14074 Federal Register / Vol. 76, No. 50 / Tuesday, March 15, 2011 / Notices 

1Because the Ford VEBA Plan is not qualified 

under section 401 of the Code, there is no 

jurisdiction under Title II of the Act pursuant to 

section 4975 of the Code. However, there is 

jurisdiction under Title I of the Act. 

2The Notice incorporates by reference 

information contained in the Notice of Proposed 

Individual Exemption Involving Ford Motor 

Company Located in Detroit, MI, 74 FR 64716, 

December 8, 2009 (the Proposed PTE) and PTE 

2010–08. For ease of reference, unless otherwise 

specified herein, all capitalized terms used in this 

Summary have the meaning set forth in PTE 2010– 

08. 

3The term ‘‘Securities’’ includes New Note A and 

New Note B, the Warrants, the LLC Interests, any 

Payment Shares received under New Note B, and 

any additional shares of Ford Common Stock 

acquired in accordance with other transactions 

described in Sections I(a)(2) and (3) of the proposed 

exemption, as such terms are defined in Section VII 

of the proposed exemption. 

parole violators, other conditional 

release violators returned, transfers from 

other jurisdictions, AWOLs and 

escapees returned, and returns from 

appeal and bond; 

(d) Prison release information in the 

calendar year for the following 

categories: Expirations of sentence, 

commutations, other conditional 

releases, probations, supervised 

mandatory releases, paroles, other 

conditional releases, deaths by cause, 

AWOLs, escapes, transfers to other 

jurisdictions, and releases to appeal or 

bond; 

(e) Number of inmates under 

jurisdiction on December 31 by race and 

Hispanic origin; 

(f) Number of inmates in custody 

classified as non-citizens and/or under 

18 years of age; 

(g) Testing of incoming inmates for 

HIV; and HIV infection and AIDS cases 

on December 31; and 

(h) The aggregate rated, operational, 

and design capacities, by sex, of each 

State’s correctional facilities at year-end. 

The Bureau of Justice Statistics uses 

this information in published reports 

and for the U.S. Congress, Executive 

Office of the President, practitioners, 

researchers, students, the media, and 

others interested in criminal justice 

statistics. 

5) An estimate of the total number of 

respondents and the amount of time 

needed for an average respondent to 

respond to both forms: 51 respondents 

each taking an average 6.5 total hours to 

respond to the NPS–1B. Burden hours 

are down by 76 hours since the last 

clearance because we are eliminating 

the NPS–1A midyear counts to reduce 

redundancy. We plan to establish a 

series of rotating short forms to replace 

the NPS–1A which will collect data on 

special topics, such as mental health, 

medical problems, and reentry, but 

these forms are in the working stages. A 

supplemental approval and burden 

adjustment will be sought through OMB 

when the materials are ready for review. 

(6) An estimate of the total public 

burden (in hours) associated with the 

collection: 332 annual burden hours. 

If additional information is required 

contact: Mrs. Lynn Murray, Department 

Clearance Officer, United States 

Department of Justice, Justice 

Management Division, Policy and 

Planning Staff, Two Constitution 

Square, 145 N Street, NE., Suite 2E–808, 

Washington, DC 20530. 

Dated: March 9, 2011. 

Lynn Murray, 

Department Clearance Officer, PRA, 

Department of Justice. 

[FR Doc. 2011–5966 Filed 3–14–11; 8:45 am] 

BILLING CODE 4410–18–P 

DEPARTMENT OF LABOR 

Employee Benefits Security 

Administration 

[Application No. L–11641] 

Notice of Proposed Amendment to 

Prohibited Transaction Exemption 

(PTE) 2010–08 Involving Ford Motor 

Company, Located in Detroit, MI 

AGENCY: Employee Benefits Security 

Administration, U.S. Department of 

Labor. 

ACTION: Notice of proposed amendment. 

This document contains a notice of 

pendency (the Notice) before the 

Department of Labor (the Department) of 

a proposed amendment to PTE 2010–08 

(75 FR 14192, March 24, 2010), an 

individual exemption from certain 

prohibited transaction restrictions of the 

Employee Retirement Income Security 

Act of 1974 (the Act or ERISA). The 

transactions involve the UAW Ford 

Retirees Medical Benefits Plan (the Ford 

VEBA Plan) and its funding vehicle, the 

UAW Retiree Medical Benefits Trust 

(the VEBA Trust), (collectively the 

VEBA).1 The proposed amendment, if 

granted, would affect the VEBA, and its 

participants and beneficiaries. 

DATES: Effective Date: If granted, this 

proposed amendment will be effective 

as of December 31, 2009, except with 

respect to Section I(a)(7), which will be 

effective as of June 25, 2010. 

DATES: Written comments and requests 

for a public hearing on the proposed 

amendment should be submitted to the 

Department within 51 days from the 

date of publication of this Federal 

Register Notice. 

ADDRESSES: All written comments and 

requests for a public hearing concerning 

the proposed amendment should be sent 

to the Office of Exemption 

Determinations, Employee Benefits 

Security Administration, Room N–5700, 

U.S. Department of Labor, 200 

Constitution Avenue, NW., Washington 

DC 20210, Attention: Application No. 

L–11641. Interested persons are also 

invited to submit comments and/or 

hearing requests to the Department by 

facsimile to (202) 219–0204 or by 

electronic mail to 

Blinder.Warren@dol.gov by the end of 

the scheduled comment period. The 

application pertaining to the proposed 

amendment and the comments received 

will be available for public inspection in 

the Public Disclosure Room of the 

Employee Benefits Security 

Administration, U.S. Department of 

Labor, Room N–1513, 200 Constitution 

Avenue, NW., Washington, DC 20210. 

Comments and hearing requests will 

also be available online at http:// 

www.regulations.gov and http:// 

www.dol.gov/ebsa, at no charge. 

Warning: If you submit written 

comments or hearing requests, do not 

include any personally-identifiable or 

confidential business information that 

you do not want to be publiclydisclosed. All comments and hearing 

requests are posted on the Internet 

exactly as they are received, and they 

can be retrieved by most Internet search 

engines. The Department will make no 

deletions, modifications or redactions to 

the comments or hearing requests 

received, as they are public records. 

FOR FURTHER INFORMATION CONTACT: Mr. 

Warren Blinder, Office of Exemption 

Determinations, Employee Benefits 

Security Administration, U.S. 

Department of Labor, telephone (202) 

693–8553. (This is not a toll-free 

number.) 

SUPPLEMENTARY INFORMATION: 2

This document contains a notice of 

proposed exemption that, if granted, 

would amend PTE 2010–08, which 

relates to the Ford VEBA Plan and the 

VEBA Trust. Specifically, PTE 2010–08, 

which is effective as of December 31, 

2009, provides exemptive relief from the 

restrictions of sections 406(a)(1)(A), 

406(a)(1)(B), 406(a)(1)(E), 406(a)(2), 

406(b)(1), 406(b)(2) and 407(a) of ERISA 

for (a) the acquisition by the Ford VEBA 

Plan and the VEBA Trust of the 

Securities,3 transferred by Ford and 

deposited in the Ford Employer 

Security Sub-Account of the Ford 


srobinson on DSKHWCL6B1PROD with NOTICES
Federal Register / Vol. 76, No. 50 / Tuesday, March 15, 2011 / Notices 14075 

4The Summary of Facts and Representations (the 

Summary) is based on the Applicant’s 

representations and does not reflect the views of the 

Department. 

5See UAW v. Ford Motor Company, No. 07– 

14845, 2008 WL 4104329 (E.D. Mich. August 29, 

2008); UAW v. Gen. Motors Corp., No. 07–CV– 

14074–DT, 2008 WL 2968408 (E.D. Mich. July 31, 

2008); UAW v. Chrysler, No. 07–CV–14310, 2008 

WL 2980046 (E.D. Mich. July 31, 2008). 

6See Ford Motor Co., 2008 WL 4104329. 

7For a full description of the VEBA Trust, see 

pages 64718–64719 of the Proposed PTE. 

8See Ford Motor Co., 2008 WL 4104329. 

9See Int’l Union, UAW, et al. v. Ford Motor 

Company, Civil Action No. 07–14845, (E.D. Mich. 

November 9, 2009) (Doc. # 71, Order and Final J.). 

10For a full description of the assets transferred 

to the VEBA Trust under the 2009 Settlement 

Agreement, see pages 64720–64721 of the Proposed 

PTE and pages 14195–14197, 14199, and 14200– 

14201 of PTE 2010–08. 

11For a full description of the New Notes, see 

pages 64721–64722 of the Proposed PTE and pages 

14195–14196 of PTE 2010–08. 

