Proposed Extension of the Approval of Information Collection
Requirements
[12/17/2007]
Volume 72, Number 241
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF LABOR
Employee Benefits Security Administration
Prohibited Transaction Exemption 2007-17; Grant of Individual
Exemptions Involving; D-11390, BSC Services Corp. 401(k) Profit Sharing
Plan (the Plan), PTE 2007-17; D-11402 and D-11403, Owens Corning
Savings Plan and Owens Corning Savings and Security Plan (Collectively,
the Plans), PTE 2007-18; D-11405, Middleburg Trust Company
(Middleburg), PTE 2007-19; D-11420, BlackRock, Inc (BlackRock), and
Merrill Lynch & Co. (Merrill Lynch) (Collectively, the Applicants), PTE
2007-20; D-11441, Gastroenterology and Oncology Associates, P.A. (the
Plan), 2007-21
AGENCY: Employee Benefits Security Administration, Labor.
ACTION: Grant of Individual Exemptions.
-----------------------------------------------------------------------
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
(ERISA or the Act) and/or the Internal Revenue Code of 1986 (the Code).
A notice was published in the Federal Register of the pendency
before the Department of a proposal to grant such exemption. The notice
set forth a summary of facts and representations contained in the
application for exemption and referred interested persons to the
application for a complete statement of the facts and representations.
The application has been available for public inspection at the
Department in Washington, DC. The notice also invited interested
persons to submit comments on the requested exemption to the
Department. In addition the notice stated that any interested person
might submit a written request that a public hearing be held (where
appropriate). The applicant has represented that it has complied with
the requirements of the notification to interested persons. No requests
for a hearing were received by the Department. Public comments were
received by the Department as described in the granted exemption.
[[Page 71438]]
The notice of proposed exemption was issued and the exemption is
being granted solely by the Department because, effective December 31,
1978, section 102 of Reorganization Plan No. 4 of 1978, 5 U.S.C. App. 1
(1996), 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 exemption is administratively feasible;
(b) The exemption is in the interests of the plan and its
participants and beneficiaries; and
(c) The exemption is protective of the rights of the participants
and beneficiaries of the plan.
BSC Services Corp. 401(k) Profit Sharing Plan (the Plan), Located in
Philadelphia, PA
[Prohibited Transaction Exemption 2007-17; Exemption Application No. D-
11390]
Exemption
Section I--Covered Transactions
The restrictions of sections 406(a), 406(b)(1) and (b)(2) and
407(a) of the Act and the sanctions resulting from the application of
section 4975 of the Code,\1\ by reason of section 4975(c)(1)(A) through
(E) of the Code, shall not apply, effective April 27, 2006, to (1) the
acquisition by the Plan of certain stock rights (the Rights) pursuant
to a stock rights offering (the Offering) from First Bank of Delaware
(the Bank), a party in interest and the parent company of BSC Services
Corp., which is the Plan sponsor as well as a party in interest with
respect to the Plan; (2) the holding of the Rights by the Plan during
the subscription period of the Offering; and (3) the disposition or
exercise of the Rights by the Plan.
---------------------------------------------------------------------------
\1\ For purposes of this exemption, references to provisions of
Title I of the Act, unless otherwise specified, refer also to the
corresponding provisions of the Code.
---------------------------------------------------------------------------
Section II--Conditions
This exemption is conditioned upon adherence to the material facts
and representations described herein and upon satisfaction of the
following conditions:
(a) The Rights were acquired by the Plan pursuant to Plan
provisions for the individually-directed investment of participant
accounts.
(b) The Plan's receipt of the Rights occurred in connection with
the Rights Offering made available to all shareholders of the Bank's
common stock (the Bank Stock).
(c) All decisions regarding the holding and disposition of the
Rights by the Plan were made in accordance with Plan provisions for the
individually-directed investment of participant accounts by the
individual participants whose accounts in the Plan received Rights in
the Offering, and if no instructions were received, the Rights expired.
(d) The Plan's acquisition of the Rights resulted from an
independent act of the Bank as a corporate entity, and all holders of
the Rights, including the Plan, were treated in the same manner with
respect to the acquisition, holding and disposition of such Rights.
(e) The Plan received the same proportionate number of the Rights
as other owners of Bank Stock.
Effective Date: This exemption is effective as of April 27, 2006.
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 2, 2007 at 72 FR
36059.
FOR FURTHER INFORMATION CONTACT: Ms. Jan D. Broady of the Department,
telephone number (202) 693-8556. (This is not a toll-free number.)
Owens Corning Savings Plan and Owens Corning Savings and Security Plan
(Collectively, the Plans), Located in Toledo, Ohio
[Prohibited Transaction Exemption 2007-18; Exemption Application
Numbers D-11402 and D-11403, respectively]
Exemption
The restrictions of sections 406(a), 406(b)(1), 406(b)(2), and
407(a) of the Act and the sanctions resulting from the application of
section 4975 of the Code, by reason of section 4975(c)(1)(A) through
(E) of the Code, shall not apply, effective October 31, 2006, to: (1)
The acquisition by the Plans of certain warrants (the Warrants) issued
by Owens Corning (the Applicant), a party in interest with respect to
the Plans, where such Warrants have been issued in exchange for the
common stock (the Old Common Stock) of the Applicant incident to a
bankruptcy reorganization; (2) the holding of the Warrants by each of
the Plans pending the exercise or other disposition of said Warrants;
(3) the exercise of the Warrants by participants in the Plans to permit
acquisition of shares of the Applicant's new common stock (the New
Common Stock).
In addition, the restrictions of section 406(a)(1)(A) through (D)
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, effective October 31, 2006, to the sale or
disposition of the Warrants by participants in the Plans through a
broker-dealer acting as an agent on behalf of such participants.
Conditions
(a) Other than the right to vote on the Reorganization Plan, the
Plans had no ability to affect the provisions of the Sixth Amended
Joint Plan of Reorganization for Owens Corning and Its Affiliated
Debtors and Debtors-in-Possession (the Reorganization Plan) approved by
the United States Bankruptcy Court for the District of Delaware (the
Bankruptcy Court) on September 26, 2006 pursuant to Chapter 11 of Title
11 of the United States Code (the Bankruptcy Code);
(b) The acquisition and holding of the Warrants by the Plans
occurred in connection with the Reorganization Plan, in which all
holders of the Applicant's stock of the same class have been and will
be treated similarly;
(c) The Warrants were acquired automatically and without any action
on the part of the Plans;
(d) The Plans did not pay any fees or commissions in connection
with the acquisition or holding of the Warrants;
(e) The Plans will not pay any fees or commissions in connection
with the exercise of the Warrants;
(f) All decisions regarding the exercise or other disposition of
the Warrants have been and will be made by the individual participants
of the Plans in whose accounts the Warrants were allocated, in
accordance with the respective provisions of the Plans pertaining to
the individually-directed investment of such accounts, subject to the
duty of the fiduciaries of the Plans to take action consistent with
sections 403 and 404 of the Act, in the event the current market price
for the New Common Stock is below $45.25 per share (the Strike Price)
at the time of participant exercise or in the event that it becomes
clear that the Warrants would otherwise expire ``in the money''
unexercised by participants; and
(g) The terms and conditions applicable to the sale of the Warrants
by participants in the Plans have been and will be at least as
favorable to the Plans as those that would have been obtained in an
arm's length transaction with an unrelated party.
