Federal Register / Vol. 66, No. 87 / Friday, May 4, 2001 / Notices 22607

(60 FR 12980, 3/9/95). This notice lists

nine (9) programs and procedures

(collectively, programs), eight of which

(called supplemental programs) an

NRTL may use to rely on other parties

to perform product testing and

evaluation activities. An NRTL’s initial

recognition will always include the first

or basic program, which requires that all

of these activities be performed in-house

by the NRTL that will certify the

product. OSHA previously granted

FMRC recognition to use these

programs, which currently are listed in

OSHA’s informational web page on the

FMRC recognition.

Program 2: Acceptance of testing data

from independent organizations, other

than NRTLs.

Program 3: Acceptance of product

evaluations from independent

organizations, other than NRTLs.

Program 4: Acceptance of witnessed

testing data.

Program 5: Acceptance of testing data

from non-independent organizations.

Program 6: Acceptance of evaluation

data from non-independent

organizations (requiring NRTL review

prior to marketing).

Program 7: Acceptance of continued

certification following minor

modifications by the client.

Program 8: Acceptance of product

evaluations from organizations that

function as part of the International

Electrotechnical Commission

Certification Body (IEC–CB) Scheme.

Program 9: Acceptance of services

other than testing or evaluation

performed by subcontractors or agents.

OSHA developed the program

descriptions to limit how an NRTL may

perform certain aspects of its work and

to accept the activities covered under a

program only when the NRTL meets

certain criteria. In this sense, they are

special conditions that the Agency

places on an NRTL’s recognition. OSHA

does not consider these programs in

determining whether an NRTL meets

the requirements for recognition under

29 CFR 1910.7. However, OSHA does

treat these programs as one of the three

elements that defines an NRTL’s scope

of recognition.

Preliminary Finding on the Application

FMRC has submitted an acceptable

request for renewal of its recognition as

an NRTL. While processing this request,

OSHA performed an on-site review of

FMRC’s NRTL testing facilities. FMRC

has addressed any discrepancies noted

by the assessor following the on-site

evaluation, and the assessor has

recommended renewal of FMRC’s

recognition (see Exhibit 12).

Following a review of the application

file, the assessor’s recommendation, and

other pertinent documents, the NRTL

Program staff has concluded that OSHA

can grant to FMRC the renewal of its

recognition as an NRTL to use the

facilities, test standards, and programs

listed above. The staff, therefore,

recommended to the Assistant Secretary

that the application be preliminarily

approved.

Based upon the recommendation of

the staff, the Agency has made a

preliminary finding that the Factory

Mutual Research Corporation can meet

the requirements, as prescribed by 29

CFR 1910.7, for the renewal of its

recognition. This preliminary finding

does not constitute an interim or

temporary approval of the application.

OSHA welcomes public comments, in

sufficient detail, as to whether FMRC

has met the requirements of 29 CFR

1910.7 for renewal of its recognition as

a Nationally Recognized Testing

Laboratory. Your comment should

consist of pertinent written documents

and exhibits. To consider it, OSHA must

receive the comment at the address

provided above (see ADDRESS) no later

than the last date for comments (see

DATES above). Should you need more

time to comment, OSHA must receive

your written request for extension at the

address provided above (also see

ADDRESS) no later than the last date for

comments (also see DATES above). You

must include your reason(s) for any

request for extension. OSHA will limit

an extension to 15 days unless the

requester justifies a longer period. We

may deny a request for extension if it is

frivolous or otherwise unwarranted.

You may obtain or review copies of

FMRC’s requests, the memo on the

recommendation, and all submitted

comments, as received, by contacting

the Docket Office, Room N2625,

Occupational Safety and Health

Administration, U.S. Department of

Labor, at the above address. You should

refer to Docket No. NRTL3–93, the

permanent record of public information

on FMRC’s recognition.

The NRTL Program staff will review

all timely comments and, after

resolution of issues raised by these

comments, will recommend whether to

grant FMRC’s application for renewal of

recognition. The Agency will make the

final decision on granting the renewal

and, in making this decision, may

undertake other proceedings that are

prescribed in Appendix A to 29 CFR

Section 1910.7. OSHA will publish a

public notice of this final decision in

the Federal Register.

Signed at Washington, DC this 26th day of

April 2001.

R. Davis Layne,

Acting Assistant Secretary.

[FR Doc. 01–11245 Filed 5–3–01; 8:45 am]

BILLING CODE 4510–26–P

DEPARTMENT OF LABOR

Pension and Welfare Benefits

Administration

[Prohibited Transaction Exemption 2001–

16; Exemption Application No. D–10584, et

al.]

Grant of Individual Exemptions; New

York Life Insurance Company (NYLIC)

et al.

AGENCY: Pension and Welfare Benefits

Administration, Labor.

ACTION: Grant of individual exemptions.

SUMMARY: This document contains

exemptions issued by the Department of

Labor (the Department) from certain of

the prohibited transaction restrictions of

the Employee Retirement Income

Security Act of 1974 (the Act) and/or

the Internal Revenue Code of 1986 (the

Code).

Notices were published in the Federal

Register of the pendency before the

Department of proposals to grant such

exemptions. The notices set forth a

summary of facts and representations

contained in each application for

exemption and referred interested

persons to the respective applications

for a complete statement of the facts and

representations. The applications have

been available for public inspection at

the Department in Washington, D.C. The

notices also invited interested persons

to submit comments on the requested

exemptions to the Department. In

addition the notices stated that any

interested person might submit a

written request that a public hearing be

held (where appropriate). The

applicants have represented that they

have complied with the requirements of

the notification to interested persons.

No public comments and no requests for

a hearing, unless otherwise stated, were

received by the Department.

The notices of proposed exemption

were issued and the exemptions are

being granted solely by the Department

because, effective December 31, 1978,

section 102 of Reorganization Plan No.

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

transferred the authority of the Secretary

of the Treasury to issue exemptions of

the type proposed to the Secretary of

Labor.

22608 Federal Register / Vol. 66, No. 87 / Friday, May 4, 2001 / Notices

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.

New York Life Insurance Company

(NYLIC) Located In New York, NY

[Prohibited Transaction Exemption 2001–16

Exemption Application No.: D–10584]

Exemption

I. Transactions

The restrictions of section

406(a)(1)(A) through (D) 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

to the following transactions, if the

conditions set forth in Section II and

Section III, below, are satisfied:

(a) The receipt, directly or indirectly,

by a sales agent (Sales Agent or Sales

Agents), as defined in Section IV(l)

below, of a sales commission from

NYLIC in connection with the purchase,

with plan assets, of an insurance

contract (the Insurance Contract or

Insurance Contracts), as defined in

Section IV(h) below;

(b) The receipt of a sales commission

by NYLIC, as principal underwriter for

a mutual fund registered under the

Investment Company Act of 1940, in

connection with the purchase, with plan

assets, of securities issued by such

mutual fund (the NYLife Fund or

NYLife Funds), as defined in Section

IV(c) below;

(c) The effecting by NYLIC, as

principal underwriter, of a transaction

for the purchase, with plan assets, of

securities issued by a NYLife Fund, and

the effecting by a Sales Agent of a

transaction for the purchase, with plan

assets, of an Insurance Contract; and

(d) The purchase, with plan assets, of

an Insurance Contract from NYLIC.

II. General Conditions

(a) The transactions are effected by

NYLIC in the ordinary course of

NYLIC’s business as an insurance

company, or as a principal underwriter

to an NYLife Fund, or in the case of a

Sales Agent, in the ordinary course of

the Sales Agent’s business as a Sales

Agent.

(b) The transactions are on terms at

least as favorable to the plan as an arm’s

length transaction with an unrelated

party would be.

(c) The combined total of all fees,

sales commissions, and other

consideration received by NYLIC or a

Sales Agent: (1) For the provision of

services to the plan, and (2) in

connection with a purchase of an

Insurance Contract or securities issued

by a NYLife Fund, is not in excess of

‘‘reasonable compensation’’ within the

contemplation of section 408(b)(2) and

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

and (d)(10) of the Code. If such total is

in excess of ‘‘reasonable compensation’’

the ‘‘amount involved’’ for purposes of

the civil penalties of section 502(i) of

the Act and excise taxes imposed by

section 4975(a) and (b) of the Code is

the amount of compensation in excess

of ‘‘reasonable compensation.’’

III. Specific Conditions

(a) NYLIC or the Sales Agent is not—

(1) A trustee of the plan (other than

a non-discretionary trustee who does

not render investment advice with

respect to any assets of the plan or a

trustee to a pooled trust (the Pooled

Trust), as defined in Section IV(g)

below, which will not purchase

Insurance Contracts or securities issued

by a NYLife Fund pursuant to this

exemption);

(2) A plan administrator (within the

meaning of section 3(16)(A) of the Act

and section 414(g) of the Code;

(3) A fiduciary who is expressly

authorized in writing to manage,

acquire, or dispose of, on a discretionary

basis, those assets of the plan that are or

could be invested in Insurance

Contracts, securities issued by a NYLife

Fund, or units of a Pooled Trust; or

(4) An employer any of whose

employees are covered by the plan.

