Bank of America Corporation Filed Pursuant to Rule 424(b)(2)
Registration No. 333-97197
Pricing Supplement No. 293
(To Prospectus dated August 20, 2002
and Prospectus Supplement dated August 20, 2002)
7.00% SENIOR NOTES
LINKED TO THE RUSSELL 2000(R) INDEX, DUE 2004
Aggregate Face Amount: $16,500,000
Issue Price: 100% $16,500,000
Commission or Discount: 0% $ 0
Proceeds to Corporation: 100% $16,500,000
The value of these Notes at maturity is uncertain. You may lose some or all of
your investment in the Notes. Potential purchasers of the Notes should consider
the information in "Risk Factors" beginning on page 4.
Securities Offered: 7.00% Senior Notes Linked to the Russell 2000(R) Index,
due 2004 (the "Notes"). The Notes are senior unsecured
debt securities issued by Bank of America Corporation.
When reference is made to "we," "our," "us," and
similar terms in this pricing supplement, such terms
refer to Bank of America Corporation.
Agent: Banc of America Securities LLC ("BAS")
CUSIP #: 06050 MCE5
Form: Book-entry only.
Pricing Date: February 26, 2003.
Settlement Date: March 3, 2003.
Maturity Date: March 3, 2004, subject to extension upon the occurrence
of certain Market Disruption Events. See the section
entitled "Description of the Notes - Market Disruption
Events."
Valuation Date: February 26, 2004, subject to adjustment upon the
occurrence of certain Market Disruption Events. See the
section entitled
______________________
"Russell 2000(R) Index" is a trademark of Frank Russell Company and has been
licensed for use by Bank of America Corporation. The Notes are not sponsored,
endorsed, sold, or promoted by Frank Russell Company, and Frank Russell Company
makes no representation regarding the advisability of investing in the Notes.
The "Russell 3000(R) Index" also is a trademark of Frank Russell Company.
"Description of the Notes - Market Disruption Events."
Underlying Index: The Russell 2000(R) Index.
Face Amount Per Note: $1,000.
Initial Index Level: 358.95.
Minimum Denomination: $100,000 and integral multiples of $1,000 in excess of
$100,000.
Interest Payments: The Notes bear interest from March 3, 2003 at a rate
per annum of 7.00% of the Aggregate Face Amount.
Interest is payable semi-annually in arrears on
September 3, 2003 and on the Maturity Date (each, an
"Interest Payment Date"). Interest is computed on the
basis of the actual number of days elapsed in a 360-day
year of twelve 30-day months. Each Interest Payment on
an Interest Payment Date includes interest accrued to,
but not including, such Interest Payment Date. See the
section entitled "Description of the Notes - Interest."
Principal Repayment At maturity, the principal amount payable in respect of
Amount: the Face Amount Per Note (the "Principal Repayment
Amount") will be equal to the Face Amount Per Note
multiplied by the following fraction:
Capped Index Level
---------------------
Initial Index Level
Capped Index Level: The lesser of (a) the Valuation Date Level and (b)
396.28.
Valuation Date Level: The Closing Level of the Russell 2000(R) Index on the
Valuation Date. The Valuation Date Level will be
subject to adjustment upon the occurrence of certain
Market Disruption Events. See the section entitled
"Description of the Notes - Market Disruption Events."
Closing Level: The "Closing Level" of the Russell 2000(R) Index means
the level of the Russell 2000(R) Index at the close of
any Trading Day.
Trading Day: A "Trading Day" means a day, as determined by the
Calculation Agent, on which trading generally is
conducted on the New York Stock Exchange ("NYSE"), the
American Stock Exchange ("AMEX"), the Nasdaq National
Market ("NASDAQ"), the Chicago Mercantile Exchange, and
the Chicago Board Options Exchange, and in the
over-the-counter, or "OTC," market for equity
securities in the United States.
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May the Notes be
redeemed by the
Corporation prior to
maturity? No.
May the Notes be repaid
prior to maturity at the
option of the holder? No.
Listing: None.
Calculation Agent: BAS
3
RISK FACTORS
Your investment in the Notes entails significant risks not associated
with similar investments in a conventional debt security, including, among other
things, fluctuations in the level of the Russell 2000(R) Index, economic
conditions, interest rates, and other events that are difficult to predict and
beyond our control. Your decision to purchase the Notes should be made only
after carefully considering the risks of an investment in the Notes, including
those discussed below, with your advisors in light of your particular
circumstances. The Notes are not an appropriate investment for you if you are
not knowledgeable about the significant elements of the Notes or financial
matters in general.
Possible Loss of Principal; Limited Appreciation. The Notes differ from
ordinary debt securities in that the principal amount paid at maturity is not
fixed and may be less than the Face Amount of the Notes. The Principal Repayment
Amount depends on the Closing Level of the Russell 2000(R) Index on the
Valuation Date. There can be no assurance that the Principal Repayment Amount
will be greater than or equal to the Face Amount. As a result, you may lose your
original investment. For example, if the Valuation Date Level is less than the
Initial Index Level, the Principal Repayment Amount will be less than the Face
Amount, in which case an investment in the Notes will result in a loss. The
appreciation potential of the Notes is limited because the Principal Repayment
Amount is capped at 110.40% of the Face Amount. As a result, even if the Closing
Level of the Russell 2000(R) Index is above 396.28 on the Valuation Date, you
will not receive any benefit from the difference between such level and 396.28.
The maximum potential Principal Repayment Amount per Face Amount of Notes is
$1,104.00. See the section entitled "Description of the Notes - General."
Relationship of the Notes and the Russell 2000(R) Index. Unlike owning
the common stock of companies that comprise the Russell 2000(R) Index, the Notes
do not offer you the opportunity to participate in unlimited appreciation. Any
yield on your investment may be less than the overall return you would earn if
you bought a more conventional senior debt security with the same maturity date
or if you invested in a Russell 2000(R) Index fund, or the stocks of the
companies that comprise the Russell 2000(R) Index, directly.
