[Federal Register Volume 74, Number 57 (Thursday, March 26, 2009)]
[Notices]
[Pages 13242-13261]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-6619]



[[Page 13242]]

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DEPARTMENT OF LABOR

Employee Benefits Security Administration

[Application Nos. and Proposed Exemptions; D-11397, PNC Financial 
Services Group, Inc. (PNC Financial); D-11552, Barclays Bank PLC and 
Barclays Capital Inc. (Collectively, Barclays or the Applicants; D-
11536 Through D-11550, Individual Retirement Accounts (the IRAs) for 
Ralph Hartwell, Harold Latin, Kenlon Johnson, Carol Johnson, Shanon 
Taylor, Michael Ball, Dianne Barkas, Roy Barkas, Harry DeWall, Alice 
Pike, Steven Larsen, C. Timothy Hopkins, Wayne Meuleman, Robert L. 
Miller, and Richard T. Scott (Collectively, the Participants), et al.]


Notice of Proposed Exemptions

AGENCY: Employee Benefits Security Administration, Labor.

ACTION: Notice of proposed exemptions.

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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).

Written Comments and Hearing Requests

    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. Comments and 
requests for a hearing should state: (1) the name, address, and 
telephone number of the person making the comment or request, and (2) 
the nature of the person's interest in the exemption and the manner in 
which the person would be adversely affected by the exemption. A 
request for a hearing must also state the issues to be addressed and 
include a general description of the evidence to be presented at the 
hearing.

ADDRESSES: All written comments and requests for a hearing (at least 
three copies) should be sent to the Employee Benefits Security 
Administration (EBSA), Office of Exemption Determinations, Room N-5700, 
U.S. Department of Labor, 200 Constitution Avenue, NW., Washington, DC 
20210. Attention: Application No. ----, stated in each Notice of 
Proposed Exemption. Interested persons are also invited to submit 
comments and/or hearing requests to EBSA via e-mail or FAX. Any such 
comments or requests should be sent either by e-mail to: 
``<a href="/cdn-cgi/l/email-protection#721f1d14141b06065c101706060b32161d1e5c151d04"><span class="__cf_email__" data-cfemail="4924262f2f203d3d672b2c3d3d30092d2625672e263f">[email protected]</span></a>'', or by FAX to (202) 219-0204 by the end of 
the scheduled comment period. The applications for exemption and the 
comments received will be available for public inspection in the Public 
Documents Room of the Employee Benefits Security Administration, U.S. 
Department of Labor, Room N-1513, 200 Constitution Avenue, NW., 
Washington, DC 20210.

Notice to Interested Persons

    Notice of the proposed 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, 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.

PNC Financial Services Group, Inc. (PNC Financial) Located in 
Pittsburgh, Pennsylvania [Application No. D-11397]

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--Exemption for Receipt of Fees

    In connection with the investment in an open-end investment company 
(a Fund or Funds), as defined, below, in Section IV(e), by certain 
employee benefit plans (Client Plan or Client Plans) for which PNC, as 
defined, below, in Section IV(a), serves as a fiduciary and is a party 
in interest with respect to such Client Plan(s), if the exemption is 
granted, the restrictions of sections 406(a) and 406(b) of the Act and 
the sanctions resulting from the application of section 4975 of the 
Code, by reason of sections 4975(c)(1)(A) through (F) \1\ of the Code, 
shall not apply, effective September 29, 2006, to:
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    \1\ For purposes of this exemption reference to specific 
provisions of Title I of the Act, unless otherwise specified, refer 
also to the corresponding provisions of the Code.
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    (a) The receipt of fees by PNC from a Fund where BlackRock, as 
defined, below, in Section IV(b), acts as the investment adviser for 
such Fund, and the receipt of fees by BlackRock for the provision of 
investment advisory services, or similar services, to such Fund;
    (b) the receipt of fees by PNC from a Fund for providing certain 
service(s) (Secondary Service(s)), as defined, below, in Section IV(i), 
to such Fund; and
    (c) the receipt of fees by PNC from BlackRock in connection with 
administrative service(s) (Mutual Fund Administration Service(s)), as 
defined, below, in Section IV(l), provided to a Fund in which a Client 
Plan invests; provided that the conditions, as set forth in Section II 
and Section III, below, were satisfied, as of the effective date of 
this exemption and thereafter.

Section II--Specific Conditions

    (a) PNC, serving as a fiduciary for a Client Plan, satisfies any 
one (but not all) of the following:
    (1) A Client Plan invested in a Fund does not pay any plan-level 
investment management fee, investment advisory fee, or similar fee 
(Plan-Level Fee(s)) to PNC with respect to any of the assets of such 
Client Plan which are invested in shares of such Fund for the entire 
period of such investment (the Offset Fee Method). This condition does 
not preclude the payment of investment advisory fees or similar fees 
(Fund-Level Fee(s)) by a Fund to BlackRock under the terms of an 
investment advisory agreement adopted in accordance with section 15 of 
the Investment Company Act of 1940 (the Investment Company Act);
    (2) A Client Plan invested in a Fund pays an investment management 
fee or similar fee based on total assets of such Client Plan from which 
a credit has been subtracted representing such Client Plan's pro rata 
share of

[[Page 13243]]

investment advisory fees or similar fees paid by such Fund to BlackRock 
(the Subtraction Fee Method). If, during any fee period for which a 
Client Plan has prepaid its investment management or similar fee, such 
Client Plan purchases shares of such Fund, the requirement of this 
Section II(a)(2) shall be deemed met with respect to such prepaid fee 
if, by a method reasonably designed to accomplish the same, the amount 
of the prepaid fee that constitutes the fee with respect to the assets 
of such Client Plan invested in shares of such Fund: (i) Is anticipated 
and subtracted from the prepaid fee at the time of payment of such fee, 
(ii) is returned to such Client Plan no later than during the 
immediately following fee period, or (iii) is offset against the 
prepaid fee for the immediately following fee period or for the fee 
period immediately following thereafter. For purposes of this Section 
II(a)(2), a fee shall be deemed to be prepaid for any fee period, if 
the amount of such fee is calculated as of a date not later than the 
first day of such period; or
    (3) A Client Plan invested in a Fund receives a ``a credit'' \2\ 
(the Credit Fee Method) of such Client Plan's proportionate share of 
all fees charged to such Fund by BlackRock for investment advisory 
services or similar services for a particular month: (1) Effective for 
the period, September 29, 2006, through December 31, 2008, on the 
earlier of either: (a) The same day as PNC receives a fee from 
BlackRock for Mutual Fund Administration Services provided for that 
month to such Fund by PNC, or (b) the fifth business day before the end 
of the month following the month in which fees for investment advisory 
services, or similar services, accrued, or (2) effective for the period 
beginning, January 1, 2009, and continuing thereafter, on a date which 
is no later than one business day after BlackRock receives fees from 
the Fund for investment advisory services, or similar services, 
provided for that month to such Fund by BlackRock. The crediting of all 
such fees to such Client Plan by PNC is audited by an independent 
accounting firm (the Auditor) on at least an annual basis to verify the 
proper crediting of such fees to such Client Plan.
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    \2\ PNC Financial represents that it would be accurate to 
describe ``the credit'' as a ``credited dollar amount'' to cover 
situations in which the credited amount is used to acquire 
additional shares of a Fund, rather than being held by a Client Plan 
in the form of cash. It is represented that the standard practice is 
to reinvest the ``credited dollar amount'' in additional shares of 
the same Fund with respect to which the fees were credited.
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    (b) The price paid or received by a Client Plan for shares in a 
Fund is the net asset value per share, as defined, below, in Section 
IV(f), at the time of the transaction, and is the same price which 
would have been paid or received for such shares by any other investor 
in such Fund at that time;
    (c) PNC, including any officer or director of PNC, does not 
purchase shares of a Fund from any Client Plan or sell shares of a Fund 
to any Client Plan;
    (d) A Client Plan does not pay sales commissions in connection with 
any purchase or sale of shares of a Fund, and a Client Plan does not 
pay redemption fees in connection with any sale of shares to a Fund, 
unless (1) such redemption fee is paid only to a Fund, and
    (2) The existence of such redemption fee is disclosed in the 
prospectus for such Fund in effect both at the time of any purchase of 
such shares and at the time of such sale;
    (e) The combined total of all fees received by PNC for services 
provided by PNC:
    (1) To Client Plans, and
    (2) To Funds in which Client Plans invest is not in excess of 
reasonable compensation within the meaning of section 408(b)(2) of the 
Act;
    (f) PNC does not receive any fees payable pursuant to Rule 12b-1 
under the Investment Company Act in connection with the subject 
transactions;
    (g) A Client Plan is not an employee benefit plan sponsored or 
maintained by PNC;
    (h) A second fiduciary (Second Fiduciary), as defined, below, in 
Section IV(h), who is acting on behalf of a Client Plan receives, in 
advance of any initial investment by a Client Plan in a Fund, full and 
detailed written disclosure of information concerning such Fund, 
including but not limited to:
    (1) A current prospectus for each Fund in which such Client Plan is 
considering investing;
    (2) A statement describing the fees, including the nature and 
extent of any differential between the rates of such fees for:
    (i) Any investment advisory or similar services to be paid by such 
Fund to BlackRock,
    (ii) Any Secondary Services to be paid by such Fund to PNC,
    (iii) Any Mutual Fund Administration Services to be paid by 
BlackRock to PNC, and
    (iv) All other fees to be charged to or paid by a Client Plan and 
by such Fund;
    (3) The reasons why PNC, acting as fiduciary for such Client Plan, 
may consider investment in such Fund to be appropriate for such Client 
Plan;
    (4) A statement describing whether there are any limitations 
applicable to PNC with respect to which assets of a Client Plan that 
may be invested in such Fund, and if so, the nature of such 
limitations; and
    (5) Upon the request of the Second Fiduciary, acting on behalf of a 
Client Plan, a copy of the proposed exemption and a copy of the final 
exemption, if granted, once such documents are published in the Federal 
Register.
    (i) On the basis of the information described, above, in Section 
II(h), a Second Fiduciary, acting on behalf of a Client Plan, 
authorizes in writing: (1) The investment of the assets of such Client 
Plan in shares of each particular Fund; and (2) the fees received by 
PNC and by BlackRock in connection with services provided by PNC and by 
BlackRock to such Fund. Such authorization by a Second Fiduciary must 
be consistent with the responsibilities, obligations, and duties 
imposed on fiduciaries by Part 4 of Title I of the Act.
    (j)(1) All authorizations, described, above, in Section II(i), made 
by a Second Fiduciary, regarding: (i) Investments by a Client Plan in a 
Fund, (ii) fees paid for investment advisory services or similar 
services provided by BlackRock to such Fund, (iii) fees paid for 
Secondary Services provided by PNC to such Fund, and (iv) fees paid by 
BlackRock to PNC for Mutual Fund Administration Services provided by 
PNC to such Fund, shall be terminable at will by the Second Fiduciary, 
acting on behalf of such Client Plan, without penalty to such Client 
Plan, upon receipt by PNC of a written notice of termination. A form 
(the Termination Form), as defined, below, in Section IV(j), expressly 
providing an election to terminate the authorizations, described, 
above, in Section II(i), with instructions on the use of such 
Termination Form must be provided to such Second Fiduciary at least 
annually. However, if a Termination Form has been provided to such 
Second Fiduciary, pursuant to Section II(k) and (l), below, then a 
Termination Form need not be provided again, pursuant to this Section 
II(j), unless at least six (6) months but no more than twelve (12) 
months have elapsed, since a Termination Form was provided, pursuant to 
Section II(k) and (l), below.
    (2) The instructions for the Termination Form must include the 
following statements:
    (i) The authorization, described, above, in Section II(i), is 
terminable at will by the Second Fiduciary, acting on

[[Page 13244]]

behalf of a Client Plan, without penalty to such Client Plan, upon 
receipt by PNC of written notice from such Second Fiduciary.
    (ii) Failure by such Second Fiduciary to return the Termination 
Form on behalf of such Client Plan will be deemed to be an approval by 
the Second Fiduciary and will result in the continuation of the 
authorization, as described, above, in Section II(i), of PNC to engage 
in the transactions which are the subject of this exemption.
    (k) For a Client Plan invested in a Fund which uses one of the fee 
methods described, above, in Section II(a)(1), (a)(2), or (a)(3), in 
the event of a proposed change from one of the fee methods to another 
or in the event of a proposed increase in the rate of any fee paid by a 
Fund to BlackRock for any investment advisory service, or similar 
service that BlackRock provides to such Fund over an existing rate for 
such services or method of determining the fee for such services, which 
had been authorized, in accordance with Section II(i), above, by the 
Second Fiduciary for such Client Plan, at least thirty (30) days in 
advance of the implementation of such change from one of the fee 
methods to another or such increase in a fee, PNC will provide a 
written notice (which may take the form of a proxy statement, letter, 
or similar communication that is separate from the prospectus of such 
Fund and which explains the nature and amount of such change from one 
of the fee methods to another or increase in fee) to the Second 
Fiduciary of each Client Plan affected by such change from one of the 
fee methods to another or increased fee. Such notice shall be 
accompanied by a Termination Form, with instructions on the use of such 
Termination Form, as described, above, in Section II(j).\3\
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    \3\ It is represented that PNC furnished only disclosure, not 
advanced notice, of a mid-2007 advisory fee change to the Second 
Fiduciaries of Client Plans invested in Funds using the Credit Fee 
Method. The change, which resulted in increased fees to BlackRock of 
0.5 basis points, (which it is represented was credited back to the 
Client Plans) occurred effective June 1, 2007, with the disclosure 
being provided in October 2007, after the effective date of such 
change. As the Second Fiduciaries of the Client Plans did not 
receive notification of such increase at least thirty (30) days in 
advance of the implementation of such increase, the Department, 
herein, is not providing relief for the receipt of such fee increase 
by BlackRock.
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    (l) In the event of:
    (i) A proposed addition of a Secondary Service for which an 
additional fee is charged; or
    (ii) A proposed addition of a Mutual Fund Administration Service 
provided by PNC to a Fund in which a Client Plan invests and for which 
an additional fee is charged; or
    (iii) A proposed increase in the rate of any fee paid by a Fund to 
PNC for any Secondary Service, or
    (iv) A proposed increase in the rate of any fee paid by BlackRock 
to PNC for Mutual Fund Administration Services provided to such Fund, 
or
    (v) A proposed increase in the rate of any fee paid for Secondary 
Services or for Mutual Fund Administration Services that results from 
the decrease in the number or kind of services performed by PNC for 
such fee over an existing rate for services which had been authorized, 
in accordance with Section II(i), by the Second Fiduciary for a Client 
Plan invested in such Fund, PNC, at least thirty (30) days in advance 
of the implementation of such fee increase or additional service for 
which an additional fee is charged, will provide a written notice 
(which may take the form of a proxy statement, letter, or similar 
communication that is separate from the prospectus of such Fund and 
which explains the nature and amount of the additional service for 
which an additional fee is charged or the nature and amount of the 
increase in fees) to the Second Fiduciary of each Client Plan invested 
in such Fund which is proposing to increase fees or add services for 
which an additional fee is charged. Such notice shall be accompanied by 
a Termination Form, with instructions on the use of such Termination 
Form, as described, above in Section II(j).
    (m) On an annual basis, PNC, serving as fiduciary to a Client Plan, 
provides the Second Fiduciary of such Client Plan invested in a Fund 
with:
    (1) A copy of the current prospectus for such Fund in which such 
Client Plan invests;
    (2) Upon the request of such Second Fiduciary, a copy of the 
Statement of Additional Information for such Fund which contains a 
description of all fees paid by such Fund to PNC and all fees paid by 
BlackRock to PNC for Mutual Fund Administration Services;
    (3) A copy of the annual financial disclosure report which includes 
information about Fund portfolios, as well as the audit findings of the 
independent Auditor, within sixty (60) days of the preparation of such 
report; and
    (4) Oral or written responses to inquiries of the Second Fiduciary 
of such Client Plan, as such inquiries arise.
    (n) All dealings between a Client Plan and a Fund are on a basis no 
less favorable to such Client Plan than dealings between such Fund and 
other shareholders invested in such Fund.