(b) (1) Prior to the execution of a

transaction involving the receipt of sales

commissions by a Sales Agent in

connection with the plan’s purchase of

an Insurance Contract, NYLIC or the

Sales Agent provides to an independent

plan fiduciary (the Independent Plan

Fiduciary), as defined in Section IV(f)

below, disclosures of the following

information concerning the Insurance

Contract in writing and in a form

calculated to be understood by a plan

fiduciary who has no special expertise

in insurance or investment matters:

(A) An explanation of: (i) the nature

of the affiliation or relationship between

NYLIC and the Sales Agent

recommending the Insurance Contract;

and, (ii) the nature of any limitations

that such affiliation or relationship, or

any agreement between the Sales Agent

and NYLIC places on the Sales Agent’s

ability to recommend Insurance

Contracts;

(B) The sales commission, expressed

as a percentage of gross annual premium

payments for the first year and for each

of the succeeding renewal years, that

will be paid by NYLIC to the Sales

Agent in connection with the purchase

of the recommended Insurance Contract,

together with a description of any

factors that may affect the commission;

and

(C) A full and detailed description of

any charges, fees, discounts, penalties,

or adjustments which may be paid by

the plan under the recommended

Insurance Contract in connection with

the plan’s purchase, holding, exchange,

termination, or sale of the Insurance

Contract, including a description of any

factors that may affect the level of

charges, fees, discounts, or penalties

paid by the plan.

(2) Following receipt of the

information required to be provided to

the Independent Plan Fiduciary, as

described in Section III(b)(1) above, and

before execution of the transaction, the

Independent Plan Fiduciary

acknowledges in writing receipt of such

information, and approves the

transaction on behalf of the plan. The

Independent Plan Fiduciary may be an

employer of employees covered by the

plan but may not be a Sales Agent

involved in the transaction. The

Independent Plan Fiduciary may not

receive, directly or indirectly (e.g.

through an affiliate), any compensation

or other consideration for his or her own

personal account from any party dealing

with the plan in connection with the

transaction.

(3) With respect to additional

purchases of Insurance Contracts, the

written disclosure required under

Section III(b)(1) need not be repeated,

unless—

(A) More than three years have passed

since such disclosure was made with

respect to the same kind of Insurance

Contract, or

(B) The Insurance Contract being

recommended for purchase or the

commission with respect thereto is

materially different from that for which

the approval described under Section

III(b)(2) was obtained.

(c)(1) With respect to purchases with

plan assets of securities issued by a

NYLife Fund, or receipt of sales

commissions by NYLIC in connection

with such purchases, NYLIC provides to

an Independent Plan Fiduciary, prior to

the execution of the transaction, the

following information concerning the

Federal Register / Vol. 66, No. 87 / Friday, May 4, 2001 / Notices 22609

recommended NYLife Fund in writing

and in a form calculated to be

understood by a plan fiduciary who has

no special expertise in insurance or

investment matters:

(A) A description of: (i) the

investment objectives and policies of

the NYLife Fund, (ii) the principal

investment strategies that the NYLife

Fund may use to obtain its investment

objectives, (iii) the principal risk factors

associated with investing in the NYLife

Fund, (iv) historical investment return

information for the NYLife Fund, (v)

fees and expenses of the NYLife Fund,

including annual operating expenses

(e.g., management fees, distribution fees,

service fees, and other expenses) and

fees paid by shareholders (e.g., sales

charges and redemption fees), (vi) the

identity of the NYLife Fund adviser, and

(vii) the procedures for purchases of

securities issued by the NYLife Fund

(including any applicable minimum

investment requirements and sales

charges);

(B) A description of: (i) the expenses

of the recommended NYLife Fund,

including investment management,

investment advisory, or similar services,

any fees for secondary services (e.g., for

services other than investment

management, investment advisory, or

similar services, including but not

limited to custodial, administrative, or

other services), and (ii) any charges,

fees, discounts, penalties, or

adjustments that may be paid by the

plan in connection with the purchase,

holding, exchange, termination, or sale

of shares of the recommended NYLife

Fund securities, together with a

description of any factors that may

affect the level of charges, fees,

discounts, or penalties paid by the plan

or the NYLife Fund;

(C) An explanation of (i) the nature of

the affiliation or relationship between

NYLIC, the NYLife Fund, and (ii) the

limitation, if any, that such affiliation,

relationship, or any agreement between

NYLIC and the NYLife Fund places on

NYLIC’s ability to recommend securities

issued by other investment companies;

(D) The sales commission, if any, that

NYLIC will receive in connection with

the purchase of securities of the

recommended NYLife Fund, expressed

either as: (i) a percentage of the dollar

amount of the plan’s gross payments

and the amount actually invested, (ii) an

annual percentage of average daily net

asset value of securities issued by the

NYLife Fund, or (iii) both if applicable,

with a description of any factors that

may affect the commission; and

(E) A description of the procedure or

procedures for redeeming the NYLife

Fund securities.

The disclosures required under

Section III(c)(1) above shall be deemed

to be completed only if, with respect to

fees and expenses of NYLife Fund, the

type of each fee or expense (e.g.,

management fees, administrative fees,

fund operating expenses, and other fees,

including but not limited to fees payable

for marketing and distribution services

pursuant to Rule 12b–1 under the

Investment Company Act of 1940 (the

12b–1 Fees)) and the rate or amount

charged for a specified period (e.g.,

annually) is provided in a written

document separate from the prospectus

of such NYLife Fund.

(2) Following receipt of the

information required to be provided to

the Independent Plan Fiduciary, as

described in Section III(c)(1) above, and

before execution of the transaction, the

Independent Plan Fiduciary approves

the specific transaction on behalf of the

plan. Unless facts and circumstances

would indicate the contrary, such

approval may be presumed if the

Independent Plan Fiduciary directs the

transaction to proceed after NYLIC has

delivered the written disclosures to the

Independent Plan Fiduciary. The

Independent Plan Fiduciary may be an

employer of employees covered by the

plan but may not be NYLIC. The

Independent Plan Fiduciary may not

receive, directly or indirectly (e.g.

through an affiliate), any compensation

or other consideration for his or her own

personal account from any party dealing

with the plan in connection with the

transaction.

(3) With respect to additional

purchases of NYLife Fund securities,

NYLIC:

(A) Provides reasonable advance

notice of any material change with

respect to the NYLife Fund securities

being purchased or the commission

with respect thereto, and

(B) Repeats the written disclosure

required under Section III(c)(1)(A), (C),

(D), and (E) once every three years.

(d)(1) NYLIC shall retain or cause to

be retained for a period of six (6) years

from the date of any transaction covered

by this exemption the following:

(A) The information disclosed with

respect to such transaction pursuant to

Section III(b), and (c) above; and

(B) Any additional information or

documents provided to the Independent

Plan Fiduciary with respect to the

transaction; and

(C) The written acknowledgments

described in Section III(b)(2) above.

(2) A prohibited transaction shall not

be deemed to have occurred if, due to

circumstances beyond the control of

NYLIC, such records are lost or

destroyed before the end of such sixyear period.

(3) Notwithstanding anything to the

contrary in sections 504(a)(2) and (b) of

the Act, such records shall be

unconditionally available for

examination during normal business

hours by duly authorized employees or

representatives of the Department of

Labor, the Internal Revenue Service,

plan participants and beneficiaries, any

employer of plan participants and

beneficiaries, and any employee

organization any of whose members are

covered by the plan.

(e) Neither NYLIC nor a Sales Agent

renders investment advice (within the

meaning of 29 CFR 2510.3–21(c)) with

respect to the assets involved in the

transaction in connection with a formal

advice program under which specific/

individualized asset allocation

recommendations are made available to

participants based on their responses to

questionnaires.

