[Federal Register Volume 60, Number 109 (Wednesday, June 7, 1995)]
[Notices]
[Pages 30103-30106]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-13911]
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DEPARTMENT OF LABOR
Pension and Welfare Benefits Administration
[Prohibited Transaction Exemption 95-40; Exemption Application No. D-
09694, et al.]
Grant of Individual Exemptions; General Motors Hourly-Rate
Employees Pension Plan, 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 [[Page 30104]] 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.
General Motors Hourly-Rate Employees Pension Plan; General Motors
Retirement Program for Salaried Employees; Saturn Individual Retirement
Plan for Represented Team Members; and Saturn Personal Choices
Retirement Plan for Non-Represented Team Members (collectively, the
Plans) Located in New York, New York; Exemption
[Prohibited Transaction Exemption 95-40; Application Nos. D-09694 thru
D-09697]
The restrictions of section 406(b)(2) of the Act shall not apply to
the stock index ``exchange of futures for physicals'' (EFP) transaction
between the General Motors Retirement Program for Salaried Employees
(the Salaried Plan) and the General Motors Hourly-Rate Employees
Pension Plan, Saturn Individual Retirement Plan for Represented Team
Members, and Saturn Personal Choices Retirement Plan for Non-
Represented Team Members (together, the Hourly Plan) which occurred on
November 30, 1993 in the amount of approximately $730 million, provided
the following conditions were met:
(a) The terms of the EFP transaction were at least as favorable to
the Plans as the terms which would have been available in an arm's-
length EFP transaction involving unrelated parties;
(b) Each Plan received a price in the EFP transaction which was
equal to the midpoint between the highest independent bid and lowest
independent offer for buying and selling the futures involved on
November 30, 1993, based on EFP quotations obtained from at least six
independent broker-dealers capable of engaging in such an EFP at the
time of the transaction;
(c) Wells Fargo Institutional Trust Company, N.A. (WFITC), as an
independent fiduciary for the Salaried Plan, determined that the EFP
transaction was prudent and in the best interests of the Salaried Plan
and its participants and beneficiaries at the time of the transaction;
(d) WFITC monitored the EFP transaction on behalf of the Salaried
Plan and took whatever action was necessary to safeguard the interests
of the Salaried Plan at the time of the transaction;
(e) General Motors Investment Management Corporation (GMIMCo), as
the fiduciary for the Hourly Plan, determined that the EFP transaction
was prudent and in the best interests of the Hourly Plan and its
participants and beneficiaries at the time of the transaction; and
(f) GMIMCo monitored the EFP transaction on behalf of the Hourly
Plan and took whatever action was necessary to safeguard the interests
of the Hourly Plan at the time of the transaction.
EFFECTIVE DATE: The exemption is effective November 30, 1993.
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 (the Proposal) published on March 13,
1995, at 60 FR 13467.
WRITTEN COMMENTS: The Department received three comment letters on the
Proposal.
Two of the comment letters, submitted by individuals who are
participants in the Salaried Plan, objected to the granting of an
exemption for the EFP transaction. However, these individuals
subsequently withdrew their adverse comments after a discussion of the
issues involved with a representative of the Department.
The third letter received by the Department was a general inquiry
from representatives of the GM Alumni Club in San Diego, California,
requesting clarification of the EFP transaction. The Department
responded to this inquiry by telephone and answered the particular
questions raised by these commenters.
No other comment letters were received by the Department on this
matter.
Accordingly, the Department has determined to grant the exemption.
FOR FURTHER INFORMATION CONTACT: Mr. E.F. Williams of the Department at
(202) 219-8194. (This is not a toll-free number.)
Analex Corporation (Analex), Analex Corporation Retirement Plan (the
Plan) Located in Brook Park, OH; Exemption
[Prohibited Transaction Exemption 95-41; Application No. D-09786]
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 retroactively to the past loan (the Past Loan) made by
the Plan to Analex (the Employer) in accordance with the following
conditions:
(1) The terms and conditions of the Past Loan were at least as
favorable to the Plan as those obtainable by the Plan under similar
circumstances in arm's-length transactions with unrelated parties;
(2) The amount of the Plan's assets involved in the Past Loan did
not exceed 15% of the Plan's total assets at any time during the
transaction;
(3) The Past Loan was at all times secured by collateral which was
valued at not less than 200% of the value of the Past Loan;
(4) Prior to the disbursement under the Loan agreement, an
independent, qualified fiduciary determined on behalf of the Plan that
the Past Loan was in the best interests of the Plan as an investment
for the Plan's portfolio, and protective of the Plan and its
participants and beneficiaries;
(5) The independent, qualified fiduciary reviewed the terms and
conditions of the exemption and the Past Loan, including the applicable
interest rate, the sufficiency of the collateral, the financial
condition of the [[Page 30105]] Employer and compliance with the 15% of
Plan assets maximum loan amount, prior to approving the disbursement
under the Loan agreement;
(6) The fiduciary is monitoring the Past Loan to ensure compliance
with the terms and conditions of the exemption and the Loan agreement;
(7) The Plan suffers no loss as a result of the Past Loan; and
(8) The Past Loan will be fully repaid by May 31, 1995.
