SECTION 3. Scope and Application .

3.1 In General . The IRS will not challenge the equity characterization of auction rate preferred stock, as described in § 2.1 of this notice, for Federal income tax purposes as a result of adding a liquidity facility, as described in § 2.2 of this notice, to support the auction rate preferred stock if the conditions of §§ 3.2 through 3.5 of this notice are met and if the conditions of either § 3.6 or § 3.7, as applicable, of this notice are met.

3.2 Certain Overall Limits on Scope . The issuer of the auction rate preferred stock must be an Eligible Issuer. The auction rate preferred stock had to be outstanding on February 12, 2008 (the date on which significant auction failures first occurred) or issued after that date to refinance, directly or indirectly, any auction rate preferred stock that was outstanding on that date, provided that the total par amount of the liquidation preferences on all such stock issued for refinancing purposes is no greater than the total par amount of the liquidation preferences on such outstanding refinanced stock. The liquidity facility must be an initial liquidity facility with respect to the auction rate preferred stock that is entered into after February 12, 2008 and on or before December 31, 2009 or a liquidity facility that renews, replaces, or extends such an initial liquidity facility, either directly or in a series of liquidity facilities.

3.3 Certain Limits on Dividend Pay- ments . An issuer may pay dividends on auction rate preferred stock only if it duly declares such dividends and it pays such dividends out of legally available funds for payments in respect of stock under applicable state law.

3.4 Unrelated Liquidity Providers and Related Party Definition . The liquidity provider must be an “unrelated party” (as defined below) to the issuer of the auction rate preferred stock, as determined before taking into account any purchase of such stock by the liquidity provider under the liquidity facility. As used generally in this notice, the term “related party” means a party whose relationship to another party under § 267(b) or § 707(b) would result in a disallowance of losses, and an “unrelated party” is a party other than such a related party. Sections 3.6, 3.7, and 3.8 of this notice also include certain provisions that consider related parties to issuers for purposes of redemptions or repurchases of stock or partnership interests from liquidity providers.

3.5 Certain Limits on Tender Options under a Liquidity Facility . The liquidity facility must provide to holders of auction rate preferred stock a tender option or right to sell their stock to the liquidity provider only if one of the following two trigger events occurs: (1) a failed auction or remarketing; or (2) a failure to renew, replace, or extend an existing liquidity facility then in place with the same liquidity provider or another liquidity provider by a date that occurs at least two auction or remarketing dates before the termination date of the existing liquidity facility then in place.

3.6 Certain Conditions on Rights of a Liquidity Provider to Require Redemp- tion or Repurchase of Stock by Issuer . In the case of a liquidity facility for auction rate preferred stock in which the liquidity provider has any contractual rights to require the issuer of such stock or a related party to such issuer to redeem or repurchase stock purchased by the liquidity provider under the liquidity facility, any such contractual rights must be limited by applicable state law restrictions on redemptions of stock that apply to any holder of the auction rate preferred stock ( e.g., state law restrictions on redemptions of stock which would impair the issuer’s required capital, surplus, or total assets). The liquidity provider must hold auction rate preferred stock purchased under a liquidity facility for a minimum continuous holding period of at least six months before any redemption or repurchase of such stock by the issuer or a related party to the issuer. During this required six-month

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relief expressly provided in this notice, no inferences should be drawn from this notice regarding the debt or equity character of any security, material modifications or exchanges of any security under § 1001, or any other Federal tax issues regarding any security. In addition, this notice is not intended to address any other Federal tax issue implicated in the described transactions to add liquidity facilities to auction rate preferred stock.