Proposed Exemptions; The Chicago Corporation
Federal RegisterJan 14, 1997
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DEPARTMENT OF LABOR
Pension and Welfare Benefits Administration
[Application No. D-10172, et al.]
Proposed Exemptions; The Chicago Corporation
AGENCY: Pension and Welfare Benefits Administration, Labor.
ACTION: Notice of Proposed Exemptions.
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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, NW., Washington, DC
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, NW., Washington, DC 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 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 Chicago Corporation (TCC) Located in Chicago, IL
[Application No. D-10172]
Proposed Exemption
Based on the facts and representations set forth in the
application, 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.) \1\
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\1\ For purposes of this proposed exemption, references to the
provisions of Title I of the Act, unless otherwise specified, refer
also to corresponding provisions of the Code.
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Section I. Covered Transactions
If the exemption is granted, 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 to the proposed sale, for cash or other
consideration, by the Midwest Banc Fund IV Group Trust (the BF IV Group
Trust) in which employee benefit plans (the Plans) invest, of certain
securities (the Securities) that are held in the BF IV Group Trust
Portfolio, to a party in interest with respect to a participating Plan,
where the party in interest proposes to acquire or merge with a bank
company (the Bank Company) or a financial services company (the
Financial Services Company) that issued such securities.
In addition, the restrictions of section 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)(E) of the Code, shall
not apply to the payment of a performance fee (the Performance Fee) by
Plans investing in the BF IV Group Trust to TCC.
[[Page 1914]]
This proposed exemption is subect to the following conditions as
set forth below in Section II.
Section II. General Conditions
(a) Prior to a Plan's investment in the BF IV Group Trust, a Plan
fiduciary which is independent of TCC and its affiliates (the
Independent Fiduciary) approves such investment on behalf of the Plan.
(b) Each Plan investing in the BF IV Group Trust has total assets
that are in excess of $50 million.
(c) No Plan invests more than 10 percent of its assets in
beneficial interests (the Beneficial Interests) in the BF IV Group
Trust and such Beneficial Interests held by the Plan may not exceed 25
percent of the Group Trust.
(d) No Plan may invest more than 25 percent of its assets in
investment vehicles (i.e., collective investment funds or separate
accounts) managed or sponsored by TCC and/or its affiliates.
(e) Prior to investing in the BF IV Group Trust,
(1) Each Independent Fiduciary receives a Private Placement
Memorandum and its supplement containing descriptions of all material
facts concerning the purpose, structure and the operation of the BF IV
Group Trust.
(2) An Independent Fiduciary who expresses further interest in the
BF IV Group Trust receives--
(A) A copy of the Group Trust Agreement outlining the
organizational principles, investment objectives and administration of
the BF IV Group Trust, the manner in which Beneficial Interests may be
redeemed, the duties of the parties retained to administer the BF IV
Group Trust and the manner in which BF IV Group Trust assets will be
valued;
(B) A copy of the Investment Management Agreement describing the
duties and responsibilities of TCC, as investment manager of the BF IV
Group Trust, the rate of compensation that it will be paid and
conditions under which TCC may be terminated; and
(C) Copies of the proposed exemption and grant notice covering the
exemptive relief provided herein.
(3) If accepted as an investor in the Group Trust, the Independent
Fiduciary is--
(A) Furnished with the names and addresses of all other
participating Plans;
(B) Required to acknowledge, in writing, prior to purchasing a
Beneficial Interest in the BF IV Group Trust that such Independent
Fiduciary has received copies of such documents; and
(C) Required to acknowledge, in writing, to TCC that such fiduciary
is independent of TCC and its affiliates, capable of making an
independent decision regarding the investment of Plan assets,
knowledgeable with respect to the Plan in administrative matters and
funding matters related thereto, and able to make an informed decision
concerning participation in the BF IV Group Trust.
(f) Each Plan, including the trustee (the Trustee) of the BF IV
Group Trust, receives the following written disclosures from TCC with
respect to its ongoing participation in the BF IV Group Trust:
(1) Within 120 days after the end of each fiscal year of the BF IV
Group Trust as well as at the time of termination, an annual financial
report containing a balance sheet for the BF IV Group Trust as of the
end of such fiscal year and a statement of changes in the financial
position for the fiscal year, as audited and reported upon by
independent, certified public accountants. The annual report will also
disclose the fees paid or accrued to TCC.
(2) Within 60 days after the end of each quarter (except in the
last quarter) of each fiscal year of the BF IV Group Trust, an
unaudited quarterly financial report consisting of at least a balance
sheet for the BF IV Group Trust as of the end of such quarter and a
profit and loss statement for such quarter. The quarterly report will
also specify the fees that are actually paid to or accrued to TCC.
(3) Such other information as may be reasonably requested by the
Plans or the Trustee (e.g., certain trading activity and portfolio
status reports provided to the Trustee as required by Prohibited
Transaction Exemption (PTE) 86-128 (51 FR 41686, November 16, 1986) in
order to comply with the reporting requirements of the Act and the
Code.
(g) At least annually, TCC holds a meeting of the participating
Plans at which time the Independent Fiduciaries of investing Plans are
given the opportunity to decide on whether the BF IV Group Trust, the
Trustee or TCC should be terminated as well as to discuss any aspect of
the BF IV Group Trust and the agreements promulgated thereunder with
TCC.
(h) During each year of the BF IV Group Trust's existence, TCC
representatives are available to confer by telephone or in person with
Independent Fiduciaries on matters concerning such Group Trust.
(i) The terms of all transactions that are entered into on behalf
of the BF IV Group Trust by TCC remain at least as favorable to an
investing Plan as those obtainable in arm's length transactions with
unrelated parties. In this regard, the valuation of assets in the BF IV
Group Trust that is done in connection with the payment of Performance
Fees is based upon independent market quotations or (where the same are
unavailable) determinations made by an independent appraiser (the
Independent Appraiser).
(j) In the case of the sale by the BF IV Group Trust of Securities
to a party in interest with respect to a participating Plan, the party
in interest is not TCC, any employer of a participating Plan, or any
affiliated thereof, and the BF IV Group Trust receives the same terms
as is offered to other shareholders of a Bank Company or a Financial
Services Company.
(k) As to each Plan, the total fees paid to TCC and its affiliates
constitute no more than ``reasonable compensation'' within the meaning
of section 408(b)(2) of the Act.
(l) TCC's Performance Fee is based upon a predetermined percentage
of net realized gains minus net unrealized losses. In this regard,
(1) The Performance Fee is not to be paid before December 31, 2001,
which represents the completion of the projected acquisition phase (the
Acquisition Phase) of the BF IV Group Trust, and not until all
participating Plans have received distributions equal to 100 percent of
their capital contributions made to the BF IV Group Trust.
(2) Prior to the termination of the BF IV Group Trust, no more than
75 percent of the Performance Fee credited to TCC is withdrawn from
such Group Trust.
(3) The Performance Fee account established for TCC is credited
with realized gains and losses and charged for net unrealized losses
and fee payments.
(4) No portion of the Performance Fee is withdrawn if the
Performance Fee Account is in a deficit position.
(5) TCC repays all deficits in its Performance Fee account and it
maintains a 25 percent cushion in such account before receiving any
further fee payment.
(m) Either TCC or the Trustee, on behalf of Plans participating in
the BF IV Group Trust, may terminate the Investment Management
Agreement at any time pursuant to the provisions in such agreement.
(n) TCC maintains, for a period of six years, the records necessary
to enable the persons described in paragraph (o) of this Section II to
determine whether the conditions of this exemption have been met,
except that--
[[Page 1915]]
(1) A prohibited transaction will not be considered to have
occurred if, due to circumstances beyond the control of TCC and/or its
affiliates, the records are lost or destroyed prior to the end of the
six year period; and
(2) No party in interest other than TCC 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 (o) below.
(o)(1) Except as provided in section (o)(2) of this paragraph and
notwithstanding any provisions of subsections (a)(2) and (b) of section
504 of the Act, the records referred to in paragraph (n) of this
Section II shall be unconditionally available at their customary
location during normal business hours by:
(A) Any duly authorized employee or representative of the
Department or the Internal Revenue Service;
(B) Any Independent Fiduciary of a participating Plan or any duly
authorized representative of such Independent Fiduciary;
(C) Any contributing employer to any participating Plan or any duly
authorized employee representative of such employer; and
(D) Any participant or beneficiary of any participating Plan, or
any duly authorized representative of such participant or beneficiary.
(o)(2) None of the persons described above in subparagraphs (B)-(D)
of this paragraph shall be authorized to examine the trade secrets of
TCC or commercial or financial information which is privileged or
confidential.
Section III. Definitions
For purposes of this proposed exemption,
(a) the term ``TCC'' means The Chicago Corporation and any
affiliate of TCC as defined in paragraph (b) of Section III.
