0001287695-12-000467.txt : 20121009 0001287695-12-000467.hdr.sgml : 20121008 20121009161127 ACCESSION NUMBER: 0001287695-12-000467 CONFORMED SUBMISSION TYPE: NSAR-B/A PUBLIC DOCUMENT COUNT: 10 CONFORMED PERIOD OF REPORT: 20120731 FILED AS OF DATE: 20121009 DATE AS OF CHANGE: 20121009 EFFECTIVENESS DATE: 20121009 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BLACKROCK MUNIYIELD QUALITY FUND III, INC. CENTRAL INDEX KEY: 0000883412 IRS NUMBER: 223165131 FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: NSAR-B/A SEC ACT: 1940 Act SEC FILE NUMBER: 811-06540 FILM NUMBER: 121135282 BUSINESS ADDRESS: STREET 1: 100 BELLEVUE PARKWAY CITY: WILMINGTON STATE: DE ZIP: 19809 BUSINESS PHONE: 800-441-7762 MAIL ADDRESS: STREET 1: 100 BELLEVUE PARKWAY CITY: WILMINGTON STATE: DE ZIP: 19809 FORMER COMPANY: FORMER CONFORMED NAME: BLACKROCK MUNIYIELD QUALITY FUND III, INC DATE OF NAME CHANGE: 20101109 FORMER COMPANY: FORMER CONFORMED NAME: BLACKROCK MUNIYIELD INSURED FUND, INC DATE OF NAME CHANGE: 20070612 FORMER COMPANY: FORMER CONFORMED NAME: MUNIYIELD INSURED FUND INC DATE OF NAME CHANGE: 19920717 NSAR-B/A 1 myi.fil PAGE 1 000 B000000 07/31/2012 000 C000000 0000883412 000 D000000 N 000 E000000 NF 000 F000000 Y 000 G000000 Y 000 H000000 N 000 I000000 6.1 000 J000000 A 001 A000000 BLACKROCK MUNIYIELD QUALITY FUND III, INC. 001 B000000 811-06540 001 C000000 8004417762 002 A000000 100 BELLEVUE PARKWAY 002 B000000 WILMINGTON 002 C000000 DE 002 D010000 19809 003 000000 N 004 000000 N 005 000000 N 006 000000 N 007 A000000 N 007 B000000 0 007 C010100 1 008 A000001 BLACKROCK ADVISORS, LLC 008 B000001 A 008 C000001 801-47710 008 D010001 WILMINGTON 008 D020001 DE 008 D030001 19809 008 A000002 BLACKROCK INVESTMENT MANAGEMENT, LLC 008 B000002 S 008 C000002 801-56972 008 D010002 PRINCETON 008 D020002 NJ 008 D030002 08540 012 A000001 COMPUTERSHARE TRUST COMPANY, N.A. 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(VRDP) 012 B000003 85-00000 012 C010003 NEW YORK 012 C020003 NY 012 C030003 10179 013 A000001 DELOITTE & TOUCHE LLP PAGE 2 013 B010001 BOSTON 013 B020001 MA 013 B030001 02116 014 A000001 BLACKROCK CAPITAL MARKETS, LLC 014 B000001 8-67827 014 A000002 BLACKROCK EXECUTION SERVICES 014 B000002 8-48719 014 A000003 BLACKROCK INVESTMENTS, LLC 014 B000003 8-48436 014 A000004 HARRIS WILLIAMS LLC 014 B000004 8-53380 014 A000005 PNC CAPITAL MARKETS, INC. 014 B000005 8-32493 014 A000006 PNC INVESTMENTS LLC 014 B000006 8-66195 015 A000001 STATE STREET BANK & TRUST COMPANY 015 B000001 C 015 C010001 BOSTON 015 C020001 MA 015 C030001 02110 015 A000002 THE BANK OF NEW YORK MELLON 015 B000002 S 015 C010002 NEW YORK 015 C020002 NY 015 C030002 10286 015 E010002 X 015 A000003 J.P. 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0 086 F020000 0 087 A010000 COMMON STOCK 087 A020000 09254E103 087 A030000 MYI 087 B010000 PREFERRED STOCK 088 A000000 N 088 B000000 N 088 C000000 N 088 D000000 Y SIGNATURE NEAL J. ANDREWS TITLE CFO EX-99.77O RULE 10F-3 2 kentstate10f3.htm Unassociated Document
 
 
 


 
Participating Funds
 
n U.S. Registered Funds (Name of Fund, Aladdin Ticker):
BlackRock Municipal Bond Trust (BBK)
BlackRock Investment Quality Municipal Trust (BKN)
BlackRock Municipal Income Quality Trust (BYM)
BlackRock MuniEnhanced Fund, Inc. (MEN)
BlackRock MuniYield Quality Fund II, Inc. (MQT)
BlackRock MuniYield Quality Fund, Inc. (MQY)
BlackRock Muni Intermediate Duration Fund, Inc. (MUI)
BlackRock MuniYield Quality Fund III, Inc. (MYI)
 
The Offering
 
 
Key Characteristics (Complete ALL Fields)
Date of
Offering Commencement:
06-08-2012
Security Type:
Municipal

Issuer
Kent State University (A State University of Ohio) General Receipt Bonds, Series 2012A
Selling Underwriter
Bank of America Merrill Lynch
Affiliated Underwriter(s)
 PNC
 Other:       
List of Underwriter(s)
Bank of America Merrill Lynch, KeyBanc Capital Markets, CastleOak Securities, L.P., Fifth Third Securities, Inc., Huntington Investment Company,J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC, PNC Capital Markets, Sterne, Agee & Leach, Inc
 
Transaction Details
Date of Purchase
06-08-2012

Purchase Price/Share
(per share / % of par)
$ 108.077
$ 107.571
Total Commission, Spread or Profit
0.5936975

1. Aggregate Principal Amount Purchased (a+b)
$ 12,355,000
a.US Registered Funds
(Appendix attached with individual Fund/Client purchase)
$ 6,000,000
 
b.Other BlackRock Clients
$ 1,000,000
$ 5,355,000 (PI)
 
 
2. Aggregate Principal Amount of Offering
 
$ 170,000,000
Fund Ratio
[Divide Sum of #1 by #2]
Must be less than 0.25
(unless securities are Government Securities)
0.072676471
 
Legal Requirements
 
 
Offering Type (check ONE)
The securities fall into one of the following transaction types (see Definitions):
 
U.S. Registered Public Offering[Issuer must have 3 years of continuous operations]
 
Eligible Rule 144A Offering[Issuer must have 3 years of continuous operations]
 
Eligible Municipal Securities[Issuer must have 3 years of continuous operations]
 
Eligible Foreign Offering[Issuer must have 3 years of continuous operations]
 
Government Securities Offering
 
Timing and Price (check ONE or BOTH)
 
The securities were purchased before the end of the first day on which any sales were made, at a price that was not more than the price paid by each other purchaser of securities in that offering or in any concurrent offering of the securities; and
 
If the securities are offered for subscription upon exercise of rights, the securities were purchased on or before the fourth day before the day on which the rights offering terminated.
 
