Grant of Individual Exemptions; Sammons Enterprises, Inc. Employee Stock Ownership Trust, et al.

DEPARTMENT OF LABOR

Pension and Welfare Benefits Administration

[Prohibited Transaction Exemption 95-14; Exemption Application No. D-

09743, et al.]

Grant of Individual Exemptions; Sammons Enterprises, Inc.

Employee Stock Ownership Trust, et al.

AGENCY: Pension and Welfare Benefits Administration, Labor.

ACTION: Grant of Individual Exemptions.

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SUMMARY: This document contains exemptions issued by the Department of

Labor (the Department) from certain of the prohibited transaction

restrictions of the Employee Retirement Income Security Act of 1974

(the Act) and/or the Internal Revenue Code of 1986 (the Code).

Notices were published in the Federal Register of the pendency

before the Department of proposals to grant such exemptions. The

notices set forth a summary of facts and representations contained in

each application for exemption and referred interested persons to the

respective applications for a complete statement of the facts and

representations. The applications have been available for public

inspection at the Department in Washington, D.C. The notices also

invited interested persons to submit comments on the requested

exemptions to the Department. In addition the notices stated that any

interested person might submit a written request that a public hearing

be held (where appropriate). The applicants have represented that they

have complied with the requirements of the notification to interested

persons. No public comments and no requests for a hearing, unless

otherwise stated, were received by the Department.

The notices of proposed exemption were issued and the exemptions

are being granted solely by the Department because, effective December

31, 1978, section 102 of Reorganization Plan No. 4 of 1978 (43 FR

47713, October 17, 1978) transferred the authority of the Secretary of

the Treasury to issue exemptions of the type proposed to the Secretary

of Labor.

Statutory Findings

In accordance with section 408(a) of the Act and/or section

4975(c)(2) of the Code and the procedures set forth in 29 CFR part

2570, subpart B (55 FR 32836, 32847, August 10, 1990) and based upon

the entire record, the Department makes the following findings:

(a) The exemptions are administratively feasible;

(b) They are in the interests of the plans and their participants

and beneficiaries; and

(c) They are protective of the rights of the participants and

beneficiaries of the plans.

Sammons Enterprises, Inc., Employee Stock Ownership Trust (the Trust),

Located in Dallas, TX; [Prohibited Transaction Exemption 95-14;

Exemption Application No. D-09743]

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 cash sale (the Sale) by certain accounts (the

Prior Plan Accounts) in the Trust of certain limited partnership

interests (the Limited Partnership Interests) and an undivided interest

in certain real property (the Property Interest; collectively, the

Interests) to Otter, Inc., a party in interest with respect to the

Trust.

This exemption is conditioned upon the following requirements: (1)

All terms and conditions of the Sale are at least as favorable to the

Prior Plan Accounts as those obtainable in an arm's length transaction;

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

Accounts are not required to pay any commissions, costs or other

expenses in connection with the Sale; (4) the Prior Plan Accounts

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

value of the Interests as determined by qualified, independent

appraisers; or (b) the Prior Plan Accounts' aggregate costs of

acquiring and holding the Interests; (5) Churchill Management

Corporation (Churchill) determines that the Sale is appropriate for the

Prior Plan Accounts and is in the best interests of the Prior Plan

Accounts and their participants and beneficiaries; (6) the Prior Plan

Accounts, prior to the Sale, obtain the written consent of the general

partner of each of the limited partnerships involved with respect to

the sale of the Limited Partnership Interests; and (7) the other

partners of such limited partnerships, as per the limited partnership

agreements, are given the right of first refusal with respect to the

Limited Partnership Interests.

Written Comments: In the Notice of Proposed Exemption (the Notice),

the Department invited all interested persons to submit written

comments on the proposed exemption within forty-five days from the date

of publication of the Notice in the Federal Register. All written

comments were to have been received by the Department by January 12,

1995. The Department received two written comments and no requests for

a hearing.

The first comment was submitted on behalf of Texas Commerce Bank,

N.A., the trustee of the Trust (the Trustee). The Trustee states that

Churchill is the investment manager with respect to the assets of the

Prior Plan Accounts. As such, the Trustee does not have the sole

investment discretion with respect to the assets of the Prior Plan

Accounts. As a result, the following changes must be made to the

Notice:

(1) The references to ``the trustee of the Trust'' or ``Trustee''

found in Condition #5 of the Notice, the entire second paragraph of

Representation #3 and subsection (e) of Representation #7 of the

Summary of Facts and Representations (the Summary) should be replaced

with ``Churchill.''

(2) The third sentence of Representation #2 of the Summary is

stricken and replaced with ``Churchill, as investment manager, has

discretion with respect to the assets of the Prior Plan Accounts. The

Trustee has investment discretion with respect to all remaining assets

of the Trust.''

The Department concurs with the proposed modifications and,

accordingly, amends the language of the Notice.

The second comment was submitted on behalf of the applicants. The

issues addressed in the comment and the Department's responses are

summarized as follows:

(1) The first sentence of Representation #1 of the Summary names

the sponsored plan as the ``Sammons Employee Stock Ownership Plan.''

