[Federal Register Volume 61, Number 208 (Friday, October 25, 1996)]
[Notices]
[Pages 55321-55325]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-27441]
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DEPARTMENT OF LABOR
Pension and Welfare Benefits Administration
[Application No. D-10240, et al.]
Proposed Exemptions; Beall Corporation
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
All interested persons are invited to submit written comments or
request for a hearing on the pending exemptions, unless otherwise
stated in the Notice of Proposed Exemption, 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, N.W., Washington, D.C.
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, N.W., Washington, D.C. 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.
Beall Corporation 401(k) Profit Sharing Plan (the Plan) Located in
Portland, OR
[Application No. D-10240]
[[Page 55322]]
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) 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 sections 4975(c)(1)(A) through
(E) of the Code shall not apply to the proposed cash sale (the Sale) by
the Plan of four acres of unimproved real property (the Land) to the
Diamond Beall Development Corporation, an Oregon general partnership
and party in interest with respect to the Plan, provided that the
following conditions are satisfied: (1) the Sale is a one-time
transaction for cash; (2) the Plan experiences no losses nor incurs any
expenses as a result of the Sale; (3) the Plan receives in cash the
greater of $479,160, or the fair market value of the Land as determined
at the time of the Sale; and (4) the terms of the Sale are 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.
Summary of Facts and Representations
1. The Plan is a defined contribution profit sharing plan which is
intended to satisfy the qualification requirements of sections 401(a)
and 401(k) of the Code. The Employer may make discretionary matching
contributions and/or profit sharing contributions. The Plan has
approximately 136 participants and beneficiaries who would be affected
by the transaction. As of October 31, 1995, the fair market value of
the net assets of the Plan was $6,457,677.
2. St. Johns Corporation (SJC) is a holding company and the sole
owner of Beall Corporation (the Employer), employer of a portion of
Plan participants. Beall Corporation is the sole owner of several
subsidiaries that employ the balance of Plan participants.
The applicant is Jerry E. Beall, acting as General Partner of the
Diamond Beall Development Company. Mr. Beall is the principal owner of
SJC, which owns property adjacent to the Land. Mr. Beall is also a
trustee of the Plan.
3. On February 10, 1975, the Land was purchased for the Plan as a
long-term real estate investment for $92,000 from the Port of Portland,
an unrelated third party.1 The property is located in the
Rivergate Industrial District in Portland, Oregon. The Land consists of
4 acres of vacant land and is located adjacent to property where SJC
conducts its operations. Mr. Beall represents that the Land has not
been leased or used by any parties since the time of the purchase.
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\1\ The Department expresses no opinion as to whether the Plan's
acquisition and holding of the Land violated any relevant provision
of Part 4, Subtitle B, of Title 1 of the Act, and no exemption from
such provisions is proposed herein.
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The aggregate real estate taxes and maintenance fees for 1975
through 1996 were $90,284.09. The applicant further represents that
these were the only costs incurred by the Plan in carrying the
property.
4. The Land was appraised as of January 1, 1996 (the Appraisal) by
Karl L. Lucke (Mr. Lucke), an independent real estate appraiser
certified in the State of Oregon. Mr. Lucke relied on the Direct Sales
Comparison (Market) Approach exclusively and estimated that as of
January 1, 1996, the fair market value of the Land was $2.50 per square
foot, for a total of $436,000. The Appraisal includes the following
description of the Land and its surrounding neighborhood: ``* * * the
streets and railroad system are being expanded and construction
activity has increased lately. The Rivergate Industrial District is a
growing industrial area * * * the location and available land make this
a desirable place for industrial development and demand is growing for
sites * * * the subject property lies in the path of growth.'' The
Appraisal also states that the Rivergate District has experienced
significant recent activity, and that prices for Rivergate sites have
increased over the last few years.
Because the Land is located on the lot adjacent to SJC's business
facilities, Mr. Lucke was asked to determine whether there should be
any premium value associated with the Land. In this regard, Mr. Lucke
states that there was insufficient market data to support a premium for
an adjacent landowner or related company with respect to the proposed
transaction.
5. The applicant provided information received from the Port of
Portland in August, 1996, regarding the Port's recent list prices for
the remainder of the undeveloped Rivergate Industrial District. Current
list prices, and the prices of sales closing subsequent to the January
1996 Appraisal, reflect that prices for parcels similar to the Land
have increased 20 to 25% within the past year, after several years of
nominal appreciation.
