CALCULATION OF REGISTRATION FEE
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Title of Each Class of Securities to be Registered
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Amount
to be
Registered
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Proposed
Maximum Offering
Price Per Unit
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Proposed
Maximum
Aggregate
Offering Price
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Amount of
Registration
Fee
(1)
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STEP Income Securities
®
Linked to the Common Stock of D.R. Horton, Inc., due September 12, 2014
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2,552,172
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$10.00
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$25,521,720
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$3,481.16
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(1)
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Calculated in accordance with Rule 457(r) of the Securities Act of 1933.
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Filed Pursuant to Rule 424(b)(2)
Registration No. 333-180488
(To Prospectus dated March 30, 2012,
Prospectus Supplement dated March 30, 2012 and
Product Supplement STEPS-4 dated
April 3, 2012)
The notes are being issued by Bank of America Corporation (BAC). There are important differences between the
notes and a conventional debt security, including different investment risks and certain additional costs. See Risk Factors on page TS-6 of this term sheet and beginning on page S-8 of product supplement STEPS-4.
The initial estimated value of the notes as of the pricing date is $9.73 per unit, which is less than the public offering price listed below.
See
Summary on the following page, Risk Factors on page TS-6 of this term sheet and Structuring the Notes on page TS-8 of this term sheet for additional information. The actual value of your notes at any time will
reflect many factors and cannot be predicted with accuracy.
None of the Securities and Exchange Commission (the SEC), any state securities
commission, or any other regulatory body has approved or disapproved of these securities or determined if this Note Prospectus (as defined below) is truthful or complete. Any representation to the contrary is a criminal offense.
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Per Unit
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Total
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Public offering price
(1)
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$10.000
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$25,521,720.00
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Underwriting discount
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$0.175
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$446,630.10
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Proceeds, before expenses, to BAC
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$9.825
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$25,075,089.90
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(1)
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Plus accrued interest from the scheduled settlement date, if settlement occurs after
that date.
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The notes:
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Are Not FDIC Insured
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Are Not Bank Guaranteed
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May Lose Value
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Merrill Lynch & Co.
August 29, 2013
2,552,172 Units
$10 principal amount per unit
CUSIP No. 06053F521
Pricing Date August 29, 2013
Settlement Date September 6,
2013
Maturity Date September STEP Income Securities® Linked to the Common Stock of D.R. Horton, Inc.
Maturity of approximately one year and one week
Interest payable quarterly at the rate of 9% per year
A payment
of $0.818 per unit if the Underlying Stock increases to or above 109% of the Starting Value
1-to-1 downside exposure to
decreases in the Underlying Stock beyond a 5% decline, with up to 95% of your principal at risk
All payments on the
notes subject to the credit risk of Bank of America Corporation
Limited secondary market liquidity, with no exchange
listing 12, 2014
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STEP
Income
S
ecurities
®
Linked to the Common Stock of D.R. Horton, Inc., due September 12, 2014
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Summary
The
STEP
Income
S
ecurities
®
Linked to the Common Stock of D.R. Horton, Inc., due September 12, 2014 (the
notes) are our senior unsecured debt securities. The notes are not guaranteed or insured by the Federal Deposit Insurance Corporation or secured by collateral.
The notes will rank equally with all of our other unsecured and
unsubordinated debt. Any payments due on the notes, including any repayment of principal, will be subject to the credit risk of BAC.
The notes provide quarterly interest payments. Additionally, if the Ending Value of the Underlying Stock, which
is the common stock of D.R. Horton, Inc., is at or above the Step Level, the notes will also provide a payment of $0.818 per unit at maturity. If the Ending Value is less than the Step Level, the Redemption Amount will not be greater than your
principal amount. If the Ending Value is less than the Threshold Value, the Redemption Amount will be less, and possibly significantly less, than the principal amount of your notes. Payments on the notes, including the amount you receive at
maturity, will be calculated based on the $10 Original Offering Price per unit and will depend on our credit risk and the performance of the Underlying Stock. See Terms of the Notes below.
