41732 Federal Register / Vol. 65, No. 130 / Thursday, July 6, 2000 / Notices

progit; Not-for-profit institutions;

Federal Government.

Total Respondents: 185,550.

Frequency: On occasion.

Total Responses: 185,550.

Time per Response: 6–10.5 minutes.

Estimated Total Burden Hours:

30,430.

Total Burden Cost (capital/startup):

$0.

Total Burden Cost (operating/

maintenance): $6,665.

Comments submitted in response to

this notice will be summarized and/or

included in the request for Office of

Management and Budget approval of the

information collection request; they will

also become a matter of public record.

Dated: June 29, 2000.

Margaret J. Sherrill,

Chief, Branch of Management Review and

Internal Control, Division of Financial

Management, Office of Management,

Administration and Planning, Employment

Standards Administration.

[FR Doc. 00–17035 Filed 7–5–00; 8:45 am]

BILLING CODE 4510–47–M

DEPARTMENT OF LABOR

Pension and Welfare Benefits

Administration

[Prohibited Transaction Exemption 2000–

34; Exemption Application No. D–10712, et

al.]

Grant of Individual Exemptions; The

Fidelity Mutual Life Insurance

Company (In Rehabilitation) (FML)

AGENCY: Pension and Welfare Benefits

Administration, Labor.

ACTION: Grant of individual exemptions.

SUMMARY: This document contains

exemptions issued by the Department of

Labor (the Department) from certain of

the prohibited transaction restrictions of

the Employee Retirement Income

Security Act of 1974 (the Act) and/or

the Internal Revenue Code of 1986 (the

Code).

Notices were published in the Federal

Register of the pendency before the

Department of proposals to grant such

exemptions. The notices set forth a

summary of facts and representations

contained in each application for

exemption and referred interested

persons to the respective applications

for a complete statement of the facts and

representations. The applications have

been available for public inspection at

the Department in Washington, DC. 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

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

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.

The Fidelity Mutual Life Insurance

Company (In Rehabilitation) (FML)

Located in Radnor, PA

[Prohibited Transaction Exemption 2000–34;

Exemption Application No. D–10712]

Exemption

Section I. Covered Transactions

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 receipt of certain stock (the

Plan Stock) issued by Fidelity Insurance

Group. Inc. (Group), a wholly owned

subsidiary of FML, or (2) the receipt of

plan credits (the Plan Credits), by or on

behalf of a mutual member (the Mutual

Member) of FML, which is an employee

benefit plan (the Plan), other than the

Employee Pension Plan of Fidelity

Mutual Lift Insurance Company, in

exchange for such Mutual Member’s

membership interest (the Membership

Interest) in FML, in accordance with the

terms of a plan of rehabilitation (the

Third Amended Plan of Rehabilitation),

approved by the Pennsylvania

Commonwealth Court (the Court) and

supervised by both the Court and a

rehabilitator (the Rehabilitator)

appointed by the Pennsylvania

Insurance Commissioner (the

Commissioner).

This exemption is subject to the

following conditions set forth below in

Section II.

Section II. General Conditions

(a) The Third Amended Plan of

Rehabilitation is approved by the Court,

implemented in accordance with

procedural and substantive safeguards

that are imposed under Pennsylvania

law and is subject to review and/or

supervision by the Commissioner and

the Rehabilitator. The Court determines

whether the Third Amended Plan of

Rehabilitation—

(1) Properly conserves and equitably

administers the assets of FML in the

interests of investors, the public and

others in accordance with the

legislatively-stated purpose of

protecting the interests of the insureds.

creditors and the public; and

(2) Equitably apportions any

unavoidable loss through improved

methods for rehabilitating FML.

(b) Each Mutual Member has an

opportunity to comment on the Third

Amended Plan of Rehabilitation at

hearings held by the Court after full

written disclosure of the terms of the

Plan is given to such Mutual Member by

FML.

(c) Participation by all Mutual

Members in the Third Amended Plan of

Rehabilitation, if approved by the Court,

is mandatory, although Mutual

Members may disclaim Plan Stock.

(d) The decision by a Mutual Member

which is a Plan to receive or disclaim

Plan Stock or Plan Credits allocated to

such Mutual Member is made by one or

more independent fiduciaries of such

plan and not by FML, Group or Fidelity

Life Insurance Company (FLIC).

Consequently, neither FML nor any of

its affiliates will exercise investment

discretion nor render ‘‘investment

advice’’ within the meaning of 29 CFR

2510.3–21(c) with respect to an

independent Plan fiduciary’s decision to

receive or disclaim Plan Stock or Plan

Credits.

