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

Federal RegisterMar 18, 2011

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DEPARTMENT OF LABOR

Employee Benefits Security Administration

[Application No. D-11588]

Notice of Proposed Exemption; 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:

Notice of proposed exemption.

SUMMARY:

This document contains a notice of pendency before the Department of Labor (the Department) of a proposed 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 proposed transactions involve BlackRock, Inc. and its investment advisory, investment management and broker-dealer affiliates and their successors. The proposed exemption, if granted, would affect 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:

If granted, this proposed exemption will be effective as of December 1, 2009.

Written Comments and Hearing Requests:

All interested persons are invited to submit written comments and/or requests for a hearing on the proposed exemption within forty-five (45) days from the date of the publication of this

Federal Register

Notice. Comments and requests for a hearing should state: (1) The name, address and telephone number of the person making the comment or the request for a hearing and (2) the nature of the person's interest in the proposed exemption and the manner in which the person would be adversely affected by the proposed exemption. A request for a hearing must also state the issues to be addressed at the requested hearing and include a general description of the evidence to be presented at the requested hearing.

ADDRESSES:

All written comments and requests for a public hearing concerning the proposed exemption should be sent to the Office of Exemption Determinations, Employee Benefits Security Administration, Room N-5700, U.S. Department of Labor, 200 Constitution Avenue, NW., Washington, DC 202010,

Attention:

Application No. D-11588. Interested persons are also invited to submit comments and/or hearing requests to the Employee Benefits Security Administration by e-mail or FAX. Any such comments or requests should be sent either to:

moffitt.betty@dol.gov,

or by FAX to (202) 219-0204 by the end of the scheduled comment period. The application for exemption and the comments received will be available for inspection in the Public Documents Room of the Employee Benefits Security Administration, U.S. Department of Labor, Room N-1513, 200 Constitution Avenue, NW., Washington, DC 20210.

Warning:

If you submit written comments or hearing requests, do not include any personally-identifiable or confidential business information that you do not want to be publicly-disclosed. All comments and hearing requests are posted on the Internet exactly as they are received, and they can be retrieved by most Internet search engines. The Department will make no deletions, modifications or redactions to the comments or hearing requests received, as they are public records.

FOR FURTHER INFORMATION CONTACT:

Brian L. Shiker, Office of Exemption Determinations, Employee Benefits Security Administration, U.S. Department of Labor, telephone (202) 693-8552. (This is not a toll-free number.)

SUPPLEMENTARY INFORMATION:

This document contains 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 has been 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 proposed exemption is being issued solely by the Department.

Summary of Facts and Representations

Capitalized terms used but not defined in the Summary of Facts and Representations have the meaning set forth in Section VI of the proposed exemption.

1. 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. The Applicants

together with any other entity presently or subsequently under the direct or indirect control, through one or more intermediaries, of BlackRock and successors of any of the foregoing are referred to herein as the “BlackRock Entities.”

For purposes of this application, references to the “Applicants” include each of the banks, investment advisors and investment managers 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. As of the date hereof, banks, investment advisors and investment managers under the control of BlackRock include, but are 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 BTC (collectively, the BlackRock Managers). “Applicants” also includes broker-dealers presently or subsequently under the direct or indirect control, through one or more intermediaries, of BlackRock.

2. 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, a public limited company

organized under the laws of England and Wales. BTC, as of the date of the Acquisition, is now a wholly-owned subsidiary of BlackRock.

3. The Applicants represent that they are regulated by various federal government agencies such as the SEC and the Office of the Comptroller of the Currency, as well as state government agencies and industry self-regulatory organizations (

e.g.,

the Financial Industry Regulatory Authority or, in the case of some broker-dealers and banks, corresponding foreign regulatory authorities). As with the Applicants, each of (a) Barclays PLC (Barclays), (b) Bank of America Corporation (BOA), (c) The PNC Financial Services Group, Inc. (PNC), and (d) each entity directly or indirectly, through one or more intermediaries, controlling, controlled by or under common control with one or more of Barclays, BOA or PNC

has previously made representations to the Department regarding the significant extent to which they are regulated.

Each of Barclays, BOA and PNC is a “Minority Passive Shareholder” or “MPS,” but, for avoidance of doubt, an MPS does not include any BlackRock Entity.

See

applications associated with PTE 2009-25, 74 FR 45300 (September 1, 2009) (Barclays); PTE 2009-22, 74 FR 45284 (September 1, 2009) (PNC); and proposed exemption for application D-11576, 75 FR 61932 (October 6, 2010) (Bank of America/Merrill Lynch).

The Acquisition

4. There have recently occurred extraordinary circumstances in both the U.S. financial services industry and the global financial services industry. Many entities in the financial services industry have faced severe economic hardship. During this period of upheaval, the recent trend of industry consolidation amongst significant banks, broker-dealers and other providers of financial services has accelerated. For example, BOA became the parent company of the Merrill Lynch Group, Inc. (the Merrill Group) as of January 1, 2009; in September 2008, Barclays Bank PLC (Barclays Bank), a subsidiary of Barclays PLC, acquired most of the U.S. broker-dealer business of Lehman Brothers Holdings Inc.; and, in May 2008, Bear Stearns Companies Inc. was acquired by JPMorgan Chase & Co.

5. In this context, BlackRock, in June 2009, made a binding offer to Barclays pursuant to an Amended and Restated Stock Purchase Agreement by and among BlackRock, Barclays Bank and (for limited purposes) Barclays, which ultimately resulted in the Acquisition. BlackRock completed the Acquisition on December 1, 2009, in exchange for an aggregate of 37,566,771 shares of BlackRock common stock and participating preferred stock (which ownership is discussed in more detail below) and approximately $6.6 billion in cash. Barclays' decision to enter into the Acquisition was based upon a variety of factors that Barclays stated would be beneficial to its shareholders, including the creation of material economic exposure to a highly competitive global asset manager.

6. Prior to the Acquisition, PNC, indirectly through its subsidiary PNC Bancorp, Inc. (PNC Bancorp), held an approximately 31.9% economic interest and an approximately 43.2% voting interest in BlackRock. BOA, through its (indirect) wholly-owned subsidiary the Merrill Group, held an approximately 48.3% economic interest and approximately 4.6% voting interest in BlackRock. Immediately following the Acquisition, the MPS ownership was as follows:

(a)

Bank of America/Merrill Group.

The Merrill Group owned approximately 3.7% of BlackRock voting common stock and approximately 34.2% of BlackRock equity by value, consisting of Series B Non-Voting Preferred Stock

in addition to the voting common stock held. The Merrill Group also owned (and owns) the equity of the Merrill brokerage firms (including Merrill Lynch, Pierce, Fenner & Smith Incorporated) and other financial service providers, which firms are owned down different chains of ownership from the Merrill Group's stake in BlackRock. The Merrill Group is 100% owned by Merrill Lynch & Co. Inc. (the former publicly traded holding company), which in turn is 100% owned by BOA, the publicly traded overall Bank of America holding company. BOA owns Bank of America, N.A. down a different ownership chain from the Merrill Group-BlackRock ownership chain.

Series B Non-Voting Preferred Stock provides for the same economic rights as BlackRock common stock, but it is non-voting. The Series B Non-Voting Preferred Stock is automatically converted to common stock when transferred to a third party.

(b)

PNC Ownership Interest.

PNC Bancorp owned approximately 35.2% of BlackRock voting common stock and approximately 24.5% of BlackRock equity by value, consisting of Series B, C and D

Non-Voting Preferred Stock. PNC Bancorp owned (and owns) PNC Bank, N.A. down a different chain of ownership. PNC Bancorp is wholly-owned by PNC, the publicly traded overall PNC holding company.

Series C Non-Voting Preferred Stock provides for the same terms as Series B Non-Voting Preferred Stock, except that it (a) has a liquidation preference of $40 per share as opposed to $.01 for Series B Non-Voting Preferred Stock, (b) is only convertible to common stock upon the termination of a Share Surrender Agreement between BlackRock, and (c) can only be transferred to BlackRock pursuant to such Share Surrender Agreement. Series D Non-Voting Preferred Stock provides for the same terms as Series B Non-Voting Preferred Stock and was automatically converted to Series B Non-Voting Preferred Stock on January 31, 2010.

(c)

Barclays Ownership Interest.

Barclays BlackRock Holdings, S.a.r.l. (Barclays Luxembourg), a wholly-owned Luxembourg subsidiary of Barclays Bank, owned approximately 4.8% of BlackRock voting common stock and approximately 19.8% of BlackRock equity by value, consisting of Series B Non-Voting Preferred Stock and Series D Non-Voting Preferred Stock in addition to the voting common stock. Barclays Bank is a 100% owned subsidiary of Barclays PLC, the publicly traded Barclays holding company.

On November 17, 2010, Barclays Luxembourg transferred approximately ninety nine percent (99%) of its BlackRock voting common stock and approximately ninety nine (99%) of its Series B Non-Voting Preferred Stock to Lapis (Gers Investments) LP, a newly-formed Delaware limited partnership and an indirect subsidiary of Barclays Bank PLC.

7. Post-Acquisition, a secondary offering of BlackRock common stock was completed on November 15, 2010, by the Merrill Group and PNC Bancorp (the Secondary Offering). BlackRock's ownership structure following the Secondary Offering was as follows: (a) The Merrill Group owned 0% of BlackRock's voting common stock and approximately 7.1% of BlackRock's equity by value, consisting of Series B Non-Voting Preferred Stock; (b) PNC Bancorp owned approximately 25.3% of BlackRock's voting common stock and approximately 20.3% of BlackRock's equity by value, consisting of Series B and C Non-Voting Preferred Stock in addition to the voting common stock held; and (c) Barclays Bank owned approximately 2.3% of BlackRock's voting common stock and approximately 19.7% of BlackRock's equity by value, consisting of Series B Non-Voting Preferred Stock in addition to the voting common stock held.

8. Immediately following the Acquisition, the approximately 56.3% of BlackRock's voting common stock not owned by the MPSs (representing an approximately 21.5% economic interest in BlackRock) was beneficially owned by the employees of BlackRock and retail and institutional investors unrelated to BlackRock or an MPS. Immediately following the Secondary Offering, the approximately 72.4% of BlackRock's voting common stock not owned by the MPSs (representing an approximately 52.9% economic interest in BlackRock) was beneficially owned

by the employees of BlackRock and retail and institutional investors unrelated to BlackRock or an MPS.

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. The Stockholder Agreements also contemplate a reduction in the number of Board seats which an MPS is entitled to designate to one upon the MPS' interest falling below a ten percent (10%) equity interest for ninety (90) consecutive days, and to zero upon the MPS' interest falling below a five percent (5%) equity interest for ninety (90) consecutive days. The Board may waive this provision. As a result of the Secondary Offering, the Merrill Group fell below a ten percent (10%) equity interest, and, assuming that it remains below this level, the Merrill Group lost the right to identify to BlackRock one representative director on or about February 13, 2011 (the Merrill Director Reduction). It is anticipated that the Board will not waive the Merrill Director Reduction.

At least 10 of the current 19 directors must be “independent” (within the meaning of New York Stock Exchange (NYSE) 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,

must consist of independent directors. With limited exceptions, all decisions of any committee of the Board require the presence of a majority of the directors at a meeting at which a quorum is present. 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 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.

Section 303A.01 of the NYSE Listed Company Manual requires listed companies to have a majority of independent directors. Although an exception is made for companies controlled by a group of shareholders, the Stockholders Agreements among BlackRock and the MPSs preclude the MPSs from becoming part of any such group. BlackRock represents that the Board must include a minimum of fourteen (14) directors total, which minimum would be applicable only if one or more of the MPSs has its equity stake drop to the point where it loses the ability to identify representative BlackRock directors, due to the interplay of the Shareholders Agreements and NYSE rules.