Separate Retiree Account of the VEBA 

Trust; (b) the acquisition by the Ford 

VEBA Plan of Payment Shares; (c) the 

acquisition by the Ford VEBA Plan of 

shares of Ford Common Stock pursuant 

to (i) the Independent Fiduciary’s 

exercise of all or a pro rata portion of 

the Warrants, and (ii) an adjustment, 

substitution, conversion, or other 

modification of Ford Common Stock in 

connection with a reorganization, 

restructuring, recapitalization, merger, 

or similar corporate transaction, 

provided that each holder of Ford 

Common Stock is treated in an identical 

manner; (d) the holding by the Ford 

VEBA Plan of the Securities in the Ford 

Employer Security Sub-Account of the 

Ford Separate Retiree Account of the 

VEBA Trust; (e) the deferred payment of 

any amounts due under New Note B by 

Ford pursuant to the terms thereunder; 

and (f) the disposition of the Securities 

by the Independent Fiduciary. 

In addition, PTE 2010–08 provides 

relief from the restrictions of sections 

406(a)(1)(A), 406(b)(1), and 406(b)(2) of 

ERISA for the sale of Ford Common 

Stock or Warrants held by the Ford 

VEBA Plan to Ford in accordance with 

the Right of First Offer or a Ford selftender under the Securityholder and 

Registration Rights Agreement. 

Furthermore, PTE 2010–08 provides 

relief from the restrictions of sections 

406(a)(1)(B), 406(a)(1)(D), 406(b)(1), and 

406(b)(2) of ERISA, for (a) the extension 

of credit or transfer of assets by Ford, 

the Ford Retiree Health Plan, or the 

Ford VEBA Plan in payment of a benefit 

claim that was the responsibility and 

legal obligation of one of the other 

aforementioned parties; (b) the 

reimbursement by Ford, the Ford 

Retiree Health Plan, or the Ford VEBA 

Plan, of a benefit claim that was paid by 

another of the aforementioned parties, 

which was not legally responsible for 

the payment of such claim, plus 

interest; (c) the retention of an amount 

by Ford until payment to the Ford 

VEBA Plan resulting from an 

overaccrual of pre-transfer expenses 

attributable to the TAA or the retention 

of an amount by the Ford VEBA Plan 

until payment to Ford resulting from an 

underaccrual of pre-transfer expense 

attributable to the TAA; and (d) the Ford 

VEBA Plan’s payment to Ford of an 

amount equal to any underaccrual by 

Ford of pre-transfer expenses 

attributable to the TAA or the payment 

by Ford to the Ford VEBA Plan of an 

amount equal to any overaccrual by 

Ford of pre-transfer expenses 

attributable to the TAA. 

Finally, PTE 2010–08 provides relief 

from the restrictions of sections 

406(a)(1)(B), 406(a)(1)(D), 406(b)(1), and 

406(b)(2) of ERISA for the return to Ford 

of assets deposited or transferred to the 

Ford VEBA Plan by mistake, plus 

interest. 

Summary of Facts and 

Representations 4

1. Background 

The Department originally granted 

PTE 2010–08 in response to an 

application for exemption submitted by 

Ford on July 24, 2009 (the Application). 

The Application was an integral part of 

the wholesale restructuring of retiree 

health care benefits by the three major 

domestic car companies, which sought 

to contain skyrocketing healthcare costs 

and settle lawsuits brought by the 

International Union, United 

Automobile, Aerospace and Agricultural 

Implement Workers of America (the 

UAW) and the companies’ respective 

classes of retirees.5

Pursuant to a court approved class 

wide settlement (the 2008 Settlement 

Agreement) in the case of Int’l Union, 

UAW, et al. v. Ford Motor Company, on 

January 1, 2010, the Ford VEBA Plan 

assumed the responsibility for providing 

post-retirement medical benefits for a 

class of retirees of Ford (the Class) and 

a group of Ford active employees (the 

Covered Group) eligible for retiree 

benefits.6 Pursuant to the 2008 

Settlement Agreement, the Ford VEBA 

Plan would be funded by the VEBA 

Trust, which would be responsible for 

the payment of post-retirement medical 

benefits to members of the Class and the 

Covered Group as of January 1, 2010.7

Ford agreed to transfer assets to the 

VEBA Trust on behalf of the Ford VEBA 

Plan with an estimated worth of $13.2 

billion, based on a present value as of 

December 31, 2007, designed to provide 

retiree health benefits for members of 

the Class and the Covered Group for an 

indefinite duration.8

On July 23, 2009, Ford, the UAW, and 

counsel for the Class amended the 2008 

Settlement Agreement, effective 

November 9, 2009 (as amended, the 

2009 Settlement Agreement), to provide 

that, inter alia, Ford could contribute 

Ford Common Stock to the VEBA Trust 

to satisfy up to approximately 50% of 

certain future obligations to the VEBA 

Trust on behalf of the Ford VEBA Plan.9

In accordance with the terms of the 

2009 Settlement Agreement, on 

December 31, 2009, Ford transferred the 

Securities to the Ford Employer 

Security Sub-Account, the sub-account 

established and maintained in the Ford 

Separate Retiree Account of the VEBA 

Trust to hold Securities on behalf of the 

Ford VEBA Plan and any proceeds from 

the disposition of any such Security.10

2. The New Notes 

Among the Securities transferred to 

the VEBA Trust and held in the Ford 

Employer Security Sub-Account were 

the New Notes, consisting of New Note 

A and New Note B, which were 

structured to provide a series of 

payments over 13 years. New Note A 

was issued in the principal amount of 

$6,705,470,000, and New Note B was 

issued in the principal amount of 

$6,511,850,000. The New Notes were to 

be non-interest bearing and mature on 

June 30, 2022.11

Whereas New Note A was payable 

only in cash, under the 2009 Settlement 

Agreement, New Note B was to be 

payable in either cash or, upon the 

satisfaction of certain conditions, shares 

of Ford Common Stock designated as 

‘‘Payment Shares’’ of equal value. The 

number of Payment Shares payable 

would be determined based on the 

volume-weighted average selling price 

per share (VWAP) of Ford Common 

Stock for the 30 trading-day period 

ending on the second business day prior 

to the relevant payment date. In 

addition, Payment Shares received by 

the VEBA Trust in lieu of cash pursuant 

to New Note B would be subject to 

certain registration rights and transfer 

restrictions, as described in the 

Proposed PTE. 


srobinson on DSKHWCL6B1PROD with NOTICES
14076 Federal Register / Vol. 76, No. 50 / Tuesday, March 15, 2011 / Notices 

12Pursuant to the terms of New Note A, Ford’s 

partial pre-payment of New Note A reduced 

proportionately each future principal payment on 

New Note A, beginning with the June 30, 2010 

payment. 13For a full description of the rights and 

obligations of the Independent Fiduciary, see pages 

64727–64728 of the Proposed PTE and pages 

14197–14201 of PTE 2010–08. 

Ford made its first scheduled 

payments in respect of the New Notes 

on December 31, 2009, including a 

partial prepayment of New Note A in 

the amount of $500,000,000.12 After 

Ford made such payments, the payment 

schedule under the New Notes, 

beginning with the June 30, 2010 

payment date, became the following: 

Payment date Payment of Note A Payment of Note B 

June 30, 2010 ........................................................................................................................................... $249.45 million ...... $609.95 million. 

June 30, 2011 ........................................................................................................................................... $249.45 million ...... $609.95 million. 

June 30, 2012 ........................................................................................................................................... $584.06 million ...... $654 million. 

June 30, 2013 ........................................................................................................................................... $584.06 million ...... $654 million. 

June 30, 2014 ........................................................................................................................................... $584.06 million ...... $654 million. 

June 30, 2015 ........................................................................................................................................... $584.06 million ...... $654 million. 

June 30, 2016 ........................................................................................................................................... $584.06 million ...... $654 million. 

June 30, 2017 ........................................................................................................................................... $584.06 million ...... $654 million. 

June 30, 2018 ........................................................................................................................................... $584.06 million ...... $654 million. 

June 30, 2019 ........................................................................................................................................... $22.36 million ........ $26 million. 

June 30, 2020 ........................................................................................................................................... $22.36 million ........ $26 million. 

June 30, 2021 ........................................................................................................................................... $22.36 million ........ $26 million. 

June 30, 2022 ........................................................................................................................................... $22.36 million ........ $26 million. 

As noted above, Ford could prepay in 

cash either or both of the New Notes in 

whole or in part. For prepayments in 

whole, the payment on each payment 

date would equal the corresponding 

amounts set forth as a schedule to the 

applicable New Note. In the event of 

any partial prepayment, future 

payments would be determined on a 

basis that provided the economically 

equivalent present value and duration to 

the VEBA Trust using a discount rate of 

9% per annum. 

