[Federal Register Volume 62, Number 147 (Thursday, July 31, 1997)]
[Notices]
[Pages 41088-41093]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-20242]
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DEPARTMENT OF LABOR
Pension and Welfare Benefits Administration
[Prohibited Transaction Exemption 97-35; Exemption Application No.
D-10192, et al.]
Grant of Individual Exemptions; ILGWU National Retirement Fund
AGENCY: Pension and Welfare Benefits Administration, Labor.
ACTION: Grant of individual exemptions.
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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
[[Page 41089]]
for a complete statement of the facts and representations. The
applications have been available for public inspection at the
Department in Washington, D.C. 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.
ILGWU National Retirement Fund, et al. (collectively, the Plans),
Located in New York, New York
[Prohibited Transaction Exemption 97-35; Exemption Application Nos. D-
10192, L-10193 through L-10196]
Exemption
Section I--Transactions
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 July 1, 1995, to--
(A) the provision of banking services (Banking Services, as defined
in section IV(C)) by the Amalgamated Bank of New York (the Bank) to
certain employee benefit plans (the Plans, as defined in section
IV(E)), which are maintained on behalf of members of the International
Ladies Garment Workers Union;
(B) the purchase by the Plans of certificates of deposit (CDs)
issued by the Bank; and
(C) the deposit of Plans' assets in money market or other deposit
accounts established by the Bank;
provided that the applicable conditions of Section II and Section III
are met:
Section II--Conditions
(A) The terms under which the Banking Services are provided by the
Bank to the Plans, and those under which the Plans purchase CDs from
the Bank or maintain deposit accounts with the Bank, are at least as
favorable to the Plans as those which the Plans could obtain in arm's-
length transactions with unrelated parties.
(B) The interests of each of the Plans with respect to the Bank's
provision of Banking Services to the Plans, the purchase of CDs from
the Bank by any of the Plans, and the deposit of Plan assets in deposit
accounts established by the Bank, are represented by an Independent
Fiduciary (as defined in section IV(D)).
(C) On a periodic basis, not less frequently than annually, an
Authorizing Plan Fiduciary (as defined below in section IV(A)) with
respect to each Plan authorizes the representation of the Plan's
interests by the Independent Fiduciary and determines that the Banking
Services and any CDs and depository accounts utilized by the Plan are
necessary and appropriate for the establishment or operation of the
Plan;
(D) With respect to the purchase by any of the Plans of
certificates of deposit (CDs) issued by the Bank or the deposit of Plan
assets in a money market account or other deposit account established
at the Bank,: (1) Such transaction complies with the conditions of
section 408(b)(4) of the Act; (2) Any CD offered to the Plans by the
Bank is also offered by the Bank in the ordinary course of its business
with unrelated customers; and (3) Each CD purchased from the Bank by a
Plan pays the maximum rate of interest for CDs of the same size and
maturity being offered by the Bank to unrelated customers at the time
of the transaction;
(E) The compensation received by the Bank for the provision of
Banking Services to the Plan is not in excess of reasonable
compensation within the meaning of section 408(b)(2) of the Act.
(F) Following the merger of the International Ladies Garment
Workers Union with UNITE, the Independent Fiduciary made an initial
written determination that (1) the Bank's provision of Banking Services
to the Plans, (2) the deposit of Plan assets in depository accounts
maintained by the Bank, and (3) the purchase by the Plans of CDs from
the Bank, are in the best interests and protective of the participants
and beneficiaries of each of the Plans.
(G) On a periodic basis, not less frequently than quarterly, the
Bank provides the Independent Fiduciary with a written report (the
Periodic Report) which includes the following items with respect to the
period since the previous Periodic Report: (1) A listing of Banking
Services provided to, all outstanding CDs purchased by, and deposit
accounts maintained for each Plan; (2) a listing of all fees paid by
the Plans to the Bank for the Banking Services, (3) the performance of
the Bank with respect to all investment management services, (4) a
description of any changes in the Banking Services, (5) an explanation
of any problems experienced by the Bank in providing the Banking
Services, (6) a description of any material adverse events affecting
the Bank, and (7) any additional information requested by the
Independent Fiduciary in the discharge of its obligations under this
exemption.
