7268 Federal Register / Vol. 62, No. 32 / Tuesday, February 18, 1997 / Notices

inability to establish procedures that

will minimize the time elapsing

between cash advances and

disbursements, OJP may terminate

advance funding and require the state to

finance its operations with its own

working capital. Payments to the state

will then be made to the state by the

ACH Vendor Express method to

reimburse the grantee for actual cash

disbursements. It is essential that the

grantee organization maintain a

minimum of cash on hand and that

drawdowns of cash are made only when

necessary for disbursements.

VII. Monitoring

A. Office of the Comptroller

The Office of the Comptroller

conducts periodic reviews of the

financial policies, procedures, and

records of VOCA grantees and

subrecipients. Therefore, upon request,

state grantees and subrecipients must

give authorized representatives the right

to access and examine all records,

books, papers, case files, or documents

related to the grant, use of

administrative funds, and all

subawards.

B. Office for Victims of Crime

OVC conducts on-site monitoring in

which each state grantee is visited a

minimum of once every three years.

While on site, OVC personnel will

review various documents and files

such as (1) financial and program

manuals and procedures governing the

VOCA grant program; (2) financial

records, reports, and audit reports for

the grantee and all VOCA subrecipients;

(3) the state grantee’s VOCA application

kit, procedures, and guidelines for

subawarding VOCA funds; and (4) all

other state grantee and subrecipient

records and files.

In addition, OVC will visit selected

subrecipients and will review similar

documents such as (1) financial records,

reports, and audit reports; (2) policies

and procedures governing the

organization and the VOCA funds; (3)

programmatic records of victims’

services; and (4) timekeeping records

and other supporting documentation for

costs supported by VOCA funds.

VIII. Suspension and Termination of

Funding

If, after notice and opportunity for a

hearing, OVC finds that a state has

failed to comply substantially with

VOCA, the OJP Financial Guide

(effective edition), the Proposed

Program Guidelines, or any

implementing regulation or

requirement, OVC may suspend or

terminate funding to the state and/or

take other appropriate action. At such

time, states may request a hearing on the

justification for the suspension and/or

termination of VOCA funds. VOCA

subrecipients, within the state, may not

request a hearing at the federal level.

However, VOCA subrecipients who

believe that the state grantee has

violated a program and/or financial

requirement are not precluded from

bringing the alleged violation(s) to the

attention of OVC.

Aileen Adams,

Director, Office for Victims of Crime, Office

for Justice Programs.

[FR Doc. 97–3836 Filed 2–14–97; 8:45 am]

BILLING CODE 4410–18–P

DEPARTMENT OF LABOR

Pension and Welfare Benefits

Administration

[Application Nos. D–10192, L–10193

through L–10196, et al.]

Proposed Exemptions ILGWU National

Retirement Fund, et al. (Collectively

the Plans)

AGENCY: Pension and Welfare Benefits

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 restriction of the

Employee Retirement Income Security

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

Revenue Code of 1986 (the Code).

Written Comments and Hearing

Requests

Unless otherwise stated in the Notice

of Proposed Exemption, all interested

persons are invited to submit written

comments, and with respect to

exemptions involving the fiduciary

prohibitions of section 406(b) of the Act,

requests for hearing within 45 days from

the date of publication of this Federal

Register Notice. Comments and request

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. 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

request for a hearing (at least three

copies) should be sent to the Pension

and Welfare Benefits Administration,

Office of Exemption Determinations,

Room N–5649, U.S. Department of

Labor, 200 Constitution Avenue, N.W.,

Washington, D.C. 20210. Attention:

Application No. stated in each Notice of

Proposed Exemption. The applications

for exemption and the comments

received will be available for public

inspection in the Public Documents

Room of Pension and Welfare Benefits

Administration, U.S. Department of

Labor, Room N–5507, 200 Constitution

Avenue, N.W., Washington, D.C. 20210.

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).

SUPPLEMENTARY INFORMATION: 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 (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. 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.
Federal Register / Vol. 62, No. 32 / Tuesday, February 18, 1997 / Notices 7269

ILGWU National Retirement Fund, et

al. (collectively, the Plans), Located in

New York, New York

[Application Nos. D–10192, L–10193 through

L–10196]

Proposed Exemption

Section I—Transactions

The restrictions of sections 406(a),

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

sanctions resulting from the application

of section 4975 of the Code, by reason

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

the Code, shall not apply, effective July

1, 1995, to—

(A) The provision of banking services

(Banking Services, as defined in section

IV(C)) by the Amalgamated Bank of New

York (the Bank) to certain employee

benefit plans (the Plans, as defined in

section IV(E)), which are maintained on

behalf of members of the International

Ladies Garment Workers Union;

(B) The purchase by the Plans of

certificates of deposit (CDs) issued by

the Bank; and

(C) The deposit of Plans’ assets in

money market or other deposit accounts

established by the Bank; provided that

the applicable conditions of Section II

and Section III are met:

Section II—Conditions

(A) The terms under which the

Banking Services are provided by the

Bank to the Plans, and those under

which the Plans purchase CDs from the

Bank or maintain deposit accounts with

the Bank, are at least as favorable to the

Plans as those which the Plans could

obtain in arm’s-length transactions with

unrelated parties.

(B) The interests of each of the Plans

with respect to the Bank’s provision of

Banking Services to the Plans, the

purchase of CDs from the Bank by any

of the Plans, and the deposit of Plan

assets in deposit accounts established

by the Bank, are represented by an

Independent Fiduciary (as defined in

section IV(D)).

