Grant of Individual Exemptions; John Taylor Fertilizers Company

DEPARTMENT OF LABOR

Pension and Welfare Benefits Administration

[Prohibited Transaction Exemption 98-55; Exemption Application No. D-

10379, et al.]

Grant of Individual Exemptions; John Taylor Fertilizers Company

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.

John Taylor Fertilizers Company, Profit Sharing Plan (the Plan),

Sacramento, California

[Prohibited Transaction Exemption 98-55; Exemption Application No. D-

10379]

Exemption

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 proposed sale by the Plan of an undivided

16.28% interest (Leasehold Interest) in a certain leasehold of a

professional office complex located in Sacramento, California, to John

Taylor Fertilizers Company, a party in interest with respect to the

Plan, provided that the following conditions are satisfied:

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

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

transaction with an unrelated party;

(B) The sale is a one-time transaction for cash;

(C) The Plan pays no commissions or other expenses relating to the

sale;

(D) The purchase price is the greater of: (1) the fair market value

of the Leasehold Interest as determined by a qualified, independent

appraiser, or (2) the original acquisition cost, plus all costs

attributable to holding the Leasehold Interest through the date of the

sale; and

(E) The Plan receives rental income due and owing to the Plan

through 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 16, 1998 at 63

FR 49612.

FOR FURTHER INFORMATION CONTACT: Janet L. Schmidt of the Department,

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

[[Page 65245]]

Toyota Motor Credit Corporation (TMCC) and certain of its

Affiliates, Located in Torrance, California

[Prohibited Transaction Exemption No. 98-56; Application No. D-10438]

Exemption

Section I--Transactions

A. The restrictions of sections 406(a) and 407(a) 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, as of

September 1, 1997, to the following transactions involving trusts and

certificates evidencing interests therein:

(1) The direct or indirect sale, exchange or transfer of

certificates in the initial issuance of certificates between the

sponsor or underwriter and an employee benefit plan when the sponsor,

servicer, trustee or insurer of a trust, the underwriter of the

certificates representing an interest in the trust, or an obligor is a

party in interest with respect to such plan;

(2) The direct or indirect acquisition or disposition of

certificates by a plan in the secondary market for such certificates;

and

(3) The continued holding of certificates acquired by a plan

pursuant to Section I.A.(1) or (2).

Notwithstanding the foregoing, Section I.A. does not provide an

exemption from the restrictions of sections 406(a)(1)(E), 406(a)(2) and

407 for the acquisition or holding of a certificate on behalf of an

Excluded Plan, as defined in Section III.K. below, by any person who

has discretionary authority or renders investment advice with respect

to the assets of that Excluded Plan.1

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\1\ Section I.A. provides no relief from sections 406(a)(1)(E),

406(a)(2) and 407 for any person rendering investment advice to an

Excluded Plan within the meaning of section 3(21)(A)(ii) and

regulation 29 CFR 2510.3-21(c).

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B. The restrictions of sections 406(b)(1) and 406(b)(2) of the Act

and the taxes imposed by section 4975(a) and (b) of the Code, by reason

of section 4975(c)(1)(E) of the Code, shall not apply, as of September

1, 1997, to:

(1) The direct or indirect sale, exchange or transfer of

certificates in the initial issuance of certificates between the

sponsor or underwriter and a plan when the person who has discretionary

authority or renders investment advice with respect to the investment

of plan assets in the certificates is (a) an obligor with respect to 5

percent or less of the fair market value of obligations or receivables

contained in the trust, or (b) an affiliate of a person described in

(a); if

(i) The plan is not an Excluded Plan;

(ii) Solely in the case of an acquisition of certificates in

connection with the initial issuance of the certificates, at least 50

percent of each class of certificates in which plans have invested is

acquired by persons independent of the members of the Restricted Group,

as defined in Section III.L., and at least 50 percent of the aggregate

interest in the trust is acquired by persons independent of the

Restricted Group;

