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    Approaching “Year 15” on housing tax credit properties

    Partnerships should weigh options

    From 2015 to 2020, approximately 650,000 of the two million affordable housing units in the U.S. will exit their tax credit compliance period as they near their "Year 15" anniversaries, according to government data. Most general partners have chosen to remain in the affordable program and the trend is likely to continue. However, those general partners may still face a number of issues, including how to manage refinancing, address partnership complexities and source new investment.


    APPROACHING YEAR 15

    General and limited partners of these properties need to analyze their options as they approach the end of their first 15 years under the Low Income Housing Tax Credit (LIHTC) program, as LIHTC is the most important resource for creating affordable housing in the U.S. today.

     

    Despite heavy demand for affordable housing, as property values rise, property owners may be tempted to apply for approval to remove the 30-year IRS tax restriction, especially in the largest markets on the coasts and in major cities. The qualified contract process enables owners to convert properties to market rents if a state agency cannot find a buyer who would keep the property in the program. 

    The more likely scenario for these properties, however, based on studies and practical experience by affordable housing developers, is that a majority will stay affordable for the entire 30-year period as dictated by their extended LIHTC use restrictions.

    A Department of Housing and Urban Development study released in August 2012, titled, What Happens to Low-Income Housing Tax Credit Properties at Year 15 and Beyond?, said most of the properties that have hit the 15-year period have stayed affordable and extended the affordability period for an additional 15 years. It also predicted that most projects would continue to operate as is, with modest improvements made in conjunction with property refinancings without applying for new tax credits for major renovations. A smaller percentage would be recapitalized by re-syndicating tax credits, issuing bonds or applying for other housing subsidies, and another small portion would apply for the qualified contract exemption.

     

    This pattern is likely to continue because newer projects exhibit better occupancy rates and more cash flow than older projects. The study found that "the later year LIHTC properties appear to be at even lower risk of being repositioned as market-rate housing with unaffordable rents than the early year LIHTCs."

     

    “I have not been involved in any deal that has taken advantage of the qualified contract option." said Marianne Votta, tax credit equity asset management executive for Bank of America Merrill Lynch. “Usually limited partners exit and the general partner has to keep the property affordable for another 15 years. I have heard of a few instances in South Carolina and Arkansas where they applied because market rates were close to LIHTC rents.


    TAKE ACTION NOW

    Only 1%-2% of affordable housing loans foreclose, the 2012 study showed. Operating and maintenance budgets are typically tight, but in such a stable environment, with ever-increasing demands for affordable housing, it may be appealing for partners to put off developing a strategy for their properties as they approach the Year 15 mark. That may not be a good idea.

     

    "Owners need to think proactively about what works best for their portfolio of properties,” said Ellen Rogers, senior vice president and market executive for the Southeast region for community development banking at Bank of America Merrill Lynch.

    "Owners need to initiate discussions with their investor partners and think strategically in terms of their occupied properties."

    Owners need to think proactively about what works best for their portfolio of properties.

    Ellen Rogers

    Senior Vice President, Market Executive

    Rewriting the original agreement requires close attention to the details. Each property has to be reviewed separately based on individual circumstances. Rogers added, "If you have 400 properties, do you know what's happening with each one? A lot of the early-executed documents are silent on key issues. That means there needs to be some dialogue on what needs to happen."

     

    “The reality is, you start the disposition process when you sign your partnership agreement,” Votta advised. “What is documented in the agreement becomes the roadmap for the deal to unwind. You should refer to the partnership agreement prior to approaching your investor before disposition or any refinancing. There may be tax consequences involved, so it is advisable to contact your tax advisors.

     

    Before approaching an investor about a disposition, or for that matter, any capital transaction, an owner should refer to the partnership agreement and confer with their tax advisor. It is important to remember that the partners’ capital accounts will play a key role in determining what an investor is entitled to collect. Many general partners make the mistake of looking solely to the “waterfall.” This will lead to expectations of exit splits that are not realistic. Many general partners look strictly to the real estate issues on exit and neglect the tax considerations of the deal which are explicit in the partnership agreement.

     

    In most cases, the limited partners, having benefited from the tax credits, are looking to exit the investment and it's the general partners who buy them out. This is an opportune time to refinance the property with favorable interest rates, abundant capital and a borrowing base on a property value that may have increased significantly.

     

    If the general partners do not assume total ownership, they can choose to re-syndicate new tax credit investments, thereby raising capital for property improvements.

