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Secretary of Labor Thomas E. Perez
Grant of Individual Exemptions; Wells Fargo Bank, N.A. (The Bank), et al. [Notices] [07/22/1996]

EBSA (Formerly PWBA) Federal Register Notice

Grant of Individual Exemptions; Wells Fargo Bank, N.A. (The Bank), et al. [07/22/1996]

[PDF Version]

Volume 61, Number 141, Page 37933-37937

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DEPARTMENT OF LABOR
[Prohibited Transaction Exemption 96-54; Exemption Application No. D-
09334, et al.]

 
Grant of Individual Exemptions; Wells Fargo Bank, N.A. (the 
Bank), 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 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.

Wells Fargo Bank, N.A. (the Bank) Located in San Francisco, CA 
[Prohibited Transaction Exemption 96-54; Exemption Application No. D-
09334]

Exemption

Section I. Exemption for the In-Kind Transfer of Assets

    The restrictions of sections 406(a) and 406(b) of the Act and the 
sanctions resulting from the application of section 4975 of the Code, 
by reason of section 4975(c) of the Code, shall not apply, effective 
July 2, 1993 until October 1, 1993, to the in-kind transfer of all or a 
pro rata portion of the assets of employee benefit plans (the Plans) 
that are held in certain collective investment funds (the CIF or CIFs), 
for which the Bank or any of its affiliates (collectively, Wells Fargo) 
serves as fiduciary, to the Stagecoach Funds, Inc. (the Fund or Funds), 
an open-end investment company registered under the Investment Company 
Act of 1940 (the '40 Act), as amended, for which Wells Fargo acts as 
investment adviser and may provide other services, in exchange for 
shares of the Funds (the CIF Exchanges), in connection with the partial 
termination of the CIFs.
    This exemption is subject to the following conditions and the 
general conditions of Section II:
    (a) The CIF Exchange is a one-time transaction between the Plan and 
the respective Fund.
    (b) No sales commissions or other fees are paid by the Plans in 
connection with the CIF Exchanges and no redemption fees are paid by 
the Plan in connection with the sale by the Plan of shares acquired in 
a CIF Exchange.
    (c) A fiduciary of each Plan who is independent of and unrelated to 
Wells Fargo (the Second Fiduciary) receives advance written notice of 
the CIF Exchange and full written disclosure of information concerning 
the Funds which includes, but is not limited to the following:
    (1) A current prospectus for each Fund in which the Plan is 
considering investing;
    (2) A statement describing the fees for investment advisory or 
similar services, any secondary services (the Secondary Services) as 
referred to in paragraph (h) of Section III, and all other fees to be 
charged to, or paid by, the Plan (and by such Fund) to Wells Fargo, 
including the nature and extent of any differential between the rates 
of the fees;
    (3) The reasons why Wells Fargo considers an investment in the Fund 
to be appropriate for the Plan; and
    (4) A statement describing whether there are any limitations 
applicable to Wells Fargo with respect to which assets of a Plan may be 
invested in a Fund, and, if so, the nature of such limitations.
    (d) On the basis of the foregoing information, the Second Fiduciary 
approves, in writing, the CIF Exchange.
    (e) Each Plan receives shares of the Funds which have a total net 
asset value equal to the value of all or the Plan's pro rata share of 
the Plan's assets invested in the CIF on the date of the transfer, 
based on the current market value of the CIF's assets, as objectively 
determined in a single valuation, performed in the same manner at the 
close of the same business day by a principal pricing service (the 
Principal Pricing Service), disclosed previously by Wells Fargo to the 
Second Fiduciary, and/or as applicable, by the amortized cost method.
    (f) The terms of the transaction are no less favorable to each Plan 
than those obtainable in an arm's length transaction with an unrelated 
party.
    (g) Wells Fargo sends by regular mail to each affected Plan a 
written confirmation, not more than 7 days after the completion of the 
transaction, containing the date of the transaction, the number of 
shares acquired by the Plan in each of the Funds, the price paid per 
share for the shares in each of the Funds and the total dollar amount 
involved in the transaction with each Fund.
    (h) As to each Plan, the combined total of all fees received by 
Wells Fargo for the provision of services to such Plan, and in 
connection with the provision of services to any of the Funds in which 
the Plan may invest, is not in excess of ``reasonable compensation'' 
within the meaning of section 408(b)(2) of the Act.
    (i) Wells Fargo does not receive any fees payable pursuant to Rule 
12b-1 of