Firm Commitment Offering (check ONE)
  YES
  NO
The securities were offered pursuant to an underwriting or similar agreement under which the underwriters were committed to purchase all of the securities being offered, except those purchased by others pursuant to a rights offering, if the underwriters purchased any of the securities.
 
No Benefit to Affiliated Underwriter (check ONE)
  YES
  NO
No affiliated underwriter was a direct or indirect participant in, or benefited directly or indirectly from, the transaction.



Completed by:
Gina Mansure
Date:
06-14-2012
       
Approved by:
Odette Rajwan
Date:
06-14-2012
 
Senior Global Syndicate Team Member
 
    

 

 





 

 
 
Definitions
 
Term
Definition
Fund Ratio
Number appearing at the bottom of page 1 of 2 of the Rule 10f-3 Report form.  It is the sum of the Funds’ participation in the offering divided by the total amount of the offering.
Eligible Foreign Offering
The securities are sold in a public offering conducted under the laws of a country other than the United States and
(a)the offering is subject to regulation in such country by a “foreign financial regulatory authority,” as defined in Section 2(a)(50) of the Investment Company Act of 1940;
(b)the securities were offered at a fixed price to all purchasers in the offering (except for any rights to purchase securities that are required by law to be granted to existing security holders of the issuer);
(c)financial statements, prepared and audited as required or permitted by the appropriate foreign financial regulatory authority in such country, for the two years prior to the offering, were made available to the public and prospective purchasers in connection with the offering; and
(d)if the issuer is a “domestic issuer,” i.e., other than a foreign government, a national of any foreign country, or a corporation or other organization incorporated or organized under the laws of any foreign country, it (1) has a class of securities registered pursuant to section 12(b) or 12(g) of the Securities Exchange Act of 1934 or is required to file reports pursuant to section 15(d) of that act, and (2) has filed all the material required to be filed pursuant to section 13(a) or 15(d) of that act for a period of at least 12 months immediately preceding the sale of securities (or for such shorter period that the issuer was required to file such material)
Eligible Municipal Securities
The securities are direct obligations of, or obligations guaranteed as to principal or interest by, a State or any political subdivision thereof, or any agency or instrumentality of a State or any political subdivision thereof, or any municipal corporate instrumentality of one or more States, or any security which is an industrial development bond (as defined in section 103(c)(2) of Title 26) the interest on which is excludable from gross income under certain provisions of the Internal Revenue Code.
(a)with respect to ratings, the securities
(1)have received an investment grade rating from at least one nationally recognized statistical rating organization (“NRSRO”); or
(2)have received one of the three highest ratings from an NRSRO, if the issuer of the municipal securities, or the entity supplying the revenue or other payments from which the issue is to be paid, has been in continuous operation for less than three years, including the operation of any predecessors.
(b) The purchases of municipal securities, if any, were not designated as group sales or otherwise allocated to the account of any prohibited seller (i.e., an affiliated underwriter).
Eligible Rule 144A Offering
The securities are sold in an offering where
(a)the securities are offered or sold in transactions exempt from registration under Section 4(2) of the Securities Act of 1933, Rule 144A thereunder, or Rules 501-508 thereunder;
(b)the securities were sold to persons that the seller and any person acting on behalf of the seller reasonably believe to include qualified institutional buyers, as defined in Rule 144A (“QIBs”); and
(c)the seller and any person acting on behalf of the seller reasonably believe that the securities are eligible for resale to other QIBs pursuant to Rule 144A
Government Securities Offering
The security is issued or guaranteed as to principal or interest by the United States, or by a person controlled or supervised by and acting as an instrumentality of the Government of the United States pursuant to authority granted by the Congress of the United States; or any certificate of deposit for any of the foregoing
U.S. Registered Public Offering.
The securities offered are registered under the Securities Act of 1933 that are being offered to the public.



 
 Page  of 2
 
 
 

EX-99.77O RULE 10F-3 3 stbuildingauth10f3.htm Unassociated Document
 
 
 


 
Participating Funds
 
n U.S. Registered Funds (Name of Fund, Aladdin Ticker):
BlackRock Municipal 2020 Term Trust (BKK),
BlackRock Municipal Income Quality Trust (BYM),
BlackRock MuniEnhanced Fund, Inc. (MEN),
BlackRock MuniYield Michigan Quality Fund, Inc. (MIY),
BlackRock MuniYield Quality Fund II, Inc. (MQT),
BlackRock MuniYield Quality Fund, Inc. (MQY),
BlackRock MuniYield Quality Fund III, Inc. (MYI),
BlackRock MuniYield Michigan Quality Fund II, Inc. (MYM)
 
The Offering
 
 
Key Characteristics (Complete ALL Fields)
Date of
Offering Commencement:
07/12/2011
Security Type:
Municipal

Issuer
State Building Authority State of Michigan, Series I-A
Selling Underwriter
J.P. Morgan Securities LLC
Affiliated Underwriter(s)
 PNC
 Other:       
List of Underwriter(s)
J.P. Morgan Securities LLC, Citigroup Global Markets Inc., BMO Capital Markets GKST, Inc., PNC Capital Markets LLC, Wells Fargo Securities, Bank of America Merrill Lynch, Morgan Stanley & Co. LLC, Siebert Brandford Shank & Co., Loop Capital Markets, Edward D. Jones & Co., Ramirez & Co., Inc.
 
Transaction Details
Date of Purchase
07/12/2011

Purchase Price/Share
(per share / % of par)
$98.159,
$98.775
$108.278
Total Commission, Spread or Profit
0.4957

1. Aggregate Principal Amount Purchased (a+b)
$15,885,000
a.US Registered Funds
(Appendix attached with individual Fund/Client purchase)
$7,325,000
b.Other BlackRock Clients
$7,235,000.00
$1,325,000.00 (PI)
 
2. Aggregate Principal Amount of Offering
 
$409,550,000
Fund Ratio
[Divide Sum of #1 by #2]
Must be less than 0.25
(unless securities are Government Securities)
0.0388



 
 Page  of 2
 
 
 
Rule 10f-3 Report – Definitions
 

 
Legal Requirements
 
 
Offering Type (check ONE)
The securities fall into one of the following transaction types (see Definitions):
 
U.S. Registered Public Offering[Issuer must have 3 years of continuous operations]
 
Eligible Rule 144A Offering[Issuer must have 3 years of continuous operations]
 
Eligible Municipal Securities[Issuer must have 3 years of continuous operations]
 
Eligible Foreign Offering[Issuer must have 3 years of continuous operations]
 
Government Securities Offering
 
Timing and Price (check ONE or BOTH)
 
The securities were purchased before the end of the first day on which any sales were made, at a price that was not more than the price paid by each other purchaser of securities in that offering or in any concurrent offering of the securities; and
 
If the securities are offered for subscription upon exercise of rights, the securities were purchased on or before the fourth day before the day on which the rights offering terminated.
 
