Filed Pursuant to Rule 424(b)(2)
Registration Statement No. 333-180488
Pricing
Supplement No. 1423
(To Prospectus dated February 24, 2015
and
Series L Prospectus Supplement dated February 24, 2015)
April
28, 2015
$5,590,000
Fixed
to Floating Rate Notes Linked to CMS10, due April 30, 2025
| • | The
notes are senior unsecured debt securities issued by Bank of America Corporation (“BAC”).
All payments and return of principal on the notes are subject to our credit risk. |
| • | The
notes will mature on April 30, 2025. At maturity, you will receive a cash payment equal
to 100% of the principal amount of your notes, plus any accrued and unpaid interest. |
| • | Interest
will be paid on January 30, April 30, July 30 and October 30 of each year, beginning
on July 30, 2015. |
| • | From,
and including, the issue date to, but excluding, April 30, 2017, the notes will bear
interest at the fixed rate of 3.25% per annum. |
| • | From,
and including, April 30, 2017, to, but excluding, the maturity date, the notes will bear
interest at a per annum floating rate equal to the 10-year U.S. Dollar Constant Maturity
Swap Rate (“CMS10”). |
| • | We
will not have the option to redeem the notes prior to maturity. |
| • | The
notes are issued in minimum denominations of $1,000
and whole multiples of $1,000. |
| • | The
notes will not be listed on any securities exchange. |
| • | In
connection with this offering, Merrill Lynch, Pierce, Fenner & Smith Incorporated
(“MLPF&S”) is acting in its capacity as principal for your account. |
| • | The
CUSIP number for the notes is 06048WQS2. |
| • | The
initial estimated value of the notes is less than the public offering price. As of
April 28, 2015 (the “pricing date”), the initial estimated value of the notes
is $967 per $1,000 in principal amount. See “Summary of Terms” beginning
on page PS-2 of this pricing supplement, “Risk Factors” beginning on page
PS-5 of this pricing supplement and “Structuring the Notes” on page PS-12
of this pricing supplement for additional information. The actual value of your notes
at any time will reflect many factors and cannot be predicted with accuracy. |
The
notes:
Are
Not FDIC Insured |
Are
Not Bank Guaranteed |
May
Lose Value |
|
Per
Note |
|
Total |
Public
Offering Price |
100.00% |
|
$5,590,000 |
Underwriting
Discount |
0.96%* |
|
$ 53,664 |
Proceeds
(before expenses) to BAC |
99.04% |
|
$5,536,336 |
*
We or one of our affiliates may pay varying selling concessions of up to 0.96% in connection with the distribution of the notes
to other registered broker-dealers.
The
notes are unsecured and are not savings accounts, deposits, or other obligations of a bank. The notes are not guaranteed by Bank
of America, N.A. or any other bank, are not insured by the Federal Deposit Insurance Corporation or any other governmental agency
and involve investment risks. Potential purchasers of the notes should consider the information in “Risk Factors”
beginning on page PS-5 of this pricing supplement, page S-5 of the attached prospectus supplement, and page 9 of the attached
prospectus.
None
of the Securities and Exchange Commission, any state securities commission, or any other regulatory body has approved or disapproved
of these notes or passed upon the adequacy or accuracy of this pricing supplement, the accompanying prospectus supplement, or
the accompanying prospectus. Any representation to the contrary is a criminal offense.
We
will deliver the notes in book-entry form only through The Depository Trust Company on April 30, 2015 against payment in immediately
available funds.
Series
L MTN prospectus supplement dated February 24, 2015
and
prospectus dated February 24, 2015
BofA
Merrill Lynch
SUMMARY
OF TERMS
This
pricing supplement supplements the terms and conditions in the prospectus, dated February 24, 2015, as supplemented by the Series
L prospectus supplement, dated February 24, 2015 (as so supplemented, together with all documents incorporated by reference, the
“prospectus”), and should be read with the prospectus. Unless otherwise defined in this pricing supplement, terms
used herein have the same meanings as are given to them in the prospectus.