3. The Holding, Management and 

Disposition of the Ford Securities Held 

in the Ford Employer Security SubAccount 

As a condition of the Department’s 

granting relief under PTE 2010–08 for 

the transactions described above, the 

Committee of the Ford VEBA Plan was 

required to retain an Independent 

Fiduciary to manage the Securities, 

including the New Notes, held in the 

Ford Employer Security Sub-Account.13

To satisfy such condition, and in 

accordance with the Trust Agreement, 

the Committee appointed Independent 

Fiduciary Services, Inc. (IFS) to 

represent the interests of the Ford VEBA 

Plan for the duration of the Ford VEBA 

Plan’s holding of the New Notes or any 

Ford security in the Ford Employer 

Security Sub-Account of the VEBA 

Trust. 

In accordance with PTE 2010–08, IFS 

may also authorize the disposition, by 

the trustee of the VEBA Trust, State 

Street Bank and Trust Company (the 

Trustee), of any Securities, including 

the New Notes, once IFS determines, at 

the time of the transaction, that the 

transaction is feasible, in the interest of 

the Ford VEBA Plan, and protective of 

the participants and beneficiaries of the 

Ford VEBA Plan. Furthermore, IFS must 

discharge its duties consistent with the 

terms of the Ford VEBA Plan, the Trust 

Agreement, and the UAW Retiree 

Medical Benefits Trust Independent 

Fiduciary Agreement Relating to Ford 

Motor Company, dated as of December 

1, 2009, between the VEBA Trust and 

IFS, as amended by Amendment 

Number 1 thereto effective June 25, 

2010 (the Independent Fiduciary 

Agreement), and any other documents 

governing the Securities, such as the 

Securityholder and Registration Rights 

Agreement, and any successors to those 

agreements. 

As the Independent Fiduciary 

representing the Ford VEBA Plan’s 

interest in the Ford Employer Security 

Sub-Account of the VEBA Trust, IFS has 

had sole discretionary authority relating 

to the holding, ongoing management 

and disposition of the Securities 

pursuant to the Trust Agreement and 

the Independent Fiduciary Agreement. 

In that regard, on April 6, 2010, IFS, on 

behalf of the Ford VEBA Plan, 

completed the sale in a secondary 

public offering of all 362,391,305 

Warrants held by the VEBA Trust. The 

offering was priced at $5.00 per Warrant 

through a modified Dutch auction that 

took place on March 30, 2010. The 

aggregate net proceeds to the VEBA 

Trust from the offering were 

approximately $1.78 billion. 

IFS states that, after the sale of the 

Warrants, it began looking for ways to 

further reduce the amount of Securities 

that the Ford VEBA Plan held, which 

still equaled as much as 42.8% of the 

assets in the Ford Separate Retiree 

Account. Accordingly, IFS met with 

representatives from leading investment 

banking firms to discuss possible 

approaches to the marketing of New 

Note A and of any shares of Ford 

Common Stock that the VEBA Trust 

might receive from Ford on June 30, 

2010 in its annual principal payment on 

New Note B. IFS states that, as the June 

30th payment date approached, it was 

aware that conditions in the credit 

markets had deteriorated as a result of 

uncertainties surrounding European 

nations’ sovereign debt and other 

market factors. 

According to IFS, it also approached 

Ford, in order to inform the company of 

its desire to monetize the New Notes, 

particularly New Note A, and prepare 

for the possibility of receiving the June 

30th payment of New Note B in 

Payment Shares. IFS represents that 

Ford then indicated that it would be 

interested in purchasing a substantial 

portion of New Note A, provided that 

Ford could obtain additional 

prepayment rights under New Note B. 

After considerable negotiation, during 

which it consulted extensively with its 

legal counsel, Proskauer Rose LLP 

(Proskauer Rose), and its financial 

advisors, including Sutter Securities 

Incorporated (Sutter), IFS states that it 

entered into an agreement, dated as of 

June 25, 2010 (the Note Agreement), by 

and among Ford, Ford Motor Credit 

Company LLC (Ford Credit), and the 

VEBA Trust, under which the VEBA 

Trust would sell New Note A to Ford 

and Ford Credit and New Note B would 

be amended to add provisions 

permitting Ford to prepay all or a 

portion of New Note B, in each case 

under the terms and conditions set forth 


srobinson on DSKHWCL6B1PROD with NOTICES
Federal Register / Vol. 76, No. 50 / Tuesday, March 15, 2011 / Notices 14077 

14For a more detailed description of the 

exemptive relief granted for the acquisition and 

holding of New Note B, refer to pages 64724–64726 

of the Proposed PTE and pages 14196–14197 of PTE 

2010–08. 

15As described above, but for the Note 

Agreement, the value formula contained in New 

Note B allows Ford, in a declining market for its 

equity, to pay its annual principal payments on 

New Note B at a discount if the payments are made 

in Payment Shares (see page 64722 of the Proposed 

PTE). 

16The Applicant believes such purchase is 

covered by PTE 2010–08 provided the conditions of 

the exemption have been satisfied. The Department 

concurs. Thus, the proposed amendment described 

herein relates solely to New Note B. 

17Based on information provided by the 

Committee to IFS, as of June 30, 2010, the fair 

market value of New Note B, as amended, was 

$3.016 billion, representing approximately 20.7% of 

the aggregate fair market value of the total assets of 

the Ford VEBA Plan, or $14.596 billion. According 

to the Applicant, the VEBA Trust does not have a 

recent annual report on which to base the fair 

market value of the Securities due to the fact that 

the assets were transferred to the VEBA Trust on 

behalf of the Ford VEBA Plan on December 31, 

2009. As a result, the fair market value is based on 

the June 30, 2010 payment date under the New 

Notes, consistent with other references to fair 

market value of assets held by the VEBA Trust. 

Similarly, the VEBA Trust does not have a recent 

financial statement. 

18As described above, prior to the amendment by 

the Note Agreement, New Note B, by its terms, 

permitted Ford, without prior notice, to prepay 

such note at 100 percent of the scheduled 

prepayment amount on each annual June 30th 

scheduled principal payment date. 

therein, described in further detail 

below. 

4. Amendment of PTE 2010–08 

Ford, on behalf of IFS, the Trustee, 

and Ford Credit, has requested a new 

exemption that would amend PTE 

2010–08, effective as of June 25, 2010, 

which is the effective date of the Note 

Agreement. The amendment would 

extend the exemptive relief provided 

under PTE 2010–08 to (a) the execution 

of the Note Agreement by and between 

Ford, Ford Credit, and the VEBA Trust, 

acting by and through IFS; and (b) the 

amendment of New Note B to provide 

for a new prepayment right pursuant to 

the Note Agreement (the Subject 

Transactions). 

The Applicant states that the VEBA 

Trust’s entering into the Note 

Agreement with Ford and Ford Credit 

and simultaneously amending New 

Note B to provide Ford additional 

prepayment rights in exchange for 

Ford’s commitment to purchase the 

outstanding balance under New Note A 

and to make the June 30, 2010 

scheduled principal payment under 

New Note B in cash, could be viewed as 

the sale or exchange of property 

between the Ford VEBA Plan and Ford 

if the new prepayment right is deemed 

to be ‘‘property’’ and a ‘‘sale or exchange’’ 

is deemed to occur for purposes section 

406(a)(1)(A) of the Act, which prohibits 

such transactions. As a result, the 

Applicant explains that the Subject 

Transactions could be deemed to be a 

prohibited exchange of property under 

section 406(a)(1)(A). To facilitate this 

relief, the Applicant has requested that 

the Covered Transactions set forth in 

Section I(a) of PTE 2010–08 be modified 

to incorporate the Subject Transactions 

described above, retroactive to June 25, 

2010. 

Furthermore, the Applicant is aware 

that the amendment of New Note B 

pursuant to the Note Agreement may 

constitute a material change of New 

Note B, and as such, New Note B, as 

amended, may not be covered by PTE 

2010–08.14 Therefore, the Applicant has 

requested exemptive relief retroactively 

effective to June 25, 2010 for the holding 

of New Note B, as amended, by the Ford 

VEBA Plan. To facilitate this relief, the 

Applicant has requested that the 

definition of ‘‘New Note B’’ in PTE 

2010–08 be amended to incorporate the 

terms of the amendment of New Note B 

pursuant to the Note Agreement, also 

retroactive to June 25, 2010. 

After considering the Applicants’ 

request, the Department has determined 

to propose an amendment to PTE 2010– 

08. The proposed amendment has been 

requested in an application filed by the 

Ford Motor Company (Ford or the 

Applicant) pursuant to section 408(a) of 

ERISA and in accordance with the 

procedures set forth in 29 CFR 2570, 

Subpart B (55 FR 32836, 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. Accordingly, this 

proposed amendment is being issued 

solely by the Department. 

