34260 Federal Register / Vol. 76, No. 113 / Monday, June 13, 2011 / Notices 

clarifications and updates to the 

Summary. 

After giving full consideration to the 

entire record, including the written 

comments, the Department has decided 

to grant this exemption amending PTE 

2010–08, as described above. The 

complete application file is made 

available for public inspection in the 

Public Documents Room of the 

Employee Benefits Security 

Administration, Room N–1513, U.S. 

Department of Labor, 200 Constitution 

Avenue, NW., Washington, DC 20210. 

For a more complete statement of the 

facts and representations supporting the 

Department’s decision to grant this 

exemption refer to the proposed 

amendment, published in the Federal 

Register on March 15, 2011 at 76 FR 

14074. 

FOR FURTHER INFORMATION CONTACT: 

Warren Blinder of the Department, 

telephone (202) 693–8553. (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 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) This exemption is 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 this exemption 

is subject to the express condition that 

the material facts and representations 

contained in the application accurately 

describes all material terms of the 

transaction which is the subject of the 

exemption. 

Signed at Washington, DC, this 8th day of 

June, 2011. 

Ivan Strasfeld, 

Director of Exemption Determinations, 

Employee Benefits Security Administration, 

U.S. Department of Labor. 

[FR Doc. 2011–14521 Filed 6–10–11; 8:45 am] 

BILLING CODE 4510–29–P 

DEPARTMENT OF LABOR 

Employee Benefits Security 

Administration 

Proposed Exemptions From Certain 

Prohibited Transaction Restrictions 

AGENCY: Employee Benefits Security 

Administration, Labor. 

ACTION: Notice of proposed exemptions. 

SUMMARY: This document contains 

notices of pendency before the 

Department of Labor (the Department) of 

proposed exemptions from certain of the 

prohibited transaction restrictions of the 

Employee Retirement Income Security 

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

the Internal Revenue Code of 1986 (the 

Code). This notice includes the 

following proposed exemptions: D– 

11608, Russell Trust Company; and D– 

11659, Pacific Capital Bancorp 

Amended and Restated Incentive and 

Investment and Salary Savings Plan 

DATES: All interested persons are invited 

to submit written comments or requests 

for a hearing on the pending 

exemptions, unless otherwise stated in 

the Notice of Proposed Exemption, 

within 45 days from the date of 

publication of this Federal Register 

Notice. 

ADDRESSES: Comments and requests for 

a hearing should state: (1) The name, 

address, and telephone number of the 

person making the comment or request, 

and (2) the nature of the person’s 

interest in the exemption and the 

manner in which the person would be 

adversely affected by the exemption. A 

request for a hearing must also state the 

issues to be addressed and include a 

general description of the evidence to be 

presented at the hearing. All written 

comments and requests for a hearing (at 

least three copies) should be sent to the 

Employee Benefits Security 

Administration (EBSA), Office of 

Exemption Determinations, Room N– 

5700, U.S. Department of Labor, 200 

Constitution Avenue, NW., Washington, 

DC 20210. Attention: Application 

No.ll, stated in each Notice of 

Proposed Exemption. Interested persons 

are also invited to submit comments 

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

requests should be sent either by e-mail 

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

(202) 219–0204 by the end of the 

scheduled comment period. The 

applications for exemption and the 

comments received will be available for 

public inspection in the Public 

Documents Room of the Employee 

Benefits Security Administration, U.S. 

Department of Labor, Room N–1513, 

200 Constitution Avenue, NW., 

Washington, DC 20210. 

Warning: If you submit written 

comments or hearing requests, do not 

include any personally-identifiable or 

confidential business information that 

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

requests are posted on the Internet 

exactly as they are received, and they 

can be retrieved by most Internet search 

engines. The Department will make no 

deletions, modifications or redactions to 

the comments or hearing requests 

received, as they are public records. 

SUPPLEMENTARY INFORMATION: 

Notice to Interested Persons 

Notice of the proposed exemptions 

will be provided to all interested 

persons in the manner agreed upon by 

the applicant and the Department 

within 15 days of the date of publication 

in the Federal Register. Such notice 

shall include a copy of the notice of 

proposed exemption as published in the 

Federal Register and shall inform 

interested persons of their right to 

comment and to request a hearing 

(where appropriate). 

The proposed exemptions were 

requested in applications filed pursuant 

to section 408(a) of the Act and/or 

section 4975(c)(2) of the Code, and in 

accordance with procedures set forth in 

29 CFR Part 2570, Subpart B (55 FR 

32836, 32847, August 10, 1990). 

Effective December 31, 1978, section 

102 of Reorganization Plan No. 4 of 

1978, 5 U.S.C. App. 1 (1996), transferred 

the authority of the Secretary of the 

Treasury to issue exemptions of the type 

requested to the Secretary of Labor. 

Therefore, these notices of proposed 

exemption are issued solely by the 

Department. 

The applications contain 

representations with regard to the 

proposed exemptions which are 

summarized below. Interested persons 

are referred to the applications on file 

with the Department for a complete 

statement of the facts and 

representations. 


emcdonald on DSK2BSOYB1PROD with NOTICES
Federal Register / Vol. 76, No. 113 / Monday, June 13, 2011 / Notices 34261 

Russell Trust Company (RTC or the 

Applicant); Located in Seattle, 

Washington; [Exemption Application 

No. D–11608] 

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). 

Section I—Covered Transactions 

If the proposed exemption is 

granted— 

(a) The restrictions of sections 

406(a)(1)(A), (a)(1)(B), (a)(1)(D), 

406(b)(1) and 406(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), 

(c)(1)(B), (c)(1)(D), and (c)(1)(E) of the 

Code, shall not apply, between 

September 14, 2009 and September 10, 

2010, inclusive, to an arrangement 

involving the following transactions: 

(1) The extension of credit, through a 

revised capital support agreement, to 

certain employee benefit plans (the 

Plans) invested, directly or indirectly, in 

the Russell Securities Lending ShortTerm Investment Fund (the SecLending 

Fund) by the Frank Russell Company 

(FRC), the parent company of RTC and 

a party in interest with respect to the 

Plans, in connection with the 

SecLending Fund’s holding of certain 

notes (the Notes) issued by Lehman 

Brothers Holdings Inc. or its affiliates 

(the Revised SecLending Fund CSA); 

(2) The extension of credit, through a 

revised capital support agreement, to 

certain Plans invested, directly or 

indirectly, in the RTC Russell Liquidity 

Fund (the Liquidity Fund) by FRC in 

connection with the Liquidity Fund’s 

holding of the Notes (the Revised 

Liquidity Fund CSA); 

(3) The provision of a revised 

guarantee to FRC by its parent company, 

the Northwest Mutual Life Insurance 

Company (NML), a party in interest 

with respect to the Plans, in order to 

ensure FRC’s foregoing capital support 

obligation to the SecLending Fund (the 

Revised SecLending Fund Guarantee); 

(4) The provision of a revised 

guarantee to FRC by NML in order to 

ensure FRC’s foregoing capital support 

obligation to the Liquidity Fund (the 

Revised Liquidity Fund Guarantee); 

(5) The accrual and periodic payment 

of certain supplemental yield 

contributions by FRC to the SecLending 

Fund (the SecLending Fund 

Supplemental Yield Contributions); and 

(6) The accrual and periodic payment 

of certain supplemental yield 

contributions by FRC to the Liquidity 

Fund (the Liquidity Fund Supplemental 

Yield Contributions); 

(b) The restrictions of sections 

406(a)(1)(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) 

and (E) of the Code shall not apply to 

the September 10, 2010 cash sale (the 

Sale) of all of the Notes held by both the 

SecLending Fund and the Liquidity 

Fund (taken together, the Funds) to 

FRC; provided that all of the conditions 

set forth below in Section II are 

satisfied. 

Section II—Conditions 

(a) With respect to the arrangement 

involving (i) The Revised SecLending 

Fund CSA and the Revised Liquidity 

Fund CSA transactions (together, the 

Revised CSAs), (ii) the Revised 

SecLending Fund Guarantee and the 

Revised Liquidity Fund Guarantee 

transactions (together, the Revised 

Guarantees), and (iii) the SecLending 

Fund Supplemental Yield Contributions 

and the Liquidity Fund Supplemental 

Yield Contribution transactions 

(together, the Supplemental Yield 

Contributions): 

(1) The decision to enter into each of 

these transactions was made on behalf 

of the Funds (and the employee benefit 

plans invested, directly or indirectly, in 

the Funds) by an independent fiduciary 

(the Independent Fiduciary), who 

reviewed their terms and conditions of 

each of the foregoing transactions and 

determined that they were protective of, 

and in the interest of, the Funds and the 

Plans investing therein; 

(2) The foregoing transactions were 

entered into pursuant to written 

agreements that contained all of the 

relevant terms and conditions relating to 

such transactions; and 

(3) The Funds did not pay any fees, 

commissions or other expenses in 

connection with the foregoing 

transactions; 

(b) With respect to the Sale of the 

Notes by each Fund to FRC: 

(1) The Sale was a one-time 

transaction for cash; 

(2) In connection with the Sale, the 

applicable Fund received an amount 

which was equal to the greater of: (i) 

