerations with
respect to the acquisition, ownership, and disposition of
purchase contracts offered in this prospectus, including any tax
considerations relating to the specific terms of the purchase
contracts. Investors considering the purchase of purchase
contracts we are offering should carefully examine the
applicable prospectus supplement regarding the special
U.S. federal income tax considerations, if any, of the
acquisition, ownership, and disposition of the purchase
contracts.
Investors should consult with their own tax advisors
regarding the U.S. federal income tax consequences and the
tax consequences of any other taxing jurisdiction relating to
the ownership and disposition of the purchase contracts in light
of their investment or tax circumstances.
The applicable prospectus supplement will contain a discussion
of any special U.S. federal income tax considerations with
respect to the acquisition, ownership, and disposition of units
that we are offering, including any tax considerations relating
to the specific terms of the units. Investors considering the
purchase of units that we are offering should carefully examine
the applicable prospectus supplement regarding the special
U.S. federal income tax consequences, if any, of the
acquisition, ownership, and disposition of the units.
Investors should consult with their own tax advisors
regarding the U.S. federal income tax consequences and the
tax consequences of any other taxing jurisdiction relating to
the ownership
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and disposition of units comprised of two or more of the
securities we are offering in light of their investment or tax
circumstances.
Applicable Treasury regulations require taxpayers that
participate in reportable transactions to disclose
their participation to the IRS by attaching Form 8886 to
their U.S. federal tax returns and to retain a copy of all
documents and records related to the transaction. In addition,
material advisors with respect to such a transaction
may be required to file returns and maintain records, including
lists identifying investors in the transactions, and to furnish
those records to the IRS upon demand. A transaction may be a
reportable transaction based on any of several
criteria, one or more of which may be present with respect to an
investment in the securities that we are offering. Whether an
investment in these securities constitutes a reportable
transaction for any investor depends on the
investors particular circumstances. The Treasury
regulations provide that, in addition to certain other
transactions, a loss transaction constitutes a
reportable transaction. A loss
transaction is any transaction resulting in the taxpayer
claiming a loss under Section 165 of the Code, in an amount
equal to or in excess of certain threshold amounts, subject to
certain exceptions. The Treasury regulations specifically
provide that a loss resulting from a Section 988
transaction will constitute a Section 165 loss, and
certain exceptions will not be available if the loss from sale
or exchange is treated as ordinary under Section 988. In
general, certain securities issued in a foreign currency will be
subject to the rules governing foreign currency exchange gain or
loss. Therefore, losses realized with respect to such a security
may constitute a Section 988 transaction, and a holder of
such a security that recognizes exchange loss in an amount that
exceeds the loss threshold amount applicable to that holder may
be required to file Form 8886. Investors should consult
their own tax advisors concerning any possible disclosure
obligation they may have with respect to their investment in the
securities that we are offering and should be aware that, should
any material advisor determine that the return
filing or investor list maintenance requirements apply to such a
transaction, they would be required to comply with these
requirements.
EU
DIRECTIVE ON THE TAXATION OF SAVINGS INCOME
On July 1, 2005, a directive adopted by the European Union
Council of Economic and Finance Ministers regarding the taxation
of savings income payments came into effect. The directive
obliges a member state of the European Union, or the
EU, to provide to the tax authorities of another EU
member state details of payments of interest or other similar
income payments made by a person within its jurisdiction for the
immediate benefit of an individual or to certain non-corporate
entities resident in that other EU member state (or for certain
payments secured for their benefit). However, Austria, Belgium,
and Luxembourg have opted out of the reporting requirements and
are instead applying a special withholding tax for a
transitional period in relation to such payments of interest,
deducting tax at rates rising over time to 35.00%. This
transitional period commenced on July 1, 2005 and will
terminate at the end of the first fiscal year following
agreement by certain non-EU countries to the exchange of
information relating to such payments.