[[Page 37934]]

the `40 Act in connection with the transactions involving the Funds.
    (j) The Plans are not sponsored or maintained by Wells Fargo.
    (k) Wells Fargo provides the Second Fiduciary of such Plan with--
    (l) A copy of the proposed exemption and/or the final exemption, if 
granted;
    (2) A copy of an updated prospectus of such Fund, at least 
annually;
    (3) A report or statement (which may take the form of the most 
recent financial report, the current statement of additional 
Information, or some other written statement) which contains a 
description of all fees paid by the Fund to Wells Fargo, upon the 
request of the Second Fiduciary; and
    (4) A statement specifying--
    (A) The total, expressed in dollars, of brokerage commissions that 
are paid to Wells Fargo by such Fund;
    (B) The total, expressed in dollars, of brokerage commissions that 
are paid by such Fund to brokerage firms unrelated to Wells Fargo;
    (C) The average brokerage commissions per share, expressed as cents 
per share, paid to Wells Fargo by such Fund; and
    (D) The average brokerage commissions per share, expressed as cents 
per share, paid by such Fund to brokerage firms unrelated to Wells 
Fargo. (Such statement will be provided at least annually with respect 
to each of the Funds in which a Plan invests in the event a Fund places 
brokerage transactions with Wells Fargo.)
    (l) All dealings between the Plans and the Funds are on a basis no 
less favorable to the Plans than dealings with other shareholders of 
the Funds.

Section II. General Conditions

    (a) Wells Fargo maintains for a period of six years the records 
necessary to enable the persons described below in paragraph (b) of 
Section II to determine whether the conditions of this exemption have 
been met, except that (1) a prohibited transaction will not be 
considered to have occurred if, due to circumstances beyond the control 
of Wells Fargo, the records are lost or destroyed prior to the end of 
the six-year period, and (2) no party in interest, other than Wells 
Fargo shall be subject to the civil penalty that may be assessed under 
section 502(i) of the Act or the taxes imposed by section 4975 (a) and 
(b) of the Code if the records are not maintained or are not available 
for examination as required by paragraph (b) below; and
    (b)(1) Except as provided in paragraph (b)(2) and notwithstanding 
any provisions of section 504 (a)(2) and (b) of the Act, the records 
referred to in paragraph (a) are unconditionally available at their 
customary location for examination during normal business hours by--
    (A) Any duly authorized employee or representative of the 
Department or the Internal Revenue Service,
    (B) Any fiduciary of the Plans who has authority to acquire or 
dispose of shares of the Funds owned by the Plans, or any duly 
authorized employee or representative of such fiduciary, and
    (C) Any participant or beneficiary of the Plans or duly authorized 
employee or representative of such participant or beneficiary;
    (2) None of the persons described in paragraph (b)(1)(B) and (C) 
shall be authorized to examine trade secrets of Wells Fargo, or 
commercial or financial information which is privileged or 
confidential.