In addition, the Port's information shows that the three sales of
comparable parcels that have closed subsequent to the Appraisal were
for $2.75 to $2.86 per square foot. Accordingly, the applicant proposes
to pay $2.75 per square foot for the Land, for a total of $479,160.
The applicant represents that the Land will be revalued at the time
of the proposed transaction, in order to establish its fair market
value.
7. Mr. Beall, as General Partner of Diamond Beall Development
Corporation, proposes to purchase the Land from the Plan in a one-time
cash transaction. The Plan will pay no real estate commissions or other
costs associated with the sale of the Land. As of October 31, 1995, the
Land represented 6.7% of the Plan's total assets. The applicant
represents that considering the cost basis of the property, the
investment has not performed well in that the Plan has received an
annual return of approximately 4.3%, based on its initial purchase
price, subsequent annual cash outlays, and appraised value of $436,000.
Carrying costs have recently totalled $5,000 to $7,000 per year. The
Plan has actively attempted to lease the property in the past but has
been unable to do so.
It is represented by the applicant that the proposed transaction is
in the best interest and protective of the Plan because it will allow
the Plan to increase its liquidity and diversify its assets.
8. In summary, the applicant represents that the transaction
satisfies the statutory criteria of section 408(a) of the Act because:
(1) the proposed sale will be a one-time cash transaction; (2) the Plan
will experience no losses nor incur any expenses from the Sale; (3) the
Plan will receive in cash as consideration for the Sale the greater of
$479,160, or the fair market value of the Land as determined at the
time of the Sale; and (4) the terms of the Sale are 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.
FOR FURTHER INFORMATION CONTACT: Mr. Gary H. Lefkowitz of the
Department, telephone (202) 219-8881. (This is not a toll-free number.)
Wayne Obstetrical Group, P.A. Money Purchase Retirement Plan (the
Wayne Plan); Pediatric Professional Associates, P.A. Profit Sharing
Plan (the Pediatric Plan); Physicians for Women, P.A. Profit-
Sharing Plan and Trust (the Physicians Plan; collectively, the
Plans) Located in Wayne, New Jersey
[Application Nos. D-10262, D-10263, and D-10264]
[[Page 55323]]
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 loans totalling $530,000 by the
Plans to S & D Associates (S & D), provided that the following
conditions are satisfied:
(a) The terms and conditions of the loans are at least as favorable
to the Plans as those the Plans could obtain in comparable arm's length
transactions with unrelated parties;
(b) At all times, the loans are secured by a first mortgage on
certain real property (the Property), which is duly recorded under New
Jersey State law;
(c) At all times, the fair market value of the Property, as
established by a qualified, independent appraiser, equals at least 150%
of the total outstanding balances of the loans;
(d) At all times, no more than 25% of the assets of each lending
Plan are invested in the loans;
(e) A qualified, independent fiduciary has determined that the
loans are in the best interests of the Plans; and
(f) At all times, the independent fiduciary enforces compliance
with the terms and conditions of the loans and of the exemption,
including foreclosure on the Property in the event of default.
Summary of Facts and Representations
1. Wayne Obstetrical Group, P.A. is a New Jersey corporation owned
by Seymour Eisner, Bernard Simon, Barry Cohen, and Steven Domnitz (each
a 25% shareholder). As of December 31, 1994, the Wayne Plan, a money
purchase pension plan, had approximately nine participants and total
assets of $2,975,100. The trustees of the Wayne Plan are Seymour
Eisner, Bernard Simon, and Barry Cohen.
Pediatric Professional Associates, P.A. is a New Jersey corporation
owned by Alvin Edelstein, Abraham H. Topchik, Herbert L. Cole, Israel
I. Rayman, and Geraldine Nelson (each a 20% shareholder). As of July
31, 1995, the Pediatric Plan, a profit sharing plan, had approximately
18 participants and total assets of $4,934,064. The trustees of the
Pediatric Plan are the five owners, above.
Physicians for Women, P.A. is a New Jersey corporation owned by Les
A. Burns, Kenneth Garrett, Leonard T. Nicosia, and Arthur Suffin (each
a 25% shareholder). As of December 31, 1994, the Physicians Plan, a
profit sharing plan, had approximately 15 participants and total assets
of Sec. 3,384,784. The trustees of the Pediatric Plan are the four
owners, above, and Edwin J. Pear.