(e) Twenty percent of the Plan Stock

is allocated to a Mutual Member based

upon voting rights and eighty percent is

allocated to a Mutual Member on the

basis of the contribution of the Mutual

Member’s insurance or annuity contract

(the Contract) to the surplus of FML.

The contribution to FML’s surplus is the

actuarial calculation of both the

historical and expected future profit

contribution of the Contracts that have

contributed to the surplus (i.e., the net

earnings) of FML. The actuarial

Federal Register / Vol. 65, No. 130 / Thursday, July 6, 2000 / Notices 41733

formulas are approved by the Court and

the Commissioner.

(f) The value of Plan Stock or Plan

Credits that will be received by a

Mutual Member will reflect the

aggregate price paid by an independent

investor (the Investor) to Group for

common Stock (the Common Stock) and

for plan credit shares (the Plan Credit

Shares) in convertible preferred stock

(the Preferred Stock) issued by Group.

(g) All Mutual Members that are Plans

participate in the transactions on the

same basis as all other Mutual Members

that are not Plans.

(h) No Mutual Member pays any

brokerage commissions or fees in

connection with the receipt of Plan

Stock or Plan Credits.

(i) The Third Amended Plan of

Rehabilitation does not affect the rights

of a contractholder of the company (the

Contractholder), which is a Mutual

Member. In this regard, FML’s

obligations to a Contractholder are

discharged and terminated upon their

endorsement and assumption by FLIC,

thereby making FLIC liable for the

obligations under such Contract.

Section III. Definitions

For purposes of this exemption:

(a) The term ‘‘FML’’ means the

Fidelity Mutual Life Insurance

Company (In Rehabilitation) and any

affiliate of FML as defined in paragraph

(c) of this Section III.

(b) The term ‘‘FLIC’’ means Fidelity

Life Insurance Company and any

affiliate of FLIC as defined in paragraph

(c) of this Section III.

(c) An ‘‘affiliate’’ of FML or FLIC

includes—

(1) Any person directly or indirectly

through one or more intermediaries,

controlling, controlled by, or under

common control with FML or FLIC; (For

purposes of this paragraph, the term

‘‘control’’ means the power to exercise

a controlling influence over the

management or policies of a person

other than an individual.) or

(2) Any officer, director or partner in

such person.

(c) The term ‘‘Mutual Member’’ means

a Contractholder whose name appears

on FML’s records as an owner of an

FML Contract on the Record Date of the

Third Amended Plan of Rehabilitation.

(d) The term ‘‘Investor’’ means the

person (e.g., individual, corporation,

partnership, joint venture, etc.) selected

by the Rehabilitator and approved by

the Court to be the purchaser under the

Investment Agreement.

(e) The term ‘‘Group Stock’’ refers to

shares of Group Common Stock and to

Group Preferred Stock, which will have

a cumulative, annual dividend equal to

7 percent of its liquidation value. The

Preferred Stock will be Series A stock

having a par value of $0.01 per share

and a liquidation preference and a

redemption value of $25 per share.

(f) The term ‘‘Plan Stock’’ means the

3 million shares of Group Common

Stock and the 2.8 million of Group

Preferred Stock that will be allocated to

Mutual Members.

(g) The term ‘‘Plan Credit’’ means

either (1) additional paid up insurance

for a traditional life policy or (2) credits

to the account values for Contracts that

are not traditional (such as a flexible

premium policy). Under FML’s Third

Amended Plan of Plan of Rehabilitation,

Plan Credits are to be allocated to

certain Mutual Members in lieu of Plan

Stock.

(h) The term ‘‘Plan Credit Shares’’

includes those shares of Plan Stock (i.e.,

the 15,000 to 180,000 shares of Group

Common Stock) and any shares of

Group Preferred Stock to be issued and

sold by Group to the Investor to fund

Plan Credits.

(i) The term ‘‘Policyholder Stock

means those shares of Group Common

or Group Preferred Stock that will be

issued and distributed to Mutual

Members, consisting of Plan Stock plus

any shares of Group Stock (in excess of

Plan Stock) issued for purposes of

correcting errors in the allocation of

Plan Stock, less Plan Credit Shares and

any disclaimed shares.

(j) The term ‘‘Investor Stock’’ means

the 3.1 million shares of Group

Common Stock (other than Plan Stock)

and the Plan Credit Shares which, under

the Third Amended Plan of

Rehabilitation, are sold to the Investor

pursuant to bid procedures and the

Investment Agreement.

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 Notice) that

was published on April 7, 2000 at 65 FR

18359.

Written Comments

The department received two written

comments with respect to the Notice.

The comments were submitted by FML

for the purpose of clarifying certain

statements made in the Notice and to

provide additional information

regarding specific issues raised therein.

