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Secretary of Labor Thomas E. Perez
Grant of Individual Exemptions; WLI Industries, Inc. Employees' Stock Ownership Plan (the Plan), et al. [Notices] [01/31/1996]

EBSA (Formerly PWBA) Federal Register Notice

Grant of Individual Exemptions; WLI Industries, Inc. Employees' Stock Ownership Plan (the Plan), et al. [01/31/1996]

[PDF Version]

Volume 61, Number 21, Page 3488-3493

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DEPARTMENT OF LABOR
[Prohibited Transaction Exemption 96-06; Exemption Application No. D-
09987, et al.]

 
Grant of Individual Exemptions; WLI Industries, Inc. Employees' 
Stock Ownership Plan (the Plan), et al.

AGENCY: Pension and Welfare Benefits Administration, Labor.

ACTION: Grant of Individual Exemptions.

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SUMMARY: This document contains exemptions issued by the Department of 
Labor (the Department) from certain of the prohibited transaction 
restrictions of the Employee Retirement Income Security Act of 1974 
(the Act) and/or the Internal Revenue Code of 1986 (the Code).
    Notices were published in the Federal Register of the pendency 
before the Department of proposals to grant such exemptions. The 
notices set forth a summary of facts and representations contained in 
each application for exemption and referred interested persons to the 
respective applications for a complete statement of the facts and 
representations. The applications have been available for public 
inspection at the Department in Washington, DC. The 

[[Page 3489]]
notices also invited interested persons to submit comments on the 
requested exemptions to the Department. In addition the notices stated 
that any interested person might submit a written request that a public 
hearing be held (where appropriate). The applicants have represented 
that they have complied with the requirements of the notification to 
interested persons. No public comments and no requests for a hearing, 
unless otherwise stated, were received by the Department.
    The notices of proposed exemption were issued and the exemptions 
are being granted solely by the Department because, effective December 
31, 1978, section 102 of Reorganization Plan No. 4 of 1978 (43 FR 
47713, October 17, 1978) transferred the authority of the Secretary of 
the Treasury to issue exemptions of the type proposed to the Secretary 
of Labor.

Statutory Findings

    In accordance with section 408(a) of the Act and/or section 
4975(c)(2) of the Code and the procedures set forth in 29 CFR Part 
2570, Subpart B (55 FR 32836, 32847, August 10, 1990) and based upon 
the entire record, the Department makes the following findings:
    (a) The exemptions are administratively feasible;
    (b) They are in the interests of the plans and their participants 
and beneficiaries; and
    (c) They are protective of the rights of the participants and 
beneficiaries of the plans.

WLI Industries, Inc. Employees' Stock Ownership Plan (the Plan), 
Located in Villa Park, IL

[Prohibited Transaction Exemption 96-06; Exemption Application No. D-
09987]

Exemption

    The restrictions of sections 406(a), 406(b)(1) and (b)(2) of the 
Act and the sanctions resulting from the application of section 4975 of 
the Code, by reason of section 4975(c)(1)(A) through (E) shall not 
apply to the cash sale by the Plan of its interest (the Interest) in a 
limited partnership (the Partnership), on December 29, 1995, to James 
Van DeVelde and Robert Van DeVelde, the general partners of the 
Partnership and parties in interest with respect to the Plan, provided 
(1) all terms and conditions of the sale were at least as favorable to 
the Plan as those obtainable in an arm's length transaction with an 
unrelated party; (2) the sale was a one-time transaction for cash; (3) 
the Plan was not required to pay any commissions, costs or other 
expenses in connection with the sale; (4) the Plan received a price for 
the Interest which was not less than the greater of: (i) $2,500 or (ii) 
the fair market value of the Interest as determined by a qualified, 
independent appraiser and; (5) within 30 days of the publication, in 
the Federal Register, of the notice granting this proposed exemption, 
WLI files a Form 5330 with the Internal Revenue Service and pays all 
applicable excise taxes by reason of such prior or continuing 
prohibited transactions.
    For a more complete statement of the facts and representations 
supporting the Department's decision to grant this exemption, refer to 
the notice of proposed exemption published on October 17, 1995 at 60 FR 
53808.

EFFECTIVE DATE: This exemption is effective as of December 29, 1995.