(C) With respect to each Plan, the

representation of the Plan’s interests by

the Independent Fiduciary is

authorized, and confirmed at least

annually, by the Authorizing Plan

Fiduciary (as defined below in section

IV(A));

(D) With respect to the purchase by

any of the Plans of certificates of deposit

(CDs) issued by the Bank or the deposit

of Plan assets in a money market

account or other deposit account

established at the Bank: (1) Such

transaction complies with the

conditions of section 408(b)(4) of the

Act; (2) Any CD offered to the Plans by

the Bank is also offered by the Bank in

the ordinary course of its business with

unrelated customers; and (3) Each CD

purchased from the Bank by a Plan pays

the maximum rate of interest for CDs of

the same size and maturity being offered

by the Bank to unrelated customers at

the time of the transaction;

(E) The compensation received by the

Bank for the provision of Banking

Services to the Plan is not in excess of

reasonable compensation within the

meaning of section 408(b)(2) of the Act.

(F) Following the merger of the

International Ladies Garment Workers

Union with UNITE, the Independent

Fiduciary made an initial written

determination that (1) the Bank’s

provision of Banking Services to the

Plans, (2) the deposit of Plan assets in

depository accounts maintained by the

Bank, and (3) the purchase by the Plans

of CDs from the Bank, are in the best

interests and protective of the

participants and beneficiaries of each of

the Plans.

(G) On a periodic basis, not less

frequently than quarterly, the Bank

provides the Independent Fiduciary

with a written report (the Periodic

Report) which includes the following

items with respect to the period since

the previous Periodic Report: (1) A

listing of Banking Services provided to,

all outstanding CDs purchased by, and

deposit accounts maintained for each

Plan; (2) a listing of all fees paid by the

Plans to the Bank for the Banking

Services, (3) the performance of the

Bank with respect to all investment

management services, (4) a description

of any changes in the Banking Services,

(5) an explanation of any problems

experienced by the Bank in providing

the Banking Services, (6) a description

of any material adverse events affecting

the Bank, and (7) any additional

information requested by the

Independent Fiduciary in the discharge

of its obligations under this exemption.

(H) On a periodic basis, not less

frequently than annually, the

Independent Fiduciary reviews the

Banking Services provided to each Plan

by the Bank, the compensation received

by the Bank for such services, any

purchases by the Plan of CDs from the

Bank, and any deposits of assets in

deposit accounts maintained by the

Bank, and makes the following written

determinations:

(1) The services, CDs and depository

accounts are necessary or appropriate

for the establishment or operation of the

Plan;

(2) The Bank is a solvent financial

institution and has the capability to

perform the services;

(3) The fees charged by the Bank are

reasonable and appropriate;

(4) The services, the depository

accounts, and the CDs are offered to the

Plan on the same terms under which the

Bank offers the services to unrelated

Bank customers in the ordinary course

of business;

(5) Where the Banking Services

include an investment management

service, that the rate of return is not less

favorable to the Plan than the rates on

comparable investments involving

unrelated parties; and

(6) The continuation of the Bank’s

provision of Banking Services to the

Plan for compensation is in the best

interests and protective of the

participants and beneficiaries of the

Plan.

(I) Copies of the Bank’s periodic

reports to the Independent Fiduciary are

furnished to the Authorizing Plan

Fiduciaries on a periodic basis, not less

frequently than annually and not later

than 90 days after the period to which

they apply.

(J) The Independent Fiduciary is

authorized to continue, amend, or

terminate, without any penalty to any

Plan (other than the payment of

penalties required under federal or state

banking regulations upon premature

redemption of a CD), any arrangement

involving: (1) The provision of Banking

Services by the Bank to any of the Plans,

(2) the deposit of Plan assets in a

deposit account maintained by the

Bank, or (3) any purchases by a Plan of

CDs from the Bank;

(K) The Authorizing Plan Fiduciary

may terminate, without penalty to the

Plan (other than the payment of

penalties required under federal or state

banking regulations upon premature

redemption of a CD), the Plan’s

participation in any arrangement

involving: (1) The representation of the

Plan’s interests by the Independent

Fiduciary, (2) the provision of Banking

Services by the Bank to the Plan, (3) the

deposit of Plan assets in a deposit

account maintained by the Bank, or (4)

the purchase by the Plan of CDs from

the Bank.

Section III—Recordkeeping

(A) For a period of six years, the Bank

and the Independent Fiduciary will

maintain or cause to be maintained all

written reports and other memoranda

evidencing analyses and determinations

made in satisfaction of conditions of

this exemption, except that: (a) A

prohibited transaction will not be

considered to have occurred if, due to

circumstances beyond the control of the

Independent Fiduciary and the Bank the

records are lost or destroyed before the

end of the six-year period; and (b) no

party in interest other than the Bank and
7270 Federal Register / Vol. 62, No. 32 / Tuesday, February 18, 1997 / Notices

the Independent Fiduciary shall be

subject to the civil penalty that may be

assessed under section 502(i) of the Act,

or to the taxes imposed by section 4975

(a) and (b) of the Code, if the records are

not maintained, or are not available for

examination as required by paragraph

(2) below;

(B)(1) Except as provided in section

(2) of this paragraph (B) and

notwithstanding any provisions of

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

of the Act, the records referred to in

paragraph (A) of this section III shall be

unconditionally available at their

customary location during normal

business hours for inspection by: (a)

Any duly authorized employee or

representative of the U.S. Department of

Labor or the Internal Revenue Service,

(b) any employer participating in the

Plans or any duly authorized employee

or representative of such employer, and

(c) any participant or beneficiary of the

Plans or any duly authorized

representative of such participant or

beneficiary.

(2) None of the persons described in

subsections (b) and (c) of subsection (1)

above shall be authorized to examine

trade secrets of the Independent

Fiduciary or the Bank, or any of their

affiliates, or any commercial, financial,

or other information that is privileged or

confidential.

Section IV—Definitions

(A) ‘‘Authorizing Plan Fiduciary’’

means, with respect to each Plan, the

board of trustees of the Plan or other

appropriate plan fiduciary with

discretionary authority to make

decisions with respect to the investment

of Plan assets;

(B) ‘‘Bank’’ means the Amalgamated

Bank of New York;

(C) ‘‘Banking Services’’ means

custodial, safekeeping, checking

account, trustee services, and

investment management services

involving fixed income securities (either

directly or through a collective

investment fund maintained by the

Bank).