The correct name of such plan is the ``Sammons Enterprises, Inc.

Employee Stock Ownership Plan.''

(2) The third sentence of the first paragraph of Representation #3

of the Summary states that, effective 1991, the TMIS Plan merged into

the Plan. The correct year of such merger is 1989.

(3) The first sentence of the first paragraph of Representation #4

of the Summary states that the Plan has a 14.5 percent Class B interest

in Sunbelt City, Ltd. The correct name of such partnership is ``Sunbelt

Oklahoma City, Ltd.''

(4) The first sentence of the third paragraph of Representation #4

should be revised as follows: ``Annual valuations of interests in both

partnerships are furnished to investors by Churchill Management

Corporation (Churchill), the investment adviser to the Prior Plan

Accounts and for most of [[Page 10878]] the other limited partners of

the Limited Partnerships.''

(5) The last sentence in the fourth paragraph of Representation #5

states that the Liabilities increased by $350,000 to $842,000. The

correct amount of the increase in the Liabilities was $225,000 to

$842,000.

The changes described above are hereby incorporated into the

exemption as granted. After consideration of the entire record,

including the comments, the Department has determined to grant the

exemption. In this regard, the comments have been included as part of

the public record for the exemption application. The complete

application file is made available for public inspection in the Public

Documents Room of the Pensions and Welfare Benefits Administration,

room N-5638, U.S. Department of Labor, 200 Constitution Avenue, N.W.,

Washington, D.C. 20210.

For a more complete statement of the facts and representations

supporting the Department's decision to grant this exemption, refer to

the notice of proposed exemption published on November 28, 1994 at 59

FR 60839.

FOR FURTHER INFORMATION CONTACT: Kathryn Parr of the Department,

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

American Express Incentive Savings Plan (the Plan) Located in New York,

NY; [Prohibited Transaction Exemption 95-15; Exemption Application No.

D-09813]

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 (1) the extensions of credit (the Loans) to the Plan

by American Express Company (the Employer), the sponsor of the Plan,

with respect to two guaranteed investment contracts (the GICs) issued

by Confederation Life Insurance Company (Confederation); (2) the Plan's

potential repayment of the Loans; and (3) the potential purchase of the

GICs from the Plan by the Employer for cash; provided the following

conditions are satisfied:

(A) All terms and conditions of such transactions are no less

favorable to the Plan than those which the Plan could obtain in arm's-

length transactions with unrelated parties;

(B) No interest and/or expenses are paid by the Plan in connection

with the transactions;

(C) The proceeds of the Loans are used solely in lieu of payments

due from Confederation with respect to the GICs;

(D) Repayment of the Loans will be restricted to the GIC Proceeds,

defined as the cash proceeds obtained by the Plan from or on behalf of

Confederation with respect to the GICs;

(E) Repayment of the Loans will be waived to the extent that the

Loans exceed the GIC Proceeds; and

(F) In any sale of he GICs to the Employer, the Plan will receive a

purchase price which is no less than the fair market value of the GICs

as of the sale date, and no less than the GICs' accumulated book value,

defined as the total principal deposits plus accrued interest at the

rates guaranteed by the GICs, less previous withdrawals and any Loans

made pursuant to this exemption, as of the sale date.

For a more complete statement of the facts and representations

supporting the Department's decision to grant this exemption, refer to

the notice of proposed exemption published on December 19, 1994 at 59

FR 65397.

FOR FURTHER INFORMATION CONTACT: Ronald Willett of the Department,

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

Bermo, Inc. Profit Sharing Plan and Trust (the Plan), Located in Circle

Pines, MN; [Prohibited Transaction Exemption 95-16; Application No. D-

09826]

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 series of loans (the Loans), originated within a

five year period, by the Plan to Bermo, Inc. (the Employer), a party in

interest with respect to the Plan, provided that the following

conditions are met:

(a) The total amount of outstanding Loans shall not exceed 25

percent of the Plan's total assets at any time during the transaction;

(b) All terms and conditions of the Loans are at least as favorable

to the Plan as those which the Plan could obtain in an arm's length

transaction with an unrelated third party;

(c) Each loan will be: (1) For a maximum term of forty-eight months

fully amortized and payable in equal monthly installments of principal

and interest, (2) the Loan proceeds shall be used exclusively by the

Employer to purchase new equipment (the Equipment) used by the Employer

in the course of its business, (3) collateralized by the Equipment and

other assets owned by the Employer such that at all times each Loan

will be collateralized in an amount equal to at least 200% of the

outstanding balance of such Loan, (4) equal to no more than 80% of the

purchase price of the Equipment financed, and (5) guaranteed personally

by Fred Berdass, the principal shareholder of the Employer.