(H) On a periodic basis, not less frequently than annually, the
Independent Fiduciary reviews the Banking Services provided to each
Plan by the Bank, the compensation received by the Bank for such
services, any purchases by the Plan of CDs from the Bank, and any
deposits of assets in deposit accounts maintained by the Bank, and
makes the following written determinations:
(1) The continuation of the Bank's provision of Banking Services
to the Plan for compensation is in the best interests and protective
of the participants and beneficiaries of the Plan;
(2) The Bank is a solvent financial institution and has the
capability to perform the services;
(3) The fees charged by the Bank are reasonable and appropriate;
(4) The services, the depository accounts, and the CDs are
offered to the Plan on the same terms under which the Bank offers
the services to unrelated Bank customers in the ordinary course of
business; and
(5) Where the Banking Services include an investment management
service, that the rate of return is not less favorable to the Plan
than the rates on comparable investments involving unrelated
parties.
(I) Copies of the Bank's periodic reports to the Independent
Fiduciary are furnished to the Authorizing Plan Fiduciaries on a
periodic basis, not less frequently than annually and not later than 90
days after the period to which they apply.
(J) The Independent Fiduciary is authorized to continue, amend, or
[[Page 41090]]
terminate, without any penalty to any Plan (other than the payment of
penalties required under federal or state banking regulations upon
premature redemption of a CD), any arrangement involving: (1) The
provision of Banking Services by the Bank to any of the Plans, (2) the
deposit of Plan assets in a deposit account maintained by the Bank, or
(3) any purchases by a Plan of CDs from the Bank;
(K) The Authorizing Plan Fiduciary may terminate, without penalty
to the Plan (other than the payment of penalties required under federal
or state banking regulations upon premature redemption of a CD), the
Plan's participation in any arrangement involving: (1) The
representation of the Plan's interests by the Independent Fiduciary,
(2) the provision of Banking Services by the Bank to the Plan, (3) the
deposit of Plan assets in a deposit account maintained by the Bank, or
(4) the purchase by the Plan of CDs from the Bank.
Section III--Recordkeeping
(A) For a period of six years, the Bank and the Independent
Fiduciary will maintain or cause to be maintained all written reports
and other memoranda evidencing analyses and determinations made in
satisfaction of conditions of this exemption, except that: (a) A
prohibited transaction will not be considered to have occurred if, due
to circumstances beyond the control of the Independent Fiduciary and
the Bank the records are lost or destroyed before the end of the six-
year period; and (b) no party in interest other than the Bank and the
Independent Fiduciary shall be subject to the civil penalty that may be
assessed under section 502(i) of the Act, or to the taxes imposed by
section 4975(a) and (b) of the Code, if the records are not maintained,
or are not available for examination as required by paragraph (2)
below;
(B)(1) Except as provided in section (2) of this paragraph (B) and
notwithstanding any provisions of subsections (a)(2) and (b) of section
504 of the Act, the records referred to in paragraph (A) of this
Section III shall be unconditionally available at their customary
location during normal business hours for inspection by: (a) Any duly
authorized employee or representative of the U.S. Department of Labor
or the Internal Revenue Service, (b) any employer participating in the
Plans or any duly authorized employee or representative of such
employer, and (c) any participant or beneficiary of the Plans or any
duly authorized representative of such participant or beneficiary.
(2) None of the persons described in subsections (b) and (c) of
subsection (1) above shall be authorized to examine trade secrets of
the Independent Fiduciary or the Bank, or any of their affiliates, or
any commercial, financial, or other information that is privileged or
confidential.
