Filed Pursuant to Rule 433
Registration No. 333-180488
Subject to Completion
Preliminary Term Sheet 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. See “Risk Factors” on page TS-6 of this term sheet and beginning on page S-8 of product supplement SUN-2.
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.
| Per Unit |
Total |
|||||||||
| Public offering price (1)(2) |
$10.000 | $ | ||||||||
| Underwriting discount (1)(2) |
$0.225 | $ | ||||||||
| Proceeds, before expenses, to BAC |
$9.775 | $ | ||||||||
| (1) | For any purchase of 500,000 units or more in a single transaction by an individual investor, the public offering price and the underwriting discount will be $9.95 per unit and $0.175 per unit, respectively. |
| (2) | For any purchase by certain fee-based trusts and discretionary accounts managed by U.S. Trust operating through Bank of America, N.A., the public offering price and underwriting discount will be $9.775 per unit and $0.00 per unit, respectively. |
The notes:
| Are Not FDIC Insured | Are Not Bank Guaranteed | May Lose Value |
Merrill Lynch & Co.
April , 2012
Units $10 principal amount per unit CUSIP No. Pricing Date* April , 2012 Settlement Date* May , 2012 Maturity Date* April , 2015 *Subject to change based on the actual date the notes are priced for initial sale to the public (the “pricing date”) Enhanced Market-Linked Step Up Notes with Buffer Linked to the Dow Jones Industrial AverageSM Maturity of approximately three years If the Index is greater than or equal to 90% of the Starting Value (the “Threshold Value”) up to the Step Up Value, a return of 19% to 25% If the Index increases above the Step Up Value, a return equal to the percentage increase in the Index 1-to-1 downside exposure to decreases in the Index beyond a 10% decline, with up to 90% of your principal at risk All payments at maturity subject to the credit risk of Bank of America Corporation No periodic interest payments Limited secondary market liquidity, with no exchange listing
| Enhanced Market-Linked Step Up Notes with Buffer Linked to the Dow Jones Industrial AverageSM, due April , 2015 |
|
Summary
The Enhanced Market-Linked Step Up Notes with Buffer Linked to the Dow Jones Industrial AverageSM Index due April , 2015 (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 you with a Step Up Payment if the Ending Value (as determined below) of the Dow Jones Industrial AverageSM Index (the “Index”) is equal to or greater than the Threshold Value, but is not greater than the Step Up Value. If the Ending Value is greater than the Step Up Value, you will participate on a 1-for-1 basis in the increase in the level of the Index above the Starting Value. If the Ending Value is less than the Threshold Value, you will lose a portion, which could be significant, of the principal amount of your notes.
The terms and risks of the notes are contained in this term sheet and the documents listed below (together, the “Note Prospectus”). The documents have been filed as part of a registration statement with the SEC, which may, without cost, be accessed on the SEC website as indicated below or obtained from MLPF&S by calling 1-866-500-5408:
| § | Product supplement SUN-2 dated April 2, 2012: |
http://www.sec.gov/Archives/edgar/data/70858/000119312512146583/d324730d424b5.htm
| § | Series L MTN prospectus supplement dated March 30, 2012 and prospectus dated March 30, 2012: |
http://www.sec.gov/Archives/edgar/data/70858/000119312512143855/d323958d424b5.htm
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 SUN-2. Unless otherwise indicated or unless the context requires otherwise, all references in this document to “we,” “us,” “our,” or similar references are to BAC.
| Enhanced Market-Linked Step Up Notes with Buffer | TS-2 |
| Enhanced Market-Linked Step Up Notes with Buffer Linked to the Dow Jones Industrial AverageSM, due April , 2015 |
|
Investor Considerations
We urge you to consult your investment, legal, tax, accounting, and other advisors before you invest in the notes.
Hypothetical Payout Profile
The below graph is based on hypothetical numbers and values.
| Enhanced Market-Linked Step Up Notes with Buffer |
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|
|
This graph reflects the returns on the notes, based on a Step Up Payment of $2.20 (the midpoint of the Step Up Payment range of $1.90 to $2.50), a Step Up Value of 122% of the Starting Value (the midpoint of the Step Up Value range of 119% to 125%) and the Threshold Value of 90% of the Starting Value. The green line reflects the returns on the notes, while the dotted gray line reflects the returns of a direct investment in the stocks included in the Index, excluding dividends.
