[Federal Register Volume 66, Number 167 (Tuesday, August 28, 2001)]
[Notices]
[Pages 45340-45343]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-21628]
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DEPARTMENT OF LABOR
Pension and Welfare Benefits Administration
Prohibited Transaction Exemption 2001-27; [Exemption Application No. D-
10935, et al.]
Grant of Individual Exemptions; The Walston & High, P.A. Profit
Sharing Plan (the Plan) et al.
AGENCY: Pension and Welfare Benefits Administration, Labor.
ACTION: Grant of individual exemptions.
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SUMMARY: This document contains exemptions issued by the Department of
Labor (the Department) from certain of the prohibited transaction
restrictions of the Employee Retirement Income Security Act of 1974
(the Act) and/or the Internal Revenue Code of 1986 (the Code).
Notices were published in the Federal Register of the pendency
before the Department of proposals to grant such exemptions. The
notices set forth a summary of facts and representations contained in
each application for exemption and referred interested persons to the
respective applications for a complete statement of the facts and
representations. The applications have been available for public
inspection at the Department in Washington, DC. The 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, 5 U.S.C.
App. 1 (1996), 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.
The Walston & High, P.A. Profit Sharing Plan (the Plan) Located in
Wilson, North Carolina
[Prohibited Transaction Exemption No. 2001-27; Application No. D-10935]
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 Sale (the Sale) by the Plan to A.J. Walston and
Arthur T. High, the trustees of the Plan (the Trustees), of three
parcels of improved real property (the Parcels). This exemption is
conditioned upon the adherence to the material facts and
representations described herein and upon the satisfaction of the
following requirements:
(a) The Sale is a one-time transaction for cash;
(b) The Plan does not pay any commissions, costs or other expenses
in connection with the Sale; and
(c) The Plan will receive an amount equal to the greater of:
(i) $234,000; or (ii) The current fair market value of the
Property, as established by an independent, qualified, appraiser at the
time of 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 June 28, 2001 at 66 FR
34471.
FOR FURTHER INFORMATION CONTACT: Khalif Ford of the Department,
telephone (202) 219-8883 (this is not a toll-free number).
Retirement Plan of Dime Bancorp, Inc. (The Dime Plan); Retirement
401(k) Plan of Dime Bancorp, Inc. (the Dime 401(k) Plan); North
American Mortgage Company Retirement and 401(k) Savings Plan (the
NAMCO Plan); and Lakeview Savings Bank Employee Stock Ownership
Plan (the ESOP; together, the Plans), Located in New York, New York
[Prohibited Transaction Exemption 2001-28; Exemption Application Nos.
D-10962 through D-10965]
Exemption
The restrictions of sections 406(a), 406(b)(1) and (b)(2) and
407(a) of the Act and the sanctions resulting from the application of
section 4975 of the Code, by reason of section 4975(c)(1)(A) through
(E) of the Code, shall not apply, as of December 29, 2000, to: (1) the
receipt by the Plans of certain Litigation Tracking Warrants (the
Warrants) pursuant to the distribution of Warrants (the Warrant
Distribution) by Dime Bancorp, Inc. (Dime) to all of its common
stockholders as of December 22, 2000 (the Record Date);\1\ (2) the past
[[Page 45341]]
and proposed future holding of the Warrants by the Plans;\2\ and (3)
the disposition or exercise of the Warrants by the Plans; provided that
the following conditions are satisfied:
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\1\ In addition to all of Dime's common stockholders as of
December 22, 2000 receiving Warrants pursuant to the Warrant
Distribution, any person or entity (including the Plans) who bought
the common stock of Dime (the Stock) during the period from December
20, 2000 through December 29, 2000 received such Stock with certain
accompanying ``due bills'' reflecting the seller's obligation to
deliver Warrants to the buyer upon the seller's receipt of such
Warrants pursuant to the Warrant Distribution, and therefore also
received Warrants in connection with such purchases of Stock.