The market value of the Notes being 

sold on the date of the Sale; or (ii) the 

sum of the amortized cost of such Notes, 

plus any accrued but unpaid interest on 

such Notes through the earlier of the 

maturity date of the applicable Note or 

September 14, 2009, in each case 

calculated at the contract rate; 

(3) The Funds did not pay any fees, 

commissions or other expenses in 

connection with the Sale; 

(4) The decision to sell all of the 

Notes held by the Funds to FRC was 

made by an Independent Fiduciary, who 

determined that the Sale of the Notes 

was appropriate for, and in the best 

interests of, each of the Funds and the 

Plans invested, directly or indirectly, in 

the Funds, at the time of the Sale 

transaction; 

(5) The Independent Fiduciary has 

taken all appropriate actions necessary 

to safeguard the interests of the Funds, 

and of the employee benefit plans 

invested, directly or indirectly, in the 

Funds, in connection with the 

transaction; 

(6) If the exercise of any of FRC’s 

rights, claims, or causes of action in 

connection with its ownership of the 

Notes results in recovering from the 

issuer of the Notes, or any third party, 

an aggregate amount that is in excess of 

the sum of: (i) The Sale price paid for 

the Notes by FRC; and (ii) interest on 

such Sale price paid from September 10, 

2010 to September 14, 2010, inclusive, 

made by FRC to the Funds, then FRC 

will refund such excess amount 

promptly to the Fund (after deducting 

all reasonable expenses incurred in 

connection with the recovery); 

(c) RTC and its affiliates, as 

applicable, maintain, or cause to be 

maintained, for a period of six (6) years 

from the date of any covered transaction 

such records as are necessary to enable 

the person described below in 

paragraph (d)(1), to determine whether 

the conditions of this exemption have 

been met, except that: 

(1) No party in interest with respect 

to a plan which engages in the covered 

transaction, other than FRC, RTC and 

their affiliates, as applicable, shall be 

subject to a civil penalty under section 

502(i) of the Act or the taxes imposed 

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

if such records are not maintained, or 

not available for examination, as 

required, below, by paragraph (d)(1); 

(2) A separate prohibited transaction 

shall not be considered to have occurred 

solely because due to circumstances 

beyond the control of FRC, RTC or their 

affiliates, as applicable, such records are 

lost or destroyed prior to the end of the 

six-year period. 

(d)(1) Except as provided, below, in 

paragraph (d)(2), and notwithstanding 

any provisions of subsections (a)(2) and 

(b) of section 504 of the Act, the records 

referred to, above, in paragraph (c) are 

unconditionally available at their 

customary location for examination 

during normal business hours by — 


emcdonald on DSK2BSOYB1PROD with NOTICES
34262 Federal Register / Vol. 76, No. 113 / Monday, June 13, 2011 / Notices 

1The Department is expressing no opinion herein 

regarding whether the acquisition and holding of 

the Notes on, before, or after September 15, 2008 

by either the SecLending Fund or the STIF Fund 

(or its successor fund, the Liquidity Fund) violated 

any of the fiduciary responsibility provisions of Part 

4 of Title I of the Act. In this regard, the Department 

notes that section 404(a) of the Act requires, among 

other things, that a fiduciary of a plan act 

prudently, solely in the interest of the plan’s 

participants and beneficiaries, and for the exclusive 

purpose of providing benefits to participants and 

beneficiaries when making investment decisions on 

behalf of a plan. Section 404(a) of the Act also states 

that a plan fiduciary should diversify the 

investments of a plan so as to minimize the risk of 

large losses, unless under the circumstances it is 

clearly prudent not to do so. 

Moreover, the Department is not providing any 

opinion herein as to whether a particular category 

of investments or investment strategy would be 

considered prudent or in the best interests of a plan 

as required by section 404 of the Act. The 

determination of the prudence of a particular 

investment or investment course of action must be 

made by a plan fiduciary after appropriate 

consideration of those facts and circumstances that, 

given the scope of such fiduciary’s investment 

duties, the fiduciary knows or should know are 

relevant to the particular investment or investment 

course of action involved, including a plan’s 

potential exposure to losses and the role the 

investment or investment course of action plays in 

that portion of the plan’s portfolio with respect to 

which the fiduciary has investment duties (see 29 

CFR 2550.404a–1). The Department also notes that 

in order to act prudently in making investment 

decisions, a plan fiduciary must consider, among 

other factors, the availability, risks and potential 

return of alternative investments for the plan. Thus, 

a particular investment by a plan, which is selected 

in preference to other alternative investments, 

would generally not be prudent if such investment 

involves a greater risk to the security of a plan’s 

assets than other comparable investments offering 

a similar return or result. 

(A) Any duly authorized employee or 

representative of the Department, the 

Internal Revenue Service, or the 

Securities and Exchange Commission; 

or 

(B) Any fiduciary of any plan that 

engages in the covered transaction, or 

any duly authorized employee or 

representative of such fiduciary; or 

(C) Any employer of participants and 

beneficiaries and any employee 

organization whose members are 

covered by a plan that engages in the 

covered transaction, or any authorized 

employee or representative of these 

entities; or 

(D) Any participant or beneficiary of 

a plan that engages in the covered 

transaction, or duly authorized 

employee or representative of such 

participant or beneficiary; 

(2) None of the persons described, 

above, in paragraph (d)(1)(B)–(D) shall 

be authorized to examine trade secrets 

of FRC, RTC or their affiliates, or 

commercial or financial information 

which is privileged or confidential; and 

(3) Should RTC refuse to disclose 

information on the basis that such 

information is exempt from disclosure, 

RTC shall, by the close of the thirtieth 

(30th) day following the request, 

provide a written notice advising that 

person of the reasons for the refusal and 

that the Department may request such 

information. 

Summary of Facts and Representations 

1. RTC is a trust company organized 

under the laws of the State of 

Washington that is subject to regulation 

by the Washington State Department of 

Financial Institutions. RTC provides a 

wide range of fiduciary and investment 

management services to a broad array of 

institutional clients, including 

employee benefit plans subject to the 

Act and the Code. RTC serves as 

discretionary trustee for several 

commingled employee benefit fund 

trusts. RTC has numerous affiliates and 

is a subsidiary of FRC, a Washington 

corporation. FRC, in turn, is a 

subsidiary of NML. 

2. The Applicant represents that the 

SecLending Fund is a separate fund of 

the Russell Trust Company Commingled 

Employee Benefit Funds Trust (the 

Trust), a group trust that is exempt from 

federal income tax pursuant to Rev. Rul. 

81–100. The SecLending Fund is used 

as an investment vehicle for cash 

collateral received in connection with 

securities lending activities. The 

Applicant also represents that, on all 

dates relevant to the requested 

exemption, the SecLending Fund had 

Plan investors who were subject to the 

Act and the Code. The Liquidity Fund 

(like its predecessor fund, the Russell 

Short-Term Investment Fund, or STIF 

Fund) is a cash sweep vehicle that does 

not engage in securities lending 

activities. The Applicant represents 

that, on all dates relevant to the 

requested exemption, the assets of both 

the Liquidity Fund and its predecessor, 

the STIF Fund, constituted ‘‘plan assets’’ 

subject to the Act because each of the 

foregoing funds were collective trust 

funds maintained by a bank, and 

included Plan investors who were 

subject to the Act and the Code. In this 

connection, the Applicant represents 

that, under 29 CFR section 2510.3– 

101(h)(1)(ii), when a plan acquires or 

holds an interest in such a common or 

collective fund of a bank, its assets are 

deemed to include an undivided 

interest in each of the underlying assets 

of such fund. 

Each of the Funds is bank-maintained 

for purposes of the Act, and RTC serves 

as a discretionary trustee for each Fund. 

The Funds are short-term investment 

funds that seek to maintain a constant 

net asset value, or ‘‘NAV,’’ equal to $1.00 

per unit. RTC has investment discretion 

with respect to the assets of the Funds, 

and makes all determinations with 

respect to the purchase, sale, and 

holding of the assets by the Funds 

(within the investment parameters 

established for each Fund). 

3. The Applicant represents that, as of 

September 15, 2008, numerous 

collective investment funds maintained 

by RTC or its affiliates (the RTC CIFs) 

were direct investors in the STIF Fund. 

Further, numerous Plans were indirectly 

invested in the SecLending Fund and 

the STIF Fund through their investment 

in the RTC CIFs. One Plan sponsored by 

RTC or its affiliates had a direct (rather 

than an indirect) investment in the STIF 

Fund. 

The Lehman Notes 

4. On September 15, 2008, both the 

SecLending Fund and the STIF Fund 

held Notes issued by Lehman Brothers 

Holdings Inc. or its affiliates (the 

Lehman Issuers). The SecLending Fund 

acquired all of the Notes described in 

this proposed exemption between 

September of 2007 and March of 2008, 

while the STIF Fund acquired the Notes 

between September of 2007 and August 

of 2008. The decision both to acquire 

and to hold the Notes was made by RTC 

in its capacity as trustee and investment 

manager for each of the foregoing funds. 