If you attempt to sell the Notes prior to maturity, you may find that
the market value of the Notes, if any, is less than the Face Amount of the
Notes. Unlike savings accounts, certificates of deposit, and other similar
investment products, you have no right to redeem the Notes prior to maturity. If
you wish to liquidate your investment in the Notes prior to maturity, your only
option would be to sell the Notes. As we discuss below, there may be a very
illiquid market for the Notes or no market at all. Even if you are able to sell
your Notes, there are factors outside of our control that may affect the market
value of the Notes, some of which, but not all, are stated below. Some of these
factors are interrelated in complex ways. As a result, the effect of any one
factor may be offset or magnified by the effect of another factor.
. Russell 2000(R) Index. The market value of the Notes at any time
will be affected primarily by changes in the level of the Russell
2000(R) Index. We cannot predict whether the level of the Russell
2000(R) Index will rise or fall. The trading levels of the
Russell 2000(R) Index are influenced by the operational results,
creditworthiness,
4
and dividend rates, if any, of the companies represented by the
component stocks of that index, and by complex and interrelated
political, economic, financial, and other factors that affect the
capital markets generally, the markets on which the component
stocks of that index are traded, and the market segments of which
the companies represented by the component stocks of that index
are a part. It is impossible to predict the level of the Russell
2000(R) Index. See the section entitled "The Russell 2000(R)
Index."
. Volatility of the Russell 2000(R) Index. Volatility is the term
used to describe the size and frequency of market fluctuations.
The volatility of the Russell 2000(R) Index may affect the market
value of the Notes. During recent periods, the Russell 2000(R)
Index has been highly volatile and can be subject to significant
risks. The terrorist attacks in New York and Washington, D.C. on
September 11, 2001, the unsettled international environment, and
related uncertainties have resulted in greater market volatility,
which may continue over the term of the Notes. This volatility
may increase the risk that the market value of the Notes and the
payment you would receive at maturity will be adversely affected.
Due to the cap on the Principal Repayment Amount, if the
volatility of the Russell 2000(R) Index increases, we expect that
the trading value of the Notes will decrease. If the volatility
of the Russell 2000(R) Index decreases, we expect that the
trading value of the Notes will increase. As a result, the Notes
may trade at a value significantly below that which would be
expected based on the level of interest rates and the Russell
2000(R) Index.
. Interest Rates. We expect that the trading value of the Notes
will be affected by changes in interest rates. Generally, if
United States interest rates increase, we expect that the market
value of the Notes will decrease. If United States interest rates
decrease, we expect the market value of the Notes will increase.
Interest rates also may affect the economy which, in turn, may
affect the level of the Russell 2000(R) Index.
. Our credit ratings, financial condition, and results. Actual or
anticipated changes in our credit ratings, financial condition,
or results may affect the market value of the Notes.
. Economic conditions generally. Economic conditions in general and
as they impact the capital markets may affect the market value of
the Notes.
. Earnings performance and creditworthiness of the Russell 2000(R)
Index companies. The earnings results and creditworthiness of the
companies represented by the constituent stocks of the Russell
2000(R) Index and real or anticipated changes in those conditions
and results may affect the market value of the Notes.
We cannot assure you that a trading market for your Notes will ever
develop or be maintained. We will not list the Notes on any securities exchange.
We cannot predict how the Notes will trade in the secondary market or whether
that market will be liquid or illiquid. The
5
number of potential buyers of the Notes in any secondary market may be limited.
If you sell your Notes prior to maturity, you may find that the market value of
the Notes is less than the Face Amount of the Notes. Although under ordinary
market conditions, BAS intends to indicate prices on the Notes on request, there
can be no assurance at which price such a bid would be made. BAS may discontinue
buying and selling the Notes on the secondary market at any time.
Hedging activities may affect the Principal Repayment Amount, if any,
and the market value of the Notes. Hedging activities we or one or more of our
affiliates, including BAS, may engage in may affect the level of the Russell
2000(R) Index and, accordingly, increase or decrease the market value of the
Notes prior to maturity and the Principal Repayment Amount, if any, you would
receive at maturity. In addition, we or one or more of our affiliates, including
BAS, may purchase or otherwise acquire a long or short position in the Notes. We
or one of our affiliates, including BAS, may hold or resell the Notes. Although
we have no reason to believe that any of those activities will have a material
impact on the level of the Russell 2000(R) Index, we cannot assure you that
these activities will not affect such level and the market value of the Notes
prior to maturity or the Principal Repayment Amount, if any, payable at
maturity.
You have no shareholder rights, no rights to receive any stock of the
Russell 2000(R) Index stocks and are not entitled to dividends or other
distributions on the Russell 2000(R) Index stocks. The Notes are our debt
securities. They are not equity instruments or shares of stock. Investing in the
Notes will not make you a holder of any of the Russell 2000(R) Index constituent
stocks. You will not have any voting rights, any rights to receive dividends or
other distributions, or any other rights with respect to the Russell 2000(R)
Index constituent stocks. Your Notes will be paid in cash, and you will have no
right to receive delivery of any Russell 2000(R) Index constituent stocks.
We are not affiliated with any Russell 2000(R) Index company and are
not responsible for any disclosure by any Russell 2000(R) Index company. While
we may currently, or in the future, engage in business with companies
represented by constituent stocks of the Russell 2000(R) Index, neither we nor
any of our affiliates, including BAS, assume any responsibility for the adequacy
or accuracy of any publicly available information about any companies
represented by constituent stocks of the Russell 2000(R) Index. You should make
your own investigation into the Russell 2000(R) Index and the companies
represented by its constituent stocks. See the section entitled "The Russell
2000(R) Index" below for additional information about the Russell 2000(R) Index.