Section IV--Definitions
(A) Authorizing Plan Fiduciary means, with respect to each Plan,
the board of trustees of the Plan or other appropriate plan fiduciary
with discretionary authority to make decisions with respect to the
investment of Plan assets;
(B) Bank means the Amalgamated Bank of New York;
(C) Banking Services means (1) custodial, safekeeping, checking
account, trustee services, and (2) investment management services
involving (a) fixed income securities (either directly or through a
collective investment fund maintained by the Bank), (b) the LongView
Fund maintained by the Bank, and, (c) effective January 3, 1998, the
LEI Fund maintained by the Bank.
(D) Independent Fiduciary means a person, within the meaning of
section 3(9) of the Act, who (1) is not an affiliate of the Union of
Needletrades, Industrial & Textile Employees (UNITE) and any successor
organization thereto by merger, consolidation or otherwise, (2) is not
an officer, director, employee or partner of UNITE, (3) is not an
entity in which UNITE has an ownership interest, (4) has no
relationship with the Bank other than as Independent Fiduciary under
this exemption, and (5) has acknowledged in writing that it is acting
as a fiduciary under the Act. No person may serve as an Independent
Fiduciary for the Plans for any fiscal year in which the gross income
(other than fixed, non-discretionary retirement income) received by
such person (or any partnership or corporation of which such person is
an officer, director, or ten percent or more partner or shareholder)
from UNITE and the Plans for that fiscal year exceed five percent of
such person's annual gross income from all sources for the prior fiscal
year. An affiliate of a person is any person directly or indirectly,
through one or more intermediaries, controlling, controlled by, or
under common control with the person. The term ``control'' means the
power to exercise a controlling influence over the management or
policies of a person other than an individual. Initially, the
Independent Fiduciary is U.S. Trust Company of California, N.A.
(E) Plans means any of the following employee benefit plans, and
their successors by reason of merger, spin-off or otherwise:
International Ladies Garment Workers Union Nation Retirement Fund;
International Ladies Garment Workers Union Death Benefit Fund;
Health Fund of New York Coat, Suit, Dress, Rainwear & Allied Workers
Union, ILGWU;
Health & Vacation Fund, Amalgamated Ladies Garment Cutters Union,
Local 10;
ILGWU Eastern States Health & Welfare Fund;
ILGWU Office, Clerical & Misc. Employee Retirement Fund;
ILGWU Retirement Fund, Local 102;
Union Health Center Staff Retirement Fund;
Unity House 134 HREBIU Plan Fund;
Puerto Rican Health & Welfare Fund;
Health & Welfare Fund of Local 99, ILGWU;
Local 99 Exquisite Form Industries, Inc. Severance Fund;
Local 99 K-Mart Severance Fund;
Local 99 Kenwin Severance Fund;
Local 99 Lechters Severance Fund;
Local 99 Eleanor Shops Severance Fund;
Local 99 Monette Severance Fund;
Local 99 Moray, Inc. Severance Fund;
Local 99 Petri Stores, Inc. Severance Fund;
Local 99 Netco, Inc. Severance Fund;
Local 99 Misty Valley, Inc. Severance Fund; and
Local 99 Norstan Apparel Shops, Inc. Severance Fund.
(F) UNITE means the Union of Needletrades, Industrial & Textile
Employees and any successor organization thereto by merger,
consolidation or otherwise.
EFFECTIVE DATE: This exemption is effective as of July 1, 1995, except
for Plan investments in the LEI Fund, for which the effective date is
January 3, 1998.
Written Comments: The Department received no requests for a hearing
and one written comment submitted by the Amalgamated Bank of New York
(the Bank). The Bank's comment, and the Department's response thereto,
is summarized as follows:
(1) The Bank notes that section II(H)(1) of the proposed exemption
would require the Independent Fiduciary, U.S. Trust, to make a periodic
determination with respect to each Plan that the Banking Services, CDs
and depository accounts involving the Plan are necessary and
appropriate for the establishment or operation of the Plan. The Bank
maintains that this periodic determination is more appropriately made
by the Authorizing Plan Fiduciary with respect to each Plan, as the
parties have agreed under the terms of the appointment of the
Independent Fiduciary. The Bank requests that the condition be modified
to require the Independent Fiduciary to
[[Page 41091]]
receive such an annual determination from the Authorizing Plan
Fiduciary with respect to each Plan. The Department has determined to
modify the final exemption as requested. Accordingly, the Department
has added a requirement to section II(C) of the final exemption that
the Authorizing Plan Fiduciary make a periodic determination, at least
annually, that the Banking Services, CDs and depository accounts are
necessary or appropriate for the establishment or operation of the
Plan, and communicate such determination to the Independent Fiduciary.
