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EBSA Notices

Exemptions From Certain Prohibited Transaction Restrictions   [6/13/2011]
[PDF]
Federal Register, Volume 76 Issue 113 (Monday, June 13, 2011)
[Federal Register Volume 76, Number 113 (Monday, June 13, 2011)]
[Notices]
[Pages 34253-34260]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-14521]


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DEPARTMENT OF LABOR

Employee Benefits Security Administration


Exemptions From Certain Prohibited Transaction Restrictions

AGENCY: Employee Benefits Security 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 
(ERISA or the Act) and/or the Internal Revenue Code of 1986 (the Code). 
This notice includes the following: D-11632, 2011-10, William W. 
Etherington IRA (the Plan); D-11642, 2011-11, H-E-B Brand Savings and 
Retirement Plan (the Plan) and H.E. Butt Grocery Company (the Company); 
L-11625, 2011-12, The International Union of Painters and Allied Trades 
Finishing Trades Institute (the Plan or the Applicants); and L-11641, 
2011-13, Ford Motor Company (the Applicant)

SUPPLEMENTARY INFORMATION: 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.
    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.

William W. Etherington IRA (the IRA); Located in Park City, Utah; 
[Prohibited Transaction Exemption 2011-10; Exemption Application No. D-
11632]

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 sale (the Sale) by the IRA to William W. Etherington 
and his wife, Paula D. Etherington (the Applicants), disqualified 
persons with respect to the IRA,\1\ of the IRA's 80% interest (the 
Interest) in certain residential real property (the Property); provided 
that:
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    \1\ 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.
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    (a) The terms and conditions of the Sale are at least as favorable 
to the IRA

[[Page 34254]]

as those obtainable in an arm's length transaction with an unrelated 
party;
    (b) The Sale is a one-time transaction for cash;
    (c) As consideration, the IRA receives the fair market value of the 
Interest as determined by a qualified, independent appraiser, in an 
updated appraisal on the date of Sale; and
    (d) The IRA pays no real estate commissions, costs, fees, or other 
expenses with respect to the Sale.

Written Comments

    The Department invited all interested persons to submit written 
comments and/or requests for a public hearing with respect to the 
notice of proposed exemption on or before April 14, 2011. During the 
comment period, the Department received one written comment from the 
Applicants, which was submitted by Mr. Etherington, the owner of the 
IRA. The Department received no hearing requests.

The Applicants' Comment

    The Applicants' comment concerned their desire to use a different 
qualified, independent appraiser than Mary Mau of Second Opinion 
Appraisal, Inc. (the Appraiser), the individual who performed the 
original appraisal (the Appraisal) of the Property on February 10, 
2010, in order to determine the fair market value of the Interest. 
Condition (c) of the proposed exemption provides that the Interest's 
appraised value, which is based on the underlying value of the 
Property, must be updated on the date of Sale.\2\ Because the date of 
the Sale will have occurred in excess of one year after the Property's 
Appraisal, the Department is requiring the Applicants to obtain an 
updated appraisal (the Update) on or before the date of Sale in order 
to satisfy the requirements of Condition (c) of the proposal. To the 
extent that the Update is obtained prior to the Sale, the Appraiser 
must provide a confirmation (either orally or in writing) that the fair 
market value of the Property on the date of the Sale has not changed. 
If the Appraiser determines that there has been a change in the fair 
market value of the Property on the date of the Sale, then they must 
provide an additional Update (either orally or in writing) setting 
forth the fair market value of the Property. This will ensure that the 
Applicants will purchase the Interest from the IRA at fair market 
value. Mr. Etherington has requested that the Applicants be allowed to 
obtain the Update, including any confirmation or additional Update of 
the Property's fair market value on the date of the Sale, using a 
qualified, independent appraiser other than the Appraiser.
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    \2\ Representations 27-30 of the notice of proposed exemption 
describe the Appraisal and the approaches considered by the 
Appraiser.
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    In conversations with the Department, Mr. Etherington stated that 
he was dissatisfied with the responsiveness of the Appraiser and the 
cost of her services. In this regard, Mr. Etherington represented that, 
after the Appraisal was conducted, it took the Appraiser in excess of 
three months to submit additional representations concerning her status 
as a qualified independent appraiser, along with copies of supporting 
documentation, which had been requested by the Department. Mr. 
Etherington stated that, during this period, he had attempted to 
contact the Appraiser on numerous occasions to request that the 
submission of the additional information be expedited, but the 
Appraiser was unresponsive to his inquiries. Furthermore, the Appraiser 
requested an additional fee for such submission, which Mr. Etherington 
viewed as unreasonable because he did not believe that the Applicants 
should be forced to pay an extra fee for information that was requested 
by the Department in connection with the Appraisal.\3\ Finally, 
according to Mr. Etherington, the Appraiser has requested a $600 fee to 
perform the Update and an additional fee for a verbal confirmation as 
to the Property's value on the date of the Sale, to be negotiated at 
such time.
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    \3\ Mr. Etherington stated that he was charged approximately 
$600 for the Appraisal and $300 for an additional one page written 
submission that was requested by the Department.
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    Accordingly, the Applicants have retained Mr. Don Baxter of the 
Baxter Realty Group, located in Kailua, Hawaii, to perform the Update 
on the Property. According to Mr. Etherington, Mr. Baxter is a 
Certified Residential Appraiser, licensed under the State of Hawaii, 
and has no personal relationship with the Applicants or any interest in 
the Property or the Sale. In his comment, Mr. Etherington states that 
Mr. Baxter will charge $575.92 for the Update and will provide a verbal 
confirmation of the Property's value on the date of Sale for free, if 
the Property's fair market value has not changed. According to Mr. 
Etherington, if the Property's value has changed on the date of Sale, 
then Mr. Baxter will provide an additional Update, at a fee to be 
determined at the time. Finally, in his comment letter, Mr. Etherington 
represents that Mr. Baxter will earn less than 1% of his annual income 
from the Applicants and he understands that the Update will be used for 
the purpose of obtaining an exemption from the Department for the Sale.

