Proposed Exemptions; Laney & Duke Terminal Warehouse Co., Inc., Profit Sharing Plan and Trust, et al.

DEPARTMENT OF LABOR

[Application No. D-9552, et al.]

Proposed Exemptions; Laney & Duke Terminal Warehouse Co., Inc.,

Profit Sharing Plan and Trust, 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 restriction 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

All interested persons are invited to submit written comments or

request for a hearing on the pending exemptions, unless otherwise

stated in the Notice of Proposed Exemption, within 45 days from the

date of publication of this Federal Register Notice. Comments and

request 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. 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 request 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, NW., Washington, DC

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 NW., Washington, DC 20210.

Notice to Interested Person

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.

Laney & Duke Terminal Warehouse Co., Inc., Profit Sharing Plan and

Trust (the Plan) Located in Jacksonville, Florida; Proposed Exemption

[Application No. D-9552]

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 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 proposed sale of two adjacent commercial

buildings (collectively; the Buildings) by the Plan to Laney & Duke

Terminal Warehouse Co. Inc., (the Employer), the Plan sponsor and a

party in interest with respect to the Plan; provided that the following

conditions are satisfied:

(1) the Plan will receive the greater of: (1) $1,958,000,

representing the Plan's total investment in the Buildings; or (2) the

aggregate fair market value of the Buildings as determined at the time

of the sale by an independent, qualified appraiser;

(2) the proposed sale will be a one-time transaction; and

(3) the Plan will pay no costs or commissions as a result of this

transaction.

Summary of Facts and Representations

1. The Plan is a defined contribution profit sharing plan, which as

of June 30, 1993, had $3,136,301 in assets, and 136 participants. The

Plan's trustees are Thomas A. Duke, Brian T. Duke and Stephen T. Duke,

who are officers of the Employer. Thomas A. Duke is also a stockholder

of the Employer. The Employer is a Florida subchapter ``C'' corporation

in the business of storing and transporting food supplies and consumer

goods.

2. The Plan owns the two Buildings which are located in downtown

Jacksonville. The first building consists of 10,400 square feet and its

entirely leased by the SouthTrust Bank (the S/T Building) for $82,500

per year. The lease agreement (The S/T Lease) effective December 31,

1983, was for a five year period, with two successive renewal options

of five years each. The first five year renewal option was exercised

and extended the S/T Lease term to December 31, 1993. The S/T Lease has

been recently renewed and will expire December 21, 1995. The second

building is a three story building which consists of approximately

33,000 square feet of floor space (the Dean Witter Building). A total

of 13,200 square feet of the Dean Witter Building has been leased to

Dean Witter Reynolds, Inc. (Dean Witter) for $263,000 per year. The

lease agreement (D/W Lease) was effective December 1, 1978, and

originally had a ten year term. By an agreement dated March 14, 1984,

the term of the D/W Lease was extended for an additional five years to

November 30, 1993. Dean Witter vacated the Dean Witter Building during

1992, but continued to make payments under the D/W Lease until its

expiration on November 30, 1993. The Dean Witter Building is currently

empty. It is represented that the SouthTrust Bank and Dean Witter are

unrelated to the Plan and the Employer.

3. The Buildings were acquired by the Plan through an investment in

a partnership (the Partnership) in which the Plan was a limited

partner. The original 49% interest in the Partnership was acquired by

the Plan in February 1980 with an initial $450,000 capital

contribution. The Buildings were transferred into the Partnership by

Alan E. Johnson (Mr. Johnson), the original general partner and the

owner of the other 51% Partnership interest, at the time the

Partnership was formed. Mr. Johnson was unrelated to the Employer and

the Plan. The Plan advanced additional funds to the Partnership from

1981 through 1985. In 1985, the Plan received a mortgage from the

Partnership for $1,208,000 covering all capital contributions and

previous advances to that date. On July 29, 1989, the remaining 51%

interest in the Partnership was acquired by the Plan from Mr. Johnson

for $750,000. After the 51% interest was acquired, the Partnership was

dissolved and the assets of the Partnership, principally the Buildings,

were transferred to the Plan.\1\ It is represented that the Plan's

total investment in the Buildings acquired through these transactions

was $1,958,000.

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\1\The Department expresses no opinion as to whether the Plans

investment in the Partnership and the acquisition and holding of the

Buildings violated any provision of part 4 of Title I of the Act,

and no relief is provided herein.

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4. The Employer now desires to purchase the Buildings from the Plan

in a one-time cash sale. The Buildings were appraised (the Appraisal)

by James C. Johnston (Mr. Johnston), SRPA on June 30, 1993, an

independent qualified appraiser. Mr. Johnston states that the purpose

of the Appraisal is to estimate the market value of the commercial

Buildings on an ``as is'' basis. The S/T Building is improved with

offices and banking facilities, and is currently leased to the S/T

Bank. The Dean Witter Building is a three story, multi tenant, Class

``B'' building and is currently vacant. In determining the fair market

value of the Buildings, Mr. Johnston utilized the sales comparison

approach, the income approach and the cost approach, but relied on the

income approach as the primary basis for the value estimate of the

Buildings. Accordingly, as of June 20, 1993, Mr. Johnston determined

the fair market value of the S/T Building to be $850,000, and the fair

market value of the Dean Witter Building to be $1,000,000, for an

aggregate fair market value of $1,850,000 for both Buildings.

5. The Plan's total investment in the Buildings was $1,958,000. The

applicant represents that the Plan as a result of this transaction will

receive the greater of: (1) $1,958,000, representing the Plan's total

investment in the Buildings; or (2) the aggregate fair market value of

the Buildings as determined at the time of the sale by an independent,

qualified appraiser. The applicant maintains that the Buildings have

yielded revenue for the Plan, with the Plan receiving positive cash

flow as a result of its investment. The applicant submitted a ``return

on investment'' analysis (the Analysis) on the Plan's investment in the

Buildings, covering the period from June 30, 1980 through June 30,

1993. Return on investment ratios were derived by the applicant by

dividing the estimated net rental income by the estimated cost of

investment for each year of ownership. An average of the ``return on

investment'' figures was determined to be 16.12%. Therefore, according

to the Analysis, the Plan received an average yield of 16.12% for its

investment in the Buildings.\2\

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\2\In the Analysis, the applicant represents that for the period

June 30, 1986 through and including June 30, 1989, actual rental

income and expense figures could not be located, and they were

estimated by the applicant. The estimate was based upon the 1985 net

rental income of $242,000, and was rounded to $240,000 per year for

the period 1986-1989.