     

    Re-syndication has its own issues. The market for new credits is very strong, but the problem is getting an allocation as a preservation deal. Each state has a finite amount of 9% credits to allocate and each state has priorities on the types of deals that they want to allocate to, whether it's the type of property – family, elderly, special needs, mixed-income, mixed-use – or construction type. In many states, with other government subsidies cut or in some cases eliminated, LIHTC may be one of the only vehicles the state has to not only build housing but revitalize communities. Therefore, a preservation and re-syndication property may not get the credits.

     

    An owner who wants to keep a property should assess its physical condition. If the property has generated healthy cash flow and kept up with physical needs, it may be able to go forward without a re-syndication. Although the property still has to maintain the affordability restrictions of the extended use program, the owner does not have to provide the investor reporting if the property does not re-syndicate. However, for properties with little cash flow that are in need of capital improvements, there may be no other option than to re-syndicate.


    STRATEGIC CONSIDERATIONS

    Post “Year 15" decisions will depend upon the property's condition, how it compares to comparable properties and local real estate market trends. Does the property need significant repairs or updates to compete? Is it cash-flow stable? Does local demand support conversion to market rate? Additionally, some government or quasi-government subsidy providers require long-term rental restrictions via subordinate debt or grants. Consequently, there isn't one strategy. Each property needs to be evaluated individually in order to structure an optimal Year 15 strategy.

     

    According to the HUD study, after Year 15, properties take one of three paths: They remain affordable without recapitalization, remain affordable with a major new source of subsidy or are repositioned as market-rate housing.

     

    "The cost of rehabilitating deferred maintenance is minimized if the GP has reinvested in the property as needed.  The problem is that not all tax credit properties generate the cash flow needed to address all maintenance issues as they arise,” Votta said.

     

    Keeping housing affordable while keeping up with the Joneses isn't easy. Developers have to find the capital to maintain appearances and meet evolving building standards. A 15-year-old building should not have the same issues and capital needs that a 40-year-old one does. Earlier deals that carried multiple layers of debt struggled to get reworked or refunded. And several years ago, when the earliest deals were underwritten, allocating agencies did not fund sufficient replacement reserves in fear of appearing to be giving developers unneeded taxpayer money. That's changed, Votta said: "Local governments are realizing these properties really do need reserves. They may need new roofs, new systems.”


    OWNER OPTIONS

    Alongside a refinance, general partners can take over total ownership and re-syndicate the property with new tax credits. Fortunately, it's a good time to do that. In heavily banked areas, namely the largest 5O markets, demand for tax credits has pushed prices to par or at a premium of face value. Rural tax credits are still lagging as rural communities confront declining populations and weaker market conditions, but they have risen in price in recent years. “Usually given the current market for tax credits, most deals with credits get done,” Votta noted.

     

    In 2013, Bank of America Merrill Lynch financed the construction and rehabilitation of a portfolio of 502 units spread across seven affordable apartment complexes in rural North Carolina. It was the second direct purchase of housing bonds – this one totaled $20.3 million in construction finance and $9.5 million in LIHTC – the bank has closed with the same developer. The properties were 96% occupied at the time of the transaction with project-based rent subsidies in place on 93% of the units.

     

    "Many developers are using tax-exempt bond financing to recapitalize and enhance their Year 15 properties. Tax-exempt financing proceeds and tax credit equity fund repairs and upgrades, and enhance long-term cash flow,” said Sindy Spivak, senior vice president for community development banking at Bank of America Merrill Lynch.  

    "Often our clients initially seek acquisition financing to gain control of an asset followed by a request for debt and sometimes equity as part of a tax-exempt financing to recapitalize a property."

    There is a strong market for affordable properties if limited partners want to exit, said BofAML bankers. Managing partners with strong development or property management businesses often seek to acquire control of their properties toward the end of the compliance period. That way, they can leverage opportunities for future development and economies of scale. Owners should also be smart about property values and practice good portfolio management.

     

    Looking strategically at a portfolio allows a developer to identify immediate opportunities and plan for issues that all affordable housing developments face, such as uncertainty of funding sources and rising interest rates, Spivak said.

     

    "In recent years, developers have been able to benefit from historically low interest rates. If interest rates rise, properties with rental restrictions could face challenges in refinancing and recapitalization. Availability of tax-exempt financing, LIHTC and preservation funds will become crucial to the future of properties ending their initial compliance period," Spivak added.


