Proposed Exemptions; Bill Ussery Motors, Inc.

[[Page 31954]]

DEPARTMENT OF LABOR

Pension and Welfare Benefits Administration

[Application No. D-10146, et al.

Proposed Exemptions; Bill Ussery Motors, Inc.

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 Persons

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.

Bill Ussery Motors, Inc. Fourth Amended and Restated Profit Sharing

Plan and Trust (the Plan), Located in Coral Gables, Florida

[Application No. D-10146]

Proposed Exemption

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

(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 real property (the Property) by the Plan to Bill Ussery Motors,

Inc. (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 does not experience any loss nor

incur any expenses from the proposed transaction; and (3) the Plan

receives as consideration from the Sale the greater of either (a) the

fair market value of the Property as determined by a qualified,

independent appraiser on the date of the Sale, or (b) an amount equal

to the appraised fair market value as determined on December 31, 1994.

Summary of Facts and Representations

1. The Employer, a Florida corporation formed in 1959 and located

in Coral Gables, Florida, is in the business of selling new and used

Mercedes-Benz vehicles under a dealership franchise issued by Mercedes-

Benz. The Employer also services Mercedes-Benz vehicles and sells new

replacement or spare parts for the vehicles. The principals of the

Employer are Mr. John C. Brockway, who is the sole shareholder of the

Employer and its Chief Executive Officer, and his son, Robert W.

Brockway, who is the President of the Employer.

2. The Plan is a defined contribution plan that was established by

the Employer on December 1, 1969, and was intended to satisfy the

requirements of sections 401(a) and 401(k) of the Code. The total

assets of the Plan were approximately $5,733,666.64, as of December 31,

1995, and the total participants and beneficiaries were approximately

119.

All investment decisions for the Plan are made by Mr. John C.

Brockway, as Plan Administrator, upon recommendations of Mr. Fred W.

Newcomb, a Plan Trustee, and with the concurrence of Mr. Robert

Brockway, a Plan Trustee. Mr. Newcomb was an employee of the Employer

from 1972 until December 1994 in the capacity of general manager from

1977 through 1991 and president from 1991 until his resignation in

December 1994. Mr. Newcomb is presently employed by the Employer as a

consultant as well as serving as a Trustee of the Plan.

3. The Property is 27.66 acres of land located on Lots 10 and 11

Section 14, Township 5 South Rauge 24 East, Clay County, Florida with

an address given by the applicant as Southeast corner of S.R. 21 and

C.R. 218, Middleburg, Clay County, Florida, and represented by the

applicant as unimproved and zoned as Intermediate Business District and

Agricultural. The applicant represents that the Property was purchased

below the market value at a price considered to be a prudent investment

in four transactions that involved no prohibited transactions under the

Act. The first transaction occurred on June 17, 1985, in which 6.6

acres was acquired for $241,814, and another purchase of 4 acres, not

contiguous to the 6.6 acres, was made on November 12, 1985, for

$15,009. On August 24, 1989, another 17.06 acres, contiguous to the

other two purchased parcels, was acquired for $100,000; and, at the

same time, rights

[[Page 31955]]

were purchased to certain proceeds from the sale of the 6.6 acres for

$290,000.1 Thus, the total purchase price to the Plan of the 27.66

acres was $646,823.2

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\1\ The original sales agreement provided that the seller was to

receive 49% of the net proceeds in excess of $330,000 upon the sale

of the 6.6 acres by the Plan.

\2\ In this proposed exemption, the Department expresses no

opinion as to whether the acquisition and holding of the Property

violated any provision of Part 4 of Title I of the Act.

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The applicant represents that the additional 4 acres and 17 acres

were acquired in order to enhance the value of the Property. Because

portions of the 4 acres and the 17 acres were designated as wetland

areas by governmental authority, the Plan was required to obtain

approval to fill a portion of the wetland areas. This approval enabled

8.7 acres of the Property to have frontage on two state highways and

become suitable for commercial development.