The economic terms of the notes (including the Step Payment) are based on the rate we would pay to borrow funds through the issuance of market-linked notes and the
economic terms of certain related hedging arrangements. The implied borrowing rate for market-linked notes is typically lower than the rate we would pay when we issue conventional fixed or floating rate debt securities. This difference in borrowing
rate, as well as the underwriting discount and the hedging related charge described below, reduced the economic terms of the notes to you and the initial estimated value of the notes on the pricing date. Due to these factors, the public offering
price you pay to purchase the notes is greater than the initial estimated value of the notes.
On the cover page of this term sheet, we have provided
the initial estimated value for the notes. This initial estimated value was determined based on our and our affiliates pricing models, which take into consideration our implied borrowing costs and the market prices for the hedging arrangements
related to the notes. For more information about the initial estimated value and the structuring of the notes, see Structuring the Notes on page TS-8.
Terms of the Notes
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Issuer:
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Bank of America Corporation (BAC)
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Original Offering Price:
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$10 per unit
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Term:
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Approximately one year and one week
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Underlying Stock:
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Common stock of D.R. Horton, Inc. (the Underlying Company) (NYSE symbol:
DHI)
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Starting Value:
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18.27 (the Volume Weighted Average Price on the pricing date).
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Volume Weighted Average Price:
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The volume weighted average price (rounded to two decimal places) shown on page AQR on
Bloomberg L.P. for trading in shares of the Underlying Stock taking place from approximately 9:30 a.m. to 4:02 p.m. on all U.S. exchanges.
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Ending Value:
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The Closing Market Price of the Underlying Stock on the valuation date, multiplied by the Price
Multiplier. The valuation date is subject to postponement in the event of Market Disruption Events, as described beginning on page S-19 of product supplement STEPS-4.
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Valuation Date:
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September 5, 2014
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Interest Rate:
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9% per year
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Interest Payment Dates:
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December 12, 2013, March 12, 2014, June 12, 2014 and the maturity date
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Step Payment:
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$0.818 per unit, which represents a return of 8.18% of the Original Offering Price.
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Step Level:
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19.91 (109% of the Starting Value, rounded to two decimal places).
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Threshold Value:
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17.36 (95% of the Starting Value, rounded to two decimal places).
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Fees and Charges:
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The underwriting discount of $0.175 per unit listed on the cover page and the hedging related charge of
$0.075 per unit described in Structuring the Notes on page TS-8.
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Price Multiplier:
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1, subject to adjustment for certain corporate events relating to the Underlying Stock described beginning
on page S-22 of product supplement STEPS-4.
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Calculation Agent:
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Merrill Lynch, Pierce, Fenner & Smith Incorporated (MLPF&S), a subsidiary of
BAC.
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Redemption Amount Determination
In addition to interest payable, on the maturity date, you will receive a cash payment per unit determined as follows:
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STEP
Income
S
ecurities
®
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TS-2
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STEP
Income
S
ecurities
®
Linked to the Common Stock of D.R. Horton, Inc., due September 12, 2014
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The terms and risks of the notes are contained in this term sheet and in the following:
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§
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Product supplement STEPS-4 dated April 3, 2012:
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http://www.sec.gov/Archives/edgar/data/70858/000119312512147923/d326525d424b5.htm
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§
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Series L MTN prospectus supplement dated March 30, 2012 and prospectus dated March 30, 2012:
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http://www.sec.gov/Archives/edgar/data/70858/000119312512143855/d323958d424b5.htm
These documents (together, the Note Prospectus) have been filed as part of a registration statement with the SEC, which may, without
cost, be accessed on the SEC website as indicated above or obtained from MLPF&S by calling 1-866-500-5408.
Before you invest, you should read the
Note Prospectus, including this term sheet, for information about us and this offering. Any prior or contemporaneous oral statements and any other written materials you may have received are superseded by the Note Prospectus. Capitalized terms used
but not defined in this term sheet have the meanings set forth in product supplement STEPS-4. Unless otherwise indicated or unless the context requires otherwise, all references in this document to we, us, our, or
similar references are to BAC.