(b) An ``affiliate'' of TCC includes--
(1) Any person directly or indirectly through one or more
intermediaries, controlling, controlled by, or under common control
with TCC.
(2) Any officer, director or partner in such person, and
(3) Any corporation or partnership of which such person is an
officer, director or a 5 percent partner or owner.
(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) An ``Independent Fiduciary'' is a Plan fiduciary who is
independent of TCC and its affiliates and is either a Plan
administrator, trustee, named fiduciary, as the recordholder of
Beneficial Interests in the BF IV Group Trust or an investment manager.
Preamble
On September 22, 1993, the Department granted PTE 93-63 (58 FR
49322), a temporary exemption which is effective for a period of eight
years from the date of the grant. PTE 93-63 permits a series of
transactions relating to the (a) sale by the Bank Fund III Group Trust
(the BF III Group Trust) in which Plans invest, of certain Securities
which have been issued by Bank Companies and are held in the BF III
Group Trust's portfolio, to a party in interest with respect to a Plan,
where the party in interest proposes to acquire or merge with the Bank
Company that issued such securities. In addition, PTE 93-63 permits the
BF III Group Trust to purchase Bank Company Securities from the Midwest
Bank Fund I Limited Partnership (MBF I LP) and the Midwest Bank Fund
II, Limited Partnership (MBF II LP), two entities organized by TCC.
Further, PTE 93-63, allows Plans investing in the BF III Group Trust to
pay a Performance Fee to TCC.
The pooled investment fund that is described herein (i.e., the BF
IV Group Trust) is virtually identical to the pooled investment fund
that is described in PTE 93-63 as well as other funds organized by TCC.
The transactions described herein are generally patterned after the
exemptive relief described in PTE 93-63. However, no cross-trading
transactions under this exemption will be permitted. Also, permanent
exemptive relief is being provided.
Summary of Facts and Representations
1. TCC is an investment services firm founded in 1965 in Chicago,
Illinois to serve the needs of financial institutions, corporations,
governments, individual investors, fiduciaries and securities and
commodities dealers. TCC is a registered investment adviser under the
Investment Advisers Act of 1940, as amended. It is also registered as a
broker-dealer under the Securities Exchange Act of 1934 and is a member
in good standing with various national and regional securities
exchanges. By virtue of its exchange memberships, TCC is an exchange
specialist for many securities as well as an over-the-counter market
maker in other securities. As of March 31, 1995, TCC had total assets
of $507 million.
TCC has four principal lines of business. First TCC provides
institutional investors with investment research and trade execution
services for listed and unlisted equity and fixed income securities,
options and futures. Second, TCC's investment banking group provides
corporations with assistance in capital planning and in facilitating
and arranging for corporate mergers and acquisitions as well as
underwriting. Third, TCC's asset management group provides investment
management services to a broad range of clients, including Plans,
through separate accounts. In this regard, TCC currently manages $3.545
billion in client Plan assets in 259 separate accounts. Fourth, TCC
provides securities firms, futures commission merchants and
professional investors with exchange floor execution and clearing
services.
TCC's relevant specialty is provided by its banking group which, in
addition to the services described above, provides management,
investment and capital formation services to collective investment
vehicles which invest in commercial banks and other financial
institutions. The banking group possesses detailed knowledge of the
banking industry and other financial institutions such as consumer
finance companies and stock insurance companies. It researches
financial institutions, underwrites the securities of these
institutions and acts as consultants or organizers of merger and
acquisition projects.
During 1997, it is anticipated that TCC's parent will be acquired
by ABN AMRO North America, Inc., a subsidiary of ABN AMRO Bank N.V., a
global bank headquartered in the Netherlands. The acquisition will not
involve the purchase of the assets of TCC's parent and TCC will retain
its separate corporate identity.
2. In 1989, TCC organized the MBF II LP as a limited partnership
with the investors acting as the limited partners. The general partners
of MBF II LP are partnerships (MidBanc I and MidBanc II), whose general
partners are corporate affiliates of TCC and whose limited partners are
the members of TCC staff who are responsible for managing the MBF II
LP. Less than 25 percent of the funds invested in the MBF II LP have
been provided by Plans. According to the applicant, the portfolios of
these funds do not constitute ``plan assets'' within the meaning of 29
CFR 2510.3-101 and TCC has not assumed the role of a fiduciary with
respect to these investing Plans.\2\
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\2\ TCC also organized the MBF I LP in 1986. This limited
partnership shared the same general partners and types of
investments as MBF II LP. Moreover, less than 25 percent of its
assets were provided by Plans. On January 1, 1995, MBF I LP reached
the end of its term and final liquidations were made.
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[[Page 1916]]
In 1993, TCC completed the organization of the BF III Group Trust
and the Bank Fund III Limited Partnership (the BF III LP) \3\ whose
objectives were somewhat identical to those formulated for the MBF II
LP. Taxable investors acquired an interest in the BF III LP, the
general partner of which is MidBanc III, L.P., a limited partnership of
which Chicorp Management III, Inc. is the general partner.\4\
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\3\ The BF III Group Trust and the BF III LP are collectively
referred to herein as BF III.
\4\ The limited partners of the MidBanc III, L.P. are the
individuals who are responsible for the management of BF III.
Chicorp Management III, Inc. is a wholly owned subsidiary of
Chicorp, Inc., which is the holding company of TCC.
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3. The MBF II LP and the BF III invest in subregional banks that
are located in the United States.\5\ In this regard, these entities
acquire minority investments in Bank Companies that may be potential
candidates for acquisition by other entities or at public offerings.
Interests in Bank Companies can be acquired in freely-traded public
securities, on either exchanges or in the over-the-counter markets, or
in private transactions.
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\5\ In the case of MBF II LP, these banks are located in the
Midwestern United States. In the case of BF III and proposed BF IV
Group Trust, there are no geographic restrictions.
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4. The MBF II LP and BF III have pre-defined terms of existence and
defined activity periods within those terms. For example, the MBF II LP
has an eight year term between organization and liquidation. The first
five years represent the acquisition phase (the Acquisition phase).
Once those five years elapse, no further acquisitions of Bank Company
Securities can be made except under limited circumstances. The last
three years of the term of the MFB II LP will be used to liquidate the
portfolio.
5. TCC proposes to organize Banc Fund IV (BF IV) as two separate
and distinct entities sharing the same investment philosophy and
strategy, similar (if not identical) portfolios and operational methods
as those formulated for the MBF II LP and the BF III. Taxable investors
will acquire an interest in the Banc Fund IV Limited Partnership (the
BF IV LP). The general partner of the BF IV LP will be MidBanc IV,
L.P., a limited partnership of which Chicorp Management IV, Inc., a
wholly owned subsidiary of TCC's parent corporation, is the general
partner.
In addition to the BF IV LP, approximately 5-10 Plans will acquire
Beneficial Interests in the BF IV Group Trust which will be a tax-
exempt entity pursuant to Revenue Ruling 81-100, 1981-1 C.B. 326.\6\
The BF IV Group Trust and the BF IV LP will not be organized unless $50
million in capital contribution commitments are subscribed for by
investors in both entities. Unless extended, the BF IV Group Trust and
the BF IV LP will terminate on December 31, 2003.
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\6\ TCC believes it is appropriate to organize the BF IV Group
Trust separate from the BF IV LP in order that the assets of the
Group Trust may be regarded as ``plan assets'' and the requirements
of the Act may otherwise be complied with in a separate entity.
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Investments by both the BF IV Group Trust and the BF IV LP may be
made in the equities and debt instruments of Bank Companies such as
commercial banks and other depository institutions. BF IV may also
acquire interests in Financial Services Companies such as consumer
finance companies and demutualizing insurance companies. All of these
entities will be located in the United States.
6. It is anticipated that Citibank will act as the trustee of the
BF IV Group Trust. In this capacity, the Trustee will be responsible
for retaining TCC or such other investment manager for the BF IV Group
Trust. The Trustee will also be responsible for monitoring TCC's
compliance with the established investment philosophy of the BF IV
Group Trust and for policing TCC's adherence to the provisions of the
Investment Management Agreement.
For services rendered, the Trustee is entitled to receive the
following annualized fees that will be paid quarterly and in arrears:
(a) a base fee of $1,500; (b) a proportionate fee based upon the
combined market value of the BF IV Group Trust and the BF IV LP at the
beginning of the quarter representing (i) 0.02 percent of the first
$100 million and (ii) 0.01 percent of any amount over $100 million; and
a transaction fee of $12 per purchase or sale and a disbursement fee of
$8 per payment of funds from the BF IV Group Trust. In accordance with
the provisions of the Group Trust Agreement, the Trustee may be removed
by a vote of Plans holding a majority of the Beneficial Interests in
the BF IV Group Trust, provided such Plans give the Trustee 30 days'
advance written notice of their intent to terminate the Trustee.
