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Secretary of Labor Hilda L. Solis
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EBSA Notices

Exemptions From Certain Prohibited Transaction Restrictions   [6/1/2012]
[PDF]
Federal Register, Volume 77 Issue 106 (Friday, June 1, 2012)
[Federal Register Volume 77, Number 106 (Friday, June 1, 2012)]
[Notices]
[Pages 32672-32686]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-13263]


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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-11579, Delaware Charter Guarantee 
& Trust Co. d\b\a Principal Trust Company (Principal Trust), 2012-11; 
D-11677, Weyerhaeuser Company (Weyerhaeuser) and Federalway Asset 
Management LP (collectively, the Applicants), 2012-12; and D-11679, 
Sammons Enterprises, Inc. Employee Stock Ownership ESOP (the ESOP), 
2012-13.

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 (76 FR 66637, 66644, October 27, 2011) \1\ and based 
upon the entire record, the Department makes the following findings:
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    \1\ The Department has considered exemption applications 
received prior to December 27, 2011 under the exemption procedures 
set forth in 29 CFR Part 2570, Subpart B (55 FR 32836, 32847, August 
10, 1990).
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    (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.

[[Page 32673]]

Delaware Charter Guarantee & Trust Co. d\b\a Principal Trust Company 
(Principal Trust); Principal Life Insurance Company (Principal Life) 
and Any Affiliates, Thereof (collectively, Principal or the Applicants) 
Located in Wilmington, Delaware and in Des Moines, Iowa

[Prohibited Transaction 2012-11; Exemption Application No. D-11579]

Exemption

Section I--Transactions
    The restrictions of sections 406(a)(1)(D) and 406(b) of the Act and 
the taxes resulting from the application of section 4975 of the Code, 
by reason of section 4975(c)(1)(D) through (F) of the Internal Revenue 
Code (the Code),\2\ shall not apply, as of the effective date of this 
exemption, to:
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    \2\ For purposes of this exemption reference to specific 
provisions of Title I of the Act, unless otherwise specified, refer 
also to the corresponding provisions of the Code.
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    (a) The receipt of a fee by Principal, as Principal is defined, 
below, in Section IV(a), from an open-end investment company or open-
end investment companies (Affiliated Fund(s)), as defined, below, in 
Section IV(e), in connection with the direct investment in shares of 
any such Affiliated Fund, by an employee benefit plan or by employee 
benefit plans (Client Plan(s)), as defined, below, in Section IV(b), 
where Principal serves as a fiduciary with respect to such Client Plan, 
and where Principal:
    (1) Provides investment advisory services, or similar services to 
any such Affiliated Fund; and
    (2) Provides to any such Affiliated Fund other services (Secondary 
Service(s)), as defined, below, in Section IV(i); and
    (b) In connection with the indirect investment by a Client Plan in 
shares of an Affiliated Fund through investment in a pooled investment 
vehicle or pooled investment vehicles (Collective Fund(s)),\3\ as 
defined, below, in Section IV(j), where Principal serves as a fiduciary 
with respect to such Client Plan, the receipt of fees by Principal 
from:
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    \3\ The Department, herein, is expressing no opinion in this 
exemption regarding the reliance of the Applicants on the relief 
provided by section 408(b)(8) of the Act with regard to the purchase 
and with regard to the sale by a Client Plan of an interest in a 
Collective Fund and the receipt by Principal, thereby, of any 
investment management fee, any investment advisory fee, and any 
similar fee (a Collective Fund-Level Management Fee), as defined, 
below, in Section IV(n), where Principal serves as an investment 
manager or investment adviser with respect to such Collective Fund 
and also serves as a fiduciary with respect to such Client Plan, nor 
is the Department offering any view as to whether the Applicants 
satisfy the conditions, as set forth in section 408(b)(8) of the 
Act.
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    (1) An Affiliated Fund for the provision of investment advisory 
services, or similar services by Principal to any such Affiliated Fund; 
and
    (2) An Affiliated Fund for the provision of Secondary Services by 
Principal to any such Affiliated Fund; provided that the conditions, as 
set forth, below, in Section II and Section III, are satisfied, as of 
the effective date of this exemption and thereafter.
Section II--Specific Conditions
    The relief provided in this exemption is conditioned upon adherence 
to the material facts and representations described, herein, and as set 
forth in the application file and upon compliance with the conditions, 
as set forth in this exemption.
    (a)(1) Each Client Plan which is invested directly in shares of an 
Affiliated Fund either:
    (i) Does not pay to Principal for the entire period of such 
investment any investment management fee, or any investment advisory 
fee, or any similar fee at the plan-level (the Plan-Level Management 
Fee), as defined, below, in Section IV(m), with respect to any of the 
assets of such Client Plan which are invested directly in shares of 
such Affiliated Fund; or
    (ii) Pays to Principal a Plan-Level Management Fee, based on total 
assets of such Client Plan under management by Principal at the plan-
level, from which a credit has been subtracted from such Plan-Level 
Management Fee, where the amount subtracted represents such Client 
Plan's pro rata share of any investment advisory fee and any similar 
fee (the Affiliated Fund-Level Advisory Fee), as defined, below, in 
Section IV(o), paid by such Affiliated Fund to Principal.
    If, during any fee period, in the case of a Client Plan invested 
directly in shares of an Affiliated Fund, such Client Plan has prepaid 
its Plan-Level Management Fee, and such Client Plan purchases shares of 
an Affiliated Fund directly, the requirement of this Section 
II(a)(1)(ii) shall be deemed met with respect to such prepaid Plan-
Level Management Fee, if, by a method reasonably designed to accomplish 
the same, the amount of the prepaid Plan-Level Management Fee that 
constitutes the fee with respect to the assets of such Client Plan 
invested directly in shares of an Affiliated Fund:
    (A) Is anticipated and subtracted from the prepaid Plan-Level 
Management Fee at the time of the payment of such fee; or
    (B) Is returned to such Client Plan, no later than during the 
immediately following fee period; or
    (C) Is offset against the Plan-Level Management Fee for the 
immediately following fee period or for the fee period immediately 
following thereafter.
    For purposes of Section II(a)(1)(ii), a Plan-Level Management Fee 
shall be deemed to be prepaid for any fee period, if the amount of such 
Plan-Level Management Fee is calculated as of a date not later than the 
first day of such period.
    (2) Each Client Plan invested in a Collective Fund the assets of 
which are not invested in shares of an Affiliated Fund:
    (i) Does not pay to Principal for the entire period of such 
investment any Plan-Level Management Fee with respect to any assets of 
such Client Plan invested in such Collective Fund.
    The requirements of this Section II(a)(2)(i) do not preclude the 
payment of a Collective Fund-Level Management Fee by such Collective 
Fund to Principal, based on the assets of such Client Plan invested in 
such Collective Fund; or
    (ii) Does not pay directly to Principal or indirectly to Principal 
through the Collective Fund for the entire period of such investment 
any Collective Fund-Level Management Fee with respect to any assets of 
such Client Plan invested in such Collective Fund.
    The requirements of this Section II(a)(2)(ii) do not preclude the 
payment of a Plan-Level Management Fee by such Client Plan to 
Principal, based on total assets of such Client Plan under management 
by Principal at the plan-level; or
    (iii) Such Client Plan pays to Principal a Plan-Level Management 
Fee, based on total assets of such Client Plan under management by 
Principal at the plan-level, from which a credit has been subtracted 
from such Plan-Level Management Fee (the ``Net'' Plan-Level Management 
Fee), where the amount subtracted represents such Client Plan's pro 
rata share of any Collective Fund-Level Management Fee paid by such 
Collective Fund to Principal.
    The requirements of this Section II(a)(2)(iii) do not preclude the 
payment of a Collective Fund-Level Management Fee by such Collective 
Fund to Principal, based on the assets of such Client Plan invested in 
such Collective Fund.
    (3) Each Client Plan invested in a Collective Fund the assets of 
which are invested in shares of an Affiliated Fund:
    (i) Does not pay to Principal for the entire period of such 
investment any Plan-Level Management Fee (including

[[Page 32674]]