[[Page 71439]]
Written Comments
The Notice of Proposed Exemption (the Notice), published in the
Federal Register on July 2, 2007, stated that the Applicant would
distribute the Notice to interested persons within fifteen (15) days of
its publication in the Federal Register; the Notice also invited all
interested persons to submit written comments and requests for a
hearing to the Department concerning the proposed exemption within
forty-five (45) days of the date of its publication.
Shortly after the Notice was published in the Federal Register, the
Applicant requested that the Department extend the foregoing deadlines
for notification to interested persons. The Department agreed to this
request, and advised the Applicant that notification to interested
persons be provided no later than August 16, 2007. The Department
received a written certification from the Applicant dated August 17,
2007 confirming that the Notice and the accompanying supplemental
statement had been distributed to interested persons on August 15, 2007
via first class mail.
During the comment period, the Department received two written
comments concerning the Notice. One comment, submitted by a former
employee of the Applicant, expressed opposition to the proposed
exemption, but did not offer any information or rationale in support of
this viewpoint. The second comment received by the Department was
submitted by the Applicant. In its comment, the Applicant represented
that although it had originally requested exemptive relief from the
Department for the acquisition, holding, exercise, and other
disposition of the Warrants (including the sale of the Warrants to
third parties), the Notice did not contain relief for the disposition
of the Warrants.
In this regard, the Applicant also expressed its understanding that
securities traded through the Pink Sheets (such as the Warrants) may be
sold in the context of either principal transactions (wherein a market
maker or broker purchases the security for its own account) or agency
transactions (wherein the broker acts as agent for a non-broker
purchaser). In either instance, the commenter stated, it was possible
that the purchaser of the Warrants could be a party in interest with
respect to the plan. Further, the Applicant commented that neither Part
II nor Part IV of PTE 75-1 (40 FR 50845, October 31, 1975, as amended
at 71 FR 5883, February 3, 2006) would provide relief from the
restriction of section 406(a) of the Act for an agency transaction
involving the Warrants. In this connection, the Applicant expressed the
view that it would not be in the interests of the Plans or of the
Plans' participants to limit the potential purchasers of the Warrants
to market makers or other brokers who could rely on PTE 75-1. The
Applicant also commented that the applicability of section 408(b)(17)
of the Act to the transactions described in the proposed exemption was
problematic because certain interpretive issues may be raised in
applying the adequate consideration condition contained therein,
particularly in the case of participant-directed plans and/or
securities not traded on an exchange.
The Applicant also commented that Fidelity Brokerage Services, LLC
(Fidelity), which is not affiliated with the Applicant, will process
the Warrant sales ``in accordance with its customary provisions for the
execution of securities transactions in the over the counter [OTC]
market and neither [the Applicant] nor any affiliate will have any role
in that process.'' Based on the foregoing considerations, the Applicant
requested in its comment that the Department modify the proposed
exemption by (1) permitting relief from the applicable restrictions of
the Act and the Code for the sale or disposition of the Warrants and
(2) limiting such relief to those sales transactions that are ``at
least as favorable to the Plan as an arms'' length transaction with an
unrelated party would be.'' \2\
---------------------------------------------------------------------------
\2\ On November 22, 2007, the Department received a written
communication from the Applicant stating that the New Common Stock
became an investment option for participants in the Plans as of
November 6, 2007. The Applicant further represented that this
development does not affect the rights of participants in the Plans
with respect to the Warrants held in their respective accounts
(i.e., the participants will continue to have the ability to sell or
exercise the Warrants).
---------------------------------------------------------------------------
In response to the Applicant's request, the Department has
determined to grant exemptive relief to the Applicant for the sale or
disposition of the Warrants by participants in the Plans provided that
such sale or disposition was effected through a broker-dealer acting as
an agent on behalf of such participants. In addition, the Department
has determined to add a condition (Condition (g)) to the exemption
which stipulates that such relief is only available where ``the terms
and conditions applicable to the sale of the Warrants by participants
in the Plans have been and will be at least as favorable to the Plans
as those that would have been obtained in an arm's length transaction
with an unrelated party.''
Condition (a) of the proposed exemption (located in the first
column on page 36058 of the July 2, 2007 edition of the Federal
Register) states that ``[t]he Plans had no ability to affect the
provisions of the Sixth Amended Joint Plan of Reorganization for Owens
Corning and its Affiliated Debtors and Debtors-in-Possession (the
Reorganization Plan) approved by the United States Bankruptcy Court for
the District of Delaware (the Bankruptcy Court) on September 26, 2006
pursuant to Chapter 11 of Title 11 of the United States Code (the
Bankruptcy Code).'' The Applicant suggested that, ``[f]or the purpose
of clarity,'' Condition (a) of the proposed exemption should be
modified by the Department by inserting the words ``Other than the
right to vote on the Reorganization Plan'' at the beginning of the
condition. The Department has agreed to adopt the Applicant's request
concerning this matter.
Condition (f) of the proposed exemption (located in the second
column on page 36058) states that ``[a]ll decisions regarding the
exercise or other disposition of the Warrants have been and will be
made by the individual participants in the Plans in whose accounts the
Warrants were allocated, in accordance with the respective provisions
of the Plans pertaining to the individually-directed investment of such
accounts.'' The Applicant suggested in its comment that Condition (f)
of the proposed exemption should be modified by the Department to read
as follows: ``All decisions regarding the exercise or other disposition
of the Warrants have been and will be made by the individual
participants of the Plans to whose accounts the Warrants were
allocated, subject to the duty of the Plan fiduciaries to take action
with respect to the employer securities held by the Plans pursuant to
sections 403 and 404 of ERISA, and the right of the Plan sponsor to
amend the Plans.'' The Applicant commented that such a revision is
necessary to confirm that the relief provided by the exemption would
still be available even if the fiduciaries of the Plans were required
to exercise their fiduciary duty with respect to the Warrants (as noted
by the Department in footnote 10 of the proposed exemption, located at
the bottom of page 36059, which states that ``[t]he Applicant
acknowledges that the appropriate fiduciaries of the Plans shall be
responsible for monitoring the investment options available to
participants in the Plans, and taking such action as they deem
appropriate under the circumstances.'' Such action
[[Page 71440]]
may include preventing participants from exercising the Warrants if the
current market price for the Common Stock is below the Strike Price, or
causing the Plans to sell the Warrants in the event that it becomes
clear that they would otherwise expire unexercised by participants.
After due consideration of this comment, the Department has decided
to modify the text of Condition (f) of the exemption to read as
follows: ``All decisions regarding the exercise or other disposition of
the Warrants have been and will be made by the individual participants
of the Plans in whose accounts the Warrants were allocated, in
accordance with the respective provisions of the Plans pertaining to
the individually-directed investment of such accounts, subject to the
duty of the fiduciaries of the Plans to take action consistent with
sections 403 and 404 of the Act, in the event the current market price
for the New Common Stock is below $45.25 per share (the Strike Price)
at the time of participant exercise or in the event that it becomes
clear that the Warrants would otherwise expire `in the money'
unexercised by participants.'' In this regard, the Department notes
that no relief is provided under this final exemption for the plan
fiduciaries to overrule the direction of participants, unless the
direction or lack of direction is clearly imprudent under the
particular circumstances.