Written Comments

    The Department received one written comment with respect to the 
notice of proposed exemption and no requests for a public hearing. The 
written comment was submitted by the applicants. It informed the 
Department that the sale had been consummated by the parties on 
December 29, 1995 in accordance with the terms and conditions of the 
proposed exemption. In response to this comment, the Department has 
made the exemption retroactive to December 29, 1995 and has determined 
to grant the exemption as initially proposed.

FOR FURTHER INFORMATION CONTACT: Ms. Jan D. Broady of the Department, 
telephone (202) 219-8881. (This is not a toll-free number.)

Ventura County National Bancorp 401(k) and Employee Stock Ownership 
Plan (the Plan), Located in Oxnard, California

[Prohibited Transaction Exemption 96-07; Application No. D-10024]

Exemption

    The restrictions of sections 406(a), 406(b)(1) and (b)(2), and 
407(a) 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 for the period from May 12, 1995 until 
June 21, 1995 (the Offering Period), to: (1) The receipt of certain 
stock rights (the Rights) by the Plan, which is sponsored by Ventura 
County National Bancorp (Ventura) and its affiliates, pursuant to a 
stock rights offering (the Rights Offering) by Ventura to shareholders 
of record of Ventura's common stock (the Employer Stock) as of May 10, 
1995; (2) the holding of the Rights by the Plan during the Offering 
Period; and (3) the exercise of the Rights by the Plan, provided the 
following conditions were met:
    (a) The Plan's acquisition and holding of the Rights resulted from 
an independent act of Ventura as a corporate entity, and all holders of 
the Employer Stock were treated in a like manner, including the Plan;
     (b) With respect to the ``401(k) portion'' of the Plan, the Rights 
were acquired, held and controlled by individual Plan participant 
accounts pursuant to plan provisions for individually directed 
investment of such accounts; and
    (c) With respect to the ``ESOP portion'' of the Plan, the authority 
for all decisions regarding the acquisition, holding and control of the 
Rights was exercised by an independent fiduciary which made 
determinations as to whether and how the Plan should exercise or sell 
the Rights acquired through the Rights Offering.

EFFECTIVE DATE: The exemption is effective for the period from May 12, 
1995 until June 21, 1995.
    For a more complete statement of the facts and representations 
supporting the Department's decision to grant this exemption refer to 
the notice of proposed exemption published on November 28, 1995, at 60 
FR 58664.

FOR FURTHER INFORMATION CONTACT: Mr. E.F. Williams of the Department, 
telephone (202) 219-8194. (This is not a toll-free number.)

Industrial Bank of Japan Limited, New York Branch (IBJ), Located in New 
York, New York

[Prohibited Transaction Exemption 96-08; Exemption Application Nos. D-
10065 and D-10066]

Exemption

    The restrictions of section 406(a) 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 (D) of the Code, shall not apply to 
(1) the granting to IBJ, as the representative of lenders (the Lenders) 
participating in a credit facility (the Facility), of security 
interests in limited partnership interests in the Tiger Real Estate 
Fund, L.P. (the Partnership) owned by certain employee benefit plans 
(the Plans) with respect to which some of the Lenders are parties in 
interest; and (2) the agreements by the Plans to honor capital calls 
made by IBJ in lieu of the Partnership's general partner; provided that 
(a) the grants and agreements are on terms no less favorable to the 
Plans than those which the Plans could obtain in arm's length 
transactions with unrelated parties; and (b) the decisions on behalf of 
each Plan 

[[Page 3490]]
to invest in the Partnership and to execute such grants and agreements 
in favor of IBJ are made by a fiduciary which is not included among, 
and is independent of, the Lenders and IBJ.
    For a more complete statement of the facts and representations 
supporting the Department's decision to grant this exemption, refer to 
the notice of proposed exemption published on November 3, 1995 at 60 FR 
55859.

FOR FURTHER INFORMATION CONTACT: Ms. Karin Weng of the Department, 
telephone (202) 219-8881. (This is not a toll-free number.)

Fidelitone, Inc. Employees' Profit Sharing and Savings Plan & Trust 
(the Plan), Located in Wauconda, Illinois

[Prohibited Transaction Exemption 96-09, Exemption Application No. D-
10077]

Exemption

    The restrictions of section 406(a), 406(b)(1) and (b)(2) of the Act 
and the sanctions resulting from the application of section 4975 of the 
Code, by reason of section 4975(c)(1)(A) through (E) shall not apply to 
the sale by the Plan of certain securities to Fidelitone, Inc. 
(Fidelitone), a party in interest with respect to the Plan, provided 
that the following conditions are satisfied: (1) The sale is a one-time 
transaction for cash; (2) the Plan pays no commissions nor any other 
expenses relating to the sale; and (3) the purchase price is the 
greater of: (a) the fair market value of the securities as determined 
by a qualified, independent appraiser, or (b) the Plan's initial 
capital investment plus opportunity costs attributable to the 
securities, less cash dividends received.
    For a more complete statement of the facts and representations 
supporting the Department's decision to grant this exemption, refer to 
the notice of proposed exemption published on November 28, 1995 at 60 
FR 58668.