any ``Net'' Plan-Level Management Fee, as described, above, in Section 
II(a)(2)(iii)), and does not pay directly to Principal or indirectly to 
Principal through the Collective Fund for the entire period of such 
investment any Collective Fund-Level Management Fee with respect to the 
assets of such Client Plan which are invested in such Affiliated Fund; 
or
    (ii) Pays indirectly to Principal through the Collective Fund a 
Collective Fund-Level Management Fee, in accordance with Section 
II(a)(2)(i), above, based on the total assets of such Client Plan 
invested in such Collective Fund, from which a credit has been 
subtracted from such Collective Fund-Level Management Fee, where the 
amount subtracted represents such Client Plan's pro rata share of any 
Affiliated Fund-Level Advisory Fee paid to Principal by such Affiliated 
Fund; and does not pay to Principal for the entire period of such 
investment any Plan-Level Management Fee with respect to any assets of 
such Client Plan invested in such Collective Fund; or
    (iii) Pays to Principal a Plan-Level Management Fee, in accordance 
with Section II(a)(2)(iii), above, based on the total assets of such 
Client Plan under management by Principal at the plan-level, from which 
a credit has been subtracted from such Plan-Level Management Fee, where 
the amount subtracted represents such Client Plan's pro rata share of 
any Affiliated Fund-Level Advisory Fee paid to Principal by such 
Affiliated Fund; and does not pay directly to Principal or indirectly 
to Principal through the Collective Fund for the entire period of such 
investment any Collective Fund-Level Management Fee with respect to any 
assets of such Client Plan invested in such Collective Fund; or
    (iv) Pays to Principal a ``Net'' Plan-Level Management Fee, in 
accordance with Section II(a)(2)(iii), above, from which a further 
credit has been subtracted from such ``Net'' Plan-Level Management Fee, 
where the amount of such further credit which is subtracted represents 
such Client Plan's pro rata share of any Affiliated Fund-Level Advisory 
Fee paid to Principal by such Affiliated Fund.
    Provided that the conditions of this exemption are satisfied, the 
requirements of Section II(a)(1)(i)-(ii), and Section II(a)(3)(i)-(iv) 
do not preclude the payment of an Affiliated Fund-Level Advisory Fee by 
an Affiliated Fund to Principal under the terms of an investment 
advisory agreement adopted in accordance with section 15 of the 
Investment Company Act of 1940 (the Investment Company Act). Further, 
the requirements of Section II(a)(1)(i)-(ii), and Section II(a)(3)(i)-
(iv) do not preclude the payment of a fee by an Affiliated Fund to 
Principal for the provision by Principal of Secondary Services to such 
Affiliated Fund under the terms of a duly adopted agreement between 
Principal and such Affiliated Fund.
    For the purpose of Section II(a)(1)(ii), and Section II(a)(3)(ii)-
(iv), in calculating a Client Plan's pro rata share of an Affiliated 
Fund-Level Advisory Fee, Principal must use an amount representing the 
``gross'' advisory fee paid to Principal by such Affiliated Fund. For 
purposes of this paragraph, the ``gross'' advisory fee is the amount 
paid to Principal by such Affiliated Fund, including the amount paid by 
such Affiliated Fund to sub-advisers.
    (b) The purchase price paid and the sales price received by a 
Client Plan for shares in an Affiliated Fund purchased or sold 
directly, and the purchase price paid and the sales price received by a 
Client Plan for shares in an Affiliated Fund purchased or sold 
indirectly through a Collective Fund, is the net asset value per share 
(NAV), as defined, below, in Section IV(f), at the time of the 
transaction, and is the same purchase price that would have been paid 
and the same sales price that would have been received for such shares 
by any other shareholder of the same class of shares in such Affiliated 
Fund at that time.\4\
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    \4\ The selection of a particular class of shares of an 
Affiliated Fund as an investment for a Client Plan indirectly 
through a Collective Fund is a fiduciary decision that must be made 
in accordance with the provisions of section 404(a) of the Act. In 
this exemption, the Department is not providing any relief for any 
fiduciary violations, pursuant to section 404 of the Act, or 
violations of the prohibited transaction provisions, as set forth in 
section 406 of the Act that may arise from the selection of one 
class of shares of an Affiliated Fund over another class of shares.
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    (c) Principal, including any officer and any director of Principal, 
does not purchase any shares of an Affiliated Fund from and does not 
sell any shares of an Affiliated Fund to any Client Plan which invests 
directly in such Affiliated Fund, and Principal, including any officer 
and director of Principal, does not purchase any shares of any 
Affiliated Fund from and does not sell any shares of an Affiliated Fund 
to any Collective Fund in which a Client Plan invests indirectly in 
shares of such Affiliated Fund.
    (d) No sales commissions, no redemption fees, and no other similar 
fees are paid in connection with any purchase and in connection with 
any sale by a Client Plan directly in shares of an Affiliated Fund, and 
no sales commissions, no redemption fees, and no other similar fees are 
paid by a Collective Fund in connection with any purchase and in 
connection with any sale of shares in an Affiliated Fund by a Client 
Plan indirectly through such Collective Fund. However, this Section 
II(d) does not prohibit the payment of a redemption fee, if:
    (1) Such redemption fee is paid only to an Affiliated Fund; and
    (2) The existence of such redemption fee is disclosed in the 
summary prospectus for such Affiliated Fund in effect both at the time 
of any purchase of shares in such Affiliated Fund and at the time of 
any sale of such shares.
    (e) The combined total of all fees received by Principal is not in 
excess of reasonable compensation within the meaning of section 
408(b)(2) of the Act, for services provided:
    (1) By Principal to each Client Plan;
    (2) By Principal to each Collective Fund in which a Client Plan 
invests;
    (3) By Principal to each Affiliated Fund in which a Client Plan 
invests directly in shares of such Affiliated Fund; and
    (4) By Principal to each Affiliated Fund in which a Client Plan 
invests indirectly in shares of such Affiliated Fund through a 
Collective Fund.
    (f) Principal does not receive any fees payable pursuant to Rule 
12b-1 under the Investment Company Act in connection with the 
transactions covered by this exemption;
    (g) No Client Plan is an employee benefit plan sponsored or 
maintained by Principal.
    (h)(1) In the case of a Client Plan investing directly in shares of 
an Affiliated Fund, a second fiduciary (the Second Fiduciary), as 
defined, below, in Section IV(h), acting on behalf of such Client Plan, 
receives, in writing, in advance of any investment by such Client Plan 
directly in shares of such Affiliated Fund, a full and detailed 
disclosure via first class mail or via personal delivery of (or, if the 
Second Fiduciary consents to such means of delivery, through electronic 
email, in accordance with Section II(q), as set forth, below) of 
information concerning such Affiliated Fund, including but not limited 
to the items listed, below:
    (i) A current summary prospectus issued by each such Affiliated 
Fund;
    (ii) A statement describing the fees, including the nature and 
extent of any differential between the rates of such fees for:
    (A) Investment advisory and similar services to be paid to 
Principal by each Affiliated Fund;
    (B) Secondary Services to be paid to Principal by each such 
Affiliated Fund; and

[[Page 32675]]

    (C) All other fees to be charged by Principal to such Client Plan 
and to each such Affiliated Fund and all other fees to be paid to 
Principal by each such Client Plan and by each such Affiliated Fund;
    (iii) The reasons why Principal may consider investment directly in 
shares of such Affiliated Fund by such Client Plan to be appropriate 
for such Client Plan;
    (iv) A statement describing whether there are any limitations 
applicable to Principal with respect to which assets of such Client 
Plan may be invested directly in shares of such Affiliated Fund, and if 
so, the nature of such limitations; and
    (v) Upon the request of the Second Fiduciary acting on behalf of 
such Client Plan, a copy of the Notice of Proposed Exemption (the 
Notice), a copy of the final exemption, if granted, and any other 
reasonably available information regarding the transactions which are 
the subject of this exemption.
    (2) In the case of a Client Plan whose assets are proposed to be 
invested in a Collective Fund after such Collective Fund has begun 
investing in shares of an Affiliated Fund, a Second Fiduciary, acting 
on behalf of such Client Plan, receives, in writing, in advance of any 
investment by such Client Plan in such Collective Fund, a full and 
detailed disclosure via first class mail or via personal delivery (or, 
if the Second Fiduciary consents to such means of delivery, through 
electronic email, in accordance with Section II(q), as set forth, 
below) of information concerning such Collective Fund and information 
concerning each such Affiliated Fund in which such Collective Fund is 
invested, including but not limited to the items listed, below:
    (i) A current summary prospectus issued by each such Affiliated 
Fund;
    (ii) A statement describing the fees, including the nature and 
extent of any differential between the rates of such fees for:
    (A) Investment advisory and similar services to be paid to 
Principal by each Affiliated Fund;
    (B) Secondary Services to be paid to Principal by each such 
Affiliated Fund; and
    (C) All other fees to be charged by Principal to such Client Plan, 
to such Collective Fund, and to each such Affiliated Fund and all other 
fees to be paid to Principal by such Client Plan, by such Collective 
Fund, and by each such Affiliated Fund;
    (iii) The reasons why Principal may consider investment by such 
Client Plan in shares of each such Affiliated Fund indirectly through 
such Collective Fund to be appropriate for such Client Plan;
    (iv) A statement describing whether there are any limitations 
applicable to Principal with respect to which assets of such Client 
Plan may be invested indirectly in shares of each such Affiliated Fund 
through such Collective Fund, and if so, the nature of such 
limitations;
    (v) Upon the request of the Second Fiduciary, acting on behalf of 
such Client Plan, a copy of the Notice, a copy of the final exemption, 
if granted, and any other reasonably available information regarding 
the transactions which are the subject of this exemption; and
    (vi) A copy of the organizational documents of such Collective Fund 
which expressly provide for the addition of one or more Affiliated 
Funds to the portfolio of such Collective Fund.
    (3) In the case of a Client Plan whose assets are proposed to be 
invested in a Collective Fund before such Collective Fund has begun 
investing in shares of any Affiliated Fund, a Second Fiduciary, acting 
on behalf of such Client Plan, receives, in writing, in advance of any 
investment by such Client Plan in such Collective Fund, a full and 
detailed disclosure via first class mail or via personal delivery (or, 
if the Second Fiduciary consents to such means of delivery, through 
electronic email, in accordance with Section II(q), as set forth, 
below) of information, concerning such Collective Fund, including but 
not limited to the items listed, below:
    (i) A statement describing the fees, including the nature and 
extent of any differential between the rates of such fees for all fees 
to be charged by Principal to such Client Plan and to such Collective 
Fund and all other fees to be paid to Principal by such Client Plan, 
and by such Collective Fund;
    (ii) Upon the request of the Second Fiduciary, acting on behalf of 
such Client Plan, a copy of the Notice, a copy of the final exemption, 
if granted, and any other reasonably available information regarding 
the transactions which are the subject of this exemption; and
    (iii) A copy of the organizational documents of such Collective 
Fund which expressly provide for the addition of one or more Affiliated 
Funds to the portfolio of such Collective Fund.
    (i) On the basis of the information described, above, in Section 
II(h), a Second Fiduciary, acting on behalf of a Client Plan:
    (1) Authorizes in writing the investment of the assets of such 
Client Plan, as applicable:
    (i) Directly in shares of an Affiliated Fund;
    (ii) Indirectly in shares of an Affiliated Fund through a 
Collective Fund where such Collective Fund has already invested in 
shares of an Affiliated Fund; and
    (iii) In a Collective Fund which is not yet invested in shares of 
an Affiliated Fund but whose organizational document expressly provides 
for the addition of one or more Affiliated Funds to the portfolio of 
such Collective Fund; and
    (2) Authorizes in writing, as applicable:
    (i) The Affiliated Fund-Level Advisory Fee received by Principal 
for investment advisory services and similar services provided by 
Principal to such Affiliated Fund;
    (ii) The fee received by Principal for Secondary Services provided 
by Principal to such Affiliated Fund;
    (iii) The Collective Fund-Level Management Fee received by 
Principal for investment management, investment advisory, and similar 
services provided by Principal to such Collective Fund in which such 
Client Plan invests;
    (iv) The Plan-Level Management Fee received by Principal for 
investment management and similar services provided by Principal to 
such Client Plan at the plan-level; and
    (v) The selection by Principal of the applicable fee method, as 
described, above, in Section II(a)(1)-(3).
    All authorizations made by a Second Fiduciary, pursuant to this 
Section II(i), must be consistent with the responsibilities, 
obligations, and duties imposed on fiduciaries by Part 4 of Title I of 
the Act;
    (j)(1) Any authorization, described, above, in Section II(i), and 
any authorization made pursuant to negative consent, as described, 
below, in Section II(k) and in Section II(l), made by a Second 
Fiduciary, acting on behalf of a Client Plan, shall be terminable at 
will by such Second Fiduciary, without penalty to such Client Plan, 
upon receipt by Principal via first class mail, via personal delivery, 
or via electronic email of a written notification of the intent of such 
Second Fiduciary to terminate any such authorization.
    (2) A form (the Termination Form) expressly providing an election 
to terminate any authorization, described, above, in Section II(i), or 
to terminate any authorization made pursuant to negative consent, as 
described, below, in Section II(k) and in Section II(l), with 
instructions on the use of such Termination Form must be provided to 
such Second Fiduciary at least annually, either in writing via first 
class mail or

