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Grant of Individual Exemption Involving BlackRock, Inc. and Its Investment Advisory, Investment Management and Broker-Dealer Affiliates and Their Successors (Applicants) Located in New York, NY   [8/15/2011]
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Federal Register, Volume 76 Issue 157 (Monday, August 15, 2011)
[Federal Register Volume 76, Number 157 (Monday, August 15, 2011)]
[Notices]
[Pages 50632-50659]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-20344]



[[Page 50631]]

Vol. 76

Monday,

No. 157

August 15, 2011

Part III





 Labor Department





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 Employee Benefits Security Administration





 Grant of Individual Exemption Involving BlackRock, Inc. and its 
Investment Advisory, Investment Management and Broker-Dealer Affiliates 
and their Successors (Applicants); Notice

Federal Register / Vol. 76 , No. 157 / Monday, August 15, 2011 / 
Notices

[[Page 50632]]


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DEPARTMENT OF LABOR

Employee Benefits Security Administration

[Prohibited Transaction Exemption 2011-17; Exemption Application No. D-
11588]


Grant of Individual Exemption Involving BlackRock, Inc. and Its 
Investment Advisory, Investment Management and Broker-Dealer Affiliates 
and Their Successors (Applicants) Located in New York, NY

AGENCY: Employee Benefits Security Administration, U.S. Department of 
Labor.

ACTION: Grant of individual exemption.

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SUMMARY: This document contains an individual exemption from certain 
prohibited transaction restrictions of the Employee Retirement Income 
Security Act of 1974, as amended (ERISA), the Federal Employees' 
Retirement System Act of 1986, as amended (FERSA), and the Internal 
Revenue Code of 1986, as amended (the Code). The transactions involve 
BlackRock, Inc. and its investment advisory, investment management and 
broker-dealer affiliates and their successors. The individual exemption 
affects plans for which BlackRock, Inc. and its investment advisory, 
investment management and broker-dealer affiliates and their successors 
serve as fiduciaries, and the participants and beneficiaries of such 
plans.

DATES: Effective Date: This exemption is effective as of December 1, 
2009.

SUPPLEMENTARY INFORMATION: On March 18, 2011, the Department published 
a notice of proposed individual exemption from the restrictions of 
ERISA sections 406(a)(1) and 406(b), FERSA sections 8477(c)(1) and 
(c)(2) and the sanctions resulting from the application of Code section 
4975, by reason of Code section 4975(c)(1) (the Proposed Exemption).\1\ 
The Proposed Exemption was requested by BlackRock, Inc. and its 
investment advisory, investment management and broker-dealer affiliates 
and their successors pursuant to ERISA section 408(a), Code section 
4975(c)(2) and FERSA section 8477(c)(3), and in accordance with the 
procedures set forth in 29 CFR part 2570, subpart B (55 FR 32836, 
32847, August 10, 1990). Effective December 31, 1978, section 102 of 
the Reorganization Plan No. 4 of 1978, (43 FR 47713, October 17, 1978) 
transferred the authority of the Secretary of the Treasury to issue 
exemptions of the type requested to the Secretary of Labor. 
Accordingly, this final individual exemption is being issued solely by 
the Department.
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    \1\ 76 FR 15058 (March 18, 2011).
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Background \2\
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    \2\ Capitalized terms used but not defined in the Background 
Section have the meaning set forth in Section VI of the exemption.
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    BlackRock, Inc. (BlackRock), based in New York, NY, is the largest 
publicly-traded investment management firm in the United States. 
BlackRock, through its investment advisory and investment management 
subsidiaries, currently manages assets for institutional and individual 
investors worldwide through a variety of equity, fixed income, cash 
management and alternative investment products. As of September 30, 
2010, BlackRock, through its advisor subsidiaries, had approximately 
$3.446 trillion in assets under management, including assets managed by 
BlackRock Institutional Trust Company, N.A. (BTC) (formerly known as 
Barclays Global Investors, N.A. (BGI)) and its affiliates.
    BTC is a national banking association headquartered in San 
Francisco, California. Prior to its acquisition by BlackRock on 
December 1, 2009 (the Acquisition), BTC (then BGI) was the largest 
asset manager in the U.S. A significant amount of BTC's assets under 
management in the U.S. consist of assets of employee benefit plans 
subject to ERISA, FERSA and/or the Code. BTC is a market leader in 
index and model-driven investment products. Until its sale to 
BlackRock, BGI was an indirect subsidiary of Barclays PLC. BTC, as of 
the date of the Acquisition, is now a wholly-owned subsidiary of 
BlackRock.
    Immediately following the Acquisition, (1) Barclays PLC (Barclays), 
(2) Bank of America Corporation (BOA), and (3) The PNC Financial 
Services Group, Inc. (PNC) (each of these, a Minority Passive 
Shareholder, or MPS) controlled the following interests in BlackRock:
    (a) BOA. BOA owned approximately 3.7% of BlackRock voting common 
stock and approximately 34.2% of BlackRock equity by value.
    (b) PNC. PNC owned approximately 35.2% of BlackRock voting common 
stock and approximately 24.5% of BlackRock equity by value.
    (c) Barclays. Barclays owned approximately 4.8% of BlackRock voting 
common stock and approximately 19.8% of BlackRock equity by value.
    Post-Acquisition, a secondary offering of BlackRock common stock 
was completed on November 15, 2010 (the Secondary Offering). 
BlackRock's ownership structure following the Secondary Offering was as 
follows: (a) BOA controlled 0% of BlackRock's voting common stock and 
approximately 7.1% of BlackRock's equity by value; (b) PNC controlled 
approximately 25.3% of BlackRock's voting common stock and 
approximately 20.3% of BlackRock's equity by value; and (c) Barclays 
controlled approximately 2.3% of BlackRock's voting common stock and 
approximately 19.6% of BlackRock's equity by value.
    All BlackRock stock beneficially owned by each MPS (other than 
stock held in certain fiduciary capacities and customer or market 
making accounts) is subject to a stockholders agreement entered into by 
and between that MPS and BlackRock (collectively, the Stockholders 
Agreements). Pursuant to each Stockholders Agreement, each MPS has or 
had the right to identify to BlackRock two (2) prospective directors, 
and, if such nominees are reasonably acceptable to the BlackRock Board 
of Directors (the Board), BlackRock and each respective MPS agrees to 
use best efforts to cause the election of such nominees to the Board. 
As a result of the Secondary Offering, BOA fell below a ten percent 
(10%) equity interest, and, assuming that it remains below this level, 
it lost the right to identify to BlackRock one representative director 
on or about February 13, 2011.
    At least ten (10) of the current eighteen (18) BlackRock directors 
must be ``independent'' (within the meaning of New York Stock Exchange 
rules) of the MPSs and BlackRock management and each MPS must vote its 
BlackRock voting common stock in accordance with the recommendations of 
the Board. In addition, the Audit Committee, the Management Development 
and Compensation Committee, and the Nominating and Governance Committee 
of the Board consist entirely of independent directors, and a majority 
of each other Board committee (if any), with the exception of the 
Executive Committee,\3\ must consist of independent directors. As of 
the date hereof, none of the directors representing an MPS serve on any 
Board committee, except that one director representing PNC serves on 
the Executive Committee. Further, no MPS representative directors sit 
on any of the Board of Directors of BlackRock Managers. While each MPS 
monitors its investment in BlackRock through its

[[Page 50633]]

Board representatives and each MPS has certain limited governance 
rights, no MPS has or will have any involvement in the day-to-day 
management of BlackRock, any BlackRock Manager or any other BlackRock 
Entity. In addition, the respective Stockholder Agreements impose 
standstill agreements, transfer restrictions and arm's length 
transaction restrictions on the ability of an MPS to control BlackRock 
or any BlackRock Manager.
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    \3\ While the Executive Committee may exercise the powers of the 
Board during intervals between Board meetings or at times when the 
Board is unable to convene, the Executive Committee has not met for 
over five (5) years.
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    A BlackRock Manager is a fiduciary with investment discretion with 
respect to the applicable Client Plan.\4\ As a result, the BlackRock 
Manager decides whether to enter into a Covered Transaction \5\ with or 
involving an MPS. The ownership interest of the MPS in BlackRock could 
affect the BlackRock Manager's best judgment as a fiduciary, raising 
issues under ERISA Section 406(b). Therefore, the Applicants sought 
relief from the prohibitions of ERISA section 406(b).
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    \4\ ``Client Plan'' means any plan subject to section 406 of the 
Act, Code section 4975 or FERSA section 8477(c) for which a 
BlackRock Manager is a fiduciary as described in section 3(21) of 
ERISA, including, but not limited to, any Pooled Fund, MPS Plan, 
Index Account or Fund, Model-Driven Account or Fund, Other Account 
or Fund, or In-House Plan, except where specified to the contrary.
    \5\ ``Covered Transaction'' means each transaction set forth in 
Section III of the exemption by a BlackRock Manager for a Client 
Plan with or involving, directly or indirectly, an MPS and/or a 
BlackRock Entity.
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    Further, if BlackRock and one or more MPS are deemed affiliates, 
each MPS and its affiliates will very likely be parties in interest 
within the meaning of ERISA section 3(14) with respect to many Client 
Plans. Therefore, the Applicants also sought relief from the 
prohibitions of ERISA section 406(a).
    Such ERISA section 406(a) and section 406(b) relief was sought 
solely with respect to certain enumerated types of Covered Transactions 
entered into after the Acquisition and, in certain cases, before the 
Acquisition and that have continued after the Acquisition.
    The structure of the requested relief is founded upon compliance 
with five sets of general conditions. The five sets of general 
conditions are: (a) Modified conditions derived from Prohibited 
Transaction Exemption 84-14, as amended (sometimes referred to as the 
QPAM Exemption) \6\; (b) restrictions on the compensation of BlackRock 
Managers and their employees; (c) the establishment and implementation 
of certain policies and procedures; (d) the appointment by BlackRock of 
an Exemption Compliance Officer; and (e) the retention by BlackRock of 
an Independent Monitor. The purpose of these general conditions is, 
when coupled with the restrictions of the Stockholders Agreements and 
the BlackRock ownership structure, to foster independence of action by 
BlackRock notwithstanding the equity interests in BlackRock held by the 
MPSs. This unique overarching structure includes a comprehensive 
compliance function and an independent monitor, each of which work 
together for the benefit of Client Plans and their participants and 
beneficiaries by allowing Covered Transactions with or involving an MPS 
only if the Covered Transaction is, as best as can be determined, as 
favorable to the Client Plans as arm's length transactions with third 
parties.
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    \6\ 49 FR 9494 (Mar. 13, 1984), as amended, 70 FR 49305 (Aug. 
23, 2005), and as amended, 75 FR 38837 (July 6, 2010).
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    In addition to the general conditions, each Covered Transaction has 
its own set of specific conditions deemed suitable for it in light of 
the nature of the transaction. Many of the conditions for individual 
Covered Transactions are derived from statutory exemptions, 
administrative class exemptions or administrative individual exemptions 
frequently relied upon by fiduciaries and parties in interest 
(sometimes affiliated and sometimes not) to exempt similar 
transactions. The general and transaction-specific conditions for 
relief attempt to strike a balance that takes into account both the 
MPSs' unique equity interests in BlackRock and the ability of BlackRock 
acting on behalf of Client Plans to engage in arm's length Covered 
Transactions with or involving institutions as significant in their 
markets as are the MPSs.
    Compliance with the exemption requires that all Violations must be 
completely corrected. No non-exempt prohibited transaction will be 
deemed to occur, however, if the Violation is completely corrected 
(within the meaning of the exemption) no later than fourteen (14) 
business days following the date on which the Exemption Compliance 
Officer submits the quarterly report to the Independent Monitor for the 
quarter in which the Covered Transaction first became a non-exempt 
prohibited transaction.

Written Comments

    The Department invited all interested persons to submit written 
comments and/or requests for a public hearing with respect to the 
notice of proposed exemption on or before May 2, 2011. During the 
comment period, the Department received one (1) Comment letter on the 
proposed exemption. The sole comment letter was filed by BlackRock. The 
Department received no hearing requests during the comment period. The 
following is a discussion of BlackRock's comments and the Department's 
responses.
    Section III.D. of the Proposed Exemption. Section III.D. of the 
Proposed Exemption applies to certain transactions in the secondary 
market by BlackRock Managers of Fixed Income Obligations, including 
Fixed Income Obligations issued by or traded with an MPS. Specifically, 
BlackRock comments on the language in Section III.D.2(a) of the 
Proposed Exemption that states that ``[t]he purchase of the Fixed 
Income Obligation issued by an MPS is not made from the issuing 
MPS[.]'' BlackRock believes that so long as the purchase of an MPS 
Fixed Income Obligation is the result of the Three Quote Process, as 
required by the Proposed Exemption, there is no reason why the purchase 
from the issuing MPS should not be permitted.
    BlackRock points out that, for ERISA purposes, the purchase of a 
Fixed Income Obligation issued by an MPS represents two separate 
transactions: (1) The purchase of a debt security and (2) an extension 
of credit, an ongoing relationship with an MPS, which could present the 
potential for an ERISA conflict of interest. The Proposed Exemption 
requires that all purchases (or sales) in the secondary market of Fixed 
Income Obligations issued by or traded with an MPS be conducted through 
the Three Quote Process in order to ensure that the purchase is 
executed on the best available economic terms. BlackRock believes that 
whether or not an MPS Fixed Income Obligation is purchased from the 
issuing MPS or some other dealer is irrelevant, and the potential for 
later conflict is unrelated to a purchase pursuant to the Three Quote 
Process. BlackRock further notes that other safeguards contained in the 
proposed exemption, particularly the existence of and involvement of 
the Exemption Compliance Officer and the Independent Monitor, serve to 
adequately mitigate the risk that an unaddressed conflict will arise 
during the holding of an MPS Fixed Income Obligation, whether acquired 
from the issuing MPS or another dealer. In order to address this issue, 
BlackRock requests that Section III.D.2(a) of the Proposed Exemption be 
deleted in its entirety.
    The Department agrees with the comment, and it has deleted Section 
III.D.2(a) from the exemption's operative language.
    Section III.F. of the Proposed Exemption. Section III.F. of the 
Proposed Exemption applies to the purchase in an underwriting and 
holding by BlackRock Managers of Asset-Backed Securities, when an MPS

[[Page 50634]]

is an underwriter, in the capacity as either a manager or a member of 
the selling syndicate, trustee, or, in the case of Asset-Backed 
Securities which are CMBS, servicer. BlackRock states that the language 
of Section III.F. of the Proposed Exemption would not provide relief in 
circumstances where an MPS was acting as both an underwriter and a 
servicer of a CMBS Asset-Backed Security. BlackRock believes such a 
result was not intended by the Department.\7\ BlackRock comments that 
both the Affiliated Underwriting provisions of the Proposed Exemption 
(Section IV.A.) and the Affiliated Servicing provisions of the Proposed 
Exemption (Section IV.B.) should apply to the transaction. 
Specifically, in order to address this issue, BlackRock believes that: 
(1) In the first paragraph of Section III.F. of the Proposed Exemption, 
clause (iii) should be deleted in its entirety and the following should 
be substituted ``(iii) solely in the case of Asset-Backed Securities 
which are CMBS, serves as servicer of a trust that issued such CMBS, 
provided that:'', and (2) in Section III.F.(1), ``and'' before ``(b)'' 
should be replaced with a comma, and the following should be inserted 
before the semi-colon: ``and (c) if an MPS is an underwriter and an MPS 
is a servicer as described in clause (b), the conditions of both 
Section IV.A., as modified by Section III.F.1(a), and Section IV.B. 
must be satisfied.''
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    \7\ See Preamble to the Proposed Exemption (76 FR at 15067).
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    The Department agrees with the comment, and it has modified Section 
III.F. of the exemption's operative language accordingly.
    Section III.M. of the Proposed Exemption. Section III.M.1. of the 
Proposed Exemption applies to securities lending transactions involving 
Client Plan assets by BlackRock Managers to an MPS which is a U.S. 
Broker-Dealer, a U.S. Bank, a Foreign Broker-Dealer or a Foreign Bank. 
Conditions applicable to these transactions are set forth in Sections 
III.M.2. and III.M.3. of the Proposed Exemption. BlackRock points out 
that Sections III.M.2(d), III.M.3(b) and III.M.3(c) of the Proposed 
Exemption provide an alternative means of compliance with certain 
collateral requirements if the lending agent is a U.S. Broker-Dealer or 
U.S. Bank and agrees to provide an indemnity. BlackRock does not 
believe, however, that there are any significant policy issues 
presented with respect to these conditions in circumstances where a 
BlackRock Manager is acting as a lending agent through one of its U.S. 
registered investment advisor affiliates and not through a U.S. Bank or 
U.S. Broker-Dealer. BlackRock argues that, as the largest publicly-
traded investment management firm in the world, there should be no 
concern that an indemnity delivered by a BlackRock Manager would not be 
honored.\8\
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    \8\ BlackRock also points out that certain cross-references were 
inadvertently omitted in Section III.M.3. of the Proposed Exemption. 
The Department agrees, and the language has been modified to apply 
the proper cross references to Sections VI.KK. and VI.JJ. of the 
exemption.
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    In order to address these issues, BlackRock believes that Section 
III.M. of the Proposed Exemption should be revised to include the 
phrase ``, an investment advisor registered under the Investment 
Advisors Act of 1940, as amended'' after the words ``U.S. Bank'' in the 
first sentence of Sections III.M.2(d), III.M.3(b)(ii) and III.M.3(c) of 
the Proposed Exemption.
    The Department agrees that under the unique factual scenario 
presented by this exemption, adding U.S. registered investment advisors 
does not present any significant policy concerns, provided that the 
registered investment advisor is required to meet additional 
requirements regarding assets under management and shareholders' or 
partners' equity. Such additional requirements will ensure that the 
applicable BlackRock Manager can meet the terms of an indemnity 
agreement. As a result, the Department has modified Section III.M. of 
the exemption's operative language to include the term ``Registered 
Investment Advisor'' after the words ``U.S. Bank'' in the first 
sentence of Sections III.M.2(d), III.M.3(b)(ii) and III.M.3(c) of the 
Proposed Exemption. Further, the Department has inserted a definition 
in Section VI.GGG. of the exemption that reads as follows:

    ``Registered Investment Advisor'' means an investment advisor 
registered under the Investment Advisors Act of 1940, as amended, 
that has total client assets under its management or control in 
excess of $5 billion as of the last day of its most recent fiscal 
year and shareholders' or partners' equity in excess of $1 million, 
as shown in the most recent balance sheet prepared within the two 
years immediately preceding a Covered Transaction, in accordance 
with generally accepted accounting principles.''

    Section III.P. of the Proposed Exemption. Section III.P. of the 
Proposed Exemption applies to agency execution of equity and fixed 
income securities trades and related clearing as described in 
Prohibited Transaction Exemption 86-128, as amended \9\ (PTE 86-128), 
including agency cross trades, where the broker is an MPS. Section 
III.P.2. of the Proposed Exemption requires that Covered Transactions 
described in Section III.P. of the Proposed Exemption must satisfy the 
conditions of Section III(e), Section III(f), Section III(g)(2) and 
Section III(h) of PTE 86-128, which Sections require, among other 
things, the delivery of certain information to a Client Plan's 
``authorizing fiduciary.'' BlackRock is concerned that this provision 
is inconsistent with Section III.P.3. of the Proposed Exemption which 
requires that the ECO Function receive the information required to be 
provided to the ``authorizing fiduciary'' under those sections of PTE 
86-128. Applicants believe that it was the Department's intention that 
the conditions of Section III of PTE 86-128 that relate to actions 
required of, or information to be provided to, the Client Plan's 
authorizing fiduciary, may be satisfied if required of, or provided to, 
the ECO Function, including the authority to terminate the MPS broker-
dealer.\10\
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    \9\ 51 FR 41686 (Nov. 18, 1986), as amended, 67 FR 64137 (Oct. 
17, 2002).
    \10\ The Applicants believe such intent is set forth in the 
Summary of Facts and Representations published with the Proposed 
Exemption, 76 FR at 15073.
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    In order to address this ambiguity, BlackRock proposes that Section 
III.P.3. of the Proposed Exemption be deleted and Section III.P.2. of 
the Proposed Exemption be amended to read as follows:

    ``2. The conditions of PTE 86-128 set forth in the following 
sections of that exemption must be complied with: Section III(e); 
Section III(f); Section III(g)(2); and Section III(h); provided, 
however, that for purposes of Section III(e), Section III(f) and 
Section III(g)(2) of PTE 86-128, the ECO Function is the 
``authorizing fiduciary'' referred to therein; and the ECO has the 
authority to terminate the use of the MPS as broker-dealer without 
penalty to Client Plans at any time; and provided further that the 
first sentence of Section III(h) of PTE 86-128 is amended for 
purposes of this Section III.P.2. to provide as follows: * * *''

    The Department agrees that its intent was to permit the ECO 
Function to satisfy certain provisions that otherwise might be 
applicable to a Client Plan's ``authorizing fiduciary'' under PTE 86-
128. While the Department does not believe that the language of the 
Proposed Exemption is unclear, in order to ensure clarity, it has 
modified Section III.P. of the exemption's operative language as 
requested by BlackRock.
    Section III.U. of the Proposed Exemption. Section III.U. of the 
Proposed Exemption applies to purchases, sales and holdings by 
BlackRock Managers for Client Plans of commercial paper issued by ABCP

[[Page 50635]]

Conduits, when an MPS has one or more roles. BlackRock points out that 
Section III.U. of the Proposed Exemption does not specifically apply to 
circumstances under which commercial paper issued by an ABCP Conduit in 
which an MPS is a placement agent and/or has one or more continuing 
roles is purchased from or sold to an MPS by a BlackRock Manager. 
BlackRock believes that this omission was unintentional and is 
inconsistent with the intent and subsequent provisions of Section 
III.U. of the Proposed Exemption. In order to address this issue, 
BlackRock requests that the first paragraph of Section III.U. of the 
Proposed Exemption should be revised to read:

    ``Relief under Section I of this exemption is available for the 
purchase or sale, including purchases from or sales to an MPS, and 
the holding by BlackRock Managers acting on behalf of Client Plans 
of commercial paper issued by an ABCP Conduit with respect to which 
an MPS acts as seller, placement agent, and/or in some continuing 
capacity such as program administrator, provider of liquidity or 
provider of credit support, provided that: * * *''