Prior to investing in the Notes, the 

Applicant represents that RTC 

conducted an investigation of the 

potential investment, examining and 

considering the economic and other 

terms of the Notes. RTC represents that 

the investment in the Notes was 

consistent with the applicable 

investment policies and objectives of 

both the SecLending Fund and the STIF 

Fund. At the time they were acquired by 

the foregoing funds, the Notes were 

rated at least ‘‘A’’ or ‘‘A+’’ by both 

Moody’s and S&P rating agencies. Based 

on its consideration of the relevant facts 

and circumstances, RTC determined 

that it was prudent and appropriate to 

acquire the Notes.1

The Initial Capital Support Agreements 

and Guarantees 

5. On September 15, 2008, each of the 

Lehman Issuers filed for Chapter 11 

bankruptcy protection. As a 

consequence of the Lehman Issuers’ 

bankruptcy filing, the market value of 

the Notes decreased substantially and 

the market for the Notes became 

relatively illiquid, with prices for actual 

trades being substantially lower than the 

SecLending Fund’s and the STIF Fund’s 

amortized cost for the Notes. In this 

connection, the Applicant determined 

that FRC should immediately provide 

capital support to both the SecLending 

Fund and the STIF Fund in an amount 

sufficient to maintain a constant NAV of 


emcdonald on DSK2BSOYB1PROD with NOTICES
Federal Register / Vol. 76, No. 113 / Monday, June 13, 2011 / Notices 34263 

2The Department expresses no opinion herein as 

to the role of an NRSRO in determining whether a 

fund’s net asset value per share has fallen below 

$0.9950. 

3Section IV of PTE 80–26 (as amended at 71 FR 

17920, Apr. 7, 2006) provides that, effective as of 

December 15, 2004, the restrictions of section 

406(a)(1)(B) and (D) and section 406(b)(2) of the 

Act, and the taxes imposed by section 4975(a) and 

(b) of the Code, by reason of section 4975(c)(1)(B) 

and (D) of the Code, shall not apply to the lending 

of money or other extension of credit from a party 

in interest or disqualified person to an employee 

benefit plan, nor to the repayment of such loan or 

other extension of credit in accordance with its 

terms or written modifications thereof, if: 

(a) No interest or other fee is charged to the plan, 

and no discount for payment in cash is relinquished 

by the plan, in connection with the loan or 

extension of credit; 

(b) The proceeds of the loan or extension of credit 

are used only— 

(1) For the payment of ordinary operating 

expenses of the plan, including the payment of 

benefits in accordance with the terms of the plan 

and periodic premiums under an insurance or 

annuity contract, or 

(2) For a purpose incidental to the ordinary 

operation of the plan; 

(c) The loan or extension of credit is unsecured; 

(d) The loan or extension of credit is not directly 

or indirectly made by an employee benefit plan; 

(e) The loan is not described in section 408(b)(3) 

of ERISA and the regulations promulgated 

thereunder (29 CFR 2550.408b–3) or section 

4975(d)(3) of the Code and the regulations 

promulgated thereunder (26 CFR 54.4975–7(b)); and 

(f) (1) Any loan described in section IV(b)(1) that 

is entered into on or after April 7, 2006 and that 

has a term of 60 days or longer must be made 

pursuant to a written loan agreement that contains 

all of the material terms of such loan. 

(2) Any loan described in (b)(2) of this paragraph 

that is entered into for a term of 60 days or longer 

must be made pursuant to a written loan agreement 

that contains all of the material terms of such loan. 

The Department offers no opinion herein as to 

whether each of the applicable conditions for 

exemptive relief contained in PTE 80–26 were 

satisfied in this particular instance. 

$1.00 per unit for each of the foregoing 

funds. 

Accordingly, on September 15, 2008, 

FRC entered into separate capital 

support agreements with both the 

SecLending Fund (the Initial 

SecLending Fund CSA) and the STIF 

Fund (the STIF Fund CSA). The 

Applicant explains that, pursuant to 

these agreements (which, taken together, 

constitute the Initial CSAs), FRC 

contractually agreed to provide on-going 

capital support to both the SecLending 

Fund and the STIF Fund with respect to 

the Notes, up to the lesser of: (a) An 

agreed upon ‘‘maximum contribution 

amount’’ ($75,000,000 for the STIF Fund 

and $70,000,000 for the SecLending 

Fund), which amounts equaled the 

aggregate par value of the Notes held by 

the SecLending Fund and the STIF 

Fund, as applicable, as of September 15, 

2008; (b) the difference between the 

amortized cost of such Notes and any 

proceeds received by either the 

SecLending Fund or the STIF Fund as 

a result of the subsequent sale or other 

disposition of the Notes by either fund; 

or (c) the minimum capital contribution 

amount necessary for each of the 

foregoing funds to maintain an NAV of 

$0.995 per unit, after taking into 

account the market value of the Notes 

held or disposed of by such fund. On 

the same date, NML contracted to 

guarantee FRC’s capital support 

obligations to both the SecLending Fund 

(under the Initial SecLending Fund 

Guarantee) and the STIF Fund (under 

the STIF Fund Guarantee). The 

Applicant represents that, at all times 

relevant to this exemption, NML has 

maintained a rating of AAA by Standard 

& Poor’s. 

The Applicant represents that each of 

the Initial CSAs, as well as the Initial 

SecLending Fund Guarantee and the 

STIF Fund Guarantee (which, taken 

together, constitute the Initial 

Guarantees) were set to expire on 

September 15, 2009 unless, prior to that 

date, the SecLending Fund and the STIF 

Fund received either full cash 

repayment of the Notes or capital 

contributions from FRC and NML equal 

to the respective maximum contribution 

amounts pursuant to the Initial CSAs. 

Each of the Initial CSAs and Initial 

Guarantees also contained a repayment 

provision stipulating that, in the event 

that either the SecLending Fund or the 

STIF Fund received a capital 

contribution from FRC (or from NML, as 

guarantor) with respect to a Note and 

subsequently received additional 

payments from or on behalf of the 

Lehman Issuer in respect of the Note, 

such fund would repay to FRC (if NML 

had received contributions equal to its 

capital contribution) the lesser of: (i) 

The amount of such capital 

contribution; or (ii) the amount of such 

subsequent payments, provided that in 

no event would such repayment cause 

the respective fund’s NAV per share to 

fall below $0.995 or such greater 

amount as required by any nationallyrecognized statistical rating organization 

(NRSRO).2

6. The Applicant represents that the 

decision to enter into the Initial CSAs 

was a fund-level decision made by RTC 

(similar to any decision to acquire or 

dispose of assets) that was intended to 

limit the downside risk for both the 

SecLending Fund and the STIF Fund 

with respect to the Notes, while 

preserving the upside potential for the 

foregoing funds, and that this 

determination did not represent any 

change to the funds’ goals or investment 

strategies or any deviation from the 

funds’ investment parameters. The 

Applicant further represents that the 

relative rights and interests of the Plans 

with respect to both the SecLending 

Fund and the STIF Fund (and the RTC 

CIFs having an interest in each fund) 

and the terms and conditions of any 

agreements between RTC and the Plans 

were not affected by this decision. 

The Applicant maintains that the 

terms of the Initial CSAs and Initial 

Guarantees executed on September 14, 

2008 to provide capital support to both 

the SecLending Fund and the STIF 

Fund constituted a lending of money or 

other extension of credit from a party in 

interest to an employee benefit plan that 

satisfied the conditions contained in a 

class exemption, Prohibited Transaction 

Exemption (PTE) 80–26; for this reason, 

the Applicant is not seeking an 

individual exemption for the period of 

time during which the Initial CSAs and 

Initial Guarantees were in force.3

Transfer of the Assets of the STIF Fund 

to the Liquidity Fund 

7. On September 11, 2009, RTC 

reorganized the STIF Fund, and 

transferred all of the assets of the STIF, 

including the Notes held by the STIF 

Fund that were subject to the STIF Fund 

CSA, to the Liquidity Fund. In 

connection with this reorganization, the 

Liquidity Fund became the beneficiary 

of both FRC’s capital support 

obligations under the STIF Fund CSA 

and of NML’s guarantee of FRC’s 

foregoing capital support obligation 

pursuant to the STIF Fund Guarantee. 

The Retention of an Independent 

Fiduciary 

8. As noted previously, the terms of 

both the Initial CSAs and the Initial 

Guarantees were set to expire on 

September 15, 2009. Expiration of the 

Initial CSAs, however, would have 

triggered a contractual obligation that 

the Funds liquidate the Notes in the 

market. The Applicant further 

represents that the Funds’ liquidation of 

the Notes would, in turn, have triggered 

the payment of FRC’s capital support 

obligations to the Funds. The Applicant 

states that the capital support payments 

required under the Initial CSAs 

represented the amount that would have 

been necessary to permit each Fund to 

maintain an NAV of $0.995 per unit. 

