Raising Capital in Today’s Market
Discussion Materials for:
Dallas CPA Society
May 26, 2011
Table of Contents
1.
Current Economic Climate
2.
Middle Market Bank Financing
3.
Asset Based Loan Market
4.
Syndicated Loan Market
A. Investment Grade
B.
5.
Leveraged Loans
Capital Markets
A.
High Yield Debt
B.
Mezzanine
2
Current Economic Climate
US Recovery Gains Momentum but Unemployment High
Key Themes
■
Real GDP to grow 2.5% to 3% in 2011 despite ongoing housing problems

Stronger consumption will stimulate production, jobs

Rapid rebounds in exports and business investment in equipment & software

Corporate profits and cash flows rebound sharply

No. African & Middle East tensions boost oil prices, restraining pace of rebound
■
Employment gains strengthen gradually, and unemployment rate begins to fall from very high levels
■
Household sector deleveraging
■
Core inflation to rise only modestly while commodity prices soar

10-yr treasury rate – key driver of U.S. housing – expected to increase to 4%

Uncertainty still remains
4
An Improving U.S. Economic Outlook For 2011
U.S. Macroeconomic Outlook
U.S. GDP
U.S. Unemployment
10.5%
4.0%
3.2%
4.0%
3.1%
9.4%
3.1%
3.0%
8.9%
9.0%
3.0%
2.0%
2.5%
3.0%
2.0%
8.6%
7.5%
7.9%
1.0%
1.6%
1.6%
1.0%
1.1%
6.0%
0.0%
Consensus:
Inflation Outlook
2011
2012
2.9%
3.1%
0.0%
Consensus:
2011
2012
8.7%
8.2%
New
Consensus:
2011
2012
2.6%
2.0%
Old
U.S. Consumer Update
Consumer Credit(2)
Personal Savings
(% disp. income)
10.0%
$2.52
8.0%
77.5
Avg
72.0
70
6.0%
5.8%
4.0%
$2.44
$2.40
2.0%
50
Jan-07
0.0%
Jan-07 May-08 Sep-09 Jan-11
Feb-11
$2.45
4.5%
Avg
60
May-08 Sep-09
$2.50
$2.30
____________________
Source: Bloomberg and BofAML Economic Research as of April 15, 2011.
Note: Old estimates as of January 28, 2011.
(1)
Source: University of Michigan Consumer Sentiment survey.
(2)
Dollars in trillions. Per Federal Reserve statistical release dated February 7, 2011. Includes revolving credit such as credit cards and nonrevolving credit such as loans for automobiles and education.
Excludes loans secured by real estate.
5
2010
80
$2.56
2009
90
($tn)
$2.60
2007
100
2008
Consumer Sentiment(1)
An Improving U.S. Economic Outlook For 2011
Unemployment Remains High
Civilian Unemployment Rate: 16 yr +
S A, %
12
12
10
10
8
8
6
6
4
4
2
2
70
75
80
85
90
Source: Bureau of Labor Statistics /Haver Analytics
6
95
00
05
10
03/04/11
An Improving U.S. Economic Outlook For 2011
Housing Activity Remains Weak & Inventory Lingers
Housing Starts
S AAR, Thous. Units
NAR Single Fam Homes Avail for Sale at End of Period, United States
Units, NS A
2400
4000000
2000
3500000
1600
3000000
1200
2500000
800
2000000
400
1500000
96
97
98
99
00
01
Sources: CENSUS, REALTOR /Haver
02
03
04
05
06
07
08
09
10
01/14/11
7
An Improving U.S. Economic Outlook For 2011
Distressed Mortgages
12
30-59 days past due
60-89 days past due
90 days or more past due
% of outstanding mortgages
10
8
6
4
2
75
80
85
90
95
Source: Mortgage Bankers Association, Haver Analytics
8
00
05
10
Middle Market Bank Financing
Bank Financing – Term Loans
Bank of America Offers Financing of Long-term Assets such as Fixed Assets, Permanent
Working Capital and Business Expansion and Acquisition on a Structured Payment Schedule
■ Features