The Department's Response

    It is the Department's understanding that the Update, and any 
necessary verbal confirmation at the time of the Sale, will be 
conducted by a qualified, independent appraiser, as required under the 
Department's policies and exemption procedures, and in compliance with 
Condition (c) of the proposal. Therefore, based on Mr. Etherington's 
comment letter, the Department concurs with the Applicants' request to 
retain a new qualified, independent appraiser to perform the Update, 
and takes note of any corresponding changes to the proposed exemption.
    After giving full consideration to the entire record, including the 
Applicants' written comment, the Department has decided to grant the 
exemption, as described above. The complete application file is made 
available for public inspection in the Public Documents Room of the 
Employee Benefits Security Administration, Room N-1513, U.S. Department 
of Labor, 200 Constitution Avenue, NW., Washington, DC 20210.
    For a more complete statement of the facts and representations 
supporting the Department's decision to grant this exemption refer to 
the proposed exemption published in the Federal Register on March 15, 
2011 at 76 FR 14090.

FOR FURTHER INFORMATION CONTACT:  Mr. Warren Blinder of the Department 
at (202) 693-8553. (This is not a toll-free number.)

H-E-B Brand Savings and Retirement Plan (the Plan) and H.E. Butt 
Grocery Company (the Company); Located in San Antonio, Texas.; 
[Prohibited Transaction Exemption No. 2011-11; Application No. D-11642]

Exemption

    The restrictions of section 406(a), section 406(b)(1), and section 
406(b)(2) of the Act and the sanctions resulting from the application 
of 4975 of the Code by reason of section 4975(c)(1)(A) through (E) of 
the Code shall not apply to the sale of real property (the Property) by 
the Plan to the Company, a party in interest with respect to the Plan; 
provided the following conditions are satisfied:
    (a) The sale of the Property is a one-time transaction for cash;
    (b) The Plan will receive from the proceeds of the sale of the 
Property a sales price in the amount of $2,762,566, plus an amount 
equal to $432,618 (the

[[Page 34255]]

total of all real estate taxes and expenses incurred by the Plan as a 
result of holding the Property from the date the Plan purchased the 
Property through December 31, 2009), plus an additional amount equal to 
the total of all real estate taxes and expenses from January 1, 2010, 
to the date of the sale of the Property to the Company;
    (c) The terms and conditions of the sale are at least as favorable 
to the Plan as those obtainable in an arm's length transaction with an 
unrelated party; and
    (d) The Plan pays no fees, commissions, or other expenses in 
connection with the sale of the Property to the Company; and
    (e) Prior to entering into the subject transaction, the trustees of 
the Plan determine that the sale of the Property is feasible, 
protective of, and in the interest of the Plan and its participants and 
beneficiaries.
    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 March 15, 2011, at 76 FR 
14094.

FOR FURTHER INFORMATION CONTACT:  Ms. Angelena C. Le Blanc of the 
Department, telephone (202) 693-8540. (This is not a toll-free number.)

The International Union of Painters and Allied Trades Finishing Trades 
Institute (the Plan or the Applicant); Located in Hanover, Maryland; 
[Prohibited Transaction Exemption 2011-12; Exemption Application No. L-
11625]

