20766 Federal Register / Vol. 60, No. 81 / Thursday, April 27, 1995 / Notices

1This takes into account the rate of interest

guaranteed after December 31, 1991, to the Plan by

the Employer.

Signed at Washington, D.C. this 21st day of

April 1995.

Katharine G. Abraham,

Commissioner.

[FR Doc. 95–10366 Filed 4–26–95; 8:45 am]

BILLING CODE 4510–24–M

Pension and Welfare Benefits

Administration

[Application No. D–09875, et al.]

Proposed Exemptions; Toyota Motor

Sales, U.S.A., Inc.

AGENCY: Pension and Welfare Benefits

Administration, Labor.

ACTION: Notice of proposed exemptions.

SUMMARY: This document contains

notices of pendency before the

Department of Labor (the Department) of

proposed exemptions from certain of the

prohibited transaction restriction of the

Employee Retirement Income Security

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

Revenue Code of 1986 (the Code).

Written Comments and Hearing

Requests

All interested persons are invited to

submit written comments or request 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

request for a hearing should state: (1)

The name, address, and telephone

number of the person making the

comment or request, and (2) the nature

of the person’s interest in the exemption

and the manner in which the person

would be adversely affected by the

exemption. A request for a hearing must

also state the issues to be addressed and

include a general description of the

evidence to be presented at the hearing.

A request for a hearing must also state

the issues to be addressed and include

a general description of the evidence to

be presented at the hearing.

ADDRESSES: All written comments and

request for a hearing (at least three

copies) should be sent to the Pension

and Welfare Benefits Administration,

Office of Exemption Determinations,

Room N–5649, U.S. Department of

Labor, 200 Constitution Avenue, N.W.,

Washington, D.C. 20210. Attention:

Application No. stated in each Notice of

Proposed Exemption. The applications

for exemption and the comments

received will be available for public

inspection in the Public Documents

Room of Pension and Welfare Benefits

Administration, U.S. Department of

Labor, Room N–5507, 200 Constitution

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

Notice to Interested Persons

Notice of the proposed exemptions

will be provided to all interested

persons in the manner agreed upon by

the applicant and the Department

within 15 days of the date of publication

in the Federal Register. Such notice

shall include a copy of the notice of

proposed exemption as published in the

Federal Register and shall inform

interested persons of their right to

comment and to request a hearing

(where appropriate).

SUPPLEMENTARY INFORMATION: The

proposed exemptions were requested in

applications filed pursuant to section

408(a) of the Act and/or section

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

accordance with procedures set forth in

29 CFR Part 2570, Subpart B (55 FR

32836, 32847, August 10, 1990).

Effective December 31, 1978, section

102 of Reorganization Plan No. 4 of

1978 (43 FR 47713, October 17, 1978)

transferred the authority of the Secretary

of the Treasury to issue exemptions of

the type requested to the Secretary of

Labor. Therefore, these notices of

proposed exemption are issued solely

by the Department.

The applications contain

representations with regard to the

proposed exemptions which are

summarized below. Interested persons

are referred to the applications on file

with the Department for a complete

statement of the facts and

representations.

Toyota Motor Sales, U.S.A., Inc. Money

Purchase Pension Plan for Bargaining

Unit Employees (the Plan), located in

Torrance, CA

[Application No. D–09875]

Proposed Exemption

The Department is considering

granting an exemption under the

authority of section 408(a) of the Act

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

in accordance with the procedures set

forth in 29 CFR Part 2570, Subpart B (55

FR 32836, 32847, August 10, 1990). If

the exemption is granted the restrictions

of sections 406(a) and 406 (b)(1) and

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

resulting from the application of section

4975 of the Code, by reason of section

4975(c)(1) (A) through (E) of the Code

shall not apply to the proposed cash

sale by the Plan (the Sale), of group

annuity contract No. GA–4564 (the

GAC) issued by Mutual Benefit Life

Insurance Company (Mutual Benefit),

located in Newark, New Jersey, to

Toyota Motor Sales, U.S.A., Inc., a

California corporation, (the Employer), a

party in interest with respect to the

Plan; provided that (1) the Sale is a onetime transaction for cash; (2) the Plan

experiences no loss nor incurs any

expense from the Sale; and (3) the Plan

receives as consideration from the Sale

the greater of either the fair market

value of the GAC as determined by the

trustee of the Plan on the date of the

Sale, or an amount that is equal to the

total funds expended by the Plan in

acquiring and holding the GAC, plus the

amount of interest earned and accrued

by the Plan on the GAC to the date of

the Sale,1 less all withdrawals from the

Plan to the date of the Sale, and less all

advances made to the Plan by the

Employer to the date of the Sale.

Summary of Facts and Representations

1. The Employer is a California

corporation with its corporate

headquarters in Torrance, California and

other facilities located throughout the

United States, including port facilities,

regional sales offices, and parts

distribution centers. The Employer is

primarily engaged in the wholesale

distribution of automobiles, light trucks,

industrial equipment and accessories

throughout the United States (excluding

Hawaii). In addition, the Employer

exports automobiles and related

replacement parts and accessories to

Europe, Asia, and the U.S. Territories.

Also the Employer manufactures certain

automobiles and trucks though its

subsidiaries in the United States.

2. The Plan is a defined contribution

plan that is intended to qualify under

the provisions of section 401(a) of the

Code as a money purchase pension plan

with individual accounts for its

participants. The sponsor of the Plan

and its principal funding source is the

Employer; however, eligible employees

who are participants of the plan may

elect to make additional, voluntary

funding contributions. The Plan is

maintained pursuant to various

collective bargaining agreements

between the Employer and the unions

representing the employees. As of

September 30, 1994, the Plan had 548

active participants and total assets of

$4,468,556.

From April 4, 1986, to October 1,

1987, the named fiduciary of the Plan

was Toyota Body, Inc., and from

October 1, 1987, to August 19, 1994, the

named fiduciary was the Employer.

Since August 19, 1994, the named

fiduciary for the Plan is the Toyota

Employee Benefit Committee (the

Benefit Committee), which consists of 4

or more individuals who are appointed
Federal Register / Vol. 60, No. 81 / Thursday, April 27, 1995 / Notices 20767

2The Department notes that the investment in the

GAC is governed by the provisions of Part 4,

Subtitle B, of Title I of the Act. In this regard, the

Department is not proposing herein relief for any

violations of Part 4 which may have arisen as a

result of not diversifying the investments of the

Plan.