    Further, Section III.U.4. of the Proposed Exemption requires that 
purchases and sales of ABCP Conduit commercial paper must be conducted 
pursuant to the Three Quote Process even in situations where such 
purchase or sale is with a third party in the secondary market and the 
MPS' sole involvement relates to its performance in a continuing role 
with respect such ABCP Conduit. BlackRock believes that if the sole 
involvement of an MPS is acting in a continuing role, then the Three 
Quote Process should not be required for purchases from or sales to 
third parties because there will be no additional compensation payable 
to and/or other benefits conferrable on such MPS in the secondary 
market by reason of such purchase or sale whether or not the Three 
Quote Process is followed. In order to address this issue, BlackRock 
believes that Section III.U.4. of the Proposed Exemption should be 
revised to delete the words ``and/or an MPS performs a continuing role 
with respect to the Securities.''
    The Department agrees with the comments, and it has modified 
Section III.U. of the exemption's operative language accordingly.
    Structured Securities, Including Guaranteed Governmental Mortgage 
Pool Certificates. BlackRock has determined that there is a common type 
of transaction which is superficially similar to the ``guaranteed 
governmental mortgage pool certificate'' TBA transactions covered by 
Section III.N. of the Proposed Exemption, but which in substance is 
more similar to a straightforward secondary market purchase of a 
``guaranteed governmental mortgage pool certificate'' as defined in the 
Department's regulations at 29 CFR 2510.3-101(i). An example, BlackRock 
states, of such a transaction would be a ``specified pool'' trade, 
wherein a BlackRock Manager identifies an existing specific mortgage 
pool listed on the FHLMC Web site, and asks a dealer (or dealers) for a 
quote on the delivery of a FHLMC pass-through certificate based on such 
specified pool in a few days time. BlackRock believes that this sort of 
purchase from an MPS was intended to be covered by the Proposed 
Exemption, subject to the credit quality determination set forth in 
Section III.N.2 of the Proposed Exemption and the Three Quote Process. 
Accordingly, BlackRock requests that the definition of ``Fixed Income 
Obligation'' be amended to explicitly include Securities which are 
guaranteed governmental mortgage pool certificates.
    BlackRock additionally believes purchases of Fixed Income 
Securities, including guaranteed governmental mortgage pool 
certificates, should be explicitly permitted where an MPS has either an 
ongoing function or can potentially incur liability. It notes that, 
pursuant to 29 CFR 2510.3-101(i)(1), when a plan invests in a 
guaranteed governmental mortgage pool, its assets include its 
investment in the certificate, but do not, solely by reason of such 
investment, include any of the underlying mortgages. However, private 
sector entities, such as an MPS, may perform services with respect to 
the underlying mortgages.\11\ BlackRock believes investments in 
guaranteed governmental pool certificates are analogous to investments 
in high quality asset-backed debt Securities.
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    \11\ See, e.g., Advisory Opinion 99-05A, regarding the Federal 
Agricultural Mortgage Corporation.
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    BlackRock observes that Sections III.B., III.C. and III.D. of the 
Proposed Exemption would permit BlackRock Managers to acquire Fixed 
Income Obligations issued by an MPS, subject to applicable conditions. 
On such grounds, BlackRock believes that BlackRock Managers should, 
therefore, be able to purchase Fixed Income Obligations, whether they 
are debt under 29 CFR 2510.3-101, or they are guaranteed governmental 
mortgage pool certificates, if an MPS performs an ongoing function with 
respect to such Fixed Income Obligations, such as trustee or servicer 
of collateral of a private sector collateralized structured obligation 
constituting debt under the plan asset regulation, or such as a trustee 
or mortgage servicer under a FNMA certificate.
    The conditions of Sections III.D. and III.E. of the Proposed 
Exemption reflect the ability of a BlackRock Manager to purchase and 
hold third party Fixed Income Obligations under which an MPS has an 
ongoing function ``such as debt trustee [or] servicer of collateral for 
asset-backed debt. * * *'' BlackRock notes that the heading for Section 
III.E. mentions only one such role, that of ``[d]ebt [t]rustee'', and 
the heading of Section III.D. does not mention any continuing roles. 
BlackRock believes that the exemption should clearly reflect the 
ability of BlackRock Managers to acquire and hold Fixed Income 
Obligations despite an MPS or MPSs performing one or more of a 
multiplicity of possible roles with respect to such Securities. 
BlackRock argues that, in the primary markets, the affiliated 
underwriting restrictions minimize the chance that a purchase may be 
intended to benefit an MPS.
    Accordingly, BlackRock believes that the following changes should 
be made to the exemption:
    1. Section VI.HH. should be amended to read as follows: ``Fixed 
Income Obligations'' means:
    (1) Fixed income obligations including structured debt or other 
instruments characterized as debt pursuant to 29 CFR 2510.3-101, 
including, but not limited to, debt convertible into equity, 
certificates of deposit and loans (other than loans with respect to 
which an MPS is the entity which acts as lead lender); and
    (2) guaranteed governmental mortgage pool certificates within the 
meaning of 29 CFR 2510.3-101(i).
    (3) Asset-Backed Securities are not Fixed Income Obligations for 
purposes of this exemption.
    2. The title of Section III.D. and the opening paragraphs thereof 
should be revised to read as follows:
    ``D. Certain Transactions in the Secondary Market by BlackRock 
Managers of Fixed Income Obligations Including Fixed Income Obligations 
Issued by or Traded With an MPS, and/or Under Which an MPS has Either 
an Ongoing Function or Can Potentially Incur Liability. Relief under 
Section I of this exemption is available for a purchase or sale in the 
secondary market or the holding by BlackRock Managers on behalf of 
Client Plans of (i) Fixed Income Obligations issued by an MPS, (ii) 
Fixed Income Obligations issued by a third party but purchased from or 
sold to an MPS, and/or (iii) Fixed Income Obligations under which

[[Page 50636]]

an MPS has either an ongoing function or can potentially incur 
liability, provided that:
    (1) If the Fixed Income Obligations are purchased from or sold to 
an MPS, it is as a result of the Three Quote Process.
    (2) * * *''
    3. The title of Section III.E. and the opening paragraph thereof 
should be revised to ``Purchase in an Underwriting and Holding by 
BlackRock Managers of Fixed Income Obligations Issued by a Third Party 
when an MPS is Underwriter, in Either a Manager or Member Capacity, 
and/or Under Which an MPS has Either an Ongoing Function or Can 
Potentially Incur Liability. Relief under Section I of this exemption 
is available for the purchase and holding by BlackRock Managers of 
Fixed Income Obligations issued by third parties in an underwriting 
when an MPS is an Underwriter, in either a manager or a member 
capacity, and/or Fixed Income Obligations under which an MPS has either 
an ongoing function or can potentially incur liability, provided that: 
* * *''
    4. A new subsection should be added to each of Sections III.D. and 
III.E. of the exemption, the text of which would be:\12\.
---------------------------------------------------------------------------

    \12\ An ``explicit U.S. Government guarantee'' refers to the 
U.S. Government's statutory guarantee of certain guaranteed 
governmental mortgage pool certificates. An ``implicit U.S. 
Government guarantee'' refers to guaranteed governmental mortgage 
pool certificates that are not statutorily guaranteed by the U.S. 
Government but are still issued by corporations chartered by the 
U.S. Government.

    ``( ) With respect to any Fixed Income Obligation acquired under 
this Section III which is a guaranteed governmental mortgage pool 
certificate within the meaning of 29 CFR 2510.3-101(i) which is 
accompanied by an implicit U.S. Government guarantee as opposed to 
an explicit U.S. Government guarantee (i) The BlackRock Manager 
initiating a purchase of such Securities makes a determination that 
such Securities are of substantially similar credit quality as 
guaranteed governmental mortgage pool certificates accompanied by an 
explicit U.S. Government guarantee, (ii) the ECO (in regular 
consultation with and under the supervision of the IM) monitors the 
credit spread between such implicitly and explicitly guaranteed 
certificates, and (iii) each of the ECO and the IM (independently) 
has the authority and responsibility to determine whether purchases 
of implicitly guaranteed certificates should not be permitted due to 
such credit spread, and such authority and responsibility is 
---------------------------------------------------------------------------
reflected in the EPPs.''

    The Department agrees with the comments, and it has modified the 
exemption's operative language.
    Model or Quantitative Conformity. Sections III.B.1., III.D.2(c), 
III.R.1. and III.X.1. of the Proposed Exemption apply to Covered 
Transactions that involve Model-Driven Accounts or Funds and Index 
Accounts or Funds. The Applicants have noted that the provisions in 
Sections III.B.1., III.D.2(c), III.R.1. and III.X.1. of the Proposed 
Exemption that state that purchases must not ``exceed the purchase 
amount necessary for such Model or quantitative conformity'' present a 
practical issue for the Applicants due to the fact that in the ordinary 
course of trading in Securities under the specified Covered 
Transactions, the amount of the Securities purchased could 
inadvertently exceed the amount necessary for Model or quantitative 
conformity despite the responsible BlackRock Manager's intention and 
reasonable attempt to comply with the condition.
    The Applicants have suggested that the language be revised as 
follows: ``And such purchase is reasonably calculated not to exceed the 
purchase amount necessary for such Model or quantitative conformity by 
more than a de minimis amount.''
    The Department agrees with the comment, and it has modified 
Sections III.B.1., III.D.2(c), III.R.1. and III.X.1. of the exemption's 
operative language accordingly.
    Effective Dates. Section I of the Proposed Exemption states that 
the exemption will be effective from December 1, 2009, through the 
earlier of (1) The effective date of an individual exemption granting 
permanent relief for the Covered Transaction or (2) May 31, 2011. 
BlackRock believes that it is unlikely that an individual exemption 
granting permanent relief for the Covered Transactions will be granted 
until late in 2011 or early 2012. As a result, BlackRock requests that 
the date May 31, 2011, set forth in Section I of the Proposed 
Exemption, should be revised to March 31, 2012.
    The Department agrees with the comment, and it has modified Section 
I of the final exemption accordingly.
    Following the Secondary Offering, BOA's interest in BlackRock 
decreased significantly. As a result, the exemption ceased to be 
available with respect to Bank of America Corporation and any entity 
directly or indirectly, through one or more intermediaries, 
controlling, controlled by or under common control with Bank of America 
Corporation (collectively, the BOA Group) on the day after the number 
of representatives of the BOA Group on the BlackRock Board of Directors 
was reduced to one (1).
    Technical Corrections. BlackRock also sought a number of technical 
corrections to the Proposed Exemption. Where the Department agrees with 
such technical corrections, the technical corrections have been made.
    After giving full consideration to the entire record, including 
BlackRock's written comment, the Department has decided to grant the 
exemption, as modified herein. For further information regarding 
BlackRock's comments and other matters discussed herein, interested 
persons are encouraged to obtain copies of the exemption application 
file (Exemption Application No. D-11588) that the Department maintains 
with respect to this case. The complete application file, as well as 
supplemental submissions received by the Department, is made available 
for public inspection in the Public Documents room of the Employee 
Benefits Security Administration, Room N-1513, U.S. Department of 
Labor, 200 Constitution Ave., NW., Washington, DC 20210.
    For a more complete statement of the facts and representations 
supporting the Department's decision to grant this exemption, refer to 
the notice of proposed exemption published on March 18, 2011, at 76 FR 
15058.

FOR FURTHER INFORMATION CONTACT: Brian Shiker, Office of Exemption 
Determinations, Employee Benefits Security Administration, U.S. 
Department of Labor, telephone (202) 693-8552.

Exemption

Section I: Covered Transactions Generally

    For the period from December 1, 2009, through the earlier of (i) 
The effective date of an individual exemption granting permanent relief 
for the following transactions, or (ii) March 31, 2012,\13\ the 
restrictions of ERISA sections 406(a)(1) and 406(b), FERSA sections 
8477(c)(1) and (2), and the sanctions resulting from the application of 
Code section 4975, by reason of Code section 4975(c)(1),\14\ shall not 
apply to the Covered Transactions set forth in Section III and entered 
into on behalf of or with the assets of a Client Plan; provided, that 
(x) the generally

[[Page 50637]]

applicable conditions of Section II of this exemption are satisfied, 
and, as applicable, the transaction-specific conditions set forth below 
in Sections III and IV of this exemption are satisfied, or (y) the 
Special Correction Procedure set forth in Section V of this exemption 
is satisfied.
---------------------------------------------------------------------------

    \13\ The exemption ceased to be available with respect to Bank 
of America Corporation and any entity directly or indirectly, 
through one or more intermediaries, controlling, controlled by or 
under common control with Bank of America Corporation (collectively, 
the BOA Group) on the day after the number of representatives of the 
BOA Group on the BlackRock Board of Directors was reduced to one 
(1).
    \14\ For purposes of this exemption, references to ERISA section 
406 should be read to refer as well to the corresponding provisions 
of Code section 4975 and FERSA section 8477(c).
---------------------------------------------------------------------------

Section II: Generally Applicable Conditions

    A. Compliance with the QPAM Exemption. The following conditions of 
Part I of Prohibited Transaction Exemption 84-14, as amended (PTE 84-14 
or the QPAM Exemption),\15\ must be satisfied with respect to each 
Covered Transaction:
---------------------------------------------------------------------------

    \15\ 49 FR 9494 (Mar. 13, 1984), as amended, 70 FR 49305 (Aug. 
23, 2005), and as amended, 75 FR 38837 (July 6, 2010).
---------------------------------------------------------------------------

    1. The BlackRock Manager engaging in the Covered Transaction is a 
Qualified Professional Asset Manager;
    2. Except as set forth in Section III of this exemption, at the 
time of the Covered Transaction (as determined under Section VI(i) of 
the QPAM Exemption) with or involving an MPS, such MPS, or its 
affiliate (within the meaning of Section VI(c) of the QPAM 
Exemption),\16\ does not have the authority to:
---------------------------------------------------------------------------

    \16\ Solely for purposes of this Section II.A.2., no BlackRock 
Entity will be deemed to be an affiliate of an MPS. The Department 
is not making herein a determination as to whether any BlackRock 
Entity is an affiliate of an MPS under ERISA.
---------------------------------------------------------------------------

    (a) Appoint or terminate the BlackRock Manager as a manager of the 
Client Plan assets involved in the Covered Transaction, or
    (b) negotiate on behalf of the Client Plan the terms of the 
management agreement with the BlackRock Manager (including renewals or 
modifications thereof) with respect to the Client Plan assets involved 
in the Covered Transaction;
    3. (a) Notwithstanding the foregoing, in the case of an investment 
fund (as defined in Section VI(b) of the QPAM Exemption) in which two 
or more unrelated Client Plans have an interest, a Covered Transaction 
with an MPS will be deemed to satisfy the requirements of Section 
II.A.2. of this exemption if the assets of a Client Plan on behalf of 
which the MPS or its affiliate possesses the authority set forth in 
Subsections 2(a) and/or (b) above, and which are managed by the 
BlackRock Manager in the investment fund, when combined with the assets 
of other Client Plans established or maintained by the same employer 
(or an affiliate thereof described in section VI(c)(1) of the QPAM 
Exemption) or by the same employee organization, on behalf of which the 
same MPS possesses such authority and which are managed in the same 
investment fund, represent less than ten percent (10%) of the assets of 
the investment fund;
    (b) For purposes of Section II.A.3.(a) of this exemption, and for 
purposes of Sections III.I.6, L.3(b), M.2.(b) and U.1. of this 
exemption, with respect to the assets of an MPS Plan invested in a 
Pooled Fund as of the date of the Acquisition, which Pooled Fund is a 
bank-maintained common or collective trust, such assets when aggregated 
with the assets of all other MPS Plans of the same MPS Group and 
invested in such Pooled Fund shall be deemed to constitute less than 
ten percent (10%) of the assets of such Pooled Fund from the date of 
the Acquisition through July 1, 2010 (the Unwind Period); provided, 
that:\17\
---------------------------------------------------------------------------

    \17\ For purposes of this Section II.A.3.(b), the MPS Plans of 
each of the MPS Groups (the PNC MPSs, the BOA MPSs, and the Barclays 
MPSs) are separately aggregated (e.g., all MPS Plans of BOA MPSs are 
aggregated together but are not aggregated with MPS Plans of 
Barclays MPSs or PNC MPSs).
---------------------------------------------------------------------------

    (i) The fees paid by such MPS Plans to BlackRock Managers during 
the Unwind Period are not more than reasonable compensation and are 
substantially the same as fees paid to the same BlackRock Managers by 
other, comparable Client Plans which are not MPS Plans, invested in 
such Pooled Fund as of the date of the Acquisition;
    (ii) such MPS Plans do not pay to the same BlackRock Managers 
during the Unwind Period any type of fee or other compensation that was 
not charged to or otherwise borne by Client Plan investors, which are 
not MPS Plans, in the Pooled Fund as of the date of the Acquisition;
    (iii) during the Unwind Period, the IM reviews the investment by 
the MPS Plans in the Pooled Fund; all fees paid by the MPS Plans to 
BlackRock Managers are disclosed to the IM; the IM reviews the offering 
documents for the Pooled Funds and any advisory or management 
agreements with BlackRock Managers; and any material change in the 
terms and conditions of the investment by the MPS Plans in the Pooled 
Fund, including but not limited to fees paid to BlackRock Managers and 
the terms of the advisory or management agreements with BlackRock 
Managers, are promptly disclosed to the IM and are subject to the IM's 
approval; and
    (iv) during the Unwind Period, each MPS Plan may terminate its 
investment in the Pooled Fund upon no more than thirty (30) days notice 
and without incurring a redemption fee paid to a BlackRock Manager;
    4. The terms of the Covered Transaction are negotiated on behalf of 
the investment fund by, or under the authority and general direction 
of, the BlackRock Manager and either the BlackRock Manager or (so long 
as the BlackRock Manager retains full fiduciary responsibility with 
respect to the Covered Transaction) a property manager acting in 
accordance with written guidelines established and administered by the 
BlackRock Manager, makes the decision on behalf of the investment fund 
to enter into the Covered Transaction, provided that the Covered 
Transaction is not part of an agreement, arrangement or understanding 
designed to benefit the MPS;
    5. The Covered Transaction is not entered into with an MPS which is 
a party in interest or disqualified person with respect to any Client 
Plan whose assets managed by the BlackRock Manager, when combined with 
the assets of other Client Plans established or maintained by the same 
employer (or affiliate thereof described in Section VI(c)(1) of the 
QPAM Exemption) or by the same employee organization, and managed by 
the BlackRock Manager, represent more than twenty percent (20%) of the 
total client assets managed by the BlackRock Manager at the time of the 
Covered Transaction;
    6. At the time the Covered Transaction is entered into, and at the 
time of any subsequent renewal or modification thereof that requires 
the consent of the BlackRock Manager, the terms of the Covered 
Transaction are at least as favorable to the investment fund as the 
terms generally available in arm's length transactions between 
unrelated parties; and
    7. Neither the BlackRock Manager nor any affiliate thereof (as 
defined in Section VI(d) of the QPAM Exemption),\18\ nor any owner, 
direct or indirect, of a five percent (5%) or more interest in the 
BlackRock Manager \19\ is a person who within the ten years immediately 
preceding the Covered Transaction has been either convicted or released 
from imprisonment, whichever is later, as a result of: any felony 
involving abuse or misuse of such person's employee benefit plan 
position or employment, or position or employment with a labor 
organization; any felony arising out of the conduct of the business of 
a broker, dealer, investment adviser, bank, insurance

[[Page 50638]]

company or fiduciary; income tax evasion; any felony involving the 
larceny, theft, robbery, extortion, forgery, counterfeiting, fraudulent 
concealment, embezzlement, fraudulent conversion, or misappropriation 
of funds or securities; conspiracy or attempt to commit any such crimes 
or a crime in which any of the foregoing crimes is an element; or any 
other crime described in ERISA section 411. For purposes of this 
section, a person shall be deemed to have been ``convicted'' from the 
date of the judgment of the trial court, regardless of whether that 
judgment remains under appeal.
---------------------------------------------------------------------------

    \18\ For the avoidance of doubt, all MPSs are excluded from the 
term ``affiliate'' for these purposes.
    \19\ For the avoidance of doubt, all MPSs are excluded from the 
term ``owner'' for these purposes.
---------------------------------------------------------------------------

    B. Compensation. None of the employees of a BlackRock Manager 
receive any compensation that is based on any Covered Transaction 
having taken place between Client Plans and any of the MPSs (as opposed 
to with another institution that is not an MPS). The fact that a 
specific Covered Transaction occurred with an MPS as opposed to a non-
MPS counterparty is ignored by BlackRock and BlackRock Managers for 
compensation purposes. None of the employees of BlackRock or a 
BlackRock Manager receive any compensation from BlackRock or a 
BlackRock Manager which consists of equity Securities issued by an MPS, 
which fluctuates in value based on changes in the value of equity 
Securities issued by an MPS, or which is otherwise based on the 
financial performance of an MPS independent of BlackRock's performance, 
provided that this condition shall not fail to be met because the 
compensation of an employee of a BlackRock Manager fluctuates with the 
value of a broadly-based index which includes equity Securities issued 
by an MPS.
    C. Exemption Policies and Procedures. BlackRock adopts and 
implements Exemption Policies and Procedures (EPPs) which address each 
of the types of Covered Transactions and which are designed to achieve 
the goals of: (1) Compliance with the terms of the exemption, (2) 
ensuring BlackRock's decision-making with respect to the Covered 
Transactions on behalf of Client Plans with MPSs or BlackRock Entities 
is done in the interests of the Client Plans and their participants and 
beneficiaries, and (3) to the extent possible, verifying that the terms 
of such Covered Transactions are at least as favorable to the Client 
Plans as the terms generally available in arm's length transactions 
with unrelated parties. The EPPs are developed with the cooperation of 
both the Exemption Compliance Officer (ECO) and the Independent Monitor 
(IM), and such EPPs are subject to the approval of the IM. The EPPs 
need not address transactions which are not within the definition of 
the term Covered Transactions.
    Transgressions of the EPPs which do not result in Violations 
require correction only if the amount involved in the transgression and 
the extent of deviation from the EPPs is material, taking into account 
the amount of Client Plan assets affected by such transgressions (EPP 
Corrections). The ECO will make a written determination as to whether 
such transgressions require EPP Correction, and, if the ECO determines 
an EPP Correction is required, the ECO will provide written notice to 
the IM of the EPP Correction. The ECO will provide summaries for the IM 
of any such EPP Corrections as part of the quarterly report referenced 
in Section II.D.11.
    D. Exemption Compliance Officer. BlackRock appoints an Exemption 
Compliance Officer (ECO) with respect to the Covered Transactions. If 
the ECO resigns or is removed, BlackRock shall appoint a successor ECO 
within a reasonable period of time, not to exceed thirty (30) days, 
which successor shall be subject to the affirmative written approval of 
the IM. With respect to the ECO, the following conditions shall be met:
    1. The ECO is a legal professional with at least ten years of 
experience and extensive knowledge of the regulation of financial 
services and products, including under ERISA and FERSA;
    2. A committee made up exclusively of members of the Board who are 
independent of BlackRock and the MPSs determines the ECO's compensation 
package, with input from the general counsel of BlackRock; the ECO's 
compensation is not set by BlackRock business unit heads, and there is 
no direct or indirect input regarding the identity or compensation of 
the ECO from any MPS;
    3. The ECO's compensation is not based on performance of any 
BlackRock Entity or MPS, although a portion of the ECO's compensation 
may be provided in the form of BlackRock stock or stock equivalents;
    4. The ECO can be terminated by BlackRock only with the approval of 
the IM;
    5. The EPPs prohibit any officer, director or employee of BlackRock 
or any MPS or any person acting under such person's direction from 
directly or indirectly taking any action to coerce, manipulate, 
mislead, or fraudulently influence the ECO in the performance of his or 
her duties;
    6. The ECO is responsible for monitoring Covered Transactions and 
shall determine whether Violations have occurred, and the appropriate 
correction thereof, consistent with the requirements of Section V of 
this exemption;
    7. If the ECO determines a Violation has occurred, the ECO must 
determine why it occurred and what steps should be taken to avoid such 
a Violation in the future (e.g., additional training, additional 
procedures, additional monitoring, or additional and/or changed 
processes or systems);
    8. The ECO is responsible for monitoring and overseeing the 
implementation of the EPPs. The ECO may delegate such responsibilities 
to the ECO Function, but the ECO will remain responsible for monitoring 
and overseeing the ECO Function's implementation of the EPPs. When 
appropriate, the ECO will recommend changes to the EPPs to BlackRock 
and the IM. The ECO will consult with the IM regarding the need for, 
timing, and form of EPP Corrections;
    9. The ECO carries out the responsibilities required of the ECO 
described in: (a) The definition of ``Index'' in this exemption and (b) 
with respect to loans of Securities to an MPS in Section III.M. of this 
exemption, and carries out such other responsibilities stipulated or 
described in Section III of this exemption including supervision of the 
ECO Function;
    10. The ECO, with the assistance of the ECO Function, monitors 
Covered Transactions and situations resulting from Covered Transactions 
with or involving an MPS with respect to which, because of the 
investment of the MPS in BlackRock, an action or inaction on the part 
of a BlackRock Manager might be thought to be motivated by an interest 
which may affect the exercise of such BlackRock Manager's best judgment 
as a fiduciary. If a situation is identified by the ECO which poses the 
potential for a conflict, as specified in Section III, the ECO shall 
consult with the IM, or refer decision-making to the discretion of the 
IM;
    11. The ECO provides a quarterly report \20\ to the IM summarizing 
the material activities of the ECO for the preceding quarter and 
setting forth any Violations discovered during the quarter and actions 
taken to correct such Violations. With respect to Violations, the ECO 
report details changes to process put in place to guard against a 
substantially similar Violation occurring again, and recommendations 
for additional training, additional procedures, additional monitoring, 
or