As discussed below, a majority of FML’s

concerns relate to the general conditions

(the General Conditions) set forth in

Section II of the Notice while other

areas of concern relate to the Summary

of Facts and Representations (the

summary) of the Notice.

Concerns About the General Conditions

1. Standard of Review by the Court.

Paragraph (a) of Section II of the Notice

states that the Court will determine

‘‘* * * whether the Third Amended

Plan of Rehabilitation is fair and

equitable to Mutual Members.’’ FML

states that although this General

Condition may convey a broad

description of the court’s review, ‘‘fair

and equitable’’ is a technical standard of

review in some states but it is not a

statutory requirement under

Pennsylvania law. According to FML,

the Pennsylvania Supreme court has

stated in Foster v. Mutual Fire, Marine

& Inland Insurance Co., 614 A2d 1086,

1094 (PA 1992) that a rehabilitation

plan must ‘‘properly conserve and

equitably administer the assets of the

involved corporation in the interests of

investors, the public and others’’ in

accordance with the ‘‘legislatively stated

purpose [of] ‘the protection of the

interests of the insureds, creditors and

the public generally * * *’ and the

‘equitable apportionment of any

unavoidable loss’ through * * *

‘improved methods for rehabilitating

insurers * * *’ ’’

In response to this comment, the

Department has revised Section II(a) of

the exemption, as follows, to reflect the

decision of the Pennsylvania Supreme

Court:

The Third Amended Plan of Rehabilitation

is approved by the Court, implemented in

accordance with procedural and substantive

safeguards that are imposed under

Pennsylvania law and is subject to review

and/or supervision by the Commissioner and

the Rehabilitator. The Court determines

whether the Third Amended Plan of

Rehabilitation—

(1) Properly conserves and equitably

administers the assets of FML in the interests

of investors, the public and others in

accordance with the legislatively-stated

purpose of protecting the interests of the

insureds, creditors and the public; and

(2) Equitably apportions any unavoidable

loss through improved methods for

rehabilitating FML.

2. Non-Voting by Mutual Members.

Paragraph (b) of Section II of the Notice

states, in part, that ‘‘[e]ach Mutual

Member has an opportunity to vote and

comment on the Third Amended Plan of

Rehabilitation.’’ FML points out that

each Mutual member has received, and

will continue to receive, full written

disclosure of the terms of such Plan and

each Mutual Member also has the

opportunity to comment on the Plan by

filing written objections to the Court or

providing testimony at the hearings for

such Plan.

However, FML notes that Mutual

Members do not have an opportunity to

41734 Federal Register / Vol. 65, No. 130 / Thursday, July 6, 2000 / Notices

1Although the notice has generally been sent

only to FML’s creditors and to the ‘‘Master Service

List,’’ FML states that it will most likely

recommend the same scope of notice to the Court

assuming the moratorium is to be terminated.

However, once a revision of the moratorium is

approved, FML explains that notice of the Court’s

order must also be sent to all Contractholders and

this procedure will be followed in the event the

moratorium is lifted. Because none of the previous

petitions have been opposed, FML states that no

hearing has been required. However, if objections

are filed, the Court will decide whether to hold a

hearing or make a decision based on the pleadings.

2According to the Third Amended Plan of

Rehabilitation, the ‘‘Record Date’’ means the last

day of the month immediately preceding the month

vote, as such, on the Third Amended

Plan of Rehabilitation because there is

no provision in the Pennsylvania

rehabilitation statute requiring or

allowing for a vote by such Mutual

Members on the Third Amended Plan of

Rehabilitation. Additionally, FML

explains that Footnote 20 of the

Summary states that the Rehabilitator

has been advised that the Pennsylvania

rehabilitation statute, which does

require a vote in certain circumstances,

is not applicable to this situation.

Moreover, in Representation 20(b) of

the Summary, FML notes that the

‘‘Court will review the terms of the

Third Amended Plan of Rehabilitation

and will approve such Plan following

* * * a public hearing * * *’’ Finally,

FML notes that in Representation 20(c)

of the Summary ‘‘[e]ach Mutual Member

will have an opportunity to participate

in any hearing or hearings before the

Court regarding the approval of the

Third Amended Plan of Rehabilitation.’’

On the basis of the foregoing

clarifications, the Department has

decided to revise Section II(b) of the

exemption to read as follows:

Each Mutual Member has an opportunity

to comment on the Third Amended Plan of

Rehabilitation at hearings held by the Court

after full written disclosure of the terms of

the Plan is given to such Mutual Member by

FML.