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6. It is represented that the transaction is desirable for the Plan

as the sale will enable the Plan to divest of an investment which

constitutes approximately 59% of the Plan's assets, and will provide

the Plan with liquidity to fund cash distributions to the participants.

The transaction is protective and in the best interest of the Plan

because the aggregate fair market value of the Buildings was determined

by an independent qualified appraiser, and because as a result of this

transaction, the Plan will receive the greater of: (1) $1,958,000,

representing the Plan's total investment in the Buildings; or (2) the

aggregate fair market value of the Buildings as determined at the time

of the sale by an independent, qualified appraiser. The applicant

represents that any amount in excess of the aggregate fair market value

of the Buildings, received by the Plan as a result of the proposed

transaction, if treated as a contribution to the Plan, will not exceed

limitations of section 415 of the Internal Revenue Code.

7. In summary, the applicant represents that the transaction

satisfies the statutory criteria of section 408(a) of the Act and

section 4975(c)(2) of the Code because:

(1) the Plan will receive the greater of: (1) $1,958,000,

representing the Plan's total investment in the Buildings; or (2) the

aggregate fair market value of the Buildings as determined at the time

of the sale by an independent, qualified appraiser;

(2) the proposed sale will be a one-time transaction; and

(3) the Plan will pay no costs or commissions as a result of this

transaction.

For Further Information Contact: Ekaterina A. Uzlyan of the

Department, telephone (202) 219-8883. (This is not a toll-free number.)

Waterman Medical Center, Inc. Productivity Incentive Program (the Plan)

Located in Eustis, Florida; Proposed Exemption

[Application No. D-9587]

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 sections 406(a) and 406(b)(1) and (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 a group annuity policy the (the

Policy) from the Plan to Florida Hospital/Waterman (the Employer), a

party in interest with respect to the Plan, provided that the following

conditions are met:

1. The fair market value of the Policy is established by a party

independent of the Employer and the Plan;

2. The Employer pays the greater of the current fair market value

of the Policy or the total amount the Plan has expended on the Policy

as of the date of sale;

3. The sale is a one-time transaction for cash; and

4. The Plan pays no fees or commissions in regard to the sale.

Summary of Facts and Representations

1. The Employer, a subsidiary of Adventist Health Systems Sunbelt

Healthcare Corporation, was formed by the merger of Florida Hospital

and Waterman Medical Center, Inc. (Waterman) on October 1, 1992. Prior

to the merger, Waterman had established the Plan, which is a defined

contribution plan, for the benefit of its eligible employees. The

Employer became the Plan sponsor after the merger and active Plan

participants became employees of the Employer. The Plan has been frozen

since January 18, 1992. As of September 30, 1993, the Plan had

approximately 837 participants and total assets of $1,202,429.

2. On September 17, 1986, the trustees of the Plan invested

$345,780 in the Policy, a separate investment account group annuity

policy issued by New England Mutual Life Insurance Company (New England

Life). New England Life is otherwise independent of the Employer and

the Plan. New England Life maintains a separate investment fund under

the Policy called the Developmental Properties Account (the DPA) which

is invested in new income producing properties throughout the United

States. Such properties consist mainly of commercial real estate, with

62 percent of the properties located in the Western United States.

According to the applicant, the DPA has been adversely affected by the

continuing recession in the California real estate market and other

negative market conditions. The total amount the Plan has invested in

the Policy is $345,780 (the original purchase price). Since the time of

purchase, no distributions from the Policy to the Plan have been made.

3. The market value of the Policy had declined to $183,937 as of

September 30, 1993, according to New England Life. An analysis of the

income or loss generated by the underlying properties as well as the

projected sales price and liquidity factors were utilized in this

determination of value.

New England Life has informed the Plan trustees that the value of

the DPA, and hence the Policy, may continue to fall in the months ahead

due to the continued recession in the real estate market. New England

Life has also notified the Plan that the level of withdrawal requests

from the DPA has been close to forcing a complete liquidation of the

DPA, which would not be in the best interests of policyholders.

Accordingly, New England Life has requested that any further withdrawal

requests be rescinded or reconsidered.

4. According to the applicant, under current market conditions, any

attempt by the Plan to liquidate the Plan's interest in the DPA could

force a distress liquidation of the DPA, thus creating a severe

hardship for the Plan. As a result, the Plan trustees may be precluded

from making distributions to Plan participants unless they are able to

transfer the Plan's interest in the DPA to another buyer. New England

Life has agreed to the transfer of the Policy to the Employer provided

that the Department grants an exemption with respect to such a

transaction.

5. The Plan now proposes to sell the Policy to the Employer. The

Employer will pay the greater of the current fair market value of the

Policy or the total amount the Plan has expended on the Policy as of

the date of sale. The sale will be a one-time transaction for cash, and

the Plan will pay no fees in regard to the transaction. The applicant

represents that any amounts received by the Plan as a result of the

proposed transaction which are in excess of the fair market value of

the Policy will be treated as a contribution to the Plan. However, such

contribution will not exceed the limitations of section 415 of the

Code.

6. In summary, the applicant represents that the proposed

transaction will satisfy the statutory criteria of section 408(a) of

the Act because: (1) The fair market value of the Policy will be

established by New England Life, a party unrelated to the Plan and the

Employer; (2) the Employer will pay the greater of the current fair

market value of the Policy or the total amount the Plan has expended on

the Policy as of the date of sale; (3) the sale will remove from the

Plan a group annuity policy which has been declining in value; and (4)

the Plan will receive all cash as a result of the transaction.

Tax Consequences of Transaction

The Department of the Treasury has determined that, if a

transaction between a qualified employee benefit plan and its

sponsoring employer (or affiliate thereof) results in the plan either

paying less or receiving more than fair market value, such excess may

be considered to be a contribution by the sponsoring employer to the

plan and thus must be examined under the applicable provisions of the

Code, including sections 401(a)(4), 404 and 415.

