Grant of Individual Exemptions; Jacor Communications Inc.

DEPARTMENT OF LABOR

[Prohibited Transaction Exemption 96-46; Exemption Application No. D-

09844, et al.]

Grant of Individual Exemptions; Jacor Communications Inc.

AGENCY: Pension and Welfare Benefits Administration, Labor.

ACTION: Grant of individual exemptions.

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

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.

[[Page 31959]]

Jacor Communications Inc. Retirement Plan (the Plan), Located in

Cincinnati, Ohio

[Prohibited Transaction Exemption 96-46; Exemption Application No. D-

09844]

Exemption

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

407(a) of the Act and the sanctions resulting from the application of

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

(E) of the Code shall not apply to (1) the past receipt by the Plan of

certain stock-purchase warrants (the Warrants) pursuant to the

restructuring of Jacor Communications, Inc. (Jacor), excluding that

portion of Warrants which was acquired by the Plan's Qualified Matching

Contribution Account (the QMCA); (2) the past and future holding of the

Warrants by the Plan; and (3) the disposition or exercise of the

Warrants by the Plan; provided that the following conditions are

satisfied:

(A) With respect to all participant accounts other than the QMCA,

the Warrants were acquired pursuant to Plan provisions for

individually-directed investment of such accounts;

(B) The Plan's receipt and holding of the Warrants occurred in

connection with the restructuring of Jacor and the Warrants were made

available to all shareholders of common stock of Jacor;

(C) The Plan's receipt and holding of the Warrants resulted from an

independent act of Jacor as a corporate entity, and all holders of the

common stock of Jacor, including the Plan, were treated in the same

manner with respect to the restructuring of Jacor; and

(D) With respect to Warrants allocated to the QMCA, the authority

for all decisions regarding the holding, disposition or exercise of the

Warrants by the Plan will be exercised by an independent fiduciary

acting on behalf of the Plan, to the extent that such decisions have

not been passed through to Plan participants; and

(E) With respect to all other accounts, the decisions regarding the

holding, disposition or exercise of the Warrants have been, and will

continue to be made in accordance with Plan provisions for

individually-directed investment of participant accounts, by the

individual Plan participants whose accounts in the Plan received

Warrants in connection with the restructuring.

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 April 25, 1996 at 61 FR

18421.

EFFECTIVE DATE: This exemption is effective as of January 11, 1993,

except with respect to the Warrants held by the QMCA. With respect to

those Warrants, the exemption is effective July 26, 1995.

FOR FURTHER INFORMATION CONTACT: Gary H. Lefkowitz of the Department,

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

EAI Partners, L.P. (EAI), Located in Norwalk, CT

[Prohibited Transaction Exemption 96-47; Exemption Application No. D-

10147]

Exemption

Section I. Exemption for the In-Kind Transfer of Assets

The restrictions of sections 406(a) and 406(b) 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 (F) of the Code, shall not

apply, as of December 29, 1995, to the in-kind transfer of assets of

employee benefit plans that are participant-directed account plans

intended to satisfy section 404(c) of the Act and as to which EAI

serves as a fiduciary (the Client Plans), including a plan established

by EAI (the EAI Plan), as well as two plans that are sponsored by

affiliates of EAI, namely, the Harding Service Corporation et al.

Profit Sharing Plan and Trust (the Harding Plan) and the Stockwood VII,

Inc. 401(k) Plan (the Stockwood Plan),* that are held in the Small

Managers Equity Fund Trust (SMEF) maintained by EAI in exchange for

shares of the EAI Select Managers Equity Fund (the Fund), an open-end

investment company registered under the Investment Company Act of 1940

(the '40 Act) for which Evaluation Associates Capital Markets, Inc.

(EACM), a wholly owned subsidiary of EAI, acts as investment adviser,

in connection with the partial termination of SMEF.

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

\*\ The Client Plans, the EAI Plan, the Harding Plan and the

Stockwood Plan are collectively referred to herein as the Plans. In

addition, the EAI Plan, the Harding Plan and the Stockwood Plan are

collectively referred to herein as the Related Plans.

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

This exemption is subject to the following conditions:

(a) No sales commissions or other fees, including any fees payable

pursuant to Rule 12b-1 of the '40 Act, are paid by a Plan in connection

with the purchase of Fund shares through the in-kind transfer of SMEF

assets.