Investor Considerations
You may wish to consider an investment in the notes if:
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You anticipate that the Ending Value will be greater than or equal to the Step Level.
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You seek interest payments on your investment.
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You accept that the maximum return on the notes is limited to the sum of the quarterly interest payments and the Step Payment, if any.
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You accept that your investment will result in a loss, which could be significant, if the Ending Value is below the Threshold Value.
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You are willing to forgo dividends or other benefits of owning shares of the Underlying Stock.
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You are willing to accept a limited market for sales prior to maturity, and understand that the market prices for the notes, if any, will be affected by various
factors, including our actual and perceived creditworthiness, the implied borrowing rate and fees and charges on the notes.
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You are willing to assume our credit risk, as issuer of the notes, for all payments under the notes, including the Redemption Amount.
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The notes may not be an appropriate investment for you if:
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You anticipate that the Ending Value will be less than the Step Level.
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You anticipate that the price of the Underlying Stock will increase substantially and do not want a payment at maturity that is limited to the Step Payment.
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You seek 100% principal protection or preservation of capital.
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In addition to interest payments, you seek an additional guaranteed return above the principal amount.
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You want to receive dividends or other distributions paid on the Underlying Stock.
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You seek an investment for which there will be a liquid secondary market.
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You are unwilling or are unable to take market risk on the notes or to take our credit risk as issuer of the notes.
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We urge you to consult your investment, legal,
tax, accounting, and other advisors before you invest in the notes.
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STEP
Income
S
ecurities
®
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TS-3
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STEP
Income
S
ecurities
®
Linked to the Common Stock of D.R. Horton, Inc., due September 12, 2014
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Hypothetical Payments at Maturity
The following examples are for purposes of illustration only. They are based on
hypothetical
values and show
hypothetical
payments on the notes.
The actual amount you receive and the resulting
return will depend on the actual Starting Value, Threshold Value, Ending Value, Step Level, and term of your investment.
The following examples do not take into account any tax consequences from investing in the notes. These examples are based
on:
1)
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a Starting Value of 100;
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2)
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a Threshold Value of 95;
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4)
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the Step Payment of $0.818 per unit;
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5)
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the term of the notes from September 6, 2013 to September 12, 2014; and
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6)
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the interest rate of 9% per year.
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The hypothetical
Starting Value of 100 used in these examples has been chosen for illustrative purposes only. The actual Starting Value is 18.27, which was the Volume Weighted Average Price of the Underlying Stock on the pricing date. For recent actual prices of the
Underlying Stock, see The Underlying Stock section below. In addition, all payments on the notes are subject to issuer credit risk.
Example 1
The Ending Value is 115 (115% of the Starting
Value)
The Ending Value is greater than the Step Level. Consequently, in addition to the quarterly interest payments, you will receive on the
maturity date the principal amount of your notes plus the Step Payment of $0.818 per unit. The Redemption Amount per unit on the maturity date will therefore be equal to $10.818 per unit ($10.000 plus the Step Payment of $0.818 per unit).
Example 2
The Ending Value is 105 (105% of
the Starting Value)
The Ending Value is greater than the Starting Value but below the Step Level. Consequently, you will receive the quarterly
interest payments, but you will not receive the Step Payment on the maturity date. The Redemption Amount per unit on the maturity date will therefore be equal to $10.000.
Example 3
The Ending Value is 96 (96% of the Starting Value)
The Ending Value is less than the Starting Value, but greater than the Threshold Value. Consequently, you will receive the quarterly interest payments, but you will
not receive the Step Payment on the maturity date. The Redemption Amount per unit on the maturity date will therefore be equal to $10.000.
Example 4
The Ending Value is 70 (70% of the Starting Value)
The Ending Value is less than the Starting Value and the Threshold Value. Consequently, you will receive the quarterly interest payments, but you will not receive the Step Payment on the maturity date, and you will
participate on a 1-for-1 basis in the decrease in the price of the Underlying Stock below the Threshold Value. The Redemption Amount per unit will equal:
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$10
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[
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$10 ×
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(
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95.00 70.00
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)
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]
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= $7.50
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100.00
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On the maturity date, you will receive the Redemption Amount per unit of $7.500.