    STRATEGIES AT WORK

    For an example of how these transactions are working, in early 2016 BofAML completed the refinance of a 4% tax credit property in the Northeast that is approaching the end of its compliance period. The property requires a series of repairs to address deferred maintenance and upgrade the units. With FHA rates still attractive, a 223(f) mortgage insured refinance is the ideal tool to provide the capital needed for the exit as well as make critical repairs.

     

    The bank has also assisted several clients with acquisition financing, including one in Houston recently that allowed the client to gain control of the property and stabilize operations while going through the process of applying for additional tax credits and bonds for permanent financing.

     

    Not only is HUD focused on affordable housing, Freddie Mac and Fannie Mae are also stepping up to the table with a more competitive range of products. At the same time they still provide the necessary flexibility for affordable housing and Year 15 financing.

    Summary

    The future of affordable housing, even with its challenges, looks bright. Industry participants have worked together to educate the public and private sectors as to the benefits of LIHTC in providing quality, affordable housing for low- and moderate-income individuals as well as those with special needs.

     

    Participants have also always faced change and challenges with creativity, adapting to new programs and regulations. The market continues to see increased innovation in the form of mixed-income developments, special needs developments, inclusionary housing, sustainable green technology and leveraging of government lending programs, all in a time of budget cuts and increased costs. Such creativity has allowed the LIHTC to remain one of the most effective programs in creating and preserving affordable housing despite various challenges.

    Action Center Module

    Key Takeaways

    • When approaching the end of your compliance period, three primary options are to stay affordable, re-cap to stay affordable or go market rate
    • Tax-exempt financing can help with funding repairs, making upgrades, generating fees and enhancing long-term cash flow
    • The keys to a smooth Year 15 transition lie in owner preparedness and an experienced financial partner

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    All materials at these Sites are meant to be reviewed in their entirety, including any footnotes, legal disclaimers, restrictions or disclosures, or any copyright or proprietary notices. Any disclaimers, restrictions, disclosure or hedge clauses apply to any partial document or material in the same manner as they do to the whole, and will be deemed incorporated in the portion of any material or document that you consult or download.

    LINKED SITES

    Certain hyperlinks on the Sites may link websites maintained by the Affiliates, which are not to be considered a part of the Sites. Certain other links on the Sites to non-affiliated third-party sites may contain information over which we have no control. We take no responsibility for the content, accuracy, content, completeness, timeliness, current value or any aspect of the information on these sites and disclaim any liability to Client for it or for any consequence of your decision to use the links provided or your use of such information. Links to non–Bank of America sites do not imply any endorsement of or responsibility for the opinions, ideas, products, information or services offered at such sites, or any representation regarding the content at such sites. We also disclaim all liability and make no representations or warranties for any products or services sold or provided to Bank of America or its Affiliates by any third party. Your purchase of products or services through one of those other sites is subject to agreements and/or the terms and conditions in effect between Client and the providers of products and services at those other sites. Client agrees that it shall not bring a suit or claim against Bank of America or its Affiliates arising from or based on your purchase or use of products or services through those other sites. Links do not imply that Bank of America, its Affiliates or the Sites sponsors, endorses, is affiliated or associated with, or is legally authorized to use any trademark, trade name, logo or copyright symbol displayed in or accessible through the links, or that any linked sites is authorized to use any trademark, trade name, logo or copyright symbol of Bank of America or its Affiliates.

    CONTENT AND SERVICE AVAILABILITY

    Bank of America or its Affiliates may make changes to the Sites and reserves the right to do so without prior notice to you. Client acknowledges that not all products and services listed or discussed in the Sites are available in all geographic areas. Your eligibility for particular products and services is subject to final determination and acceptance by Bank of America or its Affiliates.

    CONSENT TO ELECTRONIC DELIVERY

    You agree to receive certain documents and information provided by Bank of America and its Affiliates through the Sites and/or through email provided to you via the Sites. This delivery will generally consist of certain Content on the Sites, and certain other documents relating to Bank of America and its Affiliate’s business. This electronic provision and delivery will be regarded by you as appropriate delivery pursuant to any delivery requirements under the various statutes and rules, where applicable, of the Securities and Exchange Commission, the National Association of Securities Dealers and any state or other jurisdiction. You acknowledge that you have the appropriate technological equipment to use the Sites and to receive email via the Internet and understand that your use of the Internet may incur certain operational costs such as monthly fees for a service provider. You agree to notify Bank of America or the applicable Affiliate in the event that you no longer desire to receive content through this delivery procedure and will allow a reasonable amount of time to permit proper delivery to you through other means.