3. Receipt of Consideration by Plan

Mutual Members. Paragraph (d) of

Section II of the Notice states that —

Any determination by a Mutual Member

which is a Plan to receive Plan Stock or Plan

Credits is made by one or more independent

fiduciaries of such plan and not by FML,

Group or Fidelity Life Insurance Company

(FLIC). Consequently, neither FML nor any of

its affiliates will exercise investment

discretion nor render ‘‘investment advice’’

within the meaning of 29 CFR 2510.3–21 (c)

with respect to an independent Plan

fiduciary’s decision to elect Plan Stock or

Plan Credits.

FML represents that it is accurate to

state that the determination to receive

Plan Stock or Plan Credits is not made

by FML, Group or FLIC. However, FML

points out that there is no

‘‘determination or decision’’ to be made

by a Mutual Member because the Third

Amended Plan of Rehabilitation

provides for Plan Stock to go to all

Mutual Members, except for NonTrusteed Tax-Qualified Retirement

Funding Contracts that are described in

sections 401(a), 403(a) or (b) or 408 of

the Code. FML represents that NonTrusteed Tax-Qualified Retirement

Funding Contracts will automatically

receive Plan Credits.

In addition, FML explains that the

Third Amended Plan of Rehabilitation

sets forth exactly who will receive Plan

Stock or Plan Credits, with no option for

an election between the two. FML

further states that the only election that

can be made by a Mutual Member is the

disclaimer to receive Plan Stock or Plan

Credits, and that decision cannot be

made by FML, Group or FLIC.

In consideration of this comment, the

Department has decided to revise

Section II(d) of the exemption to read as

follows:

The decision by a Mutual Member which

is a Plan to receive or disclaim Plan Stock or

Plan Credits allocated to such Mutual

Member is made by one or more independent

fiduciaries of such plan and not by FML,

Group or Fidelity Life Insurance Company

(FLIC). Consequently, neither FML nor any of

its affiliates will exercise investment

discretion nor render ‘‘investment advice’’

within the meaning of 29 CFR 2510.3–21(c)

with respect to an independent Plan

fiduciary’s decision to receive or disclaim

Plan Stock or Plan Credits.

4. FML’s Obligations to

Contractholders. Paragraph (i) of

Section II of the Notice states that ‘‘[a]ll

of FML’s obligations to contractholders

(the Contractholders) of the company

which are Mutual Members remain in

force upon endorsement and transfer to

FLIC and are not affected by the Third

Amended Plan of Rehabilitation.’’

Nevertheless, FML notes that while this

General Condition is technically correct,

it is somewhat misleading. In this

regard, FML indicates that

Representation 11 of the Summary

states that ‘‘[e]ach Contractholder

having a Contract in force on the

Closing Date will have his or her

Contract assumed and reinsured by

FLIC as of the Closing Date.’’ In

addition, FML notes that Representation

19 of the Summary states that FML will

discontinue its business operations after

the Closing Date and will subsequently

liquidate and dissolve. Consequently,

FML represents that its obligations to

the Contractholders will be discharged

and terminated upon their assumption

by FLIC rather that remaining in force.

Under these circumstances, FML

explains that FLIC will then be

responsible for those contractual

obligations under the endorsed or

assumed contracts.

Thus, on the basis of this comment,

the Department has decided to revise

paragraph (i) of Section II of the

exemption to read as follows:

The Third Amended Plan of Rehabilitation

does not affect the rights of a contractholer

of the company (the Contractholder), which

is a Mutual Member. In this regard. FML’s

obligations to a Contractholer are discharged

and terminated upon their endorsement and

assumption by FLIC, thereby making FLIC

liable for the obligations under such

Contract.

Concerns About the Summary

1. Possible Termination of the

Moratorium. Representation 3 of the

Summary states, in pertinent part, that

‘‘[u]nder the Order of Rehabilitation, a

moratorium was imposed on cash

distributions, Contract surrenders,

withdrawals and policy loans, except in

certain hardship situations.’’ The

moratorium, which was imposed by the

Court and which placed FML into

rehabilitation, was intended to stop the

outflow of cash and to afford the

Rehabilitator time to stabilize FML’s

assets.

FML represents that it is currently

considering eliminating this moratorium

but it has not made a final decision nor

has it determined when the end of the

moratorium will occur. FML asserts that

the Rehabilitator has petitioned the

Court for five separate revisions of the

moratorium based on FML’s improved

financial condition. FML notes that

these revisions have generally allowed

access to a percentage of cash value,

included additional hardship criteria

and have restored the exercise of

various contractual obligations. None of

the five petitions has been opposed by

the Court.