IV. Definitions

For purposes of this exemption—

(a) ‘‘NYLTC’’ means the New York

Life Trust Company, or any other

financial institution supervised under

state or federal laws and affiliated with

NYLIC;

(b) ‘‘NYLIC’’ means the New York Life

Insurance Company and any of its

affiliates, including but not limited to

NYLTC, as defined in Section IV(a)

above;

(c) ‘‘NYLife Fund or NYLife Funds’’

mean any investment company

registered under the Investment

Company Act of 1940 for which NYLIC

serves as investment advisor and as

principal underwriter (as that term is

defined in section 2(a)(29) of the

Investment Company Act of 1940, 15

U.S.C. § 80a–2(a)(29));

(d) An ‘‘affiliate’’ of a person means:

(1) any person directly or indirectly

controlling, controlled by, or under

common control with such person, (2)

any officer, director, employee, or

relative of any such person, or any

partner in such person, and (3) any

corporation or partnership of which

such person is an officer, director, or

employee, or in which such person is a

partner. For purposes of this definition,

an ‘‘employee’’ includes: (A) any

registered representative of NYLIC,

where NYLIC or an affiliate is principal

underwriter, and (B) any insurance

agent or broker or pension consultant

acting under a written agreement as

NYLIC’s agent in connection with the

sale of an Insurance Contract, whether

or not such registered representative or

insurance agent or broker or pension

22610 Federal Register / Vol. 66, No. 87 / Friday, May 4, 2001 / Notices

1The Department expresses no opinion as to

whether any so-called ‘‘synthetic guaranteed

insurance contracts’’ offered by NYLIC constitute an

Insurance Contract within the meaning of this

exemption. The Department further notes that this

exemption provides relief from the self-dealing and

conflict of interest provisions of the Act in

connection with the sale of Insurance Contracts to

plans by fiduciaries. It does not provide relief from

any acts of self-dealing that do not arise directly in

connection with the purchase of specific insurance

products. Thus, for example, no relief is provided

under this exemption for any act of self-dealing that

may arise in connection with the ongoing operation

or administration of an Insurance Contract.

consultant is a common law employee

of NYLIC;

(e) The term, ‘‘control,’’ means the

power to exercise a controlling

influence over the management or

policies of a person other than an

individual;

(f) ‘‘Independent Plan Fiduciary’’

means a fiduciary with respect to a plan,

which fiduciary has no relationship to

or interest in NYLIC that might affect

the exercise of such fiduciary’s best

judgment as a fiduciary;

(g) ‘‘Pooled Trust’’ means any

collective investment fund or group

trust maintained by NYLTC, provided

that, NYLTC its successor or affiliate

does not have discretionary authority or

responsibility with respect to the

management and administration of or

provide investment advice with respect

to, any assets of the plan that are or

could be invested in Insurance

Contracts, securities issued by a NYLife

Fund, or units of a Pooled Trust;

(h) ‘‘Insurance Contract or Insurance

Contacts’’ mean an insurance or annuity

contract issued by NYLIC;1

(i) A ‘‘nondiscretionary trustee’’ of a

plan is a trustee whose powers and

duties with respect to any assets of the

plan are limited to: (1) The provision of

nondiscretionary trust services, as

defined in Section IV(j) below, to such

plan, and (2) the duties imposed on the

trustee by any provision or provisions of

the Act or the Code;

(j) ‘‘Nondiscretionary trust services’’

mean custodial services and services

ancillary to custodial services, none of

which services are discretionary;

(k) A ‘‘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 Code section

4975(e)(6), or a brother, a sister, or a

spouse of a brother or a sister;

(l) ‘‘Sales Agent or Sales Agents’’

mean any insurance agent, broker, or

pension consultant or any affiliate

thereof that is affiliated with NYLIC;

and

(m) ‘‘Principal underwriter’’ is

defined in the same manner as that term

is defined in section 2(a)(29) of the

Investment Company Act of 1940 (15

U.S.C. 8a–2(a)(29)).

Effective Date

This exemption is effective, as of

February 12, 1998, the date of the filing

of the application for exemption.

Written Comments

In the Notice of Proposed Exemption

(the Notice), the Department of Labor

(the Department) invited all interested

persons to submit written comments

and requests for a hearing on the

proposed exemption within thirty (30)

days of the date of the publication of the

Notice in the Federal Register on

February 15, 2001. All comments and

requests for a hearing were due by April

6, 2001.

During the comment period, the

Department received no requests for a

hearing. However, the Department did

receive a comment letter from the

applicant. In this regard, in a letter

dated April 6, 2001, the applicant

requested certain amendments to the

language of the Summary of Facts and

Representations (the SFR), as published

in the Notice. The applicant believes

that none of the changes described

below involve material changes in any

facts or representation made by NYLIC

in its application to the Department.

A discussion of each of the

applicant’s comments and the

Department’s responses, thereto, are set

forth in the numbered paragraphs

below. In the language below, words

that have been stricken from the text of

the SFR appear in the closed brackets,

and additions to the SFR appear in bold

italics.

1. Representation 2. The applicant has

informed the Department that NYLIC

recently organized a new wholly-owned

investment management subsidiary,

New York Life Investment Management

LLC (NYLIM), and has made other

changes to the names or organization of

one or more of its subsidiaries. The

applicant requests that the Department

substitute the language, as set forth in

the paragraph below, for the text of

Representation 2, as it appeared in the

SFR.

The Department concurs.

Accordingly, the language, as set forth

in the Notice at 66 FR at 10517, column

1, lines 49 to 57 and column 2, lines 1–

2 should have read as follows:

The application was filed on behalf of

NYLIC and its direct or indirect whollyowned subsidiaries, New York Life Trust

Company (NYLTC), New York Life Benefit

Services LLC (NYLBS), NYLIFE Distributors

Inc. (NYLIFE Distributors), New York Life

Investment Management LLC (NYLIM),

MacKay-Shields LLC [Financial Corporation]

(MacKay-Shields), [Monitor Capital Advisors,

Inc. (Monitor Capital)], and NYLIFE Securities

Inc. (NYLIFE Securities).

2. Representation 3. The applicant

wishes to update the total consolidated

assets information, as published in the

SFR. In this regard, the applicant

represents that the revised numbers, as

set forth below, are based on NYLIC’s

annual report, as of December 31, 2000.

It is further represented that this report

includes condensed, consolidated

financial information for NYLIC and its

domestic, wholly-owned life insurance

subsidiaries, New York Life Insurance

and Annuity Corporation and NYLIC

Insurance Company of Arizona.

The Department concurs.

Accordingly, the language, as set forth

in the Notice at 66 FR at 10517, column

2, lines 5–9 should have read, as

follows:

As of December 31, [1996] 2000, NYLIC

had approximately $97.1 billion in total

consolidated assets [of approximately $78.8

billion and net] (including policy reserves) and

$88.4 billion in total liabilities [of $74.8

billion].

In addition, the applicant wishes to

clarify the following statement that

appeared in Representation 3 in the

Notice at 66 FR at 10517, column 2,

lines 16–23:

It is represented that all insurance products

offered by NYLIC are reviewed and approved

by the New York Insurance Department

under New York insurance laws and under

the applicable insurance laws of any other

state where such products are marketed and

sold.

The applicant notes that insurance

products offered by NYLIC are reviewed

and approved by the New York State

Insurance Department under New York

laws or under the applicable insurance

laws of another state where such

products are marketed and sold. In this

regard, NYLIC may not obtain New York

State Insurance Department approval for

insurance products marketed and sold

in states other than New York, although

such products are filed with the New

York State Insurance Department. In

addition, insurance products offered by

certain subsidiaries of NYLIC that are

organized and supervised by another

state are not approved by the New York

State Insurance Department but are filed

with the New York State Insurance

Department if marketed in New York.

The Department acknowledges the

clarification as submitted by the

applicant.

3. Representation 6. The applicant has

informed the Department of certain

changes with respect to the NYLife

Funds, including the renaming of the

MainStay Institutional Funds Inc. on

Federal Register / Vol. 66, No. 87 / Friday, May 4, 2001 / Notices 22611

2Unless otherwise noted, all references to

Indianapolis Life and its affiliates are deemed to

include references to AmerUs Group and its

affiliates.

December 29, 2000. Therefore, the

applicant requests that the Department

substitute the language, as set forth in

the paragraph below, for the text of

Representation 6, as it appeared in the

SFR.

The Department concurs.

Accordingly, the language, as set forth

in the Notice at 66 FR at 10517, column

3, lines 29 to 60 and at 10518, column

1, lines 1–7 should have read as follows:

The NYLife Funds are open-end

investment companies registered with the

Securities and Exchange Commission (SEC)

under the Investment Company Act of 1940.

The NYLife Funds are offered to plans

directly and through variable life and annuity

contracts issued by NYLIC. Currently, the

NYLife Funds include [the] The MainStay

Funds, which are available to retail and

institutional investors (including defined

contribution plans) and the [MainStay

Institutional] Eclipse Funds Inc., and Eclipse

Funds, which are [only] available to

institutional investors, [and to] group

individual retirement account customers,

and retail investors. The MainStay Funds,

organized as a Massachusetts business trust,

currently include [fourteen (14)] twenty-five

(25) separate funds, each of which has its

own investment objectives and policies.