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STEP
Income
S
ecurities
®
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TS-4
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STEP
Income
S
ecurities
®
Linked to the Common Stock of D.R. Horton, Inc., due September 12, 2014
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Summary of the
Hypothetical Examples
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Example 1
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Example 2
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Example 3
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Example 4
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The Ending Value is
greater than or equal to
the Step Level
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The Ending Value is
less than the Step Level
but greater than or
equal to the Starting
Value
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The Ending Value is
less than the Starting
Value but greater
than or equal to the
Threshold Value
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The Ending Value is
less than the Starting
Value and the
Threshold
Value
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Starting Value
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100.00
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100.00
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100.00
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100.00
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Ending Value
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115.00
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105.00
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96.00
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70.00
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Step Level
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109.00
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109.00
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109.00
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109.00
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Threshold Value
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95.00
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95.00
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95.00
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95.00
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Interest Rate (per year)
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9.00%
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9.00%
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9.00%
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9.00%
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Step Payment
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$0.818
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$0.000
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$0.000
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$0.000
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Redemption Amount per Unit
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$10.818
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$10.000
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$10.000
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$7.500
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Total Return of the Underlying Stock
(1)
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15.80%
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5.80%
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-3.20%
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-29.20%
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Total Return on the Notes
(2)
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17.33%
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9.15%
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9.15%
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-15.85%
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(1)
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The total return of the Underlying Stock assumes:
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(a)
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the percentage change in the price of the Underlying Stock from the Starting Value to the Ending Value;
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(b)
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a constant dividend yield of 0.79% per year; and
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(c)
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no transaction fees or expenses.
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(2)
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The total return on the notes includes interest paid on the notes from September 6, 2013 to September 12, 2014.
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STEP
Income
S
ecurities
®
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TS-5
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STEP
Income
S
ecurities
®
Linked to the Common Stock of D.R. Horton, Inc., due September 12, 2014
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Risk Factors
There are important differences between the notes and a conventional debt security. An investment in the notes involves significant risks, including those listed below. You should carefully review the more
detailed explanation of risks relating to the notes in the Risk Factors sections beginning on page S-8 of product supplement STEPS-4, page S-5 of the MTN prospectus supplement, and page 8 of the prospectus identified above. We also urge
you to consult your investment, legal, tax, accounting, and other advisors before you invest in the notes.
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Depending on the performance of the Underlying Stock as measured shortly before the maturity date, your investment may result in a loss; there is no guaranteed
return of principal.
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§
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Your return on the notes may be less than the yield you could earn by owning a conventional fixed or floating rate debt security of comparable maturity.
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Payments on the notes are subject to our credit risk, and actual or perceived changes in our creditworthiness are expected to affect the value of the notes. If
we become insolvent or are unable to pay our obligations, you may lose your entire investment.
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§
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You will not receive a Step Payment at maturity unless the Ending Value is greater than or equal to the Step Level.
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§
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Your investment return, if any, is limited to the return represented by the periodic interest payments over the term of the notes and the Step Payment, if any,
and may be less than a comparable investment directly in the Underlying Stock.
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§
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The initial estimated value of the notes is an estimate only, determined as of a particular point in time by reference to our and our affiliates pricing
models. These pricing models consider certain assumptions and variables, including our credit spreads, our implied borrowing rate on the pricing date, mid-market terms on hedging transactions, expectations on interest rates and volatility,
price-sensitivity analysis, and the expected term of the notes. These pricing models rely in part on certain forecasts about future events, which may prove to be incorrect.
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§
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The public offering price you pay for the notes exceeds the initial estimated value. If you attempt to sell the notes prior to maturity, their market value may
be lower than the price you paid for them and lower than the initial estimated value. This is due to, among other things, changes in the price of the Underlying Stock, the implied borrowing rate we pay to issue market-linked notes, and the inclusion
in the public offering price of the underwriting discount and the hedging related charge, all as further described in Structuring the Notes on page TS-8. These factors, together with various credit, market and economic factors over the
term of the notes, are expected to reduce the price at which you may be able to sell the notes in any secondary market and will affect the value of the notes in complex and unpredictable ways.
