Federal Register / Vol. 72, No. 55 / Thursday, March 22, 2007 / Notices 13517 

DEPARTMENT OF LABOR 

Employee Benefits Security 

Administration 

[Application No. D–11408, et al.] 

Proposed Exemption; The DeRose 

Dental Offices, Inc., S.C. Profit Sharing 

Plan (the Plan) 

AGENCY: Employee Benefits Security 

Administration, Labor. 

ACTION: Notice of Proposed Exemption. 

SUMMARY: This document contains 

notices of pendency before the 

Department of Labor (the Department) of 

a 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). 

Written Comments and Hearing 

Requests 

All interested persons are invited to 

submit written comments or requests for 

a hearing on the pending exemption, 

unless otherwise stated in the Notice of 

Proposed Exemption, within 45 days 

from the date of publication of this 

Federal Register Notice. 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. 

ADDRESSES: 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. ll, stated 

in each Notice of Proposed Exemption. 

Interested persons are also invited to 

submit comments and/or hearing 

requests to EBSA via e-mail 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. 

Notice to Interested Persons 

Notice of the proposed exemption 

will be provided to all interested 

persons in the manner agreed upon by 

the applicant and the Department 

within 15 days of the date of publication 

in the Federal Register. Such notice 

shall include a copy of the notice of 

proposed exemption as published in the 

Federal Register and shall inform 

interested persons of their right to 

comment and to request a hearing 

(where appropriate). 

SUPPLEMENTARY INFORMATION: The 

proposed exemption were requested in 

an 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 exemption 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. 

The DeRose Dental Offices, Inc., S.C. 

Profit Sharing Plan (the Plan), Located 

in Racine, Wisconsin 

[Application No. D–11408] 

Proposed Exemption 

The Department is considering 

granting an 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). If the exemption is granted, the 

restrictions of section 406(a), 406(b)(1) 

and (b)(2) of the Act, and the sanctions 

resulting from the application of section 

4975(a) and (b) of the Code, by reason 

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

the Code, shall not apply to the 

December 29, 2006 sale by the Plan of 

2,174 shares of stock (the Stock) in 

Wisconsin Bancshares, Inc. (the 

Company) each to Francesca DeRose 

(Francesca) and Nicolet DeRose 

(Nicolet), parties in interest with respect 

to the Plan, provided the following 

conditions are satisfied: 

(a) The sales of the Stock were onetime transactions for cash; 

(b) The Plan paid no commissions or 

other fees in connection with the sales; 

(c) The terms of the transactions were 

at least as favorable to the Plan as those 

the Plan could obtain in similar 

transactions with an unrelated party; 

and 

(d) the sales price of the Stock was 

determined by a qualified, independent 

appraiser. 

DATES: Effective Date: The proposed 

exemption, if granted, will be effective 

as of December 29, 2006. 

Summary of Facts and Representations 

1. The Plan is an individual account 

plan established by DeRose Dental 

Offices, Inc., S.C. (the Employer), a 

professional dental corporation located 

in Racine, Wisconsin. As of December 

31, 2005 (the Last Valuation Date), the 

Plan had 10 participants and 

beneficiaries, and had total assets of 

$1,951,401. Francesca and Nicolet, the 

only dentists employed by the 

Employer, are participants in the Plan. 

Francesca, along with Ronald S. Rizzo, 

is also the co-trustee of the Plan. As of 

the Last Valuation Date, Francesca’s 

account value was $747,061.71, and 

Nicolet’s account value was 

$986,336.53. These account values 

constitute approximately 88.83% of the 

total assets of the Plan. The applicants 

represent that since the Last Valuation 

Date, the values of the participants’

respective accounts have not 

significantly changed. 

2. Among other assets, the Plan held 

shares (i.e., the Stock) of the Company, 

a closely-held bank holding company 

registered under the Bank Holding 

Company Act of 1956, as amended, and 

a financial holding company under the 

Gramm-Leach-Bliley Act of 1999. The 

Company is the 100% owner of Banks 

of Wisconsin (the Bank), a full service 

community bank with four locations in 

Wisconsin. As of December 8, 2006, 

535,594 shares of Stock were issued and 

outstanding. 