• Title
of the Series: |
|
Fixed
to Floating Rate Notes Linked to CMS10, due April 30, 2025 |
• Aggregate
Principal Amount
Initially Being Issued: |
|
$5,590,000 |
• Issue
Date: |
|
April
30, 2015 |
• Maturity
Date: |
|
April
30, 2025 |
• Minimum
Denominations: |
|
$1,000
and multiples of $1,000 in excess of $1,000 |
• Ranking: |
|
Senior,
unsecured |
• Day
Count Fraction: |
|
30/360 |
• Interest
Periods: |
|
Quarterly. Each
interest period (other than the first interest period, which will begin on the issue date) will begin on, and will include,
an interest payment date, and will extend to, but will exclude, the next succeeding interest payment date (or the maturity
date, as applicable). |
• Interest
Payment Dates: |
|
January
30, April 30, July 30 and October 30 of each year, beginning on July 30, 2015. |
• Interest
Reset Dates: |
|
January 30, April 30, July 30 and
October 30 of each year, beginning on April 30, 2017. |
• Interest
Rates: |
|
Fixed
Rate Period. From, and including, the issue date to, but excluding, April 30, 2017, the notes will bear interest at
the fixed rate of 3.25% per annum.
Floating
Rate Period. From, and including, April 30, 2017 to, but excluding, the maturity date (the “Floating Rate Period”),
the notes will bear interest at a per annum floating rate equal to CMS10. The rate of interest payable on the notes during
the floating rate period will not be less than 0%.
“CMS10”
means the 10-year U.S. Dollar Constant Maturity Swap Rate, expressed as a percentage, as quoted on the Reuters Screen
ISDAFIX3 Page, at 11:00 a.m., New York City time, on the applicable interest determination date. |
•
Interest Determination Date: |
|
The
“interest determination date” for each quarterly interest period during the Floating Rate Period will be the
second U.S. Government Securities Business Day (as defined below) prior to the beginning of the applicable quarterly interest
period.
A
“U.S. Government Securities Business Day” means any day, other than a Saturday, Sunday, or a day on which
the Securities Industry and Financial Markets Association (or any successor thereto) recommends that the fixed income |
|
|
departments
of its members be closed for the entire day for purposes of trading in U.S. government securities. |
• Calculation
Agent: |
|
Merrill Lynch Capital
Services, Inc. |
• Business
Days: |
|
If any interest
payment date or the maturity date occurs on a day that is not a business day in New York, New York, then the payment will
be postponed until the next business day in New York, New York. No additional interest will accrue on the notes
as a result of such postponement, and no adjustment will be made to the length of the relevant interest period. |
• Redemption
at Our Option: |
|
None |
• Repayment
at Option of Holder: |
|
None |
• Record
Dates for Interest Payments: |
|
For
book-entry only notes, one business day in New York, New York prior to the payment date. If notes are not held in book-entry
only form, the record dates will be the first day of the month in which the applicable interest payment is due. |
•
Unavailability of CMS10: |
|
If,
on any interest determination date, CMS10 is not quoted on the Reuters Screen ISDAFIX3 Page, or any page substituted for that
page, then CMS10 will be a percentage determined on the basis of the mid-market semi-annual swap rate quotations provided
by three banks chosen by the calculation agent (which may include one of our affiliates) at approximately 11:00 a.m., New
York City time, on that date. For this purpose, the semi-annual swap rate means the mean of the bid and offered
rates for the semi-annual fixed leg, calculated on the basis of a 360-day year consisting of twelve 30-day months, of a fixed-for-floating
U.S. dollar interest rate swap transaction with a term equal to 10 years, commencing on the applicable date and in a representative
amount with an acknowledged dealer of good credit in the swap market, where the floating leg, calculated on the actual number
of days in a 360-day year, is equivalent to USD-LIBOR-BBA, as quoted on the Reuters Screen LIBOR01 Page at 11:00 a.m., New
York City time, with a designated maturity of three months. The calculation agent will request the principal New
York City office of each of the three banks chosen by it to provide a quotation of its rate. If at least three
quotations are provided, the rate for the relevant interest determination date will be the arithmetic mean of the quotations. If