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§
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The initial estimated value does not represent a minimum or maximum price at which we, MLPF&S or any of our affiliates would be willing to purchase your
notes in any secondary market (if any exists) at any time. The value of your notes at any time after issuance will vary based on many factors that cannot be predicted with accuracy, including the performance of the Underlying Stock, our
creditworthiness and changes in market conditions.
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§
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A trading market is not expected to develop for the notes. Neither we nor MLPF&S is obligated to make a market for, or to repurchase, the notes. There is no
assurance that any party will be willing to purchase your notes at any price in any secondary market.
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§
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Our business activities as a full service financial institution, including our commercial and investment banking activities, our hedging and trading activities
(including trades in shares of the Underlying Stock) and any hedging and trading activities we engage in for our clients accounts, may affect the market value of the notes and their return and may create conflicts of interest with you.
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The Underlying Company will have no obligations relating to the notes, and neither we nor MLPF&S will perform any due diligence procedures with respect to
the Underlying Company in connection with this offering.
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§
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You will have no rights of a holder of the Underlying Stock, and you will not be entitled to receive shares of the Underlying Stock or dividends or other
distributions by the Underlying Company.
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§
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While we or our affiliates may from time to time own shares of the Underlying Company, we do not control the Underlying Company, and are not responsible for any
disclosure made by the Underlying Company.
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§
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The Redemption Amount will not be adjusted for all corporate events that could affect the Underlying Stock. See Description of the NotesAnti-Dilution
Adjustments beginning on page S-22 of product supplement STEPS-4.
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§
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There may be potential conflicts of interest involving the calculation agent. We have the right to appoint and remove the calculation agent.
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The U.S. federal income tax consequences of the notes are uncertain, and may be adverse to a holder of the notes. See Summary Tax Consequences below
and U.S. Federal Income Tax Summary beginning on page S-30 of product supplement STEPS-4.
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STEP
Income
S
ecurities
®
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TS-6
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STEP
Income
S
ecurities
®
Linked to the Common Stock of D.R. Horton, Inc., due September 12, 2014
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The Underlying Stock
We have derived the following information from publicly available documents published by the Underlying Company. We have not independently verified the accuracy or completeness of the following information. D.R.
Horton, Inc. constructs and sells single-family homes designed primarily for the entry-level and move-up markets. The company operates in the Midwest, Mid-Atlantic, Southeast, Southwest, and Western regions of the United States. Through its
financial services operations, the company also provides mortgage financing and title agency services to homebuyers
Because the Underlying Stock is
registered under the Securities Exchange Act of 1934, the Underlying Company is required to file periodically certain financial and other information specified by the SEC. Information provided to or filed with the SEC by the Underlying Company can
be located at the Public Reference Section of the SEC, 100 F Street, N.E., Room 1580, Washington, D.C. 20549 or through the SECs web site at http://www.sec.gov by reference to SEC CIK number 882184.
This term sheet relates only to the notes and does not relate to the Underlying Stock or to any other securities of the Underlying Company. Neither we nor any of
our affiliates have participated or will participate in the preparation of the Underlying Companys publicly available documents. Neither we nor any of our affiliates have made any due diligence inquiry with respect to the Underlying Company in
connection with the offering of the notes. Neither we nor any of our affiliates make any representation that publicly available documents or any other publicly available information regarding the Underlying Company are accurate or complete.
Furthermore, there can be no assurance that all events occurring prior to the date of this term sheet, including events that would affect the accuracy or completeness of these publicly available documents that would affect the trading price of the
Underlying Stock, have been or will be publicly disclosed. Subsequent disclosure of any events or the disclosure of or failure to disclose material future events concerning the Underlying Company could affect the value of the Underlying Stock and
therefore could affect your return on the notes. The selection of the Underlying Stock is not a recommendation to buy or sell the Underlying Stock.
The
Underlying Stock trades on the New York Stock Exchange under the symbol DHI.