3. The applicants represent that the 

Plan initially acquired shares of 

common stock of the Bank in the 

secondary private stock offering by the 

Bank on July 29, 2003 at a price of $23 

per share, or an aggregate purchase price 

of $100,004. On December 31, 2004, the 

Company was formed as a holding 

company for all of the shares of the 

common stock of the Bank. As of 

January 1, 2005, all of the shares of the 

Bank were converted into shares of the 

Stock. The price per share in the 

secondary offering was determined by 

the Board of Directors (the Board) of the 

Bank. The shares were offered to 


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13518 Federal Register / Vol. 72, No. 55 / Thursday, March 22, 2007 / Notices 

existing shareholders of the Bank and to 

the Plan. The offer was not underwritten 

by any third party. The applicants 

represent that the Board determined the 

secondary offering price by calculating 

a hypothetical fair return for a start up 

bank after three years of operations and 

experience. All of the shares of the Bank 

were sold in the secondary offering, 

which raised approximately $2.8 

million for the Bank. The Bank’s initial 

private stock offering occurred on June 

26, 2000 at a price of $20 per share. The 

Plan has not acquired any additional 

shares of Stock since the acquisition on 

July 29, 2003. The applicants represent 

that the Bank is, and at the time of the 

acquisition of the Stock by the Plan was, 

an entity unrelated to the Plan, and not 

a party in interest with respect to the 

Plan within the meaning of section 3(14) 

of the Act. The Company has at all times 

been an entity unrelated to the Plan. 

4. Francesca also holds 3,950 shares 

of the Stock individually. In addition, 

David Barnes, her husband and the 

Chairman of the Board of the Bank, 

holds 37,777 shares of Stock 

individually and 2,050 shares as trustee 

of one or more custodial accounts 

established under the Uniform Transfer 

to Minors Act. Together, Mr. Barnes and 

Francesca hold approximately 9.02% of 

the issued and outstanding shares of 

Stock. Nicolet in her individual capacity 

holds 375 shares of Stock. Mr. Rizzo, the 

co-trustee of the Plan, holds 15,616 

shares of the Stock individually, which 

represents approximately 2.92% of the 

issued and outstanding Stock. The Stock 

held by the Plan represented 0.81% of 

the issued and outstanding Stock. 

During the period of its ownership of 

the Stock, the Plan earned no dividends 

or other income and incurred no 

expenses with respect to the Stock. 

Except for Mr. Barnes, neither Mr. 

Rizzo, nor any family member 

(including the Plan participants) is an 

officer, director or controlling 

shareholder of the Bank or the 

Company. 

5. The applicants have requested a 

retroactive prohibited transaction 

exemption for the purchase of 2,174 

shares of the Stock by Francesca, and 

the purchase of 2,174 shares of the 

Stock by Nicolet. Both transactions 

occurred on December 29, 2006. The 

applicants represent that due to 

business and income tax considerations, 

the Company and Bank are both seeking 

to make a Subchapter S election, to be 

effective as of January 1, 2007. Although 

a tax-exempt qualified trust forming part 

of a stock bonus, pension or profitsharing plan, such as the Plan and its 

related trust, can be an S corporation 

eligible shareholder, such exempt trust 

is required to pay the unrelated business 

income tax (UBIT) on all income 

attributable to ownership of stock of an 

S corporation, using the income tax 

rates. UBIT is due whether or not the S 

corporation actually distributes the 

income to the trust. In addition, any 

gain on the sale of the S corporation 

stock by a trust is generally subject to 

UBIT. Because the Plan would incur 

unfavorable tax consequences as a result 

of an S corporation election and the 

continued holding of the Stock, Nicolet 

and Francesca desired to purchase the 

Stock from the Plan. The decision on 

behalf of the Plan to sell the Stock was 

made solely by Mr. Rizzo in his capacity 

as co-trustee. 

6. The Stock was independently 

appraised by an independent appraiser, 

Mercer Capital (Mercer). Mercer is an 

independent financial advisor 

experienced in the financial analysis 

and valuation of financial institutions. 

The Company retained Mercer, in 

connection with the S corporation 

election and related merger transaction, 

to assist the Board in determining a fair 

price for the Stock. Mercer delivered an 

appraisal to the Board at the Board’s 

meeting on October 17, 2006, using the 

Company’s September 30, 2006 

financial data, whereby it determined 

the fair market value of the Stock to be 

$44 per share. On November 1, 2006, 

Mercer issued an opinion to the Board 

that the cash consideration to be 

received by the Bank’s shareholders was 

fair to the shareholders. In arriving at its 

opinion and appraisal, Mercer reviewed 

and analyzed the Company’s audited 

financial statements, quarterly reports, 

the Company’s financial forecasts, the 

historical trading prices and activity for 

the Stock, the nature and financial terms 

of certain other merger and acquisition 

transactions involving banks, financial 

studies, analyses and investigations and 

relevant financial, economic and market 

criteria. In addition, Mercer met with 

the management of the Company to 

discuss past and current operations, 

financial condition and prospects, as 

well as the result of regulatory 

examinations. 