two quotations are provided, the rate for the relevant interest determination date will be the arithmetic mean of the two
quotations. If only one quotation is provided, the rate for the relevant interest determination date will equal
that one quotation. If no quotations are available, then CMS10 will be the rate the calculation agent, in its sole
discretion, determines to be fair and reasonable under the circumstances at approximately 11:00 a.m., New York City time,
on the relevant interest determination date. |
• Listing:
|
|
None |
•
Estimated Initial Value: |
|
Payments
on the notes depend on our credit risk and on the level of CMS10. The economic terms of the notes are based on our internal
funding rate, which is the rate we would pay to borrow funds through the issuance of market-linked notes and the economic
terms of certain related hedging arrangements we enter into. Our internal funding rate is typically lower than the rate
we would pay when we issue conventional fixed or floating rate debt securities. This difference in our internal funding
rate, as well as the underwriting discount and the hedging related charges described below, reduced the economic terms
of the notes to you and the initial estimated value of the notes. Due to these factors, the public offering price you
pay to purchase the notes is greater than the initial estimated value of the notes.
The
estimated initial estimated value of the notes as of the pricing date is set forth on the cover page of this document.
For more information about the initial estimated value and the structuring of the notes, see “Risk Factors”
on page PS-5 and “Structuring the Notes” on page PS-12. |
RISK
FACTORS
Your
investment in the notes entails significant risks, many of which differ from those of a conventional security. 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 significant elements of the notes or financial matters in general.
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. The notes are our senior unsecured debt securities. As a result, your receipt of all payments of interest
and principal on the notes is dependent upon our ability to repay our obligations on the applicable payment date. No assurance
can be given as to what our financial condition will be at any time during the term of the notes or on the maturity date. If we
default on our financial obligations, you may not receive the amounts payable under the terms of the notes.
Our
credit ratings are an assessment by ratings agencies of our ability to pay our obligations. Consequently, our perceived creditworthiness
and actual or anticipated decreases in our credit ratings or increases in our credit spreads prior to the maturity date of the
notes may adversely affect the market value of the notes. However, because your return on the notes depends upon factors in addition
to our ability to pay our obligations, such as the difference between the interest rates accruing on the notes and current market
interest rates, an improvement in our credit ratings will not reduce the other investment risks related to the notes.
The
public offering price you pay for the notes exceeds their initial estimated value. The initial estimated value of the notes
that is provided in this pricing supplement is an estimate only, determined as of the pricing date by reference to our and our
affiliates’ pricing models. These pricing models consider certain assumptions and variables, including our credit spreads,
our internal funding rate, 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.
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
the date of this pricing supplement will vary based on many factors that cannot be predicted with accuracy, including our creditworthiness
and changes in market conditions.
The
quoted price of any of our affiliates for the notes could be higher or lower than the price that you paid for them.
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
their initial estimated value. This is due to, among other things, changes in the level of market interest rates, our internal
funding rate, and the inclusion in the public offering price of the underwriting discount and the hedging related charges, all
as further described in "Structuring the Notes" on page PS-22. 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.
We
cannot assure you that a trading market for the 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 any secondary market, or whether that market will be liquid
or illiquid.