Accordingly, it is represented that, 

because both FRC and RTC did not 

believe that it would be in the best 

interest of either Fund to liquidate the 

Notes upon the expiration of the Initial 

CSAs on September 15, 2009, FRC and 

RTC determined to seek the amendment 

and extension of the Initial CSAs and 

the Initial Guarantees for one year, 

through an expiration date of September 

15, 2010. 


emcdonald on DSK2BSOYB1PROD with NOTICES
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4The Department offers no opinion herein 

concerning whether any exemptive relief for which 

the Applicant may have been eligible under PTE 

80–26 on or before September 15, 2009 would have 

expired upon the termination of the Initial CSAs 

and the Initial Guarantees. Moreover, the 

Department offers no opinion herein concerning the 

Applicant’s contention that the inclusion of 

termination dates in the Initial CSAs and the Initial 

Guarantees would have made the Applicant 

ineligible for exemptive relief under PTE 80–26 

after September 15, 2009. 

When, in September 2009, RTC 

determined that it would be necessary 

and in the best interest of the Funds to 

extend the terms of the Initial CSAs, 

RTC considered that such amendments 

would not qualify for relief in reliance 

upon PTE 80–26. In this connection, the 

Applicant represents that, had the 

Initial CSAs not included termination 

dates (i.e., September 15, 2009), RTC 

could have continued to rely upon the 

exemptive relief provided under PTE 

80–26; however, given these fixed 

termination dates, the amendment and 

renewal of the terms of the Initial CSAs 

could have been interpreted as 

depriving the Funds of payments to 

which they were contractually entitled 

to receive. Alternatively, the Applicant 

represents that the delay of such 

payments could have been construed as 

an extension of credit from the Funds to 

FRC, which would not have been 

permitted under PTE 80–26 or any other 

class exemption.4 In light of these 

assumptions, the Applicant engaged 

Fiduciary Counselors Inc. (hereinafter 

the Independent Fiduciary) to negotiate 

and approve, on behalf of each Fund 

(and the Plans invested, directly or 

indirectly, in each Fund) the 

amendment and extension of the term of 

the Initial CSAs for an additional 12 

months; this engagement was 

formalized under a letter agreement 

dated August 25, 2009 (the Engagement 

Letter). 

9. Pursuant to the Engagement Letter, 

the Independent Fiduciary was retained 

to represent the Funds through 

September 15, 2010. The Independent 

Fiduciary represents that it is both an 

‘‘investment adviser’’ within the 

meaning of the Investment Advisers Act 

of 1940 and a ‘‘qualified professional 

asset manager’’ within the meaning of 

PTE 84–14. The Applicant further 

represents that the Independent 

Fiduciary has provided independent 

fiduciary services to clients since its 

incorporation in 1999. 

Under the terms of the Engagement 

Letter, the Independent Fiduciary 

assumed responsibility for, among other 

things: (1) Negotiating, on behalf of each 

Fund, the terms of any amendments to 

the Initial CSAs on behalf of each Fund 

and determining that such terms were 

fair and reasonable to each Fund; (2) 

determining whether to enter into any 

amendments on behalf of each Fund 

and directing RTC to sign any such 

amendments; (3) monitoring the future 

capital support agreements on a goingforward basis, including negotiating the 

terms, and determining the fairness and 

reasonableness, of any modifications, 

extensions, or renewals thereof; and (4) 

determining on behalf of each Fund 

whether to liquidate the Notes, and 

determining the fairness and 

reasonableness of any proposed sale of 

the Notes to RTC or an affiliate of RTC. 

The Independent Fiduciary also 

assumed the same duties on behalf of 

the Funds with respect to the 

negotiation and approval of any 

extension to, and amendment of, the 

Initial Guarantees made by NML. 

The 2009–2010 Payment of 

Supplemental Yield Contributions to the 

Funds 

10. The Applicant represents that the 

Independent Fiduciary reviewed the 

terms of the Initial CSAs and Initial 

Guarantees in place at the time of its 

engagement, and the proceeds that each 

Fund would receive if these instruments 

expired as scheduled and were not 

extended. Upon reviewing the terms of 

the Initial CSAs, the Independent 

Fiduciary determined that it would be 

in the best interests of the investors in 

each Fund for FRC to make additional 

periodic cash contributions, or 

Supplemental Yield Contributions, to 

each Fund. By letter agreement dated 

September 14, 2009, FRC agreed, after 

negotiation with the Independent 

Fiduciary, to pay the Supplemental 

Yield Contributions to each Fund. The 

amount of such contributions would be 

determined by a mathematical formula. 

The first step of this formula would 

require computing the sum of (a) the 

amount of capital support that would 

have been required under the Initial 

CSAs as of September 14, 2009, had the 

Notes been sold by the Funds at the 

September 14, 2009 closing market 

price, and (b) the market value of the 

Notes as of September 14, 2009 based 

upon the closing market price on such 

date (the date prior to the date that 

accrual of such Supplemental Yield 

Contributions commenced). The sum 

resulting from the first step of the 

formula (i.e., the Base Amount) would 

then be multiplied by an annual interest 

rate figure equal to (a) t he 3-month 

LIBOR (expressed as an annual rate) as 

quoted by Bloomberg at end of day print 

on September 14, 2009, and updated 

every three months thereafter, plus (b) 

0.15 percent. If any Notes were sold by 

a Fund after September 14, 2009, the 

Supplemental Yield Contributions 

would be proportionately reduced based 

on the par value of such sold Notes as 

a proportion of the aggregate par value 

of the Notes. The Supplemental Yield 

Contributions would accrue daily 

beginning on September 15, 2009, and 

would be paid to the Funds in arrears 

on a monthly basis. The Supplemental 

Yield Contributions would also not 

reduce or offset any of FRC’s obligations 

under the proposed revision of the 

capital support agreements. FRC’s 

obligation to make Supplemental Yield 

Contributions to the Funds pursuant to 

the September 14, 2009 letter agreement 

would cease only upon the occurrence 

of a termination event under the 

proposed revision of the capital support 

agreements (such as the sale of all of the 

Notes held by the Funds). Because 

accrual of the Supplemental Yield 

Contributions would commence on 

September 15, 2009, the Independent 

Fiduciary determined that, in the event 

of such sale, RTC (or its affiliate) would 

not be required to pay interest for any 

purchased Notes with respect to the 

period following September 14, 2009. 

11. The following chart documents 

the monthly payment of accrued 

Supplemental Yield Contributions that 

were made by FRC to the Funds during 

the years 2009 and 2010, pursuant to the 

foregoing contractual arrangements: 

Supplemental 

yield contributions to the 

SecLending 

fund 

Supplemental 

yield contributions to the liquidity fund 

September 2009 

(9/14/09 through 

9/30/09) ............ $13,910.18 $12,647.38 

October 2009 ...... 25,365.61 23,062.88 

November 2009 ... 24,547.37 22,318.91 

December 2009 ... 24,000.34 21,821.54 

January 2010 ...... 23,014.31 20,925.03 

February 2010 ..... 20,787.12 18,900.02 

March 2010 ......... 23,135.59 21,035.30 

April 2010 ............ 22,485.94 20,444.63 

May 2010 ............ 23,235.47 21,126.11 

June 2010 ........... 31,220.59 28,386.33 

July 2010 ............. 39,163.17 35,608.04 

August 2010 ........ 39,163.17 35,608.04 

September 2010 

(9/1/10 through 

9/14/10) ............ 17,686.68 16,081.05 

Total Supplemental 

Yield Contributions 

Paid by 

FRC to the 

Funds: ....... 327,715.54 297,965.26 

The 2009 Revision of the CSAs and the 

Guarantees 

12. In addition to requiring FRC to 

make Supplemental Yield Contributions 

to the Funds, the Independent Fiduciary 

(in a letter to RTC dated September 14, 

2009) directed RTC and FRC to execute, 


emcdonald on DSK2BSOYB1PROD with NOTICES
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5 In this connection, the Independent Fiduciary 

stipulated that should FRC, through the exercise of 

any of its rights, claims, or causes of action related 

to its ownership of any Notes after the Sale date, 

recover from the Lehman Issuers or any third party 

an aggregate amount that was in excess of the sum 

of (a) the purchase price paid for the Notes by FRC 

and (b) interest on such purchase price from and 

after the date of the Sale transaction (determined at 

the rate of interest equal to the rate of interest 

applicable to the Supplemental Yield 

Contributions), FRC would refund such excess 

promptly to the applicable Fund (after deducting all 

reasonable expenses incurred in connection with 

the recovery). 

6The Applicant represents that as of the close of 

business on September 10, 2010, the net asset value 

of the Liquidity Fund’s portfolio was approximately 

$2,137,000,000, or $1.0000 per unit. As of the close 

of business on September 10, 2010, the net asset 

value of the SecLending Fund’s portfolio was 

approximately $1,767,000,000, or $0.9991 per unit. 

on behalf of each Fund, revised capital 

support agreements between FRC and 

each of the Funds (namely, the Revised 

CSAs), as well as revised guarantees by 

NML of FRC’s capital support 

obligations to each of the Funds under 

the Revised CSAs (namely, the Revised 

Guarantees). Each of the foregoing 

contracts were executed on September 

14, 2009. The Applicant represents that 

a new provision was included in each 

of the Revised CSAs stipulating that if 

all of the Notes were sold after 

September 14, 2009 (or another event 

occurs triggering FRC’s capital support 

obligations under each of the Revised 

CSAs, the total amount of capital 

support payable to each Fund under 

each of the Revised CSAs would be no 

less than the Base Amount, minus the 

sum of (a) The proceeds actually 

received by the Fund from the 

disposition of the Notes, plus (b) all 

payments received by the Fund in 

respect of the Notes to the extent not 

already included in (a), and excluding 

the amount of any Supplemental Yield 

Contributions. The Independent 

Fiduciary determined that this 

provision, in conjunction with the 

Supplemental Yield Contributions, 

would help to ensure that each Fund’s 

total recovery with respect to the Notes 

and the required capital support would 

not decline as a result of the adoption 

of the Revised CSAs. 