This graph has been prepared for purposes of illustration only. | |
| Enhanced Market-Linked Step Up Notes with Buffer | TS-3 |
| Enhanced Market-Linked Step Up Notes with Buffer Linked to the Dow Jones Industrial AverageSM, due April , 2015 |
|
Hypothetical Payments at Maturity
The following table and examples are for purposes of illustration only. They are based on hypothetical values and show hypothetical returns on the notes. The actual amount you receive and the resulting total rate of return will depend on the actual Starting Value, Threshold Value, Ending Value, Step Up Value, Step Up Payment, and the term of your investment.
The following table is based on a Starting Value of 100, a Threshold Value of 90, a Step Up Value of 122% of the Starting Value, and a Step Up Payment of $2.20 per unit. It illustrates the effect of a range of Ending Values on the Redemption Amount per unit of the notes and the total rate of return to holders of notes. The following examples do not take into account any tax consequences from investing in the notes.
| Ending Value |
Percentage Change from Value to the Ending Value |
Redemption |
Total Rate | |||||||||||||||
| 50.00 | -50.00 | % | $6.00 | -40.00 | % | |||||||||||||
| 60.00 | -40.00 | % | $7.00 | -30.00 | % | |||||||||||||
| 70.00 | -30.00 | % | $8.00 | -20.00 | % | |||||||||||||
| 80.00 | -20.00 | % | $9.00 | -10.00 | % | |||||||||||||
| 85.00 | -15.00 | % | $9.50 | -5.00 | % | |||||||||||||
| 90.00 | (1) | -10.00 | % | $12.20 | (3) | 22.00 | % | |||||||||||
| 92.00 | -8.00 | % | $12.20 | 22.00 | % | |||||||||||||
| 94.00 | -6.00 | % | $12.20 | 22.00 | % | |||||||||||||
| 96.00 | -4.00 | % | $12.20 | 22.00 | % | |||||||||||||
| 98.00 | -2.00 | % | $12.20 | 22.00 | % | |||||||||||||
| 100.00 | (2) | 0.00 | % | $12.20 | 22.00 | % | ||||||||||||
| 102.00 | 2.00 | % | $12.20 | 22.00 | % | |||||||||||||
| 104.00 | 4.00 | % | $12.20 | 22.00 | % | |||||||||||||
| 106.00 | 6.00 | % | $12.20 | 22.00 | % | |||||||||||||
| 108.00 | 8.00 | % | $12.20 | 22.00 | % | |||||||||||||
| 110.00 | 10.00 | % | $12.20 | 22.00 | % | |||||||||||||
| 120.00 | 20.00 | % | $12.20 | 22.00 | % | |||||||||||||
| 122.00 | (4) | 22.00 | % | $12.20 | 22.00 | % | ||||||||||||
| 130.00 | 30.00 | % | $13.00 | 30.00 | % | |||||||||||||
| 140.00 | 40.00 | % | $14.00 | 40.00 | % | |||||||||||||
| 150.00 | 50.00 | % | $15.00 | 50.00 | % | |||||||||||||
| (1) | This is the hypothetical Threshold Value. |
| (2) | The hypothetical Starting Value of 100 used in these examples has been chosen for illustrative purposes only, and does not represent a likely actual Starting Value for the Market Measure. |
| (3) | This amount represents the sum of the Original Offering Price and the hypothetical Step Up Payment of $2.20. |
| (4) | This is the hypothetical Step Up Value. |
For recent actual levels of the Market Measure, see “The Index” section below. The Index is a price return index and as such the Ending Value will not include any income generated by dividends paid on the stocks included in the Index, which you would otherwise be entitled to receive if you invested in those stocks directly. In addition, all payments on the notes are subject to issuer credit risk.
| Enhanced Market-Linked Step Up Notes with Buffer | TS-4 |
| Enhanced Market-Linked Step Up Notes with Buffer Linked to the Dow Jones Industrial AverageSM, due April , 2015 |
|
Redemption Amount Calculation Examples
Example 1:
The Ending Value is 80, or 80% of the Starting Value:
Starting Value: 100
Threshold Value: 90
Ending Value: 80
| = $10 – |
[ | $10 × | ( | 90 – 80 | ) | ] | = $9.00 | Redemption Amount per unit | ||||||||||
| 100 |
Example 2
The Ending Value is 95, or 95% of the Starting Value:
Starting Value: 100
Threshold Value: 90
Ending Value: 95
$10.00 + $2.20 = $12.20 Redemption Amount per unit, the Original Offering Price plus the Step Up Payment, even though the Ending Value is less than the Starting Value, and since the Ending Value is equal to or greater than the Threshold Value, but less than the Step Up Value.