Although TCC may have and may have had business relationships with
the Trustee, there will be no control relationship or ownership-based
affiliation between TCC and the Trustee. Further, no Plan sponsored by
TCC will be permitted to invest in the BF IV Group Trust.\7\
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\7\ Although TCC and the Trustee will not be affiliated with, or
under the control of or controlling any participating Plan, the
applicant represents that it is likely that certain participating
Plans may have a pre-existing relationship with TCC in the form of
investment in the MBF II LP or the BF III. The applicant believes it
is possible that a Plan participating in the BF IV Group Trust may
utilize the services of the Trustee with respect to certain of its
other assets that are not invested in such Group Trust. In this
regard, the applicant is not requesting, nor is the Department
providing, exemptive relief with respect therefor.
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7. Interests in the BF IV Group Trust are referred to as
``Beneficial Interests.'' \8\ All investors that are beneficiaries of
the BF IV Group Trust must evidence the following characteristics in
order to acquire Beneficial Interests: (a) Each must commit to making
at least $1 million in initial capital contributions; (b) each investor
must be a Plan; (c) each Plan mut have at least $50 million in assets;
(d) each Plan must agree to incorporate the terms of the Group Trust
Agreement into its own trust agreement; (e) no Plan may invest more
than 10 percent of its assets in Beneficial Interests in the BF IV
Group Trust and such Beneficial Interests held by a Plan may not exceed
25 percent of such Group Trust; and (f) no Plan may subscribe for
Beneficial Interests which, when aggregated with all other Plan assets
that are subject to investment funds or separate accounts managed by
TCC and/or its affiliates, is valued in excess of 25 percent of such
Plan's net assets.
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\8\ The Department is not proposing, nor in the applicant
requesting herein, exemptive relief for the purchase and sale of
Beneficial Interests in the BF IV Group Trust between the Trustee
and the investing Plans beyond that provided under section 408(b)(8)
of the Act.
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8. The Group Trust Agreement provides that each Plan's commitment
to contribute will be divided into 20 equal segments. TCC, as
investment manager, may call any amount of these installments, upon 14
days' advance written notice, when cash is needed to fund the
acquisition of the Securities.\9\ However, there are two limitations
upon TCC's power to call contributions. First,
[[Page 1917]]
no more than 50 percent of the contribution commitment may be called in
any twelve month period. Second, TCC cannot call any contributions
after the sixth anniversary date of the inception of the BF IV Group
Trust (the period running from the date on which initial capital
contributions are made to such sixth anniversary being referred to as
``the Acquisition Period'').
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\9\ If an investing Plan cannot or does not meet a capital call,
the Trust Agreement provides that ten days after the investor
receives notice of default on a capital call, TCC may (a) permit the
investor's continued participation in the BF IV Group Trust with a
commensurate reduction in both the investor's proportionate interest
in such Group Trust and aggregate size of the Group Trust; (b)
declare the investor's entire capital commitment due and pursue
collection of the same; or (c) expel, at fair market value, the
defaulting investor and offer its interest in the BF IV Group Trust
first to the non-defaulting investors and then to non-investors who
are qualified to invest in such Group Trust. In making the choice
between these alternatives, it is represented that TCC will be
guided by then-current investment strategies and the best interest
of the non-defaulting investors.
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9. The terms of the BF IV Group Trust prescribe the content of the
Investment Management Agreement. For example, TCC, at its own expense,
will provide the BF IV Group Trust with personnel who are able to
perform the administrative functions of the Group Trust. In addition,
TCC, at its own expense, will provide the BF IV Group Trust with office
space, telephones, copying machines, postage and all other necessary
items of office services. Further, TCC will control proxy voting on all
portfolio securities.\10\
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\10\ The Department is not providing exemptive relief herein for
any prohibited transactions that may arise as a result of proxy
voting on the part of TCC. The Department also notes that the
general standards of fiduciary conduct promulgated under the Act
would apply to such voting practices.
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The Investment Management Agreement permits TCC to provide
brokerage services in an agency capacity. To the extent that TCC
utilizes its own services in connection with brokerage services
provided to the BF IV Group Trust, it will comply fully with state and
federal securities laws as well as with PTE 86-128.\11\
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\11\ The Department expresses no opinion on whether the
effecting of securities transactions by TCC will comply with the
terms and conditions of PTE 86-128.
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The Investment Management Agreement may be terminated by either the
Trustee, on behalf of the Plans, or by TCC at any time, subject to the
following provisions. If the termination is a ``Justified
Termination,'' \12\ the Investment Management Agreement can be
terminated by the Trustee unilaterally. However, if the termination is
a ``Non-Justified Termination,'' it cannot be terminated unilaterally
by the Trustee. In such case, the Trustee must first obtain the
approval of Plans holding at least two-thirds of the Beneficial
Interests in the BF IV Group Trust. Further, as a precondition to a
``Non-Justified Termination,'' the terminating party must provide the
other party with 60 days' advance written notice of its intent to
terminate.
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\12\ A Justified Termination will occur if it is caused by: (a)
a material breach of the Investment Management Agreement by the
party that is not seeking to terminate such Agreement; (b) a
material violation of the Act that has already occurred or will
occur absent termination of the Investment Management Agreement; or
(c) the disassociation of key personnel (i.e., those upon whom the
Plans relied in making their investment) from TCC without being
replaced by individuals who are approved by a majority of the Plans.
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10. In general, Beneficial Interests in the BF IV Group Trust will
not be assignable, and no Plan may assign or otherwise transfer, pledge
or otherwise encumber any or all of its interest in the Group Trust
except for the purpose of redemption. Redemptions are limited to
situations where (a) a replacement Plan is available from either
current Plans investing in BF IV or there are new, qualified investors;
(b) a Plan submits to TCC and the Trustee, a written opinion of counsel
to the effect that the Plan's continued participation in the BF IV
Group Trust would violate the Act and that relief from the violation
cannot be obtained; (c) the Plan loses its tax-exempt status and that
loss threatens the tax-exempt status of the BF IV Group Trust; and (d)
the BF IV Group Trust loses its tax-exempt status or fails to obtain
the exemptive relief proposed herein for the necessary operation of
such Group Trust. This information will be disclosed to investors.
11. The decision to participate in the BF IV Group Trust will be
made by a plan fiduciary who is independent of TCC and the Trustee. In
each instance, the Plan fiduciary who makes the investment decision
will agree not to rely on either the advice of TCC or the Trustee as
the primary basis for a Plan's investment and the Independent Fiduciary
will be specifically required to do so in every instance.\13\ TCC
represents that the decision of a Plan to invest in the BF IV Group
Trust will be made by an unrelated Plan fiduciary acting on the basis
of his or her own investigation into the advisability of investing in
the Group Trust.\14\
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\13\ The Department notes that the general standards of
fiduciary conduct promulgated under the Act would apply to the
participation in the BF IV Group Trust by an Independent Fiduciary.
Section 404 of the Act requires that a fiduciary discharge his
duties respecting a plan solely in the interest of the plan's
participants and beneficiaries and in a prudent fashion.
Accordingly, an Independent Fiduciary must act prudently with
respect to the decision to invest in the BF IV Group Trust. The
Department expects that an Independent Fiduciary, prior to investing
in the BF IV Group Trust, to fully understand all aspects of such
investment following disclosure by TCC of all relevant information.
(For a further discussion of these disclosures, see Representation
12 above.)
\14\ The Department is not expressing an opinion on whether TCC
or the Trustee would be deemed to be fiduciaries under section
3(21)(A)(ii) of the Act with respect to a Plan's investment in the
BF IV Group Trust. The Department is also not proposing relief for
the rendering of investment advice in connection with the
acquisition of Beneficial Interests in the BF IV Group Trust.
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12. An Independent Fiduciary of each Plan proposing to invest in
the BF IV Group Trust will be provided with a copy of the Private
Placement Memorandum by TCC. The Private Placement Memorandum will
describe all material facts concerning the purpose, structure and
operation of the BF IV Group Trust. If the Independent Fiduciary
expresses further interest in participating in the BF IV Group Trust,
such Independent Fiduciary will be provided with copies of the Group
Trust Agreement outlining the organization principles, investment
objectives and administration of the BF IV Group Trust, the procedure
for the redemption of Beneficial Interests, the duties of the parties
retained to administer the BF IV Group Trust and the manner in which
Group Trust assets will be valued. The Independent Fiduciary will also
be provided with a copy of the Investment Management Agreement which
describes the duties and responsibilities of TCC, as investment manager
of the BF IV Group Trust, the fees that will be paid to TCC, the
conditions under which TCC may be terminated and the functions of the
Independent Appraiser which may be retained under certain
circumstances. Once the Independent Fiduciary has made a decision to
invest in the BF IV Group Trust, TCC will provide such Independent
Fiduciary with the names and addresses of all other participating
Plans. The Independent Fiduciary will be required to acknowledge, in
writing, prior to purchasing a Beneficial Interest in the BF IV Group
Trust that such fiduciary has received copies of such documents.
