Proposed Exemptions; Smith Barney Shearson Prototype

DEPARTMENT OF LABOR

Pension and Welfare Benefits Administration

[Application No. D-10150, et al.]

Proposed Exemptions; Smith Barney Shearson Prototype

AGENCY: Pension and Welfare Benefits Administration, Labor.

ACTION: Notice of Proposed Exemptions.

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

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, N.W., Washington, D.C.

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, N.W., Washington, D.C. 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

[[Page 54225]]

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.

The Smith Barney Shearson Prototype, Defined Contribution Plan (the

Plan), Located in Los Angeles, California

[Application No. D-10150]

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)(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 the past acquisition, holding, and

exercise by the Plan of certain stock purchase rights (the

Rights),1 which were issued by the Highland Federal Bank (the

Employer) to all shareholders of record, as of November 7, 1995, of

common stock of the Employer (the Employer Stock) pursuant to a rights

offering (the Rights Offering), provided that the following conditions

were satisfied:

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

\ 1\ The Department notes that the Rights do not constitute

``qualifying employer securities'' within the meaning of section

407(d)(5) of the Act.

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

(a) The Plan's acquisition and holding of the Rights in connection

with the Rights Offering occurred as a result of an independent act of

the Employer as a corporate entity;

(b) All holders of the Employer stock, including the Plan, were

treated in a like manner with respect to all aspects of the Rights

Offering; and

(c) The acquisition, holding, and disposition of the Rights by the

affected participant accounts in the Plan occurred in accordance with

Plan provisions for the individually directed investment of such

accounts.

EFFECTIVE DATE: This exemption, if granted, will be effective for the

period from November 8, 1995 to December 15, 1995.

Summary of Facts and Representations

1. The Plan is a profit sharing plan with a 401(k) feature adopted

by the Employer. The Employer is a Federal savings bank headquartered

in Los Angeles, California. Effective January 1, 1995, the previous

plan maintained by the Employer was amended and restated as the current

Plan to provide for individually directed accounts. As of September 30,

1995, the Plan had total assets of $2,416,827. As of December 31, 1994,

the Plan had approximately 94 participants and beneficiaries. The

trustee of the Plan is Smith Barney Corporate Trust Company (the

Trustee).

2. Among the assets of the Plan is the Employer Stock. The Employer

Stock began to trade on the SmallCap Market of the National Association

of Securities Dealers Automated Quotation Stock Market, Inc. (NASDAQ)

as of October 16, 1995, under the symbol ``HBNK,'' and was approved for

quotation in the NASDAQ National Market System as of December 29, 1995.

The trustees of the previous plan made the decision to invest a portion

of plan assets in the Employer Stock. The Employer Stock was carried

over to the Plan and is now held under the individual accounts of those

participants with an interest in the Employer Stock (the Invested

Participants). As of December 31, 1994, the Plan had 92 Invested

Participants. Participants are no longer permitted to invest in the

Employer Stock. The only action that Invested Participants can take

with respect to the Employer Stock is to sell such stock and to direct

the Trustee as to the investment of the sale proceeds in one or more of

the six funds that comprise the investment options currently available

to participants. As of November 7, 1995 (the Record Date), there were

issued an outstanding 1,105,000 shares of the Employer Stock. As of

that date, the Plan held 21,436 shares of the Employer Stock at $13.25

per share (a total of $284,027), or about two percent of all

outstanding shares.

3. The Employer, as a means of raising capital needed to promote

its business plan and to support future growth, made a Rights Offering

to its shareholders. The Rights Offering commenced on November 8, 1995

with the issuance by the Employer to all its shareholders of record as

of the close of business on the Record Date (the Record Date

Shareholders) transferable subscription Rights in the ratio of one

Right for every 1.105 shares of the Employer Stock held. The number of

Rights actually issued to each Record Date Shareholder was rounded up

to the nearest whole Right. It is represented that the Rights Offering

was an independent act of the Employer as a corporate entity and that

all holders of the Employer Stock, including the Plan, were treated in

a like manner with respect to all aspects of the Rights Offering.