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.

Pursuant to the BOA Stockholder Agreement, the following significant actions would require BOA's consent: (a) Certain amendments to the certificate of incorporation or bylaws; (b) entering into certain regulatory settlements with specified adverse consequences to BOA; (c) amending or modifying the PNC Stockholder Agreement in a manner that would be viewed as materially adverse to BOA or materially more advantageous to PNC, and (d) any voluntary bankruptcy filing by BlackRock. Pursuant to the PNC Stockholder Agreement, the following significant actions would require approval by two-thirds of all directors or all of the independent directors: (a) Appointment of a new Chief Executive Officer; (b) certain major acquisitions, divestures or share issuances; (c) amendments to the certificate of incorporation or bylaws applicable to BlackRock; and (d) any amendment, modification or waiver of any obligation of another significant stockholder pursuant to a stockholder agreement with such significant stockholder. Further, the PNC Stockholder Agreement provides that the following actions would require the consent of PNC: (a) Certain major acquisition or divestitures; and (b) the same matters for which BOA has a consent right as described previously. Pursuant to the Barclays Stockholder Agreement, the following significant actions would require the consent of Barclays: (a) Amending the certificate of incorporation or bylaws in a manner that would in any material respect adversely change the powers or preferences of any capital stock; (b) entering into certain regulatory settlements with specified adverse consequences to Barclays and (c) any voluntary bankruptcy of BlackRock.

In addition, the respective Stockholder Agreements provide for the following additional restrictions on the ability of an MPS to control BlackRock or any BlackRock Manager:

(a)

Standstill Agreements.

The Stockholder Agreements cap the MPSs' ownership interest in BlackRock's capital stock at certain prescribed levels of voting power on an issued and outstanding basis, and economic interest on a fully diluted basis, and they generally restrict each MPS from purchasing additional stock if doing so would cause its respective interests in BlackRock to exceed the applicable ownership cap.

The following are the caps on voting interests: BOA = 4.9%; PNC = 49.9%; and Barclays = 4.9%. The following are the caps on economic interest: BOA = 9.9%; PNC = 38%; and Barclays = 19.9%.

(b)

Transfer Restrictions.

The Stockholder Agreements include limitations on the transfer of an MPS' BlackRock capital stock, and provide for a right of first refusal in BlackRock's favor should the MPS desire to sell its BlackRock capital stock privately.

(c)

Arm's Length Business Relationships.

The MPSs and BlackRock conduct business on a competitive basis, including executions and other services for the clients of each. Under the Stockholder Agreements, any new material transaction between BlackRock or its affiliates and an MPS or its affiliates not in the ordinary course of business on behalf of clients or not pursuant to a policy, transaction or agreement (or form of agreement) previously approved must generally be approved by a majority of the BlackRock directors (other than the directors designated by the applicable MPS).

Requested Relief

9. Given the unique nature of the BlackRock ownership structure following the Acquisition, the Applicants believe that no MPS should be regarded for ERISA purposes as an “affiliate” of BlackRock or any BlackRock Manager because the Applicants believe that no MPS, alone or with another MPS, will be in a position to “control” BlackRock. In addition to the BlackRock ownership structure itself preventing MPS control of BlackRock, the Stockholder Agreements provide several important safeguards to mitigate the possibility of an MPS exerting any form of control that might otherwise raise concerns under ERISA. In particular, the standstill agreements, transfer restrictions and arm's length business relationship provisions are designed to ensure that BlackRock maintains its independence. Even if the MPSs wished to act together to control BlackRock, BlackRock believes that the MPSs would not be able control BlackRock because the Stockholder Agreements mandate that each MPS vote its BlackRock shares in accordance with the recommendations of the Board, which is dominated by persons other than MPS nominees. Lastly, the MPSs are competitors in the financial services industry, and as such, concerted action among the MPSs is extremely unlikely.

10. Nevertheless, the Applicants represent that when a BlackRock

Manager is a fiduciary with investment discretion with respect to a Client Plan,

and the BlackRock Manager is deciding whether to enter into a Covered Transaction

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). The Applicants note that the Department's regulation at 29 CFR 2550.408b-2(e)(1) provides that “[a] person in which a fiduciary has an interest which may affect the exercise of such fiduciary's best judgment as a fiduciary includes, for example, a person who is a party in interest by reason of a relationship to such fiduciary described in section 3(14)(E), (F), (G), (H), or (I)” of ERISA. ERISA section 3(14)(H) provides that a 10% or more shareholder of a service provider (which may include a plan fiduciary) is a party in interest to the plan in question by reason of that relationship to the service provider. Accordingly, the Applicants seek relief from the prohibitions of ERISA section 406(b) to cover the Covered Transactions described hereinafter. Further, if BlackRock Entities and one or more MPS are deemed affiliates, and because each MPS and its affiliates are very likely parties in interest within the meaning of ERISA section 3(14) with respect to many Client Plans, the Applicants also seek relief from the prohibitions of ERISA section 406(a) with respect to such Covered Transactions. Specifically, many prohibited transaction class exemptions from ERISA section 406(a) require as a condition for relief that the plan fiduciary and the party in interest not be “affiliates.” Although the Applicants believe that no MPS should be regarded for ERISA purposes as an “affiliate” of BlackRock, the Applicants desire the certainty of relief which the proposed exemption would provide if Covered Transactions are entered into in conformance therewith. The Applicants, however, are seeking relief with respect to BOA only until the day after the effective date of the Merrill Director Reduction.

“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, as defined in Section VI of the proposed exemption, except where specified to the contrary.

“Covered Transaction” means each transaction set forth in Section III of the proposed exemption by a BlackRock Manager for a Client Plan with or involving, directly or indirectly, an MPS and/or a BlackRock Entity.

11. As discussed above, there have recently occurred extraordinary circumstances in both the U.S. and the global financial services industry. Many entities in the financial services industry have faced severe economic hardship. During this period of upheaval, the trend of industry consolidation amongst significant banks, broker-dealers and other providers of financial services has accelerated. Thus, it is the Applicants' belief that each MPS' involvement in financial services has expanded at the same time as the number of participants in the capital markets has declined. As a result, the Applicants believe that the failure to obtain exemptive relief proposed herein would deny Client Plans access to a significant portion of the financial markets and that such denial would unduly harm Client Plans and their participants and beneficiaries.

12. The Applicants request that the proposed exemption provide relief for 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.

Structure of Relief

13. The structure of the Applicants' requested relief is founded upon compliance with five sets of general conditions. The five sets of general conditions are: (a) Modified conditions derived from PTE 84-14, as amended (sometimes referred to as the QPAM Exemption);

(b) restrictions on the compensation of BlackRock Managers and their employees; (c) the establishment and implementation of certain policies and procedures (the Exemption Polices and Procedures or EPPs); (d) the appointment by BlackRock of an Exemption Compliance Officer (ECO); and (5) the retention by BlackRock of an Independent Monitor (IM). 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 the BlackRock Managers 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.

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

14. In addition to the general conditions, each Covered Transaction has its own set of additional 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 Managers 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.

15. With respect to the relief for all Covered Transactions described herein, Section II of the proposed exemption provides that the following general safeguards must be met:

Section II.A—Compliance with the QPAM Exemption.

With certain exceptions, the conditions for relief under Part I of PTE 84-14 must be satisfied with respect to each Covered Transaction.

Compliance with the QPAM Exemption conditions, as modified, is intended to assure that BlackRock Managers will be independent of the MPSs with which they enter into transactions. These conditions impose, among other requirements, the requirement that there be no agreement, arrangement or understanding designed to benefit an MPS, and the requirement that the terms of the Covered Transaction be at least as favorable to the Client Plans as the terms generally available in arm's length transactions between unrelated parties. Each BlackRock Manager utilizing the requested relief must meet the definition of a “qualified professional asset manager” as described in Section VI(a) of the QPAM Exemption, and each Covered Transaction must satisfy the

conditions described in the following paragraphs.

The QPAM Exemption may not be relied upon for securities lending.

See

Section I(b)(1) of the QPAM Exemption. However, for purposes of this proposed exemption, securities lending constituting Covered Transactions involving an MPS must comply with the QPAM Exemption conditions set forth in Section II.A. of the proposed exemption as well as the specific conditions (modeled on PTE 2006-16, 71 FR 63786 (October 31, 2006)) set forth in Section III.M. of the proposed exemption.

With certain exceptions discussed in the descriptions of the Covered Transactions, Section II.A.2. of the proposed exemption provides that, at the time of a Covered Transaction with or involving an MPS, the MPS, or its affiliate (within the meaning of section VI(c) of the QPAM Exemption),

must not have the authority to appoint or terminate the BlackRock Manager as a manager of the Client Plan assets involved in the Covered Transaction, or 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. Under Section II.A.3(a), notwithstanding the foregoing, in the case of an investment fund 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 the foregoing condition if the assets of a Client Plan on behalf of which the MPS or its affiliate possesses the authority described above and which is 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) 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 (this rule is referred to herein as the 10% Rule).

For the avoidance of doubt, no BlackRock Entity will be regarded as an affiliate of an MPS for these purposes.

In this regard, the Applicants represent that, in certain cases, as of the date of the Acquisition, assets of MPS Plans, whether or not combined with the assets of other plans of the same employer, represented ten percent (10%) or more of a BTC bank collective trust fund. These investments in the BTC bank collective trust fund, at the time they were made or authorized, were selected by fiduciaries of MPS Plans (or participants therein) as being in the interests of the MPS Plans and their participants and beneficiaries when no relationship existed between BlackRock and the MPSs in question that might be viewed as affecting the best judgment of the fiduciaries of the MPS Plans. While the appropriate fiduciary of these Client Plans, rather than the MPS itself, appointed the BlackRock Manager by investing or permitting investment in the bank collective trust fund, the Applicants nevertheless desire certainty that Section II.A.2. of this proposed exemption will be deemed to be met during the an unwind period that shall last until July 1, 2010 (the Unwind Period). There were practical obstacles to otherwise achieving compliance with the ten percent (10%) limitation in a shorter time frame, such as the need of the MPS Plans for sufficient time to adequately explore replacement investment managers. During the Unwind Period, such MPS Plans would be deemed for purposes of the proposed exemption to satisfy the 10% Rule if certain conditions are met; such conditions focus on fees paid by MPS Plans to BlackRock Managers during the Unwind Period, the termination provisions of the MPS Plans' investments in the Pooled Fund, and the IM's oversight of the terms of the investments in the Pooled Fund.

For purposes of Section I.A.3.(b) of the proposed exemption and for the 10% Rule set forth in Sections III.I., III.L., III.M. and III.U. of the proposed exemption, 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).

The remaining conditions of Section II.A. of the proposed exemption generally track conditions set forth in Sections I(c)-I(g) of the QPAM Exemption, with an exception for the condition set forth in Section I(d) of the QPAM Exemption because MPSs are deemed not “related to” BlackRock for purposes of the proposed exemption.

For the avoidance of doubt, MPSs are excluded from the terms “affiliate” and “owner” for purposes of Section II.A. of the proposed exemption.

Section II.B.—Compensation Restrictions.

The Applicants recognize that an unrestricted ability for employees of BlackRock to receive compensation in connection with the Covered Transactions could give rise to potential ERISA conflicts. In order to address this potential for conflicts, the Applicants will agree that no employees of a BlackRock Manager can 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 must be ignored by BlackRock and BlackRock Managers for compensation purposes. None of the employees of BlackRock or a BlackRock Manager can 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 of 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.