Example 3
The Ending Value is 110, or 110% of the Starting Value:
Starting Value: 100
Step Up Value: 122
Ending Value: 110
$10.00 + $2.20 = $12.20 Redemption Amount per unit, the Original Offering Price plus the Step Up Payment, since the Ending Value is equal to or greater than the Threshold Value, but less than the Step Up Value.
Example 4
The Ending Value is 150, or 150% of the Starting Value:
Starting Value: 100
Step Up Value: 122
Ending Value: 150
| = $10 + |
[ | $10 × | ( | 150 – 100 | ) | ] | = $15.00 Redemption Amount per unit | |||||||||
| 100 |
| Enhanced Market-Linked Step Up Notes with Buffer | TS-5 |
| Enhanced Market-Linked Step Up Notes with Buffer Linked to the Dow Jones Industrial AverageSM, due April , 2015 |
|
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 SUN-2, page S-5 of the MTN prospectus supplement, and page 8 of the prospectus identified above under “Summary.” We also urge you to consult your investment, legal, tax, accounting, and other advisors before you invest in the notes.
| § | Depending on the performance of the Index as measured shortly before the maturity date, your investment may result in a loss; there is no guaranteed return of principal. |
| § | Your yield may be less than the yield you could earn by owning a conventional debt security of comparable maturity. |
| § | 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. |
| § | If you attempt to sell the notes prior to maturity, their market value may be lower than the price you paid for the notes due to, among other things, the inclusion of fees charged for developing, hedging and distributing the notes, as described on page TS-10 and various credit, market and economic factors that interrelate in complex and unpredictable ways. |
| § | A trading market is not expected to develop for the notes. MLPF&S is not obligated to make a market for, or to repurchase, the notes. |
| § | 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 companies included in the Index) 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. |
| § | The Index sponsor may adjust the Index in a way that affects its level, and has no obligation to consider your interests. |
| § | You will have no rights of a holder of the securities represented by the Index, and you will not be entitled to receive securities or dividends or other distributions by the issuers of those securities. |
| § | While we or our affiliates may from time to time own shares of companies included in the Index, except to the extent that our common stock is included in the Index, we do not control any company included in the Index, and are not responsible for any disclosure made by any other company. |
| § | There may be potential conflicts of interest involving the calculation agent. We have the right to appoint and remove the calculation agent. |
| § | 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-32 of product supplement SUN-2. |
| Enhanced Market-Linked Step Up Notes with Buffer | TS-6 |
| Enhanced Market-Linked Step Up Notes with Buffer Linked to the Dow Jones Industrial AverageSM, due April , 2015 |
|
The Index
All disclosures contained in this term sheet regarding the Index, including, without limitation, its make up, method of calculation, and changes in its components, have been derived from publicly available sources. The information reflects the policies of Dow Jones Indexes, the marketing name of CME Group Index Services LLC (“CME Indexes”, the “Index Sponsor”), and is subject to change by Dow Jones Indexes. Dow Jones Indexes has no obligation to continue to publish, and may discontinue publication of, the Index. The consequences of Dow Jones Indexes discontinuing publication of the Index are discussed beginning on page S-25 of product supplement SUN-2 entitled “Description of the Notes—Discontinuance of a Market Measure. None of us, the calculation agent, or the selling agent accepts any responsibility for the calculation, maintenance, or publication of the Index or any successor index.
Publication of the Index
Unless otherwise stated, all information on the Index provided in this term sheet is derived from Dow Jones Indexes, the marketing name and a licensed trademark of CME Indexes. The Index is a price-weighted index, which means an underlying stock’s weight in the Index is based on its price per share rather than the total market capitalization of the issuer. The Index is designed to provide an indication of the composite performance of 30 common stocks of corporations representing a broad cross-section of U.S. industry. The corporations represented in the Index tend to be market leaders in their respective industries and their stocks are typically widely held by individuals and institutional investors.
The Index is maintained by an Averages Committee comprised of the Managing Editor of The Wall Street Journal (“WSJ”), the head of Dow Jones Indexes research and the head of CME Group Inc. research. The Averages Committee was created in March 2010, when Dow Jones Indexes became part of CME Group Index Services, LLC, a joint venture company owned 90% by CME Group Inc. and 10% by Dow Jones & Company. Generally, composition changes occur only after mergers, corporate acquisitions or other dramatic shifts in a component’s core business. When such an event necessitates that one component be replaced, the entire Index is reviewed. As a result, when changes are made they typically involve more than one component. While there are no rules for component selection, a stock typically is added only if it has an excellent reputation, demonstrates sustained growth, is of interest to a large number of investors and accurately represents the sector(s) covered by the average.