(iii) A plan's investment in each class of certificates does not

exceed 25 percent of all of the certificates of that class outstanding

at the time of the acquisition; and

(iv) Immediately after the acquisition of the certificates, no more

than 25 percent of the assets of a plan with respect to which the

person has discretionary authority or renders investment advice are

invested in certificates representing an interest in a trust containing

assets sold or serviced by the same entity.2 For purposes of

this paragraph B.(1)(iv) only, an entity shall not be considered to

service assets contained in a trust if it is merely a subservicer of

that trust;

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\2\ For purposes of this exemption, each plan participating in a

commingled fund (such as a bank collective trust fund or insurance

company pooled separate account) shall be considered to own the same

proportionate undivided interest in each asset of the commingled

fund as its proportionate interest in the total assets of the

commingled fund as calculated on the most recent preceding valuation

date of the fund.

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(2) The direct or indirect acquisition or disposition of

certificates by a plan in the secondary market for such certificates,

provided that conditions set forth in paragraphs B.(1)(i), (iii), and

(iv) are met; and

(3) The continued holding of certificates acquired by a plan

pursuant to Section I.B.(1) or (2).

C. The restrictions of sections 406(a), (b) and 407(a) of the Act

and the taxes imposed by section 4975(a) and (b) of the Code, by reason

of section 4975(c) of the Code, shall not apply, as of September 1,

1997, to transactions in connection with the servicing, management and

operation of a trust, provided;

(1) Such transactions are carried out in accordance with the terms

of a binding Pooling and Servicing Agreement; and

(2) The Pooling and Servicing Agreement is provided to, or

described in all material respects in the prospectus or private

placement memorandum provided to, investing plans before they purchase

certificates issued by the trust.3

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\3\ In the case of a private placement memorandum, such

memorandum must contain substantially the same information that

would be disclosed in a prospectus if the offering of the

certificates were made in a registered public offering under the

Securities Act of 1933. In the Department's view, the private

placement memorandum must contain sufficient information to permit

plan fiduciaries to make informed investment decisions.

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Notwithstanding the foregoing, Section I.C. does not provide an

exemption from the restrictions of section 406(b) of the Act, or from

the taxes imposed by reason of section 4975(c) of the Code, for the

receipt of a fee by the servicer of the trust from a person other than

the trustee or sponsor, unless such fee constitutes a ``qualified

administrative fee'' as defined in Section III.S. below.

D. The restrictions of sections 406(a) and 407(a) of the Act and

the taxes imposed by sections 4975(a) and (b) of the Code, by reason of

sections 4975(c)(1)(A) through (D) of the Code, shall not apply, as of

September 1, 1997, to any transaction to which those restrictions or

taxes would otherwise apply merely because a person is deemed to be a

party in interest or disqualified person (including a fiduciary) with

respect to a plan by virtue of providing services to the plan (or by

virtue of having a relationship to such service provider as described

in section 3(14)(F), (G), (H) or (I) of the Act or section

4975(e)(2)(F), (G), (H) or (I) of the Code), solely because of the

plan's ownership of certificates.

Section II--General Conditions

A. The relief provided under Section I is available only if the

following conditions are met:

(1) The acquisition of certificates by a plan is on terms

(including the certificate price) that are at least as favorable to the

plan as such terms would be in an arm's-length transaction with an

unrelated party;

(2) The rights and interests evidenced by the certificates are not

subordinated to the rights and interests evidenced by other

certificates of the same trust;

(3) The certificates acquired by the plan have received a rating at

the time of such acquisition that is in one of the three highest

generic rating categories from either Standard & Poor's Ratings

Services, Moody's Investor Service, Inc., Duff & Phelps, Inc., or Fitch

IBCA, Inc., or their successors (collectively, the Rating Agencies);

(4) The trustee is not an affiliate of any other member of the

Restricted Group. However, the trustee shall not be considered to be an

affiliate of a servicer

[[Page 65246]]

solely because the trustee has succeeded to the rights and

responsibilities of the servicer pursuant to the terms of the Pooling

and Servicing Agreement providing for such succession upon the

occurrence of one or more events of default by the servicer;