Also with effect from July 1, 2005, a number of non-EU
countries and certain dependent or associated territories of EU
member states have adopted similar measures (either provision of
information or transitional withholding) in relation to payments
of interest or other similar income payments made by a person in
that jurisdiction for the immediate benefit of an individual or
to certain non-corporate entities in any EU member state. The EU
member states have entered into reciprocal provision of
information or transactional special withholding tax
arrangements with certain of those dependent or associated
territories. These apply in the same way to payments by persons
in any EU member state to individuals or certain non-corporate
residents of those territories.
78
We may sell the securities offered under this prospectus:
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through underwriters;
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through dealers;
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through agents; or
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directly to purchasers.
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The underwriters, dealers, or agents may include Banc of America
Securities LLC, Banc of America Securities Limited, or any of
our other affiliates.
Each prospectus supplement relating to an offering of securities
will state the terms of the offering, including:
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the names of any underwriters, dealers, or agents;
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the public offering or purchase price of the offered securities
and the net proceeds that we will receive from the sale;
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any underwriting discounts and commissions or other items
constituting underwriters compensation;
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any discounts, commissions, or fees allowed or paid to dealers
or agents; and
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any securities exchange on which the offered securities may be
listed.
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Distribution
Through Underwriters
We may offer and sell securities from time to time to one or
more underwriters who would purchase the securities as principal
for resale to the public, either on a firm commitment or best
efforts basis. If we sell securities to underwriters, we will
execute an underwriting agreement with them at the time of the
sale and will name them in the applicable prospectus supplement.
In connection with these sales, the underwriters may be deemed
to have received compensation from us in the form of
underwriting discounts and commissions. The underwriters also
may receive commissions from purchasers of securities for whom
they may act as agent. Unless we specify otherwise in the
applicable prospectus supplement, the underwriters will not be
obligated to purchase the securities unless the conditions set
forth in the underwriting agreement are satisfied, and if the
underwriters purchase any of the securities, they will be
required to purchase all of the offered securities. 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. The underwriters may sell the offered securities to or
through dealers, and those dealers may receive discounts,
concessions, or commissions from the underwriters as well as
from the purchasers for whom they may act as agent. Any initial
public offering price and any discounts or concessions allowed
or reallowed or paid to dealers may be changed from time to time.
Distribution
Through Dealers
We may offer and sell securities from time to time to one or
more dealers who would purchase the securities as principal. The
dealers then may resell the offered securities to the public at
fixed or varying prices to be determined by those dealers at the
time of resale. We will set forth the names of the dealers and
the terms of the transaction in the applicable prospectus
supplement.
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Distribution
Through Agents
We may offer and sell securities on a continuous basis through
agents that become parties to an underwriting or distribution
agreement. We will name any agent involved in the offer and sale
and describe any commissions payable by us in the applicable
prospectus supplement. Unless we specify otherwise in the
applicable prospectus supplement, the agent will be acting on a
best efforts basis during the appointment period.
We may sell directly to, and solicit offers from, institutional
investors or others who may be deemed to be underwriters, as
defined in the Securities Act of 1933, for any resale of the
securities. We will describe the terms of any sales of this kind
in the applicable prospectus supplement.
Underwriters, dealers, or agents participating in an offering of
securities may be deemed to be underwriters, and any discounts
and commissions received by them and any profit realized by them
on resale of the offered securities for whom they act as agent,
may be deemed to be underwriting discounts and commissions under
the Securities Act of 1933.
We may offer to sell securities either at a fixed price or at
prices that may vary, at market prices prevailing at the time of
sale, at prices related to prevailing market prices, or at
negotiated prices. 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 own accounts or as
our agent.
In connection with an underwritten offering of the securities,
the underwriters may engage in over-allotment, stabilizing
transactions, and syndicate covering transactions in accordance
with Regulation M under the Securities Exchange Act of
1934. Over-allotment involves sales in excess of the offering
size, which creates a short position for the underwriters. The
underwriters may enter bids for, and purchase, securities in the
open market in order to stabilize the price of the securities.