[[Page 50639]]

additional and/or changed processes or systems or training changes and 
BlackRock management's actions on such recommendations. In connection 
with providing the quarterly report for the second quarter and fourth 
quarter of each year, upon the request of the IM, the ECO and the IM 
shall meet in person to review the content of the report. Other members 
of the ECO Function may attend such meetings at the request of either 
the ECO or the IM;
---------------------------------------------------------------------------

    \20\ The first quarterly report covered a 4-month period ending 
March 31, 2010.
---------------------------------------------------------------------------

    12. In each quarterly report, the ECO certifies in writing to his 
or her knowledge that (a) The quarterly report is accurate; (b) 
BlackRock's compliance program is working in a manner which is 
reasonably designed to prevent Violations; (c) any Violations 
discovered during the quarter and the related corrections taken to date 
have been identified in the report; and (d) BlackRock has complied with 
the EPPs in all material respects;
    13. No less frequently than annually, the ECO certifies to the IM 
as to whether BlackRock has provided the ECO with adequate resources, 
including, but not limited to, adequate staffing of the ECO Function, 
and, in connection with the quarterly report for the fourth quarter of 
each year, the ECO shall identify to the IM those BlackRock Managers 
that relied upon this exemption during the prior year and those that he 
reasonably anticipates relying on this exemption during the current 
year; and
    14. The ECO provides any further information regarding Covered 
Transactions reasonably requested by the IM.
    E. Independent Monitor. BlackRock retains an Independent Monitor 
(IM) with respect to the Covered Transactions. If the IM resigns or is 
removed, BlackRock shall appoint a successor IM within a reasonable 
period of time, not to exceed thirty (30) days. The IM:
    1. Agrees in writing to serve as IM, and he or she is independent 
within meaning of Section VI(OO);
    2. Approves the ECO selected by BlackRock, and as part of the 
approval process and annually thereafter approves in general terms the 
reasonableness of the ECO's compensation, taking into account such 
information as the IM may request of BlackRock and which BlackRock must 
supply, and approves any termination of the ECO by BlackRock;
    3. Assists in the development of, and the granting of written 
approval of, the EPPs and any material alterations of the EPPs by 
determining that they are reasonably designed to achieve the goals of 
(a) compliance with the terms of the exemption, (b) ensuring 
BlackRock's decision-making with respect to Covered Transactions on 
behalf of Client Plans with MPSs or BlackRock Entities is done in the 
interests of the Client Plans and their respective participants and 
beneficiaries and, (c) requiring, to the extent possible, verification 
that the terms of such Covered Transactions are at least as favorable 
to the Client Plans as the terms generally available in comparable 
arm's length transactions with unrelated parties;
    4. Consults with the ECO regarding the need for, timing and form of 
any EPP Corrections. The IM has the responsibilities with respect to 
corrections of Violations, as set forth in Section V of this Exemption. 
In response to EPP Corrections or Violations, the IM considers whether, 
and must have the authority, to require further sampling, testing or 
corrective action if necessary;
    5. Exercises discretion for Client Plans in situations specified in 
Section III of this exemption where BlackRock Managers may be thought 
to have conflicts;
    6. Performs certain monitoring functions described in Section III, 
and carries out the responsibilities required of the IM, as set forth 
in the definition of ``Index'' in this exemption, and with respect to 
loans of Securities to an MPS as set forth in Section III.M. of this 
exemption, and carries out such other responsibilities stipulated in 
Section III of this exemption;
    7. Reviews the quarterly reports of the ECO, obtains and reviews 
representative samples of the data underlying the quarterly reports of 
the ECO, and, if the IM deems it appropriate, obtains additional 
factual information on either an ad hoc basis or on a systematic basis;
    8. Reviews the certifications of the ECO as to whether (a) The 
quarterly report is accurate; (b) BlackRock's compliance program is 
working in a manner which is reasonably designed to prevent Violations; 
(c) any Violations discovered during the quarter and the related 
corrections taken to date have been identified in the report; (d) 
BlackRock has complied with the EPPs in all material respects; and (e) 
BlackRock has provided the ECO with adequate resources, including, but 
not limited to, adequate staffing of the ECO Function;
    9. Determines, on the basis of the information supplied to the IM 
by BlackRock and the ECO, whether there has occurred a pattern or 
practice of insufficient diligence in adhering to the EPPs and/or the 
conditions of the exemption, and if such a determination is made, 
reports the same to the Department, and informs BlackRock and the ECO 
of any such report;
    10. Determines whether the purchases of equity Securities issued by 
an MPS on behalf of Client Plans that are Other Accounts or Funds by a 
BlackRock Manager has had a positive material impact on the market 
price for such Securities, notwithstanding any volume limitations 
imposed by Section III.S. of the exemption and/or imposed by the IM 
with respect to such equity Securities. The IM makes this determination 
based upon its review of the relevant monthly reports required by the 
exemption with respect to such Covered Transactions provided by the ECO 
and publicly available information materially related to the trading of 
the Securities of an MPS on its primary listing exchange (or market);
    11. Issues an annual compliance report,\21\ to be timely delivered 
to (i) the Chairman of the Board of Directors of BlackRock, (ii) the 
Chief Executive Officer of BlackRock and (iii) the General Counsel of 
BlackRock. The annual compliance report shall be based on a review of 
the EPPs, the quarterly reports provided by the ECO, any transactions 
reviewed by the IM as well as any additional information the IM 
requests from BlackRock, and certifying to each of the following (or 
describing any exceptions thereto) that:
---------------------------------------------------------------------------

    \21\ The first annual compliance report covered the 13-month 
period ending December 31, 2010.
---------------------------------------------------------------------------

    (a) The EPPs are reasonably designed to achieve the goals of (i) 
compliance with the terms of the exemption, (ii) ensuring BlackRock's 
decision-making with respect to Covered Transactions on behalf of 
Client Plans with MPSs or BlackRock Entities is done in the interests 
of the Client Plans and the respective participants and beneficiaries, 
and (iii) requiring to the extent possible, verification that the terms 
of any Covered Transaction are at least as favorable to Client Plans as 
the terms generally available in comparable arm's length transactions 
with unrelated parties;
    (b) the EPPs and the other terms of the exemption were complied 
with, with any material exceptions duly noted;
    (c) the IM has made the determination referred to in Section 
II.E.9. and the results of that determination;
    (d) BlackRock has provided the ECO with adequate resources, 
including but not limited to adequate staffing of the ECO Function; and
    (e) the compensation package for the ECO for the prior year is 
reasonable;
    12. The annual compliance report of the IM, as described in Section 
II.E.11., shall contain a summary of Violations,

[[Page 50640]]

any corrections of Violations required by the IM and/or the ECO at any 
time during the prior year. In addition, the IM further certifies that 
BlackRock correctly implemented the prescribed corrections, based in 
part on certification from the ECO; and
    13. The annual compliance report of the IM shall also be timely 
delivered by the IM to the chief executive officer, the general counsel 
and the members of the boards of directors of each of the BlackRock 
Managers identified to the IM by the ECO as having relied upon this 
exemption during the prior year and those that the ECO reasonably 
anticipates will be relying on this exemption during the current year. 
The copies of the compliance report described in this Section II.E.13. 
shall be accompanied by a cover letter from the IM calling the 
attention of the recipients to any violations, material exceptions to 
compliance with the EPPs, or other shortfalls in compliance with the 
exemption to assist such officers and directors in carrying out their 
respective responsibilities.
    F. Special Notice Provisions. A Special Notice containing (i) A 
notice of all of the conditions for relief under Sections III.C., E., 
F., G., Q., R., S. and V. and (ii) a copy of the Notice to Interested 
Parties must be provided to affected Client Plans in writing (which may 
be provided by U.S. mail or electronically, including by e-mail or use 
of a centralized electronic mailbox, so long as such electronic 
communication is reasonably calculated to result in the applicable 
Client Plan's receipt) as soon as practical, but no later than fifteen 
(15) days, following the date that the Notice to Interested Persons is 
provided to Client Plans generally, through publication in the Federal 
Register. As soon as practical following the Special Notice, a Client 
Plan fiduciary independent of any BlackRock Entity must be provided any 
additional material information regarding Covered Transactions 
described in Sections III.C., E., F., G., Q., R., S. and V. by the 
applicable BlackRock Manager on reasonable request; provided, that, 
solely for purposes of this subsection, the fiduciary of an In-House 
Plan is not required to be independent of any BlackRock Entity.

Section III: Covered Transactions

    A. Continuing Transactions. Relief under Section I of this 
exemption is available for Type B Covered Transactions and Type C 
Covered Transactions and the unwind, settlement or other termination 
thereof provided that:
    1. A list of all Type B Covered Transactions and all Type C Covered 
Transactions (the B and C List) as of the date of the Acquisition is 
prepared by BlackRock and provided to the ECO.
    2. Any discretionary act by a BlackRock Manager with respect to a 
transaction on the B and C List is approved in advance in writing by 
the ECO. Such approval is required for, but not limited to, sales and 
other transfers to a third party, redemptions, the exercise of options, 
and the declaration of default or other credit impairment-driven 
decisions. The ECO must determine that the terms of such discretionary 
act are in the interests of the affected Client Plans.
    3. The ECO Function periodically monitors outstanding transactions 
on the B and C List to inquire if an affirmative discretionary act, 
such as a credit driven action, would be appropriate. If the ECO makes 
such a determination, the ECO must direct the action be taken and must 
approve the terms thereof as being in the interests of the affected 
Client Plans.
    4. The ECO Function sends to the IM an updated copy of the B and C 
List as of the end of each fiscal quarter summarizing the Type B 
Covered Transactions and Type C Covered Transactions remaining at the 
end of the quarter and any discretionary actions taken during the 
quarter by BlackRock Managers with respect to such transactions.
    5. Upon the determination by the IM that an action taken with 
respect to a Type B Covered Transaction or Type C Covered Transaction 
was inappropriate or that the compensation the Client Plans received 
was inadequate, or that an action should have been taken but was not, 
the Client Plans are made whole by BlackRock.
    B. Purchases and Holdings by BlackRock Managers of Fixed Income 
Obligations Issued by an MPS in an Underwriting on Behalf of Client 
Plans Invested in an Index Account or Fund, or in a Model-Driven 
Account or Fund. Relief under Section I of this exemption is available 
for a purchase and holding by BlackRock Managers of Fixed Income 
Obligations issued by an MPS in an underwriting on behalf of Client 
Plans for an Index Account or Fund, or a Model-Driven Account or Fund, 
provided that:
    1. Such purchase is for the sole purpose of maintaining 
quantitative conformity with the weight of such Securities prescribed 
by the relevant Index, for Index Accounts or Funds, or the weight of 
such Securities prescribed by the relevant Model, for Model-Driven 
Accounts or Funds; and such purchase is reasonably calculated not to 
exceed the purchase amount necessary for such Model or quantitative 
conformity by more than a de minimis amount;
    2. Such purchase is not made from any MPS;
    3. No BlackRock Entity is in the selling syndicate;
    4. After purchase, the responsible BlackRock Manager notifies the 
ECO if circumstances arise in which an action or inaction on the part 
of the BlackRock Manager regarding an MPS Fixed Income Obligation so 
acquired might be thought to be motivated by an interest which may 
affect the exercise of such BlackRock Manager's best judgment as a 
fiduciary, and complies with decisions of the ECO regarding the taking, 
or the refraining from taking, of actions in such circumstances; and
    5. After purchase, any decision regarding conversion of an MPS 
Fixed Income Obligation into equity in the MPS is made by the IM.
    C. Purchase and Holding by BlackRock Managers of Fixed Income 
Obligations Issued by an MPS in an Underwriting on Behalf of Client 
Plans Invested in an Other Account or Fund. Relief under Section I of 
this exemption is available for a purchase and holding by BlackRock 
Managers of Fixed Income Obligations issued by an MPS in an 
underwriting on behalf of Client Plans invested in an Other Account or 
Fund provided that:
    1. The conditions of Section IV.A. of this exemption are satisfied, 
except that for purposes of Section IV.A.4.(a) and Section IV.A.5.(c), 
the MPS-issued Fixed Income Obligations at the time of purchase must be 
rated in one of the three highest rating categories by a Rating 
Organization and none of the Rating Organizations may rate the Fixed 
Income Obligations lower than in the third highest rating category;
    2. Such purchase is not made from an MPS;
    3. No BlackRock Entity is in the selling syndicate;
    4. After purchase, the responsible BlackRock Manager notifies the 
ECO if circumstances arise in which an action or inaction on the part 
of the BlackRock Manager regarding an MPS Fixed Income Obligation so 
acquired might be thought to be motivated by an interest which may 
affect the exercise of such BlackRock Manager's best judgment as a 
fiduciary, and complies with decisions of the ECO regarding the taking, 
or the refraining from taking, of actions in such circumstances;
    5. After purchase, any decision regarding conversion of an MPS 
Fixed Income Obligation into equity in the MPS is made by the IM; and

[[Page 50641]]

    6. Special Notice of all of the foregoing conditions for relief 
under this Section III.C. must be provided in accordance with the terms 
of Section II.F.
    D. Certain Transactions in the Secondary Market by BlackRock 
Managers of Fixed Income Obligations Including Fixed Income Obligations 
Issued by or Traded With an MPS, and/or Under Which an MPS has Either 
an Ongoing Function or Can Potentially Incur Liability. Relief under 
Section I of this exemption is available for a purchase or sale in the 
secondary market or the holding by BlackRock Managers on behalf of 
Client Plans of (i) Fixed Income Obligations issued by an MPS, (ii) 
Fixed Income Obligations issued by a third party but purchased from or 
sold to an MPS, and/or (iii) Fixed Income Obligations under which an 
MPS has either an ongoing function or can potentially incur liability, 
provided that:
    1. If the Fixed Income Obligations are purchased from or sold to an 
MPS, it is as a result of the Three Quote Process.
    2. With respect to Fixed Income Obligations that are issued by an 
MPS and are purchased and held by a BlackRock Manager for a Client 
Plan--
    (a) After purchase, the responsible BlackRock Manager notifies the 
ECO if circumstances arise in which an action or inaction on the part 
of the BlackRock Manager regarding an MPS Fixed Income Obligation so 
acquired might be thought to be motivated by an interest which may 
affect the exercise of such BlackRock Manager's best judgment as a 
fiduciary, and complies with the decisions of the ECO regarding the 
taking, or the refraining from taking, of actions in such 
circumstances;
    (b) After purchase, any decision regarding conversion of an MPS 
Fixed Income Obligation into equity in the MPS is made by the IM; and
    (c) If purchased for an Index Account or Fund, or a Model-Driven 
Account or Fund, such purchase is for the sole purpose of maintaining 
quantitative conformity with the weight of such Securities prescribed 
by the relevant Index, for Index Accounts or Funds, or the weight of 
such Securities prescribed by the relevant Model, for Model-Driven 
Accounts or Funds and such purchase is reasonably calculated not to 
exceed the purchase amount necessary for such Model or quantitative 
conformity by more than a de minimis amount.
    3. With respect to Fixed Income Obligations (whether or not issued 
by an MPS) held by a BlackRock Manager for a Client Plan under which an 
MPS has an ongoing function, such as servicing of collateral for asset-
backed debt, or the potential for liability, such as under 
representations or warranties made by an MPS with respect to collateral 
for such asset-backed debt which the MPS originated, the taking of or 
refraining from taking any action by the responsible BlackRock Manager 
which could have a material positive or negative effect upon the MPS is 
decided upon by the ECO.
    4. With respect to any Fixed Income Obligation acquired under this 
Section III.D. which is a guaranteed governmental mortgage pool 
certificate within the meaning of 29 CFR 2510.3-101(i) which is 
accompanied by an implicit U.S. Government guarantee as opposed to an 
explicit U.S. Government guarantee, (a) The BlackRock Manager 
initiating a purchase of such Securities makes a determination that 
such Securities are of substantially similar credit quality as 
guaranteed governmental mortgage pool certificates accompanied by an 
explicit U.S. Government guarantee, (b) the ECO (in regular 
consultation with and under the supervision of the IM) monitors the 
credit spread between such implicitly and explicitly guaranteed 
certificates, and (c) each of the ECO and the IM (independently) has 
the authority and responsibility to determine whether purchases of 
implicitly guaranteed certificates should not be permitted due to such 
credit spread, and such authority and responsibility is reflected in 
the EPPs.
    5. For purposes of this Section III.D., Asset-Backed Securities are 
not Fixed Income Obligations.
    E. Purchase in an Underwriting and Holding by BlackRock Managers of 
Fixed Income Obligations Issued by a Third Party when an MPS is 
Underwriter, in Either a Manager or Member Capacity, and/or Under Which 
an MPS has Either an Ongoing Function or Can Potentially Incur 
Liability. Relief under Section I of this exemption is available for 
the purchase and holding by BlackRock Managers of Fixed Income 
Obligations issued by third parties in an underwriting when an MPS is 
an Underwriter, in either a manager or a member capacity, and/or Fixed 
Income Obligations under which an MPS has either an ongoing function or 
can potentially incur liability, provided that:
    1. The conditions of Section IV.A. are satisfied.
    2. Such purchase is not made from an MPS.
    3. No BlackRock Entity is in the selling syndicate.
    4. With respect to Fixed Income Obligations under which an MPS has 
either an ongoing function, such as debt trustee, servicer of 
collateral for asset-backed debt, or the potential for liability, such 
as under representations or warranties made by an MPS with respect to 
collateral for such asset-backed debt which the MPS originated, the 
taking of or refraining from taking any action by the responsible 
BlackRock Manager which could have a material positive or negative 
effect upon the MPS is decided upon by the ECO.
    5. With respect to any Fixed Income Obligation acquired under this 
Section III.E. which is a guaranteed governmental mortgage pool 
certificate within the meaning of 29 CFR 2510.3-101(i) which is 
accompanied by an implicit U.S. Government guarantee as opposed to an 
explicit U.S. Government guarantee, (a) The BlackRock Manager 
initiating a purchase of such Securities makes a determination that 
such Securities are of substantially similar credit quality as 
guaranteed governmental mortgage pool certificates accompanied by an 
explicit U.S. Government guarantee, (b) the ECO (in regular 
consultation with and under the supervision of the IM) monitors the 
credit spread between such implicitly and explicitly guaranteed 
certificates, and (c) each of the ECO and the IM (independently) has 
the authority and responsibility to determine whether purchases of 
implicitly guaranteed certificates should not be permitted due to such 
credit spread, and such authority and responsibility is reflected in 
the EPPs.
    6. For purposes of this Section III.E., Asset-Backed Securities are 
not Fixed Income Obligations.
    7. Special Notice of all of the foregoing conditions for relief 
under this Section III.E. must be provided in accordance with the terms 
of Section II.F.
    F. Purchase in an Underwriting and Holding by BlackRock Managers of 
Asset-Backed Securities, when an MPS is an Underwriter, in the capacity 
as either a Manager or a Member of the Selling Syndicate, Trustee, or, 
in the case of Asset-Backed Securities Which Are CMBS, Servicer. Relief 
under Section I of this exemption is available for the purchase and 
holding by BlackRock Managers of Asset-Backed Securities issued in an 
underwriting where an MPS is (i) An underwriter, in the capacity as 
either a manager or a member of the selling syndicate, (ii) trustee, or 
(iii) solely in the case of Asset-Backed Securities which are CMBS, 
serves as servicer of a trust that issued such CMBS, provided that:
    1. The conditions of Section IV.A. are satisfied, except that (a) 
For purposes of Section IV.A.4.(a), the Asset-Backed Securities at the 
time of purchase must