3The Department notes that the decision to

acquire and hold the GAC are governed by the

fiduciary responsibility provisions of Part 4,

Subtitle B, of the Title I of the Act. In this regard,

the Department is not herein proposing relief for

any violations of Part 4 which may have arisen as

a result of the acquisition and holding of the GAC

by the Plan.

4The applicant represents that the terms of the

periodic advances to the Plan satisfied the

conditions of the class exemption PTE 80–26 (45 FR

28545, April 29, 1980). The Department express no

opinion herein as to whether the periodic advances

to the plan satisfied the terms and conditions of

PTE 80–26.

5This takes into account the rate of interest

guaranteed after December 31, 1991, to the Plan by

the Employer.

by the president of the Employer. The

Benefit Committee has full authority to

control and manage the assets and

administration of the Plan. The powers

of the Benefit Committee includes,

among other things, the authority to

appoint legal counsel and other agents

for the Plan.

On September 15, 1994, the Eagle

Trust Company (the Trustee), a trust

company incorporated under the

Pennsylvania Bankruptcy Code, was

selected by the Benefit Committee to

serve as the trustee of the assets of the

Plan. The applicant represents the

Trustee to be independent and not

affiliated with the Employer in any

other capacity.

From July 16, 1984, when the Plan

acquired the GAC from Mutual Benefit

until July 16, 1991, the GAC served as

the exclusive investment vehicle for the

Plan.2 Until July 16, 1991, Mutual

Benefit would periodically make a

determination of the interest rate used

to compute the earnings paid to the Plan

by the GAC. This involved the

establishment of a separate subfund by

Mutual Benefit for each annual deposit

period of contributions during the life of

the GAC, and the applicable interest rate

for such subfund thereafter was reset on

an annual basis. From the issuance of

the GAC through December 31, 1991,

the GAC was earning various interest

rates, ranging from 8.35 percent to 14.05

percent. The applicant represents that

the GAC had no stated maturity date.

The GAC can be discontinued

unilaterally by either the Employer or

Mutual Benefit, or if certain stipulated

conditions arise.

3. On July 16, 1991, Mutual Benefit

was placed into rehabilitation

proceedings by the New Jersey

Commissioner of Insurance.3 As a result

of these proceedings the assets of the

Plan invested in the GAC were frozen.

Following cessation of payments by

Mutual Benefit with respect to the GAC,

the Employer decided to make periodic

advances of funds (the Advances) to the

Plan to enable the payment of

distributions to terminating and retiring

participants and the payment of certain

in-service withdrawals to current

participants.4 The applicant represents

that at the same time the Advances

commenced, the Employer committed

itself to enhance the rate of return the

individual accounts of the participants

would earn and accrue after December

31, 1991, by guaranteeing a 6 percent

per annum return for the calendar year

1992 and a 5 percent per annum return

for the subsequent calendar years. The

applicant further represents that the

periodic Advances made by the

Employer to the Plan, as of September

30, 1994, totaled $460,668.

The applicant represents that it

desires to enter into the proposed

transaction in order to protect the

participants of the Plan from the risks of

investment loss associated with the

GAC. Further, the applicant represents

that the Plan needs to sell its interest in

the GAC in order to give the participants

of the Plan more investment flexibility

to direct the investments of their

respective account balances to other

investments. The applicant also

represents that the Plan will not incur

any expense with respect to the

proposed transaction.

4. In order to protect the interests of

the participants and beneficiaries of the

Plan, the Employer proposes to

purchase the GAC from the Plan for

cash. The proposed purchase price for

the GAC is to be the greater of the fair

market value of the GAC as determined

by the Trustee on the date of the Sale

or an amount that is equal to the total

funds expended by the Plan in acquiring

and holding the GAC, plus the amount

of interest earned and accrued by the

Plan on the GAC to the date of the Sale,5

less all withdrawals from the Plan to the

date of the Sale, and less all advances

to the Plan made by the Employer to the

date of the Sale. As of September 30,

1994, the GAC had a fair market value

of $2,349,840.

The Trustee has reviewed the

proposed transaction as an independent

fiduciary on behalf of the Plan and its

participants and beneficiaries. The

Trustee represents that the proposed

transaction is in the best interests of the

Plan and its participants and

beneficiaries.

5. In summary, the applicant

represents that the proposed transaction

will satisfy the criteria for an exemption

under section 408(a) of the Act because

(a) the Plan will receive, from the

Employer in a one-time transaction,

cash in an amount that is the greater of

either (1) the fair market value of the

GAC; or (2) the total funds expended by

the Plan in acquiring and holding the

GAC plus the amount of interest earned

or accrued by the Plan to the date of the

Sale, less withdrawals and less prior

advances of funds to the Plan made by

the Employer; (b) the proposed

transaction will enable the Plan and its

participants and beneficiaries to avoid

any risk associated with continued

holding of the GAC; (c) the Plan will not

incur any loss or expense from the

proposed transaction; and (d) the

Trustee of the Plan has determined that

the proposed transaction is in the best

interests of the Plan and its participants

and beneficiaries, and that the proposed

price for the GAC is not less than its fair

market value.

FOR FURTHER INFORMATION CONTACT: Mr.

C. E. Beaver of the Department,

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

a toll-free number.)

Masik Tool and Die Corporation Profit

Sharing Plan (the Plan), located in

Cudahy, WI

[Exemption Application No. D–09899]

Proposed Exemption

The Department is considering

granting an exemption under the

authority of section 408(a) of the Act

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

in accordance with the procedures set

forth in 29 CFR Part 2570, Subpart B (55

FR 32836, 32847, August 10, 1990). If

the exemption is granted, the

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

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

resulting from the application of section

4975 of the Code, by reason of section

4975(c)(1)(A) through (E) of the Code,

shall not apply to: (1) The past leasing

(the Lease) of a lathe (the Lathe) owned

by the Plan and certain individuallydirected accounts in the Plan (the

Accounts) to Masik Tool and Die

Corporation (Masik), a party in interest

with respect to the Plan; and (2) the

proposed cash sale (the Sale) of the

Lathe by the Accounts to Masik.

This proposed exemption is

conditioned on the following

requirements:

(1) With respect to the past Lease—

(a) the terms and conditions of the

Lease have been at least as favorable to

the Plan and the Accounts as those

obtainable in an arm’s length

transaction with an unrelated party; (b)

the value of the Lathe did not exceed
20768 Federal Register / Vol. 60, No. 81 / Thursday, April 27, 1995 / Notices

6The Department is expressing no opinion in this

proposed exemption on whether the acquisition

and holding of the Lathe by the Plan violated any

of the fiduciary responsibility provisions of Part 4

of Title I of the Act.