Section III--General Conditions

    (a) PNC maintains for a period of six (6) years the records 
necessary to enable the persons described, below, in Section III(b) to 
determine whether the conditions of this exemption have been met, 
except that:
    (1) A prohibited transaction will not be considered to have 
occurred, if solely because of circumstances beyond the control of PNC, 
the records are lost or destroyed prior to the end of the six-year 
period, and
    (2) No party in interest other than PNC 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 Section III(b), below.
    (b)(1) Except as provided in Section III(b)(2) and notwithstanding 
any provisions of section 504(a)(2) of the Act, the records referred to 
in Section III(a) are unconditionally available at their customary 
location for examination during normal business hours by--
    (i) Any duly authorized employee or representative of the 
Department or the Internal Revenue Service,
    (ii) Any fiduciary of a Client Plan who has authority to acquire or 
dispose of shares of a Fund owned by such Client Plan, or any duly 
authorized employee or representative of such fiduciary, and
    (iii) Any participant or beneficiary of a Client Plan or duly 
authorized employee or representative of such participant or 
beneficiary.
    (2) None of the persons described in Section III(b)(1)(ii) and 
(iii) shall be authorized to examine trade secrets of PNC, or 
commercial or financial information which is privileged or 
confidential.

Section IV--Definitions

    For purposes of this exemption:
    (a) The term, ``PNC,'' means PNC Financial, and any affiliate 
thereof, as defined, below in Section IV(c).
    (b) The term, ``BlackRock,'' means BlackRock, Inc., and any 
affiliate thereof, as defined, below in Section IV(c).
    (c) An ``affiliate'' of a person includes:
    (1) Any person directly or indirectly, through one or more 
intermediaries, controlling, controlled by, or under common control 
with the person;
    (2) Any officer, director, employee, relative, or partner in any 
such person; and
    (3) Any corporation or partnership of which such person is an 
officer, director, partner, or employee.

[[Page 13245]]

    (d) The term, ``control,'' means the power to exercise a 
controlling influence over the management or policies of a person other 
than an individual.
    (e) The term, ``Fund(s),'' shall mean any diversified open-end 
investment company or companies registered with the Securities and 
Exchange Commission under the Investment Company Act, as amended, for 
which BlackRock serves as an investment adviser (but not sub-adviser).
    (f) The term, ``net asset value,'' means the amount for purposes of 
pricing all purchases and sales of shares of a Fund calculated by 
dividing the value of all securities, determined by a method as set 
forth in the prospectus for such Fund and in the statement of 
additional information, and other assets belonging to the Fund or 
portfolio of the Fund, less the liabilities charged to each such 
portfolio or Fund, by the number of outstanding shares.
    (g) The term, ``relative,'' means a relative as that term is 
defined in section 3(15) of the Act (or a member of the family as that 
term is defined in section 4975(e)(6) of the Code), or a brother, a 
sister, or a spouse of a brother or a sister.
    (h) The term, ``Second Fiduciary,'' means a fiduciary of a Client 
Plan who is independent of and unrelated to PNC and BlackRock. For 
purposes of this exemption, the Second Fiduciary will not be deemed to 
be independent of and unrelated to PNC and BlackRock if:
    (1) Such fiduciary, directly or indirectly controls, through one or 
more intermediaries, is controlled by, or is under common control with 
PNC or with BlackRock;
    (2) Such fiduciary, or any officer, director, partner, employee, or 
relative of the fiduciary, is an officer, director, partner, or 
employee of PNC or of BlackRock (or is a relative of such persons); or
    (3) Such fiduciary, directly or indirectly, receives any 
compensation or other consideration for his or her personal account in 
connection with any transaction described in this exemption.
    If an officer, director, partner, or employee of PNC or of 
BlackRock (or relative of such persons) is a director of such Second 
Fiduciary, and if he or she abstains from participation in:
    (i) The choice of such Client Plan's investment adviser,
    (ii) The approval of any such purchase or sale between such Client 
Plan and a Fund, and
    (iii) The approval of any change in fees, as described, above, in 
Section II(k) or (l), charged to or paid by such Client Plan in 
connection with any of the transactions described in Section I above, 
then Section IV(h)(2), above, shall not apply.
    (i) The term, ``Secondary Service(s),'' means a service or services 
which is/are provided by PNC to a Fund, including but not limited to 
custodial, accounting, or administrative services. The fees for 
providing Secondary Services to a Fund are paid to PNC by such Fund.
    (j) The term, ``Termination Form,'' means the form supplied to a 
Second Fiduciary which expressly provides an election to such Second 
Fiduciary to terminate on behalf of a Client Plan the authorization 
described, above, in Section II(i).
    (k) The term, ``business day,'' means any day that
    (i) PNC Financial is open for conducting all or substantially all 
of its banking functions, and
    (ii) The New York Stock Exchange (or any successor exchange) is 
open for trading.
    (l) The term, ``Mutual Fund Administration Services,'' means a 
service or services which is/are provided by PNC to, or on behalf of, a 
Fund, including PNC's maintaining records of investments by Client 
Plans in such Fund, processing Fund transactions for Client Plans, 
transmitting account statements and shareholder communications, 
responding to inquiries from Client Plans regarding account balances 
and dividends, and providing information to such Fund on sales and 
assisting in monitoring possible market timing. The fees for providing 
Mutual Fund Administration Services to a Fund are paid to PNC by 
BlackRock, rather than by such Fund.

DATES: Effective Date: If granted, this proposed exemption will be 
effective as of September 29, 2006.

Summary of Facts and Representations

    1. PNC Financial is a bank holding company that owns or controls 
two banks and a number of non-bank subsidiaries. PNC Financial 
provides, through its subsidiaries, a wide variety of trust and banking 
services to individuals, corporations, and institutions. Through its 
banking subsidiaries, PNC Financial provides investment management, 
fiduciary and trustee services to employee benefit plans and charitable 
and endowment assets, and provides non-discretionary services and 
investment options for defined contribution plans. PNC Financial also 
provides a range of tailored investment, trust, and private banking 
products to affluent individuals and families. In addition, PNC 
Financial and its affiliates provide various types of administrative 
services to mutual funds, including acting as transfer and disbursing 
agents and providing custodial and accounting services.
    As of June 30, 2006, PNC Financial had $50 billion in assets under 
management.
    2. The Funds are open-end investment companies registered with the 
Securities and Exchange Commission under the Investment Company Act, as 
amended. The investment adviser to the Fund is BlackRock Advisors, Inc. 
(BlackRock Advisors), a wholly-owned subsidiary of BlackRock, Inc. 
which is a subsidiary of PNC Financial. BlackRock Advisors had $464.1 
billion in assets under management, as of June 30, 2006. Based in New 
York, BlackRock Advisors currently manages assets for institutional and 
individual investors worldwide through a variety of equity, fixed 
income, cash management, and alternative investment products.
    The overall management of the Funds, including the negotiation of 
investment advisory contracts, rests with the Board of Trustees that 
are elected by the shareholders of the Funds.
    3. PFPC Inc. serves as co-administrator, transfer agent, and 
dividend disbursing agent for the Funds, and its parent company, PFPC 
Trust Company, serves as custodian for the Funds. Both are indirect 
wholly-owned subsidiaries of PNC Financial. The distributor for the 
Funds is BlackRock Distributors, Inc., a wholly-owned subsidiary of 
PFPC Inc. In the application file, PNC Financial represents that the 
Funds or their agents may pay fees to broker-dealers that are 
affiliates of PNC for omnibus account services with regard to 
shareholders that have invested through such broker-dealers. In this 
regard, PNC Financial has agreed to the exclusion from the scope of 
relief under this proposed exemption of brokerage services provided to 
the Funds by affiliated brokers for the execution of securities 
transactions engaged in by the Funds.\4\
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    \4\ The Department, herein, is not providing any relief for 
brokerage services provided to the Funds by affiliated brokers for 
the execution of securities transactions engaged in by the Funds.
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    4. The Client Plans which are the subject of this exemption, 
include employee benefit plans, as defined in section 3(3) of the Act, 
and plans, as defined in section 4975(e)(1) of the Code.
    PNC Financial, through its subsidiaries and affiliates serves as 
trustee, investment manager, and in other similar fiduciary capacities 
with

[[Page 13246]]

respect to retirement plans qualified under section 401(a) of the Code, 
individual retirement accounts (IRAs) described in section 408 of the 
Code, and welfare or other employee benefit plans that constitute 
``employee plans,'' as defined in section 3(3) of the Act and/or plans, 
as defined in section 4975(e)(1) of the Code. These services include 
discretionary investment management programs under which PNC Financial 
and its affiliates invest the assets of plans in securities, including 
shares of open-end investment companies registered under the Investment 
Company Act, the investment advisers of which may or may not be 
affiliated with PNC Financial and its affiliates.
    The specific Client Plans for which this exemption has been 
requested are Client Plans to which PNC Financial or one of its 
affiliates is a fiduciary with investment discretion and whose assets 
either: (1) Are currently invested in the Funds; or (2) may in the 
future be invested in the Funds.
    The exemption is not being requested for in-house plans of PNC 
Financial or its affiliates.
    5. PNC provides discretionary investment management services to a 
number of its Client Plans. As of June 30, 2006, PNC performed 
discretionary asset management services, including through the 
management of asset allocation models, for 1,102 employee benefit 
accounts with total assets of $4.299 billion. PNC receives asset-based 
compensation for its services to the Client Plans, which is paid for 
either by a Client Plan from its assets or by the sponsor of a Client 
Plan. In the course of managing assets for Client Plans, PNC may invest 
the assets of such Client Plans in the Funds as a means of obtaining 
more specialized management along with enhanced liquidity, economies of 
scale, and greater diversification than would be available through a 
separate account arrangement.
    Investments by Client Plans in the Funds occur through direct 
purchases of shares of the Funds on an ongoing basis. PNC also offers 
an asset allocation product, Capital Directions, which utilizes the 
Funds.
    6. Section 406(a)(1)(A) of the Act prohibits a fiduciary with 
respect to a plan from causing such plan to engage in a direct or 
indirect sale or exchange of any property with a party in interest. 
Section 406(a)(1)(D) of the Act prohibits a fiduciary with respect to a 
plan from causing such plan to engage in a transaction, if he knows or 
should know, that such transaction constitutes a transfer to, or use by 
or for the benefit of, a party in interest, of any assets of such plan.
    Sections 3(14)(A) and (B) of the Act define the term, ``party in 
interest,'' to include, respectively, any fiduciary of a plan and any 
person providing services to a plan. Under section 3(21)(A)(i) of the 
Act, a person is a fiduciary with respect to a plan to the extent such 
person exercises authority or control with respect to the management or 
disposition of a plan's assets.
    Under section 406(b) of the Act, a fiduciary with respect to a plan 
may not: (1) Deal with the assets of a plan in his own interest or for 
his own account, (2) in his individual or in any other capacity act in 
any transaction involving a plan on behalf of a party (or represent a 
party) whose interests are adverse to the interests of such plan or the 
interests of its participants or beneficiaries, or (3) receive any 
consideration for his own personal account from any party dealing with 
a plan in connection with a transaction involving the assets of such 
plan.
    Where PNC is a fiduciary with respect to a Client Plan, the 
investment of that Client Plan's assets in a Fund advised by BlackRock 
may potentially raise issues under sections 406(a)(1)(D), 406(b)(1), 
406(b)(2) and 406(b)(3) of the Act, unless an exemption is available.
Reliance on PTE 77-4
    7. PTE 77-4 provides an exemption from section 406 of the Act and 
section 4975 of the Code for the purchase or sale by a plan of mutual 
fund shares where the investment adviser of such fund: (1) Is a plan 
fiduciary or affiliated with a plan fiduciary; and (2) is not an 
employer of employees covered by the plan. The conditions of the PTE 
77-4 prohibit the payment of commissions by a plan, limit the payment 
of redemption fees by such plan, require prior disclosure to and 
approval by a second fiduciary, and prohibit the payment of double 
investment advisory fees.
    PNC is considered a fiduciary with respect to Client Plans for 
which it has investment discretion. PNC has in the past used and 
continues using investment discretion to invest the assets of Client 
Plans in the Funds. In the past, PNC has relied on the relief provided 
by PTE 77-4.
Description of Merger
    8. On September 29, 2006, Merrill Lynch and Co., Inc. (Merrill 
Lynch) merged its asset management group, Merrill Lynch Investment 
Managers (MLIM), with BlackRock Advisors, in return for an interest in 
BlackRock Advisors. The new company formed by the merger operates under 
the ``BlackRock'' name and is governed by a Board of Directors with a 
majority of independent members. As a result of the merger, Merrill 
Lynch holds a 49.8 percent (49.8%) economic stake and about 45 percent 
(45%) of the common stock of the new company, and the interest of PNC 
in the common stock was reduced from approximately 70 percent (70%) to 
approximately 34 percent (34%) of the new company. Further, as a result 
of the merger, mutual funds previously advised by MLIM now have 
BlackRock Advisors, acting as the investment adviser. The Funds 
previously advised by BlackRock continue to operate as before. It is 
represented that certain Funds with similar investment objectives will 
be merged to simplify investment offerings. All Funds will be labeled 
with the ``BlackRock'' name. For purposes of this proposed exemption, 
the term, ``Fund(s),'' includes those former Merrill Lynch funds that, 
following the merger, have BlackRock Advisors as the investment 
adviser.
Availability of PTE 77-4 after the Merger
    9. As discussed above, PTE 77-4 provides relief for investments in 
a Fund by a Client Plan for which PNC is a fiduciary with investment 
discretion. However, PTE 77-4 applies only where the investment adviser 
to such Fund is also a fiduciary to such Client Plan, or an affiliate 
of such a fiduciary. BlackRock is the investment adviser to the Funds. 
However, because PNC, rather than BlackRock, is the fiduciary to the 
Client Plan, PNC is concerned with its reliance on the relief provided 
under PTE 77-4.
Retroactive Relief
    10. The Applicant has requested retroactive relief pursuant to 
ERISA Technical Release 85-1.\5\ It is represented that after the 
merger was initially approved in February of 2006, PNC decided in June 
of 2006, to seek an individual exemption. On September 26, 2006, the 
Department received an application for exemption filed on behalf of PNC 
which was dated September 25, 2006. It is represented that the 
application was submitted as soon as possible under the circumstances. 
In going forward on the basis of the requested relief, PNC represents 
that it acted in good faith in this matter. Accordingly, PNC requests 
that the proposed exemption be granted

[[Page 13247]]

retroactively to September 29, 2006, the date of the merger.
---------------------------------------------------------------------------