[[Page 50642]]

be rated in one of the three highest rating categories by a Rating 
Organization and none of the Rating Organizations may rate the Asset-
Backed Securities lower than the third highest rating category, (b) in 
the case of Asset-Backed Securities which are CMBS and for which the 
MPS is servicer, the conditions of Section IV.B. are satisfied instead 
of the conditions of Section IV.A., and (c) if an MPS is an underwriter 
and an MPS is a servicer as described in clause (b), the conditions of 
both Section IV.A., as modified by Section III.F.1(a), and Section 
IV.B. must be satisfied;
    2. Such purchase is not made from an MPS;
    3. No BlackRock Entity is in the selling syndicate;
    4. In the case of Asset-Backed Securities with respect to which an 
MPS has either an ongoing function, such as trustee, servicer of 
collateral for CMBS, or the potential for liability, such as under 
representations or warranties made by an MPS with respect to collateral 
for CMBS which collateral the MPS originated, the taking of or 
refraining from taking of any action by a responsible BlackRock Manager 
which could have a material positive or negative effect upon the MPS is 
decided upon by the ECO;
    5. The purchase meets the conditions of an applicable Underwriter 
Exemption; and
    6. Special Notice of all of the foregoing conditions for relief 
under this Section III.F. must be provided in accordance with the terms 
of Section II.F.
    G. Purchase and Holding by BlackRock Managers of Equity Securities 
Issued by an Entity which is not an MPS and is Not a BlackRock Entity, 
in an Underwriting when an MPS is an Underwriter, in either a Manager 
or a Member Capacity. Relief under Section I of this exemption is 
available for the purchase and holding by BlackRock Managers of Equity 
Securities issued by an entity which is not an MPS and which is not a 
BlackRock Entity in an underwriting when an MPS is an underwriter, in 
either a manager or a member capacity, provided that:
    1. The conditions of Section IV.A. are satisfied;
    2. Such purchase is not made from an MPS;
    3. No BlackRock Entity is in the selling syndicate;
    4. The Securities are not Asset-Backed Securities; and
    5. Special Notice of all of the foregoing conditions for relief 
under this Section III.G. must be provided in accordance with the terms 
of Section II.F.
    H. Purchase and Sale by BlackRock Managers of Asset-Backed 
Securities in the Secondary Market, from or to an MPS, and/or when an 
MPS is Sponsor, Servicer, Originator, Swap Counterparty, Liquidity 
Provider, Trustee or Insurer, and the Holding Thereof. Relief under 
Section I of this exemption is available for a sale of Asset-Backed 
Securities by a BlackRock Manager to an MPS, or the purchase of Asset-
Backed Securities by BlackRock Managers from an MPS and the holding 
thereof, and/or any such purchase or sale in the secondary market or 
holding when an MPS is a sponsor, a servicer, an originator, a swap 
counterparty, a liquidity provider, a trustee or an insurer, provided 
that:
    1. If the Asset-Backed Securities are purchased from or sold to an 
MPS, the purchase or sale is as a result of the Three Quote Process.
    2. Regardless of from whom the BlackRock Manager purchases the 
Asset-Backed Securities, the purchase and holding of the Asset-Backed 
Security otherwise meets the conditions of an applicable Underwriter 
Exemption.
    3. Regardless of from whom the BlackRock Manager purchased the 
Asset-Backed Securities, if an MPS is, with respect to such Asset-
Backed Securities, a sponsor, servicer, originator, swap counterparty, 
liquidity provider, insurer or trustee, as those terms are utilized or 
defined in the Underwriter Exemptions, and circumstances arise in which 
the taking of or refraining from taking of any action by the 
responsible BlackRock Manager could have a material positive or 
negative effect upon the MPS, the taking of or refraining from taking 
of any such action is decided upon by the ECO.
    I. Repurchase Agreements when MPS is the Seller. Section I of this 
exemption applies to an investment by a BlackRock Manager of Client 
Plan assets which involves the purchase or other acquisition, holding, 
sale, exchange or redemption by or on behalf of a Client Plan of a 
repurchase agreement (or Securities or other instruments under cover of 
a repurchase agreement) in which the seller of the underlying 
Securities or other instruments is an MPS which is a bank supervised by 
the United States or a State, a broker-dealer registered under the 1934 
Act, or a dealer who makes primary markets in Securities of the United 
States government or any agency thereof, or in banker's acceptances, 
and reports daily to the Federal Reserve Bank of New York its positions 
with respect to these obligations, provided that each of the following 
conditions are satisfied:
    1. The repurchase agreement is embodied in, or is entered into 
pursuant to a written agreement. Such written agreement must be a 
standardized industry form; provided, that with the approval of the ECO 
on or about the date of the Acquisition, written agreements with an MPS 
that were in effect as of the date of the Acquisition may continue to 
be used until there is a material modification of the same, at which 
time standardized industry forms must be adopted;
    2. The repurchase agreement has a term of one year or less;
    3. The Client Plan receives interest no less than that which it 
would receive in a comparable arm's length transaction with an 
unrelated party;
    4. The Client Plan receives Securities, banker's acceptances, 
commercial paper or certificates of deposit having a market value equal 
to not less than one hundred percent (100%) of the purchase price paid 
by the Client Plan;
    5. Upon expiration of the repurchase agreement and return of the 
Securities or other instruments to the seller, the seller transfers to 
the Client Plan an amount equal to the purchase price plus the 
appropriate interest;
    6. Neither the MPS seller nor any MPS which is a member of the same 
MPS Group has discretionary authority or control with respect to the 
investment of the Client Plan assets involved in the transaction or 
renders investment advice (within the meaning of 29 CFR 2510.3-21(c)) 
with respect to such assets. This Section III.I.6. shall be deemed 
satisfied notwithstanding the investment of assets of an MPS Plan of 
the MPS which is the seller under such repurchase agreement in a Pooled 
Fund as of the date of the Acquisition, which Pooled Fund is a bank-
maintained common or collective trust, provided that such assets, when 
aggregated with the assets of all other MPS Plans of the same MPS Group 
as that of the MPS seller and invested in such Pooled Fund, at all 
times since the date of the Acquisition, constitute or are deemed 
pursuant to Section II.A.3.(b) to constitute less than ten percent 
(10%) of the assets of such Pooled Fund.
    7. The Securities, banker's acceptances, commercial paper or 
certificates of deposit received by the Client Plan:
    (a) could be acquired directly by the Client Plan in a transaction 
not covered by this Section III.I. without violating ERISA sections 
406(a)(1)(E), 406(a)(2) or 407(a); and,
    (b) if the Securities are subject to the provisions of the 1933 
Act, they are

[[Page 50643]]

obligations that are not ``restricted securities'' within the meaning 
of Rule 144 under the 1933 Act; provided that such restricted 
securities are permitted until July 31, 2010.
    8. If the market value of the underlying Securities or other 
instruments falls below the purchase price at any time during the term 
of the agreement, the Client Plan may, under the written agreement 
required by Section III.I.1., require the MPS seller to deliver, by the 
close of business on the following business day (as such term is 
defined for purposes of the relevant written agreement), additional 
Securities or other instruments the market value of which, together 
with the market value of Securities or other instruments previously 
delivered or sold to the Client Plan under the repurchase agreement, 
equals at least one hundred percent (100%) of the purchase price paid 
by the Client Plan.
    9. If the MPS seller does not deliver additional Securities or 
other instruments as required above, the Client Plan may terminate the 
agreement, and, if upon termination or expiration of the agreement, the 
amount owing is not paid to the Client Plan, the Client Plan may sell 
the Securities or other instruments and apply the proceeds against the 
obligations of the MPS seller under the agreement, and against any 
expenses associated with the sale.
    10. The MPS seller agrees to furnish the Client Plan with the most 
recent available audited statement of its financial condition as well 
as its most recent available unaudited statement, agrees to furnish 
additional audited and unaudited statements of its financial condition 
as they are issued and either: (a) Agrees that each repurchase 
agreement transaction pursuant to the agreement shall constitute a 
representation by the MPS seller that there has been no material 
adverse change in its financial condition since the date of the last 
statement furnished that has not been disclosed to the Client Plan with 
whom such written agreement is made; or (b) prior to each repurchase 
agreement transaction, the MPS seller represents that, as of the time 
the transaction is negotiated, there has been no material adverse 
change in its financial condition since the date of the last statement 
furnished that has not been disclosed to the Client Plan with whom such 
written agreement is made.
    11. In the event of termination and sale as described in Section 
III.I.9., the MPS seller pays to the Client Plan the amount of any 
remaining obligations and expenses not covered by the sale of the 
Securities or other instruments, plus interest at a reasonable rate.
    12. If an MPS seller involved in a repurchase agreement covered by 
this exemption fails to comply with any condition of this exemption in 
the course of engaging in the repurchase agreement, the BlackRock 
Manager who caused the plan to engage in such repurchase agreement 
shall not be deemed to have caused the plan to engage in a transaction 
prohibited by ERISA sections 406(a)(1)(A) through (D) or ERISA section 
406(b), Code section 4975, or FERSA section 8477(c) solely by reason of 
the MPS seller's failure to comply with the conditions of the 
exemption.
    13. In the event of any dispute between a BlackRock Manager and an 
MPS seller involving a Covered Transaction under this Section III.I., 
the IM has the responsibility to decide whether, and if so how, 
BlackRock is to pursue relief on behalf of the Client Plan(s) against 
the MPS Seller.
    14. At time of entry into or renewal of each Covered Transaction 
under this Section III.I., including both term repurchase transactions 
and daily renewals for ``open'' or ``overnight'' transactions, either 
(a) each Covered Transaction under this Section III.I., is as a result 
of the Three Quote Process, or, (b) the BlackRock Manager determines 
that the yield on the proposed transaction, or the renewal thereof, is 
at least as favorable to the Client Plans as the yield of the Client 
Plan on two (2) other available transactions which are comparable in 
terms of size, collateral type, credit quality of the counterparty, 
term and rate. The methodology employed for purposes of the comparison 
in (b) above must (c) be approved in advance by the ECO Function and 
(d), to the extent possible, refer to objective external data points, 
such as the Eurodollar overnight time deposit bid rate, the rate for 
repurchase agreements with U.S. government Securities, or rates for 
commercial paper issuances or agency discount note issuances sourced 
from Bloomberg, or another third party pricing service or market data 
provider (which providers may use different terminology to refer to 
these same external data points). The applicable BlackRock Manager must 
record a description of the comparable transactions, if reliance is 
placed upon same, and such data must be periodically reviewed by the 
ECO Function. The procedures described in this Section III.I.14. must 
be designed to ensure that BlackRock Managers determine to only enter 
into Covered Transactions with MPS sellers which are in the interests 
of Plan Clients, and such procedures must be reviewed and may be 
commented on by the IM.
    J. Responding to Tender Offers and Exchange Offers Solicited by an 
MPS. Relief under Section I of this exemption is available for 
participation by BlackRock Managers on behalf of Client Plans in tender 
offers or exchange offers or similar transactions where an MPS acts as 
agent for the entity (which entity may not be an MPS) making the offer, 
provided that:
    1. The Client Plan pays no fees to the MPS in connection with this 
Covered Transaction;
    2. The BlackRock Manager submits to the ECO in advance of 
participation a written explanation of the reasons for such 
participation; and
    3. The ECO Function determines that the reasons for participation 
by the BlackRock Manager in the Covered Transaction are appropriate 
from the vantage point of the Client Plans. Effective as of October 1, 
2010, the ECO Function must affirmatively make this determination in 
writing prior to the BlackRock Manager participating in the Covered 
Transactions under this Section III.J.
    K. Purchase in Underwritings of Securities Issued by an Entity 
which is not an MPS when the Proceeds are Used to Repay a Debt to an 
MPS. Relief under Section I of this exemption is available for the 
purchase by BlackRock Managers of Securities in underwritings issued by 
an entity which is not an MPS, but where the proceeds of the offering 
are used to repay a debt owed to an MPS, and the payment of such 
proceeds to the MPS, provided that the BlackRock Manager does not know 
that the proceeds will be applied to the repayment of debt owed to an 
MPS. If the BlackRock Manager does know that proceeds of the offering 
will be applied to the repayment of debt owed to an MPS, the purchase 
of the Securities and the payment of the proceeds to the MPS are exempt 
under Section I of this exemption provided that no more than twenty 
percent (20%) of the offering is purchased by BlackRock Managers for 
Client Plans, and no more than fifty percent (50%) of the offering in 
the aggregate is purchased by BlackRock, BlackRock Managers and other 
BlackRock Entities for Client Plans, other clients of BlackRock 
Managers, or as proprietary investments.
    L. Bank Deposits and Commercial Paper. Relief under Section I of 
this exemption is available for an investment by a BlackRock Manager of 
Client Plan assets which involves the purchase or other acquisition, 
holding, sale, exchange or redemption by or on behalf

[[Page 50644]]

of a Client Plan of certificates of deposit, time deposits or other 
bank deposits at an MPS, or in commercial paper issued by an MPS, 
provided that:
    1. With respect to bank deposits, either:
    (a)(i) The bank is supervised by the United States or a State, and 
at the outset of the Covered Transaction or renewal thereof of, such 
bank has a credit rating in one of the top two (2) categories by at 
least one of the Rating Organizations; (ii) neither the bank nor an 
affiliate of the bank has discretionary authority or control with 
respect to the investment of Client Plan assets involved in the Covered 
Transaction or renders investment advice (within the meaning of 29 CFR 
2510.3-21(c)) with respect to those assets; and (iii) such deposit 
bears a reasonable interest rate, or--
    (b) the BlackRock Manager and the MPS comply with ERISA section 
408(b)(4).
    2. With respect to commercial paper:
    (a) the Client Plan is not an MPS Plan of the MPS issuing the 
commercial paper;
    (b) the commercial paper has a stated maturity date of nine (9) 
months or less from the date of issue, exclusive of days of grace, or 
is a renewal of an issue of commercial paper the maturity of which is 
likewise limited;
    (c) neither the MPS issuer of the commercial paper, any MPS 
guarantor of the commercial paper, nor any member of the same MPS Group 
as such MPS issuer or guarantor has discretionary authority or control 
with respect to the investment of the Client Plan assets involved in 
the Covered Transaction or renders investment advice (within the 
meaning of 29 CFR 2510.3-21(c)) with respect to those assets; and
    (d) at the time it is acquired, the commercial paper is ranked in 
one of the two (2) highest rating categories by at least one of the 
Rating Organizations.
    3. For purposes of the Covered Transactions set forth in this 
Section III.L.:
    (a) No BlackRock Entity shall be regarded as an affiliate of an MPS 
bank at which a deposit is made of Client Plan assets, nor of an MPS 
issuer of commercial paper in which a BlackRock Manager invests Client 
Plan assets, and
    (b) Section III.L.1.(a)(ii) and Sections III.L.2.(a) and (c) shall 
be deemed satisfied notwithstanding the investment of assets of an MPS 
Plan of the MPS which is the depository bank or issuer of commercial 
paper in a Pooled Fund as of the date of the Acquisition, which Pooled 
Fund is a bank-maintained common or collective trust, provided that 
such assets when aggregated with the assets of all other MPS Plans of 
the same MPS Group as the issuer of such asset and invested in such 
Pooled Fund, at all times since the date of the Acquisition, constitute 
or are deemed pursuant to Section II.A.3.(b) to constitute less than 
ten percent (10%) of such Pooled Fund.
    M. Securities Lending to an MPS.
    1. Relief under Section I of this exemption is available for:
    (a) the lending of Securities by a BlackRock Manager that are 
assets of a Client Plan to an MPS which is a U.S. Broker-Dealer or a 
U.S. Bank provided that the conditions set forth in Section III.M.2. 
are met;
    (b) the lending of Securities by a BlackRock Manager that are 
assets of a Client Plan to an MPS which is a Foreign Broker-Dealer or 
Foreign Bank; provided that, the conditions set forth in Section 
III.M.2. and Section III.M.3. below are met; and
    (c) the payment to a BlackRock Manager of compensation for services 
rendered in connection with loans of Client Plan assets that are 
Securities to an MPS; provided that, the conditions set forth in 
Section III.M.4. below are met.
    2. General Conditions for Transactions Described in Sections 
III.M.1.(a) and (b).
    (a) The length of a Securities loan to an MPS does not exceed one 
year in term.
    (b) Neither the MPS borrower nor any MPS which is a member of the 
same MPS Group as the MPS borrower has or exercises discretionary 
authority or control with respect to the investment of the Client Plan 
assets involved in the transaction, or renders investment advice 
(within the meaning of 29 CFR 2510.3-21(c)) with respect to those 
assets. This Section III.M.2.(b) shall be deemed satisfied 
notwithstanding the investment of the assets of an MPS Plan of the MPS 
which is the borrower under such Securities lending transaction in a 
Pooled Fund as of the date of the Acquisition, which Pooled Fund is a 
bank-maintained common or collective trust, provided that such assets 
when aggregated with the assets of all other MPS Plans of the same MPS 
Group as that of the MPS borrower and invested in such Pooled Fund, at 
all times since the date of the Acquisition, constitute or are deemed 
pursuant to Section II.A.3.(b) to constitute less than ten percent 
(10%) of the assets of such Pooled Fund.
    (c) The Client Plan receives from the MPS borrower by the close of 
the BlackRock Manager's business on the day in which the Securities 
lent are delivered to the MPS,
    (i) U.S. Collateral having, as of the close of business on the 
preceding business day, a market value, or, in the case of bank letters 
of credit, a stated amount, equal to not less than one hundred percent 
(100%) of the then market value of the Securities lent; or
    (ii) Foreign Collateral having as of the close of business on the 
preceding business day, a market value, or, in the case of bank letters 
of credit, a stated amount, equal to not less than:
    (x) one hundred two percent (102%) of the then market value of the 
Securities lent as valued on a Recognized Securities Exchange or an 
Automated Trading System on which the Securities are primarily traded 
if the collateral posted is denominated in the same currency as the 
Securities lent, or
    (y) one hundred five percent (105%) of the then market value of the 
Securities lent as valued on a Recognized Securities Exchange or an 
Automated Trading System on which the Securities are primarily traded 
if the collateral posted is denominated in a different currency than 
the Securities lent.
    (d) Notwithstanding the foregoing, if the BlackRock Manager is a 
U.S. Bank, a Registered Investment Advisor, or U.S. Broker-Dealer, and 
such BlackRock Manager indemnifies the Client Plan with respect to the 
difference, if any, between the replacement cost of the borrowed 
Securities and the market value of the collateral on the date of a 
borrower default, the Client Plan receives from the MPS borrower by the 
close of the BlackRock Manager's business on the day in which the 
Securities lent are delivered to the borrower, Foreign Collateral 
having as of the close of business on the preceding business day, a 
market value, or, in the case of bank letters of credit, a stated 
amount, equal to not less than:
    (i) One hundred percent (100%) of the then market value of the 
Securities lent as valued on a Recognized Securities Exchange or an 
Automated Trading System on which the Securities are primarily traded 
if the collateral posted is denominated in the same currency as the 
Securities lent; or
    (ii) one hundred one percent (101%) of the then market value of the 
Securities lent as valued on a Recognized Securities Exchange or an 
Automated Trading System on which the Securities are primarily traded 
if the collateral posted is denominated in a different currency than 
the Securities lent and such currency is denominated in Euros, British 
pounds, Japanese yen, Swiss francs or Canadian dollars; or

[[Page 50645]]

    (iii) one hundred five percent (105%) of the then market value of 
the Securities lent as valued on a Recognized Securities Exchange or an 
Automated Trading System if the collateral posted is denominated in a 
different currency than the Securities lent and such currency is other 
than those specified above.
    (e)(i) If the MPS borrower is a U.S. Bank or U.S. Broker-Dealer, 
the Client Plan receives such U.S. Collateral or Foreign Collateral 
from the MPS borrower by the close of the BlackRock Manager's business 
on the day in which the Securities are delivered to the MPS borrower. 
Such collateral is received by the Client Plan either by physical 
delivery, wire transfer or by book entry in a Securities depository 
located in the United States, or,
    (ii) If the MPS borrower is a Foreign Bank or Foreign Broker-
Dealer, the Client Plan receives U.S. Collateral or Foreign Collateral 
from the MPS borrower by the close of the BlackRock Manager's business 
on the day in which the Securities are delivered to the borrower. Such 
collateral is received by the Client Plan either by physical delivery, 
wire transfer or by book entry in a Securities depository located in 
the United States or held on behalf of the Client Plan at an Eligible 
Securities Depository. The indicia of ownership of such collateral 
shall be maintained in accordance with section 404(b) of ERISA and 29 
CFR 2550.404b-1.
    (f) Prior to making of any such loan, the MPS borrower shall have 
furnished the BlackRock Manager with:
    (i) The most recent available audited statement of the MPS 
borrower's financial condition, as audited by a United States certified 
public accounting firm or in the case of an MPS borrower that is a 
Foreign Broker-Dealer or Foreign Bank, a firm which is eligible or 
authorized to issue audited financial statements in conformity with 
accounting principles generally accepted in the primary jurisdiction 
that governs the borrowing MPS Foreign Broker-Dealer or Foreign Bank;
    (ii) the most recent available unaudited statement of its financial 
condition (if the unaudited statement is more recent than such audited 
financial statement); and
    (iii) a representation that, at the time the loan is negotiated, 
there has been no material adverse change in its financial condition 
since the date of the most recent financial statement furnished to the 
BlackRock Manager that has not been disclosed to the BlackRock Manager. 
Such representations may be made by the MPS borrower's agreement that 
each loan shall constitute a representation by the MPS borrower that 
there has been no such material adverse change.
    (g) The loan is made pursuant to a written loan agreement, the 
terms of which are at least as favorable to the Client Plan as an 
arm's-length transaction with an unrelated party would be. Such loan 
agreement states that the Client Plan has a continuing security 
interest in, title to, or the rights of secured creditor with respect 
to the collateral. Such agreement may be in the form of a master 
agreement covering a series of Securities lending transactions.
    (h) The written loan agreement must be a standardized industry 
form; provided, that, with the approval of the ECO on or about the date 
of the Acquisition, written loan agreements with an MPS borrower that 
were in effect as of the date of the Acquisition may continue to be 
used until there is a material modification of the same, at which time 
standardized industry forms must be adopted.
    (i) In return for lending Securities, the Client Plan:
    (i) receives a reasonable fee (in connection with the Securities 
lending transaction), and/or
    (ii) has the opportunity to derive compensation through the 
investment of the currency collateral. Where the Client Plan has that 
opportunity, the Client Plan may pay a loan rebate or similar fee to 
the MPS borrower, if such fee is not greater than the Client Plan would 
pay in a comparable transaction with an unrelated party.
    (j) All fees and other consideration received by the Client Plan in 
connection with the loan of Securities are reasonable. The identity of 
the currency in which the payment of fees and rebates will be made is 
set forth either in the written loan agreement or the loan confirmation 
as agreed to by the MPS borrower and the BlackRock Manager prior to the 
making of the loan.
    (i) Pricing of a loan to an MPS borrower is based on (i) rates for 
comparable loans of the same Security to non-MPS borrowers and (ii) 
third-party market data:
    (x) For loans of liquid Securities (sometimes referred to as 
general collateral loans), an automatic system may be used to price 
loans so long as the resulting rate the Client Plan receives from the 
MPS borrower is at least as favorable to the Client Plan as the rate 
the BlackRock Managers are receiving for Client Plans or other clients 
from non-MPS borrowers of the same Security;
    (y) For purposes of pricing loans of less liquid Securities 
(sometimes referred to as ``special loans''), and for purposes of 
determining whether to terminate or continue a loan which does not have 
a set term, pricing may also be based on a BlackRock trader 
determination that continuing the loan is in the interest of the Client 
Plan based on all relevant factors, including price (provided that 
price is within the range of prices of other loans of the same Security 
to comparable non-MPS borrowers by BlackRock Managers for Client Plans 
or other clients) and potential adverse consequences to the Client Plan 
of terminating the loan, provided that the pricing data used in making 
these decisions is retained and made available for possible review by 
the ECO.
    (ii) Automatic pricing mechanisms and pricing decisions by traders 
are subject to ongoing periodic review by the ECO Function, and the 
results of such review are included in reports by the ECO to the IM. 
Specifically, the quarterly reports by the ECO to the IM must address 
the lending patterns of:
    (x) illiquid Securities to the MPS borrowers from all Client Plans, 
including the percentage that loans of such Securities to the MPSs 
represent of all loans of such Securities from all Client Plans; and
    (y) illiquid Securities to the MPS borrowers from all Other 
Accounts or Funds, including the percentage that loans of such 
Securities to the MPSs represent of all loans of such Securities from 
all Other Accounts or Funds.
    (k) The Client Plan receives the equivalent of all distributions 
made to holders of the borrowed Securities during the term of the loan 
including, but not limited to, dividends, interest payments, shares of 
stock as a result of stock splits and rights to purchase additional 
Securities;
    (l) If the market value of the collateral at the close of trading 
on a business day is less than the applicable percentage of the market 
value of the borrowed Securities at the close of trading on that day 
(as described in this Section III.M.2.(c) of this exemption), then the 
MPS borrower shall deliver, by the close of business on the following 
business day, an additional amount of U.S. Collateral or Foreign 
Collateral the market value of which, together with the market value of 
all previously delivered collateral, equals at least the applicable 
percentage of the market value of all the borrowed Securities as of 
such preceding day.
    Notwithstanding the foregoing, part of the U.S. Collateral or 
Foreign Collateral may be returned to the MPS borrower if the market 
value of the collateral exceeds the applicable percentage (described in 
this Section III.M.2.(c) of