7Subsequently, Russ Bottoni (Mr. Bottoni), the

owner of Russco Sales, Inc., a company specializing

in used equipment, appraised the Lathe. Based

upon comparable sales, Mr. Bottoni placed the fair

market value of the Lathe as of February 22, 1989

at $79,500.

twenty-five percent of the assets of the

Plan or of any of the Accounts at any

time during the duration of the Lease;

(c) an independent, qualified fiduciary

approved of the Lease on behalf of the

Plan and the Accounts and has

monitored the Lease throughout its

entirety; (d) the rental amount received

by the Plan and the Accounts was based

upon the fair market rental value of the

Lathe; and (e) within ninety days of the

publication in the Federal Register of

the grant of this exemption, Masik files

Forms 5330 with the Internal Revenue

Service and pay all applicable excise

taxes that are due by reason of the past

prohibited transactions, which are not

subject to this exemption.

(2) With respect to the prospective

Sale—

(a) the terms and conditions of the

Sale are at least as favorable to the

Accounts as those obtainable in an

arm’s length transaction with an

unrelated party; (b) the Sale is a onetime cash transaction; (c) the Accounts

are not required to pay any

commissions, costs or other expenses in

connection with the Sale; (d) the Sale

price for the Lathe is based upon its fair

market value on the date of the Sale as

determined by an independent,

qualified appraiser; and (e) within

ninety days of the publication in the

Federal Register of the grant of this

exemption, Masik files Forms 5330 with

the Internal Revenue Service and pay all

applicable excise taxes that are due by

reason of the past prohibited

transactions, which are not subject to

this exemption.

EFFECTIVE DATE: This exemption, if

granted, will be effective as of June 1,

1988 with respect to the Lease. The

proposed exemption will be effective as

of the date of the grant of the exemption

with respect to the Sale.

Summary of Facts and Representations

1. The Plan is a profit sharing plan

sponsored by Masik, a closely-held

Wisconsin corporation engaged in the

business of manufacturing, rebuilding,

and repairing tools and dies for

industrial manufacturers in

Southeastern Wisconsin. Joseph Masik,

Jr. and his wife, Patricia Masik, hold 100

percent of Masik’s stock and are its only

directors. Mr. Masik, Mrs. Masik and

David Zirkelbach serve, respectively, as

President, Secretary/Treasurer and Vice

President of Masik. In addition to being

officers of Masik, Mr. Masik, Mrs. Masik

and Mr. Zirkelbach have been the

trustees for the Plan (the Trustees) from

the inception of the Lease until the

present time.

On May 31, 1990, the Trustees

amended the Plan to provide for

participant directed investment. As of

May 30, 1992, the Plan had twenty-one

participants and $322,693 in assets.

Such assets are primarily invested in

life insurance annuity contracts and

certificates of deposit.

2. Among the assets of the Plan is the

Lathe, which is a seventy-six inch, used

Bullard-Dynatrol Vertical Turret Lathe,

serial number 31820. The Lathe weighs

130,000 pounds and measures twenty

feet in height. Within six months of the

Plan’s purchase of the Lathe, Masik

mounted the Lathe in the concrete floor

of Masik’s plant and attached a $20,000

‘‘tracer unit’’ to the Lathe at no cost to

the Plan. As of August 15, 1994, the

Lathe remained mounted in the concrete

floor.

3. The Trustees acquired the Lathe, on

behalf of the Plan, in January of 1987

from the George Meyer Manufacturing

Company, an unrelated party, for a

purchase price of $33,250.6 The

Trustees represent that they purchased

the Lathe because, based upon their

experience in the industry, they

believed that the purchase price of the

Lathe was less than one-half of its fair

market value.7

4. The Trustees represent that the

exact date that the Lathe was first

placed into the service of Masik is

unknown. However upon a review of

the Plan’s records, partial installation of

the Lathe occurred sometime prior to

February 4, 1987. Masik formally

commenced leasing the Lathe from the

Plan under a written lease (the Lease)

executed June 2, 1988 with an initial

five-year term expiring May 31, 1993.

Masik represents that it compensated

the Plan for its use of the Lathe which

occurred prior to June 2, 1988. As of

June 1, 1987, the Plan had in excess of

$200,000 in assets thereby involving

sixteen percent of the Plan’s assets in

the Lathe. Masik represents that from

June 2, 1988 until the termination of the

Lease on May 31, 1993, the Plan and the

Accounts received $105,540, which

represents an annualized rate of return

of sixty-three percent.

5. In March of 1989, Masik applied to

the Department for exemptive relief

with respect to the Lease but withdrew

that application in June of 1989. The

Trustees represent that the reason for

the withdrawal was the mistaken belief

that amending the Plan to allow for

participant directed investments (see

Representation #1) would result in

correction of the past prohibited

transaction and would ensure that no

future prohibited transactions would

occur. Masik represents that in response

to this Plan amendment, all of the

eligible participants chose to direct their

account balances (the Accounts) on

September 20, 1990 towards the

purchase of the Lathe and the leasing

arrangements. Masik and the Trustees

amended the Lease to reflect these

participant investment elections. The

Trustees represent that no participant

directed more than twenty-five percent

of his or her account balance to the

Lease.

6. Roger McManus represents that he

served as an independent, qualified

fiduciary on behalf of the Plan and the

Accounts with respect to the Lease

beginning in June of 1988. Mr.

McManus’ qualifications include

twenty-five years of experience

practicing law, primarily in the area of

small business. Mr. McManus

represents that he was unrelated to, and

independent of, Masik. Mr. McManus

states that he understood and

acknowledged his duties,

responsibilities, and liabilities in acting

as a fiduciary with respect to the Plan

based upon his familiarity with the

fiduciary responsibility provisions of

the Act.

Mr. McManus states that, in 1988, he

reviewed the investment portfolio of the

Plan and considered the diversification

of the Plan’s assets as well as its

liquidity needs. Mr. McManus

represents that the Lease did not

represent more than twenty-five percent

of the assets of any of the Accounts. Mr.

McManus believed that the Lease would

be in the best interests of the Plan and

its participants and beneficiaries as an

investment for the Plan’s portfolio based

on the Lease’s rate of return, the

stability of the lessee, the character and

diversification of the Plan’s other assets,

and the projected liquidity needs of the

Plan.