Further, the Independent Fiduciary 

determined it to be appropriate and in 

the best interest of the Funds to include 

a new provision in each of the Revised 

CSAs stipulating that, in the event the 

Funds determined to sell some or all of 

the Notes to RTC or an affiliate of RTC 

(through either a single transaction or 

series of transactions with each Fund), 

the purchase price for such Notes would 

be equal to the greater of (a) The market 

value of such Notes on the date of any 

such transaction, or (b) the sum of (i) the 

amortized cost of such Notes to be sold 

in such transaction, plus (ii) any 

accrued but unpaid interest through the 

earlier of the maturity date of the 

applicable Note or September 14, 2009 

(the date prior to the date that accrual 

of the Supplemental Yield 

Contributions commenced) calculated at 

the contract rate. 

It is represented that each of the 

Revised CSAs, as well as the Revised 

SecLending Fund Guarantee and the 

Revised Liquidity Fund Guarantee 

(which, taken together, constitute the 

Revised Guarantees) were set to expire 

on September 15, 2010 (unless, prior to 

that date, the Funds received either full 

cash payment for the Notes or capital 

contributions from FRC and NML equal 

to their respective maximum 

contribution amounts under each of the 

Revised CSAs). It is further represented 

that the Funds paid no fees or 

commissions in connection with the 

negotiation of either the Revised CSAs 

and Guarantees or the payment of the 

Supplemental Yield Contributions, nor 

for the Independent Fiduciary’s services 

relating to such matters. 

13. The Applicant represents that the 

Revised CSAs and the Revised 

Guarantees, as well as the Supplemental 

Yield Contributions, benefitted the 

investors in the Funds because the 

Independent Fiduciary determined that 

they placed the Funds in a position that 

was at least as favorable as that which 

would have been obtained had the 

Initial CSAs and Guarantees expired by 

their terms on September 15, 2009 and 

FRC and NML had made payments to 

the Funds in satisfaction of its capital 

support obligations. The Applicant also 

represents that the Revised CSAs and 

the Revised Guarantees provided the 

Funds the opportunity to seek recovery 

of their amortized cost or the full par 

value of the Notes, either through 

recovery from the Lehman Issuers, 

liquidation on the market or a potential 

sale to RTC or its affiliate. The 

Supplemental Yield Contributions were 

intended to ensure that the Funds 

remained in a position that was at least 

as favorable as if FRC had satisfied its 

capital support obligations upon 

expiration of the Initial CSAs on 

September 15, 2009 and the proceeds 

were invested in instruments providing 

a comparable yield. The Applicant also 

states that the Revised CSAs contained 

new provisions ensuring that the Funds 

would receive an aggregate amount not 

less than the Base Amount in 

connection with any sale of the Notes 

(or other event that would otherwise 

trigger FRC’s capital support 

obligations). The foregoing 

arrangements were negotiated by and 

determined to be fair, reasonable and in 

the best interest of each of the Funds by 

the Independent Fiduciary. 

The 2010 Sale of the Notes to FRC by 

the Funds 

14. At a meeting of its investment 

committee on September 2, 2010, the 

Independent Fiduciary discussed and 

approved the terms of a proposed sale 

of the Notes by the Funds to FRC. 

Pursuant to this determination, RTC and 

FRC negotiated the terms of the Sale of 

the Notes with the Independent 

Fiduciary. The Independent Fiduciary 

concluded that the Sale transaction 

would benefit the investors in the Funds 

because it would permit the Funds to 

recover an amount equal to or in excess 

of its amortized cost for each of the 

Notes and maintain an NAV per unit of 

at least $0.995, while also retaining a 

right to recover amounts received by 

FRC in excess of the sale price for the 

Notes. In addition, under the terms of 

the Sale negotiated by the Independent 

Fiduciary, each Fund would continue to 

earn interest under the Supplemental 

Yield Agreements until the settlement of 

the transaction, and would be entitled to 

additional amounts in the event that 

FRC subsequently recovered an amount 

greater than the sale price adjusted for 

interest accrued through the date of the 

refund to the relevant Fund.5 Given 

these factors, the Independent Fiduciary 

determined that the terms of the Sale 

were fair and reasonable to each Fund. 

Accordingly, by the terms of a letter 

dated September 8, 2010, the 

Independent Fiduciary directed in 

writing that all of the Notes held by 

each of the Funds be sold to FRC. 

15. In accordance with the 

Independent Fiduciary’s direction, the 

Sale of all of the Notes from the 

Liquidity Fund to FRC was executed on 

September 10, 2010, and settled two 

business days later on September 14, 

2010 for an aggregate price of 

$75,296,431; similarly, the Sale of all of 

the Notes from the SecLending Fund to 

FRC was executed on September 10, 

2010, and settled two business days 

later on September 14, 2010 for an 

aggregate price of $70,436,820. The 

Applicant represents that the Sale 

resulted in an NAV for the Liquidity 

Fund of $1.0000 per unit and for the 

SecLending Fund of $0.9991 per unit.6

For each Note, the foregoing amounts 

paid by FRC (which were computed in 

accordance with the formula specified 

in the Revised CSAs with each of the 

Funds) represented the sum of (i) The 

applicable Fund’s amortized cost of the 

Note ($75,000,000 in the aggregate for 

the Liquidity Fund and $70,000,000 for 

the SecLending Fund), plus (ii) any 

accrued but unpaid interest on the 


emcdonald on DSK2BSOYB1PROD with NOTICES
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7Pursuant to the terms of the Revised CSAs, the 

one-time payment to the Funds of accrued but 

unpaid interest on the Notes owed by the Lehman 

Issuers was separate from, and in addition to, the 

accrual and payment of the Supplemental Yield 

Contributions to the Funds that commenced on 

September 15, 2009. 

8The Applicant further represents that, prior to 

the consummation of the Sale, the Independent 

Fiduciary confirmed that the sale price calculated 

pursuant to the formula discussed above for each 

Note was greater than the market value of such Note 

as determined by reference to price quotes provided 

by two major investment brokers (since no 

transaction on the Notes was available through 

Bloomberg). Specifically, Barclays provided a quote 

of $19.25 (representing a bid price per unit received 

for each Note as of September 10, 2010), and J.P. 

Morgan provided a quote of $19.00 (representing 

the bid price per unit for each Note as of September 

10, 2010). These prices reflect a decrease of 

approximately 81% from the par value of the Notes. 

Notes that was owed by the Lehman 

Issuers through the earlier of the 

maturity date of the applicable Note or 

September 14, 2009, calculated at the 

contract rate ($296,431 of aggregate 

interest for the Liquidity Fund, and 

$436,820 in aggregate interest for the 

SecLending Fund).7 The following chart 

summarizes the par values and the 

September 10, 2010 sale prices 8 of the 

various Notes held by each of the 

Funds: 

Fund Lehman note Aggregate 

par value Acquisition price & date Sale price 

Liquidity Fund .................................... Lehman Brothers Disc (52525MJF6) 

Maturity Date: 9/18/08; Face Interest 

Rate: 2.80% 

$10,000,000 $9,981,000 (acquired 8/22/08) ......... $10,000,000 

Lehman Brothers V/R (52517P5C1) 

Maturity date: 9/26/08; Face Interest 

Rate: 3.75% 

35,000,000 35,000,000 (acquired 8/28/07) ......... 35,218,410 

Lehman Brothers V/R (52525KAB8) 

Maturity Date: 3/11/09; Face Interest 

Rate: 3.75% 

30,000,000 30,000,000 (acquired 2/11/08) ......... 30,078,021 

Total ........................................... ........................................................... $75,000,000 $74,981,000 ...................................... $75,296,431 

SecLending Fund .............................. Lehman Brothers V/R (52517P5C1) 

Maturity Date: 9/26/08; Face Interest 

Rate: 5.51% 

$40,000,000 $40,000,000 (acquired 8/28/07) ....... $40,249,611 

Lehman Brothers V/R (52517P5C1) 

Maturity Date: 9/26/08; Face Interest 

Rate: 5.51% 

30,000,000 30,000,000 (acquired 8/28/07) ......... 30,187,209 

Total ........................................... ........................................................... $70,000,000 $70,000,000 ...................................... $70,436,820 

16. The Applicant represents that, 

with the execution of the Sale on 

September 10, 2010, the terms of 

Revised CSAs, the Revised Guarantees, 

and the agreement concerning the 

accrual and payment of the 

Supplemental Yield Contributions each 

ceased to be effective as of that date. On 

September 14, 2010, the Sale transaction 

was settled when each of the Funds 

received the sale price of the Notes from 

FRC. The Applicant further represents 

that, while FRC’s obligation to accrue 

the Supplemental Yield Contributions 

technically terminated on September 10, 

2010, FRC and RTC (following 

discussions with the Independent 

Fiduciary) determined that these 

contributions would continue to accrue 

(and would be paid on) the date that the 

Sale settled. Accordingly, the final 

installment of the Supplemental Yield 

Contributions to the Funds was paid on 

the settlement date of September 14, 

2010. 