Eclipse Funds Inc., a Maryland corporation,

currently offers thirteen (13)separate funds,

and the Eclipse Funds, a Massachusetts

business trust, currently offers four (4)

separate funds. Both the Eclipse Funds Inc.

and the Eclipse Funds are marketed under a

combined prospectus. [MainStay Institutional

Funds Inc. currently include eleven (11) separate

funds].

Affiliates of NYLIC provide [provides] a

broad range of services to NYLife Funds.

Specifically, the NYLife Funds are managed

by NYLIM. MacKay-Shields is a sub-advisor

to one or more of the NYLife Funds. [or

Monitor Capital, both of which] Both are

registered investment advisers and indirect

wholly-owned subsidiaries of NYLIC. NYLIM

[NYLIC] is the administrator to each of the

NYLife Funds and provides various services,

including administration, accounting, and

other similar services and shareholder

administration and sub-accounting for which

NYLIM [NYLIC] and/or its affiliates may

receive management fees, administrative fees,

and/or shareholder services fees.

4. Representation 9. The applicant

wishes to clarify the following statement

that appeared in Representation 9 in the

Notice at 66 FR at 10518, column 2, line

1:

In this regard, it is represented that NYLIC

will advise NYLTC in connection with the

management of the Collective Trust, although

NYLTC will have final decision making

authority.

The applicant has informed the

Department that NYLIC has engaged

NYLIM to advise it in providing

investment management services to all

of its clients, including services

provided by NYLIC to NYLTC for the

Collective Trust. However, it is

represented that NYLIC remains fully

responsible for providing advice and

other services under the terms and

conditions of the documents governing

the Collective Trust, described in

Representation 9, as published in the

SFR.

The Department acknowledges the

clarification as submitted by the

applicant.

After giving full consideration to the

entire record, including the written

comment from the applicant, the

Department has decided to grant the

exemption, as described, amended,

clarified, and concurred in above. In

this regard, the comment letter

submitted by the applicant to the

Department has been included as part of

the public record of the exemption

application. The complete application

file, including all supplemental

submissions received by the

Department, is made available for public

inspection in the Public Documents

Room of the Pension Welfare Benefits

Administration, Room N–1513, U.S.

Department of Labor, 200 Constitution

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

For a more complete statement of the

facts and representations supporting the

Department’s decision to grant this

exemption refer to the Notice published

on February 15, 2001, at 66 FR 10514.

For Further Information Contact

Angelena C. Le Blanc of the

Department, telephone (202) 219–8883.

(This is not a toll-free number.)

Indianapolis Life Insurance Company

(Indianapolis Life) and AmerUs Group

Co. (AmerUs Group) Located in

Indianapolis, IN

[Prohibited Transaction Exemption 2001–17;

Exemption Application No. D–10930]

Exemption

Section I. Covered Transactions

The restrictions of section 406(a) of

the Act (or ERISA) and the sanctions

resulting from the application of section

4975 of the Code, by reason of section

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

shall not apply to (1) the receipt of

common stock (Common Stock) issued

by AmerUs Group, which will become

the parent of Indianapolis Life, or (2) the

receipt of cash (Cash) or policy credits

(Policy Credits), by or on behalf of a

policyowner of Indianapolis Life who is

an eligible member, as defined in

Section III (the Eligible Member), which

is an employee benefit Plan, including

an employee benefit plan that is

sponsored by Indianapolis Life and its

affiliates for their own employees (the

Indianapolis Life Plans; collectively, the

Plans), in exchange for such Eligible

Member’s membership interest in

Indianapolis Life, in accordance with

the terms of a plan of conversion (the

Plan of Conversion), implemented

under Indiana law.2

In addition, the restrictions of section

406(a)(1)(E) and (a)(2) and section

407(a)(2) of the Act shall not apply to

the receipt or holding, by the

Indianapolis Life Insurance Company

Group Term Life Insurance Plan for

Employees, Plan No. 505 (the IL Group

Term Life Insurance Plan), of employer

securities in the form of excess AmerUs

Group Common Stock, in accordance

with the terms of the Plan of

Conversion.

This exemption is subject to the

following conditions set forth below in

Section II.

Section II. General Conditions

(a) The Plan of Conversion is subject

to approval, review and supervision by

the Commissioner of Insurance of the

Indiana Department of Insurance (the

Commissioner) and is implemented in

accordance with procedural and

substantive safeguards imposed under

Indiana law.

(b) The Commissioner reviews the

terms and options that are provided to

Eligible Members as part of such

Commissioner’s review of the Plan of

Conversion, and the Commissioner

approves the Plan of Conversion

following a determination that such

Plan is fair, reasonable and equitable to

Eligible Members.

(c) Each Eligible Member has an

opportunity to vote to approve the Plan

of Conversion after full written

disclosure is given to the Eligible

Member by Indianapolis Life.

(d) Any determination to receive

Common Stock, Cash or Policy Credits

by an Eligible Member which is a Plan,

pursuant to the terms of the Plan of

Conversion, is made by one or more

Plan fiduciaries which are independent

of Indianapolis Life and its affiliates and

neither Indianapolis Life nor any of its

affiliates exercises any discretion or

provides ‘‘investment advice’’ within

the meaning of 29 CFR 2510.3–21(c),

with respect to such decisions.

(e) After each Eligible Member

entitled to receive shares of AmerUs

Group Common Stock is allocated at

least 12 shares, additional consideration

is allocated to Eligible Members who

own participating policies based on

actuarial formulas that take into account

22612 Federal Register / Vol. 66, No. 87 / Friday, May 4, 2001 / Notices

the actuarial contribution, if any, that

each Eligible Member’s policy has made

(and is expected to make) to

Indianapolis Life’s statutory surplus,

which formulas are subject to review

and approval by the Commissioner.

(f) In the case of the Indianapolis Life

Plans, the independent fiduciary—

(1) Votes on whether to approve or

not to approve the proposed

restructuring process (the

Restructuring);

(2) Elects between consideration in

the form of AmerUs Group Common

Stock or Cash;

(3) Determines how to apply the Cash

or AmerUs Group Common Stock

received for the benefit of the

participants and beneficiaries of the

Indianapolis Life Plans;

(4) Votes shares of AmerUs Group

Common Stock held by all Indianapolis

Life Plans, including the IL Group Term

Life Insurance Plan, and disposes of

such stock held by the IL Group Term

Life Insurance Plan exceeding the

limitation of section 407(a)(2) of the Act

as soon as reasonably practicable, but in

no event later than six months after the

effective date of the Plan of Conversion.

(5) Provides the Department with a

complete and detailed final report as it

relates to the Indianapolis Life Plans

prior to the effective date of the

Restructuring; and

(6) Takes all actions that are necessary

and appropriate to safeguard the

interests of the Indianapolis Life Plans

and their participants and beneficiaries.

(g) All Eligible Members that are Plans

participate in the transactions on the

same basis as all Eligible Members that

are not Plans.

(h) No Eligible Member pays any

brokerage commissions or fees in

connection with their receipt of AmerUs

Group Common Stock or Policy Credits

or in connection with the

implementation of the commission-free

purchase and sale program.

(i) All of Indianapolis Life’s

policyholder obligations remain in force

and are not affected by the Plan of

Conversion.

Section III. Definitions

For purposes of this exemption,

(a) The term ‘‘Indianapolis Life’’

means Indianapolis Life Insurance

Company and AmerUs Group Co.,

unless otherwise noted.

(b) An ‘‘affiliate’’ of Indianapolis Life

includes —

(1) Any person directly or indirectly

through one or more intermediaries,

controlling, controlled by, or under

common control with Indianapolis Life.

(For purposes of this paragraph, the

term ‘‘control’’ means the power to

exercise a controlling influence over the

management or policies of a person

other than an individual.)

(2) Any officer, director or partner in

such person, and

(3) Any corporation or partnership of

which such person is an officer, director

or a 5 percent partner or owner.

(c) A ‘‘policy’’ is defined as (1) any

contract of insurance, annuity contract,

or supplemental contract in each case,

that has been issued by Indianapolis

Life; (2) each certificate issued under

any of Indianapolis Life’s group annuity

contracts as part of a custodial 403(b) or

IRA arrangement, or as part of a nonERISA 403(b) arrangement (the

custodian or employer-sponsor holding

such group annuity contracts shall not

be considered the Eligible Member or

owner); and (3) each certificate issued

under the group plan established as a

convenience by Indianapolis Life to

provide life insurance to self-employed

agents. The following policies and

contracts are deemed not to be policies

for purposes of the Plan of Conversion:

(1) a certificate issued to an individual

pursuant to a group life insurance

policy (except as set forth in the

preceding sentence); (2) a certificate

issued under a group annuity contract

(except as set forth in the preceding

sentence); and (3) any reinsurance

assumed on an indemnity basis (but

certificates of assumption constitute

policies).

