Federal Register / Vol. 61, No. 101 / Thursday, May 23, 1996 / Notices 25909

1Unless termination was in bad faith wherein the

Manager may seek legal recourse.

a fiduciary or other party in interest of

disqualified person from certain other

provisions of the Act and/or the Code,

including any prohibited transaction

provisions to which the exemption does

not apply and the general fiduciary

responsibility provisions of section 404

of the Act, which among other things

require a fiduciary to discharge his

duties respecting the plan solely in the

interest of the participants and

beneficiaries of the plan and in a

prudent fashion in accordance with

section 404(a)(1)(b) of the act; nor does

it affect the requirement of section

401(a) of the Code that the plan must

operate for the exclusive benefit of the

employees of the employer maintaining

the plan and their beneficiaries;

(2) Before an exemption may be

granted under section 408(a) of the Act

and/or section 4975(c)(2) of the Code,

the Department must find that the

exemption is administratively feasible,

in the interests of the plan and of its

participants and beneficiaries and

protective of the rights of participants

and beneficiaries of the plan;

(3) The proposed exemptions, if

granted, will be supplemental to, and

not in derogation of, any other

provisions of the Act and/or the Code,

including statutory or administrative

exemptions and transitional rules.

Furthermore, the fact that a transaction

is subject to an administrative or

statutory exemption is not dispositive of

whether the transaction is in fact a

prohibited transaction; and

(4) The proposed exemptions, if

granted, will be subject to the express

condition that the material facts and

representations contained in each

application are true and complete, and

that each application accurately

describes all material terms of the

transaction which is the subject of the

exemption.

Signed at Washington, DC, this 20th day of

May 1996.

Ivan Strasfeld,

Director of Exemption Determinations,

Pension and Welfare Benefits Administration,

U.S. Department of Labor.

[FR Doc. 96–12985 Filed 5–22–96; 8:45 am]

BILLING CODE 4510–29–P

[Prohibited Transaction Exemption 96–38;

Exemption Application No. D–09410, et al.]

Grant of Individual Exemptions;

RREEF USA Fund

AGENCY: Pension and Welfare Benefits

Administration, Labor.

ACTION: Grant of Individual Exemptions.

SUMMARY: This document contains

exemptions issued by the Department of

Labor (the Department) from certain of

the prohibited transaction restrictions of

the Employee Retirement Income

Security Act of 1974 (the Act) and/or

the Internal Revenue Code of 1986 (the

Code).

Notices were published in the Federal

Register of the pendency before the

Department of proposals to grant such

exemptions. The notices set forth a

summary of facts and representations

contained in each application for

exemption and referred interested

persons to the respective applications

for a complete statement of the facts and

representations. The applications have

been available for public inspection at

the Department in Washington, D.C. The

notices also invited interested persons

to submit comments on the requested

exemptions to the Department. In

addition the notices stated that any

interested person might submit a

written request that a public hearing be

held (where appropriate). The

applicants have represented that they

have complied with the requirements of

the notification to interested persons.

No public comments and no requests for

a hearing, unless otherwise stated, were

received by the Department.

The notices of proposed exemption

were issued and the exemptions are

being granted solely by the Department

because, effective December 31, 1978,

section 102 of Reorganization Plan No.

4 of 1978 (43 FR 47713, October 17,

1978) transferred the authority of the

Secretary of the Treasury to issue

exemptions of the type proposed to the

Secretary of Labor.

Statutory Findings

In accordance with section 408(a) of

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

Code and the procedures set forth in 29

CFR Part 2570, Subpart B (55 FR 32836,

32847, August 10, 1990) and based upon

the entire record, the Department makes

the following findings:

(a) The exemptions are

administratively feasible;

(b) They are in the interests of the

plans and their participants and

beneficiaries; and

(c) They are protective of the rights of

the participants and beneficiaries of the

plans.

RREEF USA Fund—I (The Trust),

Located in San Francisco, California

[Prohibited Transaction Exemption 96–38;

Exemption Application No. D–09410]

Exemption

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 the receipt

by RREEF America L.L.C., the

investment manager of the Trust (the

Manager), of a certain performance

compensation fee (the Performance Fee)

in connection with the liquidation of

the Trust, provided that the following

conditions are satisfied:

(a) The terms and the payment of the

Performance Fee shall be approved in

writing, through approval of an

amendment to the Group Trust

Agreement, by independent fiduciaries

of the plans that participate in the Trust

(the Participating Plans);

(b) The terms of the Performance Fee

shall be at least as favorable to the

Participating Plans as those obtainable

in an arm’s-length transaction between

unrelated parties;

(c) The total fees paid to the Manager

by the Participating Plans that have

invested in the Trust, shall constitute no

more than reasonable compensation;

(d) The Performance Fee will be

payable only when all of the assets of

the Trust have been completely

liquidated;

(e) The Performance Fee received by

the Manager will be based on

distributions, adjusted for inflation and

present value, and will be calculated

using two real hurdle rates of return.