For Further Information Contact: Paul Kelty of the Department,

telephone (202) 219-8883. (This is not a toll-free number.)

Alberici Companies Retirement Plan (the Plan) Located in St. Louis,

Missouri; Proposed Exemption

[Application No. D-9633]

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, and 32847, August 10, 1990). If the

exemption is granted, 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 proposed cash sale (the

Sale) by the Plan of Group Annuity Policy No. GA-3363 (the GAP) issued

by the New England Life Insurance Company (New England Life) to

Alberici Corporation, the Plan sponsor (the Employer) and a party in

interest with respect to the Plan; provided the following conditions

are satisfied: (1) The Sale is a one-time transaction for cash; (2) the

Plan receives no less than the fair market value of the GAP at the time

of the Sale or, the cost of the GAP to the Plan, whichever is greater;

(3) the plan does not suffer any loss nor incur any expenses in

connection with the transaction; and (4) the Trustees of the Plan have

determined that the proposed transaction is appropriate for and in the

best interests of the Plan and its participants and beneficiaries.

Summary of Facts and Representations

1. The Plan is a defined contribution individual-account plan with

provisions for salary reduction contributions. As of December 31, 1993,

the Plan had 283 participants and total assets of approximately

$10,796,703. Alberici Corporation, the Plan sponsor, is a Missouri

Corporation and a holding company which owns all of the stock of J.S.

Alberici Construction Co., Inc.; Gunther-Nash Mining Construction Co.;

J.H. Hudson Construction Co.; and General Installation Company.

Alberici Corporation's corporate headquarters are located in St. Louis,

Missouri.

2. The Plan's trustees (the Trustees) manage the investment of the

Plan's assets. The Trustees are Gabriel J. Alberici, John S. Alberici

and David G. Millar. The Trustees have decided to change the Plan's

investment practices to permit participant self-directed investments.

In order to implement participant direction, present Plan assets,

including the GAP, will be liquidated.

3. The Plan acquired the GAP on December 31, 1982 at a cost of

$250,000 and subsequently invested an additional $100,000 in the GAP on

December 31, 1984. Thus, the Plan's total investment in the GAP is

$350,000. Under the terms of the GAP, the Plan's investment in the GAP

is credited to the Developmental Properties Fund, which is then

invested in the Developmental Properties Account (DPA). The DPA is a

pooled open-end separate investment account established by New England

Life in 1981. The DPA's investment objective is to produce a high and

increasing current rate of return principally through investing in new

income-producing properties throughout the United States. Although the

GAP did well initially, investment returns have been negative since

1990.\3\ The Trustees have been unable to liquidate the Plan's

investment in the GAP because withdrawals from the Developmental

Properties Fund and the DPA are limited to the Plan's ratable share of

the DPA's liquid balance, which has been insufficient due to negative

returns.

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\3\The Department notes that the decisions to acquire and hold

the GAP are governed by the fiduciary responsibility requirements of

part 4, subtitle B, title I of the Act. In this regard, the

Department is not herein proposing relief for any violations of part

4 which my have arisen as a result of the acquisition and holding of

the GAP issued by New England Life.

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4. The Trustees represent that the GAP is a non-performing asset

for which there is no ready market. The Trustees also represent that

the proposed Sale will enable the Plan to recoup its investment in the

GAP and will make it possible for the Plan to liquidate its investment

in the Gap so that provisions for participant self-directed investment

can be implemented. The Trustees propose that the Employer purchase the

GAP, for cash, at a price equal to the greater of (1) the cost of the

GAP to the Plan ($350,000), or (2) the fair market value of the GAP as

of the purchase date. The fair market value of the GAP will be

determined by the value reported by New England Life as of the end of

the quarter preceding the purchase date. New England Life represents

that the value of the GAP as of December 31, 1993 was $310,814.

Copley Real Estate Advisers (Copley), an indirect subsidiary of New

England Life, acts as asset manager and advisor to New England Life

with respect to the DPA. Copley selects qualified appraisal firms to

conduct annual outside appraisals on the properties which make up the

DPA. At quarterly dates between annual appraisals, Copley's asset

management group prepares internal valuations. Copley represents that

the internal valuations are based on the work that is completed by the

outside appraiser and that the same basic valuation methods used by the

outside appraisers are used for the internal valuations. The Trustees

represent that the valuations reported by New England Life provide a

reliable indication of the fair market value of the GAP and the DPA.

The Trustees also represent that the proposed transaction is protective

of and in the best interests of the Plan and its participants and

beneficiaries. In addition, the Trustees represent that the Employer

will receive no benefit from the sale, directly or indirectly.

5. In summary, the applicant represents that the proposed

transaction satisfies the criteria of section 408(a) of the Act

because: (1) The Plan will receive cash for the GAP in an amount equal

to (a) the amount invested in the GAP, $350,000, or (b) the fair market

value of the GAP as of the date of the Sale, if greater; (2) the

transaction will enable the Plan and its participants and beneficiaries

to avoid undue risk associated with the continued holding of the GAP

and will enable the Plan to implement participant self-directed

investment; (3) the Plan will not incur any expenses with respect to

the proposed transaction; and (4) the Trustees have determined that the

Sale at the proposed price is in the best interests of the participants

and beneficiaries of the Plan.

For Further Information Contact: Ms. Virginia J. Miller of the

Department, telephone (202) 219-8971. (This is not a toll-free number.)

Bank of America National Trust and Savings Association (Bank of

America) Located in San Francisco, California; Proposed Exemption

[Application No. D-9516]

Part I--Exemption for Cross-Trading Between Certain Funds

The restrictions of sections 406(a)(1)(A) and 406(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) of the Code, shall not apply

to (1) The purchase and sale of stock (including the stock of

BankAmerica Corporation (BAC) between Index Funds and/or Model Driven

funds (collectively, the Funds); and (2) the purchase and sale of

stocks (including the common stock of BAC) between Index or Model-

Driven Funds and various large pension plans (the Large Plans) pursuant

to portfolio restructuring programs of the Large Plans; provided that

the following conditions and the General Conditions of Part III are

met:

(a) The Index or Model-Driven Fund is based on an index which

represents the investment performance of a specific segment of the

public market for equity securities in the United States and/or foreign

countries. The organization creating and maintaining the index must be

(1) Engaged in the business of providing financial information,

evaluation, advice or securities brokerage services to institutional

clients, (2) a publisher of financial news or information, or (3) a

public stock exchange or association of securities dealers. The index

must be created and maintained by an organization independent of Bank

of America and its affiliates. The index must be a generally accepted

standardized index of securities which is not specifically tailored for

the use of Bank of America or its affiliates.