Accordingly, the exemption proposed herein shall also apply to the
acquisition, holding, disposition and exercise of Warrants acquired
by the Plans in connection with the purchase of Stock with due
bills.
\2\ On June 25, 2001, Dime signed an agreement to merge (the
Merger) with Washington Mutual, Inc. (WM). After the closing of the
Merger, Dime will no longer be a separate corporate entity, and the
Warrants will convert into warrants to purchase shares of WM common
stock in accordance with their terms.
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(A) The Plans' acquisition and holding of the Warrants resulted
from an independent act of Dime as a corporate entity, and all holders
of Stock, including the Plans, were treated in a like manner with
respect to the Warrant Distribution (with the exception of one holder
of Stock, who did not receive Warrants);
(B) With respect to Warrants allocated to the Dime 401(k) Plan and
the NAMCO Plan, the Warrants were acquired solely for the accounts of
participants who had directed investment of all or a portion of their
account balances in Stock pursuant to Plan provisions for individually-
directed investment of participant accounts;
(C) With respect to Warrants allocated to the Dime Plan and the
ESOP, the authority for all decisions regarding the holding,
disposition or exercise of the Warrants by such Plans will be exercised
by an independent fiduciary acting on behalf of such Plans; and
(D) With respect to Warrants allocated to the Dime 401(k) Plan and
the NAMCO Plan, all decisions regarding the holding, disposition or
exercise of the Warrants have been, and will continue to be made, in
accordance with Plan provisions for individually-directed investment of
participant accounts, by the individual Plan participants whose
accounts in the Plan received Warrants in connection with the Warrant
Distribution, including all determinations regarding the exercise or
sale of the Warrants received through the Warrant Distribution,\3\
except for those participants who fail to file timely and valid
instructions concerning the exercise of the Warrants, with respect to
whom the Warrants allocated to their accounts will, to the extent a
public trading market for the Warrants exists, be sold.
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\3\ On January 1, 2001, the NAMCO Plan was merged with and into
the Dime 401(k) Plan. As a result, for a period of time, there was a
temporary administrative freeze period (the Freeze Period) during
which former participants of the NAMCO Plan (the Former NAMCO
Participants) could not direct the investment of their accounts
under the Dime 401(k) Plan, including any Warrants allocated to such
accounts. During such Freeze Period, an independent fiduciary had
the authority to hold, sell or exercise (to the extent the Warrants
were then exercisable) all of the Warrants transferred from the
NAMCO Plan and allocated to the accounts of the Former NAMCO
Participants under the Dime 401(k) Plan. Once the Freeze Period
ceased, the Former NAMCO Participants immediately regained the
ability to direct the investment of their accounts under the Dime
401(k) Plan, including any Warrants allocated to such accounts.
EFFECTIVE DATE: This exemption is effective as of December 29, 2000.
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 (the Proposal) published on June 28,
2001 at 66 FR 34472.
Written Comments
The Department received two written comments with respect to the
Proposal. One comment was submitted by a Dime Plan participant who,
after receiving an explanation of the Proposal over the telephone by a
representative of the Department, withdrew her objection to the
Proposal.
The other comment letter was submitted by the applicants. In that
letter, the applicants informed the Department that on June 25, 2001,
Dime signed an agreement to merge with WM. After the closing of the
Merger, Dime will cease to be a separate corporate entity, and WM will
be the surviving corporate entity. After the Merger, the Warrants will
therefore be exercisable, following the occurrence of their triggering
event, with respect to WM stock rather than Dime Stock, in accordance
with the terms of the Warrant Agreement (the Agreement). The Agreement
was attached as an exhibit to Dime's Form 8-A Filing with the
Securities and Exchange Commission in connection with the distribution
of the Warrants. The Agreement also provides for the adjustment of the
exercise price of the Warrants in the event of a corporate transaction,
such as the Merger.
As a result of the anticipated Merger, the applicants requested
that the granted exemption reflect this factual change by adding the
information contained in footnote 2. The Department has modified the
exemption accordingly.
