Grant of Individual Exemptions; UNUM Life Insurance Company of America

DEPARTMENT OF LABOR

Pension and Welfare Benefits Administration

[Prohibited Transaction Exemption 97-56; Exemption Application No. D-

10437, et al.]

Grant of Individual Exemptions; UNUM Life Insurance Company of

America

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, 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.

UNUM Life Insurance Company of America (UNUM), Located in Portland,

Maine

[Prohibited Transaction Exemption 97-56; Exemption Application No. D-

10437]

Exemption

Section I--Exemption for Certain Transactions Involving the Management

of Investments Shared by Two or More Accounts Maintained by UNUM

The restrictions of certain sections of the Act and the sanctions

resulting from the application of certain parts of section 4975 of the

Code shall not apply to the following transactions if the conditions

set forth in Section IV are met:

(a) Transfers Between Accounts

(1) The restrictions of section 406(b)(2) of the Act shall not

apply to the sale or transfer of an interest in a shared investment

(including a shared joint venture interest) between two or more

Accounts (except the General Account), provided that each ERISA-Covered

Account pays no more, or receives no less, than fair market value for

its interest in a shared investment.

(2) The restrictions of sections 406(a), 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) through (E) of the

Code shall not apply to the sale or transfer of an interest in a shared

investment (including a shared joint venture interest) between ERISA-

Covered Accounts and the General Account, provided that such transfer

is made pursuant to stalemate procedures, described in the notice of

proposed exemption, adopted by the independent fiduciary for the ERISA-

Covered Account, and provided further that the ERISA-Covered Account

pays no more or receives no less than fair market value for its

interest in a shared investment.

(b) Joint Sales of Property--The restrictions of sections 406(a),

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) through (E) of the Code shall not apply to the sale to a

third party of the entire interest in a shared investment (including a

shared joint venture interest) by two or more Accounts, provided that

each ERISA-Covered Account receives no less than fair market value for

its interest in the shared investment.

(c) Additional Capital Contributions--The restrictions of sections

406(a), 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) through (E) of the Code shall not apply either to the

making of a pro rata equity capital contribution by one or more of the

Accounts to a shared investment; or to the making of a Disproportionate

[as defined in Section V(e)] equity capital contribution by one or more

of such Accounts which results in an adjustment in the equity ownership

interests of the Accounts in the shared investment on the basis of the

fair market value of such interests subsequent to such contribution,

provided that each ERISA-Covered Account is given an opportunity to

make a pro rata contribution.

(d) Lending of Funds--The restrictions of sections 406(a),

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) through (E) of the Code shall not apply to the lending of

funds from the General Account to an ERISA-Covered Account to enable

the ERISA-Covered Account to make an additional pro rata contribution,

provided that such loan--

(A) Is unsecured and non-recourse with respect to participating

plans,

(B) Bears interest at a rate not to exceed the prevailing rate on

90-day Treasury Bills,

(C) Is not callable at any time by the General Account, and

(D) Is prepayable at any time without penalty.

Section II--Exemption for Certain Transactions Involving the Management

of Joint Venture Interests Shared by Two or More Accounts Maintained by

UNUM

The restrictions of certain sections of the Act and the sanctions

resulting from the application of certain parts of section 4975 of the

Code shall not apply to the following transactions resulting from the

sharing of an investment in a real estate joint venture between two or

more Accounts, if the conditions set forth in Section IV are met:

(a) Additional Capital Contributions--(1) The restrictions of

sections 406(a), 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) through (E) of the Code shall not apply to the

making of additional pro rata equity capital contributions by one or

[[Page 56202]]

more Accounts participating in the joint venture.

(2) The restrictions of sections 406(a), 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) through (E) of the

Code shall not apply to the lending of funds from the General Account

to an ERISA-Covered Account to enable the ERISA-Covered Account to make

an additional pro rata capital contribution, provided that such loan--

(A) Is unsecured and non-recourse with respect to the participating

plans,

(B) Bears interest at a rate not to exceed the prevailing rate on

90-day Treasury Bills,

(C) Is not callable at any time by the General Account, and

(D) Is prepayable at any time without penalty.