Mr. McManus states that, based upon

his previous representation of other

businesses and involvement in

numerous leasing transactions, he

believed that the Lease provisions were

quite favorable to the Plan participants

and were at least comparable to an arm’s

length transaction. In addition, Mr.

McManus represents that he evaluated

the term of the Lease to assure that the

Lease satisfied the established standards

for commercial reasonableness. Mr.

McManus represents that the monthly
Federal Register / Vol. 60, No. 81 / Thursday, April 27, 1995 / Notices 20769

Lease payments were established at

$1,759 based upon calculations which

utilized mortgage-type amortization

schedules and the fair market and

salvage values of the Lathe, which were

determined by the Plan’s accountant,

Tom Harmann.

Mr. McManus represents that he

monitored the Lease from its inception

through April 10, 1992. Mr. McManus

further represents that from the

inception of the Lease in 1988 until

April 10, 1992, Masik has abided by all

of the terms of the Lease, the Lathe has

been kept in good working order and all

rental due the Plan has been timely

paid.

Jeffrey R. Brodek represents that, as of

April 10, 1992, he assumed Mr.

McManus’ role as the independent,

qualified fiduciary on behalf of the Plan

and the Accounts with respect to the

Lease. Mr. Brodek’s qualifications

include ten years of experience

practicing employee benefits law. Mr.

Brodek represents that he is unrelated

to, and independent of, Masik. Mr.

Brodek states that he understood and

acknowledged his duties,

responsibilities, and liabilities in acting

as a fiduciary with respect to the Plan

based upon his familiarity with the

fiduciary responsibility provisions of

the Act.

Mr. Brodek represents he assumed the

same duties that Mr. McManus had

previously undertaken which included

enforcing the terms of the Lease, making

sure that the Lathe was kept in good

working order and making sure that

payments due under the Lease were

timely paid to the Plan. Mr. Brodek

represents Masik has abided by all of

the terms of the Lease, the Lathe has

been kept in good working order and all

rentals due the Plan were timely paid

through May 31, 1993, the expiration of

the original five-year term of the Lease.

At this time, the Trustees suspended

any future Lease payments pending

resolution of the prohibited transaction

issues. However, Masik represents that

it utilized the Lathe in the course of its

operations after the cessation of the

Lease payments. Masik represents that it

will make payments pursuant to the

rental rate specified by the Lease to the

Plan for every month between June of

1993 through the present time, plus a

reasonable rate of interest.

7. Because of the party in interest

relationship and the past leasing

arrangement between the Plan and

Masik, the Trustees along with Masik

(the Applicants) are aware of the fact

that prohibited transactions have

occurred in violation of the Act as of the

date of Masik’s first use of the Lathe.

The Applicants have requested

retroactive exemptive relief with respect

to the Lease as well as prospective

exemptive relief for the Sale. In this

regard, the Department is not proposing

exemptive relief for the prohibited

transactions described in this proposed

exemption for the periods: (1) Prior to

June 1, 1988, the date that Masik began

leasing the Lathe from the Plan pursuant

to a written lease; and (2) after May 31,

1993, the cessation of the Lease

payments. Accordingly, Masik

represents that within ninety days of the

publication in the Federal Register of

the grant of this exemption, it will file

Forms 5330 with the Internal Revenue

Service and pay all applicable excise

taxes that are due by reason of the past

prohibited transactions, which are not

subject to this exemption.

8. Masik represents that the

participants whose accounts are

invested in the Lathe desire to sell the

Lathe so that an alternative investment

can be made by the Accounts. The

Trustees represent that because the

Lathe is presently mounted in the

concrete floor of Masik’s plant, sale to

an unrelated party at fair market value

is unlikely due to the cost of removing

the Lathe. Therefore, Masik proposes to

purchase the Lathe for its fair market

value on the date of the Sale. The Plan

will not be required to pay any

commissions, costs or other expenses in

connection with these transactions.

9. The Trustees retained Richard

Levo, a sales engineer for L.L. Richards

Machinery Co, Inc. to appraise the

Lathe. Mr. Levo has dealt in new and

used chipmaking and fabricating

machine tools for forty-three years. His

appraisal, dated June 6, 1994, places the

fair market value of the Lathe at $29,500

based on its age, condition and location.

Mr. Levo states that the Lathe has

declined in value since its acquisition in

1987 due to recent innovations in

technology which have left the Lathe

obsolete. The appraisal for the Lathe

will be reviewed and updated prior to

the Sale pursuant to this exemption. Mr.

Levo represents that both he and L.L.

Richards Machinery Co, Inc. are

independent of and unrelated to Masik.

10. In summary, the Applicants

represent that the Lease and the Sale

will satisfy the statutory criteria for an

exemption under 408(a) of the Act

because:

(a) With respect to the past Lease—

(1) the terms and conditions of the

Lease have been at least as favorable to

the Plan as those obtainable in an arm’slength transaction with an unrelated

party; (2) the Lathe did not exceed

twenty-five percent of the assets of the

Plan or of any individually-directed

accounts within the Plan at any time

during the duration of the leasing

arrangements; (3) Roger McManus,

acting as the Plan’s independent,

qualified fiduciary, approved of the

Lease; (4) Mr. McManus and

subsequently, Jeffrey Brodek, acting as

the Plan’s independent, qualified

fiduciary during different periods,

monitored the Lease; (5) the rental

charged by the Plan was based upon the

fair market rental value of the Lathe;

and (6) within ninety days of the

publication in the Federal Register of

the grant of this exemption, Masik will

file Forms 5330 with the Internal

Revenue Service and pay all applicable

excise taxes that are due by reason of

the past prohibited transactions, which

are not subject to this exemption.

(b) With respect to the prospective

Sale—

(1) the Sale will be a one-time cash

transaction; (2) the Plan will not be

required to pay any commissions, costs

or other expenses in connection with

this transaction; (3) the Lathe will be

appraised by Richard Levo, an

independent, qualified appraiser; (4) the

sales price for the Lathe will reflect its

fair market value on the date of the Sale;

and (5) within ninety days of the

publication in the Federal Register of

the grant of this exemption, Masik will

file Forms 5330 with the Internal

Revenue Service and pay all applicable

excise taxes that are due by reason of

the past prohibited transactions, which

are not subject to this exemption.

FOR FURTHER INFORMATION CONTACT:

Kathryn Parr of the Department,

telephone (202) 219–8971. (This is not

a toll-free number.)

