Notices. Notice of proposed exemptions

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BILLING CODE 4140-31-M DEPARTMENT OF LABOR Employee Benefits Security Administration [Application No. L-11258, et al.] Proposed Exemptions; Retail Clerks Welfare Trust Health and Welfare Plan (the Plan) AGENCY: Employee Benefits Security Administration, Labor. ACTION: Notice of proposed exemptions. SUMMARY: This document contains notices of pendency before the Department of Labor (the Department) of proposed exemptions from certain of the prohibited transaction restrictions of the Employee Retirement Income Security Act of 1974 (the Act) and/or the Internal Revenue Code of 1986 (the Code).

Written Comments and Hearing Requests All interested persons are invited to submit written comments or requests for a hearing on the pending exemptions, unless otherwise stated in the Notice of Proposed Exemption, within 45 days from the date of publication of this **Federal Register** Notice. Comments and requests for a hearing should state:

(1)The name, address, and telephone number of the person making the comment or request, and

(2)the nature of the person's interest in the exemption and the manner in which the person would be adversely affected by the exemption. A request for a hearing must also state the issues to be addressed and include a general description of the evidence to be presented at the hearing. ADDRESSES: All written comments and requests for a hearing (at least three copies) should be sent to the Employee Benefits Security Administration (EBSA), Office of Exemption Determinations, Room N-5700, U.S. Department of Labor, 200 Constitution Avenue, NW., Washington, DC 20210. Attention: Application No. ____ , stated in each Notice of Proposed Exemption. Interested persons are also invited to submit comments and/or hearing requests to EBSA via e-mail or FAX. Any such comments or requests should be sent either by e-mail to: *moffitt.betty@dol.gov* , or by FAX to

(202)219-0204 by the end of the scheduled comment period. The applications for exemption and the comments received will be available for public inspection in the Public Documents Room of the Employee Benefits Security Administration, U.S. Department of Labor, Room N-1513, 200 Constitution Avenue, NW., Washington, DC 20210. Notice to Interested Persons Notice of the proposed exemptions will be provided to all interested persons in the manner agreed upon by the applicant and the Department within 15 days of the date of publication in the **Federal Register** . Such notice shall include a copy of the notice of proposed exemption as published in the **Federal Register** and shall inform interested persons of their right to comment and to request a hearing (where appropriate). SUPPLEMENTARY INFORMATION: The proposed exemptions were requested in applications filed pursuant to section 408(a) of the Act and/or section 4975(c)(2) of the Code, and in accordance with procedures set forth in 29 CFR part 2570, subpart B (55 FR 32836, 32847, August 10, 1990). 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 requested to the Secretary of Labor. Therefore, these notices of proposed exemption are issued solely by the Department. The applications contain representations with regard to the proposed exemptions which are summarized below. Interested persons are referred to the applications on file with the Department for a complete statement of the facts and representations. Retail Clerks Welfare Trust Health and Welfare Plan (the Plan) Located in Seattle, Washington [Application No. L-11258] Proposed Exemption The Department is considering granting an exemption under the authority of section 408(a) of the Act and in accordance with the procedures set forth in 29 CFR part 2570, subpart B (55 FR 32836, 32847, August 10, 1990). If the exemption is granted, the restrictions of section 406(a), 406(b)(1) and (b)(2) of the Act shall not apply, effective July 1, 2005, to the purchase by Plan participants and beneficiaries of prescription drugs from pharmacies established and maintained by contributing employers to the Plan, or their affiliates (the Custom Network), which are parties in interest with respect to the Plan, provided the following conditions are satisfied:

(a)The terms of each transaction are at least as favorable to the Plan as those the Plan could obtain in a similar arm's-length transaction with an unrelated third party;

(b)All determinations regarding which party in interest pharmacies, if any, may participate in the Custom Network, will be made by the Plan's independent fiduciary based on objective standards developed by the independent fiduciary in reliance on information provided by NMHCrx, the Plan's Pharmacy Benefits Manager, an entity which is independent of any contributing employer to the Plan, and the Plan's independent actuarial consultants;

(c)At least 50% of the providers participating in the Custom Network are pharmacies of contributing employers other than the employer of any individual Plan participant;

(d)In the aggregate, on an on-going basis, the costs for each plan year for the Plan from participants using the Custom Network pharmacies will be at least one percentage point less than would be the costs through the use of NMHCrx's preferred provider network pharmacies (the PPN pharmacies);

(e)In the aggregate, on an on-going basis, the costs for each plan year for the Plan from participants using the PPN pharmacies will be significantly less than costs for the retail purchase of prescription drugs from non-participating pharmacies;

(f)The Plan's independent fiduciary will monitor the subject transactions to ensure that all conditions of the exemption, including conditions

(d)and

(e)regarding pricing, continue to be satisfied during each plan year; and

(g)All future updated summary plan descriptions, furnished to participants, will state that the purchase price of a particular prescription drug at Custom Network pharmacies may be less than the purchase price that is available either through the use of the PPN pharmacies or through retail non-participating pharmacies, and that the cost of prescription drugs in the aggregate over the course of a 12-month plan year will be:

(i)Lower at Custom Network pharmacies than at the PPN pharmacies and

(ii)Significantly lower at the Custom Network pharmacies than at non-participating retail pharmacies. *Effective Date:* If the proposed exemption is granted, it will be effective July 1, 2005. Summary of Facts and Representations 1. The Plan is a multi-employer welfare benefit plan, which has been in existence since June 18, 1957. The Plan was established to provide health and welfare benefits, including life, sickness, accident and other benefits for Plan participants and their beneficiaries. The Plan is directed by a twelve-person Board of Trustees (the Trustees). The six Trustees representing labor are appointed by the United Food and Commercial Workers Local Union 1105 (the Union). The six employer Trustees are appointed by Allied Employers, Inc., a trade association of which the Plan's contributing employers are members. The Plan currently has approximately 27,600 participants, and it covers approximately 30,700 beneficiaries as well, so that the total number of participants and related family members affected by the subject transactions is approximately 58,300. 2. The applicant represents that the Plan has a long established and on-going relationship with a third-party administrator, Zenith Administrators, Inc. (Zenith). Prior to October 1, 1999, Zenith processed all pharmacy benefit claims for the Plan. Participants paid the total prescription cost and then submitted claim forms to Zenith for reimbursement of the portion in excess of the required co-payment. 3. In 1999, the Plan's Board of Trustees asked the Plan's consultants, Mercer Human Resource Consulting (Mercer) and The Segal Company (together, the Consultants) 1 to conduct a search for a Pharmacy Benefits Manager

(PBM)to take over as primary processor for pharmacy benefit claims. Pursuant to that search, Pharmaceutical Care Network

(PCN)was selected as the entity most able to fill the needs of the Plan. Effective October 1, 1999, PCN became the PBM for the Plan. Effective September 1, 2003, National Medical Health Card Systems, Inc. (NMHCrx) became the PBM for the Plan, replacing PCN. NMHCrx is not affiliated with Zenith, the Plan or any contributing employer. The agreement with NMHCrx includes a 90-day termination clause which permits the Plan to terminate the contract, without cause, and without penalty, upon 90 days advance written notice. 1 In 2003, The Segal Corporation was replaced as one of the Consultants by Cheiron, a firm of financial consultants and actuaries with offices in Washington, DC, McLean, Virginia and Charlotte, North Carolina. Cheiron and Mercer continue to provide financial, acturial and general consulting to the Plan. 4. NMHCrx, headquartered at Port Washington, New York, has been managing prescription drug programs since 1981 and has a nationwide network of over 53,000 pharmacies. It manages the prescription benefits of more than 1.5 million participants in governmental, single employer and multiemployer plans. NMHCrx is a public company with its shares trading on NASDAQ. NMHCrx is an independent organization not related to Zenith, the Plan or the employers maintaining the Plan. The applicant represents that the transactions described herein are not part of an agreement, arrangement or understanding designed to benefit a party in interest. 5. NMHCrx maintains an extensive system of participating pharmacies in its preferred provider network ( *i.e.* , the PPN pharmacies). In addition, NMHCrx maintains a Custom Network consisting of pharmacies that are, or are owned by, the Plan's participating employers or their affiliates. Thus, some of the pharmacies in the Custom Network are part of corporations that are employers of employees covered by the Plan; the other pharmacies in the Custom Network are wholly-owned by corporations that have affiliates whose employees are covered by the Plan. 6. NMHCrx also receives rebates from the drug manufacturers and, pursuant to the agreement with the Plan, pays over a portion of such rebates to the Plan. The parties have also memorialized agreed-upon terms regarding rebates due to the Plan from NHMCrx. The pricing and rebates are disclosed by NMHCrx to the Plan as part of its mandatory periodic reporting to the Plan. The records are open to examination pursuant to the audit provisions of the contract. The Plan and NMHCrx have agreed to specific dispensing fees and drug pricing. These terms are stated in the contract. For purchases made at NMHCrx PPN pharmacies, the Plan will pay the lower of

(i)an agreed discount from average wholesale price (brand) or maximum allowable cost (generic) and