[[Page 32676]]

via personal delivery (or if such Second Fiduciary consents to such 
means of delivery, through electronic email, in accordance with Section 
II(q), as set forth, below). However, if a Termination Form has been 
provided to such Second Fiduciary, pursuant to Section II(k) or 
pursuant to Section II(l), below, then a Termination Form need not be 
provided again, pursuant to this Section II(j), until at least six (6) 
months but no more than twelve (12) months have elapsed, since a 
Termination Form was provided;
    (3) The instructions for the Termination Form must include the 
following statements:
    (i) Any authorization, described, above, in Section II(i), and any 
authorization made pursuant to negative consent, as described, below, 
in Section II(k) or in Section II(l), is terminable at will by a Second 
Fiduciary, acting on behalf of a Client Plan, without penalty to such 
Client Plan, upon receipt by Principal via first class mail or via 
personal delivery or via electronic email of the Termination Form, or 
some other written notification of the intent of such Second Fiduciary 
to terminate such authorization;
    (ii) Within 30 days from the date the Termination Form is sent to 
such Second Fiduciary by Principal, the failure by such Second 
Fiduciary to return such Termination Form or the failure by such Second 
Fiduciary to provide some other written notification of the Client 
Plan's intent to terminate any authorization, described in Section 
II(i), or intent to terminate any authorization made pursuant to 
negative consent, as described, below, in Section II(k) or in Section 
II(l), will be deemed to be an approval by such Second Fiduciary;
    (4) In the event that a Second Fiduciary, acting on behalf of a 
Client Plan, at any time returns a Termination Form or returns some 
other written notification of intent to terminate any authorization, as 
described, above, in Section II(i), or intent to terminate any 
authorization made pursuant to negative consent, as described, below, 
in Section II(k) or in Section II(l);
    (i)(A) In the case of a Client Plan which invests directly in 
shares of an Affiliated Fund, the termination will be implemented by 
the withdrawal of all investments made by such Client Plan in the 
affected Affiliated Fund, and such withdrawal will be effected by 
Principal within one (1) business day of the date that Principal 
receives such Termination Form or receives from the Second Fiduciary, 
acting on behalf of such Client Plan, some other written notification 
of intent to terminate any such authorization;
    (B) From the date a Second Fiduciary, acting on behalf of a Client 
Plan that invests directly in shares of an Affiliated Fund, returns a 
Termination Form or returns some other written notification of intent 
to terminate such Client Plan's investment in such Affiliated Fund, 
such Client Plan will not be subject to pay a pro rata share of any 
Affiliated Fund-Level Advisory Fee and will not be subject to pay any 
fees for Secondary Services paid to Principal by such Affiliated Fund;
    (ii)(A) In the case of a Client Plan which invests in a Collective 
Fund, the termination will be implemented by the withdrawal of such 
Client Plan from all investments in such affected Collective Fund, and 
such withdrawal will be implemented by Principal within such time as 
may be necessary for withdrawal in an orderly manner that is equitable 
to the affected withdrawing Client Plan and to all non-withdrawing 
Client Plans, but in no event shall such withdrawal be implemented by 
Principal more than five (5) business days after the day Principal 
receives from the Second Fiduciary, acting on behalf of such 
withdrawing Client Plan, a Termination Form or receives some other 
written notification of intent to terminate the investment of such 
Client Plan in such Collective Fund, unless such withdrawal is 
otherwise prohibited by a governmental entity with jurisdiction over 
the Collective Fund, or the Second Fiduciary fails to instruct 
Principal as to where to reinvest or send the withdrawal proceeds; and
    (B) From the date Principal receives from a Second Fiduciary, 
acting on behalf of a Client Plan, that invests in a Collective Fund, a 
Termination Form or receives some other written notification of intent 
to terminate such Client Plan's investment in such Collective Fund, 
such Client Plan will not be subject to pay a pro rata share of any 
fees arising from the investment by such Client Plan in such Collective 
Fund, including any Collective Fund-Level Management Fee, nor will such 
Client Plan be subject to any other charges to the portfolio of such 
Collective Fund, including a pro rata share of any Affiliated Fund-
Level Advisory Fee and any fee for Secondary Services arising from the 
investment by such Collective Fund in an Affiliated Fund.
    (k)(1) Principal, at least thirty (30) days in advance of the 
implementation of each fee increase (Fee Increase(s)), as defined, 
below, in Section IV(l), must provide, in writing via first class mail 
or via personal delivery (or if the Second Fiduciary consents to such 
means of delivery, through electronic email, in accordance with Section 
II(q), as set forth, below), a notice of change in fees (the Notice of 
Change in Fees) (which may take the form of a proxy statement, letter, 
or similar communication which is separate from the summary prospectus 
of such Affiliated Fund) and which explains the nature and the amount 
of such Fee Increase to the Second Fiduciary of each affected Client 
Plan. Such Notice of Change in Fees shall be accompanied by a 
Termination Form and by instructions on the use of such Termination 
Form, as described, above, in Section II(j)(3);
    (2) For each Client Plan affected by a Fee Increase, Principal may 
implement such Fee Increase without waiting for the expiration of the 
30-day period, described, above, in Section II(k)(1), provided 
Principal does not begin implementation of such Fee Increase before the 
first day of the 30-day period, described, above in Section II(k)(1), 
and provided further that the following conditions are satisfied:
    (i) Principal delivers, in the manner described in Section 
II(k)(1), to the Second Fiduciary for each affected Client Plan, the 
Notice of Change of Fees, as described in Section II(k)(1), accompanied 
by the Termination Form and by instructions on the use of such 
Termination Form, as described, above, in Section II(j)(3);
    (ii) Each affected Client Plan receives from Principal a credit in 
cash equal to each such Client Plan's pro rata share of such Fee 
Increase to be received by Principal for the period from the date of 
the implementation of such Fee Increase to the earlier of:
    (A) The date when an affected Client Plan, pursuant to Section 
II(j), terminates any authorization, as described, above, in Section 
II(i), or, terminates any negative consent authorization, as described, 
in Section II(k) or in Section II(l); or
    (B) The 30th day after the day that Principal delivers to the 
Second Fiduciary of each affected Client Plan the Notice of Change of 
Fees, described in Section II(k)(1), accompanied by the Termination 
Form and by the instructions on the use of such Termination Form, as 
described, above, in Section II(j)(3).
    (iii) Principal pays to each affected Client Plan the cash credit, 
described, above, in Section II(k)(2)(ii), with interest thereon, no 
later than five (5) business days following the earlier of:
    (A) The date such affected Client Plan, pursuant to Section II(j), 
terminates any authorization, as described, above, in Section II(i), or 
terminates, any negative consent

[[Page 32677]]

authorization, as described, in Section II(k) or in Section II(l); or
    (B) The 30th day after the day that Principal delivers to the 
Second Fiduciary of each affected Client Plan, the Notice of Change of 
Fees, described in Section II(k)(1), accompanied by the Termination 
Form and instructions on the use of such Termination Form, as 
described, above, in Section II(j)(3);
    (iv) Interest on the credit in cash is calculated at the prevailing 
Federal funds rate plus two percent (2%) for the period from the day 
Principal first implements the Fee Increase to the date Principal pays 
such credit in cash, with interest thereon, to each affected Client 
Plan;
    (v) An independent accounting firm (the Auditor) at least annually 
audits the payments made by Principal to each affected Client Plan, 
audits the amount of each cash credit, plus the interest thereon, paid 
to each affected Client Plan, and verifies that each affected Client 
Plan received the correct amount of cash credit and the correct amount 
of interest thereon;
    (vi) Such Auditor issues an audit report of its findings no later 
than six (6) months after the period to which such audit report 
relates, and provides a copy of such audit report to the Second 
Fiduciary of each affected Client Plan; and
    (3) Within 30 days from the date Principal sends to the Second 
Fiduciary of each affected Client Plan, the Notice of Change of Fees 
and the Termination Form, the failure by such Second Fiduciary to 
return such Termination Form and the failure by such Second Fiduciary 
to provide some other written notification of the Client Plan's intent 
to terminate the authorization, described in Section II(i), or to 
terminate the negative consent authorization, as described, in Section 
II(k) or in Section II(l), will be deemed to be an approval by such 
Second Fiduciary of such Fee Increase.
    (l) Effective on the date the final exemption is granted, in the 
case of a Client Plan which has received the disclosures, as set forth, 
above, in Section II(h)(2)(i), II(h)(2)(ii)(A), II(h)(2)(ii)(B), 
II(h)(2)(ii)(C), II(h)(2)(iii), II(h)(2)(iv), II(h)(2)(v), and 
II(h)(2)(vi), and has authorized the investment by a Client Plan in a 
Collective Fund, in accordance with Section II(i)(1)(ii), above; and, 
as applicable, effective on the date the final exemption is granted, in 
the case of a Client Plan which has received the disclosures, as set 
forth, above, in Section II(h)(3)(i), II(h)(3)(ii), and II(h)(3)(iii), 
and has authorized the investment by a Client Plan in a Collective 
Fund, in accordance with Section II(i)(1)(iii), above, then, the 
authorization, pursuant to negative consent, in accordance with this 
Section II(l), applies to:
    (1) The purchase, as an addition to the portfolio of such 
Collective Fund, of shares of an Affiliated Fund (a New Affiliated 
Fund) where such New Affiliated Fund has not been previously 
authorized, pursuant to Section II(i)(1)(ii) or, as applicable, Section 
II(i)(1)(iii), above, and such Collective Fund may commence investing 
in such New Affiliated Fund without further written authorization from 
the Second Fiduciary of each Client Plan invested in such Collective 
Fund provided that:
    (i) The organizational documents of such Collective Fund expressly 
provide for the addition of one or more Affiliated Funds to the 
portfolio of such Collective Fund, and such documents were disclosed in 
writing via first class mail or via personal delivery (or, if the 
Second Fiduciary consents to such means of delivery, through electronic 
email, in accordance with Section II(q), as set forth, below) to the 
Second Fiduciary of each such Client Plan invested in such Collective 
Fund, in advance of any investment by such Client Plan in such 
Collective Fund;
    (ii) At least thirty (30) days in advance of the purchase by a 
Client Plan of shares of such New Affiliated Fund indirectly through a 
Collective Fund, Principal provides, either in writing via first class 
or via personal delivery (or if the Second Fiduciary consents to such 
means of delivery, through electronic email, in accordance with Section 
II(q), as set forth, below), to the Second Fiduciary of each Client 
Plan having an interest in such Collective Fund, full and detailed 
disclosures about such New Affiliated Fund, including but not limited 
to:
    (A) A notice of Principal's intent to add a New Affiliated Fund to 
the portfolio of such Collective Fund. Such notice may take the form of 
a proxy statement, letter, or similar communication that is separate 
from the summary prospectus of such New Affiliated Fund to the Second 
Fiduciary of each affected Client Plan;
    (B) Such notice of Principal's intent to add a New Affiliated Fund 
to the portfolio of such Collective Fund shall be accompanied by the 
information, as described, above, in Section II(h)(2)(i), 
II(h)(2)(ii)(A), II(h)(2)(ii)(B), II(h)(2)(ii)(C), II(h)(2)(iii), 
II(h)(2)(iv), and II(2)(v) with respect to each such New Affiliated 
Fund to be added to the portfolio of such Collective Fund; and
    (C) A Termination Form, and instructions on the use of such 
Termination Form, as described, above, in Section II(j)(3); and
    (2) Within 30 days from the date Principal sends to the Second 
Fiduciary of each affected Client Plan, the information described, 
above, in Section II(l)(1)(ii), the failure by such Second Fiduciary to 
return the Termination Form or to provide some other written 
notification of the Client Plan's intent to terminate the 
authorization, described in Section II(i)(1)(ii), or, as appropriate, 
to terminate the authorization, described in Section II(i)(1)(iii), or 
to terminate any authorization, pursuant to negative consent, as 
described, in this Section II(l), will be deemed to be an approval by 
such Second Fiduciary of the addition of a New Affiliated Fund to the 
portfolio of such Collective Fund in which such Client Plan invests, 
and will result in the continuation of the authorization of Principal 
to engage in the transactions which are the subject of this exemption 
with respect to such New Affiliated Fund.
    (m) Principal is subject to the requirement to provide within a 
reasonable period of time any reasonably available information 
regarding the covered transactions that the Second Fiduciary of such 
Client Plan requests Principal to provide.
    (n) All dealings between a Client Plan and an Affiliated Fund, 
including all such dealings when such Client Plan is invested directly 
in shares of such Affiliated Fund and when such Client Plan is invested 
indirectly in such shares of such Affiliated Fund through a Collective 
Fund, are on a basis no less favorable to such Client Plan, than 
dealings between such Affiliated Fund and other shareholders of the 
same class of shares in such Affiliated Fund.
    (o) In the event a Client Plan invests directly in shares of an 
Affiliated Fund, and, as applicable, in the event a Client Plan invests 
indirectly in shares of an Affiliated Fund through a Collective Fund, 
if such Affiliated Fund places brokerage transactions with Principal, 
Principal will provide to the Second Fiduciary of each such Client 
Plan, so invested, at least annually a statement specifying:
    (1) The total, expressed in dollars of brokerage commissions that 
are paid to Principal by each such Affiliated Fund;
    (2) The total, expressed in dollars, of brokerage commissions that 
are paid by each such Affiliated Fund to brokerage firms unrelated to 
Principal;
    (3) The average brokerage commissions per share, expressed as cents 
per share, paid to Principal by each such Affiliated Fund; and
    (4) The average brokerage commissions per share, expressed as