The Independent Fiduciary will also be required to acknowledge, in
writing, to TCC that such fiduciary is independent of TCC and its
affiliates, capable of making an independent decision regarding the
investment of Plan assets, knowledgeable with respect to the Plan in
administrative matters and funding matters related thereto, and able to
make an informed decision concerning participation in the BF IV Group
Trust.
13. TCC will prepare, or cause to be prepared on behalf of the BF
IV Group Trust, the following reports with respect to the ongoing
operations of the Group Trust: (a) Trading Activity and Portfolio
Status Reports, for the Trustees, as required by PTE 86-128; (b) annual
audited financial statements for the Trustee and the Plans; and (c)
quarterly unaudited financial statements for the Trustee and Plan
investors. The annual financial statements will contain a balance sheet
for the BF IV Group Trust as of the end of the applicable fiscal year
and a statement describing changes in the financial position for the
fiscal year, as audited and reported upon by independent, certified
public accountants. The annual financial report
[[Page 1918]]
will also specify the fees that are payable or accruable to TCC. TCC
will make the annual financial report available to the Trustee and each
Plan within 120 days after the end of each fiscal year of the BF IV
Group Trust. Within 60 days after the end of each quarter (except in
the last quarter) of each fiscal year of the BF IV Group Trust, TCC
will prepare and distribute an unaudited quarterly financial report to
the Trustee and each Plan investor. The report will consist of at least
a balance sheet for the BF IV Group Trust as of the end of fiscal year
quarter and a profit and loss statement for such quarter. The quarterly
financial report will also disclose the fees that are payable or
accruable to TCC.
In addition to the foregoing reports, TCC will prepare and
distribute to the BF IV Group Trust and each Plan such other
information as may be reasonably requested by the Plans, including such
information as a Plan may request in order to comply with the reporting
requirements of the Act or Code.
14. A meeting of the participating Plans and TCC will be held at
least annually. The meeting will afford Independent Fiduciaries an
opportunity to decide on whether the BF IV Group Trust should be
terminated, whether the Trustee should be removed or whether the
Investment Management Agreement should be terminated, if the situation
warrants. However, before any termination can take place, the advance
notification requirements for termination discussed above must be
complied with. Also at the annual meeting, TCC representatives will be
available to discuss any aspect of the BF IV Group Trust and the
agreements promulgated thereunder with Independent Fiduciaries. Such
meetings will be conducted in either TCC's offices or in the offices of
the Independent Fiduciaries.
15. During the Acquisition Phase for the BF IV Group Trust, any net
gains realized on portfolio sales will be distributed to Plan investors
but the original cost of the Security that is sold will be
reinvested.\15\ From the seventh year of the Group Trust through its
termination, the net proceeds from sales of portfolio Securities will
be distributed unless the proceeds are needed to honor pre-seventh year
investment commitments or to protect pre-seventh year investments.\16\
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\15\ According to the applicant, cash dividends that are
received by the BF IV Group Trust from investments in Securities
will be distributed to investors on an annual basis. Stock dividends
will be retained by the BF IV Group Trust until the original
portfolio investment is sold.
\16\ The applicant explains that these exceptions to the general
distribution rules are disclosed to investors in the Group Trust
Agreement. With respect to the commitment exception, the applicant
states that it is meant to cover situations where the BF IV Group
Trust enters into an installment-type purchase agreement or some
other contingency contract prior to the seventh year of its
existence. In this connection, the applicant explains that TCC may
have determined that the BF IV Group Trust should own a certain
percentage of the Securities of a Bank Company or a Financial
Services Company, but the requisite number of shares might not be
available at that time. Under these circumstances, the applicant
states that the BF IV Group Trust might enter into an agreement to
purchase such Securities as they become available, even if the
availability does not occur until after the sixth year.
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16. Under the Investment Management Agreement, two types of fees
will be payable to TCC by the BF IV Group Trust. These fees are the
Management Fee and the Performance Fee, the components of which are
described below. TCC's Management Fee, which is independent of the
Performance Fee, is intended to cover the day-to-day operating expenses
of the BF IV Group Trust. TCC represents that the Management Fee is
covered by the statutory exemptive relief available under section
408(b)(2) of the Act.\17\ With respect to the Performance Fee, TCC is
requesting administrative exemptive relief from the Department.
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\17\ The Department expresses no opinion herein on whether TCC's
receipt of the Management Fee will satisfy the terms and conditions
of section 408(b)(2) of the Act.
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(a) The annualized Management Fee will be payable to TCC monthly in
arrears during each fiscal year the BF IV Group Trust is in existence.
The Management Fee will be based upon a percentage of the aggregate
capital contributions committed to both the BF IV Group Trust and the
BF IV LP (the Management Fee Base). It will be equal to (1) the sum of
5 percent of the first $35 million of the Management Fee Base plus (2)
0.84 percent of the Management Fee Base in excess of $35 million,
multiplied by (3) a fraction (the Trust Share), the numerator of which
is the amount of capital contributions committed to the BF IV Group
Trust and the denominator of which is the aggregate of the capital
contributions made to the BF IV Group Trust and the BF IV LP.\18\ The
Management Fee will not exceed 2 percent of committed capital when all
capital is contributed, even if BF IV is capitalized at less than $125
million.
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\18\ By aggregating capital contributions that are made by the
BF IV Group Trust with those made to the BF IV LP and by allocating
the dollar amount between both entities in proportion to their
respective size, TCC represents that all investors will be charged a
lower Management Fee. TCC believes that by computing the Management
Fee in this manner more appropriately reflects the unified
investment management of the BF IV Group Trust and the BF IV LP. The
Department, however, expresses no opinion as to whether this
arrangement for computing the Management Fee satisfies the
``reasonable compensation'' requirements of section 408(b)(2) of the
Act and the applicable regulations.
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After the end of the Acquisition Phase, the Management Fee will be
subject to certain adjustments, particularly as distributions are made
to Plan investors.\19\ If, as a result of distributions to Plan
investors, capital contributions made by Plans are reduced to 50
percent or less of the original aggregate capital contributions to the
BF IV Group Trust, the Trust Share of the Management Fee will be
reduced to 70 percent of the amount otherwise payable, effective for
fiscal years subsequent to the year in which said payment was
completed, and upon the payment to the Plans of an amount sufficient to
reduce to 25 percent or less of their total capital contributions to
the BF IV Group Trust, the Trust Share of the Management Fee will be
reduced to 50 percent of the amount otherwise payable, effective for
fiscal years subsequent to the year in which said payment was
completed.
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\19\ All distributions, with the exception of interest income
and cash dividends, count as returns of capital.
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(b) The Performance Fee that will be accruable to TCC for each
fiscal year of the Group Trust, will be equal to 20 percent of ((1) the
excess, if any of (a) the cumulative total of realized capital gains
from the inception of the BF IV Group Trust through the end of such
fiscal year over (b) the cumulative total of realized capital losses
during the term, less (2) any unrealized losses in the BF IV Group
Trust portfolio at the end of such period in excess of unrealized
appreciation in the Portfolio) and, the amount of such fee previously
accrued. The amount of the annual Performance Fee that is accruable to
TCC will be determined after the annual audit of the BF IV Group Trust
as described in Representation 13. The calculation of the Performance
Fee will be made within 60 days of the BF IV Group Trust's fiscal year
end. Specifically, Securities will be valued as of the close of
business on the last day of the Group Trust's fiscal year.
The Performance Fee will be further subject to the following terms
and conditions:
(1) Fee Base. As stated above, the amount credited to TCC as the
Performance Fee will be equal to a percentage of realized gains minus
realized and net unrealized losses. Such
[[Page 1919]]
amount will be credited to TCC annually.
(2) Limited Deferral/Return of Capital. The Performance Fee will be
paid after December 31, 2001 which is the completion of the Acquisition
Phase for the BF IV Group Trust and it cannot be paid until all
participating Plans have received distributions equal to 100 percent of
their capital contributions made to the BF IV Group Trust.\20\
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\20\ For purposes of calculating the Performance Fee, cash
dividends and interest are not included in the computation of the
return of capital to Plan investors. As such, cash dividends do not
affect the calculation of the amount of the Performance Fee or the
time such fee can be first paid, even if the return of capital
occurs before December 31, 2001.
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(3) Reduced Availability. Prior to the termination of the Group
Trust, only 75 percent of what is credited to TCC as the Performance
Fee may be withdrawn from the BF IV Group Trust after the Acquisition
Phase.