Neither Frank Russell Company, which calculates the Russell 2000(R)
Index, nor any company represented by the constituent stocks of the Russell
2000(R) Index is involved in this offering of the Notes or has any obligation of
any sort with respect to the Notes. Thus, none of Frank Russell Company or the
companies represented by constituent stocks of the Russell 2000(R) Index have
any obligation to take your interests into consideration for any reason,
including taking any corporate actions that might affect the value of your
Notes.
Our business activities may create conflicts of interest with you. We
or one or more of our affiliates, including BAS, may engage in trading
activities related to the Russell 2000(R) Index and the Russell 2000(R) Index
constituent stocks that are not for your account or on your
6
behalf. These trading activities may present a conflict of interest between your
interest in your Notes and the interests we and our affiliates may have in our
proprietary accounts, in facilitating transactions, including block trades, for
our other customers, and in accounts under our management. These trading
activities, if they influence the level of the Russell 2000(R) Index, could be
adverse to your interests as a beneficial owner of the Notes.
We and our affiliates, including BAS, at present or in the future, may
engage in business with companies represented by the constituent stocks of the
Russell 2000(R) Index, including making loans to, equity investments in, or
providing investment banking, asset management, or other services to those
companies and their competitors. In connection with these activities, we may
receive information about those companies that we will not divulge to you or
other third parties. One or more of our affiliates have published, and may in
the future publish, research reports on one or more of the companies represented
by the constituent stocks of the Russell 2000(R) Index. This research is
modified from time to time without notice and may express opinions or provide
recommendations that are inconsistent with purchasing or holding the Notes. Any
of these activities may affect the market value of the Notes.
There may be potential conflicts of interest between you and the
Calculation Agent. We have the right to appoint and remove a Calculation Agent.
Our subsidiary, BAS, is the Calculation Agent for the Notes and, as such,
determines the Valuation Date Level and calculates the Principal Repayment
Amount, if any. Under certain circumstances these duties could result in a
conflict of interest between BAS' status as our subsidiary and its
responsibilities as Calculation Agent.
Uncertain Tax Consequences. In the absence of an administrative or
judicial ruling to the contrary, we will treat the Notes for United States
federal income tax purposes as an investment unit consisting of two components:
1. a fixed-rate debt instrument (the "Debt Instrument") issued by
us, and
2. a cash-settled capped forward purchase contract on the Russell
2000(R) Index (the "Forward Contract").
Under this characterization, the interest payable on the Notes will be
treated in the following manner:
1. a part as a payment of interest, and
2. the balance as consideration for your entering into the Forward
Contract.
In general, for United States federal income tax purposes, the amount
treated as interest on the Debt Instrument would be includable in income as
ordinary income in the year it is received or accrued depending on your method
of accounting for tax purposes. Similarly, by purchasing the Notes, you agree
with us to treat the amount characterized as consideration for entering into the
Forward Contract as includable in income in the year it is received or accrued
in accordance with your method of accounting for tax purposes.
7
Other significant aspects of the tax treatment of the Notes also are
uncertain. We do not plan to request a ruling from the United States Internal
Revenue Service (the "IRS") regarding the United States federal income tax
treatment of the Notes, and the IRS or a court may not agree with the tax
treatment described in this pricing supplement. Alternative characterizations of
the Notes, which produce different tax results, are possible. Accordingly, you
should consult your own tax advisor as to the United States federal income tax
consequences of an investment in the Notes.
For more details, see the section entitled "Certain United States
Federal Income Tax Considerations."
8
THE RUSSELL 2000(R) INDEX
We have obtained all information regarding the Russell 2000(R) Index
contained in this pricing supplement, including its make-up, method of
calculation, and changes in its components, from publicly available information.
That information reflects the policies of, and is subject to change by, Frank
Russell Company. Frank Russell Company has no obligation to continue to publish,
and may discontinue publication of, the Russell 2000(R) Index. The consequences
of Frank Russell Company discontinuing publication of the Russell 2000(R) Index
are described in the section entitled "Description of the Notes - Discontinuance
of Russell 2000(R) Index; Alteration of Method of Calculation." We do not assume
any responsibility for the accuracy or completeness of any information relating
to the Russell 2000(R) Index.
The Russell 2000(R) Index is an index calculated, published and
disseminated by Frank Russell Company, and measures the composite price
performance of stocks of 2,000 companies domiciled in the United States and its
territories. All 2,000 stocks are traded on either the New York Stock Exchange
or the American Stock Exchange or in the OTC market and form a part of the
Russell 3000(R) Index. The Russell 3000(R) Index is composed of the 3,000
largest United States companies as determined by market capitalization and
represents approximately 98.00% of the investable United States equity market.
The Russell 2000(R) Index consists of the smallest 2,000 companies
included in the Russell 3000(R) Index and represents approximately 8.00% of the
total market capitalization of the Russell 3000(R) Index. The Russell 2000(R)
Index is designed to track the performance of the small capitalization segment
of the United States equity market.
Selection of Stocks Underlying the Russell 2000(R) Index. Only common
stocks belonging to corporations domiciled in the United States and its
territories are eligible for inclusion in the Russell 3000(R) Index and the
Russell 2000(R) Index. Stocks traded on United States exchanges but domiciled in
other countries are excluded. Preferred and convertible preferred stock,
redeemable shares, participating preferred stock, paired shares, warrants and
rights also are excluded. Trust receipts, Royalty Trusts, limited liability
companies, OTC Bulletin Board companies, pink sheets, closed-end mutual funds,
and limited partnerships that are traded on United States exchanges also are
ineligible for inclusion. Real Estate Investment Trusts and Beneficial Trusts,
however, are eligible for inclusion.