Exemption

    The restrictions of sections 406(a)(1)(A), (C) and (D), 406(b)(1), 
and 406(b)(2) of the Act shall not apply to the payment for lodging and 
meals by the Plan to the International Union of Painters and Allied 
Trades, AFL-CIO (the Union), a party in interest with respect to the 
Plan, in a residence hall (the Residence Hall) owned by the Union 
through its wholly-owned entity IUPAT Building Corporation LLC (the 
Building Corporation), provided that the following conditions are 
satisfied:
    (a) An independent, qualified fiduciary (the I/F), acting on behalf 
of the Plan, determines prior to entering into the transaction that the 
transaction is feasible, in the interest of, and protective of the Plan 
and the participants and beneficiaries of the Plan;
    (b) Before the Plan enters into the proposed transaction, the I/F 
reviews the transaction, ensures that the terms of the transaction are 
at least as favorable to the Plan as an arm's length transaction with 
an unrelated party, and determines whether or not to approve the 
transaction, in accordance with the fiduciary provisions of the Act;
    (c) The I/F monitors compliance with the terms and conditions of 
this exemption, as described herein, and ensures that such terms and 
conditions are at all times satisfied;
    (d) The I/F monitors compliance with the terms of the written 
agreement (the Agreement) between the Plan and the Union, and takes any 
and all steps necessary to ensure that the Plan is protected, 
including, but not limited to, agreeing to extend the Agreement on an 
annual basis or exercising his authority to terminate the Agreement on 
30 days' written notice;
    (e) The payments by the Plan for the lodging at the Residence Hall 
and for the meals provided under the Agreement and under the terms of 
any subsequent extension of the Agreement are at no time greater than 
their fair market value, as determined by the I/F;
    (f) The subject transaction is on terms and at all times remains on 
terms that are at least as favorable to the Plan as those that would 
have been negotiated under similar circumstances at arm's-length with 
an unrelated third party;
    (g) The Applicant's independent auditor will perform an annual 
audit for the Plan to verify whether the Plan paid the proper amounts 
with respect to the subject transaction. In this regard, the written 
audit report for each year must identify, as applicable, any errors or 
irregularities relating to such payments, any internal control 
weaknesses that must be addressed under generally accepted auditing 
standards, and any recordkeeping matters that would impede the auditor 
from properly auditing such payments. To the extent there are any 
discrepancies as to the foregoing matters, the independent auditor will 
promptly communicate them to the Board of Trustees of the Plan (the 
Trustees), who will, in turn, promptly notify the I/F about such 
discrepancies.\4\
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    \4\ To the extent that the independent auditor raises issues 
with respect to the payments, the Trustees have an obligation to 
address them in a manner consistent with their fiduciary 
responsibilities pursuant to section 404 of the Act.
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    (h) The transaction is appropriate and helpful in carrying out the 
purposes for which the Plan is established or maintained;
    (i) The Trustees maintain, or cause to be maintained within the 
United States for a period of six (6) years in a manner that is 
convenient and accessible for audit and examination, such records as 
are necessary to enable the persons described, below, in paragraph 
(j)(1) of this exemption to determine whether the conditions of this 
exemption have been met; except that--
    (1) If the records necessary to enable the persons described, 
below, in paragraph (j)(1) of this exemption to determine whether the 
conditions of this exemption have been met are lost or destroyed, due 
to circumstances beyond the control of the Trustees, then a separate 
prohibited transaction will not be considered to have occurred solely 
on the basis of the unavailability of those records; and
    (2) No party in interest, other than the Trustees, shall be subject 
to the civil penalty that may be assessed under section 502(i) of the 
Act, or to the taxes imposed by section 4975(a) and (b) of the Code, if 
the records are not maintained, or are not available for examination as 
required by paragraph (i) of this exemption; and
    (j)(1) Except as provided, below, in paragraph (j)(2) of this 
exemption and notwithstanding any provisions of sections (a)(2) and (b) 
of section 504 of the Act, the records referred to in paragraph (i) of 
this exemption are unconditionally available at their customary 
location for examination during normal business hours by:
    (A) Any duly authorized employee or representative of the 
Department, the Internal Revenue Service, or any other applicable 
federal or state regulatory agency;
    (B) Any fiduciary of the Plan, or any duly authorized 
representative of such fiduciary;
    (C) Any contributing employer to the Plan and any employee 
organization whose members are covered by the Plan, or any duly 
authorized employee or representative of these entities; or
    (D) Any participant or beneficiary of the Plan, or any duly 
authorized representative of such participant or beneficiary.
    (2) None of the persons described, above, in paragraph (j)(1)(B)-
(D) of this exemption are authorized to examine trade secrets or 
commercial or financial information that is privileged or confidential.
    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 March 15, 
2011 at 76 FR 14096. The Department received no comments or hearing 
requests with respect to the Notice.
    For Further Information Contact: Gary H. Lefkowitz of the 
Department, telephone (202) 693-8546 (This is not a toll-free number.)

[[Page 34256]]

Ford Motor Company (the Applicant); Located in Detroit, MI; [Prohibited 
Transaction Exemption (PTE) 2011-13; Exemption Application No. L-11641]