The Department notes that the Independent Fiduciary is responsible
under the final exemption for making the other determinations required
under section II(H).
(2) The Bank notes that, in paragraph 8 of the Summary of Facts and
Representations in the Notice of Proposed Exemption, the Department
summarizes U.S. Trust's view of the Bank's financial condition using in
some instances language from U.S. Trust's original Independent
Fiduciary report. In the interest of complete accuracy of disclosure,
the Bank wishes to note that the third sentence following the
italicized heading, ``Financial condition of the Bank'', (commencing
with ``U.S. Trust represents that the duration positioning * * *'') was
deleted in the revised Independent Fiduciary report in favor of a more
detailed explanation, in Appendix A of the revised report, of the
effect of interest rate changes on the Bank. The Bank points out that
this change did not alter U.S. Trust's conclusion that the Bank is
operated conservatively and is well-capitalized and solvent.
(3) The Bank states that while the Department has accurately and
completely identified the Plans and the Bank's products and services as
they existed at the time of the filing of the exemption application,
the Plans' investment needs are dynamic and one or more Plans might
identify additional products offered by the Bank in the normal course
of its business that would fit the Plan's investment needs. The Bank
represents that this has occurred since the exemption application was
filed, with respect to two of the Bank's collective funds:
The LongView Fund: A commingled, equity investment fund which
invests proportionately in the securities that comprise the S&P 500
Index, designed to mirror the rate of return on the S&P 500 Index. The
LongView Fund currently has approximately $1.2 billion in assets. The
Bank has overall responsibility for the LongView Fund, acts as
custodian, and oversees investment of the Fund, which is offered to the
public in the ordinary course of the Bank's business. Although trustees
of the Plans have tentatively approved investments in the LongView
Fund, none of the Plans have yet invested in it.
The LEI Fund: A commingled, equity investment fund designed to
``outperform'' the S&P 500 Index by 100 basis points per annum, gross
of fees. The LEI Fund opened in January 1997 and has approximately $38
million in assets. The Bank has overall responsibility for the Fund,
acts as custodian and recordkeeper, and oversees the investment
managers. None of the Plans have invested in the LEI Fund, although
trustees of certain of the Plans have expressed an interest in such
investment.
The Bank requests, in view of the pendency of the current exemption
proposal, that the Department add these two funds to the exemption by
amending the definition of ``Banking Services'' in Section IV(c) of the
exemption specifically to include these funds. In support of this
request, the Bank requested that the Independent Fiduciary, U.S. Trust,
conduct the same type of review of the LongView and LEI Funds that it
conducted with respect to the other banking services and products that
are the subject of this exemption. The Independent Fiduciary's reports
with respect to each fund was submitted to the Department with the
Bank's comment. As with respect to the investment management services
reviewed in its original report, the Independent Fiduciary requested
that Towers Perrin prepare reports regarding these products, and the
Towers Perrin reports were also submitted to the Department with the
Bank's comment. The Bank states that inclusion of these funds in the
exemption at this time would be in the interests of administrative
convenience and feasibility for the Department and the parties to avoid
a second exemption proceeding. The Bank notes that the two additional
funds are fully described and analyzed in the reports of Towers Perrin
and the Independent Fiduciary, which were submitted with the comment.
