[Federal Register Volume 59, Number 51 (Wednesday, March 16, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-6015]


[[Page Unknown]]

[Federal Register: March 16, 1994]


-----------------------------------------------------------------------

DEPARTMENT OF LABOR
[Prohibited Transaction Exemption 94-24; Exemption Application No. D-
9561, et al.]

 

Grant of Individual Exemptions; Jacobs Corporation Profit Sharing 
Plan and Trust, et al.

AGENCY: Pension and Welfare Benefits Administration, Labor.

ACTION: Grant of individual exemptions.

-----------------------------------------------------------------------

SUMMARY: This document contains exemptions issued by the Department of 
Labor (the Department) from certain of the prohibited transaction 
restrictions of the Employee Retirement Income Security Act of 1974 
(the Act) and/or the Internal Revenue Code of 1986 (the Code).
    Notices were published in the Federal Register of the pendency 
before the Department of proposals to grant such exemptions. The 
notices set forth a summary of facts and representations contained in 
each application for exemption and referred interested persons to the 
respective applications for a complete statement of the facts and 
representations. The applications have been available for public 
inspection at the Department in Washington, DC. The notices also 
invited interested persons to submit comments on the requested 
exemptions to the Department. In addition the notices stated that any 
interested person might submit a written request that a public hearing 
be held (where appropriate). The applicants have represented that they 
have complied with the requirements of the notification to interested 
persons. No public comments and no requests for a hearing, unless 
otherwise stated, were received by the Department.
    The notices of proposed exemption were issued and the exemptions 
are being granted solely by the Department because, effective December 
31, 1978, section 102 of 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 proposed to the Secretary 
of Labor.

Statutory Findings

    In accordance with section 408(a) of the Act and/or section 
4975(c)(2) of the Code and the procedures set forth in 29 CFR part 
2570, subpart B (55 FR 32836, 32847, August 10, 1990) and based upon 
the entire record, the Department makes the following findings:
    (a) The exemptions are administratively feasible;
    (b) They are in the interests of the plans and their participants 
and beneficiaries; and
    (c) They are protective of the rights of the participants and 
beneficiaries of the plans.

Jacobs Corporation Profit Sharing Plan and Trust (the Plan) Located 
in Harlan, IA

[Prohibited Transaction Exemption No. 94-24; Application No. D-9561]

Exemption

    The restrictions of section 406(a) and 406 (b)(1) and (b)(2) of the 
Act and the sanctions resulting from the application of section 4975 of 
the Code, by reason of section 4975(c)(1) (A) through (E) of the Code 
shall not apply to the cash sale of certain assets of the Plan (the 
Assets), to occur over two (2) consecutive years, by the Plan to the 
Jacobs Corporation (the Employer), a party in interest with respect to 
the Plan; provided that: (1) The aggregate purchase price paid by the 
Employer for all of the Assets is no less than $683,384; (2) the 
purchase price paid by the Employer in each of the two consecutive 
years will be at least $341,692; (3) the purchase price paid by the 
Employer in each of the two consecutive years upon execution of the 
sale of such Assets is not less than the fair market value of such 
Assets on the date of each sale; (4) the terms of each of the sales are 
no less favorable to the Plan than those negotiated in similar 
circumstances with unrelated third parties; and (5) the Plan will incur 
no fees, commissions, or expenses as a result of either of the sales.

Temporary Nature of Exemption

    The exemption is temporary and is effective on the date of 
publication of the grant of this exemption in the Federal Register and 
will expire upon the earlier to occur of the date which is two years 
from the grant of this exemption or the date when the Plan no longer 
owns any of the Assets which are the subject of this exemption.
    For a more complete statement of the facts and representations 
supporting the Department's decision to grant this exemption refer to 
the notice of proposed exemption published on January 18, 1994, at 59 
FR 2625.

FOR FURTHER INFORMATION CONTACT: Angelena C. Le Blanc of the 
Department, telephone (202) 219-8883. (This is not a toll-free number.)