Section II.C.—Exemption Policies and Procedures.

The Applicants recognize that in order for BlackRock to successfully manage and monitor Covered Transactions, the establishment of systematic policies and procedures is essential. The proposed exemption requires that BlackRock adopt and implement Exemption Policies and Procedures (EPPs), as defined in the proposed exemption, that address each of the Covered Transactions and that are reasonably designed to achieve the goals of: (a) Compliance with the terms of the exemption, (b) ensuring BlackRock's decisionmaking with respect to the Covered Transactions on behalf of Client Plans is done in the interests of the Client Plans and their participants and beneficiaries and, (c) to the extent possible, verifying that the terms of such Covered Transactions are at least as favorable to Client Plans as the terms generally available in arm's length transactions with unrelated parties. The EPPs are to be developed with the cooperation of both the ECO and the 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 fall into three categories: (a) transgressions that constitute prohibited transactions under ERISA sections 406, Code section 4975, or FERSA section 8477(c) and which are not exempt by reason of a failure to comply with the proposed exemption or another administrative or statutory exemption (referred to herein as Violations), (b) transgressions that involve material amounts or material deviations from the EPPs, taking into account the amount of Client Plan assets affected by such transgressions (EPP Corrections), but that do not constitute Violations, and (c) transgressions that involve immaterial amounts and deviations from the EPPs and do not constitute Violations. The ECO will make a written determination as to whether such transgressions constitute Violations and require corrective action pursuant to Section V of the proposed exemption, require EPP Correction, or

require no action. If the ECO determines a Violation has occurred, the provisions of Section V of the proposed exemption are applicable. If the ECO determines an EPP Correction is required, the ECO will provide written notice to the IM of the EPP Correction and the IM would have the authority to mandate further corrective action. The ECO will provide summaries for the IM of any such EPP Corrections as part of the required quarterly report.

To illustrate the implementation of the rules with respect to the three categories outlined above, the Applicants have provided the following hypothetical examples.

(a) Hypothetical Example One: A portfolio manager (PM) at a BlackRock Manager purchases Barclays common stock on the secondary market on behalf of several Client Plan portfolios, which if such purchases were below fifteen percent (15%) of the aggregate average daily trading volume (ADTV) for the previous ten trading days or below fifteen percent (15%) of the trading volume on the day of the purchase would otherwise appear to satisfy the criteria for relief under Section III.S. of the proposed exemption. The PM fails to aggregate the purchases of all of the accounts, and it purchases 15.2% of the ten trading day ADTV (which is also higher than the day in question's volume), thereby exceeding fifteen percent (15%) of both the ten day ADTV and the trading volume on the day of the transactions. As a result, they are no longer eligible for purchase under Section III.S. of the proposed exemption. Unless timely corrected under Section V of the proposed exemption, the purchase would constitute a Violation.

(b) Hypothetical Example Two: A PM at a BlackRock Manager purchases Barclays common stock on the secondary market on behalf of several Client Plan portfolios. The PM purchases an amount of Barclay stock equal to thirteen percent (13%) of the ten trading day ADTV. In order to simplify a compliance monitoring process that oversees three separate trading desks, the EPPs provide that purchases with respect to certain groups of portfolios be limited to purchases of MPS stock that equal no more than five percent (5%) of the ten day ADTV, unless approved in advance by the ECO. The purchases are made and no Violation has occurred because BlackRock is well below fifteen percent (15%) of the ten trading day ADTV, but there has been a serious transgression of the EPPs in that the PM failed to adhere to the carefully designed EPPs. Assuming for these purposes no mitigating further circumstances, the ECO Function would make a determination of an appropriate EPP Correction, including whether the implicated Client Plans would be better served by keeping or selling the securities acquired. The ECO would provide written notice to the IM of the EPP Correction. The IM would have the authority to mandate further corrective action.

(c) Hypothetical Example Three: The circumstances of the Barclays stock purchase are essentially the same as those in Hypothetical Example Two, except the PM at the BlackRock Manager in question, when he checks his trade list and aggregates the total percentage of Barclays stock to be purchased, issues instructions to cancel enough of the proposed purchase to bring it below five percent (5%). However, through inadvertence of the broker, the cancellation is not implemented and the full thirteen percent (13%) purchase is made of Barclays stock. There is no Violation, the original purchase order was a transgression of the EPPs, and correction may or may not be necessary depending on the circumstances, including why it was that the original purchase order was given and why it was the cancellation was not effected.

Section II.D.—Exemption Compliance Officer.

In order to comply with the proposed exemption, the Applicants represent that it is essential to appoint an ECO and an ECO Function.

The ECO and the ECO Function will be developed and maintained by BlackRock to monitor compliance with the Code, ERISA, FERSA and the proposed exemption. The use of a dedicated ECO is more advantageous than simple reliance upon the Applicants' existing compliance department because the ECO will have a single focus on ERISA compliance as well as the expertise to ensure such compliance. In addition, the ECO and the ECO Function provide a centralized resource that is well suited to providing and receiving information to and from the IM (as discussed below).

“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.

The proposed exemption requires that BlackRock appoint an ECO. 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. The ECO is a professional with at least ten years of experience and extensive knowledge of the regulation of financial services and products, including such regulation under ERISA and FERSA.

The conditions of Section II.D. of the proposed exemption govern the ECO's employment with BlackRock, including compensation, termination, treatment and responsibilities. The responsibilities set forth in Section II.D. of the proposed exemption generally include, but are not limited to: Monitoring Covered Transactions (including transactions and situations resulting from transactions with MPSs), monitoring compliance with the EPPs, determining whether corrective action, if any, is necessary with respect to Violations and EPP Corrections, determining whether revisions are necessary to the EPPs, the supervision of the ECO Function, the provision of a quarterly report to the IM, and the provision of certain certifications to the IM.

Section II.E.—Independent Monitor.

The applicant represents that the ECO and the ECO Function alone may not be sufficient to completely avoid potential conflicts of interests. Conversely, the Applicants also believe that a wholly independent third party alone would not be able to efficiently or effectively monitor and oversee all of the relevant BlackRock activities. Therefore, BlackRock will appoint an IM that will provide an independent perspective, be capable of making independent decisions when necessary, and, to the extent any Violations occur or corrections are necessary, pass upon the same without any risk of self-interested motives that could be perceived if the ECO alone were to be responsible for making such decisions. The IM serves some of the same functions that a Qualified Professional Asset Manager might under similar circumstances but, as discussed above, due to the unique nature and complexities of the requirements contained in the proposed exemption, reliance upon the IM alone, without the support of the ECO and the ECO Function (and the EPPs) would be inadequate. The Applicants believe that the ECO, the ECO Function and the IM together will complement each other in serving their respective roles and combine, through frequent communication and coordination, to provide the necessary compliance regime.

The proposed exemption, therefore, requires that BlackRock retain an IM. 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 agrees in writing to serve as IM, and he or she is independent within the meaning of the proposed exemption.

The conditions of Section II.E. of the proposed exemption set forth the IM's responsibilities. The IM's responsibilities generally include, but are not limited to, the following: approval of the ECO and his or her compensation, assistance in the development, alteration and monitoring of the EPPs, consulting with the ECO regarding EPP Corrections and Violations (including modifications regarding such), exercising discretion for Client Plans when BlackRock Managers may have conflicts, reviewing the ECO's quarterly reports and certifications, determining whether a pattern or practice of BlackRock non-compliance exists, and the completion of an annual report.

Section II.F.—Special Notice Provisions.

As an added safeguard to affected Client Plans, the proposed exemption requires specific disclosure to a plan fiduciary independent of BlackRock with respect to certain Covered Transactions. Such additional disclosure makes the provision of exemptive relief for certain Covered Transactions consistent with existing exemptive relief regimes. In that vein, a Special Notice containing (a) a notice of all of the conditions for relief under Sections III.C., E., F., G., Q., R., S. and V. of the proposed exemption and (b) a copy of the Notice to Interested Persons, 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. of the proposed exemption by the applicable BlackRock Manager on reasonable request; provided, that, solely for purposes of this provision, the fiduciary of an In-House Plan is not required to be independent of any BlackRock Entity.

Covered Transactions

16. As discussed above, the structure of the requested relief is founded upon compliance with five sets of general conditions. These five sets of general conditions are then modified by additional conditions deemed suitable for each Covered 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. Section III of the proposed exemption sets forth the Covered Transactions for which the Applicants are seeking exemptive relief and the conditions which must be satisfied in respect of such Covered Transactions in order to be accorded such relief. Each Covered Transaction is set forth below, corresponding to the subsections of Section III of the proposed exemption.

A. Continuing Covered Transactions

17. The Applicants represent that as of the closing date of the Acquisition, there were three types of continuing Covered Transactions still in place which were previously entered into between BlackRock Managers and one or more of the MPSs in reliance on PTE 84-14 (the QPAM Exemption) and/or PTE 91-38

(a class exemption for transactions entered into on behalf of bank collective trust funds), with such transactions relying upon the continuing transaction provisions therein (

i.e.,

Section VI(i) of the QPAM Exemption and Section IV(h) of PTE 91-38). The three types of continuing transactions (Continuing Covered Transactions) are defined in the proposed exemption as Type A, Type B and Type C.

56 FR 31966 (July 12, 1991), as corrected at 56 FR 59299 (Nov. 25, 1991).

18. The three types of Continuing Covered transactions can be described as follows:

(a)

Type A:

Continuing Covered transactions where 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, the ability of the MPS to sell or otherwise transfer its position to a third party, or the ability of an MPS to otherwise terminate the transaction on previously specified terms. This could include, for example, the holding by a Client Plan of a corporate debt instrument issued by an MPS, which the BlackRock Manager may sell on behalf of a Client Plan or which the MPS may redeem. Another example is a commercial mortgage loan made to a Client Plan by an MPS that does not include a prepayment provision, which loan the MPS might sell to a third party.

(b)

Type B:

Continuing Covered Transactions such as those described as Type A, with 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. This could include a note issued by an MPS which the BlackRock Manager, on behalf of a Client Plan, has the ability to sell to a third party, or could choose to “put” back to the MPS on previously specified terms.

(c)

Type C:

Continuing Covered Transactions similar to Type B where 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. An example of such a Transaction could include a swap between a Client Plan and an MPS with a fixed term, under which the BlackRock Manager can seek novation to a third party if the MPS consents (perhaps for a price, for example, to reflect any credit differences between the selling Client Plan and the buyer), or which the BlackRock manager can terminate at any time if there is agreement on the termination payments.

The Applicants represent that each continuing Covered Transaction was believed to be in the interests of Client Plans and their participants and beneficiaries as of the date entered into.

19. With respect to Type A Covered Transactions in reliance on PTE 84-14 or PTE 91-38, the Applicants' position is that relief for any prohibited transaction that might arise under ERISA section 406(a) should continue to be available, if such relief applied pre-Acquisition, whether or not needed, pursuant to Section VI(i) of PTE 84-14 and Section IV(h) of PTE 91-38, the “continuing transactions” provisions of the exemptions, until or unless a modification, renewal or other discretionary action becomes necessary. The Department has previously concurred with a similar analysis of the “continuing transaction” provisions of PTE 84-14 and 91-38 in the Notice of Proposed Exemption with respect to PTE 2009-11.

However, the Department additionally noted that no relief is provided from ERISA section

406(b) for an act of self-dealing that arises if circumstances change during the course of the continuing transaction.