5. The Note Agreement 

On June 25, 2010, Ford and Ford 

Credit entered into the Note Agreement 

with the VEBA Trust, acting by and 

through IFS. The Note Agreement 

generally provides for Ford’s agreement 

to purchase New Note A and pay the 

June 30, 2010 principal payment of New 

Note B in cash, in exchange for the 

VEBA Trust’s agreement to amend New 

Note B to grant additional prepayment 

rights for Ford. 

Pursuant to the Note Agreement, Ford 

made the June 30, 2010 New Note A 

principal payment of $249,452,786 to 

the VEBA Trust in cash, as scheduled 

under the terms of such note and 

without any discount. Furthermore, the 

Applicant represents that, in 

compliance with the Note Agreement, 

on June 30, 2010, Ford made the 

scheduled New Note B principal 

payment of $609,950,000 to the VEBA 

Trust in cash and did not elect to make 

such payment in Payment Shares, as 

otherwise permitted by the terms of 

New Note B.15

In addition, on June 30, 2010, 

following Ford’s payment of principal 

under the New Notes, Ford and Ford 

Credit together purchased the remaining 

outstanding principal amount of New 

Note A ($2,962,066,894 on a present 

value basis) at a price of 98% of such 

remaining principal amount.16 In this 

regard, Ford purchased 

$1,635,536,281.76 of the present value 

of the remaining outstanding principal 

amount for a price of $1,602,825,556.12 

and Ford Credit purchased 

$1,326,530,612.24 of the present value 

of the remaining outstanding principal 

amount for a price of $1.3 billion. 

The Applicant further represents that, 

pursuant to the Note Agreement, 

Section 2(g) of New Note B was 

amended to provide Ford a three-year 

right beginning in July 2010 to prepay 

in cash from time to time, on the last 

business day of each month except May 

and June, all or a portion of the present 

value of the outstanding principal 

amount of New Note B ($3,622,050,000 

on a present value basis as of June 30, 

2010, following Ford’s required annual 

payment of principal) 17 at a 5 percent 

discount for prepayments made prior to 

January 1, 2012 and at a 4 percent 

discount for prepayments made from 

January 1, 2012 until the last business 

day in July 2013. Under the terms of 

New Note B, as amended, Ford must 

provide 10 days’ prior written notice to 

IFS of its intention to prepay all or a 

portion of New Note B.18

6. Fairness Opinion 

The Applicant states that IFS received 

a fairness opinion, dated June 24, 2010, 

from Sutter with respect to the 

transactions. Pursuant to terms of the 

Note Agreement, under which Ford 

agreed to pay 50% (but not in excess of 

$250,000) of the fee payable to Sutter for 

preparation of the fairness opinion, Ford 

paid $200,000 of the total fee payable to 

Sutter of $400,000 and the VEBA Trust 

paid $200,000. 

7. Other Written Agreements 

In addition, in connection with the 

Note Agreement, Ford and IFS entered 

into an Indemnification Agreement 

dated as of June 25, 2010 pursuant to 

which Ford may be required to 


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19 Given the VWAP for the 30 trading days ending 

June 28, 2010 of $11.35 per share, Ford could have 

made New Note B’s principal installment payment 

of $609,950,000 with 53,740,088 shares of Ford 

Common Stock with a market value based on the 

stock’s June 29, 2010 closing price of $9.88, of only 

$530,952,071, a difference of $79,000,000. This 

amount fully offsets the 2% discount on the price 

that Ford and Ford Credit paid for New Note A. 

20Pursuant to the Note Agreement, ‘‘par’’ is 

calculated by discounting the ‘‘Prepayment 

Amount’’ (as defined in New Note B) payable on the 

then next scheduled ‘‘Payment Date’’ (as defined in 

New Note B) at a rate per annum of 9% from the 

then next scheduled Payment Date back to such 

prepayment date. 

21 If not for such prohibition, the dates on which 

such notice of prepayment at the end of May and 

June would have fallen are within the periods in 

which the VWAP of Ford stock is calculated for 

purposes of determining the number of shares Ford 

would have to pay on the principal installment 

immediately following June 30. 

indemnify IFS for claims arising from 

Ford’s exercise of its prepayment right 

under New Note B, as amended, if an 

exemption with retroactive application 

as of the effective date of the Note 

Agreement (i.e., June 25, 2010) is not 

granted. Ford, the VEBA Trust and IFS 

also entered into a standard 

Confidentiality Agreement on June 25, 

2010 in order to facilitate the 

transaction and the exchange of certain 

confidential, nonpublic information 

related to the transactions contemplated 

in the Note Agreement. 

8. Determinations of the Independent 

Fiduciary 

As noted above, PTE 2010–08 

provides that the Independent Fiduciary 

of the Ford VEBA Plan may authorize 

the disposition, by the Trustee, of the 

Securities once it determines that the 

transaction is feasible, in the interest of 

the Ford VEBA Plan, and protective of 

the participants and beneficiaries of the 

Ford VEBA Plan. In this regard, IFS, as 

the Independent Fiduciary, with the 

assistance of Sutter and Proskauer Rose, 

concluded that the Subject Transactions 

were administratively feasible, in the 

interest of, and protective of the Ford 

VEBA Plan and its participants and 

beneficiaries. Furthermore, IFS 

determined that reducing the exposure 

of the Ford Separate Retiree Account to 

Ford-specific risk through a fair 

transaction that would generate cash to 

be invested in a more diversified 

portfolio would be consistent with the 

diversification aspect of prudence set 

forth in section 404 of the Act. 

IFS, together with Sutter, ascertained 

that the price paid for New Note A (i.e., 

98% of par) pursuant to the Note 

Agreement was at least equal to the net 

proceeds the VEBA Trust would likely 

have achieved through a sale of New 

Note A to unrelated third parties. IFS 

resolved that there was no way to 

reliably predict if or when market 

conditions would improve to the point 

of allowing the VEBA Trust to realize a 

better price on New Note A. According 

to IFS, it realized that, under its original 

terms, the potential value of New Note 

A was limited by Ford’s right to prepay 

all or a portion of New Note A at par 

each June 30. 

Furthermore, IFS found that it would 

be advantageous to the Ford VEBA Plan 

to secure Ford’s agreement to make 

100% of the scheduled June 30, 2010 

principal payment on New Note B in 

cash. As described above, under New 

Note B, Ford could have made its June 

30th payment with Payment Shares in 

an amount based on Ford Common 

Stock’s VWAP for the 30 trading days 

ending June 28. IFS determined that, in 

light of the downward trend during the 

preceding 30-trading day period in 

Ford’s common stock price, the number 

of shares that Ford could have delivered 

would have had a market value (based 

on the stock’s closing price on June 29) 

significantly less than the amount 

otherwise due in cash. Thus, by 

guaranteeing that the June 30, 2010, 

payment on New Note B was made in 

cash, IFS effectively saved the VEBA 

Trust $79 million.19 IFS was also 

cognizant of the fact that Ford’s 

payment of cash allowed the VEBA 

Trust to avoid the transaction costs and 

market risk associated with monetizing 

any Payment Shares that could have 

been delivered in lieu of cash. 

IFS also made a determination that 

the prepayment discount prices for New 

Note B payable by Ford during the 

three-year period ending July 31, 2013 

(i.e., 95% of par 20 through 2011 and 

96% of par in 2012 and 2013) would 

likely be equal to, or greater than, the 

fair market value of New Note B. In this 

regard, IFS considered the possibility 

that principal payments of New Note B 

could be made in Payment Shares with 

a market value less than the scheduled 

principal payment if it were made in 

cash and the fact that, by its terms, New 

Note B is not transferable without the 

sole written consent of Ford. Moreover, 

it was important to IFS that any 

prepayment of principal would be made 

in cash, thus allowing the VEBA Trust 

to avoid the transaction costs and 

market risk associated with having to 

monetize shares of Ford Common Stock 

that could be delivered in payment of 

future principal payments. 

IFS also determined that the 

amendment of New Note B was 

protective of the Ford VEBA Plan and 

its participants and beneficiaries in and 

of itself. As described above, the newly 

provided prepayment options for New 

Note B must be in cash and on 

designated payment dates, and Ford 

must give the VEBA Trust advance 

notice of its intent to make any such 

prepayments. By contrast, IFS was 

aware that the original terms of New 

Note B did not require any advance 

notice of Ford’s intent to make a 

prepayment, nor did they require that 

any prepayment must be in cash. 

Finally, IFS approved of the 

amendment, because under the new 

prepayment terms no additional 

prepayment opportunity could be 

exercised during the months of May and 

June, foreclosing the possibility of 

Ford’s ‘‘gaming’’ the VWAP calculation 

feature of Payment Share calculation to 

deliver less value to the VEBA Trust 

upon a prepayment.21 IFS explains that 

it did not want to modify the 

requirement already in New Note B that 

a prepayment of principal on June 30 be 

at 100% of the outstanding principal. 