The applicant represents that the Plan expended $208,337 for

improvements to the property during the years from 1990 through

1994,3 and the property taxes on the Property totalled $71,115 for

the years 1985 through 1995. Thus, the applicant represents that the

Plan expended a total of $926,275 from 1985 through 1995 in acquiring

and holding the Property.

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\3\ The improvements were represented by the applicant to

involve an environmental assessment, preparation of conceptual land

use, continuation and permits, finalization of plans, drainage, and

driveways, maintenance land clearing, and additional fill.

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On December 27, 1991, the Property was appraised by Mr. John W.

Veasey, MAI, of Weigel-Veasey Appraisers, Inc. located in Middleburg,

Florida, who determined that the fair market value of the Property was

$1,004,380. On December 31, 1994, in an update to the original

appraisal, Mr. Veasey determined that the fair market value of the

Property had increased to $1,100,880. The original 1991 appraisal

represented, inter alia, that a portion of the Property was located

within jurisdictional wetlands, and that a portion of the commercial

tract of the Property would require a change in its zoning and also

would require fill.

Mr. John R. Seivert, Broker/Salesperson, with Coldwell Banker,

Walter Williams Realty, Inc. located in Jacksonville, Florida (the

Realtor), represented in a letter, dated December 1, 1995, that his

company began marketing portions of the Property in 1987 and continued

offering the additional portions as acquired through 1995. The

marketing involved placing from time to time different signs on the

Property and advertising continuously in the Florida Times Union, a

newspaper published in Jacksonville, Florida. In addition, beginning in

August 1995, the Realtor began placing additional advertisements in the

Real Estate Buyers Guide, that was to provide 10 publications per year

with a distribution of over 200,000 copies per year at over 150

locations in various stores and restaurants. Also, the Realtor has

distributed brochures regarding the Property to other commercial

brokers, and since 1987 the Property has been in the Multiple Listing

Service of the Jacksonville Association of Realtors.

The Realtor also represented that the Property had some problems

with some areas that were low and needed fill, plus having a drainage

fault. The Realtor represented that there were also problems requiring

zoning changes from residential to business. The road construction and

general depressed economic conditions in the area of the Property was

represented by the Realtor as having a detrimental effect on marketing

the Property.

4. The applicant proposes that the Plan sell the Property to the

Employer for the greater of either the fair market value of the

Property as determined by a qualified, independent appraiser on the

date of the Sale, or for an amount equal to the appraised fair market

value determined on December 31, 1994. The purpose of the proposed

transaction is to enable the Plan to avoid the continuing additional

expenses of improving and maintaining the Property. In addition, the

Plan will be able to invest in liquid assets that generate yields and

incur a minimum of expenses. The applicant represents that the Plan

will incur no expenses or losses from the proposed Sale.

The applicant further represents that the proposed transaction is

in the best interests of the Plan and its participants and

beneficiaries because of (a) the difficulty experienced in attempting

to sell the Property, (b) the expenses incurred from maintaining and

improving the Property, and (c) only 8.7 acres of the Property is

usable for commercial purposes with the remainder acreage either

protected wetlands, or portions with no road frontage, and surface

contours sloping deeply towards a creek that frequently floods the

area.

5. In summary, the applicant represents that the proposed

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

because (a) the Sale of the Property involves a one-time transaction

for cash; (b) the Plan will not incur any expenses from the Sale; (c)

the Plan will receive as consideration from the Sale the greater of

either the fair market value of the Property as determined by a

qualified, independent appraiser on the date of the Sale, or an amount

equal to the appraised fair market value as determined on December 31,

1994; (d) the Sale will permit the Plan to reinvest illiquid and non-

yielding assets into income producing, and liquid assets; and (e) the

Plan will avoid the expenses and risks involved in maintaining and

developing the Property.

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

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

Hach Company 401(k) Profit Sharing Plan (the Plan), Located in

Loveland, CO

[Application No. D-10203]

Proposed Exemption

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 cash sale by the Plan of Group

Annuity Contract No. 5000008 (the GAC) issued by Anchor National Life

Insurance Company (Anchor National), located in Los Angeles,

California, to Hach Company (the Employer), a party in interest with

respect to the Plan.