73 FR 63200, 63204 (Oct. 23, 2008).

20. With respect to Type B and Type C Continuing Covered Transactions, and the unwind, settlement or other termination thereof, ERISA section 406(a) and 406(b) relief is afforded under the proposed exemption, subject to the conditions outlined below. In conjunction therewith, the Applicants' position is that the provision of the exemptive relief from ERISA sections 406(a) and (b) for Type B and Type C continuing Covered Transactions does not necessarily mean that ERISA section 406(a) relief was not available for at least some of these Continuing Covered Transactions under PTE 84-14 or PTE 91-38. The Applicants acknowledge, however, that the Department is expressing no view as to whether such relief was otherwise available.

21. A list of all Type B Covered Transactions and all Type C Covered Transactions (B and C List) as of the Acquisition must be prepared and provided to the ECO and the IM. Any discretionary act by a BlackRock Managers with respect to a transaction on the B and C List must be approved in writing in advance 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 the action are in the interests of the affected Client Plans. 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. The ECO Function must send 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 the 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. Upon the determination by the IM that an action taken with respect to a Type B Covered Transaction or a 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 will be 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

22. The MPSs are significant issuers of Fixed Income Obligations

both in the United States and in the United Kingdom. The Applicants represent that BlackRock Managers in their normal course may determine that an investment for Client Plans in Fixed Income Obligations newly issued by an MPS will be a beneficial investment for Client Plans. In the case of Index Funds or Model-Driven Funds, BlackRock Managers will need to make purchases of MPS Fixed Income Obligations for Index Funds for purposes of tracking the relevant Index, and for Model-Driven Funds for purposes of tracking the relevant Model. The Applicants represent that the purchase of such MPS Fixed Income Obligations for Index Funds or Model-Driven Funds in the primary market may be the best way to acquire such Fixed Income Obligations. The purchase of such Fixed Income Obligations, however, may convey an economic benefit on the issuing MPS, and establishes a debtor-creditor relationship. In addition, if an MPS is a member or manager of the selling syndicate, the purchase might convey an economic benefit on such MPS.

For purposes of the proposed exemption, Fixed Income Obligations is a defined term generally meaning fixed income obligations characterized as debt pursuant to 29 CFR 2510.3-101 (other than loans with respect to which an MPS is the entity which acts as lead lender and other than Asset-Backed Securities).

23. The Applicants represent that: (a) Each BlackRock Manager makes investment decisions on behalf of, or renders investment advice to, its Client Plans in accordance with the governing document of the particular Client Plan and the guidelines and objectives established in the relevant trust agreement or investment management or advisory agreement; (b) a decision to invest in a particular offering of Fixed Income Obligations is made on the basis of price, value, and a Client Plan's investment criteria; (c) a BlackRock Manager has little incentive to make purchases from offerings in which an MPS is an issuer that are not in the interests of a Client Plan because the BlackRock Manager's compensation for its services is generally based upon assets under management; and (d) if the assets under its management do not perform well, the BlackRock Manager will over time receive less compensation and could lose clients.

The Applicants' representations in this regard are equally applicable to other Covered Transactions.

24. In order for relief under the proposed exemption to be available for this transaction, such purchase and holding must be 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 may not exceed the purchase amount necessary for such Model or quantitative conformity. In addition, such purchase shall not be made from any MPS and no BlackRock Entity shall be in the selling syndicate. Furthermore, the responsible BlackRock Manager must notify 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 (

e.g.,

participation in a creditor's committee, exercise of a put, waiver of covenants or other substantially similar actions), and the BlackRock Manager must comply with decisions of the ECO regarding the taking, or the refraining from taking, of actions in such circumstances. After the purchase, any decision regarding the conversion of an MPS Fixed Income Obligation into equity in the MPS must be 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

25. Because the MPSs are significant issuers of Fixed Income Obligations in the United States and the United Kingdom, the Applicants represent that BlackRock Managers in their normal course may determine that an investment in a new offering of Fixed Income Obligations issued by an MPS will be a beneficial investment for Client Plans in an account or a pooled fund which is not an Index Fund or Model-Driven Fund (an Other Account or Fund). As stated above, the purchase of such Fixed Income Obligations, however, may convey an economic benefit on the issuing MPS, and establishes a debtor-creditor relationship. In addition, if an MPS is a member or manager of the selling

syndicate, the purchase might convey an economic benefit on such MPS.

26. In order for relief under the proposed exemption to be available for this transaction, such purchase and holding must satisfy the conditions of Section IV.A. (Affiliated Underwritings) of the proposed exemption, except that for purposes of the ratings requirement described therein, 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. In addition, such purchase must not be made from an MPS and no BlackRock Entity can be in the selling syndicate.

27. After purchase, the responsible BlackRock Manager must notify 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 the BlackRock Manager must comply with decisions of the ECO regarding the taking, or the refraining from taking, of actions in such circumstances. After purchase, any decision regarding conversion of an MPS Fixed Income Obligation into equity in the MPS must be made by the IM.

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

28. Because the MPSs and their affiliates are significant issuers of Fixed Income Obligations in the United States and the United Kingdom, the Applicants represent that BlackRock Managers in their normal course may determine that a secondary market investment for Client Plans in Fixed Income Obligations issued by an MPS will be a beneficial investment for Client Plans. The Applicants further represent that BlackRock Managers in the normal course may determine that the purchase from or sale to an MPS in the secondary market of third party Fixed Income Obligations will be beneficial investments for Client Plans. The MPSs are significant participants in the fixed income markets as broker-dealers and offer significant sources of trading liquidity to investment managers. Furthermore, multiple MPSs are often ranked in the top five counterparties in the debt markets in the aggregate as well as many asset classes and geographies. A leading 2008 survey (completed before Barclays/Lehman and BOA/Merrill Group acquisitions) of investment managers ranking the quality of fixed income broker-dealers ranked Bank of America, Barclays, Lehman Brothers, and Merrill Lynch in the top 10 broker-dealers.

Greenwich Associates, Leading Dealers (2008).

29. While purchases of Fixed Income Obligations in the secondary market convey no economic benefit on the issuing MPS, a debtor-creditor relationship is still established thereby. Also, such a purchase from an MPS may be a prohibited transaction in and of itself, requiring exemptive relief.

30. The Applicants state that obtaining the best available purchase or sales price for a particular trade presents special challenges in the fixed income markets, which trade a very large array of different Fixed Income Obligations with specific features, including some Fixed Income Obligations issued in relatively small numbers and/or in which markets are made by only a small number of dealers. The diminution in the number of market makers due to the recent exit of several major participants from the financial services industry through bankruptcies or acquisitions has heightened these challenges. Accordingly, the Applicants represent that purchases and sales to or from an MPS will be done in compliance with the Three Quote Process,

which will demonstrate that the MPS provides the best available purchase or sale price for the Fixed Income Obligation being traded.

As defined in the proposed exemption, “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 may 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 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 ten (10) year treasury bond, dealer 2 might quote 52 bps above the yield of the ten (10) year treasury bond and dealer 3 might quote 53 bps above the yield of the ten (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 (a) 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 (b) 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.

31. In order for relief under the proposed exemption to be available for this transaction, the following additional conditions are applicable solely to the extent that the Fixed Income Obligations are issued by an MPS and are purchased and held by a BlackRock Manager for a Client Plan: (a) The purchase of the Fixed Income Obligation issued by an MPS is not made from the issuing MPS; (b) after purchase, the responsible BlackRock Manager must notify 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 must comply with the decisions of the ECO regarding the taking, or the refraining from taking, of actions in such circumstances; (c) after purchase, any decision regarding conversion of an MPS Fixed Income Obligation into equity in the MPS must be made by the IM; and (d) if purchased for an Index Account or Fund, or a Model-Driven Account or Fund, such purchase must be 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 may not exceed the purchase amount necessary for such Model or quantitative conformity.

32. 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 of any action (

e.g.,

instituting legal action for breach of representation) by the responsible BlackRock Manager which could have a material positive or negative effect upon the MPS must be decided upon by the ECO. For purposes of this Covered Transaction, Asset-Backed Securities,

as defined in the proposed exemption, are not Fixed Income Obligations.

As defined in the proposed exemption, 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 (a) a single or multi-family residential or commercial mortgage investment trust, (b) a motor vehicle receivable investment trust, or (c) 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 the proposed exemption, Asset-Backed Securities are treated as debt Securities.

E. Purchase in an Underwriting and Holding by BlackRock Managers of Fixed Income Obligations Issued by a Third Party When an MPS is Underwriter, Manager or Member of the Selling Syndicate, or a Debt Trustee

33. The Applicants represent that BlackRock Managers in their normal course may determine that an investment in a new offering of third-party Fixed Income Obligations where an MPS is an underwriter, manager or member of the selling syndicate and/or where an MPS is the debt trustee will be a beneficial investment for Client Plans. As discussed above, the purchase of Securities in an offering when an MPS is a member or manager of the syndicate might convey an economic benefit on such MPS. In addition, if an MPS is a debt trustee of such Securities, the purchase might enable such MPS to earn a fee, or earn a larger fee.

The Department has issued individual exemptions for situations where an asset manager purchases securities in an underwriting and an affiliate is trustee of the issuer.

See, e.g.,

PTE 2003-24, granted to Deutsche Bank AG and JPMorgan Chase Bank, 68 FR 48637 (August 14, 2003).

34. The Applicants estimate that the majority of the syndicated offerings that they review as potentially attractive investments for Client Plans include one or more MPS as an underwriter. Additionally, multiple MPS are often ranked in the top five underwriters for total debt issued in the Americas and globally. Thus, the failure to obtain relief for primary market offerings due to an MPS acting as an underwriter, whether as a manager or member, would deny Client Plans access to a majority of primary market offerings for Fixed Income Obligations.

35. In order for relief under the proposed exemption to be available for this transaction, the following conditions apply: (a) The conditions of Section IV.A. (Affiliated Underwritings) of the proposed exemption must be satisfied; (b) such purchase must not be made from an MPS; (c) no BlackRock Entity may be in the selling syndicate; and (d) 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 must be decided upon by the ECO. For purposes of this Covered Transaction, Asset-Backed Securities are not Fixed Income Obligations.

F. Purchase in an Underwriting and Holding by BlackRock Managers of Asset-Backed Securities, When an MPS is 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

Applicants note that the Department concluded under similar circumstances that relief is not necessary for the purchase of investment grade CMBS Securities on behalf of employee benefit plans during an underwriting syndicate, where the investment manager is related to an originator of one or more of the loans in the CMBS pool, once the loan originator has transferred the loans to the pool because the loan originator has no other responsibilities to the pool other than a limited repurchase obligation.

See

Notice of Proposed Exemption with respect to PTE 2008-16, 73 FR 60325, 60328 (Oct. 10, 2008).

36. The Applicants represent that BlackRock Managers in their normal course may determine that an investment in a new offering of Asset-Backed Securities treated as equity for ERISA purposes where an MPS is an underwriter, in the capacity as either a manager or a member of the selling syndicate, or trustee (or, in the case of CMBS, servicer, when the MPS serves solely as servicer and not as underwriter or trustee while being such servicer) will be a beneficial investment for Client Plans. The Applicants also represent that multiple MPSs are often ranked in the top ten underwriters for Asset-Backed Securities. Thus, the failure to obtain relief for primary market offerings due to an MPS acting as an underwriter or CMBS Servicer would have a significant impact on Client Plans. A failure to obtain relief would prevent Client Plans from investing in a large part of the Asset-Backed Securities market, resulting in tracking error for Index or Model Driven Funds and greatly reducing opportunities for Other Funds or Accounts.