The Applicant also provided a comment concerning the content of
footnote 8 of the Notice (located at the bottom of the first column on
page 36059), which states that ``[b]ased on the Applicant's
representations, to the extent the Warrants are publicly traded on a
national exchange to unrelated third parties, no exemptive relief is
being provided by the Department.'' In this regard, the Applicant
represented in its comment that the Warrants are not traded on a
national exchange. The Department concurs with the Applicant, and
hereby deletes footnote 8 in its entirety.
The Applicant also made two additional suggestions for technical
revisions to the proposed exemption. In the fifth sentence of the
second paragraph of the ``Summary of Facts and Representations''
section of the proposed exemption (located in the second column of page
36058), the following language appears: ``The Reorganization Plan
became effective on October 31, 2006, at which time the Old Common
Stock was delisted from the New York Stock Exchange and all outstanding
shares of the Old Common Stock were cancelled.'' The Applicant has now
advised the Department in its comment that the Old Common Stock was
delisted some time before October 31, 2006, the date on which it was
cancelled. In addition, the Applicant suggested modification of the
content of the seventh sentence of the same paragraph (located in the
third column of page 36058), which states that ``[t]he Applicant
represents that the Warrants do not constitute qualifying employer
securities as defined in section 407(d)(5) of the Act.'' In this
connection, the Applicant commented that ``it did not concede in its
[a]pplication [for exemption] that the Warrants `do not constitute'
qualifying employer securities, but indicated that they may not be.''
After due consideration, the Department has adopted these
clarifications requested by the Applicant.
Therefore, after giving full consideration to the entire record,
the Department has determined to grant the exemption subject to the
modifications described herein.
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 in the Federal Register on
July 2, 2007 at 72 FR 36058.
FOR FURTHER INFORMATION CONTACT: Mr. Mark Judge of the Department,
telephone (202) 693-8339. (This is not a toll-free number).
Middleburg Trust Company (Middleburg), Located in Richmond, VA
[Prohibited Transaction Exemption 2007-19; Application No. D-11405]
Exemption
The sanctions resulting from the application of section 4975 of the
Code, by reason of section 4975(c)(1)(A) through (E) of the Code, shall
not apply to the past sale, on March 28, 2006, by the William T. Smith
IRA (the IRA) \3\ of certain bonds (the Bonds) to Middleburg, a
disqualified person with respect to the IRA, provided that the
following conditions are satisfied:
---------------------------------------------------------------------------
\3\ Pursuant to 29 CFR 2510.3-2(d), the IRA is not within the
jurisdiction of Title I of the Employee Retirement Income Security
Act of 1974 (the Act). However, there is jurisdiction under Title II
of the Act pursuant to section 4975 of the Code.
---------------------------------------------------------------------------
(a) The sale was a one-time transaction for cash;
(b) The purchase price for the Bonds was based on the Bonds' face
value;
(c) The Bonds' face value was in excess of bids for the Bonds
solicited from independent brokers and in excess of the price for the
Bonds quoted by an independent valuation service for the date of the
sale;
(d) Neither the IRA nor Mr. William T. Smith, the owner of the IRA,
paid any fees, commissions, or other costs or expenses associated with
the sale;
(e) The IRA received its portion of income and all interest accrued
on the Bonds through the date of the sale;
(f) The terms and conditions of the sale were at least as favorable
to the IRA as those obtainable in an arm's length transaction with an
unrelated party; and
(g) Within 30 days of the publication of the grant notice in the
Federal Register, Middleburg will pay the IRA $196.53 to make up for
the loss sustained by the IRA as a result 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 October 26, 2007 at 72 FR
60904.
FOR FURTHER INFORMATION CONTACT: Ms. Blessed Chuksorji of the
Department, telephone number (202) 693-8567. (This is not a toll-free
number).
BlackRock, Inc. (BlackRock), and Merrill Lynch & Co. (Merrill Lynch)
(Collectively, the Applicants), Located in New York, New York
[Prohibited Transaction Exemption 2007-20 Application No. D-11420]
Exemption
Section I--Transactions
The restrictions of section 406 of the Act and the sanctions
resulting from the application of section 4975 of the Code, by reason
of section 4975(c)(1)(A) through (F) of the Code, shall not apply to
the purchase of certain securities (the Securities), as defined, below
in Section III(k), by an Asset Manager, as defined, below, in Section
III(f), from any person other than a Merrill Lynch/BlackRock Related
Entity or Merrill Lynch/BlackRock Related Entities, as defined, below,
in Section III(c), during the existence of an underwriting or selling
syndicate with respect to such Securities, where a Merrill Lynch/
BlackRock Related Broker-Dealer, as defined, below, in Section III(b),
is a manager or member of such syndicate and the Asset Manager
purchases such Securities, as a fiduciary:
(a) On behalf of an employee benefit plan or employee benefit plans
(Client Plan(s)), as defined, below, in Section III(h); or
(b) On behalf of Client Plans, and/or In-House Plans, as defined,
below, in Section III(o), which are invested in a pooled fund or in
pooled funds (Pooled
[[Page 71441]]
Fund(s)), as defined, below, in Section III(i); provided that the
conditions as set forth, below, in Section II, are satisfied
(Transactions described in Section I(a) and (b) are referred to herein
as an affiliated underwriter transaction(s) (AUT(s)).\4\
---------------------------------------------------------------------------
\4\ For purposes of this exemption an In-House Plan may engage
in AUT's only through investment in a Pooled Fund.
---------------------------------------------------------------------------
Section II--Conditions
The exemption is conditioned upon adherence to the material facts
and representations described herein and upon satisfaction of the
following requirements:
(a)(1) The Securities to be purchased are either--
(i) Part of an issue registered under the Securities Act of 1933
(the 1933 Act) (15 U.S.C. 77a et seq.). If the Securities to be
purchased are part of an issue that is exempt from such registration
requirement, such Securities:
(A) Are issued or guaranteed by the United States or by any person
controlled or supervised by and acting as an instrumentality of the
United States pursuant to authority granted by the Congress of the
United States,
(B) Are issued by a bank,
(C) Are exempt from such registration requirement pursuant to a
federal statute other than the 1933 Act, or
(D) Are the subject of a distribution and are of a class which is
required to be registered under section 12 of the Securities Exchange
Act of 1934 (the 1934 Act) (15 U.S.C. 781), and are issued by an issuer
that has been subject to the reporting requirements of section 13 of
the 1934 Act (15 U.S.C. 78m) for a period of at least ninety (90) days
immediately preceding the sale of such Securities and that has filed
all reports required to be filed thereunder with the Securities and
Exchange Commission (SEC) during the preceding twelve (12) months; or
(ii) Part of an issue that is an Eligible Rule 144A Offering, as
defined in SEC Rule 10f-3 (17 CFR 270.10f-3(a)(4)). Where the Eligible
Rule 144A Offering of the Securities is of equity securities, the
offering syndicate shall obtain a legal opinion regarding the adequacy
of the disclosure in the offering memorandum;
(2) The Securities to be purchased are purchased prior to the end
of the first day on which any sales are made, pursuant to that
offering, at a price that is not more than the price paid by each other
purchaser of the Securities in that offering or in any concurrent
offering of the Securities, except that--
(i) If such Securities are offered for subscription upon exercise
of rights, they may be purchased on or before the fourth day preceding
the day on which the rights offering terminates; or
(ii) If such Securities are debt securities, they may be purchased
at a price that is not more than the price paid by each other purchaser
of the Securities in that offering or in any concurrent offering of the
Securities and may be purchased on a day subsequent to the end of the
first day on which any sales are made, pursuant to that offering,
provided that the interest rates, as of the date of such purchase, on
comparable debt securities offered to the public subsequent to the end
of the first day on which any sales are made and prior to the purchase
date are less than the interest rate of the debt Securities being
purchased; and
(3) The Securities to be purchased are offered pursuant to an
underwriting or selling agreement under which the members of the
syndicate are committed to purchase all of the Securities being
offered, except if--
(i) Such Securities are purchased by others pursuant to a rights
offering; or
(ii) Such Securities are offered pursuant to an over-allotment
option.