[[Page 32678]]

cents per share, paid by each such Affiliated Fund to brokerage firms 
unrelated to Principal.
    (p)(1) Principal provides to the Second Fiduciary of each Client 
Plan invested directly in shares of an Affiliated Fund, with the 
disclosures, as set forth, below, and at the times set forth below, in 
Section II(p)(1)(i), II(p)(1)(ii), II(p)(1)(iii), II(p)(1)(iv), and 
II(p)(1)(v), either in writing via first class mail or via personal 
delivery (or if the Second Fiduciary consents to such means of 
delivery, through electronic email, in accordance with Section II(q), 
as set forth, below);
    (i) Annually, with a copy of the current summary prospectus for 
each Affiliated Fund in which such Client Plan invests directly in 
shares of such Affiliated Fund;
    (ii) Upon the request of such Second Fiduciary, a copy of the 
statement of additional information for each Affiliated Fund in which 
such Client Plan invests directly in shares of such Affiliated Fund 
which contains a description of all fees paid by such Affiliated Fund 
to Principal;
    (iii) With regard to any Fee Increase received by Principal, 
pursuant to Section II(k)(2), above, a copy of the audit report 
referred to in Section II(k)(2)(v), above, within sixty (60) days of 
the completion of such audit report;
    (iv) Oral or written responses to the inquiries posed by the Second 
Fiduciary of such Client Plan, as such inquiries arise; and
    (v) Annually, with a Termination form, as described in Section 
II(j)(1), and instructions on the use of such form, as described in 
Section II(j)(3), except that if a Termination Form has been provided 
to such Second Fiduciary, pursuant to Section II(k) or pursuant to 
Section II(l), above, then a Termination Form need not be provided 
again, pursuant to this Section II(p)(1)(v), until at least six (6) 
months but no more than twelve (12) months have elapsed, since a 
Termination Form was provided.
    (2) Principal provides to the Second Fiduciary of each Client Plan 
invested in a Collective Fund, with the disclosures, as set forth, 
below, and at the times set forth below, in Section II(p)(2)(i), 
II(p)(2)(ii), II(p)(2)(iii), II(p)(2)(iv), II(p)(2)(v), II(p)(2)(vi), 
II(p)(2)(vii), and II(p)(2)(viii), either in writing via first class 
mail or via personal delivery (or if the Second Fiduciary consents to 
such means of delivery, through electronic email, in accordance with 
Section II(q), as set forth, below);
    (i) Annually, with a copy of the current summary prospectus for 
each Affiliated Fund in which such Client Plan invests indirectly in 
shares of such Affiliated Fund thorough each such Collective Fund;
    (ii) Upon the request of such Second Fiduciary, a copy of the 
statement of additional information for each Affiliated Fund in which 
such Client Plan invests indirectly in shares of such Affiliated Fund 
thorough each such Collective Fund which contains a description of all 
fees paid by such Affiliated Fund to Principal;
    (iii) Annually, with a statement of the Collective Fund-Level 
Management Fee for investment management, investment advisory or 
similar services paid to Principal by each such Collective Fund, 
regardless of whether such Client Plan invests in shares of an 
Affiliated Fund through such Collective Fund;
    (iv) A copy of the annual financial statement of each such 
Collective Fund in which such Client Plan invests, regardless of 
whether such Client Plan invests in shares of an Affiliated Fund 
through such Collective Fund, within sixty (60) days of the completion 
of such financial statement;
    (v) With regard to any Fee Increase received by Principal, pursuant 
to Section II(k)(2), above, a copy of the audit report referred to in 
Section II(k)(2)(v), above, within sixty (60) days of the completion of 
such audit report;
    (vi) Oral or written responses to the inquiries posed by the Second 
Fiduciary of such Client Plan, as such inquiries arise;
    (vii) For each Client Plan invested indirectly in shares of an 
Affiliated Fund through a Collective Fund, a statement of the 
approximate percentage (which may be in the form of a range) on an 
annual basis of the assets of such Collective Fund that was invested in 
Affiliated Funds during the applicable year; and
    (viii) Annually, with a Termination Form, as described in Section 
II(j)(1), and instructions on the use of such form, as described in 
Section II(j)(3), except that if a Termination Form has been provided 
to such Second Fiduciary, pursuant to Section II(k) or pursuant to 
Section II(l), above, then a Termination Form need not be provided 
again, pursuant to this Section II(p)(2)(viii), until at least six (6) 
months but no more than twelve (12) months have elapsed, since a 
Termination Form was provided.
    (q) Any disclosure required, herein, to be made by Principal to a 
Second Fiduciary may be delivered by electronic email containing direct 
hyperlinks to the location of each such document required to be 
disclosed, which are maintained on a Web site by Principal, provided:
    (1) Principal obtains from such Second Fiduciary prior consent in 
writing to the receipt by such Second Fiduciary of such disclosure via 
electronic email;
    (2) Such Second Fiduciary has provided to Principal a valid email 
address; and
    (3) The delivery of such electronic email to such Second Fiduciary 
is provided by Principal in a manner consistent with the relevant 
provisions of the regulations of the Department of Labor (the 
Department) at 29 CFR section 2520.104b-1(c) (substituting the word, 
``Principal,'' for the word, ``administrator,'' as set forth therein, 
and substituting the phrase, ``Second Fiduciary,'' for the phrase, 
``the participant, beneficiary or other individual,'' as set forth 
therein).
Section III--General Conditions
    (a) Principal maintains for a period of six (6) years the records 
necessary to enable the persons described, below, in Section III(b) to 
determine whether the conditions of this exemption have been met, 
except that:
    (1) A prohibited transaction will not be considered to have 
occurred, if solely because of circumstances beyond the control of 
Principal, the records are lost or destroyed prior to the end of the 
six-year period; and
    (2) No party in interest other than Principal 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 Section III(b); below.
    (b)(1) Except as provided in Section III(b)(2) and notwithstanding 
any provisions of section 504(a)(2) of the Act, the records referred to 
in Section III(a) are unconditionally available at their customary 
location for examination during normal business hours by--
    (i) Any duly authorized employee or representative of the 
Department or the Internal Revenue Service, or the Securities & 
Exchange Commission;
    (ii) Any fiduciary of a Client Plan invested directly in shares of 
an Affiliated Fund, any fiduciary of a Client Plan who has the 
authority to acquire or to dispose of the interest in a Collective Fund 
in which a Client Plan invests, any fiduciary of a Client Plan invested 
indirectly in an Affiliated Fund through a Collective Fund where such 
fiduciary has the authority to acquire or to dispose of the interest in 
such

[[Page 32679]]