The
development of a trading market for the notes will depend on our financial performance and other factors. The number of potential
buyers of the notes in any secondary market may be limited. We anticipate that MLPF&S will act as a market-maker for the notes,
but neither MLPF&S nor any of our other affiliates is required to do so. MLPF&S may discontinue its market-making activities
as to the notes at any time. To the extent that MLPF&S engages in any market-making activities, it may bid for or offer the
notes. Any price at which MLPF&S may bid for, offer, purchase, or sell any notes may differ from the values determined by
pricing models that it may use, whether as a result of dealer discounts, mark-ups, or other transaction costs. These bids, offers,
or completed transactions may affect the prices, if any, at which the notes might otherwise trade in the market.
In
addition, if at any time MLPF&S were to cease acting as a market-maker for the notes, it is likely that there would be significantly
less liquidity in the secondary market. In such a case, the price at which the notes could be sold likely would be lower than
if an active market existed.
Many
economic and other factors will impact the market value of the notes. The market for, and the market value of, the notes may
be affected by a number of factors that may either offset or magnify each other, including:
| • | the
time remaining to maturity of the notes; |
| • | the
aggregate amount outstanding of the notes; |
| • | the
level, direction, and volatility of market interest rates generally; |
| • | general
economic conditions of the capital markets in the United States; |
| • | geopolitical
conditions and other financial, political, regulatory, and judicial events that affect
the capital markets generally; |
| • | our
financial condition and creditworthiness; and |
| • | any
market-making activities with respect to the notes. |
Our
trading and hedging activities may create conflicts of interest with you. We or one or more of our affiliates, including MLPF&S,
may engage in trading activities related to the notes that are not for your account or on your behalf. We expect to enter into
arrangements to hedge the market risks associated with our obligation to pay the amounts due under the notes. We may seek competitive
terms in entering into the hedging arrangements for the notes, but are not required to do so, and we may enter into such hedging
arrangements with one of our subsidiaries or affiliates. This hedging activity is expected to result in a profit to those engaging
in the hedging activity, which could be more or less than initially expected, but which could also result in a loss for the hedging
counterparty. These trading and hedging activities may present a conflict of interest between your interest in the notes and the
interests we and our affiliates may have in our proprietary accounts, in facilitating transactions for our other customers, and
in accounts under our management.
You
must rely on your own evaluation of the merits of an investment linked to CMS10. In the ordinary course of their businesses,
we or our affiliates may have expressed views on expected movements in CMS10 and related interest rates, and may do so in the
future. These views or reports may be communicated to our clients and clients of our affiliates. However, these views are subject
to change from time to time. Moreover, other professionals who deal in markets relating to CMS10 may at any time have significantly
different views from those of ours or our affiliates. For these reasons, you are encouraged to derive information concerning CMS10
and related interest rates from multiple sources, and you should not rely on the views expressed by us or our affiliates.
Neither
the offering of the notes nor any views which we or our affiliates from time to time may express in the ordinary course of their
businesses constitutes a recommendation as to the merits of an investment in the notes.
Recent
regulatory investigations regarding potential manipulation of ISDAFIX may adversely affect your notes. It has been reported
that certain U.S. and non-U.S. regulators are investigating potential manipulation of ISDAFIX. If such manipulation occurred,
it may have resulted in CMS10 being artificially lower (or higher) than it would otherwise have been. Any changes or reforms affecting
the determination or supervision of ISDAFIX in light of these investigations may result in a sudden or prolonged decrease in reported
ISDAFIX, which may have an adverse impact on the trading market for ISDAFIX-benchmarked securities, such as your notes, the market
value of your notes and the payments on your notes during the Floating Rate Period.
THE
CMS10
CMS10
is a “constant maturity swap rate” that measures the fixed rate of interest payable on a hypothetical fixed-for-floating
U.S. dollar interest rate swap transaction with a maturity of 10 years. In such a hypothetical swap transaction, the fixed rate
of interest, payable semi-annually on the basis of a 360-day year consisting of twelve 30-day months, is exchangeable for a floating
3-month LIBOR-based payment stream that is payable quarterly on the basis of the actual number of days elapsed during a quarterly
period in a 360-day year. “LIBOR” is the London Interbank Offered Rate and is a common rate of interest used in the
swaps industry.