Exemption

Section I. Covered Transactions \5\
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    \5\ Because the Ford VEBA Plan is not qualified under section 
401 of the Code, there is no jurisdiction under Title II of the Act 
pursuant to section 4975 of the Code. However, there is jurisdiction 
under Title I of the Act.
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    (a) The restrictions of sections 406(a)(1)(A), 406(a)(1)(B), 
406(a)(1)(E), 406(a)(2), 406(b)(1), 406(b)(2) and 407(a) of ERISA shall 
not apply to the following transactions:
    (1) The acquisition by the UAW Ford Retirees Medical Benefits Plan 
(the Ford VEBA Plan) and its funding vehicle, the UAW Retiree Medical 
Benefits Trust (the VEBA Trust) of: (i) The LLC Interests; (ii) New 
Note A; (iii) New Note B (together with New Note A, the New Notes); and 
(iv) Warrants, transferred by Ford and deposited in the Ford Employer 
Security Sub-Account of the Ford Separate Retiree Account of the VEBA 
Trust.
    (2) The acquisition by the Ford VEBA Plan of shares of Ford Common 
Stock pursuant to Ford's right to settle its payment obligations under 
New Note B in shares of Ford Common Stock (i.e., Payment Shares), 
consistent with the 2009 Settlement Agreement;
    (3) The acquisition by the Ford VEBA Plan of shares of Ford Common 
Stock pursuant to (i) The Independent Fiduciary's exercise of all or a 
pro rata portion of the Warrants, consistent with the 2009 Settlement 
Agreement and (ii) an adjustment, substitution, conversion, or other 
modification of Ford Common Stock in connection with a reorganization, 
restructuring, recapitalization, merger, or similar corporate 
transaction, provided that each holder of Ford Common Stock is treated 
in an identical manner;
    (4) The holding by the Ford VEBA Plan of the aforementioned 
Securities in the Ford Employer Security Sub-Account of the Ford 
Separate Retiree Account of the VEBA Trust, consistent with the 2009 
Settlement Agreement;
    (5) The deferred payment of any amounts due under New Note B by 
Ford pursuant to the terms thereunder;
    (6) The disposition of the Securities by the Independent Fiduciary; 
and
    (7) The amendment of New Note B pursuant to the execution of the 
Note Agreement.
    (b) The restrictions of sections 406(a)(1)(A), 406(b)(1), and 
406(b)(2) of ERISA shall not apply to the sale of Ford Common Stock or 
Warrants held by the Ford VEBA Plan to Ford in accordance with the 
Right of First Offer or a Ford self-tender under the Securityholder and 
Registration Rights Agreement.
    (c) The restrictions of sections 406(a)(1)(B), 406(a)(1)(D), 
406(b)(1), and 406(b)(2) of ERISA shall not apply to:
    (1) The extension of credit or transfer of assets by Ford, the Ford 
Retiree Health Plan, or the Ford VEBA Plan in payment of a benefit 
claim that was the responsibility and legal obligation, under the terms 
of the applicable plan documents, of one of the other parties listed in 
this paragraph;
    (2) The reimbursement by Ford, the Ford Retiree Health Plan, or the 
Ford VEBA Plan, of a benefit claim that was paid by another party 
listed in this paragraph, which was not legally responsible for the 
payment of such claim, plus interest;
    (3) The retention of an amount by Ford until payment to the Ford 
VEBA Plan resulting from an overaccrual of pre-transfer expenses 
attributable to the TAA or the retention of an amount by the Ford VEBA 
Plan until payment to Ford resulting from an underaccrual of pre-
transfer expense attributable to the TAA; and
    (4) The Ford VEBA Plan's payment to Ford of an amount equal to any 
underaccrual by Ford of pre-transfer expenses attributable to the TAA 
or the payment by Ford to the Ford VEBA Plan of an amount equal to any 
overaccrual by Ford of pre-transfer expenses attributable to the TAA.
    (d) The restrictions of sections 406(a)(1)(B), 406(a)(1)(D), 
406(b)(1), and 406(b)(2) of ERISA shall not apply to the return to Ford 
of assets deposited or transferred to the Ford VEBA Plan by mistake, 
plus interest.

Section II. Conditions Applicable to Section I(a) and I(b)

    (a) The Committee appoints a qualified Independent Fiduciary to act 
on behalf of the Ford VEBA Plan for all purposes related to the 
transfer of the Securities to the Ford VEBA Plan for the duration of 
the Ford VEBA Plan's holding of the Securities. Such Independent 
Fiduciary will have sole discretionary responsibility relating to the 
holding, ongoing management and disposition of the Securities, except 
for the voting of the Ford Common Stock. The Independent Fiduciary has 
determined or will determine, before taking any actions regarding the 
Securities, that each such action or transaction is in the interest of 
the Ford VEBA Plan.
    (b) In the event that the same Independent Fiduciary is appointed 
to represent the interests of one or more of the other plans comprising 
the VEBA Trust (i.e., the UAW Chrysler Retiree Medical Benefits Plan 
and/or the UAW General Motors Company Retiree Medical Benefits Plan) 
with respect to employer securities deposited into the VEBA Trust, the 
Committee takes the following steps to identify, monitor and address 
any conflict of interest that may arise with respect to the Independent 
Fiduciary's performance of its responsibilities:
    (1) The Committee appoints a ``conflicts monitor'' to: (i) Develop 
a process for identifying potential conflicts; (ii) Regularly review 
the Independent Fiduciary reports, investment banker reports, and 
public information regarding the companies, to identify the presence of 
factors that could lead to a conflict; and (iii) Further question the 
Independent Fiduciary when appropriate.
    (2) The Committee adopts procedures to facilitate prompt 
replacement of the Independent Fiduciary if the Committee in its sole 
discretion determines such replacement is necessary due to a conflict 
of interest.
    (3) The Committee requires the Independent Fiduciary to adopt a 
written policy regarding conflicts of interest. Such policy shall 
require that, as part of the Independent Fiduciary's periodic reporting 
to the Committee, the Independent Fiduciary includes a discussion of 
actual or potential conflicts identified by the Independent Fiduciary 
and options for avoiding or resolving the conflicts.
    (c) The Independent Fiduciary authorizes the trustee of the Ford 
VEBA Plan to dispose of the Ford Common Stock (including any Payment 
Shares or any shares of Ford Common Stock acquired pursuant to exercise 
of the Warrants), the LLC Interests, the New Notes, or exercise the 
Warrants, only after the Independent Fiduciary determines, at the time 
of the transaction, that the transaction is feasible, in the interest 
of the Ford VEBA Plan, and protective of the participants and 
beneficiaries of the Ford VEBA Plan.
    (d) The Independent Fiduciary negotiates and approves on behalf of 
the Ford VEBA Plan any transactions between the Ford VEBA Plan and any 
party in interest involving the Securities that may be necessary in 
connection with the subject transactions (including but not limited to 
the registration of the Securities contributed to the Ford VEBA Plan).
    (e) Any contract between the Independent Fiduciary and an 
investment banker includes an