(b) The price for the stock is set at the closing price for that

stock on the day of trading; unless the stock was added to or deleted

from an index underlying a Fund (or Funds) after the close of trading,

in which case the price will be the opening price for that stock on the

next business day after the announcement of the addition or deletion.

(c) The transaction takes place within three business days of the

``triggering event'' giving rise to the cross-trade opportunity. A

triggering event is defined as:

(1) A change in the composition or weighting of the index and/or

model underlying a Fund;

(2) A change in the overall level of investment in a Fund as a

result of investments and withdrawals made on the Fund's regularly-

scheduled opening date; or

(3) A declaration by Bank of America (recorded on Bank of America's

records) that a ``triggering event'' has occurred, which will be made

upon an accumulation of cash in a Fund attributable to dividends and/or

tender offers for portfolio securities equal to not less than .05

percent and not more than .5 percent of the Fund's total value;

(d) In the event that a number of shares of a particular stock

which all of the Funds or Large Plans propose to sell on a given day is

less than the number of shares of such stock which all of the Funds or

the Large Plans propose to buy, or vice versa, the direct cross-trade

opportunity must be allocated among potential buyers or sellers on a

pro rata basis.

(e) With respect to transactions involving a Large Plan:

(1) It has assets in excess of $50 million;

(2) Fiduciaries of the Large Plan who are independent of Bank of

America are, prior to any cross-trade transactions, fully informed of

the cross-trade technique and provide advance written approval of such

transactions. Within 45 days of the completion of the Large Plan's

portfolio restructuring program, such fiduciaries shall be fully

appraised in writing of the transaction results. However, if such

program takes longer than three months to complete, interim reports of

the transaction results will be made within 30 days of the end of each

three month period.

(3) Such Large Plan transactions occur only in situations where

Bank of America has been authorized to restructure all or a portion of

the Large Plan's portfolio into an Index or Model-Driven Fund

(including a separate account based on an index or computer model) or

to act as a ``trading adviser'' in carrying out a Large Plan-initiated

liquidation or restructuring of its equity portfolio; and

(f) Bank of America receives no additional direct or indirect

compensation as a result of the cross-trade transaction.

Part II--Exemption for the Acquisition, Holding and Disposition of BAC

Stock

The restrictions of sections 406(a)(1)(D), 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) (D) and (E) of the

Code, shall not apply to the acquisition, holding or disposition of the

common stock of BAC by Index or Model-Driven Funds, if the following

conditions and the General Conditions of Part III are met: (a) The

acquisition or disposition of the BAC stock is for the sole purpose of

maintaining strict quantitative conformity with the relevant index upon

which the Index or Model-Driven Fund is based;

All acquisitions and dispositions, other than through cross-trade

transactions meeting the conditions of Part I, will comply with Rule

10b-18 of the Securities and Exchange Commission, including the

limitations regarding the price paid or received for such stock;

(c) Aggregate daily purchases of BAC stock, other than cross-trade

purchases meeting the conditions of Part I, will constitute no more

than the greater of: (1) 10 percent of the stock's average daily

trading volume for the previous five days; or (2) 10 percent of the

stock's trading volume on the date of the transaction;

(d) If the necessary number of shares of BAC stock cannot be

acquired within 10 business days from the date of the event which

causes the particular Index or Model-Driven Fund(s) to require BAC

stock, Bank of America will appoint a fiduciary which is independent of

Bank of America and its affiliates to design acquisition procedures and

monitor Bank of America's compliance with such procedures;

(e) All purchases and sales of BAC stock, other than cross-trades

meeting the conditions of Part I, will be executed on the national

exchange on which BAC stock is primarily traded;

(f) No transactions will involve purchases from, or sales to, Bank

of America or any affiliate, officer, director or employee of Bank of

America or any party in interest with respect to a plan which is

invested in an Index or Model-Driven Fund. This requirement does not

preclude purchases and sales of BAC stock in cross-trade transactions

meeting the conditions of Part I;

(g) No more than five (5) percent of the total amount of BAC stock

issued and outstanding at any time shall be held in the aggregate by

the Index and Model-Driven Funds;

(h) BAC stock shall constitute no more than two percent of the

value of any independent third-party index on which the investments of

an Index or Model-Driven Fund are based;

(i) A plan fiduciary independent of Bank of America authorizes the

investment of such plan's assets in an Index or Model-Driven Fund which

purchases and/or holds BAC stock; and

(j) A fiduciary independent of Bank of America and its affiliates

will direct the voting of the BAC stock held by an Index or Model-

Driven Fund on any matter in which shareholders of BAC stock are

required or permitted to vote.

Part III--General Conditions

(a) Bank of America maintains or causes to be maintained for a

period of six years from the date of the transaction the records

necessary to enable the persons described in paragraph (b) of this Part

to determine whether the conditions of the exemption have been met,

except that a prohibited transaction will not be considered to have

occurred if, due to circumstances beyond the control of Bank of America

or its affiliates, the records are lost or destroyed prior to the end

of the six-year period.

(b) (1) Except as provided in paragraph (2) of this subsection (b)

and notwithstanding any provisions of subsections (a)(2) and (b) of

section 504 of the Act, the records referred to in subsection (a) of

this Part are available at their customary location for examination

during normal business hours by--

(A) Any duly authorized employee or representative of the

Department of Labor or the Internal Revenue Service,

(B) Any fiduciary of a plan participating in an Index or Model-

Driven fund who has authority to acquire or dispose of the interests of

the plan, or any duly authorized employee or representative of such

fiduciary,

(C) Any contributing employer with respect to any plan

participating in an Index or Model-Driven Fund or any duly authorized

employee or representative of such employer, and

(D) Any participant or beneficiary of any plan participating in an

Index or Model-Driven Fund, or any duly authorized employee or

representative of such participant or beneficiary.