(b) The issuer of the Securities to be purchased pursuant to this
exemption must have been in continuous operation for not less than
three years, including the operation of any predecessors, unless the
Securities to be purchased--
(1) Are non-convertible debt securities rated in one of the four
highest rating categories by Standard & Poor's Rating Services, Moody's
Investors Service, Inc., Fitch Ratings, Inc., Dominion Bond Rating
Service Limited, Dominion Bond Rating Service, Inc., or any successors
thereto (collectively, the Rating Organizations); provided that none of
the Rating Organizations rates such securities in a category lower than
the fourth highest rating category; or
(2) Are debt securities issued or fully guaranteed by the United
States or by any person controlled or supervised by and acting as an
instrumentality of the United States pursuant to authority granted by
the Congress of the United States; or
(3) Are debt securities which are fully guaranteed by a person (the
Guarantor) that has been in continuous operation for not less than
three years, including the operation of any predecessors, provided that
such Guarantor has issued other securities registered under the 1933
Act; or if such Guarantor has issued other securities which are exempt
from such registration requirement, such Guarantor has been in
continuous operation for not less than three years, including the
operation of any predecessors, and such Guarantor:
(a) Is a bank, or
(b) Is an issuer of securities which are exempt from such
registration requirement, pursuant to a Federal statute other than the
1933 Act; or
(c) Is an issuer of securities that are the subject of a
distribution and are of a class which is required to be registered
under section 12 of the Securities Exchange Act of 1934 (the 1934
Act)(15 U.S.C. 781), and are issued by an issuer that has been subject
to the reporting requirements of section 13 of the 1934 Act (15 U.S.C.
78m) for a period of at least ninety (90) days immediately preceding
the sale of such securities and that has filed all reports required to
be filed hereunder with the SEC during the preceding twelve (12)
months.
(c) The aggregate amount of Securities of an issue purchased,
pursuant to this exemption, by the Asset Manager with: (i) The assets
of all Client Plans; and (ii) the assets, calculated on a pro-rata
basis, of all Client Plans and In-House Plans investing in Pooled Funds
managed by the Asset Manager; and (iii) the assets of plans to which
the Asset Manager renders investment advice within the meaning of 29
CFR 2510.3-21(c) does not exceed:
(1) 10 percent (10%) of the total amount of the Securities being
offered in an issue, if such Securities are equity securities;
(2) 35 percent (35%) of the total amount of the Securities being
offered in an issue, if such Securities are debt securities rated in
one of the four highest rating categories by at least one of the Rating
Organizations; provided that none of the Rating Organizations rates
such Securities in a category lower than the fourth highest rating
category; or
(3) 25 percent (25%) of the total amount of the Securities being
offered in an issue, if such Securities are debt securities rated in
the fifth or sixth highest rating categories by at least one of the
Rating Organizations; provided that none of the Rating Organizations
rates such Securities in a category lower than the sixth highest rating
category; and
(4) The assets of any single Client Plan (and the assets of any
Client Plans and any In-House Plans investing in Pooled Funds) may not
be used to purchase any Securities being offered, if such Securities
are debt securities rated lower than the sixth highest rating category
by any of the Rating Organizations;
(5) Notwithstanding the percentage of Securities of an issue
permitted to be acquired, as set forth in Section II(c)(1),
[[Page 71442]]
(2), and (3), above, of this exemption, the amount of Securities in any
issue (whether equity or debt securities) purchased, pursuant to this
exemption, by the Asset Manager on behalf of any single Client Plan,
either individually or through investment, calculated on a pro-rata
basis, in a Pooled Fund may not exceed three percent (3%) of the total
amount of such Securities being offered in such issue, and;
(6) If purchased in an Eligible Rule 144A Offering, the total
amount of the Securities being offered for purposes of determining the
percentages, described, above, in Section II(c)(1)-(3) and (5), is the
total of:
(i) The principal amount of the offering of such class of
Securities sold by underwriters or members of the selling syndicate to
``qualified institutional buyers'' (QIBs), as defined in SEC Rule 144A
(17 CFR 230.144A(a)(1)); plus
(ii) The principal amount of the offering of such class of
Securities in any concurrent public offering.
(d) The aggregate amount to be paid by any single Client Plan in
purchasing any Securities which are the subject of this exemption,
including any amounts paid by any Client Plan or In-House Plan in
purchasing such Securities through a Pooled Fund, calculated on a pro-
rata basis, does not exceed three percent (3%) of the fair market value
of the net assets of such Client Plan or In-House Plan, as of the last
day of the most recent fiscal quarter of such Client Plan or In-House
Plan prior to such transaction.
(e) The covered transactions are not part of an agreement,
arrangement, or understanding designed to benefit any Merrill Lynch/
BlackRock Related Entity.
(f) No Merrill Lynch/BlackRock Related Broker-Dealer receives,
either directly, indirectly, or through designation, any selling
concession, or other compensation or consideration that is based upon
the amount of Securities purchased by any single Client Plan, or that
is based on the amount of Securities purchased by Client Plans or In-
House Plans through Pooled Funds, pursuant to this exemption. In this
regard, a Merrill Lynch/BlackRock Related Broker-Dealer may not
receive, either directly or indirectly, any compensation or
consideration that is attributable to the fixed designations generated
by purchases of the Securities by the Asset Manager on behalf of any
single Client Plan or any Client Plan or In-House Plan in Pooled Funds.
(g)(1) The amount a Merrill Lynch/BlackRock Related Broker-Dealer
receives in management, underwriting, or other compensation or
consideration is not increased through an agreement, arrangement, or
understanding for the purpose of compensating such Merrill Lynch/
BlackRock Related Broker-Dealer for foregoing any selling concessions
for those Securities sold pursuant to this exemption. Except as
described above, nothing in this Section II(g)(1) shall be construed as
precluding a Merrill Lynch/BlackRock Related Broker-Dealer from
receiving management fees for serving as manager of an underwriting or
selling syndicate, underwriting fees for assuming the responsibilities
of an underwriter in the underwriting or selling syndicate, or other
compensation or consideration that is not based upon the amount of
Securities purchased by the Asset Manager on behalf of any single
Client Plan, or on behalf of any Client Plan or In-House Plan
participating in Pooled Funds, pursuant to this exemption; and
(2) Each Merrill Lynch/BlackRock Related Broker-Dealer shall
provide to the Asset Manager a written certification, signed by an
officer of such Merrill Lynch/BlackRock Related Broker-Dealer, stating
the amount that each such Merrill Lynch/BlackRock Related Broker-Dealer
received in compensation or consideration during the past quarter, in
connection with any offerings covered by this exemption, was not
adjusted in a manner inconsistent with Section II(e), (f), or (g) of
this exemption.
