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Secretary of Labor Thomas E. Perez
Grant of Individual Exemptions; Univar Corporation UniSaver Tax [Notices] [01/14/1997]

EBSA (Formerly PWBA) Federal Register Notice

Grant of Individual Exemptions; Univar Corporation UniSaver Tax [01/14/1997]

[PDF Version]

Volume 62, Number 9, Page 1925-1930

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DEPARTMENT OF LABOR
[Prohibited Transaction Exemption 97-01; Exemption Application No. D-
10143, et al.]

 
Grant of Individual Exemptions; Univar Corporation UniSaver Tax

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

Statutory Findings

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

Univar Corporation UniSaver Tax Savings Investment Plan (the Plan) 
Located In Kirkland, Washington

[Prohibited Transaction Exemption 97-01; Exemption Application No. D-
10143]

Exemption

    The restrictions of sections 406(a) and 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 extension of credit in the form of 
guarantees and loans of funds (the Loans), not to exceed $1,466,785.38, 
to the Plan by Univar Corporation (the Employer), the sponsor of the 
Plan, or it successors, with respect to Guaranteed Investment Contract 
No. 62127 (the GIC) issued by Confederation Life Insurance Company of 
Canada (Confederation), and the repayment of the Loans by the Plan to 
the Employer, or its successors, provided the following conditions are 
satisfied: (a) All terms and conditions of the transactions are no less 
favorable to the Plan than those the Plan could receive in arm's length 
transactions with unrelated parties; (b) No interest payments or other 
expenses will be incurred by the Plan with respect to the transactions; 
(c) Repayment of the Loans will be made from proceeds realized from the 
GIC (the GIC Proceeds) as paid to the Plan by Confederation, its 
successors, or any other third party, and made only if the repayments 
do not interfere with the liquidity needs of the Plan for payment of 
benefits, transfers of investments, hardship withdrawals, or loans as 
determined by BZW Barclays Global Investors, N.A., the Plan trustee; 
(d) Repayment of the Loans will be waived by the Employer and its 
successors to the extent the Loans exceed the GIC Proceeds; and (e) All 
unpaid principal and interest that was due under the GIC on August 12, 
1994, minus any Loans from the Employer and its successors, and/or 
payments received under the GIC after August 12, 1994, will be 
completely paid by January 1, 2000, by a Loan to the Plan from the 
Employer or its successors.
    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 6, 1996, at 61 
FR 57467.

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

Wayne Obstetrical Group, P.A. Money Purchase Retirement Plan (the Wayne 
Plan); Pediatric Professional Associates, P.A. Profit Sharing Plan (the 
Pediatric Plan); Physicians for Women, P.A. Profit-Sharing Plan and 
Trust (the Physicians Plan; collectively, the Plans) Located in Wayne, 
New Jersey

[Prohibited Transaction Exemption 97-02; Exemption Application Nos. D-
10262, D-10263, and D-10264]

Exemption

    The restrictions of sections 406(a), 406(b)(1) and (b)(2) of the 
Act and the

[[Page 1926]]

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 loans totalling $530,000 by the Plans to
S & D Associates (S & D), provided that the following conditions are 
satisfied:
    (a) The terms and conditions of the loans are at least as favorable 
to the Plans as those the Plans could obtain in comparable arm's length 
transactions with unrelated parties;
    (b) At all times, the loans are secured by a first mortgage on 
certain real property (the Property), which is duly recorded under New 
Jersey State law;
    (c) At all times, the fair market value of the Property, as 
established by a qualified, independent appraiser, equals at least 150% 
of the total outstanding balances of the loans;
    (d) At all times, no more than 25% of the assets of each lending 
Plan are invested in the loans;
    (e) A qualified, independent fiduciary has determined that the 
loans are in the best interests of the Plans; and
    (f) At all times, the independent fiduciary enforces compliance 
with the terms and conditions of the loans and of the exemption, 
including foreclosure on the Property in the event of default.

EFFECTIVE DATE: The exemption is effective as of January 1, 1997.