In general, only one class of securities of a company is allowed in the
Russell 2000(R) Index, although exceptions to this general rule have been made
where Frank Russell Company has determined that each class of securities acts
independently of the other. Stocks must trade at or above $1.00 on May 31 of
each year to be eligible for inclusion in the Russell 2000(R) Index. However, if
a stock falls below $1.00 intra-year, it will not be removed until the next
reconstitution if it is still trading below $1.00.
The primary criterion used to determine the initial list of securities
eligible for the Russell 3000(R) Index is total market capitalization, which is
defined as the price of the shares times the total number of available shares.
Based on closing values on May 31 of each year, Frank Russell Company
reconstitutes the composition of the Russell 3000(R) Index using the then
existing
9
market capitalizations of eligible companies. As of June 30 of each year, the
Russell 2000(R) Index is adjusted to reflect the reconstitution of the Russell
3000(R) Index for that year. Real-time dissemination of the Russell 2000(R)
Index began on January 1, 1987.
Capitalization Adjustments. As a capitalization-weighted index, the
Russell 2000(R) Index reflects changes in the capitalization, or market value,
of the component stocks relative to the capitalization on a base date. The
current Russell 2000(R) Index value is calculated by adding the market value of
the Russell 2000(R) Index's component stocks, which are derived by multiplying
the price of each stock by the number of available shares, to arrive at the
total market capitalization of the 2,000 stocks. The total market capitalization
is then divided by a divisor, which represents the "adjusted" capitalization of
the Russell 2000(R) Index on the base date of December 31, 1986. To calculate
the Russell 2000(R) Index, last sale prices will be used for exchange-traded and
NASDAQ stocks. If a component stock is not open for trading, the most recently
traded price for that security will be used in calculating the Russell 2000(R)
Index. In order to provide continuity for the Russell 2000(R) Index's value, the
divisor is adjusted periodically to reflect events including changes in the
number of common shares outstanding for component stocks, company additions or
deletions, corporate restructurings, and other capitalization changes.
Available shares are assumed to be shares available for trading.
Exclusion of capitalization held by other listed companies and large holdings of
private investors (10.00% or more) is based on information recorded in
Securities and Exchange Commission ("SEC") filings. Other sources are used in
cases of missing or questionable data.
The following types of shares are considered unavailable for the
purposes of capitalization determinations:
. ESOP or LESOP shares - shares of corporations that have Employee
Stock Ownership Plans that comprise 10.00% or more of the shares
outstanding are adjusted;
. Corporate cross-owned shares - when shares of a company in the index
are held by another company also in the index, this is considered
corporate cross-ownership. Any percentage held in this class will be
adjusted;
. Large private and corporate shares - shares held by an individual, a
group of individuals acting together, or a corporation not in the
index that own 10.00% or more of the shares outstanding. However,
institutional holdings (investment companies not in the index,
partnerships, insurance companies not in the index, mutual funds,
banks not in the index, or venture capital companies) are not
included in this class; and
. Unlisted share classes - classes of common stock that are not traded
on a U.S. securities exchange.
Corporate Actions Affecting the Russell 2000(R) Index. The following
summarizes the types of Russell 2000(R) Index maintenance adjustments and
indicates whether or not an index adjustment is required.
10
. "No Replacement" Rule - Securities that leave the Russell 2000(R)
Index, between reconstitution dates, for any reason (e.g., mergers,
acquisitions, or other similar corporate activity) are not
replaced. Thus, the number of securities in the Russell 2000(R)
Index over the year will fluctuate according to corporate activity.
. Rule for Deletions - When a stock is a acquired, delisted, or moves
to the pink sheets or bulletin boards on the floor of a United
States securities exchange, the stock is deleted from the Russell
2000(R) Index at the close on the effective date or when the stock
is no longer trading on the exchange.
When acquisitions or mergers take place within the Russell 2000(R)
Index, the stock's capitalization moves to the acquiring stock,
hence, mergers have no effect on the index total capitalization.
Shares are updated for the acquiring stock at the time the
transaction is final. Prior to April 1, 2000, if the acquiring
stock was a member of a different index (i.e., the Russell 3000(R)
Index or the Russell 1000(R) Index), the shares for the acquiring
stock were not adjusted until month end.
. Deleted Stocks - Effective on January 1, 2002, when deleting stocks
from the Russell 2000(R) Index as a result of exchange delisting or
reconstitution, the price used is the market price on the day of
deletion, including potentially the OTC Bulletin Board price.
Previously, prices used to reflect delisted stocks were the last
traded price on the primary exchange. There may be corporate
events, like mergers or acquisitions, that result in the lack of
current market price for the deleted security, and in such an
instance the latest primary exchange closing price available will
be used.
. Rule for Additions - The only additions between reconstitution
dates are as a result of spin-offs. Spin-off companies are added to
the parent company's index and capitalization tier of membership,
if the spin-off is large enough. To be eligible, the spun-off
company's total market capitalization must be greater than the
market-adjusted total market capitalization of the smallest
security in the Russell 2000(R) Index at the latest reconstitution.
Updates to Share Capital Affecting the Russell 2000(R) Index. Each
month, the Russell 2000(R) Index is updated for changes to shares outstanding as
companies report changes in share capital to the SEC. Effective April 30, 2002
only cumulative changes to shares outstanding greater than 5.00% are reflected
in the Russell 2000(R) Index. This does not affect treatment of major corporate
events, which are effective on the ex-date.
The table below sets forth the high, the low, and the quarter-end
Closing Levels of the Russell 2000(R) Index for the calendar years 1997, 1998,
1999, 2000, 2001, 2002, and partial data for the first calendar quarter of 2003
through February 25, 2003. The Closing Levels listed in the table below were
obtained from Bloomberg Financial Markets, without independent verification.