Predetermined payment schedule for your cash flow planning

Repayment schedule matched to the estimated depreciated life of the asset financed

Alternative fixed-rate pricing
■ Benefits

Allows you to retain your operating cash flow

Leverages your capital for expansion and acquisitions

Eliminates the guesswork around cash needed for repayment
10
Bank Financing – Revolving Lines of Credit
Bank of America Offers Flexible Credit Facilities to Match Your Borrowing Needs with Your
Working Capital Requirements
■ Features

Draw down from an available amount (non-revolving line), or draw and pay back with an option to draw
again (revolving line)

Can include sub-facilities for other financing instruments, such as letters of credit or bankers' acceptances

Terms and conditions are customized to fit your business

Principal amortization not required

Monthly interest payments only
■ Benefits

Reduces your interest expense through daily borrowings or reductions on the line of credit

Enables you to borrow only what you need when you need it

Evens out your seasonal working capital needs

Increases your liquidity by providing available cash flow for unexpected needs
11
Asset Based Loan Market
Asset-Based Lending Overview
Comparison of Leveraged Cash Flow and Asset-Based Structures
13
Asset-Based Lending Overview
Comparison of Leveraged Cash Flow and Asset-Based Structures
14
Asset-Based Lending Overview
Comparison of Leveraged Cash Flow and Asset-Based Structures
15
Asset-Based Loan Market Update
Current Market Conditions
Pricing and Structure Continue to Tighten

Based on current deals in-market and the slate of forward calendar transactions, BofAML anticipates average LIBOR spreads will
trend to the 225-250 bps area, with unused fees ranging from 37.5 bps – 50.0 bps Refinancing

Investors remain focused on structure:

5 year tenors have become the standard

Cash dominion typically triggered at 12.5% – 15.0% availability

Appraisal and field exam frequency (1-2 times per year, with a trigger to 1 additional)

Financial covenant generally springs at 12.5% availability

Restricted payments generally allowed with 17.5% - 20.0% availability and 1.1x pro forma fixed charge coverage
16
Asset-Based Loan Market Update
Current Market Conditions
Pricing Trends
5-Year Tenors Have Begun to Dominate
17
Syndicated Loan Market
Investment Grade
Leveraged Finance
Investment Grade Market
Investment Grade Loan Market Overview
Renewed Commercial Bank Demand
Lending Standards Have Begun to Ease(1)….
←Easing Tightening→
45%
0%
-45%
-90%
Apr-02
Apr-05
Apr-08
% of Banks Reporting Stronger Demand
Lenders Easing Standards
Lenders Tightening Standards
____________________
Sources: (1) Fed Loan Survey
(2) Bank of America Merrill Lynch Database; matrix based on frequency and size of commitment
20
Apr-11
Investment Grade Loan Market Overview
Renewed Commercial Bank Demand
Pent-up Demand for Corporate Loans
($Bn)
1,650
23%
1,450
19.3%
1,250
19%
1,050
15.6%
850
Mar-07
15%
Mar-11
Mar-09
Loans
% of Deposits
____________________
Sources: (1) Fed Loan Survey
(2) Bank of America Merrill Lynch Database; matrix based on frequency and size of commitment
21
Investment Grade Loan Market Overview
Capital Markets Recovery
…As the Markets Recovered, IG Loan Volume Was
Strong Across All Sectors
IG Loan Volume Rebounds Alongside Solid Bond
Issuance
$114.5
$Bn
$855
$737
$376
$539
IG Loans
____________________
Sources: Bloomberg and Bank of America Merrill Lynch Database
22
Consumer
Retail
LTM
Healthcare
$216
2010
General
Industries
IG Bonds
2009
Tech, Media,
Telecom
2008
Energy &
Power
2007
$51.8
Financial
Institutions
2006
LTM Investment Grade Loan
Volume: $538.5
$64.0
$606
$283
2005
$105.2
$93.7
$748
$960
$677
$879
$638
$689
$1,012
$104.6
Investment Grade Loan Market Overview
Pricing Has Declined Across the Ratings Spectrum from Highs
Loan Spreads Have Tightened as Market Confidence Returned