Firm Commitment Offering (check ONE)
  YES
  NO
The securities were offered pursuant to an underwriting or similar agreement under which the underwriters were committed to purchase all of the securities being offered, except those purchased by others pursuant to a rights offering, if the underwriters purchased any of the securities.
 
No Benefit to Affiliated Underwriter (check ONE)
  YES
  NO
No affiliated underwriter was a direct or indirect participant in, or benefited directly or indirectly from, the transaction.



Completed by:
Janine Bianchino
Date:
7/13/11
 
PMG
    
Approved by:
Steven DeLaura & Odette Rajwan
Date:
08/31/11
 
Senior Global Syndicate Team Member
 
    

 

 
 

 
 
Definitions
 
Term
Definition
Fund Ratio
Number appearing at the bottom of page 1 of 2 of the Rule 10f-3 Report form.  It is the sum of the Funds’ participation in the offering divided by the total amount of the offering.
Eligible Foreign Offering
The securities are sold in a public offering conducted under the laws of a country other than the United States and
(a)the offering is subject to regulation in such country by a “foreign financial regulatory authority,” as defined in Section 2(a)(50) of the Investment Company Act of 1940;
(b)the securities were offered at a fixed price to all purchasers in the offering (except for any rights to purchase securities that are required by law to be granted to existing security holders of the issuer);
(c)financial statements, prepared and audited as required or permitted by the appropriate foreign financial regulatory authority in such country, for the two years prior to the offering, were made available to the public and prospective purchasers in connection with the offering; and
(d)if the issuer is a “domestic issuer,” i.e., other than a foreign government, a national of any foreign country, or a corporation or other organization incorporated or organized under the laws of any foreign country, it (1) has a class of securities registered pursuant to section 12(b) or 12(g) of the Securities Exchange Act of 1934 or is required to file reports pursuant to section 15(d) of that act, and (2) has filed all the material required to be filed pursuant to section 13(a) or 15(d) of that act for a period of at least 12 months immediately preceding the sale of securities (or for such shorter period that the issuer was required to file such material)
Eligible Municipal Securities
The securities are direct obligations of, or obligations guaranteed as to principal or interest by, a State or any political subdivision thereof, or any agency or instrumentality of a State or any political subdivision thereof, or any municipal corporate instrumentality of one or more States, or any security which is an industrial development bond (as defined in section 103(c)(2) of Title 26) the interest on which is excludable from gross income under certain provisions of the Internal Revenue Code.
(a)with respect to ratings, the securities
(1)have received an investment grade rating from at least one nationally recognized statistical rating organization (“NRSRO”); or
(2)have received one of the three highest ratings from an NRSRO, if the issuer of the municipal securities, or the entity supplying the revenue or other payments from which the issue is to be paid, has been in continuous operation for less than three years, including the operation of any predecessors.
(b) The purchases of municipal securities, if any, were not designated as group sales or otherwise allocated to the account of any prohibited seller (i.e., an affiliated underwriter).
Eligible Rule 144A Offering
The securities are sold in an offering where
(a)the securities are offered or sold in transactions exempt from registration under Section 4(2) of the Securities Act of 1933, Rule 144A thereunder, or Rules 501-508 thereunder;
(b)the securities were sold to persons that the seller and any person acting on behalf of the seller reasonably believe to include qualified institutional buyers, as defined in Rule 144A (“QIBs”); and
(c)the seller and any person acting on behalf of the seller reasonably believe that the securities are eligible for resale to other QIBs pursuant to Rule 144A
Government Securities Offering
The security is issued or guaranteed as to principal or interest by the United States, or by a person controlled or supervised by and acting as an instrumentality of the Government of the United States pursuant to authority granted by the Congress of the United States; or any certificate of deposit for any of the foregoing
U.S. Registered Public Offering.
The securities offered are registered under the Securities Act of 1933 that are being offered to the public.


 
 
 

EX-99.77B ACCT LTTR 4 muniholdings577b.htm Unassociated Document
 
 
 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors of BlackRock MuniHoldings Quality Fund II, Inc., BlackRock MuniYield California Quality Fund, Inc., BlackRock MuniYield Michigan Quality Fund II, Inc., BlackRock MuniYield New York Quality Fund, Inc., and BlackRock MuniYield Quality Fund III, Inc.:

In planning and performing our audit of the financial statements of BlackRock MuniHoldings Quality Fund II, Inc., BlackRock MuniYield California Quality Fund, Inc., BlackRock MuniYield Michigan Quality Fund II, Inc., BlackRock MuniYield New York Quality Fund, Inc., and BlackRock MuniYield Quality Fund III, Inc. (collectively the "Funds") as of and for the year ended July 31, 2012, in accordance with the standards of the Public Company Accounting Oversight Board (United States), we considered the Funds’ internal control over financial reporting, including controls over safeguarding securities, as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements and to comply with the requirements of Form N-SAR, but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion.

The management of the Fund is responsible for establishing and maintaining effective internal control over financial reporting. In fulfilling this responsibility, estimates and judgments by management are required to assess the expected benefits and related costs of controls. A funds’ internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A funds’ internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the fund; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the fund are being made only in accordance with authorizations of management and directors of the fund; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of a fund's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.

A deficiency in internal control over financial reporting exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Fund's annual or interim financial statements will not be prevented or detected on a timely basis.

Our consideration of the Funds’ internal control over financial reporting was for the limited purpose described in the first paragraph and would not necessarily disclose all deficiencies in internal control that might be material weaknesses under standards established by the Public Company Accounting Oversight Board (United States). However, we noted no deficiencies in the Fund's internal control over financial reporting and its operation, including controls for safeguarding securities, that we consider to be a material weakness, as defined above, as of July 31, 2012.

This report is intended solely for the information and use of management and the Board of Directors of BlackRock MuniHoldings Quality Fund II, Inc., BlackRock MuniYield California Quality Fund, Inc., BlackRock MuniYield Michigan Quality Fund II, Inc., BlackRock MuniYield New York Quality Fund, Inc., BlackRock MuniYield Quality Fund III, Inc. and the Securities and Exchange Commission and is not intended to be and should not be used by anyone other than these specified parties.