17. In summary, the Applicant 

represents that the transactions 

described herein satisfied the statutory 

criteria of section 408(a) of the Act and 

section 4975(c)(2) of the Code because: 

(a) The transactions were easily 

identifiable, have been completed, and 

will not require ongoing monitoring; (b) 

The Revised CSAs, the Revised 

Guarantees, and the Supplemental Yield 

Contributions were negotiated and 

documented, and were monitored by the 

Independent Fiduciary through their 

expiration; (c) The Sale was a one-time 

transaction for cash that was negotiated 

by the Independent Fiduciary, and 

neither of the Funds bore any brokerage 

commissions, fees or other expenses in 

connection with the Sale; (d) The 

transactions enabled the Funds, and the 

participating investors therein, 

including the Plans invested therein, to 

receive (i) Continued capital support 

from FRC with respect to the Notes 

under the Revised CSAs (guaranteed by 

NML) and (ii) periodic payment of the 

Supplemental Yield Contributions; (e) 

The Independent Fiduciary determined 

the foregoing arrangements placed the 

Funds in a position that was at least as 

favorable as the position they would 

have been in had the Initial CSAs and 

the Initial Guarantees expired by their 

terms; (f) The Revised CSAs and the 

Revised Guarantees provided the Funds 

the opportunity to seek recovery of their 

amortized cost, the full par value, or at 

least a greater portion of the par value 

of the Notes, either through recovery 

from the Lehman Issuers, liquidation on 

the market, or a potential Sale to RTC 

or its affiliates; and (g) the Independent 

Fiduciary determined that it would be 

in the best interests of the investors in 

each Fund for FRC to make 

Supplemental Yield Contributions to 

each Fund. 

Notice to Interested Persons: Notice of 

the proposed exemption shall be given 

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. 

Comments and requests for a hearing are 

due forty-five (45) days after publication 

of the notice in the Federal Register. 

For Further Information Contact: Mr. 

Mark Judge of the Department at (202) 

693–8550 (This is not a toll-free 

number). 

Pacific Capital Bancorp Amended and 

Restated Incentive and Investment and 

Salary Savings Plan (the Plan); Located 

in Santa Barbara, California; 

[Application No. D–11659] 

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). 


emcdonald on DSK2BSOYB1PROD with NOTICES
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9For purposes of this proposed exemption, 

references to specific provisions of Title I of the 

Act, unless otherwise specified, refer also to the 

corresponding provisions of the Code. 

Section I: Transactions 

If the proposed exemption is granted, 

effective October 27, 2010, the 

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

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

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

4975(c)(1)(E) of the Code,9 shall not 

apply: 

(1) To the acquisition of certain rights 

(the Rights) by the Plan in connection 

with an offering (the Offering) of shares 

of the common stock (the Stock) in 

Pacific Capital Bancorp (Bancorp) by 

Bancorp, a party in interest with respect 

to the Plan, and 

(2) To the holding of the Rights 

received by the Plan during the 

subscription period of the Offering; 

provided that the conditions as set forth 

in section II of this proposed exemption 

were satisfied for the duration of the 

acquisition and holding. 

Section II: Conditions 

The relief provided in this exemption 

is conditioned upon adherence to the 

material facts and representations 

described, herein, and as set forth in the 

application file and upon compliance 

with the conditions, as set forth in this 

proposed exemption. 

(1) The receipt of the Rights by the 

Plan occurred in connection with the 

Offering and was made available by 

Bancorp on the same terms to all 

shareholders of the Stock of Bancorp; 

(2) The acquisition of the Rights by 

the Plan resulted from an independent 

act of Bancorp, as a corporate entity, 

and all holders of the Rights, including 

the Plan, were treated in the same 

manner with respect to the acquisition 

of such Rights; 

(3) Each shareholder of the Stock, 

including the Plan, received the same 

proportionate number of Rights based 

on the number of shares of Stock of 

Bancorp held by such shareholder; 

(4) The Board of Directors of Bancorp 

(the Board) decided that the Offering 

should be made available to all 

shareholders of the Stock, including the 

Plan, as record owner of the Stock held 

in the Plan on behalf of the accounts of 

the individual participants (the Invested 

Participants) all or a portion of whose 

accounts in the Plan are invested in the 

Stock, in accordance with provisions 

under such Plan for individuallydirected investment of such accounts; 

(5) The decision to exercise the Rights 

or to refrain from exercising the Rights 

was made by each of the Invested 

Participants in accordance with the 

provision under the Plan for 

individually-directed accounts; and 

(6) No brokerage fees, commissions, 

subscription fees, or any other charges 

were paid by the Plan with respect to 

the Offering, and no brokerage fees, 

commissions, or other monies were paid 

by the Plan to any broker in connection 

with the exercise of the Rights. 

Effective Date: This proposed 

exemption, if granted, will be effective, 

October 27, 2010, the date the Plan 

acquired the Rights. 

Summary of Facts and Representations 

1. The Plan is a defined contribution 

profit sharing plan. Bancorp is the 

sponsor of the Plan. The Plan is 

intended to satisfy the requirements 

under section 401(a), 401(k) and 401(m) 

of the Code. The Plan is a participant 

directed account plan intended to 

satisfy the requirements of section 

404(c) of the Act. 

As of August 30, 2010, the Plan had 

approximately 1,417 participants. The 

fair market value of the total assets of 

the Plan, as of August 30, 2010, was 

$64,324,228. 

The Compensation & Benefits 

Committee (the Committee) became the 

fiduciary responsible for Plan matters 

on October 2010. The Committee is 

comprised of non-employee members of 

the Board of Bancorp. It is represented 

the members of the Committee satisfy 

the independence requirements of 

NASDAQ, the Code, and various 

banking laws and regulations. As a 

fiduciary with respect to the Plan, the 

Committee is a party in interest to the 

Plan, pursuant to section 3(14)(A) of the 

Act. 

On December 1, 2007, the Charles 

Schwab Trust Company (Charles 

Schwab Trust), a California chartered 

non-depository trust company, became 

the directed trustee for the Plan. Charles 

Schwab Trust also serves as custodian 

for the Plan. As custodian, Charles 

Schwab Trust executes investment 

directions in accordance with 

participants’ written or electronic 

instructions. In addition Charles 

Schwab Corporate and Retirement 

Services (CSC) is the broker for the Plan. 

As service providers to the Plan, Charles 

Schwab Trust and CSC are parties in 

interest to the Plan, pursuant to section 

3(14)(B) of the Act. 

2. The Plan offers to participants the 

following permitted investment options 

in which to invest all or a portion of 

such participants’ account balances: (a) 

The Stock, (b) a variety of money market 

funds, (c) common collective trusts, (d) 

mutual funds, and (e) self-directed 

accounts. Charles Schwab Stable Value 

Fund is the common collective trust 

fund in which Plan assets are invested. 

Certain Plan assets are also invested in 

mutual funds managed by an affiliate of 

Charles Schwab Trust. 

3. The application was filed on behalf 

of Bancorp, a bank holding company, 

located in Santa Barbara, California. 

Pacific Capital Bank, National 

Association (the Bank) is a whollyowned subsidiary of Bancorp. The Bank 

is a full-service, state-chartered 

commercial bank located in California 

whose deposits are insured by the 

Federal Deposit Insurance Corporation. 

As of June 30, 2010, the Bank had $7.1 

billion in assets. The Bank, as an 

employer any of whose employees are 

covered by the plan, is a party in 

interest with respect to the Plan, 

pursuant to section 3(14)(C) of the Act. 

Substantially all of the activities of 

Bancorp are conducted through the 

Bank. Bancorp, as the parent of the 

Bank, is a party in interest with respect 

to the Plan, pursuant to section 3(14)(E) 

of the Act. 

4. The Stock of Bancorp is listed for 

quotation on the NASDAQ Global Select 

Market under the symbol PCBC. The 

total number of shares of Stock 

outstanding, as of August 18, 2010, was 

47,406,579. During the period beginning 

on October 19, 2010 and ending on 

November 15, 2010, the Stock was 

trading on the NASDAQ at prices 

ranging between $0.73 and $0.42 per 

share. 

The Stock is a ‘‘qualifying employer 

security,’’ as defined under section 

407(d)(5) of the Act and 4975(e) of the 

Code. 

5. On April 29, 2010, Bancorp and the 

Bank entered into an investment 

agreement with SB Acquisition 

Company LLC, a wholly-owned 

subsidiary of Ford Financial Fund, L.P. 

(the Investor) for the sale to the Investor 

of 225,000,000 shares of Stock at $0.20 

per share and 455,000 shares of 

mandatorily convertible participating 

voting preferred stock at $1,000 per 

share. The aggregate consideration paid 

to Bancorp by the Investor for these 

securities was $500 million in cash. 

Before accounting for any issuance of 

Stock pursuant to the Offering, the 

Investor owned approximately 86 

percent (86%) of the outstanding Stock. 