(D) ‘‘Independent Fiduciary’’ means a

person, within the meaning of section

3(9) of the Act, who (1) Is not an affiliate

of the Union of Needletrades, Industrial

& Textile Employees (UNITE) and any

successor organization thereto by

merger, consolidation or otherwise, (2)

is not an officer, director, employee or

partner of UNITE, (3) is not an entity in

which UNITE has an ownership

interest, (4) has no relationship with the

Bank other than as Independent

Fiduciary under this exemption, and (5)

has acknowledged in writing that it is

acting as a fiduciary under the Act. No

person may serve as an Independent

Fiduciary for the Plans for any fiscal

year in which the gross income (other

than fixed, non-discretionary retirement

income) received by such person (or any

partnership or corporation of which

such person is an officer, director, or ten

percent or more partner or shareholder)

from UNITE and the Plans for that fiscal

year exceed five percent of such

person’s annual gross income from all

sources for the prior fiscal year. An

affiliate of a person is any person

directly or indirectly, through one or

more intermediaries, controlling,

controlled by, or under common control

with the person. The term ‘‘control’’

means the power to exercise a

controlling influence over the

management or policies of a person

other than an individual. Initially, the

Independent Fiduciary is U.S. Trust

Company of California, N.A.

(E) ‘‘Plans’’ means any of the

following employee benefit plans, and

their successors by reason of merger,

spin-off or otherwise:

International Ladies Garment Workers

Union Nation Retirement Fund;

International Ladies Garment Workers

Union Death Benefit Fund;

Health Fund of New York Coat, Suit,

Dress, Rainwear & Allied Workers

Union, ILGWU;

Health & Vacation Fund, Amalgamated

Ladies Garment Cutters Union, Local

10;

ILGWU Eastern States Health & Welfare

Fund;

ILGWU Office, Clerical & Misc.

Employee Retirement Fund;

ILGWU Retirement Fund, Local 102;

Union Health Center Staff Retirement

Fund;

Unity House 134 HREBIU Plan Fund;

Puerto Rican Health & Welfare Fund;

Health & Welfare Fund of Local 99,

ILGWU;

Local 99 Exquisite Form Industries, Inc.

Severance Fund;

Local 99 K-Mart Severance Fund;

Local 99 Kenwin Severance Fund;

Local 99 Lechters Severance Fund;

Local 99 Eleanor Shops Severance

Fund;

Local 99 Monette Severance Fund;

Local 99 Moray, Inc. Severance Fund;

Local 99 Petri Stores, Inc. Severance

Fund;

Local 99 Netco, Inc. Severance Fund;

Local 99 Misty Valley, Inc. Severance

Fund; and

Local 99 Norstan Apparel Shops, Inc.

Severance Fund

(F) ‘‘UNITE’’ means the Union of

Needletrades, Industrial & Textile

Employees and any successor

organization thereto by merger,

consolidation or otherwise.

EFFECTIVE DATE: This exemption, if

granted, shall be effective as of July 1,

1995.

Summary of Facts and Representations

1. The Plans are pension and welfare

benefit plans established pursuant to

collective bargaining agreements to

provide benefits to active members,

retired members and staff of the

International Ladies Garment Workers

Union (ILGWU) and its local unions. At

various times prior to July 1, 1995, each

of the Plans had retained and

commenced to utilize the banking

services of the Amalgamated Bank of

New York (the Bank), a New York statechartered commercial bank located in

New York, New York. The services for

which the Plans contracted with the

Bank have included custodial,

safekeeping, checking account, trustee,

and fixed-income investment

management services. The Plans have

also purchased certificates of deposit

issued by the Bank and utilized the

Bank’s money market and other deposit

accounts. The Plans have used varying

combinations of the services offered by

the Bank. For example, as of July 1,

1995, six of the Plans were using the

Banks’s investment management

services of a fixed-income nature; six

Plans were using the Bank’s custodial

services, some in conjunction with the

investment management services; seven

Plans were using the Bank’s safekeeping

services; and one Plan held certificates

of deposit issued by the Bank.

When these service-provision

relationships between the Bank and the

Plans were established, prior to July 1,

1995, all of the common stock of the

Bank was held by or on behalf of the

General Office of the Amalgamated

Clothing and Textile Workers Union

(ACTWU), local unions and joint boards

of ACTWU, and individuals related to

ACTWU. Prior to July 1, 1995, ACTWU

and ILGWU were not related. Thus, the

Bank represents that prior to July 1,

1995, the Bank was a party in interest

with respect to the Plans solely by

reason of the provision of services to the

Plans and not by reason of any

ownership of interests in the Bank by

ILGWU or the Plans.

2. Effective July 1, 1995 (the

Consolidation Date), ACTWU and the

ILGWU merged and formed a

consolidated organization, the Union of

Needletrades, Industrial and Textile

Employees (UNITE). Under the

agreement governing the merger (the

Agreement), UNITE is deemed to be a

consolidation and continuation of

ILGWU and ACTWU and their

respective affiliates. Neither ACTWU

nor ILGWU is deemed to have been
Federal Register / Vol. 62, No. 32 / Tuesday, February 18, 1997 / Notices 7271

dissolved or terminated by the

consolidation, and each is treated under

the Agreement as a ‘‘constituent

member’’ of UNITE. As part of the

consolidation, new Bank stock was

issued to UNITE and Bank stock

previously held in the name of ACTWU

was transferred to and registered in the

name of UNITE. Pursuant to the

Agreement, the president of UNITE

appointed ten new members of the

Bank’s board of directors to reflect the

participation of ILGWU in the

ownership of the Bank, and all of the

newly-appointed Bank directors are

trustees of one or more of the Plans. The

Bank represents that as a result of the

consolidation pursuant to the

Agreement, the Bank became more than

fifty percent (50%) owned by an

employee organization whose members

are covered by the Plans, and therefore

the Bank became a party in interest with

respect to the Plans by reason of the

ownership of the Bank by UNITE.