[[Page 50646]]

this exemption) of the market value of the borrowed Securities, as long 
as the market value of the remaining U.S. Collateral or Foreign 
Collateral equals at least the applicable percentage of the market 
value of the borrowed Securities.
    (m) The loan may be terminated by the Client Plan at any time, 
whereupon the MPS borrower shall deliver certificates for Securities 
identical to the borrowed Securities (or the equivalent thereof in the 
event of reorganization, recapitalization or merger of the issuer of 
the borrowed Securities) to the Client Plan within the lesser of:
    (i) The customary delivery period for such Securities,
    (ii) five business days, or
    (iii) the time negotiated for such delivery by the BlackRock 
Manager for the Client Plan, and the borrower.
    (n) In the event that the loan is terminated, and the MPS borrower 
fails to return the borrowed Securities or the equivalent thereof 
within the applicable time described in Section III.M.2(m), the 
BlackRock Manager for the Client Plan may, under the terms of the loan 
agreement:
    (i) Purchase Securities identical to the borrowed Securities (or 
their equivalent as described above) and may apply the collateral to 
the payment of the purchase price, any other obligations of the 
borrower under the agreement, and any expenses associated with the sale 
and/or purchase, and
    (ii) the MPS borrower is obligated, under the terms of the loan 
agreement, to pay, and does pay to the Client Plan the amount of any 
remaining obligations and expenses not covered by the collateral, 
including reasonable attorney's fees incurred by the Client Plan for 
legal action arising out of default on the loans, plus interest at a 
reasonable rate.
    Notwithstanding the foregoing, the MPS borrower may, in the event 
the MPS borrower fails to return borrowed Securities as described 
above, replace collateral, other than U.S. currency, with an amount of 
U.S. currency that is not less than the then current market value of 
the collateral, provided such replacement is approved by the BlackRock 
Manager.
    (o) If the MPS borrower fails to comply with any provision of a 
loan agreement which requires compliance with this exemption, the 
BlackRock Manager who caused the Client Plan to engage in such 
transaction shall not be deemed to have caused the Client Plan to 
engage in a transaction prohibited by ERISA sections 406(a)(1)(A) 
through (D) or ERISA section 406(b) or FERSA section 8477(c) solely by 
reason of the borrower's failure to comply with the conditions of the 
exemption.
    (p) If the Securities being loaned to an MPS borrower are managed 
in an Index Account or Fund, or a Model-Driven Account or Fund where 
the Index or the Model are created or maintained by the MPS borrower, 
the ECO Function periodically performs a review, no less than 
quarterly, of the use of such MPS-sponsored Index or Model, and the 
Securities loaned from such an account or fund to the MPS, which review 
is designed to enable a reasonable judgment as to whether the use of 
such Index or Model, or any changes thereto, were for the purpose of 
benefitting BlackRock or the MPS through the Securities lending 
activity described in this Section III.M. If the ECO forms a reasonable 
judgment that the use of such Index or Model, or any changes thereto, 
were for the purpose of benefitting BlackRock or the MPS, the ECO shall 
promptly inform the IM.
    (q) In the event of any dispute between the BlackRock Manager on 
behalf of a Client Plan and an MPS borrower involving a Covered 
Transaction under this Section III.M., the IM shall decide whether, and 
if so, how the BlackRock Manager is to pursue relief on behalf of the 
Client Plan(s) against the MPS borrower.
    (r) If the Securities being loaned to an MPS borrower are managed 
in an Other Account or Fund, the employees of the BlackRock Manager who 
exercise discretionary authority or control over the Other Account or 
Fund shall not have access to the information regarding whether the 
particular Securities are on loan to an MPS, with such access 
limitations imposed on or about September 30, 2010, and implemented 
through the EPPs on or about September 30, 2010.
    3. Specific Conditions for Transactions Described in Section 
III.M.1.(b).
    (a) The BlackRock Manager maintains the written documentation for 
the loan agreement at a site within the jurisdiction of the courts of 
the United States.
    (b) Prior to entering into a transaction involving an MPS Foreign 
Broker-Dealer that is described in Section VI.KK.(1) or (2) or an MPS 
Foreign Bank that is described in Section VI.JJ.(1) either:
    (i) The MPS Foreign Broker-Dealer or Foreign Bank agrees to submit 
to the jurisdiction of the United States; agrees to appoint an agent 
for service of process in the United States, which may be an affiliate; 
consents to service of process on such agent; and agrees that any 
enforcement by a Client Plan of its rights under the Securities lending 
agreement will, as the option of the Client Plan, occur exclusively in 
the United States courts; or
    (ii) the BlackRock Manager, if a U.S. Bank, a Registered Investment 
Advisor, or U.S. Broker-Dealer, agrees to indemnify the Client Plan 
with respect to the difference, if any, between the replacement cost of 
the borrowed Securities and the market value of the collateral on the 
date of an MPS borrower default plus interest and any transaction costs 
incurred (including attorney's fees of such Client Plan arising out of 
the default on the loans or the failure to indemnify properly under 
this provision) which the Client Plan may incur or suffer directly 
arising out of a borrower default by the MPS Foreign Broker-Dealer or 
Foreign Bank.
    (c) In the case of a Securities lending transaction involving an 
MPS Foreign Broker-Dealer that is described in Section VI.KK.(3) or an 
MPS Foreign Bank that is described in Section VI.JJ.(2), the BlackRock 
Manager must be a U.S. Bank, a Registered Investment Advisor, or U.S. 
Broker-Dealer, and prior to entering into the loan transaction, such 
BlackRock Manager must agree to indemnify the Client Plan with respect 
to the difference, if any, between the replacement cost of the borrowed 
Securities and the market value of the collateral on the date of an MPS 
borrower default plus interest and any transaction costs incurred 
(including attorney's fees of such plan arising out of the default on 
the loans or the failure to indemnify properly under this provision) 
which the Client Plan may incur or suffer directly arising out of a 
borrower default by the MPS Foreign Broker-Dealer or Foreign Bank.
    4. Specific Conditions for Transactions Described in Section 
III.M.1.(c):
    (a) The loan of Securities is not prohibited by section 406(a) of 
ERISA or otherwise satisfies the conditions of this exemption.
    (b) The BlackRock Manager is authorized to engage in Securities 
lending transactions on behalf of the Client Plan.
    (c) The compensation, the terms of which are at least as favorable 
to the Client Plan as an arm's length transaction with an unrelated 
party, is reasonable and is paid in accordance with the terms of a 
written instrument, which may be in the form of a master agreement 
covering a series of Securities lending transactions.
    (d) Except as otherwise provided in Section III.M.4.(f), the 
arrangement under which the compensation is paid:
    (i) Is subject to the prior written authorization of a fiduciary of 
a Client

[[Page 50647]]

Plan (the authorizing fiduciary), who is (other than in the case of an 
In-House Plan) independent of the BlackRock Manager, provided that for 
purposes of this Section III.M.4.(d) a fiduciary of an MPS Plan acting 
as the authorizing fiduciary shall be deemed independent of the 
BlackRock Manager so long as such fiduciary, as of the date of the 
authorization, is not a BlackRock Entity, and
    (ii) may be terminated by the authorizing fiduciary within:
    (x) the time negotiated for such notice of termination by the 
Client Plan and the BlackRock Manager, or
    (y) five business days, whichever is less, in either case without 
penalty to the Client Plan.
    (e) No such authorization is made or renewed unless the BlackRock 
Manager shall have furnished the authorizing fiduciary with any 
reasonably available information which the BlackRock Manager reasonably 
believes to be necessary to determine whether such authorization should 
be made or renewed, and any other reasonably available information 
regarding the matter that the authorizing fiduciary may reasonably 
request.
    (f) Special Rule for Commingled Investment Funds. In the case of a 
pooled separate account maintained by an insurance company qualified to 
do business in a State or a common or collective trust fund maintained 
by a bank or trust company supervised by a State or Federal agency, the 
requirements of Section III.M.4.(d) of this exemption shall not apply, 
provided that:
    (i) The information described in Section III.M.4.(e) (including 
information with respect to any material change in the arrangement) 
shall be furnished by the BlackRock Manager to the authorizing 
fiduciary described in Section III.M.4.(d) with respect to each Client 
Plan whose assets are invested in the account or fund, not less than 30 
days prior to implementation of the arrangement or material change 
thereto, and, where requested, upon the reasonable request of the 
authorizing fiduciary;
    (ii) in the event any such authorizing fiduciary submits a notice 
in writing to the BlackRock Manager objecting to the implementation of, 
material change in, or continuation of the arrangement, the Client Plan 
on whose behalf the objection was tendered is given the opportunity to 
terminate its investment in the account or fund, without penalty to the 
Client Plan, within such time as may be necessary to effect such 
withdrawal in an orderly manner that is equitable to all withdrawing 
plans and to the non-withdrawing plans. In the case of a Client Plan 
that elects to withdraw pursuant to the foregoing, such withdrawal 
shall be effected prior to the implementation of, or material change 
in, the arrangement; but an existing arrangement need not be 
discontinued by reason of a Client Plan electing to withdraw; and
    (iii) in the case of a Client Plan whose assets are proposed to be 
invested in the account or fund subsequent to the implementation of the 
compensation arrangement and which has not authorized the arrangement 
in the manner described in Sections III.M.4.(f)(i) and (ii), the Client 
Plan's investment in the account or fund shall be authorized in the 
manner described in Section III.M.4.(d)(i).
    N. To-Be-Announced Trades (TBAs) of GNMA, FHLMC or FNMA Mortgage-
Backed Securities with an MPS Counterparty. Relief under Section I of 
this exemption is available for trades (purchases and sales) on a 
principal basis of mortgage-backed Securities issued by FHLMC, FNMA or 
guaranteed by GNMA and meeting the definition of ``guaranteed 
governmental mortgage pool certificate'' in 29 CFR 2510.3-101(i) with 
an MPS on a TBA basis, including, when applicable, delivery of the 
underlying Securities to a Client Plan, provided that:
    1. The Covered Transactions under this Section III.N. are a result 
of the Three Quote Process; provided that, solely for purposes of this 
Section III.N.1., firm quotes under the Three Quote Process may also 
include firm quotes obtained on comparable Securities, as described 
below, when firm quotes with respect to the applicable TBA transactions 
are not reasonably attainable.
    2. With regard to purchases of FHLMC and FNMA mortgage-backed 
Securities on a TBA basis, (i) The BlackRock Manager makes a 
determination that such Securities are of substantially similar credit 
quality as GNMA guaranteed governmental mortgage pool certificates, 
(ii) the ECO (in regular consultation with and under the supervision of 
the IM) monitors the credit spread between GNMA and FHLMC/FNMA 
mortgage-backed Securities, and (iii) each of the ECO and the IM 
(independently) has the authority and responsibility to determine 
whether purchases of FHLMC and/or FNMA mortgage-backed Securities on a 
TBA basis should not be permitted due to such credit spread, and such 
authority and responsibility is reflected in the EPPs.
    3. With regard to possible delivery of underlying Securities to 
Client Plans, as opposed to cash settlement, the ECO Function approves 
any such delivery in advance.
    For purposes of Section III.N.1., ``comparable Securities'' are 
Securities that: (a) Are issued and/or guaranteed by the same agency, 
(b) have the same coupon, (c) have a principal amount at least equal to 
but no more than two percent (2%) greater than the Security purchased 
or sold, (d) are of the same program or class, and (e) either (i) Have 
an aggregate weighted average monthly maturity within a 12-month 
variance of the Security purchased or sold, but in no case can the 
variance be more than ten percent (10%) of such aggregate weighted 
average maturity of the Securities purchased or sold, or (ii) meet some 
other comparable objective standard containing a range of variance that 
is no greater than that described in (i) above and that assures that 
the aging of the Securities is properly taken into account.
    O. Foreign Exchange Transactions with an MPS Counterparty. Relief 
under Section I of this exemption is available for a Foreign Exchange 
Transaction by a BlackRock Manager on behalf of Client Plans with an 
MPS as counterparty provided that:
    1. (a) The Foreign Exchange Transaction is as a result of the Three 
Quote Process; or (b) the total net amount of the Foreign Exchange 
Transaction on behalf of Client Plans by BlackRock Managers is greater 
than $1 million and the exchange rate is within 0.5% above or below the 
Interbank Rate as represented to the BlackRock Managers by the MPS;
    2. Foreign Exchange Transactions with an MPS counterparty only 
involve currencies of countries that are classified as ``developed'' or 
``emerging'' markets by a third party Index provider that divides 
national economies into ``developed,'' ``emerging'' and ``frontier'' 
markets. The Index provider shall be selected by BlackRock, provided, 
however, the IM shall have the right to reject the Index provider in 
its sole discretion at any time; and
    3. Each Foreign Exchange Transaction complying with Section 
III.O.1.(b) must be set forth in the applicable quarterly reports of 
the ECO to the IM.
    P. Agency Execution of Equity and Fixed Income Securities Trades 
and Related Clearing as Described in PTE 86-128, Including Agency Cross 
Trades, When the Broker is an MPS. Relief under Section I of this 
exemption is available for transactions in Securities described in 
Section II of Prohibited Transaction Exemption 86-128, as

[[Page 50648]]

amended \22\ (PTE 86-18), as if BlackRock Managers and MPS broker-
dealers were ``affiliates'' as defined in Section I.(b) of PTE 86-128, 
provided the following conditions are satisfied:
---------------------------------------------------------------------------

    \22\ 51 FR 41686 (Nov. 18, 1986), as amended, 67 FR 64137 (Oct. 
17, 2002).
---------------------------------------------------------------------------

    1. The MPS is selected to perform Securities brokerage services for 
Client Plans pursuant to the normal brokerage placement practices, 
policies and procedures of the BlackRock Manager designed to ensure 
best execution.
    2. The conditions of PTE 86-128 set forth in the following sections 
of that exemption must be complied with: Section III(e); Section 
III(f); Section III(g)(2); and Section III(h); provided, however, that, 
for purposes of Section III(e), Section III(f) and Section III(g)(2) of 
PTE 86-128, the ECO Function is the ``authorizing fiduciary'' referred 
to therein; and the ECO has the authority to terminate the use of the 
MPS as broker-dealer without penalty to Client Plans at any time; and 
provided further that the first sentence of Section III(h) of PTE 86-
128 is amended for purposes of this Section III.P.2. to provide as 
follows: ``A trustee [other than a nondiscretionary trustee] may only 
engage in a covered transaction with a plan that has total net assets 
with a value of at least $50 million and in the case of a pooled fund, 
the $50 million requirement will be met if fifty percent (50%) or more 
of the units of beneficial interest in such pooled fund are held by 
investors having total net assets with a value of at least $50 
million.''
    3. With respect to agency cross transactions described in Section 
III(g) of PTE 86-128 that are being effected or executed by an MPS 
broker, (i) Neither the MPS broker effecting or executing the agency 
cross transaction nor any member of the same MPS Group as the MPS 
broker effecting or executing the agency cross transaction may have 
discretionary authority to act on behalf of, and/or provide investment 
advice to another party to the agency cross transaction which is a 
seller when the Client Plan is a buyer, or which is a buyer, when the 
Client Plan is a seller (Another Party), and (ii), the BlackRock 
Manager instituting the transaction for the Client Plan must not have 
knowledge that a BlackRock Entity has discretionary authority and/or 
provides investment advice to Another Party to the agency cross 
transaction.
    4. The exceptions in Sections IV(a), (b), and (c) of PTE 86-128 are 
applicable to this exemption.
    5. Notwithstanding the other conditions of this Section III.P., 
with respect to Client Plans which as of the date of the Acquisition 
had in place with BlackRock Managers either directed brokerage and/or 
wrap fee arrangements which required the BlackRock Managers to use an 
MPS as a Securities broker, BlackRock Managers may continue to use that 
MPS as the Securities broker for such Client Plans under the brokerage 
procedures in place as of the date of the Acquisition; provided that a 
list of all of such arrangements has been provided to the ECO and no 
material changes are made to such arrangements.
    Q. Use by BlackRock Managers of Exchanges and Automated Trading 
Systems on Behalf of Client Plans. Relief under Section I of this 
exemption is available for the direct or indirect use by, or directing 
of trades to, U.S. and non-U.S. exchanges or U.S. Automated Trading 
Systems (ATS) in which one or more MPSs have an ownership interest by 
BlackRock Managers for Client Plans, provided that:
    1. Prior to January 1, 2011,
    (a) No single MPS (together with other members of the same MPS 
Group) has a greater than twenty percent (20%) ownership interest in 
the exchange or the ATS; and
    (b) the ECO does not make a determination, summarized in the ECO 
quarterly report, that a BlackRock Manager or all BlackRock Managers 
must discontinue such direct or indirect use of or the directing of 
trades to any such exchange or ATS on the basis that either the amount 
of use or the volume of trades is unwarranted or not in the interests 
of the Client Plans and their participants and beneficiaries.
    2. Effective on and after January 1, 2011, either
    (a) No one MPS (together with other members of the same MPS Group) 
has (i) A greater than ten percent (10%) ownership interest in the 
exchange or ATS or (ii) the BlackRock Managers do not know the level of 
such ownership interest; or
    (b) if a BlackRock Manager knows that an MPS (together with other 
members of the same MPS Group) has an ownership interest that is 
greater than ten percent (10%) but not greater than twenty percent 
(20%) in the exchange or ATS,
    (i) The ECO makes a determination, summarized in the ECO quarterly 
report, that there is no reason for a BlackRock Manager or all 
BlackRock Managers to discontinue such direct or indirect use of or the 
directing of trades to any such exchange or ATS on the basis that the 
amount of use or the volume of trades is unwarranted or not in the 
interests of the Client Plans and their participants and beneficiaries, 
and does not make a determination that a BlackRock Manager or all 
BlackRock Managers must discontinue such direct or indirect use of or 
the directing of trades to any such exchange or ATS on the basis that 
the amount of use or the volume of trades is unwarranted or not in the 
interests of the Client Plans and their participants and beneficiaries. 
The IM may request any additional information relating to any such 
determination summarized in the ECO quarterly report and may, after 
consultation with the ECO, make a determination that a BlackRock 
Manager or all BlackRock Managers must discontinue such direct or 
indirect use of or the directing of trades to any such exchange or ATS 
on the basis that the amount of use or the volume of trades is 
unwarranted or not in the interests of the Client Plans and their 
participants and beneficiaries;
    (ii) the price and compensation associated with any purchases or 
sales utilizing such exchange or ATS are not greater than the price and 
compensation associated with an arm's length transaction with an 
unrelated party;
    (iii) all such exchanges and ATSs shall be situated within the 
jurisdiction of the U.S. District Courts and regulated by a U.S. 
Federal regulatory body or a U.S. federally approved self-regulatory 
body, provided that this condition shall not apply to the direct or 
indirect use of or the directing of trades to an exchange in a country 
other than the United States which is regulated by a government 
regulator or a government approved self-regulatory body in such country 
and which involves trading in Securities (including the lending of 
Securities) or futures contracts; and
    (iv) Special Notice of all of the foregoing conditions for relief 
under this Section II.Q.2.(b) must be provided in accordance with the 
terms of Section II.F.
    R. Purchases in the Secondary Market of Common and Preferred Stock 
Issued by an MPS by BlackRock Managers for Client Plans Invested in an 
Index Account or Fund, or a Model-Driven Account or Fund. Relief under 
Section I of this exemption is available for the purchase in the 
secondary market of common or preferred stock issued by an MPS by 
BlackRock Managers for Client Plans invested in an Index Account or 
Fund, or a Model-Driven Account or Fund provided that:
    1. Such purchase is for the sole purpose of maintaining 
quantitative conformity with the weight of such Securities prescribed 
by the relevant Index, for Index Accounts or Funds, or the weight of 
such Securities prescribed by the relevant Model, for Model-Driven 
Accounts or Funds, and such purchase