(2) None of the persons described in subparagraphs (B) through (D)

of this subsection (b) shall be authorized to examine trade secrets of

Bank of America, any of its affiliates, or commercial or financial

information which is privileged or confidential.

Part IV--Definitions

(1) Index Fund--Any investment fund, account or portfolio

sponsored, maintained and/or trusteed by Bank of America, or an

affiliate of Bank of America, in which one or more investors invest

which is designed to replicate the capitalization-weighted composition

of a stock index which satisfies the conditions of Part I(a) and Part

II(h).

(2) Model-Driven Fund--Any investment fund, account or portfolio

sponsored, maintained and/or trusteed by Bank of America, or an

affiliate of the Bank of America, in which one or more investors invest

which is based on computer models using prescribed objective criteria

to transform an independent third-party stock index which satisfies the

conditions of Part I(a) and Part II(h).

(3) Opening date--The regularly-scheduled date on which investments

in or withdrawals from an Index or Model-Driven Fund may be made.

(4) Trading adviser--A person whose role is limited to arranging a

Large Plan-initiated liquidation or equity restructuring within a

stated time so as to minimize transaction costs.

Summary of Facts and Representatives

1. Bank of America National Trust and Savings Association (the

Bank) is a national bank which is the principal subsidiary of

BankAmerica Corporation (BAC). BAC is the second largest bank holding

company in the U.S., with assets of approximately $185 billion. The

Bank is licensed to operate a trust department, which is regulated by

the Office of the Comptroller of the Currency (OCC). Within its trust

department, the Bank provides a variety of fiduciary services,

including acting as trustee of pension plans subject to the Act.

Currently, the Bank acts as trustee of pension plans with assets

totalling approximately $27 billion.

2. In its capacity as trustee, the Bank may be either directed by

an independent fiduciary or a plan participant with self-direction

ability (such as a participant in a 401(k) plan) with respect to

investment decisions. Alternatively, in those cases in which the Bank

actually manages the investments, the Bank will make the investment

decisions itself, which would include choosing to place some or all of

the pension assets under its management in the Funds or other

collective investment funds managed by the Bank. A combination of

management responsibilities result when an independent fiduciary

directs the Bank to invest pension assets in a particular Bank

collective investment fund. The Bank represents that it requires the

ability to manage its collective investment funds in various ways, in

order to enable pension plan assets to be diversified, to reduce risk,

and to be invested in the types of investments that a particular

manager for a plan may determine is appropriate at a particular time.

Index Funds and Model-Driven Funds (the Funds) are two examples of the

Bank's collective investment funds which include plan investors.

Index and Model-Driven Funds

3. An Index Fund is a collective investment fund, the objective of

which is the replication of the performance of an independently-

maintained stock index representing the performance of a specific

segment of the public market for equity securities. The Index Funds are

passively managed, in that the choice of stocks purchased and sold, and

the volume purchased and sold, are made according to predetermined

third party indices rather than according to active evaluation of the

investments. The Bank currently offers two types of funds that are

invested according to the criteria of an Index:

(a) The Mid-Cap 400 Index Fund is designed to track the Standard &

Poors Mid-Cap 400 Index. This index was established by Standard & Poors

(S&P) on June 5, 1991, and was the first index established by S&P after

the creation of the S&P 500 Index in 1957. The universe of stocks from

which the S&P Mid-Cap 400 Index is developed consists of U.S. companies

having market values ranging from $200 million to $5 billion. The level

of the index reflects the total market value of all 400 component

stocks relative to a particular base period. The stocks included in the

index are selected by the S&P Index Committee, an independent committee

selected by S&P.

(b) Another fund, the S&P 500 Index Fund, tracks the Standard &

Poors 500 Index (S&P 500). The S&P 500 is an index of 500 stocks that

are traded on the New York Stock Exchange, the American Stock Exchange,

and the NASDAQ National Market System. The S&P 500 is a market value-

weighted index, multiplying shares outstanding times stocks price, in

which each company's influence on index performance is directly

proportional to its market value. The 500 companies chosen by the S&P

Index Committee for the index are not the 500 largest companies but,

instead, are the companies that tend to be leaders in key industries

within the U.S. economy, as determined by the Committee.

4. A Model-Driven Fund is a collective investment fund, the

performance of which is based on computer models using prescribed

objective criteria to transform an independently-maintained stock index

representing the performance of a specific segment of the public market

for equity securities. The portfolio of a Model-Driven Fund is

determined by the details of the computer model, which examines

structural aspects of the stock market rather than the underlying stock

values. An example of a Model-Driven fund would include a fund which

``transforms'' the S&P 500, making investments according to a computer

model which uses such data as the following: (a) Earnings, dividends

and price-earning ratios for S&P 500 common stocks; (b) current yields

on corporate bonds and money market instruments; and (c) historical

standard deviations and correlations of and between asset classes. Like

Index Funds, Model-Driven Funds are also passively-managed, in that the

decisions about stock purchases and sales are not the result of active

evaluation of the investments by an investment manager, but are

determined in accordance with the predetermined computer model. The

Bank does not currently maintain any Model-Driven funds, but intends to

establish such funds in the future.

Cross Trades

5. Frequent purchases and sales of securities by the Funds are

required to accomplish portfolio balances in accordance with the

particular indexes or models in use. In addition, some securities

transactions may be prompted by a client Plan's request to add funds

to, or withdraw funds from, a Fund. Under any of these circumstances,

the Bank's disposition of a particular security for one Fund may

involve a security which may be needed by another Fund, presenting an

opportunity to save substantial commissions for both the liquidating

Fund and the acquiring Fund. This saving is enabled by a cross-trade

transaction, which involves matching the Bank's sell orders for a

particular day with its buy orders for the same day, and the execution

of trades between the Funds in off-market transactions. Under current

procedures, all securities transactions, including cross-trades between

accounts maintained by the Bank, are executed by a broker on behalf of

a purchasing or selling Fund, at the direction of the Bank, dealing

with a second broker acting on behalf of a purchasing or selling second

party.