    In response to a comment from the applicants, the Department has 
agreed to modify the Summary of Facts and Representations (the Summary) 
in the notice of proposed exemption to reflect a modification to the 
terms of the loans. Accordingly, on page 55323 of such notice, the 
first subparagraph in Paragraph 4 of the Summary should be corrected to 
read as follows:

    The loans, as evidenced by promissory notes, will each provide 
for a term of 15 years and a fixed interest rate of 11 percent per 
annum for the first 10 years. Thereafter, the interest rate will 
become adjustable annually, based upon the greater of: (a) 11 
percent, or (b) three percent above the five-year Treasury note 
yield as published in The Wall Street Journal, determined as of the 
10th anniversary of the loans and each subsequent anniversary 
thereof. The promissory notes will require S & D Associates to make 
monthly payments of principal and interest on the loans, to be fully 
amortized over the 15-year term. The Plans will pay no fees nor 
other expenses relating to the loans.

A ``Supplemental Statement'' describing the modified loan terms was 
provided to interested persons, along with a copy of the notice of 
proposed exemption as published in the Federal Register. Due to a delay 
in providing notice to interested persons, the comment period was 
extended until December 26, 1996.
    In addition, the applicants wished to note that the last sentence 
in the first subparagraph of Paragraph of 1 of the Summary should be 
corrected to read as follows:

    The trustees of the Wayne Plan are the four owners, above [i.e., 
revised to include Steven Domnitz].

    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 25, 1996 at 61 FR 
55322.

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

National Baptist Publishing Board Pension Plan (the Plan) Located in 
Nashville, TN

[Prohibited Transaction Exemption 97-03; Exemption Application No. D-
10283]

Exemption

    The restrictions of sections 406(a) and 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 sections 4975(c)(1) (A) through (E) of 
the Code shall not apply to the cash sale (the Sale) of common stock of 
Citizens Savings Bank and Trust Company (the Stock) located in 
Nashville, Tennessee, by the Plan to AmeriStar Investments and Trust, a 
division of First American National Bank, Trustee of the Plan and party 
in interest with respect to the Plan; provided that (1) the Sale is a 
one-time transaction for cash; (2) the Plan experiences no loss nor 
incurs any expenses from the Sale; and (3) the Plan receives as 
consideration from the Sale the greater of the following amounts: (a) 
the fair market value of the Stock as of the date of the Sale plus 
interest at 6% for the period March 31, 1993 through the date the Stock 
is sold by the Plan; or (b) the total cost of the investment, $100,000, 
plus interest at 6% for the period March 31, 1993 through the date the 
Stock is sold by the Plan.
    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 25, 1996 at 61 FR 
55324.

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

Summit Sheet Metal, Inc. Defined Benefit Pension Plan (the Plan) 
Located In Anaheim, California

[Prohibited Transaction Exemption 97-04; Exemption Application No. D-
10330]

Exemption

    The restrictions of sections 406(a) and 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 cash sale (the Sale) by the Plan of 
certain real property (the Property) to Messrs. Milton J. Chasin, 
Donald E. Hanson, and Gale N. Searing, parties in interest with respect 
to the Plan; provided that the following conditions are satisfied: (a) 
The Sale is a one-time transaction for a lump sum cash payment; (b) the 
purchase price is the fair market value of the Property as determined 
on the date of the Sale by a qualified, independent appraiser; and (c) 
the Plan will incur no commissions or any other expenses from the Sale.
    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 25, 1996, at 61 
FR 59914.

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

SouthTrust Securities, Inc. (ST) Located in Birmingham, Alabama

[Prohibited Transaction Exemption 97-05; Exemption Application No. D-
10376]

Exemption

I. Transactions
    A. Effective October 25, 1996, 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 the secondary market for such certificates; 
and

[[Page 1927]]

    (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) and 407 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.<SUP>1
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    \1\ Section I.A. provides 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 October 25, 1996, 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 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 certificates is (a) an obligor with respect to 5 
percent or less of the fair market value of obligations or receivables 
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 has 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.<SUP>2 For purposes of this 
paragraph B.(1)(iv) only, an entity will not be considered to service 
assets contained in a trust if it is merely a subservicer of that 
trust;
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    \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
    (3) The continued holding of certificates acquired by a plan 
pursuant to subsection I.B. (1) or (2).
    C. Effective October 25, 1996, 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