Thus, IFS notes, by barring Ford from 

exercising a prepayment right at 95% or 

96% once the VWAP calculation period 

started, it assured that, at that point, 

Ford could only pay the principal 

installment due on June 30 at a discount 

if Ford stock declined during the VWAP 

calculation period (the discount would 

be limited to the result produced by the 

VWAP calculation). According to IFS, 

this also meant that Ford could not use 

the 95% or 96% discount available 

outside the VWAP calculation period to 

make a discounted prepayment during 

the calculation period that would have 

the effect of reducing the principal 

installment due in cash at 100% on June 

30. 

9. Appropriateness of Exemptive Relief 

Ford suggests that, if exemptive relief 

is denied, the VEBA Trust would lose 

the economic benefits relating to the 

prepayment of New Note B. Ford 

explains that, under Section 5 of the 

Note Agreement, if an exemption for the 

amendment of New Note B is not 

granted on or prior to December 31, 

2011, or such later date as agreed to in 

writing by the parties, or the 

Department indicates that the 

exemption will not be granted, then the 

amendment of New Note B will be 

deemed null and void from that date. 

Although Ford recognizes that the 

parties, on behalf of the VEBA Trust, 

could agree in the future to specific 

prepayment terms, the Note Agreement 

and the amendment of New Note B, 

both of which were required in order for 

the VEBA Trust to receive the benefit of 

the other provisions of the Note 

Agreement, created an opportunity for 

Ford to prepay New Note B in cash on 

set dates, at a price certain that IFS has 


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concluded is equal to, or greater than, 

the fair market value of New Note B. 

Thus, according to Ford, a denial of 

exemptive relief would decrease the 

likelihood that Ford would make such 

cash prepayments on New Note B and 

reduce the VEBA Trust’s exposure to 

Ford-specific risk. 

Finally, Ford notes that IFS and its 

advisors negotiated the Note Agreement 

on behalf of the VEBA Trust in an 

adversarial process with Ford. In doing 

so, IFS states in its analysis that it was 

able to immediately and significantly 

reduce the VEBA Trust’s exposure to 

Ford-specific risk and give the VEBA 

Trust the opportunity to invest the cash 

proceeds of approximately $3.76 billion 

in a diversified portfolio. According to 

IFS, but for the Subject Transactions, 

the only cash the VEBA Trust was 

assured of receiving on June 30, 2010 

was approximately $250 million (the 

amount of the principal payment due on 

New Note A), with no assurance of 

additional cash until June 30, 2011. 

10. Description of Revisions to the 

Operative Language of PTE 2010–08 

The proposed amendment generally 

modifies the operative language of PTE 

2010–08 to take into account the 

execution of the Note Agreement and 

the amendment of New Note B. Section 

I(a) of PTE 2010–8 has been amended to 

add new paragraph (7) as follows: ‘‘The 

amendment of New Note B pursuant to 

the execution of the Note Agreement.’’ 

Thus, the modification extends the 

exemptive relief provided by 

PTE 2010–08 to the VEBA Trust’s 

execution of the Note Agreement in 

exchange for Ford’s June 30, 2010 

prepayment of New Note A and June 30, 

2010 payment of New Note B in cash. 

In the Definitions, the proposed 

amendment also makes a modification 

to the term ‘‘New Note B,’’ in relettered 

Section VII(q), to include the descriptive 

clauses ‘‘unless prepaid,’’ and ‘‘as 

amended by the Note Agreement 

effective June 25, 2010,’’ in order to 

ensure that New Note B, as amended by 

the Note Agreement effective June 25, 

2010, is included in the exemptive relief 

afforded under PTE 2010–08. 

Furthermore, Section VII of PTE 

2010–08, which sets forth the 

Definitions, has been modified by 

inserting new paragraph (h) which 

defines the term ‘‘Ford Credit’’ as 

referred to in the Note Agreement; 

inserting new paragraph (k) which 

defines the term IFS as referred to in the 

Note Agreement; inserting new 

paragraph (r) to define and describe the 

term ‘‘Note Agreement’’ to reflect 

changes made to the operative language 

of PTE 2010–08; and relettering the 

remaining paragraphs, accordingly. 

Finally, the Effective Date in new 

Section VIII is modified to provide that 

the exemption, if granted, will be 

effective as of December 31, 2009, 

except for Section I(a)(7), which will be 

effective as of June 25, 2010, the 

effective date of the Note Agreement 

and the amendment of New Note B. In 

addition, the flush language of Section 

I(a), (b), (c), and (d) has been modified 

to omit references to the December 31, 

2009 effective date of exemptive relief 

in order to avoid confusion. 

Notice to Interested Persons 

Notice of the proposed exemption 

will be mailed by first class mail to each 

member of the Class and the Covered 

Group, as such terms are defined in the 

2009 Settlement Agreement. Such 

notice will be given within 21 days of 

the publication of the notice of 

pendency in the Federal Register. The 

notice will contain a copy of the notice 

of proposed exemption, as published in 

the Federal Register, and a 

supplemental statement, as required 

pursuant to 29 CFR 2570.43(b)(2). The 

supplemental statement will inform 

interested persons of their right to 

comment on and/or to request a hearing 

with respect to the pending exemption. 

Written comments and hearing requests 

are due within 51 days of the 

publication of the proposed exemption 

in the Federal Register. 

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 ERISA does not relieve a 

fiduciary or other party in interest from 

certain other provisions of ERISA, 

including any prohibited transaction 

provisions to which the exemption does 

not apply and the general fiduciary 

responsibility provisions of section 404 

of ERISA, 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 ERISA; 

(2) Before an exemption may be 

granted under section 408(a) of ERISA, 

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 exemption, if 

granted, will be supplemental to, and 

not in derogation of, any other 

provisions of ERISA, 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 exemption, if 

granted, will be subject to the express 

condition that the material facts and 

representations contained in the 

application are true and complete, and 

that the application accurately describes 

all material terms of the transaction 

which is the subject of the exemption. 

Proposed Exemption 

Based on the facts and representations 

set forth in the application, the 

Department is considering granting the 

requested exemption under the 

authority of section 408(a) of the Act 

and in accordance with the procedures 

set forth in 29 CFR part 2570, subpart 

B (55 FR 32836, 32847, August 10, 

1990), as follows: 

SECTION I. Covered Transactions 

(a) If the exemption is granted, the 

restrictions of sections 406(a)(1)(A), 

406(a)(1)(B), 406(a)(1)(E), 406(a)(2), 

406(b)(1), 406(b)(2) and 407(a) of ERISA 

shall not apply to the following 

transactions: 

(1) The acquisition by the UAW Ford 

Retirees Medical Benefits Plan (the Ford 

VEBA Plan) and its funding vehicle, the 

UAW Retiree Medical Benefits Trust 

(the VEBA Trust) of: (i) The LLC 

Interests; (ii) New Note A; (iii) New 

Note B (together with New Note A, the 

New Notes); and (iv) Warrants, 

transferred by Ford and deposited in the 

Ford Employer Security Sub-Account of 

the Ford Separate Retiree Account of the 

VEBA Trust. 

(2) The acquisition by the Ford VEBA 

Plan of shares of Ford Common Stock 

pursuant to Ford’s right to settle its 

payment obligations under New Note B 

in shares of Ford Common Stock (i.e., 

Payment Shares), consistent with the 

2009 Settlement Agreement; 

(3) The acquisition by the Ford VEBA 

Plan of shares of Ford Common Stock 

pursuant to (i) the Independent 

Fiduciary’s exercise of all or a pro rata 

portion of the Warrants, consistent with 

the 2009 Settlement Agreement and (ii) 

an adjustment, substitution, conversion, 

or other modification of Ford Common 

Stock in connection with a 

reorganization, restructuring, 

recapitalization, merger, or similar 

corporate transaction, provided that 

each holder of Ford Common Stock is 

treated in an identical manner; 


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(4) The holding by the Ford VEBA 

Plan of the aforementioned Securities in 

the Ford Employer Security SubAccount of the Ford Separate Retiree 

Account of the VEBA Trust, consistent 

with the 2009 Settlement Agreement; 

(5) The deferred payment of any 

amounts due under New Note B by Ford 

pursuant to the terms thereunder; 

(6) The disposition of the Securities 

by the Independent Fiduciary; and 

(7) The amendment of New Note B 

pursuant to the execution of the Note 

Agreement. 

(b) If the exemption is granted, the 

restrictions of sections 406(a)(1)(A), 

406(b)(1), and 406(b)(2) of ERISA shall 

not apply to the sale of Ford Common 

Stock or Warrants held by the Ford 

VEBA Plan to Ford in accordance with 

the Right of First Offer or a Ford selftender under the Securityholder and 

Registration Rights Agreement. 