6. The Bank proposes to take advantage of opportunities to direct

the cross-trading of securities directly between the Funds, or directly

with other client accounts for which the Bank is the investment

manager, or with mutual funds or institutional accounts for which the

Bank is the investment advisor. The Bank maintains that comparable

transactions on the open market between unrelated parties would require

a brokerage commission equal to between four and five cents per share

for each sale or purchase transaction. However, the brokerage

commission paid for each proposed cross trade would be only 1 cent per

share, which reflects the record-keeping costs of the brokers. The Bank

represents that in accordance with Bank policy, the Bank's own in-house

brokerage unit would not be used to effect the cross trades, and that

all brokers used in the cross trades will be unrelated to and

independent of the Bank.

The Bank also represents that by participating in its cross-trading

program, the Funds will benefit by not incurring the cost, in terms of

price, of dealing with a person or firm acting as ``market maker'' for

the particular security involved in a cross-trade transaction. This

cost is measured by the spread between the asking and bidding prices

for the security. Additionally, the Bank represents that where trading

of a particular security is ``thin'' (limited in numbers of shares

available), participation in the cross-trading program may enable the

Funds to obtain early opportunities to acquire or sell such securities.

The Bank intends that the requested exemption for cross-trade

transactions would apply, in addition to the two Index Funds it

currently maintains, to Index and Model-Driven Funds which it may

create in the future which satisfy all the conditions of the exemption,

if granted.

7. The Bank also proposes cross-trade transactions between the

Funds and Large Plans with assets in excess of $50 million and whose

investment portfolio is not controlled by an index or model. Such

trades will occur only when the Large Plans' fiduciaries, which are

independent of the Bank, are fully informed of the cross-trade

technique, provided advance written approval of such transactions, and

are fully apprised of the transaction results. Further, cross trades

involving Large Plans will be limited to those situations where the

Bank's advising role is restricted to either managing a portion of the

Large Plan's assets through one or more of the Bank's passive

investment strategies such as the Funds, or acting as a trading adviser

in a Large Plan portfolio restructuring. Such restructurings generally

occur in connection with a Large Plan decision to invest in one of the

Bank's Funds, but they may also involve requests for the Bank to carry

out a restructuring program independent of future investments in the

passive Funds. In this instance, the Bank's only role is that of a

trading adviser, carrying out a Large Plan-initiated liquidation or

equity restructuring. When a Large Plan engages the Bank to invest in a

Fund or to arrange its own passively-managed portfolio, the Large

Plan's assets must be transformed into an Index or Model-Driven Fund

portfolio. In implementing the transformation, the Bank is limited by

the stated portfolio and is not in any active investment role. The

impetus for the investment comes from the independent fiduciaries of

these Large Plans. Given such an investment by a Large Plan, the Bank's

role is limited to recreating the required portfolio. By performing

cross-trades with Index or Model-Driven Funds where possible, the Bank

reduces the overall transactions costs by both parties to the cross-

trade. The Bank has a similar lack of discretion in the case of Large

Plans which request the Bank to restructure a portfolio, generally by

liquidation: The Bank then acts as the trading advisor to the Large

Plan, arranging for the stock transactions within a stated time so as

to minimize transaction costs. The opportunity to engage in cross-

trades with Index and/or Model-Driven Funds occurs only when those

Funds are required to purchase the same stock which the Large Plan is

selling.

8. The Bank represents that its cross-trading program will be

effected pursuant to a proportional allocation system which will ensure

that no client account will be favored over any other client account.

In the event that the number of shares of a particular stock which all

of the Funds or Large Plans propose to sell on a given day is less than

the number of shares of such stock which all the Funds or the Large

Plans propose to buy, the direct cross-trade opportunity will be

allocated among potential buyers on a pro rata basis. Thus, all the

Bank's client accounts participating in its cross-trade program will

have opportunities to participate on a proportional basis in all cross-

trade transactions during the operation of the cross-trading program.

This aspect of the Bank's cross-trading program is among the

information which is disclosed in writing to the fiduciaries of the

Large Plans and pension plans which invest in the Funds.

Acquisition, Holding and Disposition of BAC Stock

9. The Bank is also proposing that each Fund be permitted to invest

in the stock of BAC (BAC Stock) if BAC stock is included among the

stocks listed on the index utilized by the Fund. BAC Stock is not

currently included in the S&P Mid-Cap 400 Index, but BAC Stock is one

of the stocks included in the S&P 500. Because of the prohibitions of

section 406 and 407 of the Act, the S&P 500 Index Fund currently is not

permitted to invest in BAC stock. The Bank represents that the

exclusion of BAC stock from the S&P 500 Index Fund creates a material

tracking error due to BAC's substantial capitalization. To correct the

tracking error, the Bank proposes to purchase on the open market, and

hold, on behalf of the S&P 500 Fund the number of shares of BAC Stock

necessary to replicate correctly the weighting of BAC Stock in the S&P

500. All purchases will be made in accordance with Securities and

Exchange Commission (SEC) Rule 10b-18, which provides a ``safe harbor''

for issuers of securities from section 9(a)(2) of the Securities

Exchange Act of 1943 and SEC Rule 10b-5 (which generally prohibits

persons from manipulating the price of a security and engaging in fraud

in connection with the purchase or sale of a security).

The Bank represents that the conditions imposed by Rule 10b-18 for

proposed purchases of BAC Stock would be as follows: (a) All purchases

must be made from or through only one broker on any single day. (b) No

purchases may constitute the opening transaction in BAC Stock. (c)

Purchases may not occur during the one-half hour before the scheduled

close of trading on the NYSE. (d) The price may not be higher than the

current independent bid quotation or the last independent sale price on

the exchange, whichever is higher. (e) If the purchases of BAC Stock

are not block purchases as defined by rule 10b-189(b)(4), the total

amount of purchases on any one day may not exceed the higher of one

round lot or the number of round lots closest to 25 percent of the

trading volume for BAC Stock on that day.

Any purchases or sales of BAC Stock by the S&P 500 Fund after the

initial acquisition of the stock would be accomplished either through

cross-trade transactions subject to the conditions of Parts I and III

of the proposed exemption, or on the open market subject to SEC rule

10b-18 and the conditions of Parts II and III of the proposed

exemption.