[[Page 50649]]

is reasonably calculated not to exceed the purchase amount necessary 
for such Model or quantitative conformity by more than a de minimis 
amount.
    2. Such purchase is not made from the issuing MPS.
    3. Notwithstanding Section III.R.2.,
    (a) With respect to Client Plans which as of the date of the 
Acquisition had in place with a BlackRock Manager either a directed 
brokerage and/or wrap fee arrangement which required the BlackRock 
Manager to use a certain MPS as a Securities broker, the BlackRock 
Manager may purchase MPS common or preferred stock through such MPS, 
including, if applicable, the issuing MPS, acting as agent under the 
brokerage arrangement in place as of the date of the Acquisition; 
provided that, a list of all of such arrangements has been provided to 
the ECO and no material changes are made to such arrangements. Special 
Notice of all of the foregoing conditions for relief under this Section 
III.R. must be provided in accordance with the terms of Section II.F.
    (b) BlackRock Managers may rely on other exemptive relief when 
acquiring stock of an MPS for Client Plans through an MPS broker, 
including the issuing MPS.
    S. Purchase in the Secondary Market of Common and Preferred Stock 
Issued by an MPS by BlackRock Managers for Client Plans Invested in an 
Other Account or Fund. Relief under Section I of this exemption is 
available for the purchase in the secondary market of common or 
preferred stock issued by an MPS by BlackRock Managers for Client Plans 
invested in an Other Account or Fund provided that:
    1. Such purchase is not made from the issuing MPS.
    2. Notwithstanding Section III.S.1.,
    (a) With respect to Client Plans which as of the date of the 
Acquisition had in place with a BlackRock Manager either a directed 
brokerage and/or wrap fee arrangement which required the BlackRock 
Manager to use a certain MPS as a Securities broker, the BlackRock 
Manager may purchase MPS common or preferred stock through such MPS, 
including if applicable, the issuing MPS, acting as agent under the 
brokerage arrangements in place as of the date of the Acquisition; 
provided that, a list of all of such arrangements has been provided to 
the ECO and no material changes are made to such arrangements. Special 
Notice of all of the foregoing conditions for relief under this Section 
III.S. must be provided in accordance with the terms of Section II.F.
    (b) BlackRock Managers may rely on other exemptive relief when 
acquiring stock of an MPS for Client Plans under this Section III.S. 
through an MPS broker, including the issuing MPS.
    3. With respect to Client Plans described in Section III.S.2.(a), 
the ECO Function periodically monitors purchases of MPS stock for such 
Client Plans to ensure that the amount of stock of an MPS purchased for 
such Client Plans is not disproportionate to the amount of such stock 
of the same MPS purchased for Client Plans invested in Other Accounts 
or Funds not subject to directed brokerage and/or wrap fee arrangements 
and described in Section III.S.2.(a).
    4. As a consequence of a purchase of MPS stock, the class of stock 
purchased does not constitute more than five percent (5%) of the Other 
Account or Fund. In the case of a Pooled Fund, the class of stock 
purchased and attributed to each Client Plan does not exceed five 
percent (5%) of such Client Plan's proportionate interest in the Pooled 
Fund.
    5. Aggregate daily purchases of a class of MPS stock for Client 
Plans do not exceed the greater of (i) Fifteen percent (15%) of the 
aggregate average daily trading volume (ADTV) for the previous ten (10) 
trading days, or (ii) fifteen percent (15%) of trading volume on the 
date of the purchase. These volume limitations must be met on a 
portfolio manager by portfolio manager basis unless purchases are 
coordinated among portfolio managers, in which case the limitations are 
applied to the coordinated purchase.\23\ Any coordinated purchases of 
the same class of MPS stock in the secondary market for Index Accounts 
or Funds or for Model-Driven Accounts or Funds must be taken into 
account when applying these ADTV limitations on purchases for an Other 
Account or Fund; provided, however, if coordinated purchases for Index 
Accounts or Funds, or for Model-Driven Accounts or Funds, would cause 
the fifteen percent (15%) limitation to be exceeded, BlackRock Managers 
can nonetheless acquire for Other Accounts or Funds up to the greater 
of five percent (5%) of ADTV for the previous ten (10) trading days or 
five percent (5%) of trading volume on the day of the Covered 
Transaction. For purposes of this Section III.S.5., cross trades of MPS 
equity Securities which comply with an applicable statutory or 
administrative prohibited transaction exemption are not taken into 
account.
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    \23\ For example, if two or more portfolio managers send their 
purchase orders to the same trading desk and the traders on that 
trading desk coordinate the purchases of the same MPS equity 
Securities, the limitations apply to the trading desk; if two or 
more portfolio managers or two or more trading desks are 
coordinating purchases of MPS equity Securities, the limitations are 
applied across the group of portfolio managers or traders who are 
coordinating the purchase orders.
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    6. The ECO Function monitors the volume limits on purchases of MPS 
stock described in Section III.S.5. and provides a monthly report to 
the IM with respect to such purchases and limits. The IM shall impose 
lower volume limitations and take other appropriate action with respect 
to such purchases if the IM determines on the basis of these reports by 
the ECO and publicly available information materially related to the 
trading of the Securities of an MPS on its primary listing exchange (or 
market) that the purchases described have a material positive impact on 
the market price for such Securities.
    T. The Provision of Custodial, Administrative and Similar 
Ministerial Services by an MPS for a Client Plan as a Consequence of a 
BlackRock Manager Exercising Investment Discretion on Behalf of the 
Client Plan or Rendering Investment Advice to the Client Plan. Relief 
under Section I of this exemption is available for the provision of 
custodial, administrative and similar ministerial services by an MPS 
for a Client Plan as a consequence of a BlackRock Manager exercising 
investment discretion or rendering investment advice (in each case, 
within the meaning of ERISA section 3(21)(A)) for or to such Client 
Plan, provided that (1) the terms of such service are comparable to 
those a Client Plan would receive in an arm's length transaction with 
an unrelated party and (2) the ECO approves in advance and in writing 
(which may include electronic communication if retrievable by the ECO) 
the choice or recommendation of the MPS by the BlackRock Manager and 
the terms of the services, including but not limited to, the associated 
fees.
    U. Purchases, Sales and Holdings by BlackRock Managers for Client 
Plans of Commercial Paper Issued by ABCP Conduits, When an MPS Has One 
or More Roles. Relief under Section I of this exemption is available 
for the purchase or sale, including purchases from or sales to an MPS, 
and the holding by BlackRock Managers acting on behalf of Client Plans 
of commercial paper issued by an ABCP Conduit with respect to which an 
MPS acts as seller, placement agent, and/or in some continuing capacity 
such as program administrator, provider of liquidity or provider of 
credit support, provided that:
    1. (a)(i) The Client Plan is not an MPS Plan of the MPS with whom 
the purchase or sale takes place, or an MPS Plan of another member of 
the same

[[Page 50650]]

MPS Group as such MPS, and (ii) the Client Plan is not an MPS Plan of 
an MPS which is acting in a continuing capacity, or an MPS Plan of 
another member of the same MPS Group as such MPS, and (iii) no MPS 
described in Sections III.U.1.(a)(i) or (ii), or another member of the 
same MPS Group as such MPS, has discretionary authority or control with 
respect to the Client Plan assets involved in the Covered Transaction 
or renders investment advice (within the meaning of 29 CFR 2510.3-
21(c)) with respect to such assets;
    (b) This Section III.U.1 shall be deemed satisfied notwithstanding 
the investment of assets of an MPS Plan of the MPS, which is placement 
agent or otherwise is acting in a continuing capacity, in a Pooled Fund 
as of the date of the Acquisition, which Pooled Fund is a bank-
maintained common or collective trust, provided that such assets when 
aggregated with the assets of all other MPS Plans of the same MPS Group 
as the MPS which is the placement agent or otherwise is acting in a 
continuing capacity and invested in such Pooled Fund, at all times 
since the date of the Acquisition, constitute or are deemed pursuant to 
Section II.A.3.(b) to constitute less than ten percent (10%) of such 
Pooled Fund.
    2. The commercial paper has a stated maturity date of nine months 
or less from the date of issue, exclusive of days of grace, or is a 
renewal of an issue of commercial paper the maturity of which is 
likewise limited;
    3. At the time it is acquired, the commercial paper is ranked in 
the highest rating category by at least one of the Rating 
Organizations;
    4. If the seller or purchaser of the ABCP Conduit commercial paper 
is an MPS, secondary market purchases and sales are pursuant to the 
Three Quote Process, provided that, for purposes of this Section 
III.U.4., firm quotes on comparable short-term money market instruments 
rated in the same category may be used as quotes for purposes of the 
Three Quote Process;
    5. If an MPS performs a continuing role and there is a default, the 
taking of or refraining from taking of any action by the responsible 
BlackRock Manager which could have a material positive or negative 
effect upon the MPS is decided upon by the IM;
    No BlackRock Entity is to be regarded as an affiliate of any MPS 
for purposes of the Covered Transactions set forth in this Section 
III.U.
    V. Purchase, Holding and Disposition by BlackRock Managers for 
Client Plans of Shares of Exchange-Traded Open-End Investment Companies 
Registered Under the 1940 Act (ETF) Managed by BlackRock Managers. 
Relief under Section I of this exemption is available for the purchase, 
holding and disposition by BlackRock Managers for Client Plans of 
shares of an ETF managed by a BlackRock Manager provided that:
    1. (a) the BlackRock Manager purchases such ETF shares from or 
through a person other than an MPS or a BlackRock Entity, and
    (b) no purchase is exempt under Section I of this exemption if the 
BlackRock Manager portfolio manager acting for the Client Plan knows or 
should know that the shares to be acquired for Client Plans are 
Creation Shares, or that the purchase for Client Plans will result in 
new Creation Shares.
    2. Notwithstanding Section III.V.1.(a), BlackRock Managers may 
purchase shares of ETFs managed by a BlackRock Manager through an MPS 
acting as agent for Client Plans which, as of the date of the 
Acquisition, had in place with a BlackRock Manager either a directed 
brokerage and/or wrap fee arrangement which required the BlackRock 
Manager to use such MPS as a Securities broker; provided that, (i) A 
list of all of such arrangements has been provided to the ECO and no 
material changes are made to such arrangements and (ii) the ECO 
Function periodically monitors purchases of Securities to ensure that 
the amount of BlackRock-managed ETF shares purchased for Client Plans 
under Section III.V.2. is not disproportionate to the amount of 
BlackRock-managed ETF shares purchased for Client Plans pursuant to 
Section III.V.1. Special Notice of all of the foregoing conditions for 
relief under this Section III.V.2. must be provided in accordance with 
the terms of Section II.F.
    W. Investment of Assets of MPS Plans in a BlackRock Bank-Maintained 
Common or Collective Trust as of the Date of the Acquisition--Fees Paid 
Outside the Trust. Relief under Section I of this exemption is 
available with respect to MPS Plans invested in Pooled Funds as of the 
date of the Acquisition, which Pooled Funds are common or collective 
trusts maintained by BlackRock Institutional Trust Company, N.A., and 
in connection with which investments such MPS Plans pay management fees 
directly to BlackRock Managers until the earliest of (i) Termination of 
the investment in the Pooled Fund, (ii) transition of the fee 
arrangement to one under which the BlackRock Manager's fees are paid 
from assets of the Pooled Fund or by the MPS Plan sponsor, or (iii) 
December 31, 2010 (Unwind Period 2) provided that:
    1. The fees paid by such MPS Plans to the BlackRock Managers during 
Unwind Period 2 are neither more than reasonable compensation nor 
significantly more than fees paid to the BlackRock Managers by other, 
comparable Client Plans invested in such Pooled Funds which are not MPS 
Plans; and
    2. The MPS Plans do not pay to BlackRock Managers during Unwind 
Period 2 any type of fee or other compensation that was not charged to 
or otherwise borne by MPS Client Plan investors in the Pooled Fund as 
of the date of the Acquisition.
    During Unwind Period 2, the IM must review the investment by the 
MPS Plans in the Pooled Fund; all fees paid by the affected MPS Plans 
to BlackRock Managers must be disclosed to the IM; the IM must review 
the offering documents for the Pooled Funds and any advisory or 
management agreements with BlackRock Managers; and any material change 
in the terms and conditions of the investment by the affected MPS Plans 
in the Pooled Fund, including but not limited to changes to fees paid 
to BlackRock Managers or the terms of the advisory or management 
agreements with BlackRock Managers, must be promptly disclosed to the 
IM and be subject to the IM's written approval. Further, during Unwind 
Period 2, each such MPS Plan may terminate its investment in the Pooled 
Fund upon no more than thirty (30) days notice and without incurring a 
redemption fee paid to a BlackRock Manager.
    X. Purchase, Holding and Disposition of BlackRock Equity Securities 
in the Secondary Market by BlackRock Managers for an Index Account or 
Fund, or a Model-Driven Account or Fund, Including Buy-Ups.\24\ Relief 
under Section I of this exemption is available for the purchase, 
holding and disposition of common or preferred stock issued by 
BlackRock in the secondary market by BlackRock Managers for Client 
Plans in an Index Account or Fund, or in a Model-Driven Account or Fund 
provided that:
---------------------------------------------------------------------------

    \24\ BlackRock requested such relief for the avoidance of any 
issue about the necessity for such relief in particular 
circumstances; the Department is not opining on the need for such 
relief herein.
---------------------------------------------------------------------------

    1. The acquisition, holding and disposition of the BlackRock 
Securities is for the sole purpose of maintaining quantitative 
conformity with the weight of such Securities prescribed by the 
relevant Index, for Index Accounts or Funds, or the weight of such 
Securities prescribed by the relevant Model, for Model-Driven Accounts 
or Funds, and

[[Page 50651]]

such purchase is reasonably calculated not to exceed the purchase 
amount necessary for such Model or quantitative conformity by more than 
a de minimis amount.
    2. Any acquisition of BlackRock Securities does not involve any 
agreement, arrangement or understanding regarding the design or 
operation of the account or fund acquiring the BlackRock Securities 
which is intended to benefit BlackRock or any party in which BlackRock 
may have an interest.
    3. With respect to an acquisition of BlackRock Securities by such 
an account or fund which constitutes a Buy-Up,
    (a) The acquisition is made on a single trading day from or through 
one broker-dealer, which broker-dealer is not an MPS or a BlackRock 
Entity; provided, however, that if the volume limitation in Section 
III.X.3.(d) below cannot be satisfied in a single trading day, the 
acquisition will be completed in as few trading days as possible in 
compliance with such volume limitation and such trades will be reviewed 
by the ECO and reported to the IM;
    (b) based upon the best available information, the acquisition is 
not the opening transaction of a trading day and is not made in the 
last half hour before the close of the trading day;
    (c) the price paid by the BlackRock Manager is not higher than the 
lowest current independent offer quotation, determined on the basis of 
reasonable inquiry from broker-dealers who are not MPSs or BlackRock 
Entities;
    (d) aggregate daily purchases do not exceed fifteen percent (15%) 
of aggregate average daily trading volume for the Security, as 
determined by the greater of (i) The trading volume for the Security 
occurring on the applicable Recognized Securities Exchange and/or 
Automated Trading System on the date of the transactions, or (ii) the 
aggregate average daily trading volume for the Security occurring on 
the applicable Recognized Securities Exchange and/or Automated Trading 
System for the previous ten (10) trading days, both based on the best 
information reasonably available at the time of the transaction. These 
volume limitations are applied on a portfolio manager by portfolio 
manager basis unless purchases of BlackRock Securities are coordinated 
by the portfolio managers or trading desks, in which case the 
limitations are aggregated for the coordinating portfolio managers or 
trading desks. Provided further, if BlackRock, without Client Plan 
direction or consent, initiates a new Index Account or Fund or Model-
Driven Account or Fund on its own accord, with BlackRock Securities 
included therein, the volume restrictions for such new account or fund 
shall be determined by aggregating all portfolio managers purchasing 
for such new account of fund. Cross trades of BlackRock Securities 
which comply with an applicable statutory or administrative prohibited 
transaction exemption are not included in the amount of aggregate daily 
purchases to which the limitations of this Section III.X. apply;
    (e) All purchases and sales of BlackRock Securities occur either 
(i) On a Recognized Securities Exchange, (ii) through an Automated 
Trading System operated by a broker-dealer that is not a BlackRock 
Entity and is either registered under the 1934 Act, and thereby subject 
to regulation by the Securities and Exchange Commission, or subject to 
regulation and supervision by the Securities and Futures Authority of 
the UK or another applicable regulatory authority, which provides a 
mechanism for customer orders to be matched on an anonymous basis 
without the participation of a broker-dealer, or (iii) through an 
Automated Trading System that is operated by a Recognized Securities 
Exchange, pursuant to the applicable securities laws, and provides a 
mechanism for customer orders to be matched on an anonymous basis 
without the participation of a broker-dealer; and
    (f) the ECO designs acquisition procedures for BlackRock Managers 
to follow in Buy-Ups, which the IM approves in advance of the 
commencement of any Buy-Up, and the ECO Function monitors BlackRock 
Manager's compliance with such procedures.
    Y. Acquisition by BlackRock Managers of Financial Guarantees, 
Indemnities and Similar Protections for Client Plans from MPSs. Relief 
under Section I of this exemption is available for the provision by an 
MPS of a financial guarantee, indemnification arrangement or similar 
instrument or arrangement providing protection to a Client Plan against 
possible losses or risks provided that:
    1. The terms of the arrangement (including the identity of the 
provider) are approved by a fiduciary of the Client Plan which is 
independent of the MPS providing such protection and of BlackRock;
    2. The compensation owed the MPS under the arrangement is paid by a 
BlackRock Entity and not paid out of the assets of the Client Plan;
    3. In the event a Client Plan or the ECO concludes an event has 
occurred which should trigger the obligations of the MPS under the 
arrangement, and the MPS disagrees to any material extent, the IM 
determines the steps the BlackRock Manager must take to protect the 
interests of the Client Plan; and
    4. The MPS providing the arrangement is capable of being sued in 
United States courts, has contractually agreed to be subject to 
litigation in the United States with respect to any matter relating to 
this Section III.Y., and has sufficient assets in the United States to 
honor its commitments under the arrangement.

Section IV: Affiliated Underwritings and Affilliated Servicing

A. Affiliated Underwritings
    1. The Securities to be purchased are either:
    (a) Part of an issue registered under the 1933 Act, or, if 
Securities to be purchased are part of an issue that is exempt from 
such registration requirement, such Securities:
    (i) Are issued or guaranteed by the United States or by any person 
controlled or supervised by and acting as an instrumentality of the 
United States pursuant to authority granted by the Congress of the 
United States,
    (ii) are issued by a bank,
    (iii) are exempt from such registration requirement pursuant to a 
Federal statute other than the 1933 Act, or
    (iv) are the subject of a distribution and are of a class which is 
required to be registered under section 12 of the 1934 Act, and are 
issued by an issuer that has been subject to the reporting requirements 
of section 13 of the 1934 Act for a period of at least ninety (90) days 
immediately preceding the sale of such Securities and that has filed 
all reports required to be filed thereunder with the SEC during the 
preceding twelve (12) months; or
    (b) part of an issue that is an Eligible Rule 144A Offering. Where 
the Eligible Rule 144A Offering of the Securities is of equity 
securities, the offering syndicate shall obtain a legal opinion 
regarding the adequacy of the disclosure in the offering memorandum; or
    (c) municipal bonds taxable by the United States, including Build 
America Bonds created under section 54AA of the Code or successor 
thereto, under which the United States pays a subsidy to the state or 
local government issuer, but not including Building America Bonds which 
provide a tax credit to investors.
    2. The Securities to be purchased are purchased prior to the end of 
the first day on which any sales are made, pursuant to that offering, 
at a price that

[[Page 50652]]

is not more than the price paid by each other purchaser of the 
Securities in that offering or in any concurrent offering of the 
Securities, except that:
    (a) If such Securities are offered for subscription upon exercise 
of rights, they may be purchased on or before the fourth day preceding 
the day on which the rights offering terminates; or
    (b) if such Securities are debt Securities, they may be purchased 
at a price that is not more than the price paid by each other purchaser 
of the Securities in that offering or in any concurrent offering of the 
Securities and may be purchased on a day subsequent to the end of the 
first day on which any sales are made, pursuant to that offering, 
provided that the interest rates, as of the date of such purchase, on 
comparable debt Securities offered to the public subsequent to the end 
of the first day on which any sales are made and prior to the purchase 
date are less than the interest rate of the debt Securities being 
purchased; and
    3. The Securities to be purchased are offered pursuant to an 
underwriting or selling agreement under which the members of the 
syndicate are committed to purchase all of the Securities being 
offered, except if:
    (a) such Securities are purchased by others pursuant to a rights 
offering; or
    (b) such Securities are offered pursuant to an over-allotment 
option.
    4. The issuer of the Securities to be purchased pursuant to this 
exemption must have been in continuous operation for not less than 
three (3) years, including the operation of any predecessors, unless 
the Securities to be purchased:
    (a) Are non-convertible debt Securities rated in one of the four 
highest rating categories by a Rating Organization; provided that none 
of the Rating Organizations rates such Securities in a category lower 
than the fourth highest rating category; or
    (b)(i) are debt Securities issued or fully guaranteed by the United 
States or by any person controlled or supervised by and acting as an 
instrumentality of the United States pursuant to authority granted by 
the Congress of the United States; or
    (ii) are municipal bonds taxable by the United States, including 
Build America Bonds created under section 54AA of the Code or successor 
thereto, under which the United States pays a subsidy to the state or 
local government issuer, but not including Building America Bonds which 
provide a tax credit to investors; or
    (c) are debt Securities which are fully guaranteed by a guarantor 
that has been in continuous operation for not less than three (3) 
years, including the operation of any predecessors, provided that such 
guarantor has issued other Securities registered under the 1933 Act; or 
if such guarantor has issued other Securities which are exempt from 
such registration requirement, such guarantor has been in continuous 
operation for not less than three (3) years, including the operation of 
any predecessors, and such guarantor is:
    (i) a bank;
    (ii) an issuer of Securities which are exempt from such 
registration requirement, pursuant to a Federal statute other than the 
1933 Act; or
    (iii) an issuer of Securities that are the subject of a 
distribution and are of a class which is required to be registered 
under section 12 of the 1934 Act, and are issued by an issuer that has 
been subject to the reporting requirements of section 13 of the 1934 
Act for a period of at least ninety (90) days immediately preceding the 
sale of such Securities and that has filed all reports required to be 
filed hereunder with the SEC during the preceding twelve (12) months.
    5. The aggregate amount of Securities of an issue purchased, 
pursuant to this exemption, by the BlackRock Manager with: (i) the 
assets of all Client Plans; and (ii) the assets, calculated on a pro 
rata basis, of all Client Plans investing in Pooled Funds managed by 
the BlackRock Manager; and (iii) the assets of plans to which the 
BlackRock Manager renders investment advice within the meaning of 29 
CFR 2510.3 21(c) does not exceed:
    (a) ten percent (10%) of the total amount of the Securities being 
offered in an issue, if such Securities are equity securities;
    (b) thirty five percent (35%) of the total amount of the Securities 
being offered in an issue, if such Securities are Asset-Backed 
Securities rated in one of the three highest rating categories by at 
least one of the Rating Organizations; provided that none of the Rating 
Organizations rates such Securities in a category lower than the third 
highest rating category;
    (c) thirty five percent (35%) of the total amount of the Securities 
being offered in an issue, if such Securities are debt Securities rated 
in one of the four highest rating categories by at least one of the 
Rating Organizations; provided that none of the Rating Organizations 
rates such Securities in a category lower than the fourth highest 
rating category; or
    (d) twenty five percent (25%) of the total amount of the Securities 
being offered in an issue, if such Securities are debt Securities rated 
in the fifth or sixth highest rating categories by at least one of the 
Rating Organizations; provided that none of the Rating Organizations 
rates such Securities in a category lower than the sixth highest rating 
category; and
    (e) the assets of any single Client Plan (and the assets of any 
Client Plans investing in Pooled Funds) may not be used to purchase any 
Securities being offered, if such Securities are debt Securities rated 
lower than the sixth highest rating category by any of the Rating 
Organizations;
    (f) notwithstanding the percentage of Securities of an issue 
permitted to be acquired, as set forth in Subsections A.(5)(a)-(d) of 
this Section IV., the amount of Securities in any issue (whether equity 
or debt Securities or Asset-Backed Securities) purchased, pursuant to 
this exemption, by the BlackRock Manager on behalf of any single Client 
Plan, either individually or through investment, calculated on a pro 
rata basis, in a Pooled Fund may not exceed three percent (3%) of the 
total amount of such Securities being offered in such issue, provided 
that a Sub-Advised Pooled Fund described in Section VI.AAA. as a whole 
may purchase up to three percent (3%) of an issue; and
    (g) If purchased in an Eligible Rule 144A Offering, the total 
amount of the Securities being offered for purposes of determining the 
percentages, described, above, in Section IV.A.5.(a)-(d) and (f), is 
the total of:
    (i) The principal amount of the offering of such class of 
Securities sold by underwriters or members of the selling syndicate to 
QIBs; plus
    (ii) The principal amount of the offering of such class of 
Securities in any concurrent public offering.
    6. The aggregate amount to be paid by any single Client Plan in 
purchasing any Securities which are the subject of this exemption, 
including any amounts paid by any Client Plan in purchasing such 
Securities through a Pooled Fund, calculated on a pro rata basis, does 
not exceed three percent (3%) of the fair market value of the net 
assets of such Client Plan, as of the last day of the most recent 
fiscal quarter of such Client Plan prior to such transaction, provided 
that a Sub-Advised Pooled Fund as a whole may pay up to one percent 
(1%) of fair market value of its net assets in purchasing such 
Securities.
    7. The covered transactions are not part of an agreement, 
arrangement, or understanding designed to benefit any BlackRock Entity 
or MPS.
    8. Each Client Plan shall have total net assets with a value of at 
least $50 million (the $50 Million Net Asset Requirement). For purposes 
of engaging

