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Employee Benefits Security Administration
 
 [Federal Register: May 13, 2008 (Volume 73, Number 93)]
[Notices]               
[Page 27564-27578]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr13my08-87]                         

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DEPARTMENT OF LABOR Pension and Welfare Benefits Administration [Exemption Application No. D-11369, D-11434 & D-11446] Prohibited Transaction Exemption 2008-06; Grant of Individual Exemptions involving D-11369, The Swedish Health Services Pension Plan; D-11434, Credit Suisse (CS) and Its Current and Future Affiliates; and D-11446, Amendment to Prohibited Transaction Exemption (PTE) 93-31, PTE 97-34, PTE 2002-41, PTE 2007-05, involving Bank of America, N.A., the Successor of NationsBank Corporation AGENCY: Employee Benefits Security Administration, Labor. ACTION: Grant of Individual Exemption. ----------------------------------------------------------------------- SUMMARY: This document contains an exemption 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). A notice was published in the Federal Register of the pendency before the Department of a proposal to grant such exemption. The notice set forth a summary of facts and representations contained in the application for exemption and referred interested persons to the application for a complete statement of the facts and representations. The application has been available for public inspection at the Department in Washington, DC. The notice also invited interested persons to submit comments on the requested exemption to the Department. In addition the notice stated that any interested person might submit a written request that a public hearing be held (where appropriate). The applicant has represented that it has complied with the requirements of the notification to interested persons. No requests for a hearing were received by the Department. Public comments were received by the Department as described in the granted exemption. The notice of proposed exemption was issued and the exemption is 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. 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 exemption is administratively feasible; (b) The exemption is in the interests of the plan and its participants and beneficiaries; and (c) The exemption is protective of the rights of the participants and beneficiaries of the plan. The Swedish Health Services Pension Plan (the Plan), Located in Seattle, Washington [Prohibited Transaction Exemption 2008-06; Exemption Application No. D- 11369]. Exemption The restrictions of sections 406(a)(1)(A), 406(b)(1) and (b)(2) of the Act and the sanctions resulting from the application of Section 4975 of the Code, by reason of section 4975(c)(1)(A) through (E) of the Code, shall not apply effective April 14, 2005, to two contributions in-kind (the Contribution(s)) to the Plan of securities (the Securities) made on April 14th and 15th 2005 by Swedish Health Services (the Applicant), the Plan sponsor, a party in interest with respect to the Plan, provided that the following conditions were satisfied: (a) The Securities were valued at their fair market value at the time of each Contribution; (b) The Contributions represented no more than 20% of the total assets of the Plan; (c) The Plan has not paid any commissions, costs or other expenses in connection with the Contributions; (d) The Contributions represented a contribution in lieu of cash to the Plan to meet ERISA filing requirements; (e) The Contributions were based on publicly traded closing prices of the Securities on the date of the transfer; and (f) The terms of the Contributions between the Plan and the Applicant were no less favorable to the Plan than terms negotiated at arm's length under similar circumstances between unrelated third parties. [[Page 27565]] DATES: Effective Date: This exemption is effective as of April 14, 2005. 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 (the Notice) published on June 1, 2007, at 72 FR 30634. Written Comments: Subsequent to the publication of the Notice, the Service Employees International Union District 1199 NW (SEIU) transmitted a letter to the Applicant on July 25, 2007. Certain participants in the Plan are represented by SEIU. The collective bargaining agreement between the Applicant and SEIU requires the Applicant to maintain the Plan for certain employees represented by SEIU. In this letter, SEIU requested that the Applicant obtain a statement from each of the Plan's investment managers who had selected certain securities that were transferred from the Applicant's business account to the Plan's trust account in connection with the transaction for which relief has been requested. The requested statements involved responses to the following questions: (1) A description of each of the securities; (2) a statement from the investment manager that all these securities meet the investment policy and guidelines under which it manages assets for the Plan; (3) a statement from the investment manager that in its capacity as a fiduciary to the Plan, it would have purchased these same securities in the open market had the opportunity to acquire them from Swedish's business account not presented itself and that the terms of each transaction were equivalent or more favorable than those available in the open market; (4) a statement that none of the securities included collateralized debt obligations, collateralized loan obligations, other asset backed securities, such as sub-prime mortgages, or other derivatives that are backed by below- investment grade securities; (5) a statement that conditions (a), (c) and (e) in the Notice were met. Stoel Rives LLP (Stoel Rives), the law firm that represents the Plan and the Applicant in this matter, hired AON Consulting (AON) in order to assist in gathering responses from the investment managers to the foregoing questions. Pursuant to the direction of Stoel Rives, AON sent a report to the Department dated October 24, 2007, which contained responses from the investment managers to the aforementioned questions. Based upon the responses to the questions, the Department has determined to finalize the exemption as proposed. The Department also received numerous telephone calls and a number of written comments from interested persons concerning the Notice. All of the telephone calls and comments requested additional information regarding the possible effect the Contributions would have on benefits payable to the appropriate Plan participants. The Department responded to each inquiry by telephone and attempted to answer all questions directly relating to the transaction at issue. None of the commenters offered any information regarding the substance of the subject transactions. Based on the entire record the Department has determined to grant the exemption as proposed. For Further Information Contact: Brian Buyniski of the Department, telephone (202) 693-8545 (this is not a toll-free number). Credit Suisse (CS) and Its Current and Future Affiliates (Collectively, the Applicant) Located in Zurich, Switzerland, With Offices Around the World [Prohibited Transaction Exemption 2008-07; Exemption Application No. D- 11434] Exemption Section I--Transactions The restrictions of section 406 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 purchase of certain securities (the Securities), as defined, below in Section III(h), by an asset management affiliate of CS, as ``affiliate'' is defined, below, in Section III(c), from any person other than such asset management affiliate of CS or any affiliate thereof, during the existence of an underwriting or selling syndicate with respect to such Securities, where a broker-dealer affiliated with CS (the Affiliated Broker-Dealer), as defined, below, in Section III(b), is a manager or member of such syndicate and the asset management affiliate of CS purchases such Securities, as a fiduciary: (a) On behalf of an employee benefit plan or employee benefit plans (Client Plan(s)), as defined, below, in Section III(e); or (b) On behalf of Client Plans, and/or In-House Plans, as defined, below, in Section III(l), which are invested in a pooled fund or in pooled funds (Pooled Fund(s)), as defined, below, in Section III(f); provided that the conditions as set forth, below, in Section II, are satisfied (an affiliated underwriter transaction (AUT)).\1\ --------------------------------------------------------------------------- \1\ For purposes of this exemption an In-House Plan may engage in AUTs only through investment in a Pooled Fund. --------------------------------------------------------------------------- Section II--Conditions The exemption is conditioned upon adherence to the material facts and representations described herein and upon satisfaction of the following requirements: (a)(1) The Securities to be purchased are either-- (i) Part of an issue registered under the Securities Act of 1933 (the 1933 Act) (15 U.S.C. 77a et seq.). If the Securities to be purchased are part of an issue that is exempt from such registration requirement, such Securities: (A) Are issued or guaranteed by the United States or by any person controlled or supervised by and acting as an instrumentality of the United States pursuant to authority granted by the Congress of the United States, (B) Are issued by a bank, (C) Are exempt from such registration requirement pursuant to a federal statute other than the 1933 Act, or (D) Are the subject of a distribution and are of a class which is required to be registered under section 12 of the Securities Exchange Act of 1934 (the 1934 Act) (15 U.S.C. 781), and are issued by an issuer that has been subject to the reporting requirements of section 13 of the 1934 Act (15 U.S.C. 78m) for a period of at least ninety (90) days immediately preceding the sale of such Securities and that has filed all reports required to be filed thereunder with the Securities and Exchange Commission (SEC) during the preceding twelve (12) months; or (ii) Part of an issue that is an Eligible Rule 144A Offering, as defined in SEC Rule 10f-3 (17 CFR 270.10f-3(a)(4)). Where the Eligible Rule 144A Offering of the Securities is of equity securities, the offering syndicate shall obtain a legal opinion regarding the adequacy of the disclosure in the offering memorandum; (2) The Securities to be purchased are purchased prior to the end of the first day on which any sales are made, pursuant to that offering, at a price that is not more than the price paid by each other purchaser of the Securities in that offering or in any concurrent offering of the Securities, except that-- (i) If such Securities are offered for subscription upon exercise of rights, they may be purchased on or before the fourth day preceding the day on which the rights offering terminates; or (ii) If such Securities are debt securities, they may be purchased at a [[Page 27566]] price that is not more than the price paid by each other purchaser of the Securities in that offering or in any concurrent offering of the Securities and may be purchased on a day subsequent to the end of the first day on which any sales are made, pursuant to that offering, provided that the interest rates, as of the date of such purchase, on comparable debt securities offered to the public subsequent to the end of the first day on which any sales are made and prior to the purchase date are less than the interest rate of the debt Securities being purchased; and (3) The Securities to be purchased are offered pursuant to an underwriting or selling agreement under which the members of the syndicate are committed to purchase all of the Securities being offered, except if-- (i) Such Securities are purchased by others pursuant to a rights offering; or (ii) Such Securities are offered pursuant to an over-allotment option. (b) The issuer of the Securities to be purchased pursuant to this exemption must have been in continuous operation for not less than three years, including the operation of any predecessors, unless the Securities to be purchased are-- (1) Non-convertible debt securities rated in one of the four highest rating categories by Standard & Poor's Rating Services, Moody's Investors Service, Inc., FitchRatings, Inc., Dominion Bond Rating Service Limited, Dominion Bond Rating Service, Inc., or any successors thereto (collectively, the Rating Organizations), provided that none of the Rating Organizations rates such Securities in a category lower than