/s/ Deloitte & Touche LLP
Boston, Massachusetts
September 26, 2012

 

 
 
 

EX-99.77E LEGAL 5 myi77e.htm Unassociated Document
 
 
 


 
NSAR Item 77E - MuniYield Quality Fund III, Inc. ("MYI")
 
 
On August 3, 2010, Dolores Eitel and other shareholders of MYI filed a purported derivative action in the Supreme Court of the State of New York, New York County.  The complaint named BlackRock Advisors, LLC, BlackRock, Inc. and certain of the board members, officers and portfolio managers of MYI as defendants.  The complaint alleged, among other things, that the defendants breached fiduciary duties owed to MYI and its common shareholders and committed waste by redeeming MYI's auction preferred shares at their liquidation preference.  The complaint sought unspecified damages for losses purportedly suffered by MYI as a result of the prior redemptions and injunctive relief preventing MYI from redeeming auction preferred shares at their liquidation preference in the future and awarding the plaintiffs the costs and disbursements of this action, including reasonable attorneys', accountants' and experts' fees and expenses.  The plaintiffs in the Curbow Action previously moved to preliminarily enjoin BlackRock Credit Allocation Income Trust II, Inc. (PSY) and BlackRock Credit Allocation Income Trust IV (BTZ) from redeeming their outstanding auction preferred shares and, on December 23, 2010, the Court denied that motion.
 
 
On March 15, 2012, the Supreme Court of the State of New York, New York County, entered an order consolidating the above-referenced derivative complaint with another derivative complaint, containing almost identical allegations, already pending in that court.  The court on March 15, 2012 also authorized plaintiffs to file an amended complaint.  On April 16, 2012, the Plaintiffs filed a Consolidated Shareholder Derivative Complaint.  Defendants moved to dismiss the Consolidated Shareholder Derivative Complaint on July 20, 2012.
 
 

 

852032.01-New York Server 6A MSW - Draft September 11, 2012 - 2:25 PM
 
 
 

EX-99.77I NEW SECUR 6 myi77i.htm Unassociated Document
 
 
 

BlackRock MuniYield Quality Fund III, Inc. (the, “Registrant”)

77(I)
Terms of new or amended securities

A copy of (i) the Registrant's Articles of Amendment Amending the Articles Supplementary Establishing and Fixing the Rights and Preferences of the Fund’s Series W-7 Variable Rate Demand Preferred Shares filed with the State Department of Assessments and Taxation of Maryland on June 20, 2012 (the "Articles of Amendment") and (ii) the Registrant’s Series W-7 Variable Rate Demand Preferred Shares Notice of Special Rate Period dated June 20, 2012 and filed with the Registrant's books and records (the "Notice of Special Rate Period") are attached under sub-item 77Q1(a).

The Articles of Amendment contains a description of amendments to the Registrant's Articles Supplementary Establishing and Fixing the Rights and Preferences of the Fund’s Series W-7 Variable Rate Demand Preferred Shares.  The Notice of Special Rate Period contains a description of the terms of the Series W-7 Variable Rate Demand Preferred Shares that is applicable during the Special Rate Period (as defined therein).


 
 
 

EX-99.77Q1 OTHR EXHB 7 myi77q1a.htm Unassociated Document
 
 
 

BlackRock MuniYield Quality Fund III, Inc. (the “Registrant”)

77Q1(a):

Copies of material amendments to Registrant’s charter or by-laws

Attached please find as an exhibit under Sub-Item 77Q1(a) of Form N-SAR, a copy of (i) the Registrant's Articles of Amendment Amending the Articles Supplementary Establishing and Fixing the Rights and Preferences of the Fund’s Series W-7 Variable Rate Demand Preferred Shares filed with the State Department of Assessments and Taxation of Maryland on June 20, 2012 and (ii) the Registrant’s Series W-7 Variable Rate Demand Preferred Shares Notice of Special Rate Period dated June 20, 2012 and filed with the Registrant’s books and records.

 
 
 

Exhibit 77Q1(a)

[Printer Note: Insert Rider 1 Here]

 
 
 

Exhibit 77Q1(a)

[Printer Note: Insert Rider 2 Here]



 
 
 

EX-99.77Q1 OTHR EXHB 8 myi77q1d.htm Unassociated Document
 
 
 

BlackRock MuniYield Quality Fund III, Inc. (the, “Registrant”)

77Q1(d):

Copies of all constituent instruments defining the rights of the holders of any new class of securities and of any amendments to constituent instruments referred to in answer to sub-item 77I.

A copy of the Registrant's Articles of Amendment Amending the Articles Supplementary Establishing and Fixing the Rights and Preferences of the Fund’s Series W-7 Variable Rate Demand Preferred Shares filed with the State Department of Assessments and Taxation of Maryland on June 20, 2012 and the Registrant’s Series W-7 Variable Rate Demand Preferred Shares Notice of Special Rate Period dated June 20, 2012 and filed with the Registrant’s books and records are attached under sub-item 77Q1(a).



 
 
 

EX-99.77Q1 OTHR EXHB 9 myiriderone77q1a.htm Unassociated Document
 
 
 

BLACKROCK MUNIYIELD QUALITY FUND III, INC.
 
ARTICLES OF AMENDMENT
 
AMENDING THE ARTICLES SUPPLEMENTARY ESTABLISHING
 
AND FIXING THE RIGHTS AND PREFERENCES OF
 
VARIABLE RATE DEMAND PREFERRED SHARES
 
This is to certify that
 
First: The charter of BlackRock MuniYield Quality Fund III, Inc., a Maryland corporation (the "Corporation"), is amended by these Articles of Amendment, which amend the Articles Supplementary Establishing and Fixing the Rights and Preferences of Variable Rate Demand Preferred Shares, dated as of May 17, 2011 (the “Articles Supplementary”).
 
Second: The charter of the Corporation is hereby amended by deleting Section 4(d)(i) of Part I of the Articles Supplementary and inserting the following:
 
