EBSA Notices

[Prohibited Transaction Exemption 2002-06; Exemption Application No. D-10894, et al.] Grant of Individual Exemptions; Brookshire Brothers, Ltd., et al.   [1/18/2002]
[PDF]
[Federal Register: January 18, 2002 (Volume 67, Number 13)]
[Notices]               
[Page 2686-2688]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr18ja02-91]                         

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DEPARTMENT OF LABOR

Pension and Welfare Benefits Administration

[Prohibited Transaction Exemption 2002-06; Exemption Application No. D-
10894, et al.]

 
Grant of Individual Exemptions; Brookshire Brothers, Ltd., et al.

AGENCY: Pension and Welfare Benefits Administration, Labor.

ACTION: Grant of individual exemptions.

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SUMMARY: This document contains exemptions issued by the Department of 
Labor (the Department) from certain of the prohibited transaction 
restrictions of the Employee Retirement Income Security Act of 1974 
(the Act) and/or the Internal Revenue Code of 1986 (the Code).
    Notices were published in the Federal Register of the pendency 
before the Department of proposals to grant such exemptions. The 
notices set forth a summary of facts and representations contained in 
each application for exemption and referred interested persons to the 
respective applications for a complete statement of the facts and 
representations. The applications have been available for public 
inspection at the Department in Washington, DC. The notices also 
invited interested persons to submit comments on the requested 
exemptions to the Department. In addition, the notices stated that any 
interested person might submit a written request that a public hearing 
be held (where appropriate). The applicants have represented that they 
have complied with the requirements of the notification to interested 
persons. No public comments and no requests for a hearing, unless 
otherwise stated, were received by the Department.
    The notices of proposed exemption were issued and the exemptions 
are being granted solely by the Department because, effective December 
31, 1978, section 102 of Reorganization Plan No. 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 exemptions are administratively feasible;

[[Page 2687]]

    (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.

Brookshire Brothers, Ltd. (Brookshire) Located in Lufkin, Texas

[Prohibited Transaction Exemption 2002-06 Application No. D-10894]

Exemption

Section I. Transaction
    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 to the establishment by Brookshire of a minimum price 
guarantee (the Minimum Price Guarantee) for the valuation and purchase 
by Brookshire of Profit Sharing Stock owned by the Brookshire Brothers 
Employee Stock Ownership Plan (the ESOP), provided the conditions set 
forth in Section II are satisfied:
Section II. Conditions
    A. The ESOP shall pay no consideration, interest or other fee or 
expense in connection with the Minimum Price Guarantee.
    B. The Minimum Price Guarantee shall expire on the first date after 
December 22, 1999 upon which the fair market value of a share of the 
Profit Sharing Stock exceeds the minimum price per share established by 
the Minimum Price Guarantee.
Section III. Definitions
    A. The term ``Brookshire'' means Brookshire Brothers, Ltd., a Texas 
limited partnership with headquarters in Lufkin, Texas.
    B. The term ``Profit Sharing Plan'' means the Brookshire Brothers 
Profit Sharing Plan, as amended and restated effective April 30, 1988.
    C. The term ``Profit Sharing Stock'' means approximately 600,182 
shares of the common stock of Brookshire Brothers Holding, Inc., 
Brookshire's parent company, transferred from the Profit Sharing Plan 
to the ESOP on November 19, 1999.
    D. The term ``Minimum Price Guarantee'' means the guarantee 
established pursuant to the ESOP whereby the value of the Profit 
Sharing Stock will be equal to the price of such stock prior to 
December 22, 1999 plus a 4% annual increase.
    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 (the Notice) published on September 7, 
2001 at 66 FR 46837.

EFFECTIVE DATE: The exemption is effective as of November 19, 1999.