The Performance Fee will equal 10%

after the Participating Plans have earned

a 5% real return on the initial value of

their investment and 20% after the

Participating Plans have earned an 8%

real return on the initial value of their

investment;

(f) In the event of the Manager’s

resignation or termination as the

investment manager to the Trust, the

Investment Management Agreement

would also terminate 1 and the Manager

will not receive a Performance Fee;

(g) The Manager or its affiliates shall

maintain, for a period of six years, the

records necessary to enable the persons

described in paragraph (2) of this

Section (g) to determine whether the

conditions of this exemption have been

met, except that:

(1) (a) a prohibited transaction will

not be considered to have occurred if,

due to circumstances beyond the control

of the Manager or its affiliates, the

records are lost or destroyed prior to the

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

party in interest, other than the

Manager, shall be subject to the civil

penalty that may be assessed under

section 502(i) of the Act or the taxes

imposed by section 4975(a) and (b) of

the Code if the records are not
25910 Federal Register / Vol. 61, No. 101 / Thursday, May 23, 1996 / Notices

2The AT&T Trust and the BellSouth Trust are

collectively referred to herein as the Trusts.

maintained or are not available for the

examinations required from (2) below.

(2) (a) Except as provided in

paragraph (3) and notwithstanding any

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

of the Act, the records referred to in

paragraph (1) of this Part (g) shall be

unconditionally available at their

customary location for examination

during normal business hours by:

(i) Any duly authorized employee or

representative of the Department or the

Internal Revenue Service;

(ii) Any fiduciary of a Participating

Plan or any duly authorized employee

or representative of such fiduciary;

(iii) Any contributing employer to a

Participating Plan or any duly

authorized employee or representative

of such employer; and

(iv) Any participant or beneficiary of

a Participating Plan or any duly

authorized employee or representative

of such participant or beneficiary.

(3) None of the persons described

above in paragraph (2)(a)(ii)–(iv) shall

be authorized to examine the trade

secrets of the Manager and its affiliates

or any commercial or financial

information which is privileged or

confidential.

EFFECTIVE DATE: This exemption will be

effective as of January 1, 1993.

FOR FURTHER INFORMATION CONTACT:

Ekaterina A. Uzlyan, U.S. Department of

Labor, telephone (202) 219–8883. (This

is not a toll-free number.)

Timberland Investment Group, Inc.

(Timberland) and Wachovia Bank of

Georgia, N.A. (the Investment

Manager), Located in Atlanta, GA

[Prohibited Transaction Exemption 96–39;

Exemption Application Nos. D–09969 and

D–09970]

Exemption

Section I. Covered Transaction

The restrictions of section 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)(E) of the Code, shall not

apply to the payment of an incentive fee

(the Incentive Fee) by Timberland, a

special purpose corporation which

holds plan assets from the American

Telephone and Telegraph Master Trust

(the AT&T Trust) and the BellSouth

Master Pension Trust (the BellSouth

Trust),2 to the Investment Manager of

Timberland, a party in interest with

respect to the Trusts.

This exemption is conditioned upon

the requirements set forth below in

Section II.

Section II. General Conditions

(a) The investment of the assets of

each Trust in Timberland, including the

terms and payment of the Incentive Fee,

is approved in writing by a Trust

fiduciary who is independent of the

Investment Manager and its affiliates

(the Independent Fiduciary).

(b) Each Trust participating in

Timberland has total assets that are in

excess of $50 million and no Trust has

invested more than one percent of its

assets in Timberland.

(c) The terms of the Trusts’

investment management agreements for

Timberland, including the Incentive

Fee, are at least as favorable to the

Trusts as those obtainable in an arm’s

length transaction with an unrelated

party.

(d) Prior to investing in Timberland,

each Independent Fiduciary entered

into an agreement with the Investment

Manager disclosing all material facts

concerning the purpose, structure and

operation of Timberland including the

fee arrangements.