Changes in the composition of the Index are made entirely by the Averages Committee without consultation with the corporations represented in the Index, any stock exchange, any official agency or us. Changes to the common stocks included in the Index tend to be made infrequently, and the underlying stocks of the Index may be changed at any time for any reason. The companies currently represented in the Index are incorporated in the United States and its territories and their stocks are listed on the New York Stock Exchange and NASDAQ.
The Index initially consisted of 12 common stocks and was first published in the WSJ in 1896. The Index was increased to include 20 common stocks in 1916 and to 30 common stocks in 1928. The number of common stocks in the Index has remained at 30 since 1928, and, in an effort to maintain continuity, the constituent corporations represented in the Index have been changed on a relatively infrequent basis. Nine main groups of companies constitute the Index, with the approximate sector weights of the Index as of March 30, 2012 indicated in parentheses: Industrials (21.37%); Technology (17.99%); Consumer Services (14.52%); Oil & Gas (11.11%); Consumer Goods (10.27%); Financials (9.89%); Health Care (7.28%); Telecommunications (3.98%); and Basic Materials (3.60%).
Computation of the Index
The level of the Index is the sum of the primary exchange prices of each of the 30 component stocks included in the Index, divided by a divisor that is designed to provide a meaningful continuity in the level of the Index. Because the Index is price-weighted, stock splits or changes in the component stocks could result in distortions in the Index level. In order to prevent these distortions related to extrinsic factors, the divisor is periodically changed in accordance with a mathematical formula that reflects adjusted proportions within the Index. The current divisor of the Index is published daily in the WSJ and other publications. In addition, other statistics based on the Index may be found in a variety of publicly available sources.
| Enhanced Market-Linked Step Up Notes with Buffer | TS-7 |
| Enhanced Market-Linked Step Up Notes with Buffer Linked to the Dow Jones Industrial AverageSM, due April , 2015 |
|
The following table presents the listing symbol, industry group, price per share, and component stock weight for each of the component stocks in the Index based on publicly available information on March 30, 2012.
| Issuer of Component Stock(1) |
Symbol |
Industry |
Price Per |
Component | |||||||||||||
| 3M Co. |
MMM | Diversified Industrials |
$89.21 | 5.11% | |||||||||||||
| Alcoa Inc. |
AA | Aluminum |
$10.02 | 0.57% | |||||||||||||
| American Express Company |
AXP | Consumer Finance |
$57.86 | 3.31% | |||||||||||||
| AT&T Inc. |
T | Fixed Line Telecommunications |
$31.23 | 1.79% | |||||||||||||
| Bank of America Corporation |
BAC | Banks |
$9.57 | 0.55% | |||||||||||||
| The Boeing Company |
BA | Aerospace |
$74.37 | 4.26% | |||||||||||||
| Caterpillar Inc. |
CAT | Commercial Vehicles & Trucks |
$106.52 | 6.10% | |||||||||||||
| Chevron Corporation |
CVX | Integrated Oil & Gas |
$107.24 | 6.14% | |||||||||||||
| Cisco Systems Inc. |
CSCO | Networking Products |
$21.15 | 1.21% | |||||||||||||
| The Coca-Cola Company |
KO | Soft Drinks |
$74.01 | 4.24% | |||||||||||||
| E.I. DuPont De Nemours and Company. |
DD | Commodity Chemicals |
$52.90 | 3.03% | |||||||||||||
| Exxon Mobil Corporation |
XOM | Integrated Oil & Gas |
$86.73 | 4.97% | |||||||||||||
| General Electric Company |
GE | Diversified Industrials |
$20.07 | 1.15% | |||||||||||||
| Hewlett-Packard Company |
HPQ | Computer Hardware |
$23.83 | 1.37% | |||||||||||||
| Home Depot Inc. |
HD | Home Improvement Retailers |
$50.31 | 2.88% | |||||||||||||
| Intel Corporation |
INTC | Semiconductors |
$28.11 | 1.61% | |||||||||||||
| International Business Machines Corporation |
IBM | Computer Services |
$206.65 | 11.95% | |||||||||||||
| Johnson & Johnson |
JNJ | Pharmaceuticals |
$65.96 | 3.78% | |||||||||||||
| JPMorgan Chase & Co. |
JPM | Banks |
$45.98 | 2.63% | |||||||||||||
| Kraft Foods Inc. Class A |
KFT | Food Products |
$38.01 | 2.18% | |||||||||||||
| McDonald’s Corporation |
MCD | Restaurants & Bars |
$98.10 | 5.62% | |||||||||||||
| Merck & Co., Inc. |
MRK | Pharmaceuticals |
$38.40 | 2.20% | |||||||||||||
| Microsoft Corporation |
MSFT | Software |
$32.25 | 1.86% | |||||||||||||
| Pfizer Inc. |
PFE | Pharmaceuticals |
$22.66 | 1.30% | |||||||||||||
| The Procter & Gamble Company |
PG | Nondurable Household Products |
$67.21 | 3.85% | |||||||||||||