(5) The sum of all payments made to and retained by the

underwriters in connection with the distribution or placement of

certificates represents not more than reasonable compensation for

underwriting or placing the certificates; the sum of all payments made

to or retained by the sponsor pursuant to the assignment of obligations

(or interest therein) to the trust represents not more than the fair

market value of such obligation (or interest); and the sum of all

payments made to and retained by the servicer represents not more than

reasonable compensation for the servicer's services under the Pooling

and Servicing Agreement and reimbursement of the servicer's reasonable

expenses in connection therewith;

(6) The plan investing in such certificates is an ``accredited

investor'' as defined in Rule 501(a)(1) of Regulation D of the

Securities and Exchange Commission under the Securities Act of 1933;

(7) To the extent that the pool of leases used to create a

portfolio for a trust is not closed on the date of the issuance of

certificates by the trust, additional leases may be added during a

period of no more than 15 consecutive months from the closing date used

for the initial allocation of leases that was made to create such

portfolio, provided that:

(a) All such additional leases meet the same terms and conditions

for eligibility as the original leases used to create the portfolio (as

described in the prospectus or private placement memorandum for such

certificates), which terms and conditions have been approved by the

Rating Agencies. Notwithstanding the foregoing, the terms and

conditions for an ``eligible lease'' (as defined in Section III.X

below) may be changed if such changes receive prior approval either by

a majority vote of the outstanding certificateholders or by the Rating

Agencies; and

(b) Such additional leases do not result in the certificates

receiving a lower credit rating from the Rating Agencies, upon

termination of the period during which additional leases may be added

to the portfolio, than the rating that was obtained at the time of the

initial issuance of the certificates by the trust;

(8) Any additional period described in Section II.A.(7) must be

described in the prospectus or private placement memorandum provided to

investing plans;

(9) The average annual percentage lease rate (the Average Lease

Rate) for the pool of leases in the portfolio for the trust, after the

additional period described in Section II.A.(7), shall not be more than

200 basis points greater than the Average Lease Rate for the original

pool of leases that was used to create such portfolio for the trust;

(10) For the duration of the additional period described in Section

II.A.(7), principal collections that are reinvested in additional

leases are first reinvested in the ``eligible lease contract'' (as

defined in Section III.X. below) with the earliest origination date,

then in the ``eligible lease contract'' with the next earliest

origination date, and so forth, beginning with any lease contracts that

have been reserved specifically for such purposes at the time of the

initial allocation of leases to the pool of leases used to create the

particular portfolio, but excluding those specific lease contracts

reserved for allocation to or allocated to other pools of leases used

to create other portfolios;

(11) The trustee of the trust (or the agent with which the trustee

contracts to provide trust services) is a substantial financial

institution or trust company experienced in trust activities and is

familiar with its duties, responsibilities, and liabilities as a

fiduciary under the Act. The trustee, as the legal owner of the

obligations in the trust, enforces all the rights created in favor of

certificateholders of such trust, including employee benefit plans

subject to the Act;

(12) The Pooling and Servicing Agreement and other governing

documents require that funds collected by the servicer with respect to

trust assets be deposited on a monthly basis in a trust account, even

though distributions on the certificates may be scheduled to be made

less frequently than monthly, and invested in certain highly rated debt

instruments known as ``permitted investments''; and

(13) The Pooling and Servicing Agreement expressly provides that

funds collected by the servicer with respect to trust assets are

required to be deposited in a trust account within two business days

after such collection, if TMCC's short-term unsecured debt is no longer

rated P-1 by Moody's Investors Service and A-1 by Standard & Poor's

Ratings Services (or successors thereto), unless such Rating Agencies

accept an alternative arrangement.