FOR FURTHER INFORMATION CONTACT: Ms. Karin Weng of the Department, 
telephone (202) 219-8881. (This is not a toll-free number.)

Intrenet Employee Retirement Savings Plan (the Plan), Located in 
Milford, OH

[Prohibited Transaction Exemption 96-10; Exemption Application No. D-
10095]

Exemption

    The restrictions of section 406(a), 406(b)(1) and (b)(2) of the Act 
and the sanctions resulting from the application of section 4975 of the 
Code, by reason of section 4975(c)(1)(A) through (E) shall not apply to 
the sale by the Plan of certain units of limited partnership interests 
(the Units) to Intrenet Inc. (Intrenet), a party in interest with 
respect to the Plan, provided that the following conditions are 
satisfied: (a) The sale is a one-time transaction for cash; (b) the 
Plan suffers no loss, taking into account all cash distributions 
received as a result of owning the Units; (c) the Plan pays no 
commissions nor any other expenses relating to the sale; and (d) the 
purchase price is the greater of $48,850 or the fair market value of 
the Units as of the date of the sale as determined by a qualified, 
independent appraiser.
    For a more complete statement of the facts and representations 
supporting the Department's decision to grant this exemption, refer to 
the notice of proposed exemption published on November 28, 1995 at 60 
FR 58670.

FOR FURTHER INFORMATION CONTACT: Ms. Karin Weng of the Department, 
telephone (202) 219-8881. (This is not a toll-free number.)

ContiFinancial Services Corporation (ContiFinancial), Located in New 
York, New York

[Prohibited Transaction Exemption 96-11; Exemption Application No. D-
10102]

Exemption

Section I. Transactions
    A. Effective November 28, 1995, 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 the following transactions involving trusts and 
certificates evidencing interests therein:
     (1) The direct or indirect sale, exchange or transfer of 
certificates in the initial issuance of certificates between the 
sponsor or underwriter and an employee benefit plan when the sponsor, 
servicer, trustee or insurer of a trust, the underwriter of the 
certificates representing an interest in the trust, or an obligor is a 
party in interest with respect to such plan;
    (2) The direct or indirect acquisition or disposition of 
certificates by a plan in a secondary market for such certificates; and
    (3) The continued holding of certificates 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) for the acquisition or holding of a 
certificate 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.\1\

    \1\ A provide no relief from sections 406(a)(1)(E), 406(a)(2) 
and 407 for any person rendering investment advice to an Excluded 
Plan within the meaning of section 3(21)(A)(ii) and regulation 29 
CFR 2510.3-21(c).
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    B. Effective November 28, 1995, the restrictions of sections 
406(b)(1) and 406(b)(2) of the Act and the taxes imposed by section 
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 
certificates in the initial issuance of certificates between the 
sponsor and underwriter and a plan when the person who has 
discretionary authority or renders investment advice with respect to 
the investment or plan assets in the certificates is (a) an obligor 
with respect to 5 percent or less of the fair market value of 
obligations or assets contained in the trust, 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 certificates in 
connection with the initial issuance of the certificates, at least 50 
percent of each class of certificates in which plans have invested is 
acquired by persons independent of the members of the Restricted Group 
and at least 50 percent of the aggregate interest in the trust is 
acquired by persons independent of the Restricted Group.
    (iii) A plan's investment in each class of certificates does not 
exceed 25 percent of all of the certificates of that class outstanding 
at the time of the acquisition; and
    (iv) Immediately after the acquisition of the certificates, no more 
than 25 percent of the assets of a plan with respect to which the 
person had discretionary authority or renders investment advice are 
invested in certificates representing an interest in a trust containing 
assets sold or serviced by the same entity.\2\ For purposes of this 
paragraph B.(i)(iv) only, an entity will not be considered to service 
assets contained in a trust if it is merely a subservicer of that 
trust;