[[Page 34257]]

acknowledgement by the investment banker that the investment banker's 
ultimate client is an ERISA plan.
    (f) The Independent Fiduciary discharges its duties consistent with 
the terms of the Ford VEBA Plan, the Trust Agreement, the Independent 
Fiduciary Agreement, and any other documents governing the Securities, 
such as the Registration Rights Agreement.
    (g) The Ford VEBA Plan incurs no fees, costs or other charges 
(other than described in the Trust Agreement, the 2009 Settlement 
Agreement, and the Securityholder and Registration Rights Agreement) as 
a result of the transactions exempted herein.
    (h) The terms of any transaction exempted herein are no less 
favorable to the Ford VEBA Plan than the terms negotiated at arms' 
length under similar circumstances between unrelated parties.

Section III. Conditions Applicable to Section I(c)(1) and I(c)(2)

    (a) The Committee and the Ford VEBA Plan's third party 
administrator will review the benefits paid during the transition 
period and determine the dollar amount of mispayments made, subject to 
the review of the Ford VEBA Plan's independent auditor. The results of 
this review will be made available to Ford.
    (b) Ford and the applicable third party administrator of the Ford 
Active Health Plan will review the benefits paid during the transition 
period and determine the dollar amount of mispayments made, subject to 
the review of the plan's independent auditor. The results of this 
review will be made available to the Committee.
    (c) Interest on any reimbursed mispayment will accrue from the date 
of the mispayment to the date of the reimbursement.
    (d) Interest will be determined using the applicable 6 month 
published LIBOR rate.
    (e) If there is a dispute as to the amount, timing or other feature 
of a reimbursement payment, the parties will enter into the Dispute 
Resolution Procedure found in Section 26B of the 2009 Settlement 
Agreement and described further in Section VII(c) herein.

Section IV. Conditions Applicable to Section I(c)(3) and I(c)(4)

    (a) Ford and the Committee will cooperate in the calculation and 
review of the amounts of expense accruals related to the TAA, and the 
amount of any overaccrual shall be made subject to the review of an 
independent auditor selected by Ford and the amount of any underaccrual 
shall be made subject to the review of the Ford VEBA Plan's independent 
auditor.
    (b) Ford must make a claim for any underaccrual to the Committee, 
and the Committee must make a claim for any overaccrual to Ford, as 
applicable, within the Verification Time Period, as defined in Section 
VII(cc).
    (c) Interest on any true-up payment will accrue from the date of 
transfer of the assets in the TAA (or the LLC containing the TAA) for 
the amount in respect of the overaccrual or underaccrual, as 
applicable, until the date of payment of such true-up amount.
    (d) Interest will be determined using the published six month LIBOR 
rate.
    (e) If there is a dispute as to the amount, timing or other feature 
of a true-up payment in respect of TAA expenses, the parties will enter 
into the Dispute Resolution Procedure found in Section 26B of the 2009 
Settlement Agreement and described further in Section VII(c) herein.

Section V. Conditions Applicable to Section I(d)

    (a) Ford must make a claim to the Committee regarding the specific 
deposit or transfer made in error or made in an amount greater than 
that to which the Ford VEBA Plan was entitled.
    (b) The claim is made within the Verification Time Period, as 
defined in Section VII(cc).
    (c) Interest on any mistaken deposit or transfer will accrue from 
the date of the mistaken deposit or transfer to the date of the 
repayment.
    (d) Interest will be determined using the published six month LIBOR 
rate.
    (e) If there is a dispute as to the amount, timing or other feature 
of a mistaken payment, the parties will enter into the Dispute 
Resolution Procedure found in Section 26B of the 2009 Settlement 
Agreement and described further in Section VII(c) herein.

Section VI. Conditions Applicable to Section I

    (a) The Committee and the Independent Fiduciary maintain for a 
period of six years from the date (i) The Securities are transferred to 
the Ford VEBA Plan, and (ii) the shares of Ford Common Stock are 
acquired by the Ford VEBA Plan through the exercise of the Warrants or 
Ford's delivery of Payment Shares in settlement of its payment 
obligations under New Note B, the records necessary to enable the 
persons described in paragraph (b) below to determine whether the 
conditions of this exemption have been met, provided that (i) a 
separate prohibited transaction will not be considered to have occurred 
if, due to circumstances beyond the control of the Committee and/or the 
Independent Fiduciary, the records are lost or destroyed prior to the 
end of the six-year period, and (ii) no party in interest other than 
the Committee or the Independent Fiduciary shall be subject to the 
civil penalty that may be assessed under ERISA section 502(i) if the 
records are not maintained, or are not available for examination as 
required by paragraph (b) below; and
    (b) Notwithstanding any provisions of subsections (a)(2) and (b) of 
section 504 of ERISA, the records referred to in paragraph (a) above 
shall be unconditionally available at their customary location during 
normal business hours to:
    (1) Any duly authorized employee or representative of the 
Department or the Internal Revenue Service;
    (2) The UAW or any duly authorized representative of the UAW;
    (3) Ford or any duly authorized representative of Ford;
    (4) The Independent Fiduciary or any duly authorized representative 
of the Independent Fiduciary;
    (5) The Committee or any duly authorized representative of the 
Committee; and
    (6) Any participant or beneficiary of the Ford VEBA Plan or any 
duly authorized representative of such participant or beneficiary.
    (c) None of the persons described above in paragraphs (b)(2), (4)-
(6) shall be authorized to examine trade secrets of Ford, or commercial 
or financial information which is privileged or confidential, and 
should Ford refuse to disclose information on the basis that such 
information is exempt from disclosure, Ford 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 VII. Definitions

    (a) The term ``affiliate'' means: (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, or employee in any such person, or relative (as 
defined in section 3(15) of ERISA) of any such person; or (3) any 
corporation, partnership or other entity of which such person is an 
officer, director or partner. (For purposes of this definition, the 
term ``control'' means the power to exercise a controlling influence 
over the management or policies of a person other than an individual.)