[[Page 50653]]

in covered transactions involving an Eligible Rule 144A Offering, each 
Client Plan shall have total net assets of at least $100 million in 
Securities of issuers that are not affiliated with such Client Plan 
(the $100 Million Net Asset Requirement).
    For purposes of a Pooled Fund engaging in an Affiliated 
Underwriting, each Client Plan in such Pooled Fund other than a Sub-
Advised Pooled Fund shall have total net assets with a value of at 
least $50 million. Notwithstanding the foregoing, if each such Client 
Plan in a Pooled Fund other than a Sub-Advised Pooled Fund does not 
have total net assets with a value of at least $50 million, the $50 
Million Net Asset Requirement will be met, if fifty percent (50%) or 
more of the units of beneficial interest in such Pooled Fund are held 
by investors, each of which has total net assets with a value of at 
least $50 million.
    For purposes of a Pooled Fund engaging in an Affiliated 
Underwriting involving an Eligible Rule 144A Offering, each Client Plan 
in such Pooled Fund other than a Sub-Advised Pooled Fund shall have 
total net assets of at least $100 million in Securities of issuers that 
are not affiliated with such Client Plan. Notwithstanding the 
foregoing, if each such Client Plan in such Pooled Fund other than a 
Sub-Advised Pooled Fund does not have total net assets of at least $100 
million in Securities of issuers that are not affiliated with such 
Client Plan, the $100 Million Net Asset Requirement will be met if 
fifty percent (50%) or more of the units of beneficial interest in such 
Pooled Fund are held by investors, each of which have total net assets 
of at least $100 million in Securities of issuers that are not 
affiliated with such investor, and the Pooled Fund itself qualifies as 
a QIB.
    For purposes of the net asset requirements described, above in 
Section IV.A.8., where a group of Client Plans is maintained by a 
single employer or controlled group of employers, as defined in ERISA 
section 407(d)(7), the $50 Million Net Asset Requirement (or in the 
case of an Eligible Rule 144A Offering, the $100 Million Net Asset 
Requirement) may be met by aggregating the assets of such Client Plans, 
if the assets of such Client Plans are pooled for investment purposes 
in a single master trust.
    9. No more than twenty percent (20%) of the assets of a Pooled 
Fund, at the time of a covered transaction, are comprised of assets of 
In-House Plans for which the BlackRock Manager, or a BlackRock Entity 
exercises investment discretion.
    10. The BlackRock Manager must be a QPAM, and, in addition to 
satisfying the requirements for a QPAM under section VI(a) of PTE 84-
14, the BlackRock Manager must also have total client assets under its 
management and control in excess of $5 billion, as of the last day of 
its most recent fiscal year and shareholders' or partners' equity in 
excess of $1 million.
    11. The BlackRock Manager maintains, or causes to be maintained, 
for a period of six (6) years from the date of any covered transaction 
such records as are necessary to enable the persons described below in 
Section IV.A.12.(a) to determine whether the conditions of this 
exemption have been met, except that:
    (a) No party in interest with respect to a plan which engages in 
the covered transactions, other than the BlackRock Manager, shall be 
subject to a civil penalty under ERISA section 502(i) or the taxes 
imposed by Code sections 4975(a) and (b), if such records are not 
maintained, or not available for examination as required below by 
Section IV.A.12.(a); and
    (b) A separate prohibited transaction shall not be considered to 
have occurred if, due to circumstances beyond the control of the 
BlackRock Manager, such records are lost or destroyed prior to the end 
of the six-year period.
    12. (a) Except as provided below, in Section IV.A.12.(b), and 
notwithstanding the provisions of subsections (a)(2) and (b) of ERISA 
section 504, the records referred to, above, in Section IV.A.11. are 
unconditionally available at their customary location for examination 
during normal business hours by:
    (i) Any duly authorized employee or representative of the 
Department, the Internal Revenue Service, or the SEC;
    (ii) Any fiduciary of any plan that engages in the covered 
transactions, or any duly authorized employee or representative of such 
fiduciary;
    (iii) Any employer of participants and beneficiaries and any 
employee organization whose members are covered by a plan that engages 
in the covered transactions, or any authorized employee or 
representative of these entities; or
    (iv) Any participant or beneficiary of a plan that engages in the 
covered transactions, or duly authorized employee or representative of 
such participant or beneficiary;
    (b) None of the persons described in Sections IV.A.12.(a)(ii) 
through (iv) shall be authorized to examine trade secrets of the 
BlackRock Manager, or commercial or financial information which is 
privileged or confidential; and
    (c) Should the BlackRock Manager refuse to disclose information on 
the basis that such information is exempt from disclosure, pursuant to 
Section IV.A.12.(b), the BlackRock Manager shall, by the close of the 
thirtieth (30th) day following the request, provide a written notice 
advising that person of the reasons for the refusal and that the 
Department may request such information.
B. Affiliated Servicing
    1. The Securities are CMBS that are rated in one of the three 
highest rating categories by a Rating Organization; provided that none 
of the Rating Organizations rates such Securities in a category lower 
than the third highest rating category.
    2. The purchase of the CMBS meets the conditions of an applicable 
Underwriter Exemption.
    3. (a) The aggregate amount of CMBS of an issue purchased, pursuant 
to this exemption, by the BlackRock Manager with:
    (i) The assets of all Client Plans; and
    (ii) The assets, calculated on a pro rata basis, of all Client 
Plans and In-House Plans investing in Pooled Funds managed by the Asset 
Manager; and
    (iii) The assets of plans to which the Asset Manager renders 
investment advice, within the meaning of 29 CFR Sec. 2510.3-21(c), does 
not exceed thirty five percent (35%) of the total amount of the CMBS 
being offered in an issue.
    (b) Notwithstanding the percentage of CMBS of an issue permitted to 
be acquired, as set forth in Section IV.B.3.(a) of this exemption, the 
amount of CMBS in any issue purchased, pursuant to this exemption, by 
the Asset Manager on behalf of any single Client Plan, either 
individually or through investment, calculated on a pro rata basis, in 
a Pooled Fund may not exceed three percent (3%) of the total amount of 
such CMBS being offered in such issue, and
    (c) If purchased in an Eligible Rule 144A Offering, the total 
amount of the CMBS being offered for purposes of determining the 
percentages described in Section IV.B.3(a), is the total of:
    (i) The principal amount of the offering of such class of CMBS sold 
by underwriters or members of the selling syndicate to QIBs; plus
    (ii) The principal amount of the offering of such class of CMBS in 
any concurrent public offering.
    4. The aggregate amount to be paid by any single Client Plan in 
purchasing any CMBS which are the subject of this exemption, including 
any amounts paid by any Client Plan in purchasing such

[[Page 50654]]

CMBS through a Pooled Fund, calculated on a pro rata basis, does not 
exceed three percent (3%) of the fair market value of the net assets of 
such Client Plan, as of the last day of the most recent fiscal quarter 
of such Client Plan prior to such transaction.
    5. The Covered Transactions under this Section IV.B. are not part 
of an agreement, arrangement, or understanding designed to benefit any 
MPS.
    6. The requirements of Sections IV.A.8. through 12. are met.

Section V: Correction Procedures

    A. 1. The ECO shall monitor Covered Transactions and shall 
determine whether a particular Covered Transaction constitutes a 
Violation. The ECO shall notify the IM within five (5) business days 
following the discovery of any Violation.
    2. The ECO shall make an initial determination as to how to correct 
a Violation and place the conclusion of such determination in writing, 
with such conclusion disclosed to the IM within five (5) business days 
of the placing of the conclusion of such determination in writing. 
Following the initial determination, the ECO must keep the IM apprised 
on a current basis of the process of correction and must consult with 
the IM regarding each Violation and the appropriate form of correction. 
The ECO shall report the correction of the Violation to the IM within 
five (5) business days following completion of the correction. For 
purposes of this Section V.A.2., ``correction'' must be consistent with 
ERISA section 502(i) and Code section 4975(f)(5).
    3. The IM shall determinate whether it agrees that the correction 
of a Violation by the ECO is adequate and shall place the conclusion of 
such determination in writing, and, if the IM does not agree with the 
adequacy of the correction, the IM shall have the authority to require 
additional corrective actions by BlackRock.
    4. A summary of Violations and corrections of Violations will be in 
the IM's annual compliance report as described in Section II.E.12.
B. Special Correction Procedure
    1. If a Covered Transaction which would otherwise constitute a 
Violation is corrected under this ``Special Correction Procedure,'' 
such Covered Transaction shall continue to be exempt under Section I of 
this exemption.
    2. (a) The Special Correction Procedure is a complete correction of 
the Violation no later than fourteen (14) business days following the 
date on which the ECO submits the quarterly report to the IM for the 
quarter in which the Covered Transaction first would become a non-
exempt prohibited transaction by reason of constituting a Violation if 
not for this Section V.B.
    (b) Solely for purposes of the Special Correction Procedure, 
``correction'' of a Covered Transaction which would otherwise be a 
Violation means either:
    (i) Restoring the Client Plan to the position it would have been in 
had the conditions of the exemption been complied with;
    (ii) correction consistent with ERISA section 502(i) and Code 
section 4975(f)(5); or
    (iii) correction consistent with the Voluntary Fiduciary Correction 
Program.\25\
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    \25\ PTE 2002-51, 67 FR 70623 (November 25, 2002), as amended, 
71 FR 20135 (April 19, 2006).
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    (c) Other than with respect to the definition of ``correction'' 
specified above, when utilizing the Special Correction Procedure the 
ECO and the IM shall comply with Section V.A.

Section VI: Definitions \26\
---------------------------------------------------------------------------

    \26\ The definition of terms herein shall apply equally to the 
singular and plural forms of the terms defined. Section headings are 
for convenience only.
---------------------------------------------------------------------------

    A. ``1933 Act'' means the Securities Act of 1933, as amended.
    B. ``1934 Act'' or ``Exchange Act'' means the Securities Exchange 
Act of 1934, as amended.
    C. ``1940 Act'' means the Investment Company Act of 1940, as 
amended.
    D. ``$50 Million Net Asset Requirement'' shall have the meaning set 
forth in Section IV.A.8. of this exemption.
    E. ``$100 Million Net Asset Requirement'' shall have the meaning 
set forth in Section IV.A.8. of this exemption.
    F. ``ABCP Conduit'' means a special purpose vehicle that acquires 
assets from one or more originators and issues commercial paper to 
provide funding to the originator(s). Such vehicles are typically 
administered by a bank, but is not required to be administered by a 
bank, which provides liquidity support (standing ready to purchase the 
conduit's commercial paper if it cannot be rolled over) and/or credit 
support (committing to cover losses in the event of default). The 
program administrator also typically acts as placement agent for the 
commercial paper, sometimes together with one or more other placement 
agents. Commercial paper issued by such a conduit may be purchased 
directly from the program administrator or other placement agent, or 
traded on the secondary market with another broker-dealer making a 
market in the Securities.
    G. ``Acquisition'' means the acquisition by BlackRock of Barclays 
Global Investors UK Holdings, Ltd. and its subsidiaries on December 1, 
2009.
    H. ``Affiliate'' of another person means:
    (1) Any person directly or indirectly, through one or more 
intermediaries, controlling, controlled by, or under common control 
with such person;
    (2) Any officer, director, partner, employee, or relative (as 
defined in section 3(15) of ERISA) of such other person; and
    (3) Any corporation or partnership of which such other person is an 
officer, director, partner or employee.
    I. ``Asset-Backed Securities'' means Securities which are pass-
through certificates or trust certificates characterized as equity 
pursuant to 29 CFR 2510.3-101 that represent a beneficial ownership 
interest in the assets of an issuer which is a trust, with any such 
trust limited to (1) A single or multi-family residential or commercial 
mortgage investment trust, (2) a motor vehicle receivable investment 
trust, or (3) a guaranteed governmental mortgage pool certificate 
investment trust, and which entitles the holder to payments of 
principal, interest and/or other payments made with respect to the 
assets of the trust, the corpus or assets of which consist solely or 
primarily of secured obligations that bear interest or are purchased at 
a discount. For purposes of Section IV.A. of this exemption, Asset-
Backed Securities are treated as debt Securities.
    J. ``authorizing fiduciary'' has the meaning set forth in Section 
III.M.4(d)(i) of this exemption.
    K. ``Automated Trading System'' or ``ATS'' means an electronic 
trading system, ECN or electronic clearing network or similar venue 
that functions in a manner intended to simulate a Securities exchange 
by electronically matching orders from multiple buyers and sellers, 
such as an ``alternative trading system'' within the meaning of the 
SEC's Reg. ATS (17 CFR part 242.300), as such definition may be amended 
from time to time, or an ``automated quotation system'' as described in 
Section 3(a)(51)(A)(ii) of the 1934 Act.
    L. ``B and C List'' has the meaning set forth in Section III.A.1. 
of this exemption.
    M. ``BlackRock'' means BlackRock, Inc. and any successors thereof.
    N. ``BlackRock Entity'' means BlackRock and any entity directly or 
indirectly, through one or more intermediaries, under the control of

[[Page 50655]]

BlackRock, and any other entity which subsequently becomes directly or 
indirectly, through one or more intermediaries, under the control of 
BlackRock, and successors of the foregoing.
    O. ``BlackRock Manager'' means any bank, investment advisor, 
investment manager directly or indirectly, through one or more 
intermediaries, under the control of BlackRock, and any other bank, 
investment advisor, or investment manager which subsequently becomes 
directly or indirectly, through one or more intermediaries, under the 
control of BlackRock, and successors of the foregoing, including but 
not limited to BlackRock Advisors, LLC, BlackRock Financial Management, 
Inc., BlackRock Capital Management, Inc., BlackRock Institutional 
Management Corporation, BlackRock International, Ltd., State Street 
Research and Management Company, BlackRock Realty Advisors, Inc., 
BlackRock Investment Management, LLC, BlackRock Fund Advisors, and 
BlackRock Institutional Trust Company, N.A. and any of the investment 
advisors and investment manager it controls.
    P. ``Buy-Up'' means an initial acquisition of Securities issued by 
BlackRock by a BlackRock Manager, if such acquisition exceeds one 
percent (1%) of the aggregate daily trading volume for such Security, 
for an Index Account or Fund, or a Model-Driven Account or Fund which 
is necessary to bring the fund's or account's holdings of such 
Securities either to its capitalization-weighted or other specified 
composition in the relevant Index, as determined by the organization 
maintaining such Index, or to its correct weighting as determined by 
the Model.
    Q. ``Client Plan'' means any plan subject to ERISA section 406, 
Code section 4975 or FERSA section 8477(c) for which a BlackRock 
Manager is a fiduciary as described in ERISA section 3(21), including, 
but not limited to, any Pooled Fund, MPS Plan, Index Account or Fund, 
Model-Driven Account or Fund, Other Account or Fund, or In-House Plan, 
except where specified to the contrary.
    R. ``CMBS'' means an Asset-Backed Security with respect to which 
the assets or corpus of the issuer consist solely or primarily of 
obligations secured by commercial real property (including obligations 
secured by leasehold interests on commercial real property).
    S. ``Code'' means the Internal Revenue Code of 1986, as amended.
    T. ``control'' means the power to exercise a controlling influence 
over the management or policies of a person other than an individual.
    U. ``Covered Transaction'' means each transaction set forth in 
Section III by a BlackRock Manager for a Client Plan with, affecting or 
involving, directly or indirectly, an MPS and/or a BlackRock Entity.
    V. ``Creation Shares'' means new shares in an ETF created by an 
exchange of a specified basket of Securities and/or cash to the ETF for 
such new shares of the ETF.
    W. ``ECO Function'' means the ECO and such other BlackRock Entity 
employees in legal and compliance roles working under the supervision 
of the ECO in connection with the Covered Transactions. The list of 
BlackRock Entity employees shall be shared with the IM from time to 
time, not less than quarterly, and such employees will be made 
available to discuss the relevant Covered Transactions with the IM to 
the extent the IM or the ECO deem it reasonably prudent.
    X. ``Electronic Communications Network'' or ``ECN'' means an 
electronic system described in Rule 600(b)(23) of Regulation NMS under 
the 1934 Act.
    Y. ``Eligible Rule 144A Offering'' shall have the same meaning as 
defined in SEC Rule 10f-3(a)(4) (17 CFR 270.10f-3(a)(4)) under the 1940 
Act.
    Z. ``Eligible Securities Depository'' means an eligible securities 
depository as that term is defined under Rule 17f-7 of the 1940 Act, as 
such definition may be amended from time to time.
    AA. ``EPP Correction'' has the meaning set forth in Section II.C. 
of this exemption.
    BB. ``ERISA'' means the Employee Retirement Income Security Act of 
1974, as amended.
    CC. ``Exemption Compliance Officer'' or ``ECO'' means an officer of 
BlackRock or of a BlackRock Entity appointed by BlackRock or such 
BlackRock Entity, subject to the approval of the IM, who is responsible 
for compliance with the exemption. The ECO, unless otherwise stated in 
this exemption, will be responsible for: monitoring all Covered 
Transactions and reviewing compliance with all of the conditions of the 
exemption applicable thereto; approving certain Covered Transactions in 
advance as required by the terms of the exemption; reviewing reports of 
Covered Transactions and the results of sampling of Covered 
Transactions; and determining when Covered Transactions transgress the 
EPPs and/or constitute a Violation.
    DD. ``ETF'' means an exchange-traded open-end investment company 
registered under the 1940 Act.
    EE. ``Exemption Polices and Procedures'' or ``EPPs'' means the 
written policy adopted and implemented by BlackRock for BlackRock 
Entities that is reasonably designed to ensure compliance with the 
terms of the exemption. The EPPs must reflect the specific requirements 
of the exemption, but must also be designed to ensure that the 
decisions to enter into Covered Transactions on behalf of Client Plans 
with the MPSs are in the interests of Client Plans and their 
participants and beneficiaries, including by ensuring to the extent 
possible that the terms of each Covered Transaction are at least as 
favorable to the Client Plan as the terms generally available in 
comparable arm's length transactions with unrelated parties.
    FF. ``FERSA'' means the Federal Employees' Retirement System Act of 
1986, as amended.
    GG. ``FHLMC'' means the Federal Home Loan Mortgage Corporation.
    HH. ``Fixed Income Obligations'' means: (1) Fixed income 
obligations including structured debt or other instruments 
characterized as debt pursuant to 29 CFR 2510.3-101, including, but not 
limited to, debt convertible into equity, certificates of deposit and 
loans (other than loans with respect to which an MPS is the entity 
which acts as lead lender) and (2) guaranteed governmental mortgage 
pool certificates within the meaning of 29 CFR 2510.3-101(i). Asset-
Backed Securities are not Fixed Income Obligations for purposes of this 
exemption.
    II. ``FNMA'' means the Federal National Mortgage Association.
    JJ. ``Foreign Bank'' means an institution that has substantially 
similar powers to a bank as defined in section 202(a)(2) of the 
Investment Advisers Act, as amended, has as of the last day of its most 
recent fiscal year, equity capital which is the equivalent of no less 
than $200 million, and is:
    (1)(a) Registered and regulated under the laws of the Financial 
Services Authority in the United Kingdom, or (b)(i) registered and 
regulated by a securities commission of a Province of Canada that is a 
member of the Canadian Securities Administration, and (ii) is subject 
to the oversight of a Canadian self-regulatory authority; or
    (2) subject to regulation by the relevant governmental banking 
agency(ies) of a country other than the United States and the 
regulation and oversight of these banking agencies were applicable to a 
bank that received: (i) An individual exemption, granted by the 
Department under section 408(a) of ERISA, involving the loan of 
securities

