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Secretary of Labor Thomas E. Perez
Proposed Exemptions; Alloy Die Casting Co. Employees Profit Sharing Plan and Trust (the Plan), et al. [Notices] [08/08/1997]

EBSA (Formerly PWBA) Federal Register Notice

Proposed Exemptions; Alloy Die Casting Co. Employees Profit Sharing Plan and Trust (the Plan), et al. [08/08/1997]

[PDF Version]

Volume 62, Number 153, Page 42837-42839

[DOCID:fr08au97-118]

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DEPARTMENT OF LABOR

Pension and Welfare Benefits Administration
[Application No. D-10439, et al.]

 
Proposed Exemptions; Alloy Die Casting Co. Employees Profit 
Sharing Plan and Trust (the Plan), et al.

AGENCY: Pension and Welfare Benefits Administration, Labor.

ACTION: Notice of proposed exemptions.

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SUMMARY: This document contains notices of pendency before the 
Department of Labor (the Department) of proposed exemptions 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).

Written Comments and Hearing Requests

    Unless otherwise stated in the Notice of Proposed Exemption, all 
interested persons are invited to submit written comments, and with 
respect to exemptions involving the fiduciary prohibitions of section 
406(b) of the Act, requests for hearing within 45 days from the date of 
publication of this Federal Register Notice. Comments and requests for 
a hearing should state: (1) the name, address, and telephone number of 
the person making the comment or request, and (2) the nature of the 
person's interest in the exemption and the manner in which the person 
would be adversely affected by the exemption. A request for a hearing 
must also state the issues to be addressed and include a general 
description of the evidence to be presented at the hearing.

ADDRESSES: All written comments and requests for a hearing (at least 
three copies) should be sent to the Pension and Welfare Benefits 
Administration, Office of Exemption Determinations, Room N-5649, U.S. 
Department of Labor, 200 Constitution Avenue, N.W., Washington, D.C. 
20210. Attention: Application No. stated in each Notice of Proposed 
Exemption. The applications for exemption and the comments received 
will be available for public inspection in the Public Documents Room of 
Pension and Welfare Benefits Administration, U.S. Department of Labor, 
Room N-5507, 200 Constitution Avenue, N.W., Washington, D.C. 20210.

Notice to Interested Persons

    Notice of the proposed exemptions will be provided to all 
interested persons in the manner agreed upon by the applicant and the 
Department within 15 days of the date of publication in the Federal 
Register. Such notice shall include a copy of the notice of proposed 
exemption as published in the Federal Register and shall inform 
interested persons of their right to comment and to request a hearing 
(where appropriate).

SUPPLEMENTARY INFORMATION: The proposed exemptions were requested in 
applications filed pursuant to section 408(a) of the Act and/or section 
4975(c)(2) of the Code, and in accordance with procedures set forth in 
29 CFR Part 2570, Subpart B (55 FR 32836, 32847, August 10, 1990). 
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 requested 
to the Secretary of Labor. Therefore, these notices of proposed 
exemption are issued solely by the Department.
    The applications contain representations with regard to the 
proposed exemptions which are summarized below. Interested persons are 
referred to the applications on file with the Department for a complete 
statement of the facts and representations.

Alloy Die Casting Co. Employees' Profit Sharing Plan and Trust (the 
Plan), Located in Anaheim, California

[Application No. D-10439]

Proposed Exemption

    The Department is considering granting an exemption under the 
authority of section 408(a) of the Act and section 4975(c)(2) of the 
Code and in accordance with the procedures set forth in 29 CFR Part 
2570, Subpart B (55 FR 32836, 32847, August 10, 1990). If the exemption 
is granted, 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) of 
the Code, shall not apply to the proposed cash sale by the Plan to the 
Alloy Die Casting Co./W.E. Holmes, Inc. (Alloy), the Plan sponsor and a 
party in interest with respect to the Plan, of units (the Units) in the 
Krupp Insured Plus-II Limited Partnership (the Partnership), provided: 
(a) the sale is a one-time transaction for cash; (b) no commissions or 
other expenses are paid by the Plan in connection with the sale; (c) 
the Plan will receive $1.15 above the highest bid price for the Units 
at the most recent sealed bid auction for the Units which has occurred 
prior to the time of the sale; and (d) Alloy will purchase the Units 
from the Plan within 10 calendar days following the granting of the 
exemption proposed herein.