(h) The covered transactions are performed under a written
authorization executed in advance by an independent fiduciary of each
single Client Plan (the Independent Fiduciary), as defined, below, in
Section III(j).
(i) Prior to the execution by an Independent Fiduciary of a single
Client Plan of the written authorization described, above, in Section
II(h), the following information and materials (which may be provided
electronically) must be provided by the Asset Manager to such
Independent Fiduciary:
(1) A copy of the Notice of Proposed Exemption (the Notice) and a
copy of the final exemption (the Grant) as published in the Federal
Register, provided that the Notice and the Grant are supplied
simultaneously; and
(2) Any other reasonably available information regarding the
covered transactions that such Independent Fiduciary requests the Asset
Manager to provide.
(j) Subsequent to the initial authorization by an Independent
Fiduciary of a single Client Plan permitting the Asset Manager to
engage in the covered transactions on behalf of such single Client
Plan, the Asset Manager will continue to be subject to the requirement
to provide within a reasonable period of time any reasonably available
information regarding the covered transactions that the Independent
Fiduciary requests the Asset Manager to provide.
(k)(1) In the case of an existing employee benefit plan investor
(or existing In-House Plan investor, as the case may be) in a Pooled
Fund, such Pooled Fund may not engage in any covered transactions
pursuant to this exemption, unless the Asset Manager provides the
written information, as described, below, and within the time period
described, below, in this Section II(k)(2), to the Independent
Fiduciary of each such plan participating in such Pooled Fund (and to
the fiduciary of each such In-House Plan participating in such Pooled
Fund).
(2) The following information and materials, (which may be provided
electronically) shall be provided by the Asset Manager not less than 45
days prior to such Asset Manager engaging in the covered transactions
on behalf of a Pooled Fund, pursuant to this exemption; and provided
further that the information described, below, in this Section
II(k)(2)(i) and (iii) is supplied simultaneously:
(i) A notice of the intent of such Pooled Fund to purchase
Securities pursuant to this exemption, a copy of this Notice, and a
copy of the Grant, as published in the Federal Register;
(ii) Any other reasonably available information regarding the
covered transactions that the Independent Fiduciary of a plan (or
fiduciary of an In-House Plan) participating in a Pooled Fund requests
the Asset Manager to provide; and
(iii) A termination form expressly providing an election for the
Independent Fiduciary of a plan (or fiduciary of an In-House Plan)
participating in a Pooled Fund to terminate such plan's (or In-House
Plan's) investment in such Pooled Fund without penalty to such plan (or
In-House Plan). Such form shall include instructions specifying how to
use the form. Specifically, the instructions will explain that such
plan (or such In-House Plan) has an opportunity to withdraw its assets
from a Pooled Fund for a period of no more than 30 days after such
plan's (or such In-House Plan's) receipt of the initial notice of
intent, described, above, in Section II(k)(2)(i), and that the failure
of the Independent Fiduciary of such plan (or fiduciary of such In-
House Plan) to return the termination form to the Asset Manager in the
case of a plan (or In-House Plan) participating in a Pooled
[[Page 71443]]
Fund by the specified date shall be deemed to be an approval by such
plan (or such In-House Plan) of its participation in the covered
transactions as an investor in such Pooled Fund.
Further, the instructions will identify the Asset Manager and the
Merrill Lynch/BlackRock Related Broker-Dealer and will provide the
address of the Asset Manager. The instructions will state that this
exemption may be unavailable, unless the fiduciary of each plan
participating in the covered transactions as an investor in a Pooled
Fund is, in fact, independent of the Merrill Lynch/BlackRock Related
Entities. The instructions will also state that the fiduciary of each
such plan must advise the Asset Manager, in writing, if it is not an
``Independent Fiduciary,'' as that term is defined, below, in Section
III(j).
For purposes of this Section II(k), the requirement that the
fiduciary responsible for the decision to authorize the transactions
described, above, in Section I of this exemption for each plan be
independent of the Merrill Lynch/BlackRock Related Entities shall not
apply in the case of an In-House Plan.
(l)(1) In the case of each plan (and in the case of each In-House
Plan) whose assets are proposed to be invested in a Pooled Fund after
such Pooled Fund has satisfied the conditions set forth in this
exemption to engage in the covered transactions, the investment by such
plan (or by such In-House Plan) in the Pooled Fund is subject to the
prior written authorization of an Independent Fiduciary representing
such plan (or the prior written authorization by the fiduciary of such
In-House Plan, as the case may be), following the receipt by such
Independent Fiduciary of such plan (or by the fiduciary of such In-
House Plan, as the case may be) of the written information described,
above, in Section II(k)(2)(i) and (ii); provided that the Notice and
the Grant, described, above, in Section II(k)(2)(i) are provided
simultaneously.
(2) For purposes of this Section II(l), the requirement that the
fiduciary responsible for the decision to authorize the transactions
described, above, in Section I of this exemption for each plan
proposing to invest in a Pooled Fund be independent of the Merrill
Lynch/BlackRock Related Entities shall not apply in the case of an In-
House Plan.
(m) Subsequent to the initial authorization by an Independent
Fiduciary of a plan (or by a fiduciary of an In-House Plan) to invest
in a Pooled Fund that engages in the covered transactions, the Asset
Manager will continue to be subject to the requirement to provide
within a reasonable period of time any reasonably available information
regarding the covered transactions that the Independent Fiduciary of
such plan (or the fiduciary of such In-House Plan, as the case may be)
requests the Asset Manager to provide.
(n) At least once every three months, and not later than 45 days
following the period to which such information relates, the Asset
Manager shall furnish:
(1) In the case of each single Client Plan that engages in the
covered transactions, the information described, below, in this Section
II(n)(3)-(7), to the Independent Fiduciary of each such single Client
Plan.
(2) In the case of each Pooled Fund in which a Client Plan (or in
which an In-House Plan) invests, the information described, below, in
this Section II(n)(3)-(6) and (8), to the Independent Fiduciary of each
such Client Plan (and to the fiduciary of each such In-House Plan)
invested in such Pooled Fund.