This proposed exemption is subject to the following conditions:

(a) The sale is a one-time transaction for cash.

(b) The Plan does not experience any losses or incur any expenses

in connection with the transaction.

(c) The Plan receives as consideration an amount that is equal to

the fair market value of the GAC as of the date of the sale.

(d) The trustees (the Trustees) of the Plan have determined that

the proposed transaction is appropriate for the Plan and in the best

interests of the Plan's participants and beneficiaries.

Summary of Facts and Representations

1. The Plan is a profit sharing plan with a deferred compensation

feature allowing participants to self-direct investments. As of April

30, 1995, the Plan had 857 participants and net assets of $24,850,046.

The Trustees of the Plan are Gary Dreher, Randy Petersen and

[[Page 31956]]

Loel Sirovy. The Trustees make investment decisions for the Plan with

respect to investment options and contributions.

2. The Employer sponsoring the Plan is a Delaware corporation

maintaining its principal place of business at 5600 Lindbergh Drive,

Loveland, Colorado. The Employer is engaged in the manufacture of

products that are used in the analysis and testing of chemicals.

3. Among the assets of all of the participant accounts in the Plan

is the GAC investment. The GAC was issued by Anchor National, an

unrelated party, on February 20, 1987. It was purchased by the Plan for

$685,832 through Boettcher & Company, also an unrelated party, on the

issuance date. The GAC represents approximately 9 percent of the Plan's

assets and consists of mutual fund investments that are managed under

the Anchor National American Pathway Fund, an open-end investment

management company registered under the Investment Company Act of 1940.

The mutual fund investments include five variable accounts and one

fixed income account.4 The GAC has no stated maturity date and it

can be discontinued unilaterally by either the Plan or Anchor National

at any time. Since November 1990 which is the date of the earliest

deposit, the interest rates earned by the GAC have ranged from 4.5

percent to 6.0 percent, with the GAC providing for a minimum guaranteed

interest rate of 4 percent. These interest earnings have all been

attributed to the fixed income account investments. Contrarily, the

variable accounts do not earn any interest. Instead, each fund

experiences increases or decreases in value.

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4 Specifically, the five variable accounts constituting

the GAC are the Growth Separate Account, the Growth & Income

Separate Account, the Government Securities Account, the Cash

Management Separate Account and the Asset Allocation Separate

Account. The fixed income account comprising the GAC is the Fixed

Annuity General Account.

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4. The GAC may require that the Plan pay a 3 percent surrender fee

on money that is withdrawn from the GAC during the five year period

following deposit. The surrender fee is ongoing, meaning that the five

year period commences with the date of each deposit. The surrender fee

is paid to Anchor National only if the Plan withdraws an amount that is

in excess of 5 percent of the value of the GAC.5

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5 It is represented that the surrender fee does not apply where

a participant takes a withdrawal in the form of an annuity, in the

case of death benefits or where less than 5 percent of the value of

the GAC is withdrawn in any year.

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The GAC also provides for annual risk charges of 1.15 percent of

the total amount of deposits under the GAC. These risk charges are

similar to a management fee. The risk charges are deducted against

earnings or interest on the mutual funds and are made automatically.

5. Since it has owned the GAC, it is represented that the Plan has

paid no surrender fees. However, the Plan has incurred aggregate risk

charges of $48,179 and made withdrawals for disbursement to

participants totaling $4,715,313. Including the acquisition price of

$685,832, the Plan has also made deposits totaling $4,189,449, received

aggregate interest payments of $558,172 and realized appreciation

totaling $1,359,752. Thus, the Plan's net investment in the GAC is

$1,343,881.6 As of April 24, 1996, the GAC had a current balance

of $2,164,324.

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6 The Plan's net investment in the GAC has been calculated

as follows: $4,189,449 (deposits) + $558,172 (interest) + $1,359,752

(appreciation) = $6,107,373 (gross investment) - $4,715,313

(withdrawals) - $48,179 (risk charges) = $1,343,881.