the fourth highest rating category; or (2) Debt securities issued or fully guaranteed by the United States or by any person controlled or supervised by and acting as an instrumentality of the United States pursuant to authority granted by the Congress of the United States; or (3) Debt securities which are fully guaranteed by a person (the Guarantor) that has been in continuous operation for not less than three years, including the operation of any predecessors, provided that such Guarantor has issued other securities registered under the 1933 Act; or if such Guarantor has issued other securities which are exempt from such registration requirement, such Guarantor has been in continuous operation for not less than three years, including the operation of any predecessors, and such Guarantor is: (a) A bank; or (b) An issuer of securities which are exempt from such registration requirement, pursuant to a Federal statute other than the 1933 Act; or (c) An issuer of securities that are the subject of a distribution and are of a class which is required to be registered under section 12 of the 1934 Act (15 U.S.C. 781), and are issued by an issuer that has been subject to the reporting requirements of section 13 of the 1934 Act (15 U.S.C. 78m) for a period of at least ninety (90) days immediately preceding the sale of such securities and that has filed all reports required to be filed thereunder with the SEC during the preceding twelve (12) months. (c) The aggregate amount of Securities of an issue purchased, pursuant to this exemption, by the asset management affiliate of CS with: (i) The assets of all Client Plans; and (ii) The assets, calculated on a pro-rata basis, of all Client Plans and In-House Plans investing in Pooled Funds managed by the asset management affiliate of CS; and (iii) The assets of plans to which the asset management affiliate of CS renders investment advice within the meaning of 29 CFR 2510.3-21(c) does not exceed: (1) Ten percent (10%) of the total amount of the Securities being offered in an issue, if such Securities are equity securities; (2) Thirty-five percent (35%) of the total amount of the Securities being offered in an issue, if such Securities are debt securities rated in one of the four highest rating categories by at least one of the Rating Organizations, provided that none of the Rating Organizations rates such Securities in a category lower than the fourth highest rating category; or (3) Twenty-five percent (25%) of the total amount of the Securities being offered in an issue, if such Securities are debt securities rated in the fifth or sixth highest rating categories by at least one of the Rating Organizations; provided that none of the Rating Organizations rates such Securities in a category lower than the sixth highest rating category; and (4) The assets of any single Client Plan (and the assets of any Client Plans and any In-House Plans investing in Pooled Funds) may not be used to purchase any Securities being offered, if such Securities are debt securities rated lower than the sixth highest rating category by any of the Rating Organizations; (5) Notwithstanding the percentage of Securities of an issue permitted to be acquired, as set forth in Section II(c) (1), (2), and (3), above, of this exemption, the amount of Securities in any issue (whether equity or debt securities) purchased, pursuant to this exemption, by the asset management affiliate of CS on behalf of any single Client Plan, either individually or through investment, calculated on a pro-rata basis, in a Pooled Fund may not exceed three percent (3%) of the total amount of such Securities being offered in such issue, and; (6) If purchased in an Eligible Rule 144A Offering, the total amount of the Securities being offered for purposes of determining the percentages, described, above, in Section II(c)(1)-(3) and (5), is the total of: (i) The principal amount of the offering of such class of Securities sold by underwriters or members of the selling syndicate to ``qualified institutional buyers'' (QIBs), as defined in SEC Rule 144A (17 CFR 230.144A(a)(1)); plus (ii) The principal amount of the offering of such class of Securities in any concurrent public offering. (d) The aggregate amount to be paid by any single Client Plan in purchasing any Securities which are the subject of this exemption, including any amounts paid by any Client Plan or In-House Plan in purchasing such Securities through a Pooled Fund, calculated on a pro- rata basis, does not exceed three percent (3%) of the fair market value of the net assets of such Client Plan or In-House Plan, as of the last day of the most recent fiscal quarter of such Client Plan or In-House Plan prior to such transaction. (e) The covered transactions are not part of an agreement, arrangement, or understanding designed to benefit the asset management affiliate of CS or an affiliate. (f) The Affiliated Broker-Dealer does not receive, either directly, indirectly, or through designation, any selling concession, or other compensation or consideration that is based upon the amount of Securities purchased by any single Client Plan, or that is based on the amount of Securities purchased by Client Plans or In-House Plans through Pooled Funds, pursuant to this exemption. In this regard, the Affiliated Broker-Dealer may not receive, either directly or indirectly, any compensation or consideration that is attributable to the fixed designations generated by purchases of the Securities by the asset management affiliate of CS on behalf of any single Client Plan or any Client Plan or In-House Plan in Pooled Funds. (g)(1) The amount the Affiliated Broker-Dealer receives in management, underwriting, or other compensation or consideration is not increased through an agreement, arrangement, or understanding for the purpose of compensating the Affiliated Broker-Dealer for foregoing any selling [[Page 27567]] concessions for those Securities sold pursuant to this exemption. Except as described above, nothing in this Section II(g)(1) shall be construed as precluding the Affiliated Broker-Dealer from receiving management fees for serving as manager of the underwriting or selling syndicate, underwriting fees for assuming the responsibilities of an underwriter in the underwriting or selling syndicate, or other compensation or consideration that is not based upon the amount of Securities purchased by the asset management affiliate of CS on behalf of any single Client Plan, or on behalf of any Client Plan or In-House Plan participating in Pooled Funds, pursuant to this exemption; and (2) The Affiliated Broker-Dealer shall provide to the asset management affiliate of CS a written certification, dated and signed by an officer of the Affiliated Broker-Dealer, stating the amount that the Affiliated Broker-Dealer received in compensation or consideration during the past quarter, in connection with any offerings covered by this exemption, was not adjusted in a manner inconsistent with Section II (e), (f), or (g) of this exemption. (h) The covered transactions are performed under a written authorization executed in advance by an independent fiduciary of each single Client Plan (the Independent Fiduciary), as defined, below, in Section III(g). (i) Prior to the execution by an Independent Fiduciary of a single Client Plan of the written authorization described, above, in Section II(h), the following information and materials (which may be provided electronically) must be provided by the asset management affiliate of CS to such Independent Fiduciary: (1) A copy of the Notice of Proposed Exemption (the Notice) and a copy of the final exemption (the Grant) as published in the Federal Register, provided that the Notice and the Grant are supplied simultaneously; and (2) Any other reasonably available information regarding the covered transactions that such Independent Fiduciary requests the asset management affiliate of CS to provide. (j) Subsequent to the initial authorization by an Independent Fiduciary of a single Client Plan permitting the asset management affiliate of CS to engage in the covered transactions on behalf of such single Client Plan, the asset management affiliate of CS will continue to be subject to the requirement to provide within a reasonable period of time any reasonably available information regarding the covered transactions that the Independent Fiduciary requests the asset management affiliate of CS to provide. (k)(1) In the case of an existing employee benefit plan investor (or existing In-House Plan investor, as the case may be) in a Pooled Fund, such Pooled Fund may not engage in any covered transactions pursuant to this exemption, unless the asset management affiliate of CS provides the written information, as described, below, and within the time period described, below, in this Section II(k)(2), to the Independent Fiduciary of each such plan participating in such Pooled Fund (and to the fiduciary of each such In-House Plan participating in such Pooled Fund). (2) The following information and materials (which may be provided electronically) shall be provided by the asset management affiliate of CS not less than 45 days prior to such asset management affiliate of CS engaging in the covered transactions on behalf of a Pooled Fund, pursuant to this exemption, and provided further that the information described below, in this Section II(k)(2)(i) and (iii) is supplied simultaneously: (i) A notice of the intent of such Pooled Fund to purchase Securities pursuant to this exemption, a copy of the Notice, and a copy of the Grant, as published in the Federal Register; (ii) Any other reasonably available information regarding the covered transactions that the Independent Fiduciary of a plan (or fiduciary of an In-House Plan) participating in a Pooled Fund requests the asset management affiliate of CS to provide; and (iii) A termination form expressly providing an election for the Independent Fiduciary of a plan (or fiduciary of an In-House Plan) participating in a Pooled Fund to terminate such plan's (or In-House Plan's) investment in such Pooled Fund without penalty to such plan (or In-House Plan). Such form shall include instructions specifying how to use the form. Specifically, the instructions will explain that such plan (or such In-House Plan) has an opportunity to withdraw its assets from a Pooled Fund for a period of no more than 30 days after such plan's (or such In-House Plan's) receipt of the initial notice of intent, described, above, in Section II(k)(2)(i), and that the failure of the Independent Fiduciary of such plan (or fiduciary of such In- House Plan) to return the termination form to the asset management affiliate of CS in the case of a plan (or In-House Plan) participating in a Pooled Fund by the specified date shall be deemed to be an approval by such plan (or such In-House Plan) of its participation in the covered transactions as an investor in such Pooled Fund. Further, the instructions will identify CS, the asset management affiliate of CS, and the Affiliated Broker-Dealer and will provide the address of the asset management affiliate of CS. The instructions will state that this exemption may be unavailable, unless the fiduciary of each plan participating in the covered transactions as an investor in a Pooled Fund is, in fact, independent of CS, the asset management affiliate of CS, and the Affiliated Broker-Dealer. The instructions will also state that the fiduciary of each such plan must advise the asset management affiliate of CS, in writing, if it is not an ``Independent Fiduciary,'' as that term is defined, below, in Section III(g). For purposes of this Section II(k), the requirement that the fiduciary responsible for the decision to authorize the transactions described, above, in Section I of this exemption for each plan be independent of the asset management affiliate of CS shall not apply in the case of an In-House Plan. (l)(1) In the case of each plan (and in the case of each In-House Plan) whose assets are proposed to be invested in a Pooled Fund after such Pooled Fund has satisfied the conditions set forth in this exemption to engage in the covered transactions, the investment by such plan (or by such In-House Plan) in the Pooled Fund is subject to the prior written authorization of an Independent Fiduciary representing such plan (or the prior written authorization by the fiduciary of such In-House Plan, as the case may be), following the receipt by such Independent Fiduciary of such plan (or by the fiduciary