    NO WARRANTY

    Client acknowledges that any information provided through the Sites is not intended to be a recommendation, offer or solicitation of any particular products or services. In addition, all research, analysis and similar market information from non-affiliated third parties provided represent the views and opinions solely of the author or the indicated source. Bank of America and its Affiliates do not independently verify the accuracy or completeness of such information, nor does Bank of America and its Affiliates endorse any particular views expressed therein. Except for offering memoranda, Bank of America and its Affiliates disclaim any liability to Client for this information or for any consequence of your decision to use it. Client agrees that it shall independently confirm any such information presented through the Sites before relying on such information. Bank of America, its Affiliates and their respective employees, contractors, agents and various contributors to the Sites have no duty to correct or update any inaccurate or out-of-date information on the Sites.

    Client acknowledges that it is acting for its own account, and it has made its own independent decisions to enter into a Transaction and as to whether a Transaction is appropriate or proper for it based upon its own judgment and upon advice from such advisors as it has deemed necessary. Client is not relying on any communication (written or oral) of Bank of America or its Affiliates as investment advice or as a recommendation to enter into a Transaction; it being understood that information and explanations related to the terms and conditions of a Transaction shall not be considered investment advice or a recommendation to enter into that Transaction. Further, Client has not received from Bank of America or its Affiliates any assurance or guarantee as to the expected results of a Transaction.

    COMPLIANCE WITH LAWS AND INDEMNITY

    The Sites may be used only for lawful purposes. Client’s conduct may be subject to local, state, national and international laws. Client agrees that it and any of its Authorized Persons shall comply with this Agreement, applicable laws, rules, regulations, ordinances and other similar national and international requirements of the country, state and province in which you are accessing and using the Sites.

    Client agrees to abide by applicable export control laws and not to transfer, by electronic transmission or otherwise, any content on the Sites subject to restrictions under such laws to a national destination prohibited under such laws, without first obtaining, and then complying with, any requisites government authorization. Client further agrees not to upload to the Sites any data or software that cannot be exported without prior written government authorization, including, but not limited to, certain encryption software. This assurance and commitment shall survive termination of these Terms and Conditions. Offices, residents and operations of your organization in Cuba, Iran, Iraq, Libya, North Korea, Sudan, Syria and any other countries that are the subject of sanctions by the United States Office of Foreign Asset Control or other general U.S. embargo restrictions are not permitted to access and use the Sites, and any such access and use is a violation of these Terms and Conditions.

    Upon request by Bank of America or its Affiliates, you agree to defend, indemnify and hold harmless Bank of America, its Affiliates, their officers, directors, employees, agents, contractors or other suppliers from all liabilities, claims and expenses, including attorneys fees, that arise from a breach of these Terms and Conditions for which you are responsible, or from third-party claims arising from your use of the Sites. Bank of America and its Affiliates reserve the right to assume the exclusive defense and control of any matter otherwise subject to indemnification by you. Notwithstanding the foregoing, you are not required to indemnify Bank of America or its Affiliates for its own violations of applicable laws.

    • FOR RESIDENTS OF BRAZIL:

      The information contained here does not constitute a public offering or distribution of securities in Brazil and no registration or filing with respect to any securities or financial products available on the Sites has been made with Commisao de Valores Mobiliarios.

    • FOR RESIDENTS OF CANADA:

      The information contained here does not constitute a public offering or distribution of securities in Canada or any of its provinces. No registration or filing with respect to any securities or financial products available on the Sites has been made with any regulatory agency thereof.

    • FOR RESIDENTS OF FRANCE:

      The Sites do not constitute a solicitation to enter into a transaction involving financial instruments, is not being distributed in the context of a public offer in France within the meaning of Article L. 411–1 of the Monetary and Financial Code, and has thus not been submitted to the COB for prior approval and clearance procedure. Any offers, sales or distribution of financial instruments through the Sites shall only be made in France to qualified investors (investisseurs qualifi?s) as defined in and in accordance with Article L. 411-2 of the Monetary and Financial Code and d?cret no. 98–880 dated 1st October, 1998. The contents of the Sites may not be redistributed or reproduced (in whole or in part) by any User. The Sites are made available with the understanding that Users will make investment decisions for their own account with the conditions set out in d?cret no. 98–880 dated 1st October, 1998. By using the Sites, Users undertake not to transfer, directly or indirectly, any financial instrument acquired through the Sites to the public in France, other than in compliance with applicable laws and regulation. Services hereunder may be provided by Banc of America Securities, Limited, as agent or otherwise.

    • FOR RESIDENTS OF GERMANY:

      The Sites are made available only to professional investors as such term is defined in the Securities Sales Prospectus Act.