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6. The GAC is valued on a daily basis by Anchor National which

calculates the fair market values of all securities held in the

variable and fixed income accounts. Market values for the variable

accounts comprising the GAC are also published periodically in

Barron's. As of April 24, 1996, Anchor National placed the aggregate

fair market value of the GAC at $2,164,324. This amount was also

equivalent to the outstanding balance of the GAC as discussed in

Representation 5.

7. To make available cash proceeds to the Plan in order that it may

invest in alternative investments which have no continuing surrender

fees, the Trustees request an administrative exemption from the

Department which would permit the Plan to sell the GAC to the Employer.

The sales price for the GAC will be based upon its fair market value as

of the date of the sale. Specifically, on the date of the transaction,

the Employer will obtain an updated valuation of the GAC from Anchor

National. In addition, the Plan will not pay any transaction fees,

commissions or other expenses in connection with the proposed sale.

8. The Trustees have reviewed the proposed transaction and

represent that it is in the best interests of the Plan and its

participants and beneficiaries. The Trustees also represent that the

proposed purchase price for the GAC is at least equal to fair market

value.

9. In summary, it is represented that the proposed transaction will

satisfy the statutory criteria for an exemption under section 408(a) of

the Act because: (a) the Plan will receive as consideration an amount

that is equal to the fair market value of the GAC as of the date of the

sale; (b) the transaction will enable the Plan to invest in other

investment vehicles which have no surrender fees; (c) the Plan will

incur no expenses with respect to the proposed sale; and (d) the

Trustees have determined that the sale is in the best interests of the

Plan and its participants and beneficiaries.

Notice to Interested Persons

Notice of the proposed exemption will be provided to interested

persons within 10 days of the publication of the notice of proposed

exemption in the Federal Register. The notice will include a copy of

the proposed exemption as published in the Federal Register as well as

a supplemental statement, as required pursuant to 29 CFR 2570.43(b)(2),

which shall inform interested persons of their right to comment on and/

or to request a hearing. Notice will be provided to interested persons

by posting copies of the proposed exemption and supplemental statement

on the Employer's bulletin boards or other employee advisory cites. Any

participant who is not employed by the Employer and any participant's

beneficiary will receive notice of the proposed exemption by certified

mail at such person's last known address. Written comments and hearing

requests with respect to the notice of proposed exemption will be due

within 40 days of the publication of the proposed exemption in the

Federal Register.

FOR FURTHER INFORMATION CONTACT: Ms. Jan D. Broady of the Department,

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

Hoechst Marion Roussel, Inc. Matching Contribution Plan (the Plan),

Located in Kansas City, Missouri

[Application No. D-10242]

Proposed Exemption

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 continuing guarantee by Hoechst Marion

Roussel, Inc. (the Corporation) of a loan made to the Marion Merrell

Dow Inc. Associate Stock Ownership Plan (the ASOP,

[[Page 31957]]

currently known as the Plan), provided the following conditions are

satisfied: a) the transaction is a continuation of a guarantee that was

statutorily exempt at the time it was entered into; and b) the

transaction requires an exemption because of an independent transaction

involving the Plan's sponsor as a corporate entity.

Effective Dates: If the proposed exemption is granted, the exemption

will be effective from July 18, 1995 to August 2, 2005.

Summary of Facts and Representations

1. Effective July 31, 1990, the Corporation [then known as Marion

Merrell Dow, Inc. (MMD)] established the Plan (then known as the ASOP),

a plan designed to qualify under sections 401(a) and 4975(e)(7) of the

Code as a leveraged employee stock ownership plan. The Corporation is

engaged in the development, manufacture and sale of pharmaceutical and

other products for hospital use. As of December 31, 1995, the Plan had

approximately $69 million credited to a suspense account and

approximately $40 million allocated to participants' accounts. For the

Plan year ending on December 31, 1995, the Plan covered 5,447

participants and beneficiaries.

