[Federal Register Volume 59, Number 118 (Tuesday, June 21, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-15007]


[[Page Unknown]]

[Federal Register: June 21, 1994]


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DEPARTMENT OF LABOR
Pension and Welfare Benefits Administration
[Application No. D-9613]

 

Proposed Exemptions; Abbott Pension Plan et al.

AGENCY: Pension and Welfare Benefits Administration, Labor.

ACTION: Notice of proposed exemptions.

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SUMMARY: This document contains notices of pendency before the 
Department of Labor (the Department) of proposed exemptions from 
certain of the prohibited transaction restriction of the Employee 
Retirement Income Security Act of 1974 (the Act) and/or the Internal 
Revenue Code of 1986 (the Code).

Written Comments and Hearing Requests

    Unless otherwise stated in the Notice of Proposed Exemption, all 
interested persons are invited to submit written comments, and with 
respect to exemptions involving the fiduciary prohibitions of section 
406(b) of the Act, requests for hearing within 45 days from the date of 
publication of this Federal Register Notice. Comments and request for a 
hearing should state: (1) the name, address, and telephone number of 
the person making the comment or request, and (2) the nature of the 
person's interest in the exemption and the manner in which the person 
would be adversely affected by the exemption. A request for a hearing 
must also state the issues to be addressed and include a general 
description of the evidence to be presented at the hearing. A request 
for a hearing must also state the issues to be addressed and include a 
general description of the evidence to be presented at the hearing.

ADDRESSES: All written comments and request for a hearing (at least 
three copies) should be sent to the Pension and Welfare Benefits 
Administration, Office of Exemption Determinations, Room N-5649, U.S. 
Department of Labor, 200 Constitution Avenue, NW., Washington, DC 
20210. Attention: Application No. stated in each Notice of Proposed 
Exemption. The applications for exemption and the comments received 
will be available for public inspection in the Public Documents Room of 
Pension and Welfare Benefits Administration, U.S. Department of Labor, 
Room N-5507, 200 Constitution Avenue, NW., Washington, DC 20210.

Notice to Interested Persons

    Notice of the proposed exemptions will be provided to all 
interested persons in the manner agreed upon by the applicant and the 
Department within 15 days of the date of publication in the Federal 
Register. Such notice shall include a copy of the notice of proposed 
exemption as published in the Federal Register and shall inform 
interested persons of their right to comment and to request a hearing 
(where appropriate).

SUPPLEMENTARY INFORMATION: The proposed exemptions were requested in 
applications filed pursuant to section 408(a) of the Act and/or section 
4975(c)(2) of the Code, and in accordance with procedures set forth in 
29 CFR Part 2570, Subpart B (55 FR 32836, 32847, August 10, 1990). 
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 requested 
to the Secretary of Labor. Therefore, these notices of proposed 
exemption are issued solely by the Department.
    The applications contain representations with regard to the 
proposed exemptions which are summarized below. Interested persons are 
referred to the applications on file with the Department for a complete 
statement of the facts and representations.

Abbott Pension Plan (the Plan), located in Lynn, MA.

[Application No. D-9613].

Proposed Exemption

    The Department is considering granting an exemption under the 
authority of section 408(a) of the Act and section 4975(c)(2) of the 
Code and in accordance with the procedures set forth in 29 CFR part 
2570, subpart B (55 FR 32836, 32847, August 10, 1990). If the exemption 
is granted, 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 to the proposed transfer by the Plan, of 
certain limited partnership interests (the Interests) to Abbott House 
Nursing Home, Inc. (Abbott); Winthrop Nursing Home, Inc. (which does 
business as the Bay View Nursing Home and is referred to herein as 
Winthrop/Bay View); Devereux House Nursing Home, Inc. (Devereux); and 
the Greenview House Nursing Home, Inc. (Greenview), in satisfaction of 
certain cash advances made to the Plan by these entities. (Abbott, 
Winthrop/Bay View, Devereux and Greenview, which are parties in 
interest with respect to the Plan, are collectively referred to herein 
as the Nursing Facilities.)
    This proposed exemption is conditioned upon the following 
requirements: (1) The transfer represents a one-time transaction and 
satisfies certain cash advances made by the Nursing Facilities to the 
Plan; (2) the Interests are transferred for the greater of their 
historical cost to the Plan, their fair market value or the total 
amount of cash advanced to the Plan; (3) for purposes of the transfer, 
the fair market value of the Interests has been established by a 
qualified, independent appraiser; and (4) the Plan does not pay any 
fees or commissions in connection with the transfer.