Recapitalized banks are anxious to lend amid lower demand

Lending appetite resurges, but return requirements remain high:


Stabilized capital

Drive for revenues

Competitive dynamics
Greater focus on risk/return and capital requirements will shape future price action
370
(L+bps Drawn)
(Undrawn bps)
63
(Undrawn bp
370
63
280
48
190
33
100
18
Historical Pricing Trends
280
48
33
190
18
100
10
3
Jun-05
Jun-07
AA+/-
Jun-09 10
A
Jan-11
Dec-03
BBB+
Jun-05
BBBAA+/-
3
Jun-05
Current
Dec-06
A
____________________
Source: Bank of America Merrill Lynch Loan Pricing Matrix
23
Jun-07
Jun-08
BBB+
Jun-09
AA+/-Dec-09
A
BBB-
Current
Jan-11
BBB+
Current
BBB-
Jun-05
Investment Grade Loan Market Overview
Pricing Expectations
3 Month LIBOR Expectations Remain Subdued
4.0%
3.0%
2.0%
2Q11
3Q11
4Q11
1Q12
2Q12
BofAML
Research
0.30%
0.30%
0.35%
0.45%
0.60%
Bloomberg
Consensus
0.32%
0.38%
0.52%
0.79%
1.16%
Forward
Curve
0.26%
0.28%
0.37%
0.48%
0.66%
1.0%
0.0%
2011
2012
2013
24
2014
Investment Grade Loan Market Overview
Renewed Commercial Bank Demand
Most Active Lenders(1)
Rank
Rank
Lender
Lender
1
Bank of America
9
Crédit Suisse
2
JP Morgan Chase
10
Morgan Stanley
3
Wells Fargo
11
Deutsche Bank
4
Citigroup
12
BNP Paribas
5
Barclays
13
Goldman Sachs
6
Royal Bank of Scotland
14
HSBC
7
US Bank
15
Bank of Nova Scotia
8
Mitsubishi UFJ
16
Bank of New York
____________________
Sources: (1) Bank of America Merrill Lynch Database; matrix based on frequency and size of commitment
25
Investment Grade Loan Market Overview
Multi-Year Facilities Dominate the Market
Forward Calendar Volume Illustrates a Shift Toward Longer Maturities(1)

The tenor distribution in the high grade loan market tilts toward longer maturities

More than 63% of forward calendar volume is multi-year

Nearly 75% of closed LTM volume is multi-year

Increasingly, there is a willingness to structure facilities with 4- and 5-year maturities