    \2\ For purposes of this exemption, each plan participating in a 
commingled fund (such as a bank collective trust fund or insurance 
company pooled separate account) shall be considered to own the same 
proportionate undivided interest in each asset of the commingled 
fund as its proportionate interest in the total assets of the 
commingled fund as calculated on the most recent preceding valuation 
date of the fund.
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    (2) The direct or indirect acquisition or disposition of 
certificates by a plan in the secondary market for such certificates, 
provided that the conditions set forth in paragraphs B.(1) (i), (iii) 
and (iv) are met; and 

[[Page 3491]]

    (3) The continued holding of certificates acquired by a plan 
pursuant to Subsection I.B. (1) or (2).
    C. Effective November 28, 1995, 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 a trust; provided:
    (1) Such transactions are carried out in accordance with the terms 
of a binding pooling and servicing arrangement; and
    (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 
certificates issued by the trust.<SUP>3 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 trust from a person other than the trustee or sponsor, unless such 
fee constitutes a ``qualified administrative fee'' as defined in 
Section III.S.

     <SUP>3 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 
certificates 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.
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    D. Effective November 28, 1995, 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 sections 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 certificates.
Sec. II. General Conditions
    A. The relief provided under Section I is available only if the 
following conditions are met:
    (1) The acquisition of certificates by a plan is on terms 
(including the certificate 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 certificates are not 
subordinated to the rights and interests evidenced by other 
certificates of the same trust;
    (3) The certificates acquired by the plan have received a rating at 
the time of such acquisition that is in one of the three highest 
generic rating categories from either Standard & Poor's Corporation 
(S&P's), Moody's Investors Service, Inc. (Moody's), Duff & Phelps Inc. 
(D&P) or Fitch Investors Service, Inc. (Fitch);
    (4) The trustee is not an affiliate of any member of the Restricted 
Group. However, 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;
    (5) The sum of all payments made to and retained by the 
underwriters in connection with the distribution or placement of 
certificates represents not more than reasonable compensation for 
underwriting or placing the certificates; the sum of all payments made 
to and retained by the sponsor pursuant to the assignment of 
obligations (or interests therein) to the trust 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; and
    (6) The plan investing in such certificates is an ``accredited 
investor'' as defined in Rule 501(a)(1) of Regulation D of the 
Securities and Exchange Commission (the SEC) under the Securities Act 
of 1933.
    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 certificates, shall be denied the relief 
provided under Section I, if the provision of Subsection II.A.(6) above 
is not satisfied with respect to acquisition or holding by a plan of 
such certificates, provided that (1) such condition is disclosed in the 
prospectus or private placement memorandum; and (2) in the case of a 
private placement of certificates, 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 certificates) 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) above.
Sec. III. Definitions
    For purposes of this exemption:
    A. ``Certificate'' means:
    (1) A certificate--
    (a) That represents a beneficial ownership interest in the assets 
of a trust; and
    (b) That entitles the holder to pass-through payments of principal, 
interest, and/or other payments made with respect to the assets of such 
trust; or
    (2) A certificate denominated as a debt instrument--
    (a) That represents an interest in a Real Estate Mortgage 
Investment Conduit (REMIC) within the meaning of section 860D(a) of the 
Internal Revenue Code of 1986; and
    (b) That is issued by and is an obligation of a trust;
with respect to certificates defined in (1) and (2) for which 
ContiFinancial or any of its affiliates is either (i) the sole 
underwriter or the manager or co-manager of the underwriting syndicate, 
or (ii) a selling or placement agent.
    For purposes of this exemption, references to ``certificates 
representing an interest in a trust'' include certificates denominated 
as debt which are issued by a trust.
    B. ``Trust'' means an investment pool, the corpus of which is held 
in trust and consists solely of:
    (1) Either
    (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);
    (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, as defined in Section III.T);
    (c) Obligations that bear interest or are purchased at a discount 
and which are secured by single-family residential, multi-family 
residential and commercial real property, (including obligations 
secured by leasehold interests on commercial real property); 

[[Page 3492]]

    (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 (as defined in Section III.U);
    (e) ``Guaranteed governmental mortgage pool certificates,'' 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 Section B.(1); <SUP>4