[[Page 34258]]

    (b) The ``Committee'' means the eleven individuals consisting of 
six independent members and five UAW appointed members who will serve 
as the plan administrator and named fiduciary of the Ford VEBA Plan.
    (c) The term ``Dispute Resolution Procedure'' means the process 
found in Section 26B of the 2009 Settlement Agreement to effectuate the 
resolution of any dispute respecting the transactions described in 
Sections I(c)(1), (c)(2), (c)(3), (c)(4), and (d) herein, and which 
reads in pertinent part: (1) The aggrieved party shall provide the 
party alleged to have violated the 2009 Settlement Agreement (Dispute 
Party) with written notice of such dispute, which shall include a 
description of the alleged violation and identification of the 
Section(s) of the 2009 Settlement Agreement allegedly violated. Such 
notice shall be provided so that it is received by the Dispute Party no 
later than 180 calendar days from the date of the alleged violation or 
the date on which the aggrieved party knew or should have known of the 
facts that give rise to the alleged violation, whichever is later, but 
in no event longer than 3 years from the date of the alleged violation; 
and (2) If the Dispute Party fails to respond within 21 calendar days 
from its receipt of the notice, the aggrieved party may seek recourse 
to the District Court; provided however, that the aggrieved party 
waives all claims related to a particular dispute against the Dispute 
Party if the aggrieved party fails to bring the dispute before the 
District Court within 180 calendar days from the date of sending the 
notice. All the time periods in Section 26 of the 2009 Settlement 
Agreement may be extended by agreement of the parties to the particular 
dispute.
    (d) The term ``Exchange Agreement'' means the Security Exchange 
Agreement among Ford, the subsidiary guarantors listed in Schedule I 
thereto and the LLC, dated as of December 11, 2009.
    (e) The term ``Ford'' or the ``Applicant'' means Ford Motor 
Company, located in Detroit, MI, and its affiliates.
    (f) The term ``Ford Active Health Plan'' means the medical benefits 
plan maintained by Ford to provide benefits to eligible active hourly 
employees of Ford and its participating subsidiaries.
    (g) The term ``Ford Common Stock'' means the shares of common 
stock, par value $0.01 per share, issued by Ford.
    (h) The term ``Ford Credit'' means Ford Motor Credit Company LLC, a 
Delaware limited liability company and an indirect, wholly owned 
subsidiary of Ford.
    (i) The term ``Ford Employer Security Sub-Account of the Ford 
Separate Retiree Account of the VEBA Trust'' means the sub-account 
established in the Ford Separate Retiree Account of the VEBA Trust to 
hold Securities on behalf of the Ford VEBA Plan.
    (j) The term ``Ford Retiree Health Plan'' means the retiree medical 
benefits plan maintained by Ford that provided benefits to, among 
others, those who will be covered by the Ford VEBA Plan.
    (k) The term ``IFS'' means Independent Fiduciary Services, Inc., a 
Delaware corporation, appointed by the Committee to be the Independent 
Fiduciary.
    (l) The term ``Implementation Date'' means December 31, 2009.
    (m) The term ``Independent Fiduciary'' means a fiduciary that is 
(1) Independent of and unrelated to Ford, the UAW, the Committee, and 
their affiliates, and (2) appointed to act on behalf of the Ford VEBA 
Plan with respect to the holding, management and disposition of the 
Securities. In this regard, the fiduciary will be deemed not to be 
independent of and unrelated to Ford, the UAW, the Committee, and their 
affiliates if (1) Such fiduciary directly or indirectly controls, is 
controlled by, or is under common control with Ford, the UAW, the 
Committee or their affiliates, (2) such fiduciary directly or 
indirectly receives any compensation or other consideration from Ford, 
the UAW or any Committee member in his or her individual capacity in 
connection with any transaction contemplated in this exemption (except 
that an Independent Fiduciary may receive compensation from the 
Committee or the Ford VEBA Plan for services provided to the Ford VEBA 
Plan in connection with the transactions discussed herein if the amount 
or payment of such compensation is not contingent upon or in any way 
affected by the independent fiduciary's ultimate decision), and (3) the 
annual gross revenue received by the fiduciary, in any fiscal year, 
from Ford, the UAW or a member of the Committee in his or her 
individual capacity, exceeds 3% of the fiduciary's annual gross revenue 
from all sources (for federal income tax purposes) for its prior tax 
year.\6\
---------------------------------------------------------------------------

    \6\ The Department notes that the preceding conditions are not 
exclusive, and that other circumstances may develop which cause the 
Independent Fiduciary to be deemed not to be independent of and 
unrelated to Ford, the UAW, the Committee, and their affiliates.
---------------------------------------------------------------------------

