[Federal Register Volume 60, Number 39 (Tuesday, February 28, 1995)]
[Notices]
[Pages 10877-10879]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-4888]
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DEPARTMENT OF LABOR
Pension and Welfare Benefits Administration
[Prohibited Transaction Exemption 95-14; Exemption Application No. D-
09743, et al.]
Grant of Individual Exemptions; Sammons Enterprises, Inc.
Employee Stock Ownership Trust, et al.
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 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.
Sammons Enterprises, Inc., Employee Stock Ownership Trust (the Trust),
Located in Dallas, TX; [Prohibited Transaction Exemption 95-14;
Exemption Application No. D-09743]
Exemption
The restrictions of sections 406(a), 406 (b)(1) and (b)(2) of the
Act and the sanctions resulting from the application of section 4975 of
the Code, by reason of section 4975(c)(1) (A) through (E) of the Code,
shall not apply to the cash sale (the Sale) by certain accounts (the
Prior Plan Accounts) in the Trust of certain limited partnership
interests (the Limited Partnership Interests) and an undivided interest
in certain real property (the Property Interest; collectively, the
Interests) to Otter, Inc., a party in interest with respect to the
Trust.
This exemption is conditioned upon the following requirements: (1)
All terms and conditions of the Sale are at least as favorable to the
Prior Plan Accounts as those obtainable in an arm's length transaction;
(2) the Sale is a one-time cash transaction; (3) the Prior Plan
Accounts are not required to pay any commissions, costs or other
expenses in connection with the Sale; (4) the Prior Plan Accounts
receive a sales price equal to the greater of: (a) the fair market
value of the Interests as determined by qualified, independent
appraisers; or (b) the Prior Plan Accounts' aggregate costs of
acquiring and holding the Interests; (5) Churchill Management
Corporation (Churchill) determines that the Sale is appropriate for the
Prior Plan Accounts and is in the best interests of the Prior Plan
Accounts and their participants and beneficiaries; (6) the Prior Plan
Accounts, prior to the Sale, obtain the written consent of the general
partner of each of the limited partnerships involved with respect to
the sale of the Limited Partnership Interests; and (7) the other
partners of such limited partnerships, as per the limited partnership
agreements, are given the right of first refusal with respect to the
Limited Partnership Interests.
Written Comments: In the Notice of Proposed Exemption (the Notice),
the Department invited all interested persons to submit written
comments on the proposed exemption within forty-five days from the date
of publication of the Notice in the Federal Register. All written
comments were to have been received by the Department by January 12,
1995. The Department received two written comments and no requests for
a hearing.
The first comment was submitted on behalf of Texas Commerce Bank,
N.A., the trustee of the Trust (the Trustee). The Trustee states that
Churchill is the investment manager with respect to the assets of the
Prior Plan Accounts. As such, the Trustee does not have the sole
investment discretion with respect to the assets of the Prior Plan
Accounts. As a result, the following changes must be made to the
Notice:
(1) The references to ``the trustee of the Trust'' or ``Trustee''
found in Condition #5 of the Notice, the entire second paragraph of
Representation #3 and subsection (e) of Representation #7 of the
Summary of Facts and Representations (the Summary) should be replaced
with ``Churchill.''
(2) The third sentence of Representation #2 of the Summary is
stricken and replaced with ``Churchill, as investment manager, has
discretion with respect to the assets of the Prior Plan Accounts. The
Trustee has investment discretion with respect to all remaining assets
of the Trust.''
The Department concurs with the proposed modifications and,
accordingly, amends the language of the Notice.
The second comment was submitted on behalf of the applicants. The
issues addressed in the comment and the Department's responses are
summarized as follows:
(1) The first sentence of Representation #1 of the Summary names
the sponsored plan as the ``Sammons Employee Stock Ownership Plan.''
The correct name of such plan is the ``Sammons Enterprises, Inc.
Employee Stock Ownership Plan.''
(2) The third sentence of the first paragraph of Representation #3
of the Summary states that, effective 1991, the TMIS Plan merged into
the Plan. The correct year of such merger is 1989.
(3) The first sentence of the first paragraph of Representation #4
of the Summary states that the Plan has a 14.5 percent Class B interest
in Sunbelt City, Ltd. The correct name of such partnership is ``Sunbelt
Oklahoma City, Ltd.''
(4) The first sentence of the third paragraph of Representation #4
should be revised as follows: ``Annual valuations of interests in both
partnerships are furnished to investors by Churchill Management
Corporation (Churchill), the investment adviser to the Prior Plan
Accounts and for most of [[Page 10878]] the other limited partners of
the Limited Partnerships.''