2. An administrative exemption is requested to permit the Plans to
make loans totalling $530,000 to S & D, a New Jersey partnership. The
partners of S & D are as follows: Bernard Simon (a 19% partner),
Seymour J. Eisner (19%), Barry Cohen (19%), Robert Natusch (12.5%),
Lawrence May (12.5%) and a partnership known as 7 Oak Ridge Partners
(18%). The partners of 7 Oak Ridge Partners are as follows: Les Burns,
Kenneth Garrett, Leonard Nicosia, Edward Pear, Alvin Edelstein, Herbert
Cole, Geraldine Nelson, Ian Rayman, and Abraham Topchik (all equal
partners).
Specifically, the Wayne Plan will lend $230,000, the Pediatric Plan
will lend $100,000, and the Physicians Plan will lend $200,000. At all
times, no more than 25% of the assets of each lending Plan may be
invested in the loans. It is intended that S & D use the proceeds of
the proposed loans to retire an outstanding first mortgage held by
Lakeland State Bank (Lakeland) on the Property, which S & D owns and
which S & D currently leases to the sponsors of the aforementioned
Plans, among other tenants. As of November 30, 1995, the outstanding
balance on this mortgage was approximately $536,000, which amount
becomes due and payable on January 1, 1997.
3. The loans will be secured by a first mortgage on the Property,
to be duly recorded under New Jersey State law. The Property, which
consists of a two-story mixed-use building of 9936 sq. ft. on 1.34
acres, is located at 7 Oak Ridge Road, West Milford, New Jersey. The
Property has office space on the first floor that is currently being
leased to the Plans' sponsors and to other professionals, as well as
eight one-bedroom residential apartments on the second floor. S & D
will assign these leases and the excess net rentals collectible
thereunder to the Plans as additional collateral for the loans.
The Property was appraised by Mr. Robert D. Clifford, MAI, RM of
Value Analysis Incorporated, an independent general real estate
appraiser certified in the State of New Jersey. Relying on the income
approach to valuation, Mr. Clifford concluded that the fair market
value of the leased fee interest of the Property was $800,000, as of
December 11, 1995. Thus the fair market value of the Property equals at
least 150% of the total outstanding balances of the loans, which will
be a continuing requirement for the duration of the loans. The Property
will also be insured against casualty loss in an amount not less than
the total principal amounts of the loans (plus accrued but unpaid
interest), with the Plans as the named beneficiaries of the policy.
4. The loans will each provide for an interest rate of 11% per
annum and a term of 10 years, as evidenced by a promissory note. The
notes will require S & D to make monthly payments of principal and
interest on the loans, to be fully amortized over the 10-year term. The
Plans will pay no fees nor other expenses relating to the loans.
Lakeland, an unrelated lender, has held the current mortgage on the
Property for almost 10 years. The mortgage has a balloon every five
years, which requires renegotiation. The last mortgage extension and
modification agreement will expire on January 1, 1997. In keeping with
the commercial practices of other area banks, Lakeland will not grant a
``permanent mortgage'' on such commercial property. In a letter dated
November 30, 1995, Lakeland states that if it were their policy to
grant S & D a permanent mortgage, they would, under the then current
financial conditions, seek an interest rate of 11%.
5. Naskret, Selzer & Associates, P.A., Certified Public Accountants
(Naskret, Selzer) represents in a letter from Harold S. Selzer dated
August 14, 1996 that they will serve as an independent fiduciary to
represent the interests of the Plans with respect to the proposed
loans. Naskret, Selzerit represents that it is unrelated to and
independent of S & D and the Plans' sponsors and derives less than 1%
of its annual income from S & D. Naskret, Selzer represents that it has
extensive experience as a fiduciary under the Act, that it is
knowledgeable as to the subject loan transactions, and that it
acknowledges and accepts its duties, responsibilities, and liabilities
in acting as a fiduciary with respect to the Plans.
6. Naskret, Selzer has reviewed the terms and conditions of the
loans and determined that such terms and conditions are at least as
favorable to the Plans as those the Plans could obtain in comparable
arm's length transactions with unrelated parties, as evidenced by the
terms required by Lakeland in their letter dated November 30, 1995. The
loans will be secured by a first mortgage on the Property, which has
been independently appraised to insure that its fair market value
equals at least 150% of the total outstanding balances of the loans.