| The Travelers Companies, Inc. |
TRV | Insurance |
$59.20 | 3.39% | |||||||||||||
| United Technologies Corporation |
UTX | Aerospace |
$82.94 | 4.75% | |||||||||||||
| Verizon Communications Inc. |
VZ | Fixed Line Telecommunications |
$38.23 | 2.19% | |||||||||||||
| Wal-Mart Stores, Inc. |
WMT | Broadline Retailers |
$61.20 | 3.51% | |||||||||||||
| The Walt Disney Company |
DIS | Broadcasting & Entertainment |
$43.78 | 2.51% | |||||||||||||
| (1) | The inclusion of a component stock in the Index should not be considered a recommendation to buy or sell that stock and neither we nor any of our affiliates make any representation to any purchaser of the notes as to the performance of the Index or any component stock included in the Index. Beneficial owners of the notes will not have any right to the component stocks included in the Index or any dividends paid on those stocks. |
| (2) | Information obtained from Bloomberg Financial Markets. |
Neither we nor any of our affiliates, including the selling agent, accepts any responsibility for the calculation, maintenance, or publication of, or for any error, omission, or disruption in, the Index or any successor to the Index. Dow Jones and CME Indexes do not guarantee the accuracy or the completeness of the Index or any data included in the Index. Dow Jones and CME Indexes assume no liability for any errors, omissions, or disruption in the calculation and dissemination of the Index. Dow Jones and CME Indexes disclaim all responsibility for any errors or omissions in the calculation and dissemination of the Index or the manner in which the Index is applied in determining the amount payable on the notes at maturity.
| Enhanced Market-Linked Step Up Notes with Buffer | TS-8 |
| Enhanced Market-Linked Step Up Notes with Buffer Linked to the Dow Jones Industrial AverageSM, due April , 2015 |
|
The following graph shows the monthly historical performance of the Index in the period from January 2007 through March 2012. We obtained this historical data from Bloomberg L.P. We make no representation or warranty as to the accuracy or completeness of the information from Bloomberg L.P. On March 30, 2012, the closing level of the Index was 13,212.04.
This historical data on the Index is not necessarily indicative of the future performance of the Index or what the value of the notes may be. Any historical upward or downward trend in the level of the Index during any period set forth above is not an indication that the level of the Index 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 levels and trading pattern of the Index.
License Agreement
The “DJIASM” is a product of Dow Jones Indexes, the marketing name and a licensed trademark of CME Indexes and has been licensed for use. “Dow Jones”, “Dow Jones Industrial AverageSM”, “Dow Jones Indexes” and “DJIA” are service marks of Dow Jones and have been licensed for use for certain purposes by us. The notes based on the Dow Jones Industrial AverageSM are not sponsored, endorsed, sold or promoted by Dow Jones, CME Indexes or their respective affiliates and Dow Jones, CME Indexes and their respective affiliates make no representation regarding the advisability of investing in the notes.
The only relationship of Dow Jones, CME Indexes, or any of their respective affiliates to us is the licensing of certain trademarks, trade names and service marks of Dow Jones and of the DJIASM, which is determined, composed and calculated by CME Indexes without regard to us or the notes. Dow Jones and CME Indexes have no obligation to take the needs of us or the owners of the notes into consideration in determining, composing, or calculating DJIASM. Dow Jones, CME Indexes, and their respective affiliates are not responsible for and have not participated in the determination of the timing of, prices at, or quantities of the notes to be issued or in the determination or calculation of the equation by which the notes are to be converted into cash. Dow Jones, CME Indexes, and their respective affiliates have no obligation or liability in connection with the administration, marketing or trading of the notes. Notwithstanding the foregoing, CME Group Inc. and its affiliates may independently issue and/or sponsor financial products unrelated to the notes currently being issued by us, but which may be similar to and competitive with the notes. In addition, CME Group Inc. and its affiliates may trade financial products which are linked to the performance of the DJIASM. It is possible that this trading activity will affect the value of the DJIASM and the notes.