Each Right conferred upon its holder an entitlement (the Basic

Privilege) to purchase one additional share of the Employer Stock at a

subscription price of $12 per share (the Subscription Price). Each

Right also conferred upon its holder a second privilege (the

Oversubscription Privilege) allowing each Rights holder exercising the

Basic Privilege in full to subscribe for an unlimited number of

additional shares of the Employer Stock (the Excess Shares), also at

$12 per share, subject to availability after satisfaction of

subscriptions made pursuant to the Basic Privilege. If the number of

Excess Shares was insufficient to satisfy all exercises of the

Oversubscription Privilege, the Excess Shares were to be allocated on a

pro rata basis in accordance with the number of shares of the Employer

Stock owned as of the Record Date by each Rights holder who exercised

the Oversubscription Privilege. Any exercise of the Oversubscription

Privilege had to occur at the same time that the Basic Privilege was

exercised. Once the Basic Privilege or the Oversubscription Privilege

was exercised, such exercise could not be revoked. The Rights Offering

was announced to expire at 5 p.m., Pacific Time, on December 15, 1995

(the Expiration Time), at which time no further exercises of Rights

could occur.

While the Basic Privilege under the Rights was generally

transferable, the Oversubscription Privilege was not transferable. The

Rights traded on the SmallCap Market of NASDAQ under the symbol

``HBNKR'' until the close of trading on December 14, 1995, the date

prior to the expiration date of the Rights Offering. The Employer had

authorized the issuance of up to 1,700,500 additional shares of the

Employer Stock, for a total of 2,805,500 outstanding shares if the

maximum number of additional shares were sold. Payments of the

Subscription Price for the purchase of the Employer Stock pursuant to

the exercise of the Rights were held in an escrow account maintained by

First Interstate Bank of California as the subscription agent (the

Subscription Agent) pursuant to an Escrow Agreement with the Employer.

The Rights Offering was conditioned upon the receipt of minimum

proceeds of $12 million pursuant to the exercise of Rights and from

standby purchasers 2

[[Page 54226]]

prior to the Expiration Time, which minimum condition was

achieved.3

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

\2\ The Employer had standby purchase agreements with certain

outside investors, who severally agreed to commit to purchasing a

specified number of shares of the Employer Stock at the Subscription

Price, subject to availability after satisfaction of exercises by

Rights holders of the Basic Privilege and the Oversubscription

Privilege. The standby purchase agreements have no bearing on this

proposed exemption.

\3\ The Employer was not required to issue shares of the

Employer Stock pursuant to the Rights Offering to any Rights holder

or standby purchaser who, in the Employer's sole judgment and

discretion, was required to obtain prior clearance, approval, or non

disapproval from any Federal bank regulatory authority to own or

control such shares, unless prior to the expiration time, evidence

of such clearance, approval, or nondisapproval had been provided to

the Employer. This regulatory limitation had no bearing on this

proposed exemption because it was not possible for the relatively

small number of shares of the Employer Stock available for purchase

by the Invested Participants to trigger the regulatory limitation on

purchases described in the Rights Offering Circular.

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

4. It is represented that the acquisition, holding, and disposition

of the Rights by the affected participant accounts in the Plan occurred

in accordance with Plan provisions for the individually directed

investment of such accounts. In anticipation of the Rights Offering,

the trust agreement (the Trust Agreement) of the Plan was amended in

order to permit Invested Participants as of the Record Date to direct

the Trustee either to exercise or sell the Rights attributable to their

accounts, and such amendments also established the procedures for

making such directions. Due to the amendments to the Trust Agreement

and, consequently, the conversion of the Plan from a prototype plan

into an individually designed plan, the Employer has submitted the Plan

to the Internal Revenue Service for its determination on the

qualification of the Plan as an individually designed plan.