(e) With respect to its ongoing

participation in Timberland, each Trust

receives the following written

documentation from the Investment

Manager:

(1) Audited financial statements of

Timberland prepared by independent,

qualified public accountants on an

annual basis, which disclose the fees

that are paid to the Investment Manager

and its affiliates.

(2) Quarterly valuations, transmitted

routinely to the Trusts, which indicate

the fair market value of Timberland’s

assets as established by appraisers who

are independent of the Investment

Manager and its affiliates.

(3) Upon request, valuations

performed by independent appraisers at

three year intervals which determine the

underlying land value of Timberland.

(4) Upon request, a timber inventory

valuation of Timberland performed

every five years by independent,

registered consulting foresters in order

to determine timber volume and growth

rates.

(f) The total fees paid to the

Investment Manager constitute no more

than reasonable compensation.

(g) The Incentive Fee is payable to the

Investment Manager upon the complete

liquidation of the Trusts’ account in

Timberland (the Timberland Account)

and only if the Trusts recover

distributions equal to their initial

investments in Timberland.

(h) In the event that the Investment

Manager resigns or is removed prior to

the complete liquidation of the

Timberland Account,

(1) The Trusts will appoint a

successor Investment Manager to effect

the liquidation of such account.

(2) The Incentive Fee will not be paid

to the former Investment Manager until

the complete liquidation of the

Timberland Account takes place.

(3) The Incentive Fee will only be

paid to the former Investment Manager

if it represents the lowest of three fee

amounts.

(i) The Investment Manager

maintains, for a period of six years, the

records necessary to enable the persons

described in paragraph (i) of this

Section to determine whether the

conditions of this exemption have been

met, except that (1) a prohibited

transaction will not be considered to

have occurred if, due to circumstances

beyond the control of the Investment

Manager and/or its affiliates, the records

are lost or destroyed prior to the end of

the six year period, and (2) no party in

interest other than the Investment

Manager 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 (i)

below.

(i)(1) Except as provided in section (2)

of this paragraph and notwithstanding

any provisions of subsections (a)(2) and

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

referred to in paragraph (i) of this

Section shall be unconditionally

available at their customary location

during normal business hours by:

(A) Any duly authorized employee or

representative of the Department or the

Internal Revenue Service (the Service);

(B) Any fiduciary of a plan (the Plan)

participating in the Trusts or any duly

authorized representative of such

fiduciary;

(C) Any contributing employer to any

Plan participating in the Trusts or any

duly authorized employee

representative of such employer; and

(D) Any participant or beneficiary of

any Plan participating in the Trusts, or

any duly authorized representative of

such participant or beneficiary.

(2) None of the persons described

above in subparagraphs (B)–(D) of this

paragraph (i) shall be authorized to

examine the trade secrets of the

Investment Manager or commercial or

financial information which is

privileged or confidential.

Section III. Definitions

For purposes of this exemption:

(a) An ‘‘affiliate’’ of the Investment

Manager includes—
Federal Register / Vol. 61, No. 101 / Thursday, May 23, 1996 / Notices 25911

3 Pursuant to 29 CFR 2510.3–2(d), the HHG IRAs

are not within the jurisdiction of Title I of the Act.

However, there is jurisdiction under Title II of the

Act, pursuant to section 4975 of the Code.

(1) Any person directly or indirectly

through one or more intermediaries,

controlling, controlled by, or under

common control with the Investment

Manager. (For purposes of this

subsection, 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, employee,

relative of, or partner of any such

person, and

(3) Any corporation or partnership of

which such person is an officer,

director, partner or employee.

(b) The term ‘‘control’’ means the

power to exercise a controlling

influence over the management or

policies of a person other than an

individual.

(c) An ‘‘Independent Fiduciary’’ is a

Trust fiduciary which is independent of

the Investment Manager and its

affiliates.

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

December 8, 1995 at 60 FR 63065.

Written Comments

The Department received 54 written

comments with respect to the notice of

proposed exemption and no requests for

a public hearing. The written comments

were submitted by participants in the

BellSouth Trust and were essentially the

same, with the commentators expressing

their concern that the granting of the

exemption would somehow jeopardize

the security of the participants’ pension

rights under Plans investing in the

BellSouth Trust.