(3) The restrictions of sections 406(a), 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) through (E) of the

Code shall not apply to the making of Disproportionate [as defined in

section V(e)] additional equity capital contributions (or the failure

to make such additional contributions) in the joint venture by one or

more Accounts which result in an adjustment in the equity ownership

interests of the Accounts in the joint venture on the basis of the fair

market value of such joint venture interests subsequent to such

contributions, provided that each ERISA-Covered Account is given an

opportunity to provide its proportionate share of the additional equity

capital contributions; and

(4) In the event a co-venturer fails to provide all or any part of

its pro rata share of an additional equity capital contribution, the

restrictions of sections 406(a), 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) through (E) of the Code shall

not apply to the making of Disproportionate additional equity capital

contributions to the joint venture by the General Account and an ERISA-

Covered Account up to the amount of such contribution not provided by

the co-venturer which result in an adjustment in the equity ownership

interests of the Accounts in the joint venture on the basis provided in

the joint venture agreement, provided that such ERISA-Covered Account

is given an opportunity to participate in all additional equity capital

contributions on a proportionate basis.

(b) Third Party Purchase Offers--(1) In the case of an offer by a

third party to purchase any property owned by the joint venture, the

restrictions of sections 406(a), 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) through (E) of the Code shall

not apply to the acquisition by the Accounts, including one or more

ERISA-Covered Account[s], on either a proportionate or Disproportionate

basis of a co-venturer's interest in the joint venture in connection

with a decision on behalf of such Accounts to reject such purchase

offer, provided that each ERISA-Covered Account is first given an

opportunity to participate in the acquisition on a proportionate basis;

and

(2) The restrictions of section 406(b)(2) of the Act shall not

apply to any acceptance by UNUM on behalf of two or more Accounts,

including one or more ERISA-Covered Account[s], of an offer by a third

party to purchase a property owned by the joint venture even though the

independent fiduciary for one (but not all) of such ERISA-Covered

Account[s] has not approved the acceptance of the offer, provided that

such declining ERISA-Covered Account[s] are first afforded the

opportunity to buy out both the co-venturer and ``selling'' Account's

interests in the joint venture.

(c) Rights of First Refusal--(1) In the case of the right to

exercise a right of first refusal described in a joint venture

agreement to purchase a co-venturer's interest in the joint venture at

the price offered for such interest by a third party, the restrictions

of sections 406(a), 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) through (E) of the Code shall not apply

to the acquisition by such Accounts, including one or more ERISA-

Covered Account[s], on either a proportionate or Disproportionate basis

of a co-venturer's interest in the joint venture in connection with the

exercise of such a right of first refusal, provided that each ERISA-

Covered Account is first given an opportunity to participate on a

proportionate basis; and

(2) The restrictions of section 406(b)(2) of the Act shall not

apply to any decision by UNUM on behalf of the Accounts not to exercise

such a right of first refusal even though the independent fiduciary for

one (but not all) of such ERISA-Covered Accounts has approved the

exercise of the right of first refusal, provided that none of the

ERISA-Covered Accounts that approved the exercise of the right of first

refusal decides to buy-out the co-venturer on its own.

(d) Buy-Sell Options--(1) In the case of the exercise of a buy-sell

option set forth in the joint venture agreement, the restrictions of

sections 406(a), 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) through (E) of the Code shall not apply to the

acquisition by one or more of the Accounts on either a proportionate or

Disproportionate basis of a co-venturer's interest in the joint venture

in connection with the exercise of such a buy-sell option, provided

that each ERISA-Covered Account is first given the opportunity to

participate on a proportionate basis; and

(2) The restrictions of section 406(b)(2) of the Act shall not

apply to any decision by UNUM on behalf of two or more Accounts,

including one or more ERISA-Covered Account[s], to sell the interest of

such Accounts in the joint venture to a co-venturer even though the

independent fiduciary for one (but not all) of such ERISA-Covered

Account[s] has not approved such sale, provided that such disapproving

ERISA-Covered Account is first afforded the opportunity to purchase the

entire interest of the co-venturer.

Section III--Exemption for Transactions Involving a Joint Venture or

Persons Related to a Joint Venture

The restrictions of section 406(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 (D) of the Code shall not apply, if the

conditions in Section IV are met, to any additional equity capital

contributions to a joint venture by an ERISA-Covered Account that is

participating in an interest in the joint venture, where the joint

venture is a party in interest solely by reason of the ownership on

behalf of the General Account of a 50 percent or more interest in such

joint venture.