(c) If the exemption is granted, the 

restrictions of sections 406(a)(1)(B), 

406(a)(1)(D), 406(b)(1), and 406(b)(2) of 

ERISA shall not apply to: 

(1) The extension of credit or transfer 

of assets by Ford, the Ford Retiree 

Health Plan, or the Ford VEBA Plan in 

payment of a benefit claim that was the 

responsibility and legal obligation, 

under the terms of the applicable plan 

documents, of one of the other parties 

listed in this paragraph; 

(2) The reimbursement by Ford, the 

Ford Retiree Health Plan, or the Ford 

VEBA Plan, of a benefit claim that was 

paid by another party listed in this 

paragraph, which was not legally 

responsible for the payment of such 

claim, plus interest; 

(3) The retention of an amount by 

Ford until payment to the Ford VEBA 

Plan resulting from an overaccrual of 

pre-transfer expenses attributable to the 

TAA or the retention of an amount by 

the Ford VEBA Plan until payment to 

Ford resulting from an underaccrual of 

pre-transfer expense attributable to the 

TAA; and 

(4) The Ford VEBA Plan’s payment to 

Ford of an amount equal to any 

underaccrual by Ford of pre-transfer 

expenses attributable to the TAA or the 

payment by Ford to the Ford VEBA Plan 

of an amount equal to any overaccrual 

by Ford of pre-transfer expenses 

attributable to the TAA. 

(d) If the exemption is granted, the 

restrictions of sections 406(a)(1)(B), 

406(a)(1)(D), 406(b)(1), and 406(b)(2) of 

ERISA shall not apply to the return to 

Ford of assets deposited or transferred 

to the Ford VEBA Plan by mistake, plus 

interest. 

SECTION II. Conditions Applicable to 

Section I(a) and I(b) 

(a) The Committee appoints a 

qualified Independent Fiduciary to act 

on behalf of the Ford VEBA Plan for all 

purposes related to the transfer of the 

Securities to the Ford VEBA Plan for the 

duration of the Ford VEBA Plan’s 

holding of the Securities. Such 

Independent Fiduciary will have sole 

discretionary responsibility relating to 

the holding, ongoing management and 

disposition of the Securities, except for 

the voting of the Ford Common Stock. 

The Independent Fiduciary has 

determined or will determine, before 

taking any actions regarding the 

Securities, that each such action or 

transaction is in the interest of the Ford 

VEBA Plan. 

(b) In the event that the same 

Independent Fiduciary is appointed to 

represent the interests of one or more of 

the other plans comprising the VEBA 

Trust (i.e., the UAW Chrysler Retiree 

Medical Benefits Plan and/or the UAW 

General Motors Company Retiree 

Medical Benefits Plan) with respect to 

employer securities deposited into the 

VEBA Trust, the Committee takes the 

following steps to identify, monitor and 

address any conflict of interest that may 

arise with respect to the Independent 

Fiduciary’s performance of its 

responsibilities: 

(1) The Committee appoints a 

‘‘conflicts monitor’’ to: (i) Develop a 

process for identifying potential 

conflicts; (ii) regularly review the 

Independent Fiduciary reports, 

investment banker reports, and public 

information regarding the companies, to 

identify the presence of factors that 

could lead to a conflict; and (iii) further 

question the Independent Fiduciary 

when appropriate. 

(2) The Committee adopts procedures 

to facilitate prompt replacement of the 

Independent Fiduciary if the Committee 

in its sole discretion determines such 

replacement is necessary due to a 

conflict of interest. 

(3) The Committee requires the 

Independent Fiduciary to adopt a 

written policy regarding conflicts of 

interest. Such policy shall require that, 

as part of the Independent Fiduciary’s 

periodic reporting to the Committee, the 

Independent Fiduciary includes a 

discussion of actual or potential 

conflicts identified by the Independent 

Fiduciary and options for avoiding or 

resolving the conflicts. 

(c) The Independent Fiduciary 

authorizes the trustee of the Ford VEBA 

Plan to dispose of the Ford Common 

Stock (including any Payment Shares or 

any shares of Ford Common Stock 

acquired pursuant to exercise of the 

Warrants), the LLC Interests, the New 

Notes, or exercise the Warrants, only 

after the Independent Fiduciary 

determines, at the time of the 

transaction, that the transaction is 

feasible, in the interest of the Ford 

VEBA Plan, and protective of the 

participants and beneficiaries of the 

Ford VEBA Plan. 

(d) The Independent Fiduciary 

negotiates and approves on behalf of the 

Ford VEBA Plan any transactions 

between the Ford VEBA Plan and any 

party in interest involving the Securities 

that may be necessary in connection 

with the subject transactions (including 

but not limited to the registration of the 

Securities contributed to the Ford VEBA 

Plan). 

(e) Any contract between the 

Independent Fiduciary and an 

investment banker includes an 

acknowledgement by the investment 

banker that the investment banker’s 

ultimate client is an ERISA plan. 

(f) The Independent Fiduciary 

discharges its duties consistent with the 

terms of the Ford VEBA Plan, the Trust 

Agreement, the Independent Fiduciary 

Agreement, and any other documents 

governing the Securities, such as the 

Registration Rights Agreement. 

(g) The Ford VEBA Plan incurs no 

fees, costs or other charges (other than 

described in the Trust Agreement, the 

2009 Settlement Agreement, and the 

Securityholder and Registration Rights 

Agreement) as a result of the 

transactions exempted herein. 

(h) The terms of any transaction 

exempted herein are no less favorable to 

the Ford VEBA Plan than the terms 

negotiated at arms’ length under similar 

circumstances between unrelated 

parties. 

SECTION III. Conditions Applicable to 

Section I(c)(1) and I(c)(2) 

(a) The Committee and the Ford 

VEBA Plan’s third party administrator 

will review the benefits paid during the 

transition period and determine the 

dollar amount of mispayments made, 

subject to the review of the Ford VEBA 

Plan’s independent auditor. The results 

of this review will be made available to 

Ford. 

(b) Ford and the applicable third party 

administrator of the Ford Active Health 

Plan will review the benefits paid 

during the transition period and 

determine the dollar amount of 

mispayments made, subject to the 

review of the plan’s independent 

auditor. The results of this review will 

be made available to the Committee. 

(c) Interest on any reimbursed 

mispayment will accrue from the date of 


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the mispayment to the date of the 

reimbursement. 

(d) Interest will be determined using 

the applicable 6 month published 

LIBOR rate. 

(e) If there is a dispute as to the 

amount, timing or other feature of a 

reimbursement payment, the parties 

will enter into the Dispute Resolution 

Procedure found in Section 26B of the 

2009 Settlement Agreement and 

described further in Section VII(c) 

herein. 

SECTION IV. Conditions Applicable to 

Section I(c)(3) and I(c)(4) 

(a) Ford and the Committee will 

cooperate in the calculation and review 

of the amounts of expense accruals 

related to the TAA, and the amount of 

any overaccrual shall be made subject to 

the review of an independent auditor 

selected by Ford and the amount of any 

underaccrual shall be made subject to 

the review of the Ford VEBA Plan’s 

independent auditor. 

(b) Ford must make a claim for any 

underaccrual to the Committee, and the 

Committee must make a claim for any 

overaccrual to Ford, as applicable, 

within the Verification Time Period, as 

defined in Section VII(cc). 

(c) Interest on any true-up payment 

will accrue from the date of transfer of 

the assets in the TAA (or the LLC 

containing the TAA) for the amount in 

respect of the overaccrual or 

underaccrual, as applicable, until the 

date of payment of such true-up 

amount. 

(d) Interest will be determined using 

the published six month LIBOR rate. 

(e) If there is a dispute as to the 

amount, timing or other feature of a 

true-up payment in respect of TAA 

expenses, the parties will enter into the 

Dispute Resolution Procedure found in 

Section 26B of the 2009 Settlement 

Agreement and described further in 

Section VII(c) herein. 

SECTION V. Conditions Applicable to 

Section I(d) 

(a) Ford must make a claim to the 

Committee regarding the specific 

deposit or transfer made in error or 

made in an amount greater than that to 

which the Ford VEBA Plan was entitled. 

(b) The claim is made within the 

Verification Time Period, as defined in 

Section VII(cc). 

(c) Interest on any mistaken deposit or 

transfer will accrue from the date of the 

mistaken deposit or transfer to the date 

of the repayment. 

(d) Interest will be determined using 

the published six month LIBOR rate. 

(e) If there is a dispute as to the 

amount, timing or other feature of a 

mistaken payment, the parties will enter 

into the Dispute Resolution Procedure 

found in Section 26B of the 2009 

Settlement Agreement and described 

further in Section VII(c) herein. 