3. The Bank is requesting an

exemption to permit the continuation,

after the Consolidation Date, of the

Bank’s provision to the Plans of the

banking services which had been

provided to the Plans prior to the

Consolidation Date, under the terms and

conditions described herein. The

services which the Bank will be

authorized to continue to provide to the

Plans are defined in the exemption as

(1) services identified in the exemption

as Banking Services, consisting of

custodial, safekeeping, checking

account, trustee services, and

investment management services

involving fixed income securities (either

directly or through a collective

investment fund maintained by the

Bank); (2) the purchase by the Plans of

certificates of deposit (CDs) issued by

the Bank; and (3) the deposit of Plans’

assets in money market or other deposit

accounts established by the Plan.

Hereafter, references to Banking

Services will include all three types of

services provided to the Plans by the

Bank.

4. Under the exemption, with respect

to the proposed continuation of the

Bank’s provision of Banking Services to

the Plan, the interests of the Plans and

their participants and beneficiaries must

be represented by a fiduciary which is

independent of and unrelated to the

Bank (the Independent Fiduciary). The

exemption defines the Independent

Fiduciary as a person (within the

meaning of section 3(9) of the Act) who

has acknowledged in writing its

fiduciary capacity under the Act and

who is unrelated to the Bank and UNITE

other than as Independent Fiduciary

under this exemption. Under the terms

of the exemption, the Independent

Fiduciary is required to conduct an

initial evaluation of the Banking

Services to determine whether their

continued provision to the Plans after

the Consolidation Date is in the best

interests and protective of the

participants and beneficiaries of the

Plans, and thereafter to monitor and

oversee the relationships between the

Plans and the Bank, representing the

Plans’ interests therein and conducting

ongoing periodic evaluations and

determinations as to whether the Bank’s

provision of Banking Services to the

Plans continues to be in the best

interests and protective of the Plans.

The Independent Fiduciary’s authority

includes the ability to continue, amend

or terminate, without penalty to a Plan

(other than a penalty required for early

redemption of a CD) any arrangement

under which the Bank provides the

Banking Services to any of the Plans. On

a periodic basis no less frequent than

annually, the Independent Fiduciary is

required to review the Banking Services

provided to each Plan by the Bank, the

compensation received by the Bank for

such services, any purchases by the Plan

of certificates of deposit (CDs) from the

Bank, and any deposits of assets in

deposit accounts maintained by the

Bank, and to make a number of written

determinations, more fully described in

section II(H) of the proposed exemption,

constituting an analysis of whether the

Bank’s provision of Banking Services to

the Plans continues to be in the best

interests and protective of the

participants and beneficiaries of the

Plans. To enable the Independent

Fiduciary to fulfill its obligations under

the exemption, the Bank is required to

provide information (listed in section

II(G) of the proposed exemption) in

writing to the Independent Fiduciary no

less frequently than quarterly, relating

to identification and description of the

Banking Services and the circumstances

under which they are rendered. The

exemption requires that the

compensation received by the Bank for

the provision of services to the Plans is

not in excess of reasonable

compensation within the meaning of

section 408(b)(2) of the Act.

5. With respect to each Plan, the

exemption requires that the

representation of the Plan’s interests by

the Independent Fiduciary regarding the

Bank’s provision of Banking Services to

the Plan is authorized and confirmed at

least annually by the Plan’s board of

trustees or other appropriate Plan

fiduciary with authority to make

decisions with respect to the investment

of Plan assets (the Authorizing Plan

Fiduciary). The Authorizing Plan

Fiduciary of each Plan must be

furnished copies of the Bank reports to

the Independent Fiduciary no less

frequently than annually and no later

than 90 days after the period to which

they apply. The exemption provides

that the Authorizing Plan Fiduciary may

terminate, without penalty to the Plan

(other than a penalty required for early

redemption of a CD), the Plan’s

participation in any arrangement

involving the representation of the

Plan’s interests by the Independent

Fiduciary or the provision of Banking

Services by the Bank.

6. The exemption requires the Bank

and the Independent Fiduciary to

maintain all written reports and other

memoranda evidencing analyses and

determinations made in satisfaction of

the conditions of the exemption. The

Plans which are covered by the

exemption are identified in section

IV(E) of the exemption. The effective

date of the exemption will be July 1,

1995, the Consolidation Date.

7. The U.S. Trust Company of

California, N.A. (U.S. Trust) was

appointed by the Plans (the

Appointment) effective July 28, 1995 to

serve in the capacity of Independent

Fiduciary on behalf of the Plans with

respect to the Bank’s provision of the

Banking Services to the Plans in

accordance with the exemption,

pursuant to an agreement signed and

formalized on September 21, 1995

between the Plans, the Bank and U.S.

Trust. With assets under management

totalling approximately $53 billion, U.S.

Trust represents that it has extensive

trust and management capabilities,

including discretionary asset

management, asset allocation and

diversification, investment advice,

securities trading and independent

fiduciary assignments under the Act.

U.S. Trust represents that immediately

upon the Appointment, it undertook a

review and assessment of the Banking

Services and made a preliminary

determination that the Banking Services

were appropriate and adequate to satisfy

the Plans’ banking needs, until a more

thorough review and assessment could

be completed. U.S. Trust represents that

it has completed this thorough review

and assessment with the professional

assistance of the consulting firm of

Towers Perrin (Towers Perrin). Towers

Perrin, an international firm of

consultants and consulting actuaries,

represents that it is a registered

investment advisor under the

Investment Advisors Act of 1940,

providing a broad range of services for

investment management evaluation and

performance measurement. U.S. Trust
7272 Federal Register / Vol. 62, No. 32 / Tuesday, February 18, 1997 / Notices

represents that in its review and

assessment of the Bank and the Banking

Services provided to the Plans, U.S.