    • FOR RESIDENTS OF HONG KONG:

      Access to the Sites is by invitation only to institutional investors. No information or material contained in the Sites is or should be construed as amounting to an offer to enter into any transaction or investment whatsoever. The information on these Sites is provided by the Hong Kong branch of Bank of America, N.A., and is compiled from information prepared by subsidiaries and affiliates of Bank of America Corporation. Your agreement for the use of this Site is with the Hong Kong branch of Bank of America, N.A.

    • FOR RESIDENTS OF IRELAND:

      Access to the Sites is by invitation only to professional investors.

    • FOR RESIDENTS OF ITALY:

      Access to the Sites is by invitation only to professional investors as defined in article 31 of CONSOB regulation no. 11522 of July 1, 1998.

    • FOR RESIDENTS OF JAPAN:

      Access to the Sites is by invitation only to financial institutions as defined under the Law Concerning Foreign Securities Firms.

    • FOR RESIDENTS OF KOREA:

      Access to the Sites is by invitation only to professional investors with a valid password. The information contained here does not constitute a public offering or distribution of securities in Korea.

    • FOR RESIDENTS OF NETHERLANDS:

      Access to the Sites is by invitation only to professional market parties as defined in the Dutch Securities Transactions Supervision Act 1995. Securities or other instruments on these Sites are only offered to professional market parties.

    • FOR RESIDENTS OF SINGAPORE:

      Access to the Sites is by invitation only to institutional investors. The information contained here does not constitute a public offering or distribution of securities in Singapore. The information in these Sites is provided by Bank of America Singapore Limited and is compiled from information prepared by subsidiaries and affiliates of Bank of America Corporation. Your agreement for the use of these Sites is with Bank of America Singapore Limited.

    LIMITATION OF LIABILITY

    THE FOLLOWING LIMITATIONS OF LIABILITY IN THIS SECTION SHALL NOT APPLY TO VIOLATIONS OF LAWS RELATING TO THE OFFER AND SALE OF SECURITIES. YOU ACKNOWLEDGE THAT NEITHER Bank of America, ITS AFFILIATES NOR THEIR OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, CONTRACTORS OR OTHER SUPPLIERS MAKES ANY WARRANTIES OR GUARANTEES WITH RESPECT TO THE SITES, INCLUDING WITHOUT LIMITATION, WARRANTIES REGARDING THE ACCURACY OR COMPLETENESS OF ANY CONTENT, OR WARRANTIES OF MERCHANTABILITY, NON-INFRINGEMENT OF INTELLECTUAL PROPERTY, TITLE OR FITNESS FOR A PARTICULAR PURPOSE. Bank of America, ITS AFFILIATES AND SUCH PERSONS SHALL NOT BE LIABLE TO YOU FOR ANY LOSS, COST, DAMAGE OR OTHER INJURY, WHETHER IN CONTRACT, TORT, NEGLIGENCE OR OTHERWISE, ARISING OUT OF OR CAUSED IN WHOLE OR IN PART BY (I) CLIENT’S USE OF OR RELIANCE ON THE SITES, OR (II) Bank of America’s PERFORMANCE OF ITS OBLIGATIONS UNDER OR IN CONNECTION WITH THESE TERMS AND CONDITIONS. Bank of America DOES NOT REPRESENT, WARRANT OR GUARANTEE THAT THE SITES WILL BE FREE FROM ERRORS OR WILL BE AVAILABLE. FURTHERMORE, Bank of America WILL NOT BE LIABLE FOR ANY DELAY, DIFFICULTY IN USE, INACCURACY OF INFORMATION, COMPUTER VIRUSES, MALICIOUS CODE OR OTHER DEFECT IN THE SITES, OR FOR THE INCOMPATIBILITY BETWEEN THE SITES AND FILES AND THE USER’S BROWSER OR OTHER SITES ACCESSING PROGRAM. NOR WILL Bank of America BE LIABLE FOR ANY OTHER PROBLEMS EXPERIENCED BY THE USER DUE TO CAUSES BEYOND THE Bank of America’s CONTROL. IN NO EVENT WILL Bank of America, ITS OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, CONTRACTORS OR OTHER SUPPLIERS BE LIABLE TO YOU OR ANY THIRD PARTY FOR ANY PUNITIVE, INCIDENTAL, CONSEQUENTIAL, SPECIAL OR SIMILAR DAMAGES, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGE.