Summary of Facts and Representations

    1. The Plan is a defined benefit plan that has been adopted by four 
Massachusetts-based nursing facilities which are members of a 
controlled group of corporations. The Nursing Facilities that sponsor 
the Plan for the benefit of their employees are Abbott, Winthrop/Bay 
View, Devereux and Greenview. As of December 31, 1992, the Plan had 
total net assets of $2,060,920. This amount was allocated among the 
Nursing Facility sub-Plan accounts as follows: 

------------------------------------------------------------------------
             Nursing facility sub-plan accounts              Net assets 
------------------------------------------------------------------------
Abbott.....................................................     $471,149
Winthrop/Bay View..........................................      385,383
Greenview..................................................      872,004
Devereux...................................................      332,384
                                                            ------------
    Total..................................................    2,060,920
------------------------------------------------------------------------

    2. As of December 23, 1993, the Plan had two remaining 
participants, Richard C. Bane and his brother, Robert Bane, both of 
whom participate in the Abbott sub-Plan account. Richard Bane is the 
Plan trustee and the decisionmaker with respect to the Plan's 
investments. Both Richard and Robert Bane are 50 percent shareholders 
of Abbott and Devereux. Their father, George H. Bane, and Gerald 
Gouchberg, an outside investor who is not related to members of the 
Bane Family, each own 50 percent of the outstanding stock of Winthrop/
Bay View and Greenview.
    3. The Plan is in the process of terminating and upon termination, 
will be replaced with a deferred compensation plan. On April 12, 1993, 
the Plan received approval from the Internal Revenue Service to 
terminate as of December 31, 1992 and it made cash distributions to 126 
employees of the Nursing Facilities with the exception of the Banes. To 
provide partial funding for the participant distributions and to 
provide liquidity while assets were being sold, the Nursing Facilities 
made cash advances\1\ to the Plan during the second and third quarters 
of 1993 in the following amounts:
---------------------------------------------------------------------------

    \1\11 The applicant represents that the loans were interest-
free, unsecured and used for the payment of benefits to 
participants. As such, the applicant is of the view that such loans 
are in compliance with Prohibited Transaction Exemption 80-26 (45 FR 
28545, April 29, 1980). However, the Department expresses no opinion 
herein on whether the cash advances have satisfied the terms and 
conditions of PTE 80-26. 

------------------------------------------------------------------------
                                                                 Cash   
                      Nursing facility                         advance  
------------------------------------------------------------------------
Winthrop/Bay View..........................................      $27,808
Greenview..................................................       31,650
Devereux...................................................       41,296
                                                            ------------
      Total................................................      100,754
------------------------------------------------------------------------