As a condition of the investment 

agreement with the Investor, Bancorp 

agreed to commence the Offering, which 

is the subject of this proposed 

exemption, whereby shareholders of 

record would receive non-transferable 

rights to purchase a number of shares of 


emcdonald on DSK2BSOYB1PROD with NOTICES
34268 Federal Register / Vol. 76, No. 113 / Monday, June 13, 2011 / Notices 

10This ownership percentage is based on 

47,406,579 common shares of Stock outstanding on 

August 18, 2010. 

Stock equal to 20 percent (20%) of the 

then outstanding shares of Stock, at a 

purchase price equal to $0.20 per share. 

It is represented that the Rights were 

non-transferable to allow only legacy 

shareholders of the Stock the 

opportunity to purchase additional 

shares of the Stock to help offset the 

share dilution such shareholders 

incurred when the Stock was acquired 

by the Investor. Accordingly, Bancorp, 

as a corporate entity and issuer of 

securities, announced in connection 

with the Offering the issuance of up to 

726,975,565 shares of Stock, as required 

by the investment agreement: (a) To 

raise equity capital; and (2) to provide 

existing shareholders the opportunity to 

purchase common stock at the same 

price per share paid by the Investor for 

the Stock. Bancorp intends to use the 

net proceeds from the Offering for 

general corporate purposes, including 

an investment in the Bank. 

6. Under the terms of the Offering, all 

shareholders of the Stock of Bancorp, 

such as the Invested Participants, 

received at no charge the Rights to 

purchase, through the exercise of such 

Rights, the Stock being issued by 

Bancorp in connection with the 

Offering. With respect to the Rights, 

under the terms of the Offering, 15.335 

Rights were issued for every share of the 

Stock held by each shareholder on 

August 30, 2010, (the Record Date). All 

Rights were rounded down to the 

nearest whole number for each 

shareholder. For example, an Invested 

Participant’s account in the Plan that 

held 543 shares of Stock, as of the 

Record Date, would entitle such 

Invested Participant to 8,326 Rights 

(15.335 × 543 = 8,326.905 rounded 

down to 8,326), pursuant to the 

Offering, which in turn would permit an 

Invested Participant to purchase 8,326 

shares of Stock. 

It is represented that the Rights were 

not listed, traded or quoted on NASDAQ 

or on any other stock exchange or 

trading market. Further, the terms of the 

Offering stipulated that the Rights could 

not be sold, assigned or transferred. 

7. The Rights could only be exercised 

in whole numbers. Upon exercise, each 

of the Rights permitted a shareholder of 

the Stock of Bancorp to purchase one (1) 

additional share of Stock at a 

subscription price of $0.20 per share. A 

shareholder had the right to choose to 

exercise some, all, or none of his Rights. 

The exercise of any of the Rights was 

irrevocable. It is represented that there 

were no over-subscription rights 

associated with the Offering. The Rights 

could be exercised beginning October 

18, 2010, the date of the issuance of the 

prospectus describing the Offering. The 

Offering closed with respect to the 

exercise of the Rights on November 19, 

2010, at 5 p.m. New York City time. 

Pursuant to the terms of the Offering all 

unexercised Rights expired and became 

worthless after the closing of the 

Offering. 

8. It is represented that on the Record 

Date, the Plan was the record owner of 

1,573,450 shares of Stock which were 

allocated to the individual accounts of 

the 1,417 Invested Participants. The 

aggregate fair market value of the assets 

of the Plan invested in shares of the 

Stock, on the Record Date, based on a 

closing price of $0.859 on that date was 

$1,351,593.55. The approximate 

percentage of the fair market value of 

the Plan’s total assets invested in the 

Stock is 2.1 percent (2.1%). As of the 

Record Date, 1,573,450 shares of Stock 

constituted approximately 3.32 percent 

(3.32%) of the 47,406,579 shares of 

Stock outstanding. 

Based on the ratio of 15.335 Rights for 

each share of Stock held, the Plan 

acquired 24,128,855 Rights as a result of 

the Offering. It is represented that the 

Rights held by the Plan for the accounts 

of Invested Participants were plan 

assets. It is represented that 11,751,048 

shares of Stock were subscribed for by 

the Plan. Of the Rights received by the 

Plan on behalf of accounts of the 

Invested Participants, all Rights were 

either exercised or expired. 

It is represented that the Committee 

recommended to the Board that it was 

in the best interest of the Invested 

Participants to provide such Invested 

Participants with an opportunity to 

participate in (and the ability to make 

the decision not to participate in) the 

Offering which would prevent dilution 

of such Interested Participants’ interest 

in Bancorp from the exercise of the 

Rights by other shareholders of Bancorp. 

Accordingly, the Board after considering 

the Committee’s recommendation 

concluded, as a matter of California 

Corporations law and as a matter of 

fairness, that the Rights should be made 

available to all shareholders of Bancorp, 

including the Plan, as record owner of 

the Stock. In this regard, the Plan holds 

title to the Stock on behalf of the 

accounts of the Invested Participants, in 

accordance with provisions under such 

Plan for individually-directed 

investment of such accounts. The 

Offering was approved by the Board on 

April 28, 2010, August 18, 2010, and 

August 27, 2011. It is represented that 

all members of the Board participated in 

each vote to approve the Offering and 

each vote was unanimously approved 

by the Board. 

On the dates of approval, the Board 

was comprised of eleven (11) 

individuals, two (2) of whom are 

employees of Bancorp or a subsidiary. 

The following table identifies the 

members of the Board and the 

Committee and each member’s 

respective ownership interests in 

Bancorp, as of August 27, 2010: 

Name Number of 

shares owned 

Ownership 

percentage 10 Employed by Bancorp or subsidiary 

Edward E. Birch ............................................................ 6,485 0.014 No. 

H. Gerald Bidwell .......................................................... 0 0.000 No. 

Richard S. Hambleton, Jr., Committee Member .......... 6,485 0.014 No. 

D. Vernon Horton ......................................................... 9,317 0.020 Yes. 

Mr. Horton provides services to Bancorp on a parttime basis. 

S. Lachlan Hough ......................................................... 0 0.000 No. 

Roger C. Knopf ............................................................. 363 0.001 No. 

George S. Leis ............................................................. 6,318 0.013 Yes. 

Mr. Leis was the CEO of Bancorp at the time of the 

Offering and is currently the Chief Operating Officer 

of Bancorp. 

William R. Loomis, Committee Member ....................... 0 0.000 No. 

John R. Mackall ............................................................ 10,909 0.023 No. 


emcdonald on DSK2BSOYB1PROD with NOTICES
Federal Register / Vol. 76, No. 113 / Monday, June 13, 2011 / Notices 34269 

11 It is represented that the Invested Participants 

rely on the relief provided by the statutory 

exemption, pursuant to section 408(e) of the Act for 

the exercise of the Rights. The Department is 

offering no view, as to whether the requirements of 

the statutory exemption provided in section 408(e) 

of the Act have been satisfied. Further, the 

Department, herein, is not providing any relief with 

respect to the exercise of the Rights. 

Name Number of 

shares owned 

Ownership 

percentage 10 Employed by Bancorp or subsidiary 

Richard A. Nightingale, Committee Member ................ 15,204 0.032 No. 

Kathy J. Odell, Committee Member ............................. 7,285 0.015 No. 

9. Enclosed with a form letter mailed 

to each participant in the Plan, on 

October 19, 2010, Bancorp provided a 

copy of the prospectus which described 

the Offering, a document providing 

frequently asked questions and answers 

regarding the Offering for Plan 

participants, an election form for Plan 

participants, and a return envelope 

addressed to BNY Mellon Shareowner 

Services (BMSS), the subscription agent. 

10. In order to exercise the Rights, 

Invested Participants had to complete 

an election form, deliver such form to 

BMSS, the subscription agent, liquidate 

sufficient existing investments in the 

Plan in order to generate the full 

subscription price in cash, transfer such 

cash to the Schwab Value Advantage 

Money Institutional Prime Shares Fund 

by the close of business on the fourth 

(4th) business day (November 15, 2010) 

prior to the expiration of the Offering on 

November 19, 2010. It is represented 

that the date, November 15, 2010, 

provided the third party administrator 

with four (4) days within which to 

compile the exercise elections of the 

Invested Participants, update the Plan 

records, and forward such exercise 

elections to the subscription agent. 

It is represented that 404 Invested 

Participants out of 1,417 decided to 

exercise the Rights. In this regard, the 

Rights of such Invested Participants 

were executed on November 19, 2010.11

It is represented that November 19, 

2010, the last day of the Offering, was 

selected as the exercise date with 

respect to the Rights held under the 

Plan for the purpose of providing a 

protective cut-off date, where if on such 

date the exercise price of the Rights was 

greater than the trading price of the 

Stock, the election to exercise would not 

be honored and the Rights would be 

canceled. The Invested Participants 

exercised 11,751,048 Rights. As a result 

of this exercise, the Invested 

Participants received 11,751,048 shares 

of Stock. Accordingly, it is represented 

that the Plan received total gross 

proceeds of $2,350,209.60 as a result of 

participation in the Offering. 