Bangs, McCullen, Butler, Foye & Simmons Employees' Retirement Plan (the 
Plan) Located in Rapid City, SD

[Prohibited Transaction Exemption 94-25; Exemption Application No. D-
9598]

Exemption

    The restrictions of sections 406(a), 406 (b)(1) and (b)(2) of the 
Act and the sanctions resulting from the application of section 4975 of 
the Code, by reason of section 4975(c)(1) (A) through (E) of the Code, 
shall not apply, effective January 1, 1994, to the lease by the Plan 
(the Lease) of certain improved real property located in Rapid City, 
South Dakota (the Property) to Bangs, McCullen, Butler, Foye & Simmons 
(the Employer), the sponsor of the Plan; provided that the following 
conditions are satisfied:
    (A) All terms and conditions of the Lease are at least as favorable 
to the Plan as those which the Plan could obtain in an arm's-length 
transaction with an unrelated party;
    (B) The Lease is a triple net lease under which the Employer is 
obligated for all costs of maintenance and repair, and all taxes, 
related to the Property;
    (C) The interests of the Plan for all purposes under the Lease are 
represented by an independent fiduciary, Norwest Bank South Dakota, 
N.A.; and
    (D) The rent paid by the Employer under the Lease is no less than 
the fair market rental value of the Property.

EFFECTIVE DATE: This exemption is effective as of January 1, 1994.
    For a more complete statement of the facts and representations 
supporting the Department's decision to grant this exemption, refer to 
the notice of proposed exemption published on January 18, 1994 at 59 FR 
2627.

FOR FURTHER INFORMATION CONTACT: Ronald Willett of the Department, 
telephone (202) 219-8881. (This is not a toll-free number.)

Donohoe Restated Profit Sharing Plan and Trust (the Plan) Located 
in Washington, DC

[Prohibited Transaction Exemption 94-26; Exemption Application No. D-
9442]

Exemption

    The restrictions of sections 406(a), 406(b)(1), and 406(b)(2) of 
the Act and the sanctions resulting from the application of section 
4975 of the Code, by reason of section 4975(c)(1) (A) through (E) of 
the Code, effective December 28, 1993, shall not apply to the cash sale 
by the Plan of shares of common stock (the Shares) of the Federal 
Center Plaza Corporation (FCPC) to FCPC; provided that: (1) As the 
result of the sale, the Plan received in cash the greater of $25.00 per 
share or the fair market value of the Shares of FCPC, as determined by 
an independent, qualified appraiser, as of December 28, 1993, the date 
of the sale; (2) the Plan paid no commissions or fees in regard to the 
transaction; and (3) the terms of the sale were no less favorable to 
the Plan than those it would have received in similar circumstances 
when negotiated at arm's length with unrelated third parties.

EFFECTIVE DATE: This exemption is effective on December 28, 1993.

Written Comments

    In the Notice of Proposed Exemption (the Notice), the Department 
invited all interested persons to submit written comments and requests 
for a hearing on the proposed exemption within forty-five (45) days of 
the date of the publication of the Notice in the Federal Register. All 
comments and requests for hearing were due by December 27, 1993.
    During the comment period, the Department received no requests for 
a hearing. However, the Department did receive a comment letter from 
the applicant, dated December 27, 1993. In its letter the applicant 
informed the Department that prior to receiving a granted exemption, 
the trustees of the Plan (the Trustees) intended on December 28, 1993, 
to sell to FCPC the Shares owned by the Plan. It was represented that 
the Trustees proposed to enter the transaction on that date, because 
FCPC planned to elect on January 1, 1994, to become a subchapter S 
Corporation under section 1361 of the Code. It was represented that 
FCPC will elect subchapter S Corporation status in order to reduce its 
administrative expenses, in the hope that by doing so it can continue 
in business without taking the step of discharging employees.
    In its December 27 letter the applicant represented that the Plan 
would receive from the sale of the Shares to FCPC sales proceeds in 
cash in an amount equal to the greater of $25.00 per share or the fair 
market value of the Shares, as of the date of the sale, as determined 
by an independent appraiser. In this regard, an independent, qualified 
appraiser, Arthur Andersen & Co. SC (Arthur Andersen), prepared an 
appraisal report, dated February 9, 1994. In its report Arthur Andersen 
estimated that, as of December 28, 1993, the fair market value of the 
Shares of FCPC was $19.00 per share.
    After giving full consideration to the entire record, including the 
written comment from the applicant, the Department has decided to grant 
the exemption retroactively. In this regard, the comment by the 
applicant and the appraisal report of Arthur Andersen submitted to the 
Department have been included as part of the public record of the 
exemption application. The complete application file, including all 
supplemental submissions received by the Department, are made available 
for public inspection in the Public Documents Room of the Pension 
Welfare Benefits Administration, room N-5507, U.S. Department of Labor, 
200 Constitution Avenue NW., Washington, DC 20210.
    For a more complete statement of the facts and representations 
supporting the Department's decision to grant this exemption refer to 
the notice of proposed exemption published on November 24, 1993, at 58 
FR 62142.