    \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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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.
    D. Effective October 25, 1996, 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.
II. General Conditions
    A. The relief provided under Part 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 Structured 
Rating Group (S&P's), Moody's Investors Service, Inc. (Moody's), Duff & 
Phelps Credit Rating Co. (D & P) or Fitch Investors Service, L.P. 
(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 under the Securities Act of 1933.
    B. Neither any underwriter, sponsor, trustee, servicer, insurer, 
nor any obligor, unless it or any of its affiliates has discretionary 
authority or renders

[[Page 1928]]

investment advice with respect to the plan assets used by a plan to 
acquire certificates, shall be denied the relief provided under Part 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.
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) above for which ST 
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);
    (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
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    \4\ It is the Department's view that the definition of ``trust'' 
contained in III.B. includes a two-tier 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 securities 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 subsection 
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) ST;
    (2) any person directly or indirectly, through one or more 
intermediaries, controlling, controlled by or under common control with 
ST; or
    (3) any member of an underwriting syndicate or selling group of 
which ST 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 loans contained in the 
trust, but is not a party to the pooling and servicing agreement.
    G. ``Servicer'' means any entity which services loans 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;

[[Page 1929]]

    (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 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);
    (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:
    (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 trust's security interest in the 
equipment is at least as protective of the rights of the trust as would 
be the case 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:
    (1) the trust holds a security interest in the lease;
    (2) the trust holds a security interest in the leased motor 
vehicle; and
    (3) the trust's security interest in the leased motor vehicle is at 
least as protective of the trust's rights as would be the case if the 
trust consisted of motor vehicle installment loan contracts.
    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.
    W. ``ST'' means SouthTrust Securities, Inc. and its affiliates.
    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 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 December 3, 1996 at 61 FR 
64164.

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

Skana Enterprises, Inc. Defined Benefit Pension Plan (the Plan) Located 
in Kodiak, Alaska

[Prohibited Transaction Exemption 97-06; Exemption Application No. D-
10342]

Exemption

    The sanctions resulting from the application of section 4975 of the 
Code, by reason of section 4975(c)(1)(A) through (E) of the Code, shall 
not apply to: (1) the loan (the Loan) of $157,500 by the Plan to Skana 
Enterprises, Inc. (Skana), the Plan's sponsor and a disqualified person 
with respect to the Plan, and (2) the personal guarantee of the Loan by 
Mr. Ralph Bolton (Mr. Bolton), a disqualified person with respect to 
the Plan, provided the following conditions are satisfied: (a) the 
terms of the Loan are at least as favorable to the Plan as those 
obtainable in an arm's-length transaction with an unrelated party; (b) 
the Loan does not exceed 25% of the assets of the Plan; (c) the Loan is 
secured by a first deed of trust on real property (the Property) which 
has been appraised by a qualified independent appraiser to have a fair 
market value not less than 150% of the amount of the Loan; (d) the fair 
market value of the Property remains at least equal to 150% of the 
outstanding balance of the Loan throughout the duration of the Loan; 
(e) the Plan's independent fiduciary has determined that the Loan is 
appropriate for, in the best interest of, and protective of the Plan; 
and (f) the Plan's independent fiduciary will monitor compliance with 
the terms of the Loan and conditions of the exemption throughout the 
duration of the transaction, taking any action necessary to safeguard 
the Plan's interest, including foreclosure on the Property in the event 
of default.<SUP>5
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    \5\ Since Mr. Bolton is the sole owner of Skana and the only 
participant in the Plan, there is no jurisdiction under Title I of 
the Act pursuant to 29 CFR 2510.3-3(b). However, there is 
jurisdiction under Title II of the Act pursuant to section 4975 of 
the Code.
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    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 25, 1996 at 61 
FR 59915.

FOR FURTHER INFORMATION CONTACT: Gary H. Lefkowitz of the Department,

[[Page 1930]]

telephone (202) 219-8881. (This is not a toll-free number.)