Section IV--General Conditions

(a) Each contractholder or prospective contractholder in an ERISA-

Covered Account which shares or proposes to share real estate

investments is provided with a written description of potential

conflicts of interest that may result from the sharing, a copy of the

notice of pendency, and a copy of this exemption.

(b) An independent fiduciary must be appointed on behalf of each

ERISA-Covered Account participating in the sharing of investments. The

independent fiduciary shall be either

[[Page 56203]]

(1) A business organization which has at least five years of

experience with respect to commercial real estate investments, or

(2) A committee composed of three to five individuals who each have

at least five years of experience with respect to commercial real

estate investments.

(c) The independent fiduciary or independent fiduciary committee

member shall not be or consist of UNUM or any of its affiliates.

(d) No organization or individual may serve as an independent

fiduciary for an ERISA-Covered Account for any fiscal year if the gross

income (other than fixed, non-discretionary retirement income) received

by such organization or individual (or any partnership or corporation

of which such organization or individual is an officer, director, or

ten percent or more partner or shareholder) from UNUM, its affiliates

and the ERISA-Covered Accounts for that fiscal year exceeds five

percent of its or his or her annual gross income from all sources for

the prior fiscal year. If such organization or individual had no income

for the prior fiscal year, the five percent limitation shall be applied

with reference to the fiscal year in which such organization or

individual serves as an independent fiduciary.

The income limitation will include income for services rendered to

the Accounts as independent fiduciary under any prohibited transaction

exemption(s) granted by the Department.

In addition, no organization or individual who is an independent

fiduciary, and no partnership or corporation of which such organization

or individual is an officer, director or ten percent or more partner or

shareholder, may acquire any property from, sell any property to, or

borrow any funds from, UNUM, its affiliates, or any Account maintained

by UNUM or its affiliates, during the period that such organization or

individual serves as an independent fiduciary and continuing for a

period of six months after such organization or individual ceases to be

an independent fiduciary, or negotiate any such transaction during the

period that such organization or individual serves as independent

fiduciary.

(e) The independent fiduciary will approve the initial allocation

of a shared investment to an ERISA-Covered Account. In addition, the

independent fiduciary acting on behalf of an ERISA-Covered Account

shall have the responsibility and authority to approve or reject

recommendations made by UNUM or its affiliates for each of the

transactions in this exemption. In the case of a possible transfer or

exchange of any interest in a shared investment between the General

Account and an ERISA-Covered Account, the independent fiduciary shall

also have full authority to negotiate the terms of the transfer. UNUM

shall involve the independent fiduciary in the consideration of

contemplated transactions prior to the making of any decisions, and

shall provide the independent fiduciary with whatever information may

be necessary in making its determinations.

In addition, the independent fiduciary shall review on an as-needed

basis, but not less than twice annually, the shared real estate

investments in the ERISA-Covered Account to determine whether the

shared real estate investments are held in the best interest of the

ERISA-Covered Account.

(f) UNUM maintains for a period of six years from the date of the

transaction the records necessary to enable the persons described in

paragraph (g) of this Section to determine whether the conditions of

this exemption have been met, except that a prohibited transaction will

not be considered to have occurred if, due to circumstances beyond the

control of UNUM or its affiliates, the records are lost or destroyed

prior to the end of the six-year period.

(g)(1) Except as provided in paragraph (2) of this subsection (g)

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

section 504 of the Act, the records referred to in subsection (f) of

this Section 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 a plan participating in an ERISA-Covered

Account who has authority to acquire or dispose of the interests of the

plan, or any duly authorized employee or representative of such

fiduciary,

(C) Any contributing employer to any plan participating in an

ERISA-Covered Account or any duly authorized employee or representative

of such employer, and

(D) Any participant or beneficiary of any plan participating in an

ERISA-Covered Account, or any duly authorized employee or

representative of such participant or beneficiary.

(2) None of the persons described in subparagraphs (B) through (D)

of this subsection (g) shall be authorized to examine trade secrets of

UNUM, any of its affiliates, or commercial or financial information

which is privileged or confidential.

Section V--Definitions

For the purposes of this exemption:

(a) An ``affiliate'' of UNUM includes--

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

intermediaries, controlling, controlled by, or under common control

with UNUM,

(2) Any officer, director or employee of UNUM or person described

in section V(a)(1), and

(3) Any partnership in which UNUM is a partner.