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THE RUSSELL 2000(R) INDEX QUARTERLY LEVELS
High Low Period End
---- --- ----------
1997:
First Quarter ....................... 370.65 342.56 342.56
Second Quarter ...................... 396.49 335.85 396.37
Third Quarter ....................... 453.82 394.13 453.82
Fourth Quarter ...................... 465.21 420.03 437.02
1998:
First Quarter ....................... 480.68 410.88 480.68
Second Quarter ...................... 491.41 433.86 457.39
Third Quarter ....................... 463.64 337.95 363.59
Fourth Quarter ...................... 421.96 310.28 421.96
1999:
First Quarter ....................... 433.13 383.37 397.63
Second Quarter ...................... 457.68 397.77 457.68
Third Quarter ....................... 465.80 417.09 427.09
Fourth Quarter ...................... 504.75 408.90 504.75
2000:
First Quarter ....................... 606.05 475.34 539.09
Second Quarter ...................... 542.99 453.72 517.23
Third Quarter ....................... 545.18 490.22 521.37
Fourth Quarter ...................... 511.67 443.80 483.53
2001:
First Quarter ....................... 511.66 432.80 450.53
Second Quarter ...................... 517.23 425.74 512.80
Third Quarter ....................... 498.19 378.89 404.87
Fourth Quarter ...................... 493.62 397.60 488.50
2002:
First Quarter ....................... 506.46 458.40 506.46
Second Quarter ...................... 522.95 452.45 462.65
Third Quarter ....................... 447.73 356.58 362.27
Fourth Quarter ...................... 410.24 327.04 383.09
2003:
First Quarter (through
February 25, 2003) .................. 398.45 354.77 361.20
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Following the terrorist attacks in New York and Washington D.C., the United
States financial markets were closed from September 11, 2001 through September
17, 2001. Since reopening, those markets, and the Russell 2000(R) Index, have
been highly volatile. Those disasters and related uncertainties may result in
financial markets generally and the Russell 2000(R) Index exhibiting greater
volatility than in earlier periods. Before investing in the Notes, you should
consult publicly available sources for the levels and trading pattern of the
Russell 2000(R) Index.
LICENSE AGREEMENT
The Notes are not sponsored, endorsed, sold, or promoted by Frank Russell
Company. Frank Russell Company makes no representation or warranty, express or
implied, to the owners of the Notes or any member of the public regarding the
advisability of investing in securities generally or in the Notes particularly
or the ability of the Russell 2000(R) Index to track general stock market
performance or a segment of the same. Frank Russell Company's publication of the
Russell 2000(R) Index in no way suggests or implies an opinion by Frank Russell
Company as to the advisability of investment in any or all of the securities
upon which the Russell 2000(R) Index is based. Frank Russell Company's only
relationship to Bank of America Corporation is the licensing of certain
trademarks and trade names of Frank Russell Company and of the Russell 2000(R)
Index which is determined, composed and calculated by Frank Russell Company
without regard to Bank of America Corporation or the Notes. Frank Russell
Company is not responsible for and has not reviewed the Notes nor any associated
literature or publications and Frank Russell Company makes no representation or
warranty express or implied as to their accuracy or completeness, or otherwise.
Frank Russell Company reserves the right, at any time and without notice, to
alter, amend, terminate or in any way change the Russell 2000(R) Index. Frank
Russell Company has no obligation or liability in connection with the
administration, marketing, or trading of the Notes.
FRANK RUSSELL COMPANY DOES NOT GUARANTEE THE ACCURACY AND/OR THE
COMPLETENESS OF THE RUSSELL 2000(R) INDEX OR ANY DATA INCLUDED THEREIN AND FRANK
RUSSELL COMPANY SHALL HAVE NO LIABILITY FOR ANY ERRORS, OMISSIONS, OR
INTERRUPTIONS THEREIN. FRANK RUSSELL COMPANY MAKES NO WARRANTY, EXPRESS OR
IMPLIED, AS TO RESULTS TO BE OBTAINED BY BANK OF AMERICA CORPORATION, INVESTORS,
HOLDERS OF THE NOTES, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE RUSSELL
2000(R) INDEX OR ANY DATA INCLUDED THEREIN. FRANK RUSSELL COMPANY MAKES NO
EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE
RUSSELL 2000(R) INDEX OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE
FOREGOING, IN NO EVENT SHALL FRANK RUSSELL COMPANY HAVE ANY LIABILITY FOR ANY
SPECIAL, PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS),
EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.
13
DESCRIPTION OF THE NOTES
General
The Notes are part of a series of medium-term notes entitled "Medium-Term
Notes, Series J" issued under the Senior Indenture, which is more fully
described in the accompanying prospectus supplement and prospectus. The
following description of the Notes supplements the description of the general
terms and provisions of the notes and debt securities set forth under the
headings "Description of Notes" in the prospectus supplement and "Description of
Debt Securities" in the prospectus. If information in this pricing supplement is
inconsistent with the prospectus supplement or prospectus, this pricing
supplement will supersede those documents.
Certain capitalized terms used herein have the meanings ascribed to them in
the prospectus supplement and prospectus.
The Aggregate Face Amount of the Notes is $16,500,000. However, we may
"reopen" this series of Notes and issue additional Notes at a later time or
issue additional debt securities or other securities with terms similar to those
of the Notes, and such issuances may affect the trading value of the Notes. The
minimum denomination of the Notes is $100,000 or integral multiples of $1,000 in
excess of $100,000. The Notes mature on March 3, 2004, subject to extension in
the case of certain Market Disruption Events. See the section entitled "Market
Disruption Events."
Prior to maturity, the Notes are not redeemable by us or repayable at the
option of any holder. The Notes are not subject to any sinking fund. Upon the
occurrence of an Event of Default (as defined in the Senior Indenture) with
respect to the Notes, holders may accelerate the maturity of the Notes, as
described under "Description of the Notes - Events of Default and Acceleration"
in this pricing supplement and under "Description of Debt Securities - Events of
Default" in the prospectus.