(d) The term ‘‘Eligible Member’’

means a policyholder whose name

appears on Indianapolis Life’s records

as the owner of one or more policies

issued by Indianapolis Life on both the

date the Board of Directors adopts the

Plan of Conversion and the effective

date of the Plan of Conversion.

(e) A ‘‘supplemental contract’’ is a

policy or contract that has been issued

pursuant to a Plan, qualified under

section 401(a) of the Code, directly to a

Plan participant.

(f) ‘‘Policy Credits’’ will consist of an

increase in the dividend accumulation

on an Indianapolis Life policy or

contract (to which no sales, surrender,

or similar charges will be applied), an

increase in the accumulation account

value of the Indianapolis Life policy or

contract (to which no sales, surrender,

or similar charge will be applied), an

increase in the premium deposit fund

under the Indianapolis Life policy or

contract, an increase in the amount of

the payments distributed under an

Indianapolis Life policy or contract that

is a supplemental contract, or an

extension of the expiry date on an

Indianapolis Life policy or contract that

is in force as extended term life

insurance pursuant to a non-forfeiture

provision of a life insurance policy.

For a more complete statement of the

facts and representations supporting the

Department’s decision to grant this

exemption, refer to the notice of

proposed exemption published on

January 25, 2001 at 66 FR 7802.

Written Comments

The Department received four written

comments with respect to the proposed

exemption. Two comments were

submitted by Plan policyholders of

Indianapolis Life. Of these comments,

one policyholder said he was in favor of

the Department’s granting the proposed

exemption while the other policyholder

said he was opposed to the

demutualization and preferred that

Indianapolis Life’s surplus earnings

remain with the insurer in order to

enhance the policyholder’s existing

insurance policies with Indianapolis

Life. The third and fourth comments,

which were submitted under separate

cover by AmerUs Group and

Indianapolis Life, expressed specific

concerns about the proposed exemption

in a number of areas.

The dissenting policyholder’s

comment, as well as the comments

submitted by AmerUs Group and

Indianapolis Life, are discussed below.

Also discussed below are Indianapolis

Life’s response to the policyholder

comment and the Department’s

responses to the areas of concern raised

by both AmerUs Group and

Indianapolis Life.

Policyholder Comment

As stated briefly above, one

commenter states that he is opposed to

Indianapolis Life’s contemplated

demutualization and maintains that

Indianapolis Life should retain its

current status as a mutual insurance

company. The commenter indicates that

he does not believe the exemption is in

his best interest as grounds for his

opposition. The commenter explains

that he would prefer that Indianapolis

Life’s surplus remain with the insurer in

order to make the policyholder’s

insurance contracts stronger.

In response, Indianapolis Life

disagrees with the commenter’s

position. As explained in the exemption

application, Indianapolis Life

emphasizes that the demutualization

will not in any way reduce the benefits,

values, guarantees, or dividend

eligibility of existing policies or

contracts that it has issued. Instead, the

Restructuring will result in significant

benefits to Indianapolis Life

policyholders. In this regard,

Indianapolis Life states that the

Federal Register / Vol. 66, No. 87 / Friday, May 4, 2001 / Notices 22613

3For example, Indianapolis Life refers to the

definition of ‘‘Eligible Member’’ in paragraph (d) of

Section III. Without distinguishing between it and

its affiliates, Indianapolis Life explains that this

definition would incorrectly include persons with

policies issued by the affiliates as members of

Indianapolis Life. Policyholders of Indianapolis

Life’s affiliates are not members of Indianapolis

Life, according to Indianapolis Life.

Restructuring is designed to enhance its

financial strength in access to capital

through an affiliation with AmerUs

Group that will result in a larger

combined organization. Moreover,

Indianapolis Life explains that access to

capital markets will enable it to invest

in new technology, improve customer

service, develop new products and

channels of distribution, and obtain

more financial flexibility with which to

maintain its ratings and financial

stability. Finally, Indianapolis Life

explains that the combination with

AmerUs Group will create an

opportunity to leverage its corporate

capacity and strength and reduce

expenses through economies of scale.

In addition, Indianapolis Life notes

that, at the special policyholders

meeting held earlier this week, over 96

percent of the policyholders who voted

on the Restructuring voted to approve it.

Because of the overwhelming

policyholder vote and the reasons cited

for the Restructuring, Indianapolis Life

maintains that the view expressed by

the commenter should not preclude the

Department from granting the final

exemption.

AmerUs Group’s Comment

In its comment, AmerUs Group notes

that the proposed Restructuring will

involve both the combination of

Indianapolis Life and AmerUs Group

and the sponsored demutualization of

Indianapolis Life. At the time the

demutualization consideration is

provided to Indianapolis Life

policyholders, AmerUs Group explains

that Indianapolis Life will become a

second tier subsidiary of AmerUs

Group. For this reason, AmerUs Group

states that it is important that the

exemption cover AmerUs Group and its

affiliates as well as Indianapolis Life

and its affiliates. However, AmerUs

Group notes that the proposed

exemption has been issued only under

the name of Indianapolis Life.

Therefore, AmerUs Group requests that

the final exemption be issued in the

names of both entities and that the final

exemption contain a statement to the

effect that the exemption covers the

affiliates of both entities.

In response, the Department has

modified the title of the exemption to

include a reference to AmerUs Group to

show that the exemption has been

issued to AmerUs Group and

Indianapolis Life, jointly. In addition,

the Department has inserted a new

footnote in the operative language

which states that ‘‘[f]or purposes of this

exemption, all references to

Indianapolis Life and its affiliates are

deemed to include references to

AmerUs Group and its affiliates.’’

Further, the Department has revised

Section III(a) of the final exemption by

including a reference to AmerUs Group,

the future parent of Indianapolis Life.

Section III(a) of the final exemption now

reads as follows:

The term ‘‘Indianapolis Life’’ means

Indianapolis Life Insurance Company and

AmerUs Group Co., unless otherwise noted.

Indianapolis Life’s Comments

Indianapolis Life had three major

comments to the proposed exemption

and a couple of minor comments that

were in the nature of technical

clarifications designed to enhance the

accuracy of the description of the

subject transactions and update factual

information.

1. Definition of Indianapolis Life.

Section III(a) of the proposed exemption

defines ‘‘Indianapolis Life’’ to include

‘‘any affiliate of Indianapolis Life, as

defined in paragraph (b) of this Section

III.’’ Indianapolis Life requests that the

reference to any affiliate be deleted from

the definition and that the term

‘‘affiliate’’ as defined in paragraph (b) of

Section III be added where needed

throughout the exemption. Indianapolis

Life notes that it is important to exclude

affiliates from the definition of

Indianapolis Life because the phrase

‘‘Indianapolis Life and its affiliates’’ is

referred to separately in the exemption

application, and many of the provisions

from the application have been

incorporated into the exemption. By

lumping Indianapolis Life and its

affiliates together in one defined term

changes the meanings of many of those

provisions, according to Indianapolis

Life and may lead to an incongruous

result.3

In addition, Indianapolis Life notes

that there are several other places in the

proposed exemption where a distinction

between Indianapolis Life and its

affiliates is important. Rather than

identify all of those places, Indianapolis

Life would prefer to remove ‘‘affiliates’’

from the definition of Indianapolis Life

and refer separately to affiliates where

needed in the proposed exemption.

Indianapolis Life also explains that it

conducted a word search through the

proposed exemption and found only

one instance where the term ‘‘affiliates’’

had been inappropriately used. The

sentence in question appears in the last

sentence in the third paragraph of

Representation 23 of the proposed

exemption in the Summary of Facts and

Representations (the Summary). There,

it is stated that ‘‘U.S. Trust * * *

derives less than one percent of its

annual income from Indianapolis Life.’’

Indianapolis Life believes that the

sentence should be revised to state that

‘‘U.S. Trust derives less than one

percent of its annual income from

Indianapolis Life and its affiliates.’’

In response to Indianapolis Life’s

comment, the Department has already

revised Section III(a) of the final

exemption (as shown above) by deleting

the term ‘‘affiliates’’ and by including a

reference to AmerUs Group. The

Department also notes Indianapolis

Life’s revision to Representation 23 of

the Summary.

2. Standard of Commissioner’s

Review. Section II(b) of the proposed

exemption recites the standard under

which the Commissioner will review

the Plan of Conversion under Indiana

law. Indianapolis Life states that

Indiana law requires the Commissioner

to determine that the Plan of Conversion

is not only fair and equitable but is

‘‘reasonable’’ to Eligible Members before

approving the Plan of Conversion.

Accordingly, Indianapolis Life requests

that ‘‘reasonable’’ be added to the

standard described in this subsection.

In response to this comment, the

Department has revised Section II(b) of

the final exemption to read as follows:

The Commissioner reviews the terms and

options that are provided to Eligible

Members as part of such Commissioner’s

review of the Plan of Conversion, and the

Commissioner approves the Plan of

Conversion following a determination that

such Plan is fair, reasonable and equitable to

Eligible Members.