(b) An ``Account'' means the General Account (including the general

accounts of UNUM affiliates), any separate account of UNUM or its

affiliate, or any investment advisory account, trust, limited

partnership or other investment account or fund managed by UNUM.

(c) The ``General Account'' means the general asset account of UNUM

and any of its affiliates which are insurance companies licensed to do

business in at least one State as defined in section 3(10) of the Act.

(d) An ``ERISA-Covered Account'' means any Account (other than the

General Account) which consists solely of the UNUM Plan or other plans

maintained by UNUM or its affiliates.

(e) ``Disproportionate'' means not in proportion to an Account's

existing equity ownership interest in an investment, joint venture or

joint venture interest.

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 August 1, 1997 at 62 FR

41441.

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

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

NatWest Securities Corporation, NatWest Securities Limited, Located in

New York, New York

[Prohibited Transaction Exemption 97-57; Exemption Application Nos. D-

10464, D-10465]

Exemption

Section I--Transactions

A. Effective May 22, 1997, the restrictions of section 406(a)(1)

(A) through (D) of the Employee Retirement Income Security Act of 1974

(the Act) and the taxes imposed by section 4975 (a) and (b) of the

Internal Revenue Code of 1986 (the Code), by reason of section 4975

(c)(1) (A) through (D) of the Code, shall not apply to any purchase or

sale of a security between an employee benefit plan and a broker-dealer

affiliated with NatWest Securities Corporation and subject to British

law

[[Page 56204]]

(NatWest/UK Affiliate), if the following conditions, and the conditions

of Section II, are satisfied:

(1) The NatWest/UK Affiliate customarily purchases and sells

securities for its own account in the ordinary course of its business

as a broker-dealer.

(2) Such transaction is on terms at least as favorable to the plan

as those which the plan could obtain in an arm's length transaction

with an unrelated party.

(3) Neither the NatWest/UK Affiliate nor an affiliate thereof has

discretionary authority or control with respect to the investment of

the plan assets involved in the transaction, or renders investment

advice (within the meaning of 29 CFR 2510.3-21(c)) with respect to

those assets, and the NatWest/UK Affiliate is a party in interest or

disqualified person with respect to the plan assets involved in the

transaction solely by reason of section 3(14)(B) of the Act or section

4975(e)(2)(B) of the Code, or by reason of a relationship to a person

described in such sections. For purposes of this paragraph, the

NatWest/UK Affiliate shall not be deemed to be a fiduciary with respect

to a plan solely by reason of providing securities custodial services

for a plan.

B. Effective May 22, 1997, the restrictions of section 406(a)(1)

(A) through (D) of the Act and the taxes imposed by section 4975 (a)

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

the Code, shall not apply to the lending of securities that are assets

of an employee benefit plan to an NatWest/UK Affiliate if the following

conditions, and the conditions of Section II, are satisfied:

(1) Neither the NatWest/UK Affiliate (the Borrower) nor an

affiliate of the Borrower has discretionary authority or control with

respect to the investment of the plan assets involved in the

transaction, or renders investment advice (within the meaning of 29 CFR

2510.3-21(c)) with respect to those assets;

(2) The plan receives from the Borrower, either by physical

delivery or by book entry in a securities depository located in the

United States, by the close of business on the day on which the

securities lent are delivered to the Borrower, collateral consisting of

U.S. currency, securities issued or guaranteed by the United States

Government or its agencies or instrumentalities, or irrevocable United

States bank letters of credit issued by a person other than the

Borrower or an affiliate thereof, or any combination thereof, having,

as of the close of business on the preceding business day, a market

value (or, in the case of letters of credit, a stated amount) equal to

not less than 100 percent of the then market value of the securities

lent. The collateral referred to in this Section I(B)(2) must be held

in the United States;

(3) Prior to the making of any such loan, the Borrower shall have

furnished the following items to the fiduciary for the plan who is

making decisions on behalf of the plan with respect to the lending of

securities (the Lending Fiduciary): (1) the most recent available

audited statement of the Borrower's financial condition, (2) the most

recent available unaudited statement of the Borrower's financial

condition (if more recent than such audited stated), and (3) a

representation that, at the time the loan is negotiated, there has been

no material adverse change in the Borrower's financial condition since

the date of the most recent financial statement furnished to the plan

that has not been disclosed to the Lending Fiduciary. Such

representation may be made by the Borrower's agreement that each such

loan shall constitute a representation by the Borrower that there has

been no such material adverse change;