of such In- House Plan, as the case may be) of the written information described, above, in Section II(k)(2)(i) and (ii); provided that the Notice and the Grant, described above in Section II(k)(2)(i), are provided simultaneously. (2) For purposes of this Section II(l), the requirement that the fiduciary responsible for the decision to authorize the transactions described, above, in Section I of this exemption for each plan proposing to invest in a Pooled Fund be independent of CS and its affiliates shall not apply in the case of an In-House Plan. (m) Subsequent to the initial authorization by an Independent Fiduciary of a plan (or by a fiduciary of an In-House Plan) to invest in a Pooled Fund that engages in the covered transactions, the asset management affiliate of CS will continue to be subject to the requirement to provide within a [[Page 27568]] reasonable period of time any reasonably available information regarding the covered transactions that the Independent Fiduciary of such plan (or the fiduciary of such In-House Plan, as the case may be) requests the asset management affiliate of CS to provide. (n) At least once every three months, and not later than 45 days following the period to which such information relates, the asset management affiliate of CS shall furnish: (1) In the case of each single Client Plan that engages in the covered transactions, the information described, below, in this Section II(n)(3)-(7), to the Independent Fiduciary of each such single Client Plan. (2) In the case of each Pooled Fund in which a Client Plan (or in which an In-House Plan) invests, the information described, below, in this Section II(n)(3)-(6) and (8), to the Independent Fiduciary of each such Client Plan (and to the fiduciary of each such In-House Plan) invested in such Pooled Fund. (3) A quarterly report (the Quarterly Report) (which may be provided electronically) which discloses all the Securities purchased pursuant to this exemption during the period to which such report relates on behalf of the Client Plan, In-House Plan, or Pooled Fund to which such report relates, and which discloses the terms of each of the transactions described in such report, including: (i) The type of Securities (including the rating of any Securities which are debt securities) involved in each transaction; (ii) The price at which the Securities were purchased in each transaction; (iii) The first day on which any sale was made during the offering of the Securities; (iv) The size of the issue of the Securities involved in each transaction; (v) The number of Securities purchased by the asset management affiliate of CS for the Client Plan, In-House Plan, or Pooled Fund to which the transaction relates; (vi) The identity of the underwriter from whom the Securities were purchased for each transaction; (vii) The underwriting spread in each transaction (i.e., the difference, between the price at which the underwriter purchases the Securities from the issuer and the price at which the Securities are sold to the public); (viii) The price at which any of the Securities purchased during the period to which such report relates were sold; and (ix) The market value at the end of the period to which such report relates of the Securities purchased during such period and not sold; (4) The Quarterly Report contains: (i) A representation that the asset management affiliate of CS has received a written certification signed by an officer of the Affiliated Broker-Dealer, as described, above, in Section II(g)(2), affirming that, as to each AUT covered by this exemption during the past quarter, the Affiliated Broker-Dealer acted in compliance with Section II(e), (f), and (g) of this exemption, and (ii) A representation that copies of such certifications will be provided upon request; (5) A disclosure in the Quarterly Report that states that any other reasonably available information regarding a covered transaction that an Independent Fiduciary (or fiduciary of an In-House Plan) requests will be provided, including, but not limited to: (i) The date on which the Securities were purchased on behalf of the Client Plan (or the In-House Plan) to which the disclosure relates (including Securities purchased by Pooled Funds in which such Client Plan (or such In-House Plan) invests); (ii) The percentage of the offering purchased on behalf of all Client Plans (and the pro-rata percentage purchased on behalf of Client Plans and In-House Plans investing in Pooled Funds); and (iii) The identity of all members of the underwriting syndicate; (6) The Quarterly Report discloses any instance during the past quarter where the asset management affiliate of CS was precluded for any period of time from selling Securities purchased under this exemption in that quarter because of its status as an affiliate of an Affiliated Broker-Dealer and the reason for this restriction; (7) Explicit notification, prominently displayed in each Quarterly Report sent to the Independent Fiduciary of each single Client Plan that engages in the covered transactions that the authorization to engage in such covered transactions may be terminated, without penalty to such single Client Plan, within five (5) days after the date that the Independent Fiduciary of such single Client Plan informs the person identified in such notification that the authorization to engage in the covered transactions is terminated; and (8) Explicit notification, prominently displayed in each Quarterly Report sent to the Independent Fiduciary of each Client Plan (and to the fiduciary of each In-House Plan) that engages in the covered transactions through a Pooled Fund that the investment in such Pooled Fund may be terminated, without penalty to such Client Plan (or such In-House Plan), within such time as may be necessary to effect the withdrawal in an orderly manner that is equitable to all withdrawing plans and to the non-withdrawing plans, after the date that the Independent Fiduciary of such Client Plan (or the fiduciary of such In- House Plan, as the case may be) informs the person identified in such notification that the investment in such Pooled Fund is terminated. (o) For purposes of engaging in covered transactions, each Client Plan (and each In-House Plan) shall have total net assets with a value of at least $50 million (the $50 Million Net Asset Requirement). For purposes of engaging in covered transactions involving an Eligible Rule 144A Offering,\2\ each Client Plan (and each In-House Plan) shall have total net assets of at least $100 million in securities of issuers that are not affiliated with such Client Plan (or such In-House Plan, as the case may be) (the $100 Million Net Asset Requirement). --------------------------------------------------------------------------- \2\ SEC Rule 10f-3(a)(4), 17 FR 270.10f-3(a)(4), states that the term ``Eligible Rule 144A Offering'' means an offering of securities that meets the following conditions: (i) The securities are offered or sold in transactions exempt from registration under section 4(2) of the Securities Act of 1933 [15 U.S.C. 77d(d)], rule 144A thereunder [Sec. 230.144A of this chapter], or rules 501-508 thereunder [Sec. Sec. 230.501-230.508 if this chapter]; (ii) The securities are sold to persons that the seller and any person acting on behalf of the seller reasonably believe to include qualified institutional buyers, as defined in Sec. 230.144A(a)(1) of this chapter; and (iii) The seller and any person acting on behalf of the seller reasonably believe that the securities are eligible for resale to other qualified institutional buyers pursuant to Sec. 230.144A of this chapter. --------------------------------------------------------------------------- For purposes of a Pooled Fund engaging in covered transactions, each Client Plan (and each In-House Plan) in such Pooled Fund shall have total net assets with a value of at least $50 million. Notwithstanding the foregoing, if each such Client Plan (and each such In-House Plan) in such Pooled Fund does not have total net assets with a value of at least $50 million, the $50 Million Net Asset Requirement will be met if 50 percent (50%) or more of the units of beneficial interest in such Pooled Fund are held by Client Plans (or by In-House Plans) each of which has total net assets with a value of at least $50 million. For purposes of a Pooled Fund engaging in covered transactions involving an Eligible Rule 144A Offering, each Client Plan (and each In-House Plan) in such Pooled Fund shall have total net assets of at least $100 million in securities of issuers that are not affiliated with such Client Plan (or such In-House Plan, as the case may be). Notwithstanding the foregoing, if each [[Page 27569]] such Client Plan (and each such In-House Plan) in such Pooled Fund does not have total net assets of at least $100 million in securities of issuers that are not affiliated with such Client Plan (or In-House Plan, as the case may be), the $100 Million Net Asset Requirement will be met if 50 percent (50%) or more of the units of beneficial interest in such Pooled Fund are held by Client Plans (or by In-House Plans) each of which have total net assets of at least $100 million in securities of issuers that are not affiliated with such Client Plan (or such In-House Plan, as the case may be), and the Pooled Fund itself qualifies as a QIB, as determined pursuant to SEC Rule 144A (17 CFR 230.144A(a)(F)). For purposes of the net asset requirements described above, in this Section II(o), where a group of Client Plans is maintained by a single employer or controlled group of employers, as defined in section 407(d)(7) of the Act, the $50 Million Net Asset Requirement (or in the case of an Eligible Rule 144A Offering, the $100 Million Net Asset Requirement) may be met by aggregating the assets of such Client Plans, if the assets of such Client Plans are pooled for investment purposes in a single master trust. (p) The asset management affiliate of CS qualifies as a ``qualified professional asset manager'' (QPAM), as that term is defined under Section V(a) of PTE 84-14. In addition to satisfying the requirements for a QPAM under Section V(a) of PTE 84-14, the asset management affiliate of CS must also have total client assets under its management and control in excess of $5 billion, as of the last day of its most recent fiscal year and shareholders' or partners' equity in excess of $1 million. (q) No more than 20 percent of the assets of a Pooled Fund at the time of a covered transaction, are comprised of assets of In-House Plans for which CS, the asset management affiliate of CS, the Affiliated Broker-Dealer, or an affiliate exercises investment discretion. (r) The asset management affiliate of CS, and the Affiliated Broker-Dealer, as applicable, maintain, or cause to be maintained, for a period of six (6) years from the date of any covered transaction such records as are necessary to enable the persons, described, below, in Section II(s), to determine whether the conditions of this exemption have been met, except that-- (1) No party in interest with respect to a plan which engages in the covered transactions, other than CS, the asset management affiliate of CS, and the Affiliated Broker-Dealer, as applicable, shall be subject to a civil penalty under section 502(i) of the Act or the taxes imposed by section 4975(a) and (b) of the Code, if such records are not maintained, or not available for examination, as required, below, by Section II(s); and (2) A separate prohibited transaction shall not be considered to have occurred solely because, due to circumstances beyond the control of the asset management affiliate of CS, or the Affiliated Broker- Dealer, as applicable, such records are lost or destroyed prior to the end of the six-year period. (s)(1) Except as provided, below, in Section II(s)(2), and notwithstanding any provisions of subsections (a)(2) and (b) of section 504 of the Act, the records referred to above, in Section II(r), are unconditionally available at their customary location for examination during normal business hours by-- (i) Any duly authorized employee or representative of the Department, the Internal Revenue Service, or the SEC; or (ii) Any fiduciary of any plan that engages in the covered transactions, or any duly authorized employee or representative of such fiduciary; or (iii) Any employer of participants and beneficiaries and any employee organization whose members are covered by a plan that engages in the covered transactions, or any authorized employee