FOR FURTHER INFORMATION CONTACT: Angelena C. Le Blanc of the 
Department, telephone (202) 219-8883. (This is not a toll-free number.)

Linton Industries, Inc. Retirement Plan (the Plan) Located in 
Edmonds, WA

[Prohibited Transaction Exemption 94-27; Exemption Application No. D-
9496]

Exemption

    The restrictions of sections 406(a), 406(b)(1), and 406(b)(2) of 
the Act and the sanctions resulting from the application of section 
4975 of the Code, by reason of section 4975(c)(1) (A) through (E) of 
the Code, shall not apply to the loan (the New Loan) of $485,000 from 
the Plan to Linton Industries, Inc. (the Employer), a party in interest 
with respect to the Plan.
    This exemption is conditioned upon the following requirements: (a) 
The terms of the New Loan are at least as favorable to the Plan as 
those obtainable in an arm's-length transaction with an unrelated 
party; (b) the New Loan will not exceed twenty-five percent of the 
assets of the Plan at any time during the duration of the New Loan; (c) 
the New Loan is secured by a first lien interest on certain equipment 
(the Equipment), which has been appraised by a qualified, independent 
appraiser to ensure that the fair market value of the Equipment is at 
least 200 percent of the amount of the New Loan; (d) the fair market 
value of the Equipment remains at least equal to 200 percent of the 
outstanding balance of the New Loan throughout the duration of the New 
Loan; (e) an independent, qualified fiduciary determines on behalf of 
the Plan that the New Loan is in the best interests of the Plan and 
protective of the Plan and its participants and beneficiaries; and (f) 
the independent, qualified fiduciary monitors compliance by the 
Employer with the terms and conditions of the New Loan and the 
exemption throughout the duration of the transaction, taking any action 
necessary to safeguard the Plan's interest, including foreclosure on 
the Equipment in the event of default.
    For a more complete statement of the facts and representations 
supporting the Department's decision to grant this exemption, refer to 
the notice of proposed exemption published on January 18, 1994 at 59 FR 
2624.

FOR FURTHER INFORMATION CONTACT:
Kathryn Parr of the Department, telephone (202) 219-8971. (This is not 
a toll-free number.)

General Information

    The attention of interested persons is directed to the following:
    (1) The fact that a transaction is the subject of an exemption 
under section 408(a) of the Act and/or section 4975(c)(2) of the Code 
does not relieve a fiduciary or other party in interest or disqualified 
person from certain other provisions to which the exemptions do not 
apply and the general fiduciary responsibility provisions of section 
404 of the Act, which among other things require a fiduciary to 
discharge his duties respecting the plan solely in the interest of the 
participants and beneficiaries of the plan and in a prudent fashion in 
accordance with section 404(a)(1)(B) of the Act; nor does it affect the 
requirement of section 401(a) of the Code that the plan must operate 
for the exclusive benefit of the employees of the employer maintaining 
the plan and their beneficiaries;
    (2) These exemptions are supplemental to and not in derogation of, 
any other provisions of the Act and/or the Code, including statutory or 
administrative exemptions and transactional rules. Furthermore, the 
fact that a transaction is subject to an administrative or statutory 
exemption is not dispositive of whether the transaction is in fact a 
prohibited transaction; and
    (3) The availability of these exemptions is subject to the express 
condition that the material facts and representations contained in each 
application are true and complete and accurately describe all material 
terms of the transaction which is the subject of the exemption. In the 
case of continuing exemption transactions, if any of the material facts 
or representations described in the application change after the 
exemption is granted, the exemption will cease to apply as of the date 
of such change. In the event of any such change, application for a new 
exemption may be made to the Department.

    Signed at Washington, DC, this 10th day of March, 1994.
Ivan Strasfeld,
Director of Exemption Determinations; Pension and Welfare Benefits 
Administration, U.S. Department of Labor.
[FR Doc. 94-6015 Filed 3-15-94; 8:45 am]
BILLING CODE 4510-29-P