(3) A quarterly report (the Quarterly Report) (which may be
provided electronically) which discloses all the Securities purchased
pursuant to this exemption during the period to which such report
relates on behalf of the Client Plan, In-House Plan, or Pooled Fund to
which such report relates, and which discloses the terms of each of the
transactions described in such report, including:
(i) The type of Securities (including the rating of any Securities
which are debt securities) involved in each transaction;
(ii) The price at which the Securities were purchased in each
transaction;
(iii) The first day on which any sale was made during the offering
of the Securities;
(iv) The size of the issue of the Securities involved in each
transaction;
(v) The number of Securities purchased by the Asset Manager for the
Client Plan, In-House Plan, or Pooled Fund to which the transaction
relates;
(vi) The identity of the underwriter from whom the Securities were
purchased for each transaction;
(vii) The underwriting spread in each transaction (i.e., the
difference, between the price at which the underwriter purchases the
securities from the issuer and the price at which the securities are
sold to the public);
(viii) The price at which any of the Securities purchased during
the period to which such report relates were sold; and
(ix) The market value at the end of the period to which such report
relates of the Securities purchased during such period and not sold;
(4) The Quarterly Report contains:
(i) A representation that the Asset Manager has received a written
certification signed by an officer of each Merrill Lynch/BlackRock
Related Broker-Dealer, as described, above, in Section II(g)(2),
affirming that, as to each AUT covered by this exemption during the
past quarter, such Merrill Lynch/BlackRock Related Broker-Dealer acted
in compliance with Section II(e), (f), and (g) of this exemption, and
(ii) A representation that copies of such certifications will be
provided upon request;
(5) A disclosure in the Quarterly Report that states that any other
reasonably available information regarding a covered transaction that
an Independent Fiduciary (or fiduciary of an In-House Plan) requests
will be provided, including, but not limited to:
(i) The date on which the Securities were purchased on behalf of
the Client Plan (or the In-House Plan) to which the disclosure relates
(including Securities purchased by Pooled Funds in which such Client
Plan (or such In-House Plan) invests;
(ii) The percentage of the offering purchased on behalf of all
Client Plans (and the pro-rata percentage purchased on behalf of Client
Plans and In-House Plans investing in Pooled Funds); and
(iii) The identity of all members of the underwriting syndicate;
(6) The Quarterly Report discloses any instance during the past
quarter where the Asset Manager was precluded for any period of time
from selling Securities purchased under this exemption in that quarter
because of its relationship to a Merrill Lynch/BlackRock Related
Broker-Dealer and the reason for this restriction;
(7) Explicit notification, prominently displayed in each Quarterly
Report sent to the Independent Fiduciary of each single Client Plan
that engages in the covered transactions that the authorization to
engage in such covered transactions may be terminated, without penalty
to such single Client Plan, within five (5) days after the date that
the Independent Fiduciary of such single Client Plan informs the person
identified in such notification that the authorization to engage in the
covered transactions is terminated; and
(8) Explicit notification, prominently displayed in each Quarterly
Report sent to the Independent Fiduciary of each Client Plan (and to
the fiduciary of each In-House Plan) that engages in the covered
transactions through a Pooled Fund that the investment in such Pooled
Fund may be terminated, without penalty to such Client Plan (or such
In-House Plan), within such time as may be necessary to effect the
[[Page 71444]]
withdrawal in an orderly manner that is equitable to all withdrawing
plans and to the non-withdrawing plans, after the date that that the
Independent Fiduciary of such Client Plan (or the fiduciary of such In-
House Plan, as the case may be) informs the person identified in such
notification that the investment in such Pooled Fund is terminated.
(o) For purposes of engaging in covered transactions, each Client
Plan (and each In-House Plan) shall have total net assets with a value
of at least $50 million (the $50 Million Net Asset Requirement). For
purposes of engaging in covered transactions involving an Eligible Rule
144A Offering,\5\ each Client Plan (and each In-House Plan) shall have
total net assets of at least $100 million in securities of issuers that
are not affiliated with such Client Plan (or such In-House Plan, as the
case may be) (the $100 Million Net Asset Requirement).
---------------------------------------------------------------------------
\5\ SEC Rule 10f-3(a)(4), 17 CFR 270.10f-3(a)(4), states that
the term ``Eligible Rule 144A Offering'' means an offering of
securities that meets the following conditions:
(i) The securities are offered or sold in transactions exempt
from registration under section 4(2) of the Securities Act of 1933
[15 U.S.C. 77d(d)], rule 144A there under [Sec. 230.144A of this
chapter], or rules 501-508 there under [Sec. Sec. 230.501-230-508
of this chapter];
(ii) The securities are sold to persons that the seller and any
person acting on behalf of the seller reasonably believe to include
qualified institutional buyers, as defined in Sec. 230.144A(a)(1)
of this chapter; and
(iii) The seller and any person acting on behalf of the seller
reasonably believe that the securities are eligible for resale to
other qualified institutional buyers pursuant to Sec. 230.144A of
this chapter.
---------------------------------------------------------------------------
For purposes of a Pooled Fund engaging in covered transactions,
each Client Plan (and each In-House Plan) in such Pooled Fund shall
have total net assets with a value of at least $50 million.
Notwithstanding the foregoing, if each such Client Plan (and each such
In-House Plan) in such Pooled Fund does not have total net assets with
a value of at least $50 million, the $50 Million Net Asset Requirement
will be met, if 50 percent (50%) or more of the units of beneficial
interest in such Pooled Fund are held by Client Plans (or by In-House
Plans) each of which has total net assets with a value of at least $50
million. For purposes of a Pooled Fund engaging in covered transactions
involving an Eligible Rule 144A Offering, each Client Plan (and each
In-House Plan) in such Pooled Fund shall have total net assets of at
least $100 million in securities of issuers that are not affiliated
with such Client Plan (or such In-House Plan, as the case may be).
Notwithstanding the foregoing, if each such Client Plan (and each such
In-House Plan) in such Pooled Fund does not have total net assets of at
least $100 million in securities of issuers that are not affiliated
with such Client Plan (or In-House Plan, as the case may be), the $100
Million Net Asset Requirement will be met if 50 percent (50%) or more
of the units of beneficial interest in such Pooled Fund are held by
Client Plans (or by In-House Plans) each of which have total net assets
of at least $100 million in securities of issuers that are not
affiliated with such Client Plan (or such In-House Plan, as the case
may be), and the Pooled Fund itself qualifies as a QIB, as determined
pursuant to SEC Rule 144A (17 CFR 230.144A(a)(F)).
For purposes of the net asset requirements described, above, in
this Section II(o), where a group of Client Plans is maintained by a
single employer or controlled group of employers, as defined in section
407(d)(7) of the Act, the $50 Million Net Asset Requirement (or in the
case of an Eligible Rule 144A Offering, the $100 Million Net Asset
Requirement) may be met by aggregating the assets of such Client Plans,
if the assets of such Client Plans are pooled for investment purposes
in a single master trust.
(p) No more than 20 percent of the assets of a Pooled Fund, at the
time of a covered transaction, are comprised of assets of In-House
Plans for which the Asset Manager or a Merrill Lynch/BlackRock Related
Entity exercises investment discretion.
(q) The Asset Manager and the Merrill Lynch/BlackRock Related
Broker-Dealer, as applicable, maintain, or cause to be maintained, for
a period of six (6) years from the date of any covered transaction such
records as are necessary to enable the persons, described, below, in
Section II(r), to determine whether the conditions of this exemption
have been met, except that--
(1) No party in interest with respect to a plan which engages in
the covered transactions, other than the Asset Manager, and the Merrill
Lynch/BlackRock Related Broker-Dealer, as applicable, shall be subject
to a civil penalty under section 502(i) of the Act or the taxes imposed
by section 4975(a) and (b) of the Code, if such records are not
maintained, or not available for examination, as required, below, by
Section II(r); and
(2) A prohibited transaction shall not be considered to have
occurred if, due to circumstances beyond the control of the Asset
Manager, or the Merrill Lynch/BlackRock Related Broker-Dealer, as
applicable, such records are lost or destroyed prior to the end of the
six-year period.