Section III. Definitions

    For purposes of this exemption,
    (a) The term ``Wells Fargo'' means Wells Fargo Bank, N.A. and any 
affiliate of Wells Fargo Bank, N.A., as defined in paragraph (b) of 
this Section VI.
    (b) An ``affiliate'' of Wells Fargo includes--
    (1) Any person directly or indirectly through one or more 
intermediaries, controlling, controlled by, or under common control 
with Wells Fargo;
    (2) Any officer, director, employee, relative, or partner in any 
such person; and
    (3) Any corporation or partnership of which such person is an 
officer, director, partner, or employee;
    (c) The term ``control'' means the power to exercise a controlling 
influence over the management or policies of a person other than an 
individual.
    (d) The term ``relative'' means a ``relative'' as that term is 
defined in section 3(15) of the Act (or a ``member of the family'' as 
that term is defined in section 4975(e)(6) of the Code), or a brother, 
a sister, or a spouse of a brother or a sister.
    (e) The term ``Second Fiduciary'' means a fiduciary of a Plan who 
is independent of and unrelated to Wells Fargo. For purposes of this 
exemption, the Second Fiduciary will not be deemed to be independent of 
and unrelated to Wells Fargo if--
    (1) Such Second Fiduciary directly or indirectly controls, is 
controlled by, or is under common control with Wells Fargo;
    (2) Such Second Fiduciary, or any officer, director, partner, 
employee, or relative of such Second Fiduciary is an officer, director, 
partner, or employee of Wells Fargo (or is a relative of such persons);
    (3) Such Second Fiduciary directly or indirectly receives any 
compensation or other consideration for his or her own personal account 
in connection with any transaction described in this proposed 
exemption.
    If an officer, director, partner, or employee of Wells Fargo (or a 
relative of such persons), is a director of such Second Fiduciary, and 
if he or she abstains from participation in the choice of the Plan's 
investment manager/adviser, the approval of any purchase or sale by the 
Plan of shares of the Funds, and the approval of any change of fees 
charged to or paid by the Plan, in connection with any of the 
transactions described in Section I above, then paragraph (e)(2) of 
this Section III, shall not apply.
    (f) The term ``Fund or Funds'' means a diversified open-end 
investment company or companies registered under the `40 Act for which 
Wells Fargo serves as investment adviser and may also provide Secondary 
Services as approved by such Fund. The Funds are limited to six 
investment Fund portfolios of the Stagecoach Funds, Inc. These Fund 
portfolios include include the Asset Allocation Fund, the Bond Index 
Fund, the Growth Stock Fund, the Short-Intermediate Term Fund, the S&P 
500 Stock Fund and the U.S. Treasury Allocation Fund.
    (g) The term ``net asset value'' means the amount for purposes of 
pricing all purchases and sales of shares in a Fund calculated by 
dividing the value of all securities, determined by a method as set 
forth in a Fund's prospectus and statement of additional information, 
and other assets belonging to such Fund, less the liabilities charged 
to the Fund, by the number of outstanding shares in such Fund.
    (h) The term ``Secondary Service'' means a service other than an 
investment management, investment advisory or similar service which is 
provided by Wells Fargo to the Funds. However, for purposes of this 
exemption, Secondary Services will include only brokerage services 
provided to the Funds by Wells Fargo for the execution of securities 
transactions engaged in by the Funds.
    (i) The term ``Principal Pricing Service'' means an independent, 
recognized pricing service that has determined the aggregate dollar 
value of marketable securities involved in a CIF Exchange. Prior to the 
CIF Exchange, the Principal Pricing Service was disclosed in writing by 
Wells Fargo to the Second Fiduciary.

EFFECTIVE DATE: This exemption is effective from July 2, 1993 until 
October

[[Page 37935]]

1, 1993 with respect to CIF Exchanges that occurred on July 2, August 
19, and October 1, 1993.
    For a more complete statement of the facts and representations 
supporting the Department's decision to grant this exemption, refer to 
the notice of proposed exemption published on April 4, 1996 at 61 FR 
15123.

Written Comments

    The Department received one written comment with respect to the 
notice of proposed exemption and no requests for a public hearing. The 
comment, which was submitted by Wells Fargo, concerned notification of 
interested persons. In this regard, Wells Fargo represented that notice 
of the proposed exemption was originally sent to its client Plans on 
April 24, 1996. However, because the notice was incomplete, Wells Fargo 
explained that it renotified these Plans of the proposed exemption on 
May 24, 1996 and extended the comment period until June 24, 1996.
    In addition, Wells Fargo stated that client Plans of BZW Barclays 
Global Investors, N.A. were properly notified of the proposed 
exemption. Therefore, there were no further extensions of the comment 
period with respect to such Plans.
    Thus, after giving full consideration to the entire record, the 
Department has decided to grant the subject exemption. Wells Fargo'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.)