(b) All of the assets of a Plan that are held in SMEF are

contributed by such Plan in-kind to the Fund in exchange for shares of

such Fund. A Plan not electing to invest in the Fund receives a

distribution of its allocable share of the assets of SMEF either in

cash or in-kind.

(c) Each Plan receives shares of the Fund which have a total net

asset value that is equal in value to such Plan's allocable share of

the assets of SMEF as determined in a single valuation performed in the

same manner at the close of the same business day, using independent

sources in accordance with the procedures set forth in Rule 17a-7(b)

(Rule 17a-7) under the '40 Act, as amended, and the procedures

established by the Fund pursuant to Rule 17a-7 for the valuation of

such assets. Such procedures must require that all securities for which

a current market price cannot be obtained by reference to the last sale

price for transactions reported on a recognized securities exchange or

NASDAQ be valued based on an average of the highest current independent

bid and lowest current independent offer, as of the close of business

on the Friday preceding the weekend of the in-kind contribution of SMEF

assets to the Fund, determined on the basis of reasonable inquiry from

at least three sources that are broker-dealers or pricing services

independent of EAI.

(d) On behalf of each Plan, a second fiduciary who is independent

of and unrelated to EAI (the Second Fiduciary) receives advance written

notice of the in-kind transfer of assets of SMEF to the Fund and full

written disclosure, which includes, but is not limited to, the

following information concerning the Fund:

(1) A current prospectus for the Fund in which a Plan is

considering investing.

(2) A statement describing the fees for investment advisory or

similar services that are to be paid by the Fund to EACM; the fees

retained by EACM for secondary services (the Secondary Services), as

defined in paragraph g of Section II below; and all other fees to be

charged to or paid by the Plan and by such Fund to EAI, EACM or to

unrelated parties, including the nature and extent of any differential

between the rates of the fees.

(3) The reasons why EAI considers such investment to be appropriate

for the Plan.

(4) Upon request of the Second Fiduciary, copies of the proposed

and final exemptions relating to the transaction described herein.

(e) On the basis of the foregoing information, the Second Fiduciary

authorizes in writing the in-kind transfer of a Plan's assets invested

in SMEF to the Fund, in exchange for shares of the Fund, and the fees

received by EACM in connection with

[[Page 31960]]

its investment advisory services to the Fund. Such authorization by the

Second Fiduciary will be consistent with the responsbilities,

obligations and duties imposed on fiduciaries under Part 4 of Title I

of the Act.

(f) EAI sends by regular mail to the Second Fiduciary of each

affected Plan, the following information:

(1) Not later than 30 days after the completion of the in-kind

transfer transaction, a written confirmation which contains--

(A) The identity of each security that was valued for purposes of

the transaction in accordance with Rule 17a-7(b)(4) of the '40 Act;

(B) The price of each such security involved in the transaction;

and

(C) The identity of each pricing service or market maker consulted

in determining the value of such securities.

(2) Within 90 days after the completion of each transfer, a written

confirmation which contains--

(A) The number of SMEF units held by the Plan immediately before

the transfer, the related per unit value and the total dollar amount of

such SMEF units; and

(B) The number of shares in the Fund that are held by the Plan

following the transfer, the related per share net asset value and the

total dollar amount of such shares.

(g) On an ongoing basis, EAI provides a Plan investing in the Fund

with--

(1) A copy of an updated prospectus of such Fund, at least

annually; and

(2) Upon request, a report or statement (which may take the form of

the most recent financial report, the current statement of additional

information, or some other written statement) containing a description

of all fees paid by the Fund to EAI and its affiliates.

(h) As to each Plan, the combined total of all fees received by EAI

and/or its affiliates for the provision of services to the Plan, and in

connection with the provision of services to the Fund in which the Plan

invests, is not in excess of ``reasonable compensation'' within the

meaning of section 408(b)(2) of the Act.

(i) All dealings between a Plan and the Fund are on a basis no less

favorable to the Plan than dealings between the Fund and other

shareholders.