    (n) The term ``LLC'' means the Ford-UAW Holdings LLC, established 
by Ford as a wholly owned LLC, and subsequently renamed VEBA-F Holdings 
LLC, established to hold the assets in the TAA and certain other assets 
required to be contributed to the VEBA under the 2008 Settlement 
Agreement, as amended by the 2009 Settlement Agreement.
    (o) The term ``LLC Interests'' means Ford's wholly owned interest 
in the LLC.
    (p) The term ``New Note A'' means the amortizing guaranteed secured 
note maturing on June 30, 2022, in the principal amount of 
$6,705,470,000, with payments to be made in cash, in annual 
installments from 2009 through 2022, issued by Ford and referred to in 
the Exchange Agreement.
    (q) The term ``New Note B'' means the amortizing guaranteed secured 
note maturing June 30, 2022, in the principal amount of $6,511,850,000, 
with payments to be made in cash, Ford Common Stock, or a combination 
thereof, in annual installments from 2009 through 2022, unless prepaid, 
issued by Ford and referred to in the Exchange Agreement, and as 
amended by the Note Agreement, effective June 25, 2010.
    (r) The term ``Note Agreement'' means the Agreement, dated as of 
June 25, 2010 by and among Ford, Ford Credit, and the VEBA Trust, 
acting by and through IFS, wherein the VEBA Trust will sell New Note A 
to Ford and Ford Credit and New Note B is amended to add provisions 
permitting Ford to prepay all or a portion of New Note B, in each case 
under the terms and conditions set forth therein.
    (s) The term ``Payment Shares'' means any shares of Ford Common 
Stock issued by Ford to satisfy all or a portion of its payment 
obligation under New Note B, subject to the terms and conditions 
specified in New Note B.
    (t) The term ``published six month LIBOR rate'' means the Official 
British Banker's Association Six Month London Interbank Offered Rate 
(LIBOR) 11 a.m. GMT ``fixing'' as reported on Bloomberg page ``BBAM 
\7\''.
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    \7\ LIBOR is calculated by Thomson Reuters and published by the 
British Bankers' Association after 11 a.m. (and generally around 
11:45 a.m.) each day (London time). It is a trimmed average of 
inter-bank deposit rates offered by designated contributor banks, 
for maturities ranging from overnight to one year. The rates are a 
benchmark rather than a tradable rate; the actual rate at which 
banks will lend to one another continues to vary throughout the day.
---------------------------------------------------------------------------

    (u) The term ``Securities'' means (1) New Note A; (2) New Note B; 
(3) the Warrants; (4) the LLC Interests, (5) any Payment Shares, and 
(6) additional shares of Ford Common Stock acquired in accordance with 
the transactions described in Sections I(a)(2) and (3) of this 
exemption.

[[Page 34259]]

    (v) The term ``Securityholder and Registration Rights Agreement'' 
means the Securityholder and Registration Rights Agreement by and among 
Ford and the LLC, dated as of December 11, 2009.
    (w) The term ``2008 Settlement Agreement'' means the settlement 
agreement, effective as of August 29, 2008, entered into by Ford, the 
UAW, and a class of retirees in the case of Int'l Union, UAW, et al. v. 
Ford Motor Company, Civil Action No. 07-14845, 2008 WL 4104329 (E.D. 
Mich. Aug. 29, 2008).
    (x) The term ``2009 Settlement Agreement'' means the 2008 
Settlement Agreement, as amended by an Amendment to such Settlement 
Agreement dated July 23, 2009, effective as of November 9, 2009, 
entered into by Ford, the UAW, and a class of retirees in the case of 
Int'l Union, UAW, et al. v. Ford Motor Company, Civil Action No. 07-
14845, 2008 WL 4104329 (E.D. Mich. Aug. 29, 2008), Order and Final 
Judgment Granted, Civil Action No. 07-14845, Doc. 71, (E.D. 
Mich. Nov. 9, 2009).
    (y) The term ``TAA'' means the temporary asset account established 
by Ford under the 2008 Settlement Agreement to serve as tangible 
evidence of the availability of Ford assets equal to Ford's obligation 
to the Ford VEBA Plan.
    (z) The term ``Trust Agreement'' means the trust agreement for the 
VEBA Trust.
    (aa) The term ``UAW'' means the International Union, United 
Automobile, Aerospace and Agricultural Implement Workers of America.
    (bb) The term ``VEBA'' means the Ford UAW Retirees Medical Benefits 
Plan (the Ford VEBA Plan) and its associated UAW Retiree Medical 
Benefits Trust (the VEBA Trust).
    (cc) The term ``Verification Time Period'' means: (1) With respect 
to each of the Securities other than the payments in respect of the New 
Notes, the period beginning on the date of publication of the final 
exemption in the Federal Register (or, if later, the date of the 
transfer of any such Security to the Ford VEBA Plan) and ending 90 
calendar days thereafter; (2) with respect to each payment pursuant to 
the New Notes, the period beginning on the date of the payment and 
ending 90 calendar days thereafter; and (3) with respect to the TAA, 
the period beginning on the date of publication of the final exemption 
in the Federal Register (or, if later, the date of the transfer of the 
assets in the TAA to the Ford VEBA Plan) and ending 180 calendar days 
thereafter.
    (dd) The term ``Warrants'' means warrants issued by Ford to acquire 
362,391,305 shares of Ford Common Stock at a strike price of $9.20 per 
share, expiring on January 1, 2013. For purposes of this definition, 
the term ``Warrants'' includes additional warrants to acquire Ford 
Common Stock acquired in partial or complete exchange for, or 
adjustment to, the warrants described in the preceding sentence, at the 
direction of the Independent Fiduciary or pursuant to a reorganization, 
restructuring or recapitalization of Ford as well as a merger or 
similar corporate transaction involving Ford (each, a corporate 
transaction), provided that, in such corporate transaction, similarly 
situated warrantholders, if any, will be treated the same to the extent 
that the terms of such warrants and/or rights of such warrantholders 
are the same.