The Notes will be issued in book-entry form only. The CUSIP number for the
Notes is 06050 MCE5.
Interest
The Notes bear interest at 7.00% per annum from, and including, the issue
date, to, but excluding, each Interest Payment Date. Interest is computed on the
basis of the actual number of days elapsed in a 360-day year of twelve 30-day
months.
Principal Payment at Maturity
At maturity you will receive the Principal Repayment Amount, if any. On the
Pricing Date, we determined the Initial Index Level to be 358.95. On the
Valuation Date, the Calculation Agent will determine the Closing Level of the
Russell 2000(R) Index for that day and calculate the Principal Repayment Amount
by applying the following formula:
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Face Amount Per Note x Capped Index Level
--------------------------------------
Initial Index Level
Market Disruption Events
Each of the following will be a "Market Disruption Event" if, in the sole
opinion of the Calculation Agent, that event materially affects the Russell
2000(R) Index:
. the suspension, material limitation, or absence of the trading of a
material number of stocks included in the Russell 2000(R) Index;
. the suspension or material limitation of the trading of stocks on one
or more stock exchanges on which stocks included in the Russell
2000(R)Index are quoted;
. the suspension or material limitation of the trading of (a) options or
futures relating to the Russell 2000(R) Index on any options or
futures exchanges or (b) options or futures generally; or
. the imposition of any exchange controls in respect of any currencies
involved in determining the total amount payable on the Notes at
maturity.
For the purpose of this definition of Market Disruption Event:
. a limitation on the number of hours or days of trading will not be a
Market Disruption Event if it results from an announced change in the
regular business hours of any exchange;
. a limitation on trading imposed by reason of the movements in price
exceeding the levels permitted by any relevant exchange will be a
Market Disruption Event;
. a decision to permanently discontinue trading in the relevant futures
or options contracts will not constitute a Market Disruption Event;
and
. an absence of trading on a securities exchange or quotation system
will not include any time when such exchange or quotation system is
closed for trading under ordinary circumstances.
If a Market Disruption Event occurs or is continuing on a day that would
otherwise be the Valuation Date, then the Calculation Agent will instead use the
Closing Level of the Russell 2000(R) Index on the first Trading Day after that
day on which no Market Disruption Event occurs or is continuing. In no event,
however, will the Valuation Date be postponed by more than five Trading Days. If
the Valuation Date is postponed to the last possible day, but a Market
Disruption Event occurs or is continuing on that day, that day nevertheless will
be the Valuation Date, and the Calculation Agent will make a good faith estimate
of the Capped Index Level based upon its assessment of the Closing Level of the
Russell 2000(R) Index at that time. If the Valuation Date is postponed due to a
Market Disruption Event, the Maturity Date for the Notes also will be postponed
by the same number of Trading Days.
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Discontinuance of the Russell 2000(R) Index; Alteration of Method of Calculation
If Frank Russell Company discontinues publication of the Russell 2000(R)
Index and Frank Russell Company or another entity publishes a successor or
substitute index that the Calculation Agent determines, in its sole discretion,
is comparable to the discontinued Russell 2000(R) Index (such new index being
referred to as a "Successor Index"), then the relevant Closing Levels shall be
determined by reference to the Successor Index at the close of trading on the
NYSE, the AMEX, NASDAQ, or the relevant exchange or market for the Successor
Index.
If the Calculation Agent selects a Successor Index, the Calculation Agent
immediately shall notify us and the Senior Trustee, and the Senior Trustee will
provide written notice of a change to the holders of the Notes within three
Trading Days of such selection.
If Frank Russell Company discontinues publication of the Russell 2000(R)
Index, and the Calculation Agent determines that no Successor Index is
available, then the Calculation Agent will notify us and the Senior Trustee and
shall calculate the appropriate Closing Levels. These calculations by the
Calculation Agent will be in accordance with the formula for and method of
calculating the Russell 2000(R) Index last in effect prior to such
discontinuance. If a Successor Index is selected or the Calculation Agent
calculates a level as a substitute for the Russell 2000(R) Index, that Successor
Index or level will be substituted for the Russell 2000(R) Index for all
purposes.
If at any time the method of calculating the Russell 2000(R) Index or a
Successor Index, or the level thereof, is changed in a material respect, or if
the Russell 2000(R) Index or a Successor Index in any other way is modified so
that the index does not, in the opinion of the Calculation Agent, fairly
represent the level of the Russell 2000(R) Index or that Successor Index had
those changes or modifications not been made, then, from and after such time,
the Calculation Agent will notify us and the Senior Trustee and shall make such
calculations and adjustments as, in the good faith judgment of the Calculation
Agent, may be necessary in order to arrive at a level of a stock index
comparable to the Russell 2000(R) Index or the Successor Index, as the case may
be, as if those changes or modifications had not been made, and calculate the
Closing Levels with reference to the Russell 2000(R) Index or the Successor
Index, as adjusted. Accordingly, if the method of calculating the Russell
2000(R) Index or a Successor Index is modified so that the level of the index is
a fraction of what it would have been if it had not been modified (e.g., due to
a split in the index), then the Calculation Agent shall adjust that index in
order to arrive at a level of the Russell 2000(R) Index or the Successor Index
as if it had not been modified (e.g., as if such split had not occurred).
Role of the Calculation Agent
The Calculation Agent in its sole discretion will make all determinations
regarding the Notes, including determinations regarding the Closing Level of the
Russell 2000(R) Index at any time (including the Valuation Date Level), the
Principal Repayment Amount paid at maturity, Market Disruption Events, Successor
Indices, and Trading Days. Absent manifest error, all determinations of the
Calculation Agent will be final and binding on you and us, without any liability
on the part of the Calculation Agent.
