Grant of Individual Exemptions; Westinghouse Savannah River Company/Bechtel Savannah River, Inc. Pension Plan, et al.

DEPARTMENT OF LABOR

[Prohibited Transaction Exemption 96-69; Exemption Application No. D-

10189, et al.]

Grant of Individual Exemptions; Westinghouse Savannah River

Company/Bechtel Savannah River, Inc. Pension Plan, et al.

AGENCY: Pension and Welfare Benefits Administration, Labor.

ACTION: Grant of Individual Exemptions.

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SUMMARY: This document contains exemptions issued by the Department of

Labor (the Department) from certain of the prohibited transaction

restrictions of

[[Page 49172]]

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.

Westinghouse Savannah River Company/Bechtel Savannah River, Inc.

Pension Plan (the Plan), Located in Aiken, South Carolina

[Prohibited Transaction Exemption 96-69; Exemption Application No. D-

10189]

Exemption

The restrictions of section 406(a)(1)(A), 406(a)(1)(D), 406(b)(1),

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), 4975(c)(1)(D), and 4975(c)(1)(E) of the Code shall not

apply,1 effective October 15, 1994, to the past and future use by

the U. S. Department of Energy (DOE) 2, acting on behalf of

Westinghouse Savannah River Company (WSRC) and Bechtel Savannah River,

Inc. (BSRI), parties in interest with respect to the Plan, of portions

of DOE's interest in Group Annuity Contract GR-409 (GR-409) issued by

Connecticut General Life Insurance Company (CGLIC), an insurance

company headquartered in Hartford, Connecticut, to purchase interests

for the Plan in CGLIC Group Annuity Contract IN-16111 (IN-16111) for

the purpose of funding the benefits under the Plan; provided that:

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1 For purposes of this exemption, references to specific

provisions of Title I of the Act, unless otherwise specified, refer

also to the corresponding provisions of the Code.

2 References to DOE include, where applicable, DOE's

predecessors, the Energy Research and Development Administration and

the Atomic Energy Commission.

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(1) The use by DOE, acting on behalf of WSRC and BSRI, of portions

of DOE's interests in GR-409 to purchase additional interests in IN-

16111 on behalf of the Plan has benefited and will benefit the Plan to

the same extent, as contributions of cash by DOE to such Plan;

(2) The fair market value of the debits to GR-409 that have

occurred or will occur, as a result of the use of portions of GR-409 by

DOE to purchase additional interest in IN-16111 on behalf of the Plan,

has exactly matched and will exactly match the fair market value of the

credits to IN-16111 acquired by the Plan as a result of such purchase

transactions;

(3) The Plan has received and will receive interests in IN-16111

that have a fair market value equal to the fair market value of the

interests the Plan would have received had DOE or WSRC acquired

additional interests in IN-16111 for the Plan for cash;

(4) The value of the expected earnings received by the Plan from

the interests in IN-16111 purchased by DOE with portions of GR-409 has

been and will be the same, as if those interests were or are purchased

with cash;

(5) The named fiduciary of the Plan has determined that the

transactions have been and will be prudent, feasible, and in the

interest of and protective of the Plan;

(6) CGLIC, an independent, qualified third party, has determined

and will continue to determine the fair market value of the interests

in GR-409, as of the date of each purchase transaction;

(7) The actuary for the Plan has determined and will continue to

determine the minimum funding requirement of the Plan and has

determined and will continue to determine the extent to which the

amount credited to the Plan's funding standard account by virtue of the

use of the interest in GR-409 satisfies the minimum funding

requirement;

(8) The actuary of the Plan has monitored and will continue to

monitor the transactions on behalf of the Plan, as well as the terms

and conditions of the exemption at all times;

(9) No more than 25% of the assets of the Plan has been or will be

involved in the transactions;

(10) The Plan has not, nor will the Plan in the future, incur any

fees, costs, or other charges or expenses as a result of the

transactions; and

(11) If, by the required filing date of the Form 5500 (including

extensions) for any year, the aggregate book value 3 of the

interests in IN-16111 purchased for the Plan is less than the aggregate

amount credited to the Plan's funding standard account as a result of

such purchases, DOE will (by the filing date of the Form 5500 for such

year) purchase an additional interest in IN-16111 for the Plan that has

a book value equal to the shortfall or contribute to the Plan cash in

the amount of such shortfall.