Trust gathered information from various

sources, including various operations of

the Bank, the Bank’s legal counsel, the

Plans, and Towers Perrin. U.S. Trust

represents that its representatives and

those of Towers Perrin met with various

officers of the Bank including the Bank’s

Chief Executive Officer and Chief

Investment Officer. U.S. Trust

represents that it also utilized a written

report by Towers Perrin, prepared at the

request of U.S. Trust, specifically

analyzing the investment management

services which the Bank has provided

the Plans.

8. U.S. Trust has made various

findings and determinations with

respect to the Bank and the provision of

Banking Services to the Plans which are

summarized as follows:

Financial condition of the Bank: U.S.

Trust represents that it examined the

Bank as a whole, from a financial point

view. U.S. Trust states that it found the

Bank’s assets to be liquid and secure,

with 82 percent of assets invested in

AAA-rated securities and only 7.4

percent invested in loans. U.S. Trust

represents that the duration positioning

of the Bank’s assets and liabilities is

managed such that, when considered in

conjunction with the liquidity of the

Bank’s assets, interest rate changes will

have a minimal effect on the Bank’s

income. U.S. Trust concludes that the

Bank is operated very conservatively

and is very well capitalized and solvent.

Custodial and safekeeping services:

U.S. Trust represents that it determined

that the Bank possesses adequate

capability to perform all custodial and

safekeeping services needed by the

Plans, utilizing both the Bank’s own

personnel and facilities as well as the

contract services of qualified third

parties for certain data processing and

sub-custodial services. U.S. Trust

determined that these services as

provided to the Plans are offered by the

Bank to the public in the ordinary

course of business. U.S. Trust states that

the fee schedules of the Bank for these

services are reasonable, based on

industry standards, and that the actual

fees charged the Plans for custodial

services are lower than the scheduled

fees. U.S. Trust concludes that the

Bank’s provision of custodial and

safekeeping services to the Plan is

reasonable and appropriate.

Certificates of deposit (CDs), money

market accounts and checking

accounts: U.S. Trust determined that the

Bank has the capability to offer CDs and

money market and other deposit

account services as needed by any of the

Plans, and that the Bank offers these

same services to the general public in

the ordinary course of its business. U.S.

Trust states that the fees are reasonable,

because no fees are charged with respect

to CDs and money market accounts and

the Bank customarily does not charge

the Plans fees for checking accounts.

U.S. Trust represents that at the time of

its review, the rates of return on CDs, as

published in the Wall Street Journal,

were lower than the rates paid by the

Bank on CDs with the same or shorter

maturities. U.S. Trust states that the rate

paid by the Bank on its money market

account also appears to be reasonable,

based on U.S. Trust’s experience and

investigation, although there are no

indices or published rates to use in

comparison. Considering all the

information obtained, U.S. Trust

concludes that the Plans’ utilization of

the Bank for CDs and money market and

other deposit account services is

reasonable and appropriate.

Investment Management Services:

U.S. Trust represents that it reviewed

and evaluated the fixed-income

investment products offered by the Bank

to the Plans, which are of three

categories:

(1) A short-term bond fund (the ShortTerm Product) with an average duration

of 1.7 years in 1995, investing primarily

in U.S. Treasury and government agency

securities, in which four Plans have

invested a total of $111.6 million;

(2) A bond fund with an average

duration of 3.4 years in 1995 (the

Intermediate-Duration Product)

investing primarily in U.S. Treasury and

government agency securities and

corporate bonds, in which one Plan has

invested a total of $2.5 million; and

(3) A bond fund designed for longer

term investors (the Core Duration

Product) with an average duration of 4.6

years in 1995, investing primarily in

U.S. Treasury and government

securities, corporate bonds, and

mortgage-backed securities, in which

one Plan has invested a total of $24.1

million.

U.S. Trust represents that in its review

and evaluation of these investment

products, it utilized an extensive report

prepared by Towers Perrin regarding the

products, and attended due diligence

meetings with various officers of the

Bank. U.S. Trust states that it analyzed

the Bank’s investment process,

personnel, performance results, fees,

product and personnel growth,

representative clients, historical

portfolio characteristics and a current

portfolio contents summary. U.S. Trust

represents that in the course of its

review it determined that the Bank

maintains the capability to provide

these investment management services

competently, that the services are

offered by the Bank to the public in the

ordinary course of business, and that the

fees for the services are reasonable

based on industry norms taking into

account the experience and reputation

of the Bank. U.S. Trust states that it

determined that additional costs to the

Plans, approximating $80,000, would

likely result from a decision to replace

the Bank as the provider of these

investment management services. With

respect to each of these three categories

of investment products, U.S. Trust made

specific determinations regarding the

rates of return provided and arrived at

specific conclusions as to whether the

investment products were appropriate

for the Plans, summarized as follows:

(1) The Short-Duration Product has

consistently outperformed its

benchmark index, the Merrill Lynch 1–

3 Year Treasury Index, earning 8.4

percent per year over the past seven

years on an annualized basis, while

being conservatively managed and

maintaining a high quality of

investment assets. U.S. Trust notes that

the Bank has represented that the

investment strategy of this product will

remain unchanged. U.S. Trust has

determined that the investment of assets

of the Plans in the Short-Duration

Product is reasonable and appropriate.

(2) The Intermediate-Duration

Product’s cumulative performance over

the past seven years is very close to its

benchmark, the Lehman Intermediate

Government/Corporate Index, and U.S.

Trust determined that this product is

capable of generating returns above its

benchmark. U.S. Trust notes that the

investment parameters of this product

have recently changed to include

investments in corporate bonds and that

it has since demonstrated an ability to

enhance returns. Because this product

has been managed under its current

guidelines for a relatively short period

of time, U.S. Trust has concluded that

the selection of this product by certain

of the Plans is reasonable and

appropriate for one more year, after

which time another year’s investment

results will be available for

consideration and U.S. Trust will

undertake a reassessment of whether

this product remains reasonable and

appropriate for investments by the

Plans.