Syndicate covering transactions involve purchases of the
securities in the open market after the distribution has been
completed in order to cover short positions. In addition, 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. These activities
may cause the price of the securities to be higher than it would
otherwise be. Those activities, if commenced, may be
discontinued at any time.
Ordinarily, each issue of securities will be a new issue, and
there will be no established trading market for any security
other than our common stock prior to its original issue date. We
may not list any particular series of securities on a securities
exchange or quotation system. Any underwriters to whom or agents
through whom the offered securities are sold for offering and
sale may make a market in the offered securities. However, any
underwriters or agents that make a market will not be obligated
to do so and may stop doing so at any time without notice. We
cannot assure you that there will be a liquid trading market for
the offered securities.
Under agreements entered into with us, underwriters and agents
may be entitled to indemnification by us against certain civil
liabilities, including liabilities under the Securities Act of
1933, or to contribution for payments the underwriters or agents
may be required to make.
The offer and sale of any securities by Banc of America
Securities LLC or any of our other affiliates that is a member
of the National Association of Securities Dealers, Inc., or the
NASD, will comply with the requirements of
Rule 2720 of the Conduct Rules of the NASD regarding a
member firms offer and sale of securities of an affiliate.
As required by Rule 2720, any such offer
80
and sale will not be made to any discretionary account without
the prior approval of the customer.
The maximum commission or discount to be received by any NASD
member or independent broker-dealer will not be greater than 8%
of the initial gross proceeds from the sale of any security
being sold.
Although we expect that delivery of securities generally will be
made against payment on or about the third business day
following the date of any contract for sale, we may specify a
longer settlement cycle in the applicable prospectus supplement.
Under Rule 15c6-1 of the Securities Exchange Act of 1934,
trades in the secondary market generally are required to settle
in three business days, unless the parties to a trade expressly
agree otherwise. Accordingly, if we have specified a longer
settlement cycle in the applicable prospectus supplement for an
offering of securities, purchasers who wish to trade those
securities on the date of the contract for sale, or on one or
more of the next succeeding business days as we will specify in
the applicable prospectus supplement, will be required, by
virtue of the fact that those securities will settle in more
than T+3, to specify an alternative settlement cycle at the time
of the trade to prevent a failed settlement and should consult
their own advisors in connection with that election.
An underwriter or agent participating in an offering of
securities may make the securities available for distribution on
the Internet through a proprietary website and/or a third-party
system operated by MarketAxess Corporation, an Internet-based
communications technology provider. MarketAxess Corporation
provides its system as a conduit for communications for
broker-dealers and their customers and is not a party to any
transactions. MarketAxess Corporation, a registered
broker-dealer, will receive compensation from any broker-dealer
based on transactions the broker-dealer conducts through its
system. Any underwriter or agent that makes securities available
to its customers through Internet distributions, whether made
through a proprietary or third-party system, will make the
securities available on the same terms as distributions made
through other channels.
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.
Market-Making
Transactions by Affiliates
Following the initial distribution of securities, our
affiliates, including Banc of America Securities LLC and Banc of
America Securities Limited, may buy and sell the securities in
secondary market transactions as part of their business as
broker-dealers. Resales of this kind may occur in the open
market or may be privately negotiated, at prevailing market
prices at the time of resale or at related or negotiated prices.
This prospectus and any related prospectus supplements may be
used by one or more of our affiliates in connection with these
market-making transactions to the extent permitted by applicable
law. Our affiliates may act as principal or agent in these
transactions.
The aggregate initial offering price specified on the cover of
the applicable prospectus supplement will relate to the initial
offering of securities not yet issued as of the date of this
prospectus. This amount does not include any securities to be
sold in market-making transactions. The securities to be sold in
market-making transactions include securities issued after the
date of this prospectus.
Information about the trade and settlement dates, as well as the
purchase price, for a market-making transaction will be provided
to the purchaser in a separate confirmation of sale.