\3\ It is represented that the book value of an annuity contract

represents the amount contributed to such contract, plus accumulated

interest credited to date, less amounts withdrawn from such

contract. Fair market value, on the other hand, represents the

market value of the general account assets in which a contract is

deemed to be invested for accounting purposes.

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EFFECTIVE DATE: The exemption is effective, as of October 15, 1994, the

date DOE first used, on behalf of WSRC and BSRI, portions of its

interests in GR-409 to acquire additional interests in IN-16111 for the

Plan.

Written Comments

In the Notice of Proposed Exemption (the Notice), the Department

invited all interested persons to submit written comments and requests

for a hearing on the exemption. All comments and requests for hearing

were due by September 4, 1996.

The Department received 24 letters from interested persons

commenting on the exemption. In addition, a number of interested

persons telephoned the Department. These individuals were assisted with

their questions by members of the staff of the Office of Exemption

Determinations of the Department. With respect to all the written

comments submitted by

[[Page 49173]]

interested persons, the Department forwarded copies to the applicants

and requested that the applicants address the various concerns raised

by the commentators in writing. In this regard, it is noted that the

number of comments discussed below exceeds the total number of letters

from commentators, because numerous letters contained more than one

concern. A description of the comments and the applicants' responses

are summarized below.

Sixteen (16) commentators neither opposed nor supported the

proposed exemption. Rather, these commentators expressed a lack of

understanding of the nature of the exemption and asked for a simple and

brief explanation. In response to these commentators, the applicants

state that, as permitted under the Act, WSRC has elected to satisfy its

funding obligations with respect to the Plan over the next several

years by permitting DOE to purchase, on behalf of WSRC, interests in a

group annuity contract for the Plan. In this regard, the exemption

would permit DOE to purchase such group annuity contract interests for

the Plan with interests in another annuity contract owned by DOE,

rather than with cash.

Other commentators opposed the exemption and raised questions and

concerns regarding the transactions described in the Notice. The

concerns expressed by these commentators generally related to: (a) The

impact of the exemption on the benefits provided under the Plan; (b)

the possible detrimental effect of the exemption on the funding of the

Plan; and (c) the decline in the book value of IN-16111.

The following summarizes the applicants' responses to these

concerns raised by commentators. With respect to (a) above, ten (10)

commentators expressed concern that the exemption in some way would

eliminate, diminish, or otherwise adversely affect the pensions payable

under the Plan.

In response, the applicants state that the exemption pertains only

to the funding of the Plan and does not change or affect in any way the

pension benefits payable under the Plan. As a result, the applicants

represent that the exemption will not affect a participant's

eligibility to receive a pension benefit or the amount of pension

benefit checks.

With respect to (b) above, nine (9) commentators expressed concern

that the exemption would have a detrimental effect on the level of Plan

funding or had other questions related to funding. In this regard, one

of the commentators expressed a general concern that funding would be

reduced. Another opposed the exemption because, ``it reduces the net

worth of the fund by moving assets from one part of the plan to another

and really does not provide payments into the plan.'' Two (2)

commentators stated concerns that the contributed assets were riskier

or could lose their value. Another commentator asked how the minimum

funding would be determined. Another commentator expressed a belief

that any surplus funding in the Plan should be preserved for the

benefit of participants. In the opinion of that same commentator the

transactions which are the subject of this exemption would reduce the

Plan to the minimum legal funding level. Finally, a single commentator

asked a number of questions related to the effect of the transactions

on funding.

In response to these comments, the applicants state that the Act

expressly permits the sponsor of a pension plan to satisfy its funding

obligations to such plan by purchasing interests in one or more annuity

contracts. In this regard, the applicants maintain that the exemption

does not relate to whether WSRC may fund the Plan by purchasing

interests in a group annuity contract instead of purchasing, for

example stocks and bonds, but rather, relates to whether such purchases

may be made using interests in another annuity contract owned by DOE.