Summary of Facts and Representations

    1. On June 23, 1997, the Department proposed an exemption for the 
subject transaction (62 FR 33924). However, the exemption proposed 
therein provided for a sales price for the Units of the greater of: (1) 
$13.05 per Unit, or (2) $1.15 above the highest bid price for the Units 
at the most recent sealed bid auction for the Units which has

[[Page 42838]]

occurred prior to the time of the sale. The floor price of $13.05 per 
Unit derived from the highest bid price at the most recent sealed bid 
auction prior to the filing of the exemption application request.
    2. The applicant represents that subsequent to the publication of 
the proposed exemption, Krupp Insured Plus Corp. (Krupp), a general 
partner of the Partnership, announced that all holders of Partnership 
Units would receive a special distribution (the SD) of $.71 per Unit. 
The applicant represents that this SD constitutes a material change 
which necessitates an amendment to the proposed exemption cited in rep. 
1, above. The applicant states that the SD will result in a decrease in 
the fair market value of each Unit at the next sealed bid auction. 
Consequently, if the exemption were to be granted as originally 
proposed, Alloy would be paying significantly more than the fair market 
value of the Units. While Alloy felt that the proposed transaction, as 
published in the above cited proposed exemption, was close to fair 
market value at the time of the application and the publication, Alloy 
no longer believes that the proposed purchase price therein is 
representative of fair market value in light of the SD. Therefore, 
Alloy has requested that the proposed exemption be amended to the price 
of $1.15 above the highest bid price for the Units at the most recent 
sealed bid auction for the Units which has occurred prior to the time 
of the sale, but subsequent to the SD. The applicant further represents 
that Alloy will purchase the Units from the Plan within 10 calendar 
days of the granting of the exemption proposed herein.
    3. For a more complete statement of the circumstances involved in 
the subject transaction, refer to the notice of proposed exemption 
cited in rep. 1, above.

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

Bloom Consulting Corporation Profit Sharing Plan (the Plan), Located in 
Tiburon, California

[Application No. D-10440]

Proposed Exemption

    The Department of Labor is considering granting an exemption under 
the authority of section 408(a) of the Act and section 4975(c)(2) of 
the Code and in accordance with the procedures set forth in 29 CFR part 
2570, subpart B (55 FR 32836, August 10, 1990). If the exemption is 
granted, the sanctions resulting from the application of section 4975 
of the Code, by reason of sections 4975(c)(1) (A) through (E) of the 
Code shall not apply to the proposed purchase by the Plan of shares of 
common stock of Valley Forge Corporation (the Stock) from the Martin J. 
Bloom Family Trust, (the Trust) a disqualified person with respect to 
the Plan provided that the following conditions are satisfied: (1) the 
purchase of the Stock will be a one-time transaction for cash; (2) the 
Plan will purchase the Stock at a price no greater than the fair market 
value of the Stock as reported on the American Stock Exchange (AMEX) on 
the date of purchase; (3) the Plan will not pay any expenses in 
connection with the proposed transaction; and (4) the purchase of the 
Stock shall represent no more than 25% of the fair market value of the 
Plan's assets.