Unless we or our agent inform you in your confirmation of
sale that the security is being purchased in its original
offering and sale, you may assume that you are purchasing the
security in a market-making transaction.
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A fiduciary of a pension plan or other employee benefit plan,
including a governmental plan, an individual retirement account,
or a Keogh plan, proposing to invest in the securities being
offered should consider this section carefully. This summary is
based on provisions of the Employee Retirement Income Security
Act of 1974, as amended (commonly referred to as
ERISA), and the Code as of the date of this
prospectus. This summary does not purport to be complete and is
qualified in its entirety by reference to ERISA and the Code. No
assurance can be given that future legislation, administrative
regulations, or rulings or court decisions will not
significantly modify the requirements summarized in this
section. Any changes may be retroactive and could apply to
transactions entered into prior to the date of their enactment
or release.
The fiduciary investment considerations summarized in this
section generally apply to private employee benefit plans,
individual retirement accounts, and plans subject to
Section 4975 of the Code, but generally do not apply to
governmental plans (as defined in Section 3(32) of ERISA),
certain church plans (as defined in Section 3(33) of
ERISA), and foreign plans (as described in Section 4(b)(4)
of ERISA). However, these other plans may be subject to similar
provisions under applicable federal, state, local, foreign, or
other regulations, rules, or laws (similar laws).
The following discussion focuses on issues affecting employee
benefit plans subject to ERISA, but the fiduciaries of employee
benefit plans subject to similar laws should also consider these
issues in general terms as well as any further issues arising
under the applicable similar laws.
Before authorizing an investment in the securities, fiduciaries
of employee benefit plans subject to ERISA, which we refer to as
ERISA Plans, should consider, among other factors,
(a) the fiduciary standards under ERISA, (b) whether
investment in the securities satisfies the prudence and
diversification requirements of ERISA, and (c) whether such
fiduciaries have authority to make the investment under the
appropriate plan investment policies and governing instruments
and under Title I of ERISA.
In determining whether an investment is prudent for purposes of
ERISA, the fiduciaries of an ERISA Plan should consider all
relevant facts and circumstances including, without limitation,
whether the investment provides sufficient liquidity in light of
the foreseeable needs of the ERISA Plan, and whether the
investment is reasonably designed, as part of the ERISA Plan
assets with respect to which the fiduciary has investment
duties, to further the purposes of the ERISA Plan, taking into
consideration (a) the risk of loss and the opportunity for
gain (or other return) associated with the investment,
(b) the ERISA Plans portfolio composition with
regards to diversification, and (c) the projected return of
the ERISA Plans total portfolio relative to the
anticipated cash flow needs of the ERISA Plan. In addition,
fiduciaries of ERISA Plans should determine whether the
particular type of securities in which they propose to invest
poses more specific concerns under ERISA. For example, a
fiduciary of an ERISA Plan considering an investment in our
subordinated debt securities should determine whether it holds
any of our senior debt securities and how any such holdings and
the exercise of rights thereunder might impact its proposed
investment. We make no representation with respect to whether an
investment in the securities would be a suitable investment for
any ERISA Plan. It is the obligation of the fiduciaries of an
ERISA Plan to consider whether an investment in the securities
by the ERISA Plan, when judged in light of the overall portfolio
of the ERISA Plan, will meet the prudence, diversification, and
other applicable standards of ERISA.
In addition to making the threshold determination that the use
of the assets of an ERISA Plan to acquire the securities is
consistent with the fiduciary duties imposed by ERISA, a
fiduciary should also consider the potential effects of the Plan
Assets Regulation (as defined below) on the acquisition of such
securities. For purposes of this discussion, we refer to ERISA
Plans, together with individual retirement accounts or other
plans that are not subject to ERISA
82
but are subject to Section 4975 of the Code, as
Covered Plans, and we refer to the assets of Covered
Plans as plan assets.