The applicants state that the contributions which are the subject

of this exemption are expected to increase, and are expected to

maintain, the value of the assets of the Plan to the same extent as if

the additional interests in the Plan's annuity contract had been

purchased with cash. In this regard, the fair market value of each

contribution will be determined by CGLIC, an independent third party.

Further, Buck Consultants (Buck), the Plan's actuary, will ensure each

year that such contributions satisfy the minimum funding requirements

of the Plan.

With respect to the funding level of the Plan, the applicants

represent that the Plan is well-funded, with the value of the current

assets and receivables exceeding current liabilities by $73,846,957 as

of the end of 1995, and the Plan's portfolio is well-diversified, with

approximately 52 percent (52%) of the assets invested in a broad range

of equity securities, 34 percent (34%) in IN-16111, 8 percent (8%) in a

variety of fixed income securities, and 6 percent (6%) in cash and cash

equivalents.

In addition, the applicants state that although there is no reason

to expect that the subject transactions will endanger adequate funding

of the Plan, additional safeguards exist for participants and

beneficiaries under the Act. In this regard, if the value of the Plan's

assets becomes inadequate to meet the liabilities of the Plan, WSRC and

DOE would be required to contribute additional amounts to the extent

necessary to pay all benefits.

With respect to (c) above, one commentator expressed concern that

the book value of IN-16111 had decreased between 1990 and 1994. In

addition, the same commentator alleged that in the past DuPont has

refused to agree to a proposal similar to the one which is the subject

of this exemption.

In response to these comments, the applicants explain that the book

value of IN-16111 decreased between 1990 and 1994, because the Plan

exercised its option to cash out approximately 16 percent (16%) of the

value of that contract each year and reinvested the proceeds in

equities and other assets. Furthermore, the applicants represent that

the value of the remaining portion of IN-16111 has increased every year

and has proven to be a sound investment for the Plan. In response to

this commentator's other concern, the applicants represent that they

are not aware of any similar transactions with respect to the Plan

proposed in the past and rejected by DuPont.

In addition to the comments discussed above, the commentators

requested answers to various questions. The questions and the

applicants' answers are discussed in the paragraphs below.

First, at least one commentator asked why the Benefits Committee

could not be the trustee for all funds. In answer to this question, the

applicants state that the role of the Benefits Committee is to serve as

the Plan Administrator and named fiduciary with respect to the Plan.

The applicants maintain that NationsBank, as a financial institution

with significant experience holding and managing assets for its

clients, is better qualified to be the Plan's trustee than the Benefits

Committee.

Second, a commentator suggested that the Department supervise all

exempted transactions. In response, the applicant notes that it may not

be administratively feasible for the Department to monitor transactions

with respect to which a prohibited transaction exemption is granted.

However, the exemption includes several safeguards to protect the Plan

and its participants and beneficiaries. For example, CGLIC, an

independent third party insurance company, will determine the fair

market value of each contribution, ensuring that the contributions will

be equal in value to the amount that otherwise would have been paid in

cash. Further, Buck, the Plan's actuary, will ensure that the

contributions satisfy the minimum

[[Page 49174]]

funding requirement of the Plan each year.

Third, another commentator questioned whether the comment period

was of sufficient duration. In response to this question, the

applicants state that as a general matter applicants for exemption are

permitted fifteen (15) days after publication of a proposed exemption

in the Federal Register to post and/or to mail the notice of such

proposed exemption to all interested persons. Thereafter, all

interested persons have not less than thirty (30) days to comment on

the proposed exemption and, in certain circumstances, to request a

hearing. With regard to the subject exemption, the applicants agreed to

post and to mail the Notice more quickly, so that all interested

persons would see or receive the Notice not later than thirty (30) days

before the end of the comment period.

Fourth, a commentator asked what would happen if the exemption were

denied. In response, the applicants state that if the exemption were

denied, WSRC or DOE would be required to purchase the annuity interests

with cash, to contribute cash directly to the Plan, or to fund the Plan

under any other method permitted by the Act.