With respect to the LongView Fund, in a supplemental report dated
January 14, 1997, the Independent Fiduciary summarizes its findings and
conclusions regarding that fund. The Independent Fiduciary states that
it considered information obtained from its own research as well as an
extensive report prepared by Towers Perrin which analyzed the Bank's
management structure regarding the LongView Fund, the investment
process, key investment professionals, performance results, fees, style
and risk characteristics, and clients. The Independent Fiduciary
concludes that making the LongView Fund available for investments by
the Plans would be reasonable, appropriate, and in the best interests
of the Plans.
With respect to the LEI Fund, in a second supplemental report dated
May 8, 1997, the Independent Fiduciary summarizes its findings and
conclusions regarding that fund. As with the LongView Fund, the
Independent Fiduciary states that it considered information obtained
from its own research as well as an extensive report on the LEI Fund by
Towers Perrin. On the basis of its review and evaluation, the
Independent Fiduciary determined that it would be in the best interests
of the Plans to make the LEI Fund available through inclusion in the
exemption. However, in view of the relatively short performance history
of the LEI Fund, the Independent Fiduciary intends to defer any Plan
investments in the LEI Fund until it completes its annual review of the
Bank's investment management services included under the exemption,
such review to occur effective January 3, 1998. If at that time the
Independent Fiduciary concludes that the LEI should continue to be made
available under the exemption, the Independent Fiduciary proposes to
authorize Plan investments in the LEI Fund.
The Bank represents that the inclusion of these two funds in the
exemption would be protective of the interests of participants and
beneficiaries of the Plans. In this regard, the Bank notes the
independent review and analysis of the funds by the Independent
Fiduciary and Towers Perrin, and the continuing oversight of the
Independent Fiduciary of any Plan investments in either of the Funds.
On the basis of the information contained in the reports of the
Independent Fiduciary reports and Towers Perrin, the Department has
determined that it would be appropriate to include the LongView Fund
and the LEI Fund in the exemption. Accordingly, the definition of
Banking Services in the exemption has been modified to include the
LongView Fund and, effective January 3, 1998, the LEI Fund.
For a more complete statement of the summary of facts and
representations supporting the Department's decision to grant this
exemption refer to the Notice of Proposed Exemption published on
February 18, 1997 at 62 FR 7269.
FOR FURTHER INFORMATION CONTACT: Ronald Willett of the Department,
[[Page 41092]]
telephone (202) 219-8881. (This is not a toll-free number.)
Operating Engineers Local 150, Apprenticeship Fund (the Fund), Located
in Plainfield, Illinois
[Prohibited Transaction Exemption 97-36; Exemption Application No. L-
10280]
Exemption
The restrictions of section 406(a) and 406(b) (1) and (2) shall not
apply to the sale (the Sale) of a certain parcel of improved real
property (the Property) from the Fund to International Union of
Operating Engineers, Local 150 (Local 150), a party in interest with
respect to the Plan provided that the following conditions are met:
(1) The fair market value of the Property is established by a
qualified and independent real estate appraiser;
(2) Local 150 pays the greater of $180,000 or the current fair
market value of the Property as of the date of the transaction;
(3) The Sale is a one time transaction for cash; and
(4) The Fund pays no fees or commissions related to the Sale.
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 April 17, 1997 at 62 FR
18803.
FOR FURTHER INFORMATION CONTACT: Allison Padams of the Department,
telephone (202) 219-8971. (This is not a toll-free number.)
The Roquette America, Inc. Pension Plan, for Salaried Employees (the
Plan) Located in Keokuk, Iowa, [Prohibited Transaction Exemption 97-37;
Exemption Application No. D-10390]
Exemption
The restrictions of sections 406(a) 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 (D) of the Code, shall not apply to
(1) the loan by Aon Consulting, Inc. (Aon Consulting) to the Plan, in
connection with certain excess distributions (the Overpayments) that
Aon Consulting inadvertently caused to be made under the Plan, and (2)
the potential repayment of the loan by the Plan to Aon Consulting.