Aircon Energy, Inc. 401(k) Profit Sharing Plan (the Plan) Located in 
Sacramento, California

[Prohibited Transaction Exemption 96-55; Exemption Application No. D-
10073]

Exemption

    The restrictions of sections 406(a), 406(b)(1) and (b)(2) of the 
Act and the sanctions resulting from the application of section 4975 of 
the Code, by reason of section 4975(c)(1) (A) through (E) of the Code, 
shall not apply to the sale by the Plan of certain office equipment 
(the Workstations) to Aircon Energy, Inc. (Aircon), 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; 
(3) the purchase price is the greater of: (a) the fair market value of 
the Workstations as determined by a qualified, independent appraiser, 
or (b) the Plan's initial acquisition cost plus opportunity costs 
attributable to the Workstations while in storage; (4) 
contemporaneously with the sale, Aircon reimburses the Plan for the 
fair market rental value with respect to the prohibited use of certain 
of the Workstations; (5) contemporaneously with the sale, Aircon 
reimburses the Plan for losses and opportunity costs associated with 
the prior sale of certain of the Workstations to an unrelated third 
party; and (6) within 90 days of the publication in the Federal 
Register of the grant of this exemption, Aircon files Form 5330 with 
the Internal Revenue Service (the Service) and pays all applicable 
additional excise taxes that are due by reason of the prohibited use 
transactions.
    The Department has determined to clarify Conditions 4 and 5 and has 
modified the language in this exemption accordingly.
    For a more complete statement of the facts and representations 
supporting the Department's decision to grant this exemption, refer to 
the notice of proposed exemption published on January 31, 1996 at 61 FR 
3476.

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

Smith Barney, Located in New York, New York

[Prohibited Transaction Exemption 96-56; Exemption Application No. D-
10126]

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 
the lending of securities, under certain ``exclusive borrowing'' 
arrangements, to Smith Barney, and to any affiliate of Smith Barney who 
is a U.S. registered broker-dealer or a government securities broker or 
dealer (Affiliates; collectively Smith Barney), by employee benefit 
plans (Plans) with respect to which Smith Barney is a party in 
interest, provided that the following conditions are satisfied:
    (a) For each Plan, neither Smith Barney nor its Affiliates has 
discretionary authority or control over the Plan's investment in the 
securities available for loan, nor do they render investment advice 
(within the meaning of 29 CFR 2510.3-21(c)) with respect to those 
assets;
    (b) Smith Barney directly negotiates an exclusive borrowing 
agreement (Borrowing Agreement) with a Plan fiduciary which is 
independent of Smith Barney;
    (c) In exchange for granting Smith Barney the exclusive right to 
borrow certain securities, the Plan either (i) receives a reasonable 
fee, which is specified in the Borrowing Agreement for each category of 
securities available for loan and is a flat fee, a set percentage rate, 
or a percentage rate established by reference to an objective formula, 
or (ii) has the opportunity to derive compensation through the 
investment of cash collateral posted by Smith Barney;
    (d) Any change in the rate that Smith Barney pays to the Plan with 
respect to any securities loan requires the prior written consent of 
the independent fiduciary, except that consent is presumed where the 
rate changes pursuant to an objective formula specified in the 
Borrowing Agreement and the independent fiduciary is notified at least 
24 hours in advance of such change and does not object in writing 
thereto, prior to the effective time of such change;
    (e) On or before the day the loaned securities are delivered, the 
Plan receives from Smith Barney (by physical delivery, book entry in a 
securities depository, wire transfer, or similar means) collateral 
consisting of cash, securities issued or guaranteed by the U.S. 
Government or its agencies, irrevocable bank letters of credit issued 
by persons other than Smith Barney or its Affiliates, or other 
collateral permitted under PTCE 81-6, as it may be amended or 
superseded; <SUP>1
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     1  PTCE 81-6 (46 FR 7527, January 23, 1981, as amended at 52 FR 
18754, May 19, 1987) provides an exemption under certain conditions 
from section 406(a)(1) (A) through (D) of the Act and the 
corresponding provisions of section 4975(c) of the Code for the 
lending of securities that are assets of an employee benefit plan to 
certain broker-dealers or banks which are parties in interest.
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    (f) The market value of the collateral initially equals at least 
102 percent of the market value of the loaned securities and, if the 
market value of the collateral at any time falls below 100 percent, 
Smith Barney delivers additional collateral on the following day to 
bring the level of the collateral back to 102 percent;
    (g) Before entering into a Borrowing Agreement, Smith Barney 
furnishes to the Plan the most recent publicly available audited and 
unaudited statements of its financial condition, as