“(i)           a notice (“Notice of Special Rate Period”) stating (A) that the Corporation has determined to designate the next succeeding Rate Period of such Series of VRDP Shares as a Special Rate Period, specifying the same and the first (1st) day thereof, (B) the Rate Determination Date immediately prior to the first (1st) day of such Special Rate Period, (C) the rate calculation period to be used in determining the Applicable Rate if the term thereof is different from the term of the Special Rate Period and any other special provisions relating to the calculation of the Applicable Rate, including any provision for setting the Applicable Rate by reference to any index or to the ratings of the VRDP Shares or specifying any additional events or conditions the existence or occurrence of which result in adjustments to the Applicable Rate or additional fees or payments in respect of shares of such Series of VRDP Shares (which provisions may vary provisions that are set forth in the Charter (including the Articles Supplementary), provided that the provisions and variations are clearly and expressly set forth in the Notice of Special Rate Period), (D) that such Special Rate Period shall not commence if (1) any shares of such Series of VRDP Shares are owned by the Liquidity Provider pursuant to the Purchase Obligation on either such Rate Determination Date or on the first (1st) day of such Special Rate Period, or (2) full cumulative dividends or any amounts due with respect to redemptions payable prior to such Rate Determination Date have not been paid in full, (E) the scheduled Dividend Payment Dates for shares of such Series of VRDP Shares during such Special Rate Period, (F) the Special Redemption Provisions, if any, applicable to shares of such Series of VRDP Shares in respect of such Special Rate Period, (G) the Special Optional Tender Provisions, if any, applicable to shares of such Series of VRDP Shares in respect of such Special Rate Period (including whether the Optional Tender provisions shall be applicable or otherwise subject to special conditions during the Special Rate Period), (H) the special provisions, if any, relating to the transfer of the shares of such Series of VRDP Shares during the Special Rate Period, (I) the special provisions, if any, relating to the creation and termination of the Special Rate Period including, but not limited to, any provisions relating to the nature and scope of the obligations and rights of the Liquidity Provider and the Remarketing Agent in connection therewith, the short-term credit ratings of the Liquidity Provider and the short-term preferred stock ratings of the VRDP Shares, the Remarketing of the VRDP Shares upon the termination of the Special Rate Period, the applicability of the redemption and certain other related provisions of the Articles Supplementary with respect to shares of such Series of VRDP Shares held by the Liquidity Provider (whether or not in its capacity as such) during the Special Rate Period and any rights of the Corporation to request Holders of such Series of VRDP Shares to agree to an extension of the Special Rate Period prior to the termination thereof and (J) the special provisions, if any, relating to Mandatory Tender Events and Mandatory Tenders with respect to shares of such Series of VRDP Shares during the Special Rate Period (including whether Mandatory Tender Events and Mandatory Tenders shall be applicable during the Special Rate Period), such notice to be accompanied by a VRDP Shares Basic Maintenance Report showing that, as of the third (3rd) Business Day immediately preceding such proposed Special Rate Period, Moody’s Eligible Assets (if Moody’s is then rating such VRDP Shares at the request of the Corporation), Fitch Eligible Assets (if Fitch is then rating such VRDP Shares at the request of the Corporation) and Other Rating Agency Eligible Assets (if any Other Rating Agency is then rating such VRDP Shares at the request of the Corporation) each have an aggregate Discounted Value at least equal to the VRDP Shares Basic Maintenance Amount as of such Business Day (assuming for purposes of the foregoing calculation that (a) the Maximum Rate is the Maximum Rate on such Business Day as if such Business Day were the Rate Determination Date for the proposed Special Rate Period, and (b) the Moody’s Discount Factors applicable to Moody’s Eligible Assets are determined by reference to the first Exposure Period (as defined in the Moody’s Guidelines) longer than the Exposure Period then applicable to the Corporation, as described in the Moody’s Guidelines); or”
 
Third:  The charter of the Corporation is hereby amended by deleting Section 4(e) of Part I of the Articles Supplementary and inserting the following:
 
“(e)           Failure to Deliver Notice of Special Rate Period.  If the Corporation fails to deliver either of the notices described in paragraphs (d)(i) or (d)(ii) of this Section 4 (and, in the case of the notice described in paragraph (d)(i) of this Section 4, a VRDP Shares Basic Maintenance Report to the effect set forth in such paragraph (but only if Moody's, Fitch or an Other Rating Agency is then rating the Series in question pursuant to the request of the Corporation)) with respect to any designation of any proposed Special Rate Period to the Remarketing Agent and the Liquidity Provider by 11:00 a.m., New York City time, on the second Business Day immediately preceding the first (1st) day of such proposed Special Rate Period (or by such later time or date, or both, as may be agreed to by the Remarketing Agent and the Liquidity Provider), the Corporation shall be deemed to have delivered a notice to the Remarketing Agent and the Liquidity Provider with respect to such Special Rate Period to the effect set forth in paragraph (d)(ii) of this Section 4.  In the event the Corporation delivers to the Remarketing Agent and the Liquidity Provider a notice described in paragraph (d)(i) of this Section 4, it shall file a copy of such notice with the Secretary of the Corporation, and the contents of such notice shall be binding on the Corporation and the Holders and Beneficial Owners of the shares of such Series of VRDP Shares.  In the event the Corporation delivers to the Remarketing Agent and the Liquidity Provider a notice described in paragraph (d)(ii) of this Section 4, the Corporation will provide Moody's (if Moody's is then rating the VRDP Shares in question pursuant to the request of the Corporation) and Fitch (if Fitch is then rating the VRDP Shares in question pursuant to the request of the Corporation) and each Other Rating Agency (if any Other Rating Agency is then rating the VRDP Shares in question pursuant to the request of the Corporation) a copy of such notice.
 
Fourth:  The charter of the Corporation is hereby amended by inserting the following as Section 4(g) of Part I of the Articles Supplementary:
 
“(g)           Notice to Holders.  In the event the Corporation delivers to the Remarketing Agent and the Liquidity Provider a Notice of Special Rate Period, it shall deliver, concurrently with the delivery thereof to the Remarketing Agent and the Liquidity Provider, such Notice of Special Rate Period to the Holders of the shares of the Series of VRDP Shares subject to the Special Rate Period.  During the term of the Special Rate Period, the Corporation shall provide a copy of the Notice of Special Rate Period to (i) any Holder or Beneficial Owner of the shares of such Series of VRDP Shares upon request and (ii) any Holder or Beneficial Owner that is a transferee in any transfer of the shares of such Series of VRDP Shares during the Special Rate Period promptly after receiving the notice described below, provided the Corporation has been notified of any such transfer and has been provided with the contact information of such Holder or Beneficial Owner, as applicable.”
 
Fifth: The charter of the Corporation is hereby amended by inserting the following as Section 4(h) of Part I of the Articles Supplementary:
 
“(h)           Ambiguities.  In the event of any conflict between the terms of the Notice of Special Rate Period and the terms of this Articles Supplementary, the terms of the Notice of Special Rate Period shall govern.”
 
Sixth: The charter of the Corporation is hereby amended by inserting the following as Section 5(i) of Part I of the Articles Supplementary:
 
“(i)           Grant of Irrevocable Proxy.  To the fullest extent permitted by applicable law, each Holder and Beneficial Owner may in its discretion grant an irrevocable proxy.”
 
Seventh: The amendment to the charter of the Corporation as set forth above in these Articles of Amendment has been duly advised by the board of directors of the Corporation and approved by the stockholders of the Corporation as and to the extent required by law and in accordance with the charter of the Corporation.
 

 

 
 
 

IN WITNESS WHEREOF, BlackRock MuniYield Quality Fund III, Inc. has caused these Articles of Amendment to be signed as of June 20, 2012 in its name and on its behalf by the person named below who acknowledges that these Articles of Amendment are the act of the Corporation and, to the best of such person’s knowledge, information and belief and under penalties for perjury, all matters and facts contained in these Articles of Amendment are true in all material respects.
 
 
BLACKROCK MUNIYIELD QUALITY FUND III, INC.
 