    In addition to the cash advances, each Nursing Facility made cash 
contributions during 1992 and 1993 to their respective sub-Plan account 
in order to satisfy the Plan's liabilities. Such contributions were in 
excess of $273,000.
    4. At present, the Plan holds certain assets that are not readily 
marketable and have limited liquidity. These assets consist of 
interests in New England Pension Properties V (NEPP V) and New England 
Pension Properties VI (NEPP VI). NEPP V and NEPP VI are real estate 
investment trusts/limited partnerships. The Plan has paid no servicing 
fees in connection with the holding of the Interests in NEPP V and NEPP 
VI nor have any restrictions been placed upon their sale or transfer.
    The Plan acquired the Interests in NEPP V and NEPP VI on June 22, 
1987 and July 13, 1988, respectively, from Copley Partnerships, an 
unrelated party. The Plan made a cash investment of $50,000 in NEPP V 
and $40,000 in NEPP VI. At the time of acquisition, the per unit value 
of the Interests in NEPP V and NEPP VI was $1,000. Thus, the Plan 
received 50 limited partnership units in NEPP V and 40 limited 
partnership units in NEPP VI. Both NEPP V and NEPP VI have a maturity 
date of December 31, 2036.
    On July 31, 1990, the Plan received $1,926 from Copley Partnerships 
with respect to the Interest in NEPP VI. This amount represented a 
return of capital. In addition, the Plan received income payments of 
$14,082 for NEPP V and $11,165 for NEPP VI or a total income payment of 
$25,247.
    The Interests have been appraised by Fredric Daub, President of 
Capital Insurance Agency, Inc., an independent investment broker from 
Maynard, MA. In an appraisal report dated February 25, 1994, Mr. Daub 
has verified that during the fourth quarter of 1993, he obtained firm 
bids for NEPP V of $232 per unit and $324 per unit for NEPP VI in the 
secondary market. Thus, the fair market values of the Plan's Interests 
in NEPP V and NEPP VI would be $11,600 and $12,960, respectively, or a 
total fair market value of $24,560. Mr. Daub represents that these 
values reflect gross proceeds before the application of a one-time fee 
of $250 and a re-registration fee of an unspecified amount. Mr. Daub 
also notes that these values reflect a commitment as of the day of the 
offering and that the secondary market for investments such as NEPP V 
and NEPP VI is extremely limited.
    5. To facilitate the liquidation and termination of the Plan and 
reimburse the Nursing Facilities for the cash advances they have made 
to the Plan, the Nursing Facilities propose to have the Interests 
transferred to them. Accordingly, an administrative exemption is 
requested from the Department.
    The Interests will be transferred to the Nursing Facilities for the 
greater of their historical cost to the Plan, their fair market value, 
or $100,754 representing the total outstanding loans advanced 
previously by the Nursing Facilities to the Plan. According to the 
applicant, these loans would have been repaid in cash had the Plan not 
been in the process of terminating. As a result of the transfer, the 
Nursing Facilities will cancel the outstanding indebtedness. The Plan 
will not be required to pay any fees or commissions in connection 
therewith.
    6. In summary, it is represented that the proposed transaction will 
satisfy the statutory criteria for an exemption under section 408(a) of 
the Act because: (a) the transfer will be a one-time transaction to 
satisfy certain cash advances made by the Nursing Facilities to the 
Plan; (b) the Interests will be transferred to the Nursing Facilities 
for the greater of their historical cost to the Plan, their fair market 
value or the total amount of cash advanced to the Plan; (c) for 
purposes of the transfer, the fair market value of the Interests has 
been established by a qualified, independent appraiser; and (d) the 
Plan will not pay any fees or commissions in connection with the 
transfer.

FOR FURTHER INFORMATION CONTACT: Ms. Jan D. Broady of the Department at 
(202) 219-8881. (This is not a toll-free number.)
    AT&T Management Pension Plan and AT&T Pension Plan (the AT&T 
Plans), and BellSouth Management Pension Plan and BellSouth Pension 
Plan (the BellSouth Plans; collectively, the Plans). Located in 
Morristown, New Jersey. [Application Nos. D-9607, D-9608, D-9609, D-
9610].

Proposed Exemption

    The Department is considering granting an exemption under the 
authority of section 408(a) of the Act and section 4975(c)(2) of the 
Code and in accordance with the procedures set forth in 29 CFR Part 
2570, Subpart B (55 FR 32836, 32847, August 10, 1990). If the exemption 
is granted 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 June 3, 1993, to the past and 
proposed lease (the Lease) by the Plans, through the Telephone Real 
Estate Equity Trust (TREET), of office space in Southpark C, a 
commercial office building in Austin, Texas, to American Telephone and 
Telegraph Co. (AT&T), one of the sponsors of the Plans; provided that 
the following conditions are satisfied:
    (A) The interests of TREET for all purposes under the Lease are 
represented by Hill Partners, which is independent of and unrelated to 
AT&T, serving as a fiduciary under the Act;
    (B) At all times under the Lease, AT&T pays TREET rent of no less 
than the fair market rental value of the Property; and
    (C) All terms and conditions of the Lease are at least as favorable 
to TREET as those which TREET could obtain in arm's-length transactions 
with unrelated parties;

EFFECTIVE DATE: This exemption, if granted, will be effective as of 
June 3, 1993.