(ii)the “usual and customary” charge for the drug. NMHCrx is obligated to maintain records needed to establish the cost the Plan pays for each drug. These records, which are to be maintained for the year that the Plan pays for the drugs and the following seven years, will be available for inspection or audit by the Plan at the offices of NMHCrx on reasonable notice during regular business hours. 2 2 The Department is expressing no opinion herein as to whether the pricing and rebate arrangements between NMHCrx and the Plan, and the disclosures thereof, are in compliance with part 4 of title I of the Act. 7. Plan participants and beneficiaries may acquire their prescription drugs through the regular PPN or the Custom Network established by NMHCrx. This choice is described in the Plan's summary plan description and other communication materials. NMHCrx adjudicates prescription claims that have been submitted and performs claims-related processing functions, not limited to determining the validity and the accuracy of the claims submitted. NMHCrx receives a fee which is paid by the Plan. 3 The applicant represents that all Plan fiduciaries are aware of fees and compensation to be paid by the Plan. NMHCrx's performance and competitiveness are monitored by the Plan's third party administrator, Zenith, and the Consultants. 3 The provisions of services to a plan by a party in interest with respect to the plan is a separate prohibited transaction under section 406(a)(1)(C) of the Act. However, the provision of services to a plan by a party in interest, which are necessary for the operation of the plan, are statutorily exempt under section 408(b)(2) of the Act, if the conditions required therein are met. The regulation, which defines the scope of the statutory exemption contained in section 408(b)(2) of the Act, states that no relief is provided for any arrangement for services which would violate section 406(b) of the Act (see 29 CFR section 2550.408b-2). Therefore, it should be noted that in this proposed exemption, the Department is providing no relief beyond that provided by section 408(b)(2) of the Act with respect to the provision of PBM services to the Plan by NMHCrx or some other entity. In addition, the Department is providing no opinion herein as to whether any service arrangements between NMHCrx or some other entity and the Plan would meet the conditions of section 408b(b)(2) of the Act and the regulations thereunder. However, interested persons should review DOL Adv. Op. 99-09A (May 21, 1999) for a discussion of issues relating to such service arrangements. 8. Plan participants who utilize the Custom Network of employer pharmacies pay a co-payment and the pharmacies then submit their charges, based on an agreed schedule, to NMHCrx. These charges are paid by NMHCrx. NMHCrx, in turn, receives reimbursement from the Plan. The payments and reimbursements are completed electronically. The applicant represents that the cost of the prescription drugs through the Custom Network is deeply discounted. The Consultants and NMHCrx have advised that the discounts are greater than those for the PPN pharmacies and also greater than for other pharmacy networks with which they are familiar. The applicant represents that the difference in savings, when comparing aggregate costs for the Plan from participants using the Custom Network pharmacies and the NMHCrx's PPN pharmacies have been and are expected to continue at approximately one percentage point. For instance, during the period from September 1, 2003 through May 30, 2005, pricing of claims through the PPN network pharmacies would have produced a discount of approximately 22% off retail prices, while pricing through the Custom Network pharmacies resulted in a discount of 23% off retail prices. Actual Plan costs through the Custom Network for this period were $45,348,737.97. The applicant further represents that the retail price for drugs dispensed for Plan participants during this period would have totaled $59,121,641.71 for 633,064 paid prescription claims. NMHCrx estimates that had these claims been adjudicated through its PPN, the Plan cost would have been approximately $45,722,245.73. Thus, the applicant represents that not only is the Custom Network more convenient for participants, and administratively more efficient for the Plan, but it also results in savings for the Plan and its participants when compared to the NMHCrx PPN. NMHCrx calculated cost savings using actual Plan prescription utilization and comparing retail prices with charges through NMHCrx's PPN network pharmacies and the Custom Network pharmacies. Pharmacies eligible to do so were presented with the opportunity to participate in both NMHCrx's PPN and the Custom Network. 9. The Department, following a routine investigation, raised concerns as to whether the employer pharmacy arrangements satisfy the requirements of section 406 of the Act. After discussions between Plan representatives and the Department, the Plan filed a request for the exemption proposed herein. Subsequently, the Department issued a closing letter, dated August 1, 2003, stating that no enforcement action would be taken with respect to the past transactions described herein. 10. To address concerns raised by the Department, the applicant represents that on July 1, 2005, the Plan retained as an independent fiduciary Nicholas Saakvitne, Esq. (the I/F), an employee benefits attorney and professional ERISA fiduciary in Marina del Rey, California. The I/F has 26 years of experience in benefits law, and most of his current practice consists of serving as trustee, plan administrator, or other plan fiduciary in plan terminations and in other special ERISA plan situations, to assist in managing plan assets and overseeing the operation of on-going plans. The cumulative total of plan assets for which the I/F has had fiduciary responsibility exceeds $500 million. The I/F represents that the gross income he will receive from the Plan for his fiduciary services for each calendar year will not exceed 5% of his expected annual gross income from all sources for such year. Mr. Saakvitne does not receive any payment in connection with his I/F duties from any contributing employer to the Plan, and further represents that he is independent from any employer pharmacy or affiliate thereof. The I/F will establish minimum standards and objective criteria for selection of employer pharmacies and, based on these standards and criteria, determine which pharmacies can participate in the Custom Network. The I/F will then have an on-going role for the Plan to periodically monitor the Custom Network pharmacies to confirm continued compliance with those minimum standards and objective criteria and the conditions of this proposed prohibited transaction exemption. The Plan's trustees would have no involvement or influence in the selection of pharmacies eligible to participate in the Custom Network. The I/F represents that he will receive and consider advice from the Plan's Consultants, as well as information from NMHCrx, the Plan's PBM. 11. The I/F represents that he confirms the findings of NMHCrx that the Plan fees in the aggregate (taking into account discounts) using the NMHCrx PPN are less than total Plan fees in the aggregate would be at standard retail prices. In addition, the Custom Network used by the Plan creates a better overall discount than the PPN alone, providing the Plan with improved cost management. In its December 2005 report to the Trustees, NMHCrx advised that actual experience under the Custom Network for the 12-month period ending August 31, 2005 (the most recent period for which data was then available) produced an approximate 29% overall discount for prescription drugs from “usual and customary” pricing—mail (20.99% for brand and 49.01% for generic) and retail (15.32% for brand and 57.15% for generic). The estimated retail price for the 320,877 prescriptions dispensed for Plan participants was $32,529,495.97. Actual Plan costs through the Custom Network pharmacies were $23,116,008.57. These findings are based on the average reimbursement rates achieved through the negotiated discounts with the represented pharmacies in these networks. 12. Minimum standards and objective criteria for the selection of the employer pharmacies in the Custom Network would be developed by the I/F, working with NMHCrx and the Plan's independent Consultants. The minimum standards and objective criteria would be set forth in writing, and would include:

(a)The maximum average price of the prescription drugs (considering both brand and generic options) and cost comparisons with the PPN network pharmacies;

(b)The quality and availability of the prescription drugs ( *e.g.* , is there a choice between generic and brand name drugs);

(c)Geographic proximity of the pharmacy ( *e.g.* , pharmacies that are located closer to participants should be selected over pharmacies that are further away, all else being equal); and

(d)Administrative efficiency ( *e.g.* , the length of time and the cost for the Plan to process claims with the particular pharmacy). 13. There would be no restrictions, other than the minimum standards and objective criteria, on the pharmacies that could be selected for the Custom Network. Any such pharmacies would be, or would be owned by, the Plan's participating employers or their affiliates ( *see rep. 5, above* ). NMHCrx would screen applicant pharmacies for compliance with the established standards and criteria and send the qualifiers to the I/F. The I/F would not be required to select any of the pharmacies currently participating in the Custom Network, but could select the same participating employer pharmacies as long as they satisfy the minimum standards and objective criteria. Eligible employer pharmacies, as selected by the I/F, would negotiate Custom Network contracts with NMHCrx. While all pharmacies in the Custom Network have been asked to participate at specific rates and fees, some of these pharmacies have chosen at their own discretion to participate at rates and fees that are lower than the minimum pricing requirement. 14. Plan participants were provided a summary of material modifications which explained the Custom Network pharmacy arrangement at the time the benefit was introduced. The participants have also received information about how to purchase their prescriptions through both NMHCrx's PPN and the Custom Network pharmacies in various news and “how to” articles published in the Plan's newsletter, *Benefits Update.* The applicant represents that all future updated summary plan descriptions will inform participants that the purchase price of a particular prescription drug at Custom Network pharmacies may be less than the purchase price that is available either through the PPN network pharmacies or through retail non-participating pharmacies, and that the cost of prescription drugs in the aggregate over the course of a 12-month plan year will be lower at Custom Network pharmacies than at PPN pharmacies and significantly lower when compared to non-participating retail pharmacies. 15. The applicant represents that Plan participants benefit from the transactions described herein because:

(a)Employees and their family members who participate in the Plan benefit from the discounts and convenience of the Custom Network through use of both their own employers' pharmacies and the pharmacies of all the other contributing employers with pharmacies in the network; and

(b)Substantially more than 50% of the pharmacies in the Custom Network are pharmacies not affiliated with any particular participant's employer—that is, participants or beneficiaries have an ample choice to use a pharmacy unaffiliated with their employer to obtain the Custom Network benefits. 16. In summary, the applicant represents that the subject transactions satisfy the criteria contained in section 408(a) of the Act because:

(a)The terms of the transactions are at least as favorable to the Plan as those the Plan could obtain in similar arm's-length transactions with an unrelated party;

(b)All determinations regarding which party in interest pharmacies, if any, may participate in the Custom Network, will be made, by the Plan's independent fiduciary based on objective standards developed by the independent fiduciary in reliance on information provided by the Plan's Pharmacy Benefits Manager, an entity which is independent of any contributing employer to the Plan, and the Plan's independent actuarial consultants;

(c)At least 50% of the providers participating in the Custom Network are pharmacies of contributing employers other than the employer of any individual Plan participant, so that a participant is assured of having an ample choice of pharmacies without loss of Custom Network benefits;

(d)In the aggregate, costs during each plan year for the Plan from participants using the Custom Network pharmacies will be at least one percent less than costs through the use of NMHCrx's PPN pharmacies, which will in turn in the aggregate be significantly less than costs for the retail purchase of such prescription drugs;

(e)The Plan's independent fiduciary will monitor the subject transactions to determine that all conditions of the exemption, including conditions

(d)and

(e)regarding pricing, continue to be satisfied; and

(f)All future updated summary plan descriptions furnished to participants will state that the purchase price of a particular prescription drug at Custom Network pharmacies may be less than the purchase price that is available either through the PPN network pharmacies or through retail non-participating pharmacies, and that the cost of prescription drugs in the aggregate over the course of a 12-month plan year will be lower at Custom Network pharmacies than at PPN pharmacies and significantly lower when compared to non-participating retail pharmacies. FOR FURTHER INFORMATION CONTACT: Gary H. Lefkowitz of the Department, telephone

(202)693-8546. (This is not a toll-free number.) The Revlon Employees Savings, Investment and Profit Sharing Plan (the Plan) Located in New York, New York [Application No. D-11355] Proposed Exemption The Department is considering granting an exemption under the authority of section 408(a) of the Act and section 4975(c)(2) of the Code and in accordance with the procedures set forth in 29 CFR part 2570, subpart B (55 FR 32836, August 10, 1990). If the exemption is granted, the restrictions of sections 406(a), 406(b)(1) and (b)(2) and 407(a) of the Act and the sanctions resulting from the application of section 4975 of the Code, by reason of section 4975(c)(1)(A) through