37. In order for relief under the proposed exemption to be available for this transaction, the following conditions apply: (a) The conditions of Section IV.A. (Affiliated Underwritings) of the proposed exemption must be satisfied, except that (i) for purposes of the ratings requirement therein, the Asset-Backed Securities 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 Asset-Backed Securities lower than the third highest rating category; and (ii) in the case of Asset-Backed Securities which are CMBS and for which the MPS is servicer, the conditions of Section IV.B. (Affiliated Servicing) of the proposed exemption must be satisfied instead of the conditions of Section IV.A. (Affiliated Underwritings) of the proposed exemption (if an MPS serves in both an Affiliated Underwriting capacity and an Affiliated Servicing capacity, both Section IV.A. and Section IV.B. of the proposed exemption must be satisfied, with respect to the applicable capacity); (b) such purchase must not be made from an MPS; (c) no BlackRock Entity may be in the selling syndicate; (d) in the case of Asset-Backed Securities with respect to which either (i) an MPS has an ongoing function (such as trustee, or servicer of collateral for CMBS) or (ii) the potential for liability exists (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 must be decided upon by the ECO;

and (e) the purchase must meet the conditions of an applicable “Underwriter Exemption.”

Relief is not provided in the proposed exemption for purchases of Asset-Backed Securities in the primary market if an MPS is a sponsor, swap counterparty, servicer (except in the case of CMBS), originator (except in the case of CMBS), liquidity provider, or insurer with respect to the Asset-Backed Securities. With respect to originators and CMBS, see footnote 28.

As defined in the proposed exemption, “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 PTE 2009-31, 74 FR 59001 (Nov. 16, 2009).

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 Member Capacity, of the Selling Syndicate

38. The Applicants represent that BlackRock Managers in their normal course may determine that equity Securities issued by an independent third party where an MPS is an underwriter, in either a manager or a member capacity, of the selling syndicate will be a beneficial investment for Client Plans.

39. The Applicants estimate that the majority of the syndicated offerings that they review as potentially attractive investments for Client Plans include one or more MPS as an underwriter. Additionally, multiple MPS are often ranked in the top ten underwriters for equity securities issued in the Americas and globally. Thus, a failure to obtain relief for primary market offerings due to an MPS acting as an underwriter would deny Client Plans access to a majority of primary markets offerings for equity securities.

40. In order for relief under the proposed exemption to be available for this transaction, such purchase and holding must meet the following conditions: (a) The conditions of Section IV.A. (Affiliated Underwritings) of the proposed exemption must be satisfied; (b) such purchase must not be made from an MPS; (c) no BlackRock Entity may be in the selling syndicate; and (d) the Securities must not be Asset-Backed Securities.

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

41. The Applicants represent that BlackRock Managers in their normal course may determine that the purchase in the secondary market of Asset-Backed Securities treated as equity for ERISA purposes where an MPS fills one of the captioned roles will be a beneficial investment decision for Client Plans. There may also be situations where the purchase or sale of such instruments to or from an MPS is in the interests of Client Plans.

42. The Applicants represent that multiple MPSs are significant counterparties for Asset-Backed Securities in the Secondary Market and have large businesses as sponsor, servicer, originator, swap counterparty, liquidity provider, trustee or insurer thereof. Thus, the failure to obtain relief for secondary market purchases and sales with an MPS or where an MPS is a CMBS servicer or fills one of the captioned roles would have a significant impact on Client Plans. The failure to obtain relief would prevent Client Plans from investing in a large part of the Asset-Backed Securities market, resulting in tracking error for Index or Model-Driven Funds and greatly reducing opportunities for Other Funds or Accounts.

43. In order for relief under the proposed exemption to be available for this transaction, the following conditions apply: (a) The Asset-Backed Securities are purchased from or sold to an MPS as a result of the Three Quote Process as defined in the proposed exemption; (b) regardless of from whom the BlackRock Manager purchases the Asset-Backed Securities, the purchase and holding of the Asset-Backed Security otherwise must meet the conditions of an applicable Underwriter Exemption;

and (c) 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 Exemption, and circumstances arise in which the taking of or refraining from taking of any action (

e.g.,

instituting legal action for breach of representation, a decision with respect to dismissing or retaining a special servicer, etc.) 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 must be decided upon by the ECO.

In Advisory Opinion 99-03A (January 25, 1999) (sometimes called the “Lawson Letter”), the Department provided that an affiliate of an ERISA fiduciary could provide sub-servicer services to a trust invested in mortgage loans without violating ERISA section 406(b) if the ERISA fiduciary could not use any of its authority or control to change or influence, in any way, compensation paid to the sub-servicer affiliate. The Applicants represent that unless and until a decision must be made which could materially affect an MPS performing one or more roles with respect to Asset-Backed Securities the reasoning articulated in the Lawson Letter should apply to such MPS roles.

I. Repurchase Agreements When MPS Is the Seller

44. The Applicants represent that a BlackRock Manager may transfer cash of a Client Plan to an MPS in exchange for Securities (

e.g.,

Treasuries, corporate debt, etc.). The MPS will agree to buy back the same Securities from the Client Plan at a fixed price or fixed spread at an agreed upon later date. The Securities transferred serve as collateral in the case of a default by the MPS. Applicants believe that the value to plans of engaging in repurchase transactions was tacitly recognized by the Department by including such transactions in PTE 81-8, the prohibited transaction class exemption covering certain short-term investments.

46 FR 7511 (January 23, 1981); as amended, 50 FR 14043 (April 9, 1985).

45. The Applicants represent that historically a BTC cash management program has held a significant amount of Client Plan assets invested in repurchase agreements with a counterparty who is now an MPS (constituting roughly 25% of BTC's repurchase positions). Generally, these Covered Transactions are “on open,” which means that they roll over automatically but are subject to termination by either party every business day. In practice, the “on open” repurchase transactions may continue indefinitely with rates changing daily to reflect market conditions as continually mutually agreed upon by the parties.

46. The Applicants further represent that there are an extremely limited number of counterparties available for these large “on open” repurchase Covered Transactions. On any given day, it is very likely that a single MPS will be the only counterparty for these overnight “on open” repurchase transactions. While BlackRock Managers may be able to find another counterparty to bid on a repurchase transaction, with like collateral and like terms, for a part of the overall amount, it is likely that only one MPS would be available as a counterparty for the full balance.

47. The Applicants represent further that on a daily basis, when such Covered Transactions roll over, another counterparty may offer a better rate than the one MPS, on that day for a partial size of the repurchase balance. Despite this rate differential, for overnight repurchase, on each business day, BlackRock Managers still need to consider whether continuing the repurchase with the MPS for some or all of the full repurchase balance is in the interests of the Client Plans. If BlackRock Managers pull part of the

trades to place with another counterparty offering a better rate on a particular day, such action can jeopardize the ability to re-place that amount with the MPS, and to continue to place large amounts with the MPS, since the MPS seeks consistent ongoing funding. Thus, over time, BlackRock Managers may continue to roll over large repurchase transactions with the MPS even though another counterparty may have offered somewhat better terms for a fraction of the repurchase amount.

48. In order for relief under the proposed exemption to be available for this transaction, the conditions of PTE 81-8 applicable to repurchase agreements, with some revisions and additional conditions, generally apply. Such revisions and additional conditions include, but are not limited to: (a) The written agreement that is referenced in Section III.A. of PTE 81-8 is required to be a standardized industry form, with the exception of certain written agreements entered into prior to the Acquisition and disclosed to the ECO; and (b) the limitation on “restricted securities” that is referenced in Section III.G. of PTE 81-8 is modified to permit Client Plans to receive Securities that are “restricted securities” within the meaning of Rule 144 under the 1933 Act, until July 31, 2010. Additionally, while this proposed exemption, consistent with PTE 81-8, provides that neither the MPS seller nor any MPS which is a member of the same MPS Group may have discretionary authority or control with respect to the investment of the Client Plan assets involved in the transaction or render investment advice (within the meaning of 29 CFR 2510.3-21(c)) with respect to such assets, it also provides an exception to such condition in the form of the 10% Rule.

49. In addition to the conditions of PTE 81-8, in order for relief under the proposed exemption to be available for this transaction, two additional conditions must be met:

(a) In the event of any dispute between a BlackRock Manager and an MPS seller involving a Covered Transaction under Section I of the proposed exemption, the IM must have 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; and

(b) 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 (i) each Covered Transaction under Section III.I. of the proposed exemption, must be as a result of the Three Quote Process, or, (ii) the BlackRock Manager must determine 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 (ii) above must (iii) be approved in advance by the ECO Function and (iv), 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 paragraph 49(b) 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

50. One or more of the MPS are commonly hired by issuers of securities to solicit holders of Securities regarding tender offers, exchange offers and similar transactions. In such capacity, the MPS acts as agent for its client. As the holder of trillions of dollars in Securities, the Applicants commonly receive solicitations from such agents in situations where BlackRock Managers are responsible for exercising discretion on behalf of Client Plans to respond to such solicitations. The compensation of the MPS for such services will be paid by its client, may or may not vary with the relative success of the offer, and the BlackRock Managers might or might not know how the MPS is compensated. Client Plans would suffer harm if the BlackRock Managers were unable to respond to such tender offers and exchanges.

51. In order for relief under the proposed exemption to be available for this transaction, the following conditions must be met: (a) The Client Plan pays no fees to the MPS in connection with this Covered Transaction; (b) the BlackRock Manager must submit to the ECO in advance of participation a written explanation of the reasons for such participation; and (c) the ECO Function must determine that the reasons for participation by the BlackRock Manager in the Covered Transaction are appropriate from the vantage point of the Client Plans. Effective October 1, 2010, the ECO Function must affirmatively make this determination in writing prior to the BlackRock Manager participating in the Covered Transactions under Section III.J. of the proposed exemption.

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

52. The Applicants represent that the MPSs are very significant lenders to domestic and foreign corporate and other third party borrowers. Such third party borrowers may issue debt or equity Securities in primary market offerings. BlackRock Managers might decide that the purchase of such Securities would be in the interest of Client Plans. The proceeds of such offerings might be used by the third party issuers to repay debt owed to an MPS. BlackRock Managers purchasing such Securities in a primary market offering might or might not know whether the proceeds of the offering would be used to repay debt to an MPS. The BlackRock Managers represent that Client Plans would be harmed if they were unable to participate in primary market offerings based on the possibility that some of the proceeds may be used to repay a pre-existing debt to an MPS.

53. Relief under the proposed exemption is available for this transaction if the BlackRock Manager does not know (within the meaning of the proposed exemption) 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 qualify for relief under the proposed 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

54. The Applicants represent that BlackRock Managers might decide that it would be in the interest of Client Plans to invest in certificates of deposit, time deposits or other bank deposits at an MPS, or in commercial paper issued by an MPS. The applicants believe that the potential merit of such investments was recognized by Congress in enacting the statutory prohibited transaction exemption set forth in ERISA section 408(b)(4) and by the Department in promulgating PTE 81-8.

55. The Applicants represent that the MPSs are significant issuers of high quality bank debt including certificates of deposit, time deposits, other bank deposits and commercial paper, and they are able to take large deposits on short notice. The universe of large domestic issuers of such instruments is contracting as a result of the consolidation outlined above. Thus, BlackRock believes having MPSs available to provide such instruments provides necessary liquidity and portfolio diversification to Client Plans. The MPS are recognizable, household names that Client Plans are familiar with and with which Client Plans are comfortable with BlackRock holding on behalf of Client Plans.