SECTION VI. Conditions Applicable to 

Section I 

(a) The Committee and the 

Independent Fiduciary maintain for a 

period of six years from the date (i) the 

Securities are transferred to the Ford 

VEBA Plan, and (ii) the shares of Ford 

Common Stock are acquired by the Ford 

VEBA Plan through the exercise of the 

Warrants or Ford’s delivery of Payment 

Shares in settlement of its payment 

obligations under New Note B, the 

records necessary to enable the persons 

described in paragraph (b) below to 

determine whether the conditions of 

this exemption have been met, provided 

that (i) a separate prohibited transaction 

will not be considered to have occurred 

if, due to circumstances beyond the 

control of the Committee and/or the 

Independent Fiduciary, the records are 

lost or destroyed prior to the end of the 

six-year period, and (ii) no party in 

interest other than the Committee or the 

Independent Fiduciary shall be subject 

to the civil penalty that may be assessed 

under ERISA section 502(i) if the 

records are not maintained, or are not 

available for examination as required by 

paragraph (b) below; and 

(b) Notwithstanding any provisions of 

subsections (a)(2) and (b) of section 504 

of ERISA, the records referred to in 

paragraph (a) above shall be 

unconditionally available at their 

customary location during normal 

business hours to: 

(1) Any duly authorized employee or 

representative of the Department or the 

Internal Revenue Service; 

(2) The UAW or any duly authorized 

representative of the UAW; 

(3) Ford or any duly authorized 

representative of Ford; 

(4) The Independent Fiduciary or any 

duly authorized representative of the 

Independent Fiduciary; 

(5) The Committee or any duly 

authorized representative of the 

Committee; and 

(6) Any participant or beneficiary of 

the Ford VEBA Plan or any duly 

authorized representative of such 

participant or beneficiary. 

(c) None of the persons described 

above in paragraphs (b)(2), (4)–(6) shall 

be authorized to examine trade secrets 

of Ford, or commercial or financial 

information which is privileged or 

confidential, and should Ford refuse to 

disclose information on the basis that 

such information is exempt from 

disclosure, Ford shall, by the close of 

the thirtieth (30th) day following the 

request, provide a written notice 

advising that person of the reasons for 

the refusal and that the Department may 

request such information. 

SECTION VII. Definitions 

(a) The term ‘‘affiliate’’ means: (1) Any 

person directly or indirectly, through 

one or more intermediaries, controlling, 

controlled by, or under common control 

with such other person; (2) any officer, 

director, partner, or employee in any 

such person, or relative (as defined in 

section 3(15) of ERISA) of any such 

person; or (3) any corporation, 

partnership or other entity of which 

such person is an officer, director or 

partner. (For purposes of this definition, 

the term ‘‘control’’ means the power to 

exercise a controlling influence over the 

management or policies of a person 

other than an individual.) 

(b) The ‘‘Committee’’ means the eleven 

individuals consisting of six 

independent members and five UAW 

appointed members who will serve as 

the plan administrator and named 

fiduciary of the Ford VEBA Plan. 

(c) The term ‘‘Dispute Resolution 

Procedure’’ means the process found in 

Section 26B of the 2009 Settlement 

Agreement to effectuate the resolution 

of any dispute respecting the 

transactions described in Sections 

I(c)(1), (c)(2), (c)(3), (c)(4), and (d) 

herein, and which reads in pertinent 

part: (1) The aggrieved party shall 

provide the party alleged to have 

violated the 2009 Settlement Agreement 

(Dispute Party) with written notice of 

such dispute, which shall include a 

description of the alleged violation and 

identification of the Section(s) of the 

2009 Settlement Agreement allegedly 

violated. Such notice shall be provided 

so that it is received by the Dispute 

Party no later than 180 calendar days 

from the date of the alleged violation or 

the date on which the aggrieved party 

knew or should have known of the facts 

that give rise to the alleged violation, 

whichever is later, but in no event 

longer than 3 years from the date of the 

alleged violation; and (2) If the Dispute 

Party fails to respond within 21 

calendar days from its receipt of the 

notice, the aggrieved party may seek 

recourse to the District Court; provided 

however, that the aggrieved party 

waives all claims related to a particular 

dispute against the Dispute Party if the 

aggrieved party fails to bring the dispute 

before the District Court within 180 

calendar days from the date of sending 

the notice. All the time periods in 

Section 26 of the 2009 Settlement 

Agreement may be extended by 


srobinson on DSKHWCL6B1PROD with NOTICES
14082 Federal Register / Vol. 76, No. 50 / Tuesday, March 15, 2011 / Notices 

22The Department notes that the preceding 

conditions are not exclusive, and that other 

circumstances may develop which cause the 

Independent Fiduciary to be deemed not to be 

independent of and unrelated to Ford, the UAW, 

the Committee, and their affiliates. 

23LIBOR is calculated by Thomson Reuters and 

published by the British Bankers’ Association after 

11 a.m. (and generally around 11:45 a.m.) each day 

(London time). It is a trimmed average of inter-bank 

deposit rates offered by designated contributor 

banks, for maturities ranging from overnight to one 

year. The rates are a benchmark rather than a 

tradable rate, the actual rate at which banks will 

lend to one another continues to vary throughout 

the day. 

agreement of the parties to the particular 

dispute. 

(d) The term ‘‘Exchange Agreement’’ 

means the Security Exchange 

Agreement among Ford, the subsidiary 

guarantors listed in Schedule I thereto 

and the LLC, dated as of December 11, 

2009. 

(e) The term ‘‘Ford’’ or the ‘‘Applicant’’ 

means Ford Motor Company, located in 

Detroit, MI, and its affiliates. 

(f) The term ‘‘Ford Active Health Plan’’ 

means the medical benefits plan 

maintained by Ford to provide benefits 

to eligible active hourly employees of 

Ford and its participating subsidiaries. 

(g) The term ‘‘Ford Common Stock’’ 

means the shares of common stock, par 

value $0.01 per share, issued by Ford. 

(h) The term ‘‘Ford Credit’’ means 

Ford Motor Credit Company LLC, a 

Delaware limited liability company and 

an indirect, wholly owned subsidiary of 

Ford. 

(i) The term ‘‘Ford Employer Security 

Sub-Account of the Ford Separate 

Retiree Account of the VEBA Trust’’ 

means the sub-account established in 

the Ford Separate Retiree Account of the 

VEBA Trust to hold Securities on behalf 

of the Ford VEBA Plan. 

(j) The term ‘‘Ford Retiree Health 

Plan’’ means the retiree medical benefits 

plan maintained by Ford that provided 

benefits to, among others, those who 

will be covered by the Ford VEBA Plan. 

(k) The term ‘‘IFS’’ means Independent 

Fiduciary Services, Inc., a Delaware 

corporation, appointed by the 

Committee to be the Independent 

Fiduciary. 

(l) The term ‘‘Implementation Date’’ 

means December 31, 2009. 

(m) The term ‘‘Independent Fiduciary’’ 

means a fiduciary that is (1) 

independent of and unrelated to Ford, 

the UAW, the Committee, and their 

affiliates, and (2) appointed to act on 

behalf of the Ford VEBA Plan with 

respect to the holding, management and 

disposition of the Securities. In this 

regard, the fiduciary will be deemed not 

to be independent of and unrelated to 

Ford, the UAW, the Committee, and 

their affiliates if (1) such fiduciary 

directly or indirectly controls, is 

controlled by, or is under common 

control with Ford, the UAW, the 

Committee or their affiliates, (2) such 

fiduciary directly or indirectly receives 

any compensation or other 

consideration from Ford, the UAW or 

any Committee member in his or her 

individual capacity in connection with 

any transaction contemplated in this 

exemption (except that an Independent 

Fiduciary may receive compensation 

from the Committee or the Ford VEBA 

Plan for services provided to the Ford 

VEBA Plan in connection with the 

transactions discussed herein if the 

amount or payment of such 

compensation is not contingent upon or 

in any way affected by the independent 

fiduciary’s ultimate decision), and (3) 

the annual gross revenue received by 

the fiduciary, in any fiscal year, from 

Ford, the UAW or a member of the 

Committee in his or her individual 

capacity, exceeds 3% of the fiduciary’s 

annual gross revenue from all sources 

(for federal income tax purposes) for its 

prior tax year.22

(n) The term ‘‘LLC’’ means the FordUAW Holdings LLC, established by 

Ford as a wholly-owned LLC, and 

subsequently renamed VEBA–F 

Holdings LLC, established to hold the 

assets in the TAA and certain other 

assets required to be contributed to the 

VEBA under the 2008 Settlement 

Agreement, as amended by the 2009 

Settlement Agreement. 

(o) The term ‘‘LLC Interests’’ means 

Ford’s wholly-owned interest in the 

LLC. 