FML states that although the

Rehabilitator is considering a

termination of the moratorium, much

analysis has to be conducted before a

decision can be made. In this regard,

FML explains that actuarial information

must be presented to the Court to

explain the financial and economic

effect of ending the moratorium. In

addition, notice, an objection period,

and possibly a hearing will be required.1

As for the effect of the termination of

the moratorium on the amount of Plan

Stock or Plan Credits a Mutual Member

will be entitled to receive, FML states if

Contractholders are permitted to

surrender their Contracts prior to the

Record Date, as defined in the Third

Amended Plan of Rehabilitation,2 and

Federal Register / Vol. 65, No. 130 / Thursday, July 6, 2000 / Notices 41735

in which the Preliminary Approval Order,

approving such Plan, is entered by the Court.

According to FML’s counsel, the Record Date is

projected for November 30, 2000.

choose to do so, such Contractholders

will be terminating their status as

Mutual Members. If the Contracts of

these Contractholders are not in force on

the Record Date, FML explains that the

Contractholders will not be entitled to

receive Plan Stock or Plan Credits.

FML further represents that if the

moratorium is terminated prior to the

Record Date, the Contractholders will

still have the option of voluntarily

surrendering their Contracts. However,

FML explains that it will be required to

make significant disclosures to these

Contractholders to inform them of the

benefits they will be foregoing if they

surrender their Contracts prematurely.

Alternatively, FML states that the

Contractholders may choose to hold

onto their Contracts until after the

Record Date. Under these

circumstances, the Contractholders,

who would then be considered Mutual

Members of FML, would receive their

allocable shares of Plan Stock or Plan

Credits but without an increase in the

amount of consideration.

In any event, FML states it will treat

Plan Contractholders no differently from

other Contractholders that are not Plans

in regard to the decision to surrender a

Contract or the effective date of

terminating the moratorium, and

requisite disclosures. In this regard,

FML states that Plan Contractholders

will be sent the same notice and

disclosure information that is provided

to all other Contractholders that are not

Plans.

The Department has noted the

foregoing clarifications to

Representation 3 and the impact of the

termination of the moratorium on a

Mutual Member’s receipt of Plan Stock

or Plan Credits. In this regard, the

Department notes that no relief is being

provided by this exemption for the

receipt of cash by a Mutual Member that

is a Plan.

2. Investor Qualifications.

Representation 9 of the Summary sets

forth the minimum qualifications for the

Investor. FML states that while the

substance of Representation 9 is

accurate, the qualifications are actually

contained in the Bid Procedures filed

under the Third Amended Plan of

Rehabilitation rather than in the Plan

itself.

The Department has noted this

clarification to the information

contained in Representation 9 of the

Summary.

3. Plans Covered by the Exemption

Request. Representation 12 of the

Summary states, in part, that ‘‘[u]nder

Section 4.05 of the Third Amended Plan

of Rehabilitation, any Contract held in

connection with a qualified retirement

plan or an arrangement described in

section[s] 401(a), 403(a) or 408 of the

Code. * * * will be allocated Plan

Credits in lieu of Plan Stock, in

exchange for the relinquishment of the

Mutual Member’s Membership Interest

under such Contract.’’ FML represents

that although Section 4.05 of the Third

Amended Plan of Rehabilitation

references only sections 401, 403 and

408 of the Code, the exemption

application specifies Contracts held in

connection with a qualified retirement

plan or an arrangement described in

section 401(a), 403(a) or (b) or 408 of the

Code.

The Department acknowledges this

comment relating to the information

contained in Representation 12 of the

Summary.

For further information regarding

FML’s comment letters and other

matters discussed herein, interested

persons are encouraged to obtain copies

of the exemption application file

(Exemption Application No. D–10712)

the Department is maintaining in this

case. The complete application file, as

well as all supplemental submissions

received by the Department, are made

available for public inspection in the

Public Documents Room of the Pension

and Welfare Benefits Administration,

Room N–5638, U.S. Department of

Labor, 200 Constitution Avenue, N.W.,

Washington, D.C. 20210.

Accordingly, after giving full

consideration to the entire record,

including FML’s written comments, the

Department has decided to grant the

exemption subject to the modifications

and clarifications described above.

FOR FURTHER INFORMATION CONTACT: Ms.

Jan D. Broady of the Department,

telephone (202) 219–8881. (This is not

a toll-free number.)