The maturity schedule is manageable given current market conditions and lender demand in the market
Forward Calendar Mix
Investment Grade Loan Maturity Wall Through 2017
$515
$502
364 days
36%
$448
$390
$390
5+ Years
45%
$230
1 to < 3 Years
0%
3+ to 4 Years
12%
$158
$169
$219
$160
$134
3 Years
7%
$90
$99
$79
$38
$14
2005
2006
2007
2008
2009
____________________
Source: Bank of America Merrill Lynch Database
26
1H'09
2H'09
1H'10
2H'10
1H'11
2H'11
2011
2012
2013
2014
2015
$2
2016
2017
Leveraged Loan Market
Leveraged Loan Market Overview
Current Leveraged Loan Market Conditions
Robust Volume in 2011
Market Conditions Strong
 The technical position in the leveraged finance market remains attractive as demand continues to outweigh supply, however heavy
volumes are beginning to balance the technical picture
 Despite equity and commodity volatility, and the large primary calendar, overall tone is solid
 A recent wave of jumbo leveraged loan executions has tested market capacity, proving demand limits
$67.1
YTD Volume: $200.7 Bn
$35.1$35.4 $33.3
$31.4
$21.0
$29.8
$27.5
$18.1
$13.1
$8.5
Jul-10
____________________
Source: S&P/LCD
Sep-10
Nov-10
Institutional
Jan-11
Mar-11
Pro Rata
28
May-11
Leveraged Loan Market Overview
Current Leveraged Loan Market Conditions
Inflows Remain Positive
Technical Position
 Leveraged loan mutual fund inflows total $22.6 Bn over the LTM (46 consecutive weeks)
$951$941$937
$897
$890
LTM flows: $22.6 Bn
with 46 consecutive inflows
$1,053
$1,048
$927
$848
$804
$708
$686
$569
$627$609
$604
$721
$532
$482
$419
$707
$639
$597
$381
$417
$206
Nov-10
Dec-10
Jan-11
Feb-11
Loan Weekly Flows
Mar-11
Apr-11
3 Week Moving Average
____________________
Source: S&P/LCD
29
May-11
Leveraged Loan Market Overview
Current Leveraged Loan Market Conditions
Defaults Continue to Fall
16%
US Lev Loans
US HY Bonds
12
8
4
2.5%
2.2%
0
Apr-09
Oct-09
Apr-10
____________________
Source: S&P/LCD; BofAML; AMG/Lipper; Moody’s
30
Oct-10
Apr-11
Leveraged Loan Market Overview
Pockets of Stability Allow for Issuance
Rates Expected to Rise
Key Issuer Considerations for Leveraged Loan Issuance Now

Rate Compression: Nearly two years of uninterrupted declines in all-in cost of financing, both for loans and bonds, as a result of easing
monetary policy

Technical Position: Uncertainty regarding timing of rate increases has resulted in rare occurrence of robust inflows to both loan and bond
asset classes. Supply has been unable to keep pace

Investor Appetite for Risk: Investors are hungry for assets and searching for return, opening the market to a wide variety of issuers, and
affording them attractive terms (both structurally and all-in cost)
6%
4.46%
3.83%
3.22%
2.50%
0.92%
0.26%
0%
Jun-11
Jan-12
Aug-12
Feb-13
10 Yr UST
Sep-13
3 Mo LIBOR
31
Mar-14
Leveraged Loan Market Overview
Current Leveraged Loan Market Conditions
Spreads Near YTD Tights
(bps)
LTM Max
LTM Min
726.8
481.9
5/25/10
4/11/11
609.2
404.8
7/7/10
4/29/11
High Yield
800
Leveraged Loan
550
504 bps
428 bps
300
May-10
Aug-10
Nov-10
LSTA 100 STM
Feb-11
High Yield BMI
____________________
Source: S&P/LCD; BofAML; AMG/Lipper; Moody’s
32
May-11
Leveraged Loan Market Overview
Significant Maturity Wall
($Bn)
$154
$144
$140
$133
$128
$117
$104
$70
$65
$57
$56
$39
$23
$16
2012
2013
2014
2015
High Yield Bond
____________________
Source: Moody’s Investor Service, LCD, BofAML Research
33
2016
2017
Leveraged Loan
2018
Leveraged Loan Market Overview
Current Leveraged Loan Market Conditions
Recent Use of Proceeds
M&A
6%
LBO
12%
Refi
63%
Dividend
19%
____________________
Source: S&P/LCD
34
Leveraged Loan Market Overview
Current Leveraged Loan Market Conditions
Resurgence of Acquisition Finance Activity

As expected, given ample demand and an encouraging economic climate, U.S. M&A activity is rebounding in 2011 at $334 billion, the highest
volume in three years

Given significant demand for new money assets from leveraged finance investors, acquisition related supply is expected to be well received for
speculative grade issuance