or representative of these entities; or (iv) Any participant or beneficiary of a plan that engages in the covered transactions, or duly authorized employee or representative of such participant or beneficiary; (2) None of the persons described above, in Section II(s)(1)(ii)-- (iv), shall be authorized to examine trade secrets of the asset management affiliate of CS, or the Affiliated Broker-Dealer, or commercial or financial information which is privileged or confidential; and (3) Should the asset management affiliate of CS, or the Affiliated Broker-Dealer refuse to disclose information on the basis that such information is exempt from disclosure, pursuant to Section II(s)(2) above, the asset management affiliate of CS shall, by the close of the thirtieth (30th) day following the request, provide a written notice advising that person of the reasons for the refusal and that the Department may request such information. Section III--Definitions (a) The term, ``the Applicant,'' means CS and its current and future affiliates. (b) The term, ``Affiliated Broker-Dealer,'' means any broker-dealer affiliate, as ``affiliate'' is defined, below, in Section III(c), of the Applicant, as ``Applicant'' is defined, above, in Section III(a), that meets the requirements of this exemption. Such Affiliated Broker- Dealer may participate in an underwriting or selling syndicate as a manager or member. The term, ``manager,'' means any member of an underwriting or selling syndicate who, either alone or together with other members of the syndicate, is authorized to act on behalf of the members of the syndicate in connection with the sale and distribution of the Securities, as defined below, in Section III(h), being offered or who receives compensation from the members of the syndicate for its services as a manager of the syndicate. (c) The term ``affiliate'' of a person includes: (1) Any person directly or indirectly through one or more intermediaries, controlling, controlled by, or under common control with such person; (2) Any officer, director, partner, employee, or relative, as defined in section 3(15) of the Act, of such person; and (3) Any corporation or partnership of which such person is an officer, director, partner, or employee. (d) The term, ``control,'' means the power to exercise a controlling influence over the management or policies of a person other than an individual. (e) The term, ``Client Plan(s),'' means an employee benefit plan(s) that is subject to the Act and/or the Code, and for which plan(s) an asset management affiliate of CS exercises discretionary authority or discretionary control respecting management or disposition of some or all of the assets of such plan(s), but excludes In-House Plans, as defined, below, in Section III(l). (f) The term, ``Pooled Fund(s),'' means a common or collective trust fund(s) or a pooled investment fund(s): (1) In which employee benefit plan(s) subject to the Act and/or Code invest, (2) Which is maintained by an asset management affiliate of CS, (as the term, ``affiliate'' is defined, above, in Section III(c)), and (3) For which such asset management affiliate of CS exercises discretionary authority or discretionary control respecting the management or disposition of the assets of such fund(s). (g)(1) The term, ``Independent Fiduciary,'' means a fiduciary of a plan who is unrelated to, and independent of CS, the asset management affiliate of CS, and the Affiliated Broker-Dealer. For purposes of this exemption, a fiduciary of a plan will be deemed to be unrelated to, and independent of CS, the asset management affiliate of CS, and the Affiliated Broker-Dealer, if such [[Page 27570]] fiduciary represents in writing that neither such fiduciary, nor any individual responsible for the decision to authorize or terminate authorization for the transactions described above, in Section I of this exemption, is an officer, director, or highly compensated employee (within the meaning of section 4975(e)(2)(H) of the Code) of CS, the asset management affiliate of CS, or the Affiliated Broker-Dealer, and represents that such fiduciary shall advise the asset management affiliate of CS within a reasonable period of time after any change in such facts occur. (2) Notwithstanding anything to the contrary in this Section III(g), a fiduciary of a plan is not independent: (i) If such fiduciary directly or indirectly controls, is controlled by, or is under common control with CS, the asset management affiliate of CS, or the Affiliated Broker-Dealer; (ii) If such fiduciary directly or indirectly receives any compensation or other consideration from CS, the asset management affiliate of CS, or the Affiliated Broker-Dealer for his or her own personal account in connection with any transaction described in this exemption; (iii) If any officer, director, or highly compensated employee (within the meaning of section 4975(e)(2)(H) of the Code) of the asset management affiliate of CS responsible for the transactions described above, in Section I of this exemption, is an officer, director, or highly compensated employee (within the meaning of section 4975(e)(2)(H) of the Code) of the sponsor of the plan or of the fiduciary responsible for the decision to authorize or terminate authorization for the transactions described above, in Section I. However, if such individual is a director of the sponsor of the plan or of the responsible fiduciary, and if he or she abstains from participation in: (A) The choice of the plan's investment manager/ adviser; and (B) the decision to authorize or terminate authorization for transactions described above, in Section I, then this Section III(g)(2)(iii) shall not apply. (3) The term, ``officer,'' means a president, any vice president in charge of a principal business unit, division, or function (such as sales, administration, or finance), or any other officer who performs a policy-making function for CS or any affiliate thereof. (h) The term, ``Securities,'' shall have the same meaning as defined in section 2(36) of the Investment Company Act of 1940 (the 1940 Act), as amended (15 U.S.C. 80a-2(36)(2000)). For purposes of this exemption, mortgage-backed or other asset-backed securities rated by one of the Rating Organizations, as defined, below, in Section III(k), will be treated as debt securities. (i) The term, ``Eligible Rule 144A Offering,'' shall have the same meaning as defined in SEC Rule 10f-3(a)(4) (17 CFR 270.10f-3(a)(4)) under the 1940 Act). (j) The term, ``qualified institutional buyer,'' or the term, ``QIB,'' shall have the same meaning as defined in SEC Rule 144A (17 CFR 230.144A(a)(1)) under the 1933 Act. (k) The term, ``Rating Organizations,'' means Standard & Poor's Rating Services, Moody's Investors Service, Inc., FitchRatings, Inc., Dominion Bond Rating Service Limited, and Dominion Bond Rating Service, Inc., or any successors thereto. (l) The term, ``In-House Plan(s),'' means an employee benefit plan(s) that is subject to the Act and/or the Code, and that is sponsored by the Applicant, as defined, above, in Section III(a) for its own employees. 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 January 17, 2008 at 73 FR 3282. FOR FURTHER INFORMATION CONTACT: Mr. Gary H. Lefkowitz of the Department, telephone (202) 693-8546. (This is not a toll-free number.) Amendment to Prohibited Transaction Exemption (PTE) 93-31, 58 FR 28620 (May 14, 1993), as amended by PTE 97-34, 62 FR 39021 (July 21, 1997), PTE 2000-58, 65 FR 67765 (November 13, 2000), PTE 2002-41, 67 FR 54487 (August 22, 2002) and PTE 2007-05, 72 FR 13130 (March 20, 2007), Technical Correction at 72 FR 16385 (April 4, 2007)(PTE 93-31), Involving Bank of America, N.A., the Successor of NationsBank Corporation [Prohibited Transaction Exemption 2008-08; Exemption Application No. D- 11446] Exemption In accordance with section 408(a) of the Act and section 4975(c)(2) of the Code and the procedures set forth in 29 CFR Part 2570, Subpart B (55 FR 32836, August 10, 1990) and based upon the entire record, the Department amends Prohibited Transaction Exemption (PTE) 93-31, 58 FR 28620 (May 5, 1993); as subsequently amended by PTE 97-34, 62 FR 39021 (July 21, 1997), PTE 2000-58, 65 FR 67765 (November 13, 2000), PTE 2002-41, 67 FR 54487 (August 22, 2002) and PTE 2007-05, 72 FR 13130 (March 20, 2007), Technical Correction at 72 FR 16385 (April 4, 2007) (PTE 93-31). I. Transactions A. Effective October 1, 2007, the restrictions of sections 406(a) and 407(a) of the Act, and the taxes imposed by sections 4975(a) and (b) of the Code, by reason of section 4975(c)(1)(A) through (D) of the Code shall not apply to the following transactions involving Issuers and Securities evidencing interests therein: (1) The direct or indirect sale, exchange or transfer of Securities in the initial issuance of Securities between the Sponsor or Underwriter and an employee benefit plan when the Sponsor, Servicer, Trustee or Insurer of an Issuer, the Underwriter of the Securities representing an interest in the Issuer, or an Obligor is a party in interest with respect to such plan; (2) The direct or indirect acquisition or disposition of Securities by a plan in the secondary market for such Securities; and (3) The continued holding of Securities acquired by a plan pursuant to subsection I.A.(1) or (2). Notwithstanding the foregoing, section I.A. does not provide an exemption from the restrictions of sections 406(a)(1)(E), 406(a)(2) and 407 of the Act for the acquisition or holding of a Security on behalf of an Excluded Plan by any person who has discretionary authority or renders investment advice with respect to the assets of that Excluded Plan.\3\ --------------------------------------------------------------------------- \3\ Section I.A. provides no relief from sections 406(a)(1)(E), 406(a)(2) and 407 of the Act for any person rendering investment advice to an Excluded Plan within the meaning of section 3(21)(A)(ii) of the Act, and regulation 29 CFR 2510.3-21(c). --------------------------------------------------------------------------- B. Effective October 1, 2007, the restrictions of sections 406(b)(1) and 406(b)(2) of the Act and the taxes imposed by sections 4975(a) and (b) of the Code, by reason of section 4975(c)(1)(E) of the Code, shall not apply to: (1) The direct or indirect sale, exchange or transfer of Securities in the initial issuance of Securities between the Sponsor or Underwriter and a plan when the person who has discretionary authority or renders investment advice with respect to the investment of plan assets in the Securities is (a) an Obligor with respect to 5 percent or less of the fair market value of obligations or receivables contained in the Issuer, or (b) an Affiliate of a person described in (a); if: (i) The plan is not an Excluded Plan; (ii) Solely in the case of an acquisition of Securities in connection with the initial issuance of the Securities, at least 50 percent of each class of Securities in which plans have invested is acquired [[Page 27571]] by persons independent of the members of the Restricted Group and at least 50 percent of the aggregate interest in the Issuer is acquired by persons independent of the Restricted Group; (iii) A plan's investment in each class of Securities does not exceed 25 percent of all of the Securities of that class outstanding at the time of the acquisition; and (iv) Immediately after the acquisition of the Securities, no more than 25 percent of the assets of a plan with respect to which the person has discretionary authority or renders investment advice are invested in Securities representing an interest in an Issuer containing assets sold or serviced by the same entity.\4\ For purposes of this paragraph (iv) only, an entity will not be considered to service assets contained in an Issuer if it is merely a Subservicer of that Issuer; --------------------------------------------------------------------------- \4\ For purposes of this Underwriter Exemption, each plan participating in a commingled fund (such as a bank collective trust fund or insurance company pooled separate account) shall be considered to own the same proportionate undivided interest in each asset of the commingled fund as its proportionate interest in the total assets of the commingled fund as calculated on the most recent preceding valuation date of the fund. --------------------------------------------------------------------------- (2) The direct or indirect acquisition or disposition of Securities by a plan in the secondary market for such Securities, provided that the conditions set forth in paragraphs (i), (iii) and (iv) of subsection I.B.