Seven (7) individual commentators requested a hearing with respect

to the exemption. Most of these commentators appear to have requested a

hearing because of their belief that the transaction would reduce their

retirement benefits. In addition, several commentators requested a

hearing but did not state a reason for such request.

In response the applicants believe that given the number of

participants and beneficiaries receiving the Notice, the number of

requests for hearing is de minimis. Moreover, the applicants maintain

that none of the few requests for a hearing presents a compelling

reason why a hearing should be held. Accordingly, the applicants

suggest that a hearing would be counterproductive and unnecessary.

The Department has considered the concerns expressed by the

individuals who have requested a hearing and the applicant's written

response addressing such concerns. After consideration of the materials

provided, the Department does not believe that any issues have been

raised which would require the convening of a hearing.

In addition to comments, questions, and requests for hearing from

commentators, the Department also received a comment letter, dated

August 30, 1996, from the applicants. In this letter, the applicants

requested certain modifications to the operant language of the

exemption, as proposed, and certain amendments which, according to the

applicants, should have been reflected in the language of the Summary

of Facts and Representations (SFR), as published in the Notice in the

Federal Register. The applicants' comments on the requested changes to

the conditions of the exemption and some of the suggested changes to

the SFR are discussed below in an order that corresponds to the

appearance of the relevant language in the Notice. The Department

acknowledges all other clarifications made by the applicant to the

information contained in the SFR. For further information regarding the

applicants' comments or other matters discussed herein, interested

persons are encouraged to obtain a copy of the exemption application

file (D-9915) which is available in the Public Documents Room of the

Pension and Welfare Benefits Administration, U.S. Department of Labor,

Room N-5638, 200 Constitution Avenue, N.W., Washington, D.C. 20210.

In their comment letter, the applicants point out that, as

described in their application for exemption, the Plan has acquired and

will acquire interests in IN-16111 that are equal or greater in value

to the additional interests the Plan would have received and will

receive had DOE purchased the interests with cash. Because the value of

an asset is equal to the present value of expected future returns, the

value of the expected earnings stream from the transferred interests

will be the same as from the interests DOE otherwise would have

purchased with cash. However, because the general account assets

underlying the interests purchased for the Plan have been and will be

different than if the interests were or are purchased with cash, the

applicants cannot guarantee that earnings have been and will be

precisely the same as if the interests were or are purchased with cash.

Accordingly, the applicants request that the language of condition 4,

as set forth in the Notice in column 3 on page 40006, should be

amended. In this regard, in the quotation below the changes requested

by the applicants have been underlined. Accordingly, the amendment

should read as follows: ``(4) the value of the expected earnings

received by the Plan from the interests in IN-16111 purchased by DOE

with portions of GR-409 has been and will be the same, as if those

interests were or are purchased with cash.'' In addition, the

applicants suggest that a conforming change also should have been made

to similar language, as set forth in paragraph (d) of section 21 of the

SFR in column 3 on page 40010 of the Notice. The Department concurs.

In addition to the change in the operant language of the exemption,

the applicants suggest that the SFR should have reflected the following

modifications in order to more accurately reflect the record. In this

regard, the underlined words or phrases in the passages from the

Notice, which are quoted below, contain the applicants' suggested

additions to the language of the SFR. Where omissions or substitutions

have occurred, the underlined words or phrases in the passages from the

Notice, which are quoted below, reflect the applicants' requested

changes to the language of the SFR. For the original wording of the

SFR, please refer to the Notice, as published in the Federal Register.

The Department concurs with all of the applicants' requested

modifications to the SFR.

In their comment letter, the applicants expressed concern that the

transactions which are the subject of this exemption may be viewed as

direct transfers of interests in GR-409 to the Plan by DOE, on behalf

of WSRC and BSRI. In order to clarify their position, the applicants

requested amendment to the language, as reflected in section 14 of the

SFR. Accordingly, the last sentence of the second paragraph of section

14 (column 2, page 40008 of the Notice) should have read: ``The

applicants are concerned that these transactions may be viewed as

contributions by DOE, on behalf of WSRC and BSRI, of interests in GR-

409 directly to the Plan or in consideration of the purchase of

interests in IN-16111 for the Plan.''