Collective Fund, and any duly authorized employee or representative of 
such fiduciary; and
    (iii) Any participant or beneficiary of a Client Plan invested 
directly in shares of an Affiliated Fund or invested in a Collective 
Fund, and any participant or beneficiary of a Client Plan invested 
indirectly in shares of an Affiliated Fund through a Collective Fund, 
and any representative of such participant or beneficiary; and
    (2) None of the persons described in Section III(b)(1)(ii) and 
(iii) shall be authorized to examine trade secrets of Principal, or 
commercial or financial information which is privileged or 
confidential.
Section IV--Definitions
    For purposes of this exemption:
    (a) The term, ``Principal,'' means Principal Trust, Principal Life, 
and any affiliate thereof, as defined, below, in Section IV(c).
    (b) The term, ``Client Plan(s),'' means a 401(k) plan(s), an 
individual retirement account(s), other tax-qualified plan(s), and 
other plan(s) as defined in the Act and Code, but does not include any 
employee benefit plan sponsored or maintained by Principal, as defined, 
above, in Section IV(a).
    (c) An ``affiliate'' of a person includes:
    (1) Any person directly or indirectly, through one or more 
intermediaries, controlling, controlled by, or under common control 
with the person;
    (2) Any officer, director, employee, relative, or partner in any 
such person; and
    (3) Any corporation or partnership of which such person is an 
officer, director, partner, or employee.
    (d) The term, ``control,'' means the power to exercise a 
controlling influence over the management or policies of a person other 
than an individual.
    (e) The term, ``Affiliated Fund(s),'' means Principal Funds, Inc., 
a series of mutual funds managed by Principal Management Corporation, 
an affiliate of Principal, as defined, above in Section IV(c), and any 
other diversified open-end investment company or companies registered 
with the Securities and Exchange Commission under the Investment 
Company Act and operated in accordance with Rule 2a-7 under the 
Investment Company Act, as amended, established and maintained by 
Principal now or in the future for which Principal serves as an 
investment adviser.
    (f) The term, ``net asset value per share,'' and the term, ``NAV,'' 
mean the amount for purposes of pricing all purchases and sales of 
shares of an Affiliated Fund, calculated by dividing the value of all 
securities, determined by a method as set forth in the summary 
prospectus for such Affiliated Fund and in the statement of additional 
information, and other assets belonging to such Affiliated Fund or 
portfolio of such Affiliated Fund, less the liabilities charged to each 
such portfolio or each such Affiliated Fund, by the number of 
outstanding shares.
    (g) The term, ``relative,'' means a relative as that term is 
defined in section 3(15) of the Act (or a member of the family as that 
term is defined in section 4975(e)(6) of the Code), or a brother, a 
sister, or a spouse of a brother or a sister.
    (h) The term, ``Second Fiduciary,'' means the fiduciary of a Client 
Plan who is independent of and unrelated to Principal. For purposes of 
this exemption, the Second Fiduciary will not be deemed to be 
independent of and unrelated to Principal if:
    (1) Such Second Fiduciary, directly or indirectly, through one or 
more intermediaries, controls, is controlled by, or is under common 
control with Principal;
    (2) Such Second Fiduciary, or any officer, director, partner, 
employee, or relative of such Second Fiduciary, is an officer, 
director, partner, or employee of Principal (or is a relative of such 
person); or
    (3) Such Second Fiduciary, directly or indirectly, receives any 
compensation or other consideration for his or her personal account in 
connection with any transaction described in this exemption.
    If an officer, director, partner, or employee of Principal (or 
relative of such person) is a director of such Second Fiduciary, and if 
he or she abstains from participation in:
    (i) The decision of a Client Plan to invest in and to remain 
invested in shares of an Affiliated Fund directly, the decision of a 
Client Plan to invest in shares of an Affiliated Fund indirectly 
through a Collective Fund, and the decision of a Client Plan to invest 
in a Collective Fund that may in the future invest in shares of an 
Affiliated Fund;
    (ii) Any authorization in accordance with Section II(i), and any 
authorization, pursuant to negative consent, as described in Section 
II(k) or in Section II(l); and
    (iii) The choice of such Client Plan's investment adviser; then 
Section IV(h)(2), above, shall not apply.
    (i) The term, ``Secondary Service(s),'' means a service or services 
other than an investment management service, investment advisory 
service, and any similar service which is provided by Principal to an 
Affiliated Fund, including but not limited to custodial, accounting, 
administrative services, and brokerage services. Principal may also 
serve as a dividend disbursing agent, shareholder servicing agent, 
transfer agent, fund accountant, or provider of some other Secondary 
Service, as defined, in this Section IV(i).
    (j) The term, ``Collective Fund(s),'' means a separate account of 
an insurance company, as defined in section 2510.3-101(h)(1)(iii) of 
the Department's plan assets regulations,\5\ maintained by Principal, 
and a bank-maintained common or collective investment trust maintained 
by Principal.
---------------------------------------------------------------------------

    \5\ 51 FR 41262 (November 13, 1986).
---------------------------------------------------------------------------

    (k) The term, ``business day,'' means any day that
    (1) Principal is open for conducting all or substantially all of 
its business; and
    (2) The New York Stock Exchange (or any successor exchange is open 
for trading.
    (l) The term, ``Fee Increase(s),'' includes any increase by 
Principal in a rate of a fee, previously authorized in writing by the 
Second Fiduciary of each affected Client Plan, pursuant to Section 
II(i)(2)(i)-(iv), above, and in addition includes, but is not limited 
to:
    (1) Any increase in any fee that results from the addition of a 
service for which a fee is charged;
    (2) Any increase in any fee that results from a decrease in the 
number of services and any increase in any fee that results from a 
decrease in the kind of service(s) performed by Principal for such fee 
over an existing rate of fee for each such service previously 
authorized by the Second Fiduciary, in accordance with Section 
II(i)(2)(i)-(iv), above; and
    (3) Any increase in any fee that results from Principal changing 
from one of the fee methods, as described, above, in Section II(a)(1)-
(3), to using another of the fee methods, as described, above, in 
Section II(a)(1)-(3).
    (m) The term, ``Plan-Level Management Fee,'' includes any 
investment management fee, investment advisory fee, and any similar fee 
paid by a Client Plan to Principal for any investment management 
services, investment advisory services, and similar services provided 
by Principal to such Client Plan at the plan-level. The term, ``Plan-
Level Management Fee'' does not include a separate fee paid by a Client 
Plan to Principal for asset allocation service(s) (Asset Allocation 
Service(s)), as defined, below, in Section

[[Page 32680]]

IV(p), provided by Principal to such Client Plan at the plan-level.\6\
---------------------------------------------------------------------------

    \6\ For the receipt by Principal from a Client Plan of a fee for 
Asset Allocation Services provided by Principal to such Client Plan 
at the plan-level, Principal relies on the relief provided by the 
statutory exemption, as set forth in section 408(b)(2) of the Act 
and the Department's regulations, pursuant to 29 CFR 2550.408b-2. 
The Department is offering no view, herein, as to whether the 
receipt by Principal of such an asset allocation fee is covered by 
such statutory exemption, nor is the Department, herein, offering 
any view as to whether Principal satisfies the conditions set forth 
in such statutory exemption.
---------------------------------------------------------------------------

    (n) The term, ``Collective Fund-Level Management Fee,'' includes 
any investment management fee, investment advisory fee, and any similar 
fee paid by a Collective Fund to Principal for any investment 
management services, investment advisory services, and any similar 
services provided by Principal to such Collective Fund at the 
collective fund level.
    (o) The term, ``Affiliated Fund-Level Advisory Fee'' includes any 
investment advisory fee and any similar fee paid by an Affiliated Fund 
to Principal under the terms of an investment advisory agreement 
adopted in accordance with section 15 of the Investment Company Act.
    (p) The term, ``Asset Allocation Service(s),'' means a service or 
services to a Client Plan relating to the selection of appropriate 
asset classes or target-date ``glidepath,'' and the allocation or 
reallocation (including rebalancing) of the assets of a Client Plan 
among the selected asset classes. Such services do not include the 
management of the underlying assets of a Client Plan, the selection of 
specific funds or managers, and the management of the selected 
Affiliated Funds or Collective Funds.
    Effective Date: This exemption is effective as of the date of the 
publication of the final exemption in the Federal Register.

Written Comments

    In the Notice, the Department invited all interested persons to 
submit written comments and requests for a hearing within 45 days of 
the date of the publication of the Notice in the Federal Register on 
December 13, 2011. All comments and requests for hearing were due by 
January 27, 2012. During the comment period, the Department received no 
requests for hearing. However, the Department did receive a comment 
(the Original Comment) from the Applicants via an email, dated January 
27, 2012. In the email, the Applicants requested certain modifications 
to the language of three (3) of the conditions of the exemption, as set 
forth in the Notice. Subsequently, after further consideration, the 
Applicants, in a letter dated March 19, 2012, amended the Original 
Comment (the Amended Comment). The Applicants' Amended Comment is 
discussed in paragraphs 1-3, below, in an order that corresponds to the 
appearance of the relevant language in the Notice.
    1. The Applicants have requested a modification to the language of 
Section II(j)(4)(ii)(A), as set forth on page 77601, column 3, lines 
10-30 of the Notice. Section II(j)(4)(ii)(A) in the Notice reads, as 
follows:

    In the case of a Client Plan which invests in a Collective Fund, 
the termination will be implemented by the withdrawal of such Client 
Plan from all investments in such affected Collective Fund, and such 
withdrawal will be implemented by Principal within such time as may 
be necessary for withdrawal in an orderly manner that is equitable 
to the affected withdrawing Client Plan and to all non-withdrawing 
Client Plans, but in no event shall such withdrawal be implemented 
by Principal more than five (5) business days after the day 
Principal receives from the Second Fiduciary, acting on behalf of 
such withdrawing Client Plan, a Termination Form or receives some 
other written notification of intent to terminate the investment of 
such Client Plan in such Collective Fund.

    In the comment letter, the Applicants agreed to accept the 
condition of a firm five (5) business day limitation on withdrawals 
from any Collective Fund that is operating in reliance on this 
exemption. However, Principal requests that this condition be waived in 
the event that (a) any governmental authority forbids Principal from 
distributing the funds within five (5) days due to an emergency (e.g., 
a market closure); or (b) the withdrawing Client Plan fails to direct 
Principal as to where to reinvest or send the withdrawal proceeds. 
Principal also requests that if the Second Fiduciary specifies an 
effective date for the withdrawal that is later than the date the 
Termination Form is delivered to Principal that Principal may treat 
such later date as the date of receipt.
    In order to clarify the language, as set forth in Section 
II(j)(4)(ii)(A) in the Notice, the Applicants request that the language 
of Section II(j)(4)(ii)(A) in the exemption be amended as follows:

    In the case of a Client Plan which invests in a Collective Fund, 
the termination will be implemented by the withdrawal of such Client 
Plan from all investments in such affected Collective Fund, and such 
withdrawal will be implemented by Principal within such time as may 
be necessary for withdrawal in an orderly manner that is equitable 
to the affected withdrawing Client Plan and to all non-withdrawing 
Client Plans, but in no event shall such withdrawal be implemented 
by Principal more than five (5) business days after the day 
Principal receives from the Second Fiduciary, acting on behalf of 
such withdrawing Client Plan, a Termination Form or receives some 
other written notification of intent to terminate the investment of 
such Client Plan in such Collective Fund, unless such withdrawal is 
otherwise prohibited by a governmental entity with jurisdiction over 
the Collective Fund, or the Second Fiduciary fails to instruct 
Principal as to where to reinvest or send the withdrawal proceeds;

    The Department concurs, and accordingly, language of Section 
II(j)(4)(ii)(A) in the exemption has been amended, as requested by the 
Applicants.
    2. The Applicants have requested deletion of the language of 
Section II(j)(4)(ii)(B), as set forth on page 77601, column 3, lines 
31-45 of the Notice. Section II(j)(4)(ii)(B) in the Notice reads, as 
follows:

    Principal will pay to such withdrawing Client Plan interest on 
the settlement amount calculated at the prevailing Federal funds 
rate plus two percent (2%) for the period from the day Principal 
receives from the Second Fiduciary, acting on behalf of such 
withdrawing Client Plan, a Termination Form or receives some other 
written notification of intent to terminate the investment of such 
Client Plan in such Collective Fund, to the date Principal pays such 
settlement amount in cash, with interest thereon, to such 
withdrawing Client Plan.