(3) U.S. Trust found that the Core

Duration Product outperformed its

benchmark, the Lehman Aggregate

Index, for 1995 and that its investment

parameters were recently changed to

expand duration and maturity

restrictions and include corporate bonds
Federal Register / Vol. 62, No. 32 / Tuesday, February 18, 1997 / Notices 7273

and asset-backed securities among its

investment assets. U.S. Trust concludes

that the selection of this product by

certain of the Plans is reasonable and

appropriate for one more year, after

which time another year’s investment

results will be available for

consideration and U.S. Trust will

undertake a reassessment of whether

this product remains reasonable and

appropriate for investments by the

Plans.

Conclusion: As a conclusion to its

review and analysis, U.S. Trust states

that in view of the information

discussed above and U.S. Trust’s

judgment with respect thereto, subject

to the limitations discussed regarding

the Intermediate and Core Duration

Products, U.S. Trust believes it is in the

best interests of the Plans to use the

investment management and other

banking services provided by the Bank.

9. In summary, the applicant

represents that the proposed exemption

satisfies the criteria of section 408(a) of

the Act for the following reasons: (a)

The interests of the Plans with respect

to the Bank and its provision of services

to the Plans are represented by an

Independent Fiduciary, U.S. Trust; (b)

The representation of each Plan’s

interests by the Independent Fiduciary

with respect to the Bank and its

provision of services is authorized

annually by the Plan’s Authorizing Plan

Fiduciary; (c) U.S. Trust has reviewed

and evaluated the entire range of

services provided by the Bank to the

Plans and has determined that it is in

the best interests of the Plans to utilize

such services; (d) The Independent

Fiduciary will oversee and monitor the

Bank’s provision of services to the Plans

and will make written determinations at

least annually regarding the

continuation of such provision of

services; (e) At least quarterly, the Bank

is required to submit a Periodic Report

to the Independent Fiduciary which

relates relevant details of the services

provided by the Bank to any of the

Plans; (f) The Authorizing Plan

Fiduciary will be provided copies of the

Bank’s Periodic Reports to the

Independent Fiduciary; (g) With respect

to each Plan, the Authorizing Plan

Fiduciary is authorized to terminate the

representation of the Plan’s interests by

the Independent Fiduciary or the

provision of any services to the Plan by

the Bank; and (h) With respect to each

Plan, the Independent Fiduciary is

authorized to continue, amend or

terminate the Bank’s provision of any

services to the Plan by the Bank.

FOR FURTHER INFORMATION CONTACT: Ron

Willett of the Department, telephone

(202) 219–8881. (This is not a toll-free

number.)

Hawaiian Airlines, Inc. Pilots’ 401(k)

Plan (the Pilots’ Plan), Hawaiian

Airlines, Inc. 401(k) Plan for Flight

Attendants (the Attendants’ Plan), and

Hawaiian Airlines, Inc. 401(k) Savings

Plan (the Savings Plan; collectively the

Plans) Located in Honolulu, Hawaii

[Application Nos. D–10380, D–10381, and D–

10382]

Proposed Exemption

The Department is considering

granting an exemption under the

authority of 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, 32847, August 10, 1990). If

the exemption is granted, the

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

and (b)(2), and 407(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 (E) of

the Code, shall not apply to (1) the past

acquisition by the Plans of certain

transferable stock rights (the Rights)

pursuant to a stock rights offering (the

Offering) to the Plans by Hawaiian

Airlines, Inc. (the Employer), the

sponsor of the Plans; (2) the past

holding of the Rights by the Plans

during the subscription period of the

Offering; and (3) the disposition or

exercise of the Rights by the Plans

provided the following conditions are

satisfied:

(A) The acquisitions and holding of

the Rights by the Plans occurred in

connection with the Offering made

available to all shareholders of the

common stock of the Employer; (B) The

acquisition and holding of Rights by the

Plans resulted from an independent act

of the Employer as a corporate entity

and all holders of the common stock of

the Employer, including the Plans, were

treated in the same manner with respect

to the Offering; and (C) All decisions

regarding the holding and disposition of

the Rights by the Plans were made in

accordance with provisions of the Plans

for individually-directed investment of

participant accounts by the individual

participants of the Plans whose

accounts in the Plans received Rights in

connection with the Offering, including

all determinations regarding the

exercise or sale of the Rights received

through the Offering, and if no timely

instructions concerning the Rights were

given by participants of the Plans, the

Rights were sold.

EFFECTIVE DATE: This exemption if

granted, will be effective as of August 7,

1996.

Summary of Facts and Representations

1. The Employer, a Hawaii

corporation since 1929, is located in

Honolulu, Hawaii. It is primarily in the

scheduled transportation of passengers,

cargo, and mail over a route system that

services the six major islands of Hawaii

and Las Vegas and four cities on the

west coast: Los Angeles, San Francisco,

Seattle, and Portland. In addition, the

Employer provides the only direct

service from Hawaii to PagoPago,

American Samoa and Papeete, Tahiti.

Also, the Employer provides charter

service from Honolulu to Las Vegas. The

Employer operates a fleet of thirteen

DC–9 aircraft and eight DC–10 aircraft.

The common stock of the Employer is

listed and traded on both the American

Stock Exchange and the Pacific Stock

Exchange.

2. The Plans are defined contribution

plans intended to satisfy the

requirements of section 401(a) of the

Code. The Pilots’ Plan and the

Attendants’ Plan are collectively

bargained profit sharing plans with cash

or deferred arrangements under section

401(k) of the Code.

