SECTION 2. Background

2.1. The Program . In general, under the Program, the Treasury Department plans to make available its Exchange Stabilization Fund on a temporary basis to assist participating money market funds in maintaining $1.00 per share net asset values and in paying their shareholders $1.00 per share upon liquidation of shares. The Program will be limited to assets in money market funds as of the close of business on September 19, 2008, and to investors of record as of that date. Participating money market funds are required to make premium payments to participate in the Program. Payments to a money market fund under the Program are tied to the per share net asset value of the money market fund itself. Payments to a money market fund under the Program are not tied to the terms or performance of any particular assets held by the money market fund, such as tax-exempt bond assets held by a tax-exempt money market fund. The general description of certain aspects of the Program herein is subject fully to the specific terms, conditions, maximum size limitations, and other limitations to be set forth in the operative legal documents for the Program.

2.2. The Restrictions Against Federal Guarantees of Tax-exempt Bonds . Section 149(b) provides generally that, subject to certain specific exceptions, the interest on State or local governmental bonds is not excludable from gross income under

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§ 103(a) if the bonds are federally guaranteed. Section 149(b)(2) provides generally that a bond is federally guaranteed if: (A) the payment of principal or interest with respect to such bond is guaranteed (in whole or in part) by the United States (or any agency or instrumentality thereof)); (B) such bond is issued as part of an issue and five (5) percent or more of the proceeds of such issue is to be (i) used in making loans the payment of principal or interest with respect to which are to be guaranteed (in whole or in part) by the United States (or any agency or instrumentality thereof), or (ii) invested (directly or indirectly) in federally insured deposits or accounts; or (C) the payment of principal or interest on such bond is otherwise indirectly guaranteed (in whole or in part) by the United States (or any agency or instrumentality thereof).