Fortis, Inc. Employees’ Uniform Profit

Sharing Plan (the Fortis Plan) Located

in New York, New York

[Prohibited Transaction Exemption 2000–35;

Exemption Application Number D–10789]

Exemption

The restrictions of sections 406(a),

406(b)(1) and (2) of the Act and the

sanctions resulting from the application

of section 4975 of the Code, by reason

of section 4975(c)(1)(A) through (E) of

the Code, shall not apply to: (1) The

restoration payment (the Restoration

Payment) by Fortis, Inc. (Fortis), a party

in interest with respect to the Fortis

Plan, to the Fortis Plan with respect to

a certain counterfeit certificate of

deposit (the Plan CD); and (2) the

potential future payment to Fortis of

recapture payments (the Recapture

Payments) made to the Fortis Plan

pursuant to proceedings involving the

issuer of the counterfeit CD. This

exemption is subject to the following

conditions:

(A) The Restoration Payment consists

of:

(i) $501,125, an amount equal to the

Plan CD’s full face value at the time of

the Plan CD’s maturity; and

(ii) An amount in cash which is equal

to:

(a) a 5.5% annual rate of return on the

Plan CD’s maturity value of $501,125 for

the period beginning October 30, 1997

and ending on December 31, 1998; and

(b) a rate of return on the amount

described in (A)(ii)(a) above which is

equal to the average annual rate of

return of the Fortis Money Market Fund

from January 1, 1999 until the date of

the Restoration Payment (i.e., the

Interest Payment);

(B) The Restoration Payment is a onetime transaction for cash;

(C) The Fortis Plan pays no expenses

with respect to the Restoration Payment;

(D) The Fortis Plan retains any

amount in excess of the Restoration

Payment that it collects in its attempts

to recover monies due under the Plan

CD; and

(E) Any Recapture Payments paid by

the Fortis Plan to Fortis are limited to

the amount of the Restoration Payment

and are restricted solely to the amounts,

if any recovered, by the Fortis Plan with

respect to the counterfeit CD in

litigation or otherwise.

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 May

4, 2000 at 65 FR 25954.

Written Comments

The Department received two written

comments, both of which were in favor

of granting the proposed exemption.

Accordingly, after giving full

consideration to the entire record, the

Department has determined to grant the

exemption.

FOR FURTHER INFORMATION CONTACT: Mr.

J. Martin Jara, telephone (202) 219–

8881. (This is not a toll-free number).

Canada Life Assurance Company

(Canada Life) Located in Toronto,

Ontario, Canada

[Prohibited Transaction Exemption 2000–36;

Exemption Application No. D–10790]

41736 Federal Register / Vol. 65, No. 130 / Thursday, July 6, 2000 / Notices

Exemption

Section I. Covered Transactions

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,

effective November 4, 1999, to the (1)

receipt of common shares (Common

Shares) of Canada Life Financial

Corporation, the holding company for

Canada Life, or (2) the receipt of cash

(Cash) or policy credits (Policy Credits),

by or on behalf of any eligible

policyholder (the Eligible Policyholder)

of Canada Life which is an employee

benefit plan (the Plan), subject to

applicable provisions of the Act and

and/or the Code, other than a Plan

established by Canada Life or an affiliate

for its own employees, in exchange for

such Eligible Policyholder’s

membership interest in Canada Life, in

accordance with the terms of a

conversion proposal (the Conversion

Proposal) adopted by Canada Life and

implemented under the insurance laws

of Canada and the State of Michigan.

This exemption is subject to the

conditions set forth below in Section II.

Section II. General Conditions

(a) The Conversion Proposal was

implemented in accordance with

procedural and substantive safeguards

that were imposed under the insurance

laws of Canada and the State of

Michigan and was subject to review

and/or approval in Canada by the Office

of the Superintendent of Financial

Institutions (OSFI) and the Minister of

Finance (the Canadian Finance

Minister) and, in the State of Michigan,

by the Commissioner of Insurance (the

Michigan Insurance Commission).

(b) OSFI, the Canadian Finance

Minister, and the Michigan Insurance

Commissioner reviewed the terms of the

options that were provided to Eligible

Policyholders of Canada Life as part of

their separate reviews of the Conversion

Proposal. In this regard,

(1) OFSI (i) Authorized the release of

the Conversion Proposal and all

information to be sent to Eligible

Policyholders, (ii) oversaw each step of

the conversion process (the Conversion),

and (iii) made a final recommendation

to the Canadian Finance Minister on the

Conversion Proposal;

(2) The Canadian Finance Minister, in

his sole discretion, could consider such

factors as (i) Whether the Conversion

Proposal was fair and equitable to

Eligible Policyholders, (ii) whether the

Conversion Proposal was in the best

interests of the financial system in

Canada, and (iii) if sufficient steps had

been taken to inform Eligible

Policyholders of the Conversion

Proposal and of the special meeting on

Conversion;

(3) The Michigan Insurance

Commission made a determination that

the Conversion Proposal was (i) Fair and

equitable to all Eligible Policyholders

and (ii) consistent with the

requirements of Michigan law; and

(4) Both the Canadian Finance

Minister and the Michigan Insurance

Commissioner concurred on the terms

of the Conversion Proposal.

(c) Each Eligible Policyholder had an

opportunity to vote to approve the

Conversion Proposal after full written

disclosure was given to the Eligible

Policyholder by Canada Life.