Both the Air Line Pilots Association,

International (the ALPA) and the

Association of Flight Attendants (the

AFA) separately bargain with the

Employer for their own members over

the terms of the Pilots’ Plan and the

Attendants’ Plan, respectively. The

Employer appoints two members to

each Retirement Board for both the

Pilots’ Plan and the Attendants’ Plan,

respectively, and the ALPA and the

AFA each appoints two members to the

respective Plans of which their members

are participants. The four members of

each of the Retirement Boards select

investment options for their respective

participants, and resolves disputes

concerning the application,

interpretation, or administration of each

of the Plans. As of August 2, 1996, the

Pilots’ Plan had total assets of

$8,960,644 and 333 participants and the

Attendants’ Plan had total assets of

$26,305,738 and 602 participants. The

Savings Plan covers mostly noncollectively and some collectively

bargained employees, represented by

the International Association of

Machinists, and is a profit sharing plan

with a cash or deferred arrangement

under section 401(k) of the Code. Since

September 1, 1993, the Savings Plan

requires Employer contributions and

provides that contributions from

participants are optional. The Employer

solely appoints the three members to the

Retirement Board for the Savings Plan.

The Retirement Board for the Savings

Plan selects investment options for
7274 Federal Register / Vol. 62, No. 32 / Tuesday, February 18, 1997 / Notices

1The Department expresses no opinion as to

whether or not the provisions of the Plans satisfy

the requirements of section 404(c) of the Act and

regulations thereunder with respect to the various

investment options offered the participants of the

Plans.

2Rights were distributed in the Offering to two

different groups: (i) all shareholders as of August 7,

1996, including the Plans but excluding AIP, and

(ii) all employees of the Employer, other than

members of senior management, who were

employed at any time during 1995 and on the

record date, August 7, 1996, without regard to their

indirect shareholder status as participants in the

Plans. Also, participants of the 1994 Stock Option

Plan of the Employer were granted options to

purchase common stock from the Employer for

$3.25 per share. The Employer also entered into

stock purchase agreements with certain

institutional investors, high net worth individuals,

and non-employee directors which the investors

agreed to purchase common stock from the

Employer at $3.25 per share. The applicant

represents that a total of 12,085,000 shares of

common stock were issued during the Rights

Offering to the above persons.

3The Department notes that the Rights do not

constitute ‘‘qualifying employer securities’’ within

the meaning of section 407(d)(5) of the Act.

participants and resolves disputes

concerning the application,

interpretation, or administration of the

Savings Plan. As of August 2, 1996, the

Savings Plan had total assets of

$11,171,947 and 1,408 participants.

Pursuant to a trust agreement with the

Employer, Vanguard Fiduciary Trust

Company (Vanguard), a Pennsylvania

corporation located in Malvern,

Pennsylvania, is the trustee for the

Plans. Vanguard acts for the Plans upon

investment instructions from

participants of the Plans and upon

directions from the respective

Retirement Boards of the Plans. In

addition, Vanguard provides the Plans

with different investment options or

combinations thereof that have been

selected by the different Retirement

Boards for the participants of the Plans

to direct investments for their respective

accounts in the Plans. 1

3. On December 8, 1995, in order to

increase its working capital, the

Employer, with approval of its

shareholders, entered into an

investment agreement with Airline

Investors Partnership, L.P. (AIP),

whereby the Employer during January

1996 issued and sold to AIP 18,181,818

shares of its common stock at $1.10 per

share for a total purchase price of $20

million. At the same time, the Employer

also issued and sold four shares of its

Class B Special Preferred Stock to AIP

for a total purchase price of $4.40.

AIP, formed in November 1995 to

invest in the Employer, is a Delaware

limited partnership whose general

partner is AIP General Partner, Inc., a

Delaware corporation with its principal

office in New York City. By its

investment in four shares of the Class B

Special Preferred Stock of the Employer,

AIP has the right to nominate six of the

eleven individuals elected to the board

of directors of the Employer. Currently

the president and a vice president of the

general partner of AIP and four other

nominees of AIP have six of the seats on

the board of directors of the Employer.

The price AIP agreed to pay for its

common stock investment in the

Employer in January 1996 was

substantially discounted from the

common stock’s closing market price of

211⁄16 on December 8, 1995. In

recognition of the dilutive effect of the

AIP acquisition, the investment

agreement with AIP contained a

provision for an offering of subscription

rights to all shareholders of the

Employer, including the Plans but

excluding AIP, to purchase an aggregate

of up to 8,151,000 shares of common

stock during the 30-day offering. The

applicant represents that the objective of

the Offering was to permit non-AIP

shareholders an opportunity to purchase

the stock of the Employer at a discount

price. Also, it was represented by the

applicant that an additional motivation

for the Offering was to raise additional

working capital above the investment by

AIP in order to meet the goal of the

Employer of improving its financial

liquidity.2

4. Pursuant to the terms of the

Offering, each shareholder, excluding

AIP, received one Right for each share

of common stock held as of the record

date at the close of business on August

7, 1996 (the Record Date).3 As of the

Record Date, the Plans held a total of

1,488,703 shares and received the same

number of Rights pursuant to the

Offering. Each Right entitled a holder to

purchase one share of the common stock

issued by the Employer for the exercise

price of $3.25. The exercise price was

determined by the Employer after

consultation with its independent

financial advisor prior to the Offering.

The Rights were traded on the American

and Pacific Stock Exchanges until the

expiration date of the Offering. The

Rights held by the Plans required

participants to communicate their

directions to Vanguard, the trustee for

the Plans, by September 5, 1996, in

order that the directions from the

participants of the Plans could be

properly and correctly processed by

Vanguard. The applicant represents that

prior to the effective date of the

Offering, the trustee, Vanguard, sent

each participant in the Plans written

information regarding the Offering and

the Rights. During the effective period of

the Offering Vanguard provided each

participant in the Plans the opportunity

to independently decide whether to

exercise the Rights or to sell them. Also,

the participants were informed that if

Vanguard did not receive timely

instructions, or received no instructions,

Vanguard would sell the Rights. The

applicant represents that all Rights

received by the Plans were either

exercised or sold.