    In the comment letter, the Applicants agreed to accept the 
condition of a firm five (5) business day limitation on withdrawals 
from any Collective Fund, as set forth in Section II(j)(4)(ii)(A) of 
this exemption, subject to the elimination of the requirement that the 
Applicants pay interest during such five business day period.
    The Department concurs, and accordingly, Section II(j)(4)(ii)(B), 
as set forth in the Notice, has been deleted from this exemption.
    3. The Applicants have requested a modification to the language of 
Section II(j)(4)(ii)(C), as set forth on page 77601, column 3, lines 
46-61 of the Notice. Section II(j)(4)(ii)(C) in the Notice reads, as 
follows:

    From the date a Second Fiduciary, acting on behalf of a Client 
Plan that invests in a Collective Fund, returns a Termination Form 
or returns some other written notification of intent to terminate 
such Client Plan's investment in such Collective Fund, such Client 
Plan will not be subject to pay a pro rata share of any Collective 
Fund-Level Management Fee, nor will such Client Plan be subject to 
any other changes to the portfolio of such Collective Fund, 
including a pro rata share of any Affiliated Fund-Level Advisory Fee 
arising from the investment by such Collective Fund in an Affiliated 
Fund.


[[Page 32681]]


    In this regard, the Applicants acknowledge that a Client Plan which 
timely returns a Termination Form or other notice of termination in 
proper form (e.g., with sufficient information to implement the intent 
of such Client Plan) will be entitled to receive the NAV of the 
Collective Fund ``as of'' the close of business on the date of receipt 
by Principal of notice of termination--even if the funds are not 
distributed for up to five (5) business days. The Applicants further 
acknowledge that this would mean that no further charges--whether 
directly at the Collective Fund-Level or indirectly at the Affiliated 
Fund-Level will be incurred from and after the effective date of the 
receipt of the notification of termination by Principal. Accordingly, 
in order to clarify the language, as set forth in Section 
II(j)(4)(ii)(C) in the Notice, the Applicants request that Section 
II(j)(4)(ii)(C) be renumbered as Section II(j)(4)(ii)(B) and that the 
word, ``changes,'' as set forth on page 77601, column 3, line 56 the 
Notice be amended to the word, ``charges.''
    The Department concurs, with the Applicants' requested amendments 
to Section II(j)((4)(ii)(C). In addition, the Department wishes to 
clarify that the effective date of a withdrawal request is the day 
Principal receives notification of termination from a withdrawing 
Client Plan. Further, the Department wishes to clarify that a 
withdrawing Client Plan, in addition to not being subject to pay a pro 
rata share of any fees arising from the investment by such Client Plan 
in such Collective Fund, and any Affiliated Fund-Level Advisory Fee 
arising from such Collective Fund investing in an Affiliated Fund, a 
withdrawing Client Plan will not be subject to pay a pro rata share of 
any fee for Secondary Services arising from the investment by such 
Collective Fund in such Affiliated Fund. Accordingly, the Department 
has amended the language of Section II(j)(4)(ii)(C), as set forth in, 
on page 77601, column 3, lines 46-61 of the Notice, as follows:

    From the date Principal receives from a Second Fiduciary, acting 
on behalf of a Client Plan, that invests in a Collective Fund, a 
Termination Form or receives some other written notification of 
intent to terminate such Client Plan's investment in such Collective 
Fund, such Client Plan will not be subject to pay a pro rata share 
of any fees arising from the investment by such Client Plan in such 
Collective Fund, including any Collective Fund-Level Management Fee, 
nor will such Client Plan be subject to any other charges to the 
portfolio of such Collective Fund, including a pro rata share of any 
Affiliated Fund-Level Advisory Fee and any fee for Secondary 
Services arising from the investment by such Collective Fund in an 
Affiliated Fund.

    In addition to the changes to the language of the final exemption 
requested by the Applicants, as discussed above, the Department has 
decided to clarify the language of several sections of the final 
exemption. The amended language of each of these sections is set forth 
in paragraphs 4-8, below.
    4. Section II(a)(2)(ii), as set forth in the Notice at page 77599, 
column 1, lines 33-37, has been deleted. Section II(a)(2)(ii) in the 
final exemption reads, as follows:

does not pay directly to Principal or indirectly to Principal 
through the Collective Fund for the entire period of such investment 
any Collective Fund-Level Management Fee with respect to any assets 
of such Client Plan invested in such Collective Fund.

    5. Section II(a)(3)(i), as set forth in the Notice at page 77599, 
column 1, lines 64-69 and column 2, lines 1-4, has been deleted. 
Section II(a)(3)(i) in the final exemption reads, as follows:

does not pay to Principal for the entire period of such investment 
any a Plan-Level Management Fee (including any ``Net'' Plan-Level 
Management Fee, as described, above, in Section II(a)(2)(iii)), and 
does not pay directly to Principal or indirectly to Principal 
through the Collective Fund for the entire period of such investment 
any Collective Fund-Level Management Fee with respect to the assets 
of such Client Plan which are invested in such Affiliated Fund; or

    6. Section II(a)(3)(ii), as set forth in the Notice at page 77599, 
column 2, lines 9-25, has been deleted. Section II(a)(3)(ii) in the 
final exemption reads, as follows:

pays indirectly to Principal through the Collective Fund a 
Collective Fund-Level Management Fee, in accordance with Section 
II(a)(2)(i), above, based on the total assets of such Client Plan 
invested in such Collective Fund, from which a credit has been 
subtracted from such Collective Fund-Level Management Fee, where the 
amount subtracted represents such Client Plan's pro rata share of 
any Affiliated Fund-Level Advisory Fee paid to Principal by such 
Affiliated Fund; and does not pay to Principal for the entire period 
of such investment any Plan-Level Management Fee with respect to any 
assets of such Client Plan invested in such Collective Fund; or

    7. Section II(a)(3)(iii), as set forth in the Notice at page 77599, 
column 2, lines 26-42, has been deleted. Section II(a)(3)(iii) in the 
final exemption reads, as follows:

pays to Principal a Plan-Level Management Fee, in accordance with 
Section II(a)(2)(iii), above, based on the total assets of such 
Client Plan under management by Principal at the plan-level, from 
which a credit has been subtracted from such Plan-Level Management 
Fee, where the amount subtracted represents such Client Plan's pro 
rata share of any Affiliated Fund-Level Advisory Fee paid to 
Principal by such Affiliated Fund; and does not pay directly to 
Principal or indirectly to Principal through the Collective Fund for 
the entire period of such investment any Collective Fund-Level 
Management Fee with respect to any assets of such Client Plan 
invested in such Collective Fund; or

    8. The definition of the term, ``Asset Allocation Services(s),'' as 
set forth in Section IV(p) in the Notice at page 77605, column 2, lines 
21-37, has been deleted. The amended definition of the term, ``Asset 
Allocation'' in the final exemption reads, as follows:

    The term, ``Asset Allocation Service(s),'' means a service or 
services to a Client Plan relating to the selection of appropriate 
asset classes or target-date ``glidepath,'' and the allocation or 
reallocation (including rebalancing) of the assets of a Client Plan 
among the selected asset classes. Such services do not include the 
management of the underlying assets of a Client Plan, the selection 
of specific funds or managers, and the management of the selected 
Affiliated Funds or Collective Funds.

    After full consideration and review of the entire record, including 
the Original Comment and the Amended Comment filed by the Applicants, 
the Department has determined to grant the exemption, as modified, 
above. The Original Comment and the Amended Comment submitted to the 
Department by the Applicants have been included as part of the public 
record of the exemption application. A copy of the Original Comment and 
the Amended Comment is posted on the Department's Web site at http://www.regulations.gov. The complete application file (D-11579), including 
all supplemental submissions received by the Department, is 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 Notice published on December 13, 2011, at 76 FR 77598.

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

[[Page 32682]]

Weyerhaeuser Company (Weyerhaeuser) and Federalway Asset Management LP 
(collectively, the Applicants) Located in Federalway, Washington

[Exemption Application No. D-11677; Prohibited Transaction Exemption 
2012-12]

Exemption

Section I: Specific Exemption Involving the Contribution In-Kind
    The restrictions of sections 406(a)(1)(A), 406(b)(1), and 406(b)(2) 
of the Act and the sanctions resulting from the application of section 
4975 of the Code, by reason of section 4975(c)(1)(A) and 4975(c)(1)(E) 
of the Code,\7\ shall not apply, effective as of the date of the 
publication of this exemption in the Federal Register, to the 
contribution in-kind by the Weyerhaeuser Company (Weyerhaeuser), the 
sponsor of the Weyerhaeuser Pension Plan (the Plan), of a bundle of 
assets (the Assets) owned by Weyerhaeuser Asset Management LLC (WAM), a 
wholly-owned subsidiary of Weyerhaeuser NR Company which is in turn a 
wholly-owned subsidiary of Weyerhaeuser, to the Weyerhaeuser Company 
Master Retirement Trust (the Master Trust); provided that the 
conditions, as set forth, below, in Section IV, and the following 
conditions are satisfied:
---------------------------------------------------------------------------

    \7\ For purposes of this exemption, references to specific 
provisions of Title I of the Act, unless otherwise specified, refer 
also to the corresponding provisions of the Code.
---------------------------------------------------------------------------