In addition, the applicants requested some changes in language to
clarify the Proposal. With respect to Transaction (1) above, the
applicants note that because the effective date of the exemption is
December 29, 2000, and the Warrants were first distributed as of that
date, there was no ``past receipt by the Plans'' of the Warrants, as
indicated in the language of the Proposal, and a reference to ``receipt
by the Plans'' would be more accurate. For purposes of clarification,
the Department has deleted the word ``past'' as it appeared in this
section of the Proposal.
The applicants also wanted to correct a typographical error that
appeared in footnote 2 of the Proposal at 66 FR 34472. The last word of
the fourth line should read ``bought,'' not ``brought.''
The applicants further noted that all references to ``Dime'' in
Paragraph 3 of the Summary of Facts and Representations (the Summary)
in the Proposal should actually be to ``Dime Savings'' and not to
``Dime,'' as Dime Savings, not Dime Bancorp, maintains the ongoing
Goodwill Litigation discussed therein.
Finally, the applicants pointed out that in the description of the
number of participants and amount of assets for the Dime 401(k) Plan in
Paragraph 8 of the Summary, the statistics listed reflect the Dime
401(k) Plan prior to its merger with the NAMCO Plan on January 1, 2001.
Thus, the Dime 401(k) Plan had (not ``has'') prior to the January 1,
2001 merger, approximately 3,000 participants and total assets with a
fair market value of approximately $147,955,000, with Dime Stock
representing approximately 15% of the fair market value of such assets.
Accordingly, based on the entire record, the Department has
determined to grant the exemption as modified herein.
FOR FURTHER INFORMATION CONTACT: Gary H. Lefkowitz of the Department,
telephone (202) 219-8881. (This is not a toll-free number
Gooch Enterprises, Inc. Money Purchase Pension Plan (the Plan),
Located in Thomasville, North Carolina
[Prohibited Transaction Exemption 2001-29; Exemption Application No. D-
10969]
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 of two tracts of land (the Property) by the
Plan to Harold L. Gooch, Jr. and Susan M. Gooch, who are shareholders
of the
[[Page 45342]]
Plan sponsor, the trustees of the Plan and, therefore, parties in
interest with respect to the Plan; provided that the following
conditions are satisfied:
(a) The sale is a one-time cash transaction;
(b) The Plan receives the current fair market value for the
Property, as established by an independent qualified appraiser at the
time of the sale; and
(c) the Plan pays no commissions or other expenses associated with
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 June 28, 2001 at 66 FR
34483.
FOR FURTHER INFORMATION CONTACT: Ekaterina A. Uzlyan of the Department
at (202) 219-8883. (This is not a toll-free number.)
J.P. Morgan Chase & Co. (Morgan Chase) and its Affiliates
(collectively, the Applicants), Located in New York, New York
[Prohibited Transaction Exemption 2001-30; Exemption Application No. D-
10998]
Exemption
Based on the facts and representations set forth in the
application, the Department is 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).\4\
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\4\ For purposes of this exemption, references to Title I of the
Act, unless otherwise noted herein, refer also to corresponding
provisions of the Code.
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Section I. Covered Transactions
The restrictions of section 406(a)(1)(A) through (D) of the Act and
the sanctions resulting from the application of section 4975 of the
Code, by reason of section 4975(c)(1)(A) through (D) of the Code, shall
not apply to: (1) The purchase or sale by employee benefit plans (the
Plans), other than Plans sponsored and maintained by the Applicants, of
publicly-traded debt securities (the Debt Securities) issued by the
Applicants; and (2) the extension of credit by the Plans to the
Applicants in connection with the holding of the Debt Securities.
This exemption is subject to the general conditions that are set
forth below in Section II.
Section II. General Conditions
(a) The Debt Securities are made available by the Applicants in the
ordinary course of their business to Plans as well as to customers
which are not Plans.
(b) The decision to invest in the Debt Securities is made by a Plan
fiduciary (the Independent Plan Fiduciary) or a participant in a Plan
that provides for participant-directed investments (the Plan
Participant), which is independent of the Applicants.