[[Page 37936]]

well as any publicly available information which it believes is 
necessary for the independent fiduciary to determine whether the Plan 
should enter into or renew the Borrowing Agreement;
    (h) The Borrowing Agreement contains a representation by Smith 
Barney that as of each time it borrows securities, there has been no 
material adverse change in its financial condition since the date of 
the most recently furnished financial statements;
    (i) The Plan receives the equivalent of all distributions made 
during the loan period, including, but not limited to, cash dividends, 
interest payments, shares of stock as a result of stock splits, and 
rights to purchase additional securities, that the Plan would have 
received (net of tax withholdings) <SUP>2 had it remained the record 
owner of the securities;
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     <SUP>2  The Department notes the applicant's representation 
that dividends and other distributions on foreign securities payable 
to a lending Plan are subject to foreign tax withholdings and that 
Smith Barney will always put the Plan back in at least as good a 
position as it would have been in had it not loaned the securities.
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    (j) The Borrowing Agreement and/or any securities loan outstanding 
may be terminated by either party at any time without penalty, 
whereupon Smith Barney returns any borrowed securities (or the 
equivalent thereof in the event of reorganization, recapitalization, or 
merger of the issuer of the borrowed securities) to the Plan within 
five business days of written notice of termination;
    (k) In the event that Smith Barney fails to return the borrowed 
securities, Smith Barney indemnifies the Plan with respect to the 
difference, if any, between the replacement cost of the borrowed 
securities and the market value of the collateral on the date the loan 
is declared in default, together with expenses not covered by the 
collateral plus applicable interest at a reasonable rate;
    (l) All procedures regarding the securities lending activities, at 
a minimum, conform to the applicable provisions of PTCE 81-6, as it may 
be amended or superseded;
    (m) Only Plans, which together with related Plans,<SUP>3 having 
assets with an aggregate market value in excess of $50 million may lend 
securities to Smith Barney under an exclusive borrowing arrangement; 
and
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     <SUP>3  The Department notes the applicant's representation 
that the term ``related Plans'' refers to plans within the 
jurisdiction of Title I of the Act that are maintained by an entity 
or its affiliates, as ``affiliate'' is defined in section 407(d)(7) 
of the Act.
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    (n) Prior to any Plan's approval of the lending of its securities 
to Smith Barney, a copy of this exemption, if granted (and the notice 
of pendency) are provided to the Plan, and Smith Barney informs the 
independent fiduciary that Smith Barney is not acting as a fiduciary of 
the Plan in connection with its borrowing securities from the 
Plan.<SUP>4

     4  The Department notes the applicant's representation that, 
under the proposed exclusive borrowing arrangements, Smith Barney 
will not perform the functions of a securities lending agent, nor 
will Smith Barney perform any services ancillary to securities 
lending, such as monitoring the level of collateral and the value of 
the loaned securities.
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EFFECTIVE DATE: The exemption is effective as of September 25, 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 May 23, 1996 at 61 FR 
25905.

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

VVP America, Inc. Incentive Savings Plan (the Plan) Located in Memphis, 
Tennessee

[Prohibited Transaction Exemption 96-57; Exemption Application No. D-
10141]

Exemption

    The restrictions of sections 406(a), 406 (b)(1) and (b)(2) of the 
Act and the sanctions resulting from the application of section 4975 of 
the Code, by reason of section 4975(c)(1) (A) through (E) of the Code, 
shall not apply to the sales by the Plan to VVP America, Inc., the 
sponsor of the Plan, of universal life insurance policies (the 
Policies) issued by the Confederation Life Insurance Company; provided 
that the following conditions are satisfied:
    (A) All terms and conditions of the transactions are at least as 
favorable to the Plan as those which the Plan could obtain in arm's-
length transactions with unrelated parties;
    (B) The Plan receives cash purchase prices for the Policies of no 
less than the greater of (1) the fair market value of each Policy as of 
the sale date, or
    (2) each Policy's cash surrender value (as described in the Notice 
of Proposed Exemption) as of the sale date; and
    (C) The Plan does not incur any expenses or suffer any loss with 
respect to the transactions.
    For a more complete statement of the facts and representations 
supporting this exemption, refer to the notice of proposed exemption 
published on May 23, 1996 at 61 FR 25907.