Written Comments

    The Department received one comment letter with respect to the 
Notice. The comment letter was submitted by the Applicant's legal 
counsel, and concerned a typographical error in the Notice. The comment 
stated that the Profit Sharing Stock was transferred from the Profit 
Sharing Plan to the ESOP on November 19, 1999, rather than December 19, 
1999 as stated in the Notice. Accordingly, the Applicant noted the 
following corrections:
    First, Section III.C. would be restated to read as follows: ``The 
term `Profit Sharing Stock' means approximately 600,182 shares of the 
common stock of Brookshire Brothers Holding, Inc., Brookshire's parent 
company, transferred from the Profit Sharing Plan to the ESOP on 
November 19, 1999.''
    Second, the effective date of the exemption would be changed from 
December 19, 1999 to November 19, 1999.
    Third, the second sentence of paragraph 3 of the Summary of Facts 
and Representations would read as follows: ``As of November 19, 1999, 
the Profit Sharing Plan held approximately 600,182 shares of the common 
stock (the Stock) of Brookshire Brothers Holding, Inc. (Holding), 
Brookshire's parent company.''
    Finally, the first sentence of paragraph 4 of the Summary of Facts 
and Representations would read as follows: ``On November 19, 1999, the 
Stock was transferred from the Profit Sharing Plan to the ESOP.''
    The Department concurs with the Applicant's comment and has 
modified the language of the final exemption accordingly.
    After giving full consideration to the entire record, including the 
written comment, the Department has decided to grant the exemption as 
modified herein.

FOR FURTHER INFORMATION CONTACT: Karen Lloyd of the Department, 
telephone (202) 693-8540. (This is not a toll-free number).

Ford Motor Company (Ford) Located in Dearborn, Michigan

[Prohibited Transaction Exemption 2002-07; Exemption Application No. L-
10937]

Exemption

    The restrictions of section 406(a) and 406(b) of the Employee 
Retirement Income Security Act of 1974 (ERISA) shall not apply, 
effective August 4, 2000, to: (1) the receipt by the Ford-UAW Benefits 
Trust (the VEBA) of approximately $2.9 billion of certain securities 
(the Partnership Securities) pursuant to the redemption (the 
Redemption) by the VEBA of its interest in the Ford Enhanced Investment 
Partnership and the Ford Super-Enhanced Investment Partnership 
(collectively, the Partnerships); and (2) the transfer of the 
Partnership Securities by the VEBA to Ford in exchange for the transfer 
of approximately $2.9 billion of certain securities (the Ford-Owned 
Securities) to the VEBA (the Exchange), provided that the following 
conditions were met:
    (a) The terms of the Redemption and the terms of the Exchange were 
at least as favorable to the VEBA as the terms that would have been 
available in arm's-length transactions between unrelated parties;
    (b) The total value of the Partnership Securities received by the 
VEBA pursuant to the Redemption equaled the value of the VEBA's pro 
rata interest in the Partnerships on the date of the Redemption;
    (c) The net asset value of the VEBA's interest in the Partnerships 
and each Partnership Security received by the VEBA pursuant to the 
Redemption were valued in the same manner using August 4, 2000 close-
of-market bid prices as determined by an independent, recognized 
pricing service;
    (d) In the case of the Exchange, the VEBA received Ford-Owned 
Securities equal in value to the Partnership Securities transferred to 
Ford;
    (e) Each Partnership Security transferred to Ford by the VEBA 
pursuant to the Exchange was valued according to its August 4, 2000 
close-of-market bid price as determined by an independent, recognized 
pricing service;
    (f) Each Ford-Owned Security transferred to the VEBA by Ford 
pursuant to the Exchange was valued according to its August 4, 2000 
close-of-market bid price as determined by an independent, recognized 
pricing service, or to the extent that a price could not be obtained in 
this manner, such security was priced according to

[[Page 2688]]

the average of three (or a minimum of two) August 4, 2000 close-of-
market bid prices obtained from independent market-makers;
    (g) The Ford-Owned Securities transferred to the VEBA pursuant to 
the Exchange were not issued by Ford and were comprised solely of cash 
and marketable short-term debt securities under the management of 
unrelated, independent investment managers;
    (h) The Partnership Securities transferred to Ford pursuant to the 
Exchange were comprised solely of cash and marketable short-term debt 
securities;
    (i) Upon the completion of the Exchange, no single issue of Ford-
Owned Securities accounted for more than 25% of the assets of the VEBA;
    (j) State Street Bank and Trust Company (SSBT), acting as an 
independent fiduciary on behalf the VEBA, monitored the Redemption and 
the Exchange; and
    (k) SSBT, as independent fiduciary, approved the Redemption and the 
Exchange upon determining that the Redemption and the Exchange were in 
the best interests of the VEBA and its participants.
    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 27, 2001 at 66 
FR 49415.

FOR FURTHER INFORMATION CONTACT: Christopher Motta of the Department, 
telephone (202) 693-8544 (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, DC, this 15th day of January, 2002.
Ivan Strasfeld,
Director of Exemption Determinations, Pension and Welfare Benefits 
Administration, Department of Labor.
[FR Doc. 02-1365 Filed 1-17-02; 8:45 am]
BILLING CODE 4510-29-P