(d) One or more independent

fiduciaries of a Plan that was an Eligible

Policyholder received Common Shares,

Cash or Policy Credits pursuant to the

terms of the Conversion Proposal and

neither Canada Life nor any of its

affiliates exercised any discretion or

provided ‘‘investment advice,’’ as that

term is defined in 29 CFR 2510.3–21(C),

with respect to such acquisition.

(e) After each Eligible Policyholder

was allocated 100 Common Shares,

additional consideration was allocated

to such Eligible Policyholder who

owned an eligible policy based on an

actuarial formula that took into account

such factors as the total cash value, the

basic annual premium and the duration

of such eligible policy. The actuarial

formula was reviewed by the Canadian

Finance Minister and the Michigan

Insurance Commissioner.

(f) All Eligible Policyholders that were

Plans participated in the transactions on

the same basis within their class

groupings as other Eligible

Policyholders that were not Plans.

(g) No Eligible Policyholder paid or

will pay any brokerage commissions or

fees to Canada Life or its affiliates in

connection with their receipt of

Common Shares, in connection with the

implementation of the secondary

offering or the assisted sales program.

(h) All of Canada Life’s policyholder

obligations will remain in force and will

not be affected by the Conversion

Proposal.

Section III. Definitions

For purposes of this exemption:

(a) The term ‘‘Canada Life’’ means the

Canada Life Assurance Company and

any affiliate of Canada Life as defined in

paragraph (b) of this Section III.

(b) An ‘‘affiliate’’ of Canada Life

Includes—

(1) Any person directly or indirectly

through one or more intermediaries,

controlling, controlled by, or under

common control with Canada Life; (For

purposes of this paragraph, the term

‘‘control’’ means the power to exercise

a controlling influence over the

management or policies of a person

other than an individual.) or

(2) Any officer, director or partner in

such person.

(c) The term ‘‘Eligible Policyholder’’

means a policyholder who—

(i) Was the owner of a voting policy

at any time on April 2, 1998 (the

Eligibility Day):

(ii) Became the owner of a voting

policy, if the voting policy was applied

for by that person before the Eligibility

Day, and the application was received

by Canada Life on or before the close of

business on June 30, 1998; or

(iii) Was the owner of a voting policy

that lapsed before June 2, 1998 and,

where the policy terms provided that, as

of June 2, 1998, the owner was entitled

to request that the policy be reinstated,

the policy was reinstated by the person

who was the owner at the time the

policy lapsed in accordance with its

terms (without regard to when the right

to reinstate expired) during the period

which began on April 2, 1998 and

ended 90 days before the special

meeting.

(d) The term ‘‘Policy Credit’’ means—

(1) For an individual life insurance

policy with respect to which dividends

may be paid, dividend deposits when

the dividend deposit option has been

selected under the policy and, in all

other cases, dividend additions;

(2) For in individual life insurance

policy other than a policy with respect

to which dividends may be paid, an

increase in the fund value (to which no

sales or surrender or similar charges

will be applied):

(3) For an individual deferred annuity

policy with respect to which dividends

may be paid, dividend additions;

(4) For an individual deferred annuity

policy other than a policy with respect

to which dividends may be paid, an

increase in accumulation value (to

which no sales or surrender or similar

charges will be applied); and

(5) For a supplementary contract,

settlement option or annuity in

annuitization status, an increase in the

periodic annuity payment amount. If the

periodic annuity payment is on a life

basis, the increase will be a life annuity

with cash refund basis.

EFFECTIVE DATE: This exemption is

effective as of November 4, 1999.

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 that was published

on May 4, 2000 at 65 FR 25956.

Federal Register / Vol. 65, No. 130 / Thursday, July 6, 2000 / Notices 41737

FOR FURTHER INFORMATION CONTACT: Ms.

Jan D. Broady 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 fidicuary

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 30th day of

June, 2000.

Ivan Strasfeld,

Director of Exemption Determinations,

Pension and Welfare Benefits Administration,

Department of Labor.

[FR Doc. 00–17066 Filed 7–5–00; 8:45 am]

BILLING CODE 4510–29–M

LIBRARY OF CONGRESS

Copyright Office

[Docket No. 99–3 CARP DD 95–98]

Distribution of 1995, 1996, 1997, and

1998 Digital Audio Recording

Technology Royalties

AGENCY: Copyright Office, Library of

Congress.

ACTION: Announcement of the schedule

for the proceeding.

SUMMARY: The Copyright Office of the

Library of Congress is announcing the

schedule for the 180-day arbitration

period for the Copyright Arbitration

Royalty Panel (‘‘CARP’’) proceeding to

determine the distribution of the 1995–

98 digital audio recording technology

(‘‘DART’’) royalties in the Musical

Works Funds.