In response to these concerns, the

Investment Manager represented that

participants’ pension rights would not

be adversely affected by the granting of

the exemption because the estimated

annualized rate of return attributed to

assets of the Trusts invested in

Timberland, net of expenses, would be

11.02 percent if the Incentive Fee was

imposed and 10.49 percent if the

exemption was not granted. The

Investment Manager noted that these

estimates were based on both actual and

estimated earnings generated by the

timberland under its management to

date.

The Investment Manager noted that if

the value of any remaining timberland

held by Timberland was to decline

significantly before the liquidation of

Timberland was completed, the rate of

return to the Trusts also would be

reduced. Such a reduction, according to

the Investment Manager, would occur

whether or not the exemption was

granted. If the exemption was granted,

the Investment Manager stated that it

would receive a lower Incentive Fee

assuming the investment return to the

Trusts was reduced.

Thus, after giving full consideration to

the entire record, the Department has

decided to grant the subject exemption.

The comment letters have 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 and

Welfare Benefits Administration, Room

N–5638, U.S. Department of Labor, 200

Constitution Avenue, N.W.,

Washington, D.C. 20210.

FOR FURTHER INFORMATION CONTACT: Ms.

Jan D. Broady of the Department,

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

a toll-free number.)

Herzog, Heine, Geduld, Inc., Located in

New York, New York

[Prohibited Transaction Exemption 96–40;

Exemption Application No. D–10018]

Exemption

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 the extension of credit between

Herzog, Heine, Geduld, Inc. (HHG) and

various individual retirement accounts

for which HHG serves as passive trustee

or custodian (the HHG IRA or HHG

IRAs) resulting from the in-kind transfer

to HHG IRAs at the direction of the

owners of such HHG IRAs of certain

senior subordinated notes (the Notes)

issued by HHG, and thereafter the

holding of such Notes by the HHG IRAs;

provided that: (1) officers, directors, and

employees in HHG who are also owners

of HHG IRAs do not participate in the

transactions; (2) the owners of the HHG

IRAs have exclusive responsibility and

control over the investment of the assets

of such accounts; (3) HHG has no

discretionary authority or control with

respect to the investment of the assets

of the HHG IRAs involved in the

transactions, nor does HHG render

investment advice (within the meaning

of 29 CFR 2510.3–21(c)) with respect to

those assets; (4) a separate accounting of

the assets in the HHG IRAs, including

the Notes which have been acquired by

such accounts, will be maintained by

HHG; (5) the value of the Notes in each

HHG IRA will at no time exceed 25

percent (25%) of the value of the assets

of each HHG IRA; (6) the HHG IRAs will

pay no fees or commissions in

connection with the transactions; and

(7) the combined total of all fees

received by HHG for the provision of

services to the HHG IRAs is not in

excess of ‘‘reasonable compensation’’

within the meaning of section

4975(d)(2) of the Code.3

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 March 22, 1996 at 61 FR 11892.

FOR FURTHER INFORMATION CONTACT:

Angelena C. Le Blanc of the Department,

telephone (202) 219–8883 (This is not a

toll-free number.)

The Buchanan Broadcasting Co., Inc.

Profit Sharing Plan and Trust (the

Plan), Located in Birmingham, AL

[Prohibited Transaction Exemption 96–41;

Exemption Application Nos. D–10133 and D–

10134]

Exemption

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 the leasing

of certain office space in a building (the

Property) by the individual account of

Robert M. Buchanan, Jr. (the Account)

in the Plan to Buchanan Broadcasting

Co., Inc. (Buchanan Broadcasting) and

to Westwood Square, Ltd. (Westwood

Square), both parties in interest with

respect to the Plan, provided that the

following conditions are satisfied:

(a) The terms and conditions of the

leases are and continue to be at least as

favorable to the Account as those the

Account could obtain in comparable

arm’s length transactions with unrelated

parties;

(b) The rent charged by the Account

under the leases is and continues to be

no less than the fair market rental value

of the Property, as established every

three years by the independent property

manager;

(c) At all times, the fair market value

of the leased premises represents no

more than 25 percent of the total assets

of the Account;

(d) Mr. Buchanan is the only

participant of the Plan to be affected by

the proposed transactions; and

(e) Within 90 days of the publication

in the Federal Register of a notice

granting this proposed exemption, both

Buchanan Broadcasting and Westwood

Square file Form 5330 with the Internal

Revenue Service (the Service) and pay
25912 Federal Register / Vol. 61, No. 101 / Thursday, May 23, 1996 / Notices

4Since Mr. Flynn is the sole stockholder of JFA

and the Flynns are the only participants in the Plan,

there is no jurisdiction under Title I of the Act

pursuant to 29 CFR 2510.3–3 (b) and (c). However,

there is jurisdiction under Title II of the Act

pursuant to section 4975 of the Code.

all excise taxes applicable under section

4975(a) of the Code that are due by

reason of certain prior prohibited lease

transactions.