3. Time Frame for Distributing Notice

to Interested Persons. In the section of

the proposed exemption titled ‘‘Notice

to Interested Persons,’’ Indianapolis Life

suggests updating the paragraph

contained therein to reflect that

Indianapolis Life had provided

interested persons with notice of the

proposed exemption as well as to show

the revised time frame for the comment

period. Indianapolis Life states that it

requested an 8 day extension of time to

provide interested persons with notice

of the proposed exemption in order to

allow time for mailing its member

information statement prior to the

dissemination of the proposal.

Indianapolis Life also notes that, at the

Department’s request, the extension of

time was granted, provided an

additional 3 days were factored into the

comment period to allow for mailing

22614 Federal Register / Vol. 66, No. 87 / Friday, May 4, 2001 / Notices

time and to ensure that interested

persons would have at least 30 days in

which to comment. With the increased

time, Indianapolis Life explains that

comments to the proposed exemption

were then due to the Department by

March 21, 2001.

4. Technical Corrections to Sections I–

III of the Proposed Exemption. a.

Section I. In the operative language of

the proposed exemption, Section I states

that AmerUs Group Co. is the parent of

Indianapolis Life. However,

Indianapolis Life explains that this

entity will not become Indianapolis

Life’s parent until the effective date of

Indianapolis Life’s Restructuring. Also,

in that same paragraph of the operative

language, Indianapolis Life states that

the reference to the term ‘‘Eligible

Member’’ should refer to the definition

of that term, as defined in Section III,

because not all of Indianapolis Life’s

policyholders are Eligible Members of

the insurer.

In response to this comment, the

Department has revised part of the

operative language of the final

exemption to read as follows:

The restrictions of section 406(a) of the Act

(or ERISA) and the sanctions resulting from

the application of section 4975 of the Code,

by reason of section 4975(c)(1)(A) through (D)

of the Code, shall not apply to (1) the receipt

of common stock (Common Stock) issued by

AmerUs Group, which will become the

parent of Indianapolis Life, or (2) the receipt

of cash (Cash) or policy credits (Policy

Credits), by or on behalf of a policyowner of

Indianapolis Life who is an eligible member,

as defined in Section III (the Eligible

Member), which is an employee benefit Plan,

including an employee benefit plan that is

sponsored by Indianapolis Life and its

affiliates for their own employees (the

Indianapolis Life Plans; collectively, the

Plans), in exchange for such Eligible

Member’s membership interest in

Indianapolis Life, in accordance with the

terms of a plan of conversion (the Plan of

Conversion), implemented under Indiana

law.

b. Section II(e). Section II(e) of the

proposed exemption states that after

each Eligible Member entitled to receive

shares of AmerUs Group Common Stock

is allocated at least 12 shares, additional

consideration will be allocated to

Eligible Members owning participating

policies based on actuarial formulas that

take into account each participating

policy’s contribution to surplus and

asset valuation reserve of Indianapolis

Life, which formulas have been

approved by the Commissioner.

Indianapolis Life requests that Section

II(e) be revised to reflect the language in

the Plan of Conversion and to

correspond more closely with language

used later in the proposed exemption to

describe the process for determining the

amount of additional consideration, if

any, an Eligible Member will receive

after being allocated the fixed

component of consideration.

In response to this comment, the

Department has revised Section II(e) of

the final exemption to read as follows:

After each Eligible Member entitled to

receive shares of AmerUs Group Common

Stock is allocated at least 12 shares,

additional consideration is allocated to

Eligible Members who own participating

policies based on actuarial formulas that take

into account the actuarial contribution, if

any, that each Eligible Member’s policy has

made (and is expected to make) to

Indianapolis Life’s statutory surplus, which

formulas are subject to review and approval

by the Commissioner.

c. Section II(f). Subparagraph 4 of

Section II(f) of the proposed exemption

states that U.S. Trust, will vote shares of

AmerUs Group Common Stock that are

held by the IL Group Term Life

Insurance Plan and dispose of any stock

held by this plan which exceeds the

limitation of section 407(a)(2) of the Act

as reasonably as practicable, but in no

event later than six months after the

effective date of the plan of Conversion.

The last paragraph of Representation 23

of the Summary contains a similar

provision.

Indianapolis Life wishes to point out

that U.S. Trust will vote all shares of

AmerUs Group Common Stock that are

held by any of the Indianapolis Life

Plans and not just those held by the IL

Group Term Life Insurance Plan.

Therefore, the Department has revised

subparagraph (4) of Section II(f) of the

final exemption to read as follows:

Votes shares of AmerUs Group Common

Stock held by all Indianapolis Life Plans,

including the IL Group Term Life Insurance

Plan, and disposes of such stock held by the

IL Group Term Life Insurance Plan exceeding

the limitation of section 407(a)(2) of the Act

as soon as reasonably practicable, but in no

event later than six months after the effective

date of the Plan of Conversion.

In addition, the Department notes a

corresponding revision to the last

paragraph of Representation 23 of the

Summary.

d. Section III(c). Section III(c) of the

proposed exemption defines the term

‘‘policy,’’ to include, in part, a

certificate issued under a group plan

established as a convenience by

Indianapolis Life to provide life

insurance to self-employed agents and

under which all premiums have been

paid by such agents. At the

Commissioner’s request, Indianapolis

Life states that the Plan of Conversion

has been revised to delete the phrase

‘‘and under which all premiums were

paid by such agents’’ from the

description of the certificates. Therefore,

in response to this comment, the

Department has revised part of Section

III(c) of the final exemption to read as

follows:

* * * each certificate issued under the group

plan established as a convenience by

Indianapolis Life to provide life insurance to

self-employed agents.

e. Section III(e). Section III(e) of the

proposed exemption defines the term

‘‘supplemental contract’’ as a policy or

contract that has been issued pursuant

to a Plan participant. Indianapolis Life

states that the definition of

‘‘supplemental contract’’ should only

include contracts issued to Plan

participants by Plans that are qualified

under section 401(a) of the Code and do

not include contracts issued by a Plan

that is not qualified under Code section

401(a). Therefore, the Department has

revised Section III(e) of the final

exemption to read as follows:

A ‘‘supplemental contract’’ is a policy or

contract that has been issued pursuant to a

Plan, qualified under section section 401(a)

of the Code, directly to a Plan participant.

5. Technical Corrections to the

Summary. The Department notes the

following clarifications made to the

Summary by Indianapolis Life:

a. Representation 1. Representation 1

states that Indianapolis Life’s rating by

Fitch is ‘‘AA’’ whereas its correct rating

is ‘‘AA¥.’’

b. Representation 3. In the first

paragraph, Representation 3 states that

Indianapolis Life’s principal products

include individual retirement accounts.

However, Indianapolis Life wishes to

point out that such products include

‘‘annuities’’ rather than ‘‘accounts’’

covered under section 408 of the Code.

c. Representation 4(a). Representation

4(a) sets forth the total assets of the

Indianapolis Life Insurance Company

Salary Reduction Plan, Plan No. 007.

Indianapolis Life wishes to clarify that

the asset and participants totals for this

Plan were reported as of June 30, 2000

rather than June 20, 2000.

For further information regarding the

comments and other matters discussed

herein, interested persons are

encouraged to obtain copies of the

exemption application file (Exemption

Application No. D–10930) the

Department is maintaining in this case.

The complete application file, as well as

all supplemental submissions received

by the Department, are made available

for public inspection in the Public

Documents Room of the Pension and

Welfare Benefits Administration, Room

N–1513, U.S. Department of Labor, 200

Federal Register / Vol. 66, No. 87 / Friday, May 4, 2001 / Notices 22615

Constitution Avenue, N.W.,

Washington, D.C. 20210.

Accordingly, after giving full

consideration to the entire record,

including the written comments, the

Department has decided to grant the

exemption subject to the modifications

and clarifications described above.

For Further Information Contact

Ms. Jan D. Broady of the Department,

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

a toll-free number.)

UAM Fund Services, Inc., Located in

Boston, MA

[Prohibited Transaction Exemption 2001–18;

Application No. D–10938]

Exemption

Section I. Transactions

The restrictions of section 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 effective April 30, 2001

to (i) the acquisition of shares of one or

more of the UAM Funds (Shares) by a

Plan for which a Fund Adviser serves as

investment manager, through the inkind exchange of the Plan’s assets held

in one or more separate accounts (each,

an Account) maintained by a Fund

Adviser, and (ii) the redemption of

Shares by a Plan for which a Fund

Adviser serves as investment manager,

through the in-kind exchange of assets

from one or more UAM Funds to one or

more Account(s), provided that the

conditions set forth in Section II below

are met.