In the third sentence of the third paragraph of section 14 of the

SFR, it is represented that on July 17, 1995, $4,323,800 of interests

at book value in GR-409 were used as consideration to purchase

additional interests in IN-16111 for the Plan. The applicants have

clarified that the corresponding fair market value of such interests in

GR-409 at that time was $4,365,598. Accordingly, the following

footnote, ``The fair market value of the interest was $4,365,598,''

should have been inserted in the SFR in the third sentence of the third

paragraph of section 14 (column 3, on page 40008 of the Notice).

In section 14 of the SFR, it is represented that if the exemption

were granted, GR-409 would be exhausted over the next two (2) years

(projected to be toward the end of 1997). However, in their comment the

applicants indicate that GR-409 may not be exhausted until 1999.

Accordingly, the first sentence of the fourth paragraph of section 14

(column 3, on page 40008 of the Notice)

[[Page 49175]]

should have read: ``DOE wishes to continue, over the next three (3)

years until GR-409 is exhausted (projected to be towards the beginning

of 1999), to use GR-409 to satisfy its obligations under the Prime

Contract to reimburse WSRC for the cost of funding the Plan.''

The applicants have clarified that CGLIC is at all times obligated

to pay retirement benefits provided under the Plans, rather than to the

Plan. Accordingly, the second sentence of footnote 4 (column 3, on page

40008 of the Notice) should have read: ``Thus, CGLIC is at all times

obligated to pay retirement benefits provided under the Plan, as

contractholder of IN-16111, to the extent requested by the Trustee, up

to an aggregate amount not to exceed the book value of IN-16111.''

In the first sentence of the first paragraph of section 15, it is

represented that the applicants did not enter into the transactions

knowing that such actions might be prohibited. The applicants maintain

that a change in tense is necessary to this sentence in order to make

that representation consistent with other representations in that same

section. Accordingly, the first sentence of the first paragraph of

section 15 (column 1, on page 40009 of the Notice) should have read:

``It is represented that neither DOE nor any of the parties on behalf

of whom the exemption is sought participated in the past transactions

knowing that such were prohibited under the Act or under the Code.''

In section 17 of the SFR, it is represented that the total

percentage of the Plans assets anticipated to be involved in the

transactions would be approximately 24 percent (24%). The applicants

have clarified that, if the exemption is granted, no more than about 17

percent of the assets of the Plan will be invested in IN-16111, if the

portion of IN-16111 that was transferred to the Plan on December 30,

1990 in the trust-to-trust transfer is ignored. Accordingly, the

penultimate sentence of section 17 (column 3, on page 40009 of the

Notice) should have read, ``In this regard, it is anticipated that

future uses by DOE of portions of GR-409 will increase the total

percentage of Plan assets that have been or will be involved in the

transactions to approximately 17 percent (17%).'' Further, the

applicants suggest that at the end of the sentence quoted above the

following footnote should have been inserted, ``i.e., it is anticipated

that no more than about 17 percent of the Plan's assets will be

invested in IN-16111, disregarding the portion of IN-16111 that was

transferred to the Plan on December 30, 1990, from the Du Pont Plan in

a trust-to-trust transfer.'' In addition, the applicants suggest that a

conforming change should also have been made in paragraph (i) of

section 21 (column 3, on page 40010 of the Notice).

Accordingly, after giving full consideration to the record,

including the comments by commentators and the comments and responses

of the applicants, the Department has determined to grant the

exemption, as described and amended herein. In this regard, the

comments submitted to the Department have been included as part of the

public record of the exemption application. The complete application

file, including all supplemental submissions received by the

Department, is made available for public inspection in the Public

Documents Room of the Pension Welfare Benefits Administration, Room N-

5507, 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 Wednesday, July 31, 1996

at 61 FR 40005.