(4) The loan is made pursuant to a written loan agreement, the

terms of which 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. Such agreement may be in the form of a master agreement covering

a series of securities-lending transactions;

(5) The plan (1) receives a reasonable fee that is related to the

value of the borrowed securities and the duration of the loan, or (2)

has the opportunity to derive compensation through the investment of

cash collateral. Where the plan has that opportunity, the plan may pay

a loan rebate or similar fee to the Borrower, if such fee is not

greater than the plan would pay an unrelated party in an arm's-length

transaction;

(6) The plan receives the equivalent of all distributions made to

holders of the borrowed securities during the term of the loan,

including, but not limited to, cash dividends, interest payments,

shares of stock as a result of stock splits and rights to purchase

additional securities;

(7) If the market value of the collateral on the close of trading

on a business day is less than 100 percent of the market value of the

borrowed securities at the close of trading on that day, the Borrower

shall deliver, by the close of business on the following business day,

an additional amount of collateral (as described in paragraph (2)) the

market value of which, together with the market value of all previously

delivered collateral, equals at least 100 percent of the market value

of all the borrowed securities as of such preceding day.

Notwithstanding the foregoing, part of the collateral may be returned

to the Borrower if the market value of the collateral exceeds 100

percent of the market value of the borrowed securities, as long as the

market value of the remaining collateral equals at least 100 percent of

the market value of the borrowed securities;

(8) The loan may be terminated by the plan at any time, whereupon

the Borrower shall deliver certificates for securities identical to the

borrowed securities (or the equivalent thereof in the event of

reorganization, recapitalization or merger of the issuer of the

borrowed securities) to the plan within (1) the customary delivery

period for such securities, (2) three business days, or (3) the time

negotiated for such delivery by the plan and the Borrower, whichever is

lesser; and

(9) In the event the loan is terminated and the Borrower fails to

return the borrowed securities or the equivalent thereof within the

time described in paragraph (8) above, then (i) the plan may, under the

terms of the loan agreement, purchase securities identical to the

borrowed securities (or their equivalent as described above) and may

apply the collateral to the payment of the purchase price, any other

obligations of the Borrower under the agreement, and any expenses

associated with the sale and/or purchase, and (ii) the Borrower is

obligated, under the terms of the loan agreement, to pay, and does pay

to the plan, the amount of any remaining obligations and expenses not

covered by the collateral plus interest at a reasonable rate.

Notwithstanding the foregoing, the Borrower may, in the event the

Borrower fails to return borrowed securities as described above,

replace non-cash collateral with an amount of cash not less than the

then current market value of the collateral, provided such replacement

is approved by the Lending Fiduciary.

(10) If the Borrower fails to comply with any condition of this

exemption, in the course of engaging in a securities-lending

transactions, the plan fiduciary who caused the plan to engage in such

transaction shall not be deemed to have caused the plan to engage in a

transaction prohibited by section 406(a)(1) (A) through (D) of the Act

solely by reason of the Borrower's failure to comply with the

conditions of the exemption.

C. Effective May 22, 1997, the restrictions of sections 406(a)(1)

(A)

[[Page 56205]]

through (D) and 406(b)(2) of the Act and the taxes imposed by section

4975 (a) and (b) of the Code shall not apply to any extension of credit

to an employee benefit plan by an NatWest/UK Affiliate to permit the

settlement of securities transactions or in connection with the writing

of options contracts provided that the following conditions are met:

(a) The NatWest/UK Affiliate is not a fiduciary with respect to any

assets of such plan, unless no interest or other consideration is

received by such fiduciary or any affiliate thereof in connection with

such extension of credit; and

(b) Such extension of credit would be lawful under the Securities

Exchange Act of 1934 and any rules or regulations thereunder if such

act, rules or regulations were applicable.