By:       /s/ Robert W. Crothers
 
Name:  Robert W. Crothers
 
Title:  Vice President
 
ATTEST:
 
 

 
 
/s/ Janey Ahn
 
 
Name:           Janey Ahn
 
 
Title:           Secretary
 

 

 
 
 

EX-99.77Q1 OTHR EXHB 10 myiridertwo77q1a.htm Unassociated Document
 
 
 

BLACKROCK MUNIYIELD QUALITY FUND III, INC. (THE “FUND”)
 
SERIES W-7
 
VARIABLE RATE DEMAND PREFERRED SHARES (“VRDP SHARES”)
 
CUSIP NO. 09254E 863*
 
Notice of Special Rate Period


June 20, 2012

BlackRock MuniYield Quality Fund III, Inc.
100 Bellevue Parkway
Wilmington, Delaware 19809

To:  Addressees listed on Schedule 1 hereto

In accordance with the Fund’s Articles Supplementary Establishing and Fixing the Rights and Preferences of VRDP Shares, dated May 17, 2011 (the “Articles Supplementary”), the Fund hereby notifies the Liquidity Provider, the Remarketing Agent and the Holders of the VRDP Shares that the Fund has determined to designate the next succeeding Rate Period for VRDP Shares as a Special Rate Period.  The first day of the Special Rate Period shall be June 21, 2012 (the “Special Rate Period Commencement Date”) and the last day of the Special Rate Period shall be June 24, 2015.

The Special Rate Period shall not commence if (1) any VRDP Shares are owned by the Liquidity Provider pursuant to the Purchase Obligation on either the Rate Determination Date immediately preceding the Special Rate Period or on the first day of the Special Rate Period or (2) full cumulative dividends or any amounts due with respect to redemptions payable prior to such Rate Determination Date have not been paid in full.

Certain capitalized terms used in this Notice of Special Rate Period are defined in Appendix A hereto.  Capitalized terms used but not defined in this Notice of Special Rate Period, including in Appendix A hereto, shall have the meanings given to such terms in the Articles Supplementary.

Calculation of Dividends During Special Rate Period

For each SRP Calculation Period for the VRDP Shares, the dividend rate on the VRDP Shares (the “SRP Applicable Rate”) shall be calculated by the Tender and Paying Agent and shall be equal to the rate per annum that results from the sum of the (1) Base Rate and (2) Ratings Spread (the “SRP Applicable Rate Determination”).  During the Special Rate Period, references in the Articles Supplementary and the other Related Documents to the “Applicable Rate Determination,” the “Applicable Rate,” a “Subsequent Rate Period” or a “Rate Determination Date,” in each case with respect to the VRDP Shares, shall be deemed to be references to the SRP Applicable Rate Determination, the SRP Applicable Rate, an SRP Calculation Period or an SRP Calculation Date, respectively.  The SRP Applicable Rate for any SRP Calculation Period (or part thereof) shall in no event be greater than the Maximum Rate.

The amount of dividends payable on each VRDP Share on any Dividend Payment Date during the Special Rate Period shall be calculated by the Tender and Paying Agent and shall equal the sum of the dividends accumulated but not yet paid for each SRP Calculation Period (or part thereof) and, if applicable, any other Rate Period (or part thereof) occurring during the related Dividend Period.  The amount of dividends accumulated for each such SRP Calculation Period (or part thereof) shall be computed by multiplying the SRP Applicable Rate for the VRDP Shares for such SRP Calculation Period (or part thereof) by a fraction, the numerator of which shall be the number of days in such SRP Calculation Period (or part thereof) and the denominator of which shall be the actual number of days in the year (365 or 366), and multiplying such product by $100,000.

During the Special Rate Period, the scheduled Dividend Payment Dates for the VRDP Shares shall continue to be the first Business Day of each calendar month.

Special Redemption Provisions

During the Special Rate Period, the VRDP Shares may be redeemed pursuant to Section 10(a)(i) of the Articles Supplementary only upon the payment of the applicable Redemption Premium and otherwise in accordance with Section 10(a) of the Articles Supplementary.  The Fund’s Board of Directors has determined in accordance with Section 10(a)(ii) of the Articles Supplementary that the Special Redemption Provisions are in the best interests of the Fund.

“Redemption Premium” means, if the VRDP Shares are rated above A1/A+ and its equivalent by all Rating Agencies then rating the VRDP Shares as of the relevant Redemption Date and with respect to the VRDP Shares subject to redemption on such Redemption Date, other than in respect of any redemption required to comply with the VRDP Shares Basic Maintenance Amount or the Minimum VRDP Shares Asset Coverage requirements or any optional redemption in connection with a redemption to comply with the Minimum VRDP Shares Asset Coverage requirements that results in Minimum VRDP Shares Asset Coverage of up to 240%, an amount equal to:

(a)           if such Redemption Date occurs on a date two years or more before the last day of the Special Rate Period, the product of 3% and the Liquidation Preference of the VRDP Shares subject to redemption;

(b)           if such Redemption Date occurs on a date that is less than two years but more than or equal to 18 months from the last day of the Special Rate Period, the product of 2% and the Liquidation Preference of the VRDP Shares subject to redemption; and

(c)           if such Redemption Date occurs on a date that is less than 18 months but more than or equal to one year from the last day of the Special Rate Period, the product of 1% and the Liquidation Preference of the VRDP Shares subject to redemption.

Any VRDP Share exchanged for a preferred share of an acquiring entity or successor entity in connection with a reorganization, merger or redomestication of the Fund in another state that had been previously approved by the Holders of VRDP Shares or that otherwise does not require the vote or consent of the Holders of VRDP Shares shall not be subject to the Redemption Premium solely as a result of such exchange of shares.

Optional Tender and Transfers of VRDP Shares
During the Special Rate Period, Beneficial Owners and Holders shall not have the right to tender their VRDP Shares for Remarketing pursuant to an Optional Tender.

The Fund agrees, however, that during the Special Rate Period, a Beneficial Owner or Holder of VRDP Shares may sell, transfer or otherwise dispose of VRDP Shares in whole shares only to (i) Persons that such Beneficial Owner or Holder reasonably believes are QIBs that are either registered closed-end management investment companies, the common shares of which are traded on a national securities exchange (“Closed-End Funds”), banks, insurance companies, companies that are included in the S&P 500 Index (and their direct or indirect wholly owned subsidiaries) or registered open-end management investment companies, (ii) tender option bond trusts (whether tax-exempt or taxable) in which all investors are Persons that such Beneficial Owner or Holder reasonably believes are QIBs that are Closed-End Funds, banks, insurance companies, companies that are included in the S&P 500 Index (and their direct or indirect wholly owned subsidiaries) or registered open-end management investment companies (or, in the case of a tender option bond trust in which an affiliate of such Beneficial Owner or Holder retains a residual interest, such affiliate of such Beneficial Owner or Holder, but only to the extent expressly provided for in an agreement between the Fund and such Beneficial Owner or Holder) or (iii) such other Persons approved in writing by the Fund, in each case, pursuant to Rule 144A of the Securities Act or another available exemption from registration under the Securities Act, in a manner not involving any public offering within the meaning of Section 4(2) of the Securities Act.  Any transfer in violation of the foregoing restrictions shall be void ab initio and any transferee of VRDP Shares transferred in violation of the foregoing restrictions shall be deemed to agree to hold all payments it received on any such improperly transferred VRDP Shares in trust for the benefit of the transferor of such VRDP Shares.