     4 The Department wishes to take the opportunity to clarify its 
view that the definition of Trust contained in Section III.B.(1) (a) 
through (e) includes a two-tier trust structure under which 
certificates issued by the first trust, which contains a pool of 
receivables described above, are transferred to a second trust which 
issues certificates that are sold to plans. However, the Department 
is of the further view that, since the exemption provides relief for 
the direct or indirect acquisition or disposition of certificates 
that are not subordinated, no relief would be available if the 
certificates held by the second trust were subordinated to the 
rights and interests evidenced by other certificates issued by the 
first trust.
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    (2) Property which had secured any of the obligations described in 
Subsection B.(1);
    (3) Undistributed cash or temporary investments made therewith 
maturing no later than the next date on which distributions are to made 
to certificateholders; and
    (4) Rights of the trustee under the pooling and servicing 
agreement, and rights under any insurance policies, third-party 
guarantees, contracts of suretyship and other credit support 
arrangements with respect to any obligations described in Section 
B.(1).
    Notwithstanding the foregoing, the term ``trust'' does not include 
any investment pool unless: (i) The investment pool consists only of 
assets of the type which have been included in other investment pools, 
(ii) certificates evidencing interests in such other investment pools 
have been rated in one of the three highest generic rating categories 
by S&P's, Moody's, D&P, or Fitch for at least one year prior to the 
plan's acquisition of certificates pursuant to this exemption, and 
(iii) certificates 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 certificates pursuant to this 
exemption.
    C. ``Underwriter'' means:
    (1) ContiFinancial;
    (2) Any person directly or indirectly, through one or more 
intermediaries, controlling, controlled by or under common control with 
ContiFinancial; or
    (3) Any member of an underwriting syndicate or selling group of 
which ContiFinancial or a person described in (2) is a manager or co-
manager with respect to the certificates.
    D. ``Sponsor'' means the entity that organizes a trust by 
depositing obligations therein in exchange for certificates.
    E. ``Master Servicer'' means the entity that is a party to the 
pooling and servicing agreement relating to trust assets and is fully 
responsible for servicing, directly or through subservicers, the assets 
of the trust.
    F. ``Subservicer'' means an entity which, under the supervision of 
and on behalf of the master servicer, services assets contained in the 
trust, but is not a party to the pooling and servicing agreement.
    G. ``Servicer'' means any entity which services assets contained in 
the trust, including the master servicer and any subservicer.
    H. ``Trustee'' means the trustee of the trust, and in the case of 
certificates which are denominated as debt instruments, also means the 
trustee of the indenture trust.
    I. ``Insurer'' means the insurer or guarantor of, or provider of 
other credit support for, a trust.
    Notwithstanding the foregoing, a person is not an insurer solely 
because it holds securities representing an interest in a trust which 
are of a class subordinated to certificates representing an interest in 
the same trust.
    J. ``Obligor'' means any person, other than the insurer, that is 
obligated to make payments with respect to any obligation or receivable 
included in the trust. Where a trust 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 trust, or subject to any lease securing an obligation included 
in the trust.
    K. ``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.
    L. ``Restricted Group'' with respect to a class of certificates 
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 trust constituting more than 5 percent of the aggregate 
unamortized principal balance of the assets in the trust, determined on 
the date of the initial issuance of certificates by the trust; or
    (7) Any affiliate of a person described in (1)-(6) above.
    M. ``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.
    N. ``Control'' means the power to exercise a controlling influence 
over the management or policies of a person other than an individual.
    O. 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.
    P. ``Sale'' includes the entrance into a forward delivery 
commitment (as defined in Section III.Q. below), provided:
    (1) The terms of the forward delivery commitment (including any fee 
paid to the investing plan) are no less favorable to the plan than they 
would be in an arm's length transaction with an unrelated party;
    (2) The prospectus or private placement memorandum is provided to 
an investing plan prior to the time the plan enters into the forward 
delivery commitment; and
    (3) At the time of the delivery, all conditions of this exemption 
applicable to sales are met.
    Q. ``Forward delivery commitment'' means a contract for the 
purchase or sale of one or more certificates to be delivered at an 
agreed future settlement date. The term includes both mandatory 
contracts (which contemplate obligatory delivery and acceptance of the 
certificates) and optional contracts (which give one party the right 
but not the obligation to deliver certificates to, or demand delivery 
of certificates from, the other party).
    R. ``Reasonable compensation'' has the same meaning as that term is 
defined in 29 CFR 2550.408c-2.
    S. ``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 (1); 

[[Page 3493]]