B. Neither any underwriter, sponsor, trustee, servicer, insurer, or

any obligor, unless it or any of its affiliates has discretionary

authority or renders investment advice with respect to the plan assets

used by a plan to acquire certificates, shall be denied the relief

provided under Section I, if the provision in Section II.A.(6) above is

not satisfied for the acquisition or holding by a plan of such

certificates, provided that (1) such condition is disclosed in the

prospectus or private placement memorandum; and (2) in the case of a

private placement of certificates, the trustee obtains a representation

from each initial purchaser which is a plan that it is in compliance

with such condition, and obtains a covenant from each initial purchaser

to the effect that, so long as such initial purchaser (or any

transferee of such initial purchaser's certificates) is required to

obtain from its transferee a representation regarding compliance with

the Securities Act of 1933, any such transferees shall be required to

make a written representation regarding compliance with the condition

set forth in Section II.A.(6).

C. Toyota Motor Credit Corporation (TMCC) and its Affiliates abide

by all securities and other laws applicable to any offering of

interests in securitized assets, such as certificates in a trust as

described herein, including those laws relating to disclosure of

material litigation, investigations and contingent liabilities.

Section III--Definitions

For purposes of this exemption:

A. ``Certificate'' means:

(1) A certificate.

(a) That represents a beneficial ownership interest in the assets

of a trust; and

(b) That entitles the holder to pass-through payments of principal

(except during the period described in Section II.A.(7), if any),

interest, and/or other payments made in connection with the assets of

such trust; or

(2) A certificate denominated as a debt instrument that is issued

by and is an obligation of a trust;

With respect to certificates defined in Section III.A.(1) and (2)

above, the underwriter shall be an entity which has received from the

Department an individual prohibited transaction exemption relating to

certificates which is substantially similar to this exemption (as noted

below in Section III.C.) and shall be either (i) the sole underwriter

or the manager or co-manager of the underwriting syndicate, or (ii) a

selling or placement agent.

For purposes of this exemption, references to ``certificates

representing an interest in a trust'' include

[[Page 65247]]

certificates denominated as debt which are issued by a trust.

B. ``Trust'' means an investment pool, the corpus of which is held

in trust and consists solely of:

(1) Either

(a) Qualified motor vehicle leases (as defined in Section III.T.);

or

(b) Fractional undivided interests in a trust containing assets

described in paragraph (a) of this Section III.B.(1), where such

fractional interest is not subordinated to any other interest in the

same pool of qualified motor vehicle leases held by such trust; \4\

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\4\ It is the Department's view that the definition of ``Trust''

contained in Section III.B. includes a two-tier trust structure

under which certificates issued by the first trust, which contains a

pool of receivables described above, are transferred to a second

trust which issues certificates that are sold to plans. However, the

Department is of the further view that, since the exemption provides

relief for the direct or indirect acquisition or disposition of

certificates that are not subordinated, no relief would be available

if the certificates held by the second trust were subordinated to

the rights and interests evidenced by other certificates issued by

the first trust.

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(2) Property which has secured any of the obligations described in

Section III.B.(1);

(3) Undistributed cash or temporary investments made therewith

maturing no later than the next date on which distributions are to be

made to certificateholders, except during the period described in

Section II.A.(7) above when temporary investments are made until such

cash can be reinvested in additional leases described in paragraph (a)

of this Section III.B.(1); and

(4) Rights of the trustee under the Pooling and Servicing

Agreement, and rights under motor vehicle dealer agreements, any

insurance policies, third-party guarantees, contracts of suretyship and

other credit support arrangements for any obligations described in

Section III.B.(1).

Notwithstanding the foregoing, the term ``trust'' does not include

any investment pool unless: (i) the investment pool consists only of

assets of the type which have been included in other investment pools,

(ii) certificates evidencing interests in such other investment pools

have been rated in one of the three highest categories by the Rating

Agencies for at least one year prior to the plan's acquisition of

certificates pursuant to this exemption, and (iii) certificates

evidencing interests in such other investment pools have been purchased

by investors other than plans for at least one year prior to the plan's

acquisition of certificates pursuant to this exemption.