Section II. Conditions

(a) The Fund Adviser is not an

employer of employees covered by the

Plan.

(b) The Plan does not pay sales

commissions, redemption fees, or other

fees in connection with such acquisition

or redemption.

(c) The assets transferred pursuant to

such acquisition or redemption consist

entirely of cash and Transferable

Securities.

(d) In the case of an acquisition, the

Plan receives Shares of the Funds that

have a total Net Asset Value equal to the

value of the Plan’s assets exchanged for

such Shares on the date of the transfer,

as determined (with respect to

Transferable Securities) in a single

valuation performed in the same

manner, at the close of the same

business day, in accordance with the

procedures set forth in Rule 17a–7

under the Investment Company Act of

1940 (the 1940 Act), as amended from

time to time, or any successor rule,

regulation, or similar pronouncement

(Rule 17a–7) (using sources

independent of the UAM Funds and the

Fund Adviser) and the procedures

established by the UAM Funds pursuant

to Rule 17a–7.

(e) In the case of a redemption, with

respect to Transferable Securities, the

Plan receives a pro rata portion of the

securities of the UAM Fund that is equal

in value to the number of Shares

redeemed for such securities, as

determined in a single valuation

performed in the same manner, at the

close of the same business day, in

accordance with the procedures set

forth in Rule 17a–7 (using sources

independent of the UAM Funds and the

Fund Adviser). With respect to all other

assets, the Plan receives cash equal to its

pro rata share of the fair market value

of such assets, determined in

accordance with Rule 17a–7 of the 1940

Act and the valuation policies and

procedures of the UAM Fund.

(f) The price that is paid or received

by the Plan for Shares is the Net Asset

Value per Share at the time of the

transaction and is the same price for the

Shares that would have been paid or

received by any other investor for

Shares of the same class at such time.

(g) Prior to the in-kind acquisition or

redemption, an Independent Fiduciary

with respect to the Plan receives full

and detailed written disclosure of

information regarding the in-kind

acquisition or redemption, including,

without limitation, the following:

(i) A current prospectus for each UAM

Fund to or from which Plan assets may

be transferred (updated as necessary to

reflect the investment mix of the UAM

Fund at the time of the in-kind

acquisition or redemption);

(ii) A statement describing the rate of

fees for investment advisory and other

services to be charged to and paid by the

Plan (and by the UAM Funds in which

the Plan invests) to the Fund Adviser,

including the nature and extent of any

differential between the rates of the fees

paid by the UAM Funds and the rates

of the fees otherwise payable by the

Plan to the Fund Adviser;

(iii) A statement of the reasons why

the Fund Adviser may consider the inkind acquisition or redemption to be

appropriate for the Plan;

(iv) A statement as to whether there

are any limitations on the Fund Adviser

with respect to which Plan assets may

be invested in Shares of the UAM Funds

and, if so, the nature of such limitations;

(v) The identity of all securities that

are deemed suitable by the Fund

Adviser for transfer to the UAM Funds

(in the case of an acquisition) or from

the UAM Funds (in the case of a

redemption);

(vi) The identity of all such securities

that will be valued in accordance with

the procedures set forth in Rule 17a–

7(b)(4) under the 1940 Act; and

(vii) Copies of the proposed and final

exemptions pertaining to the exemptive

relief provided herein for in-kind

acquisitions and redemptions.

(h) On the basis of such disclosures,

the Independent Fiduciary, consistent

with the responsibilities, obligations,

and duties imposed on fiduciaries by

Part 4 of Subtitle B of Title I of the Act,

(i) makes a determination as to whether

the terms of the in-kind acquisition or

redemption are fair to the participants of

the Plan and are comparable to and no

less favorable than terms that would be

reached at arms’ length between

unaffiliated parties, and that the in-kind

acquisition or redemption (as opposed

to an acquisition or redemption for

cash) is in the best interest of the Plan

and its participants and beneficiaries,

and (ii) gives prior written approval for

the in-kind acquisition or redemption,

including agreement as to the date on

which the in-kind acquisition or

redemption will take place.

(i) The authorization by the

Independent Fiduciary is terminable at

will without penalty to the Plan at any

time prior to the date of acquisition or

redemption, and any such termination

will be effected by the close of the

business day following the date of

receipt by the Fund Adviser, either by

mail, hand delivery, facsimile, or other

available means of written or electronic

communication at the option of the

Independent Fiduciary, of any written

notice of termination.

(j) In the case of an acquisition, all of

the Plan’s assets held in an Account

(other than Shares already held in the

Account) are transferred in-kind to one

or more UAM Funds in exchange for

Shares, except that any Plan assets in

the Account which are not suitable for

acquisition by the UAM Fund shall be

liquidated as soon as reasonably

practicable, and the cash proceeds shall

be invested directly in Shares.

(k) The Fund Adviser sends to the

Independent Fiduciary, by regular mail

or personal delivery, the following

information:

(i) No later than 30 days after the

completion of the in-kind transfer, a

written confirmation which contains:

(A) The identity of each Transferable

Security that was valued for purposes of

the in-kind transfer in accordance with

Rule 17a–7;

(B) The current market price, as of the

date of the in-kind transfer, of each such

Transferable Security; and

22616 Federal Register / Vol. 66, No. 87 / Friday, May 4, 2001 / Notices

(C) The identity of each pricing

service or market-maker consulted in

determining the current market price of

such Transferable Securities.

(ii) No later than 105 days after each

in-kind transfer, a written confirmation

which contains:

(A) In the case of an in-kind

acquisition, the number of Shares in the

UAM Funds that are held by the Plan

immediately following the acquisition,

the related per-Share Net Asset Value,

and the total dollar value of such

Shares.

(B) In the case of an in-kind

redemption, the number of Shares in the

UAM Funds that were held by the Plan

immediately prior to the redemption,

the related per-Share Net Asset Value,

and the total dollar value of such

Shares.

(l) With respect to each of the UAM

Funds in which a Plan continues to

hold Shares acquired in connection

with an in-kind acquisition, the Fund

Adviser provides the Independent

Fiduciary with:

(i) A copy of an updated prospectus

of such UAM Fund, at least annually;

and

(ii) Upon request of the Independent

Fiduciary, a report or statement (which

may take the form of the most recent

financial report, the current statement of

additional information, or some other

statement) containing a description of

all fees paid by the UAM Fund to the

Fund Adviser.

(m) The combined total of all fees

received by the Fund Adviser for the

provision of services to the Plan, and in

connection with the provision of

services to the UAM Funds in which the

Plan holds shares purchased in

connection with an in-kind exchange, is

not in excess of ‘‘reasonable

compensation’’ within the meaning of

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

(n) The Fund Adviser does not receive

any fees payable pursuant to Rule 12b–

1 under the 1940 Act in connection with

the acquisition or redemption.

(o) All other dealings between the

Plan and the UAM Funds are on a basis

no less favorable to the Plan than

dealings between the UAM Funds and

other shareholders holding the same

Shares of the same class as the Plan.

(p) The Fund Adviser maintains for a

period of six years the records necessary

to enable the persons described in

paragraph (q) below to determine

whether the conditions of this

exemption have been met, except that (i)

a prohibited transaction will not be

considered to have occurred if, due to

circumstances beyond the control of the

Fund Adviser, the records are lost or

destroyed prior to the end of the sixyear period, and (ii) no party in interest

other than the Fund Adviser shall be

subject to the civil penalty that may be

assessed under section 502(i) of the Act

or to the taxes imposed by section

4975(a) and (b) of the Code if the

records are not maintained or are not

available for examination as required by

paragraph (q) below.

(q) (1) Notwithstanding any

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

the Act, the records referred to in

paragraph (p) above are unconditionally

available at their customary locations

for examination during normal business

hours by (i) any duly authorized

employee or representative of the

Department of Labor or the Internal

Revenue Service; (ii) any fiduciary of

the Plan who has authority to acquire or

dispose of Shares of the UAM Funds

owned by the Plan, or any duly

authorized employee or representative

of such fiduciary; and (iii) any

participant or beneficiary of the Plan or

duly authorized employee or

representative of such participant or

beneficiary.

(2) None of the persons described in

paragraph (q)(1)(ii) and (iii) above shall

be authorized to examine trade secrets

of the UAM Funds or the Fund Adviser,

or commercial or financial information

which is privileged or confidential.

Section III. Availability of Prohibited

Transaction Exemption 77–4 (PTE 77–4)

Any in-kind acquisition of Shares of

the UAM Funds that complies with the

conditions of Section II of this

exemption shall be treated as a

‘‘purchase or sale’’ of shares of a

registered, open-end investment

company for purposes of PTE 77–4, 42

FR 18732 (April 8, 1977), and shall be

deemed to have satisfied paragraphs (a),

(d) and (e) of section II of that

exemption.