Section VIII. Effective Date

    This amendment to PTE 2010-08 is effective as of December 31, 2009, 
except with respect to Section I(a)(7), which is effective as of June 
25, 2010.

Written Comments

    The Department invited all interested persons to submit written 
comments with respect to the notice of proposed exemption on or before 
May 5, 2011. During the comment period, the Department received 2 
telephone inquiries and 2 written comments from participants and/or 
beneficiaries in the Ford VEBA Plan, which generally concerned the 
commenters' difficulties in understanding the notice of proposed 
exemption and/or raised issues outside the scope of the exemption. 
Furthermore, the Department received a written comment from IFS, the 
Independent Fiduciary and investment manager of the Ford Employer 
Security Sub-Account of the Ford Separate Retiree Account of the VEBA 
Trust, which supported the exemption and suggested two clarifications 
regarding the Summary of Facts and Representations (the Summary) in the 
notice of proposed exemption.
    Following is a discussion of the aforementioned comment. Any 
capitalized terms herein not otherwise defined have the meanings 
ascribed to them in the Summary.

IFS's Comment

    IFS's comment generally relates to (1) The number of financial 
advisers retained by IFS, and (2) the original prepayment terms of New 
Note B.
A. Number of Financial Advisers Retained by IFS
    In its comment, IFS states that the Summary incorrectly implies 
that it retained financial advisors other than Sutter. As described on 
page 14076 of the proposed exemption, ``[a]fter considerable 
negotiation, during which it consulted extensively with its legal 
counsel, Proskauer Rose LLP (Proskauer Rose), and its financial 
advisers, including Sutter Securities Incorporated (Sutter), IFS states 
that it entered into an agreement * * *'' IFS clarifies that the only 
financial adviser that it engaged and consulted with was Sutter. 
Further, IFS notes that, in making a decision whether to enter into the 
Note Agreement, it did consider the views expressed by the leading 
investment banking firms with which it met, but none of those firms 
served as a financial adviser to IFS besides Sutter.
    In response to these comments, the Department takes note of the 
foregoing clarifications and updates to the Summary.
B. Original Prepayment Terms of New Note B
    IFS states that Summary does not accurately reflect the original 
prepayment terms of New Note B. As the Summary describes on page 14078 
of the proposed exemption, ``[b]y contrast, IFS was aware that the 
original terms of New Note B did not require any advance notice of 
Ford's intent to make a prepayment, nor did they require that any 
prepayment must be made in cash.'' According to IFS, the original terms 
of New Note B did in fact require that any prepayments of New Note B 
were to be made in cash. IFS explains that Sections 2(c) and 2(e) of 
New Note B permitted Ford to elect to pay annual required principal 
installments in specific amounts on specific annual ``Payment Dates'' 
or, in certain cases with respect to a ``Deferred Payment,'' on 
specific ``Installment Payment Dates'' (in each case, as defined in New 
Note B) in either cash or Ford Common Stock. IFS states that amounts 
payable under Sections 2(c) and 2(e), described above, were the only 
payments under New Note B that could be made other than in cash. By 
contrast, IFS points out, Section 2(g) of New Note B required that 
prepayments of New Note B on the specified Payment Dates be made in 
cash, unlike the principal installments under Section 2(c) or 2(e). 
Furthermore, IFS states that Section 2(b) of New Note B required that 
all other payments of New Note B be made in cash.
    In response to these comments, the Department takes note of the 
foregoing

[[Page 34260]]

clarifications and updates to the Summary.
    After giving full consideration to the entire record, including the 
written comments, the Department has decided to grant this exemption 
amending PTE 2010-08, as described above. The complete application file 
is made available for public inspection in the Public Documents Room of 
the Employee Benefits Security Administration, Room N-1513, U.S. 
Department of Labor, 200 Constitution Avenue, NW., Washington, DC 
20210.
    For a more complete statement of the facts and representations 
supporting the Department's decision to grant this exemption refer to 
the proposed amendment, published in the Federal Register on March 15, 
2011 at 76 FR 14074.

FOR FURTHER INFORMATION CONTACT:  Warren Blinder of the Department, 
telephone (202) 693-8553. (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 contained in the 
application accurately describes all material terms of the transaction 
which is the subject of the exemption.

    Signed at Washington, DC, this 8th day of June, 2011.
Ivan Strasfeld,
Director of Exemption Determinations, Employee Benefits Security 
Administration, U.S. Department of Labor.
[FR Doc. 2011-14521 Filed 6-10-11; 8:45 am]
BILLING CODE 4510-29-P