    \5\ Reprinted at [August 1983-August 1985 Transfer Binder] Pens. 
Plan Guide (CCH) ] 23,672D.
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Receipt of Fees pursuant to the Fee Methods
    11. PNC represents that, prior to the effective date of this 
proposed exemption, it relied on PTE 77-4 for exemptive relief for each 
of the fee methods: (a) The Offset Fee Method, (b) the Subtraction Fee 
Method, and (c) the Credit Fee Method,\6\ as described in Section 
II(a)(1), (a)(2), and (a)(3) of this proposed exemption. PNC has 
confirmed that all three fee methods were in place on the effective 
date of this exemption, September 29, 2006. As of this effective date, 
the proposed exemption, if granted, would specifically permit PNC to 
use any one of these three (3) fee methods to comply with the 
prohibition against a Client Plan paying double investment management 
fees, investment advisory or similar fees for assets of Client Plans 
invested in a Fund, provided that the conditions of this exemption are 
satisfied.
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    \6\ It is the view of PNC that the Credit Fee Method is covered 
by PTE 77-4. The Department does not concur with PNC's view that the 
Credit Fee Method is covered under PTE 77-4. Accordingly, the 
Department has determined that no relief is available under 77-4 for 
PNC's use of the Credit Fee Method.
---------------------------------------------------------------------------

    It is represented that where a Client Plan is investing in a Fund, 
all Fund-Level Fees for advisory or similar services related to that 
Client Plan's investment in such Fund are subject to the same fee 
method. It is represented that the fee methods are not applied on a 
fund-by-fund basis. PNC Financial determines the fee method to be used, 
subject to plan approval. As a general rule, Client Plan accounts use 
the Credit Fee Method. An exception to the general rule involves Client 
Plan accounts investing through Capital Directions, an asset allocation 
program, which uses the Subtraction Fee Method. IRA's also use the 
Subtraction Fee Method. The fee method to be used is described in the 
disclosure provided at the opening of a Client Plan account, and 
affirmatively approved at that time by the Second Fiduciary for such 
Client Plan. It is represented that the Second Fiduciary of such Client 
Plan is notified in advance of any change in the fee method and is 
provided with a Termination Form. Failure by the Second Fiduciary of 
such Client Plan to return the Termination Form on behalf of such 
Client Plan is deemed to be an approval by the Second Fiduciary of a 
change in the fee method.
Offset Fee Method
    12. With regard to the Offset Fee Method, PNC represents that it 
does not charge a Client Plan any direct fees for investment management 
with respect to such Client Plan's assets invested in the Funds. Such 
Client Plan pays fees to PNC solely for non-investment trust or custody 
services. The fees a Client Plan pays for those assets invested in the 
Funds come solely from the Funds in accordance with certain advisory 
agreements. The result is that the Plan-Level Fees are offset, and the 
Client Plan pays only an investment advisory or similar Fund-Level Fee 
with respect to those plan assets invested in a Fund.
Subtraction Fee Method
    13. With regard to the Subtraction Fee Method, PNC represents that 
under this method, PNC charges a Client Plan a direct investment 
management fee but credits to the benefit of such Client Plan, as a 
subtraction to such Client Plan's Plan-Level Fees, its proportionate 
share of the investment advisory fee for Client Plan assets invested in 
a Fund and paid to BlackRock (as reduced by any waiver or rebate by 
BlackRock of such fees to the Fund due to state law or other limits on 
Fund expenses).\7\ The result is that a Client Plan pays only one 
investment management fee with respect to those assets. The subtraction 
is solely against those Plan-Level Fees charged by PNC for serving as 
investment manager, and does not include non-investment management 
trustee fees.
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    \7\ It is represented that while fees above a certain limit may 
be waived or rebated by BlackRock, as a technical matter the Funds 
may pay the excess fees and then simultaneously receive a rebate of 
the excess amount. For purposes of the Subtraction Fee Method, 
described in this section, PNC intends to credit to Client Plans 
only the net fees that BlackRock receives, and not to credit any of 
the excess fees that have been rebated to the Funds.
---------------------------------------------------------------------------

    The credit under this Subtraction Fee Method and the credit under 
the Credit Fee Method, as discussed below, do not include the co-
administrator, custodial, transfer agent, or other non-advisory fees 
payable by the Funds to PNC, because these services rendered to the 
Fund are not duplicative of any services provided directly to a Client 
Plan. The co-administrator services assist in the administration and 
operation of a Fund, which are matters particular to such Fund. The 
custodial services provided by PNC to a Fund involve maintaining 
custody and providing reporting relative to the individual securities 
owned by such Fund. The custodial services provided by PNC to a Client 
Plan, by contrast, involve maintaining custody over all or a portion of 
the Client Plan's assets, which would include the Client Plan's shares 
in a Fund, but not the assets underlying such Fund shares. These Client 
Plan custody services are necessary regardless of whether such Client 
Plan's assets are invested in the Funds.
Credit Fee Method
    14. PNC represents that in 1989 at the time PNC converted its 
collective investment funds into mutual funds, it started using the 
Credit Fee Method to avoid duplicative investment advisory fees. PNC's 
understanding at the time was that the Credit Fee Method was covered by 
PTE 77-4.\8\
---------------------------------------------------------------------------

    \8\ See supra., footnote 6.
---------------------------------------------------------------------------

    Under the Credit Fee Method, PNC charges standard fees, as 
applicable to each Client Plan, for serving as trustee and investment 
manager, without any offset. In this method, a Client Plan receives ``a 
credited dollar amount'' from BlackRock of such Client Plan's 
proportionate share of all investment advisory fees charged by 
BlackRock to the Funds for the particular month (as reduced by any 
waiver or rebate by BlackRock of such fees, as described above). The 
result of the Credit Fee Method is that a Client Plan pays its 
proportionate share of the Fund-Level Fees, but receives a ``credited 
dollar amount'' of such payment.
    It is represented that the standard practice is to reinvest the 
``credited dollar amount'' in additional shares of the same Fund with 
respect to which the fees were credited. The additional shares so 
acquired are valued at the net asset value on the date the purchase 
request is transmitted to the Fund, which is the same day the 
``credited dollar amount'' is made to the Client Plan's account.
    It is represented that the Client Plans could, in theory, request 
that the ``credited dollar amount'' be made in cash, instead of 
additional shares. No such request has occurred to date, because it has 
not been the practice of PNC to notify Client Plans that they have the 
option to request cash, rather than additional shares. If such a 
request were to be made, it is represented that the cash would be 
invested in a money market account pending an investment direction from 
the investment officer for the account.
    The applicant points out that in other exemptions granted by the 
Department, the timing of the credits generally occurred within one 
business day of the date that the mutual fund investment adviser 
received investment advisory fees. In the subject case, the applicant 
represents that the fees for investment

[[Page 13248]]

advisory services, or similar services, provided by BlackRock to a Fund 
that have accrued for a given month are not paid out to BlackRock until 
certain calculations are confirmed between BlackRock and the accountant 
for such Fund, which is generally not before the third week of the next 
month. For example, the fees for investment advisory services, or 
similar services, which accrue for the month of January, may not be 
paid to BlackRock until the third week of February, or later. However, 
it is represented that there is no consistent period of time after 
BlackRock receives such fees for investment advisory services, or 
similar services, that BlackRock then pays PNC the fees for Mutual Fund 
Administration Services provided by PNC to such Fund. For instance, 
under this example, BlackRock may not pay PNC until the following 
month, i.e., March. For this reason, PNC has adopted a practice of 
crediting the accrued fees for investment advisory services, or similar 
services, for a given month to its Client Plans no later than the fifth 
business day before the end of the month following the month in which 
fees for investment advisory services or similar services accrued--in 
this example, by the fifth business day before the end of February--
even if PNC has not yet received payment from BlackRock of the fees for 
the provision of Mutual Fund Administrations Services by PNC to such 
Fund. It is represented that PNC is implementing a system whereby it 
will be notified when BlackRock receives its fees for investment 
advisory services, or similar services, which will allow PNC to make 
the credits to its Client Plans within one business day of when 
BlackRock is paid. However, this system will not be in place until 
January 2009. Therefore, while PNC agrees that the credit of the fees 
for investment advisory services, or similar services, to the Client 
Plans will occur no later than one business day after the receipt of 
such fees by BlackRock, this condition is effective only for the fees 
for investment advisory services, or similar services, accrued after 
January 1, 2009. For prior periods, PNC has requested that consistent 
with the original language in its application for exemption and with 
PNC's practice prior to January 1, 2009, the requirement should be that 
the credit of the fees for investment advisory services, or similar 
services, accrued for a given month be made no later than the earlier 
of either: (1) The same day as the receipt by PNC of the fees from 
BlackRock for the provision of Mutual Fund Administration Services to a 
Fund for that month, or (2) the fifth business day before the end of 
the month following the month in which fees for investment advisory 
services, or similar services, accrued. Accordingly, section II(a)(3) 
of this proposed exemption reads as follows:

    A Client Plan invested in a Fund receives a ``a credit'' of such 
Client Plan's proportionate share of all fees charged to such Fund 
by BlackRock for investment advisory services, or similar services, 
for a particular month: (1) Effective for the period, September 29, 
2006, through December 31, 2008, on the earlier of either: (a) The 
same day as PNC receives a fee from BlackRock for Mutual Fund 
Administration Services provided for that month to such Fund by PNC, 
or (b) the fifth business day before the end of the month following 
the month in which fees for investment advisory services, or similar 
services, accrued, or (2) effective for the period beginning, 
January 1, 2009, and continuing thereafter, on a date which is no 
later than one business day after BlackRock receives fees from the 
Fund for investment advisory services, or similar services, provided 
for that month to such Fund by BlackRock.
Audit of the Credit Fee Method
    15. It is represented that there are sufficient safeguards to 
permit exemptive relief for the use by PNC of the Credit Fee Method. In 
this regard, PNC will establish and maintain a system of internal 
accounting controls for crediting the fees under the Credit Fee Method. 
In addition, PNC will retain the services of an independent Auditor to 
audit annually the crediting of fees to the Client Plans under the 
Credit Fee Method. Such audits will provide independent verification of 
the proper crediting to such Client Plans.
    In the annual audit of the Credit Fee Method, the Auditor will use 
procedures designed to review and test compliance with the specific 
operational controls and procedures established by PNC for making the 
credits. Specifically, the Auditor will: (i) Verify on a test basis the 
investment advisory fees paid by the Funds to BlackRock; (ii) verify on 
a test basis the monthly factors used to determine the investment 
advisory fees; (iii) verify on a test basis the credits paid in total 
for a one-month period; (iv) re-compute, on a test basis, using the 
monthly factors described above, the amount of the credit determined 
for selected Client Plans; (v) verify on a test basis the proper 
assignment of identification fields for receipt of fee credits to the 
Client Plans; and (vi) verify on a test basis that the credits were 
posted to the Client Plans within the required timeframe.
    In the event either the internal audit made by PNC or the 
independent audit made by the Auditor identifies an error in the 
crediting of fees to a Client Plan, PNC will correct the error. With 
respect to any shortfall in credited fees to a Client Plan, PNC will 
make a cash payment to such Client Plan equal to the amount of the 
error, plus interest paid at money market rates offered by PNC for the 
period involved. Any excess credits made to a Client Plan will be 
corrected by an appropriate deduction from such Client Plan or 
reallocation of cash during the next payment period after discovery of 
the error to reflect accurately the amount of total credits due to such 
Client Plan for the period involved.
Receipt of Secondary Services Fees
    16. Prior to the effective date of this proposed exemption, it is 
represented that the receipt by PNC of fees paid out of the assets of a 
Fund for Secondary Services, such as custodial, administrative, 
accounting, and transfer agency services, provided by PNC to such Fund 
were treated as exempt under PTE 77-4, pursuant to Advisory Opinion 93-
12A (Apr. 27, 1993, addressed to PNC Financial). It is further 
represented that Advisory Opinion 93-12A permits such fees for 
Secondary Services: (a) To be paid to PNC by a Fund where PNC also 
receives fees as the investment adviser to such Fund, and (b) to be 
retained by PNC without the need for PNC to offset or waive such 
fees.\9\
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    \9\ With respect to the relief available under PTE 77-4, 
pursuant to Advisory Opinion 93-12A, no reference is made to the 
Credit Fee Method. Accordingly, the Department has determined that 
the relief available under PTE 77-4, pursuant to Advisory Opinion 
93-12A was not in the past and is not now available for the Credit 
Fee Method.
---------------------------------------------------------------------------

    PNC requests an administrative exemption, effective as of September 
29, 2006, for receipt of fees by PNC for the provision of Secondary 
Services to the Funds, because it is no longer clear that relief for 
the receipt of Secondary Services fees by PNC, which prior to the 
merger was treated as exempt under PTE 77-4, pursuant to Advisory 
Opinion 93-12A, continues to be available after the merger.
Receipt of Mutual Fund Administration Services Fees
    17. It is represented that PNC also has provided in the past and 
continues to provide Mutual Fund Administration Services to, or on 
behalf of, the Funds. Mutual Fund Administration Services are part of 
an omnibus arrangement which includes maintaining records of 
investments by Client Plans in the Funds, processing Fund transactions 
for Client Plans, transmitting account

[[Page 13249]]

statements and shareholder communications, responding to inquiries from 
Client Plans regarding account balances and dividends, and providing 
information to the Funds on sales and assisting in monitoring possible 
market timing.
    PNC has received fees in the past and continues to receive fees for 
the provision of Mutual Fund Administration Services to the Funds. The 
Funds do not pay the fees for the Mutual Fund Administration Services 
provided by PNC. Instead, BlackRock, the investment adviser to the 
Fund, pays the fees to PNC for Mutual Fund Administration Services. It 
is represented that many mutual fund advisers have adopted the practice 
of covering service costs out of their own assets, a practice referred 
to as ``adviser pay.''
    It is represented that the fees for the provision of Mutual Fund 
Administration Services by PNC are currently fifteen (15) basis points 
for assets in money market funds, twenty (20) basis points for assets 
in fixed income funds (except three funds as to which the fee is five 
(5) basis points), and twenty-five (25) basis points for assets in 
equity funds (except one fund as to which the fee is four (4) basis 
points). It is represented that the fees for such Mutual Fund 
Administration Services are subject to negotiation.
    The Department believes that the receipt of fees by PNC from 
BlackRock for the provision of Mutual Fund Administration Services by 
PNC to the Funds is beyond the scope of relief provided by PTE 77-4. 
PNC has not requested, and the Department is not providing, relief in 
this proposed exemption for the payment, prior to the date of the 
merger, by BlackRock of fees for the provision of Mutual Fund 
Administration Services by PNC to the Funds.
    However, PNC has requested an individual administrative exemption, 
effective as of September 29, 2006, the date of the merger, to cover 
the payment by BlackRock to PNC Bank, National Association (PNC Bank), 
an affiliate of PNC, of fees for the provision of Mutual Fund 
Administration Services by PNC Bank to the assets in a Fund for which 
BlackRock serves as investment adviser.
In the Interest of Client Plans
    18. The applicant represents that the proposed exemption is in the 
interest of the Client Plans and their participants and beneficiaries. 
In this regard, the Funds provide advantages for Client Plans, 
including professional management, the ability to monitor performance 
on a daily basis, and the flexibility to purchase and redeem shares on 
a daily basis. It is represented that no sales commissions are charged 
to Client Plans in connection with the purchase or sale of shares in 
any of the Funds. In addition, these investments in the Funds by Client 
Plans are made in certain classes of shares, which are not subject to 
12b-1 fees. Redemption fees are charged only if disclosed in the 
prospectuses in effect at both the time of the original investment in 
the shares of a Fund and the time of redemption.
    It is further represented that the Funds provide a means for Client 
Plans with limited assets to achieve diversification of investment in a 
manner that may not be attainable through direct investment. For these 
reasons, the applicant maintains that the availability of the Funds as 
investments enable PNC, as investment manager, to better meet the 
investment goals and strategies of a Client Plan.
Protective of Client Plans
    19. It is represented that the proposed exemption contains 
sufficient safeguards for the protection of the Client Plans invested 
in the Funds. In this regard, prior to any investment by a Client Plan 
in a Fund, the investment must be authorized in writing by the Second 
Fiduciary of such Client Plan, based on full and detailed written 
disclosure concerning such Fund.
    In addition to the initial disclosures received by the Second 
Fiduciary of a Client Plan invested in a Fund, PNC provides to such 
Second Fiduciary ongoing disclosures regarding such Fund and the fee 
methods. Specifically, on an annual basis, such Second Fiduciary 
receives copies of the current Fund prospectuses, as well as copies of 
the annual financial disclosure reports containing information about 
the Funds and audit findings of the Auditor within sixty (60) days of 
the preparation of such report.
    Further, it is represented that PNC Financial or an appropriate 
affiliate, thereof, will respond to inquiries from a Second Fiduciary. 
In addition, a Second Fiduciary, upon request, will receive copies of 
the Statements of Additional Information for the Funds and a copy of 
the proposed exemption and a copy of the final exemption, if granted, 
once such documents are published in the Federal Register.
    Furthermore, each investment of the assets of a Client Plan in a 
Fund will be subject to the ongoing ability of the Second Fiduciary of 
such Client Plan to terminate the investment in such Fund without 
penalty to such Client Plan at any time upon written notice of 
termination to PNC. In this regard, a Termination Form, expressly 
providing an election to terminate the authorization, with instructions 
on the use of such Termination Form, will be supplied to the Second 
Fiduciary at least annually.
    The Termination Form may be used to notify PNC, in writing to 
effect a termination by selling the shares of the Funds held by a 
Client Plan. Such sales are to occur within one (1) business day, as 
defined in Section IV(k) of this exemption, following receipt by PNC of 
the Termination Form. If, due to circumstances beyond the control of 
PNC, the sale cannot be executed within one (1) business day, PNC will 
be obligated to complete the sale within the next business day.
    In addition, by using the Termination Form that PNC provides thirty 
(30) days in advance of any increase in the rate of fees and change in 
services, the Second Fiduciary will have sufficient opportunity to 
terminate a Client Plan's investment in a Fund, without penalty to the 
Client Plan, and withdraw the Client Plan's investment from such Fund 
in advance of any such increase in fee and change in services.
Feasibility
    20. The applicant represents that the proposed exemption is 
feasible in that compliance with the terms of the exemption will be 
monitored by the Second Fiduciary of a Client Plan who is independent 
of PNC. Further, PNC provides internal accounting safeguards to ensure 
the accuracy of the calculation of the ``credited dollar amounts'' 
under the Credit Fee Method, and an independent Auditor will provide 
assurance that the Credit Fee Method is properly administered. For 
these reasons, the applicant maintains that the Department will not 
have to monitor the implementation and enforcement of the exemption.
    Further, it is represented that the negative consent procedure, as 
described in the proposed exemption, for obtaining the approval from 
the Second Fiduciary of each Client Plan invested in a Fund for 
increases in fees and the addition of services for which a fee is 
charged is more efficient, cost effective, and administratively 
feasible than written affirmative consent approval, as described in PTE 
77-4.
    Under PTE 77-4, an increase in fees and any change in services may 
not be implemented until written approval of such increase or change is 
obtained from every Second Fiduciary of Client Plans invested in a 
Fund. A communication failure that results in not obtaining an 
affirmative written approval from a Second Fiduciary of a

[[Page 13250]]

Client Plan could force PNC to transfer a Client Plan's investments out 
of a Fund.
    Under the negative consent procedure, as set forth in this proposed 
exemption, the difficulties of obtaining written affirmative approval 
from the Second Fiduciary of each Client Plan and coordinating any fee 
increases and any additional services for which a fee is charged will 
be avoided while such Second Fiduciary will still receive the necessary 
disclosures. Specifically, each Second Fiduciary of a Client Plan 
invested in a Fund will receive advanced notice in a statement separate 
from such Fund's prospectus of any proposed change from one fee method 
to another or any proposed increase in a rate of fee for investment 
advisory services, or similar services, paid to BlackRock that was 
previously disclosed in the Fund prospectus. In addition, each Second 
Fiduciary will receive advanced notice of any additional Secondary 
Service or Mutual Fund Administration Service for which a fee is 
charged and any increase of any rate of any fee paid for Mutual Fund 
Administration Services and any Secondary Services to PNC or an 
increase in a rate of any fee that results from an addition or 
elimination in the number or kind of service performed by PNC in 
connection with a previously authorized fee for such service. With 
regard to the affected Fund, the advanced notice will contain an 
explanation of the nature and amount of the increase in fees and the 
nature and amount of the addition (or elimination) of a service for 
which an additional fee is charged. The Second Fiduciary will receive 
such advanced notice thirty (30) days prior to the effective date of 
such increase in the rate of fees and change in services with respect 
to a Client Plan's investment in a Fund. Such advanced notice must be 
accompanied by a Termination Form that would allow the Second Fiduciary 
to terminate, without penalty to the Client Plan, the authorization to 
invest in the Funds. The notice requirement would not apply if an 
increase is the result of the cessation of a voluntary temporary waiver 
of fees by PNC, and the full fee level had previously been described in 
writing to and authorized by the Second Fiduciary. Failure to return 
the Termination Form by the thirtieth (30th) day will result in the 
negative consent of the Second Fiduciary to the increase in the fees 
and to the addition of services for which an additional fee is charged.
    21. In summary, the applicant represents that the proposed 
transactions satisfy the statutory criteria for an exemption under 
section 408(a) of the Act for the following reasons:
    (a) The Funds will provide Client Plans with an effective 
investment vehicle;
    (b) The investment by Client Plan in the Funds and the payment of 
fees for Secondary Services by the Funds to PNC, the payment of fees 
for Mutual Fund Administration Services by BlackRock to PNC, and the 
payment of fees for investment advisory or similar services by the 
Funds to BlackRock in connection the investment in the Funds by Client 
Plans will require an authorization in writing in advance by a Second 
Fiduciary after full written disclosure, including current prospectuses 
for the Funds and a statement describing the fee method to be used;
    (c) Any authorization made by a Second Fiduciary will be terminable 
at will by that Second Fiduciary, without penalty to the Client Plan, 
within one (1) business day or one additional business day, if 
necessary, following receipt by PNC of written notice of termination 
from the Second Fiduciary on a form expressly providing an election to 
terminate the authorization, which will be supplied to the Second 
Fiduciary at least annually, or any other written notice of 
termination;
    (d) No sales commissions will be paid by Client Plans in connection 
with the acquisition or sale of shares of the Funds and only redemption 
fees disclosed in a Fund's prospectus will be paid by Client Plans;
    (e) All dealings among the Client Plans, any of the Funds, PNC, and 
BlackRock will be on a basis no less favorable to such Client Plans 
than such dealings with the other shareholders of the Funds;
    (f) Client Plans investing in the Funds will pay only a single 
level of investment management, investment advisory, or similar fees 
with respect to the assets of such Client Plans so invested; and
    (g) PNC will require annual audits by an independent accounting 
firm to verify that the Client Plans using the Credit Fee Method 
receive proper credits for the fees paid to PNC by the Funds.

Notice to Interested Persons

    Those persons who may be interested in the publication in the 
Federal Register of the Notice of Proposed Exemption (the Notice) 
include the Second Fiduciary of each Client Plan invested in any of the 
Funds.
    It is represented that notification will be provided to these 
interested persons by first class mail, within fifteen (15) calendar 
days of the date of the 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 person of their right to comment and 
to request a hearing.
    The Department must receive all written comments and requests for a 
hearing no later than forty-five (45) days from the date of the 
publication of the Notice in the Federal Register.

FOR FURTHER INFORMATION CONTACT: Angelena Le Blanc of the Department, 
telephone (202) 693-8540 (This is not a toll-free number.)
Barclays Bank PLC and Barclays Capital Inc. (Collectively, Barclays or 
the Applicants)
Located, respectively, in London, England and New York, New York
[Application No. D-11552]

Background

    Barclays has requested an individual exemption that would replace 
and modify exemptive relief, previously provided pursuant to Prohibited 
Transaction Exemption 96-62,\10\ for its securitization activities, 
which generally permits employee benefit plans to purchase, hold, sell 
or exchange certain securities representing interests in asset-backed 
or mortgage-backed investment pools. Barclays requests exemptive relief 
for sales of ``pass through'' notes/securities to investors, including 
employee benefit plans, representing pools of secured notes and senior 
unsecured notes issued by small and mid-sized banks.
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    \10\ For more information, see item number 3 under the heading 
entitled ``Summary of Facts and Representations.''
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    In response to the current financial and liquidity crisis, the FDIC 
adopted the TLG Program, which guarantees newly issued senior unsecured 
debt of certain financial institutions. The FDIC guarantee is backed by 
the full faith and credit of the United States. In general, the 
requested exemption would permit Barclays and its affiliates to 
underwrite and sell the pass through notes/securities and also to 
service, manage and operate the trust holding the pools of bank debt 
guaranteed under the TLG Program.
    Because Barclays has represented that the FDIC is considering 
whether the Debt Guarantee Program should be extended to secured bank 
debt that supports new consumer lending, the Department also 
specifically solicits

[[Page 13251]]

comments on extending the scope of the proposed exemptive relief to 
include such debt. The Department believes that in order to make the 
requisite section 408(a) findings for the proposed exemptive relief 
with respect to such secured debt, the debt must be explicitly included 
in the Debt Guarantee Program and also must be subject to the same 
protections that the FDIC affords to senior unsecured debt. To the 
extent that this would not be the case, the Department will consider, 
based upon public comments, whether to retain or eliminate such secured 
debt issuances from the exemptive relief granted by the Department.

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):

I. Transactions

    A. The restrictions of sections 406(a) and 407(a) of the Act and 
the taxes imposed by sections 4975(a) and (b) of the Code, by reason of 
section 4975(c)(1)(A) through (D) of the Code, shall not apply to the 
following transactions involving Issuers and Securities evidencing 
interests therein:
    (1) The direct or indirect sale, exchange or transfer of Securities 
in the initial issuance of Securities between the Sponsor or 
Underwriter and an employee benefit plan when the Sponsor, Servicer, 
Trustee or Insurer of an Issuer, the Underwriter of the Securities 
representing an interest in the Issuer, or an Obligor is a party in 
interest with respect to such plan;
    (2) The direct or indirect acquisition or disposition of Securities 
by a plan in the secondary market for such Securities; and
    (3) The continued holding of Securities acquired by a plan pursuant 
to subsection I.A.(1) or (2).
    Notwithstanding the foregoing, section I.A. does not provide an 
exemption from the restrictions of sections 406(a)(1)(E), 406(a)(2) and 
407 of the Act for the acquisition or holding of a Security on behalf 
of an Excluded Plan by any person who has discretionary authority or 
renders investment advice with respect to the assets of that Excluded 
Plan.\11\
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    \11\ Section I.A. provides no relief from sections 406(a)(1)(E), 
406(a)(2)and 407 of the Act for any person rendering investment 
advice, within the meaning of section 3(21)(A)(ii) of the Act and 
regulation 29 CFR 2510.3-21(c), to an Excluded Plan.
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    B. The restrictions of sections 406(b)(1) and 406(b)(2) of the Act 
and the taxes imposed by sections 4975(a) and (b) of the Code, by 
reason of section 4975(c)(1)(E) of the Code shall not apply to:
    (1) The direct or indirect sale, exchange or transfer of Securities 
in the initial issuance of Securities between the Sponsor or 
Underwriter and a plan when the person who has discretionary authority 
or renders investment advice with respect to the investment of plan 
assets in the Securities is (a) an Obligor with respect to 5 percent or 
less of the fair market value of obligations or receivables contained 
in the Issuer, or (b) an Affiliate of a person described in (a), if:
    (i) The plan is not an Excluded Plan;
    (ii) Solely in the case of an acquisition of Securities in 
connection with the initial issuance of the Securities, at least 50 
percent of each class of Securities in which plans have invested is 
acquired by persons independent of the members of the Restricted Group, 
and at least 50 percent of the aggregate interest in the Issuer is 
acquired by persons independent of the Restricted Group;
    (iii) A plan's investment in each class of Securities does not 
exceed 25 percent of all of the Securities of that class outstanding at 
the time of the acquisition; and
    (iv) Immediately after the acquisition of the Securities, no more 
than 25 percent of the assets of a plan with respect to which the 
person has discretionary authority or renders investment advice are 
invested in Securities representing an interest in an Issuer containing 
assets sold or serviced by the same entity.\12\ For purposes of this 
paragraph B.(1)(iv) only, an entity will not be considered to service 
assets contained in an Issuer if it is merely a Subservicer of that 
Issuer;
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    \12\ For purposes of this proposed exemption, each plan 
participating in a commingled fund (such as a bank collective trust 
fund or insurance company pooled separate account) shall be 
considered to own the same proportionate undivided interest in each 
asset of the commingled fund as its proportionate interest in the 
total assets of the commingled fund as calculated on the most recent 
preceding valuation date of the fund.
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    (2) The direct or indirect acquisition or disposition of Securities 
by a plan in the secondary market for such Securities, provided that 
conditions set forth in paragraphs (i), (iii) and (iv) of subsection 
I.B.(1) are met; and
    (3) The continued holding of Securities acquired by a plan pursuant 
to subsection I.B.(1) or (2).
    C. The restrictions of sections 406(a), 406(b), and 407(a) of the 
Act and the taxes imposed by sections 4975(a) and (b) of the Code by 
reason of section 4975(c) of the Code, shall not apply to transactions 
in connection with the servicing, management and operation of an 
Issuer, including the use of any Eligible Swap transaction; or the 
defeasance of a mortgage obligation held as an asset of the Issuer 
through the substitution of a new mortgage obligation in a commercial 
mortgage-backed Designated Transaction, provided:
    (1) Such transactions are carried out in accordance with the terms 
of a binding Pooling and Servicing Agreement;
    (2) The Pooling and Servicing Agreement is provided to, or 
described in all material respects in the prospectus or private 
placement memorandum provided to, investing plans before they purchase 
Securities issued by the Issuer; \13\ and
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    \13\ In the case of a private placement memorandum, such 
memorandum must contain substantially the same information that 
would be disclosed in a prospectus if the offering of the securities 
were made in a registered public offering under the Securities Act 
of 1933. In the Department's view, the private placement memorandum 
must contain sufficient information to permit plan fiduciaries to 
make informed investment decisions. For purposes of this exemption, 
references to the term ``prospectus'' include any related prospectus 
supplement thereto, pursuant to which Securities are offered to 
investors.
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    (3) The defeasance of a mortgage obligation and the substitution of 
a new mortgage obligation in a commercial mortgage-backed Designated 
Transaction meet the terms and conditions for such defeasance and 
substitution as are described in the prospectus or private placement 
memorandum for such Securities, which terms and conditions have been 
approved by a Rating Agency and does not result in the Securities 
receiving a lower credit rating from the Rating Agency than the current 
rating of the Securities.
    Notwithstanding the foregoing, Section I.C. does not provide an 
exemption from the restrictions of section 406(b) of the Act or from 
the taxes imposed by reason of section 4975(c) of the Code for the 
receipt of a fee by a Servicer of the Issuer from a person other than 
the Trustee or Sponsor, unless such fee constitutes a Qualified 
Administrative Fee.
    D. The restrictions of sections 406(a) and 407(a) of the Act and 
the taxes imposed by sections 4975(a) and (b) of the Code by reason of 
Code section 4975(c)(1)(A) through (D) of the Code shall not apply to 
any transactions to which those restrictions or taxes would otherwise 
apply merely because a

[[Page 13252]]

person is deemed to be a party in interest or disqualified person 
(including a fiduciary), with respect to the plan by virtue of 
providing services to the plan (or by virtue of having a relationship 
to such service provider described in section 3(14)(F), (G), (H) or (I) 
of the Act or section 4975(e)(2)(F), (G), (H) or (I) of the Code), 
solely because of the plan's ownership of Securities.

II. General Conditions



    A. The relief provided under section I. is available only if the 
following conditions are met:
    (1) The acquisition of Securities by a plan is on terms (including 
the Security price) that are at least as favorable to the plan as such 
terms would be in an arm's length transaction with an unrelated party;
    (2) The rights and interests evidenced by the Securities are not 
subordinated to the rights and interests evidenced by other Securities 
of the same Issuer, unless the Securities are issued in a Designated 
Transaction;
    (3) The Securities acquired by the plan have received a rating from 
a Rating Agency at the time of such acquisition that is in one of the 
three (or in the case of Designated Transactions, four) highest generic 
rating categories.
    (4) The Trustee is not an Affiliate of any member of the Restricted 
Group, other than an Underwriter. For purposes of this requirement:
    (a) The Trustee shall not be considered an Affiliate of a Servicer 
solely because the Trustee has succeeded to the rights and 
responsibilities of the Servicer pursuant to the terms of a Pooling and 
Servicing Agreement providing for such succession upon the occurrence 
of one or more events of default by the Servicer; and
    (b) Subsection II.A.(4) will be deemed satisfied notwithstanding a 
Servicer becoming an Affiliate of the Trustee as a result of a merger 
or acquisition involving the Trustee, such Servicer and/or their 
Affiliates which occurs after the initial issuance of the Securities, 
provided that:
    (i) Such Servicer ceases to be an Affiliate of the Trustee no later 
than six months after the date such Servicer became an Affiliate of the 
Trustee; and
    (ii) Such Servicer did not breach any of its obligations under the 
Pooling and Servicing Agreement, unless such breach was immaterial and 
timely cured in accordance with the terms of such agreement, during the 
period from the closing date of such merger or acquisition transaction 
through the date the Servicer ceased to be an Affiliate of the Trustee;
    (5) The sum of all payments made to and retained by the 
Underwriters in connection with the distribution or placement of 
Securities represents not more than Reasonable Compensation for 
underwriting or placing the Securities; the sum of all payments made to 
and retained by the Sponsor pursuant to the assignment of obligations 
(or interests therein) to the Issuer represents not more than the fair 
market value of such obligations (or interests); and the sum of all 
payments made to and retained by the Servicer represents not more than 
Reasonable Compensation for the Servicer's services under the Pooling 
and Servicing Agreement and reimbursement of the Servicer's reasonable 
expenses in connection therewith;
    (6) The plan investing in such Securities is an ``accredited 
investor'' as defined in Rule 501(a)(1) of Regulation D of the 
Securities and Exchange Commission under the Securities Act of 1933; 
and
    (7) In the event that the obligations used to fund an Issuer have 
not all been transferred to the Issuer on the Closing Date, additional 
obligations as specified in subsection III.B.(1) may be transferred to 
the Issuer during the Pre-Funding Period in exchange for amounts 
credited to the Pre-Funding Account, provided that:
    (a) The Pre-Funding Limit is not exceeded;
    (b) All such additional obligations meet the same terms and 
conditions for eligibility as the original obligations used to create 
the Issuer (as described in the prospectus or private placement 
memorandum and/or Pooling and Servicing Agreement for such Securities), 
which terms and conditions have been approved by a Rating Agency.
    Notwithstanding the foregoing, the terms and conditions for 
determining the eligibility of an obligation may be changed if such 
changes receive prior approval either by a majority vote of the 
outstanding securityholders or by a Rating Agency;
    (c) The transfer of such additional obligations to the Issuer 
during the Pre-Funding Period does not result in the Securities 
receiving a lower credit rating from a Rating Agency, upon termination 
of the Pre-Funding Period than the rating that was obtained at the time 
of the initial issuance of the Securities by the Issuer;
    (d) The weighted average annual percentage interest rate (the 
average interest rate) for all of the obligations in the Issuer at the 
end of the Pre-Funding Period will not be more than 100 basis points 
lower than the average interest rate for the obligations which were 
transferred to the Issuer on the Closing Date;
    (e) In order to ensure that the characteristics of the receivables 
actually acquired during the Pre-Funding Period are substantially 
similar to those which were acquired as of the Closing Date, the 
characteristics of the additional obligations will either be monitored 
by a credit support provider or other insurance provider which is 
independent of the Sponsor or an independent accountant retained by the 
Sponsor will provide the Sponsor with a letter (with copies provided to 
the Rating Agency, the Underwriter and the Trustee) stating whether or 
not the characteristics of the additional obligations conform to the 
characteristics of such obligations described in the prospectus, 
private placement memorandum and/or Pooling and Servicing Agreement. In 
preparing such letter, the independent accountant will use the same 
type of procedures as were applicable to the obligations which were 
transferred on the Closing Date;
    (f) The Pre-Funding Period shall be described in the prospectus or 
private placement memorandum provided to investing plans; and
    (g) The Trustee of the Trust (or any agent with which the Trustee 
contracts to provide Trust services) will be a substantial financial 
institution or trust company experienced in trust activities and 
familiar with its duties, responsibilities, and liabilities as a 
fiduciary under the Act. The Trustee, as the legal owner of the 
obligations in the Trust or the holder of a security interest in the 
obligations held by the Issuer, will enforce all the rights created in 
favor of securityholders of the Issuer, including employee benefit 
plans subject to the Act.
    (8) In order to ensure that the assets of the Issuer may not be 
reached by creditors of the Sponsor in the event of bankruptcy or other 
insolvency of the Sponsor:
    (a) The legal documents establishing the Issuer will contain:
    (i) Restrictions on the Issuer's ability to borrow money or issue 
debt other than in connection with the securitization;
    (ii) Restrictions on the Issuer merging with another entity, 
reorganizing, liquidating or selling assets (other than in connection 
with the securitization);
    (iii) Restrictions limiting the authorized activities of the Issuer 
to activities relating to the securitization;
    (iv) If the Issuer is not a Trust, provisions for the election of 
at least one

[[Page 13253]]

independent director/partner/member whose affirmative consent is 
required before a voluntary bankruptcy petition can be filed by the 
Issuer; and
    (v) If the Issuer is not a Trust, requirements that each 
independent director/partner/member must be an individual that does not 
have a significant interest in, or other relationships with, the 
Sponsor or any of its Affiliates; and
    (b) The Pooling and Servicing Agreement and/or other agreements 
establishing the contractual relationships between the parties to the 
securitization transaction will contain covenants prohibiting all 
parties thereto from filing an involuntary bankruptcy petition against 
the Issuer or initiating any other form of insolvency proceeding until 
after the Securities have been paid; and
    (c) Prior to the issuance by the Issuer of any Securities, a legal 
opinion is received which states that either:
    (i) A ``true sale'' of the assets being transferred to the Issuer 
by the Sponsor has occurred and that such transfer is not being made 
pursuant to a financing of the assets by the Sponsor; or
    (ii) In the event of insolvency or receivership of the Sponsor, the 
assets transferred to the Issuer will not be part of the estate of the 
Sponsor;
    (9) If a particular class of Securities held by any plan involves a 
Ratings Dependent or a Non-Ratings Dependent Swap entered into by the 
Issuer, then each particular swap transaction relating to such 
Securities:
    (a) Shall be an Eligible Swap;
    (b) Shall be with an Eligible Swap Counterparty;
    (c) In the case of a Ratings Dependent Swap, shall provide that if 
the credit rating of the counterparty is withdrawn or reduced by any 
Rating Agency below a level specified by the Rating Agency, the 
Servicer (as agent for the Trustee) shall, within the period specified 
under the Pooling and Servicing Agreement:
    (i) Obtain a replacement swap agreement with an Eligible Swap 
Counterparty which is acceptable to the Rating Agency and the terms of 
which are substantially the same as the current swap agreement (at 
which time the earlier swap agreement shall terminate); or
    (ii) Cause the swap counterparty to establish any collateralization 
or other arrangement satisfactory to the Rating Agency such that the 
then current rating by the Rating Agency of the particular class of 
Securities will not be withdrawn or reduced.
    In the event that the Servicer fails to meet its obligations under 
this subsection II.A.(9)(c), plan securityholders will be notified in 
the immediately following Trustee's periodic report which is provided 
to securityholders, and sixty days after the receipt of such report, 
the exemptive relief provided under section I.C. will prospectively 
cease to be applicable to any class of Securities held by a plan which 
involves such Ratings Dependent Swap; provided that in no event will 
such plan securityholders be notified any later than the end of the 
second month that begins after the date on which such failure occurs.
    (d) In the case of a Non-Ratings Dependent Swap, shall provide 
that, if the credit rating of the counterparty is withdrawn or reduced 
below the lowest level specified in section III.GG., the Servicer (as 
agent for the Trustee) shall within a specified period after such 
rating withdrawal or reduction:
    (i) Obtain a replacement swap agreement with an Eligible Swap 
Counterparty, the terms of which are substantially the same as the 
current swap agreement (at which time the earlier swap agreement shall 
terminate); or
    (ii) Cause the swap counterparty to post collateral with the 
Trustee in an amount equal to all payments owed by the counterparty if 
the swap transaction were terminated; or
    (iii) Terminate the swap agreement in accordance with its terms; 
and
    (e) Shall not require the Issuer to make any termination payments 
to the counterparty (other than a currently scheduled payment under the 
swap agreement) except from Excess Spread or other amounts that would 
otherwise be payable to the Servicer or the Sponsor;
    (10) Any class of Securities, to which one or more swap agreements 
entered into by the Issuer applies, may be acquired or held in reliance 
upon this exemption only by Qualified Plan Investors; and
    (11) Prior to the issuance of any debt securities, a legal opinion 
is received which states that the debt holders have a perfected 
security interest in the Issuer's assets.
    B. Neither any Underwriter, Sponsor, Trustee, Servicer, Insurer, 
nor any Obligor, unless it or any of its Affiliates has discretionary 
authority or renders investment advice with respect to the plan assets 
used by a plan to acquire Securities, shall be denied the relief 
provided under section I., if the provision of subsection II.A.(6) is 
not satisfied with respect to acquisition or holding by a plan of such 
Securities, provided that (1) such condition is disclosed in the 
prospectus or private placement memorandum; and (2) in the case of a 
private placement of Securities, the Trustee obtains a representation 
from each initial purchaser which is a plan that it is in compliance 
with such condition, and obtains a covenant from each initial purchaser 
to the effect that, so long as such initial purchaser (or any 
transferee of such initial purchaser's Securities) is required to 
obtain from its transferee a representation regarding compliance with 
the Securities Act of 1933, any such transferees will be required to 
make a written representation regarding compliance with the condition 
set forth in subsection II.A.(6).

III. Definitions

    For purposes of this proposed exemption:
    A. ``Security'' means:
    (1) A pass-through certificate or trust certificate that represents 
a beneficial ownership interest in the assets of an Issuer which is a 
Trust and which entitles the holder to payments of principal, interest 
and/or other payments made with respect to the assets of such Trust; or
    (2) A security which is denominated as a debt instrument that is 
issued by, and is an obligation of, an Issuer; with respect to which 
the Underwriter is either (i) the sole underwriter or the manager or 
co-manager of the underwriting syndicate, or (ii) a selling or 
placement agent.
    B. ``Issuer'' means an investment pool, the corpus or assets of 
which are held in trust (including a grantor or owner Trust) or whose 
assets are held by a partnership, special purpose corporation or 
limited liability company (which Issuer may be a Real Estate Mortgage 
Investment Conduit (REMIC) or a Financial Asset Securitization 
Investment Trust (FASIT) within the meaning of section 860D(a) or 
section 860L, respectively, of the Code); and the corpus or assets of 
which consists solely of:
    (1)(a) Secured consumer receivables that bear interest or are 
purchased at a discount (including, but not limited to, home equity 
loans and obligations secured by shares issued by a cooperative housing 
association); and/or
    (b) Secured credit instruments that bear interest or are purchased 
at a discount in transactions by or between business entities 
(including, but not limited to, Qualified Equipment Notes Secured by 
Leases); and/or
    (c) Obligations that bear interest or are purchased at a discount 
and which are secured by single-family residential, multi-family 
residential and/or commercial real property (including obligations 
secured by leasehold interest

[[Page 13254]]

on residential or commercial real property); and/or
    (d) Obligations that bear interest or are purchased at a discount 
and which are secured by motor vehicles or equipment, or Qualified 
Motor Vehicle Leases; and/or
    (e) Guaranteed governmental mortgage pool certificates, as defined 
in 29 CFR 2510.3-101(i)(2) \14\; and/or
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    \14\ In ERISA Advisory Opinion 99-05A (February 22, 1999), the 
Department expressed its view that mortgage pool certificates 
guaranteed and issued by the Federal Agricultural Mortgage 
Corporation meet the definition of a guaranteed governmental 
mortgage pool certificate as defined in 29 CFR 2510.3-101(i)(2).
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    (f) Secured debt and senior unsecured debt (excluding mandatory 
convertible debt), issued by an eligible entity, as defined in 12 CFR 
370.2(a), that are fully guaranteed as to timely payment of principal 
and interest by the Federal Deposit Insurance Corporation (FDIC) under 
the Debt Guarantee Program of the Temporary Liquidity Guarantee Program 
(TLG Program) and that are backed by the full faith and credit of the 
United States; and/or
    (g) Fractional undivided interests in any of the obligations 
described in clauses (a)-(f) of this subsection B.(1).\15\
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    \15\ It is the Department's view that the definition of 
``Issuer'' contained in section III.B. includes a two-tier structure 
under which Securities issued by the first Issuer, which contains a 
pool of receivables described above, are transferred to a second 
Issuer which issues Securities that are sold to plans. However, the 
Department is of the further view that, since the Underwriter 
Exemptions generally provide relief for the direct or indirect 
acquisition or disposition of Securities that are not subordinated, 
no relief would be available if the Securities held by the second 
Issuer were subordinated to the rights and interests evidenced by 
other Securities issued by the first Issuer, unless such Securities 
were issued in a Designated Transaction.
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    Notwithstanding the foregoing, residential and home equity loan 
receivables issued in Designated Transactions may be less than fully 
secured, provided that: (i) the rights and interests evidenced by 
Securities issued in such Designated Transactions (as defined in 
section III.DD.) are not subordinated to the rights and interests 
evidenced by Securities of the same Issuer; (ii) such Securities 
acquired by the plan have received a rating from a Rating Agency at the 
time of such acquisition that is in one of the two highest generic 
rating categories; and (iii) any obligation included in the corpus or 
assets of the Issuer must be secured by collateral whose fair market 
value on the Closing Date of the Designated Transaction is at least 
equal to 80% of the sum of: (I) The outstanding principal balance due 
under the obligation which is held by the Trust and (II) the 
outstanding principal balance(s) of any other obligation(s) of higher 
priority (whether or not held by the Issuer) which are secured by the 
same collateral.
    (2) Property which had secured any of the obligations described in 
subsection III.B.(1);
    (3)(a) Undistributed cash or temporary investments made therewith 
maturing no later than the next date on which distributions are to be 
made to securityholders; and/or
    (b) Cash or investments made therewith which are credited to an 
account to provide payments to securityholders pursuant to any Eligible 
Swap Agreement meeting the conditions of subsection II.A.(9) or 
pursuant to any Eligible Yield Supplement Agreement, and/or
    (c) Cash transferred to the Issuer on the Closing Date and 
permitted investments made therewith which:
    (i) Are credited to a Pre-Funding Account established to purchase 
additional obligations with respect to which the conditions set forth 
in paragraphs (a)-(g) of subsection II.A.(7) are met; and/or
    (ii) Are credited to a Capitalized Interest Account; and
    (iii) Are held by the Issuer for a period ending no later than the 
first distribution date to securityholders occurring after the end of 
the Pre-Funding Period.
    For purposes of this clause (c) of subsection III.B.(3), the term 
``permitted investments'' means investments which: (i) Are either (A) 
direct obligations of, or obligations fully guaranteed as to timely 
payment of principal and interest by, the United States or any agency 
or instrumentality thereof, provided that such obligations are backed 
by the full faith and credit of the United States, or (B) have been 
rated (or the Obligor has been rated) in one of the three highest 
generic rating categories by a Rating Agency; (ii) are described in the 
Pooling and Servicing Agreement; and (iii) are permitted by the Rating 
Agency.
    (4) Rights of the Trustee under the Pooling and Servicing 
Agreement, and rights under any insurance policies, third-party 
guarantees, contracts of suretyship, Eligible Yield Supplement 
Agreements, Eligible Swap Agreements meeting the conditions of 
subsection II.A.(9) or other credit support arrangements with respect 
to any obligations described in section III.B.(1).
    However, notwithstanding the foregoing, the term ``Issuer'' does 
not include any investment pool unless: (i) The assets of the type 
described in paragraphs (a)-(e) and paragraph (g) (excluding fractional 
interests in any of the obligations described in paragraph (f) of this 
subsection B.(1)) of section III.B.(1) which are contained in the 
investment pool have been included in other investment pools, (ii) 
Securities evidencing interests in such other investment pools have 
been rated in one of the three (or in the case of Designated 
Transactions, four) highest generic rating categories by a Rating 
Agency for at least one year prior to the plan's acquisition of 
Securities pursuant to this exemption, and (iii) Securities evidencing 
interests in such other investment pools have been purchased by 
investors other than plans for at least one year prior to the plan's 
acquisition of such Securities pursuant to this exemption. For purposes 
of this paragraph, Securities evidencing interests in investment pools 
containing assets described in Section III.B.(1)(f) are rated in one of 
the three highest generic rating categories by a Rating Agency at the 
time of such acquisition.
    C. ``Underwriter'' means:
    (1) The Applicants,
    (2) Any person directly or indirectly, through one or more 
intermediaries, controlling, controlled by or under common control with 
the Applicants, or
    (3) Any member of an underwriting syndicate or selling group of 
which a person described in Section III.C.(1) or (2) is a manager or 
co-manager with respect to the Securities.
    D. ``Sponsor'' means the entity that organizes an Issuer by 
depositing obligations therein in exchange for Securities.
    E. ``Master Servicer'' means the entity that is a party to the 
Pooling and Servicing Agreement relating to assets of the Issuer and is 
fully responsible for servicing, directly or through Subservicers, the 
assets of the Issuer.
    F. ``Subservicer'' means an entity which, under the supervision of 
and on behalf of the Master Servicer, services loans contained in the 
Issuer, but is not a party to the Pooling and Servicing Agreement.
    G. ``Servicer'' means any entity which services loans contained in 
the Issuer, including the Master Servicer and any Subservicer.
    H. ``Trust'' means an Issuer, which is a trust (including an owner 
trust, grantor trust or a REMIC or FASIT which is organized as a 
Trust).
    I. ``Trustee'' means the Trustee of any Trust, which issues 
Securities, and also includes an Indenture Trustee. ``Indenture 
Trustee'' means the Trustee appointed under the indenture pursuant to 
which the subject Securities are issued, the rights of holders of the 
Securities are set forth and a security interest in the Trust assets in 
favor of the holders of the Securities is created.

[[Page 13255]]

The Trustee or the Indenture Trustee is also a party to or beneficiary 
of all the documents and instruments transferred to the Issuer, and as 
such, has both the authority to, and the responsibility for, enforcing 
all the rights created thereby in favor of holders of the Securities, 
including those rights arising in the event of default by the Servicer.
    J. ``Insurer'' means the insurer or guarantor of, or provider of 
other credit support for, an Issuer. Notwithstanding the foregoing, a 
person is not an insurer solely because it holds Securities 
representing an interest in an Issuer, which are of a class 
subordinated to Securities representing an interest in the same Issuer.
    K. ``Obligor'' means any person, other than the Insurer, that is 
obligated to make payments with respect to any obligation or receivable 
included in the Issuer. Where an Issuer contains Qualified Motor 
Vehicle Leases or Qualified Equipment Notes Secured by Leases, 
``Obligor'' shall also include any owner of property subject to any 
lease included in the Issuer, or subject to any lease securing an 
obligation included in the Issuer.
    L. ``Excluded Plan'' means any plan with respect to which any 
member of the Restricted Group is a ``plan sponsor'' within the meaning 
of section 3(16)(B) of the Act.
    M. ``Restricted Group'' with respect to a class of Securities 
means:
    (1) Each Underwriter;
    (2) Each Insurer;
    (3) The Sponsor;
    (4) The Trustee;
    (5) Each Servicer;
    (6) Any Obligor with respect to obligations or receivables included 
in the Issuer constituting more than 5 percent of the aggregate 
unamortized principal balance of the assets in the Issuer, determined 
on the date of the initial issuance of Securities by the Issuer;
    (7) Each counterparty in an Eligible Swap Agreement; or
    (8) Any Affiliate of a person described in subsections III.M.(1)-
(7).
    N. ``Affiliate'' of another person includes:
    (1) Any person, directly or indirectly, through one or more 
intermediaries, controlling, controlled by or under common control with 
such other person;
    (2) Any officer, director, partner, employee, relative (as defined 
in section 3(15) of the Act), a brother, a sister, or a spouse of a 
brother or sister of such other person; and
    (3) Any corporation or partnership of which such other person is an 
officer, director or partner.
    O. ``Control'' means the power to exercise a controlling influence 
over the management or policies of a person other than an individual.
    P. A person will be ``independent'' of another person only if:
    (1) Such person is not an Affiliate of that other person; and
    (2) The other person, or an Affiliate thereof, is not a fiduciary 
who has investment management authority or renders investment advice 
with respect to assets of such person.
    Q. ``Sale'' includes the entrance into a Forward Delivery 
Commitment, provided:
    (1) The terms of the Forward Delivery Commitment (including any fee 
paid to the investing plan) are no less favorable to the plan than they 
would be in an arm's length transaction with an unrelated party;
    (2) The prospectus or private placement memorandum is provided to 
an investing plan prior to the time the plan enters into the Forward 
Delivery Commitment; and
    (3) At the time of the delivery, all conditions of this exemption 
applicable to sales are met.
    R. ``Forward Delivery Commitment'' means a contract for the 
purchase or sale of one or more Securities to be delivered at an agreed 
future settlement date. The term includes both mandatory contracts 
(which contemplate obligatory delivery and acceptance of the 
Securities) and optional contracts (which give one party the right but 
not the obligation to deliver Securities to, or demand delivery of 
Securities from, the other party).
    S. ``Reasonable Compensation'' has the same meaning as that term is 
defined in 29 CFR 2550.408c-2.
    T. ``Qualified Administrative Fee'' means a fee which meets the 
following criteria:
    (1) The fee is triggered by an act or failure to act by the Obligor 
other than the normal timely payment of amounts owing in respect of the 
obligations;
    (2) The Servicer may not charge the fee absent the act or failure 
to act referred to in subsection III.T.(1);
    (3) The ability to charge the fee, the circumstances in which the 
fee may be charged, and an explanation of how the fee is calculated are 
set forth in the Pooling and Servicing Agreement; and
    (4) The amount paid to investors in the Issuer will not be reduced 
by the amount of any such fee waived by the Servicer.
    U. ``Qualified Equipment Note Secured By a Lease'' means an 
equipment note:
    (1) Which is secured by equipment which is leased;
    (2) Which is secured by the obligation of the lessee to pay rent 
under the equipment lease; and
    (3) With respect to which the Issuer's security interest in the 
equipment is at least as protective of the rights of the Issuer as the 
Issuer would have if the equipment note were secured only by the 
equipment and not the lease.
    V. ``Qualified Motor Vehicle Lease'' means a lease of a motor 
vehicle where:
    (1) The Issuer owns or holds a security interest in the lease;
    (2) The Issuer owns or holds a security interest in the leased 
motor vehicle; and
    (3) The Issuer's security interest in the leased motor vehicle is 
at least as protective of the Issuer's rights as the Issuer would 
receive under a motor vehicle installment loan contract.
    W. ``Pooling and Servicing Agreement'' means the agreement or 
agreements among a Sponsor, a Servicer and the Trustee establishing a 
Trust. ``Pooling and Servicing Agreement'' also includes the indenture 
entered into by the Issuer and the Indenture Trustee.
    X. ``Rating Agency'' means Standard & Poor's Ratings Services, a 
division of The McGraw-Hill Companies, Inc.; Moody's Investors Service, 
Inc.; Fitch Ratings; DBRS Limited; or DBRS, Inc.; or any successors 
thereto.
    Y. ``Capitalized Interest Account'' means an Issuer account: (i) 
which is established to compensate securityholders for shortfalls, if 
any, between investment earnings on the Pre-Funding Account and the 
interest rate payable under the Securities; and (ii) which meets the 
requirements of paragraph (c) of subsection III.B.(3).
    Z. ``Closing Date'' means the date the Issuer is formed, the 
Securities are first issued and the Issue's assets (other than those 
additional obligations which are to be funded from the Pre-Funding 
Account pursuant to subsection II.A.(7)) are transferred to the Issuer.
    AA. ``Pre-Funding Account'' means an Issuer account: (i) which is 
established to purchase additional obligations, which obligations meet 
the conditions set forth in paragraphs (a)-(g) of subsection II.A.(7); 
and (ii) which meets the requirements of paragraph (c) of subsection 
III.B.(3).
    BB. ``Pre-Funding Limit'' means a percentage or ratio of the amount 
allocated to the Pre-Funding Account, as compared to the total 
principal amount of the Securities being offered, which is less than or 
equal to 25 percent.
    CC. ``Pre-Funding Period'' means the period commencing on the 
Closing Date and ending no later than the earliest to occur of: (i) The 
date the amount on

[[Page 13256]]

deposit in the Pre-Funding Account is less than the minimum dollar 
amount specified in the Pooling and Servicing Agreement; (ii) the date 
on which an event of default occurs under the Pooling and Servicing 
Agreement; or (iii) the date which is the later of three months or 90 
days after the Closing Date.
    DD. ``Designated Transaction'' means a securitization transaction 
in which the assets of the Issuer consist of secured consumer 
receivables, secured credit instruments or secured obligations that 
bear interest or are purchased at a discount and are: (i) Motor 
vehicle, home equity and/or manufactured housing consumer receivables; 
and/or (ii) motor vehicle credit instruments in transactions by or 
between business entities; and/or (iii) single-family residential, 
multi-family residential, home equity, manufactured housing and/or 
commercial mortgage obligations that are secured by single-family 
residential, multi-family residential, commercial real property or 
leasehold interests therein. For purposes of this section III.DD., the 
collateral securing motor vehicle consumer receivables or motor vehicle 
credit instruments may include motor vehicles and/or Qualified Motor 
Vehicle Leases.
    EE. ``Ratings Dependent Swap'' means an interest rate swap, or (if 
purchased by or on behalf of the Issuer) an interest rate cap contract, 
that is part of the structure of a class of Securities where the rating 
assigned by the Rating Agency to any class of Securities held by any 
plan is dependent on the terms and conditions of the swap and the 
rating of the counterparty, and if such Security rating is not 
dependent on the existence of the swap and rating of the counterparty, 
such swap or cap shall be referred to as a ``Non-Ratings Dependent 
Swap.'' With respect to a Non-Ratings Dependent Swap, each Rating 
Agency rating the Securities must confirm, as of the date of issuance 
of the Securities by the Issuer, that entering into an Eligible Swap 
with such counterparty will not affect the rating of the Securities.
    FF. ``Eligible Swap'' means a Ratings Dependent or Non-Ratings 
Dependent Swap:
    (1) Which is denominated in U.S. dollars;
    (2) Pursuant to which the Issuer pays or receives, on or 
immediately prior to the respective payment or distribution date for 
the class of Securities to which the swap relates, a fixed rate of 
interest, or a floating rate of interest based on a publicly available 
index (e.g., LIBOR or the U.S. Federal Reserve's Cost of Funds Index 
(COFI)), with the Issuer receiving such payments on at least a 
quarterly basis and obligated to make separate payments no more 
frequently than the counterparty, with all simultaneous payments being 
netted;
    (3) Which has a notional amount that does not exceed either: (i) 
The principal balance of the class of Securities to which the swap 
relates, or (ii) the portion of the principal balance of such class 
represented solely by those types of corpus or assets of the Issuer 
referred to in subsections III.B.(1), (2) and (3);
    (4) Which is not leveraged (i.e., payments are based on the 
applicable notional amount, the day count fractions, the fixed or 
floating rates designated in subsection III.FF.(2), and the difference 
between the products thereof, calculated on a one to one ratio and not 
on a multiplier of such difference);
    (5) Which has a final termination date that is either the earlier 
of the date on which the Issuer terminates or the related class of 
Securities is fully repaid; and
    (6) Which does not incorporate any provision which could cause a 
unilateral alteration in any provision described in subsections III.FF. 
(1) through (4) without the consent of the Trustee.
    GG. ``Eligible Swap Counterparty'' means a bank or other financial 
institution which has a rating, at the date of issuance of the 
Securities by the Issuer, which is in one of the three highest long-
term credit rating categories, or one of the two highest short-term 
credit rating categories, utilized by at least one of the Rating 
Agencies rating the Securities; provided that, if a swap counterparty 
is relying on its short-term rating to establish eligibility under this 
exemption, such swap counterparty must either have a long-term rating 
in one of the three highest long-term rating categories or not have a 
long-term rating from the applicable Rating Agency, and provided 
further that if the class of Securities with which the swap is 
associated has a final maturity date of more than one year from the 
date of issuance of the Securities, and such swap is a Ratings 
Dependent Swap, the swap counterparty is required by the terms of the 
swap agreement to establish any collateralization or other arrangement 
satisfactory to the Rating Agencies in the event of a ratings downgrade 
of the swap counterparty.
    HH. ``Qualified Plan Investor'' means a plan investor or group of 
plan investors on whose behalf the decision to purchase Securities is 
made by an appropriate independent fiduciary that is qualified to 
analyze and understand the terms and conditions of any swap transaction 
used by the Issuer and the effect such swap would have upon the credit 
ratings of the Securities. For purposes of the exemption, such a 
fiduciary is either:
    (1) A ``qualified professional asset manager'' (QPAM),\ 16\ as 
defined under Part V(a) of Prohibited Transaction Exemption (PTE) 84-
14, 49 FR 9494, 9506, (March 13, 1984), as amended by 70 FR 49305, 
August 23, 2005);
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    \16\ PTE 84-14 provides a class exemption for transactions 
between a party in interest with respect to an employee benefit plan 
and an investment fund (including either a single customer or pooled 
separate account) in which the plan has an interest, and which is 
managed by a QPAM, provided certain conditions are met. QPAMs (e.g., 
banks, insurance companies, registered investment advisers with 
total client assets under management in excess of $85 million) are 
considered to be experienced investment managers for plan investors 
that are aware of their fiduciary duties under ERISA.
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    (2) An ``in-house asset manager'' (INHAM),\17\ as defined under 
Part IV(a) of PTE 96-23, 61 FR 15975, 15982 (April 10, 1996); or
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    \17\ PTE 96-23 permits various transactions involving employee 
benefit plans whose assets are managed by an INHAM, an entity which 
is generally a subsidiary of an employer sponsoring the plan which 
is a registered investment adviser with management and control of 
total assets attributable to plans maintained by the employer and 
its affiliates which are in excess of $50 million.
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    (3) A plan fiduciary with total assets under management of at least 
$100 million at the time of the acquisition of such Securities.
    II. ``Excess Spread'' means, as of any day funds are distributed 
from the Issuer, the amount by which the interest allocated to 
Securities exceeds the amount necessary to pay interest to 
securityholders, servicing fees and expenses.
    JJ. ``Eligible Yield Supplement Agreement'' means any yield 
supplement agreement, similar yield maintenance arrangement or, if 
purchased by or on behalf of the Issuer, an interest rate cap contract 
to supplement the interest rates otherwise payable on obligations 
described in subsection III.B.(1). Such an agreement or arrangement may 
involve a notional principal contract provided that:
    (1) It is denominated in U.S. dollars;
    (2) The Issuer receives on, or immediately prior to the respective 
payment date for the Securities covered by such agreement or 
arrangement, a fixed rate of interest or a floating rate of interest 
based on a publicly available index (e.g., LIBOR or COFI), with the 
Issuer receiving such payments on at least a quarterly basis;
    (3) It is not ``leveraged'' as described in subsection III.FF. (4);

[[Page 13257]]

    (4) It does not incorporate any provision which would cause a 
unilateral alteration in any provision described in subsections III.JJ. 
(1)-(3) without the consent of the Trustee;
    (5) It is entered into by the Issuer with an Eligible Swap 
Counterparty; and
    (6) It has a notional amount that does not exceed either: (i) The 
principal balance of the class of Securities to which such agreement or 
arrangement relates, or (ii) the portion of the principal balance of 
such class represented solely by those types of corpus or assets of the 
Issuer referred to in subsections III.B. (1), (2) and (3).
    Effective Date: If granted, and except as otherwise provided, this 
proposed exemption will be effective as of February 4, 2004. The 
exemptive relief, if granted, for investment pools consisting solely of 
debt described in section III.B.(1)(f) will be effective as of February 
27, 2009 and will expire on the later of: July 1, 2012; or the 
expiration of the FDIC's Debt Guarantee Program, which is part of the 
TLG Program.

Summary of Facts and Representations

    1. Barclays Bank PLC is an authorized institution under the Banking 
Act of 1987 in the United Kingdom and is regulated by the Bank of 
England. As of December 31, 2007, Barclays Bank PLC (Consolidated 
Balance Sheet) had approximately [pound]1,227,583,000,000 in assets and 
[pound]31,821,000,000 in stockholders' equity. Barclays Bank PLC has 
several affiliates that are broker-dealers or banks. Barclays Capital 
Inc., a subsidiary of Barclays Bank PLC, is incorporated under the laws 
of the State of Connecticut and is registered and regulated by the 
Securities and Exchange Commission as a U.S. broker-dealer under 
Section 15 of the Securities and Exchange Act of 1934, as amended. As 
of June 30, 2008, Barclays Capital Inc. (Unaudited Consolidated Balance 
Sheet) has approximately US$ 269,433,856,000 in assets and US$ 
2,518,536,000 in stockholders' equity.
    2. Barclays Bank PLC and Barclays Capital Inc. (hereinafter 
Barclays), alone or together with other broker-dealers, act as 
underwriter or placement agent with respect to the sale of securities. 
Barclays also may act as the manager or co-manager for a syndicate of 
securities underwriters or selling group.
    3. Barclays received authorization from the Department pursuant to 
Prohibited Transaction Exemption (PTE) 96-62, 67 FR 44622 (July 3, 
2002), that certain prohibited transaction provisions do not apply to 
transactions substantially similar to transactions described in the 
Underwriter Exemptions as described in its 2003 ``EXPRO'' authorization 
request (File <greek-i>: E00342). See Final Authorization Number (FAN) 
04-03E, February 4, 2004 (hereinafter FAN 04-03E). The information 
contained in the administrative file for E00342 as well as the facts 
and representations contained in FAN 04-03E also were considered and 
relied upon by the Department for purposes of this notice.\18\ The 
Underwriter Exemptions are a group of individual exemptions that 
provide substantially identical relief for the servicing, management 
and operation of certain asset-backed or mortgage-backed investment 
pools and the acquisition, holding, sale or transfer by employee 
benefit plans of certain securities representing interests in those 
investment pools. These exemptions provide relief from certain of the 
prohibited transaction restrictions of sections 406(a), 406(b) and 
407(a) of the Employee Retirement Income Security Act of 1974, as 
amended (ERISA or the Act) and from the taxes imposed by section 
4975(a) and (b) of the Internal Revenue Code of 1986, as amended (the 
Code), by reason of certain provisions of section 4975(c)(1) of the 
Code.
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    \18\ The Underwriter Exemptions, including PTE 2002-41, 67 FR 
54487 (August 22, 2002) and PTE 2000-58, 65 FR 67765 (November 13, 
2000), and PTE 97-34, 62 FR 39021 (July 21, 1997), were amended by 
PTE 2007-05, 72 FR 13130 (March 20, 2007) and PTE 2008-08, 73 FR 
27570 (May 13, 2008). Additional information about the Underwriter 
Exemptions also is available in the notices of proposed exemption 
with respect to each of the foregoing individual exemptions.
---------------------------------------------------------------------------

    4. The Applicants are requesting, among other things, individual 
exemptive relief that would add senior unsecured debt guaranteed by the 
Federal Deposit Insurance Corporation (FDIC) pursuant to its Temporary 
Liquidity Guarantee Program (TLG Program) to the permissible assets of 
an Issuer, which currently are restricted to certain secured 
receivables, certain secured instruments, certain secured obligations 
and guaranteed governmental mortgage pool certificates as defined in 29 
CFR 2510.3-101(i)(2). If this proposed exemption is granted by the 
Department, it would replace and expand the exemptive relief authorized 
in FAN 04-03E.
    5. The TLG Program was announced by the FDIC on October 14, 2008, 
as an initiative to deal with the recent disruptions in the financial 
markets that have impaired the ability of creditworthy companies to 
issue commercial paper, particularly at maturities longer than 30 days. 
The TLG Program is designed to encourage liquidity in the banking 
system in order to ease lending to creditworthy businesses and 
consumers.
    6. One component of the TLG Program is the Debt Guarantee Program, 
by which the FDIC will guarantee the payment of certain newly-issued 
senior unsecured debt by entities described in 12 CFR 370.2(a) (i.e., 
insured depositary institutions, certain U.S. bank holding companies, 
certain U.S. savings and loan holding companies, and certain affiliates 
of an insured depositary institution that the FDIC designates as an 
eligible entity). The FDIC's payment obligation is triggered by a 
payment default rather than bankruptcy or receivership.
    7. Under the TLG Program, effective as of December 6, 2008, the 
term ``senior unsecured debt'' excludes any obligation with a stated 
maturity of 30 days or less (including debt with a maturity of ``one 
month''). The guarantee on any previously issued senior unsecured debt 
instrument issued with a stated maturity of 30 days or less will expire 
on the earlier of: (i) the date the issuer ``opts out'' pursuant to the 
TLG Program, or the maturity date of the instrument.
    8. The debt instruments covered by the TLG Program are unsecured 
borrowings that: (i) Are evidenced by a written agreement or trade 
confirmation; (ii) have a specific and fixed principal to be paid in 
full on demand or on a date certain; (iii) are not contingent and 
contain no embedded options, forwards, swaps or other derivatives; and 
(iv) are not, by their terms, subordinated to any other liability. The 
debt may pay interest at a fixed or floating rate. Any floating 
interest rate must be based on a commonly used reference rate, 
including a single index of a Treasury bill rate, the prime rate, or 
the London Interbank Offered Rate (LIBOR). For more information about 
the TLG Program, see the FDIC's final rule at 73 FR 72244 (November 26, 
2008) \19\ and the FDIC Internet site at http://www.fdic.gov/.
---------------------------------------------------------------------------

    \19\ On March 4, 2009, the FDIC published an interim rule that 
extends its guarantee to certain new issues of mandatory convertible 
debt into common shares of the issuing entity at a specified date no 
later than the expiration of the FDIC's guarantee. Because the 
requested exemptive relief relates to pools of debt, the proposed 
exemption would not apply to such mandatory convertible debt.
---------------------------------------------------------------------------

    9. Barclays represents that the debt covered by the TLG Program is 
substantially similar to, and in some respects more secure, than 
guaranteed governmental mortgage pool certificates. The applicant 
states that although interest and principal payable pursuant to a 
guaranteed governmental mortgage

[[Page 13258]]

pool certificate are guaranteed by an agency of instrumentality thereof 
(e.g., Freddie Mac, Fannie Mae and Farmer Mac), such agencies are not 
backed by the full faith and credit of the United States unlike the 
FDIC. The full faith and credit backing is significant because it 
represents an unconditional commitment from the United States to pay 
interest on defaulted notes. The Applicant further represents that 
because of the full faith and credit backing of the debt, there likely 
also will be a ready market for these notes. In this regard, Barclays 
states that plans already may invest directly in senior unsecured bank 
debt under the TLG PROGRAM in accordance with investor-based 
exemptions.\20\
---------------------------------------------------------------------------

    \20\ See, for example, PTE 84-14 and PTE 96-23, which are 
referenced, respectively, in earlier footnotes to this proposed 
exemption.
---------------------------------------------------------------------------

    10. The FDIC board announced on January 16, 2009, that it will soon 
propose rule changes to its Temporary Liquidity Guarantee Program to 
extend the maturity of the guarantee from three to up to 10 years where 
the debt is supported by collateral and the issuance supports new 
consumer lending.\21\ Barclays also has requested in its application 
that the individual exemptive relief apply to such debt.
---------------------------------------------------------------------------

    \21\ See FDIC Press Release (PR) 4-2009. To date, the FDIC has 
not published such a rule in the Federal Register. See the caption 
in the preamble entitled ``Supplementary Information'' as to the 
Department's solicitation of comments with respect to secured debt.
---------------------------------------------------------------------------

    11. The underwriter (i.e., Barclays, their affiliates, or a member 
of an underwriting syndicate or selling group of which Barclays or 
their affiliate is a manager or co-manager) will be a registered 
broker-dealer that acts as underwriter or placement agent with respect 
to the sale of securities.
    12. The issuer is established under a pooling and servicing 
agreement between a sponsor, a servicer and a trustee. The sponsor or 
servicer of an issuer selects assets to be included in a trust, 
partnership, special purpose corporation or limited liability company.
    13. As a general matter, Securityholders will be entitled to 
receive distributions of principal and/or interest, adjusted, in the 
case of payments of interest, to a specified rate--the pass through 
rate--which may be fixed or variable. These distributions will be made 
monthly, quarterly, semi-annually, or at such other intervals and dates 
as specified in the related prospectus or private placement memorandum.
    14. The trustee of a trust is the legal owner of the obligations in 
the trust and is responsible for enforcing all the rights in favor of 
securityholders pursuant to the documents and instruments deposited in 
the trust. The trustee will be an independent entity, and therefore 
will be unrelated to any member of the Restricted Group (as defined in 
section III.M.) other than an underwriter.
    15. The servicer of an issuer administers the receivables on behalf 
of the securityholders (e.g., notifying borrowers of amounts due on 
receivables, maintaining payment records, and instituting foreclosure 
or similar proceedings in the event of default). The issuer will be 
maintained as an essentially passive entity. Therefore, both the plan 
sponsor's discretion and the servicer's discretion with respect to 
assets included in an issuer are severely limited.
    16. The Applicants request that the exemptive relief, for bank debt 
guaranteed under the TLG Program by the FDIC, if granted, be made 
retroactive to February 27, 2009.
Notice to Interested Persons and Hearing Requests
    All interested persons are invited to submit written comments or 
requests for a hearing on the proposed exemption to the address above, 
within time frame set forth above, after the publication of this 
proposed exemption in the Federal Register. All comments will be made 
part of the record. Comments received will be available for public 
inspection with the application at the address set forth above.
    With respect to notification of interested persons, the Applicants 
will distribute this notice of proposed exemption by first class mail 
to an independent plan fiduciary for all ERISA pension plans for which 
the Applicants and their subsidiaries provide fiduciary services. All 
notifications will be mailed within three business days after 
publication of the proposed exemption in the Federal Register.

FOR FURTHER INFORMATION CONTACT: Eric A. Raps, Office of Exemption 
Determinations, Employee Benefits Security Administration, US. 
Department of Labor, telephone (202) 693-8532. (This is not a toll-free 
number).
    Individual Retirement Accounts (the IRAs) for Ralph Hartwell, 
Harold Latin, Kenlon Johnson, Carol Johnson, Shanon Taylor, Michael 
Ball, Dianne Barkas, Roy Barkas, Harry DeWall, Alice Pike, Steven 
Larsen, C. Timothy Hopkins, Wayne Meuleman, Robert L. Miller, and 
Richard T. Scott (Collectively, the Participants), Located in Idaho 
Falls, Idaho, and Elsewhere [Exemption Application Numbers: D-11536 
through D-11550]

Proposed Exemption

    The Department is considering granting an exemption under the 
authority of 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 sanctions resulting 
from the application of section 4975 of the Code, by reason of sections 
4975(c)(1)(A), (D), and (E) of the Code, shall not apply to the cash 
sales (the Sales) of certain shares of closely held common stock (the 
Stock) of the Bank of Idaho Holding Company (the Company) by the IRAs 
\22\ to the Participants, disqualified persons with respect to their 
respective IRAs, provided that the following conditions are satisfied:
---------------------------------------------------------------------------

    \22\ Because each IRA has only one Participant, there is no 
jurisdiction under 29 CFR Sec.  2510.3-3(b). However, there is 
jurisdiction under Title II of the Act pursuant to section 4975 of 
the Code.
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    (a) The Sale of the Stock by each IRA is a one-time transaction for 
cash;
    (b) The terms and conditions of each Sale are at least as favorable 
to each IRA as those obtainable in an arm's length transaction with an 
unrelated party;
    (c) Each IRA receives the fair market value of the Stock on the 
date of the Sale as determined by a qualified, independent appraiser; 
and
    (d) Each IRAs does not pay any commissions, costs, or other 
expenses in connection with each Sale.

Summary of Facts and Representations

    1. The IRAs are individual retirement accounts, as described in 
section 408(a) of the Code. Each of the IRAs is self-directed. Among 
the assets of each IRA are shares of closely-held stock in the Company, 
a one-bank holding company domiciled in the state of Idaho and 
registered with the Board of Governors of the Federal Reserve System. 
The sole asset of the Company is the Bank of Idaho (the Bank), located 
in Idaho Falls, Idaho. The applicants describe the Participants, the 
IRAs, and their holdings of the Stock as follows:
    (a) The IRA of Ralph Hartwell, a Director of the Bank, currently 
holds total assets of approximately $975,897.07, which includes 41,004 
shares of the Stock. The IRA of Ralph Hartwell acquired all of the 
Stock from the Company on August 28, 1985.
    (b) The IRA of Harold Latin, a Director of the Bank, currently 
holds total assets of approximately $28,703.51, which includes 1,071 
shares of the Stock. The IRA of Harold Latin acquired all of the

[[Page 13259]]

Stock from the Company on August 28, 1985.
    (c) The IRA of Kenlon Johnson, a Director of the Bank, currently 
holds total assets of approximately $448,673.63, which includes 400 
shares of the Stock. The IRA of Kenlon Johnson acquired all of the 
Stock from the Company on July 12, 2004.
    (d) The IRA of Carol Johnson, the spouse of Kenlon Johnson, 
currently holds total assets of approximately $120,165.26, which 
includes 1,000 shares of the Stock. The IRA of Carol Johnson acquired 
all of the Stock from the Company on February 16, 2000.
    (e) The IRA of Shanon Taylor, an employee of the Bank, currently 
holds total assets of approximately $23,641.36, which includes 910 
shares of the Stock. The IRA of Shanon Taylor is a Roth IRA that 
acquired all of the Stock from the Company on November 15, 1996.
    (f) The IRA of Michael Ball currently holds total assets of 
approximately $27,438.54, which includes 1,050 shares of the Stock. The 
IRA of Michael Ball acquired all of the Stock from the Company on 
January 18, 1999.
    (g) The IRA of Dianne Barkas currently holds total assets of 
approximately $162,479.85, which includes 6,380 shares of the Stock. 
The IRA of Dianne Barkas acquired all of the Stock from the Company on 
August 28, 1985.
    (h) The IRA of Roy Barkas currently holds total assets of 
approximately $83,554.74, which includes 3,262 shares of the Stock. The 
IRA of Roy Barkas acquired all of the Stock from the Company on August 
28, 1985.
    (i) The IRA of Harry DeWall currently holds total assets of 
approximately $419,921.88, which includes 10,000 shares of the Stock. 
The IRA of Harry DeWall acquired all of the Stock from the Company on 
September 11, 1999.
    (j) The IRA of Alice Pike currently holds total assets of 
approximately $36,165.72, which includes 1,117 shares of the Stock. The 
IRA of Alice Pike acquires all of the Stock from the Company on 
September 28, 2000.
    (k) The IRA of Steven Larsen currently holds total assets of 
approximately $792,100.40, which includes 3,877 shares of the Stock. 
The IRA of Steven Larsen acquired all of the Stock from the Company on 
August 28, 1985.
    (l) The IRA of C. Timothy Hopkins currently holds total assets of 
approximately $488,139.96, which includes 2,000 shares of the Stock. 
The IRA of C. Timothy Hopkins acquired all of the Stock from the 
Company on September 11, 1999.
    (m) The IRA of Wayne Meuleman currently holds total assets of 
approximately $42,651.09, which includes 1,680 shares of the Stock. The 
IRA of Wayne Meuleman acquired all of the Stock from the Company on 
August 28, 1985.
    (n) The IRA of Robert L. Miller currently holds total assets of 
approximately $39,816.46, which includes 1,543 shares of the Stock. The 
IRA of Robert L. Miller acquired all of the Stock from the Company on 
August 28, 1985.
    (o) The IRA of Richard T. Scott currently holds total assets of 
approximately $17,209.21, which includes 653 shares of the Stock. The 
IRA of Richard T. Scott acquired all of the Stock from the Company on 
February 16, 2000.
    The applicants represent that the Bank is the custodian for all of 
the IRAs, except that: (i) The custodian of the IRA of Kenlon Johnson 
is Wachovia Securities (Wachovia); (ii) the custodian of the IRA of 
Michael Ball is TD Ameritrade Institutional (TD Ameritrade); (iii) the 
custodian of the IRA of Steven Larsen is Merrill Lynch Pierce Fenner & 
Smith (Merrill Lynch); and (iv) the custodian of the IRA of C. Timothy 
Hopkins is Raymond James Financial Services, Inc (Raymond James). 
Wachovia, TD Ameritrade, Merrill Lynch, and Raymond James are all 
national brokerage firms.
    2. The applicants request an administrative exemption for the Sale 
of the Stock by each individual IRA to its respective Participant. The 
applicants also represent that the IRAs acquired the Stock directly 
from the issuer (i.e., the Company).\23\ Prior to January 1, 2007, the 
applicants represent that the Company was a Subchapter C corporation. 
The applicants state that business and income tax considerations caused 
the Company to elect to be taxed as a Subchapter S corporation pursuant 
to the Code, effective on January 1, 2007. The applicants further 
represent that, while section 1361(c)(2)(vi) of the Code permits an IRA 
to be an eligible shareholder in a bank holding company upon the 
company's conversion to a Subchapter S corporation, the applicants 
nevertheless remain liable for unrelated business tax income (UBTI) in 
their respective IRAs subsequent to the conversion, which negatively 
impacts the accounts. Accordingly, the applicants seek to effectuate 
the Sale of the Stock from their IRAs.\24\ The applicants also 
represent that the acquisition of the Stock by each IRA was done for 
investment purposes and that, in fact, each IRA made a profit on its 
original investment.
---------------------------------------------------------------------------

    \23\ The Department notes that, to the extent that the Company 
or the other sellers were not disqualified persons with respect to 
the IRAs under section 4975(e) of the Code, the purchase of the 
Stock would not have constituted a prohibited transaction under 
section 4975(c)(1) of the Code. Accordingly, to the extent that 
there were violations of section 4975(c)(1) of the Code with respect 
to the purchases and holdings of the Stock by the IRAs, the 
Department is extending no relief for these transactions.
    Further, the purchase and holding of the Stock by the IRAs whose 
Participants are officers or directors of the Company and/or the 
Bank raises questions under section 4975(c)(1)(D) and (E) of the 
Code depending on the degree (if any) of the IRA Participant's 
interest in the transaction. Section 4975(c)(1)(D) and (E) of the 
Code prohibits the use by or for the benefit of a disqualified 
person of the income or assets of a plan and prohibits a fiduciary 
from dealing with the income or assets of a plan in his own interest 
or for his own account. Those IRA Participants who are officers and/
or directors of the Company or of the Bank, may have had interests 
in the transactions which affected their best judgment as 
fiduciaries of their IRAs. In such circumstances, the transactions 
may have violated sections 4975(c)(1)(D) and (E) of the Code. See 
Advisory Opinion 90-20A (June 15, 1990). Accordingly, to the extent 
that there were violations of section 4975(c)(1)(D) and (E) of the 
Code with respect to the purchases and holdings of the Stock by the 
IRAs, the Department is extending no relief for these transactions.
    \24\ Section 4975(d)(16) of the Code provides a statutory 
exemption from the prohibited transaction provisions of the Code for 
the sale of stock held by a trust which constitutes an individual 
retirement account under section 408(a) of the Code to the 
individual for whose benefit such account is established, provided 
that: (i) Such stock is in a bank (as defined in section 581 of the 
Code) or a depository institution holding company (as defined in 
section 3(w)(1) of the Federal Deposit Insurance Act (12 U.S.C. 
1813(w)(1)); (ii) such stock is held by such trust as of the date of 
the enactment of this paragraph; (iii) such sale is pursuant to an 
election under section 1362(a) of the Code by such bank or company; 
(iv) such sale is for fair market value at the time of sale (as 
established by an independent appraiser) and the terms of the sale 
are otherwise at least as favorable to such trust as the terms that 
would apply on a sale to an unrelated party; (v) such trust does not 
pay any commissions, costs, or other expenses in connection with the 
sale; and (vi) the stock is sold in a single transaction for cash 
not later than 120 days after the S corporation election is made.
    The applicants represent that, because the Stock of the Company 
was not sold within 120 days of the Company's S Corporation election 
on January 1, 2007, the proposed Sales of the Stock would not 
qualify for exemptive relief under section 4975(d)(16) of the Code. 
The applicants further represent that advisors to the Company at the 
time of the Subchapter S election were unaware of the negative 
income tax ramifications of the election on the IRA holders, and did 
not inform the holders that the election had been made. The 
applicants also represent that, had the IRA holders been made aware 
of the election, the IRA holders would have taken action consistent 
with the statutory exemption. Accordingly, the applicants have 
applied to the Department for an administrative exemption under 
section 4975(c)(2) of the Code for the proposed Sale of the Stock.
---------------------------------------------------------------------------

    3. The Stock was initially appraised by the valuation firm of 
Southard Financial, which is located in Memphis, Tennessee. In an 
appraisal report dated October 9, 2008, Southard Financial

[[Page 13260]]

offered its opinion of the fair market value of the Stock as of August 
31, 2008. The appraisal report was signed by Mr. Douglas K. Southard 
(Mr. Southard), Mr. David A. Harris (Mr. Harris), and Mr. Mark A. 
Orndorff (Mr. Orndorff), each of whom is an accredited appraiser with 
the firm. Mr. Southard, Mr. Harris, and Mr. Orndorff (collectively, the 
Appraisers) each represent that they are full-time, qualified 
appraisers and are senior members of the American Society of Appraisers 
(ASA). In addition, Mr. Southard and Mr. Harris, as principals of 
Southard Financial, represent that they and their firm are independent 
of, and unrelated to, the Participants, the Company, and the Bank.
    In arriving at a value for the Stock, the Appraisers utilized a 
combined valuation methodology, according weight to both the income 
approach and the market approach (in the latter approach, the 
Appraisers took into account the price/book valuation method, the 
price/earnings method, and the prior transactions method). Applying 
these combined methodologies, the Appraisers arrived at a per share 
value for the Stock of $23.82. In this connection, the Appraisers 
determined that, because there is often local demand for the ownership 
of closely held community bank stock (as opposed to other businesses in 
a local market), no discount for a lack of marketability of the Stock 
should be taken in the appraisal. The Appraisers rounded the $23.82 
figure for the value of the Stock to $23.80 to reflect what they 
believed was the imprecision inherent in the various assumptions used 
in the fair market value determination.
    Applying the $23.80 per share valuation, the aggregate fair market 
value of the Stock held by the respective IRAs of the Participants as 
of August 31, 2008 is reflected in the following table:

----------------------------------------------------------------------------------------------------------------
                                                                                    Fair market    Percentage of
                                                                     Number of     value of the      total IRA
             Individual retirement account (IRA) of                  shares of     stock in each      assets
                                                                   stock held in   IRA as of  8/  represented by
                                                                     each IRA         31/2008        the stock
----------------------------------------------------------------------------------------------------------------
Ralph Hartwell..................................................          41,004     $975,895.20           99.99
Harold Latin....................................................           1,071       25,489.80           88.80
Kenlon Johnson..................................................             400           9,520            2.12
Carol Johnson...................................................           1,000          23,800           19.81
Shanon Taylor...................................................             910          21,658           91.61
Michael Ball....................................................           1,050          24,990           91.08
Dianne Barkas...................................................           6,380         151,844           93.45
Roy Barkas......................................................           3,262       77,635.60           92.92
Harry DeWall....................................................          10,000         238,000           56.68
Alice Pike......................................................           1,117       26,584.60           73.51
Steven Larsen...................................................           3,877       92,272.60           11.65
C. Timothy Hopkins..............................................           2,000          47,600            9.75
Wayne Meuleman..................................................           1,680          39,984           93.75
Robert L. Miller................................................           1,543       36,723.40           92.23
Richard T. Scott................................................             653       15,541.40           90.31
----------------------------------------------------------------------------------------------------------------

    4. The applicants represent that the combined Stock held by each of 
the IRAs (i.e., 75,947 shares) represents only 5.75% of the 1,319,757 
shares of the Stock of the Company that are currently outstanding. The 
applicants also represent that the proposed Sales of the Stock by the 
IRAs will not result in any of the Participants becoming holders of 10% 
or more of the shares of the Company, nor will the Sales give any of 
the Participants a controlling interest in the Company. The applicants 
further state that, if the Department grants an administrative 
exemption for the proposed Sales, an updated appraisal will be 
undertaken by a qualified, independent appraiser to determine the fair 
market value of the Stock as of the date that the Sales are 
consummated.
    5. The applicants represent that the transactions are 
administratively feasible because each Sale will be a one-time 
transaction for cash. The applicants also represent that the 
transactions are in the interests of the IRAs because each IRA will 
dispose of all its shares of the Stock at a price which equals the 
Stock's fair market value at the time of the Sale. As a result, greater 
diversification of the IRAs' assets will be achieved by reinvesting the 
proceeds of the Sales in other assets. Furthermore, the applicants 
represent that the transactions are protective of the rights of the 
Participants and beneficiaries of the IRAs because each IRA will 
receive the fair market value of the Stock currently owned by each IRA 
as of the date of the Sale, as determined by a qualified, independent 
appraiser. Finally, the IRAs will not incur any commissions, costs, or 
other expenses as a result of the Sales.
    6. In summary, the applicants represent that the transactions will 
satisfy the statutory criteria of section 4975(c)(2) of the Code 
because: (a) The Sale of the Stock by each IRA is a one-time 
transaction for cash; (b) The terms and conditions of each Sale is at 
least as favorable to each IRA as those obtainable in an arm's length 
transaction with an unrelated party; (c) Each IRA receives the fair 
market value of the Stock on the date of the Sale as determined by a 
qualified, independent appraiser; and (d) Each IRAs does not pay any 
commissions, costs, or other expenses in connection with each Sale.
    Notice To Interested Persons: Because the applicants are the only 
participants in the IRAs, it has been determined that there is no need 
to distribute this notice of proposed exemption (the Notice) to 
interested persons. Comments and requests for a hearing are due thirty 
(30) days after publication of the Notice in the Federal Register.

FOR FURTHER INFORMATION CONTACT: Mr. Mark Judge of the Department, 
telephone (202) 693-8339. (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

[[Page 13261]]

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 20th day of March, 2009.
Ivan Strasfeld,
Director of Exemption Determinations, Employee Benefits Security 
Administration, U.S. Department of Labor.
[FR Doc. E9-6619 Filed 3-25-09; 8:45 am]
BILLING CODE 4510-29-P


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