7. On the date of the sale of the Stock 

to Francesca and Nicolet by the Plan, 

Mr. Rizzo, in his capacity as co-trustee 

for the Plan, contacted Mr. Andy Gibbs 

at Mercer in order to obtain an updated 

appraisal of the Stock or a confirmation 

that the value of Stock since the date of 

the appraisal had not changed. Mr. 

Gibbs advised Mr. Rizzo that Mercer 

was aware of no circumstances that 

would change its appraisal of the Stock 

as of September 30, 2006, and that the 

appraisal report and appraised value of 

$44 per share of Stock remained current 

as of the date of sale. 

8. The applicants represent that there 

is no active trading market for the Stock, 

and no market is expected to develop 

for the Stock upon the consummation of 

the merger and the S corporation 

election. The sale of the Stock to 

Francesca and Nicolet presented an 

opportunity to provide better liquidity 

and diversification of investments in the 

Plan at a fair price. The applicants 

represent that the Plan benefited from 

significant appreciation in the value of 

the Stock since purchasing the Stock in 

the secondary offering. As demonstrated 

by the appraisal by Mercer, the value of 

the Stock as of September 30, 2006 ($44) 

significantly exceeds the purchase price 

paid by the Plan for the Stock ($23 per 

share on July 23, 2003) and the value of 

the Stock on the Last Valuation Date, 

which was determined to be $25 per 

share based on recent private sale 

transactions. 

9. In summary, the applicants 

represent that the subject transactions 

satisfy the criteria contained in section 

408(a) of the Act because: (a) The terms 

of the transactions were at least as 

favorable to the Plan as those the Plan 

could have obtained in similar 

transactions with an unrelated party; (b) 

the sales of the Stock were one-time 

transactions for cash, and the Plan paid 

no commissions or other fees in 

connection with the sales; (c) the sales 

price of the Stock was determined by a 

qualified, independent appraiser who 

confirmed the fair market value as of the 

date of the sales; (d) the Plan benefited 

from significant appreciation in the 

Stock since the time of its acquisition in 

July, 2003; and (e) the sales of the Stock 

provide better liquidity and 

diversification of investments in the 

Plan. 

FOR FURTHER INFORMATION CONTACT: Gary 

H. Lefkowitz of the Department, 

telephone (202) 693–8546. (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 of the Act and/or the Code, 

including any prohibited transaction 

provisions to which the exemption does 

not apply and the general fiduciary 

responsibility provisions of section 404 

of the Act, which, among other things, 

require a fiduciary to discharge his 


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Federal Register / Vol. 72, No. 55 / Thursday, March 22, 2007 / Notices 13519 

duties respecting the plan solely in the 

interest of the participants and 

beneficiaries of the plan and in a 

prudent fashion in accordance with 

section 404(a)(1)(b) of the Act; nor does 

it affect the requirement of section 

401(a) of the Code that the plan must 

operate for the exclusive benefit of the 

employees of the employer maintaining 

the plan and their beneficiaries; 

(2) Before an exemption may be 

granted under section 408(a) of the Act 

and/or section 4975(c)(2) of the Code, 

the Department must find that the 

exemption is administratively feasible, 

in the interests of the plan and of its 

participants and beneficiaries, and 

protective of the rights of participants 

and beneficiaries of the plan; 

(3) The proposed exemptions, if 

granted, will be supplemental to, and 

not in derogation of, any other 

provisions of the Act and/or the Code, 

including statutory or administrative 

exemptions and transitional rules. 

Furthermore, the fact that a transaction 

is subject to an administrative or 

statutory exemption is not dispositive of 

whether the transaction is in fact a 

prohibited transaction; and 

(4) The proposed exemptions, if 

granted, will be subject to the express 

condition that the material facts and 

representations contained in each 

application are true and complete, and 

that each application accurately 

describes all material terms of the 

transaction which is the subject of the 

exemption. 

Signed at Washington, DC, this 16th day of 

March, 2007. 

Ivan Strasfeld, 

Director of Exemption Determinations, 

Employee Benefits Security Administration, 

U.S. Department of Labor. 