Summary of Facts and Representations

    1. The AT&T Plans are defined benefit pension plans sponsored by 
the American Telephone & Telegraph Company (AT&T), a New York public 
corporation engaged in a wide variety of nationwide and international 
telecommunications services, including the design, manufacture, 
marketing and servicing of transmission and switching equipment, 
silicon chip products, electronic components, computers and software, 
and products and services for the U.S. Department of Defense and 
related agencies. The BellSouth Plans are defined benefit pension plans 
sponsored by BellSouth, a Georgia public corporation created by the 
reorganization of AT&T in 1984. BellSouth is engaged in the furnishing 
of exchange telecommunications and exchange access service within 
specific geographic areas of the southern United States, directory 
advertising and publishing, marketing of customer premises 
telecommunications equipment, the provision of advanced mobile 
communications services using cellular technology, and other 
miscellaneous business activities.
    2. TREET is a group trust which is utilized for the investment on 
an undivided basis of certain real estate assets of the Plans, 
resulting from the reorganization of AT&T and its subsidiaries pursuant 
to the Plan of Reorganization (the Reorganization) approved by the U.S. 
District Court for the District of Columbia in the matter of U.S. v. 
Western Electric Co., Inc., et.al (Civil Action No. 82-1092). The 
assets of the Plans' predecessor plans had been held in trusts 
established for the Bell System Pension Plan (the BSPP) and the Bell 
System Management Pension Plan (the BSMPP). On January 1, 1984, the 
trusts for the BSPP and the BSMPP were merged into the Bell System 
Trust (the BST). Substantially all of the non-real estate assets in the 
BST were transferred to a new AT&T trust. The real estate assets were 
retained in the BST, which was amended and restated as TREET. The 
original participants in TREET were employee benefit plans maintained 
by various separate companies resulting from the Reorganization (the 
New Companies' Plans), each of which agreed that interests in TREET 
would be bought and sold only among the participating plans.
    Buying and selling of interests in TREET has occurred among the 
Bell Companies' Plans in such manner that the AT&T Plans and the 
BellSouth Plans are the only New Companies' Plans which continue to own 
participating interests in TREET. As of December 31, 1992, TREET had 
net assets of approximately $2,637,276,588. Currently, the only 
participants in TREET are the AT&T Master Pension Trust, which holds 
the assets of the AT&T Plans, and the BellSouth Master Pension Trust, 
which holds the assets of the BellSouth Plans. On January 1, 1993, the 
assets of seventeen defined benefit plans sponsored by the NCR 
Corporation (NCR) were added to the AT&T Master Pension Trust, as a 
result of AT&T's acquisition of NCR.
    3. As named fiduciary of TREET, AT&T has utilized more than a 
hundred independent trustees and investment managers to manage TREET 
assets, including Karsten Realty Advisors (Karsten). Karsten is a 
California corporation operating as an investment adviser registered 
under the Investment Advisors Act of 1940, as amended. With its 
headquarters in Los Angeles, Karsten engages in rendering advice with 
respect to the acquisition, management, financing and disposition of 
real properties in many locations on behalf of approximately 18 pension 
funds and other clients. As of December 31, 1993, Karsten had 
approximately $600 million in assets under its management, including 
approximately $500 million in tax-exempt assets. Karsten's services to 
TREET include the supervision of property managers and leasing agents 
and the provision of recommendations regarding sales or other 
dispositions of properties. On February 1, 1994, the assets of Karsten 
were acquired by Koll Realty Advisors (Koll), which assumed Karsten's 
obligations with respect to TREET. Koll is a California corporation 
functioning as an investment adviser registered under the Investment 
Advisors Act of 1940, as amended. AT&T represents that it is 
unaffiliated with Karsten and Koll, and that Karsten and Koll are each 
``qualified professional asset managers'' within the meaning of 
Prohibited Transaction Class Exemption 84-14 (PTE 84-14, 49 FR 9494, 
March 13, 1984).
    Among TREET's assets which have been under Karsten's management is 
Southpark, a commercial office development in which AT&T was a lessee 
at the time TREET acquired it. AT&T is requesting an exemption for its 
past and proposed lease of space in Southpark from TREET under the 
terms and conditions described herein.
    4. During 1981, the Mercantile Real Estate Fund for Employee 
Benefit Plans (the Mercantile Fund) extended a line of credit in the 
amount of $5,641,000 (the Loan) to real estate developer Crowe-Simmons-
Gottesman (Crowe) to finance the development of several commercial 
buildings which included Southpark, an office complex located in the 
Crowe Industrial Park South in Austin, Texas. The Loan was secured by a 