(1) are met; and (3) The continued holding of Securities acquired by a plan pursuant to subsection I.B.(1) or (2). C. Effective October 1, 2007, the restrictions of sections 406(a), 406(b) and 407(a) of the Act, and the taxes imposed by section 4975(a) and (b) of the Code by reason of section 4975(c) of the Code, shall not apply to transactions in connection with the servicing, management and operation of an Issuer, including the use of any Eligible Swap transaction; or the defeasance of a mortgage obligation held as an asset of the Issuer through the substitution of a new mortgage obligation in a commercial mortgage-backed Designated Transaction, provided: (1) Such transactions are carried out in accordance with the terms of a binding Pooling and Servicing Agreement; (2) The Pooling and Servicing Agreement is provided to, or described in all material respects in the prospectus or private placement memorandum provided to, investing plans before they purchase Securities issued by the Issuer; \5\ and --------------------------------------------------------------------------- \5\ In the case of a private placement memorandum, such memorandum must contain substantially the same information that would be disclosed in a prospectus if the offering of the securities were made in a registered public offering under the Securities Act of 1933. In the Department's view, the private placement memorandum must contain sufficient information to permit plan fiduciaries to make informed investment decisions. For purposes of this exemption, references to ``prospectus'' include any related prospectus supplement thereto, pursuant to which Securities are offered to investors. --------------------------------------------------------------------------- (3) The defeasance of a mortgage obligation and the substitution of a new mortgage obligation in a commercial mortgage-backed Designated Transaction meet the terms and conditions for such defeasance and substitution as are described in the prospectus or private placement memorandum for such Securities, which terms and conditions have been approved by a Rating Agency and does not result in the Securities receiving a lower credit rating from the Rating Agency than the current rating of the Securities. Notwithstanding the foregoing, section I.C. does not provide an exemption from the restrictions of section 406(b) of the Act or from the taxes imposed by reason of section 4975(c) of the Code for the receipt of a fee by a Servicer of the Issuer from a person other than the Trustee or Sponsor, unless such fee constitutes a Qualified Administrative Fee. D. Effective October 1, 2007, the restrictions of sections 406(a) and 407(a) of the Act, and the taxes imposed by section 4975(a) and (b) of the Code by reason of section 4975(c)(1)(A) through (D) of the Code, shall not apply to any transactions to which those restrictions or taxes would otherwise apply merely because a person is deemed to be a party in interest or disqualified person (including a fiduciary) with respect to a plan by virtue of providing services to the plan (or by virtue of having a relationship to such service provider described in section 3(14)(F), (G), (H) or (I) of the Act or section 4975(e)(2)(F), (G), (H) or (I) of the Code), solely because of the plan's ownership of Securities. II. General Conditions A. The relief provided under section I. is available only if the following conditions are met: (1) The acquisition of Securities by a plan is on terms (including the Security price) that are at least as favorable to the plan as they would be in an arm's-length transaction with an unrelated party; (2) The rights and interests evidenced by the Securities are not subordinated to the rights and interests evidenced by other Securities of the same Issuer, unless the Securities are issued in a Designated Transaction; (3) The Securities acquired by the plan have received a rating from a Rating Agency at the time of such acquisition that is in one of the three (or in the case of Designated Transactions, four) highest generic rating categories; (4) The Trustee is not an Affiliate of any member of the Restricted Group, other than an Underwriter. For purposes of this requirement: (a) The Trustee shall not be considered to be an Affiliate of a Servicer solely because the Trustee has succeeded to the rights and responsibilities of the Servicer pursuant to the terms of a Pooling and Servicing Agreement providing for such succession upon the occurrence of one or more events of default by the Servicer; and (b) Subsection II.A.(4) will be deemed satisfied notwithstanding a Servicer becoming an Affiliate of the Trustee as the result of a merger or acquisition involving the Trustee, such Servicer and/or their Affiliates which occurs after the initial issuance of the Securities, provided that: (i) Such Servicer ceases to be an Affiliate of the Trustee no later than six months after the date such Servicer became an Affiliate of the Trustee; and (ii) Such Servicer did not breach any of its obligations under the Pooling and Servicing Agreement, unless such breach was immaterial and timely cured in accordance with the terms of such agreement, during the period from the closing date of such merger or acquisition transaction through the date the Servicer ceased to be an Affiliate of the Trustee; (c) Effective October 1, 2007 through April 1, 2008, LaSalle Bank, N.A., the Trustee, shall not be considered to be an Affiliate of any member of the Restricted Group solely as the result of the acquisition of ABN Amro North America Holding Company, the holding company of LaSalle Bank Corporation and its subsidiary, LaSalle Bank, N.A. (LaSalle) by Bank of America Corporation and its subsidiaries (Bank of America) (the Acquisition), which occurred after the initial issuance of the Securities, provided that: (i) The Trustee, LaSalle, ceases to be an Affiliate of any member of the Restricted Group no later than April 1, 2008; (ii) Any member of the Restricted Group that is an Affiliate of the Trustee, LaSalle, did not breach any of its obligations under the Pooling and Servicing Agreement, unless such breach was immaterial and timely cured in accordance with the terms of such [[Page 27572]] agreement, during the period from October 1, 2007 through the date the member of the Restricted Group ceased to be an Affiliate of the Trustee, LaSalle; and (iii) In accordance with each Pooling and Servicing Agreement, the Trustee, LaSalle, appoints a co-trustee, which is not an Affiliate of Bank of America, no later than the earlier of (A) January 2, 2008 or (B) five business days after LaSalle becomes aware of a conflict between the Trustee and any member of the Restricted Group that is an Affiliate of the Trustee. The co-trustee will be responsible for resolving any conflict between the Trustee and any member of the Restricted Group that has become an Affiliate of the Trustee as a result of the Acquisition; provided that if the Trustee has resigned on or prior to January 2, 2008 and no event described in clause (B) has occurred, no co-trustee shall be required. (iv) For purposes of this subsection II.A.(4)(c), a conflict arises whenever (A) Bank of America, as a member of the Restricted Group, fails to perform in accordance with the timeframes contained in the relevant Pooling and Servicing Agreement following a request for performance from LaSalle, as Trustee, or (B) LaSalle, as Trustee, fails to perform in accordance with the timeframes contained in the relevant Pooling and Servicing Agreement following a request for performance from Bank of America, a member of the Restricted Group. The time as of which a conflict occurs is the earlier of: The day immediately following the last day on which compliance is required under the relevant Pooling and Servicing Agreement; or the day on which a party affirmatively responds that it will not comply with a request for performance. For purposes of this subsection II.A.(4)(c), the term ``conflict'' includes but is not limited to, the following: (1) Bank of America's failure, as Sponsor, to repurchase a loan for breach of representation within the time period prescribed in the relevant Pooling and Servicing Agreement, following LaSalle's request, as Trustee, for performance; (2) Bank of America, as Sponsor, notifies LaSalle, as Trustee, that it will not repurchase a loan for breach of representation, following LaSalle's request that Bank of America repurchase such loan within the time period prescribed in the relevant Pooling and Servicing Agreement (the notification occurs prior to the expiration of the prescribed time period for the repurchase); and (3) Bank of America, as Swap Counterparty, makes or requests a payment based on a value of the London Interbank Offered Rate (LIBOR) that LaSalle, as Trustee, considers erroneous. (5) The sum of all payments made to and retained by the Underwriters in connection with the distribution or placement of Securities represents not more than Reasonable Compensation for underwriting or placing the Securities; the sum of all payments made to and retained by the Sponsor pursuant to the assignment of obligations (or interests therein) to the Issuer represents not more than the fair market value of such obligations (or interests); and the sum of all payments made to and retained by the Servicer represents not more than Reasonable Compensation for the Servicer's services under the Pooling and Servicing Agreement and reimbursement of the Servicer's reasonable expenses in connection therewith; (6) The plan investing in such Securities is an ``accredited investor'' as defined in Rule 501(a)(1) of Regulation D of the Securities and Exchange Commission under the Securities Act of 1933; and (7) In the event that the obligations used to fund a Issuer have not all been transferred to the Issuer on the Closing Date, additional obligations of the types specified in subsection III.B.(1) may be transferred to the Issuer during the Pre-Funding Period in exchange for amounts credited to the Pre-Funding Account, provided that: (a) The Pre-Funding Limit is not exceeded; (b) All such additional obligations meet the same terms and conditions for determining the eligibility of the original obligations used to create the Issuer (as described in the prospectus or private placement memorandum and/or Pooling and Servicing Agreement for such Securities), which terms and conditions have been approved by a Rating Agency. Notwithstanding the foregoing, the terms and conditions for determining the eligibility of an obligation may be changed if such changes receive prior approval either by a majority vote of the outstanding securityholders or by a Rating Agency; (c) The transfer of such additional obligations to the Issuer during the Pre-Funding Period does not result in the Securities receiving a lower credit rating from a Rating Agency upon termination of the Pre-Funding Period than the rating that was obtained at the time of the initial issuance of the Securities by the Issuer; (d) The weighted average annual percentage interest rate (the average interest rate) for all of the obligations held by the Issuer at the end of the Pre-Funding Period will not be more than 100 basis points lower than the average interest rate for the obligations which were transferred to the Issuer on the Closing Date; (e) In order to ensure that the characteristics of the receivables actually acquired during the Pre-Funding Period are substantially similar to those which were acquired as of the Closing Date, the characteristics of the additional obligations will either be monitored by a credit support provider or other insurance provider which is independent of the Sponsor or an independent accountant retained by the Sponsor will provide the Sponsor with a letter (with copies provided to the Rating Agency, the Underwriter and the Trustee) stating whether or not the characteristics of the additional obligations conform to the characteristics of such obligations described in the prospectus, private placement memorandum and/or Pooling and Servicing Agreement. In preparing such letter, the independent accountant will use the same type of procedures as were applicable to the obligations which were transferred as of the Closing Date; (f) The Pre-Funding Period shall be described in the prospectus or private placement memorandum provided to investing plans; and (g) The Trustee of the Trust (or any