(E)of the Code, shall not apply, effective February 17, 2006, to

(1)the acquisition of certain stock rights (Stock Right(s)) by the Plan in connection with a Stock Rights offering by Revlon, Inc. (Revlon), a holding company that wholly owns Revlon Consumer Products Corporation (RCPC), a party in interest with respect to the Plan;

(2)the holding of the Stock Rights by the Plan during the subscription period of the Stock Rights offering; and

(3)the disposition or exercise of the Stock Rights by the Plan, provided that the following conditions were met:

(a)The Stock Rights were acquired pursuant to Plan provisions for individually-directed investment of such accounts;

(b)The Plan's receipt of the Stock Rights occurred in connection with a Stock Rights offering made available on the same terms to all shareholders of common stock of Revlon;

(c)All decisions regarding the holding and disposition of the Stock Rights by the Plan were made, in accordance with the Plan provisions for individually-directed investment of participant accounts, by the individual Plan participants whose accounts in the Plan received Stock Rights in connection with the Stock Rights offering;

(d)The Plan's acquisition of the Stock Rights resulted from an independent act of Revlon as a corporate entity, and all holders of the Stock Rights, including the Plan, were treated in the same manner with respect to the acquisition; and

(e)The price received by the Plan for the Stock Rights was no less than the fair market value of the Stock Rights on the date of the Stock Rights offering. *Effective Date:* This exemption, if granted, will be effective as of February 17, 2006. Summary of Facts and Representations RCPC is the sponsor of the Plan. The Plan is a tax-qualified, defined contribution profit sharing plan that incorporates a cash or deferred ( *i.e.* , 401(k)) arrangement. The trustee of the trust established under the Plan is Fidelity Management Trust Company (the Trustee). 4 4 Fidelity Management Trust Company became the trustee effective January 3, 2006, at which time it replaced Putnam Fiduciary Trust Company as trustee. Revlon is a world leader in cosmetics, skin care, fragrance and personal care. MacAndrews & Forbes Holdings Inc. (together with its affiliates, MacAndrews & Forbes), which is wholly owned by Ronald O. Perelman, beneficially owns 190,160,641 shares of the Class A Common Stock (including 32,599,374 shares of the Class A Common Stock beneficially owned by a family member, with respect to which shares MacAndrews & Forbes holds a voting proxy). Mr. Perelman, through MacAndrews & Forbes, also beneficially owns all of the outstanding 31,250,000 shares of the Class B Common Stock, which, together with the Class A Common Stock referenced above, represents approximately 60% of the total outstanding shares of Revlon's outstanding Common Stock. Based on the shares referenced above, Mr. Perelman, as of December 31, 2005, had approximately 77% of the combined voting power of the outstanding shares of the Class A and the Class B Common Stock. 5 5 The 221,410,641 shares of Revlon's combined Class A common stock and Class B common stock beneficially owned by Mr. Perelman represented approximately 60% of the total 371,720,324 shares of Revlon's combined Class A and Class B common stock that was issued and outstanding. Class A common stock and Class B common stock are in all respects identical except that

(i)each share of Class A common stock entitles the holder to one vote and each share of Class B common stock entitles the holder to ten votes on all matters being voted on by Revlon's stockholders,

(ii)Class A common stock is publicly traded and held in the Plan whereas Class B common stock is not publicly traded and not held in the Plan, and

(iii)certain transfer restrictions apply to Class B common stock that do not apply to Class A common stock. These restrictions provide that the Class B common stock (all of which is currently held by MacAndrews & Forbes) can only be transferred to affiliates of the current holder of Class B common stock. The Plan provides for a variety of contributions in addition to 401(k) contributions, including after-tax employee contributions, company-matching contributions, rollover contributions and profit-sharing contributions. The Plan permits individual participants to direct the investment of their entire account balance under the Plan to the extent described below and is intended to satisfy the requirements of section 404(c) of ERISA with respect to all such participant investment directions. One of the investments available under the Plan is Class A Common Stock (the Common Stock Fund). 6 Participants may allocate all contributions made on their behalf (and any earnings thereon) among the Common Stock Fund and all of the other investments available under the Plan. 7 6 No other “employer security,” within the meaning of section 407 of ERISA, is presently available as an investment under the Plan. 7 Plan participants are effectively free to designate the extent to which their Plan accounts will be invested in Class A Common Stock. As of January 3, 2006, there were approximately 3,598 participants in the Plan. The Plan's assets totaled approximately $136,435,045.12. Approximately 1,560 Plan participants and beneficiaries held shares of Class A Common Stock. The Plan holds approximately 940,004 shares of Class A Common Stock, or approximately 0.28% of the then outstanding shares of Class A Common Stock, with a value of approximately $2,914,291.40 (based on the $3.10 opening price on the New York Stock Exchange of Class A Common Stock on January 3, 2006), or approximately 2.1% of Plan assets. Because the Plan holds Class A Common Stock, Stock Rights will be allocated to Plan participants in proportion to their holdings of Class A Common Stock under the Plan, and Plan participants will be entitled to dispose of those Stock Rights on the terms and conditions described more fully below. Participants in the Plan will receive the same information regarding the Stock Rights offering as is provided to all stockholders. In addition, participants will be provided a special notice that describes some features of the Stock Rights offering in easily understood language, together with additional information that is peculiar to their status as holders of Class A Common Stock under the Plan (for example, special rules relating to the payment of the purchase price for shares under the Stock Rights offering). If the Plan were denied participation in the Stock Rights offering, Plan participants would not receive the benefit of the Stock Rights which other stockholders will receive, including the ability to realize value by selling Stock Rights. Revlon is requesting this exemption so that Plan participants may be eligible to participate in the Stock Rights offering on the same basis as other stockholders. 8 8 The distribution of the Rights will be accomplished as a dividend under Delaware corporate law. Accordingly, Revlon will be required to distribute the Rights to all stockholders on a pro rata basis. In exercising their fiduciary duties to all stockholders, the Board of Directors of Revlon is required to treat all stockholders (including the Plan) the same and cannot pay a dividend to some, but not all, stockholders. Revlon launched the Stock Rights offering on February 17, 2006. The Stock Rights will expire at 5 p.m., New York, New York local time on the date that is approximately 30 days later (on/or about March 20, 2006). The amount of the Stock Rights offering will be $110 million (the Maximum Amount). Each Stock Right entitles its holder to purchase a number of shares of Class A Common Stock such that the aggregate number of shares of Class A Common Stock to be offered in the Stock Rights offering, multiplied by the Subscription Price, will equal the Maximum Amount. 9 9 Revlon is required under its credit agreement to use the proceeds of a $110 million equity issuance by Revlon, to be completed on or before March 31, 2006, to promptly reduce its indebtedness. Revlon has determined that a rights offering such as the Stock Rights offering is the most appropriate way for it to fulfill the capital commitment while providing an opportunity for all stock holders of Revlon, including the Plan participants, to retain their *pro rata* ownership in Revlon. Revlon will not be able to timely fulfill its credit agreement commitment if the Stock Rights offering is delayed until prospective exemptive relief is provided. Revlon will pay all of the fees and expenses attributable to the Stock Rights offering (other than any fees that may be charged by brokers or nominees). For any Stock Rights sold by the Plan, a commission of 2.9 cents per Stock Right is being charged to the Plan account from which the Stock Right was sold. The commission was disclosed to participants in the materials provided explaining the Stock Rights Offering. The commission was not paid to Revlon but to the broker-dealer, National Financial Services

(NFS)of New York City, New York, for the sale transaction. NFS is an affiliate of the Trustee and is wholly owned by Fidelity Global Brokerage Group, Inc. The Plan's investment committee established under the Plan (the Investment Committee) considered whether it was appropriate and in the best interests of the Plan to permit Fidelity to effect sales of Rights under the Plan through NFS. The Investment Committee took the following considerations into account, among others:

(a)Brokerage services required to effect the sales transactions are necessary services for the operation of the Plan;

(b)the reputation of NFS as a reputable broker;

(c)the already established procedures between Fidelity and NFS for the prompt execution of sales transactions under the Plan;

(d)the ability of NFS to accept the engagement upon very short notice ( *i.e.* , the short notice provided by Revlon);

(e)the reasonable price charged for the brokerage services when compared with other unrelated brokers; and

(f)the short-term nature of the arrangement. Following discussion, the Investment Committee authorized the use of NFS as broker for effecting sales of Stock Rights under the Plan, subject to an attempt being made to negotiate a more favorable commission rate. Although Fidelity is affiliated with NFS, Fidelity did not use any discretion to select NFS as broker for the Rights. Plan participants paid commissions on the sale of their Stock Rights in the same manner as any other similarly situated shareholder paid commissions on the sale of their Rights. 10 10 The Department provides no opinion as to whether the selection of the broker dealer meets the conditions set forth under section 408(b)(2) of the Act. Each Stock Right carries with it a basic subscription privilege and an over-subscription privilege. The basic subscription privilege entitles a Stock Rights holder to subscribe for its *pro rata* share of Class A Common Stock offered in the Stock Rights offering. MacAndrews & Forbes has agreed, upon the consummation of the Stock Rights offering and at the Subscription Price, to acquire the number of shares of Class A Common Stock as equals the number of shares of Class A Common Stock that MacAndrews & Forbes would otherwise have been entitled to purchase in the Stock Rights offering pursuant to its basic subscription privilege. Except for MacAndrews & Forbes, all holders of Common Stock who elect to exercise their Stock Rights in full may also subscribe for the remaining shares at the same Subscription Price per share, to the extent that other shareholders do not exercise all of their Stock Rights in full. Although MacAndrews & Forbes, as a holder of Common Stock, would otherwise be entitled to such over-subscription privilege, MacAndrews & Forbes has agreed to subordinate such Stock Rights in order to enhance the over-subscription privilege of other stockholders. If an insufficient number of shares is available to fully satisfy the over-subscription privilege requests, the available shares will be sold *pro rata* among Stock Rights holders who exercised their over-subscription privilege based on the number of shares each Stock Rights holder subscribed for under the basic subscription privilege. Any excess subscription payments will be returned without interest or deduction promptly after the expiration of the Stock Rights offering. MacAndrews & Forbes has agreed to “back-stop” the Stock Rights offering by purchasing, on the same terms as the Stock Rights offering, such number of shares of Class A Common Stock as equals all of the shares that are not otherwise subscribed for by the other holders of Stock Rights under either their basic subscription privilege or their over-subscription privilege. This will ensure that Revlon will receive the Maximum Amount in the Stock Rights offering. Any election to exercise a Stock Right (whether made with respect to Stock Rights held under the Plan or otherwise) will be irrevocable once made. Plan participants who want to exercise some or all of their Stock Rights will be required to notify the Trustee on or before the date that is approximately seven