This exemption is subject to the following conditions:
(1) The Plan pays no interest nor incurs any other expense relating
to the loan;
(2) The loan amount covers the Overpayments, plus lost opportunity
costs attributable to the Overpayments;
(3) Any repayment of the loan is restricted solely to the amount,
if any, recovered by the Plan with respect to the Overpayments in
litigation or otherwise; and
(4) A qualified, independent fiduciary for the Plan has reviewed
the terms and conditions of the loan on behalf of the Plan and
determined that such terms and conditions are in the best interests of
and appropriate for the Plan.
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 April 17, 1997 at 62 FR
18806.
Written Comments
The Department received two written comments with respect to the
notice of proposed exemption.
Both commenters expressed concern that the proposed exemption would
negatively affect their retirement benefits. Northern Trust, the Plan's
independent fiduciary, confirmed that the proposed exemption would not
change benefit payments under the Plan. The first commenter also stated
that Aon Consulting should make the Plan whole, not merely make the
Plan an interest-free loan. Northern Trust responded that the interest-
free loan would have the effect of making the Plan whole, since Aon
Consulting would receive repayment of the loan only to the extent that
the Plan recovered any portion of the Overpayments made to certain
Participants. The second commenter added that further legal action
should be taken against these Participants. Northern Trust responded
that under the proposed exemption, Aon Consulting would pay the legal
fees associated with recovering the Overpayments.
After a careful consideration of the entire record, the Department
has determined to grant the exemption as proposed.
FOR FURTHER INFORMATION CONTACT: Ms. Karin Weng of the Department,
telephone (202) 219-8881. (This is not a toll-free number.)
Robert A. Benz & Co., P. A., Certified Public Accountants
Employees Profit Sharing Plan (The Plan)
Located in Pensacola, Florida
[Prohibited Transaction Exemption 97-39;
Exemption Application No. D-10398]
Exemption
The restrictions of sections 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 both (1) the cash sale (the Sale) of
certain real property (the Property) to the Plan by Robert A. Benz &
Co., P.A., Certified Public Accountants (the Employer), a party in
interest with respect to the Plan, and (2) the lease-back (the Lease)
of the Property by the Plan to the Employer; provided:
(A) The terms and conditions of the transactions are at least as
favorable to the Plan as those obtainable from unrelated parties;
(B) The Plan is represented at all times and for all purposes with
respect to the Sale and the Lease by a qualified, independent
fiduciary;
(C) The Sale is a one-time transaction for a lump sum cash payment;
(D) The purchase price is the fair market value of the Property as
determined on the date of the Sale by a qualified, independent
appraiser;
(E) The monthly rents paid to the Plan will be adjusted every year
after the first 12 months of the Lease by an amount to reflect the
greater of either a 3 percent per year increase or the most recent
percentage increase in the U. S. Department of Labor Consumer Price
Index;
(F) In addition, the rents initially paid under the Lease are no
less than the fair market rental value of the Property as determined by
a qualified, independent appraiser, and thereafter are adjusted every
third year to be no less than the fair market rental value as then
determined by the independent appraiser;
(G) The Lease is a triple-net lease under which the Employer as the
lessee is obligated for all expenses incurred by the Property,
including all taxes and assessments, maintenance, insurance, utilities,
and any other expense;
(H) The qualified, independent fiduciary of the Plan monitors and
enforces compliance with the terms and conditions of the Lease and this
exemption;
(I) At all times the qualified, independent fiduciary for the Plan
determines that the Lease is in the best interests of the Plan and its
participants and beneficiaries, and at all times determines that there
are adequate protections of the rights of the participants and
beneficiaries of the Plan, and takes all the necessary steps to protect
those rights;
(J) In the event the Plan sells the Property and the proceeds
received from the sale plus the net rentals received for the Property
are less than the Plan's cost of acquiring, holding, and maintaining
the Property plus a 5 percent per annum compounded rate of return on
the cost to the Plan in acquiring, holding, and
[[Page 41093]]
maintaining the Property, the Employer, or its successors, shall pay in
cash the difference to the Plan within 45 days of the sale;
(K) No commissions, expenses, or costs shall be incurred by the
Plan from the Sale or the Lease; and
(L) At all times during the Sale and Lease, the fair market value
of the Property represents less than 25 percent of the total assets of
the Plan.