2. On or about July 31, 1990, the Plan borrowed approximately $104

million from a consortium of lenders (the Loan), the proceeds of which

were used by the Plan to purchase Series A ASOP Convertible Preferred

Stock (ASOP Shares) from MMD. MMD guaranteed the Loan and became

obligated to make contributions to the Plan which, in conjunction with

the use of cash dividends paid on the ASOP Shares (Dividends), would be

sufficient for the Plan to make payments on the Loan. In 1991, the Loan

was refinanced through an offering of public debt by the Plan (the

Refinanced Loan). The Refinanced Loan is also guaranteed by the

Corporation and requires the Corporation to make contributions to the

Plan which, in conjunction with the use of Dividends, would be

sufficient for the Plan to make payments on the Refinanced Loan. The

Refinanced Loan was not collateralized by the unallocated ASOP shares

and is not prepayable absent the consent of all bondholders.\7\

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\7\ The Refinanced Loan, however, can be defeased by the Plan by

transferring the Proceeds (as defined below) to a separate

irrevocable trust earmarked for the future repayment of the

Refinanced Loan. Upon the establishment of such trust, the Plan's

obligations under the Refinanced Loan would be discharged.

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3. At all times prior to July 18, 1995, the Plan was operated as an

employee stock ownership plan, and the applicant represents that the

Corporation's guarantee of the Loan and the Refinanced Loan met all the

requirements of the exemption set forth in section 408(b)(3) of the Act

and section 4975(d)(3) of the Code.\8\ On July 18, 1995, H Pharma

Acquisition Corp., a wholly owned subsidiary of Hoechst Corporation,

was merged with and into the Corporation (the Merger). Hoechst

Corporation is a wholly owned subsidiary of Hoechst AG, a German

corporation (the Parent). The Corporation thereby became an indirect

wholly owned subsidiary of the Parent. As required by the applicable

certificate of designation \9\ pertaining to the ASOP Shares, upon the

Merger the ASOP Shares were redeemed for the cash sum of $37.41 per

ASOP Share, plus accrued dividends. As a result of such redemption, the

Plan received approximately $80 million in cash with respect to

unallocated ASOP Shares (the Proceeds) and approximately $25 million

with respect to allocated ASOP Shares. Upon such redemption, the Plan

ceased to hold any ``employer securities'' as defined in section

407(d)(1) of the Act and section 409(l) of the Code.

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\8\ In this proposed exemption, the Department expresses no

opinion as to whether the Corporation's guarantee of the Loan and

the Refinanced Loan met the conditions of Act section 408(b)(3) and

Code section 4975(d)(3).

\9\ The certificate of designation is a document filed in

Delaware which sets forth the powers, rights and preferences with

respect to the ASOP Shares.

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4. As of the date of the Merger, the principal amount of the

Refinanced Loan was approximately $90 million. Since that time, the

principal amount has been reduced to approximately $83 million through

additional contributions by the Corporation to the Plan. The Plan

remains the primary obligor on the Refinanced Loan, and the Refinanced

Loan is still guaranteed by the Corporation. The remaining term of the

Refinanced Loan extends through August 1, 2005.

5. The Parent is a German corporation whose shares are publicly

traded on the Frankfurt exchange. However, no shares of Parent stock or

American Depository Receipts (ADRs), and no stock or ADRs of any of the

Parent's subsidiaries or affiliates, are traded on any United States

securities exchange, or on the market established by the National

Association of Securities Dealers. The applicant represents that

although it is technically possible for the Plan to acquire shares of

stock of the Parent on the Frankfurt exchange and to hold such shares

overseas in a manner consistent with 29 CFR section 2550.404b-1 of the

regulations, there are a number of legal, business and administrative

obstacles to doing so:

(a) German companies do not maintain stock plans since, under

German law, companies are not legally permitted to purchase their own

stock. The Parent does not wish to permit equity ownership for its

United States employees where such ownership is not permitted for its

German employees.

(b) It is the view of the Parent and the Corporation that it would

be inappropriate (and would not achieve the employee incentives

underlying ESOPs generally) to make Parent stock available to the

Plan--the linkage between the performance of the Corporation and the

performance of Parent stock would be attenuated at best.