Simplex Time Recorder Co., Employee

Savings Plan (the Plan), located in

Gardner, Massachusetts

[Application No. D–09935]

Proposed Exemption

The Department is considering

granting an exemption under the

authority of section 408(a) of the Act

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

in accordance with the procedures set

forth in 29 CFR part 2570, Subpart B (55

FR 32836, 32847, August 10, 1990). If

the exemption is granted, the

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

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

resulting from the application of section

4975 of the Code, by reason of section

4975(c)(1)(A) through (E) of the Code

shall not apply to (1) the proposed

extension of credit (the Loan) to the

Plan by Simplex Time Recorder Co. (the

Employer), a party in interest with

respect to the Plan, with regard to a
20770 Federal Register / Vol. 60, No. 81 / Thursday, April 27, 1995 / Notices

8The Department notes that the decisions to

acquire and hold the GAC are governed by the

fiduciary responsibility requirements of Part 4,

Subtitle B, Title I of the Act. In this regard, the

Department is not herein proposing relief for any

violations of Part 4 which may have arisen as a

result of the acquisition and holding of the GAC

issued by Executive Life.

9The Department expresses no opinion as to

whether the loans made pursuant to the Initial

Agreement satisfy the requirements of PTCE 80–26,

or whether such loans were exempt from the

prohibitions of section 406 of the Act.

group annuity contract (the GAC) issued

by Executive Life Insurance Company of

California (ELIC), and (2) the Plan’s

potential repayment of the Loan (the

Repayment); provided the following

conditions are satisfied:

(A) No interest or expenses are paid

by the Plan in connection with the

proposed transaction;

(B) The Loan will be repaid only out

of amounts paid to the Plan by ELIC, its

successors, or any other responsible

third party making payment with

respect to ELIC’s obligations under the

GAC (the GAC Proceeds); and

(C) Repayment of the Loan is waived

with respect to the amount by which the

Loan exceed GAC proceeds.

Summary of Facts and Representations

1. The Employer is a Massachusetts

corporation with its principal place of

business located in Gardner,

Massachusetts. The Plan is a defined

contribution plan with approximately

3,500 participants and total assets of

approximately $82.3 million as of

December 31, 1994. The Plan provides

for individual participant accounts (the

Accounts) and participant-directed

investment of the Accounts.

2. The terms of the Plan provide that

its participants may invest the Accounts

among any of several investment funds

(the Funds) managed by the Plan’s

trustee, State Street Bank and Trust

Company (the Trustee), including a

fixed income fund (the F.I. Fund). The

F.I. Fund invests in part in insurance

company group annuity contracts under

which the issuer guarantees repayment

of principal and payment of interest at

a fixed annual rate through the date of

maturity specified in the contract.

Among the contracts held by the Plan in

the F.I. Fund is the GAC, identified as

follows: Contract number CG0124803A,

issued to the Trustee on January 13,

1988 for an initial principal deposit of

$678,987.69, with a principal deposit

limit of $4,440,000. The GAC provides

for compound annual interest at the rate

of 10 percent (the Contract Rate), and its

terms enable withdrawals to fund

distributions, participant loans, inservice withdrawals, and participantdirected transfers of Account balances

from the F.I. Fund to the other Funds

(the Withdrawal Events). The GAC

features a maturity date of June 30,

1993, at which time the Plan was due

a payment (the Maturity Payment) in the

amount of the total principal deposits

during the term of the GAC plus interest

thereon at the Contract Rate through

maturity less previous withdrawals.

3. On April 11, 1991, ELIC was placed

into conservatorship (the

Conservatorship) by the Insurance

Commissioner of the State of California.

The Employer represents that ELIC

ceased to honor requests for

withdrawals from the GAC upon

commencement of the Conservatorship.

The effect of the Conservatorship has

been to freeze all assets invested in the

GAC. This freeze has prevented the Plan

from making withdrawals from the GAC

to fund Withdrawal Events with respect

to Accounts invested in the GAC.8

In response to the Conservatorship,

the Employer and the Trustee provided

for the GAC to be segregated from the

other assets in the F.I. Fund and placed

in a special fund (the Segregated Fund)

on April 30, 1991, in order to confine

the risks associated with the GAC to

those Accounts which were invested in

the F.I. Fund as of the commencement

of the Conservatorship. Each Account

with an interest in the F.I. Fund as of

the date of the Conservatorship obtained

a pro-rata interest in the Segregated

Fund, from which withdrawals are

prohibited for all purposes. As of April

30, 1991, the accumulated book value of

the GAC was $4,173,231, representing

total principal deposits plus interest at

the Contract Rate less previous

withdrawals. This value constituted

approximately 10 percent of the assets

in the F.I. Fund and approximately 7.6

percent of the Plan’s total assets. Upon

the maturity of the GAC on June 30,

1993, the Maturity Payment then due

was not made. Approximately 2,100

Plan participants have portions of their

Accounts invested in the Segregated

Fund.

4. A rehabilitation plan for ELIC (the

Rehab Plan) was approved in late 1993,

which offered to the Plan, as a holder of

an ELIC GAC, two options: The Plan

could ‘‘opt in’’ to the Rehab Plan by

continuing to hold the GAC with

modified terms, or the Plan could ‘‘opt

out’’ by agreeing to a cancellation of the

GAC in exchange for payments (Rehab

Payments) over a period of

approximately five years. In 1994, the

Trustee made the opt-out election on

behalf of the Plan. The Trustee

represents that under the opt-out

election, the exact amount of the Rehab

Payments is not determinable. However,

the Trustee and the Employer expect a

total opt-out recovery of approximately

$3.7 million in Rehab Payments with

respect to the GAC. Approximately 65

percent of this total, i.e., $2.4 million,

was received by the Plan shortly after

the opt-out election was processed. An

additional $485,000 was received by the

Plan in March 1995. The Trustee and

the Employer expect approximately

$815,000 more in Rehab Payments over

a remaining three-year period.

5. Shortly after the Conservatorship

commenced, in order to provide some

immediate relief to the Plan with

respect to the funding of Withdrawal

Events, the Employer structured a loan

arrangement (the Initial Agreement)

which was intended to utilize

Prohibited Transaction Class Exemption

80–26 (PTCE 80–26, 45 FR 35040, May

23, 1980), relating to interest-free loans

for, among other things, the funding of

plan benefits. In accordance with the

terms of the Initial Agreement, the

Employer commenced the making of

interest-free loans (the Initial Loans) to

the Plan solely to fund the cash

payment of benefits by the Plan to

participants with Account balances in

the Segregated Fund, in lieu of the

amounts which otherwise would have

been withdrawn from the GAC for such

payments. The Employer represents that

the Initial Loans are exempt from the

prohibited transaction provisions of the

Act because they satisfy the

requirements of PTCE 80–26.9 As of

December 31, 1994, a total of $639,967

had been loaned to the Plan by the

Employer pursuant to the Initial

Agreement.