(c) The Applicants do not have any discretionary authority or
control or provide any investment advice, within the meaning of 29 CFR
2510.3-21(c), with respect to the Plan assets involved in the
transactions.
(d) The Plans pay no fees or commissions to the Applicants in
connection with the transactions covered by the requested exemption,
other than the mark-up for a principal transaction permissible under
Part II of Prohibited Transaction Class Exemption (PTCE) 75-1 (40 FR
50845, October 31, 1975).\5\
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\5\ The Department is providing no opinion herein as to whether
any principal transactions involving debt securities would be
covered by PTCE 75-1, or whether any particular mark-up by a broker-
dealer for such transaction would be permissible under Part II of
PTCE 75-1.
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(e) The Applicants agree to notify Plan investors in the prospectus
(the Prospectus) for the Debt Securities that, at the time of
acquisition, no more than 15 percent of a Plan's assets should be
invested in any of the Debt Securities.
(f) The Debt Securities do not have a duration which exceeds 9
years from the date of issuance.
(g) Prior to a Plan's acquisition of any of the Debt Securities,
the Applicants fully disclose, in the Prospectus, to the Independent
Plan Fiduciary or Plan Participant, all of the terms and conditions of
such Debt Securities, including, but not limited to, the following:
(1) A statement to the effect that the return calculated for the
Debt Securities will be denominated in U.S. dollars;
(2) The specified index (the Index) or Indexes on which the rate of
return on the Debt Securities is based;
(3) A numerical example, designed to be understood by the average
investor, which explains the calculation of the return on the Debt
Securities at maturity and reflects, among other things, (i) a
hypothetical initial value and closing value of the applicable Index,
and (ii) the effect of any adjustment factor on the percentage change
in the applicable Index;
(4) The date on which the Debt Securities are issued;
(5) The date on which the Debt Securities will mature and the
conditions of such maturity;
(6) The initial date on which the value of the Index is calculated;
(7) Any adjustment factor or other numerical methodology that would
affect the rate of return, if applicable;
(8) The ending date on which interest is determined, calculated and
paid;
(9) Information relating to the calculation of payments of
principal and interest, including a representation to the effect that,
at maturity, the beneficial owner of the Debt Securities is entitled to
receive the entire principal amount, plus an amount derived directly
from the growth in the Index (but in no event less than zero);
(10) All details regarding the methodology for measuring
performance;
(11) The terms under which the Debt Securities may be redeemed;
(12) The exchange or market where the Debt Securities are traded or
maintained; and
(13) Copies of the proposed and final exemptions relating to the
exemptive relief provided herein, upon request.
(h) The terms of a Plan's investment in the Debt Securities are at
least as favorable to the Plan as those available to an unrelated non-
Plan investor in a comparable arm's length transaction at the time of
such acquisition.
(i) In the event the Debt Securities are delisted from any
nationally-recognized securities exchange, the Applicants will apply
for trading through the National Association of Securities Dealers
Automated Quotations System (NASDAQ), which requires that there be
independent market-makers establishing a market for such securities in
addition to the Applicants. If there are no independent market-makers,
the exemption will no longer be considered effective.
(j) The Debt Securities are rated in one of the three highest
generic rating categories by at least one nationally-recognized
statistical rating service at the time of their acquisition.
(k) The rate of return for the Debt Securities is objectively
determined and, following issuance, the Applicants retain no authority
to affect the determination of the return for such security, other than
in connection with a ``market disruption event'' that is described in
the Prospectus for the Debt Securities.
(l) The Debt Securities are based on an Index that is--
(1) Created and maintained \6\ by an entity that is unrelated to
the Applicants
[[Page 45343]]
and is a standardized and generally-accepted Index of securities; or
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\6\ For purposes of this exemption, the term ``maintain'' means
that all calculations relating to the securities in the Index, as
well as the rate of return of the Index, are made by an entity that
is unrelated to the Applicants.