Historical Data
The following table shows the quarterly high and low Closing Market Prices of the shares of the Underlying Stock on its primary exchange from the first quarter of
2008 through the pricing date. We obtained this historical data from Bloomberg L.P. We have not independently verified the accuracy or completeness of the information obtained from Bloomberg L.P. These historical trading prices may have been
adjusted to reflect certain corporate actions such as stock splits and reverse stock splits.
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High ($)
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Low ($)
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2008
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First Quarter
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17.31
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10.29
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Second Quarter
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17.23
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10.85
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Third Quarter
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15.04
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9.57
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Fourth Quarter
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13.28
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4.34
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2009
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First Quarter
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10.93
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5.96
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Second Quarter
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13.49
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8.69
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Third Quarter
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13.79
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8.40
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Fourth Quarter
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12.70
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9.81
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|
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2010
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First Quarter
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13.25
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11.16
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Second Quarter
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14.97
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9.83
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Third Quarter
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11.26
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9.71
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Fourth Quarter
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12.28
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9.87
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2011
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First Quarter
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13.50
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11.33
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Second Quarter
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12.44
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10.76
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Third Quarter
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12.13
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8.94
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Fourth Quarter
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12.78
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8.45
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2012
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First Quarter
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16.32
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12.96
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Second Quarter
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18.38
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14.05
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Third Quarter
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22.37
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17.27
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Fourth Quarter
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22.00
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18.39
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2013
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First Quarter
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25.43
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20.38
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Second Quarter
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27.60
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20.91
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Third Quarter (through the pricing date)
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22.98
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17.77
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This historical data on the Underlying Stock is not necessarily indicative of the future performance of the Underlying Stock or
what the value of the notes may be. Any historical upward or downward trend in the price per share of the Underlying Stock during any period set forth above is not an indication that the price per share of the Underlying Stock is more or less likely
to increase or decrease at any time over the term of the notes.
Before investing in the notes, you should consult publicly available sources for
the prices and trading pattern of the Underlying Stock.
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STEP
Income
S
ecurities
®
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TS-7
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STEP
Income
S
ecurities
®
Linked to the Common Stock of D.R. Horton, Inc., due September 12, 2014
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Supplement to the Plan of Distribution; Conflicts of Interest
Under our distribution agreement with MLPF&S, MLPF&S will purchase the notes from us as principal at the public offering price indicated on the cover of
this term sheet, less the indicated underwriting discount.
MLPF&S, a broker-dealer subsidiary of BAC, is a member of the Financial Industry
Regulatory Authority, Inc. (FINRA) and will participate as selling agent in the distribution of the notes. Accordingly, offerings of the notes will conform to the requirements of Rule 5121 applicable to FINRA members. MLPF&S may not
make sales in this offering to any of its discretionary accounts without the prior written approval of the account holder.
We will deliver the notes
against payment therefor in New York, New York on a date that is greater than three business days following the pricing date. 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 any such trade expressly agree otherwise. Accordingly, purchasers who wish to trade the notes more than three business days prior to the original issue date will be required to specify alternative
settlement arrangements to prevent a failed settlement.
The notes will not be listed on any securities exchange. In the original offering of the notes,
the notes will be sold in minimum investment amounts of 100 units. If you place an order to purchase the notes, you are consenting to MLPF&S acting as a principal in effecting the transaction for your account.
MLPF&S may repurchase and resell the notes, with repurchases and resales being made at prices related to then-prevailing market prices or at negotiated prices,
and these will include MLPF&Ss trading commissions and mark-ups. MLPF&S may act as principal or agent in these market-making transactions; however, it is not obligated to engage in any such transactions. At MLPF&Ss
discretion, for a short, undetermined initial period after the issuance of the notes, any purchase price paid by MLPF&S in the secondary market may be, in certain circumstances, closer to the amount that you paid for the notes than to the
initial estimated value. However, neither we nor any of our affiliates is obligated to purchase your notes at any price, or at a price that exceeds the initial estimated value.