(4) Charges. The Performance Fee account will be charged for
realized losses, net unrealized losses and fee payments. Thus, the fee
cannot be drawn when the Performance Fee account is in a deficit
position.
(5) Fee Repayment/25 Percent Cushion. TCC must repay any deficit in
the Performance Fee account and it must also maintain a 25 percent
cushion in such account.
The following examples illustrate the calculation of TCC's
Performance Fee. Although the Performance Fee is paid annually and
there are only two years of the BF IV Group Trust's expected term
during which this fee can be drawn upon (i.e., 2002 and 2003), for
purposes of illustration, four draw years have been assumed.
Example #1
----------------------------------------------------------------------------------------------------------------
Cumulative Performance Draw or
Year net position fee account Maximum draw refund
----------------------------------------------------------------------------------------------------------------
1....................................................... $800 $160 $120 $120
2....................................................... 200 40 30 (90)
3....................................................... 1,000 200 150 120
4....................................................... 700 140 105 (45)
----------------------------------------------------------------------------------------------------------------
Year 1 Assume that when the Performance Fee first becomes payable
in 2002, the BF IV Group Trust's Cumulative Net Position is $800. TCC's
Performance Fee is 20% of $200 or $160. TCC may draw 75% of the $160 or
$120.\21\
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\21\ The assumption is, for purposes of this example, that all
Plans investing in the BF IV Group Trust have received a 100 percent
return of their capital contributions.
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Year 2 The BF IV Group Trust's Cumulative Net Position at the end
of the Year 2 is $200. The Performance Fee is 20% of $200 or $40. TCC
is entitled to draw $30, but since it has previously drawn $120, it
must refund $90.
Year 3 The BF IV Group Trust now has a Cumulative Net Position of
$1,000. The Performance Fee is $200 with a permitted draw of $150.
Because TCC has previously draw a net amount of $30 at the end of Year
2 (i.e., $120-$90), it may now draw an additional $120.
Year 4 The BF IV Group Trust's Cumulative Net Position falls to
$700 and the Performance Fee falls to $140. The 75% draw equals $105,
but TCC has previously drawn a total of $150 (i.e., $120-$90+$120).
Therefore, TCC must make a refund to the BF IV Group Trust of $45.
Example #2
----------------------------------------------------------------------------------------------------------------
Cumulative Performance Draw or
Year net position fee account Maximum draw refund
----------------------------------------------------------------------------------------------------------------
1....................................................... $2,000 $400 $300 $300
2....................................................... 1,000 200 150 (150)
3....................................................... 500 100 75 (75)
4....................................................... 900 180 135 60
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Year 1 Assume that when the Performance Fee first becomes payable
in 2002, the Cumulative Net Position for the BF IV Group Trust is
$2,000. TCC's Performance Fee is 20% of $2,000 or $400. TCC may draw
75% of the $400 fee or $300. $100 or 25% of the draw amount must be
left in the BF IV Group Trust as a cushion.\22\
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\22\ The assumption is again, for purposes of this example, that
all Plans investing in the BF IV Group Trust have received a 100
percent return of their capital contributions.
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Year 2 The Cumulative Net Position for the BF IV Group Trust at
the end of Year 2 has fallen to $1,000. The Performance Fee is 20% of
$1,000 or $200. TCC is entitled to draw $150, but since it has
previously drawn $300, it must refund $150.
Year 3 The Cumulative Net Position for the BF IV Group Trust has
fallen to $500. The Performance Fee now falls to $100 (i.e., 20% of
$500) with a permitted draw of $75 and a cushion of $25. Because TCC
has previously drawn $150 ($300-$150), it must make a refund to the BF
IV Group Trust of $75.
Year 4 The Cumulative Net Position for the BF IV Group Trust is
$900 at the end of Year 4. TCC's Performance Fee is 20% of $900 of
$180. The 75% draw on the Performance Fee equals $135. However, since
TCC has previously drawn a total of $75 ($300-$150-$75), it may now
draw a Performance Fee of $60.
17. In the event of a premature termination of the Investment
Management Agreement, special fee arrangements will be effective as
follows:
(a) If the termination occurs prior to the third full fiscal year
of the Investment Management Agreement's existence (i.e., before
January 1, 1999) and it is either a Justified Termination by TCC or a
non-Justified Termination by the Trustee, TCC will be entitled to
receive a fee equal to the sum of (1) 20 percent of net realized gains
to the date the agreement was terminated plus (2) 20 percent of the
aggregate of unrealized gains net of unrealized losses
[[Page 1920]]
determined on the date the agreement was terminated. (For purposes of
determining net unrealized gains or net unrealized losses, TCC will
utilize an independent appraiser to value Securities for which there
are no independent market quotations.) Payment of this fee will be
deferred until the termination of the BF IV Group Trust. In addition,
TCC will not be required to make payments to the BF IV Group Trust in
the event a loss to such Group Trust occurs.
(b) If the termination of the Investment Management Agreement
occurs after the third full fiscal year of the BF IV Group Trust and is
either a Non-Justified Termination by the Trustee or a Justified
Termination by TCC, TCC will be entitled to its regular Performance
Fee. However, payment will be deferred to the termination of the Group
Trust.
(c) If TCC declares a Non-Justified Termination at any time, it has
no enforceable right to receive a Performance Fee under the terms of
the Investment Management Agreement.
(d) If the Trustee, on behalf of the BF IV Group Trust, declares a
Justified Termination at any time, TCC has no enforceable right to
receive a Performance Fee under the terms of the Investment Management
Agreement. However, if the Justified Termination involves a violation
of the Act and such violation has not been caused by TCC's gross
misconduct (e.g., the law changes in a manner that would prohibit
prospectively an important part of TCC's management of the BF IV Group
Trust), TCC will be entitled to the Performance Fee it would have
earned through the date of the termination of the Investment Management
Agreement. Payment will again be deferred until the termination of the
BF IV Group Trust.\23\
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\23\ If an early termination of the Investment Management
Agreement occurs, the applicant states that the Trustee, on behalf
of the BF IV Group Trust, and TCC will initially attempt to agree on
whether the termination is Justified or Non-Justified. If the
parties are unable to agree, judicial proceedings will be instituted
as a final means of resolution.
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18. The BF IV Group Trust will terminate upon the earliest to occur
of (a) the complete distribution of its assets, (b) a vote in favor of
termination by two-thirds of the Plans holding Beneficial Interests or
(c) December 31, 2003. The Group Trust may be extended by a two-thirds
affirmative vote of those Plans holding Beneficial Interests therein.
(For termination of the Trustee under the Group Trust Agreement and the
termination of TCC under the Investment Management Agreement, see
Representations 6, 9 and 17 of this proposed exemption.)
Upon termination of the BF IV Group Trust, all portfolio positions
will be liquidated, Group Trust expenses (including TCC's Performance
Fee) will be paid and distributions will be made. If all assets cannot
be converted into cash or if it would be disadvantageous to liquidate
every asset, remaining assets may be distributed in-kind. TCC will then
receive a fractional portion of its fee in-kind.
TCC has exclusive authority over the sale of portfolio securities
so it will make liquidation decisions. The Trustee will pay all
expenses of the BF IV Group Trust at the direction of TCC. Although TCC
will be responsible for directing the Trustee to make distributions,
TCC's discretion will not be unlimited. Rather, as amounts are
available for distribution, TCC will be required to make distributions
in accordance with the provisions of the Group Trust Agreement.
The following example illustrates the manner in which in-kind
distributions will be made by TCC:
Assume that all Plans investing in the BF IV Group Trust have
received a 100% return of capital. Assume also that there are only two
Plans investing in the BF IV Group Trust. Plan A has a Beneficial
Interest worth $60 and Plan B has a Beneficial Interest worth $40.
The BF IV Group Trust holds 100 shares of Securities in Bank X
which it acquired for $5 per share. Upon termination of the Group
Trust, Bank X Securities is worth $7 per share.
The total unrealized gain attributable to Bank X Securities is
($7-$5) x 100=$200.
TCC's Performance Fee is equal to $200 x 20%=$40. TCC receives
$40$7=5.7 shares of Bank X Securities.
Plan A receives 60% x 94.3=56.6 shares of Bank X Securities.
Plan B receives 40% x 94.3=37.7 shares of Bank X Securities.
19. Valuations of (and for) the BF IV Group Trust will be needed
for redemptions, acquisitions by the BF IV Group Trust, in connection
with in-kind distributions and to pay TCC's Performance Fee. The
valuations will be made by TCC for Securities for which independent
market quotations are readily available. In situations where no
independent market quotations are readily available, an Independent
Appraiser will be appointed as described below.
(a) National Exchange--Regular Trades. Any Security which is listed
on a national securities exchange will be valued based on its last
sales price on the national securities exchange on which the security
is principally traded on the valuation date.\24\ If the valuation date
is not a date on which the exchange was open for trading, the value
will be determined in the same manner as if the valuation date was the
last prior date on which the exchange was open for trading.