56. In order for relief under the proposed exemption to be available for this transaction, the following conditions must be met:

(a) With respect to Covered Transaction involving bank deposits, either (i)(A) the bank must be supervised by the United States or a State, and at the outset of the Covered Transaction or renewal thereof of, such bank must have a credit rating in one of the top two (2) categories by at least one of the Rating Organizations; (B) neither the bank nor an affiliate of the bank may have discretionary authority or control with respect to the investment of Client Plan assets involved in the Covered Transaction or render investment advice (within the meaning of 29 CFR 2510.3-21(c)) with respect to those assets; and (C) such deposit must bear a reasonable interest rate, or (ii) the BlackRock Manager and the MPS must comply with ERISA section 408(b)(4);

(b) With respect to Covered Transactions involving investments in commercial paper, the conditions of PTE 81-8 applicable to commercial paper generally apply, except that the commercial paper is required to be ranked in one of the two highest rating categories of one of the Rating Organizations instead of one of the three highest rating categories of one of the Rating Organizations, as permitted under PTE 81-8; and

(c) For purposes of the Covered Transactions set forth in this Section III.L. of the proposed exemptions, (i) 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 (ii) the 10% Rule shall apply.

M. Securities Lending to an MPS

57. The Applicants represent that Securities loans, for this purpose, consist of different types of loans, “General Collateral Open Loans,” “Special Open Loans,” “Term Loans,” and “Exclusive Loans.” In the past, BGI adopted a process to ensure, in accordance with PTE 2002-46,

that the terms of every loan made to an affiliate of BGI (such as Barclays Capital Inc. (BCI)) were at least as favorable to the Client Plan as those of comparable arm's length transactions between unrelated parties. With effect from the date of the Acquisition, BTC has adopted the same process for loans to an MPS as previously employed with respect to loans to BCI.

Granted to Barclays Global Investors, N.A., 67 FR 59569 (September 23, 2002).

58.

General Collateral (GC) Open Loans:

The Applicants represent that without regard to the identity of any given approved borrower, the large majority of Securities loans are made using an “auto borrow” functionality by which the borrower can borrow “general collateral,” or very liquid Securities, in a non-negotiated manner, at a flat rate that applies to all borrowers. Accordingly, all loans of GC collateral are re-rated based on prevailing rates for the relevant Securities. An MPS may be an approved borrower.

59.

Special Open Loans:

The Applicants represent that for those loans not made using auto borrow, which involve more illiquid and thus more desirable or “special” Securities, BlackRock Managers negotiate the rebate rate individually with each borrower. The BlackRock Managers rely upon technology built into BlackRock's trading systems which shows them the rates for all other loans of the same Security to other borrowers, as well as the general market rates for that Security from third party data suppliers.

60.

Term Loans:

The Applicants represent that BTC may agree to lend a specific Security, Securities (a basket), or fixed notional value of non-specific Securities at a negotiated price for an agreed upon duration longer than overnight. Such term loans can be GC or Special. Term agreements with MPS borrowers must be executed at the best pricing available at the time of negotiation. Since such agreements include pricing terms for a specified period of time, they are not subject to re-pricing or comparison to other loans through the agreed upon term.

61.

Exclusive Loans:

The Applicants represent that BTC may agree to provide a single borrower with exclusive borrowing access to a fund for a fixed duration. Exclusive access is awarded to the qualified borrower with the highest bid. Income is accrued daily by charging a fee on the notional value of the fund and not related to the Securities actually borrowed, if any. Exclusive loan agreements with MPS borrowers must be executed at the best pricing available at the time of negotiation. Since such agreements include pricing terms for a specified period of time, they are not subject to re-pricing or comparison to other loans through the agreed upon duration of the agreement.

62. The Applicants represent that Open Loans, both GC and Special, to an MPS must be subject to competitive pricing comparisons on the day of execution and each day that the loans remain outstanding. All Special Open Loans are re-priced on a periodic basis as market conditions and supply/demand change. More specifically, BTC runs a daily pricing comparison report that compares all Open Loans to all borrowers, including an MPS, from its proprietary system, known as Global Loan Manager. The report highlights loans that are no longer priced in accordance with the arm's length transaction requirements of PTE 2002-46, i.e., where market conditions such as supply and demand have changed. If a loan to an MPS is not currently priced at least equal to or better than the least favorable pricing to a non-MPS, such loan is re-priced to the market pricing for such Security on the same day. If the MPS does not accept the re-price, the loan is recalled.

63. The Applicants represent that if the price of a loan is identified as not meeting the criteria described above but BlackRock traders determine that the loan is not comparable to outstanding loans with comparable non-MPS borrowers and therefore should not be re-priced, the BlackRock trader must insert comments into Global Loan Manager with a relevant explanation. This may be due to the size or other characteristics of the various trades being compared. The Global Loan Manager rate comparison report, including any such comments, will then be re-generated and stored

electronically. The regenerated report is reviewed on a regular basis (usually weekly) by the trading desk manager and signed off on by such trading desk manager; hard copies of the report are saved. The ECO performs a periodic review of this process.

64. The Applicants represent that it is generally more beneficial to have a Security on loan than not, and it may not be possible to relend the same Security to another borrower. In repricing a loan, the loan will only be re-priced to a rate that is within the range of other loans of that Security to non-MPS borrowers, and the loan will only be re-priced to a rate at which, in the BlackRock Manager's judgment, it would be more favorable to the lending Client Plan to re-price the loan at that rate than to terminate the loan.

65. The Applicants represent that based on the foregoing, ongoing loans will meet an arm's length standard but may not always remain at the absolute “best” rate in the market during the entire time the loan is outstanding. Borrowers are not fungible (

e.g.,

they don't have infinite demand for a given Security, and the willingness to pay varies by broker). Thus, rates will vary across borrowers over time, and the only way to ensure all loans to MPSs are always at the absolute best rate paid by all other borrowers would be to simply lend less to the MPS. Unfortunately, however, lending less would reduce client revenue and consequently is not in the Client Plans' interests.

66. The proposed exemption will only apply (a) to 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” (as defined in the proposed exemption) or a “U.S. Bank” (as defined in the proposed exemption), provided that the conditions set forth in Section III.M.2. of the proposed exemption are met; (b) to the lending of Securities by a BlackRock Manager that are assets of a Client Plan to an MPS which is a “Foreign Broker-Dealer” (as defined in the proposed exemption) or “Foreign Bank” (as defined in the proposed exemption), provided that the conditions set forth in Sections III.M.2 and III.M.3. of the proposed exemption are met; and (c) to 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. of the proposed exemption are met.

67. In order for relief under the proposed exemption to be available for Covered Transactions described in paragraphs 66(a) and (b), the conditions of Section II of PTE 2006-16

shall generally apply, with some revisions and additional conditions. For example, in addition to the conditions of Section II of PTE 2006-16, the proposed exemption requires that the length of a securities loan to an MPS must not exceed a one-year term. Additionally, although the proposed exemption, consistent with PTE 2006-16, provides that neither the MPS borrower nor any MPS affiliate 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, it also provides an exception to such condition in the form of the 10% Rule.

71 FR 63786 (Oct. 31, 2006).

68. In addition to the general conditions of PTE 2006-16, in order for relief under the proposed exemption to be available for this transaction, additional conditions must be met:

(a) 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 (Section III.M.2.(h));

(b) all fees and other consideration received by the Client Plan in connection with the loan of Securities must be reasonable. The identity of the currency in which the payment of fees and rebates will be made must be 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 must be based on rates for comparable loans of the same Security to non-MPS borrowers and third-party market data:

(A) 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; and

(B) 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 must be retained and made available for possible review by the ECO; and

(ii) Automatic pricing mechanisms and pricing decisions by traders must be subject to ongoing periodic review by the ECO Function, and the results of such review must be 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 (I) 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 (II) 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 (Section III.M.2.(j));

(c) 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 must perform 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. of the proposed exemption. 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 must promptly inform the IM (Section III.M.2.(p));

(d) 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 Section III.M. of the

proposed exemption, 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 (Section III.M.2.(q)); and

(e) 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 (Section III.M.2.(q)).

69. In order for relief under the proposed exemption to be available for Covered Transactions described in paragraph 66(b), BlackRock must comply with the conditions of Section III of PTE 2006-16.

70. In order for relief under the proposed exemption to be available for Covered Transactions described in paragraph 67(c), the conditions of Section IV of PTE 2006-16 generally apply, with one revision. The proposed exemption provides that the compensation received by the BlackRock Managers must be paid under terms at least as favorable to the Client Plan as an arm's length transaction with an unrelated party.

N. To-Be-Announced Trades (TBAs) of GNMA, FHLMC or FNMA Mortgage-Backed Securities With an MPS Counterparty

71. The Applicants represent that BlackRock Managers might decide it would be advantageous to trade GNMA (as defined in the proposed exemption), FHLMC (as defined in the proposed exemption) or FNMA (as defined in the proposed exemption) mortgage-backed Securities with an MPS counterparty on a “to-be-announced” basis. A “TBA” is a contract for the purchase or sale of such agency mortgage-backed Securities to be delivered at a future agreed-upon date. The actual pool identities or the number of pools that will be delivered to fulfill the trade obligation or terms of the contract are unknown at the time of the trade but must meet the “Guidelines of Good Delivery” established by the Depository Trust & Clearing Corporation. TBA trading is based on the assumption that the specific mortgage pools which will be delivered are fungible, and thus do not need to be explicitly known at the time a trade is initiated. The TBA market for agency mortgage-backed Securities has been referred to as the most liquid, and consequently most important, secondary market for mortgage loans in the world. Given that TBAs allow institutional accounts to buy and sell mortgage exposure in a large and liquid manner, TBAs are a useful tool in furthering the investment objectives of such clients. Certain of the MPSs maintain deep franchises in the agency mortgage-backed Securities trading market. As TBAs are one of the largest and most active parts of the mortgage-backed Securities market, having the ability to trade agency mortgage-backed Securities with an MPS counterparty on a TBA basis in the ordinary course of business could significantly assist BlackRock Managers in providing high quality and competitive service to Client Plans managed by BlackRock. BlackRock Client Plans could be disadvantaged if BlackRock Managers are unable to access the platforms of the MPSs in agency mortgage-backed Securities trading.

72. The Applicants represent that while there has been concern recently with respect to public debt issued by FHLMC and FNMA and specifically whether such debt would be backed by the federal government, there has been little concern regarding default risk with respect to the FHLMC or FNMA mortgage-backed Securities. Such mortgage-backed Securities currently trade with virtually no difference on return from GNMA mortgage-backed Securities based on any perceived difference in credit quality due to the implicit guarantee of FHLMC and FNMA mortgage-backed Securities (in contrast to the explicit government guarantee of GNMA mortgage-backed Securities), as a result of recent actions by the US government. Even before those actions, any difference in return based on a perception of credit differences was minimal, in the order of two to five basis points. Furthermore, other factors, such as depth of liquidity (for example, FHLMC Securities typically have deeper liquidity than FNMA or GNMA Securities) have as great an effect, if not a greater effect, on returns as perceived credit differences.

73. In order for relief under the proposed exemption to be available for these transactions: (a) The Covered Transactions must be a result of the Three Quote Process; provided, that, solely for purposes of these transactions, 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; (b) with regard to purchases of FHLMC and FNMA mortgage-backed Securities on a TBA basis (i) the BlackRock Manager must make 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) must monitor the credit spread between GNMA and FHLMC/FNMA mortgage-backed Securities; and (iii) each of the ECO and the IM (independently) must have 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 must be reflected in the EPPs; and (c) with regard to possible delivery of underlying Securities to Client Plans, as opposed to cash settlement, the ECO Function must approve any such delivery in advance.

74. For purposes of these transactions, “comparable Securities” described in clause (a) of paragraph 73 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.