The U.S. Department of Labor has issued a regulation, which
we refer to as the Plan Assets Regulation, with
regard to whether the underlying assets of an entity in which a
Covered Plan acquires an equity interest are deemed to be plan
assets. Under this regulation, for purposes of ERISA and
Section 4975 of the Code, when a Covered Plan acquires an
equity interest in an entity, and the equity interest is neither
a publicly-offered security nor a security issued by
an investment company registered under the Investment Company
Act of 1940, the Covered Plans assets include both the
equity interest and an undivided interest in each of the
underlying assets of the entity issuing the equity interest,
unless it is established either that equity participation in the
entity by benefit plan investors is not significant
or that the entity is an operating company, in each
case as defined in the Plan Assets Regulation.
The Plan Assets Regulation defines an equity
interest as any interest in an entity other than an
instrument (a) that is treated as indebtedness under
applicable local law, (b) which has no substantial equity
features, and (c) which specifically includes a beneficial
interest in a trust. Debt securities incorporating substantial
equity features are generally subject to the Plan Assets
Regulation to the same extent as equity interests. In addition,
debt securities that are convertible into equity interests may
similarly become subject to the Plan Assets Regulation at the
time of their conversion. If our assets or the assets of a trust
or other vehicle through which the securities are offered were
deemed to be plan assets of investing Covered Plans,
the persons providing services in connection with such assets
might be considered parties in interest or
disqualified persons with respect to an investing
Covered Plan and could be governed by the fiduciary
responsibility provisions of Title I of ERISA and the
prohibited transaction provisions of ERISA and Section 4975
of the Code with respect to transactions involving those assets.
If this were the case, if anyone with discretionary
responsibilities over the assets were affiliated with Bank of
America, any discretionary actions undertaken by that person
regarding those assets could be deemed to be a prohibited
transaction under ERISA or the Code (e.g., the use of fiduciary
authority or responsibility in circumstances under which that
person has interests that may conflict with the interests of the
investing Covered Plan and affect the exercise of that
persons best judgment as a fiduciary).
An exception to plan asset status under the Plan Assets
Regulation applies to a class of equity interests
that are publicly-offered securities.
Publicly-offered securities are defined as securities that are:
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widely held, i.e., owned by more than 100 investors independent
of the issuer and of each other;
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freely transferable; and
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sold to a Covered Plan as part of an offering under an effective
registration statement under the Securities Act of 1933 and then
timely registered under Section 12(b) or 12(g) of the
Securities Exchange Act of 1934.
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We will specify in the applicable prospectus supplement for an
offering of securities if the underwriters in that offering
expect that an investment in the securities may constitute an
equity interest and, if so, whether the securities
meet the criteria of publicly-offered securities
above. However, we can give no assurance in that regard.
Beyond the considerations described above, ERISA and the Code
prohibit certain transactions (referred to as prohibited
transactions) involving the assets of Covered Plans.
Persons who have certain specified relationships to a Covered
Plan are parties in interest within the meaning of
ERISA or disqualified persons within the meaning of
the Code. If we or any of our affiliates are considered a party
in interest or a disqualified person with respect to a Covered
Plan, then the investment in our securities by the Covered Plan
may give rise to a prohibited
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transaction. There are several ways by which we or any of our
affiliates may be considered a party in interest or a
disqualified person with respect to a Covered Plan. For example,
if we provide banking or financial advisory services to the
Covered Plan, or act as a trustee or in a similar fiduciary role
for the Covered Plans plan assets, we may be considered a
party in interest or a disqualified person with respect to that
Covered Plan, depending on whether the Covered Plan is an
individual retirement account or another type of employee
benefit plan.
The U.S. Department of Labor has issued various prohibited
transaction class exemptions (PTCEs) that may
provide exemptive relief for direct or indirect prohibited
transactions resulting from the purchase or holding of the
securities. Among these class exemptions are the following:
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PTCE 96-23, for specified transactions determined by
in-house asset managers;
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PTCE 95-60, for specified transactions involving insurance
company general accounts;
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PTCE 91-38, for specified transactions involving bank
collective investment funds;
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PTCE 90-1, for specified transactions involving insurance
company separate accounts; and
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PTCE 84-14, for specified transactions determined by
independent qualified professional asset managers.