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\24\ The applicant explains that the phrase ``principally
traded'' means that if a Security is traded on more than one
exchange and if the trade prices differ between exchanges, the value
will be taken from the exchange on which the largest volume of that
security has traded.
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(b) National Exchange--No Trades. If no sale of a Security listed
on a national securities exchange occurred on either of the dates
described in clause (a) above, the security will be valued based on the
last bid price on the exchange on which the security was publicly-
traded.\25\
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\25\ The applicant explains that the most recent trade price is
not used to value a Security in this instance because it may be too
dated to provide an accurate estimate of value. Instead, the
applicant considers the bid price to be indicative of the current
value at which someone would be willing to acquire a Security on the
valuation date. The applicant further notes that the use of the bid
price rather than the previous trading or closing price in valuing a
Security provides a conservative valuation approach which will
result, in most instances, in a lower Performance Fee payable to
TCC.
The Department assumes that the bid price described herein
represents active bids and is a true indicator of market prices.
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(c) No Independent Market or No Listing--Use of the Independent
Appraiser. In the event that there is no independent market for a
Security or the Security is not listed on a national securities
exchange (e.g., a small bank with 5 shareholders), the Independent
Appraiser will be required to value such securities. TCC will utilize
the Independent Appraiser to value Securities in connection with the
in-kind distributions by the BF IV Group Trust, the redemption of
Beneficial Interests in the BF IV Group Trust or to determine TCC's
Performance Fee.
Although TCC will nominate the Independent Appraiser, Plans will be
given the option of either approving or disapproving of the nominee.
The Independent Appraiser will not be appointed absent the affirmative
written approval of a majority of the Plans investing in the BF IV
Group Trust. However, the Plans will have no veto power over TCC's
decision that an Independent Appraiser is required.
Each member of the Independent Appraiser (currently, the same
advisory committee serving in this capacity for the MBF II LP and the
BF III) must be experienced in the valuation of subregional banks as
well as in the business of performing valuations. In addition, each
member of the Independent Appraiser must not be
[[Page 1921]]
controlled by (or control) TCC and must not receive more than 5 percent
of their lowest annual income from TCC or the Trustee, either during
the term of BF IV or in the three years preceding its creation.
Individual members of the Independent Appraiser or the entire committee
may be removed by Plans holding 50 percent or more of the Beneficial
Interests in the Group Trust. A majority of the Plans and TCC must
approve a replacement Independent Appraiser. If the Plans and TCC
cannot agree, upon such replacement, the firm of Peat Marwick Main &
Co. will be appointed.
The Independent Appraiser will use the principles set forth in
Revenue Ruling 59-60 and the Department's proposed ``Adequate
Consideration'' regulations (53 FR 17632, May 17, 1988) to determine
fair market value. The valuations made by the Independent Appraiser
will be binding upon TCC. In addition, the Independent Appraiser will
issue reports to TCC, the Trustee and the Plans participating in the BF
IV Group Trust which set forth the Independent Appraiser's pricing
methodology and rationale for Securities it has been asked to value.
Such reports will be issued after each required valuation and they will
comply with the aforementioned regulations.
20. With respect to transactions which may arise during the
existence of the BF IV Group Trust and which involve parties in
interest to participating Plans, TCC requests exemptive relief from the
Department from the provisions of section 406(a) of the Act.
Specifically, TCC requests exemptive relief where the BF IV Group Trust
sells Securities held in its portfolio for cash or other securities to
a party in interest with respect to a participating Plan in the context
of an acquisition or a merger by the party in interest, provided the
party in interest is not an affiliate of TCC. TCC represents that the
BF IV Group Trust will receive the same offer that other shareholders
of the Bank Company or Financial Services Company will receive. Because
the BF IV Group Trust will always be a minority shareholder in such
situation, TCC states that the BF IV Group Trust will be in the
position of a beneficiary of the acquisition offer and it will not be
in the position of an active player in the merger or acquisition
transactions.
21. In summary, it is represented that the proposed transactions
meet the statutory criteria for an exemption under section 408(a) of
the Act because:
(a) The participation of Plans in the BF IV Group Trust will be
approved by an Independent Fiduciary.
(b) Each Plan investing in the BF IV Group Trust will have assets
that are in excess of $50 million.
(c) No Plan will invest more than 10 percent of its assets in
Beneficial Interests in the BF IV Group Trust and such Beneficial
Interests held by the Plan will not exceed 25 percent of such Group
Trust.
(d) No Plan will invest more than 25 percent of its assets in
investment vehicles (i.e., collective investment funds and separate
accounts) managed or sponsored by TCC and/or its affiliates.
(e) Prior to making an investment in the BF IV Group Trust, each
Independent Fiduciary contemplating investing therein will receive
offering materials which disclose all material facts concerning the
purpose, structure and operation of the Group Trust and the fees paid
to TCC.
(f) Each Plan investing in the BF IV Group Trust will be required
to acknowledge, in writing, prior to purchasing Beneficial Interests
that such fiduciary has received copies of such documents and to
acknowledge, in writing, to TCC that such fiduciary is (1) independent
of TCC and its affiliates, (2) capable of making an independent
decision regarding the investment of Plan assets and (3) knowledgeable
with respect to the Plan in administrative matters and funding matters
related thereto, and able to make an informed decision concerning
participation in the BF IV Group Trust.
(g) TCC will make quarterly and annual written disclosures to
participating Plans with respect to the financial condition of the BF
IV Group Trust and the total fees that it will receive for services
rendered to the BF IV Group Trust.
(h) TCC will hold annual meetings and conduct periodic discussions
with Independent Fiduciaries of Plans participating in the BF IV Group
Trust to address any matters pertaining to such Group Trust.
(i) The terms of all transactions that are entered into on behalf
of the BF IV Group Trust by TCC shall remain at least as favorable to
an investing Plan as those obtainable in arm's length transactions with
unrelated parties. In this regard, the valuation of assets of the BF IV
Group Trust will be based upon independent market quotations or
determinations made by an Independent Appraiser.
(j) Either TCC or the Trustee, on behalf of the Plans participating
in the BF IV Group Trust, may terminate the Investment Management
Agreement at any time.
(k) As to each Plan, the total fees paid to TCC and its affiliates
will constitute no more than reasonable compensation.
(l) TCC's Performance Fee will be based upon a percentage of net
realized gains minus net unrealized losses. In this regard,
(1) The Performance Fee will be paid after December 31, 2001, which
is the completion of the Acquisition Phase for the BF IV Group Trust,
and it cannot be paid until all participating Plans have received
distributions equal to 100 percent of their capital contributions to
the BF IV Group Trust.
(2) Prior to the termination of the BF IV Group Trust, only 75
percent of what is credited to TCC as the Performance Fee may be
withdrawn by such Group Trust.
(3) TCC will repay all deficits in its Performance Fee account.
Notice to Interested Persons
Notice of the proposed exemption will be given to Plans
participating in the BF IV Group Trust within 5 days as of the date of
publication of the notice of pendency in the Federal Register. Such
notice will include a copy of the notice of proposed exemption, as
published in the Federal Register, as well as a supplemental statement,
as required pursuant to 29 CFR 2570.43(b)(2), which shall inform
interested persons of their right to comment on and/or to request a
hearing. Comments and hearings requests with respect to the proposed
exemption are due 35 days after the date of publication of the proposed
exemption 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.)
Hughes Non-Bargaining Retirement Plan, Hughes Bargaining Retirement
Plan, Hughes Subsidiary Retirement Plan (Collectively, the Plans)
[Applications No. D-10295, D-10296 and D-10297] Located in New York,
N.Y.
Proposed Exemption
The Department of Labor (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 32847, August 10, 1990).
Effective October 6, 1995, if the exemption is granted, 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)
[[Page 1922]]
through (E) of the Code shall not apply to the leasing by the Plans of
10,106 square feet of office space (Suite 300) in a commercial office
building which is owned by the Plans (the Building) to Sarofim Realty
Advisors (SRA), a party in interest with respect to the Plans, for a
period ending February 28, 2000 pursuant to the terms of a lease
amendment (the Lease) provided the following conditions are satisfied:
(1) An independent third party determines that the terms of the Lease
represent not less than fair rental value as of the date of the Lease;
(2) the terms of the Lease are reviewed and approved by a qualified
independent fiduciary of the Plans who determines that the terms of the
transaction are at least as favorable as the terms generally available
to the Plans in arm's length transactions between unrelated parties and
that SRA's improvements to Suite 300 are acceptable; (3) the qualified
independent fiduciary concludes that the transaction is in the best
interests of the Plans and the Plans' participants and beneficiaries;
(4) on behalf of the Plans, the qualified independent fiduciary
continues to monitor SRA's performance under the Lease; and (5) within
sixty (60) days of the publication in the Federal Register of a notice
granting this proposed exemption, SRA will file Form 5330 with the
Internal Revenue Service and pay the excise taxes applicable under
section 4975(a) of the Code that are due by reason of the prohibited
Lease transaction during the period beginning March 1, 1995 and ending
on the effective date of this exemption.