The Department has previously adopted a similar concept for “replacement” mortgage-backed Securities in the context of lending such Securities in PTE 94-88, 60 FR 483 (January 4, 1995).

O. Foreign Exchange Transactions With an MPS Counterparty

75. The BlackRock Managers represent that they frequently engage in foreign exchange transactions on behalf of Client Plans. For example, foreign exchange transactions are typically necessary to facilitate the settlement of the purchase or sale of a non-US security. The Applicants represent that the types of foreign currency Covered Transactions at issue are those described in PTE 94-20,

the prohibited transaction class exemption relating to certain employee benefit plan foreign exchange transactions, i.e., options, spot trades, forwards and splits.

The Applicants represent that the primary market makers in foreign exchange are the largest banks in the world, and external surveys consistently rank multiple MPSs as major counterparties in this market.

Client Plans would be harmed if they were forced to exclude such MPS counterparties from the limited number of large banks that make markets in foreign exchange. These banks deal with each other constantly, either on behalf of themselves or their customers. The market on which these banks conduct foreign exchange transactions is called the “interbank market.”

59 FR 8022 (Feb. 17, 1994).

FX Poll: Euromoney's Annual FX Market Ranking,

http://www.Euromoney.com, http://www.euromoney.com/poll/3301/PollsAndAwards/

(last visited Jan. 31, 2011).

Parties transacting other than in the interbank market transact by referencing the interbank rate, which is the rate representative of the rate at which dealers in currencies (i.e., banks) are willing to transact with one another. Transacting in the actual foreign exchange interbank market is limited to dealers only, and does not include buy side firms such as investment managers. Accordingly, full transparency in terms of quotes (bids and offers) is limited to the dealers only.

76. In order for relief under the proposed exemption to be available for this transaction, the following conditions must be met: (a)(i) The Foreign Exchange Transaction must be as a result of the Three Quote Process; or (ii) the total net amount of the Foreign Exchange Transaction on behalf of Client Plans by BlackRock Managers must be greater than $1 million and the exchange rate must be within 0.5% above or below the Interbank Rate (as defined in the proposed exemption) as represented to the BlackRock Managers by the MPS; (b) the Foreign Exchange Transactions with an MPS counterparty will 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 (c) each Foreign Exchange Transaction complying with paragraph 76(a)(ii) 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

77. MPS broker-dealers are key brokers in both the equity and fixed income markets. For example, the NASDAQ Stock Market ranked two MPS brokers as top ten liquidity providers for September 2010.

The Applicants represent that: BlackRock Managers need the ability to utilize the brokerage services offered by the MPSs, especially in light of the consolidation of the financial services sector; BlackRock Managers have a long history of using MPS brokers to affect Securities trades, and to continue normal trading practices with these brokers will benefit Client Plans; and, Client Plans would be harmed if they were unable to access the liquidity provided by such MPS brokers. The proposed exemption would include the relief available under Section II of PTE 86-128,

the prohibited transaction class exemption for securities transactions involving employee benefit plans and broker-dealers, as if BlackRock Managers and MPS broker-dealers were “affiliates” as defined in Section I(b) of PTE 86-128; however, certain conditions would be modified, as described herein.

Top Ten Liquidity Providers—December 2010,

http://www.NASDAQOMXtrader.com, http://www.nasdaqtrader.com/trader.aspx?ID=topliquidity

(last visited Jan. 28, 2011).

51 FR 41686 (November 18, 1986), as amended, 67 FR 64137 (October 17, 2002).

78. The conditions applicable to this transaction are:

(a) The MPS must be 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;

(b) 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 the first sentence of section III(h) of PTE 86-128 is amended for purposes of this paragraph 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.” The conditions of Section III of PTE 86-128 that are not included as conditions herein are generally the conditions that would relate to actions required of, or information to be provided to, a Client Plan's independent fiduciary, and the revision to the first sentence of Section III(h) of PTE 86-128 changes the $50 million calculation to include all investors, instead of limiting such calculation to only employee benefits plans;

(c) The ECO Function must receive the information required to be provided to the “authorizing fiduciary” under Section III(e), Section III(f) and Section III(g)(2) of PTE 86-128, and the ECO must have the authority to terminate the use of the MPS as broker-dealer without penalty to Client Plans at any time;

(d) 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;

(e) The exceptions in Sections IV(a), (b) and (c) of PTE 86-128 are applicable to the proposed exemption; and

(f) Notwithstanding the other conditions of Section III.P. of the proposed exemption, 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 such arrangement has been provided to the ECO and no material changes are made to arrangements. This last condition is referred to herein as the “Existing Directed Brokerage and/or Wrap Fee Arrangement Exception.”

Q. Use by BlackRock Managers of Exchanges and Automated Trading Systems on Behalf of Client Plans

79. As outlined above, BlackRock is the largest publicly-traded U.S. investment management firm. Funds and Accounts buy, sell, or otherwise transact in securities, futures contracts, and foreign exchange to the extent contemplated by Fund or Account investment guidelines. A number of Index and Model-Driven Funds attempt to either track or outperform the index for a specific non-U.S. country or geographic region (such as Emerging Markets, World ex U.S., Asia Pacific, etc.). To do so, such Index and Model-Driven Funds must be able to buy and sell securities that are listed on the relevant non-U.S. exchanges. Additionally, a number of Index and Model-Driven Funds hold long positions in stock or bond index futures contracts to “equitize” or “bondize” dividends or other cash to be received by the Index and Model-Driven Fund (including for liquidity purposes). Foreign currency trading is a necessary adjunct to such trading. As of November 30, 2010, BlackRock managed, in the aggregate, more than $100 billion in assets for more than 100 Index and Model Driven Funds or Accounts with non-U.S. geographic benchmarks that include more than 50 countries.

The evolution of electronic trading over the last few decades has led to improvements in the trading processes within established exchanges. For example, computerized trading systems have largely replaced trading pits utilizing paper tickets as the primary execution method within numerous established exchanges. Additionally, over the last few decades a number of established Automated Trading Systems have gained widespread market acceptance for transacting in equities, fixed income obligations and foreign currency which permits BlackRock Managers to reduce the transaction costs for Client Plans.

The establishment of electronic trading over the last few decades has led to increased operational efficiencies, improved price discovery, and higher overall liquidity for plans and other investors. As financial markets have embraced electronic markets and decimal pricing, spreads have been reduced significantly. The advent of multiple execution venues for Securities and other assets encourages competition amongst market participants, driving transaction costs lower for plans and other investors.

80. The Applicants represent that one or more of the MPSs have ownership interests in one or more U.S. or non-U.S. exchanges and Automated Trading Systems. The use of such exchanges and Automated Trading Systems by BlackRock Managers increases operational efficiencies, minimizes transaction costs and improves liquidity, all of which are inherently beneficial to Client Plans. The Applicants represent that Client Plans would be harmed if they were unable to access such trading venues.

81. In order for relief under the proposed exemption to be available for this transaction, the following conditions must be met:

(a) Prior to January 1, 2011:

(i) No single MPS (together with other members of the same MPS Group) may have a greater than twenty percent (20%) ownership interest in the exchange or the ATS; and

(ii) 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; and

(b) From and after January 1, 2011, either:

(i) No one MPS (together with other members of the same MPS Group) may have (A) a greater than ten percent (10%) ownership interest in the exchange or ATS or (B) the BlackRock Managers do not know the level of such ownership interest; or

(ii) A BlackRock Manager knows that an MPS (together with other members of the same MPS Group) has a greater than ten percent (10%) ownership interest but no greater than twenty percent (20%) ownership interest in the exchange or ATS,

(A) 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;

(B) The price and compensation associated with any purchases or sales utilizing such exchange or ATS must not be greater than the price and compensation associated with an arm's length transaction with an unrelated party; and

(C) All such exchanges and ATSs must 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 involve trading in Securities (including the lending of Securities) or futures contracts.

The Applicants further request that the Department confirm that for purposes of PTE 2002-30

BlackRock Entities and MPSs are not regarded as “affiliates.” The Department concurs.

67 FR 39069 (June 6, 2002).

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

82. The MPS include several issuers of publicly traded equity securities with combined market capitalizations, as of November 11, 2010, of nearly $200 billion. As a result, the Applicants represent that common or preferred stock issued by an MPS may be included as an important constituent in an Index used by an Index Fund or a Model used by Model-Driven Fund managed by a BlackRock Manager. Thus, although the purchase of Securities issued by MPSs may convey an economic benefit on the MPS, the purchase may be necessary for a portfolio to track the underlying benchmark. If Client Plans were unable to invest in such Securities, it could result in tracking error for applicable

funds and accounts. The Applicants believe there is a sound basis for concluding that an exemption is not necessary to acquire and hold MPS stock under such circumstances, but, given the breadth of the exemption, the Applicants believe that requesting the certitude of exemptive relief on this point is appropriate.

83. In order for relief under the proposed exemption to be available for this transaction, the following conditions must be satisfied: (a) 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 may not exceed the purchase amount necessary for such Model or quantitative conformity; and (b) the purchases must not be made from the issuing MPS. The Existing Directed Brokerage and/or Wrap Fee Arrangement Exception applies.

BlackRock Managers may rely on other exemptive relief, whether statutory, class or individual, when acquiring stock of an MPS for Client Plans under either Section III.R. or Section III.S. of the proposed exemption 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

84. As stated above, the MPSs include several issuers of publicly traded equity securities with combined market capitalizations, as of November 11, 2010, of nearly $200 billion. As a result, such securities may comprise an important portion of an Other Account or Fund's investment universe. The Applicants represent that BlackRock Managers might decide that common or preferred stock of an MPS is an appropriate investment for a Client Plan account or a pooled fund that is not an Index Fund or a Model-Driven Fund. If Client Plans were unable to invest in such Securities, it could adversely result in the loss of investment opportunity for such funds and accounts.

85. In order for relief under the proposed exemption to be available for this transaction, the following conditions must be satisfied:

(a) Such purchase must not be made from the issuing MPS;

(b) The Existing Directed Brokerage and/or Wrap Fee Arrangement Exception applies with respect to this transaction as well; and

(c) With respect to such Client Plans with existing directed brokerage and/or wrap fee arrangements, the ECO Function periodically must monitor 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;

(d) As a consequence of a purchase of MPS stock, the class of stock purchased must 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 must not exceed five percent (5%) of such Client Plan's proportionate interest in the Pooled Fund.

(e) Aggregate daily purchases of a class of MPS stock for Client Plans must 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.

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 paragraph 85(e), cross trades of MPS equity Securities which comply with an applicable statutory or administrative prohibited transaction exemption are not taken into account; and

For example, if two 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.

(f) The ECO Function must monitor the volume limits on purchases of MPS stock described in paragraph 85(e) and must provide 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

86. The Applicants represent that MPSs commonly provide custodial, administrative and similar ministerial services (e.g., collective fund custodial services, recordkeeping, etc.) to numerous entities, including plans and ERISA look-through entities, and BlackRock Managers may decide that retaining an MPS to provide custodial or administrative services is in the interests of Client Plans.

87. In order for relief under the proposed exemption to be available for this transaction, the proposed exemption provides that (a) 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 (b) 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.

The Applicants did not request relief, and the Department agrees that such a request would be unnecessary, in situations where such services are performed for Client Plans at the direction of a Client Plan fiduciary independent of a BlackRock Entity (or an MPS) if neither BlackRock (nor an MPS) renders “investment advice” in connection with such determination.

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

88. The Applicants represent that in the past, the BGI cash management program purchased and sold, and at present and in the future BTC and other BlackRock Managers may purchase and sell, significant amounts of commercial paper for Client Plans through

commercial paper conduits, with respect to some of which an MPS, such as BOA, acts as the program administrator, placement agent, liquidity provider and/or credit support provider.