    Because some states or jurisdictions do not allow the exclusion or limitation of liability for certain damages, in such states or jurisdictions, the liability of the Bank of America, its officers, directors, employees, agents, contractors or other suppliers shall be limited in accordance with this agreement to the extent permitted by law.

    Neither Bank of America, its Affiliates nor any of their officers, directors, employees, agents, contractors or other suppliers shall be liable in any way, and you agree to indemnify and hold harmless Bank of America, its Affiliates and such persons for (1) any inaccuracy, error, or delay in, or omission of (a) any information on the Sites, or (b) the transmission or delivery of any information on the Sites; (2) any loss or damage arising from or occasioned by (a) any such inaccuracy, error, delay, or omission, (b) non-performance, (c) interruption of use of the Sites due either to any negligent act or omission by Bank of America, its Affiliates, their officers, directors, employees, agents, contractors or other suppliers or to any "force majeure" (i.e., flood, extraordinary weather conditions, earthquake, or other act of God, fire, war, insurrection, riot, labor dispute, accident, action of government, communications, power failure, or equipment or software malfunction) or any other cause beyond the control of the Bank of America, its Affiliates, their officers, directors, employees, agents, contractors or other suppliers. You understand that Bank of America accepts no responsibility for security of information on the Internet.

    UK CONDITIONS

    Banc of America Securities Limited has approved the Sites for the purpose of Section 57 of the Financial Services Act of 1986. Banc of America Securities Limited is regulated for the conduct of investment business in the United Kingdom by the Securities and Futures Authority Limited. No access to the Sites shall be given in the United Kingdom to Private Customers, as that term is defined under the rules of The Securities and Futures Authority Limited; and any investments will not be made by us to any Private Customer.

    CHANGES TO AGREEMENT

    Bank of America may make changes to this Agreement at any time, without prior notice to you. Your continued use of the Sites indicates your continued agreement to be bound by this Agreement, as changed from time to time. You should view these Terms and Conditions often to stay informed of changes that may affect you.

    GOVERNING LAW

    This Agreement shall be governed by and construed under the law of the State of New York and the Federal law of the United States. You hereby consent and submit to jurisdiction in the Federal or state courts of the State of New York, U.S.A. You hereby irrevocably waive your rights to a jury trial.

    THIRD-PARTY LICENSORS

    The Sites may, from time to time, provide Client with various licensed programs ("Licensed Programs") from third-party vendors ("Vendors") which have been licensed by Bank of America for Client use and/or which require Client to sign a third-party license agreement ("License Agreement"). In using the Licensed Programs, Client agrees that it will

    • protect any confidential information of Bank of America, its Affiliates or Vendors contained in the Licensed Programs;
    • restrict the use of the Licensed Programs by Client solely to conditions agreed upon in the Agreement and the License Agreement;
    • restrict the copying of Licensed Programs to that number reasonably required for Client use and backup purposes
    • include Bank of America and Vendor copyright and all other proprietary notices in the use of all Licensed Programs;
    • prohibit the sale, relicensing, leasing, rental, lending and transferring of Licensed Programs;
    • prohibit, and take reasonable measures to prevent, the decompiling, disassembly, reverse engineering or modification of Licensed Programs;
    • comply with all export laws in respect of Licensed programs;
    • disclaim any liability on the part of Vendors for damages, liabilities, costs or expenses incurred by Client in the use of License Programs; and
    • make all vendors a third-party beneficiary of all Client waivers, disclaimers, limitation of liabilities, confidentiality and IP provisions contained in the Agreement.

    MERRILL LYNCH, PIERCE, FENNER & SMITH – FURTHER INFORMATION

    "Bank of America Merrill Lynch" is the marketing name for the global banking and global markets businesses of Bank of America Corporation. Lending, derivatives and other commercial banking activities are performed globally by banking affiliates of Bank of America Corporation, including Bank of America, N.A., member FDIC. Securities, strategic advisory, and other investment banking activities are performed globally by investment banking affiliates of Bank of America Corporation ("Investment Banking Affiliates"), including, in the United States, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Merrill Lynch Professional Clearing Corp., both of which are registered as broker-dealers and members of FINRA and SIPC, and, in other jurisdictions, by locally registered entities. Merrill Lynch, Pierce, Fenner & Smith Incorporated and Merrill Lynch Professional Clearing Corp are registered as futures commission merchants with the CFTC and are members of the NFA. Investment products offered by Investment Banking Affiliates: Are Not FDIC Insured • May Lose Value • Are Not Bank Guaranteed.

    © 2017 Bank of America Corporation

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