Historical
Levels of CMS10
The
following graph sets forth the historical performance of the CMS10 based on the daily historical levels from January 1, 2008 through
the pricing date. We obtained the rates below from the Bloomberg Professional® Service. We have not undertaken
any independent review of, or made any due diligence inquiry with respect to, the information obtained from the Bloomberg Professional®
service. The rates displayed in the graph below are for illustrative purposes only.
The
rates reported by the Bloomberg Professional® Service may not be indicative of the CMS10 that will be derived from
the applicable Reuters page.
U.S.
FEDERAL INCOME TAX SUMMARY
The
following summary of the material U.S. federal income tax considerations of the acquisition, ownership, and disposition of the
notes is based upon the advice of Morrison & Foerster LLP, our tax counsel. The following discussion supplements, and
to the extent inconsistent supersedes, the discussions under “U.S. Federal Income Tax Considerations” in the accompanying
prospectus and under “U.S. Federal Income Tax Considerations” in the accompanying prospectus supplement and is not
exhaustive of all possible tax considerations. This summary is based upon the Internal Revenue Code of 1986, as amended (the “Code”),
regulations promulgated under the Code by the U.S. Treasury Department (“Treasury”) (including proposed and temporary
regulations), rulings, current administrative interpretations and official pronouncements of the Internal Revenue Service (“IRS”),
and judicial decisions, all as currently in effect and all of which are subject to differing interpretations or to change, possibly
with retroactive effect. No assurance can be given that the IRS would not assert, or that a court would not sustain, a position
contrary to any of the tax consequences described below. This summary does not include any description of the tax laws of any
state or local governments, or of any foreign government, that may be applicable to a particular holder.
This
summary is directed solely to U.S. Holders and Non-U.S. Holders that, except as otherwise specifically noted, will purchase the
notes upon original issuance and will hold the notes as capital assets within the meaning of Section 1221 of the Code, which
generally means property held for investment, and that are not excluded from the discussion under “U.S. Federal Income Tax
Considerations” in the accompanying prospectus. This summary assumes that the issue price of the notes, as determined for
U.S. federal income tax purposes, equals the principal amount thereof.
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.
U.S.
Holders
The
notes will be treated as variable rate debt instruments providing for stated interest at a single fixed rate and one or more qualified
floating rates. Under Treasury regulations applicable to such instruments, you generally will be required to account for interest
on the notes as described below. You will be required to construct an “equivalent fixed rate debt instrument” for
the notes and apply the general rules applicable to debt instruments described under the section of the prospectus entitled “U.S.
Federal Income Tax Considerations – Taxation of Debt Securities.” The applicable rules require (i) replacing the initial
fixed rate by a “qualified floating rate” that would preserve the fair market value of the notes, and (ii) determining
the fixed rate substitute for each floating rate. The fixed rate substitute for each qualified floating rate is the value of the
rate on the issue date of the notes. The equivalent fixed rate debt instrument is the hypothetical instrument that has terms that
are identical to those of the notes, except that the equivalent fixed rate debt instrument provides for the fixed rate substitutes
in lieu of the rates on the notes. Under these rules, the equivalent fixed rate debt instrument will have stated interest equal
to the fixed rate substitutes. The amount of OID is determined for the equivalent fixed rate debt instrument under the rules applicable
to fixed rate debt instruments and is taken into account as if the holder held the equivalent fixed rate debt instrument. Please
see the discussion in the prospectus under the section entitled “U.S. Federal Income Tax Considerations – Taxation
of Debt Securities – Consequences to U.S. Holders – Original Issue Discount” for a discussion of these rules.
Under these rules, based on the rates in effect as of the date of this pricing supplement we expect that the notes will be issued
with no more than de minimis OID. You will be required to make appropriate adjustments for interest actually paid on the notes.