89. The Applicants represent that an ABCP Conduit is a special purpose vehicle that acquires assets from one or more originators and issues commercial paper to provide funding to the originator(s). Conduits are typically 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.

90. The Applicants represent that commercial paper issued by 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.

91. If an MPS acts as program administrator and placement agent in a conduit, the MPS is compensated as follows: (a) In the case of asset-backed commercial paper purchased directly from the MPS in its capacity as placement agent, the MPS receives a fee, typically five basis points; and (b) in the case of asset-backed commercial paper purchased from another broker-dealer, the MPS receives a fee (the amount of which is not made public) in connection with its services as program administrator, or as a provider of credit and/or liquidity support.

92. A BlackRock Manager might determine it is in the interest of Client Plans to purchase commercial paper in a primary offering directly from the placement agent(s) or trade in the secondary market with the placement agent(s) or another broker-dealer that makes a market in the Securities. In ABCP Conduits where an MPS is a program administrator, or is providing liquidity and/or credit support, the role(s) of the MPS might give rise to prohibited transactions on the part of BlackRock Managers, whether the BlackRock Manager purchases directly from the MPS or from another broker-dealer. In many cases there will not be three counterparties with which the BlackRock Manager can trade such Securities. In particular, in the case of purchases in the primary offering, the Securities frequently can only be purchased from the administrator (e.g., an MPS), acting as the placement agent. There may be only one placement agent (e.g., an MPS). If there is more than one placement agent, they will all offer the Securities in the primary offering at the same price. As a practical matter, there are many circumstances where there will not be competing prices for these Securities even in the secondary market. As in the case of repurchase agreements, a BlackRock Manager is able to determine the competitiveness of pricing of the ABCP Conduit commercial paper by reference to prevailing rates above Treasuries for comparable short-term money market instruments rated in the same category.

93. In order for relief under the proposed exemption to be available for this transaction, the following conditions are applicable:

(a)(i) The Client Plan must not be an MPS Plan of the MPS with whom the purchase or sale takes place, or an MPS Plan of another member of the same MPS Group as such MPS; and (ii) the Client Plan must not be 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 paragraphs 93(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; however, the 10% Rule applies;

(b) The commercial paper must have a stated maturity date of nine months or less from the date of issue, exclusive of days of grace, or must be a renewal of an issue of commercial paper the maturity of which is likewise limited;

(c) At the time it is acquired, the commercial paper must be ranked in the highest rating category by at least one of the Rating Organizations;

(d) If the seller or purchaser of the ABCP Conduit commercial paper is an MPS and/or an MPS performs a continuing role with respect to the Securities, secondary market purchases and sales must be pursuant to the Three Quote Process, provided that, for purposes of this transaction, 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; and

(e) 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 must be decided upon by the IM.

94. The Applicants further request that the Department confirm that, for purposes of Section III.U. of the proposed exemption, no BlackRock Entity is to be regarded as an affiliate of any MPS. The Department concurs.

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

95. The BlackRock Managers may serve as investment advisers to ETFs. For example, the BlackRock Managers serve as the investment adviser to the iShares® family of ETFs, one of the nation's largest ETF families. The Applicants represent that investment in ETFs is becoming increasingly more popular. If Client Plans were unable to invest in such ETFs, they would be unable to take advantage of both a beneficial investment opportunity and an important tool with which to manage liquidity.

96. The Applicants observe that BGI applied for and was granted an individual prohibited transaction exemption, PTE 2008-1, 73 FR 3274 (January 17, 2008), which, among other relief, permits BGI (now, BTC) and its investment advisory affiliates to acquire for ERISA and FERSA clients, shares of ETFs managed by BTC or an affiliate of BTC. PTE 2008-1 was patterned on PTE 77-4,

the prohibited transaction class exemption for certain transactions between investment companies and employee benefit plans. The Summary of Facts and Representations in the related proposal of PTE 2008-12

describes in detail how trading in ETFs takes place, including the process by which Creation Shares are acquired.

42 FR 18732 (April 8, 1977).

See Proposed Exemption, Application No. D-11318, 72 FR 51668 (September 10, 2007).

97. The Applicants represent that should BlackRock Managers acquire or sell for Client Plans shares of ETFs managed by BTC or another BlackRock Manager, no material benefit accrues to the BlackRock Manager managing the ETF in question, as its assets under management are not thereby increased, with the possible exception of when the purchase of the ETF shares constitutes or results in new Creation Shares.

98. In order for relief under the proposed exemption to be available for this transaction,

the following conditions apply:

The grant of the exemptive relief provided in Section III.V. of the proposed exemption does not preclude compliance with and use of PTE 77-4 or PTE 2008-1 granted to Barclays Global Investors, N.A.

(a)(i) The BlackRock Manager must purchase such ETF shares from or through a person other than an MPS or a BlackRock Entity; and (ii) no purchase shall be exempt under the proposed exemption if the BlackRock Manager portfolio manager acting for the Client Plan knows (within the meaning of the proposed exemption) 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; and

(b) Notwithstanding paragraph 98(a)(i), the Existing Directed Brokerage and/or Wrap Fee Arrangement Exception applies. Additionally, the ECO Function periodically monitors purchases of Securities to ensure that the amount of BlackRock-managed ETF shares purchased for Client Plans under this paragraph 98(b) is not disproportionate to the amount of BlackRock-managed ETF shares purchased for Client Plans pursuant to paragraph 98(a) under the brokerage arrangement in place as of the date of the Acquisition.

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

99. The Applicants represent that as of the Acquisition, one or more MPS Plans was invested in one or more BTC bank collective trust funds under an arrangement where the fees owed to BTC by these MPS Plans are paid directly to BTC by the MPS Plans, not out of the assets of the bank collective trust fund. These investments in the BTC funds, at the time they were made, were selected by fiduciaries of the MPS Plans as being in the interests of such Client Plans and their participants and beneficiaries when no relationship existed between BGI and the MPSs that might be viewed as affecting the best judgment of the fiduciaries of the MPS Plans. All such fees are paid at BTC's standard rates, or at negotiated rates discounted from BTC's standard rates. The proposed exemption would permit continuation of these investments, subject to certain conditions.

100. 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 BTC, and in connection with which investments such MPS Plans pay management fees directly to BlackRock Managers, relief under the proposed exemption will be available until the earliest of (a) termination of the investment in the Pooled Fund, (b) 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 (c) December 31, 2010 (Unwind Period 2) if the following conditions are met:

(a) 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;

(b) The MPS Plans must 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 Plans investors in the Pooled Fund as of the date of the Acquisition; and

(c) 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

“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. In non-Buy-up situations, the Applicants believe that a BlackRock Manager should be able to purchase, hold and dispose of BlackRock Securities in an Index/Model-Driven Account or Fund for the purpose of maintaining the proper benchmark weight without the need for additional exemptive relief. BlackRock requests relief for non-Buy-Up situations subject only to Sections III.X.1. and 2. of the proposed exemption for the avoidance of any issues about the necessity for such relief in particular circumstances. The Department is not opining on the need for such relief herein.

101. BlackRock is an issuer of equity Securities with a significant market capitalization. As a result, the Applicants represent that common or preferred Securities issued by BlackRock may be included as a component in an Index used by an Index Fund or a Model-Driven Fund managed by a BlackRock Manager. Thus, the purchase of Securities issued by BlackRock may be necessary for a portfolio to track the underlying benchmark. If Client Plans were unable to invest in such Securities, it could result in tracking error for applicable funds and accounts. It is not clear to the Applicants that an exemption is necessary to purchase or hold BlackRock Securities under such circumstances, but, given the breadth of the exemption, the Applicants believe requesting the certitude of exemptive relief on this point is appropriate.

102. In order for relief under the proposed exemption to be available for this transaction, the following conditions apply:

(a) The acquisition, holding and disposition of the BlackRock Securities must be for the sole purpose of maintaining quantitative conformity with the weight of such Securities prescribed by the relevant Index, for Index Accounts or Fund, or the weight of such Securities prescribed by the relevant Model, for Model-Driven Accounts or Funds, and such purchase may not exceed the purchase amount necessary for such Model or quantitative conformity;

(b) Any acquisition of BlackRock Securities must 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; and

see

footnote 47):

(i) The acquisition must be 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 condition in paragraph 102(c)(iv) below cannot be satisfied in a single trading day, the acquisition must be completed in as few trading days as possible in compliance with such volume

limitation and such trades must be reviewed by the ECO and reported to the IM;

(ii) Based upon the best available information, the acquisition must not be the opening transaction of a trading day and must not be made in the last half hour before the close of the trading day;

(iii) The price paid by the BlackRock Manager must not be 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;

(iv) Aggregate daily purchases must not exceed fifteen percent (15%) of aggregate average daily trading volume for the Security, as determined by the greater of (A) 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 (B) 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 must be 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 must be determined by aggregating all portfolio managers purchasing for such new account or 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 paragraph apply;

Such trades are priced by reference to market prices, and, thus, they generally do not affect market prices.

(v) All purchases and sales of BlackRock Securities must occur either (A) on a Recognized Securities Exchange, (B) 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 (C) 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

(vi) The ECO must design 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 must monitor BlackRock Manager's compliance with such procedures.

Acquisition by BlackRock Managers of Financial Guarantees, Indemnities and Similar Protections for Client Plans From MPSs

103. The Applicants represent that BlackRock Managers in the past have provided and in some cases currently have in place for Client Plans financial guarantees, indemnification arrangements or similar instruments providing protection to the Client Plans against various possible losses or risks, such as an indemnification arrangement to protect against the consequences of a counterparty default. On occasion, these arrangements were and are provided to Client Plans by means of a contract or similar funding arrangement with a third party, and in some cases that third party can be an MPS. These guarantees, indemnification arrangements and similar instruments do not exist as a freestanding commitment constituting the sole relationship between BlackRock and the Client Plan; instead, they are features or additions to a more fundamental relationship, such as the retention of a BlackRock Manager as a discretionary asset manager, or in connection with a Client Plan investment in a commingled vehicle sponsored and/or managed by a BlackRock Manager. The terms of these arrangements benefit Client Plans, and independent Client Plan fiduciaries must agree to the terms of the arrangement, including, if provided through a third party, the identity of the third party.

104. In order for relief under the proposed exemption to be available for this transaction, the following conditions apply: (a) The terms of the arrangement (including the identity of the provider) must be approved by a fiduciary of the Client Plan which is independent of the MPS providing such protection or an MPS which is a member of the same MPS Group as such MPS and of BlackRock; (b) the compensation owed the MPS under the arrangement must be paid by a BlackRock Entity and not paid out of the assets of the Client Plan; (c) 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 must determine the steps the BlackRock Manager must take to protect the interests of the Client Plan; and (d) the MPS providing the arrangement must be 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 Section III.Y. of the proposed exemption, and must have sufficient assets in the United States to honor its commitments under the arrangement.

Affiliated Underwritings and Affiliated Servicing

105. Several of the Covered Transactions set forth above include in their conditions requirements regarding affiliated underwriting and affiliated servicing. Because the conditions associated therewith apply to multiple Covered Transactions, the specific conditions for Affiliated Underwritings and Affiliated Servicing are set forth in this paragraph 105. In order for relief under the proposed exemption to be available, the following conditions must be met for an Affiliated Underwriting:

Affiliated Underwritings

(a) The Securities to be purchased must be either—

(i) Part of an issue registered under the 1933 Act. If the Securities to be purchased are part of an issue that i

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