5. It is further represented that on November 8, 1995 all Invested

Participants received by hand delivery a packet of information

pertaining to the Rights Offering, which included: (i) a copy of the

Rights Offering Circular published by the Employer; (ii) a notice from

the Trustee describing the procedures for participant directions with

respect to the Rights Offering; (iii) a direction form (the Direction

Form); and (iv) a Statement of Benefits for the quarter ending

September 30, 1995, containing information regarding the number of

shares of the Employer Stock allocated to each Invested Participant

under his or her individual account, as well as the number of Rights

issued to each in proportion to the number of shares of the Employer

Stock held. As of November 8, 1995, the Employer had also furnished all

other Record Date Shareholders with information regarding the Rights

Offering by mail.

6. The Direction Form provided to Invested Participants enabled

them to direct the Trustee either (i) to exercise the Rights allocated

to their respective accounts, or (ii) to sell the Rights on the open

market. In order to allow the Trustee sufficient time to carry out the

administrative procedures required to review the Direction Forms of the

Invested Participants and to implement such directions, Invested

Participants had to return a properly completed form to the Trustee by

5:00 p.m., Pacific Time, on December 1, 1995 (i.e., 10 business days

before the expiration date of the Rights Offering). Invested

Participants who failed to return a timely and properly completed

Direction Form to the Trustee were deemed to have directed the Trustee

to sell their respective Rights on the open market.

Invested Participants who directed the Trustee to exercise their

Rights had to specify the order in which to liquidate their other Plan

investments, if necessary, to obtain the funds for the payment of the

Subscription Price. If an Invested Participant failed so to specify,

the Trustee would automatically liquidate such investments in the

following order: (i) Stable Value Fund; (ii) Balanced Fund; (iii) Large

Value Equity Fund; (iv) Large Growth Fund; (v) Small Growth Fund; and

(vi) International Equity Fund. Invested Participants also had to

specify the order in which to liquidate within each investment fund the

following types of contributions: profit-sharing contributions,

elective deferrals, employer matching contributions, qualified matching

contributions, or rollover contributions. If an Invested Participant

failed so to specify, the Trustee would automatically liquidate each

investment fund from the following order of contributions: (i) Rollover

contributions; (ii) profit sharing contributions; (iii) employer

matching contributions; (iv) qualified matching contributions; and (v)

elective deferrals. The Trustee would exercise Rights only to the

extent of the funds available in the Invested Participant's account.

Thus, if an Invested Participant had insufficient funds to pay the

Subscription Price for all of the shares of the Employer Stock

subscribed for, the Trustee would attempt to sell any Rights not

exercised on the open market.

7. Once the Trustee obtained the funds necessary for the payment of

the Subscription Price, the Trustee would transfer such funds to the

Reserve Deposit Account in the Plan, pending a transfer to the

Subscription Agent. Once the Subscription Agent purchased the Employer

Stock pursuant to an exercise of Rights by an Invested Participant, the

Trustee would allocate the newly acquired shares of the Employer Stock

to the account of the Invested Participant from which the funds had

been obtained.

In the event that the market price for the Employer Stock,

including the effect of any applicable brokerage commissions and other

expenses, was less than the Subscription Price at the time the Trustee

was to exercise the Rights pursuant to such election by an Invested

Participant, the Trustee was not to exercise such Rights. It is

represented that on December 15, 1995, the expiration date of the

Rights Offering and the date on which the Trustee exercised Rights on

behalf of the Invested Participants so directing the exercise of their

Rights, the Subscription Price was less than the market price for a

share of the Employer Stock on NASDAQ,4 after giving effect to any

applicable brokerage commissions and other expenses.

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

\4\ As of December 15, 1995, the closing price of the Employer

Stock, as quoted on NASDAQ, was $12.25 per share.

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

All sales of Rights by Invested Participants were to be executed by

Sandler O'Neal & Partners, L.P., the Employer's financial advisor for

the Rights Offering (the Financial Advisor), at the market price per

Right. Neither the Trustee nor the Financial Advisor were to charge any

commissions or other fees in connection with the sale of Rights. The

proceeds from the sale of any Rights were to be deposited in the

accounts of the Invested Participants in proportion to the number of

Rights they elected to sell, to be invested in accordance with their

then current investment selections.

However, the Trustee inadvertently did not follow the Invested

Participants' directions with respect to the sale or exercise of their

Rights within the time frame established by the Rights Offering

Circular. When the Trustee discovered that the Rights Offering had

expired, it took immediate steps to make the Plan whole. Accordingly,

on January 22, 1996, the Trustee paid $2,111.31 to the Plan.

8. The Employer represents that the following is a summary of the

Rights Offering. As of the Record Date, the total number of shares of

Employer Stock outstanding prior to the Rights Offering was 1,105,000,

of which approximately 21,436 shares, or approximately two percent were

held by the Plan. The Rights issued to the Plan pursuant to the Rights

Offering were allocated to the account of each Invested Participant for

his or her direction on the exercise or sale of such Rights. The

Rights, as listed on NASDAQ, were initially valued at \1/8\

[[Page 54227]]

per Right on November 21, 1995 and at \1/64\ per Right on December 14,

1995, the date prior to the expiration date of the Rights Offering.

Ninety of the Invested Participants elected to sell their Rights, a

total of 19,117 Rights. The market price of such Rights on December 4,

1995, the date on which such Rights should have been sold, was \1/16\

per Right. Two of the Invested Participants elected to exercise their

Rights pursuant to the Basic Privilege, a total of 282 Rights. No

Invested Participants elected to exercise the Oversubscription

Privilege.

The total number of shares of the Employer Stock outstanding after

the Rights Offering was 2,295,983, an increase of 1,190,983 shares. Of

these additional 1,190,983 shares, approximately 190,983 were sold to

shareholders upon exercise of their Rights, or to investors who

purchased the Rights on the open market, and the other 1,000,000 shares

were sold to outside investors pursuant to certain standby purchase

agreements.

9. In summary, the applicant represents that the transactions

satisfied the criteria for an exemption under section 408(a) of the Act

for the following reasons: (1) The Plan's acquisition and holding of

the Rights in connection with the Rights Offering occurred as a result

of an independent act of the Employer as a corporate entity; (2) all

holders of the Employer Stock, including the Plan, were treated in a

like manner with respect to all aspects of the Rights Offering; (3) the

acquisition, holding, and disposition of the Rights by the affected

participant accounts occurred in accordance with Plan provisions for

the individually directed investment of such accounts; and (4) the

Invested Participants' accounts held only approximately two percent of

the Employer Stock outstanding as of the Record Date.

Notice to Interested Persons

Notice of the proposed exemption shall be given to all interested

persons, and all employee organizations in which they are members, by

personal delivery, by first-class mail, or by posting in the Employer's

offices within 15 days of the date of publication of the notice of

pendency 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/or to

request a hearing with respect to the proposed exemption. Comments and

requests for a hearing are due within 45 days of the date of

publication of this notice in the Federal Register.

FOR FURTHER INFORMATION CONTACT: Ms. Karin Weng of the Department,

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

John A. Colglazier Self Employment Retirement Plan (the Plan), Located

in San Antonio, TX

[Application No. D-10291]

Proposed Exemption and Replacement of Exemption

The Department is proposing to grant a new exemption that will

replace Prohibited Transaction Exemption (PTE) 86-95 (51 FR 26077, July

18, 1986). Authority to grant the proposed exemption and to replace PTE

86-95 is given to the Department under 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 proposed exemption is granted, 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, will not apply to the cash sale

by the Plan, for $74,250, of a parcel of unimproved real property (the

Property) to John A. Colglazier, a sole proprietor and a disqualified

person with respect to the Plan.5

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

\5\ Because Mr. Colglazier is a sole proprietor and the only

participant in the Plan, there is no jurisdiction under Title I of

the Employee Retirement Income Security Act of 1974 (the Act).

However, there is jurisdiction under Title II of the Act pursuant to

section 4975 of the Code.

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

This proposed exemption is subject to the following conditions:

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

into within 90 days following the publication, in the Federal Register,

of the notice granting the proposed exemption.

(b) The Plan does not pay any real estate fees or commissions in

connection with the sale.

(c) The Property is appraised by a qualified, independent

appraiser.

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

the greater of $74,250 or the fair market value of the Property as of

the date of the sale, including any special value attributed to the

Property by reason of its proximity to other real property (the

Adjoining Properties) owned by Mr. Colglazier.

(e) All terms and conditions of the sale remain at least as

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

transaction with an unrelated party at the time of the sale.

Temporary Nature of Exemption/Effective Date

This proposed exemption, if granted, will be effective for a period

of 90 days subsequent to the date the grant notice is published in the

Federal Register.

Preamble

This proposed exemption is requested in an application filed with

the Department by Mr. Colglazier. The application updates the facts and

representations contained in PTE 86-95 which would have permitted the

Plan to sell the Property to Mr. Colglazier. The transaction was never

consummated due to declining real estate values which resulted in Mr.

Colglazier's inability to obtain financing. In view of the passage of

time and certain factual changes, the Department believes that it is

necessary to replace PTE 86-95 by reproposing the requested exemption

in a form which accurately reflects the current facts and

circumstances.

Summary of Facts and Representations

1. The Plan is a defined contribution, profit sharing plan and the

successor to another plan that was originally established in 1983. The

Plan, including its predecessor, has always had one participant, John

A. Colglazier. Mr. Colglazier, a sole proprietor engaged in the

commercial and investment real estate business in San Antonio, Texas,

serves as the Plan trustee and the decisionmaker with respect to the

Plan's investments. As of March 31, 1996, the Plan had total assets of

$98,487.

2. Among the assets of the Plan 6 is a parcel of real property

consisting of 1.0307 acres of unimproved land located in the northeast

corner of the intersection of Mesquite and Duval Streets in San

Antonio, Bexar County, Texas. The Property is in close proximity to the

Adjoining Properties that are owned by Mr. Colglazier.

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

\6\ Unless otherwise noted, references to the Plan include its

predecessor.

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

3. The Plan purchased the Property on October 1, 1985 from William

Cole Butler, an unrelated party, for a purchase price of $2.80 per

square foot plus $101 in charges, or a total acquisition price of

$126,093.94. At no time has the Property ever been encumbered by a

mortgage or a deed of trust.

4. Since it has owned the Property, the Plan has incurred total

costs and real estate taxes of approximately $24,059. The Plan has also

leased the Property to Conex Construction, Inc., an unrelated party,

but never to a disqualified person. The subject lease, which commenced

on November 1, 1989 and expired on October 15, 1990, required the

lessee to pay a monthly rental of $200.

5. At the time the Property was purchased by the Plan, it is

represented

[[Page 54228]]

that Mr. Colglazier, as Plan trustee, intended to develop the Property

with a warehouse that would be constructed thereon and used for

commercial rental. Soon after closing the sale, Mr. Colglazier realized

that the Plan did not have sufficient assets to construct the warehouse

and considered obtaining third party financing to realize this

objective. However, after exploring various options, Mr. Colglazier

decided that it would be more appropriate to purchase the Property from

the Plan. Therefore, on advice of counsel, Mr. Colglazier applied to

the Department for an administrative exemption.

6. On July 18, 1986, the Department granted PTE 86-95 which would

have permitted the Plan to sell the Property to Mr. Colglazier for

cash, for the higher of the fair market value of the Property or

$146,000. Although Mr. Colglazier was ready to complete the sale

following the granting of PTE 86-95, he was unable to obtain the

necessary financing because the real estate market had collapsed in

Texas. Therefore, Mr. Colglazier never utilized PTE 86-95.

7. On February 7, 1996, Mr. Colglazier purchased the Adjoining

Properties from Flo-Line Filters, Inc., an unrelated party for a total

purchase price of $37,500. The Adjoining Properties consist of two

parcels of vacant land. One of the parcels is located on Austin Street

and Duval Street and contains 0.7059 acres. The other parcel is located

on Mesquite Street and Brooks Street and contains 0.2473 acres.

It is represented that Mr. Colglazier decided to purchase the

Adjoining Properties because it would allow him to construct a larger

warehouse, when combined with the Property. Also, it is represented

that one of the Adjoining Properties has frontage on a freeway and Mr.

Colglazier believes that this factor will enhance his ability to sell

all of the Properties as one tract if he decides not to construct the

warehouse. However, at this time, Mr. Colglazier intends to construct

the warehouse to provide income for his retirement.

8. The Property has been appraised by Richard L. Dugger, MAI, CRE,

a qualified, independent appraiser. In an appraisal report dated May

14, 1996, Mr. Dugger has placed the fair market value of the Property

at $67,500 as of April 19, 1996. In valuing the Property, Mr. Dugger

has considered comparable sales of other properties.

In an addendum to the appraisal dated July 17, 1996, Mr. Dugger has

determined that the Property has nominal, incremental value by reason

of Mr. Colglazier's ownership of the Adjoining Properties. According to

Mr. Dugger, the incremental value is nominal since there has been very

limited development activity in the San Antonio area for many years.

Mr. Dugger concludes that the intrinsic value of the Property to Mr.

Colglazier is approximately 10 percent above the market value of

$67,500 or $74,250.

9. Accordingly, Mr. Colglazier requests an administrative exemption

from the Department in order to purchase the Property from the Plan.

The new exemption is being requested in view of changed circumstances

that would render PTE 86-95 invalid. As discussed above, these factual

changes are (a) Mr. Colglazier's acquisition of the Adjoining

Properties and (b) the special value attributed to the Property by Mr.

Dugger as a result of such Adjoining Property acquisition. If granted,

the new exemption will replace PTE 86-95.

10. Mr. Colglazier proposes to purchase the Property from the Plan

for cash for a price that is equal to the greater of $74,250 or the

fair market value of the Property on the date of the sale, including

any special value attributed to the Property by reason of its proximity

to the Adjoining Properties. The Plan will not incur any fees,

commissions, expenses or other costs in connection with the sale. In

addition, the transaction must be entered into within 90 days following

the publication, in the Federal Register, of the notice granting the

proposed exemption.

11. In summary, it is represented that the proposed transaction

will satisfy the terms and conditions of section 4975(c)(2) of the Code

because: (a) The sale will be a one-time transaction for cash that must

be entered into within 90 days following the publication, in the

Federal Register, of the notice granting the proposed exemption; (b)

the Plan will not pay any real estate fees or commissions in connection

with the sale; (c) the Property has been appraised by a qualified,

independent appraiser; (d) the Plan will receive as consideration an

amount that is equal to the greater of $74,250 or the fair market value

of the Property as of the date of the sale, including any special value

attributed to the Property by reason of its proximity to the Adjoining

Properties; and (e) all terms and conditions of the sale will remain at

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

transaction with an unrelated party at the time of the sale.

Notice to Interested Persons

Because Mr. Colglazier is the only person in the Plan who will be

affected by the proposed transaction, it has been determined that there

is no need to distribute the notice of pendency to interested persons.

Therefore, comments and requests for a hearing are due 30 days from the

publication of this notice 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.)

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.

[[Page 54229]]

Signed at Washington, DC, this 11th day of October, 1996.

Ivan Strasfeld,

Director of Exemption Determinations, Pension and Welfare Benefits

Administration, U.S. Department of Labor.

[FR Doc. 96-26602 Filed 10-16-96; 8:45 am]

BILLING CODE 4510-29-P