Approximately 153,929 Rights issued

to the Plans were exercised for the total

sum of $500,269, and the Plans netted

approximately $118,345.52 from the

sale of the remaining Rights. As of the

day preceding the Record Date, the price

of the common stock of the Employer at

the closing of the American Stock

Exchange was $3.75.

5. The applicant represents that the

terms of the offering can be verified by

the documents filed with the Securities

and Exchange Commission and with the

American and Pacific Stock Exchanges.

Also, prices of the common stock and

the Rights can be verified by examining

the trading activity as published in the

various newspapers. In addition, the

applicant represents that participants

and beneficiaries of the Plans had the

opportunity to exercise independent

decision-making authority with respect

to the Rights in their accounts.

Furthermore, the applicant represents

that the Plans were given the Rights at

no cost to the Plans, thus enabling the

participants to enhance their respective

account balances that were holding

Employer common stock by either

exercising the Rights at prices below the

market price or by selling the Rights.

The applicant represents that the

Employer has borne all costs associated

with the Rights Offering to the Plans

and the costs associated with the

exemption application.

6. In summary the applicants

represent that the transactions satisfied

the statutory criteria of section 408(a) of

the Act for the following reasons: (a) the

acquisition of the Rights by the Plans

resulted from an independent act by the

Employer as a corporate entity and all

holders of the common stock of the

Employer were treated in a like manner,

including the Plans; (b) all decisions

with respect to the rights were

controlled by involved participants in

accordance with provisions of the Plans

for individually-directed investments of

such accounts; (c) the Rights and the

common stock of the Employer were

both traded on the American and Pacific

Stock Exchanges with current price

information readily ascertainable as

were the terms of the offering from the

public documents distributed to the

holders of the common stock and filed

with the Securities and Exchange

Commission and the Exchanges; (d)
Federal Register / Vol. 62, No. 32 / Tuesday, February 18, 1997 / Notices 7275

*The Affiliated Funds and the Third Party Funds

are collectively referred to herein as the Funds.

there were no expenses incurred by the

Plans or its participants or beneficiaries

from the Offering and the resulting

transactions; and (e) if no instructions

were received by the Plans trustee, the

Rights were sold.

FOR FURTHER INFORMATION CONTACT: Mr.

C.E. Beaver of the Department,

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

a toll-free number.)

General Information

The attention of interested persons is

directed to the following:

(1) The fact that a transaction is the

subject of an exemption under section

408(a) of the Act and/or section

4975(c)(2) of the Code does not relieve

a fiduciary or other party in interest of

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

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

accurately describe all material terms of

the transaction which is the subject of

the exemption. In the case of continuing

exemption transactions, if any of the

material facts or representations

described in the application change

after the exemption is granted, the

exemption will cease to apply as of the

date of such change. In the event of any

such change, application for a new

exemption may be made to the

Department.

Signed at Washington, DC, this 12th day of

February, 1997.

Ivan Strasfeld,

Director of Exemption Determinations,

Pension and Welfare Benefits Administration,

U.S. Department of Labor.

[FR Doc. 97–3837 Filed 2–14–97; 8:45 am]

BILLING CODE 4510–29–P

[Prohibited Transaction Exemption 97–12;

Exemption Application No. D–10014, et al.]

Grant of Individual Exemptions; Wells

Fargo Bank, N.A. (Wells Fargo), et al.

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, D.C. The

notices also invited interested persons

to submit comments on the requested

exemptions to the Department. In

addition the notices stated that any

interested person might submit a

written request that a public hearing be

held (where appropriate). The

applicants have represented that they

have complied with the requirements of

the notification to interested persons.

No public comments and no requests for

a hearing, unless otherwise stated, were

received by the Department.

The notices of proposed exemption

were issued and the exemptions are

being granted solely by the Department

because, effective December 31, 1978,

section 102 of Reorganization Plan No.

4 of 1978 (43 FR 47713, October 17,

1978) transferred the authority of the

Secretary of the Treasury to issue

exemptions of the type proposed to the

Secretary of Labor.

Statutory Findings

In accordance with section 408(a) of

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

Code and the procedures set forth in 29

CFR Part 2570, Subpart B (55 FR 32836,

32847, August 10, 1990) and based upon

the entire record, the Department makes

the following findings:

(a) The exemptions are

administratively feasible;

(b) They are in the interests of the

plans and their participants and

beneficiaries; and

(c) They are protective of the rights of

the participants and beneficiaries of the

plans.

Wells Fargo Bank, N.A. (Wells Fargo)

Located in San Francisco, CA

[Prohibited Transaction Exemption (PTE) 97–

12; Exemption Application No. D–10014]

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 October 1, 1995, to the

purchase or redemption of shares by an

employee benefit plan (the Plan), in

certain mutual funds that are either

affiliated with Wells Fargo (the

Affiliated Funds) or are unaffiliated

with Wells Fargo (the Third Party

Funds)*, in connection with the

participation by the Plan in the Wells

Fargo Portfolio Advisor Program (the

Portfolio Advisor Program).

In addition, the restrictions of section

406(b) of the Act and the sanctions

resulting from the application of section

4975 of the Code, by reason of section

4975(c)(1) (E) and (F) of the Code, shall

not apply, effective October 1, 1995, to

the provision, by Wells Fargo, of asset

allocation services to an independent

fiduciary of a participating Plan (the

Independent Fiduciary) or to a

participant (the Directing Participant) of

a Plan covered under the provisions of

section 404(c) of the Act (the Section

404(c) Plan) which may result in the

selection of portfolios by the

Independent Fiduciary or the Directing

Participant in the Portfolio Advisor

Program for the investment of Plan

assets.

This exemption is subject to the

conditions set forth below in Section II.

Section II. General Conditions

(a) The participation by each Plan in

the Portfolio Advisor Program is