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 April

4, 1996 at 61 FR 15142.

FOR FURTHER INFORMATION CONTACT: Ms.

Karin Weng of the Department,

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

a toll-free number.)

James Flynn & Associates, Ltd. Pension

Plan (the Plan), Located in Scottsdale,

Arizona

[Prohibited Transaction Exemption 96–42;

Exemption Application No. D–10164]

Exemption

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 transfer of a parcel of real

property (Lot 1) to the Plan by James T.

and Britt Marie Flynn (the Flynns),

disqualified persons with respect to the

Plan, together with a cash payment by

the Flynns to the Plan of $29,000, and

(2) the transfer of a parcel of real

property (Lot 2) by the Plan to the

Flynns, provided the following

conditions are satisfied: (a) the Plan

receives not less than the fair market

value of Lot 2 as of the date of the

transfers; (b) the fair market values of

Lots 1 and 2 are determined by a

qualified, independent appraiser; and

(c) the Flynns are the only participants

in the Plan to be affected by the

transactions, and they both desire that

the transactions be consummated.4

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 April

4, 1996 at 61 FR 15144.

FOR FURTHER INFORMATION CONTACT: Gary

H. Lefkowitz of the Department,

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

a toll-free number.)

Pierre W. Mornell, M.D., A Sole

Proprietorship, Defined Benefit Plan

(the Plan), Located in Mill Valley,

California

[Prohibited Transaction Exemption 96–43;

Exemption Application No. D–10170]

Exemption

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 sale of certain unimproved real

property located in Mill Valley,

California (the Property) by the Plan to

Pierre W. Mornell and Linda C. Mornell,

parties in interest with respect to the

Plan; provided that the following

conditions are satisfied:

(A) All terms and conditions of the

transaction are no less favorable to the

Plan than those which the Plan could

obtain in an arm’s-length transaction

with an unrelated party;

(B) The Plan receives a cash purchase

price for the Property in the amount of

the fair market value of the Property;

and

(C) The Plan does not incur any

expenses or suffer any loss with respect

to the transaction.

For a more complete statement of the

facts and representations supporting

this exemption, refer to the notice of

proposed exemption published on

March 22, 1996 at 61 FR 11894.

FOR FURTHER INFORMATION CONTACT:

Ronald Willett 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 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 20th day

of May, 1996.

Ivan Strasfeld,

Director of Exemption Determinations,

Pension and Welfare Benefits Administration,

U.S. Department of Labor.

[FR Doc. 96–12984 Filed 5–22–96; 8:45 am]

BILLING CODE 4510–29–P

Advisory Council on Employee Welfare

and Pension Benefits Plans; Full

Council Meeting Notice

Pursuant to the authority contained in

Section 512 of the Employee Retirement

Income Security Act of 1974 (ERISA), 29

U.S.C. 1142, a full council meeting of

the Advisory Council on Employee

Welfare and pension Benefit Plans will

be held on June 19, 1996, in Room

N3437 C&D, U.S. Department of Labor

building, Third and Constitution

Avenue NW., Washington, D.C. 20210.

The purpose of the meeting, which

will be from 3:30 until 4:30 p.m., is to

hear progress being made by the three

working groups of the council.

Members of the public are encouraged

to file a written statement pertaining to

any topic concerning ERISA by

submitting 20 copies on or before May

27, 1996, to Sharon Morrissey, Acting

Executive Secretary, ERISA Advisory

Council, U.S. Department of Labor,

Suite N–5677, 200 Constitution Avenue

NW., Washington, D.C. 20210.

Individuals or representatives or

organizations wishing to address the

Advisory Council should forward their

request to the Acting Executive

Secretary of telephone (202) 219–8753.

Oral presentations will be limited to 10

minutes, but an extended statement may

be submitted for the record. Individuals

with disabilities, who need special

accommodations, should contact Sharon

Morrissey by May 27 at the address

indicated in this notice.

Organizations or individuals may also

submit statements for the record

without testifying. Twenty (20) copies of

such statements should be sent to the

Acting Executive Secretary of the