(5) The last sentence in the fourth paragraph of Representation #5
states that the Liabilities increased by $350,000 to $842,000. The
correct amount of the increase in the Liabilities was $225,000 to
$842,000.
The changes described above are hereby incorporated into the
exemption as granted. After consideration of the entire record,
including the comments, the Department has determined to grant the
exemption. In this regard, the comments have been included as part of
the public record for the exemption application. The complete
application file is made available for public inspection in the Public
Documents Room of the Pensions and Welfare Benefits Administration,
room N-5638, U.S. Department of Labor, 200 Constitution Avenue, N.W.,
Washington, D.C. 20210.
For a more complete statement of the facts and representations
supporting the Department's decision to grant this exemption, refer to
the notice of proposed exemption published on November 28, 1994 at 59
FR 60839.
FOR FURTHER INFORMATION CONTACT: Kathryn Parr of the Department,
telephone (202) 219-8971. (This is not a toll-free number.)
American Express Incentive Savings Plan (the Plan) Located in New York,
NY; [Prohibited Transaction Exemption 95-15; Exemption Application No.
D-09813]
Exemption
The restrictions of sections 406(a), 406 (b)(1) and (b)(2) of the
Act and the sanctions resulting from the application of section 4975 of
the Code, by reason of section 4975(c)(1) (A) through (E) of the Code,
shall not apply to (1) the extensions of credit (the Loans) to the Plan
by American Express Company (the Employer), the sponsor of the Plan,
with respect to two guaranteed investment contracts (the GICs) issued
by Confederation Life Insurance Company (Confederation); (2) the Plan's
potential repayment of the Loans; and (3) the potential purchase of the
GICs from the Plan by the Employer for cash; provided the following
conditions are satisfied:
(A) All terms and conditions of such transactions are no less
favorable to the Plan than those which the Plan could obtain in arm's-
length transactions with unrelated parties;
(B) No interest and/or expenses are paid by the Plan in connection
with the transactions;
(C) The proceeds of the Loans are used solely in lieu of payments
due from Confederation with respect to the GICs;
(D) Repayment of the Loans will be restricted to the GIC Proceeds,
defined as the cash proceeds obtained by the Plan from or on behalf of
Confederation with respect to the GICs;
(E) Repayment of the Loans will be waived to the extent that the
Loans exceed the GIC Proceeds; and
(F) In any sale of he GICs to the Employer, the Plan will receive a
purchase price which is no less than the fair market value of the GICs
as of the sale date, and no less than the GICs' accumulated book value,
defined as the total principal deposits plus accrued interest at the
rates guaranteed by the GICs, less previous withdrawals and any Loans
made pursuant to this exemption, as of the sale date.
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 December 19, 1994 at 59
FR 65397.
FOR FURTHER INFORMATION CONTACT: Ronald Willett of the Department,
telephone (202) 219-8881. (This is not a toll-free number.)
Bermo, Inc. Profit Sharing Plan and Trust (the Plan), Located in Circle
Pines, MN; [Prohibited Transaction Exemption 95-16; Application No. D-
09826]
Exemption
The restrictions of sections 406(a), 406 (b)(1) and (b)(2) of the
Act and the sanctions resulting from the application of section 4975 of
the Code, by reason of section 4975(c)(1) (A) through (E) of the Code,
shall not apply to the series of loans (the Loans), originated within a
five year period, by the Plan to Bermo, Inc. (the Employer), a party in
interest with respect to the Plan, provided that the following
conditions are met:
(a) The total amount of outstanding Loans shall not exceed 25
percent of the Plan's total assets at any time during the transaction;
(b) All terms and conditions of the Loans are at least as favorable
to the Plan as those which the Plan could obtain in an arm's length
transaction with an unrelated third party;
(c) Each loan will be: (1) For a maximum term of forty-eight months
fully amortized and payable in equal monthly installments of principal
and interest, (2) the Loan proceeds shall be used exclusively by the
Employer to purchase new equipment (the Equipment) used by the Employer
in the course of its business, (3) collateralized by the Equipment and
other assets owned by the Employer such that at all times each Loan
will be collateralized in an amount equal to at least 200% of the
outstanding balance of such Loan, (4) equal to no more than 80% of the
purchase price of the Equipment financed, and (5) guaranteed personally
by Fred Berdass, the principal shareholder of the Employer.