Section IV. Definitions

For purposes of this exemption:

(a) The term ‘‘UAM’’ means United

Asset Management Corporation, a

Delaware corporation with headquarters

in Boston, Massachusetts, and any

affiliate thereof;

(b) The term ‘‘UAM Funds’’ means

UAM Funds Inc., UAM Funds, Inc. II,

and UAM Funds Trust, each of which

is an open-end investment company

registered under the 1940 Act, or any

portfolio or group of portfolios thereof,

for which UAM or a Fund Advisor

serves as investment advisor and may

provide other services.

(c) The term ‘‘Fund Adviser’’ means

(i) any affiliate of UAM which serves as

an investment adviser to a UAM Fund,

and (ii) any former affiliate of UAM

which was divested within 12 months

of the acquisition of UAM by Old

Mutual, and which serves as an

investment adviser to a UAM Fund

pursuant to a contractual relationship

with UAM, and (iii) any affiliate of an

investment adviser identified in

subsections (i) or (ii).

(d) An ‘‘affiliate’’ of a person includes:

(i) Any person directly or indirectly

through one or more intermediaries

controlling, controlled by, or under

common control with the person;

(ii) Any officer, director, employee,

relative, or partner in any such person;

(iii) Any corporation or partnership of

which such person is an officer,

director, partner, or employee.

(e) The term ‘‘control’’ means the

power to exercise a controlling

influence over the management or

policies of a person other than an

individual.

(f) 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, sister, or spouse of a brother or

a sister.

(g) The term ‘‘Plan’’ includes any

pension, profit sharing or stock bonus

plan qualified under section 401(a) of

the Code, individual retirement account,

simplified employee pension plan,

custodial account plans as described in

section 403(b) of the Code, or savings

incentive match plans for employees.

(h) The term ‘‘Independent Fiduciary’’

means the Plan sponsor or other

fiduciary of a Plan who is independent

of and unrelated to UAM or the Fund

Adviser. For purposes of this

exemption, the Independent Fiduciary

will not be deemed to be independent

of and unrelated to UAM or the Fund

Adviser if:

(i) Such fiduciary directly or

indirectly controls, is controlled by, or

is under common control with UAM or

the Fund Adviser;

(ii) Such fiduciary, or any officer,

director, partner, employee, or relative

of the fiduciary is an officer, director,

partner, or employee of UAM or the

Fund Adviser (or is a relative of such

persons); or

(iii) Such fiduciary directly or

indirectly receives compensation or

other consideration for his or her own

personal account in connection with

any transaction described in this

exemption.

(i) The term ‘‘Transferable Securities’’

shall mean securities (1) for which

market quotations are readily available;

and (2) which are not in any of the

following categories: (i) securities which

may not be publicly offered or sold

Federal Register / Vol. 66, No. 87 / Friday, May 4, 2001 / Notices 22617

without registration under the Securities

Act of 1933 (the 1933 Act); (ii) securities

issued by entities in foreign countries

which (A) restrict or prohibit the

holding of securities by non-nationals

other than through qualified investment

vehicles, such as the UAM Funds, or (B)

permit transfers of ownership or

securities to be effected only by

transactions conducted on a local stock

exchange; (iii) certain portfolio

positions (such as forward foreign

currency contracts, futures and options

contracts, swap transactions, certificates

of deposit and repurchase agreements)

that, although they may be liquid and

marketable, involve the assumption of

contractual obligations, require special

trading facilities, or can only be traded

with the counterparty to the transaction

to effect a change in beneficial

ownership; (iv) cash equivalents (such

as certificates of deposit, commercial

paper, and repurchase agreements); and

(v) other assets which are not readily

distributable (including receivables and

prepaid expenses), net of all liabilities

(including accounts payable).

(j) The term ‘‘Net Asset Value’’ means

the amount for purposes of pricing all

purchases and sales calculated by

dividing the value of all securities,

determined by a method as set forth in

the UAM Fund’s prospectus and

statement of additional information, and

other assets belonging to the UAM Fund

less the liabilities charged to such UAM

Fund, by the number of outstanding

Shares.

Effective Date

This exemption is effective for

transactions occurring on or after April

30, 2001.

For a more complete statement of the

facts and representations supporting the

Department’s decision to grant this

exemption, refer to the notice of

proposed exemption published on

February 15, 2001 at 66 FR 10529.

Modification

The exemption as proposed contained

no specific effective date. In this regard,

the proposed exemption would have

been effective as of the date the final

exemption was granted and published

in the Federal Register. However, after

the exemption was proposed, the

applicant requested that the final

exemption be made effective as of April

30, 2001, to cover certain transactions

occurring on or after that date.

Therefore, the final exemption has been

modified accordingly.

FOR FURTHER INFORMATION CONTACT

Karen Lloyd of the Department,

telephone (202) 219–8194. (This is not

a toll-free number).

General Information

The attention of interested persons is

directed to the following:

(1) The fact that a transaction is the

subject of an exemption under section

408(a) of the Act and/or section

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

a fiduciary or other party in interest or

disqualified person from certain other

provisions to which the exemptions

does not apply and the general fiduciary

responsibility provisions of section 404

of the Act, which among other things

require a fiduciary to discharge his

duties respecting the plan solely in the

interest of the participants and

beneficiaries of the plan and in a

prudent fashion in accordance with

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

it affect the requirement of section

401(a) of the Code that the plan must

operate for the exclusive benefit of the

employees of the employer maintaining

the plan and their beneficiaries;

(2) These exemptions are

supplemental to and not in derogation

of, any other provisions of the Act and/

or the Code, including statutory or

administrative exemptions and

transactional rules. Furthermore, the

fact that a transaction is subject to an

administrative or statutory exemption is

not dispositive of whether the

transaction is in fact a prohibited

transaction; and

(3) The availability of these

exemptions is subject to the express

condition that the material facts and

representations contained in each

application accurately describes all

material terms of the transaction which

is the subject of the exemption.

Signed at Washington, D.C., this 1st day of

May, 2001.

Ivan Strasfeld,

Director of Exemption Determinations,

Pension and Welfare Benefits Administration,

U.S. Department of Labor.

[FR Doc. 01–11305 Filed 5–3–01; 8:45 am]

BILLING CODE 4510–29–P

NATIONAL SCIENCE FOUNDATION

Special Emphasis Panel in

Bioengineering and Environmental

Systems; Notice of Meeting

In accordance with the Federal

Advisory Committee Act (Pub. L. 92–

463, as amended), the National Science

Foundation announces the following

meeting:

Name: Special Emphasis Panel in

Bioengineering and Environmental Systems

(1189).

Date/Time: May 30–31, 2001; 8:00 am-5:00

pm.

Place: National Science Foundation, 4201

Wilson Boulevard, Arlington, VA.

Type of Meeting: Closed.

Contact Person: Fred G. Heineken, Program

Director, Division of Bioengineering and

Environmental Systems, National Science

Foundation, 4201 Wilson Boulevard,

Arlington, VA 22230. Telephone: (703) 292–

7944.

Purpose of Meeting: To provide advice and

recommendations concerning proposals

submitted to NSF for financial support.

Agenda: To review and evaluate proposals

as part of the selection process for awards.

Reason for Closing: The proposals being

reviewed include information of a

proprietary or confidential nature, including

technical information, financial data, such as

salaries; and personal information

concerning individuals associated with the

proposals. These matters are exempt under 5

U.S.C. 552b(c), (4) and (6) of the Government

in the Sunshine Act.

Dated: May 1, 2001.

Susanne Bolton,

Committee Management Officer.

[FR Doc. 01–11288 Filed 5–3–01; 8:45 am]

BILLING CODE 7555–01–M

NATIONAL SCIENCE FOUNDATION

Advisory Committee for Biological

Sciences; Notice of Meeting

In accordance with the Federal

Advisory Committee Act (Pub. L. 92–

463, as amended), the National Science

Foundation announces the following

meeting:

Name: Advisory Committee for Biological

Sciences (#1110).

Date/Time: May 9, 10, 11, 2001; 8:30 a.m.–

5 p.m.

Place: Room 630, National Science

Foundation, 4201 Wilson Blvd., Arlington,

VA.

Type of Meeting: Part Closed.

Contact Person: Dr. Jane Silverthorne and

Dr. Chris Cullis, Program Directors for Plant

Genome Research Program, Room 615,

National Science Foundation, 4201 Wilson

Blvd., Arlington, VA 22230; Telephone: 703–

292–8470.

Purpose of Meeting: To carry out

committee of visitors review, including

program evaluation and GPRA assessments.

Agenda: Open Sessions—Introduction,

program officers discussions, Fastlane

discussion.

Closed Sessions—Proposals review,

recommendations formulation, COV report

drafting.

Reason for Closing: During the closed

session, committee will review proposal