The leases of office and apartment units in the Property and the
[[Page 55324]]
excess net rentals collectible thereunder will serve as additional
collateral for the loans.
Naskret, Selzer represents that it believes the proposed loans are
in the best interest of the Plans and their respective participants and
beneficiaries. Naskret, Selzer has determined that the proposed loans
are appropriate for the Plans in light of the Plans' overall investment
portfolios because the loans will add a degree of stability and
liquidity to the Plans. Naskret, Selzer has also examined the financial
viability of S & D, based upon S & D's tax returns for years 1994 and
1995, and concluded that S & D has the ability to repay the loans. S &
D has timely made all monthly payments during the approximately 10
years Lakeland has held the current mortgage on the Property.
Finally, Naskret, Selzer will, at all times, monitor and enforce S
& D's compliance with the terms and conditions of the loans and of the
exemption, including foreclosure on the Property in the event of
default.
7. In summary, the applicants represent that the proposed
transactions satisfy the statutory criteria for an exemption under
section 408(a) of the Act for the following reasons: (a) the terms and
conditions of the loans will be at least as favorable to the Plans as
those the Plans could obtain in comparable arm's length transactions
with unrelated parties; (b) at all times, the loans will be secured by
a first mortgage on the Property, which is duly recorded under New
Jersey State law; (c) at all times, the fair market value of the
Property, as established by a qualified, independent appraiser, will
equal at least 150% of the total outstanding balances of the loans; (d)
at all times, no more than 25% of the assets of each lending Plan will
be invested in the loans; (e) Naskret, Selzer, acting as an independent
fiduciary for the Plans, has determined that the loans are in the best
interests of the Plans; and (f) at all times, the independent fiduciary
will enforce compliance with the terms and conditions of the loans and
of the exemption, including foreclosure on the Property in the event of
default.
Notice to Interested Persons
Notice of the proposed exemption shall be given to all interested
persons by personal delivery or first-class mail within 10 days of the
date of publication of the notice of pendency 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/or to request a hearing with respect to
the proposed exemption. Comments and requests for a hearing are due
within 40 days of the date of publication of this notice in the Federal
Register.
FOR FURTHER INFORMATION CONTACT: Ms. Karin Weng of the Department,
telephone (202) 219-8881. (This is not a toll-free number.)
National Baptist Publishing Board Pension Plan (the Plan) Located in
Nashville, TN
[Application No. D-10283]
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) 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 sections 4975(c)(1)(A) through (E) of
the Code shall not apply to the proposed cash sale (the Sale) of common
stock of Citizens Savings Bank and Trust Company (the Stock) located in
Nashville, Tennessee, by the Plan to AmeriStar Investments and Trust, a
division of First American National Bank (AmeriStar Investments),
Trustee of the Plan and party in interest with respect to the Plan;
provided that: (1) the Sale is a one-time transaction for cash; (2) the
Plan experiences no loss nor incurs any expenses from the Sale; and (3)
the Plan receives as consideration from the Sale the greater of the
following amounts: (a) the fair market value of the Stock as of the
date of the Sale plus interest at 6% for the period March 31, 1993
through the date the Stock is sold by the Plan; or (b) the total cost
of the investment, $100,000, plus interest at 6% for the period March
31, 1993 through the date the Stock is sold by the Plan.
Summary of Facts and Representations
1. The Plan is a defined benefit plan sponsored by the National
Baptist Publishing Board (the Sponsor). As of March 31, 1996, the
estimated number of Plan participants and beneficiaries was 93. As of
July 31, 1995, total assets of the Plan equaled $1,387,496, with
approximately .35% of total Plan assets as of that date invested in the
Stock, based on the fair market value conclusion of an appraisal
conducted as of July 21, 1994.
2. On or about May 27, 1986, Dr. T.B. Boyd III, President and CEO
of the Sponsor, used his authority to act on behalf of the Sponsor and
directed AmeriStar Investments, a division of First American National
Bank (the Bank), to purchase a seven year, six percent convertible
subordinated debenture issued by Citizens Bank for $100,000 (the
Debenture). At the time Dr. Boyd was also the Chairman of the Board of
Citizens Bank. AmeriStar Investments, as applicant for this exemption,
represents that at that time, Dr. Boyd owned approximately 42 percent
of the outstanding common stock of Citizens Bank. Various family
members owned an additional 11 percent of Citizens Bank's outstanding
common stock.