FOR FURTHER INFORMATION CONTACT: Angelena C. Le Blanc of the

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

Dillard's Marine & Sports Center, Inc. Profit Sharing Plan (the Plan),

Located in Anderson, South Carolina

[Prohibited Transaction Exemption 96-70; Exemption Application No. D-

10214]

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 loan of $47,962.50 (the Loan) by the

Plan from the individual account of Willard M. Dillard, Jr. to

Dillard's Marine & Sports Center, Inc., the sponsoring employer of the

Plan and a party in interest with respect to the Plan; provided that

(1) The terms and conditions of the Loan are no less favorable to the

Plan than those obtainable in an arm's-length transaction with an

unrelated third-party at the time the Loan is consummated; (2) the Loan

will at all times be secured by collateral having a value that exceeds

150 percent of its outstanding principal; (3) the Loan will be at all

times less than 25 percent of the balance in the individual account

maintained in the Plan for William M. Dillard, Jr.; and (4) an

independent fiduciary will approve and monitor the transaction and take

whatever actions are necessary to protect the interests of the Plan.

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 July 22, 1996, at 61 FR

37926.

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

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

Normike Industries, Inc. Profit Sharing Plan (the Plan), Located in

Plainville, Connecticut

[Prohibited Transaction Exemption 96-71; Exemption Application No. D-

10239]

Exemption

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

Act and the sanctions resulting from the application of section 4975 of

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

shall not apply to the sale by the Plan of certain improved real

property located in Plainville, Connecticut to Norman and Diane Stoll

(the Stolls), parties in interest with respect to the Plan; provided

that the following conditions are satisfied:

(A) All terms of the transaction are at least as favorable to the

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

transaction with an unrelated party;

(B) The Plan incurs no costs or expenses related to the

transaction;

(C) The Plan receives a cash purchase price for the Property in the

amount of no less than the greater of (1) The Property's fair market

value as of the date of the sale, or (2) $57,500;

(D) Before the transaction is consummated, the Plan has received

rental payments of no less than the Property's fair market rental value

for each month of the Plan's ownership of the Property in which the

Property was occupied by Normike Industries, Inc. (the Employer), the

sponsor of the Plan; and

(E) Within 60 days of the publication in the Federal Register of

this Notice granting the exemption, the Employer makes final payment to

the Internal Revenue Service of any remaining unpaid excise taxes which

are applicable under section 4975(a) of the Code by reason of the

Employer's lease of the Property from the Plan.

EFFECTIVE DATE: This exemption is effective as of August 20, 1996.

Written Comments

The Department received one written comment and no requests for a

hearing with respect to the proposed exemption.

[[Page 49176]]

The comment was submitted by the Stolls, who requested that the

exemption be effective as of August 20, 1996, the date on which the

Stolls consummated the purchase of the Property from the Plan. The

Stolls explain that they chose to proceed with the purchase transaction

on that date in order to terminate as soon as possible the ongoing

lease between the Plan and the Employer. Accordingly, the Department

has determined to grant the exemption with an effective date of August

20, 1996.

For a more complete statement of the facts and representations

supporting this exemption, refer to the notice of proposed exemption

published on July 22, 1996 at 61 FR 37926.

FOR FURTHER INFORMATION CONTACT: Ronald Willett of the Department,

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

Mei Technology Corporation 401(k) Plan (the Plan), Located in

Lexington, Massachusetts

[Prohibited Transaction Exemption 96-72; Exemption Application No. D-

10281]

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 Guaranteed

Annuity Contract No. GA-7192, Certificate Nos. 0001-0004 (collectively,

the GAC), issued by Mutual Benefit Life Insurance Company, by the Plan

to Mei Technology, the sponsoring employer of the Plan 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 expenses from the Sale; and (3) the Plan receives as consideration

from the Sale an amount that is equal to the book value of the GAC as

of the date of the Sale, as specified in paragraph 5 of the notice of

proposed exemption published on July 22, 1996, at FR 37931.

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 July 22, 1996, at FR

37931.

FOR FURTHER INFORMATION CONTACT: Ms. Marianne H. Cole 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 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 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, D.C., this 13th day of September, 1996.

Ivan Strasfeld,

Director of Exemption Determinations, Pension and Welfare Benefits

Administration, U.S. Department of Labor.

[FR Doc. 96-23927 Filed 9-17-96; 8:45 am]

BILLING CODE 4510-29-P