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 7, 1995 at 60 FR
17821.
TEMPORARY NATURE OF EXEMPTION: This exemption is effective for the
period from July 12, 1994 through May 31, 1995, the date by which the
Past Loan will be repaid.
FOR FURTHER INFORMATION CONTACT: Virginia J. Miller of the Department,
telephone (202) 219-8971. (This is not a toll-free number.)
Washington Mortgage Corporation, Inc. (WMC) Located in Seattle,
Washington; Exemption
[Prohibited Transaction Exemption 95-42; Exemption Application No. D-
09814]
I. 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 sale, exchange or transfer between WMC and its affiliates and
certain employee benefit plans (the Plans) of certain construction
loans or participation interests therein to non-party in interest
entities; and 2) the sale, exchange or transfer between WMC and its
affiliates and the Plans of any construction or permanent loan made by
a Plan to a party in interest, and the resulting extension of credit
therefrom, provided that:
(a) The terms of the transactions are not less favorable to the
Plans than the terms generally available in arm's-length transactions
between unrelated parties;
(b) Such sales, exchanges or transfers are expressly approved by a
Plan fiduciary independent of WMC and its affiliates who has authority
to manage or control those Plan assets being invested in mortgages or
participation interests therein;
(c) No investment management, advisory, underwriting fee or sales
commission or similar compensation is paid to WMC or any of its
affiliates with regard to such sale, exchange or transfer;
(d) The decision to invest in a loan or a participation interest
therein is not part of an arrangement under which a fiduciary of a
Plan, acting with the knowledge of WMC or its affiliate, causes a
transaction to be made with or for the benefit of a party in interest
(as defined in section 3(14) of the Act) with respect to the Plan;
(e) At the time of its acquisition of a loan or participation
interest therein, no Plan will have more than 25% of its assets
invested in construction and permanent mortgages;
(f) WMC and its affiliates do not and will not act as fiduciaries
with regard to any Plan investing in permanent and construction loans
and interests therein as described in this exemption; and
(g) WMC shall maintain or will cause to be maintained, for the
duration of any loan or participation interest therein sold to a Plan
pursuant to this exemption, such records as are necessary to determine
whether the conditions of this exemption have been met. The records
mentioned above must be unconditionally available at their customary
location for examination for purposes reasonably related to protecting
rights under the Plans, during normal business hours, by: Any trustee,
investment manager, employer of Plan participants, employee
organization whose members are covered by a Plan, participant or
beneficiary of a Plan.
II. 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 any
transactions to which such restrictions would otherwise apply merely
because WMC or any of its affiliates is deemed to be a party in
interest with respect to a Plan by virtue of providing services to the
Plan in connection with the subject loan transactions (or because it
has a relationship to such service provider described in section
3(14)(F), (G), (H), or (I) of the Act), solely because of the ownership
of a loan or participation interest therein as described in this
exemption by such Plan.
III. Definitions. For purposes of this exemption,
(a) An ``affiliate'' of WMC includes--
(1) Any person directly or indirectly through one or more
intermediaries, controlling, controlled by, or under common control
with WMC,
(2) Any officer, director, employee, relative of, or partner in any
such person, and
(3) Any corporation or partnership of which such person is an
officer, director, partner or employee.
(b) The term ``control'' means the power to exercise a controlling
influence over the management or policies of a person other than an
individual.
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 7, 1995 at 59 FR
38205.
TEMPORARY NATURE OF EXEMPTION: This exemption is effective only for
those transactions entered into within eight years of the date on which
the Final Grant of this exemption is published in the Federal Register.
FOR FURTHER INFORMATION CONTACT: Gary H. Lefkowitz of the Department,
telephone (202) 219-8881. (This is not a toll-free number.)