10. The Bank will appoint an independent fiduciary for the purposes

of developing trading procedures for the initial acquisition of BAC

Stock on the open market by the S&P 500 Fund in the amounts required by

the S&P 500 while minimizing the impact of the acquisitions on the

market for BAC Stock, and monitoring the Bank's compliance with those

procedures. The independent fiduciary and its principals will be

completely independent from the Bank and its affiliates and be

experienced in developing and operating investment strategies,

including index funds. The Bank will require the fiduciary to be able

to accurately represent that neither it nor its principals, employees,

or affiliates holds or controls any shares of BAC Stock and that during

the exercise of the trading program by the Bank no principal employee

of the independent fiduciary nor the fiduciary itself will engage in

any trading of any kind in BAC Stock. Furthermore, the independent

fiduciary will not act as the broker for any purchases or sales of BAC

Stock and will not receive any commissions as a result of the trading

program.

11. The independent fiduciary will have as its primary goal the

development of a trading program that minimizes the market impact of

purchases made pursuant to the program. Thus, price increases that

would be detrimental to the interests of Plan investors will be

minimized. The trading activities will be conducted in a low-profile,

mechanical, non-discretionary manner. In this regard, the independent

fiduciary will be required to utilize a computerized trading program

that will engage in a number of small purchases over the course of each

day, randomly timed. Such a program will allow the Bank to acquire the

necessary shares of BAC Stock for the S&P 500 Fund with minimum impact

on the market and in a manner that will be in the best interests of the

Plans participating in the S&P 500 Fund.

12. The independent fiduciary will also be required to monitor the

Bank's compliance with the trading program and procedures it developed

for the initial acquisition of BAC Stock. The independent fiduciary

will receive duplicate confirmation slips of all trades as well as the

``time and tape'' of all NYSE transactions in BAC Stock completed

immediately before and after each transaction and a time/price/quantity

record of all completed or attempted trades. The independent fiduciary

will be required to review the activities weekly to determine

compliance with the trading procedures and notify the Bank and the

Department should any non-compliance be detected. Should the trading

strategy need modifications due to unforeseen events or consequences,

the independent fiduciary will be required to consult with the Bank and

must approve in advance any alteration of the trading procedures. All

purchases of BAC Stock pursuant to the independent fiduciary's trading

program will comply with SEC rule 10b-18 and Parts II and III of the

proposed exemption.

13. The Bank represents that it does not exercise any discretionary

authority over whether a Plan invests in the S&P 500 Fund, except for a

relatively small number of Plans which subscribe to Portfolio

Management in Funds (PMF) services. If the Bank provides PMF to a Plan,

the Bank does exercise discretion in allocating and reallocating Plan

assets among various collective investment funds including the S&P 500

Fund and any other index or model-driven fund, based on the Plan's

investment objectives, risk profile and market conditions. However, the

Bank makes the following representations, and will take the following

steps, with respect to plans utilizing PMF (PMF Plans):

(a) The Bank represents that with respect to any prohibited

transactions which might result from its discretionary allocation and

reallocation of plan assets, such services will satisfy the

requirements of section 408(b)(8) of the Act and, accordingly, will be

exempt from the prohibitions of section 406 of the Act .\4\

---------------------------------------------------------------------------

\4\In this proposed exemption, the Department expresses no

opinion as to whether the Bank's discretionary allocation and

reallocation services satisfy the requirements of section 408(b)(8)

of the Act.

---------------------------------------------------------------------------

(b) Before BAC Stock is purchased by the Fund, the appropriate

independent fiduciary for each PMF Plan will be furnished an

explanation and a simple form to return on which approval or

disapproval of investments in Index and Model-Driven funds holding BAC

Stock could be indicated, together with a postage-paid return envelope.

If the form is not received by the Bank within 30 days, the Bank may

obtain a verbal response by telephone. If a verbal response is obtained

by telephone, the Bank will confirm the fiduciary's decision in writing

within five business days. In the event no response is obtained from a

PMF Plan fiduciary, the assets of the Plan will not be invested in any

fund which invests in BAC Stock.

(c) Each new management agreement with a PMF Plan will contain

language specifically approving or disapproving the discretionary

investment in Index or Model-Driven Funds which might hold BAC Stock.

The fiduciary for each present PMF Plan will be informed that the

existing management agreement could be modified in the same way.

(d) Each PMF Plan will be informed on a quarterly basis of any

investment in or withdrawal from an Index or Model-Driven Fund holding

BAC Stock. The PMF Plan would be granted the election to override the

Bank's discretionary decision to invest in or withdraw from such Fund.

14. In the event a third-party index, in addition to the S&P 500,

utilized by the Bank for an Index or Model-Driven Fund, adds BAC Stock,

or if the Bank establishes an Index or Model-Driven Fund based on a

third-party index other than the S&P 500, and the Bank is unable to

satisfy the need of such Fund for BAC Stock through cross-trades with

other Funds, the Bank will acquire BAC Stock in the open market. If the

Bank is required to acquire BAC Stock in the open market on behalf of

an Index or Model-Driven Fund in those circumstances, the Bank will

determine whether the stock can be acquired within 10 business days,

acquiring on each day no more than the greater of 10 percent of the

stock's average daily trading volume for the previous five days or 10

percent of the stock's current day's trading volume. If the BAC Stock

cannot be acquired within 10 business days, the Bank will appoint an

independent fiduciary to establish the procedures to be used to acquire

the BAC Stock and monitor the Bank's compliance with those procedures.

The fiduciary will be unrelated to and independent of the Bank and will

have expertise in the operation of Index Funds. Further, any such

acquisition of BAC Stock on behalf of an Index or Model-Driven Fund

will comply with the conditions of Parts II and III of the proposed

exemption, including compliance with SEC Rule 10b-18.