non-recourse promissory note (the Note) and by a deed of trust granting 
the Mercantile Fund a security interest in the three office buildings 
of Southpark, designated as Southpark A, B and C (the Deed of Trust). 
The Loan was also secured by an assignment of building rents from 
Southpark A, B and C. AT&T represents that the parties to the Loan are 
independent of an unrelated to TREET and AT&T.
    Prior to 1986, TREET acquired the Note and the Deed of Trust from 
the Mercantile Fund. Commencing in 1986, that portion of TREET's assets 
which included the Note and Deed of Trust was managed by Goldman Sachs 
& Company (Goldman) pursuant to an agreement with AT&T under which 
Goldman managed debt investments of TREET.
    Effective December 1, 1990, AT&T commenced leasing from Crowe 
approximately 13,997 square feet in Southpark C pursuant to a written 
lease (the AT&T Lease) providing for monthly rental of $6858.75 for a 
term of 36 months, through November 30, 1993. AT&T represents that at 
the time the AT&T Lease commenced, neither Karsten nor any other 
representative of TREET had any authority or control over the leasing 
of space in Southpark, and TREET's sole interest in Southpark at that 
time was as the holder of a security interest arising from TREET's 
ownership of the Note and the Deed of Trust.
    5. AT&T represents that during the mid-1980's Crowe began to 
experience increasing difficulty in meeting its Loan payment 
obligations, due to depressed real estate conditions in the Austin 
market, and Crowe and TREET negotiated modified Loan payment terms in 
1989, 1990 and 1991. These modifications related Crowe's Loan payment 
obligation to the level of cash flow generated by the Southpark 
buildings, and the parties agreed that unpaid accrued interest would be 
added to the Loan principal. As a result, however, the principal amount 
of the Loan became so large in relation to the value of the Southpark 
buildings that it appeared unlikely that Crowe would be able to receive 
any return on its equity after paying off the Loan. After it was 
evident that Crowe would eventually default on the Loan and that TREET 
would acquire Southpark by foreclosure, Goldman took steps to enable 
TREET to acquire title to Southpark prior to foreclosure, in order to 
exercise control over the buildings and to directly collect the rents. 
Crowe transferred title to Southpark to TREET through a deed in lieu of 
foreclosure (the Transfer Deed) executed on June 3, 1993. At that time, 
AT&T remained a tenant in Southpark under the AT&T Lease, occupying 
approximately 18 percent of the rentable space in Southpark. The term 
of the AT&T Lease expired on November 30, 1993, but the lease continues 
on a month-to-month holdover basis (the Holdover Lease). AT&T hopes to 
negotiate a new lease of office space in Southpark (the New Lease), 
under which it would occupy substantially less space in Southpark, 
constituting less than ten percent of the Southpark's leasable square 
footage.
    6. At all times before TREET acquired Southpark, its interests in 
the Loan had been managed and advised by Goldman, whose 
responsibilities with respect to Trust assets were limited to the 
management of debt investments. Upon acquisition of title to Southpark 
through the Transfer Deed, TREET thereby acquired equity interests, 
which were not within the scope of Goldman's authority to manage under 
the terms of its appointment. Accordingly, Karsten, which was already 
providing investment management services with respect to other assets 
of TREET, was appointed by AT&T to assume investment management 
responsibility on TREET's behalf for the Southpark buildings. With the 
addition of Southpark to TREET assets under its management, Karsten 
commenced to hold management responsibility with respect to more than 
twenty percent of the assets of TREET.
    7. In order to secure representation of TREET's interests under the 
AT&T Lease by a fiduciary which is sufficiently independent of AT&T, 
Hill Partners, Inc. (Hill Partners) has been appointed to act as an 
independent fiduciary on behalf of TREET, effective December 1, 1993, 
with respect to AT&T's lease of space in Southpark. Hill Partners is a 
Texas corporation engaged in commercial real estate development and 
management services, with its corporate headquarters in Austin, Texas. 
Hill Partners represents that it is unrelated to AT&T and TREET, except 
for the provision of services as leasing agent for Southpark C, which 
it represents constitutes less than five percent of Hill Partners' 
total revenues for the past fiscal year. Hill Partners serves as a 
fiduciary under the Act, to represent TREET's interests for all 
purposes with respect to AT&T's lease of Southpark space pursuant to 
the Holdover Lease and any New Lease or extension, renewal or 
renegotiation of the AT&T Lease. Hill Partners is required to monitor 
AT&T's performance of all obligations under any such lease, and to 
pursue appropriate remedies in the event of any default in performance 
of such obligations. Hill Partners' obligations include representing 