(d) The value of the collateral offered by the Employer will be

determined by a qualified independent appraiser;

(e) Prior to the granting of each Loan, an independent qualified

fiduciary determines, on behalf of the Plan, that each Loan is feasible

and in the best interests of the Plan and protective of the Plan and

its participants and beneficiaries;

(f) The independent fiduciary will conduct a review of the terms

and conditions of the exemption and the Loans, including the applicable

interest rate, the sufficiency of the collateral, the financial

condition of the Employer and compliance with the 25 percent of the

Plan asset maximum total Loan amount prior to approving each

disbursement under the Loan agreement;

(g) The independent fiduciary will monitor the terms and conditions

of the exemption and the Loans; and

(h) The independent fiduciary is authorized to take whatever action

is appropriate to protect the Plan's rights throughout the duration of

the exemption and throughout the duration of any Loan granted pursuant

to this exemption.

Temporary Nature of Exemption

The exemption is temporary and will expire five years from February

28, 1995. Subsequent to the expiration of this exemption, the Plan may

hold any Loans originated during this five year period until the Loans

are repaid or otherwise terminated.

For a more complete statement of the facts and representation

supporting the Department's decision to grant this exemption refer to

the notice of proposed exemption published on December 19, 1994 at 59

FR 65398.

for further information contact: Allison K. Padams of the Department,

telephone (202) 219-8971.

Jerome Companies Profit Sharing Plan and Trust (the Plan), Located in

Barron, WI [Prohibited Transaction Exemption 95-17; Exemption

Application No. D-09829]

Exemption

The restrictions on sections 406(a) and 406 (b)(1) and (b)(2) of

the Act and the sanctions resulting from the application of section

4975 of the Code, by reason of section 4975(c)(1) (A) through (E) of

the Code, shall not apply to the cash sale (the Sale) of the

[[Page 10879]] Guaranteed Investment Contract #62043 (the GIC) issued

by Confederation Life Insurance Company (Confederation), a Canadian

insurance corporation, by the Plan to Jerome Food, Inc. (the Employer),

a Wisconsin corporation, the sponsoring employer and a party in

interest with respect to the Plan: provided that (1) the Sale is a one-

time transaction for cash; (2) the Plan experiences no loss nor incurs

any expense from the Sale; and (3) the Plan receives as consideration

from the Sale the greater of either the fair market value of the GIC as

determined on the date of the Sale, or the principal amount of $500,000

plus simple interest accrued at the rate of 9.03 percent per annum on

the principal amount of the GIC for the period from January 25, 1994,

to the date 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 January 4, 1995, at 60 FR

487.

for further information contact: Mr. C. E. Beaver of the Department,

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

Employee Profit Sharing-Savings Plan and Trust Agreement of Modern

Globe, Inc. (the Plan), Located in Wyomissing, PA [Prohibited

Transaction Exemption 95-18; Exemption Application No. D-09893]

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 apply to the cash sale (the Sale) of the Guaranteed

Investment Company Contract No. 62580 (the GIC), issued by

Confederation Life Insurance of Atlanta, Georgia (Confederation), by

the Plan to VF Corporation, a Pennsylvania corporation (the Employer),

the sponsoring employer and a party in interest with respect to the

Plan; provided that (1) the Sale is a one-time transaction for cash;

(2) the Plan experiences no loss nor incurs any expense from the Sale;

and (3) the Plan receives as consideration from the Sale the greater of

either the fair market value of the GIC as determined on the date of

the Sale, or an amount that is equal to the total amount expended by

the Plan when acquiring the GIC, plus all interest accruing under the

terms of the GIC until date of 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 January 4, 1995, at 60 FR

491.

FOR FURTHER INFORMATION CONTACT: Mr. C. E. Beaver of the Department,

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

Employees' Savings Plan of Bassett-Walker, Inc., Located in

Martinsville, VA [Prohibited Transaction Exemption 95-19; Exemption

Application No. D-09894]

Exemption

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

the Act and the sanctions resulting from the application of section

4975 of the Code, by reason of section 4975(c)(1) (A) through (E) of

the Code, shall not apply to the cash sale (the Sale) of the Guaranteed

Investment Contract No. 62012 (the GIC), issued by Confederation Life

Insurance Company of Atlanta, Georgia (Confederation), by the plan to

VF Corporation, a Pennsylvania corporation, a party in interest with

respect to the Plan; provided that (1) the Sale is a one-time

transaction for cash; (2) the Plan experiences no loss nor incurs any

expense from the Sale; and (3) the Plan receives as consideration from

the Sale the greater of either the fair market value of the GIC as

determined on the date of the Sale, or $1.5 million, the principal

amount of the GIC, plus simple interest accrued at the rate of 8.7

percent per annum on the principal amount of the GIC for the period

from April 4, 1994, to the date of the Sale.

For a 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 January 4, 1995, at 60 FR

489.

FOR FURTHER INFORMATION CONTACT: Mr. C. E. Beaver 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 described all material terms of the transaction

which is the subject of the exemption.

Signed at Washington, D.C., this 23rd day of February, 1995.

Ivan Strasfeld,

Director of Exemption Determinations, Pension and Welfare Benefits

Administration, Department of Labor.

[FR Doc. 95-4888 Filed 2-27-95; 8:45 am]

BILLING CODE 4510-29-M