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Secretary of Labor Thomas E. Perez
Grant of Individual Exemptions; Moody-Day, Inc. Profit Sharing Plan, et al. [Notices] [01/21/1999]

EBSA (Formerly PWBA) Federal Register Notice

Grant of Individual Exemptions; Moody-Day, Inc. Profit Sharing Plan, et al. [01/21/1999]

[PDF Version]

Volume 64, Number 13, Page 3318-3319

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DEPARTMENT OF LABOR

Pension and Welfare Benefits Administration
[Prohibited Transaction Exemption 99-01; Exemption Application No. D-
10535, et al.]

 
Grant of Individual Exemptions; Moody-Day, Inc. Profit Sharing 
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, 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.

Moody-Day, Inc. Profit Sharing Plan (the Plan); Located in 
Carrollton, Texas; Exemption

[Prohibited Transaction Exemption 99-01; Exemption Application No. D-
10535]

    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 past sale (the Sale) by the Plan of an 
unimproved three-acre tract of real property located in Austin, Texas 
(the Property) to Metroport Realty Corporation, an affiliate of Moody-
Day, Inc., the Plan sponsor and a party in interest with respect to the 
Plan, provided the following conditions were satisfied:
    (A) the Sale was a one-time transaction for cash;
    (B) the Plan received the fair market value of the Property on the 
date of the Sale;
    (C) the Property was appraised by qualified, independent real 
estate appraisers;
    (D) a qualified, independent fiduciary determined that the Sale was 
in the best interests of the Plan; and
    (E) the Plan paid no commissions or other expenses relating to 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 9, 1998 at 63 FR 
60386.

EFFECTIVE DATE: This exemption has an effective date of May 24, 1995.

FOR FURTHER INFORMATION CONTACT: Janet L. Schmidt of the Department, 
telephone (202) 219-8883. (This is not a toll-free number.)

Toledo Clinic, Inc. Employees 401(k) and Profit Sharing Plan (the 
T/C Plan); Hart Associates, Inc. Profit Sharing Plan (the H/A 
Plan); and Midwest Fluid Power Company, Inc. Savings and Profit 
Sharing Plan and Trust (the M/F Plan, Collectively; the Plans) 
Located in Toledo, Ohio; Exemption

[Prohibited Transaction Exemption 99-02; Exemption Application Nos. D-
10633, D-10634 and D-10635, respectively]

    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

[[Page 3319]]

the Code, shall not apply, effective December 1, 1998, to: (1) the cash 
sale of certain shares of preferred stock (the Preferred Stock) issued 
by TTC Holdings Inc. (TTC), by the individually-directed account of Dr. 
Edward Orrechio in the T/C Plan, by the individually-directed account 
of Michael Hart in the H/A Plan, and by the individually-directed 
account of Larry Peterson in the M/F Plan (collectively, the Accounts) 
to TTC, a party in interest with respect to the H/A Plan and M/F Plan; 
and (2) the arrangement for the subsequent purchase of certain shares 
of common Stock (the Common Stock) issued by TTC by Messrs. Orecchio, 
Hart and Peterson (collectively; the Participants), in their own name, 
from TTC pursuant to an agreement with TTC that the purchase was to 
occur immediately after the sale of the Preferred Stock by the Plans to 
TTC; provided that the following conditions were met:
    1. The sale of the Preferred Stock to TTC by the Accounts and the 
purchase of the Common Stock from TTC by the Participants, in their 
individual capacity, were one-time transactions for cash;
    2. The transactions described in (1) above took place on the same 
business day;
    3. The amount paid to the Accounts by TTC was the fair market value 
of the Preferred Stock, as determined by a qualified independent 
appraiser at the time of the sale;
    4. The Participants, in their individual capacity, purchased from 
TTC shares of the Common Stock which were equal in number to the shares 
of Preferred Stock sold by the Accounts to TTC;
    5. A qualified independent fiduciary (the Independent Fiduciary) 
determined that the transactions described herein were in the best 
interest and protective of the Accounts at the time of the 
transactions; and
    6. The Independent Fiduciary supervised the transactions; assured 
that the conditions of this exemption were met; and took whatever 
actions were necessary to protect the interests of the Accounts, 
including reviewing amounts paid by TTC for the Preferred Stock.

EFFECTIVE DATE: This exemption is effective as of December 1, 1998.

FOR FURTHER INFORMATION CONTACT: Ekaterina A. Uzlyan of the Department, 
telephone (202) 219-8883. (This is not a toll-free number.)

Sprinx Inc. Retirement Plan (the Plan) Located in Grand Prairie, 
Texas; Exemption

[Prohibited Transaction Exemption 99-03; Exemption Application No. D-
10660]

    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 proposed loan of $90,000 (the Loan) by the 
Plan to Sprinx, Inc. (the Employer), the sponsor of the Plan; and (2) 
the guarantee of repayment of the Loan by Harry D. Spring, a party in 
interest with respect to the Plan; provided that the following 
conditions are satisfied:
    1. The Loan does not exceed 25% of the total assets of the Plan at 
any time;
    2. The terms of the Loan are at least as favorable to the Plan as 
those terms which would exist in an arm's-length transaction with an 
unrelated party;
    3. The Loan is secured by common stock issued by the Employer, 
which has a fair market value, as determined by an independent 
qualified appraiser, which will remain at least 200% of the outstanding 
principal balance of the Loan throughout its duration;
    4. The Plan has a first priority perfected security interest in the 
Stock, which is properly filed and perfected under applicable state 
law;
    5. The independent fiduciary reviews the terms and conditions of 
the Loan and determines that the Loan is in the best interest and 
protective of the Plan and its participants and beneficiaries;
    6. The independent fiduciary monitors the Loan throughout its 
duration and takes whatever action is necessary to protect the 
interests of the Plan; and
    7. The independent fiduciary monitors the parties' compliance with 
the terms and conditions of this exemption.

FOR FURTHER INFORMATION CONTACT: Ekaterina A. Uzlyan of the Department, 
telephone (202) 219-8883. (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 14th day of January, 1999.
Ivan Strasfeld,
Director of Exemption Determinations, Pension and Welfare Benefits 
Administration, Department of Labor.
[FR Doc. 99-1272 Filed 1-20-99; 8:45 am]
BILLING CODE 4510-29-P