(7)calendar days before the expiration of the Stock Rights offering (the Plan Election Date). 11 Participants will also be entitled to direct the Trustee to sell the Stock Rights allocated to them on the open market (to the extent a trading market develops) by notifying the Trustee of such election on or before the Plan Election Date; any such election will be irrevocable once made and will be executed as soon as practicable after it is received. To the extent that a participant does not elect to either exercise or sell the Stock Rights credited to his or her account on or before the Plan Election Date, the Investment Committee will instruct the Trustee to sell such Stock Rights on the open market in the same manner as if the participant had directed such a sale. The Investment Committee will instruct the Trustee not to exercise Stock Rights where the Subscription Price exceeds the per share public trading price of Class A Common Stock at the time for exercise (in which case an attempt will be made to sell the Stock Rights instead, although the Stock Rights likely will have no value in such a case and thus would expire without value). 11 This date is before the expiration date of the Offering in order to enable the Trustee to review and implement participant directions (including the liquidation of individual account balances necessary to fund each participant's exercise price) and provide such aggregate instructions to the subscription agent under the Offering within the time constraints imposed generally with respect to the Offering. Because it is expected that the Offering will extend for at least thirty

(30)calendar days, Revlon does not anticipate that this requirement will be unduly restrictive for Plan participants. Approximately three

(3)calendar days before the expiration of the Stock Rights offering, the Trustee will liquidate an amount sufficient to pay a Plan participant's exercise price by selling a pro-rata portion of the amounts held in such participant's various investment funds (other than the Common Stock Fund) and transfer such funds to the subscription agent in order to participate in the Stock Rights offering on behalf of Plan participants who elect to exercise some or all of their Stock Rights. No Stock Rights under the Plan will be exercised before this date. The shares of Class A Common Stock purchased upon the consummation of the Stock Rights offering will be allocated to the accounts of Plan participants as soon as practicable thereafter. 8. In summary, it is represented that the proposed transaction meets the statutory criteria of section 408(a) of the Act because:

(a)The Stock Rights were acquired pursuant to Plan provisions for individually-directed investment of such accounts;

(b)The Plan's receipt of the Stock Rights occurred in connection with a Stock Rights offering made available on the same terms available to all shareholders of common stock of Revlon;

(d)The Plan's acquisition of the Stock Rights resulted from an independent act of Revlon as a corporate entity; and

(e)The price received by the Plan for the Stock Rights was no less than the fair market value of the Stock Rights on the date of the Stock Rights offering. *Notice to Interested Persons:* Notice of the proposed exemption shall be given to all interested persons in the manner agreed upon by the Employer and Department within 15 days of the date of publication in the **Federal Register** . Comments and requests for a hearing are due forty-five

(45)days after publication of the notice in the **Federal Register** . FOR FURTHER INFORMATION CONTACT: Khalif Ford of the Department, telephone

(202)693-8540 (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 of the Act and/or the Code, including any prohibited transaction provisions to which the exemption does not apply and the general fiduciary responsibility provisions of section 404 of the Act, which, among other things, require a fiduciary to discharge his duties respecting the plan solely in the interest of the participants and beneficiaries of the plan and in a prudent fashion in accordance with section 404(a)(1)(b) of the Act; nor does it affect the requirement of section 401(a) of the Code that the plan must operate for the exclusive benefit of the employees of the employer maintaining the plan and their beneficiaries;

(2)Before an exemption may be granted under section 408(a) of the Act and/or section 4975(c)(2) of the Code, the Department must find that the exemption is administratively feasible, in the interests of the plan and of its participants and beneficiaries, and protective of the rights of participants and beneficiaries of the plan;

(3)The proposed exemptions, if granted, will be supplemental to, and not in derogation of, any other provisions of the Act and/or the Code, including statutory or administrative exemptions and transitional 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

(4)The proposed exemptions, if granted, will be subject to the express condition that the material facts and representations contained in each application are true and complete, and that each application accurately describes all material terms of the transaction which is the subject of the exemption. Ivan Strasfeld, Director of Exemption Determinations, Employee Benefits Security Administration, U.S. Department of Labor. [FR Doc. E6-8528 Filed 6-1-06; 8:45 am] BILLING CODE 4510-29-P DEPARTMENT OF LABOR Employee Benefits Security Administration [Prohibited Transaction Exemption 2006-07; [Exemption Application No. D-11281] et al.] Grant of Individual Exemptions; Harris Nesbitt Corporation (Harris Nesbitt) AGENCY: Employee Benefits Security Administration, Labor. ACTION: Grant of individual exemptions. SUMMARY: This document contains exemptions issued by the Department of Labor (the Department) from certain of the prohibited transaction restrictions of the Employee Retirement Income Security Act of 1974 (the Act) and/or the Internal Revenue Code of 1986 (the Code). A notice was published in the **Federal Register** of the pendency before the Department of a proposal to grant such exemption. The notice set forth a summary of facts and representations contained in the application for exemption and referred interested persons to the application for a complete statement of the facts and representations. The application has been available for public inspection at the Department in Washington, DC. The notice also invited interested persons to submit comments on the requested exemption to the Department. In addition the notice stated that any interested person might submit a written request that a public hearing be held (where appropriate). The applicant has represented that it has complied with the requirements of the notification to interested persons. No requests for a hearing were received by the Department. Public comments were received by the Department as described in the granted exemption. The notice of proposed exemption was issued and the exemption is being granted solely by the Department because, effective December 31, 1978, section 102 of Reorganization Plan No. 4 of 1978, 5 U.S.C. App. 1 (1996), transferred the authority of the Secretary of the Treasury to issue exemptions of the type proposed to the Secretary of Labor. Statutory Findings In accordance with section 408(a) of the Act and/or section 4975(c)(2) of the Code and the procedures set forth in 29 CFR part 2570, subpart B (55 FR 32836, 32847, August 10, 1990) and based upon the entire record, the Department makes the following findings:

(a)The exemption is administratively feasible;

(b)The exemption is in the interests of the plan and its participants and beneficiaries; and

(c)The exemption is protective of the rights of the participants and beneficiaries of the plan. Harris Nesbitt Corporation (Harris Nesbitt) and Its Affiliates (the Affiliates) Located in New York, NY [Prohibited Transaction Exemption 2006-07; Exemption Application No. D-11281] Exemption Section I. Covered Transactions A. Effective for transactions occurring on or after October 15, 2004, the restrictions of sections 406(a) and 407(a) of the Act and the taxes imposed by sections 4975(a) and

(b)of the Code, by reason of section 4975(c)(1)(A) through

(D)of the Code, shall not apply to the following transactions involving Issuers and Securities evidencing interests therein:

(1)The direct or indirect sale, exchange or transfer of Securities in the initial issuance of Securities between the Sponsor or Underwriter and an employee benefit plan when the Sponsor, Servicer, Trustee or Insurer of an Issuer, the Underwriter of the Securities representing an interest in the Issuer, or an Obligor is a party in interest with respect to such plan.

(2)The direct or indirect acquisition or disposition of Securities by a plan in the secondary market for such Securities; and

(3)The continued holding of Securities acquired by a plan pursuant to subsection I.A.(1) or (2). Notwithstanding the foregoing, section I.A. does not provide an exemption from the restrictions of sections 406(a)(1)(E), 406(a)(2) and 407 of the Act for the acquisition or holding of a Security on behalf of an Excluded Plan, by any person who has discretionary authority or renders investment advice with respect to the assets of that Excluded Plan. 1 1 Section I.A. provides no relief from sections 406(a)(1)(E), 406(a)(2) and 407 of the Act for any person rendering investment advice to an Excluded Plan within the meaning of section 3(21)(A)(ii) of the Act and regulation 29 CFR 2510.3-21(c). B. Effective for transactions occurring on or after, October 15, 2004, the restrictions of section 406(b)(1) and 406(b)(2) of the Act and the taxes imposed by sections 4975(a) and

(b)of the Code, by reason of section 4975(c)(1)(E) of the Code shall not apply to:

(1)The direct or indirect sale, exchange or transfer of Securities in the initial issuance of Securities between the Sponsor or Underwriter and a plan when the person who has discretionary authority or renders investment advice with respect to the investment of plan assets in the Securities is

(a)an Obligor with respect to 5 percent or less of the fair market value of obligations or receivables contained in the Issuer, or

(b)an Affiliate of a person described in (a); if

(i)The plan is not an Excluded Plan;

(ii)Solely in the case of an acquisition of Securities in connection with the initial issuance of the Securities, at least 50 percent of each class of Securities in which plans have invested is acquired by persons independent of the members of the Restricted Group, and at least 50 percent of the aggregate interest in the Issuer is acquired by persons independent of the Restricted Group;

(iii)A plan's investment in each class of Security does not exceed 25 percent of all of the Securities of that class outstanding at the time of the acquisition; and

(iv)Immediately after the acquisition of the Securities, no more than 25 percent of the assets of a plan with respect to which the person has discretionary authority or renders investment advice are invested in Securities representing an interest in an Issuer containing assets sold or serviced by the same entity. 2 For purposes of this paragraph B.(1)(iv) only, an entity will not be considered to service assets contained in an Issuer if it is merely a Subservicer of that Issuer; 2 For purposes of this exemption, each plan participating in a commingled fund (such as a bank collective trust fund or insurance company pooled separate account) shall be considered to own the same proportionate undivided interest in each asset of the commingled fund as its proportionate interest in the total assets of the commingled fund as calculated on the most recent preceding valuation date of the fund.