the interests of TREET in the negotiations with AT&T over the New 
Lease, and in the oversight and enforcement of AT&T's obligations under 
any New Lease which is consummated, including any renewal or extension 
thereof.
    Hill Partners' role also includes certain determinations with 
respect to the period commencing June 3, 1993, to December 1, 1993 (the 
Interim Period), the date of Hill Partners' assumption of duties as 
independent fiduciary on behalf of TREET. Specifically, Hill Partners 
is obligated to assess and evaluate AT&T's performance of its 
obligations under the AT&T Lease during the Interim Period, and 
Karsten's representation of TREET's interests during the Interim Period 
with respect to the AT&T Lease. Hill Partners represents that it has 
determined that during the Interim Period, AT&T was in complete 
compliance with all terms and conditions of the AT&T Lease. Hill 
Partners also represents that, based upon its review, it has determined 
that Karsten's representation of TREET's interests under the AT&T Lease 
during the Interim Period was appropriate and adequately protective of 
the interests of TREET.
    8. With respect to the proposed New Lease, the negotiation of which 
has been conducted between AT&T and Hill Partners, AT&T proposes to 
lease 7,600 square feet in Southpark C for a term of three years, 
effective April 1, 1994. The proposed annual base rent per square foot 
is $6.00 for the first year, $6.60 for the second year, and $6.96 for 
the third year, and AT&T is responsible for its pro rata share of 
expenses. The New Lease's three-year term may be extended for no more 
than one three-year renewal term at rent of no less than the prevailing 
market rental rate, by written notice to Hill Partners 180 days prior 
to expiration of the initial term, subject to Hill Partners' 
determination that such extension is in the best interests of the plans 
participating in TREET. Hill Partners confirms that it has represented 
TREET's interests in negotiating the proposed New Lease, that it 
approves of all the terms and conditions of the proposed New Lease, and 
that it would be in the best interests of TREET to execute the New 
Lease with AT&T. Hill Partners states that it has determined that the 
rent required under the New Lease is not less than the fair market 
rent. Hill Partners states that in executing the New Lease, TREET will 
be retaining a substantial corporate tenant which has an excellent 
performance record and which constitutes a very high quality tenant. 
Hill Partners represents that all the terms of the proposed New Lease 
are at least as favorable to TREET as TREET could obtain in an arm's-
length transaction with an unrelated party.
    9. In summary, the applicant represents that the proposed 
transactions satisfy the criteria of section 408(a) of the Act for the 
following reasons: (1) The interests of TREET with respect to TREET's 
lease of space in Southpark to AT&T under the Holdover Lease and the 
proposed New Lease have been and will be represented by Hill Partners, 
serving as an independent fiduciary on behalf of TREET; (2) Hill 
Partners has determined that during the Interim Period, after TREET 
acquired Southpark and before Hill Partners' appointment as independent 
fiduciary, the interests of TREET were adequately protected and 
appropriately represented by Karsten; (3) Hill Partners approves of all 
terms of the proposed New Lease and AT&T's continued tenancy in 
Southpark, and has determined that the rent required under the New 
Lease is not less than the fair market rent; (4) Under the proposed New 
Lease, AT&T will reduce the amount of space it leases in Southpark to 
less than ten percent of Southpark's total leasable space; and (5) Any 
renewal of the New Lease will require the approval of Hill Partners and 
will require rent of no less than the fair market rent.

FOR FURTHER INFORMATION CONTACT: Ronald Willett of the Department (202) 
219-8881. (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 of disqualified 
person from certain other provisions of the Act and/or the Code, 
including any prohibited transaction provisions to which the exemption 
does 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) Before an exemption may be granted under section 408(a) of the 
Act and/or section 4975(c)(2) of the Code, the Department must find 
that the exemption is administratively feasible, in the interests of 
the plan and of its participants and beneficiaries and protective of 
the rights of participants and beneficiaries of the plan;
    (3) The proposed exemptions, if granted, will be supplemental to, 
and not in derogation of, any other provisions of the Act and/or the 
Code, including statutory or administrative exemptions and transitional 
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
    (4) The proposed exemptions, if granted, will be 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 16th day of June, 1994.
Ivan Strasfeld,
Director of Exemption Determinations, Pension and Welfare Benefits 
Administration, U.S. Department Of Labor.
[FR Doc. 94-15007 Filed 6-20-94; 8:45 am]
BILLING CODE 4510-29-P