Summary of Facts and Representations

    1. The Plan is a profit sharing plan established and maintained by 
Bloom Consulting Corporation with one participant, Martin Bloom. As of 
September 1996, the fair market value of the Plan's assets was 
$5,307,723. In addition, Mr. Bloom is also the sole owner of Bloom 
Consulting Group which specializes in real estate investment and 
management consulting services. The Plan's trustees are Mr. Bloom and 
Theodore Desloge, Jr. Martin J. Bloom is also the owner of 100% of the 
beneficial interest in the Trust.
    2. Mr. Bloom proposes that the Plan purchase the Stock from the 
Trust. The Stock is traded on the American Stock Exchange (the AMEX). 
The purchase will be a one time transaction for cash. The total 
purchase price of the Stock will be determined by multiplying the 
number of shares to be purchased by the Plan by the closing price of 
the Stock as quoted on the AMEX on the date of the transaction. The 
value of the total shares of the Stock to be purchased by the Plan will 
be equal to the lesser of (a) $1,000,000 or (b) 25% of the fair market 
value of the Plan's assets at the time the transaction closes. The Plan 
will not pay any commissions or other expenses in connection with the 
purchase of the Stock.
    3. Mr. Bloom believes it is in the interest of the Plan to purchase 
the Stock. The Stock is a desirable investment for the Plan because of 
its history of steady growth. Further, Mr. Bloom believes that the 
market undervalues the stock, and it is a very safe investment for the 
Plan. Mr. Bloom expects such growth to continue. Further, Mr. Bloom 
believes that the market undervalues the stock, and it is a very safe 
investment for the Plan. In addition, the proposed transaction will 
permit the Plan to acquire the Stock without incurring any sales 
commissions or fees which ordinarily are associated with such a 
purchase on the open market.
    4. In summary, the applicant represents that the proposed 
transaction meets the statutory criteria of section 4975(c)(2) of the 
Code because: (a) the purchase of the Stock is a one time transaction 
for cash; (b) the Plan will pay no more than the fair market value of 
the Stock as traded on the AMEX; (c) no sales commissions or other 
expenses will be incurred by the Plan; and (d) the value of the total 
shares of Stock to be purchased by the Plan shall be lesser of 
$1,000,000 or 25% of the Plan's total assets.
    Notice to Interested Persons: Since Mr. Bloom is the only 
participant of the Plan, thus the only participant affected by the 
proposed transaction, it has been determined that there is no need to 
distribute the notice of proposed exemption to interested persons. 
Comments and hearing requests on the proposed transaction are due 30 
days after the date of publication of this notice in the Federal 
Register.

FOR FURTHER INFORMATION CONTACT: Allison Padams of the Department, 
telephone (202) 219-8971. (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 of disqualified 
person from certain other provisions of the Act and/or the Code, 
including any prohibited transaction provisions to which the exemption 
does not apply and the general fiduciary responsibility provisions of 
section 404 of the Act, which among other things require a fiduciary to 
discharge his duties respecting the plan solely in the interest of the 
participants and beneficiaries of the plan and in a prudent fashion in 
accordance with section 404(a)(1)(b) of the act; nor does it affect the 
requirement of section 401(a) of the Code that the plan must operate 
for the exclusive benefit of the employees of the employer maintaining 
the plan and their beneficiaries;
    (2) Before an exemption may be granted under section 408(a) of the 
Act and/or section 4975(c)(2) of the Code, the Department must find 
that the exemption is administratively feasible, in the interests of 
the plan and of its participants and beneficiaries and

[[Page 42839]]

protective of the rights of participants and beneficiaries of the plan;
    (3) The proposed exemptions, if granted, will be supplemental to, 
and not in derogation of, any other provisions of the Act and/or the 
Code, including statutory or administrative exemptions and transitional 
rules. Furthermore, the fact that a transaction is subject to an 
administrative or statutory exemption is not dispositive of whether the 
transaction is in fact a prohibited transaction; and
    (4) The proposed exemptions, if granted, will be subject to the 
express condition that the material facts and representations contained 
in each application are true and complete and 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 5th day of August, 1997.
Ivan Strasfeld,
Director of Exemption Determinations, Pension and Welfare Benefits 
Administration, Department of Labor.
[FR Doc. 97-21004 Filed 8-7-97; 8:45 am]
BILLING CODE 4510-29-P