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We have initially appointed our affiliate, BAS, as the Calculation
Agent, but we may change the Calculation Agent at any time without notifying
you.
Same-Day Settlement and Payment
The Notes will be delivered in book-entry form only through The
Depository Trust Company ("DTC") against payment by purchasers of the Notes in
immediately available funds. We will make cash interest and principal payments
in immediately available funds to DTC so long as the Notes are maintained in
book-entry form.
Listing
The Notes will not be listed on any securities exchange.
Events of Default and Acceleration
In case an Event of Default, as defined in the Senior Indenture, with
respect to the Notes shall have occurred and be continuing, the amount payable
to a holder of the Notes upon any acceleration permitted under the Senior
Indenture will be equal to: (a) the Principal Repayment Amount (determined as
though the Notes matured on the date of acceleration and that the Valuation Date
Level was the Closing Level of the Russell 2000(R) Index on the date of
acceleration) plus (b) an additional amount, if any, of interest calculated to
the date of payment.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of certain United States federal income tax
considerations relating to the ownership of the Notes. This summary does not
purport to be a complete analysis of all tax considerations relating to the
Notes. In particular, except where otherwise noted, this summary deals only with
Notes held as capital assets by initial holders and does not address all aspects
of United States federal income taxation that may be relevant to a particular
holder in light of its individual circumstances or to certain types of holders
subject to special treatment under the United States federal income tax laws,
such as financial institutions, insurance companies, regulated investment
companies, dealers in securities or currencies, tax-exempt entities, Non-United
States Holders (as defined below), persons holding Notes in a tax-deferred or
tax-advantaged account, persons holding Notes as a hedge, a position in a
"straddle" or as part of a "conversion" transaction for tax purposes, or persons
who are required to mark-to-market for tax purposes. Furthermore, the discussion
below is based upon the provisions of the Internal Revenue Code of 1986, as
amended (the "Code"), and regulations, rulings, and judicial decisions
thereunder as of the date hereof, and such authorities may be repealed, revoked,
or modified so as to result in United States federal income tax consequences
different from those discussed below.
No statutory, judicial, or administrative authority directly addresses
the characterization of the Notes or instruments similar to the Notes for United
States federal income tax purposes. As a result, significant aspects of the
United States federal income tax consequences of an investment in the Notes are
not certain. No ruling is being requested from the IRS with respect
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to the Notes and no assurance can be given that the IRS will agree with the
conclusions expressed herein.
Persons considering the purchase, ownership, or disposition of the
Notes should consult their own tax advisors concerning the United States federal
income tax consequences to them in light of their particular situations as well
as any consequences arising under the laws of any other taxing jurisdiction.
As used herein, a "United States Holder" of Notes means a holder of a
Note that is for United States federal income tax purposes (a) a citizen or
resident of the United States, (b) a corporation or partnership (including an
entity treated as a corporation or partnership for United States federal income
tax purposes) created or organized in or under the laws of the United States,
any state thereof or the District of Columbia (other than a partnership that is
not treated as a United States person under any applicable Treasury
regulations), (c) an estate whose income is subject to United States federal
income tax regardless of its source, (d) a trust if a court within the United
States is able to exercise primary supervision over the administration of the
trust and one or more United States persons have the authority to control all
substantial decisions of the trust. Notwithstanding the preceding clause (d), to
the extent provided in regulations, certain trusts in existence on August 20,
1996 and treated as United States persons prior to such date that elect to
continue to be so treated also shall be considered United States Holders. A
"Non-United States Holder" is a holder who is not a United States Holder.
By purchasing the Notes, you agree with us to treat, for United States
federal income tax purposes, the Notes as an investment unit consisting of a
Debt Instrument and a Forward Contract. Consistent with this characterization,
we have determined that any amounts paid to us in respect of the original
issuance of the Notes will be allocated entirely to the Debt Instrument. Under
this characterization, the interest payment on the Notes will be treated, (i) to
the extent of our ordinary cost of borrowing, as a payment of interest and (ii)
to the extent the interest paid on the Notes exceeds our ordinary cost of
borrowing, as consideration for your entering into the Forward Contract. At the
present time, our ordinary cost of borrowing is 1.30%. The discussion below
assumes that (i) the Notes will not be treated as our equity for United States
federal income tax purposes and (ii) the agreement described above as to the
United States federal income tax treatment of the Notes as a Debt Instrument and
Forward Contract and the allocation of the purchase price will be respected.
Taxation of United States Holders
Interest on the Debt Instrument
The portion of the interest payable on the Notes that is treated as
interest on the Debt Instrument generally will be includable by you in income as
ordinary income at the time you accrue or receive the interest in accordance
with your method of accounting for tax purposes. The terms of the Notes require
you and us to treat 1.30% of the interest paid with respect to the Notes as
interest on the Debt Instrument.
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Consideration for Entering into Forward Contract
The proper treatment, for United States federal income tax purposes, of
the portion of the interest payable on the Notes that is treated as
consideration for your entering into the Forward Contract is uncertain. However,
by purchasing the Notes, you agree with us to treat such consideration as being
includable in income in the year it is received or accrued in accordance with
your method of accounting for tax purposes. The terms of the Notes require you
and us to treat 5.70% of the interest paid with respect to the Notes as
consideration for your entering into the Forward Contract.
Payment of Principal at Maturity
The payment of all or a portion of the principal amount of the Notes
will be treated as (a) payment in full of the principal amount of the Debt
Instrument of the Notes and (b) to the extent the payment is less than the full
principal amount of the Notes, as a payment by you to us pursuant to the Forward
Contract, and to the extent the payment is more than the full principal amount
of the Notes, as a payment by us to you pursuant to the Forward Contract.