EFFECTIVE DATE: The effective date of this exemption is October 6,
1995.
Summary of Facts and Representations
1. The Plans involved in the transaction, the Hughes Non-Bargaining
Retirement Plan, the Hughes Bargaining Retirement Plan and the Hughes
Subsidiary Retirement Plan, are covered by the Hughes Master Retirement
Trust (the Trust). The Plans are defined benefit plans. The Plans'
sponsor is Hughes Electronic Corporation (Hughes). Prior to March 29,
1995, the Plans' sponsor was Hughes Aircraft Company. As of November
30, 1995, the Plans had a total of 91,006 participants and
beneficiaries. As of November 30, 1995, the approximate aggregate fair
market value of the total assets of the Plans was $6.376 billion. The
Building is a commercial office building known as Preston Sherry Plaza
with 147,008 square feet of rentable space and located in Dallas,
Texas. As of November 30, 1995, the value of the Building was .34
percent of the fair market value of the total assets of the Plans.
2. SRA states that it is a fiduciary, within the meaning of section
3(21) of the Act, to the Plans and a party in interest under section
3(14)(A) of the Act with respect to the Plans by virtue of its
appointment by the Plans as an investment manager for certain of the
Plans' real estate investments. SRA is headquartered in Dallas, Texas.
As of December 31, 1995, SRA employed 18 full-time employees and had
approximately $772 million in aggregate market value of employee
benefit plan assets under management. SRA oversees the acquisition,
development, leasing, management, financing and sale of select property
types in select regions and major cities throughout the country for the
Plans and eight other pension plans and endowment funds. SRA provides
recommendation to the Plans as to the types of properties to be
purchased, the number and location of the properties, the structure of
the transactions and the amount of third-party financing, if any, that
is appropriate. In addition, SRA is responsible for ensuring that the
Plans' properties are managed in accordance with the Plans' investment
objectives.
3. From October 1, 1991 to February 28, 1995, SRA leased 6,018
square feet of space on the fourth floor of the Building from the
Plans. SRA represents that its lease of the fourth floor space complied
with the requirements of Part III of PTE 84-14 which permits a
qualified professional asset manager (QPAM) to lease not in excess of
the greater of 7500 square feet or 1 percent of the rentable space of
the office building in which the investment fund managed by the QPAM
has the investment.\26\ In order to accommodate another Building tenant
and to facilitate a cost effective reconfiguration of space within the
Building to the benefit of the Plans, SRA relocated to the third floor
of the Building on March 1, 1995. SRA occupied this space pursuant to
the terms of the Lease entered into on March 1, 1995.
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\26\ SRA represents that it is a QPAM as that term is defined in
PTE 84-14.
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4. The Lease relates to 10,106 square feet of office space and is
for a term of five years ending February 28, 2000, at a base rent of
$16,000 per square foot. The annual base rent adjusts at a rate of $.25
per square foot per year to $17.00 per square foot in the year 2000.
The Lease also provides for a one-time-only tenant improvement or
construction allowance of $18.25 per square foot. The allowance enabled
SRA to build additional walls, replace the carpet and repaint the walls
of the third floor. Under the terms of the Lease, SRA is responsible
for its proportionate share of common area maintenance, insurance and
property taxes over the 1994 base year amount. The applicant states
that the Lease terms are comparable to the terms of the leases of other
similar tenants in the Building, as well as the terms of leases in
similar buildings in the area.
5. The applicant states that the Lease between SRA and the Plans is
not eligible for relief from the prohibited transaction provisions of
the Act pursuant to PTE 84-14 because the Lease is for an amount of
space in excess of the greater of 7,500 square feet or one percent of
the rentable space in the Building.
6. The applicant represents that on or about March 8, 1995, SRA
contacted Price Waterhouse LLP (Price) and requested that Price serve
as the independent fiduciary with respect to the Lease. The applicant
states that Price agreed to the engagement and SRA asked Price to begin
work immediately to determine whether the terms and conditions of the
Lease represented an arm's length lease of office space between
unrelated parties and to prepare a report summarizing Price's
conclusions (Price Report). During the period March 14 to March 31,
1995, Price performed a market review of the Lease. Price reviewed the
Lease and the leases of five comparable tenants. Price inspected and
evaluated the Building and interviewed the Building's management. Price
performed a present value analysis on the comparable leases in order to
evaluate the economic terms of the leases. Based on Price's research
and analysis, the March 31, 1995 Price Report determined that the Lease
was under terms which are not less than fair market value.
7. According to the Amendment, the applicant states that SRA
circulated several drafts of an independent fiduciary agreement to
Price and to the Plans. On March 30, 1995, the Plans requested that SRA
revise the independent fiduciary agreement to substitute ``independent
advisor'' for ``independent fiduciary.'' SRA objected to the change and
advised the Plans that the agreement should refer to Price as an
``indendent fiduciary.'' On April 4, 1995, the Plans advised SRA that
Price could not serve as an independent fiduciary to the Plans because
Price was not a registered investment adviser under the Investment
Advisers Act of 1940 and the Plans documents required all fiduciaries
appointed by the Plans to be registered investment advisers.
[[Page 1923]]
Subsequently, SRA and the Plans discussed several alternatives with
respect to the appointment of an independent fiduciary. On October 6,
1995, the Plans and RREEF America L.L.C. (RREEF) entered into an
agreement for RREEF to act on behalf of the Plans as an independent
fiduciary to review the Price Report, review and approve the Lease
terms and monitor SRA's performance under the Lease (the Agreement).
This Agreement was essentially an extension of RREEF's duties as a
qualified professional asset manager to the Plans pursuant to the
agreement dated March 3, 1992 between the Plans and RREEF America
Partners L.P., now known as RREEF (the Investment Management
Agreement).
8. The applicant states that RREEF is a qualified independent
fiduciary who actively manages commercial real estate in Dallas, Texas.
Further, neither RREEF nor its affiliates has any ownership interest in
SRA or its affiliates and neither SRA nor its affiliates has any
ownership interest in RREEF or its affiliates. The Applicant represents
that the Plans will pay RREEF's fee for serving as an independent
fiduciary. In view of RREEF's other unrelated business relationships
with the Plans, RREEF has agreed to perform these additional services
for the Plans for the sum of $1.00 per annum in lieu of any additional
fee which otherwise would be due under the Investment Management
Agreement.
9. According to the Statement of Independent Fiduciary dated
September 12, 1996, RREEF states that it is an investment adviser
registered under the Investment Advisers Act of 1940 and oversees the
acquisition, development, leasing, management, financing and sale of
commercial real estate throughout the country including real estate
located in Dallas, Texas. RREEF serves as an investment advisor and
fiduciary for approximately 150 employee benefit plans including the
Plans. RREEF represents that it understands its ERISA duties and
responsibilities in acting as a fiduciary with respect to the Plans.
RREEF states that as of December 31, 1995, it had approximately $6
billion in aggregate market value of employee benefit plan assets under
management and that, as of December 31, 1995, RREEF and its affiliates
received less than 1 percent of their annual income from SRA or its
affiliates.
10. The applicant represents that under the Investment Management
Agreement, RREEF may be removed with or without cause at any time by
the Plans (acting through fiduciaries of the Plans that are unrelated
to SRA or RREEF) upon written notice of such termination. Further,
RREEF's appointment is subject to annual confirmation by the
fiduciaries of the Plans. The applicant states that RREEF may not be
removed by SRA and the appointment of RREEF as independent fiduciary
shall remain in effect until 60 days after receipt by the Plans of a
notice of resignation from RREEF, or 60 days after RREEF receives a
notice of removal from the Plans.
11. The applicant states that upon the termination of RREEF's
appointment, a successor independent fiduciary (Successor) will be
designated by the Plans. The Successor will be subject to annual
confirmation by fiduciaries of the Plans. In addition, any Successor
must be an individual, group of individuals, or a business entity which
has substantial experience and expertise in the commercial real estate
field. Neither the Successor nor any affiliate of the Successor may
have any ownership interest in SRA or any of its affiliates, nor may
SRA or any of its affiliates have any ownership interest in the
Successor or its affiliates. Moreover, neither the Successor itself,
nor the Successor and its affiliates in the aggregate, may receive more
than 1 percent of their total annual gross revenues, determined as of
the end of their last fiscal year, from business transactions with SRA
or its affiliates. Furthermore, any Successor would be removable with
or without cause at any time by the Plans acting through a fiduciary or
fiduciaries unrelated to SRA or the Successor. Any Successor would not
be removable by SRA for any reason.