(d) The value of the collateral offered by the Employer will be
determined by a qualified independent appraiser;
(e) Prior to the granting of each Loan, an independent qualified
fiduciary determines, on behalf of the Plan, that each Loan is feasible
and in the best interests of the Plan and protective of the Plan and
its participants and beneficiaries;
(f) The independent fiduciary will conduct a review of the terms
and conditions of the exemption and the Loans, including the applicable
interest rate, the sufficiency of the collateral, the financial
condition of the Employer and compliance with the 25 percent of the
Plan asset maximum total Loan amount prior to approving each
disbursement under the Loan agreement;
(g) The independent fiduciary will monitor the terms and conditions
of the exemption and the Loans; and
(h) The independent fiduciary is authorized to take whatever action
is appropriate to protect the Plan's rights throughout the duration of
the exemption and throughout the duration of any Loan granted pursuant
to this exemption.
Temporary Nature of Exemption
The exemption is temporary and will expire five years from February
28, 1995. Subsequent to the expiration of this exemption, the Plan may
hold any Loans originated during this five year period until the Loans
are repaid or otherwise terminated.
For a more complete statement of the facts and representation
supporting the Department's decision to grant this exemption refer to
the notice of proposed exemption published on December 19, 1994 at 59
FR 65398.
for further information contact: Allison K. Padams of the Department,
telephone (202) 219-8971.
Jerome Companies Profit Sharing Plan and Trust (the Plan), Located in
Barron, WI [Prohibited Transaction Exemption 95-17; Exemption
Application No. D-09829]
Exemption
The restrictions on 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) of the
[[Page 10879]] Guaranteed Investment Contract #62043 (the GIC) issued
by Confederation Life Insurance Company (Confederation), a Canadian
insurance corporation, by the Plan to Jerome Food, Inc. (the Employer),
a Wisconsin corporation, the sponsoring employer and a 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 expense from the Sale; and (3) the Plan receives as consideration
from the Sale the greater of either the fair market value of the GIC as
determined on the date of the Sale, or the principal amount of $500,000
plus simple interest accrued at the rate of 9.03 percent per annum on
the principal amount of the GIC for the period from January 25, 1994,
to the date of 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 January 4, 1995, at 60 FR
487.
for further information contact: Mr. C. E. Beaver of the Department,
telephone (202) 219-8881. (This is not a toll-free number.)
Employee Profit Sharing-Savings Plan and Trust Agreement of Modern
Globe, Inc. (the Plan), Located in Wyomissing, PA [Prohibited
Transaction Exemption 95-18; Exemption Application No. D-09893]
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 apply to the cash sale (the Sale) of the Guaranteed
Investment Company Contract No. 62580 (the GIC), issued by
Confederation Life Insurance of Atlanta, Georgia (Confederation), by
the Plan to VF Corporation, a Pennsylvania corporation (the Employer),
the sponsoring employer and a 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 expense from the Sale;
and (3) the Plan receives as consideration from the Sale the greater of
either the fair market value of the GIC as determined on the date of
the Sale, or an amount that is equal to the total amount expended by
the Plan when acquiring the GIC, plus all interest accruing under the
terms of the GIC until date of 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 January 4, 1995, at 60 FR
491.
FOR FURTHER INFORMATION CONTACT: Mr. C. E. Beaver of the Department,
telephone (202) 219-8881. (This is not a toll-free number.)
Employees' Savings Plan of Bassett-Walker, Inc., Located in
Martinsville, VA [Prohibited Transaction Exemption 95-19; Exemption
Application No. D-09894]
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) of the Guaranteed
Investment Contract No. 62012 (the GIC), issued by Confederation Life
Insurance Company of Atlanta, Georgia (Confederation), by the plan to
VF Corporation, a Pennsylvania corporation, a 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
expense from the Sale; and (3) the Plan receives as consideration from
the Sale the greater of either the fair market value of the GIC as
determined on the date of the Sale, or $1.5 million, the principal
amount of the GIC, plus simple interest accrued at the rate of 8.7
percent per annum on the principal amount of the GIC for the period
from April 4, 1994, to the date of the Sale.
For a complete statement of the facts and representations
supporting the Department's decision to grant this exemption refer to
the notice of proposed exemption published on January 4, 1995, at 60 FR
489.
FOR FURTHER INFORMATION CONTACT: Mr. C. E. Beaver 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 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) 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 described all material terms of the transaction
which is the subject of the exemption.
Signed at Washington, D.C., this 23rd day of February, 1995.
Ivan Strasfeld,
Director of Exemption Determinations, Pension and Welfare Benefits
Administration, Department of Labor.
[FR Doc. 95-4888 Filed 2-27-95; 8:45 am]
BILLING CODE 4510-29-M