(2)The direct or indirect acquisition or disposition of Securities by a plan in the secondary market for such Securities, provided that conditions set forth in paragraphs (i),

(iii)and

(iv)of subsection I.B.(1) are met; and

(3)The continued holding of Securities acquired by a plan pursuant to subsection I.B.(1) or (2). C. Effective for transactions occurring on or after October 15, 2004, the restrictions of sections 406(a), 406(b), and 407(a) of the Act and the taxes imposed by sections 4975(a) and

(b)of the Code by reason of Code section 4975(c), shall not apply to the transactions in connection with the servicing, management and operation of an Issuer, including the use of the any eligible swap transaction; or the defeasance of a mortgage obligation held as an asset of the Issuer through the substitution of a new mortgage obligation in a commercial mortgage-backed designated transaction (the Designated Transaction), provided:

(1)Such transactions are carried out in accordance with the terms of a binding Pooling and Servicing Agreement;

(2)The Pooling and Servicing Agreement is provided to, or described in all material respects in the prospectus or private placement memorandum provided to, investing plans before they purchase Securities issued by the Issuer; 3 and 3 In the case of a private placement memorandum, such memorandum must contain substantially the same information that would be disclosed in a prospectus if the offering of the securities were made in a registered public offering under the Securities Act of 1933. In the Department's view, the private placement memorandum must contain sufficient information to permit plan fiduciaries to make informed investment decisions. For purposes of this exemption, references to “prospectus” include any related prospectus supplement thereto, pursuant to which Securities are offered to investors.

(3)The defeasance of a mortgage obligation and the substitution of a new mortgage obligation in a commercial mortgage-backed Designated Transaction meet the terms and conditions for such defeasance and substitution as are described in the prospectus or private placement memorandum for such Securities, which terms and conditions have been approved by a Rating Agency and does not result in the Securities receiving a lower credit rating from the Rating Agency than the current rating of the Securities. Notwithstanding the foregoing, Section I.C. does not provide an exemption from the restrictions of section 406(b) of the Act or from the taxes imposed by reason of section 4975(c) of the Code for the receipt of a fee by a Servicer of the Issuer from a person other than the Trustee or Sponsor, unless such fee constitutes a Qualified Administrative Fee. D. Effective for transactions occurring after October 15, 2004, the restrictions of sections 406(a) and 407(a) of the Act and the taxes imposed by sections 4975(a) and

(b)of the Code, by reason of Code section 4975(c)(1)(A) through

(D)of the Code shall not apply to any transactions to which those restrictions or taxes would otherwise apply merely because a person is deemed to be a party in interest or disqualified person (including a fiduciary), with respect to the plan (or by virtue of having a relationship to such service provider described in section 3(14)(F), (G),

(H)or

(I)of the Act or section 4975(e)(2)(F), (G),

(H)or

(I)of the Code), solely because of the plan's ownership of Securities. Section II. General Conditions A. The relief provided under Section I. is available only if the following conditions are met:

(1)The acquisition of Securities by a plan is on terms (including the Security price) that are at least as favorable to the plan as such terms would be in an arm's length transaction with an unrelated party;

(2)The rights and interests evidenced by the Securities are not subordinated to the rights and interests evidenced by other Securities of the same Issuer unless the Securities are issued in a Designated Transaction;

(3)The Securities acquired by the plan have received a rating from Rating Agency at the time of such acquisition that is in one of the three (or in the case of Designated Transactions, four) highest generic rating categories.

(4)The Trustee is not an Affiliate of any member of the Restricted Group, other than an Underwriter. For purposes of this requirement:

(a)The Trustee shall not be considered to be an Affiliate of a Servicer solely because the Trustee has succeeded to the rights and responsibilities of the Servicer pursuant to the terms of a Pooling and Servicing Agreement providing for such succession upon the occurrence of one or more events of default by the Servicer; and

(b)Subsection II.A.(4) will be deemed satisfied notwithstanding a Servicer becoming an Affiliate of the Trustee as a result of a merger or acquisition involving the Trustee, such Servicer and/or their Affiliates which occurs after the initial issuance of the Securities provided that:

(i)Such Servicer ceases to be an Affiliate of the Trustee no later than six months after the date such Servicer became an Affiliate of the Trustee; and

(ii)Such Servicer did not breach any of its obligations under the Pooling and Servicing Agreement, unless such breach was immaterial and timely cured in accordance with the terms of such agreement, during the period from the Closing Date of such merger or acquisition transaction through the date the Servicer ceased to be an Affiliate of the Trustee;

(5)The sum of all payments made to and retained by the Underwriters in connection with the distribution or placement of Securities represents not more than Reasonable Compensation for underwriting or placing the Securities; the sum of all payments made to and retained by the Sponsor pursuant to the assignment of obligations (or interests therein) to the Issuer represents not more than the fair market value of such obligations (or interests); and the sum of all payments made to and retained by the Servicer represents not more than Reasonable Compensation for the Servicer's services under the Pooling and Servicing Agreement and reimbursement of the Servicer's reasonable expenses in connection therewith;

(6)The plan investing in such Securities is an “accredited investor” as defined in Rule 501(a)(1) of Regulation D of the Securities and Exchange Commission under the Securities Act of 1933; and

(7)In the event that the obligations used to fund an Issuer have not all been transferred to the Issuer on the Closing Date, additional obligations as specified in subsection III.B.(1) may be transferred to the Issuer during the Pre-Funding Period in exchange for amounts credited to the Pre-Funding Account, provided that:

(a)The Pre-Funding Limit is not exceeded;

(b)All such additional obligations meet the same terms and conditions for eligibility as the original obligations used to create the Issuer (as described in the prospectus or private placement memorandum and/or Pooling and Servicing Agreement for such Securities), which terms and conditions have been approved by a Rating Agency. Notwithstanding the foregoing, the terms and conditions for determining the eligibility of an obligation may be changed if such changes receive prior approval either by a majority vote of the outstanding securityholders (the Securityholders) or by a Rating Agency;

(c)The transfer of such additional obligations to the Issuer during the Pre-Funding Period does not result in the Securities receiving a lower credit rating from a Rating Agency, upon termination of the Pre-Funding Period than the rating that was obtained at the time of the initial issuance of the Securities by the Issuer;

(d)The weighted average annual percentage interest rate (the average interest rate) for all of the obligations in the Issuer at the end of the Pre-Funding Period will not be more than 100 basis points lower than the average interest rate for the obligations which were transferred to the Issuer on the Closing Date;

(e)In order to ensure that the characteristics of the receivables actually acquired during the Pre-Funding Period are substantially similar to those which were acquired as of the Closing Date, the characteristics of the additional obligations will either be monitored by a credit support provider or other insurance provider which is independent of the Sponsor or an independent accountant retained by the Sponsor will provide the Sponsor with a letter (with copies provided to the Rating Agency, the Underwriter and the Trustee) stating whether or not the characteristics of the additional obligations conform to the characteristics of such obligations described in the prospectus, private placement memorandum and/or Pooling and Servicing Agreement. In preparing such letter, the independent accountant will use the same type of procedures as were applicable to the obligations which were transferred on the Closing Date;

(f)The Pre-Funding Period shall be described in the prospectus or private placement memorandum provided to investing plans; and

(g)The Trustee of the Trust (or any agent with which the Trustee contracts to provide Trust services) will be a substantial financial institution or trust company experienced in trust activities and familiar with its duties, responsibilities, and liabilities as a fiduciary under the Act. The Trustee, as the legal owner of the obligations in the Trust, will enforce all the rights created in favor of Securityholders of the Issuer, including employee benefit plans subject to the Act.

(8)In order to ensure that the assets of the Issuer may not be reached by creditors of the Sponsor in the event of bankruptcy or other insolvency of the Sponsor:

(a)The legal documents establishing the Issuer will contain:

(i)Restrictions on the Issuer's ability to borrow money or issue debt other than in connection with the securitization;

(ii)Restrictions on the Issuer merging with another entity, reorganizing, liquidating or selling assets (other than in connection with the securitization);

(iii)Restrictions limiting the authorized activities of the Issuer to activities relating to the securitization;

(iv)If the Issuer is not a Trust, provisions for the election of at least one independent director/partner/member whose affirmative consent is required before a voluntary bankruptcy petition can be filed by the Issuer; and

(v)If the Issuer is not a Trust, requirements that each independent director/partner/member must be an individual that does not have a significant interest in, or other relationships with, the Sponsor or any of its Affiliates; and

(b)The Pooling and Servicing Agreement and/or other agreements establishing the contractual relationships between the parties to the securitization transaction will contain covenants prohibiting all parties thereto from filing an involuntary bankruptcy petition against the Issuer or initiating any other form of insolvency proceeding until after the Securities have been paid; and

(c)Prior to the issuance by the Issuer of any Securities, a legal opinion is received which states that either:

(i)A “true sale” of the assets being transferred to the Issuer by the Sponsor has occurred and that such transfer is not being made pursuant to a financing of the assets by the Sponsor; or

(ii)In the event of insolvency or receivership of the Sponsor, the assets transferred to the Issuer will not be part of the estate of the Sponsor;

(9)If a particular class of Securities held by any plan involves a Ratings Dependent Swap or a Non-Ratings Dependent Swap entered into by the Issuer, then each particular swap transaction relating to such Security:

(a)Shall be an Eligible Swap;

(b)Shall be with an Eligible Swap Counterparty;

(c)In the case of a Ratings Dependent Swap, shall provide that if the credit rating of the counterparty is withdrawn or reduced by any Rating Agency below a level specified by the Rating Agency, the Servicer (as agent for the Trustee) shall, within the period specified under the Pooling and Servicing Agreement:

(i)Obtain a replacement swap agreement with an Eligible Swap Counterparty which is acceptable to the Rating Agency and the terms of which are substantially the same as the current swap agreement (at which time the earlier swap agreement shall terminate); or

(ii)Cause the swap counterparty to establish any collateralization or other arrangement satisfactory to the Rating Agency such that the then current rating by the Rating Agency of the particular class of Securities will not be withdrawn or reduced. In the event that the Servicer fails to meet its obligations under this subsection II.A.(9)(c), plan Securityholders will be notified in the immediately following Trustee's periodic report which is provided to Securityholders, and sixty days after the receipt of such report, the exemptive relief provided under section I.C. will prospectively cease to be applicable to any class of Securities held by a plan which involves such Ratings Dependent Swap; provided that in no event will such plan Securityholders be notified any later than the end of the second month that begins after the date on which such failure occurs.