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

Fieldcrest Cannon, Inc. Retirement Savings Plan for Salaried Employees, 
and Fieldcrest Cannon, Inc. Retirement Savings Plan for Hourly 
Employees (the Plans) Located in Eden, North Carolina

[Prohibited Transaction Exemption 96-58; Exemption Application Nos. D-
10180 & D-10181]

Exemption

    The restrictions of sections 406(a), 406 (b)(1) and (b)(2) of the 
Act and the sanctions resulting from the application of section 4975 of 
the Code, by reason of section 4975(c)(1) (A) through (E) of the Code, 
shall not apply to (1) the guaranty (the Guaranty) by Fieldcrest 
Cannon, Inc. (the Employer), the sponsor of the Plans, of amounts due 
the Plans with respect to three guaranteed investment contracts (the 
GICs) issued by Confederation Life Insurance Company (Confederation); 
(2) the potential extensions of credit (the Advances) to the Plans by 
the Employer pursuant to the Guaranty; (3) the Plans' potential 
repayment of the Advances; and (4) the potential purchase of the GICs 
from the Plans by the Employer for cash; provided the following 
conditions are satisfied:
    (A) All terms and conditions of such transactions are no less 
favorable to the Plans than those which the Plans could obtain in 
arm's-length transactions with unrelated parties;
    (B) No interest and/or expenses are paid by the Plans in connection 
with the transactions;
    (C) The proceeds of the Advances are used solely in lieu of 
payments due from Confederation with respect to the GICs;
    (D) Repayment of the Advances will be restricted to the GIC 
Proceeds, defined as the cash proceeds obtained by the Plans from or on 
behalf of Confederation with respect to the GICs;
    (E) Repayment of the Advances will be waived to the extent that the 
Advances exceed the GIC Proceeds; and
    (F) In any sale of a GIC to the Employer, the Plans will receive a 
purchase price which is no less than the fair market value of the GIC 
as of the sale date, and no less than the GIC's ``Book Value'' as 
defined in the Notice of Proposed Exemption, plus post-maturity 
interest, if applicable, at the FIF Rate as defined in the Notice of 
Proposed Exemption, less any Advances made pursuant to this exemption 
and any GIC Proceeds received with respect to the GIC, as of the sale 
date.
    For a more complete statement of the facts and representations 
supporting

[[Page 37937]]

this exemption, refer to the notice of proposed exemption published on 
May 6, 1996 at 61 FR 20281.

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

General Information

    The attention of interested persons is directed to the following:
    (1) The fact that a transaction is the subject of an exemption 
under section 408(a) of the Act and/or section 4975(c)(2) of the Code 
does not relieve a fiduciary or other party in interest or disqualified 
person from certain other provisions to which the exemption does not 
apply and the general fiduciary responsibility provisions of section 
404 of the Act, which among other things require a fiduciary to 
discharge his duties respecting the plan solely in the interest of the 
participants and beneficiaries of the plan and in a prudent fashion in 
accordance with section 404(a)(1)(B) of the Act; nor does it affect the 
requirement of section 401(a) of the Code that the plan must operate 
for the exclusive benefit of the employees of the employer maintaining 
the plan and their beneficiaries;
    (2) 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, D.C., this 17th day of July, 1996.
Ivan Strasfeld,
Director of Exemption Determinations, Pension and Welfare Benefits 
Administration, U.S. Department of Labor.
[FR Doc. 96-18539 Filed 7-19-96; 8:45 am]
BILLING CODE 4510-29-P