    (a) Prior to the execution and closing on the in-kind contribution 
of the Assets, an independent, qualified fiduciary (the I/F), as 
defined in Section V(k), acting on behalf of the Master Trust, 
determines whether and on what terms to enter into the in-kind 
contribution of such Assets;
    (b) The I/F negotiates, reviews, and approves the specific terms 
and conditions of the in-kind contribution of the Assets and 
determines, prior to entering into such in-kind contribution, that such 
transaction is feasible, in the interest of, and protective of the 
Master Trust and its participants and beneficiaries;
    (c) The I/F takes the necessary steps to ensure compliance by 
Weyerhaeuser with the terms and conditions of the in-kind contribution 
of the Assets;
    (d) As of the date the Assets are contributed to the Master Trust, 
the contributed value of the Assets is equal to the fair market value 
of the Assets, as determined by the I/F;
    (e) The terms and conditions of the in-kind contribution of the 
Assets are no less favorable to the Master Trust than terms negotiated 
at arm's length under similar circumstances between unrelated parties;
    (f) The fair market value of the Assets will constitute less than 
one percent (1%) of the assets of the Master Trust at the time such 
Assets are contributed to the Master Trust;
    (g) The Master Trust incurs no commissions, fees, costs, or other 
charges and expenses in connection with the in-kind contribution of the 
Assets to the Master Trust;
    (h) The in-kind contribution of the Assets is a one-time 
transaction;
    (i) The fair market value of the Assets is not credited in the 
prefunding balance for purposes of calculating the minimum required 
contributions of Weyerhaeuser to the Plan;
    (j) Pursuant to the royalty interest agreement (the Royalty 
Agreement) with Federalway Asset Management LP (Newco), the Master 
Trust will be entitled to receive annual royalty payments in the amount 
of 12.5 percent (12.5%) on revenues of less than $25 million per year 
and 15 percent (15%) on revenues of more than $25 million per year; and
    (k) The termination of Newco as investment manager of the Master 
Trust will have no impact on the Master Trust's rights under the 
Royalty Agreement.
Section II: Specific Exemption Involving the Management by Newco of the 
Assets of Employee Benefit Plans
    Effective for a period of five (5) years, beginning on the date of 
the publication of this exemption in the Federal Register and ending on 
the day which is five (5) years from such publication date, the 
restrictions of section 406(a)(1)(A) through (D) of the Act and the 
taxes imposed by section 4975(a) and (b) of the Code, by reason of 
section 4975(c)(1)(A) through (D) of the Code, shall not apply to:
    (a) Any transaction between a party in interest, as defined in 
Section V(e), with respect to the Plan and the Master Trust in which 
such Plan has an interest; and any transaction between a party in 
interest, as defined in Section V(e), with respect to any other 
employee benefit plan or employee benefit plans sponsored by 
Weyerhaeuser (the Other Plan(s)) and the Master Trust in which such 
Other Plan(s) have an interest; and
    (b) Any transaction between a party in interest, as defined in 
Section V(e), and any employee benefit plan or any employee benefit 
plans, as defined in Section V(i), (the Client Plan(s)), where such 
Client Plan has engaged Newco to act as investment manager within the 
meaning of section 3(38) of the Act, or where such Client Plan is 
invested in a collective investment vehicle managed by Newco the assets 
of which are treated as plan assets under section 3(42) of the Act; 
provided that:
    (1) Newco has discretionary authority or control with respect to 
the assets of the Plan, the assets of the Other Plan(s), or the assets 
the Client Plan(s) which are invested in an investment fund (a Managed 
Account) involved in any such transaction;
    (2) Newco satisfies the definition, as set forth, below, in Section 
V(a) of this exemption; and
    (3) The conditions as set forth, below, in Section III, and Section 
IV, are satisfied.
Section III: Specific Conditions Applicable to Transactions Described 
in Section II of This Exemption
    (a) At the time of the transaction, as defined in Section V(h), 
neither the party in interest, as defined in Section V(e), nor any 
affiliate, as defined in Section V(b):
    (1) Has the authority to appoint or terminate Newco as a manager of 
the Managed Account involved in the transaction, or
    (2) Has the authority to negotiate on behalf of the Plan, the Other 
Plan(s), or the Client Plan(s), the terms of the management agreement 
with Newco (including renewals or modifications thereof) with respect 
to the Managed Account involved in the transaction;
    Notwithstanding the foregoing, in the case of a Managed Account in 
which two (2) or more unrelated plans, as defined in Section V(i), have 
an interest, a transaction with a party in interest, as defined in 
Section V(e), with respect to a plan will be deemed to satisfy the 
requirements of Section III(a), if the assets of the plan managed by 
Newco in the Managed Account, when combined with the assets of other 
plans established or maintained by the same employer (or affiliate 
thereof, as described in Section V(b)(1)) or by the same employee 
organization, and managed in the same Managed Account, represent less 
than 10 percent (10%) of the assets of the Managed Account;
    (b) The transaction is not described in--
    (1) Prohibited Transaction Exemption 2006-16 (71 FR 63786; October 
31, 2006) (relating to securities lending arrangements) (as amended or 
superseded),
    (2) Prohibited Transaction Exemption 83-1 (48 FR 895; January 7, 
1983) (relating to acquisitions by plans of interests in mortgage 
pools) (as amended or superseded), or
    (3) Prohibited Transaction Exemption 82-87 (47 FR 21331; May 18, 
1982)

[[Page 32683]]

(relating to certain mortgage financing arrangements) (as amended or 
superseded);
    (c) The terms of the transaction are negotiated on behalf of the 
Managed Account by, or under the authority and general direction of, 
Newco, and either Newco, or (so long as Newco retains full fiduciary 
responsibility with respect to the transaction) a property manager 
acting in accordance with written guidelines established and 
administered by Newco, makes the decision on behalf of the Managed 
Account to enter into the transaction, provided that the transaction is 
not part of an agreement, arrangement, or understanding designed to 
benefit a party in interest, as defined in Section V(e);
    (d) The party in interest, as defined in Section V(e), dealing with 
the Managed Account is neither Newco nor a person related to Newco, 
within the meaning of Section V(g);
    (e) At the time the transaction is entered into, and at the time of 
any subsequent renewal or modification thereof that requires the 
consent of Newco, the terms of the transaction are at least as 
favorable to the Managed Account as the terms generally available in 
arm's length transactions between unrelated parties;
    (f) Neither Newco nor any affiliate thereof, as defined in Section 
V(c), nor any owner, direct or indirect, of a 5 percent (5%) or more 
interest in Newco is a person who within the ten (10) years immediately 
preceding the transaction has been either convicted or released from 
imprisonment, whichever is later, as a result of:
    (1) Any felony involving abuse or misuse of such person's employee 
benefit plan position or employment, or position or employment with a 
labor organization;
    (2) Any felony arising out of the conduct of the business of a 
broker, dealer, investment adviser, bank, insurance company, or 
fiduciary;
    (3) Income tax evasion;
    (4) Any felony involving the larceny, theft, robbery, extortion, 
forgery, counterfeiting, fraudulent concealment, embezzlement, 
fraudulent conversion, or misappropriation of funds or securities;
    (5) Conspiracy or attempt to commit any such crimes or a crime in 
which any of the foregoing crimes is an element; or
    (6) Any other crime described in section 411 of the Act. For 
purposes of this Section III(f), a person shall be deemed to have been 
``convicted'' from the date of the judgment of the trial court, 
regardless of whether that judgment remains under appeal.
Section IV-General Requirements Applicable to Transactions Described in 
Section I and Section II of This Exemption
    (a) Newco or an affiliate, as defined in Section V(l), maintains or 
causes to be maintained within the United States, for a period of six 
(6) years from the date of each covered transaction, the records 
necessary to enable the persons described, below, in Section 
IV(b)(1)(A)-(E), to determine whether the conditions of this exemption 
have been met, except that:
    (1) A separate prohibited transaction will not be considered to 
have occurred solely because, due to circumstances beyond the control 
of Newco and/or its affiliates, as defined in Section V(l), the records 
are lost or destroyed prior to the end of the six (6) year period, and
    (2) No party in interest or disqualified person, as defined in 
Section V(e), other than Newco, 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 
Section IV(b)(1).
    (b)(1) Except as provided in Section IV(b)(2), and notwithstanding 
any provisions of subsections (a)(2) and (b) of section 504 of the Act, 
the records referred to, above, in Section IV(a) are unconditionally 
available for examination at their customary location during normal 
business hours by:
    (A) Any duly authorized employee or representative of the 
Department or of the Internal Revenue Service;
    (B) Any fiduciary of the Plan, any fiduciary of any Other Plan(s), 
any fiduciary of any Client Plan(s), and any duly authorized 
representative of such fiduciary;
    (C) Any contributing employer to the Plan, any contributing 
employer to any Other Plan(s), any contributing employer to any of the 
Client Plan(s), and any duly authorized employee representative of such 
contributing employer;
    (D) Any participant or beneficiary of the Plan, any participant or 
beneficiary of any Other Plan(s), any participant or beneficiary of any 
Client Plan(s), and any duly authorized representative of such 
participants or beneficiaries; and
    (E) Any employee organization whose members are covered by the 
Plan, any employee organization whose members are covered by the Other 
Plan(s), and any employee organization whose members are covered by any 
Client Plan(s);
    (2) None of the persons, described in Section IV(b)(1)(B) through 
(E), shall be authorized to examine trade secrets of Newco or its 
affiliates, as defined in Section V(l), or commercial or financial 
information which is privileged or confidential.
Section V--Definitions
    (a) For purposes of this exemption, the term, Federalway Asset 
Management LP, and the term, ``Newco,'' means a fiduciary (as defined 
in Section V(j)) which is an investment adviser registered under the 
Investment Advisers Act of 1940 that has total client assets under its 
management and control in excess of $85,000,000, as of the date Newco 
commences operations, and shareholders' or partners' equity (as defined 
in Section V(m)) in excess of $1,000,000.
    (b) For purposes of Section III(a), an ``affiliate'' of a person 
means--
    (1) Any person directly or indirectly, through one or more 
intermediaries, controlling, controlled by, or under common control 
with the person,
    (2) Any corporation, partnership, trust or unincorporated 
enterprise of which such person is an officer, director, 10 percent 
(10%) or more partner, or highly compensated employee as defined in 
section 4975(e)(2)(H) of the Code (but only if the employer of such 
employee is the plan sponsor), and
    (3) Any director of the person or any employee of the person who is 
a highly compensated employee, as defined in section 4975(e)(2)(H) of 
the Code, or who has direct or indirect authority, responsibility or 
control regarding the custody, management or disposition of plan assets 
involved in the transaction. A named fiduciary (within the meaning of 
section 402(a)(2) of the Act) of a plan with respect to the plan assets 
involved in the transaction and an employer any of whose employees are 
covered by the plan will also be considered affiliates with respect to 
each other for purposes of Section III(a), if such employer or an 
affiliate of such employer has the authority, alone or shared with 
others, to appoint or terminate the named fiduciary or otherwise 
negotiate the terms of the named fiduciary's employment agreement.
    (c) For purposes of Section III(f), an ``affiliate'' of a person 
means--
    (1) Any person directly or indirectly through one or more 
intermediaries, controlling, controlled by, or under common control 
with the person,
    (2) Any director of, relative of, or partner in, any such person,
    (3) Any corporation, partnership, trust or unincorporated 
enterprise of which such person is an officer, director, or a 5 percent 
(5%) or more partner or owner, and

[[Page 32684]]