In April alone, over $100 billion of U.S. M&A activity was announced
M&A Volume Accelerates
$534
$431
$378
$334
$304
$299
$277
$273
$274
$265
$225
$191
2007
Q1
2007
Q2
2007
Q3
2007
Q4
2008
Q1
2008
Q2
2008
Q3
2008
Q4
$211
2010
Q1
2010
Q2
$222
$119
$103
____________________
Source: Dealogic
$203
2009
Q1
35
2009
Q2
2009
Q3
2009
Q4
2010
Q3
2010
Q4
2011
Q1
Leveraged Loan Market Overview
Current Leveraged Loan Market Conditions
Strong Secondary Market
540
97
95.59
428 bps
410
Nov-10
Jan-11
Mar-11
LSTA 100 Bid
90
May-11
LSTA 100 STM
____________________
Source: S&P/LCD
36
Leveraged Loan Market Overview
Current Leveraged Loan Market Conditions
Forward Calendar Builds
($ Bn)
$51
$39
$31
$25
$41
$40
$41 $41
$29
$25
$22
$23
$16
23-Feb
9-Mar
23-Mar
6-Apr
____________________
Source: S&P/LCD
37
20-Apr
4-May
18-May
Capital Markets
High Yield
Mezzanine
High Yield Market
High Yield Market Update
Current High Yield Market Conditions
Annual New Issuance
$319
($ Bn)
$179
$185
$173
$179
$53
2006
2007
2008
2009
40
2010
YTD
High Yield Market Update
Current High Yield Bond Market Conditions
New Issue Volume at Record Breaking Pace in 2011
Year-to-Date: $179.3 Bn
($ Bn)
$49.1
$40.9
$39.0 $38.9 $38.9
$35.3
$27.1
$25.9
$22.2 $22.1
$17.8 $18.5
$19.3
$24.8
$22.6
Jun09
Jul09
$34.0
$22.8
$15.1
$10.2
May09
$23.7
$20.2
$37.9
$35.5
Aug09
Sep09
Oct09
Nov09
Dec09
Jan10
Feb10
Mar10
Apr10
$7.7
$9.7
May10
Jun10
Jul10
Aug10
Sep10
Oct10
Nov10
Dec10
Jan11
Feb11
Mar11
Apr11
May11
Historical Market Perspective
$319
($ Bn)
$179
$140
41
$185
$173
$179
$115
2011
YTD
2010
2009
2008
2007
2006
2005
$53
2004
2001
2000
1999
____________________
Source: S&P/LCD.
$157
$61
2003
$83
2002
$101
$48
1998
$60
1997
$43
1996
1993
$37
1995
$67
1994
$43
1991
$13
1992
$101
$138
High Yield Market Update
Current High Yield Market Conditions
High Yield Mutual Funds Flow
($ MM)
$1,290
$1,037
$1,037
$967
$743
$403 $439
$739
$466
$196
$421
$510
$574
$375 $492
$131
$358
$315
$234
$373
($4)
($186)
($87)
($471)
($677)
($1,154)
Nov-10
Dec-10
Jan-11
Feb-11
Mar-11
HY Weekly Flows
Apr-11
3 Week Moving Average
42
May-11
High Yield Market Update
Structures and Uses of Proceeds have Evolved Since the Credit Crisis
Refinancing Activity Continues to Dominate
2007
2008
2011
2010
2009
110
16%
Volume ($ Billions)
15%
8%
17%
16%
15%
55
15%
23%
60,000
23%
36%
52%
61%
20,000
42%
43%
75%
17%
33%
33%
27%
39%
45% 24%
35%
57%
57%
25%
Q4-07
31%
29%
24%
75%
0
19%
37%
42%
40,000
20%
29%
13%
$80,000
Q1 2007
Q2 2007
Q3 2007
Q4 2007
Q1-08
Q2-08
Q3-08
Q4-08
Q1-09
Bank Refi
Q1 2008
Q2-09
Q2 2008
Q3 2008
Q4 2008
Q1 2009
Q3-09
Q4-09
Q1-10
Q2-10
Q3-10
Bond Redemptions
43
GCP
Cap Ex
M&A
Dividend
Q2 2009
Q4-10
Q3 2009
Q4 - YTD
Q1-11
Q2-11
2009
High Yield Market Update
Current High Yield Bond Market Conditions
Refinancing Activity Continues to Dominate
Dividend
7%
M&A
16%
Bank Refi
34%
Cap Ex
2%
GCP
15%
Bond
Redemptions
26%
Use of HY Proceeds – 2011 YTD
____________________
Source: S&P/LCD.
44
High Yield Market Update
Current High Yield Bond Market Conditions
Secondary Levels
10.0%
8.0%
6.721%
6.0%
5.537%
4.328%
4.0%
Jun-10
Aug-10
BBB
Nov-10
BB
____________________
Source: S&P/LCD.
45
Feb-11
B
May-11
High Yield Market Update
Current High Yield Market Conditions
BBB, BB and B Index Yields and Spreads
Δ Since
10-yr
3/30/10
6/30/10
9/30/10
12/31/10
3/31/11
Current
3/30/10
Avg
BBB Index YTW
5.13%
4.97%
4.32%
4.70%
4.66%
4.33%
(0.80%)
6.06%
BBB Index STW
199 bps
253 bps
225 bps
201 bps
181 bps
182 bps
(18 bps)
--
BB Index YTW
6.90%
7.46%
6.22%
6.30%
5.87%
5.54%
(1.36%)
7.91%
BB Index STW
427 bps
537 bps
469 bps
418 bps
368 bps
370 bps
(57 bps)
--
B Index YTW
8.03%
8.83%
7.76%
7.53%
7.05%
6.72%
(1.31%)
9.69%
B Index STW
589 bps
714 bps
654 bps
576 bps
520 bps
526 bps
(63 bps)
--
3.86%
2.93%
2.51%
3.30%
3.47%
3.17%
(0.69%)
4.10%
10-yr Treasury
46
Mezzanine
Mezzanine
Mezzanine Capital Benefits