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(2) Created by the Applicants, but maintained by an entity that is
unrelated to the Applicants,
(i) Consists either of standardized and generally-accepted Indexes
or an Index comprised of publicly-traded securities that are not issued
by the Applicants, are designated in advance and listed in the
Prospectus for the Debt Securities (Under either circumstance, the
Applicants may not unilaterally modify the composition of the Index,
including the methodology comprising the rate of return.),
(ii) Meets the requirements for an Index in Rule 19b-4 under the
Securities Exchange Act of 1934, and
(iii) The index value for the Index is publicly-disseminated
through an independent pricing service, such as Reuters Group, PLC or
Bloomberg L.P., or through a national securities exchange.
(m) The Applicants do not trade in any way intended to affect the
value of the Debt Securities through holding or trading in the
securities which comprise an Index.
(n) The Applicants maintain, for a period of six years, the records
necessary to enable the persons described in paragraph (o) of this
section 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 the Applicants,
the records are lost or destroyed prior to the end of the six year
period; and
(2) No party in interest other than the Applicants shall be subject
to the civil penalty that may be assessed under section 502(i) of the
Act, or to 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 (o) below.
(o)(1) Except as provided in section (o)(2) of this paragraph and
notwithstanding any provisions of subsections (a)(2) and (b) of section
504 of the Act, the records referred to in paragraph (n) are
unconditionally available at their customary location during normal
business hours by:
(A) Any duly authorized employee or representative of the
Department, the Internal Revenue Service or the Securities and Exchange
Commission;
(B) Any fiduciary of a participating Plan or any duly authorized
representative of such fiduciary;
(C) Any contributing employer to any participating Plan or any duly
authorized employee representative of such employer; and
(D) Any Plan Participant or beneficiary of any participating Plan,
or any duly authorized representative of such Plan Participant or
beneficiary.
(o)(2) None of the persons described above in subparagraphs (B)-(D)
of paragraph (o)(1) are authorized to examine the trade secrets of the
Applicants or commercial or financial information which is privileged
or confidential.
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 July 10, 2001 at 66 FR
36010.
FOR FURTHER INFORMATION CONTACT: Mr. Gary H. Lefkowitz of the
Department, telephone (202) 219-8881. (This is not a toll-free number.)
Wagner, Doxey and Company Money Purchase Plan (the Plan), Located
in San Francisco, California
[Prohibited Transaction Exemption 2001-31; Exemption Application No. D-
11003]
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 the proposed sale of certain improved real property (the
Property) by the individual account of Warren L. Wagner (the Account)
in the Plan, to Mr. Wagner, who is a disqualified person with respect
to the Plan,\7\ provided that the following conditions are satisfied:
(a) The sale is a one-time transaction for cash; (b) the Account pays
no commissions nor other expenses relating to the sale; (c) the Account
receives an amount that is the greater of $750,000, or the fair market
value of the Property as of the date of the sale, as determined by a
qualified, independent appraiser; (d) within 30 days of publication in
the Federal Register of the notice granting this exemption, Mr. Wagner
reimburses the Account for the fair market rental value of the Property
with respect to his past and present use of such Property, including a
reasonable rate of interest for the period from the date such amounts
were due to the Account to the date of payment; and (e) within 30 days
of publication in the Federal Register of the notice granting this
exemption, Mr. Wagner files Form 5330 with the Internal Revenue Service
and pays all applicable excise taxes due by reason of the above
prohibited transactions.
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\7\ Because Warren L. Wagner and Robert J. Doxey, who are
partners, are the only participants in the Plan, the Plan is not
within the jurisdiction of 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 July 10, 2001 at 66 FR
36016.
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 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 accurately describes all material terms of the transaction
which is the subject of the exemption.
Signed at Washington, D.C., this 22nd day of August, 2001.
Ivan Strasfeld,
Director of Exemption Determinations, Pension and Welfare Benefits
Administration, U.S. Department of Labor.
[FR Doc. 01-21628 Filed 8-27-01; 8:45 am]
BILLING CODE 4510-29-P