6. Although the Initial Agreement has

enabled former employees to receive

full distribution of their Account

balances, including portions invested in

the Segregated Fund, the Employer

represents that the Initial Arrangement

is not satisfactory with respect to the

participants of the Plan who remain

current employees of the Employer.

Participants who are current employees

remain unable to effect participant

loans, in-service withdrawals and

transfers with respect to Account

balances in the Segregated Fund.

Accordingly, the Employer seeks to

provide the Plan with the ability to

effect the full range of Withdrawal

Events with respect to Accounts

invested in the Segregated Fund, by

lending the Plan an amount of cash

equal to the remaining balance of the

Segregated Fund. The Employer

requests an exemption for such a loan

(the Loan), as well as its potential

repayment, under the terms and

conditions described herein.
Federal Register / Vol. 60, No. 81 / Thursday, April 27, 1995 / Notices 20771

10 Internal Revenue Procedure 92–16 provides for

a temporary closing agreement program to settle

certain tax liabilities that arise out of transactions

between an employee-sponsor and the trust of a

qualified defined contribution plan.

11The Department notes that the exemption, if

granted, will not affect the rights of any participant

or beneficiary with respect to any civil action

against Plan fiduciaries for breaches of section 404

of ERISA in connection with any aspect of the GAC

transactions.

7. The terms of the Loan and its

repayment (the Repayments) will be set

forth in a written agreement between the

Trustee and the Employer (the New

Agreement). Under the New Agreement,

the Employer proposes to make the

Loan in the amount remaining in the

Segregated Fund as of the date of the

Loan. The amount remaining in the

Segregated Fund as of the date of the

Loan will represent the GAC’s

accumulated book value as of the date

of the Conservatorship, i.e., $4,173,231,

reduced by the sum of the total Rehab

Payments and Initial Loans made as of

the Loan date. Accordingly, the

Employer estimates that the Loan will

be in the amount of approximately

$600,000. The Employer represents that

after the exemption proposed herein is

final, if granted, and the New

Agreement has been approved by the

Internal Revenue Service 10, the

Employer will make the Loan to the

Plan and will then exercise its powers

under the Plan to close the Segregated

Fund. Upon closing the Segregated

Fund, all Accounts which remained

invested in that Fund will be transferred

back to the F.I. Fund, and the Employer

will announce to Plan participants the

availability of the Loan funds to effect

all Withdrawal Events with respect to

amounts previously frozen in the

Segregated Fund. The Employer and the

Trustee represent that the Plan’s

participants will benefit from the

proposed Loan because it will ensure

that the participants receive 100% of the

Conservatorship-date value of their

Accounts invested in the GAC and such

amounts will be available as soon as

approval is received from the Internal

Revenue Service and the Department.11

8. The New Agreement provides for

repayment of the Loan (the Repayment),

but no interest will be paid on the

principal amount of the Loan. Under the

New Agreement, Repayment is limited

to amounts, if any, paid to the Plan by

or on behalf of ELIC, or its successor, or

any other responsible third parties

making payment with respect to ELIC’s

obligations under the GAC (the GAC

Proceeds). No other assets of the Plan

will be available for repayment of the

Loan. If the GAC Proceeds are not

sufficient to fully repay the Loan, the

New Agreement provides that the

Employer will have no recourse against

the Plan, or against any participants or

beneficiaries of the Plan, for the unpaid

amount. To the extent the Plan receives

GAC proceeds in excess of the total

amount of the Loan, such additional

amounts will be retained by the Trust

and allocated among the accounts of the

Plans’ participants.

9. In summary, the applicant

represents that the proposed transaction

satisfies the criteria of section 408(a) of

the Act because: (1) The transaction will

restore the Plan’s ability to fund

Withdrawal Events with respect to

Accounts invested in the GAC; (2) The

Plan will not incur any expenses or pay

any interest with respect to the

transaction; (3) Repayment of the Loan

will be made only from GAC Proceeds

paid to the Plan; (4) If the GAC Proceeds

are not sufficient to fully repay the

Loan, the Employer will have no

recourse against the Plan, or against any

participants or beneficiaries of the Plan,

for the unpaid amount; and (5)

Repayment of the Loan will be waived

with respect to the amount by which the

Loan exceeds the GAC Proceeds.

FOR FURTHER INFORMATION CONTACT:

Ronald Willett of the Department,

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

a toll-free number.)

Employees’ Thrift Plan of Columbia Gas

System (the Plan), Located in

Wilmington, DE

[Application No. D–09959]

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, August 10, 1990). If the

exemption is granted the restrictions of

sections 406(a) and 406(b)(1) and (b)(2)

of the Act and the sanctions resulting

from the application of section 4975 of

the Code, by reason of section

4975(c)(1)(A) through (E) of the Code

shall not apply to (1) the proposed loan

of funds (the Loan) to the Plan by The

Columbia Gas System, Inc. (the

Employer), the sponsor of the Plan, and

its wholly-owned subsidiary, Columbia

Gas Transmission Corporation (the

Subsidiary), with respect to the

Guaranteed Investment Contract No.

61969 (the GIC) issued by Confederation

Life Insurance Company of Canada

(Confederation); and (2) the potential

repayment by the Plan of the Loan upon

the receipt by the Plan of payments

under the GIC; provided the following

conditions are satisfied: (a) No interest

and/or expenses are paid by the Plan in

connection with the Loan; (b) all the

terms and conditions of the proposed

Loan are no less favorable to the Plan

than those which the Plan could obtain

in an arm’s-length transaction with an

unrelated party; (c) the Loan will be no

less than the accumulated book value of

the GIC as of August 12, 1994; (d) the

repayment of the Loan will not exceed

the total amount of the Loan; (e) the

repayment of the Loan by the Plan will

be restricted to funds paid to the Plan

under the GIC by Confederation, or State

Guaranty Funds, or other third-party

sources; (f) the repayment of the Loan is

waived to the extent the Loan exceeds

the proceeds the Plan receives from the

GIC; and (g) any proceeds or future

interest credited under the GIC after

August 12, 1994, in accordance with the

Rehabilitation Plan by the State of

Michigan, will be allocated and

disbursed to the affected participants of

the Plan.