Accordingly, upon maturity of the Notes, you will not recognize any gain or loss
with respect to the Debt Instrument but will be either (a) required to recognize
capital gain in an amount equal to the amount we paid to you at maturity in
respect of the Forward Contract or (b) entitled to a capital loss to the extent
of any payment made by you to us in respect of the Forward Contract at maturity.
Any such capital gain or loss generally will be short-term capital gain or loss.
Sale or Exchange of Notes
Upon a sale, exchange, or other disposition of your Notes (other than
at maturity), you will be required to apportion the amount you receive between
the Debt Instrument and the Forward Contract on the basis of the values thereof
on the date of the disposition or sale. You would recognize gain or loss with
respect to the Debt Instrument in an amount equal to the difference between (i)
the amount apportioned to the Debt Instrument and (ii) your adjusted United
States federal income tax basis in the Debt Instrument (which would generally be
equal to the principal amount of your Notes plus any accrued but unpaid interest
if you are an initial purchaser of the Notes). Except to the extent attributable
to accrued but unpaid interest with respect to the Debt Instrument (which would
be treated as ordinary income) such gain or loss would be capital gain or loss.
Similarly, the amount you receive that is apportioned to the Forward Contract
would be treated as capital gain. If the value of the Debt Instrument on the
date of the sale of your Notes is in excess of the amount you receive upon such
sale, you would likely be treated as having made a payment to the purchaser
equal to the amount of such excess in order to extinguish your rights and
obligations under the Forward Contract. In such a case, you would likely
recognize capital loss in an amount equal to the deemed payment made by you to
extinguish the Forward Contract. Any such capital gain or loss generally will be
long-term capital gain or loss if you have held the Notes for more than one
year.
Secondary Purchasers
If you are a secondary purchaser of the Notes, you would be required to
determine your purchase price of the Debt Instrument and Forward Contract for
tax purposes based on the
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respective fair market values of each on the date of purchase. If the purchase
price of the Debt Instrument determined in accordance with the preceding
sentence is in excess of your actual purchase price for the Notes, you would
likely be treated for tax purposes as having paid nothing for the Forward
Contract (i.e., your purchase price for the Forward Contract would be zero) and
as having received a payment for obligating yourself under the Forward Contract
(which payment generally will not be included in income until such time as you
sell your obligations under the Forward Contract or the Notes mature) in an
amount equal to such excess. If the purchase price of the Debt Instrument for
tax purposes is at a discount from, or is in excess of, the principal amount of
the Notes, you may be subject to the market discount or amortizable bond premium
rules with respect to the Debt Instrument. Any amount you are treated for tax
purposes as having paid for the Forward Contract would likely offset any amounts
you subsequently receive with respect to the Forward Contract (including amounts
received upon a sale of the Notes that are attributable to the Forward
Contract), thereby reducing the amount of gain or increasing the amount of loss
you would recognize with respect to the Forward Contract.
Alternative Characterization
Although you are generally required to report your income in accordance
with the treatment described above, alternative characterizations are also
possible. For example, the IRS or a court may conclude that the Notes should be
treated as a debt instrument and a capped notional principal contract, a
short-term debt instrument coupled with a cash-settled capped forward purchase
contract or capped notional principal contract, a prepaid forward contract, an
equity interest in the issuer, or other form of transaction. Under these
characterizations, the timing and character of income or gain you would be
required to recognize in respect of the Notes may differ significantly from that
described above. Accordingly, you are urged to consult your own tax advisors
concerning the United States federal income tax consequences of an investment in
the Notes.
Wash Sale Rules
If you sell an exchange traded fund representing the Russell 2000(R)
Index prior or subsequent to your purchase of the Notes, you should consult your
tax advisor regarding the possible application of the wash sale rules to your
sale of the fund.
Backup Withholding and Reporting
In general, payments of principal and interest with respect to the
Notes will be subject to reporting and possibly to backup withholding. Reporting
means that the payment is required to be reported to you and the IRS. Backup
withholding means that we (or any paying agent) are required to collect and
deposit a portion of the payment with the IRS as a tax payment on your behalf.
Backup withholding will be imposed at a rate of 30% for the 2003 calendar year
and will be reduced to 29% for the calendar year ending on December 31, 2004.
Payments of principal and interest with respect to the Notes will be
subject to backup withholding unless you are an exempt recipient, such as a
corporation, you supply us (or any paying agent) with a taxpayer identification
number and certify that such taxpayer identification number is correct or you
otherwise establish an exemption. In addition, backup withholding will
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be imposed if you have been informed by the United States Secretary of the
Treasury that you have not reported all dividend and interest income required to
be shown on your federal income tax return or you fail to certify that you have
not underreported your interest and dividend income.
Payments by the United States office of a broker of proceeds from the
sale of the Notes will be subject to both backup withholding and reporting
unless you (a) provide the payor with a taxpayer identification number or (b)
otherwise establish an exemption.
If you do not provide the payor with your correct taxpayer
identification number, you may be subject to penalties imposed by the IRS.
Any amounts withheld under the backup withholding rules will be allowed
as a refund or a credit against your United States federal income tax liability
provided certain required information is furnished to the IRS.
Recently promulgated Treasury regulations require taxpayers that
participate in "reportable transactions" to disclose such participation to the
IRS and to retain a copy of all documents and records related to the
transaction. In addition, organizers and sellers of such a transaction are
required to maintain records, including lists identifying investors in the
transaction, and must furnish those records to the IRS upon demand. Although we
do not believe that the issuance of the Notes constitutes a "reportable
transaction" as defined in the regulations, it is possible that the IRS could
contend otherwise. The IRS has announced that it expects to issue regulations
clarifying certain aspects of the current regulations shortly. Investors should
consult their own tax advisors concerning any possible disclosure obligation
they may have with respect to their investment in the Notes and should be aware
that, should we (or other participants in the transaction) determine that the
investor list maintenance requirement applies to this transaction, we (or they)
would comply with such requirement.
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