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 June 4, 1997, at 62 FR
30616.
FOR FURTHER INFORMATION CONTACT: Mr. C. E. Beaver of the Department,
telephone (202) 219-8881. (This is not a toll-free number.)
Gart Brothers Sporting Goods Company 401(k) Plan (the Plan) Located in
Denver, Colorado [Prohibited Transaction Exemption 97-39; Exemption
Application No. D-10403]
Exemption
The restrictions of sections 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 (the Sale) by the Plan of a
5 percent interest (the Interest) in the Hampden Enterprises Limited
Partnership (the Partnership) to the Gart Bros. Sporting Goods Company,
the sponsor of the Plan (the Employer) and a party in interest with
respect to the Plan; provided (1) the terms and conditions of the
transaction are at least as favorable to the Plan as those obtainable
from unrelated parties, (2) the Sale is a one-time transaction for
cash, (3) the Plan pays no commissions nor incurs any other expenses in
connection with the transaction, (4) the Plan receives as consideration
from the Sale the greater of either (a) the total funds expended by the
Plan in acquiring and holding the Interest, less any return of capital
realized from its investment in the Interest, or (b) the fair market
value of the Interest as determined on the date of the Sale by an
independent appraiser, and (5) if the Employer ever receives more from
the Interest than it pays the Plan when acquiring the Interest, the
Employer will pay the Plan the excess.
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 June 4, 1997, at 62 FR
30618.
FOR FURTHER INFORMATION CONTACT: Mr. C. E. Beaver of the Department,
telephone (202) 219-8881. (This is not a toll-free number.)
BP America Inc. Retirement Trust, Located in Cleveland, Ohio; IBM
Retirement Plan Trust, Located in Armonk, New York; United States Steel
Corporation Plan, Located in Pittsburgh, Pennsylvania; and Retirement
Plan of Marathon Oil Company, Located in Findlay, Ohio; (collectively,
the Plans) [Prohibited Transaction Exemption No. 97-40; Exemption
Application Nos. D-10441 through D-10444]
Exemption
The restrictions of section 406(a) 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 (D) of the Code, shall not apply to
(1) the granting to The Industrial Bank of Japan, Limited, New York
Branch (IBJ), as the representative of lenders (the Lenders)
participating in a credit facility (the Facility), of security
interests in limited partnership interests in The Westbrook Real Estate
Fund II, L.P. (the Partnership) owned by the Plans with respect to
which some of the Lenders are parties in interest; and (2) the
agreements by the Plans to honor capital calls made by IBJ in lieu of
the Partnership's general partner; provided that (a) the grants and
agreements are on terms no less favorable to the Plans than those which
the Plans could obtain in arm's-length transactions with unrelated
parties; (b) the decisions on behalf of each Plan to invest in the
Partnership and to execute such grants and agreements in favor of IBJ
are made by a fiduciary which is not included among, and is independent
of, the Lenders and IBJ; and (c) with respect to plans that may invest
in the Partnership in the future, such plans will have assets of not
less than $100 million and not more than 5% of the assets of such plans
will be invested in the Partnership.
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 June 4, 1997 at 62 FR
30621.
FOR FURTHER INFORMATION CONTACT: Gary H. Lefkowitz of the Department,
telephone (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 or disqualified
person from certain other provisions to which the exemptions 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) 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 accurately describes all material terms of the transaction
which is the subject of the exemption.
Signed at Washington, DC, this 25th day of July, 1997.
Ivan Strasfeld,
Director of Exemption Determinations, Pension and Welfare Benefits
Administration, U.S. Department of Labor.
[FR Doc. 97-20242 Filed 7-30-97; 8:45 am]
BILLING CODE 4510-29-P