(j) EAI maintains for a period of six years the records necessary

to enable the persons described below in paragraph (k) to determine

whether the conditions of this exemption have been met, except that (1)

a prohibited transaction will not be considered to have occurred if,

due to circumstances beyond the control of EAI, the records are lost or

destroyed prior to the end of the six year period, and (2) no party in

interest other than EAI, shall be subject to the civil penalty that may

be assessed under section 502(i) of the Act or to the taxes imposed by

section 4975(a) and (b) of the Code if the records are not maintained

or are not available for examination as required by paragraph (k) of

this Section II; and

(k)(1) Except as provided in paragraph (k)(2) and notwithstanding

any provisions of section 504(a)(2) and (b) of the Act, the records

referred to in paragraph (j) are unconditionally available at their

customary location for examination during normal business hours by--

(A) Any duly authorized employee or representative of the

Department, the Internal Revenue Service or the Securities and Exchange

Commission;

(B) Any fiduciary of a Plan who has authority to acquire or dispose

of shares of the Fund owned by such Plan, or any duly authorized

employee or representative of such fiduciary;

(C) Any contributing employer to any participating Plan or any duly

authorized employee representative of such employer; and

(D) Any participant or beneficiary of any participating Plan, or

any duly authorized representative of such participant or beneficiary.

(2) None of the persons described in paragraph (k)(1)(B)-(D) shall

be authorized to examine trade secrets of EAI, or commercial or

financial information which is privileged or confidential.

Section II. Definitions

For purposes of this exemption:

(a) The term ``EAI'' means EAI Partners, L.P. and the term ``EACM''

refers to Evaluation Associates Capital Markets, Inc.

(b) An ``affiliate'' of EAI includes--

(1) Any person directly or indirectly through one or more

intermediaries, controlling, controlled by, or under common control

with EAI. (For purposes of this paragraph, the term ``control'' means

the power to exercise a controlling influence over the management or

policies of a person other than an individual.)

(2) Any officer, director, employee, relative or partner in such

person, and

(3) Any corporation or partnership of which such person is an

officer, director, partner or employee.

(c) The term ``Fund'' refers to the EAI Select Managers Investment

Fund, a diversified open-end investment company registered under the

'40 Act for which EACM serves as an investment adviser and may also

provide some other ``Secondary Service'' (as defined below in paragraph

(g) of this Section II) which has been approved by the Fund.

(d) The term ``net asset value'' means the amount for purposes of

pricing all purchases and redemptions of Fund shares, calculated by

dividing the value of all securities, determined by a method as set

forth in a Fund's prospectus and statement of additional information,

and other assets belonging to the Fund, less the liabilities chargeable

to the portfolio, by the number of outstanding shares.

(e) The term ``relative'' means a ``relative'' as that term is

defined in section 3(15) of the Act (or member of the ``family'' as

that term is defined in section 4975(e)(6) of the Code), or a brother,

a sister, or a spouse of a brother or a sister.

(f) The term ``Second Fiduciary'' means a fiduciary of a plan who

is independent of and unrelated to EAI. For purposes of this exemption,

the Second Fiduciary will not be deemed to be independent of and

unrelated to EAI if--

(1) Such Second Fiduciary directly or indirectly controls, is

controlled by, or is under common control with EAI;

(2) Such Second Fiduciary, or any officer, director, partner,

employee, or relative of such Second Fiduciary is an officer, director,

partner or employee of EAI (or is a relative of such persons;

(3) Such Second Fiduciary directly or indirectly receives any

compensation or other consideration for his or her own personal account

in connection with any transaction described in this proposed

exemption. However, with respect to the Related Plans (i.e., the EAI

Plan, the Harding Plan and the Stockwood Plan), the Second Fiduciary

may receive compensation from EAI in connection with the transaction

contemplated herein, but the amount or payment of such compensation may

not be contingent upon or be in any way affected by the Second

Fiduciary's ultimate decision regarding whether the Related Plans may

participate in such transaction.

With the exception of the Related Plans, if an officer, director,

partner or employee of EAI (or relative of such persons), is a director

of such Second Fiduciary, and if he or she abstains from participation

in the choice of a Client Plan's investment adviser, the approval of

any such purchase or sale between a Client Plan and the Fund, and the

approval of any change of fees charged to or paid by the Client Plan,

the transaction described in Section I above, then paragraph (f)(2) of

this Section II, shall not apply.

[[Page 31961]]

(g) The term ``Secondary Service'' means a service, other than

investment advisory or similar service which is provided by EACM to the

Fund. However, the term ``Secondary Service'' does not include any

brokerage services provided by EAI Securities Inc. to the Fund.