The applicant further represents that a representative of the Bank
initially advised against the investment, but indicated that the
Sponsor could direct the Bank in writing to make the investment on
behalf of the Plan.
Pursuant to Dr. Boyd's written instructions, AmeriStar Investments
purchased the Debenture on behalf of the Plan in June of 1986. In 1991,
the Bank discovered that Dr. Boyd had a significant ownership interest
in Citizens Bank at the time of the Plan's purchase of the Debenture,
and consequently that the purchase of the Debenture may have been a
prohibited transaction.2 As of 1991, the Debenture's market value
was approximately $37,000, and AmeriStar Investments determined it was
in the Plan's best interest to hold the Debenture until its value
increased, rather than sell the Debenture immediately for a loss.
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2 The Department notes that the decision to purchase the
Debenture is governed by the fiduciary responsibility requirements
of Part 4, Subtitle B, Title I of the Act. The Department is not
proposing relief herein for any violations of Part 4 of Title I of
the Act which may have arisen as a result of the acquisition and
holding by the Plan of the Debenture, and subsequently, the Stock.
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The Debenture paid interest at six percent in accordance with its
terms until March 31, 1993 when it was converted into Citizens Bank
common stock. Under its original terms, the Debenture was to be
converted into 1,100 shares of stock in June, 1993. Citizens Bank
offered to convert the Debenture earlier than June, with a conversion
bonus of 110 shares. Accordingly, as of March 31, 1993, the Debenture
was converted into 1,210 shares of Stock.
3. The applicant represents that an active market does not
currently exist for the Stock and no dividends have been paid on the
Stock. According to a valuation as of December 31, 1993, prepared on
July 21, 1994, by Mercer Capital, an independent valuation firm,
[[Page 55325]]
the fair market value of the Stock was $5.60 per share. Based on that
valuation, the Plan's total investment in the Stock was worth $6,776.
4. The Bank desires to enter into the proposed transaction in order
to protect the participants in the Plan from the risks of investment
loss associated with the Stock. The applicant represents that the best
interest of the plan and its participants and beneficiaries are
protected by disposing of the Stock for a sales price in excess of its
fair market value and by restoring certain lost earnings to the Plan.
In this regard, AmeriStar proposes to purchase the Stock 3 for the
greater of the following amounts: (a) the fair market value of the
Stock as of the date of the Sale, plus interest at 6% for the period
March 31, 1993 through the date the Stock is sold by the Plan; or (b)
the total cost of the investment, $100,000, plus interest at 6% for the
period March 31, 1993 through the date the Stock is sold by the Plan.
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3 AmeriStar is also attempting to sell the Stock to an
unrelated third party. If the sales price is less than $100,000 plus
interest at 6% from March 31, 1993 to the date of the Sale,
AmeriStar will make up the difference to the Plan.
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5. In summary, the applicant represents that the proposed
transaction will satisfy the criteria for an exemption under section
408(a) of the Act for the following reasons: (1) the Sale is a one-time
transaction for cash; (2) the Plan experiences no loss nor incurs any
expenses from the Sale; and (3) the Plan receives as consideration from
the Sale the greater of the fair market value of the Stock as of the
date of the Sale, plus interest at 6% for the period March 31, 1993
through the date the Stock is sold by the Plan; or the total cost of
the investment, $100,000, plus interest at 6% for the period March 31,
1993 through the date the Stock is sold by the Plan.
NOTICE TO INTERESTED PERSONS: Notice will be distributed to interested
persons within 30 days of the date of publication of this Notice in the
Federal Register. Comments and requests for a hearing are due within 60
days of the publication date of this Notice.
FOR FURTHER INFORMATION CONTACT: Mr. 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 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 that each application
accurately describes all material terms of the transaction which is the
subject of the exemption.
Signed at Washington, DC, this 22nd day of October, 1996.
Ivan Strasfeld,
Director of Exemption Determinations, Pension and Welfare Benefits
Administration, Department of Labor.
[FR Doc. 96-27441 Filed 10-24-96; 8:45 am]
BILLING CODE 4510-29-P