Section II--General Conditions

A. The NatWest/UK Affiliate is registered as a broker-dealer with

the Securities and Futures Authority of the United Kingdom (the

S.F.A.);

B. The NatWest/UK Affiliate is in compliance with all requirements

of Rule 15a-6 (17 CFR 240.15a-6) under the Securities and Exchange Act

of 1934, which provides for foreign broker-dealers a limited exemption

from U.S. registration requirements;

C. Prior to the transaction, the NatWest/UK Affiliate enters into a

written agreement with the plan in which the NatWest/UK Affiliate

consents to the jurisdiction of the courts of the United States with

respect to the transactions covered by this exemption;

D. (1) The NatWest/UK Affiliate maintains or causes to be

maintained within the United States for a period of six years from the

date of such transaction such records as are necessary to enable the

persons described in this section to determine whether the conditions

of this exemption have been met; except that a party in interest with

respect to an employee benefit plan, other than the NatWest/UK

Affiliate, shall not be subject to a civil penalty under section 502(i)

of the Act or the taxes imposed by section 4975 (a) or (b) of the Code,

if such records are not maintained, or are not available for

examination as required by this section, and a prohibited transaction

will not be deemed to have occurred if, due to circumstances beyond the

control of the NatWest/UK Affiliate, such records are lost or destroyed

prior to the end of such six year period;

(2) The records referred to in subsection (1) above are

unconditionally available for examination during normal business hours

by duly authorized employees of (a) the Department of Labor, (b) the

Internal Revenue Service, (c) plan participants and beneficiaries, (d)

any employer of plan participants and beneficiaries, and (e) any

employee organization any of whose members are covered by such plan;

except that none of the persons described in (c) through (e) of this

subsection shall be authorized to examine trade secrets of NatWest

Securities Corporation or the NatWest/UK Affiliate or any commercial or

financial information which is privileged or confidential.

Section III--Definitions

``Affiliate'' of a person shall include: (i) Any person directly or

indirectly, through one or more intermediaries, controlling, controlled

by, or under common control with such other person; (ii) any officer,

director, or partner, employee or relative (as defined in section 3(15)

of the Act) of such other person; and (iii) any corporation or

partnership of which such other person is an officer, director or

partner. For purposes of this definition, the term ``control'' means

the power to exercise a controlling influence over the management or

policies of a person other than an individual.

``Security'' shall include equities, fixed income securities,

options on equity and on fixed income securities, government

obligations, and any other instrument that constitutes a security under

U.S. securities laws. The term ``security'' does not include swap

agreements or other notional principal contracts.

EFFECTIVE DATE: This exemption is effective as of May 22, 1997.

For a more complete statement of the summary of facts and

representations supporting the Department's decision to grant this

exemption refer to the Notice of Proposed Exemption published on

September 5, 1997 at 62 FR 47060.

FOR FURTHER INFORMATION CONTACT: Ronald Willett of the Department,

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

Carl M. Callaway Individual Retirement Account (IRA), Located in

Huntington, West Virginia; [Prohibited Transaction Exemption No. 97-58;

Application No. D-10469]

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 transaction involving a sale or exchange of certain

securities (the Sale) by the IRA to Carl M. Callaway and his wife,

Marianna F. Callaway, both disqualified persons with respect to the

IRA; provided the following conditions are satisfied: (a) the sale or

exchange is a one-time transaction constituting an exchange of

securities approximately equal in value and any difference in value

occurring is immediately eradicated with cash payments by either the

Callaways or the IRA, in order to equalize the value of the exchanged

assets, (b) the IRA incurs no commissions or other expenses in

connection with the transaction, (c) the transaction involves only

securities that have a fair market value on the date of the exchange

which is objectively determinable through independently and regularly

published market prices and quotations, and (d) the IRA tenders as

consideration stock valued at an amount equal to the reported closing

price of the stock on the date of the Sale and the IRA receives U. S.

Treasury notes valued at the reported closing bid on the date of the

Sale, plus the accrued interest the notes earned to the date of the

Sale.

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 September 5, 1997 at 62

FR 47604.

FOR FURTHER INFORMATION CONTACT: Mr. C. E. Beaver 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

[[Page 56206]]

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 accurately describes all material terms of the transaction

which is the subject of the exemption.

Signed at Washington, D.C., this 23rd day of October, 1997.

Ivan Strasfeld,

Director of Exemption Determinations, Pension and Welfare Benefits

Administration, U.S. Department of Labor.

[FR Doc. 97-28593 Filed 10-28-97; 8:45 am]

BILLING CODE 4510-29-P