DATES: Filings must be submitted

according to the announced schedule,

except as otherwise provided by Order

of the Copyright Arbitration Royalty

Panel.

ADDRESSES: If hand delivered, parties

shall deliver an original and five copies

of all written filings concerning this

proceeding to: Office of the Copyright

General Counsel, James Madison

Memorial Building, First and

Independence Avenue, SE., Room LM–

403, Washington, DC 20540. If sent by

mail, filings should be addressed to:

Copyright Arbitration Royalty Panel

(CARP), P.O. Box 70977, Southwest

Station, Washington, DC 20024.

FOR FURTHER INFORMATION CONTACT:

David O. Carson, General Counsel, or

Tanya M. Sandros, Senior Attorney,

Copyright Arbitration Royalty Panel

(‘‘CARP’’), PO Box 70977, Southwest

Station, Washington, DC 20024.

Telephone: (202) 707–8380. Telefax:

(202) 252–3423.

SUPPLEMENTARY INFORMATION:

A. Background

On May 4, 1999, the Copyright Office

published a notice in the Federal

Register requesting comment as to the

existence of a controversy concerning

the distribution of the 1995, 1996, 1997,

and 1998 DART royalty fees in the

Musical Works Funds and consolidating

the consideration of the distribution of

the 1995–98 Musical Works Funds into

a single proceeding. 64 FR 23875 (May

4, 1999). The following parties filed

comments and Notices of Intent to

Participate: Carl DeMonbrun/

Polyphonic Music, Inc. (‘‘DeMonbrun’’);

Broadcast Music, Inc. (‘‘BMI’’), the

American Society of Composers,

Authors and Publishers (‘‘ASCAP’’),

SESAC, Inc. (‘‘SESAC’’), the Harry Fox

Agency (‘‘HFA’’), the Songwriters Guild

of America (‘‘SGA’’), and Copyright

Management, Inc. (‘‘CMI’’) (collectively

the ‘‘Settling Parties’’); James Cannings/

Can Can Music (‘‘Cannings’’); Alicia

Carolyn Evelyn (‘‘Evelyn’’); and Eugene

‘‘Lambchops’’ Curry/ TaJai Music, Inc.

(‘‘Curry’’).

On September 21, 1999, the Office

issued an Order announcing the

precontroversy discovery schedule for

the proceeding, beginning on November

15, 1999. See Order in Docket No. 99–

3 CARP DD 95–98 (September 21, 1999).

Prior to commencement of the 45-day

precontroversy discovery period, the

Office was notified that Cannings and

DeMonbrun had settled their respective

controversies with the Settling Parties.

Thus, the parties who will appear before

the CARP in the current proceeding are

the Settling Parties, Evelyn, and Curry.

The September 21, 1999, Order also

set the initiation of the arbitration for

February 28, 2000. However, the

Office’s duty to publish every two years

a new list of arbitrators eligible to serve

on a CARP rendered the February 28

initiation date unworkable. See 37 CFR

251.3. On January 14, 2000, in

accordance with § 251.3(b), the Office

published the list of arbitrators eligible

to serve on a CARP initiated during

2000 and 2001. 65 FR 2439 (January 14,

2000). Because the time period between

the publication of the arbitrator list and

the February 28 initiation date was not

sufficient to complete the selection of

arbitrators for this proceeding, the

Office reset the initiation of the

arbitration to April 10, 2000. See Order

in Docket No. 99–3 CARP DD 95–98

(March 14, 2000).

On April 10, 2000, the Office

published a notice initiating the 180-day

arbitration period for this proceeding.

65 FR 19025 (April 10, 2000). Once the

arbitrators for this proceeding were

selected, the Office scheduled the initial

meeting between the arbitrators and the

parties for May 16, 2000. However, the

chairperson of the panel resigned out of

concern that potential conflicts of

interest, which were not known to the

arbitrator at the time of selection, may

exist under § 251.32. Because of these

concerns, the Copyright Office canceled

the May 16, 2000, meeting between the

parties and the original panel of

arbitrators. Pursuant to § 251.6(f), the

remaining two arbitrators selected a new

chairperson. On June 14, 2000, in

accordance with § 251.6(f), the Office

announced the suspension of the 180-

day arbitration period from May 16,

2000, to June 16, 2000, the resumption

of the 180-day period on June 16, 2000,

the new chairperson of the panel, and

the time and place of the rescheduled

initial meeting, which took place on

June 19, 2000. See 65 FR 37412 (June

14, 2000).

B. The Schedule

Section 251.11(b) of 37 CFR provides:

‘‘At the beginning of each proceeding,

the CARP shall develop the original

schedule of the proceeding which shall

be published in the Federal Register at