Creates financial flexibility by increasing senior debt capacity and preserving bank facilities for future needs

Adds a layer of long-term capital which will be viewed by banking institutions as equity-like capital

Creates minimal equity dilution, when compared to an equity offering
Typical Issuer Profile
Situations
EBITDA
Typical Leverage

Expansion / growth capital

Acquisition capital

Buy-out / ownership change

Restructuring / recapitalization

Generally $5 million or greater

Total Debt : EBITDA less than 4.0x to 4.5x
48
Mezzanine
Typical Offering Parameters
Companies
Issue Size
Issue
Security Interest
Maturity
Pricing
Warrants

> $5MM

Subordinated debt

Typically Unsecured

Occasionally requires second lien

Typically 6 – 8 Years

12-14% cash pay coupon

1-2% payment in kind

Generally required
49
Mezzanine
Typical Offering Parameters
Board Seat
Financial Covenants
Ratings
Redemption
Target Returns

Negotiable

Observation rights

Typically maintenance based (coverages)

Generally more lenient than senior debt

Credit ratings are not required to complete a financing

Optional Redemption: At anytime with scaling premium

Mandatory Redemption: Usually bullet maturities, sometimes amortizing

15-17% (including Warrants)
50
Notice to Recipient
Confidential
“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., all of which are registered broker dealers and members of FINRA and SIPC, and, in other
jurisdictions, by locally registered entities.
Investment products offered by Investment Banking Affiliates: Are Not FDIC Insured * May Lose Value * Are Not Bank Guaranteed.
These materials have been prepared by one or more subsidiaries of Bank of America Corporation for the client or potential client to whom such materials are directly addressed and delivered
(the "Company") in connection with an actual or potential mandate or engagement and may not be used or relied upon for any purpose other than as specifically contemplated by a written
agreement with us. These materials are based on information provided by or on behalf of the Company and/or other potential transaction participants, from public sources or otherwise
reviewed by us. We assume no responsibility for independent investigation or verification of such information (including, without limitation, data from third party suppliers) and have relied
on such information being complete and accurate in all material respects. To the extent such information includes estimates and forecasts of future financial performance prepared by or
reviewed with the managements of the Company and/or other potential transaction participants or obtained from public sources, we have assumed that such estimates and forecasts have been
reasonably prepared on bases reflecting the best currently available estimates and judgments of such managements (or, with respect to estimates and forecasts obtained from public sources,
represent reasonable estimates). No representation or warranty, express or implied, is made as to the accuracy or completeness of such information and nothing contained herein is, or shall be
relied upon as, a representation, whether as to the past, the present or the future. These materials were designed for use by specific persons familiar with the business and affairs of the
Company and are being furnished and should be considered only in connection with other information, oral or written, being provided by us in connection herewith. These materials are not
intended to provide the sole basis for evaluating, and should not be considered a recommendation with respect to, any transaction or other matter. These materials do not constitute an offer or
solicitation to sell or purchase any securities and are not a commitment by Bank of America Corporation or any of its affiliates to provide or arrange any financing for any transaction or to
purchase any security in connection therewith. These materials are for discussion purposes only and are subject to our review and assessment from a legal, compliance, accounting policy and
risk perspective, as appropriate, following our discussion with the Company. We assume no obligation to update or otherwise revise these materials. These materials have not been prepared