C. ``Underwriter'' means any investment banking firm that has

received an individual prohibited transaction exemption from the

Department that provides relief for so-called ``asset-backed''

securities that is substantially similar in format and structure to

this exemption (the Underwriter Exemptions); 5 or any person

directly or indirectly, through one or more intermediaries,

controlling, controlled by or under common control with such investment

banking firm; and any member of an underwriting syndicate or selling

group of which such firm or person described above is a manager or co-

manager with respect to the certificates.

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\5\ For a listing of the Underwriter Exemptions, see the

description provided in the text of the operative language of

Prohibited Transaction Exemption (PTE) 97-34 (62 FR 39021, July 21,

1997).

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D. ``Sponsor'' means an entity affiliated with Toyota Motor

Corporation that organizes a trust by depositing obligations therein in

exchange for certificates.

E. ``Master Servicer'' means TMCC or an entity affiliated with TMCC

that is a party to the Pooling and Servicing Agreement relating to

trust assets and is fully responsible for servicing, directly or

through subservicers, the assets of the trust.

F. ``Subservicer'' means TMCC or an entity affiliated with TMCC

which, under the supervision of and on behalf of the master servicer,

services leases contained in the trust, but is not a party to the

Pooling and Servicing Agreement.

G. ``Servicer'' means TMCC or an entity affiliated with TMCC which

services leases contained in the trust, including the master servicer

and any subservicer.

H. ``Trustee'' means an entity that is independent of TMCC and its

Affiliates which is the trustee of the trust. In the case of

certificates which are denominated as debt instruments, ``trustee''

also means the trustee of the indenture trust.

I. ``Insurer'' means the insurer or guarantor of, or provider of

other credit support for, a trust. Notwithstanding the foregoing, a

person is not an insurer solely because it holds securities

representing an interest in a trust which are of a class subordinated

to certificates representing an interest in the same trust. In

addition, a person is not an insurer if such person merely provides:

(1) property damage or liability insurance to an Obligor with respect

to a lease or leased vehicle; or (2) property damage, excess liability

or contingent liability insurance to any lessor, sponsor or servicer,

if such entities are included in the same insurance policy, with

respect to a lease or leased vehicle.

J. ``Obligor'' means any person, other than the insurer, that is

obligated to make payments for a lease in the trust.

K. ``Excluded Plan'' means any plan with respect to which any

member of the Restricted Group is a ``plan sponsor'' within the meaning

of section 3(16)(B) of the Act.

L. ``Restricted Group'' with respect to a class of certificates

means:

(1) Each Underwriter;

(2) Each Insurer;

(3) The Sponsor;

(4) The Trustee;

(5) Each Servicer;

(6) Any Obligor with respect to obligations or receivables included

in the trust constituting more than 5 percent of the aggregate

unamortized principal balance of the assets in the trust, determined on

the date of the initial issuance of certificates by the trust and at

the end of the period described in Section II.A.(7); or

(7) Any Affiliate of a person described in (1)-(6) above.

M. ``Affiliate'' of another person includes:

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

intermediaries, controlling, controlled by or under common control with

such other person;

(2) Any officer, director, partner, employee, relative (as defined

in section 3(15) of the Act), a brother, a sister, or a spouse of a

brother or sister of such other person; and

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

officer, director or partner.

N. ``Control'' means the power to exercise a controlling influence

over the management or policies of a person other than an individual.

O. A person shall be ``independent'' of another person only if:

(1) Such person is not an Affiliate of that other person; and

(2) The other person, or an Affiliate thereof, is not a fiduciary

who has investment management authority or renders investment advice

with respect to assets of such person.

P. ``Sale'' includes the entrance into a forward delivery

commitment (as defined in Section III.Q. below), provided:

(1) The terms of the forward delivery commitment (including any fee

paid to the investing plan) are no less favorable to the plan than they

would be in an arm's-length transaction with an unrelated party;

(2) The prospectus or private placement memorandum is provided to

an investing plan prior to the time the plan enters into the forward

delivery commitment; and

[[Page 65248]]

(3) At the time of the delivery, all conditions of this exemption

applicable to sales are met.