Qualified stated interest and OID, if any, allocable to an accrual period must be increased (or decreased) if the interest actually
accrued or paid during an accrual period exceeds (or is less than) the interest assumed to be accrued or paid during the accrual
period under the equivalent fixed rate debt instrument. This increase
or
decrease is an adjustment to qualified stated interest for the accrual period if the equivalent fixed rate debt instrument provides
for qualified stated interest and the increase or decrease is reflected in the amount actually paid during the accrual period.
Otherwise, this increase or decrease is an adjustment to OID, if any, for the accrual period.
Upon
the sale, exchange, retirement, or other disposition of a note, a U.S. Holder will recognize gain or loss equal to the difference
between the amount realized upon the sale, exchange, retirement, or other disposition (less an amount equal to any accrued interest
not previously included in income if the note is disposed of between interest payment dates, which will be included in income
as interest income for U.S. federal income tax purposes) and the U.S. Holder’s adjusted tax basis in the note. A U.S. Holder’s
adjusted tax basis in a note generally will be the cost of the note to such U.S. Holder, increased by any OID previously included
in income with respect to the note, and decreased by the amount of any payment (other than a payment of qualified stated interest)
received in respect of the note. Any gain or loss realized on the sale, exchange, retirement, or other disposition of a note generally
will be capital gain or loss and will be long-term capital gain or loss if the note has been held for more than one year. The
ability of U.S. Holders to deduct capital losses is subject to limitations under the Code.
Non-U.S.
Holders
Please
see the discussion under “U.S. Federal Income Tax Considerations—Taxation of Debt Securities—Consequences to
Non-U.S. Holders” in the accompanying prospectus for the material U.S. federal income tax consequences that will apply to
Non-U.S. Holders of the notes.
Backup
Withholding and Information Reporting
Please
see the discussion under “U.S. Federal Income Tax Considerations—Taxation of Debt Securities—Backup Withholding
and Information Reporting” in the accompanying prospectus for a description of the applicability of the backup withholding
and information reporting rules to payments made on the notes.
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.
SUPPLEMENTAL
PLAN OF DISTRIBUTION—conflicts of interest
Our
broker-dealer subsidiary, MLPF&S, will act as our selling agent in connection with the offering of the notes. The selling
agent is a party to the Distribution Agreement described in the “Supplemental Plan of Distribution (Conflicts of Interest)”
on page S-14 of the accompanying prospectus supplement.
The
selling agent will receive the compensation set forth on the cover page of this pricing supplement as to the notes sold through
its efforts. We or one of our affiliates may pay varying selling concessions of up to 0.96% in connection with the distribution
of the notes to other registered broker-dealers.
The
selling agent is a member of the Financial Industry Regulatory Authority, Inc. (“FINRA”). Accordingly, the offering
of the notes will conform to the requirements of FINRA Rule 5121.
The
selling agent is not acting as your fiduciary or advisor solely as a result of the offering of the notes, and you should not rely
upon any communication from the selling agent in connection with the notes as investment advice or a recommendation to purchase
the notes. You should make your own investment decision regarding the notes after consulting with your legal, tax, and other advisors.
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. Under the terms of our distribution agreement with MLPF&S, MLPF&S will purchase the notes from us on
the issue date as principal at the purchase price indicated on the cover of this pricing supplement, less the indicated underwriting
discount.
MLPF&S
and any of our other broker-dealer affiliates may use this pricing supplement, and the accompanying prospectus supplement and
prospectus for offers and sales in secondary market transactions and market-making transactions in the notes. However, they are
not obligated to engage in such secondary market transactions and/or market-making transactions. Our affiliates may act as principal
or agent in these transactions, and any such sales will be made at prices related to prevailing market prices at the time of the
sale.
STRUCTURING
THE NOTES
The
notes are our debt securities, the return on which is linked to the performance of CMS10. 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 generally relatively lower internal funding 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.