    (4) Any employee or officer of the person who--
    (A) Is a highly compensated employee (as defined in section 
4975(e)(2)(H)) of the Code or officer (earning 10 percent (10%) or more 
of the yearly wages of such person), or
    (B) Has direct or indirect authority, responsibility or control 
regarding the custody, management or disposition of plan assets.
    (d) For purposes of Section V(b), Section V(c), and Section V(l), 
the term, ``control,'' means the power to exercise a controlling 
influence over the management or policies of a person other than an 
individual.
    (e) For purposes of this exemption, the term, ``party in 
interest,'' means a person described in section 3(14) of the Act and 
includes a ``disqualified person,'' as defined in Code section 
4975(e)(2).
    (f) For purposes of Section V(c)(2) and Section V(l)(2), the term, 
``relative,'' means a relative as that term is defined in section 3(15) 
of the Act, or a brother, a sister, or a spouse of a brother or sister.
    (g) Newco is ``related'' to a party in interest for purposes of 
Section III(d), if, as of the last day of its most recent calendar 
quarter: (i) Newco owns a 10 percent (10%) or more interest in the 
party in interest; (ii) a person controlling, or controlled by, Newco 
owns a 20 percent (20%) or more interest in the party in interest; 
(iii) the party in interest owns a 10 percent (10%) or more interest in 
Newco; or (iv) a person controlling, or controlled by, the party in 
interest owns a 20 percent (20%) or more interest in Newco. 
Notwithstanding the foregoing, a party in interest is ``related'' to 
Newco if: (i) A person controlling, or controlled by, the party in 
interest has an ownership interest that is less than 20 percent (20%) 
but greater than 10 percent (10%) in Newco and such person exercises 
control over the management or policies of Newco by reason of its 
ownership interest; (ii) a person controlling, or controlled by, Newco 
has an ownership interest that is less than 20 percent (20%) but 
greater than 10 percent (10%) in the party in interest and such person 
exercises control over the management or policies of the party in 
interest by reason of its ownership interest. For purposes of this 
definition:
    (1) The term ``interest'' means with respect to ownership of an 
entity--
    (A) The combined voting power of all classes of stock entitled to 
vote or the total value of the shares of all classes of stock of the 
entity if the entity is a corporation,
    (B) The capital interest or the profits interest of the entity if 
the entity is a partnership, or
    (C) The beneficial interest of the entity if the entity is a trust 
or unincorporated enterprise; and
    (2) A person is considered to own an interest if, other than in a 
fiduciary capacity, the person has or shares the authority--
    (A) To exercise any voting rights or to direct some other person to 
exercise the voting rights relating to such interest, or
    (B) To dispose or to direct the disposition of such interest.
    (h) For purposes of this exemption, the time as of which any 
transaction occurs is the date upon which the transaction is entered 
into. In addition, in the case of a transaction that is continuing, the 
transaction shall be deemed to occur until it is terminated. If any 
transaction is entered into on or after the date of the publication of 
this exemption in the Federal Register or a renewal that requires the 
consent of Newco occurs on or after the date of the publication of this 
exemption in the Federal Register, and the requirements of this 
exemption are satisfied at the time the transaction is entered into or 
renewed, respectively, the requirements will continue to be satisfied 
thereafter with respect to the transaction. Nothing in this paragraph 
shall be construed as exempting a transaction entered into by a Managed 
Account which becomes a transaction, as described in section 406 of the 
Act or section 4975 of the Code while the transaction is continuing, 
unless the conditions of this exemption were met either at the time the 
transaction was entered into or at the time the transaction would have 
become prohibited but for this exemption.
    (i) For purposes of this exemption, the terms, ``employee benefit 
plan'' and ``plan,'' include an employee benefit plan described in 
section 3(3) of the Act and/or a plan described in section 4975(e)(1) 
of the Code, but do not include a plan sponsored by Newco or any 
affiliate of Newco.
    (j) For purposes of Section V(a), the term ``fiduciary'' means a 
fiduciary managing the assets of a plan, as defined in Section V(i), in 
a Managed Account that is independent of and unrelated to the employer 
sponsoring such plan. For purposes of this exemption, a fiduciary will 
not be deemed to be independent of and unrelated to the employer 
sponsoring the plan, if such fiduciary directly or indirectly controls, 
is controlled by, or is under common control with the employer 
sponsoring the plan.
    (k) For purposes of Section I, the term, ``I/F,'' means a fiduciary 
that:
    (1) Can demonstrate, through experience and/or education, 
proficiency in matters involving the in-kind contribution of assets, 
including assets such as the Assets which are the subject of Section I 
of this exemption;
    (2) Is an expert with respect to the valuation of assets, such as 
the Assets, or has the ability to access (itself or through persons 
engaged by it) appropriate data regarding the value of assets, such as 
the Assets, in the relevant market;
    (3) Has not engaged in any criminal activity involving fraud, 
fiduciary standards, or securities law violations;
    (4) Is appointed to act on behalf of the Master Trust for all 
purposes related to in-kind contribution of the Assets; and
    (5) Is independent of and unrelated to Weyerhaeuser and its 
affiliates, as defined, below, in Section V(l). For purposes of this 
exemption, a fiduciary will not be deemed to be independent of and 
unrelated to Weyerhaeuser and its affiliates if:
    (i) Such fiduciary directly or indirectly controls, is controlled 
by, or is under common control with Weyerhaeuser and its affiliates, as 
defined, below, in Section V(l),
    (ii) Such fiduciary directly or indirectly receives any 
compensation or other consideration in connection with any of the 
transactions described in this exemption; except that an I/F may 
receive compensation for acting as an I/F in connection with the 
transactions contemplated herein, if the amount or payment of such 
compensation is not contingent upon or in any way affected by the I/F's 
ultimate decisions, and
    (iii) The annual gross revenue from Weyerhaeuser and its 
affiliates, as defined, below, in Section V(l), received by such 
fiduciary, during any year of its engagement, does not exceed one 
percent (1%) of such fiduciary's annual gross revenue from all sources 
for its prior tax year.
    (l) For purposes of Section IV(a) and Section V(k), the term, 
``affiliate,'' means:
    (1) Any person directly or indirectly through one or more 
intermediaries, controlling, controlled by, or under common control 
with the person;
    (2) Any officer, director, employee, relative, or partner of any 
such person; and
    (3) Any corporation or partnership of which such person is an 
officer, director, partner, or employee.
    (m) For purposes of Section V(a), the term ``shareholders' or 
partners' equity'' means the equity shown in the balance sheet, as of 
the date Newco commences operations, prepared in accordance with

[[Page 32685]]

generally accepted accounting principles.

Temporary Nature of the Exemption

    Effective Date: With regard to the transaction described in Section 
I, the Department has determined that the relief granted with respect 
to such transaction shall be effective, as of the date of the 
publication of this exemption in the Federal Register.
    With regard to the transactions described in Section II, the 
Department has determined that the relief granted with respect such 
transactions is temporary in nature, and shall be effective, beginning 
on the date of the publication of this exemption in the Federal 
Register and ending on the day which is five (5) years from the date of 
the publication of this exemption in the Federal Register. Accordingly, 
relief described in this exemption with respect to the transactions 
described in Section II will not be available upon the expiration of 
such five-year period for any new or additional transactions, as 
described herein, after such date, but would continue to apply beyond 
the expiration of such five-year period for continuing transactions 
entered into within the five-year period; provided that the conditions 
of this exemption continue to be satisfied. Should the applicant wish 
to extend, beyond the expiration of such five-year period, the relief 
provided for new or additional transactions, as described in Section 
II, the Applicants may submit another application for exemption. In 
this regard, the Department expects that prior to filing another 
exemption application seeking relief for new or additional 
transactions, as described in Section II, the Applicants should be 
prepared to demonstrate compliance with the conditions of this 
exemption.

Written Comments

    In the Notice of Proposed Exemption (the Notice), the Department 
invited all interested persons to submit written comments and requests 
for a hearing on the proposed exemption within fifty (50) days of the 
date of the publication of the Notice in the Federal Register on 
January 20, 2011. All comments and requests for hearing were due by 
March 12, 2012. Although during the comment period, the Department 
received numerous telephone calls, emails, and letters from 
commentators, none of the commentators raised any substantive issues 
with respect to the transactions which are the subject of this 
exemption. During the comment period, the Department also received two 
requests from commentators for a hearing, but the commentators did not 
provide a substantive reason why a hearing should be held. As no 
material issues relating to the subject transactions were raised by the 
commentators during the comment period which would require the 
convening of a hearing, the Department has determined not to delay 
consideration of the final exemption by holding a hearing on 
application D-11677.
    Accordingly, after full consideration and review of the entire 
record, including the comments filed by the commentators, the 
Department has determined to grant the exemption, as set forth, above. 
The written comments submitted to the Department by the commentators 
have been included as part of the public record of the exemption 
application. Copies of the written comments have also been provided to 
Weyerhaeuser. The complete application file (D-11677), including all 
supplemental submissions received by the Department, is 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 Notice published on January 20, 2012, at 77 FR 3052.

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

Sammons Enterprises, Inc. Employee Stock Ownership ESOP (the ESOP) 
Located in Dallas, Texas

[Prohibited Transaction Exemption 2012-13; Exemption Application Number 
D-11679]

Exemption

    The restrictions of sections 406(a)(1)(A) and (D), 406(b)(1), and 
406(b)(2) of the Act, and the sanctions resulting from the application 
of section 4975 of the Code, by reason of section 4975(c)(1)(A), (D) 
and (E) of the Code, shall not apply to the personal holding company 
consent dividend election (the Consent) with respect to Sammons 
Enterprises, Inc. (Sammons), by the trustee of the ESOP, provided that 
the following conditions are satisfied:
    (a) The trustee of the ESOP is an independent, qualified fiduciary 
(the I/F), acting on behalf of the ESOP, which determines prior to 
entering into the transaction that the transaction is feasible, in the 
interest of, and protective of the ESOP and the participants and 
beneficiaries of the ESOP;
    (b) Before the ESOP enters into the subject transaction, the I/F 
reviews the transaction, 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) Sammons provides to the I/F, in a timely fashion, all 
information reasonably requested by the I/F to assist it in making its 
decision whether or not to approve the transaction;
    (e) The consent dividend will represent no more than two percent 
(2%) of the ESOP's assets in any taxable year within the timeframe of 
the exemption herein;
    (f) Shares of Sammons stock are held in an ESOP suspense account, 
and are allocated each year to each eligible ESOP participant in 
accordance with the applicable provisions of the Code;
    (g) All of the requirements of section 565 of the Code are met with 
respect to the Consent; and
    (h) All shareholders of Sammons are requested to consent to the 
dividend in the manner prescribed under section 565 of the Code.
    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 November 14, 2011 at 76 
FR 70503, and the notice of amendment to the proposed exemption 
published on March 30, 2012 at 77 FR 19338.
    Temporary Nature of Exemption: This exemption will expire at the 
earlier of (i) the first day of Sammons' first fiscal year next 
following the fiscal year in which falls the fifth anniversary of the 
date of grant of the exemption; and (ii) the first day upon which the 
ESOP fails to own at least 99% of the issued and outstanding shares of 
Sammons.

FOR FURTHER INFORMATION CONTACT: Gary H. Lefkowitz of the Department, 
telephone (202) 693-8546. (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

[[Page 32686]]

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 25th day of May 2012.

Lyssa E. Hall,
Acting Director of Exemption Determinations, Employee Benefits Security 
Administration, U.S. Department of Labor.
[FR Doc. 2012-13263 Filed 5-31-12; 8:45 am]
BILLING CODE 4510-29-P