The value of the notes shown on your account statement will be based on MLPF&Ss estimate of the value of the notes if MLPF&S or another of our affiliates were to make a market in the notes, which it
is not obligated to do. That estimate will be based upon the price that MLPF&S may pay for the notes in light of then-prevailing market conditions, our creditworthiness and transaction costs. At certain times, this price may be higher than or
lower than the initial estimated value of the notes.
Structuring the Notes
The notes are our debt securities, the return on which is linked to the performance of the Underlying Stock. As is the case for all of our debt securities, including our market-linked notes, the economic terms of
the notes reflect our actual or perceived creditworthiness at the time of pricing. In addition, because market-linked notes result in increased operational, funding and liability management costs to us, we typically borrow the funds under these
notes at a rate that is more favorable to us than the rate that we might pay for a conventional fixed or floating rate debt security. This rate is generally lower by an amount that we do not expect to exceed 0.50% per annum (equivalent to not
more than $0.05 per unit). This generally relatively lower implied borrowing rate, which is reflected in the economic terms of the notes, along with the fees and charges associated with market-linked notes, resulted in the initial estimated value of
the notes on the pricing date being less than their public offering price.
At maturity, we are required to pay the Redemption Amount to holders of the
notes, which will be calculated based on the performance of the Underlying Stock and the $10 per unit Original Offering Price. We are also required to make the interest payments on the notes. In order to meet these payment obligations, at the time
we issue the notes, we may choose to enter into certain hedging arrangements (which may include call options, put options or other derivatives) with MLPF&S or one of its affiliates. The terms of these hedging arrangements are determined by
seeking bids from market participants, including MLPF&S and its affiliates, and take into account a number of factors, including our creditworthiness, interest rate movements, the volatility of the Underlying Stock, the tenor of the note and the
tenor of the hedging arrangements. The economic terms of the notes and their initial estimated value depend in part on the terms of these hedging arrangements.
MLPF&S has advised us that the hedging arrangements will include a hedging related charge of approximately $0.075 per unit, reflecting an estimated profit to be credited to MLPF&S from these transactions.
Since hedging entails risk and may be influenced by unpredictable market forces, additional profits and losses from these hedging arrangements may be realized by MLPF&S or any third party hedge providers.
For further information, see Risk FactorsGeneral Risks Relating to the Notes beginning on page S-8 and Use of Proceeds on page S-17
of product supplement STEPS-4.
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STEP
Income
S
ecurities
®
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TS-8
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STEP
Income
S
ecurities
®
Linked to the Common Stock of D.R. Horton, Inc., due September 12, 2014
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Summary Tax Consequences
You should consider the U.S. federal income tax consequences of an investment in the notes, including the following:
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There is no statutory, judicial, or administrative authority directly addressing the characterization of the notes.
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You agree with us (in the absence of an administrative determination, or judicial ruling to the contrary) to characterize and treat the notes for all tax
purposes as an income-bearing single financial contract linked to the Underlying Stock.
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Under this characterization and tax treatment of the notes, we intend to take the position that the stated periodic interest payments constitute taxable ordinary
income to a U.S. Holder (as defined beginning on page 62 of the prospectus) at the time received or accrued in accordance with the U.S. Holders regular method of accounting. Upon receipt of a cash payment at maturity or upon a sale or exchange
of the notes prior to maturity (other than amounts representing accrued stated periodic interest payments), a U.S. Holder generally will recognize capital gain or loss. This capital gain or loss generally will be long-term capital gain or loss if
you hold the notes for more than one year.
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No assurance can be given that the IRS or any court will agree with this characterization and tax treatment.
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Withholding and reporting requirements under the legislation enacted on March 18, 2010 (as discussed beginning on page 85 of the prospectus), will generally
apply to payments made after June 30, 2014. However, this withholding tax will not be imposed on payments pursuant to obligations outstanding on July 1, 2014. Additionally, withholding due to any payment being treated as a dividend
equivalent (as discussed beginning
on page S-33 of
product supplement STEPS-4) will begin no earlier than January 1, 2014. Holders are urged to consult with their own tax advisors
regarding the possible implications of this recently enacted legislation on their investment in the notes.