[FR Doc. E7–5209 Filed 3–21–07; 8:45 am] 

BILLING CODE 4510–29–P 

DEPARTMENT OF LABOR 

Employee Benefits Security 

Administration 

[Application No. D–11345] 

Notice of Proposed Individual 

Exemption To Amend and Replace 

Prohibited Transaction Exemption 

(PTE) 2000–34, Involving the Fidelity 

Mutual Life Insurance Company (FML), 

Located in Pittsburgh, PA 

AGENCY: Employee Benefits Security 

Administration, U.S. Department of 

Labor. 

ACTION: Notice of proposed individual 

exemption to amend and replace PTE 

2000–34. 

This document contains a notice of 

pendency before the Department of 

Labor (the Department) of a proposed 

individual exemption which, if granted, 

would amend and replace PTE 2000–34 

(65 FR 41732, July 6, 2000), an 

exemption granted to FML. PTE 2000–

34, relates to (1) the receipt of certain 

stock (Plan Stock) issued by Fidelity 

Insurance Group, Inc. (Group), a wholly 

owned subsidiary of FML, or (2) the 

receipt of plan credits (Plan Credits), by 

or on behalf of a FML mutual member 

(the Mutual Member), which is an 

employee benefit plan (the Plan), other 

than the Employee Pension Plan of 

Fidelity Mutual Life 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), 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). These transactions are 

described in a notice of proposed 

exemption (65 FR 18359, April 7, 2000), 

which underlies PTE 2000–34. 

If granted, this proposed exemption 

would incorporate by reference many of 

the conditions contained in PTE 2000–

34. The proposed exemption would also 

revise and update certain facts and 

representations set forth in PTE 2000–34 

to include the terms of the Fourth 

Amended Plan of Rehabilitation (the 

Fourth Amended Plan) which 

supersedes the Third Amended Plan 

upon which PTE 2000–34 is based. 

DATES: Effective Date: If granted, this 

proposed exemption would be effective 

as of the date the grant notice is 

published in the Federal Register. 

DATES: Written comments should be 

received by the Department by April 24, 

2007. 

ADDRESSES: All written comments 

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. 

D–11345. Interested persons are also 

invited to submit comments to the 

Department by e-mail to 

uzlyan.katie@dol.gov or by facsimile at 

(202) 219–0204. 

The application pertaining to the 

proposed exemption and the comments 

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. 

FOR FURTHER INFORMATION CONTACT: 

Ekaterina A. Uzlyan, Office of 

Exemptions Determinations, Employee 

Benefits Security Administration, U.S. 

Department of Labor, telephone (202) 

693–8552. (This is not a toll-free 

number.) 

SUPPLEMENTARY INFORMATION: Notice is 

hereby given of the pendency before the 

Department of a proposed exemption 

that would amend and replace PTE 

2000–34. PTE 2000–34 provides an 

exemption from the prohibited 

transaction restrictions of section 406(a) 

of the Employee Retirement Income 

Security Act of 1974 (the Act) and from 

the sanctions resulting from the 

application of section 4975 of the 

Internal Revenue Code of 1986 (the 

Code), as amended, by reason of section 

4975(c)(1)(A) through (D) of the Code. 

The proposed exemption has been 

requested in an application filed on 

behalf of FML pursuant to section 408(a) 

of the Act and section 4975(c)(2) of the 

Code, and in accordance with the 

procedures set forth in 29 CFR part 

2570, subpart B (55 FR 32836, 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 exemption is being issued 

solely by the Department. 

I. FML and Its Affiliates 

As noted in the proposed exemption 

underlying PTE 2000–34, FML is a 

mutual life insurance company 

maintaining its principal place of 

business at 250 King of Prussia Road, 

Radnor, Pennsylvania. Prior to certain 

rehabilitation proceedings, FML was 

licensed to issue life insurance policies 

in 47 states and the District of 

Columbia. Because FML has been 

organized as a mutual form of life 

insurance company, it has no 

stockholders. Instead, the owners of its 

contracts (i.e., the Mutual Members) are 

vested with the right to vote and to 

receive an allocable portion of the 

divisible surplus. In addition, the 

Mutual Members have contractual rights 

under their contracts with FML. 

FML owns all of the stock of Group, 

a Pennsylvania-domiciled stock 

corporation. Group, in turn, owns all of 

the stock of Fidelity Life Insurance 

Company (FLIC), a Pennsylvania stock 

life insurance company. 


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