(r)(1) Except as provided, below, in Section II(r)(2), and
notwithstanding any provisions of subsections (a)(2) and (b) of section
504 of the Act, the records referred to, above, in Section II(q) are
unconditionally available at their customary location for examination
during normal business hours by--
(i) Any duly authorized employee or representative of the
Department of Labor (the Department), the Internal Revenue Service, or
the SEC; or
(ii) Any fiduciary of any plan that engages in the covered
transactions, or any duly authorized employee or representative of such
fiduciary; or
(iii) Any employer of participants and beneficiaries and any
employee organization whose members are covered by a plan that engages
in the covered transactions, or any authorized employee or
representative of these entities; or
(iv) Any participant or beneficiary of a plan that engages in the
covered transactions, or duly authorized employee or representative of
such participant or beneficiary;
(2) None of the persons described, above, in Section II(r)(1)(ii)-
(iv) shall be authorized to examine trade secrets of the Asset Manager,
or the Merrill Lynch/BlackRock Related Broker-Dealer, or commercial or
financial information which is privileged or confidential; and
(3) Should the Asset Manager, or the Merrill Lynch/BlackRock
Related Broker-Dealer refuse to disclose information on the basis that
such information is exempt from disclosure, pursuant to Section
II(r)(2), above, the Asset Manager shall, by the close of the thirtieth
(30th) day following the request, provide a written notice advising
that person of the reasons for the refusal and that the Department may
request such information.
Section III--Definitions
(a) The term, ``the Applicants,'' means BlackRock Inc. and Merrill
Lynch & Co, Inc.
(b) The term, ``Merrill Lynch/BlackRock Related Broker-Dealer,''
means any broker-dealer that is a Merrill Lynch/BlackRock Related
Entity that meets the requirements of this exemption. Such Merrill
Lynch/BlackRock Related Broker-Dealer may participate in an
underwriting or selling syndicate as a manager or member. The term,
``manager,'' means any member of an underwriting or selling syndicate
who, either alone or together with other members of the syndicate, is
authorized to act on behalf of the members of the syndicate in
connection with the sale and distribution of the Securities, as
[[Page 71445]]
defined, below, in Section III(k), being offered or who receives
compensation from the members of the syndicate for its services as a
manager of the syndicate.
(c) The term, ``Merrill Lynch/BlackRock Related Entity(s)''
includes all entities listed in this Section III(c)(i) and (ii): (i)
Merrill Lynch and any person directly or indirectly, through one or
more intermediaries, controlling, controlled by, or under common
control with Merrill Lynch, and (ii) BlackRock and any person directly
or indirectly, through one or more intermediaries, controlling,
controlled by, or under common control with, BlackRock. For purposes of
this exemption, the definition of a Merrill Lynch/BlackRock Related
Entity shall include any entity that satisfies such definition in the
future.
(d) The term, ``BlackRock Related Entity'' or ``BlackRock Related
Entities,'' means BlackRock and any person directly or indirectly,
through one or more intermediaries, controlling, controlled by, or
under common control with BlackRock.
(e) The term, ``Merrill Lynch Related Entity'' or ``Merrill Lynch
Related Entities,'' means Merrill Lynch and any person directly or
indirectly, through one or more intermediaries, controlling, controlled
by, or under common control with Merrill Lynch.
(f) The term, ``Asset Manager,'' means a BlackRock Related Entity,
as defined, above, in Section III(d). For purposes of this exemption,
the Asset Manager must be registered with the Securities and Exchange
Commission as an investment advisor, have total client assets under
management in excess of $5 billion, have shareholders' or partners'
equity in excess of $1 million, and must satisfy the definition of a
``qualified professional asset manager'' (QPAM), as that term is
defined in Part V(a) of PTE 84-14, 49 Fed. Reg. 9494 (Mar. 13, 1984),
as amended, 70 Fed. Reg. 49305 (Aug. 23, 2005). Accordingly, the Asset
Manager must have total client asset under its management and control
in excess of $5 billion, as of the last day of it most recent fiscal
year, and shareholders' or partners' equity in excess of $1 million in
addition to satisfying the requirements for a QPAM under Part V(a) of
PTE 84-14.
(g) The term, ``control,'' means the power to exercise a
controlling influence over the management or policies of a person other
than an individual.
(h) The term, ``Client Plan(s),'' means an employee benefit plan or
employee benefit plans that are subject to the Act and/or the Code, and
for which plan(s) an Asset Manager exercises discretionary authority or
discretionary control respecting management or disposition of some or
all of the assets of such plan(s), but excludes In-House Plans, as
defined, below, in Section III(o).
(i) The term, ``Pooled Fund(s),'' means a common or collective
trust fund(s) or a pooled investment fund(s): (i) In which employee
benefit plan(s) subject to the Act and/or Code invest, (ii) which is
maintained by an Asset Manager, and (iii) for which such Asset Manager
exercises discretionary authority or discretionary control respecting
the management or disposition of the assets of such fund(s).
(j)(1) The term, ``Independent Fiduciary,'' means a fiduciary of a
plan who is unrelated to, and independent of any Merrill Lynch/
BlackRock Related Entity. For purposes of this exemption, a fiduciary
of a plan will be deemed to be unrelated to, and independent of any
Merrill Lynch/BlackRock Related Entity, if such fiduciary represents
that neither such fiduciary, nor any individual responsible for the
decision to authorize or terminate authorization for the transactions
described, above, in Section I of this exemption, is an officer,
director, or highly compensated employee (within the meaning of section
4975(e)(2)(H) of the Code) of any Merrill Lynch/BlackRock Related
Entity, and represents that such fiduciary shall advise the Asset
Manager within a reasonable period of time after any change in such
facts occur.
(2) Notwithstanding anything to the contrary in this Section
III(j), a fiduciary of a plan is not independent:
(i) If such fiduciary, directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control
with any Merrill Lynch/BlackRock Related Entity;
(ii) If such fiduciary directly or indirectly receives any
compensation or other consideration from any Merrill Lynch/BlackRock
Related Entity for his or her own personal account in connection with
any transaction described in this exemption;
(iii) If any officer, director, or highly compensated employee
(within the meaning of section 4975(e)(2)(H) of the Code) of the Asset
Manager responsible for the transactions described, above, in Section I
of this exemption, is an officer, director, or highly compensated
employee (within the meaning of section 4975(e)(2)(H) of the Code) of
the sponsor of a plan or of the fiduciary responsible for the decision
to authorize or terminate authorization for the transactions described,
above, in Section I. However, if such individual is a director of the
sponsor of a plan or of the responsible fiduciary, and if he or she
abstains from participation in: (A) The choice of such plan's
investment manager/adviser; and (B) the decision to authorize or
terminate authorization for transactions described, above, in Section
I, then Section III(j)(2)(iii) shall not apply.
(3) The term, ``officer,'' means a president, any vice president in
charge of a principal business unit, division, or function (such as
sales, administration, or finance), or any other officer who performs a
policy-making function for a Merrill Lynch/BlackRock Related Entity.
(k) The term, ``Securities,'' shall have the same meaning as
defined in section 2(36) of the Investment Company Act of 1940 (the
1940 Act), as amended (15 U.S.C. 80a-2(36)(1996)). For purposes of this
exemption, mortgage-backed or other asset-backed securities rated by
one of the Rating Organizations, as defined, below, in Section III(n),
will be treated as debt securities.
(l) The term, ``Eligible Rule 144A Offering,'' shall have the same
meaning as defined in SEC Rule 10f-3(a)(4) (17 CFR 270. 10f-3(a)(4))
under the 1940 Act.