Welborn Clinic Employees' Retirement Plan (the Plan) Located in
Evansville, Indiana; Exemption
[Prohibited Transaction Exemption 95-43; Exemption Application No. D-
09890]
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 sale by the Plan of certain improved real
property (the Property) located in Evansville, Indiana, to WANC Leasing
Company, a party in interest with respect to the Plan; provided the
following conditions are satisfied:
(A) All terms and conditions of the transaction are no less
favorable to the Plan than those which the Plan could obtain in an
arm's-length transaction with an unrelated party;
(B) The Plan receives a cash purchase price of no less than the
greater of (1) $8,555,000, or (2) the Property's fair market value as
of the sale date; and
(C) The Plan does not incur any expenses with respect to the
transaction.
For a more complete statement of the facts and representations
supporting this exemption, refer to the notice of proposed exemption
published on March 13, 1995 at 60 FR 13473.
WRITTEN COMMENTS: The Department received one written comment,
submitted by a Plan participant, and no requests for a hearing. The
Department forwarded the comment to the applicant, the Citizens
National Bank of Evansville as trustee of the Plan (the Trustee), for
responses to the points raised therein. The points raised by the
comment, and the Trustee's responses, are summarized as follows:
(1) The commenter states that improvements have been made to the
Property since December 31, 1993, the date of one of the two appraisals
utilized by the parties to determine the [[Page 30106]] minimum
purchase price for the Property. The commenter believes that a
reappraisal of the Property should be required before the exemption is
granted.
The Trustee responds that the Property will be reappraised prior to
final determination of the purchase price, as described in the Summary.
The Trustee and the representatives of WANC Leasing Company (WANC) have
agreed that as part of the sale transaction the Property is to be
reappraised by both C. David Matthews and William R. Bartlett II, and
if the mean of the two reappraisals is higher than $8,555,000 the
purchase price will be increased to such higher mean. As part of the
application for the proposed exemption, the Trustee explained that the
agreement with respect to the purchase price for the Property resulted
from arm's-length negotiations between the Trustee and WANC over a two-
month period.
(2) The commenter states that a recently-approved casino river boat
project will affect values of real estate in downtown Evansville in
ways which should be taken into consideration in establishing the
purchase price of the Property.
The Trustee again notes that the Property will be reappraised by
Matthews and Bartlett prior to final determination of the purchase
price. The Trustee states that any increase in the Property's value
attributable to the casino river boat project will be reflected in the
reappraisals. The Trustee further maintains, however, that its own
investigation into the matter indicates that the site of the river boat
development, in the southwest corner of downtown, is too far from the
Property's location, in the northeast section of downtown, to affect
the value of the Property.
(3) The commenter, referring to the Summary's description of WANC
as a partnership with 65 general partners, states that the actual
number of general partners is in excess of 65.
The Trustee responds that the comment is correct and that the
actual number of general partners is 80.
After careful consideration of the entire record, the Department
has determined to grant the exemption.
FOR FURTHER INFORMATION CONTACT: Ronald Willett of the Department,
telephone (202) 219-8881. (This is not a toll-free number.)
The Neiman Marcus Group, Inc., Employee Savings Plan (the Plan),
Located in Chestnut Hill, Massachusetts; Exemption
[Prohibited Transaction Exemption 95-44; Exemption Application No. D-
09917]
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 sections 4975(c)(1) (A) through (E) of the Code,
shall not apply to (1) Loans to the Plan (the Loans) by The Neiman
Marcus Group, Inc., the sponsor of the Plan, with respect to guaranteed
investment contract number 62638 (the GIC) issued by Confederation Life
Insurance Company (Confederation Life); and (2) the Plan's potential
repayment of the Loans (the Repayments); provided that the following
conditions are satisfied:
(A) No interest and/or expenses are paid by the Plan;
(B) The Loans are made in lieu of amounts due the Plan under the
terms of the GIC;
(C) The Repayments are restricted to cash proceeds paid to the Plan
by Confederation Life and/or any state guaranty association or other
responsible third party making payment with respect to the GIC (the GIC
Proceeds), and no other Plan assets are used to make the Repayments;
and
(D) The Repayments will be waived to the extent the Loans exceed
the GIC Proceeds.
For a more complete statement of the facts and representations
supporting this exemption, refer to the notice of proposed exemption
published on April 14, 1995 at 60 FR 1909.
WRITTEN COMMENTS: The Department received one written comment and no
requests for a hearing. The comment was submitted by a Plan participant
who expressed support for the proposed exemption. After consideration
of the entire record, the Department has determined to grant the
exemption.
FOR FURTHER INFORMATION CONTACT: Ronald Willett 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 2nd day of June, 1995.
Ivan Strasfeld,
Director of Exemption Determinations, Pension and Welfare Benefits
Administration, U.S. Department of Labor.
[FR Doc. 95-13911 Filed 6-6-95; 8:45 am]
BILLING CODE 4510-29-P