In the event that a Beneficial Owner transfers VRDP Shares to a tender option bond trust in which such Beneficial Owner or an affiliate of such Beneficial Owner that is a wholly owned direct or indirect subsidiary of such Beneficial Owner retains a residual interest, for so long as no event has occurred that results in the termination of such tender option bond trust, for purposes of each section of the Articles Supplementary that requires, permits or provides for (i) notice or the delivery of information to the Beneficial Owner of VRDP Shares or (ii) voting of the VRDP Shares by or the giving of any consent by the Beneficial Owner of VRDP Shares (collectively, the “Applicable Sections”), then such Beneficial Owner, and not such tender option bond trust, shall be deemed to be the actual holder and Beneficial Owner of such VRDP Shares.

Anything herein to the contrary notwithstanding, except with respect to the deemed holding and ownership provisions set forth above in respect of the Applicable Sections, any tender option bond trust to which the VRDP Shares are transferred and each of the beneficial owners thereof shall, subject to the provisions of the agreements governing the tender option bond trust, retain all of its other rights in respect of the VRDP Shares under the Articles Supplementary or applicable law, including, for the avoidance of doubt, the rights of such tender option bond trust in respect of matters addressed by any of the Applicable Sections to the extent necessary for the protection or exercise of such other rights or that are otherwise applicable as a result of the exercise of such other rights.

Additional Provisions Relating to the Termination of Special Rate Period

Pursuant to an amendment to the VRDP Shares Purchase Agreement, effective as of the Special Rate Period Commencement Date, the Scheduled Termination Date will be extended to July 9, 2015 (the “Initial Extended Termination Date”) and the Initial Extended Termination Date will constitute the Scheduled Termination Date.

The Fund acknowledges and agrees that, in connection with the Mandatory Tender of the VRDP Shares upon the occurrence of the Mandatory Tender Event resulting from the delivery by the Fund of the Notice of Proposed Special Rate Period, dated June 8, 2012, Citibank, N.A. (“Citibank”) purchased all of the VRDP Shares subject to Remarketing pursuant to such Mandatory Tender directly in its individual capacity and not in its capacity as Liquidity Provider pursuant to the Purchase Obligation.  Accordingly, Citibank has acknowledged that (i) such purchase of the VRDP Shares by Citibank does not constitute a Failed Remarketing Condition-Purchased VRDP Shares, and (ii) except as provided below, the beneficial ownership of such VRDP Shares by Citibank shall not require a Failed Remarketing Condition-Purchased VRDP Shares Redemption.

If the Initial Extended Termination Date for the VRDP Shares is further extended to a succeeding Scheduled Termination Date in accordance with the terms of the VRDP Shares Purchase Agreement, then, unless the Special Rate Period has been extended in accordance with the procedures set forth below, the VRDP Shares beneficially owned by any Beneficial Owner will be deemed automatically tendered for Remarketing on the seventh day prior to the last day of the Special Rate Period (the “Automatic Tender Date”) with a Purchase Date occurring on the first day of the Subsequent Rate Period immediately succeeding the Special Rate Period.  Notice of the extension of the Initial Extended Termination Date for the VRDP Shares and the automatic tender of such VRDP Shares for Remarketing shall be provided by or on behalf of the Fund to the Holders of such VRDP Shares as soon as reasonably practicable upon the extension of the Initial Extended Termination Date, but in no event later than one Business Day before the Automatic Tender Date.  Notwithstanding the foregoing provisions of this Notice of Special Rate Period, if any VRDP Shares beneficially owned by Citibank for federal income tax purposes on such Purchase Date are not successfully remarketed for purchase on such Purchase Date, a Failed Remarketing Condition-Purchased VRDP Shares will be deemed to exist in respect of such VRDP Shares for all purposes of the Articles Supplementary (including Section 10(b) thereof and the definition of Maximum Rate) and the other Related Documents and, as of such Purchase Date, such VRDP Shares will be deemed beneficially owned by the Liquidity Provider.  Accordingly, all such VRDP Shares deemed beneficially owned by the Liquidity Provider will thereafter be deemed tendered for Remarketing on each Business Day in accordance with the Related Documents, and the continued beneficial ownership of such VRDP Shares by the Liquidity Provider will result in a Failed Remarketing Condition-Purchased VRDP Shares Redemption in accordance with, and subject to, the terms of such definition and the Related Documents.  For the avoidance of doubt, if any VRDP Shares beneficially owned by a Beneficial Owner other than Citibank are not successfully remarketed on the Purchase Date relating to the Automatic Tender Date and are purchased by the Liquidity Provider pursuant to the Purchase Obligation, such VRDP Shares shall constitute Failed Remarketing Condition-Purchased VRDP Shares, such VRDP Shares will thereafter be deemed tendered for Remarketing on each Business Day in accordance with the Related Documents, and the continued beneficial ownership of such VRDP Shares by the Liquidity Provider will result in a Failed Remarketing Condition-Purchased VRDP Shares Redemption in accordance with, and subject to, the terms of such definition and the Related Documents.

The Fund shall have the right, exercisable not more than 120 days nor less than 90 days prior to the last day of the Special Rate Period, to request that each Holder of the VRDP Shares (x) extend the term of the Special Rate Period for the VRDP Shares for an additional 364-day period, which request may be conditioned upon terms and conditions that are different from the terms and conditions herein, including, without limitation, the further extension of the Scheduled Termination Date and (y) notify the Fund and the Tender and Paying Agent of such Holder’s acceptance or rejection of such request within 30 days after receiving such request.  If any Holder of the VRDP Shares fails to notify the Fund and the Tender and Paying Agent of its acceptance or rejection of the Fund's request for extension within 30 days after receiving such request, such failure to respond shall constitute a rejection of such request.  Any acceptance by a Holder within such 30-day period may be conditioned upon terms and conditions, including, without limitation, the further extension of the Scheduled Termination Date, that are different from the terms and conditions herein or the terms proposed by the Fund in making an extension request (a “Conditional Acceptance”).  If any Holder provides a Conditional Acceptance, then the Fund shall have 30 days thereafter to notify the Total Holders and the Tender and Paying Agent of the Fund’s acceptance or rejection of the terms and conditions specified in any such Conditional Acceptance.  The Fund's failure to notify the Total Holders and the Tender and Paying Agent within such 30-day period will be deemed a rejection of the terms and conditions specified in a Conditional Acceptance.  Each Holder of the VRDP Shares may grant or deny any request for extension of the Special Rate Period for the VRDP Shares in their sole and absolute discretion and any request for such extension will be effective only if granted by the Total Holders.