(c) Use of Parent stock would add significant complexity to the

Plan's administration, particularly with respect to communications with

Plan participants.

(d) Rules regarding ESOPs require that participants be given the

option to receive their distributions in kind. If Parent stock were to

be acquired for the Plan, and if participants elected to receive their

distributions in Parent stock, such distributions would be effected in

the United States, thus subjecting the Parent to reporting and

registration requirements under United States securities laws.

Accordingly, ``employer securities'' as defined in the Act and the

Code are not effectively available for purchase by the Plan with the

Proceeds. As a result, the applicant represents that there is

substantial uncertainty as to whether the Plan's trustee can cause the

Plan to use the Proceeds to repay the Refinanced Loan (even if the

bondholders consent to prepayment) or to defease the Refinanced

Loan.\10\

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\10\ The applicant notes that the Department took the position

in Advisory Opinion 93-35A that where stock does not serve as

collateral for an employee stock ownership plan loan, it may be a

violation of the Act to apply the proceeds of the sale of the stock

to repay the loan.

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6. Accordingly, the Corporation is proposing that the Plan be

operated in the following manner:

(a) Proceeds (including earnings thereon) would continue to be held

in a suspense account maintained under the Plan. Such Proceeds would be

invested in a diversified investment portfolio and would be allocated

to participants' accounts as described in c), below;

(b) The Corporation would continue to make contributions to the

Plan (which has been converted to a profit

[[Page 31958]]

sharing plan), and, to the extent directed by the Plan

Administrator,\11\ such contributions would be used by the Plan to make

principal and interest payments on the Refinanced Loan; \12\

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\11\ If the administrator of the Plan does not direct that the

contributions be used to make principal and interest payments on the

Refinanced Loan, such contributions would be allocated directly to

participant's accounts in accordance with provisions of the Plan.

Such contributions would not be subject to the rules regarding

``release'' from the ASOP suspense account.

\12\ The amortization schedule accompanying the trust indenture

requires that payments on the Refinanced Loan be made in accordance

with the amounts set forth therein. It is also possible that, in

some circumstances, the Corporation may make certain payments on the

Refinanced Loan directly (i.e., outside of the Plan) pursuant to its

guarantee.

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(c) To the extent the Plan applies employer contributions toward

the repayment of the Refinanced Loan, a portion of the Proceeds would

be allocated from the suspense account to participants' accounts in an

amount equal to the amount of employer contributions so used. Any

amounts contributed to the Plan in excess of the amounts used by the

Plan to make principal and interest payments on the Refinanced Loan

would be allocated directly to participants' accounts; and

(d) The Corporation would continue to guarantee the Refinanced Loan

as it did prior to the Merger.

7. As the Plan no longer holds any ``employer security'' as that

term is defined in section 407(d)(1) of the Act and section 409(l) of

the Code (see Reps. 3 and 5, above), the applicant has requested the

exemption proposed herein to permit the continuing guarantee by the

Corporation of the Refinanced Loan. The applicant represents that the

Corporation has received assurance from the Internal Revenue Service

that the operation of the Plan in the manner described in Rep. 6,

above, will not adversely affect its qualified status.

8. In summary, the applicant represents that the subject

transaction satisfies the criteria contained in section 408(a) of the

Act for the following reasons: (a) The transaction is a continuation of

a guarantee that was statutorily exempt at the time it was entered

into; and (b) the transaction requires an exemption because of a

corporate transaction, the Merger, which upon consummation caused

``employer securities'' to become unavailable to the Plan while the

obligations of the Corporation with respect to the Refinanced Loan

remain unaffected.

FOR FURTHER INFORMATION CONTACT: Gary H. Lefkowitz 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 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 that each application

accurately describes all material terms of the transaction which is the

subject of the exemption.

Signed at Washington, DC, this 18th day of June, 1996.

Ivan Strasfeld,

Director of Exemption Determinations, Pension and Welfare Benefits

Administration, U.S. Department of Labor.

[FR Doc. 96-15875 Filed 6-20-96; 8:45 am]

BILLING CODE 4510-29-P