(d)In the case of a Non-Ratings Dependent Swap, shall provide that, if the credit rating of the counterparty is withdrawn or reduced below the lowest level specified in Section III.GG., the Servicer (as agent for the Trustee) shall within a specified period after such rating withdrawal or reduction:

(i)Obtain a replacement swap agreement with an Eligible Swap Counterparty, the terms of which are substantially the same as the current swap agreement (at which time the earlier swap agreement shall terminate); or

(ii)Cause the swap counterparty to post collateral with the Trustee in an amount equal to all payments owed by the counterparty if the swap transaction were terminated; or

(iii)Terminate the swap agreement in accordance with its terms; and

(e)Shall not require the Issuer to make any termination payments to the counterparty (other than a currently scheduled payment under the swap agreement) except from Excess Spread or other amounts that would otherwise be payable to the Servicer or the Sponsor;

(10)Any class of Securities, to which one or more swap agreements entered into by the Issuer applies, may be acquired or held in reliance upon the underwriter exemptions (the Underwriter Exemptions) only by Qualified Plan Investors; and

(11)Prior to the issuance of any debt securities, a legal opinion is received which states that the debt holders have a perfected security interest in the Issuer's assets. B. Neither any Underwriter, Sponsor, Trustee, Servicer, Insurer, nor any Obligor, unless it or any of its Affiliates has discretionary authority or renders investment advice with respect to the plan assets used by a plan to acquire Securities, shall be denied the relief provided under Section I., if the provision in subsection II.A.(6) is not satisfied with respect to acquisition or holding by a plan of such Securities, provided that

(1)such condition is disclosed in the prospectus or private placement memorandum; and

(2)in the case of a private placement of Securities, the Trustee obtains a representation of each initial purchaser which is a plan that it is in compliance with such condition, and obtains a covenant from each initial purchaser to the effect that, so long as such initial purchaser (or any transferee of such initial purchaser's Securities) is required to obtain from its transferee a representation regarding compliance with the Securities Act of 1933, any such transferees will be required to make a written representation regarding compliance with the condition set forth in Section II.A.(6). Section III. Definitions For purposes of this exemption: A. “Security” means:

(1)A pass-through certificate or trust certificate that represents a beneficial ownership interest in the assets of an Issuer which is a Trust and which entitles the holder to payments of principal, interest and/or other payments made with respect to the assets of such Trust; or A security which is denominated as a debt instrument that is issued by, and is an obligation of, an Issuer; with respect to which the Underwriter is either

(i)the sole underwriter or the manager or co-manager of the underwriting syndicate, or

(ii)a selling or placement agent; or

(2)A Certificate denominated as a debt instrument that represents an interest in either a Real Estate Mortgage Investment Conduit (REMIC) or a Financial Asset Securitization Investment Trust (FASIT) within the meaning of the section 860D(a) or section 860L of the Code; and that is issued by and is an obligation of a Trust, with respect to Certificates defined in Section III.A.

(1)and

(2)above, for which the Underwriter is either

(i)the sole Underwriter or the manager or co-manager of the underwriting syndicate, or

(ii)a selling or placement agent. For purposes of this exemption, references to “Certificates representing an interest in a Trust” include Certificates denominated as debt, which are issued by a Trust. B. “Issuer” means an investment pool, the corpus or assets of which are held in trust (including a grantor or owner Trust) or whose assets are held by a partnership, special purpose corporation or limited liability company (which Issuer may be a REMIC or a FASIT within the meaning of section 860D(a) or section 860L, respectively, of the Code); and the corpus or assets of which consists solely of: (1)(a) Secured consumer receivables that bear interest or are purchased at a discount (including, but not limited to, home equity loans and obligations secured by shares issued by a cooperative housing association); and/or

(b)Secured credit instruments that bear interest or are purchased at a discount in transactions by or between business entities (including, but not limited to Qualified Equipment Notes Secured by Leases); and/or

(c)Obligations that bear interest or are purchased at a discount and which are secured by single-family residential and commercial real property (including obligations secured by leasehold interest on residential or commercial real property); and/or

(d)Obligations that bear interest or are purchased at a discount and which are secured by motor vehicles or equipment, or Qualified Motor Vehicle Leases; and/or

(e)Guaranteed governmental mortgage pool certificates, as defined in 29 CFR 2510.3-101(1)(2) 4 ; and/or 4 In ERISA Advisory Opinion 99-05A (February 22, 1999), the Department expressed its view that mortgage pool certificates guaranteed and issued by the Federal Agricultural Mortgage Corporation meet the definition of a guaranteed governmental mortgage pool certificate as defined in 29 CFR 2510.3-101(i)(2).

(f)Fractional undivided interests in any of the obligations described in clauses (a)-(e) of this subsection B.(1); 5 5 It is the Department's view that the definition of “Issuer” contained in Section III.B. includes a two-tier structure under which Securities issued by the first Issuer, which contains a pool of receivables described above, are transferred to a second Issuer which issues Securities that are sold to plans. However, the Department is of the further view that, since the Underwriter Exemptions generally provide relief for the direct or indirect acquisition or disposition of Securities that are not subordinated, no relief would be available if the Securities held by the second Issuer were subordinated to the rights and interests evidenced by other Securities issued by the first Issuer, unless such Securities were issued in a Designated Transaction. Notwithstanding the foregoing, residential and home equity loan receivables issued in Designated Transactions may be less than fully secured, provided that

(i)the rights and interests evidenced by Securities issued in such Designated Transactions (as defined in Section III.DD.) are not subordinated to the rights and interests evidenced by Securities of the same Issuer;

(ii)such Securities acquired by the plan have received a rating from a Rating Agency at the time of such acquisition that is in one of the two highest generic rating categories; and

(iii)any obligation included in the corpus or assets of the Issuer must be secured by collateral whose fair market value on the Closing Date of the Designated Transaction is at least equal to 80% of the sum of:

(I)The outstanding principal balance due under the obligation which is held by the Trust and

(II)the outstanding principal balance(s) of any other obligation(s) of higher priority (whether or not held by the Issuer) which are secured by the same collateral.

(2)Property which had secured any of the obligations described in subsection III.B.(1); (3)(a) Undistributed cash or temporary investments made therewith maturing no later than the next date on which distributions are to be made to Securityholders; and/or

(b)Cash or investments made therewith which are credited to an account to provide payments to Securityholders pursuant to any Eligible Swap Agreement meeting the conditions of subsection II.A.(9) or pursuant to any Eligible Yield Supplement Agreement, and/or

(c)Cash transferred to the Issuer on the Closing Date and permitted investments made therewith which:

(i)Are credited to a Pre-Funding Account established to purchase additional obligations with respect to which the conditions set forth in paragraph (a)-(g) of subsection II.A.(7) are met; and/or

(ii)Are credited to a Capitalized Interest Account; and

(iii)Are held by the Issuer for a period ending no later than the first distribution date to Securityholders occurring after the end of the Pre-Funding Period. For purposes of this clause

(c)of subsection III.B.(3), the term “permitted investments” means investments which:

(i)Are either

(x)direct obligations of, or obligations fully guaranteed as to timely payment of principal and interest by, the United States or any agency or instrumentality thereof, provided that such obligations are backed by the full faith and credit of the United States, or

(y)have been rated (or the Obligor has been rated) in one of the three highest generic rating categories by a Rating Agency;

(ii)are described in the Pooling and Servicing Agreement; and are permitted by the Rating Agency.

(4)Rights of the Trustee under the Pooling and Servicing Agreement, and rights under any insurance policies, third-party guarantees, contracts of suretyship, Eligible Yield Supplement Agreements, Eligible Swap Agreements meeting the conditions of subsection II.A.(9) or other credit support arrangements with respect to any obligations described in section III.B.(1). Notwithstanding the foregoing, the term “Issuer” does not include any investment pool unless:

(i)The investment pool consists only of assets of the type described in paragraph (a)-(f) of subsection III.B.(1) which have been included in other investment pools,

(ii)Securities evidencing interests in such other investment pools have been rated in one of the three (or in the case of Designated Transactions, four) highest generic rating categories by a Rating Agency for at least one year prior to the plan's acquisition of Securities pursuant to this exemption, and

(iii)Securities evidencing interests in such other investment pools have been purchased by investors other than plans for at least one year prior to the plan's acquisition of Securities pursuant to the Underwriter Exemptions. C. “Underwriter” means:

(1)Harris Nesbitt;

(2)Any U.S.-domiciled person directly or indirectly, through one or more intermediaries, controlling, controlled by or under common control with such investment banking firm; and

(3)Any member of an underwriting syndicate or selling group of which such firm or person described in subsections III.C.(1) or

(2)above is a manager or co-manager with respect to the Securities. D. “Sponsor” means the entity that organizes as an Issuer by depositing obligations therein in exchange for Securities. E. “Master Servicer” means the entity that is a party to the Pooling and Servicing Agreement relating to assets of the Issuer and is fully responsible for servicing, directly or through Subservicers, the assets of the Issuer. F. “Subservicer” means an entity which, under the supervision of and on behalf of the Master Servicer, services loans contained in the Issuer, but is not a party to the Pooling and Servicing Agreement. G. “Servicer” means any entity which services loans contained in the Issuer, including the Master Servicer and any Subservicer. H. “Trust” means an Issuer, which is a trust (including an owner trust, grantor trust or a REMIC or FASIT which is organized as a Trust). I. “Trustee” means the Trustee of any Trust, which issues Securities, and in the case of Securities which are denominated as debt instruments, also means the Trustee of an Indenture Trust. “Indenture Trustee” means the Trustee appointed under the indenture pursuant to which the subject Securities are issued, the rights of holders of the Securities are set forth and a security interest in the Trust assets in favor of the holders of the Securities is created. The Trustee or the Indenture Trustee is also a party to or beneficiary of all the documents and instruments transferred to the Trust, and as such, has both the authority to, and the responsibility for, enforcing all the rights created thereby in favor of holders of the Securities, including those rights arising in the event of default by the Servicer. J. “Insurer” means the insurer or guarantor of, or provider of other credit support for, an Issuer. Notwithstanding the foregoing, a person is not an Insurer solely because it holds Securities representing an interest in an Issuer, which are of a class subordinated to Securities representing an interest in the same Issuer. K. “Obligor” means any person, other than the Insurer, that is obligated to make payments with respect to any obligation or receivable included in the Trust. Where an Issuer contains Qualified Motor Vehicle Leases or Qualified Equipment Notes Secured by Leases, “Obligor” shall also include any owner of property subject to any lease included in the Issuer, or subject to any lease securing an obligation included in the Issuer. L. “Excluded Plan” means any plan with respect to which any member of the Restricted Group is a “plan sponsor” within the meaning of section 3(16)(B) of the Act. M. “Restricted Group” with respect to a class of Securities means:

(1)Each Underwriter;

(2)Each Insurer;

(3)The Sponsor;

(4)The Trustee;

(5)Each Servicer;

(6)Any Obligor with respect to obligations or receivables included in the Issuer constituting more than 5 percent of the aggregate unamortized principal balance of the assets in the Issuer, determined on the date of the initial issuance of Securities by the Issuer; or

(7)Each counterparty in an Eligible Swap Agreement;

(8)Any Affiliate of a person described in III.M.(1)-(7) above. N. “Affiliate” of another person includes:

(1)Any person, directly or indirectly, through one or more intermediaries, controlling, controlled by or under common control with such other person;

(2)Any officer, director, partner, employee, relative (as defined in section 3(15) of the Act), a brother, a sister, or a spouse of a brother or sister of such other person; and

(3)Any corporation or partnership of which such other person is an officer, director or partner. O. “Control” means the power to exercise a controlling influence over the management or policies of a person other than an individual. P. A person will be “independent” of another person only if:

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

(2)The other person, or an Affiliate thereof, is not a fiduciary who has investment management authority or renders investment advice with respect to assets of such person. Q. “Sale” includes the entrance into a Forward Delivery Commitment, provided:

(1)The terms of the Forward Delivery Commitment (including any fee paid to the investing plan) are no less favorable to the plan than they would be in an arm's length transaction with an unrelated party;

(2)The prospectus or private placement memorandum is provided to an investing plan prior to the time the plan enters into the Forward Delivery Commitment; and

(3)At the time of the delivery, all conditions of this exemption applicable to sales are met. R. “Forward Delivery Commitment” means a contact for the purchase or sale of one or more Securities to be delivered at an agreed future settlement date. The term includes both mandatory contracts (which contemplate obligatory delivery and acceptance of the Securities) and optional contracts (which give one party the right but not the obligation to deliver Securities to, or demand delivery of Securities from, the other party). S. “Reasonable Compensation” has the same meaning as that term is defined in 29 CFR 2550.408c-2. T. “Qualified Administrative Fee” means a fee which meets the following criteria:

(1)The fee is triggered by an act or failure to act by the Obligor other than the normal timely payment of amounts owing in respect of the obligations;

(2)The Servicer may not charge the fee absent the act or failure to act referred to in subsection III.T.(1);

(3)The ability to charge the fee, the circumstances in which the fee may be charged, and an explanation of how the fee is calculated are set forth in the Pooling and Servicing Agreement; and

(4)The amount paid to investors in the Issuer will not be reduced by the amount of any such fee waived by the Servicer. U. “Qualified Equipment Note Secured By a Lease” means an equipment note:

(1)Which is secured by equipment which is leased;

(2)Which is secured by the obligation of the lessee to pay rent under the equipment lease; and

(3)With respect to which the Issuer's security interest in the equipment is at least as protective of the rights of the Issuer as would be the case if the equipment note were secured only by the equipment and not the lease. V. “Qualified Motor Vehicle Lease” means a lease of a motor vehicle where:

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

(2)The Issuer owns or holds a security interest in the leased motor vehicle; and

(3)The Issuer's interest in the leased motor vehicle is at least as protective of the Issuer's rights as the Issuer would receive under a motor vehicle installment loan contract. W. “Pooling and Servicing Agreement” means the agreement or agreements among a Sponsor, a Servicer and the Trustee establishing a Trust. In the case of Securities which are denominated as debt instruments, “Pooling and Servicing Agreement” also includes the indenture entered into by the Issuer and the Indenture Trustee. X. “Rating Agency” means Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc., Moody's Investors Service, Inc., Fitch, Inc. or any successors thereto. Y. “Capitalized Interest Account” means an Issuer account:

(i)Which is established to compensate Securityholders for shortfalls, if any, between investment earnings on the Pre-Funding Account and the pass-through rate payable under the Securities; and

(ii)which meets the requirements of clause

(c)of subsection III.B.(3). Z. “Closing Date” means the date the Issuer is formed, the Securities are first issued and the Issue's assets (other than those additional obligations which are to be funded from the Pre-Funding Account pursuant to subsection II.A.(7)) are transferred to the Issuer. AA. “Pre-Funding Account” means an Issuer account:

(i)Which is established to purchase additional obligations, which obligations meet the conditions set forth in clauses (a)-(g) of subsection II.A.(7); and

(ii)Which meets the requirements of clause

(c)of subsection III.B.(3). BB. “Pre-Funding Limit” means a percentage or ratio of the amount allocated to the Pre-Funding Account, as compared to the total principal amount of the Securities being offered which is less than or equal to 25 percent. CC. “Pre-Funding Period” means the period commencing on the Closing Date and ending no later than the earliest to occur of:

(i)The date the amount on deposit in the Pre-Funding Account is less than the minimum dollar amount specified in the Pooling and Servicing Agreement;

(ii)the date on which an event of default occurs under the Pooling and Servicing Agreement; or

(iii)the date which is the later of three months or 90 days after the Closing Date. DD. “Designated Transaction” means a securitization transaction in which the assets of the Issuer consist of secured consumer receivables, secured credit instruments or secured obligations that bear interest or are purchased at a discount and are:

(i)Motor vehicle, home equity and/or manufactured housing consumer receivables; and/or

(ii)motor vehicle credit instruments in transactions by or between business entities; and/or

(iii)single-family residential, multi-family residential, home equity, manufactured housing and/or commercial mortgage obligations that are secured by single-family residential, multi-family residential, commercial real property or leasehold interests therein. For purposes of this Section III.DD., the collateral securing motor vehicle consumer receivables or motor vehicle credit instruments may include motor vehicles and/or Qualified Motor Vehicle Leases. EE. “Ratings Dependent Swap” means an interest rate swap, or (if purchased by or on behalf of the Issuer) an interest rate cap contract, that is part of the structure of a class of Securities where the rating assigned by the Rating Agency to any class of Securities held by any plan is dependent on the terms and conditions of the swap and the rating of the counterparty, and if such Securities rating is not dependent on the existence of the swap and rating of the counterparty, such swap or cap shall be referred to as a “Non-Ratings Dependent Swap.” With respect to a Non-Ratings Dependent Swap, each Rating Agency rating the Securities must confirm, as of the date of issuance of the Securities by the Issuer that entering into an Eligible Swap with such counterparty will not affect the rating of the Securities. FF. “Eligible Swap” means a Ratings Dependent or Non-Ratings Dependent Swap:

(1)Which is denominated in U.S. dollars;

(2)Pursuant to which the Issuer pays or receives, on or immediately prior to the respective payment or distribution date for the class of Securities to which the swap relates, a fixed rate of interest, or a floating rate of interest based on a publicly available index (e.g., LIBOR or the U.S. Federal Reserve's Cost of Funds Index (COFI)), with the Issuer receiving such payments on at least a quarterly basis and obligated to make separate payments no more frequently than the counterparty, with all simultaneous payments being netted;

(3)Which has a notional amount that does not exceed either:

(i)The principal balance of the class of Securities to which the swap relates, or

(ii)the portion of the principal balance of such class represented solely by those types of corpus or assets of the Issuer referred to in subsections III.B.(1),

(2)and (3);

(4)Which is not leveraged (i.e., payments are based on the applicable notional amount, the day count fractions, the fixed or floating rates designated in subsection III.FF.(2), and the difference between the products thereof, calculated on a one to one ratio and not on a multiplier of such difference);

(5)Which has a final termination date that is either the earlier of the date on which the Issuer terminates or the related class of Securities is fully repaid; and

(6)Which does not incorporate any provision which could cause a unilateral alteration in any provision described in subsections III.FF.(1) through

(4)without the consent of the Trustee. GG. “Eligible Swap Counterparty” means a bank or other financial institution which has a rating, at the date of issuance of the Securities by the Issuer, which is in one of the three highest long-term credit rating categories, or one of the two highest short-term credit rating categories, utilized by at least one of the Rating Agencies rating the Securities; provided that, if a swap counterparty is relying on its short-term rating to establish eligibility under the Underwriter Exemptions, such swap counterparty must either have a long-term rating in one of the three highest long-term rating categories or not have a long-term rating from the applicable Rating Agency, and provided further that if the class of Securities with which the swap is associated has a final maturity date of more than one year from the date of issuance of the Securities, and such swap is a Ratings Dependent Swap, the swap counterparty is required by the terms of the swap agreement to establish any collateralization or other arrangement satisfactory to the Rating Agencies in the event of a ratings downgrade of the swap counterparty. HH. “Qualified Plan Investor” means a plan investor or group of plan investors on whose behalf the decision to purchase Securities is made by an appropriate independent fiduciary that is qualified to analyze and understand the terms and conditions of any swap transaction used by the Issuer and the effect such swap would have upon the credit ratings of the Securities. For purposes of the Underwriter Exemptions, such a fiduciary is either:

(1)A “qualified professional asset manager” (QPAM), 6 as defined under Part V(a) of Prohibited Transaction Exemption

(PTE)84-14 (49 FR 9494, 9506, March 13, 1984, as amended by 70 FR 49305, August 23, 2005); 6 PTE 84-14 provides a class exemption for transactions between a party in interest with respect to an employee benefit plan and an investment fund (including either a single customer or pooled separate account) in which the plan has an interest, and which is managed by a QPAM, provided certain conditions are met. QPAMs (e.g., banks, insurance companies, registered investment advisers with total client assets under management in excess of $85 million) are considered to be experienced investment managers for plan investors that are aware of their fiduciary duties under ERISA.