agent with which the Trustee contracts to provide Trust services) will be a substantial financial institution or trust company experienced in trust activities and familiar with its duties, responsibilities and liabilities as a fiduciary under the Act. The Trustee, as the legal owner of the obligations in the Trust or the holder of a security interest in the obligations held by the Issuer, will enforce all the rights created in favor of securityholders of the Issuer, including employee benefit plans subject to the Act; (8) In order to insure that the assets of the Issuer may not be reached by creditors of the Sponsor in the event of bankruptcy or other insolvency of the Sponsor: (a) The legal documents establishing the Issuer will contain: (i) Restrictions on the Issuer's ability to borrow money or issue debt other than in connection with the securitization; (ii) Restrictions on the Issuer merging with another entity, reorganizing, liquidating or selling assets (other than in connection with the securitization); (iii) Restrictions limiting the authorized activities of the Issuer to activities relating to the securitization; [[Page 27573]] (iv) If the Issuer is not a Trust, provisions for the election of at least one independent director/partner/member whose affirmative consent is required before a voluntary bankruptcy petition can be filed by the Issuer; and (v) If the Issuer is not a Trust, requirements that each independent director/partner/member must be an individual that does not have a significant interest in, or other relationships with, the Sponsor or any of its Affiliates; and (b) The Pooling and Servicing Agreement and/or other agreements establishing the contractual relationships between the parties to the securitization transaction will contain covenants prohibiting all parties thereto from filing an involuntary bankruptcy petition against the Issuer or initiating any other form of insolvency proceeding until after the Securities have been paid; and (c) Prior to the issuance by the Issuer of any Securities, a legal opinion is received which states that either: (i) A ``true sale'' of the assets being transferred to the Issuer by the Sponsor has occurred and that such transfer is not being made pursuant to a financing of the assets by the Sponsor; or (ii) In the event of insolvency or receivership of the Sponsor, the assets transferred to the Issuer will not be part of the estate of the Sponsor; (9) If a particular class of Securities held by any plan involves a Ratings Dependent or Non-Ratings Dependent Swap entered into by the Issuer, then each particular swap transaction relating to such Securities: (a) Shall be an Eligible Swap; (b) Shall be with an Eligible Swap Counterparty; (c) In the case of a Ratings Dependent Swap, shall provide that if the credit rating of the counterparty is withdrawn or reduced by any Rating Agency below a level specified by the Rating Agency, the Servicer (as agent for the Trustee) shall, within the period specified under the Pooling and Servicing Agreement: (i) Obtain a replacement swap agreement with an Eligible Swap Counterparty which is acceptable to the Rating Agency and the terms of which are substantially the same as the current swap agreement (at which time the earlier swap agreement shall terminate); or (ii) Cause the swap counterparty to establish any collateralization or other arrangement satisfactory to the Rating Agency such that the then current rating by the Rating Agency of the particular class of Securities will not be withdrawn or reduced. In the event that the Servicer fails to meet its obligations under this subsection II.A.(9)(c), plan securityholders will be notified in the immediately following Trustee's periodic report which is provided to securityholders, and sixty days after the receipt of such report, the exemptive relief provided under section I.C. will prospectively cease to be applicable to any class of Securities held by a plan which involves such Ratings Dependent Swap; provided that in no event will such plan securityholders be notified any later than the end of the second month that begins after the date on which such failure occurs. (d) In the case of a Non-Ratings Dependent Swap, shall provide that, if the credit rating of the counterparty is withdrawn or reduced below the lowest level specified in section III.GG., the Servicer (as agent for the Trustee) shall within a specified period after such rating withdrawal or reduction: (i) Obtain a replacement swap agreement with an Eligible Swap Counterparty, the terms of which are substantially the same as the current swap agreement (at which time the earlier swap agreement shall terminate); or (ii) Cause the swap counterparty to post collateral with the Trustee in an amount equal to all payments owed by the counterparty if the swap transaction were terminated; or (iii) Terminate the swap agreement in accordance with its terms; and (e) Shall not require the Issuer to make any termination payments to the counterparty (other than a currently scheduled payment under the swap agreement) except from Excess Spread or other amounts that would otherwise be payable to the Servicer or the Sponsor; (10) Any class of Securities, to which one or more swap agreements entered into by the Issuer applies, may be acquired or held in reliance upon this Underwriter Exemption only by Qualified Plan Investors; and (11) Prior to the issuance of any debt securities, a legal opinion is received which states that the debt holders have a perfected security interest in the Issuer's assets. B. Neither any Underwriter, Sponsor, Trustee, Servicer, Insurer or any Obligor, unless it or any of its Affiliates has discretionary authority or renders investment advice with respect to the plan assets used by a plan to acquire Securities, shall be denied the relief provided under section I., if the provision of subsection II.A.(6) is not satisfied with respect to acquisition or holding by a plan of such Securities, provided that (1) such condition is disclosed in the prospectus or private placement memorandum; and (2) in the case of a private placement of Securities, the Trustee obtains a representation from each initial purchaser which is a plan that it is in compliance with such condition, and obtains a covenant from each initial purchaser to the effect that, so long as such initial purchaser (or any transferee of such initial purchaser's Securities) is required to obtain from its transferee a representation regarding compliance with the Securities Act of 1933, any such transferees will be required to make a written representation regarding compliance with the condition set forth in subsection II.A.(6). III. Definitions For purposes of this exemption: A. ``Security'' means: (1) A pass-through certificate or trust certificate that represents a beneficial ownership interest in the assets of an Issuer which is a Trust and which entitles the holder to payments of principal, interest and/or other payments made with respect to the assets of such Trust; or (2) A security which is denominated as a debt instrument that is issued by, and is an obligation of, an Issuer; with respect to which the Underwriter is either (i) the sole underwriter or the manager or co-manager of the underwriting syndicate, or (ii) a selling or placement agent. B. ``Issuer'' means an investment pool, the corpus or assets of which are held in trust (including a grantor or owner Trust) or whose assets are held by a partnership, special purpose corporation or limited liability company (which Issuer may be a Real Estate Mortgage Investment Conduit (REMIC) or a Financial Asset Securitization Investment Trust (FASIT) within the meaning of section 860D(a) or section 860L, respectively, of the Code); and the corpus or assets of which consist solely of: (1) (a) Secured consumer receivables that bear interest or are purchased at a discount (including, but not limited to, home equity loans and obligations secured by shares issued by a cooperative housing association); and/or (b) Secured credit instruments that bear interest or are purchased at a discount in transactions by or between business entities (including, but not limited to, Qualified Equipment Notes Secured by Leases); and/or (c) Obligations that bear interest or are purchased at a discount and which are secured by single-family residential, multi-family residential and/or [[Page 27574]] commercial real property (including obligations secured by leasehold interests on residential or commercial real property); and/or (d) Obligations that bear interest or are purchased at a discount and which are secured by motor vehicles or equipment, or Qualified Motor Vehicle Leases; and/or (e) Guaranteed governmental mortgage pool certificates, as defined in 29 CFR 2510.3-101(i)(2); \6\ and/or --------------------------------------------------------------------------- \6\ In ERISA Advisory Opinion 99-05A (Feb. 22, 1999), the Department expressed its view that mortgage pool certificates guaranteed and issued by the Federal Agricultural Mortgage Corporation (``Farmer Mac'') meet the definition of a guaranteed governmental mortgage pool certificate as defined in 29 CFR 2510.3- 101(i)(2). --------------------------------------------------------------------------- (f) Fractional undivided interests in any of the obligations described in clauses (a)-(e) of this subsection B.(1).\7\ --------------------------------------------------------------------------- \7\ It is the Department's view that the definition of Issuer contained in subsection III.B. includes a two-tier structure under which Securities issued by the first Issuer, which contains a pool of receivables described above, are transferred to a second Issuer which issues Securities that are sold to plans. However, the Department is of the further view that, since the Underwriter Exemption generally provides relief only for the direct or indirect acquisition or disposition of Securities that are not subordinated, no relief would be available if the Securities held by the second Issuer were subordinated to the rights and interests evidenced by other Securities issued by the first Issuer, unless such Securities were issued in a Designated Transaction. --------------------------------------------------------------------------- Notwithstanding the foregoing, residential and home equity loan receivables issued in Designated Transactions may be less than fully secured, provided that: (i) The rights and interests evidenced by the Securities issued in such Designated Transactions (as defined in section III.DD.) are not subordinated to the rights and interests evidenced by Securities of the same Issuer; (ii) such Securities acquired by the plan have received a rating from a Rating Agency at the time of such acquisition that is in one of the two highest generic rating categories; and (iii) any obligation included in the corpus or assets of the Issuer must be secured by collateral whose fair market value on the Closing Date of the Designated Transaction is at least equal to 80% of the sum of: (I) The outstanding principal balance due under the obligation which is held by the Issuer and (II) the outstanding principal balance(s) of any other obligation(s) of higher priority (whether or not held by the Issuer) which are secured by the same collateral. (2) Property which had secured any of the obligations described in subsection III.B.(1); (3) (a) Undistributed cash or temporary investments made therewith maturing no later than the next date on which distributions are made to securityholders; and/or (b) Cash or investments made therewith which are credited to an account to provide payments to securityholders pursuant to any Eligible Swap Agreement meeting the conditions of subsection II.A.(9) or pursuant to any Eligible Yield Supplement Agreement; and/or (c) Cash transferred to the Issuer on the Closing Date and permitted investments made therewith which: (i) Are credited to a Pre-Funding Account established to purchase additional obligations with respect to which the conditions set forth in paragraphs (a)-(g) of subsection II.A.(7) are met; and/or (ii) Are credited to a Capitalized Interest Account; and (iii) Are held by the Issuer for a period ending no later than the first distribution date to securityholders occurring after the end of the Pre-Funding Period. For purposes of this paragraph (c) of subsection III.B.