EFFECTIVE DATE: This exemption will be effective December 29, 1995.

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 April 25, 1996 at 61 FR

18424.

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

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

Pension Plan of Roper Hospital, Inc. (the Plan), Located in Charleston,

South Carolina

[Prohibited Transaction Exemption 96-48; Exemption Application No. D-

10163]

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 the Plan of Separate

Investment Account Group Annuity Policy No. GA-4619 (the Policy)

maintained by New England Mutual Life Insurance Company to Roper Health

System, Inc., the Plan sponsor and a party in interest with respect to

the Plan, provided the following conditions are satisfied: (a) the Sale

is a one-time transaction for cash; (b) the Plan receives no less than

the greater of the fair market value of the Policy at the time of the

Sale, or $494,130; and (c) the Plan does not pay any commissions or

other expenses in connection with the transaction.

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 April 25, 1996 at 61 FR

18428.

FOR FURTHER INFORMATION CONTACT: Gary H. Lefkowitz of the Department,

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

First Security Group Life Insurance Plan (the Plan), Located in Salt

Lake City, Utah

[Prohibited Transaction Exemption 96-49; Exemption Application No. L-

10178]

Exemption

The restrictions of sections 406(a) and (b) of the Act shall not

apply to the reinsurance of risks and the receipt of premiums therefrom

by First Security Life Insurance Company of Arizona (FSLIA) from the

insurance contracts sold by Minnesota Mutual Life Insurance Company

(MM) or any successor insurance company to MM which is unrelated to

First Security Corporation (FSC), to provide life insurance benefits to

participants in the Plan, provided the following conditions are met:

(a) FSLIA--

(1) Is a party in interest with respect to the Plan by reason of a

stock or partnership affiliation with FSC that is described in section

3(14)(E) or (G) of the Act,

(2) Is licensed to sell insurance or conduct reinsurance operations

in at least one of the United States or in the District of Columbia,

(3) Has obtained a Certificate of Authority from the Insurance

Commissioner of its domiciliary state which has neither been revoked

nor suspended, and

(4)(A) Has undergone an examination by an independent certified

public accountant for its last completed taxable year immediately prior

to the taxable year of the reinsurance transaction; or

(B) Has undergone a financial examination (within the meaning of

the law of its current domiciliary State, Arizona) by the Insurance

Commissioner of the State of Arizona within 5 years prior to the end of

the year preceding the year in which the reinsurance transaction

occurred.

(b) The Plan pays no more than adequate consideration for the

insurance contracts;

(c) No commissions are paid with respect to the direct sale of such

contracts or the reinsurance thereof; and

(d) For each taxable year of FSLIA, the gross premiums and annuity

considerations received in that taxable year by FSLIA for life and

health insurance or annuity contracts for all employee benefit plans

(and their employers) with respect to which FSLIA is a party in

interest by reason of a relationship to such employer described in

section 3(14)(E) or (G) of the Act does not exceed 50% of the gross

premiums and annuity considerations received for all lines of insurance

(whether direct insurance or reinsurance) in that taxable year by

FSLIA. For purposes of this condition (d):

(1) the term ``gross premiums and annuity considerations received''

means as to the numerator the total of premiums and annuity

considerations received, both for the subject reinsurance transactions

as well as for any direct sale or other reinsurance of life insurance,

health insurance or annuity contracts to such plans (and their

employers) by FSLIA. This total is to be reduced (in both the numerator

and the denominator of the fraction) by experience refunds paid or

credited in that taxable year by FSLIA.

(2) all premium and annuity considerations written by FSLIA for

plans which it alone maintains are to be excluded from both the

numerator and the denominator of the fraction.

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 April 25, 1996 at 61 FR

18433.

EFFECTIVE DATE: This exemption is effective August 1, 1993.

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 or disqualified

person from certain other provisions to which the exemptions 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

[[Page 31962]]

transaction is in fact a prohibited transaction; and

(3) The availability of these exemptions is subject to the express

condition that the material facts and representations contained in each

application accurately describes all material terms of the transaction

which is the subject of the exemption.

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

Ivan Strasfeld,

Director of Exemption Determinations, Pension and Welfare Benefits,

Administration, U.S. Department of Labor.

[FR Doc. 96-15876 Filed 6-20-96; 8:45 am]

BILLING CODE 4510-29-P