15. The Bank will appoint an independent fiduciary which will

direct the voting of the BAC Stock held by the Index and/or Model-

Driven Funds. The independent fiduciary will be a consulting firm

specializing in corporate governance issues and proxy voting on behalf

of public and private pension funds, banks, trust companies, money

manager, insurance companies and other institutional investors with

large equity portfolios. The fiduciary will be required to develop, and

supply to the Bank, a corporate ownership manual which will act as a

guideline to the voting of proxies by institutional fiduciaries, and

their current voting guidelines. The Bank will provide the independent

fiduciary with all necessary information regarding the collective funds

that hold BAC Stock, the amount of BAC Stock held by the Funds on the

record date for shareholder meetings of BAC, and all proxy and consent

materials with respect to BAC Stock. The independent fiduciary will

maintain records with respect to its activities as an independent

fiduciary on behalf of the Funds, including the number of BAC Stock

shares voted, the manner in which they were voted, and the rationale

for the vote if the vote was not consistent with the independent

fiduciary's corporate ownership manual and the current voting

guidelines in effect at the time of the vote. The independent fiduciary

will supply the Bank with the information after each shareholder

meeting. The independent fiduciary will be required to acknowledge that

it will be acting as a fiduciary with respect to the plans which invest

in the Funds which own BAC Stock, when voting the Stock.

16. In summary, the applicant represents that the proposed cross-

trading transactions satisfy the criteria of section 408(a) of the Act

for the following reasons: (a) the Index and Model-Driven Funds buy or

sell stock only in response to various ``triggers'' which are not

within the Bank's control or discretion; (b) The Large Plans will

engage in cross trades only in situations where the Bank has no

discretion with respect to the investment decision; (c) All cross

trades, including cross-trades involving BAC Stock, will occur within 3

business days of the ``triggering event'' necessitating the purchase or

sale; (d) The price for the Stocks will be set at the closing (or

opening, where appropriate) price for those stocks on the day of

trading; (e) The Funds and the Large Plans will save significant

amounts of money on brokerage commissions; and (f) The Bank will

receive no additional compensation as a result of the proposed cross

trades nor with respect to the acquisition, holding and disposition of

BAC Stock.

The applicant further represents that the proposed BAC Stock

transactions satisfy the criteria of section 408(a) of the Act for the

following reasons: (a) The acquisition, holding and disposition of BAC

Stock will occur solely to maintain strict quantitative conformance by

an Index or Model-Driven Fund to its underlying index or model; (b) All

acquisitions and dispositions of BAC Stock in the open market will

comply with SEC Rule 10b-18; (c) no more than 5 percent of the total

outstanding shares of BAC Stock will be held in the aggregate by the

Funds; (d) The initial acquisition of BAC Stock by the S&P 500 Fund

will be monitored by a fiduciary independent of the Bank to result in

minimum market disturbances; and (e) A fiduciary independent of the

Bank will direct the voting of any BAC Stock held by the Funds.

For further information contact: Ronald Willett of the Department,

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

Atlanta Consulting Group, Inc. Retirement Plan (the Plan) Located

Atlanta, Georgia; Proposed Exemption

[Exemption Application No. D-9638]

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, 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 (the Sale) of

certain shares of stock (the Stock) from the Plan to Atlanta Consulting

Group, Inc., a party in interest with respect to the Plan.

This proposed exemption is conditioned upon the following

requirements: (1) All terms and conditions of the Sale are at least as

favorable to the Plan as those obtainable in an arm's length

transaction; (2) the Sale is a one-time cash transaction; (3) the Plan

is not required to pay any commissions, costs or other expenses in

connection with the Sale; and (4) the Plan receives a sales price equal

to the greater of: (a) The fair market value of the Stock on the date

of the Sale; or (b) the Stock's original acquisition of $25,000.

Summary of Facts and Representations

1. The Plan is comprised of the assets of a profit sharing plan and

a 401(k) plan sponsored by Atlanta Consulting Group, Inc. (the

Employer), a Mississippi corporation engaged in management consulting

and employee training services. As of December 31, 1992, the Plan had

total assets of $863,833 and twenty-one participants.

2. On September 14, 1988, the Plan purchased 2,500 shares of

Charter Bank stock (the Stock) for $25,000 or $10 per share directly

from Charter Bank (Charter Bank), an unrelated small banking company

organized and operating in Cobb County, Georgia. The Plan did not incur

any brokerage fees or other expenses in connection with this purchase.

On January 1, 1993, Charter Bank split the number of outstanding shares

three for two, thus increasing the number of shares owned by the Plan

to 3,750 shares. Since the Stock's acquisition, the Plan has not

received any dividends.

3. The Plan has recently offered its participants the opportunity

to direct their investments. As a result, the Plan wishes to convert

the Stock into cash so that other alternative investments can be chosen

by the participants. Since the Stock is not publicly traded and,

therefore, cannot be readily liquidated, the Employer requests an

administrative exemption from the Department to permit the Sale from

the Plan to the Employer under the terms and conditions described

herein.

4. The Employer will purchase the Stock for the greater of: (a) its

fair market value on the date of the Sale; or (b) its original

acquisition price of $25,000. At the present time, the Employer does

not own any Charter Bank stock, and as a result, the Employer will not

own a majority interest in Charter Bank after the Sale. The fair market

value will be based upon the trading prices of Charter Bank stock from

May 1, 1993 through the date of the Sale. The Sale will be a one-time

cash transaction, and the Plan will incur no expenses with respect to

the transaction.

5. From May 1, 1993 through March 25, 1994, a supplemental stock

offering and two buy/sell transactions to unrelated parties have

resulted in an average trading price of $7.50 per share. Accordingly,

because this average trading price exceeds the Plan's original

acquisition price of $25,000, the Employer will purchase the Stock for

its fair market value of $7.50 per share or $28,125. The applicant will

monitor all further buy/sell transactions of Charter Bank stock between

unrelated parties until the date of the Sale and will adjust the Sales

price accordingly.

6. In summary, the applicant represents that the proposed

transaction will satisfy the statutory criteria for an exemption under

section 408(a) of the Act because: (a) All terms and conditions of the

Sale will be at least as favorable to the Plan as those obtainable in

an arm's-length transaction; (b) the Sale will be a one-time cash

transaction; (c) the Plan will not be required to pay any commissions,

costs or other expenses in connection with the Sale; and (d) the Plan

will receive a sales price equal to the greater of: (1) The fair market

value of the Stock on the date of the Sale; or (2) the Stock's original

acquisition price of $25,000.

For further information contact: Kathryn Parr 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 believe 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 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 19th day of April, 1994.

Ivan Strasfeld,

Director of Exemption Determinations, Pension and Welfare Benefits

Administration, U.S. Department of Labor.

[FR Doc. 94-9828 Filed 4-21-94; 8:45 am]

BILLING CODE 4510-29-P