    (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 trust will not be reduced 
by the amount of any such fee waived by the servicer.
    T. ``Qualified Equipment Note Secured By A Lease'' means an 
equipment note:
    (a) Which is secured by equipment which is leased;
    (b) Which is secured by the obligation of the lessee to pay rent 
under the equipment lease; and
    (c) With respect to which the trust's security interest in the 
equipment is at least as protective of the rights of the trust as the 
trust would have if the equipment note were secured only by the 
equipment and not the lease.
    U. ``Qualified Motor Vehicle Lease'' means a lease of a motor 
vehicle where:
    (a) The trust holds a security interest in the lease;
    (b) The trust holds a security interest in the leased motor 
vehicle; and
    (c) The trust's security interest in the leased motor vehicle is at 
least as protective of the trust's rights as the trust would receive 
under a motor vehicle installment loan contract.
    V. ``Pooling and Servicing Agreement'' means the agreement or 
agreements among a sponsor, a servicer and the trustee establishing a 
trust. In the case of certificates which are denominated as debt 
instruments, ``Pooling and Servicing Agreement'' also includes the 
indenture entered into by the trustee of the trust issuing such 
certificates and the indenture trustee.
    The Department notes that this exemption is included within the 
meaning of the term ``Underwriter Exemption'' as it is defined in 
Section V(h) of Prohibited Transaction Exemption (PTE) 95-60 (60 FR 
35925, July 12, 1995), the Class Exemption for Certain Transactions 
Involving Insurance Company General Accounts, at 35932.
    For a more complete statement of the facts and representations 
supporting the Department's decision to grant this exemption, refer to 
the notice of proposed exemption published on November 28, 1995 at 60 
FR 58671.

EFFECTIVE DATE: This exemption is effective for transactions occuring 
on or after November 28, 1995.

Written Comments

    The Department received one written comment with respect to the 
notice of proposed exemption and no requests for a public hearing. The 
written comment, which was submitted by ContiFinancial, requested that 
the exemption be made effective as of November 28, 1995. This was the 
date that the notice of proposed exemption was published in the Federal 
Register. The Department has considered this comment and has revised 
the exemption, accordingly.
    Thus, after giving full consideration to the entire record, the 
Department has decided to grant the subject exemption. ContiFinancial's 
comment letter has been included as part of the public record of the 
exemption application. The complete application file, including all 
supplemental submissions received by the Department, is made available 
for public inspection in the Public Documents Room of the Pension and 
Welfare Benefits Administration, Room N-5638, U.S. Department of Labor, 
200 Constitution Avenue, NW, Washington, DC 20210.

FOR FURTHER INFORMATION CONTACT: Ms. Jan D. Broady of the Department, 
telephone (202) 219-8881. (This is not a toll-free number.)

General Information

    The attention of interested persons is directed to the following:
    (1) The fact that a transaction is the subject of an exemption 
under section 408(a) of the Act and/or section 4975(c)(2) of the Code 
does not relieve a fiduciary or other party in interest or disqualified 
person from certain other provisions to which the exemptions does not 
apply and the general fiduciary responsibility provisions of section 
404 of the Act, which among other things require a fiduciary to 
discharge his duties respecting the plan solely in the interest of the 
participants and beneficiaries of the plan and in a prudent fashion in 
accordance with section 404(a)(1)(B) of the Act; nor does it affect the 
requirement of section 401(a) of the Code that the plan must operate 
for the exclusive benefit of the employees of the employer maintaining 
the plan and their beneficiaries;
    (2) These exemptions are supplemental to and not in derogation of, 
any other provisions of the Act and/or the Code, including statutory or 
administrative exemptions and transactional rules. Furthermore, the 
fact that a transaction is subject to an administrative or statutory 
exemption is not dispositive of whether the transaction is in fact a 
prohibited transaction; and
    (3) The availability of these exemptions is subject to the express 
condition that the material facts and representations contained in each 
application are true and complete and accurately describe all material 
terms of the transaction which is the subject of the exemption. In the 
case of continuing exemption transactions, if any of the material facts 
or representations described in the application change after the 
exemption is granted, the exemption will cease to apply as of the date 
of such change. In the event of any such change, application for a new 
exemption may be made to the Department.
    Signed at Washington, DC, this 25th day of January, 1996.
Ivan Strasfeld,
Director of Exemption Determinations, Pension and Welfare Benefits 
Administration, Department of Labor.
[FR Doc. 96-1776 Filed 1-30-96; 8:45 am]
BILLING CODE 4510-29-P