In
order to meet our payment obligations on the notes, 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 based upon terms provided by MLP&S and its affiliates, and take into account
a number of factors, including our creditworthiness, interest rate movements, the volatility of the CMS10, the tenor of the notes
and 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 hedging related charges, reflecting the costs associated with, and our
affiliates’ profit earned from, these hedging arrangements. Since hedging entails risk and may be influenced by unpredictable
market forces, actual profits or losses from these hedging transactions may be more or less than this amount.
For
further information, see “Risk Factors” beginning on page PS-5 of this pricing supplement.
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 pricing supplement and the related prospectus supplement and prospectus, all in accordance with the provisions
of the indenture governing the notes, 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 the
application of principles of public policy. This opinion is given as of the date hereof and is limited to 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 trustee’s certificate of authentication of the Master Note has been manually signed by one of the trustee’s
authorized officers and to customary assumptions about the trustee’s authorization, execution and delivery of the indenture
governing the notes, the validity, binding nature and enforceability of the indenture governing the notes 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 February 24, 2015, which has been filed as an exhibit to BAC’s Post-Effective Amendment No. 2 to Registration
Statement relating to the notes filed with the Securities and Exchange Commission on February 24, 2015.
ERISA
CONSIDERATIONS
Each
fiduciary of a pension, profit-sharing, or other employee benefit plan subject to the Employee Retirement Income Security Act
of 1974 (“ERISA”) (a “Plan”), should consider the fiduciary standards of ERISA in the context of the Plan’s
particular circumstances before authorizing an investment in the notes. Accordingly, among other factors, the fiduciary should
consider whether the investment would satisfy the prudence and diversification requirements of ERISA and would be consistent with
the documents and instruments governing the Plan.
The
fiduciary investment considerations summarized above generally apply to employee benefit plans maintained by private-sector employers
and to individual retirement accounts and other arrangements subject to Section 4975 of the Code, but generally do not apply to
governmental plans (as defined in Section 3(32) of ERISA), certain church plans (as defined in Section 3(33) of ERISA), and foreign
plans (as described in Section 4(b)(4) of ERISA). However, these other plans may be subject to similar provisions under applicable
federal, state, local, foreign, or other regulations, rules, or laws (“similar laws”). The fiduciaries of plans subject
to similar laws should also consider the foregoing issues in general terms as well as any further issues arising under the applicable
similar laws.
In
addition, we and certain of our subsidiaries and affiliates, including MLPF&S, may be each considered a party in interest
within the meaning of ERISA, or a disqualified person (within the meaning of the Code), with respect to many Plans, as well as
many individual retirement accounts and Keogh plans (also “Plans”). Prohibited transactions within the meaning of
ERISA or the Code would likely arise, for example, if the notes are acquired by or with the assets of a Plan with respect to which
we or any of our affiliates is a party in interest, unless the notes are acquired under an exemption from the prohibited transaction
rules. A violation of these prohibited transaction rules could result in an excise tax or other liabilities under ERISA and/or
Section 4975 of the Code for such persons, unless exemptive relief is available under an applicable statutory or administrative
exemption.
Under
ERISA and various prohibited transaction class exemptions (“PTCEs”) issued by the U.S. Department of Labor, exemptive
relief may be available for direct or indirect prohibited transactions resulting from the purchase, holding, or disposition of
the notes. Those exemptions are PTCE 96-23 (for certain transactions determined by in-house asset managers), PTCE 95-60 (for certain
transactions involving insurance company general accounts), PTCE 91-38 (for certain transactions involving bank collective investment
funds), PTCE 90-1 (for certain transactions involving insurance company separate accounts), PTCE 84-14 (for certain transactions
determined by independent qualified asset managers), and the exemption under Section 408(b)(17) of ERISA and Section 4975(d)(20)
of the Code for certain arm’s-length transactions with a person that is a party in interest solely by reason of providing
services to Plans or being an affiliate of such a service provider (the “Service Provider Exemption”).