Q. ``Forward Delivery Commitment'' means a contract for the

purchase or sale of one or more certificates to be delivered at an

agreed future settlement date. The term includes both mandatory

contracts (which contemplate obligatory delivery and acceptance of the

certificates) and optional contracts (which give one party the right

but not the obligation to deliver certificates to, or demand delivery

of certificates from, the other party).

R. ``Reasonable Compensation'' has the same meaning as that term is

defined in 29 CFR 2550.408c-2.

S. ``Qualified Administrative Fee'' means a fee which meets the

following criteria:

(1) The fee is triggered by an act or failure to act by the obligor

other than the normal timely payment of amounts owing for the

obligations;

(2) The servicer may not charge the fee absent the act or failure

to act referred to in (1);

(3) The ability to charge the fee, the circumstances in which the

fee may be charged, and an explanation of how the fee is calculated are

set forth in the Pooling and Servicing Agreement; and

(4) The amount paid to investors in the trust shall not be reduced

by the amount of any such fee waived by the servicer.

T. ``Qualified Motor Vehicle Lease'' means a lease of a motor

vehicle where:

(1) The trust owns or holds a security interest in the lease;

(2) The trust owns or holds a security interest in the leased motor

vehicle; and

(3) The trust's interest in the leased motor vehicle is at least as

protective of the trust's rights as the trust would receive under a

motor vehicle installment loan contract.

U. ``Pooling and Servicing Agreement'' means, collectively, (i) the

securitization trust agreement between a sponsor and the trustee

establishing a trust, (ii) the trust and servicing agreement relating

to an origination trust and the servicing supplement thereto, and (iii)

the supplemental agreement establishing a beneficial interest in

certain specified origination trust assets (referred to herein as a

``special unit of beneficial interest'' or ``SUBI''). In the case of

certificates which are denominated as debt instruments, ``Pooling and

Servicing Agreement'' also includes the indenture entered into by the

trustee of the trust issuing such certificates and the indenture

trustee.

V. ``Lease Rate'' means an implicit rate in each lease calculated

as an annual percentage rate on a constant yield basis, based on the

capitalized cost of the leased vehicle as determined under the

particular lease contract for the vehicle. With respect to the

determination of a ``Lease Rate'', each lease will provide for equal

monthly payments such that at the end of the lease contract term the

capitalized cost will have been amortized to an amount equal to the

residual value of the leased vehicle established at the time of

origination of such contract. The amount to which the capitalized cost

has been amortized at any point in time will be the outstanding

principal balance for the lease.

W. ``Average Lease Rate'' means the average annual percentage lease

rate, as defined in Section III.V. above, for all leases included at

any particular time in a portfolio used to create a trust from which

certificates are issued.

X. ``Eligible Lease'' or ``Eligible Lease Contract'' means a

Qualified Motor Vehicle Lease, as defined in Section III.T. above,

which meets the eligibility criteria established for, among other

things, the term of the lease, place of origination, date of

origination, and provisions for default, as described in the particular

prospectus or private placement memorandum for the certificates

provided to investors, if such terms and conditions have been approved

by the Rating Agencies prior to the issuance of such certificates.

Y. ``Permitted Investments'' means investments which: (i) are

direct obligations of, or obligations fully guaranteed as to timely

payment of principal and interest by, the United States or any agency

or instrumentality thereof, provided that such obligations are backed

by the full faith and credit of the United States; or (ii) have been

rated (or the obligor has been rated) in one of the three highest

generic rating categories by a Rating Agency; or (iii) consist of

interests in money market mutual funds that are registered investment

companies under the Investment Company Act of 1940, which are managed

by parties independent of the Sponsor or Servicer, and which invest in

securities described in item (i) above or highly rated short-term

securities of the type described in item (ii) above, or which are of

comparable credit quality to securities having such ratings; are

described in the pooling and servicing agreement; and are permitted by

the Rating Agency.