with a view toward public disclosure under applicable securities laws or otherwise, are intended for the benefit and use of the Company, and may not be reproduced, disseminated, quoted or
referred to, in whole or in part, without our prior written consent. These materials may not reflect information known to other professionals in other business areas of Bank of America
Corporation and its affiliates.
Bank of America Corporation and its affiliates (collectively, the "BAC Group") comprise a full service securities firm and commercial bank engaged in securities, commodities and derivatives
trading, foreign exchange and other brokerage activities, and principal investing as well as providing investment, corporate and private banking, asset and investment management, financing
and strategic advisory services and other commercial services and products to a wide range of corporations, governments and individuals, domestically and offshore, from which conflicting
interests or duties, or a perception thereof, may arise. In the ordinary course of these activities, parts of the BAC Group at any time may invest on a principal basis or manage funds that invest,
make or hold long or short positions, finance positions or trade or otherwise effect transactions, for their own accounts or the accounts of customers, in debt, equity or other securities or
financial instruments (including derivatives, bank loans or other obligations) of the Company, potential counterparties or any other company that may be involved in a transaction. Products
and services that may be referenced in the accompanying materials may be provided through one or more affiliates of Bank of America Corporation. We have adopted policies and guidelines
designed to preserve the independence of our research analysts. These policies prohibit employees from offering research coverage, a favorable research rating or a specific price target or
offering to change a research rating or price target as consideration for or an inducement to obtain business or other compensation. We are required to obtain, verify and record certain
information that identifies the Company, which information includes the name and address of the Company and other information that will allow us to identify the Company in accordance, as
applicable, with the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) and such other laws, rules and regulations as applicable within and outside the United States.
We do not provide legal, compliance, tax or accounting advice. Accordingly, any statements contained herein as to tax matters were neither written nor intended by us to be used and cannot be
used by any taxpayer for the purpose of avoiding tax penalties that may be imposed on such taxpayer. If any person uses or refers to any such tax statement in promoting, marketing or
recommending a partnership or other entity, investment plan or arrangement to any taxpayer, then the statement expressed herein is being delivered to support the promotion or marketing of
the transaction or matter addressed and the recipient should seek advice based on its particular circumstances from an independent tax advisor. Notwithstanding anything that may appear
herein or in other materials to the contrary, the Company shall be permitted to disclose the tax treatment and tax structure of a transaction (including any materials, opinions or analyses
relating to such tax treatment or tax structure, but without disclosure of identifying information or, except to the extent relating to such tax structure or tax treatment, any nonpublic commercial
or financial information) on and after the earliest to occur of the date of (i) public announcement of discussions relating to such transaction, (ii) public announcement of such transaction or (iii)
execution of a definitive agreement (with or without conditions) to enter into such transaction; provided, however, that if such transaction is not consummated for any reason, the provisions of
this sentence shall cease to apply. ©2011 Bank of America Corporation.
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