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The securities may not be purchased or held by any Covered Plan,
any entity whose underlying assets include plan
assets by reason of any Covered Plans investment in
the entity (a Plan Asset Entity), or any person
investing plan assets of any Covered Plan if that
transaction would cause a prohibited transaction, unless the
purchaser or holder is eligible for the exemptive relief
available under one or more of the class exemptions (or some
other applicable exemption) and the conditions of the exemption
are satisfied or the requirements of U.S. Department of
Labor regulation
Section 2550.401c-1
regarding insurance company general accounts are satisfied so
that the securities held by the purchaser or holder do not
constitute plan assets. In addition, neither a Covered Plan nor
a Plan Asset Entity will be eligible to purchase the securities
if any entity related to us is acting as a fiduciary with
respect to the purchase or is an employer or party in interest
or disqualified person with respect to the Covered Plan or Plan
Asset Entity, unless one or more of the class exemptions (or
another applicable exemption) is available and the conditions of
that exemption are satisfied.
Any purchaser or holder of the securities or any interest in the
securities will be deemed to have represented by its purchase
and holding that either:
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it is not a Covered Plan or a Plan Asset Entity and is not
purchasing the securities on behalf of or with plan
assets of any Covered Plans;
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it is eligible for the exemptive relief available under one or
more of the class exemptions (or some other applicable
exemption) with respect to the purchase or holding of securities
if a Covered Plans acquisition of the securities would
otherwise cause a non-exempt prohibited transaction; or
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it has satisfied the requirements of U.S. Department of
Labor regulation
Section 2550.401c-1
such that the securities held by the purchaser or holder do not
constitute plan assets.
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This discussion is a general summary of some of the rules
which apply to benefit plans and their related investment
vehicles. This summary does not include all of the investment
considerations relevant to Covered Plans and should not be
construed as legal advice or a legal opinion. If you are the
fiduciary of an ERISA plan or a plan subject to similar laws, or
an insurance company that is providing investment advice or
other features to an ERISA plan or a plan subject to similar
laws, and you propose to invest in the securities described in
this prospectus with the assets of the plan, you should consult
your own advisors for further guidance.
84
WHERE
YOU CAN FIND MORE INFORMATION
We 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 us.
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 file annual, quarterly, and special reports, proxy
statements, and other information with the SEC. You may read and
copy any document that we file with the SEC at the Public
Reference Room of the SEC at 100 F Street, N.E., Room 1580,
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 over the Internet at the
SECs website, www.sec.gov. The reports and other
information we file with the SEC also are available at our
website, www.bankofamerica.com. We have included the SECs
web address and our web address as inactive textual references
only. Except as specifically incorporated by reference into this
prospectus, information on those websites is not part of this
prospectus.
You also can inspect reports and other information we file at
the offices of The New York Stock Exchange, Inc., 20 Broad
Street, 17th Floor, New York, New York 10005.
The SEC allows us to incorporate by reference the information we
file with it. This means that:
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incorporated documents are considered part of this prospectus;
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we can disclose important information to you by referring you to
those documents; and
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information that we file with the SEC automatically will update
and supersede this incorporated information and information in
this prospectus.
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We incorporate by reference the documents listed below which
were filed with the SEC under the Securities Exchange Act of
1934:
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our annual report on
Form 10-K
for the year ended December 31, 2005;
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our current reports on
Form 8-K
or
Form 8-K/A
filed January 3, 2006 (as amended on March 24, 2006),
January 23, 2006, February 22, 2006, March 24,
2006, March 27, 2006, March 28, 2006, March 29,
2006, April 20, 2006, and April 26, 2006 (in each
case, other than information that is furnished but deemed not to
have been filed); and
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the description of our common stock which is contained in our
registration statement filed under Section 12 of the
Securities Exchange Act of 1934, as modified by our current
report on
Form 8-K
dated March 30, 2004.