The Department notes that this exemption is included within the

meaning of the term ``Underwriter Exemption'' as it is defined in

Section V(h) of the Grant of the Class Exemption for Certain

Transactions Involving Insurance Company General Accounts, which was

published in the Federal Register on July 12, 1995 (see PTE 95-60, 60

FR 35925).

EFFECTIVE DATE: This exemption is effective for all transactions

described herein occurring on or after September 1, 1997.

For a more complete statement of the facts and representations

supporting the Department's decision to grant this exemption refer to

the notice of proposed exemption published on July 8, 1998, at 63 FR

36946.

WRITTEN COMMENTS: The applicant (i.e., TMCC) submitted a written

comment on the notice of proposed exemption (the Notice) relating to

the proposed definition of ``Permitted Investments'' contained in

Section III.Y.

``Permitted Investments'' were defined in the Notice as follows:

* * * investments which (i) are direct obligations of, or

obligations fully guaranteed as to timely payment of principal and

interest by, the United States or any agency or instrumentality

thereof, provided that such obligations are backed by the full faith

and credit of the United States, or (ii) have been rated (or the

obligor has been rated) in one of the three highest generic rating

categories by a Rating Agency; are described in the pooling and

servicing agreement; and are permitted by the Rating Agency.

TMCC's comment states that this definition requires that the

securitization trust invest directly in the described investments and

not through a mutual fund. TMCC states that it prefers to make such

investments through a money market mutual fund designed for

institutional investors. TMCC currently uses a mutual fund (Fund)

managed by Federated Investors which is called the Prime Obligations

Fund. The Fund invests in high quality money market instruments that

have an average maturity of 90 days or less and are either rated in the

highest short-term rating category by one or more of the Rating

Agencies or are of comparable quality to securities having such

ratings.

TMCC believes that a mutual fund investing in short-term high

quality money market investments should be specifically included as a

``permitted investment'' for purposes of the exemption. Therefore, TMCC

requests that the definition in Section III.Y. of the Notice be revised

as follows:

``Permitted Investments'' means investments which: (i) are

direct obligations of, or obligations fully guaranteed as to timely

payment of principal and interest by, the United States or any

agency or instrumentality thereof, provided that such obligations

are backed by the full faith and credit of the United States; or

(ii) have been rated (or the obligor has been rated) in one

[[Page 65249]]

of the three highest generic rating categories by a Rating Agency;

or (iii) consist of interests in money market mutual funds which are

registered investment companies under the Investment Company Act of

1940, which are managed by parties independent of the Sponsor or

Servicer, and which invest in securities described in item (i) above

or highly rated short-term securities of the type described in item

(ii) above, or which are of comparable credit quality to securities

having such ratings; are described in the pooling and servicing

agreement; and are permitted by the Rating Agency. [emphasis added]

The Department agrees with the proposed revision of the definition

and has so revised the language of Section III.Y. of the exemption.

The Department received no other written comments, nor any requests

for a hearing.

Accordingly, the Department has determined to grant the exemption

as modified.

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

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

General Information

The attention of interested persons is directed to the following:

(1) The fact that a transaction is the subject of an exemption

under section 408(a) of the Act and/or section 4975(c)(2) of the Code

does not relieve a fiduciary or other party in interest or disqualified

person from certain other provisions to which the exemptions does not

apply and the general fiduciary responsibility provisions of section

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

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

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

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

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

for the exclusive benefit of the employees of the employer maintaining

the plan and their beneficiaries;

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

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

administrative exemptions and transactional rules. Furthermore, the

fact that a transaction is subject to an administrative or statutory

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

prohibited transaction; and

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

condition that the material facts and representations contained in each

application accurately describes all material terms of the transaction

which is the subject of the exemption.

Signed at Washington, D.C., this 20th day of November, 1998.

Ivan Strasfeld,

Director of Exemption Determinations, Pension and Welfare Benefits

Administration, U.S. Department of Labor.

[FR Doc. 98-31510 Filed 11-24-98; 8:45 am]

BILLING CODE 4510-29-P