Summary of Facts and Representations

1. The Employer is a Delaware

corporation with its principal offices

located in Wilmington, Delaware. It is a

public utility holding company with 15

subsidiaries primarily engaged in the

distribution, transmission, and

production of natural gas in the

Midwest, Southeast, and Mid-Atlantic

sections of the country and with

production facilities in Texas and West

Virginia.

The Employer is also a publicly held

corporation with its securities traded on

the New York Stock Exchange. For the

fiscal year ending September 30, 1994,

it had revenues of approximately $3.1

billion.

The Employer and all its subsidiaries

are participating employers in the Plan.

2. The Plan is a defined contribution

plan with an employer-matching

funding feature. There are provisions in

the Plan for individual accounts and

participant-directed investments of

assets. The Plan has been qualified

pursuant to the requirements of sections

401(a) and 401(k) of the Code. There are

approximately 9,200 participants in the

Plan and $341.9 million in total assets,

as of December 31, 1994.

On October 1, 1989, Bankers Trust

Company of New York, New York

became trustee of all of the assets of the

Plan. On October 17, 1991, the Fidelity

Bank, N.A., located in Philadelphia,

Pennsylvania became trustee of Plan

assets that are invested in common

stock issued by the Employer and held

in the Columbia Gas System Stock Fund

(the Stock Fund) of the Plan. As of

December 31, 1994, the Stock Fund had

an aggregate fair market value of $155.4

million and represented approximately
20772 Federal Register / Vol. 60, No. 81 / Thursday, April 27, 1995 / Notices

12The Department notes that the decisions to

acquire and hold the GIC are governed by the

fiduciary responsibility provisions of Part 4,

Subtitle B, of Title I of the Act. In this regard, the

Department is not herein proposing relief for any

violations of Part 4 which may have arisen as a

result of the acquisition and holding of the GIC by

the Plan.

13The Department notes that this exemption, if

granted, will not affect the rights of any participant

or beneficiary with respect to claims under section

404 of the Act in connection with any aspect of the

GIC transactions.

45.5 percent of the total assets of the

Plan.

On April 1, 1992, the Fidelity

Management Trust Company, a

Massachusetts trust company, located in

Boston, Massachusetts (the Trustee)

became trustee of all the other assets in

the Plan and Bankers Trust Company

ceased to be a trustee of any Plan assets.

3. The Board of Directors of the

Employer establishes the general

investment policy for the Plan and has

sole authority to appoint and remove

any Trustee and any member of the

Thrift Plan Committee (the Committee).

The Committee is the named fiduciary

of the Plan and consists of officers and

directors of the Employer and its

subsidiaries. The duties of the

Committee include, inter alia, the

selection of the various investment

options offered to the participants by

the Plan; and the appointment and

removal of investment managers, agents,

assistants, legal counsel, and clericals.

The Committee also has the duty to

interpret the terms and conditions

provided in the Plan and to adopt rules

and restrictions to implement and

administer the Plan and its general

investment policy.

The Trustee is the custodian of the

assets of the Plan and is responsible for

the establishment and maintenance of

the investment and disbursement

accounts of the Plan. In addition, the

Trustee invests Plan assets as directed

by the participants into 14 various

investment options offered by the Plan.

These investment options include 13

diversified mutual funds offered by the

Trustee. Initially, all the matching

contributions to the Plan by the

Employer are invested in the Stock

Fund for the respective participants

until the participants attain the age of 55

years; and then, the participants may

direct the matching contributions by the

Employer into any of the 14 investment

options offered by the Plan.

4. The Plan acquired the GIC on

January 2, 1990, for the consideration of

$6,500,000. The GIC provides for annual

guaranteed interest payments of 8.8

percent with a maturity date of January

1, 1995. Since the GIC was acquired by

the Plan, there have been withdrawals

totalling $2,272,377, which represents

annual interest payments received

through January 2, 1994. Interest

payments are due January 2 each year.

All interest payments through January 2,

1994 have been made. As of August 11,

1994, the GIC had a balance of

$6,838,983.56, including $338,983.56 in

accrued interest.

When the Plan requested payment of

the value of the GIC on its maturity date,

Confederation was unable to grant the

request because, on August 12, 1994, the

Ingham County Circuit Court in

Lansing, Michigan had placed

Confederation in Conservatorship and

Rehabilitation, causing Confederation to

suspend payments on all of its contracts

including the GIC.12 At this time,

August 12, 1994, a segregated

subaccount (the Segregated Account)

was established within the Money

Market/Investment Contract Fund

(MMIC) offered by the Trustee to hold

the assets of the Plan represented by the

GIC. The Segregated Account represents

approximately 17 percent of the funds

in the MMIC.

The applicant represents that the

Segregated Account, which holds the

GIC that is subject to suspension of

payments, has prevented participants of

the Plan from exercising their rights

under the Plan to receive distributions

of benefits, withdrawals, and

investment transfers with respect to the

funds invested in the GIC. The applicant

further represents that it is not known

whether, when, or under what

circumstances Confederation will

resume payments on its contracts,

including the interest and principal

amount of the GIC. Approximately 26

percent of the Plan participants (2,423

individuals) are affected by these

restrictions.

5. The Employer proposes to make the

Loan to the Plan in order to permit the

participants to exercise their rights

under the Plan and avoid the

administrative problems arising from

the restrictions on investment transfers

and distributions for terminated, retired,

and disabled participants as imposed by

the rehabilitation of Confederation. The

Loan will be made pursuant to two

written agreements by the Employer and

the Subsidiary, respectively, with the

Plan. The notes issued pursuant to the

agreements will be interest-free and

unsecured. The amount of the Loan will

be no less than the accumulated book

value of the GIC (the principal amount,

plus interest at the contract rate, and

minus withdrawals) as of August 12,

1994.13 Any future interest received in

accordance with the rehabilitation plan

of the Circuit Court will be allocated

and disbursed by the Trustee to the

accounts of the participants of the Plan

that are affected by the GIC. The

purpose of the Loan, as represented by

the applicant, is to facilitate

distributions and investment transfers

from the Plan by the participants and

their beneficiaries. The applicant

represents that repayments of the Loan

by the Plan will be limited to proceeds

received from Confederation, or from

State Guaranty Funds, or other thirdparty sources. The repayment of the

Loan will be waived to the extent the

Loan exceeds the proceeds from the GIC

and in no event will the repayment

exceed the Loan.