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You should consult your
own tax advisor concerning the U.S. federal income tax consequences to you of acquiring, owning, and disposing of the notes, 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. You should review carefully the discussion under the section entitled U.S. Federal Income Tax Summary beginning on page S-30 of product supplement STEPS-4.
Validity of the Notes
In the opinion of
McGuireWoods LLP, as counsel to BAC, when the trustee has made an appropriate entry on Schedule 1 to the Master Registered Global Senior Note, dated March 30, 2012 (the Master Note) identifying the notes offered hereby as
supplemental obligations thereunder in accordance with the instructions of BAC, and the notes have been delivered against payment therefor as contemplated in this Note Prospectus, all in accordance with the provisions of the Senior Indenture, such
notes will be legal, valid and binding obligations of BAC, subject to applicable bankruptcy, reorganization, insolvency, moratorium, fraudulent conveyance or other similar laws affecting the rights of creditors now or hereafter in effect, and to
equitable principles that may limit the right to specific enforcement of remedies, and further subject to 12 U.S.C. §1818(b)(6)(D) (or any successor statute) and any bank regulatory powers now or hereafter in effect and to the application of
principles of public policy. This opinion is given as of the date hereof and is limited to the federal laws of the United States, the laws of the State of New York and the Delaware General Corporation Law (including the statutory provisions, all
applicable provisions of the Delaware Constitution and reported judicial decisions interpreting the foregoing). In addition, this opinion is subject to the assumption that the trustees certificate of authentication of the Master Note has been
manually signed by one of the trustees authorized officers and to customary assumptions about the trustees authorization, execution and delivery of the Senior Indenture, the validity, binding nature and enforceability of the Senior
Indenture with respect to the trustee, the legal capacity of natural persons, the genuineness of signatures, the authenticity of all documents submitted to McGuireWoods LLP as originals, the conformity to original documents of all documents
submitted to McGuireWoods LLP as photocopies thereof, the authenticity of the originals of such copies and certain factual matters, all as stated in the letter of McGuireWoods LLP dated March 30, 2012, which has been filed as an exhibit to
BACs Registration Statement relating to the notes filed with the SEC on March 30, 2012.
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STEP
Income
S
ecurities
®
|
|
TS-9
|
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|
STEP
Income
S
ecurities
®
Linked to the Common Stock of D.R. Horton, Inc., due September 12, 2014
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Where You Can Find More Information
We have filed a registration statement (including a product supplement, a prospectus supplement, and a prospectus) with the SEC for the offering to which this term sheet relates. Before you invest, you should read
the Note Prospectus, including this term sheet, and the other documents that we have filed with the SEC, for more complete information about us and this offering. You may get these documents without cost by visiting EDGAR on the SEC website at
www.sec.gov. Alternatively, we, any agent, or any dealer participating in this offering will arrange to send you these documents if you so request by calling MLPF&S toll-free at 1-866-500-5408.
Market-Linked Investments Classification
MLPF&S classifies certain market-linked investments (the Market-Linked Investments) into categories, each
with different investment characteristics. The following description is meant solely for informational purposes and is not intended to represent any particular Enhanced Income Market-Linked Investment or guarantee any performance.
Enhanced Income Market-Linked Investments are short- to medium-term market-linked notes that offer you a way to enhance your income stream, either through variable
or fixed-interest coupons, an added payout at maturity based on the performance of the linked asset, or both. In exchange for receiving current income, you will generally forfeit upside potential on the linked asset. Even so, the prospect of higher
interest payments and/or an additional payout may equate to a higher return potential than you may be able to find through other fixed-income securities. Enhanced Income Market-Linked Investments generally do not include market downside protection.
The degree to which your principal is repaid at maturity is generally determined by the performance of the linked asset. Although enhanced income streams may help offset potential declines in the asset, you can still lose part or all of your
original investment.
STEP
Income
S
ecurities
®
and STEPS
®
are our registered service marks.
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STEP
Income
S
ecurities
®
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TS-10
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Bank of America Corp. Leveraged Index Return Notes Linked TO The S&P 500 Index (AMEX:SVW)
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