Because
we may be considered a party in interest with respect to many Plans, the notes may not be purchased, held, or disposed of by any
Plan, any entity whose underlying assets include plan assets by reason of any Plan’s investment in the entity (a “Plan
Asset Entity”) or any person investing plan assets of any Plan, unless such purchase, holding, or disposition is eligible
for exemptive relief, including relief available under PTCE 96-23, 95-60, 91-38, 90-1, or 84-14 or the Service Provider Exemption,
or such purchase, holding, or disposition is otherwise not prohibited. Any purchaser, including any fiduciary purchasing on behalf
of a Plan, transferee or holder of the notes will be deemed to have represented, in its corporate and its fiduciary capacity,
by its purchase and holding of the notes that either (a) it is not a Plan or a Plan Asset Entity and is not purchasing such notes
on behalf of or with plan assets of any Plan or any plan subject to similar laws or (b) its purchase, holding, and disposition
are eligible for exemptive relief or such purchase, holding, and disposition are not prohibited by ERISA or Section 4975 of the
Code or similar laws.
Further,
any person acquiring or holding the notes on behalf of any plan or with any plan assets shall be deemed to represent on behalf
of itself and such plan that (x) the plan is
paying
no more than, and is receiving no less than, adequate consideration within the meaning of Section 408(b)(17) of ERISA in connection
with the transaction or any redemption of the notes, (y) none of us, MLPF&S, or any other selling agent directly or indirectly
exercises any discretionary authority or control or renders investment advice or otherwise acts in a fiduciary capacity with respect
to the assets of the plan within the meaning of ERISA and (z) in making the foregoing representations and warranties, such person
has applied sound business principles in determining whether fair market value will be paid, and has made such determination acting
in good faith.
In
addition, any purchaser, that is a Plan or a Plan Asset Entity or that is acquiring the notes on behalf of a Plan or a Plan Asset
Entity, including any fiduciary purchasing on behalf of a Plan or Plan Asset entity, will be deemed to have represented, in its
corporate and its fiduciary capacity, by its purchase and holding of the notes that (a) none of us, MLPF&S, or any of our
respective affiliates is a “fiduciary” (under Section 3(21) of ERISA, or under any final or proposed regulations thereunder,
or with respect to a governmental, church, or foreign plan under any similar laws) with respect to the acquisition, holding or
disposition of the notes, or as a result of any exercise by us or our affiliates of any rights in connection with the notes, (b)
no advice provided by us or any of our affiliates has formed a primary basis for any investment decision by or on behalf of such
purchaser in connection with the notes and the transactions contemplated with respect to the notes, and (c) such purchaser recognizes
and agrees that any communication from us or any of our affiliates to the purchaser with respect to the notes is not intended
by us or any of our affiliates to be impartial investment advice and is rendered in its capacity as a seller of such notes and
not a fiduciary to such purchaser. Purchasers of the notes have exclusive responsibility for ensuring that their purchase, holding,
and disposition of the notes do not violate the prohibited transaction rules of ERISA or the Code or any similar regulations applicable
to governmental or church plans, as described above.
This
discussion is a general summary of some of the rules which apply to benefit plans and their related investment vehicles. This
summary does not include all of the investment considerations relevant to Plans and other benefit plan investors such as governmental,
church, and foreign plans and should not be construed as legal advice or a legal opinion. Due to the complexity of these rules
and the penalties that may be imposed upon persons involved in non-exempt prohibited transactions, it is particularly important
that fiduciaries or other persons considering purchasing the notes on behalf of or with “plan assets” of any Plan
or other benefit plan investor consult with their legal counsel prior to directing any such purchase.
Bank of America (NYSE:BAC)
Historical Stock Chart
From Apr 2024 to May 2024
Bank of America (NYSE:BAC)
Historical Stock Chart
From May 2023 to May 2024