The Trustee in its independent

capacity under the Trust Agreement

with the Employer of April 1, 1992,

represents that it has determined that

the proposed transaction is in the best

interests of the Plan and its participants

and beneficiaries. Furthermore, the

Trustee represents that it will determine

that the Loan when consummated will

be as described herein.

6. In summary, the applicant

represents that the proposed transaction

will satisfy the criteria for an exemption

under section 408(a) of the Act because

(a) the proposed transaction will permit

investment transfers as well as

distributions for terminated, retired, and

disabled participants in the Plan; (b) the

Plan will not incur interest charges or

other expenses with respect to the

proposed transaction; (c) the Loan will

be no less than the accumulated book

value of the GIC as of August 12, 1994;

(d) the source of the repayment of the

Loan is restricted to the proceeds under

the GIC from Confederation, or a State

Guaranty Fund, or other third-party

sources; (e) the repayment will not

exceed the total amount of the Loan;

and (f) the repayment of the Loan will

be waived to the extent the Loan

exceeds the proceeds from the GIC.

FOR FURTHER INFORMATION CONTACT: Mr.

C. E. Beaver of the Department,

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

a toll-free number.)

General Information

The attention of interested persons is

directed to the following:

(1) The fact that a transaction is the

subject of an exemption under section

408(a) of the Act and/or section

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

a fiduciary or other party in interest of

disqualified person from certain other

provisions of the Act and/or the Code,

including any prohibited transaction

provisions to which the exemption does

not apply and the general fiduciary

responsibility provisions of section 404

of the Act, which among other things

require a fiduciary to discharge his
Federal Register / Vol. 60, No. 81 / Thursday, April 27, 1995 / Notices 20773

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 24th day of

April, 1995.

Ivan Strasfeld,

Director of Exemption Determinations,

Pension and Welfare Benefits Administration,

U.S. Department of Labor.

[FR Doc. 95–10404 Filed 4–26–95; 8:45 am]

BILLING CODE 4510–29–P

[Prohibited Transaction Exemption 95–33;

Exemption Application No. D–09626, et al.]

Grant of Individual Exemptions; Bank

South, N.A. et al.

AGENCY: Pension and Welfare Benefits

Administration, Labor.

ACTION: Grant of individual exemptions.

SUMMARY: This document contains

exemptions issued by the Department of

Labor (the Department) from certain of

the prohibited transaction restrictions of

the Employee Retirement Income

Security Act of 1974 (the Act) and/or

the Internal Revenue Code of 1986 (the

Code).

Notices were published in the Federal

Register of the pendency before the

Department of proposals to grant such

exemptions. The notices set forth a

summary of facts and representations

contained in each application for

exemption and referred interested

persons to the respective applications

for a complete statement of the facts and

representations. The applications have

been available for public inspection at

the Department in Washington, DC. The

notices also invited interested persons

to submit comments on the requested

exemptions to the Department. In

addition the notices stated that any

interested person might submit a

written request that a public hearing be

held (where appropriate). The

applicants have represented that they

have complied with the requirements of

the notification to interested persons.

No public comments and no requests for

a hearing, unless otherwise stated, were

received by the Department.

The notices of proposed exemption

were issued and the exemptions are

being granted solely by the Department

because, effective December 31, 1978,

section 102 of Reorganization Plan No.

4 of 1978 (43 FR 47713, October 17,

1978) transferred the authority of the

Secretary of the Treasury to issue

exemptions of the type proposed to the

Secretary of Labor.

Statutory Findings

In accordance with section 408(a) of

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

Code and the procedures set forth in 29

CFR part 2570, subpart B (55 FR 32836,

32847, August 10, 1990) and based upon

the entire record, the Department makes

the following findings:

(a) The exemptions are

administratively feasible;

(b) They are in the interests of the

plans and their participants and

beneficiaries; and

(c) They are protective of the rights of

the participants and beneficiaries of the

plans.

Bank South, N.A. (the Bank) Located in

Atlanta, GA

[Prohibited Transaction Exemption 95–33;

Application No. D–09626]

Section I—Exemption for In-kind

Transfer of Assets

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 section

4975(c)(1) (A) through (F) of the Code,

shall not apply as of February 11, 1994,

to the in-kind transfer of assets of plans

for which the Bank serves as a fiduciary

(the Client Plans), other than plans

established and maintained by the Bank,

that are held in certain collective

investment funds maintained by the

Bank (the CIFs), in exchange for shares

of the Peachtree Funds (the Funds), an

open-end investment company

registered under the Investment

Company Act of 1940 (the 1940 Act) for

which the Bank acts as investment

adviser, in connection with the

termination of such CIFs, provided that

the following conditions and the general

conditions of Section III below are met:

(a) No sales commissions or other fees

are paid by the Client Plans in

connection with the purchase of Fund

shares through the in-kind transfer of

CIF assets and no redemption fees are

paid in connection with the sale of such

shares by the Client Plans to the Funds.

(b) Each Client Plan receives shares of

a Fund which have a total net asset

value that is equal to the value of the

Client Plan’s pro rata share of the assets

of the CIF on the date of the transfer,

based on the current market value of the

CIF’s assets, as determined in a single

valuation performed in the same

manner at the close of the same business

day using independent sources in

accordance with Rule 17a–7(b) of the

Securities and Exchange Commission

under the 1940 Act and the procedures

established by the Funds pursuant to

Rule 17a–7 for the valuation of such

assets. Such procedures must require

that all securities for which a current

market price cannot be obtained by

reference to the last sale price for

transactions reported on a recognized

securities exchange or NASDAQ be

valued based on an average of the

highest current independent bid and

lowest current independent offer, as of

the close of business on the Friday

preceding the weekend of the CIF

transfers, determined on the basis of

reasonable inquiry from at least three

sources that are broker-dealers or

pricing services independent of the

Bank.

(c) A second fiduciary who is

independent of and unrelated to the

Bank (the Independent Fiduciary)

receives advance written notice of the

in-kind transfer of assets of the CIFs and

full written disclosure of information

concerning the Funds (including a

current prospectus for each of the Funds

and a statement describing the fee

structure) and, on the basis of such

information, authorizes in writing the

in-kind transfer of the Client Plan’s CIF

assets to a corresponding Fund in

exchange for shares of the Fund.

(d) For all transfers of CIF assets to a

Fund following the publication of the

proposed exemption in the Federal

Register (i.e. January 30, 1995), the Bank

sends by regular mail to each affected

Client Plan the following information: