Grant of Individual Exemptions; 1st Source Bank, et al.

DEPARTMENT OF LABOR

Pension and Welfare Benefits Administration

[Prohibited Transaction Exemption 97-44; Exemption Application No. D-

10346, et al.]

Grant of Individual Exemptions; 1st Source Bank, et al.

AGENCY: Pension and Welfare Benefits Administration, Labor.

ACTION: Grant of Individual Exemptions.

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SUMMARY: This document contains exemptions issued by the Department of

Labor (the Department) from certain of the prohibited transaction

restrictions of the Employee Retirement Income Security Act of 1974

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

Notices were published in the Federal Register of the pendency

before the Department of proposals to grant such exemptions. The

notices set forth a summary of facts and representations contained in

each application for exemption and referred interested persons to the

respective applications for a complete statement of the facts and

representations. The applications have been available for public

inspection at the Department in Washington, DC. 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.

[[Page 47051]]

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.

1st Source Bank, Located in South Bend, Indiana

[Prohibited Transaction Exemption 97-44; Exemption Application No. D-

10346]

Exemption

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

The restrictions of section 406(a) and section 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, effective September 19, 1996, to the in-kind transfer

to separate series of an open-end investment company registered under

the Investment Company Act of 1940 (the Funds) to which 1st Source Bank

or any of its affiliates (collectively, the Bank) serves as investment

advisor, and may provide other services, of the assets of various

employee benefit plans (the Plans) that are held in certain collective

investment funds (the CIFs) maintained by the Bank or otherwise held by

the Bank as trustee, investment manager, or in any other capacity as

fiduciary on behalf of the Plans, in exchange for shares of such Funds;

provided that the following conditions are met:

(A) A fiduciary (the Second Fiduciary) who is acting on behalf of

each affected Plan and who is independent of and unrelated to the Bank,

as defined in paragraph (G) of Section III below, receives in advance

of the investment by the Plan in any of the Funds a full and detailed

written disclosure of information concerning such Fund, including, but

not limited to:

(1) A current prospectus for each portfolio of each of the Funds in

which such Plan is considering investing,

(2) A statement describing the fees for investment management,

investment advisory, or other similar services, any fees for secondary

services (Secondary Services), as defined in paragraph (H) of section

III below, and all other fees to be charged to or paid by the Plan and

by such Funds to the Bank, including the nature and extent of any

differential between the rates of such fees,

(3) The reasons why the Bank may consider such investment in the

Funds to be appropriate for the Plan,

(4) A statement describing whether there are any limitations

applicable to the Bank with respect to which assets of a Plan may be

invested in the Funds, and, if so, the nature of such limitations, and

(5) Upon request of the Second Fiduciary, a copy of this proposed

exemption and/or a copy of the final exemption;

(B)(1) With respect to each of the Funds in which a Plan invests,

the Bank will provide the Second Fiduciary of such Plan:

(a) At least annually with a copy of an updated prospectus of such

Fund,

(b) Upon the request of such Second Fiduciary, with 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) which contains a description of all fees paid by the Fund to

the Bank;

(2) On the basis of the information described above in paragraph

(A) of this section I, the Second Fiduciary authorizes in writing the

in-kind transfer of assets of the Plans in exchange for shares of the

Funds, the investment of such assets in corresponding portfolios of the

Funds, and the fees received by the Bank in connection with its

services to the Funds, such authorization by the Second Fiduciary to be

consistent with the responsibilities, obligations, and duties imposed

on fiduciaries by Part 4 of Title I of the Act;

(C) No sales commissions or other fees are paid by the Plans in

connection with the purchase of Fund shares through the in-kind

transfer of Plan assets in the CIFs, and no redemption fees are paid in

connection with the sale of such shares by the Plans to the Fund;

(D) All or a pro rata portion of the assets of the Plans held in

the CIFs or all or a pro rata portion of the assets of the Plans held

by the Bank in any capacities as fiduciary on behalf of such Plans are

transferred in-kind to the Funds in exchange for shares of such Funds;

(E) The Plans receive shares of the Funds that have a total net

asset value that is equal to the value of the assets of the Plans or

the CIFs exchanged for such shares on the date of transfer, based on

the current market value of the assets of the Plans or the CIFs

(F) The current market value of the assets of the Plans or the CIFs

to be transferred in-kind in exchange for shares is determined in a

single valuation performed in the same manner and at the close of

business on the same day, using independent sources in accordance with

the procedures set forth in Rule 17a-7(b) (Rule 17a-7), issued by the

Securities and Exchange Commission under the Investment Company Act of

1940, and the procedures established by the Funds 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 day preceding the CIF or Plan

transfers determined on the basis of reasonable inquiry from at least

three sources that are broker-dealers or pricing services independent

of the Bank;

(G) For all conversion transactions that occur after the date of

publication in the Federal Register of a notice proposing this

exemption: Not later than thirty (30) days after completion of each in-

kind transfer of assets of the Plans or the CIFs in exchange for shares

of the Funds, the Bank sends by regular mail to the Second Fiduciary,

as defined in paragraph (G) of Section III below, a written

confirmation which contains the following information:

(1) The identity of each of the assets that was valued for purposes

of the transaction in accordance with Rule 17a-7(b)(4) under the

Investment Company Act of 1940;

(2) The price of such asset involved in the transaction; and

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

in determining the value of such assets

(H) No later than ninety (90) days after completion of each in-kind

transfer of assets of the Plans or the CIFs in exchange for shares of

the Funds, the Bank sends by regular mail to the Second Fiduciary, who

is acting on behalf of each affected Plan and who is independent of and

unrelated to the Bank, as defined in paragraph (G) of section III

below, a written confirmation that contains the following information:

(1) The number of CIF units held by each affected Plan immediately

before

[[Page 47052]]

the transfer, the related per unit value, and the aggregate dollar

value of the units transferred; and

(2) The number of shares in the Funds that are held by each

affected Plan following the transfer, the related per share net asset

value, and the aggregate dollar value of the shares received;

(I) The combined total of all fees received by the Bank for the

provision of services to the Plans, and in connection with the

provision of services to any of the Funds in which the Plans may

invest, are not in excess of ``reasonable compensation'' within the

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

(J) The Bank does not receive any fees payable pursuant to Rule

12b-1 under the Investment Company Act of 1940 in connection with the

transactions described herein;

(K) The Plans are not sponsored by the Bank;

(L) All dealings between the Plans and any of the Funds are on a

basis no less favorable to the Plans than dealings between the Funds

and other shareholders holding the same class of shares as the Plans;

and

(M) The requirements of Prohibited Transaction Class Exemption 77-4

(42 FR 18732, April 8, 1977) are met with respect to all arrangements

under which investment advisory fees are paid to the Bank directly or

indirectly by Plans with assets invested in the Funds.

Section II--General Conditions

(A) The Bank maintains for a period of six years the records

necessary to enable the persons, as described in paragraph (B) of this

section II, 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 the Bank, the

records are lost or destroyed prior to the end of the six (6) year

period, and

(2) No party in interest, other than the Bank, shall be subject to

the civil penalty that may be assessed under section 503(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 (B) of this section;

(B)(1) Except as provided in paragraph (B)(2) of this section II

and notwithstanding any provisions of subsection (a)(2) and (b) of

section 504 of the Act, the records referred to in paragraph (A) of

section II above are unconditionally available at their customary

location for examination during normal business hours by--

(a) Any duly authorized employee or representative of the

Department or the Internal Revenue Service,

(b) Any fiduciary of each of the Plans who has authority to acquire

or dispose of shares of any of the Funds owned by such a Plan, or any

duly authorized employee or representative of such fiduciary, and

(c) Any participant or beneficiary of the Plans or duly authorized

employee or representative of such participant or beneficiary;

(2) None of the persons described in paragraphs (B)(1)(b) and

(B)(1)(c) of this section II shall be authorized to examine trade

secrets of the Bank or commercial or financial information which is

privileged or confidential.

Section III--Definitions

For purposes of this exemption:

(A) The term Bank means 1st Source Bank and any affiliate of the

Bank, as defined in paragraph (B) of this section III.

(B) An affiliate of a person includes:

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

intermediaries, controlling, controlled by, or under common control

with the person,

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

such person, and

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

officer, director, partner or employee.

(C) The term control means the power to exercise a controlling

influence over the management or policies of a person other than an

individual.

(D) The term Fund or Funds means any diversified open-end

investment company or companies registered under the Investment Company

Act of 1940 for which the Bank serves as investment adviser, and may

also provide custodial or other services as approved by such Funds.

(E) The term net asset value means the amount for purposes of

pricing all purchases and sales 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

each of the portfolios in such Fund, less the liabilities charged to

each portfolio, by the number of outstanding shares.

(F) The term relative means a relative as that term is defined in

section 3(15) of the Act (or a ``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 sister.

(G) The term Second Fiduciary means a fiduciary of a plan who is

independent of and unrelated to the Bank. For purposes of this

exemption, the Second Fiduciary will not be deemed to be independent of

and unrelated to the Bank if:

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

controlled by, or is under common control with the Bank,

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

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

partner, or employee of the Bank (or is a relative of such person), or

(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 exemption.

If an officer, director, partner, or employee of the Bank (or a

relative of such persons) is a director of such Second Fiduciary, and

if he or she abstains from participation in (i) the choice of the

Plan's investment manager/advisor, (ii) the approval of any purchase or

sale by the Plan of shares of the Funds, and (iii) the approval of any

change of fees charged to or paid by the Plan, in connection with any

of the transactions described in section I above, then paragraph (G)(2)

of section III above shall not apply.

(H) The term, Secondary Service means a service, other than an

investment management, investment advisory, or similar service, which

is provided by the Bank to the Funds, including but not limited to

custodial, accounting, brokerage, administrative or any other service.

EFFECTIVE DATE: This exemption is effective as of September 19, 1996.

For a more complete statement of the facts and representations

supporting this exemption, refer to the notice of proposed exemption

published on June 23, 1997 at 62 FR 33911.

FOR FURTHER INFORMATION CONTACT: Mr. Ronald Willett of the Department,

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

Ronald L. Chez (Mr. Chez) IRA and Lawrence G. Kuntz (Mr. Kuntz) IRA

(Collectively; the IRAs) Located in Chicago, Illinois and Wilmington,

Delaware, Respectively

[Prohibited Transaction Exemption 97-45; Exemption Application Nos. D-

10359 and D-10360]

Exemption

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: (a) The sale by the IRAs of certain

[[Page 47053]]

closely held stock (the Stock) to Happy Valley Corporation (the

Corporation), the issuer of the Stock and an unrelated third party with

respect to the IRAs; and (b) the subsequent repurchase of the Stock

from the Corporation by Mr. Chez and Mr. Kuntz, fiduciaries and

disqualified persons with respect to the IRAs; provided that the

following conditions are met:

1. The sale and the repurchase of the Stock will be one-time

transactions for cash;

2. The transactions described in (1) above will take place on the

same business day;

3. Mr. Chez and Mr. Kuntz, in their individual capacity, will

purchase the same shares of the Stock, as those that were sold to the

Corporation by the IRAs. The stock transfer records of the Corporation

will evidence that this is the case; and

4. The amount paid to the IRAs for the Stock will be the fair

market value of the Stock determined at the time of the sale by a

qualified independent appraiser. Mr. Chez and Mr. Kuntz will purchase

the Stock from the Corporation for the same consideration as was

received by the IRAs for the sale of the Stock.

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 July 11, 1997 at 62 FR

37309.

Written Comments

The Department received one written comment on the proposed

exemption and no requests for a hearing. The attorney for the applicant

submitted the written comment as follows:

1. Paragraph 1 at the top of the of the third column on page 37309

and section 7 of the Summary of Facts and Representations on page 37310

state that ``the sale and repurchase of the Stock will be one-time

transactions for cash.'' The applicant requests that the phrase ``check

or bank transfer'' be added at the end of that sentence to permit

payment by check or bank transfer.

The Department notes that the term cash includes payment by ``check

or bank transfer.'' In this regard, the Department wishes to assure

that, as a result of the transactions, the IRAs receive payment by

cash, as distinguished from an in-kind transfer of assets other than

cash, and there will be no extension of credit associated with the

transactions.

2. The second paragraph of section 3 of the Summary of Facts and

Representations states that ``On August 1, 1995, Mr. Kuntz subscribed

for Stock shares in his own name. On December 20, 1995, at the request

of Mr. Kuntz, the Corporation issued a replacement Stock certificate to

Mr. Kuntz's IRA.''

The applicant clarified that although the Stock was originally

issued by the Corporation to Mr. Kuntz, the intent of Mr. Kuntz was

always to make his investment in the Corporation through his IRA.

3. Section 5 of the Summary of the Facts and Representations states

that ``By letter dated May 22, 1997, the attorneys for the Corporation

represent that the transaction must be structured through the

Corporation'' (emphasis added).

In this regard, the applicant clarified that it believed that the

taint of having a non-permitted shareholder of the Corporation was most

completely removed where the parties were put back in the position they

would have been in had the stock been issued to the individuals

concerned and not to the IRAs.

After giving full consideration to the record and the comment

submitted to the Department, the Department has determined to grant the

exemption.

FOR FURTHER INFORMATION CONTACT: Ekaterina A. Uzlyan of the Department

at (202) 219-8883. (This is not a toll-free number.)

John Hancock Mutual Life Insurance Company (JH), Located in Boston,

Massachusetts,

[Prohibited Transaction Exemption 97-46; Exemption Application Nos. D-

10416-10420]

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: (1) The acquisition by a separate account

maintained by JH (the FPGT Account) from Willamette Industries, Inc. of

certain oil and gas rights (the Deer Creek Oil and Gas Rights), subject

to existing leases (the Leases) of such rights to Enerfin Resources

Northwest Limited Partnership (Enerfin), a party in interest with

respect to the plans invested in the FPGT Account; and (2) the

continuation of the Leases following the acquisition by the FPGT

Account, provided the following conditions are satisfied: (a) As part

of its decision to enter into the separate account contract

establishing the FPGT Account, an independent fiduciary determines that

the acquisition of the Deer Creek Oil and Gas Rights is in the interest

of the participants of the plans investing in the FPGT Account and that

the price paid for the rights is no more than the fair market value of

such rights; (b) an independent fiduciary determines that the

continuation of the Leases is in the best interests of the FPGT

Account; and (c) an independent fiduciary will monitor the performance

of Enerfin under the Leases, as well as any proposed modifications or

renewals of the Leases, and will take such steps as are necessary to

protect the interests of the FPGT Account with respect to the Leases.

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 June 23, 1997 at 62 FR

33915.

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

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

AmSouth Bank of Alabama (AmSouth), Located in Birmingham, Alabama

[Prohibited Transaction Exemption 97-47; Application No. D-10422]

Exemption

Section I--Transactions

The restrictions of section 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 to the receipt of fees by AmSouth from the AmSouth Mutual Funds,

or any other diversified open-end investment companies registered under

the Investment Company Act of 1940 (the Funds), for acting as an

investment adviser for the Funds as well as for providing other

services to the Funds which are ``Secondary Services'' as defined in

Section III(h), in connection with the investment by the Client Plans

in shares of the Funds, provided that the conditions set forth in

Section II below are met.

Section II--Conditions

(a) Each Client Plan satisfies either (but not both) of the

following:

(1) The Client Plan receives a cash credit of such Plan's

proportionate share of all fees charged to the Funds by AmSouth for

investment advisory services, including any investment advisory fees

paid by AmSouth to third party sub-advisers, no later than one business

day after the receipt of such fees by AmSouth. The crediting of all

such fees to the Client Plans by AmSouth is audited by an independent

accounting firm on at least an annual basis to verify the proper

crediting of the fees to each Plan; or

[[Page 47054]]

(2) The Client Plan does not pay any Plan-level investment

management fees, investment advisory fees, or similar fees to AmSouth

with respect to any of the assets of such Plan which are invested in

shares of any of the Funds. This condition does not preclude the

payment of investment advisory or similar fees by the Funds to AmSouth

under the terms of an investment management agreement adopted in

accordance with section 15 of the Investment Company Act of 1940 (the

1940 Act), nor does it preclude the payment of fees for Secondary

Services to AmSouth pursuant to a duly adopted agreement between

AmSouth and the Funds.

(b) The price paid or received by a Client Plan for shares in a

Fund is the net asset value per share at the time of the transaction,

as defined in Section III(e), and is the same price which would have

been paid or received for the shares by any other investor at that

time.

(c) AmSouth, including any officer or director of AmSouth, does not

purchase or sell shares of the Funds from or to any Client Plan.

(d) No sales commissions are paid by the Client Plans in connection

with the purchase or sale of shares of the Funds and no redemption fees

are paid in connection with the sale of shares by the Client Plans to

the Funds.

(e) For each Client Plan, the combined total of all fees received

by AmSouth for the provision of services to a Client Plan, and in

connection with the provision of services to the Funds in which the

Client Plan may invest, are not in excess of ``reasonable

compensation'' within the meaning of section 408(b)(2) of the Act.

(f) AmSouth does not receive any fees payable pursuant to Rule 12b-

1 under the 1940 Act in connection with the transactions.

(g) The Client Plans are not employee benefit plans sponsored or

maintained by AmSouth.

(h) The Second Fiduciary receives, in advance of any initial

investment by the Client Plan in a Fund, full and detailed written

disclosure of information concerning the Funds, including but not

limited to:

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

considering investing;

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

similar services, any secondary services as defined in Section III(h),

and all other fees to be charged to or paid by the Client Plan and by

the Funds, including the nature and extent of any differential between

the rates of such fees;

(3) The reasons why AmSouth may consider such investment to be

appropriate for the Client Plan

(4) A statement describing whether there are any limitations

applicable to AmSouth with respect to which assets of a Client Plan may

be invested in the Funds, and if so, the nature of such limitations;

and

(5) Upon request of the Second Fiduciary, a copy of the proposed

exemption and/or a copy of the final exemption as published in the

Federal Register.

(i) After consideration of the information described above in

paragraph (h), the Second Fiduciary authorizes in writing the

investment of assets of the Client Plan in each particular Fund and the

fees to be paid by such Funds to AmSouth.

(j) All authorizations made by a Second Fiduciary regarding

investments in a Fund and the fees paid to AmSouth are subject to an

annual reauthorization wherein any such prior authorization referred to

in paragraph (i) shall be terminable at will by the Client Plan,

without penalty to the Client Plan, upon receipt by AmSouth of written

notice of termination. A form expressly providing an election to

terminate the authorization described in paragraph (i) above (the

Termination Form) with instructions on the use of the form must be

supplied to the Second Fiduciary no less than annually; provided that

the Termination Form need not be supplied to the Second Fiduciary

pursuant to this paragraph sooner than six months after such

Termination Form is supplied pursuant to paragraph (l) below, except to

the extent required by such paragraph in order to disclose an

additional service or fee increase. The instructions for the

Termination Form must include the following information:

(1) The authorization is terminable at will by the Client Plan,

without penalty to the Client Plan, upon receipt by AmSouth of written

notice from the Second Fiduciary; and

(2) Failure to return the Termination Form will result in continued

authorization of AmSouth to engage in the transactions described in

paragraph (i) on behalf of the Client Plan.

(k) For each Client Plan using the fee structure described in

paragraph (a)(1) above with respect to investments in a particular

Fund, the Second Fiduciary of the Client Plan receives full written

disclosure in a Fund prospectus or otherwise of any increases in the

rates of fees charged by AmSouth to the Funds for investment advisory

services, prior to the effective date of such increase.

(l)(1) For each Client Plan using the fee structure described in

paragraph (a)(2) above with respect to investments in a particular

Fund, an increase in the rate of fees paid by the Fund to AmSouth

regarding any investment management services, investment advisory

services, or similar services that AmSouth provides to the Fund over an

existing rate for such services that had been authorized by a Second

Fiduciary in accordance with paragraph (i) above; or

(2) For any Client Plan under this exemption, an addition of a

Secondary Service (as defined in Section III(h) below) provided by

AmSouth to the Fund for which a fee is charged, or an increase in the

rate of any fee paid by the Funds to AmSouth for any Secondary Service

that results either from an increase in the rate of such fee or from

the decrease in the number of kind of services performed by AmSouth for

such fee over an existing rate for such Secondary Service which had

been authorized by the Second Fiduciary of a Client Plan in accordance

with paragraph (i) above.

AmSouth will, at least 30 days in advance of the implementation of

such additional service for which a fee is charged or fee increase,

provide a written notice (which may take the form of a proxy statement,

letter, or similar communication that is separate from the prospectus

of the Fund and which explains the nature and amount of the additional

service for which a fee is charged or of the increase in fees) to the

Second Fiduciary of the Client Plan. Such notice shall be accompanied

by a Termination Form with instructions as described in paragraph (j)

above.

(m) On an annual basis, AmSouth provides the Second Fiduciary of a

Client Plan investing in the Funds with:

(1) A copy of the current prospectus for the Funds in which the

Client Plan invests and, upon such fiduciary's request, a copy of the

Statement of Additional Information for such Funds which contains a

description of all fees paid by the Funds to AmSouth;

(2) A copy of the annual financial disclosure report prepared by

AmSouth which includes information about the Fund portfolios as well as

audit findings of an independent auditor within 60 days of the

preparation of the report; and

(3) Oral or written responses to inquiries of the Second Fiduciary

as they arise.

(n) With respect to each of the Funds in which a Client Plan

invests, in the event such Fund places brokerage transactions with

AmSouth, AmSouth will provide the Second Fiduciary of

[[Page 47055]]

such Plan at least annually with a statement specifying:

(1) The total, expressed in dollars, of brokerage commissions of

each Fund that are paid to AmSouth by such Fund;

(2) The total, expressed in dollars, of brokerage commissions of

each Fund that are paid by such Fund to brokerage firms unrelated to

AmSouth;

(3) The average brokerage commissions per share, expressed as cents

per share, paid to AmSouth by each Fund; and

(4) The average brokerage commissions per share, expressed as cents

per share, paid by each Fund to brokerage firms unrelated to AmSouth.

(o) All dealings between the Client Plans and the Funds are on a

basis no less favorable to the Plans than dealings with other

shareholders of the Funds.

(p) AmSouth maintains for a period of six years the records

necessary to enable the persons described below in paragraph (q) 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 AmSouth, the

records are lost or destroyed prior to the end of the six-year period,

and (2) no party in interest other than AmSouth or an affiliate 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 (q) below.

(q)(1) Except as provided below in paragraph (q)(2) and

notwithstanding any provisions of section 504(a)(2) of the Act, the

records referred to in paragraph (p) are unconditionally available at

their customary location for examination during normal business hours

by--

(i) Any duly authorized employee or representative of the

Department or the Internal Revenue Service,

(ii) Any fiduciary of the Client Plans who has authority to acquire

or dispose of shares of the Funds owned by the Client Plans, or any

duly authorized employee or representative of such fiduciary, and

(iii) Any participant or beneficiary of the Client Plans or duly

authorized employee or representative of such participant or

beneficiary;

(2) None of the persons described in paragraph (q)(1) (ii) and

(iii) shall be authorized to examine trade secrets of AmSouth, or

commercial or financial information which is privileged or

confidential.

Section III--Definitions

For purposes of this exemption:

(a) The term AmSouth means AmSouth Bank of Alabama and any

affiliate thereof as defined below in paragraph (b) of this section.

(b) An affiliate of a person includes:

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

intermediaries, controlling, controlled by, or under common control

with the person;

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

such person; and

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

officer, director, partner, or employee.

(c) The term control means the power to exercise a controlling

influence over the management or policies of a person other than an

individual.

(d) The term Fund or Funds shall include the AmSouth Mutual Funds

or any other diversified open-end investment company or companies

registered under the 1940 Act for which AmSouth serves as an investment

adviser and may also serve as a custodian, dividend disbursing agent,

shareholder servicing agent, transfer agent, Fund accountant, or

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

(h) of this Section) which has been approved by such Funds.

(e) The term net asset value means the amount for purposes of

pricing all purchases and sales calculated by dividing the value of all

securities, determined by a method as set forth in the Fund's

prospectus and statement of additional information, and other assets

belonging to the Fund or portfolio of the Fund, less the liabilities

charged to each such portfolio or Fund, by the number of outstanding

shares.

(f) The term relative means a relative as that term is defined in

section 3(15) of the Act (or a ``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.

(g) The term Second Fiduciary means a fiduciary of a Client Plan

who is independent of and unrelated to AmSouth. For purposes of this

exemption, the Second Fiduciary will not be deemed to be independent of

and unrelated to AmSouth if:

(1) Such fiduciary directly or indirectly controls, is controlled

by, or is under common control with AmSouth;

(2) Such fiduciary, or any officer, director, partner, employee, or

relative of the fiduciary is an officer, director, partner or employee

of AmSouth (or is a relative of such persons); or

(3) Such 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 exemption.

If an officer, director, partner or employee of AmSouth (or

relative of such persons), is a director of such Second Fiduciary, and

if he or she abstains from participation in (i) the choice of the

Client Plan's investment adviser, (ii) the approval of any such

purchase or sale between the Client Plan and the Funds, and (iii) the

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

connection with any of the transactions described in Sections I and II

above, then paragraph (g)(2) of this section shall not apply.

(h) The term Secondary Service means a service other than an

investment management, investment advisory, or similar service, which

is provided by AmSouth to the Funds, including (but not limited to)

custodian services, transfer and dividend disbursing agent services,

administrator or sub-administrator services, accounting services,

shareholder servicing agent services and brokerage services.

(i) The term Termination Form means the form supplied to the Second

Fiduciary which expressly provides an election to the Second Fiduciary

to terminate on behalf of a Client Plan the authorization described in

paragraph (i) of Section II. Such Termination Form may be used at will

by the Second Fiduciary to terminate an authorization without penalty

to the Client Plan and to notify AmSouth in writing to effect a

termination by selling the shares of the Funds held by the Client Plan

requesting such termination within one business day following receipt

by AmSouth of the form; provided that if, due to circumstances beyond

the control of AmSouth, the sale cannot be executed within one business

day, AmSouth shall have one additional business day to complete such

sale.

EFFECTIVE DATE: This exemption is effective as of April 16, 1997.

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 June 23, 1997, at 62 FR

33917.

WRITTEN COMMENTS: The Department received one written comment from an

officer of a Client Plan sponsor, which supported the granting of an

exemption for the subject transactions. No other written comments, and

no requests for a hearing, were received by the Department.

Accordingly, the

[[Page 47056]]

Department has determined to grant the requested exemption as proposed.

FOR FURTHER INFORMATION CONTACT: Mr. E.F. Williams of the Department,

telephone (202) 219-8194. (This is not a toll-free number.)

Martin D. Ross Individual Retirement Account (the IRA) Located in Boca

Raton, Florida

[Prohibited Transaction Exemption 97-48; Exemption Application No. D-

10451]

Exemption

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 March 4, 1996 sale by the IRA of certain

debentures (the Debentures) to Mr. Martin D. Ross (Mr. Ross), a

disqualified person with respect to the IRA, provided the following

conditions were satisfied: (1) The sale of the Debentures by the IRA

was a one-time transaction for cash; (2) the IRA received no less than

the fair market value of the Debentures as of the time of the sale; and

(3) as soon as Mr. Ross became aware that the transaction was

prohibited, he reversed the transaction.1

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\1\ Pursuant to 29 CFR 2510.3-2(d), the IRA is not within the

jurisdiction of Title I of the Act. However, there is jurisdiction

under Title II of the Act pursuant to section 4975 of the Code.

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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 July 21, 1997 at 62 FR

39030.

EFFECTIVE DATE: This exemption is effective March 4, 1996.

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 exemption does not

apply and the general fiduciary responsibility provisions of section

404 of the Act, which among other things require a fiduciary to

discharge his duties respecting the plan solely in the interest of the

participants and beneficiaries of the plan and in a prudent fashion in

accordance with section 404(a)(1)(B) of the Act; nor does it affect the

requirement of section 401(a) of the Code that the plan must operate

for the exclusive benefit of the employees of the employer maintaining

the plan and their beneficiaries;

(2) These exemptions are supplemental to and not in derogation of,

any other provisions of the Act and/or the Code, including statutory or

administrative exemptions and transactional rules. Furthermore, the

fact that a transaction is subject to an administrative or statutory

exemption is not dispositive of whether the transaction is in fact a

prohibited transaction; and

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

condition that the material facts and representations contained in each

application 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, DC, this 2nd day of September, 1997.

Ivan Strasfeld,

Director of Exemption Determinations, Pension and Welfare Benefits

Administration, Department of Labor.

[FR Doc. 97-23641 Filed 9-4-97; 8:45 am]

BILLING CODE 4510-29-P