(3), the term ``permitted investments'' means investments which: (i) Are either: (x) Direct obligations of, or obligations fully guaranteed as to timely payment of principal and interest by, the United States or any agency or instrumentality thereof, provided that such obligations are backed by the full faith and credit of the United States or (y) have been rated (or the Obligor has been rated) in one of the three highest generic rating categories by a Rating Agency; (ii) are described in the Pooling and Servicing Agreement; and (iii) are permitted by the Rating Agency. (4) Rights of the Trustee under the Pooling and Servicing Agreement, and rights under any insurance policies, third-party guarantees, contracts of suretyship, Eligible Yield Supplement Agreements, Eligible Swap Agreements meeting the conditions of subsection II.A.(9) or other credit support arrangements with respect to any obligations described in subsection III.B.(1). Notwithstanding the foregoing, the term ``Issuer'' does not include any investment pool unless: (i) The assets of the type described in paragraphs (a)-(f) of subsection III.B.(1) which are contained in the investment pool have been included in other investment pools, (ii) Securities evidencing interests in such other investment pools have been rated in one of the three (or in the case of Designated Transactions, four) highest generic rating categories by a Rating Agency for at least one year prior to the plan's acquisition of Securities pursuant to this Underwriter Exemption, and (iii) Securities evidencing interests in such other investment pools have been purchased by investors other than plans for at least one year prior to the plan's acquisition of Securities pursuant to this Underwriter Exemption. C. ``Underwriter'' means: (1) An entity defined as an Underwriter in subsection III.C.(1) of each of the Underwriter Exemptions that are being amended by this exemption. In addition, the term Underwriter includes Deutsche Bank AG, New York Branch and Deutsche Morgan Grenfell/C.J. Lawrence Inc, Credit Lyonnais Securities (USA) Inc., ABN AMRO Inc., Ironwood Capital Partners Ltd., William J. Mayer Securities LLC, Raymond James & Associates Inc. & Raymond James Financial Inc., WAMU Capital Corporation, and Terwin Capital LLC (which received the approval of the Department to engage in transactions substantially similar to the transactions described in the Underwriter Exemptions pursuant to PTE 96-62); (2) Any person directly or indirectly, through one or more intermediaries, controlling, controlled by or under common control with such entity; or (3) Any member of an underwriting syndicate or selling group of which a person described in subsections III.C.(1) or (2) is a manager or co-manager with respect to the Securities. Effective October 1, 2007 through April 1, 2008, ``Underwriter'' means: (1) Banc of America Securities LLC, or an entity identified as an underwriter on the Securitization List at section III.KK. (i.e., Citigroup Global Market, Inc., Deutsche Bank Securities, and Goldman, Sachs & Co.); (2) Any person directly or indirectly, through one or more intermediaries, controlling, controlled by or under common control with such entities; or (3) Any member of an underwriting syndicate or selling group of which such firm or person described in subsections III.C.(1) or (2) is a manager or co-manager with respect to the Securities. D. ``Sponsor'' means: (1) The entity that organizes an Issuer by depositing obligations therein in exchange for Securities; or (2) Effective October 1, 2007 through April 1, 2008, for those transactions listed on the Securitization List at section III.KK., Bank of America. E. ``Master Servicer'' means the entity that is a party to the Pooling and Servicing Agreement relating to assets of the Issuer and is fully responsible for servicing, directly or through Subservicers, the assets of the Issuer. F. ``Subservicer'' means an entity which, under the supervision of and on [[Page 27575]] behalf of the Master Servicer, services loans contained in the Issuer, but is not a party to the Pooling and Servicing Agreement. G. ``Servicer'' means any entity which services loans contained in the Issuer, including the Master Servicer and any Subservicer. H. ``Trust'' means an Issuer which is a trust (including an owner trust, grantor trust or a REMIC or FASIT which is organized as a Trust). I. ``Trustee'' means the Trustee of any Trust which issues Securities and also includes an Indenture Trustee. ``Indenture Trustee'' means the Trustee appointed under the indenture pursuant to which the subject Securities are issued, the rights of holders of the Securities are set forth and a security interest in the Trust assets in favor of the holders of the Securities is created. The Trustee or the Indenture Trustee is also a party to or beneficiary of all the documents and instruments transferred to the Issuer, and as such, has both the authority to, and the responsibility for, enforcing all the rights created thereby in favor of holders of the Securities, including those rights arising in the event of default by the Servicer. J. ``Insurer'' means the insurer or guarantor of, or provider of other credit support for, an Issuer. Notwithstanding the foregoing, a person is not an insurer solely because it holds Securities representing an interest in an Issuer which are of a class subordinated to Securities representing an interest in the same Issuer. K. ``Obligor'' means any person, other than the Insurer, that is obligated to make payments with respect to any obligation or receivable included in the Issuer. Where an Issuer contains Qualified Motor Vehicle Leases or Qualified Equipment Notes Secured by Leases, ``Obligor'' shall also include any owner of property subject to any lease included in the Issuer, or subject to any lease securing an obligation included in the Issuer. L. ``Excluded Plan'' means any plan with respect to which any member of the Restricted Group is a ``plan sponsor'' within the meaning of section 3(16)(B) of the Act. M. ``Restricted Group'' with respect to a class of Securities means: (1) Each Underwriter; (2) Each Insurer; (3) The Sponsor; (4) The Trustee; (5) Each Servicer; (6) Any Obligor with respect to obligations or receivables included in the Issuer constituting more than 5 percent of the aggregate unamortized principal balance of the assets in the Issuer, determined on the date of the initial issuance of Securities by the Issuer; (7) Each counterparty in an Eligible Swap Agreement; or (8) Any Affiliate of a person described in subsections III.M.(1)- (7). N. ``Affiliate'' of another person includes: (1) Any person directly or indirectly, through one or more intermediaries, controlling, controlled by, or under common control with such other person; (2) Any officer, director, partner, employee, relative (as defined in section 3(15) of the Act), a brother, a sister, or a spouse of a brother or sister of such other person; and (3) Any corporation or partnership of which such other person is an officer, director or partner. O. ``Control'' means the power to exercise a controlling influence over the management or policies of a person other than an individual. P. A person will be ``independent'' of another person only if: (1) Such person is not an Affiliate of that other person; and (2) The other person, or an Affiliate thereof, is not a fiduciary who has investment management authority or renders investment advice with respect to any assets of such person. Q. ``Sale'' includes the entrance into a Forward Delivery Commitment, provided: (1) The terms of the Forward Delivery Commitment (including any fee paid to the investing plan) are no less favorable to the plan than they would be in an arm's-length transaction with an unrelated party; (2) The prospectus or private placement memorandum is provided to an investing plan prior to the time the plan enters into the Forward Delivery Commitment; and (3) At the time of the delivery, all conditions of this Underwriter Exemption applicable to sales are met. R. ``Forward Delivery Commitment'' means a contract for the purchase or sale of one or more Securities to be delivered at an agreed future settlement date. The term includes both mandatory contracts (which contemplate obligatory delivery and acceptance of the Securities) and optional contracts (which give one party the right but not the obligation to deliver Securities to, or demand delivery of Securities from, the other party). S. ``Reasonable Compensation'' has the same meaning as that term is defined in 29 CFR 2550.408c-2. T. ``Qualified Administrative Fee'' means a fee which meets the following criteria: (1) The fee is triggered by an act or failure to act by the Obligor other than the normal timely payment of amounts owing in respect of the obligations; (2) The Servicer may not charge the fee absent the act or failure to act referred to in subsection III.T.(1); (3) The ability to charge the fee, the circumstances in which the fee may be charged, and an explanation of how the fee is calculated are set forth in the Pooling and Servicing Agreement; and (4) The amount paid to investors in the Issuer will not be reduced by the amount of any such fee waived by the Servicer. U. ``Qualified Equipment Note Secured By A Lease'' means an equipment note: (1) Which is secured by equipment which is leased; (2) Which is secured by the obligation of the lessee to pay rent under the equipment lease; and (3) With respect to which the Issuer's security interest in the equipment is at least as protective of the rights of the Issuer as the Issuer would have if the equipment note were secured only by the equipment and not the lease. V. ``Qualified Motor Vehicle Lease'' means a lease of a motor vehicle where: (1) The Issuer owns or holds a security interest in the lease; (2) The Issuer owns or holds a security interest in the leased motor vehicle; and (3) The Issuer's security interest in the leased motor vehicle is at least as protective of the Issuer's rights as the Issuer would receive under a motor vehicle installment loan contract. W. ``Pooling and Servicing Agreement'' means the agreement or agreements among a Sponsor, a Servicer and the Trustee establishing a Trust. ``Pooling and Servicing Agreement'' also includes the indenture entered into by the Issuer and the Indenture Trustee. X. ``Rating Agency'' means Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc.; Moody's Investors Service, Inc.; FitchRatings, Inc.; DBRS Limited, or DBRS, Inc.; or any successors thereto. Y. ``Capitalized Interest Account'' means an Issuer account: (i) Which is established to compensate securityholders for shortfalls, if any, between investment earnings on the Pre-Funding Account and the interest rate payable under the Securities; and (ii) which meets the requirements of paragraph (c) of subsection III.B.(3). Z. ``Closing Date'' means the date the Issuer is formed, the Securities are first issued and the Issuer's assets (other than those additional obligations which are to be funded from the Pre-Funding [[Page 27576]] Account pursuant to subsection II.A.(7)) are transferred to the Issuer. AA. ``Pre-Funding Account'' means an Issuer account: (i) Which is established to purchase additional obligations, which obligations meet the conditions set forth in paragraphs (a)-(g) of subsection II.A.(7); and (ii) which meets the requirements of paragraph (c) of subsection III.B.