If the Initial Extended Termination Date is not further extended to a succeeding Scheduled Termination Date in accordance with the terms of the VRDP Shares Purchase Agreement or if the VRDP Shares Purchase Agreement is otherwise terminated on or prior to the Initial Extended Termination Date for any reason, then the VRDP Shares beneficially owned by any Beneficial Owner will be deemed automatically tendered for Remarketing on the seventh day prior to the Initial Extended Termination Date (whether or not the VRDP Shares Purchase Agreement has terminated on or prior to such date) with a Purchase Date occurring on such Initial Extended Termination Date.  Notice of the automatic tender of such VRDP Shares for Remarketing shall be provided by or on behalf of the Fund to the Holders of such VRDP Shares as soon as reasonably practicable prior to, but in no event later than one Business Day before, the Automatic Tender Date.  Notwithstanding the foregoing provisions of this Notice of Special Rate Period, if any VRDP Shares beneficially owned by Citibank for federal income tax purposes on such Purchase Date are not successfully remarketed for purchase on such Purchase Date, a Failed Remarketing Condition-Purchased VRDP Shares will be deemed to exist in respect of such VRDP Shares for all purposes of the Articles Supplementary (including Section 10(b) thereof and the definition of Maximum Rate) and the other Related Documents and, as of such Purchase Date, such VRDP Shares will be deemed beneficially owned by the Liquidity Provider, unless the Fund has entered into an Alternate VRDP Shares Purchase Agreement and all VRDP Shares beneficially owned by Citibank are subject to purchase by the replacement Liquidity Provider pursuant to the Purchase Obligation of such Liquidity Provider under such Alternate VRDP Shares Purchase Agreement on and as of such Purchase Date.  Accordingly, if a Failed Remarketing Condition-Purchased VRDP Shares is so deemed to exist in respect of any VRDP Shares deemed beneficially owned by the Liquidity Provider on such Purchase Date, such VRDP Shares will thereafter be deemed tendered for Remarketing on each Business Day in accordance with the Related Documents and the continued beneficial ownership of such VRDP Shares by the Liquidity Provider will result in a Failed Remarketing Condition-Purchased VRDP Shares Redemption in accordance with, and subject to, the terms of such definition and the Related Documents.  For the avoidance of doubt, if any VRDP Shares beneficially owned by a Beneficial Owner other than Citibank are not successfully remarketed on the Purchase Date relating to the automatic tender described above and are purchased by the Liquidity Provider pursuant to the Purchase Obligation, such VRDP Shares shall constitute Failed Remarketing Condition-Purchased VRDP Shares, such VRDP Shares will thereafter be deemed tendered for Remarketing on each Business Day in accordance with the Related Documents, and the continued beneficial ownership of such VRDP Shares by the Liquidity Provider will result in a Failed Remarketing Condition-Purchased VRDP Shares Redemption in accordance with, and subject to, the terms of such definition and the Related Documents.

Other Additional Provisions Applicable During Special Rate Period
During the Special Rate Period, the provisions of the Articles Supplementary relating to Mandatory Tender Events and related Mandatory Tenders shall be inapplicable.
During the Special Rate Period, the first sentence of the first paragraph of Section 12 of the Articles Supplementary shall be inapplicable.
During the Special Rate Period, the Fund is not required to obtain or maintain any short-term preferred share rating of the VRDP Shares.
Pursuant to Section 4(d)(i) of the Articles Supplementary, attached to this Notice of Special Rate Period, as Appendix B hereto, is a copy of the VRDP Shares Basic Maintenance Report, dated June 18, 2012.

[Signature Page Follows]
 

 
* NOTE: Neither the Fund nor the Tender and Paying Agent shall be responsible for the selection or use of the CUSIP Numbers selected, nor is any representation made as to its correctness indicated in any notice or as printed on any VRDP Share certificate.  It is included solely as a convenience to Holders of VRDP Shares.
 

 
 
 

IN WITNESS WHEREOF, I have signed this Notice of Special Rate Period as of the date first written above.
 
BLACKROCK MUNIYIELD QUALITY FUND III, INC.

By: /s/ Robert W. Crothers________________

Name: _Robert W. Crothers________________

Title: __Vice President___________________


 
 
 

Schedule 1

Recipients of this Notice of Special Rate Period

Citibank, N.A.
390 Greenwich Street, 2nd Floor
New York, New York 10013
Attention:  MSD Middle Office Manager
Telephone:  (212) 723-6320
Fax:  (212) 723-8642
Email:  msdcititob@citi.com

Citigroup Global Markets Inc.
390 Greenwich Street
New York, New York 10013
Attention:  Middle Office Manager
Telephone:  (212) 723-7124
Fax:  (212) 723-8642
Email:  msdcititob@citi.com

The Depository Trust Company
LensNotice@dtcc.com



 
 
 

Appendix A


Definitions

The following terms shall have the following meanings:

“Base Rate” means, with respect to an SRP Calculation Period, the SIFMA Municipal Swap Index on the SRP Calculation Date for such SRP Calculation Period.

"Maximum Rate" means 15% per annum, exclusive of any applicable Gross-up Payment or increased dividend payment relating to the inclusion in any dividend of net capital gains or ordinary income taxable for regular federal income tax purposes, in each case due and payable in accordance with the Articles Supplementary.

“Ratings Spread” means, with respect to an SRP Calculation Period, the percentage per annum set forth below opposite the highest applicable credit rating assigned to the VRDP Shares, unless the lowest applicable rating is below A3/A-, in which case the Ratings Spread shall mean the percentage per annum set forth below opposite the lowest applicable credit rating assigned to the VRDP Shares by Moody’s, Fitch or any Other Rating Agency, in each case rating the VRDP Shares at the request of the Fund, on the SRP Calculation Date for such SRP Calculation Period:

Moody’s/Fitch
Percentage
Aaa/AAA
0.95%
Aa3/AA- to Aa1/AA+
1.20%
A3/A- to A1/A+
2.00%
Baa3/BBB- to Baa1/BBB+
3.00%
Non-investment grade or Unrated
4.00%

“SRP Calculation Date” means (i) with respect to the SRP Initial Calculation Period, the Business Day immediately preceding the Special Rate Period Commencement Date and (ii) with respect to any SRP Subsequent Calculation Period, the last day of the immediately preceding SRP Calculation Period, provided that the next succeeding SRP Calculation Date will be determined without regard to any prior extension of a SRP Calculation Date to a Business Day.

“SRP Calculation Period” means the SRP Initial Calculation Period and any SRP Subsequent Calculation Period.

“SRP Initial Calculation Period” means, with respect to the VRDP Shares, the period commencing on, and including, the Special Rate Period Commencement Date and ending on, and including, the next succeeding Wednesday, or, if such day is not a Business Day, the next succeeding Business Day.

“SRP Subsequent Calculation Period” means, with respect to the VRDP Shares, the period from, and including, the first day following a SRP Calculation Date to, and including, the next succeeding Wednesday, or, if such day is not a Business Day, the next succeeding Business Day.
"Total Holders" means, with respect to any Series of VRDP Shares, the Holders of 100% of the aggregate Outstanding amount of the VRDP Shares of such Series.


 
 
 

Appendix B

VRDP Shares Basic Maintenance Report


Appendix B