DOW JONES, CME INDEXES, AND THEIR RESPECTIVE AFFILIATES DO NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE DJIASM OR ANY DATA INCLUDED THEREIN AND DOW JONES, CME INDEXES AND THEIR RESPECTIVE AFFILIATES SHALL HAVE NO LIABILITY FOR ANY ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN. DOW JONES, CME INDEXES, AND THEIR RESPECTIVE AFFILIATES MAKE NO WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY US, OWNERS OF THE NOTES, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE DJIASM OR ANY DATA INCLUDED THEREIN. DOW JONES, CME INDEXES, AND THEIR RESPECTIVE AFFILIATES MAKE NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIM ALL WARRANTIES, OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE DJIASM OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL DOW JONES, CME INDEXES, OR THEIR RESPECTIVE AFFILIATES HAVE ANY LIABILITY FOR ANY LOST PROFITS OR INDIRECT, PUNITIVE, SPECIAL OR CONSEQUENTIAL DAMAGES OR LOSSES, EVEN IF NOTIFIED OF THE POSSIBILITY THEREOF. THERE ARE NO THIRD PARTY BENEFICIARIES OF ANY AGREEMENTS OR ARRANGEMENTS BETWEEN CME INDEXES AND US, OTHER THAN THE LICENSORS OF CME INDEXES.
| Enhanced Market-Linked Step Up Notes with Buffer | TS-9 |
| Enhanced Market-Linked Step Up Notes with Buffer Linked to the Dow Jones Industrial AverageSM, due April , 2015 |
|
Supplement to the Plan of Distribution
We may 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, if the initial settlement of the notes occurs more than three business days from the pricing date, 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.
MLPF&S will not receive an underwriting discount for notes sold to certain fee-based trusts and fee-based discretionary accounts managed by U.S. Trust operating through Bank of America, N.A.
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. MLPF&S may act as principal or agent in these market-making transactions; however it is not obligated to engage in any such transactions.
Role of MLPF&S and Conflicts of Interest
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.
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. The public offering price includes, in addition to the underwriting discount, a charge of approximately $0.075 per unit, reflecting an estimated profit earned by MLPF&S from transactions through which the notes are structured and resulting obligations hedged. Actual profits or losses from these hedging transactions may be more or less than this amount. In entering into the hedging arrangements for the notes, we seek competitive terms and may enter into hedging transactions with MLPF&S or another of our affiliates.
All charges related to the notes, including the underwriting discount and the hedging related costs and charges, reduce the economic terms of the notes. For further information regarding these charges, our trading and hedging activities and conflicts of interest, see “Risk Factors—General Risks Relating to the Notes” beginning on page S-8 and “Use of Proceeds” on page S-18 of product supplement SUN-2.
| Enhanced Market-Linked Step Up Notes with Buffer | TS-10 |
| Enhanced Market-Linked Step Up Notes with Buffer Linked to the Dow Jones Industrial AverageSM, due April , 2015 |
|
Summary Tax Consequences
You should consider the U.S. federal income tax consequences of an investment in the notes, including the following:
| • | There is no statutory, judicial, or administrative authority directly addressing the characterization of the notes. |
| • | 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 a single financial contract with respect to the Market Measure. |
| • | Under this characterization and tax treatment of the notes, a U.S. Holder (as defined beginning on page 62 of the prospectus) generally will recognize capital gain or loss upon maturity or upon a sale or exchange of the notes prior to maturity. This capital gain or loss generally will be long-term capital gain or loss if you held the notes for more than one year. |
| • | No assurance can be given that the IRS or any court will agree with this characterization and tax treatment. |
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-32 of product supplement SUN-2.
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 Return Market-Linked Investment or guarantee any performance.
Enhanced Return Market-Linked Investments are short- to medium-term investments that offer you a way to enhance exposure to a particular market view without taking on a similarly enhanced level of market downside risk. They can be especially effective in a flat to moderately positive market (or, in the case of bearish investments, a flat to moderately negative market). In exchange for the potential to receive better-than market returns on the linked asset, you must generally accept market downside risk and capped upside potential. As these investments are not market downside protected, and do not assure full repayment of principal at maturity, you need to be prepared for the possibility that you may lose all or part of your investment.
| Enhanced Market-Linked Step Up Notes with Buffer | TS-11 |