[[Page 50656]]

by a plan to a bank or (ii) a final authorization by the Department to 
engage in an otherwise prohibited transaction pursuant to Prohibited 
Transaction Exemption 96-62, as amended (PTE 96-62), involving the loan 
of securities by a plan to a bank. On the date this exemption becomes 
effective, the following countries shall qualify for purposes of this 
clause (ii): United Kingdom, Canada, Germany, Japan, Australia, 
Switzerland, France, the Netherlands and Sweden.
    KK. ``Foreign Broker-Dealer'' means a broker-dealer that has, as of 
the last day of its most recent fiscal year, equity capital that is the 
equivalent of no less than $200 million and is:
    (1) Registered and regulated under the laws of the Financial 
Services Authority in the United Kingdom;
    (2) Registered and regulated by a securities commission of a 
Province of Canada that is a member of the Canadian Securities 
Administration, and is subject to the oversight of a Canadian self-
regulatory authority; or
    (3) Registered and regulated under the relevant securities laws of 
a governmental entity of a country other than the United States and 
such securities laws and regulation were applicable to a broker-dealer 
that received: (a) An individual exemption, granted by the Department 
under section 408(a) of ERISA, involving the loan of securities by a 
plan to a broker-dealer or (b) a final authorization by the Department 
to engage in an otherwise prohibited transaction pursuant to PTE 96-62, 
as amended, involving the loan of securities by a plan to a broker-
dealer. On the date this exemption becomes effective, the following 
countries shall qualify for purposes of this clause (2): United 
Kingdom, Canada, Germany, Japan, Australia, Switzerland, France, the 
Netherlands and Sweden.
    LL. ``Foreign Collateral'' means:
    (1) Securities issued by or guaranteed as to principal and interest 
by the following Multilateral Development Banks, the obligations of 
which are backed by the participating countries, including the United 
States: The International Bank for Reconstruction and Development, the 
Inter-American Development Bank, the Asian Development Bank, the 
African Development Bank, the European Bank for Reconstruction and 
Development and the International Finance Corporation;
    (2) Foreign sovereign debt securities provided that at least one 
nationally recognized statistical rating organization has rated in one 
of its two highest categories either the issue, the issuer or 
guarantor;
    (3) The British pound, the Canadian dollar, the Swiss franc, the 
Japanese yen or the Euro;
    (4) Irrevocable letters of credit issued by a Foreign Bank, other 
than the borrower or an affiliate thereof, which has a counterparty 
rating of investment grade or better as determined by a nationally 
recognized statistical rating organization; or
    (5) Any type of collateral described in Rule 15c3-3 of the 1934 Act 
as amended from time to time provided that the lending fiduciary is a 
U.S. Bank or U.S. Broker-Dealer and such fiduciary indemnifies the plan 
with respect to the difference, if any, between the replacement cost of 
the borrowed Securities and the market value of the collateral on the 
date of a borrower default plus interest and any transaction costs 
which a plan may incur or suffer directly arising out of a borrower 
default. Notwithstanding the foregoing, collateral described in any of 
the categories enumerated in section V(e) of Prohibited Transaction 
Exemption 2006-16 will be considered U.S. Collateral for purposes of 
the exemption.
    MM. ``Foreign Exchange Transaction'' means the exchange of the 
currency of one nation for the currency of another nation, or a 
contract for such an exchange. The term Foreign Exchange Transaction 
includes option contracts on foreign exchange transactions. Foreign 
Exchange Transactions may be either ``spot'', ``forward'' or ``split'' 
depending on the settlement date of the transaction.
    NN. ``GNMA'' means the Government National Mortgage Association.
    OO. ``Independent Monitor'' or ``IM'' means an individual or entity 
appointed by BlackRock to carry out certain functions set forth in 
Sections II, III and V of the exemption and who (or which), given the 
number of types of Covered Transactions and the number of actual 
individual Covered Transactions potentially covered by the exemption, 
must be knowledgeable and experienced with respect to each Covered 
Transaction and able to demonstrate sophistication in relevant markets, 
instruments and trading techniques relative thereto, and, in addition, 
must understand and accept in writing its duties and responsibilities 
under ERISA and the exemption with respect to the Client Plans. The IM 
must be independent of and unrelated to BlackRock and any MPS. For 
purposes of this exemption, such individual or entity will not be 
deemed to be independent of and unrelated to BlackRock and the MPSs if:
    (1) Such individual or entity directly or indirectly controls, is 
controlled by, or is under common control with BlackRock or an MPS;
    (2) Such individual or entity, or any employee thereof performing 
services in connection with this exemption, or an officer, director, 
partner, or highly compensated employee (as defined in Code section 
4975(e)(2)(H)) thereof, is an officer, director, partner or highly 
compensated employee (as defined in Code section 4975(e)(2)(H)) of 
BlackRock or an MPS; or any member of the business segment performing 
services in connection with this exemption is a relative of an officer, 
director, partner or highly compensated employee (as defined in Code 
section 4975(e)(2)(H)) of BlackRock or an MPS.
    However, if an individual is a director of the IM and an officer, 
director, partner or highly compensated employee (as defined in Code 
section 4975(e)(2)(H)) of BlackRock or an MPS, and if he or she 
abstains from participation in any of the services performed by the IM 
under this exemption, then this Section VI.OO.(2) shall not apply.
    For purposes of this Subsection, the term officer means a 
president, any senior vice president in charge of a principal business 
unit, division or function (such as sales, administration, or finance), 
or any other officer who performs a policy-making function for the IM, 
BlackRock, or an MPS.
    (3) The IM directly or indirectly receives any compensation or 
other consideration for the IM's personal account in connection with 
any Covered Transaction, except that the IM may receive compensation 
from BlackRock for acting as IM as contemplated herein if the amount or 
payment of such compensation is reasonable and not contingent upon or 
in any way affected by any decision made by the IM while acting as IM; 
or
    (4) The annual gross revenue received by the IM, during any year of 
its engagement, from the MPSs and BlackRock Entities for all services 
exceeds the greater of (a) Five percent (5%) of the IM's annual gross 
revenue from all sources for its prior tax year, or, (b) one percent 
(1%) of the annual gross revenue of the IM and its majority shareholder 
from all sources for their prior tax year.
    PP. ``Index'' means an equity or debt Securities or commodities 
index that represents the investment performance of a specific segment 
of the market for equity or debt Securities or commodities in the 
United States and/or an individual foreign country or any

[[Page 50657]]

collection of foreign countries, but only if--
    (1) The organization creating and maintaining the index is:
    (a) Engaged in the business of providing financial information, 
evaluation, advice or Securities brokerage services to institutional 
clients,
    (b) a publisher of financial news or information, or
    (c) a public Securities exchange or association of Securities 
dealers; and
    (2) The index is created and maintained by an organization 
independent of all BlackRock Entities. For purposes of this definition 
of ``Index,'' every BlackRock Entity is deemed to be independent of 
every MPS.
    (3) The index is a generally accepted standardized index of 
Securities or commodities which is not specifically tailored for the 
use of a BlackRock Manager(s).
    (4) If the organization creating, providing or maintaining the 
Index is an MPS:
    (a) such Index must be widely-used in the market by independent 
institutional investors other than pursuant to an investment management 
or advisory relationship with a BlackRock Manager, and must be prepared 
or applied by such MPS in the same manner as for customers other than a 
BlackRock Manager(s);
    (b) BlackRock must certify to the ECO whether, in its reasonable 
judgment, such Index is widely-used in the market. In making this 
determination, BlackRock shall take into consideration factors such as 
(i) Publication of summary Index information by the MPS providing the 
Index, Bloomberg, Reuters, or a similar institution involved in the 
dissemination of financial information, and (ii) delivery of Index 
information including but not limited to Index component information by 
such MPS to clients or other subscribers including by electronic means 
including via the Internet;
    (c) BlackRock must notify the ECO if it becomes aware that: (i) 
Such Index is operated other than in accordance with objective rules, 
in the ordinary course of business, (ii) manipulation of any such Index 
has occurred for the purpose of benefiting BlackRock, or (iii) in the 
event that any rule change occurred in connection with the rules 
underlying such Index, such rule change was made by the MPS for the 
purpose of benefiting BlackRock; provided, however, this Subsection 
(c)(iii) expressly excludes instances where the rule changes were made 
in response to requests from clients/prospective clients of BlackRock 
even if BlackRock is ultimately hired to manage such a portfolio (e.g., 
if plan sponsor X requests a ``Global ex-Sudan Fixed Income Index'', an 
MPS decides to sponsor such index and plan sponsor X approaches 
BlackRock or otherwise issues a ``Request for Proposal'' for investment 
managers who could manage an index portfolio benchmarked to the Global 
ex-Sudan Fixed Income Index).
    (d) BlackRock must certify to the ECO annually that it is not aware 
of the occurrence of any of the events described in Section 
VI.PP.(4)(c), and if BlackRock cannot so certify, or if BlackRock 
provides the ECO with the notice described Section VI.PP.(4)(c), the 
ECO shall notify the IM, and the IM must take appropriate remedial 
action which may include, but need not be limited to, instructions for 
relevant BlackRock Managers to cease using such Index.
    QQ. ``Index Account or Fund'' means any investment fund, account or 
portfolio sponsored, maintained, trusteed, or managed by a BlackRock 
Manager or a BlackRock Entity, in which one or more Client Plans 
invest, and--
    (1) Which is designed to track the rate of return, risk profile and 
other characteristics of an Index by either (i) replicating the same 
combination of Securities or commodities which compose such Index or 
(ii) sampling the Securities or commodities which compose such Index 
based on objective criteria and data;
    (2) for which the BlackRock Manager does not use its discretion, or 
data within its control, to affect the identity or amount of Securities 
or commodities to be purchased or sold;
    (3) that contains ``plan assets'' subject to either ERISA section 
406, Code section 4975 or FERSA section 8477(c); and,
    (4) that involves no agreement, arrangement, or understanding 
regarding the design or operation of the Index Account or Fund which is 
intended to benefit a BlackRock Entity or an MPS, or any party in which 
a BlackRock Entity or an MPS may have an interest.
    For purposes of this definition of ``Index Account or Fund'', every 
BlackRock Entity is deemed to be independent of each MPS.
    RR. ``In-House Plan'' means an employee benefit plan that is 
subject to ERISA section 406 and/or Code section 4975, and that is 
sponsored by a BlackRock Entity for its employees.
    SS. ``Interbank Rate'' means the interbank bid and asked rate for 
foreign exchange transactions of comparable size and maturity at the 
time of the transaction as quoted on a nationally recognized service 
for facilitating foreign currency trades between large commercial banks 
and Securities dealers.
    TT. ``know'' means to have actual knowledge. BlackRock Managers 
will be deemed to have actual knowledge of information set forth in a 
written agreement or offering document as of the date the BlackRock 
Manager receives such agreement or document.
    UU. ``Model'' means a computer model that is based on prescribed 
objective criteria using independent data not within the control of a 
BlackRock Entity to transform an Index.
    VV. ``Model-Driven Account or Fund'' means any investment fund, 
account or portfolio sponsored, maintained, trusteed, or managed by a 
BlackRock Manager or a BlackRock Entity in which one or more Client 
Plans invest, and--
    (1) Which is composed of Securities or commodities the identity of 
which and the amount of which are selected by a Model;
    (2) that contains ``plan assets'' subject to either ERISA section 
406, Code section 4975 or FERSA section 8477(c); and
    (3) that involves no agreement, arrangement, or understanding 
regarding the design or operation of the Model-Driven Account or Fund 
or the utilization of any specific objective criteria which is intended 
to benefit a BlackRock Entity or an MPS, or any party in which a 
BlackRock Entity or an MPS may have an interest.
    For purposes of this definition of ``Model-Driven Account or 
Fund,'' every BlackRock Entity is deemed to be independent of each MPS.
    WW. ``MPS'' or ``Minority Passive Shareholder'' means (1) Barclays 
PLC, (2) Bank of America Corporation, (3) The PNC Financial Services 
Group, Inc., or (4) each entity directly or indirectly, through one or 
more intermediaries, controlling, controlled by or under common control 
with one or more of Barclays PLC (Barclays MPSs), Bank of America 
Corporation (BOA MPSs) or The PNC Financial Services Group, Inc., (PNC 
MPSs) (each of the PNC MPSs, Barclays MPSs, and the BOA MPSs, an MPS 
Group) but excluding any and all BlackRock Entities. Bank of America 
Corporation and any entity directly or indirectly, through one or more 
intermediaries, controlling, controlled by or under common control with 
Bank of America Corporation (collectively, the BOA Group) shall cease 
to be an MPS on the day after the number of representatives of the BOA 
Group on the BlackRock Board of Directors is reduced to one (1).

[[Page 50658]]

    XX. ``MPS Group'' shall have the meaning set forth in the 
definition of MPS.
    YY. ``MPS Plans'' means an employee benefit plan(s) that is subject 
to ERISA section 406 and/or Code section 4975, and that is sponsored by 
an MPS for its employees.
    ZZ. ``Other Account or Fund'' means any investment fund, account or 
portfolio sponsored, maintained, trusteed, or managed by a BlackRock 
Manager or a BlackRock Entity in which one or more Client Plans invest, 
and--
    (1) which is not an Index Account or Fund or a Model-Driven Account 
or Fund; and
    (2) that contains ``plan assets'' subject to either ERISA section 
406, Code section 4975 or FERSA section 8477(c).
    AAA. ``Pooled Fund'' means a common or collective trust fund or 
other pooled investment fund:
    (1) In which Client Plan(s) invest;
    (2) for which a BlackRock Manager exercises discretionary authority 
or discretionary control respecting the management or disposition of 
the assets of such fund(s); and
    (3) that contains ``plan assets'' subject to either ERISA section 
406, Code section 4975 or FERSA section 8477(c).
    Solely for purposes of Section IV of this exemption, ``Pooled 
Fund(s)'' shall only include funds or trusts which otherwise meet this 
definition but which also are either (i) Maintained by a BlackRock 
Entity or (ii) maintained by a person which is not a BlackRock Entity 
but is sub-advised by a BlackRock Manager, provided that with respect 
to a Pooled Fund described in (ii), (A) the fund or trust is either a 
bank-maintained common or collective trust fund or an insurance company 
pooled separate account that holds assets of at least $250 million, (B) 
the bank or insurance company sponsoring the pooled fund has total 
client assets under its management or control in excess of $5 billion 
as of the last day of its most recent fiscal year, and shareholders' or 
partners' equity in excess of $1 million, and (C) the decision to 
invest the Client Plan into the bank-maintained common or collective 
trust or insurance company pooled separate account and to maintain such 
investment is made by a Client Plan fiduciary which is not a BlackRock 
Entity. Such sub-advised Pooled Funds are sometimes referred to herein 
as ``Sub-Advised Pooled Funds''.
    BBB. ``QPAM Exemption'' or ``PTE 84-14'' means Prohibited 
Transaction Exemption 84-14, as amended.
    CCC. ``Qualified Professional Asset Manager'' or ``QPAM'' shall 
have the meaning set forth in Section VI(a) of the QPAM Exemption.
    DDD. ``Qualified Institutional Buyer'' or ``QIB'' shall have the 
same meaning as defined in SEC Rule 144A (17 CFR 230.144A(a)(1)) under 
the 1933 Act.
    EEE. ``Rating Organizations'' means Standard & Poor's Rating 
Services, Moody's Investors Service, Inc., Fitch Ratings Inc., DBRS 
Limited, DBRS, Inc., or any similar agency subsequently recognized by 
the Department as a Rating Organization or any successors thereto.
    FFF. ``Recognized Securities Exchange'' means a U.S. securities 
exchange that is registered as a ``national securities exchange'' under 
section 6 of the 1934 Act, or a designated offshore securities market, 
as defined in Regulation S of the SEC (17 CFR part 230.902(b)), as such 
definition may be amended from time to time, which performs with 
respect to Securities the functions commonly performed by a stock 
exchange within the meaning of definitions under the applicable 
Securities laws (e.g., 17 CFR part 240.3b-16).
    GGG. ``Registered Investment Advisor'' means an investment advisor 
registered under the Investment Advisors Act of 1940, as amended, that 
has total client assets under its management or control in excess of $5 
billion as of the last day of its most recent fiscal year and 
shareholders' or partners' equity in excess of $1 million, as shown in 
the most recent balance sheet prepared within the two years immediately 
preceding a Covered Transaction, in accordance with generally accepted 
accounting principles.
    HHH. ``SEC'' means the United States Securities and Exchange 
Commission.
    III. ``Securities'' shall have the same meaning as defined in 
section 2(a)(36) of the 1940 Act. For purposes of Section IV of this 
exemption, except as where specifically identified, Asset-Backed 
Securities are treated as debt Securities.
    JJJ. ``Special Notice'' shall have the meaning set forth in Section 
II.F. of this exemption.
    KKK. ``Three Quote Process'' means three bids or offers (either of 
which being sometimes referred to as quotes) are received by a trader 
for a BlackRock Manager each of which such quotes such trader 
reasonably believes is an indication that the dealer presenting the bid 
or offer is willing to transact the trade at the stipulated volume 
under discussion, and all material terms (including volume) under 
discussion are materially similar with respect to each other such 
quote. In selecting the best of three such quotes, a BlackRock Manager 
shall maintain books and records for the three firm bids/offers in a 
convention that it reasonably believes is customary for the specific 
asset class (such as ``price'' quotes, ``yield'' quotes or ``spread'' 
quotes). For example, corporate bonds are often quoted on a spread 
basis and dealers customarily quote the spread above a certain 
benchmark bond's yield (e.g., for a given size and direction such as a 
BlackRock trader may ask for quotes to sell $1 million of a particular 
bond, dealer 1 may quote 50 bps above the yield of the 10 year treasury 
bond, dealer 2 might quote 52 bps above the yield of the 10 year 
treasury bond and dealer 3 might quote 53 bps above the yield of the 10 
year treasury bond). If only two firm bids/offers can be obtained, the 
trade requires prior approval by the ECO and the ECO must inquire as to 
why three firm bids/offers could not be obtained. If in the case of a 
sale or purchase a trader for a BlackRock Manager reasonably believes 
it would be injurious to the Client Plan to specify the size of the 
intended trade to certain bidders, a bid on a portion of the intended 
trade may be treated as a firm bid if the trader documents (i) Why the 
bid price is a realistic indication of the economic terms for the 
actual amount being traded despite the difference in the size of the 
actual trade and (ii) why it would be harmful to the Client Plan to 
solicit multiple bids on the actual amount of the trade. If a trader 
for a BlackRock Manager solicits bids from three or more dealers on a 
sale or purchase of a certain volume of Securities, and receives back 
three or more bids, but at least one bid is not for the full amount of 
the intended sale, if the price offered by the partial bidder(s) is 
less than the price offered by the full bidder(s), the trader may 
assume a full bid by the partial bidder(s) would not be the best bid, 
and the trader can consummate the trade, in the case of at least two 
full bids, with the dealer making the better of the full bids, or in 
the case of only one full bid, with the dealer making that full bid.
    LLL. ``Type A Transactions'' means transactions between BlackRock 
Managers on behalf of Client Plans with MPSs which (i) are or were 
continuing transactions within the meaning of section VI(i) of PTE 84-
14 and/or section IV(h) of Prohibited Transaction Exemption 91-38 in 
existence on the date of the Acquisition, and (ii) pursuant to which 
there is no discretion on the part of either party, other than the 
ability of the BlackRock Manager to sell or otherwise transfer the 
Client Plan's position to a third party, or the ability of the MPS to 
sell or otherwise transfer its position to a third party, or

[[Page 50659]]

the ability of the MPS to otherwise terminate the transaction on 
previously specified terms.
    MMM. ``Type B Covered Transactions'' means transactions which meet 
the criteria to be Type A Transactions but which possess the additional 
feature that the BlackRock Manager, on behalf of a Client Plan, has the 
option to terminate the transaction with the MPS on previously 
specified terms.
    NNN. ``Type C Covered Transactions'' means transactions which meet 
the criteria to be Type B Covered Transactions but which possess the 
additional feature that the BlackRock Manager may terminate or modify 
the transaction on behalf of a Client Plan under certain circumstances, 
but only with negotiation and/or payment of consideration to the MPS or 
to the Client Plan which was not predetermined.
    OOO. ``Underwriter Exemption(s)'' means a group of individual 
exemptions granted by the Department to provide relief for the 
origination and operation of certain asset pool investment trusts and 
the acquisition, holding and disposition by plans of Asset-Backed 
Securities representing undivided interests in those trusts. Such group 
of individual exemptions was collectively amended by Prohibited 
Transaction Exemption 2009-31, 74 FR 59001 (Nov. 16, 2009).
    PPP. ``Unwind Period'' shall have the meaning set forth in Section 
II.A.3.(b) of this exemption.
    QQQ. ``Unwind Period 2'' shall have the meaning set forth in 
Section III.W. of this exemption.
    RRR. ``U.S. Bank'' means a bank as defined in section 202(a)(2) of 
the Investment Advisers Act, as amended.
    SSS. ``U.S. Broker-Dealer'' means a broker-dealer registered under 
the 1934 Act or exempted from registration under section 15(a)(1) of 
the 1934 Act as a dealer in exempted government Securities (as defined 
in section 3(a)(12) of the 1934 Act).
    TTT. ``U.S. Collateral'' means:
    (1) U.S. currency;
    (2) ``government securities'' as defined in section 3(a)(42)(A) and 
(B) of the 1934 Act;
    (3) ``government securities'' as defined in section 3(a)(42)(C) of 
the 1934 Act issued or guaranteed as to principal or interest by the 
following corporations: The Federal Home Loan Mortgage Corporation, the 
Federal National Mortgage Association, the Student Loan Marketing 
Association and the Financing Corporation;
    (4) mortgage-backed Securities meeting the definition of a 
``mortgage related security'' set forth in section 3(a)(41) of the 1934 
Act;
    (5) negotiable certificates of deposit and bankers acceptances 
issued by a ``bank'' as that term is defined in section 3(a)(6) of the 
1934 Act, and which are payable in the United States and deemed to have 
a ``ready market'' as that term is defined in 17 CFR 240.15c3-1; or
    (6) irrevocable letters of credit issued by a U.S. Bank other than 
the borrower or an affiliate thereof, or any combination, thereof.
    WWW. ``Violation'' means a Covered Transaction which is a 
prohibited transaction under section 406 or 407 of ERISA, Code section 
4975, or FERSA section 8477(c) and which is not exempt by reason of a 
failure to comply with this exemption or another administrative or 
statutory exemption. To the extent that the non-exempt prohibited 
transaction relates to an act or omission that is separate and distinct 
from a prior otherwise exempt transaction that may relate to the same 
asset (e.g., a conversion of a debt instrument into an equity 
instrument or a creditor's committee for a debt instrument), the 
Violation occurs only at the current point in time and no Violation 
shall be deemed to occur for the earlier transaction relating to the 
same asset (e.g., the initial purchase of the asset) that was otherwise 
in compliance with ERISA, the Code or FERSA.

    Signed at Washington, DC, this 4th day of August, 2011.
Ivan Strasfeld,
Director of Exemption Determinations, Employee Benefits Security 
Administration, U.S. Department of Labor.
[FR Doc. 2011-20344 Filed 8-12-11; 8:45 am]
BILLING CODE 4510-29-P