11. It is represented that no brokerage 

fees, commissions, subscription fees, or 

any other charges were paid by the Plan 

with respect to the Offering, and no 

brokerage fees, commissions, or other 

monies were paid by the Plan to any 

broker in connection with the exercise 

of the Rights. It is further represented 

that Bancorp did not charge any fees or 

sales commissions to issue the Rights or 

to issue the Stock upon the exercise of 

the Rights. 

12. It is represented that, as soon as 

practicable after the expiration of the 

Offering, BMSS, as the subscription 

agent, arranged for the distribution of 

the Stock purchased as a result of the 

exercise of the Rights. It is further 

represented that the Stock purchased in 

connection with the Offering was 

eligible for trading on NASDAQ by the 

Invested Participants at any time after 

such Stock was credited to such 

participants’ accounts. 

13. Bancorp has requested an 

exemption with respect to the 

transactions which are the subject of 

this proposed exemption. In this regard, 

relief has been requested: (a) For the 

acquisition of the Rights by the Plan in 

connection with the Offering by 

Bancorp, and (b) for the holding of the 

Rights by the Plan during the 

subscription period of the Offering. It is 

represented that the Rights acquired by 

the Plan satisfy the definition of 

‘‘employer securities,’’ pursuant to 

section 407(d)(1) of the Act. As the 

Rights were not stock or a marketable 

obligation, such Rights do not meet the 

definition of ‘‘qualifying employer 

securities,’’ as set forth in section 

407(d)(5) of the Act. Accordingly, the 

subject transactions constitute an 

acquisition and holding on behalf of a 

plan, of an employer security which is 

not a qualifying employer security, in 

violation of section 407(a) of the Act, for 

which the applicant has requested relief 

from sections 406(a)(1)(A), 406(a)(1)(E), 

406(a)(2), and 407(a)(1)(A) of the Act. 

The subject transactions also raise 

conflict of interest issues by fiduciaries 

of the Plan for which relief from the 

prohibitions of section 406(b)(1) and 

406(b)(2) of the Act has been requested. 

14. It is represented that the subject 

transactions have already been 

consummated. In this regard, the Plan 

acquired the Rights pursuant to the 

Offering on October 27, 2010, and held 

such Rights pending the closing of the 

Offering on November 19, 2010. As 

there was insufficient time between the 

dates when the Plan acquired the Rights 

and when such Rights expired, to apply 

for and be granted an exemption, 

Bancorp is seeking a retroactive 

exemption to be granted, effective as of 

October 27, 2010, the date that the Plan 

acquired the Rights. 

15. Bancorp represents that the 

proposed exemption is administratively 

feasible. In this regard, the acquisition 

and holding of the Rights by the Plan 

were one-time transactions that 

involved a distribution of the Rights to 

all shareholders at no cost. It is 

represented that it is customary for the 

industry involved to make a rights 

offering available to all shareholders. 

16. Bancorp represents that the 

transactions which are the subject of 

this proposed exemption are in the 

interest of the Plan, because the subject 

transactions represented a valuable 

opportunity to the accounts of the 

Invested Participants in the Plan to buy 

the Stock at a discount. It is represented 

that this discount could be realized by 

selling the Stock immediately after the 

exercise of the Rights and investing the 

proceeds from such sale of the Stock in 

other investment options under the 

Plan. If the Plan had not participated in 

the Offering, the Invested Participants 

whose accounts in the Plan were 

invested in shares of the Stock on the 

Record Date would not have received 

the benefit all other shareholders of the 

Stock received. 

Bancorp represents that denial of the 

requested exemption would result in the 

imposition of a tax to be paid by any 

disqualified person who participated in 

the prohibited transaction. Thus, the 

denial of the exemption would result in 

an economic loss to Bancorp, to its 

shareholders, and therefore to the 

Invested Participants. 

17. Bancorp represents that the 

proposed exemption provides sufficient 

safeguards for the protection of the Plan 

and its participants and beneficiaries. In 

this regard, the participation in the 

Offering protected the accounts of the 

Invested Participants in the Plan from 

having their interest in the Stock being 

diluted as a result of the Offering. 

It is further represented that the 

interests of the accounts of Invested 

Participants in the Plan were adequately 


emcdonald on DSK2BSOYB1PROD with NOTICES
34270 Federal Register / Vol. 76, No. 113 / Monday, June 13, 2011 / Notices 

protected in the decision for the Plan to 

acquire and hold the Rights in that such 

decision was made by the Board which 

was independent of management and 

Bancorp. 

The accounts of Invested Participants 

in the Plan were protected against 

economic loss in that, if on November 

15, 2010, the trading price of the Stock 

was not greater than $0.20 per share, all 

Rights that such Invested Participants 

had elected to exercise would be 

immediately cancelled. 

18. In summary, Bancorp represents 

that the subject transactions satisfy the 

statutory criteria of section 408(a) of the 

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

because: 

(a) The receipt by the Plan of the 

Rights occurred in connection with the 

Offering made available by Bancorp on 

the same terms to all shareholders of the 

Stock of Bancorp; 

(b) The acquisition of the Rights by 

the Plan resulted from an independent 

act of Bancorp, as a corporate entity, 

and all holders of the Rights, including 

the Plan, were treated in the same 

manner with respect to the acquisition 

of such Rights; 

(c) Each shareholder of the Stock, 

including the Plan, received the same 

proportionate number of Rights based 

on the number of shares of Stock of 

Bancorp held by such shareholder; 

(d) The Board decided that the 

Offering should be made available to all 

shareholders of the Stock, including the 

Plan, as record owner of the Stock held 

in the Plan on behalf of the accounts of 

the Invested Participants, all or a 

portion of whose accounts in the Plan 

are invested in the Stock, in accordance 

with provisions under such Plan for 

individually-directed investment of 

such accounts; 

(e) The decision to exercise the Rights 

or to refrain from exercising the Rights 

was made by each of the Invested 

Participants in accordance with the 

provision under the Plan for 

individually-directed accounts; and 

(f) No brokerage fees, commissions, 

subscription fees, or any other charges 

were paid by the Plan with respect to 

the Offering, and no brokerage fees, 

commissions, or other monies were paid 

by the Plan to any broker in connection 

with the exercise of the Rights. 

Notice to Interested Persons 

The persons who may be interested in 

the publication in the Federal Register 

of the Notice of Proposed Exemption 

(the Notice) include current participants 

and beneficiaries, former participants 

and beneficiaries, who were participants 

and beneficiaries as of the Record Date, 

alternate payees, the Committee, the 

Board, and the administrator, all 

trustees of the plan, and any other 

parties determined to be ‘‘interested 

persons.’’ 

It is represented that each of these 

classes of interested persons will be 

notified of the publication of the Notice 

by first class mail, within fifteen (15) 

days of publication of the Notice in the 

Federal Register. Such mailing will 

contain a copy of the Notice, as it 

appears in the Federal Register on the 

date of publication, plus a copy of the 

Supplemental Statement, as required, 

pursuant to 29 CFR 2570.43(b)(2), which 

will advise all interested persons of 

their right to comment and to request a 

hearing. 

All written comments and/or requests 

for a hearing must be received by the 

Department from interested persons 

within 45 days of the publication of this 

proposed exemption in the Federal 

Register. 

For Further Information Contact: Ms. 

Angelena C. Le Blanc of the Department, 

telephone (202) 693–8540. (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 

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 8th day of 

June, 2011. 

Ivan Strasfeld, 

Director of Exemption Determinations, 

Employee Benefits Security Administration, 

U.S. Department of Labor. 

[FR Doc. 2011–14520 Filed 6–10–11; 8:45 am] 

BILLING CODE 4510–29–P 

DEPARTMENT OF LABOR 

Employment and Training 

Administration 

Federal-State Extended Benefits 

Program—Methodology for Calculating 

‘‘on’’ or ‘‘off’’ Total Unemployment Rate 

Indicators for Purposes of Determining 

When a State Begins and Ends an 

Extended Benefit Period 

AGENCY: Employment and Training 

Administration, Labor. 

ACTION: Notice. 

SUMMARY: UIPL 16–11 informs states of 

the methodology used to calculate the 

‘‘on’’ or ‘‘off’’ total unemployment rate 

(TUR) indicators to determine when 

extended benefit (EB) periods begin and 

end in a state. UIPL 16–11 is published 

below to inform the public and is 

available at: http://wdr.doleta.gov/ 

directives/corr_doc.cfm?DOCN=3027. 

SUPPLEMENTARY INFORMATION: 

UIPL 16–11: Federal-State Extended 

Benefits Program—Methodology for 

Calculating ‘‘on’’ or ‘‘off’’ Total 

Unemployment Rate Indicators for 

Purposes of Determining When a State 

Begins and Ends an Extended Benefit 

Period 

1. Purpose. To inform states of the 

new methodology used to calculate the 

‘‘on’’ or ‘‘off’’ total unemployment rate 

(TUR) indicators to determine when 

extended benefit (EB) periods begin and 

end in a state. 

2. References. The Federal-State 

Extended Unemployment Compensation 

Act of 1970 (EUCA); Section 2005 of 

Division B, Title II, the Assistance for 


emcdonald on DSK2BSOYB1PROD with NOTICES