(m) The term, ``qualified institutional buyer,'' or the term,
``QIB,'' shall have the same meaning as defined in SEC Rule 144A (17
CFR 230.144A(a)(1)) under the 1933 Act.
(n) The term, ``Rating Organizations,'' means Standard & Poor's
Rating Services, Moody's Investors Service, Inc., Fitch Ratings Inc.,
Dominion Bond Ratings Service Limited, and Dominion Bond Rating
Service, Inc., or any successors thereto.
(o) The term, ``In-House Plan(s),'' means an employee benefit
plan(s) that is subject to the Act and/or the Code, and that is
sponsored by: (i) A Merrill Lynch Related Entity, as defined, above, in
Section III(e), or (ii) a BlackRock Related Entity, as defined, above,
in Section III(d), for their respective employees.
The availability of this exemption is subject to the express
condition that the material facts and representations contained in the
application for exemption are true and complete and accurately describe
all material terms of the transactions. In the case of continuing
transactions, if any of the material facts or representations described
in the applications change, the exemption will cease to apply as of the
date of such change. In the event of any such change, an application
for a new exemption must be made to the Department.
[[Page 71446]]
Effective Date: This exemption will be effective as of the date the
Grant is published in the Federal Register.
Written Comments
In the Notice, the Department invited all interested persons to
submit written comments and requests for a hearing on the proposed
exemption within forty-five (45) days of the date of the publication of
the Notice in the Federal Register on September 10, 2007. All comments
and requests for a hearing were due by October 10, 2007. During the
comment period, the Department received no comments or requests for a
hearing. However, in order to clarify the meaning of the term, ``Asset
Manager,'' the Department has determined to delete the last sentence in
the definition of the term, ``Asset Manager,'' as set forth in Section
III(f) of the Notice, at 72 FR 51680, column 1, lines 11-20, and to
substitute the following sentence, ``Accordingly, the Asset Manager
must have total client asset under its management and control in excess
of $5 billion, as of the last day of its most recent fiscal year, and
shareholders' or partners' equity in excess of $1 million in addition
to satisfying the requirements for a QPAM under Part V(a) of PTE 84-
14.''
FOR FURTHER INFORMATION CONTACT: Angelena C. Le Blanc of the
Department, telephone (202) 693-8540. (This is not a toll-free number).
Gastroenterology and Oncology Associates, P.A. Profit Sharing Plan and
Trust (the Plan), Located in St. Petersburg, FL
[Prohibited Transaction Exemption 2007-21; Exemption Application No. D-
11441]
Exemption
The restrictions of sections 406(a), 406(b)(1) and (b)(2) of the
Act and the sanctions resulting from the application of section 4975 of
the Code, by reason of section 4975(c)(1)(A) through (E) of the Code,
shall not apply to the proposed sale of certain shares of common stock
(the Stock) issued by Alden Enterprises, Inc., an unrelated party, by
the individually directed account in the Plan (the Account) of
Jayaprakash K. Kamath, M.D. (Dr. Kamath), to Geetha J. Kamath, M.D.,
(Mrs. Kamath), Dr. Kamath's spouse and a party in interest with respect
to the Plan.
This exemption is subject to the following conditions:
(a) The sale of the Stock by the Account to Mrs. Kamath is a one-
time transaction for cash.
(b) The Stock is sold to Mrs. Kamath for a price that reflects the
fair market value of the Stock, as determined by a qualified,
independent appraiser (the Appraiser).
(c) The closing of the sale (the Closing Date) occurs at a time
that is mutually agreed upon by Mrs. Kamath and the Plan trustees (the
Trustees) within 30 days of the Department's approval of the final
exemption.
(d) As of the Closing Date, the Appraiser reviews the assumptions
previously made in determining the appraised value of the Stock to see
whether there has been a 3% or more increase (Material Increase) in the
fair market value of the Stock between December 31, 2006 (the Appraisal
Date) and the Closing Date.
(e) If the Appraiser determines that there has been no Material
Increase in the fair market value of the Stock on the Closing Date, the
Appraiser issues a letter to the parties to the sale to such effect and
the sale price of the Stock remains at the value determined on the
Appraisal Date.
(f) If the Appraiser determines that there has been a Material
Increase in the fair market value of the Stock, he advises the parties
to the transaction, in writing, as to the increased value as of the
Closing Date. Then, the sale price for the Stock is revised to reflect
the increased value and the amount of such increase is paid to the
Trustees by Mrs. Kamath following the receipt of the updated appraisal
report from the Appraiser setting forth the increased value of the
Stock.
(g) The sale proceeds from the transaction are credited to Dr.
Kamath's Account simultaneously with the transfer of the Stock's title
to Mrs. Kamath.
(h) The Account is not responsible for paying any fees,
commissions, or other costs or expenses associated with the sale of the
Stock.
(i) The terms and conditions of the Stock sale remain at least as
favorable to the Account as the terms and conditions obtainable under
similar circumstances negotiated at arm's length with an unrelated
party.
Written Comments
In the notice of proposed exemption, the Department invited all
interested persons to submit written comments and requests for a
hearing with respect to the proposed exemption within (30) thirty days
of the publication of the notice of pendency in the Federal Register on
October 26, 2007. All comments and requests for a hearing were due by
November 26, 2007.
During the comment period, the Department received no comments or
hearing requests. However, the Department has noted two errors in the
proposed exemption that require either revision or clarification. In
this regard, the reference to the Exemption Application Number
appearing on pages 60889 and 60890 of the proposal has been modified in
the grant notice to read ``D-11441'' instead of ``D-11141.'' In
addition, on page 60891 of the proposal, in the paragraph captioned
``Notice to Interested Persons,'' the Department wishes to clarify that
the phrase ``whose Account will be affected by the proposed
transaction,'' should have been inserted after that portion of the
sentence which states ``Because Dr. Kamath is the only participant in
the Plan, * * *''
Accordingly, the Department has considered the entire record and
has determined to grant the exemption. 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 October 26, 2007 at 72 FR 60889.
FOR FURTHER INFORMATION CONTACT: Ms. Jan D. Broady of the Department,
telephone (202) 693-8556. (This is not a toll-free number.)
General Information
The attention of interested persons is directed to the following:
(1) The fact that a transaction is the subject of an exemption
under section 408(a) of the Act and/or section 4975(c)(2) of the Code
does not relieve a fiduciary or other party in interest or disqualified
person from certain other provisions to which the exemption does not
apply and the general fiduciary responsibility provisions of section
404 of the Act, which among other things require a fiduciary to
discharge his duties respecting the plan solely in the interest of the
participants and beneficiaries of the plan and in a prudent fashion in
accordance with section 404(a)(1)(B) of the Act; nor does it affect the
requirement of section 401(a) of the Code that the plan must operate
for the exclusive benefit of the employees of the employer maintaining
the plan and their beneficiaries;
(2) This exemption is 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 this exemption is subject to the express
condition that the material facts and representations
[[Page 71447]]
contained in the application accurately describes all material terms of
the transaction which is the subject of the exemption.
Signed at Washington, DC, this 11th day of December, 2007.
Ivan Strasfeld,
Director of Exemption Determinations, Employee Benefits Security
Administration, U.S. Department of Labor.
[FR Doc. E7-24313 Filed 12-14-07; 8:45 am]
BILLING CODE 4510-29-P
|