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We also incorporate by reference reports that we will file under
Sections 13(a), 13(c), 14, and 15(d) of the Securities
Exchange Act of 1934, but not any information that we may
furnish but that is not deemed to be filed.
You should assume that the information appearing in this
prospectus is accurate only as of the date of this prospectus.
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
NC1-007-07-06
100 North Tryon Street
Charlotte, North Carolina 28255
1-866-804-5241
E-mail:
securities.administration@bankofamerica.com
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FORWARD-LOOKING
STATEMENTS
We have included or incorporated by reference in this prospectus
and the accompanying prospectus supplement statements that may
constitute forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. You may
find these statements by looking for words such as
plan, believe, expect,
intend, anticipate,
estimate, project,
potential, possible, or other similar
expressions, or future or conditional verbs such as
will, should, would, and
could.
All forward-looking statements, by their nature, are subject to
risks and uncertainties. Our actual results may differ
materially from those set forth in our forward-looking
statements. As a large, international financial services
company, we face risks that are inherent in the businesses and
market places in which we operate. Information regarding
important factors that could cause our future financial
performance to vary from that described in our forward-looking
statements is contained in our annual report on
Form 10-K
for the year ended December 31, 2005, which is incorporated
in this prospectus by reference, under the captions
Item 1A. Risk Factors, and Item 7.
Managements Discussion and Analysis of Financial Condition
and Results of Operations. See Where You Can Find
More Information above for information about how to obtain
a copy of our annual report.
You should not place undue reliance on any forward-looking
statements, which speak only as of the dates they are made.
All subsequent written and oral forward-looking statements
attributable to us or any person on our behalf are expressly
qualified in their entirety by the cautionary statements
contained or referred to in this section. Except to the extent
required by applicable law or regulation, we undertake no
obligation to update these forward-looking statements to reflect
events or circumstances after the date of this prospectus or to
reflect the occurrence of unanticipated events.
The legality of the securities being registered will be passed
upon for us by Helms Mulliss & Wicker, PLLC,
Charlotte, North Carolina, and for the underwriters or agents by
Morrison & Foerster LLP, New York, New York. Helms
Mulliss & Wicker, PLLC regularly performs legal
services for us. Some members of Helms Mulliss &
Wicker, PLLC performing those legal services own shares of our
common stock.
Our consolidated financial statements and managements
assessment of the effectiveness of internal control over
financial reporting (which is included in the Report of
Management on Internal Control Over Financial Reporting)
incorporated in this prospectus by reference to our annual
report on
Form 10-K
for the year ended December 31, 2005 have been so
incorporated in reliance on the report (which contains an
explanatory paragraph relating to our restatement of our
financial statements as described in Note 1 to the
financial statements) of PricewaterhouseCoopers LLP, an
independent registered public accounting firm, given on the
authority of said firm as experts in auditing and accounting.
86
You should rely only on the information incorporated by
reference or provided in this prospectus supplement and the
attached prospectus. We have not authorized anyone to provide
you with different information. We are not offering the
securities in any jurisdiction where the offer is not permitted.
You should not assume that the information in this prospectus
supplement and the attached prospectus is accurate as of any
date other than the date on the front of this document.
Our affiliates, including Banc of America Securities LLC and
Incapital LLC, will deliver this prospectus supplement and the
attached prospectus for offers and sales in the secondary
market.
36,000,000 Depositary
Shares,
Each Representing a 1/1,000th Interest in a Share of
7.25% Non-Cumulative
Preferred Stock, Series J
PROSPECTUS SUPPLEMENT
Sole Book-Runner
Banc of America Securities
LLC
Incapital LLC
Citi
Merrill Lynch &
Co.
Morgan Stanley
UBS Investment Bank
Wachovia Securities
RBC Capital Markets
November 14, 2007