12. RREEF states that on the Plan's behalf, RREEF has reviewed and
approved the terms of the Lease. RREEF states that is has reviewed: the
Lease; SRA's proposed improvements to the property; the Price Report
concerning the proposed transaction, including all accompanying data
and analyses; physically inspected the property; and compared the Lease
with other leases for space in the Building and leases for space at
comparable properties. RREEF also interviewed four local brokers active
in the Building's submarket to identify comparable market rent terms.
Based on RREEF's review and analysis, RREEF concluded that the terms of
the Lease are in the best interest of the Plans and the Plans'
participants and beneficiaries, the terms of the Lease are at least as
favorable as the terms generally available to the Plans in arm's length
transactions between unrelated parties, and that SRA's proposed
improvements to the office space are acceptable and will not cause the
premises to be untenantable.
13. Under the Agreement, RREEF is also obligated to monitor SRA's
performance under the Lease. RREEF agreed to review any matter which
requires the approval of the landlord under the terms of the Lease and
determine on behalf of the Plans whether or not to grant approval and
take any other action with regard to the Lease which the landlord would
have the authority and/or obligation to take, on behalf of the Plans.
14. The applicant represents that the Lease allows the Plans to
accommodate existing tenants, to retain SRA as a stable and reliable
tenant, and to realize income that might not otherwise be received. The
Plans derive a benefit by virtue of SRA's occupancy of space in the
Building and its ability to better evaluate the day-to-day performance
of the other tenants, the property manager and the physical upkeep of
the asset. If the Lease is not granted an exemption, the applicant
represents that the Plans would be subjected to the risks of downtime
and additional refit costs for the current SRA space.
15. The applicant represents that within sixty (60) days of the
publication in the Federal Register of a notice granting this proposed
exemption, SRA will file Form 5330 with the Internal Revenue Service
and pay the excise taxes applicable under section 4975(a) of the Code
that are due by reason of the prohibited Lease transaction during the
period beginning the date the Lease was entered into, March 1, 1995,
and ending on October 6, 1995, the effective date of this exemption,
the date of the appointment of an independent fiduciary with respect to
the Lease.
16. In summary, the applicant represents that the proposed
exemption meets the criteria of section 408(a) of the Act because: (1)
Price, an independent third party, has determined that the terms of the
Lease represent not less than fair rental value as of the date of the
Lease; (2) the terms of the Lease were reviewed and approved by RREEF,
a qualified independent fiduciary who determined that the terms of the
transaction were at least as favorable as the terms generally available
to the Plans in arm's length transactions between unrelated parties and
that SRA's improvement to Suite 300 were acceptable; (3) RREEF, a
qualified independent fiduciary, concluded that the Lease is in the
best interests of the Plans and the Plans' participants and
beneficiaries; (4) RREEF, on behalf of the Plans, continues to monitor
SRA's performance under the Lease; and (5) within sixty (60) days of
the publication in the Federal Register of a notice granting this
proposed exemption, SRA
[[Page 1924]]
will file Form 5330 with the Internal Revenue Service and pay the
excise taxes applicable under section 4975(a) of the Code that are due
by reason of the prohibited Lease transaction during the period
beginning March 1, 1995 and ending on the effective date of this
exemption.
Notice to Interested Persons
Notice of the proposed exemption will be provided to all interested
persons by either mail or hand delivery within 30 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 pendency of the exemption
as published in the Federal Register and shall inform interested
persons of their right to comment on and/or to request a hearing with
respect to the proposed exemption. Comments are due within 60 days of
the date of publication of the proposed exemption in the Federal
Register.
Written Comments and Hearing Requests
All interested persons are invited to submit written comments or
requests for a hearing on the proposed replacement exemption to the
address above, within the time period set forth above. All comments
will be made a part of the record. Comments and requests for a hearing
should state the reasons for the writer's interest in the proposed
exemption. Comments received will be available for public inspection
with the referenced applications at the address set forth above.
FOR FURTHER INFORMATION CONTACT: Wendy McColough of the Department,
telephone (202) 219-8971. (This is not a toll-free number.)
APA, Inc. 401(k) Profit Sharing Plan (the Plan) Located in Pleasant
Hill, California
[Application No. D-10375]
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)(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: (1) The proposed loan (the Loan) of $30,000
to Mr. Gary Petsuch (Mr. Petsuch), a party in interest with respect to
the Plan, from Mr. Petsuch's segregated account (the Account) in the
Plan, and (2) the personal guarantee of the Loan by Mr. Petsuch,
provided the following conditions are satisfied: (a) The terms of the
Loan are at least as favorable to the Plan as those obtainable in an
arm's-length transaction with an unrelated party; (b) the Loan does not
exceed 25% of the assets of the Account; (c) the Loan is secured by a
pledge of Mr. Petsuch's interest in an investment account which has
been currently valued by an independent party as having a fair market
value approximately 280% of the principal amount of the Loan; (d) the
account collateralizing the Loan will be maintained at a collateral-to-
Loan ratio of not less than 200% throughout the duration of the Loan;
(e) Mr. Petsuch has also personally guaranteed the Loan; and (f) Mr.
Petsuch is the only Plan participant to be affected by the Loan.
Summary of Facts and Representations
1. Action Personnel Agency, Inc. d.b.a. United Staffing Services
(APA), a California Subchapter S Corporation, is the sponsor of the
Plan. Mr. Petsuch is the 100% owner of APA and, as such, is a party in
interest with respect to the Plan.
2. Mr. Petsuch, as the owner of a Subchapter S Corporation, is
unable to participate in the Plan's participant loan program. Mr.
Petsuch has a segregated rollover Account in the Plan which had a value
of $124,875 as of August 23, 1996. This Account is composed of publicly
traded stock.
3. Mr. Petsuch has requested an exemption that would permit him to
borrow $30,000 from his Account in the Plan. Since the Loan is to come
from his Account, Mr. Petsuch is the only Plan participant who will be
affected by this proposed transaction. The Loan amount would represent
less than 25% of the value of the Account. The term of the Loan will be
for a period of five years at an interest rate of Prime plus two, based
on the published Prime Rate in the Western Edition of the Wall Street
Journal, which currently would be 10.75%. The interest rate will be
adjusted during the term of the Loan whenever there is a change in the
Prime Rate of Interest. The new interest rate will be effective
immediately and will remain in effect until the next time the Prime
Rate changes. The Loan will be repaid in equal monthly installments of
principal and interest. Ms. Jeanne Marx, Vice President of The Bank of
San Ramon Valley (the Bank) in San Ramon, California, has represented
that the Bank would require identical terms to make a five year loan to
Mr. Petsuch.
4. In addition to giving his personal guarantee for the Loan, Mr.
Petsuch will pledge as security for the Loan his interest in a Charles
Schwab & Co., Inc. (Schwab) investment account. The account consists of
publicly traded securities, which according to Schwab had a fair market
value of $84,855 as of August 26, 1996. Thus, the pledged security has
a fair market value approximately 2.8 times greater than the principal
amount of the proposed Loan. The applicant represents that the
collateral-to-Loan ratio will always remain at least 200%. If the
collateral-to-Loan ratio ever falls below this level, Mr. Petsuch
represents that he will add additional collateral to the Schwab
account.
5. In summary, the applicant represents that the proposed
transaction satisfies the criteria of section 408(a) of the Code
because: (a) The Loan represents less than 25% of the assets of the
Account; (b) the terms of the Loan will be identical to those required
by a third party lender, the Bank, if it were to make a similar loan;
(c) the Loan will be secured by Mr. Petsuch's personal guarantee and
his interest in an investment account which has been currently valued
by an independent party as having a fair market value approximately
280% of the principal amount of the Loan; (d) the collateral-to-Loan
ration will remain not less than 200% throughout the duration of the
Loan; and (e) Mr. Petsuch is the only Plan participant to be affected
by the Loan, and he desires that the transaction be consummated.
NOTICE TO INTERESTED PERSONS: Since Mr. Petsuch is the only Plan
participant to be affected by the proposed transaction, the Department
has determined that there is no need to distribute the notice of
proposed exemption to interested persons. Comments and requests for a
hearing are due within 30 days from the date of publication of this
notice of proposed exemption in the Federal Register.
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 of disqualified
person from certain other provisions of the Act and/or the Code,
including any prohibited transaction
[[Page 1925]]
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 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.
Signed at Washington, DC, this 9th day of January, 1997.
Ivan Strasfeld,
Director of Exemption Determinations, Pension and Welfare Benefits
Administration, U.S. Department of Labor.
[FR Doc. 97-865 Filed 1-13-97; 8:45 am]
BILLING CODE 4510-29-M
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.