(p) The term ‘‘New Note A’’ means the 

amortizing guaranteed secured note 

maturing on June 30, 2022, in the 

principal amount of $6,705,470,000, 

with payments to be made in cash, in 

annual installments from 2009 through 

2022, issued by Ford and referred to in 

the Exchange Agreement. 

(q) The term ‘‘New Note B’’ means the 

amortizing guaranteed secured note 

maturing June 30, 2022, in the principal 

amount of $6,511,850,000, with 

payments to be made in cash, Ford 

Common Stock, or a combination 

thereof, in annual installments from 

2009 through 2022, unless prepaid, 

issued by Ford and referred to in the 

Exchange Agreement, and as amended 

by the Note Agreement, effective June 

25, 2010. 

(r) The term ‘‘Note Agreement’’ means 

the Agreement, dated as of June 25, 

2010 by and among Ford, Ford Credit, 

and the VEBA Trust, acting by and 

through IFS, wherein the VEBA Trust 

will sell New Note A to Ford and Ford 

Credit and New Note B is amended to 

add provisions permitting Ford to 

prepay all or a portion of New Note B, 

in each case under the terms and 

conditions set forth therein. 

(s) The term ‘‘Payment Shares’’ means 

any shares of Ford Common Stock 

issued by Ford to satisfy all or a portion 

of its payment obligation under New 

Note B, subject to the terms and 

conditions specified in New Note B. 

(t) The term ‘‘published six month 

LIBOR rate’’ means the Official British 

Banker’s Association Six Month London 

Interbank Offered Rate (LIBOR) 11:00am 

GMT ‘‘fixing’’ as reported on Bloomberg 

page ‘‘BBAM’’.23

(u) The term ‘‘Securities’’ means (1) 

New Note A; (2) New Note B; (3) the 

Warrants; (4) the LLC Interests, (5) any 

Payment Shares, and (6) additional 

shares of Ford Common Stock acquired 

in accordance with the transactions 

described in Sections I(a)(2) and (3) of 

this exemption. 

(v) The term ‘‘Securityholder and 

Registration Rights Agreement’’ means 

the Securityholder and Registration 

Rights Agreement by and among Ford 

and the LLC, dated as of December 11, 

2009. 

(w) The term ‘‘2008 Settlement 

Agreement’’ means the settlement 

agreement, effective as of August 29, 

2008, entered into by Ford, the UAW, 

and a class of retirees in the case of Int’l 

Union, UAW, et al. v. Ford Motor 

Company, Civil Action No. 07–14845, 

2008 WL 4104329 (E.D. Mich. Aug. 29, 

2008). 

(x) The term ‘‘2009 Settlement 

Agreement’’ means the 2008 Settlement 

Agreement, as amended by an 

Amendment to such Settlement 

Agreement dated July 23, 2009, effective 

as of November 9, 2009, entered into by 

Ford, the UAW, and a class of retirees 

in the case of Int’l Union, UAW, et al. 

v. Ford Motor Company, Civil Action 

No. 07–14845, 2008 WL 4104329 (E.D. 

Mich. Aug. 29, 2008), Order and Final 

Judgment Granted, Civil Action No. 07– 

14845, Doc. #71, (E.D. Mich. Nov. 9, 

2009). 

(y) The term ‘‘TAA’’ means the 

temporary asset account established by 

Ford under the 2008 Settlement 

Agreement to serve as tangible evidence 

of the availability of Ford assets equal 

to Ford’s obligation to the Ford VEBA 

Plan. 

(z) The term ‘‘Trust Agreement’’ means 

the trust agreement for the VEBA Trust. 

(aa) The term ‘‘UAW’’ means the 

International Union, United 

Automobile, Aerospace and Agricultural 

Implement Workers of America. 

(bb) The term ‘‘VEBA’’ means the Ford 

UAW Retirees Medical Benefits Plan 


srobinson on DSKHWCL6B1PROD with NOTICES
Federal Register / Vol. 76, No. 50 / Tuesday, March 15, 2011 / Notices 14083 

(the Ford VEBA Plan) and its associated 

UAW Retiree Medical Benefits Trust 

(the VEBA Trust). 

(cc) The term ‘‘Verification Time 

Period’’ means: (1) With respect to each 

of the Securities other than the 

payments in respect of the New Notes, 

the period beginning on the date of 

publication of the final exemption in the 

Federal Register (or, if later, the date of 

the transfer of any such Security to the 

Ford VEBA Plan) and ending 90 

calendar days thereafter; (2) with 

respect to each payment pursuant to the 

New Notes, the period beginning on the 

date of the payment and ending 90 

calendar days thereafter; and (3) with 

respect to the TAA, the period 

beginning on the date of publication of 

the final exemption in the Federal 

Register (or, if later, the date of the 

transfer of the assets in the TAA to the 

Ford VEBA Plan) and ending 180 

calendar days thereafter. 

(dd) The term ‘‘Warrants’’ means 

warrants issued by Ford to acquire 

362,391,305 shares of Ford Common 

Stock at a strike price of $9.20 per share, 

expiring on January 1, 2013. For 

purposes of this definition, the term 

‘‘Warrants’’ includes additional warrants 

to acquire Ford Common Stock acquired 

in partial or complete exchange for, or 

adjustment to, the warrants described in 

the preceding sentence, at the direction 

of the Independent Fiduciary or 

pursuant to a reorganization, 

restructuring or recapitalization of Ford 

as well as a merger or similar corporate 

transaction involving Ford (each, a 

corporate transaction), provided that, in 

such corporate transaction, similarly 

situated warrantholders, if any, will be 

treated the same to the extent that the 

terms of such warrants and/or rights of 

such warrantholders are the same. 

SECTION VIII. Effective Date 

If granted, this proposed amendment 

to PTE 2010–08 will be effective as of 

December 31, 2009, except with respect 

to Section I(a)(7), which will be effective 

as of June 25, 2010. 

Signed at Washington, DC, this 9th day of 

March 2011. 

Ivan Strasfeld, 

Director of Exemption Determinations, 

Employee Benefits Security Administration, 

U.S. Department of Labor. 

[FR Doc. 2011–5912 Filed 3–14–11; 8:45 am] 

BILLING CODE 4510–29–P 

DEPARTMENT OF LABOR 

Employee Benefits Security 

Administration 

Proposed Exemptions From Certain 

Prohibited Transaction Restrictions 

AGENCY: Employee Benefits Security 

Administration, Labor. 

ACTION: Notice of proposed exemptions. 

SUMMARY: This document contains 

notices of pendency before the 

Department of Labor (the Department) of 

proposed exemptions from certain of the 

prohibited transaction restrictions of the 

Employee Retirement Income Security 

Act of 1974 (ERISA or the Act) and/or 

the Internal Revenue Code of 1986 (the 

Code). This notice includes the 

following proposed exemptions: D– 

11468 & D–11469 The Krispy Kreme 

Doughnut Corporation Retirement 

Savings Plan, The Krispy Kreme ProfitSharing Stock Ownership Plan; D– 

11632 Millenium Trust Co. LLC, 

Custodian FBO William Etherington 

IRA; D–11642 H–E–B Brand Savings & 

Retirement Plan and H.E. Butt Grocery 

Company; and L-11625 The 

International Union of Painters and 

Allied Trades Finishing Institute. 

DATES: All interested persons are invited 

to submit written comments or requests 

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. 

ADDRESSES: Comments and requests 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. 

All written comments and requests for 

a hearing (at least three copies) should 

be sent to the Employee Benefits 

Security Administration (EBSA), Office 

of Exemption Determinations, Room N– 

5700, U.S. Department of Labor, 200 

Constitution Avenue, NW., Washington, 

DC 20210. Attention: Application 

No.____, stated in each Notice of 

Proposed Exemption. Interested persons 

are also invited to submit comments 

and/or hearing requests to EBSA via email or FAX. Any such comments or 

requests should be sent either by e-mail 

to: moffitt.betty@dol.gov, or by FAX to 

(202) 219–0204 by the end of the 

scheduled comment period. The 

applications for exemption and the 

comments received will be available for 

public inspection in the Public 

Documents Room of the Employee 

Benefits Security Administration, U.S. 

Department of Labor, Room N–1513, 

200 Constitution Avenue, NW., 

Washington, DC 20210. 

Warning: If you submit written comments 

or hearing requests, do not include any 

personally-identifiable or confidential 

business information that you do not want to 

be publicly-disclosed. All comments and 

hearing requests are posted on the Internet 

exactly as they are received, and they can be 

retrieved by most Internet search engines. 

The Department will make no deletions, 

modifications or redactions to the comments 

or hearing requests received, as they are 

public records. 

SUPPLEMENTARY INFORMATION: 

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). 

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, 5 U.S.C. App. 1 (1996), 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. 


srobinson on DSKHWCL6B1PROD with NOTICES