Wayne Obstetrical Group, P.A. Money Purchase Retirement Plan (the Wayne 
Plan); Pediatric Professional Associates, P.A. Profit Sharing Plan (the 
Pediatric Plan); Physicians for Women, P.A. Profit-Sharing Plan and 
Trust (the Physicians Plan; collectively, the Plans) Located in Wayne, 
New Jersey

[Prohibited Transaction Exemption 97-07; Exemption Application Nos. D-
10262, D-10263, and D-10264]

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 loans totalling $530,000 by the Plans to S & D 
Associates (S & D), provided that the following conditions are 
satisfied:
    (a) The terms and conditions of the loans are at least as favorable 
to the Plans as those the Plans could obtain in comparable arm's length 
transactions with unrelated parties;
    (b) At all times, the loans are secured by a first mortgage on 
certain real property (the Property), which is duly recorded under New 
Jersey State law;
    (c) At all times, the fair market value of the Property, as 
established by a qualified, independent appraiser, equals at least 150% 
of the total outstanding balances of the loans;
    (d) At all times, no more than 25% of the assets of each lending 
Plan are invested in the loans;
    (e) A qualified, independent fiduciary has determined that the 
loans are in the best interests of the Plans; and
    (f) At all times, the independent fiduciary enforces compliance 
with the terms and conditions of the loans and of the exemption, 
including foreclosure on the Property in the event of default.

EFFECTIVE DATE: The exemption is effective as of January 1, 1997.
    In response to a comment from the applicants, the Department has 
agreed to modify the Summary of Facts and Representations (the Summary) 
in the notice of proposed exemption to reflect a modification to the 
terms of the loans. Accordingly, on page 55323 of such notice, the 
first subparagraph in Paragraph 4 of the Summary should be corrected to 
read as follows:

    The loans, as evidenced by promissory notes, will each provide 
for a term of 15 years and a fixed interest rate of 11 percent per 
annum for the first 10 years. Thereafter, the interest rate will 
become adjustable annually, based upon the greater of: (a) 11 
percent, or (b) three percent above the five-year Treasury note 
yield as published in The Wall Street Journal, determined as of the 
10th anniversary of the loans and each subsequent anniversary 
thereof. The promissory notes will require S & D Associates to make 
monthly payments of principal and interest on the loans, to be fully 
amortized over the 15-year term. The Plans will pay no fees nor 
other expenses relating to the loans.

A ``Supplemental Statement'' describing the modified loan terms was 
provided to interested persons, along with a copy of the notice of 
proposed exemption as published in the Federal Register. Due to a delay 
in providing notice to interested persons, the comment period was 
extended until December 26, 1996.
    In addition, the applicants wished to note that the last sentence 
in the first subparagraph of Paragraph of 1 of the Summary should be 
corrected to read as follows:

    The trustees of the Wayne Plan are the four owners, above [i.e., 
revised to include Steven Domnitz].

    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 25, 1996 at 61 FR 
55322.

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

General Information

    The attention of interested persons is directed to the following:
    (1) The fact that a transaction is the subject of an exemption 
under section 408(a) of the Act and/or section 4975(c)(2) of the Code 
does not relieve a fiduciary or other party in interest or disqualified 
person from certain other provisions to which the exemptions does not 
apply and the general fiduciary responsibility provisions of section 
404 of the Act, which among other things require a fiduciary to 
discharge his duties respecting the plan solely in the interest of the 
participants and beneficiaries of the plan and in a prudent fashion in 
accordance with section 404(a)(1)(B) of the Act; nor does it affect the 
requirement of section 401(a) of the Code that the plan must operate 
for the exclusive benefit of the employees of the employer maintaining 
the plan and their beneficiaries;
    (2) These exemptions are supplemental to and not in derogation of, 
any other provisions of the Act and/or the Code, including statutory or 
administrative exemptions and transactional rules. Furthermore, the 
fact that a transaction is subject to an administrative or statutory 
exemption is not dispositive of whether the transaction is in fact a 
prohibited transaction; and
    (3) The availability of these exemptions is subject to the express 
condition that the material facts and representations contained in each 
application accurately describes all material terms of the transaction 
which is the subject of the exemption.

    Signed at Washington, D.C., this 9th day of January, 1997.
Ivan Strasfeld,
Director of Exemption Determinations, Pension and Welfare Benefits 
Administration, U.S. Department of Labor.
[FR Doc. 97-864 Filed 1-13-97; 8:45 am]
BILLING CODE 4510-29-P