(3). BB. ``Pre-Funding Limit'' means a percentage or ratio of the amount allocated to the Pre-Funding Account, as compared to the total principal amount of the Securities being offered, which is less than or equal to 25 percent. CC. ``Pre-Funding Period'' means the period commencing on the Closing Date and ending no later than the earliest to occur of: (i) The date the amount on deposit in the Pre-Funding Account is less than the minimum dollar amount specified in the Pooling and Servicing Agreement; (ii) the date on which an event of default occurs under the Pooling and Servicing Agreement; or (iii) the date which is the later of three months or ninety days after the Closing Date. DD. ``Designated Transaction'' means a securitization transaction in which the assets of the Issuer consist of secured consumer receivables, secured credit instruments or secured obligations that bear interest or are purchased at a discount and are: (i) Motor vehicle, home equity and/or manufactured housing consumer receivables; and/or (ii) motor vehicle credit instruments in transactions by or between business entities; and/or (iii) single-family residential, multi-family residential, home equity, manufactured housing and/or commercial mortgage obligations that are secured by single-family residential, multi-family residential, commercial real property or leasehold interests therein. For purposes of this section III.DD., the collateral securing motor vehicle consumer receivables or motor vehicle credit instruments may include motor vehicles and/or Qualified Motor Vehicle Leases. EE. ``Ratings Dependent Swap'' means an interest rate swap, or (if purchased by or on behalf of the Issuer) an interest rate cap contract, that is part of the structure of a class of Securities where the rating assigned by the Rating Agency to any class of Securities held by any plan is dependent on the terms and conditions of the swap and the rating of the counterparty, and if such Security rating is not dependent on the existence of the swap and rating of the counterparty, such swap or cap shall be referred to as a ``Non-Ratings Dependent Swap''. With respect to a Non-Ratings Dependent Swap, each Rating Agency rating the Securities must confirm, as of the date of issuance of the Securities by the Issuer, that entering into an Eligible Swap with such counterparty will not affect the rating of the Securities. FF. ``Eligible Swap'' means a Ratings Dependent or Non-Ratings Dependent Swap: (1) Which is denominated in U.S. dollars; (2) Pursuant to which the Issuer pays or receives, on or immediately prior to the respective payment or distribution date for the class of Securities to which the swap relates, a fixed rate of interest, or a floating rate of interest based on a publicly available index (e.g., LIBOR or the U.S. Federal Reserve's Cost of Funds Index (COFI)), with the Issuer receiving such payments on at least a quarterly basis and obligated to make separate payments no more frequently than the counterparty, with all simultaneous payments being netted; (3) Which has a notional amount that does not exceed either: (i) The principal balance of the class of Securities to which the swap relates, or (ii) the portion of the principal balance of such class represented solely by those types of corpus or assets of the Issuer referred to in subsections III.B.(1), (2) and (3); (4) Which is not leveraged (i.e., payments are based on the applicable notional amount, the day count fractions, the fixed or floating rates designated in subsection III.FF.(2), and the difference between the products thereof, calculated on a one to one ratio and not on a multiplier of such difference); (5) Which has a final termination date that is either the earlier of the date on which the Issuer terminates or the related class of Securities is fully repaid; and (6) Which does not incorporate any provision which could cause a unilateral alteration in any provision described in subsections III.FF.(1) through (4) without the consent of the Trustee. GG. ``Eligible Swap Counterparty'' means a bank or other financial institution which has a rating, at the date of issuance of the Securities by the Issuer, which is in one of the three highest long- term credit rating categories, or one of the two highest short-term credit rating categories, utilized by at least one of the Rating Agencies rating the Securities; provided that, if a swap counterparty is relying on its short-term rating to establish eligibility under the Underwriter Exemption, such swap counterparty must either have a long- term rating in one of the three highest long-term rating categories or not have a long-term rating from the applicable Rating Agency, and provided further that if the class of Securities with which the swap is associated has a final maturity date of more than one year from the date of issuance of the Securities, and such swap is a Ratings Dependent Swap, the swap counterparty is required by the terms of the swap agreement to establish any collateralization or other arrangement satisfactory to the Rating Agencies in the event of a ratings downgrade of the swap counterparty. HH. ``Qualified Plan Investor'' means a plan investor or group of plan investors on whose behalf the decision to purchase Securities is made by an appropriate independent fiduciary that is qualified to analyze and understand the terms and conditions of any swap transaction used by the Issuer and the effect such swap would have upon the credit ratings of the Securities. For purposes of the Underwriter Exemption, such a fiduciary is either: (1) A ``qualified professional asset manager'' (QPAM),\8\ as defined under Part V(a) of PTE 84-14, 49 FR 9494, 9506 (March 13, 1984), as amended by 70 FR 49305 (August 23, 2005); --------------------------------------------------------------------------- \8\ PTE 84-14 provides a class exemption for transactions between a party in interest with respect to an employee benefit plan and an investment fund (including either a single customer or pooled separate account) in which the plan has an interest, and which is managed by a QPAM, provided certain conditions are met. QPAMs (e.g., banks, insurance companies, registered investment advisers with total client assets under management in excess of $85 million) are considered to be experienced investment managers for plan investors that are aware of their fiduciary duties under ERISA. --------------------------------------------------------------------------- (2) An ``in-house asset manager'' (INHAM),\9\ as defined under Part IV(a) of PTE 96-23, 61 FR 15975, 15982 (April 10, 1996); or --------------------------------------------------------------------------- \9\ PTE 96-23 permits various transactions involving employee benefit plans whose assets are managed by an INHAM, an entity which is generally a subsidiary of an employer sponsoring the plan which is a registered investment adviser with management and control of total assets attributable to plans maintained by the employer and its affiliates which are in excess of $50 million. --------------------------------------------------------------------------- (3) A plan fiduciary with total assets under management of at least $100 million at the time of the acquisition of such Securities. II. ``Excess Spread'' means, as of any day funds are distributed from the Issuer, the amount by which the interest allocated to Securities exceeds the amount necessary to pay interest to securityholders, servicing fees and expenses. JJ. ``Eligible Yield Supplement Agreement'' means any yield supplement agreement, similar yield maintenance arrangement or, if purchased by or on behalf of the Issuer, [[Page 27577]] an interest rate cap contract to supplement the interest rates otherwise payable on obligations described in subsection III.B.(1). Such an agreement or arrangement may involve a notional principal contract provided that: (1) It is denominated in U.S. dollars; (2) The Issuer receives on, or immediately prior to the respective payment date for the Securities covered by such agreement or arrangement, a fixed rate of interest or a floating rate of interest based on a publicly available index (e.g., LIBOR or COFI), with the Issuer receiving such payments on at least a quarterly basis; (3) It is not ``leveraged'' as described in subsection III.FF.(4); (4) It does not incorporate any provision which would cause a unilateral alteration in any provision described in subsections III.JJ.(1)-(3) without the consent of the Trustee; (5) It is entered into by the Issuer with an Eligible Swap Counterparty; and (6) It has a notional amount that does not exceed either: (i) The principal balance of the class of Securities to which such agreement or arrangement relates, or (ii) the portion of the principal balance of such class represented solely by those types of corpus or assets of the Issuer referred to in subsections III.B.(1), (2) and (3). KK. Effective October 1, 2007 through April 1, 2008, ``Securitization List'' means: ------------------------------------------------------------------------ Name & Exemption Issuance Type BofA Role ------------------------------------------------------------------------ Banc of America Comm. Mtge. 2001- C................. U, S, SC, SER PB1 93-31. Banc of America Comm. Mtge. 2004- C................. U, S, SER 2 93-31. Banc of America Comm. Mtge. 2004- C................. U, S, SER 4 93-31. Banc of America Comm. Mtge. 2004- C................. U, S, SER 6 93-31. Banc of America Comm. Mtge. 2005- C................. U, S, SER 2 93-31. Banc of America Comm. Mtge. 2005- C................. U, S, SER 3 93-31. Banc of America Comm. Mtge. 2005- C................. U, S, SER 5 93-31. Banc of America Comm. Mtge. 2005- C................. U, S, SER 6 93-31. Banc of America Comm. Mtge. 2006- C................. U, S, SER 2 93-31. Banc of America Comm. Mtge. 2006- C................. U, S, SER 5 93-31. Banc of America Comm. Mtge. 2007- C................. U, S, SER 1 93-31. Banc of America Large Loan 2006- C................. U, S, SER BIX1 93-31. Banc of America Large Loan 2004- C................. U, S, SER BBA4 93-31. Banc of America Large Loan 2005- C................. U, S BBA6 93-31. Bank of America Struct. Notes C................. U, S, SC, SER 2002-X1 93-31. Bear Stearns Series 2004-BBA3 93- C................. U, S, SER 31. Bear Stearns Series 2007-BBA8 93- C................. U, S, SER 31. Citigroup Commercial Mtg. 2006- C................. S, SER FL2 89-89 (Citigroup Global). COMM Series 2006-FL12 97-03E C................. S, SER (Deutsche Bank). COMM Series 2007-FL14 97-03E C................. S, SER (Deutsche Bank). COMM Series 2001-J2 93-31....... C................. U, S, SC, SER COMM 2006-C8 97-03E (Deutsche C................. U, S, SER Bank). GE Capital Comm Mtge. Corp. 2002- C................. U, S, SER 2 93-31. GE Capital Comm Mtge. Corp. 2003- C................. U, S, SER C2 93-31. GE Capital Comm Mtge. Corp. 2004- C................. U, S, SER C2 93-31. GE Capital Comm Mtge. Corp. 2005- C................. U, S, SER C1 93-31. GE Capital Comm Mtge. Corp. 2005- C................. U, S, SER C3 93-31. GE Capital Comm Mtge. Corp. 2006- C................. U, S, SER C1 93-31. GS Mortgage Sec. 2004-GG2 89-88 C................. S (Goldman, Sachs). Merrill Lynch Series 2004-BPC1 C................. U, S, SER 93-31. Merrill Lynch Series 2005-MKB2 C................. U, S, SER 93-31. Mortgage Cap. Funding 1996-MC2 C................. U, S 93-31. Mortgage Cap. Funding 1997-MC2 C................. U, S 93-31. NationsLink Funding Corp. 1999- C................. U, S, SER LTL-1 93-31. NationsLink Funding Corp. 1999- C................. U, S, SER SL 93-31. Asset Backed Funding Corp. 2002- R................. U, S SB1 93-31. C-BASS 2007-CBS 93-31........... R................. U, S ------------------------------------------------------------------------ Legend: C = Commercial mortgage-backed securitizations; R = Residential mortgage-backed securitizations; U = Underwriter; S = Sponsor; SC = Swap Counterparty; SER = Servicer. Effective Date: This amendment was effective October 1, 2007. For a more complete statement of the facts and representations supporting the Department's decision to amend PTE 93-31, refer to the notice of proposed exemption that was published on March 13, 2008 in the Federal Register at 73 FR 13576. FOR FURTHER INFORMATION CONTACT: Wendy M. McColough of the Department, telephone (202) 693-8540. (This is not a toll-free number.) General Information The attention of interested persons is directed to the following: (1) The fact that a transaction is the subject of an exemption under Section 408(a) of the Act and/or Section 4975(c)(2) of the Code does not relieve a fiduciary or other party in interest or disqualified person from certain other provisions 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; [[Page 27578]] (2) This exemption is supplemental to and not in derogation of, any other provisions of the Act and/or the Code, including statutory or administrative exemptions and transactional rules. Furthermore, the fact that a transaction is subject to an administrative or statutory exemption is not dispositive of whether the transaction is in fact a prohibited transaction; and (3) The availability of this exemption is subject to the express condition that the material facts and representations contained in the application accurately describes all material terms of the transaction which is the subject of the exemption. Signed at Washington, DC, this 29th day of April 2008. Ivan Strasfeld, Director of Exemption Determinations, Pension and Welfare Benefits Administration, U.S. Department of Labor. [FR Doc. E8-10631 Filed 5-12-08; 8:45 am] BILLING CODE 4510-29-P