(2)An “in-house asset manager” (INHAM), 7 as defined under Part IV(a) of PTE 96-23, 61 FR 15975, 15982 (April 10, 1996); or 7 PTE 96-23 permits various transactions involving employee benefit plans whose assets are managed by an INHAM, an entity which is generally a subsidiary of an employer sponsoring the plan which is a registered investment adviser with management and control of total assets attributable to plans maintained by the employer and its affiliates which are in excess of $50 million.

(3)A plan fiduciary with total assets under management of at least $100 million at the time of the acquisition of such Securities. II. “Excess Spread” means, as of any day funds are distributed from the Issuer, the amount by which the interest allocated to Securities exceeds the amount necessary to pay interest to Securityholders, servicing fees and expenses. JJ. “Eligible Yield Supplement Agreement” means any yield supplement agreement, similar yield maintenance arrangement or, if purchased by or on behalf of the Issuer, an interest rate cap contract to supplement the interest rates otherwise payable on obligations described in subsection III.B.(1). Such an agreement or arrangement may involve a notional principal contract provided that:

(1)It is denominated in U.S. dollars;

(2)The Issuer receives on, or immediately prior to the respective payment date for the Securities covered by such agreement or arrangement, a fixed rate of interest or a floating rate of interest based on a publicly available index (e.g., LIBOR or COFI), with the Issuer receiving such payments on at least a quarterly basis;

(3)It is not “leveraged” as described in subsection III.FF.(4);

(4)It does not incorporate any provision which would cause a unilateral alteration in any provision described in subsections III.JJ.(1)-(3) without the consent of the Trustee;

(5)It is entered into by the Issuer with an Eligible Swap Counterparty; and

(6)It has a notional amount that does not exceed either:

(i)The principal balance of the class of Securities to which such agreement or arrangement relates, or

(ii)the portion of the principal balance of such class represented solely by those types of corpus or assets of the Issuer referred to in subsections III.B.(1),

(2)and (3). *Effective Date:* This exemption is effective October 15, 2004. For a more complete statement of the facts and representations supporting the Department's decision to grant this exemption, refer to the notice of proposed exemption (the Notice) published on February 13, 2006 in the **Federal Register** at 71 FR 7628. Written Comments/Technical Correction to the Notice The Department invited all interested persons to submit written comments and requests for a hearing with respect to the Notice within 45 days of the date of its publication in the **Federal Register** on February 13, 2006. Therefore, all comments and requests for a hearing were due by March 14, 2006. During the comment period, the Department received no comments and no requests for a public hearing. However, upon careful review of the Notice, the Department observed that Footnote 11, which addresses the terms of leasehold interests on residential real property that is pledged to secure certain obligations in residential mortgage investment trusts, does not fully clarify the Department's position with respect to residential leasehold mortgages. In this regard, Footnote 11 states the following: Trust assets may also include obligations that are secured by leasehold interests on residential real property. *But see* PTE 90-32 involving Prudential-Bache Securities, Inc., 55 FR 23147, 23150 (June 6, 1990). The Department received one comment from an affiliate of the applicant with respect to the notice of proposed exemption for PTE 90-32. The comment requested clarification that the definition of trust in section III.B. would include trusts containing certain obligations secured by leasehold interests on residential real property (Residential Leasehold Mortgages or RLMs). The comment noted that RLMs are originated in jurisdictions such as Hawaii in which they are a “necessary alternative to mortgages secured by fee simple interests” and that these RLMs are “in essence, the same as, and provide substantially the same degree of security to investors as, mortgages secured by fee simple interests. The comment represented that both the Federal Home Loan Mortgage Corporation (Freddie Mac) and the Federal National Mortgage Association (Fannie Mae) have purchase programs for these RLMs and that such RLMs included in pools underlying mortgage pass-through certificates would “generally conform” with either Freddie Mac or Fannie Mae leasehold guidelines. In this regard, the term of the leasehold underlying such RLMs would extend for at least five years beyond the term of the RLM. The comment noted that the affiliate of the applicant would “comply with the requirement under the Freddie Mac and Fannie Mae leasehold guidelines that such mortgages constitute obligations secured by real property or an interest in real estate. The Department notes that the proposed exemption underlying PTE 2000-58 (65 FR 67765, Nov. 13, 2000), which amended the Underwriter Exemptions (62 FR 39021, July 21, 1997), contained a limitation concerning leasehold mortgages. Specifically, the Department stated that “[t]he terms of the ground leases pledged to secure leasehold mortgages [would] in all cases be at least ten years longer than the terms of such mortgages.” (65 FR 51454, 51455, August 23, 2000). The final exemption did not discuss this limitation. Moreover, in later exemptions to amend the Underwriter Exemptions or to provide similar individual relief, the original PTE 2000-58 preamble language referring to residential and commercial mortgage investment trusts is repeated without change, except for the omission of the provision concerning RLMs. The Department wishes to allay any public uncertainty regarding whether the RLM requirement continues to apply to the Underwriter Exemptions and to subsequent individual exemptions. Thus, the Harris Nesbitt exemption presents the first opportunity for the Department to affirm its position that with respect to RLMs, the terms of ground leases pledged to secure leasehold mortgages should be at least five years longer than the terms of such mortgages. The Department also wishes to clarify that the leasehold limitation mentioned in Footnote 11 applies to RLMs that are subject to Fannie Mae and Freddie Mac guidelines. After giving full consideration to the entire record, the Department has decided to grant the exemption subject to the clarifications described above. For further information, interested persons are encouraged to obtain copies of the exemption application file (Exemption Application No. D-11281) the Department is maintaining in this case. The complete application file, as well as all supplemental submissions received by the Department, are made available for public inspection in the Public Disclosure Room of the Employee Benefits Security Administration, Room N-1513, U.S. Department Labor, 200 Constitution Avenue, NW., Washington, DC 20210. FOR FURTHER INFORMATION CONTACT: Ms. Silvia M. Quezada of the Department, telephone

(202)693-8553. (This is not a toll-free number.) Fortunoff Fine Jewelry and Silverware, Inc. Cash Balance Pension Plan (the FFJS Cash Balance Plan), M. Fortunoff of Westbury Corp. Cash Balance Pension Plan (the MFW Cash Balance Plan), and Fortunoff Fine Jewelry and Silverware, Inc. Profit Sharing Plan (the FFJS Profit Sharing Plan; Collectively, the Plans) Located in Westbury, NY [Prohibited Transaction Exemption 2006-08; Exemption Application Nos. D-11307, D-11308 and D-11309, respectively] Exemption The restrictions of sections 406(a) and 406(b) of the Act and the sanctions resulting from the application of section 4975(a) and

(b)of the Code, 8 by reason of section 4975(c)(1)(A) through

(E)of the Code, shall not apply

(1)effective November 26, 2003 until February 28, 2005, to the leasing of certain improved real property (the Property) by the Plans, directly and then through One MH Plaza Realty LLC (the Plans' LLC), a special purpose entity designed to hold the Plans' interests in the Property, to Fortunoff Fine Jewelry and Silverware, Inc. (FFJS), under the provisions of a written lease (the Interim Lease); and

(2)effective March 1, 2005 through August 31, 2006, to the 18 month extension of the Interim Lease (the Interim Lease Extension) between the Plans, 9 through the Plans' LLC, and FFJS and its successors in interest, Fortunoff Fine Jewelry and Silverware, LLC (FFJS LLC) and M. Fortunoff of Westbury, LLC (MFW LLC). 8 For purposes of this exemption, references to provisions of Title I of the Act, unless otherwise specified, refer also to corresponding provisions of the Code. 9 As of January 1, 2006, all references to the Plans shall mean the Fortunoff, the Source, Cash Balance Plan (the Merged Cash Balance Plan), which resulted from the merger of the FFJS Cash Balance Plan and the MFW Cash Balance Plan, and the FFJS Profit Sharing Plan. This exemption is subject to the following conditions:

(a)Since November 26, 2003, the Plans have been and continue to be represented for all purposes under the Interim Lease, by Independent Fiduciary Services (IFS), a qualified, independent fiduciary, which also represents the interests of the Plans under the Interim Lease Extension.

(b)IFS has

(1)reviewed and approved the continued adherence by the Plans and the Plans' LLC with the terms and conditions of the Interim Lease under the facts and circumstances in existence on and after November 26, 2003;

(2)negotiated, reviewed, and expressly approved the terms and conditions of the Interim Lease Extension on behalf of the Plans; and

(3)determined that the leasing of the Property since November 26, 2003 pursuant to the Interim Lease and, since March 1, 2005, pursuant to the Interim Lease Extension,

(i)complies with the relevant provisions of Prohibited Transaction Exemption

(PTE)93-8 (58 FR 7258, February 5, 1993), as amended by PTE 98-22 (63 FR 27329, May 18, 1998), (except as modified by this exemption);

(ii)continues to be an appropriate investment for the Plans on and after November 26, 2003, consistent with each Plan's investment policies and liquidity needs; and

(iii)is in the best interests of each Plan and its respective participants and beneficiaries on and after November 26, 2003.

(c)The rent paid to the Plans under the Interim Lease and the Interim Lease Extension is no less than the fair market rental value of the Property, as established by a qualified, independent appraiser. Effective March 1, 2006, the rent is adjusted to the greater of the current annualized rental of $656,400 or the then-current, fair market rental value, as determined by IFS on the basis of an appraisal conducted by the independent appraiser selected by IFS.

(d)The base rent has been adjusted or is adjusted annually by IFS based upon an independent appraisal of the Property.

(e)Under both the Interim Lease and the Interim Lease Extension, FFJS pays for property and liability insurance on the Property, property taxes, utility costs, other costs for maintaining the Property including environmental assessments, engineering inspection reports, as well as all other expenses that are incident to such agreements.

(f)IFS has monitored, and continues to monitor, compliance with the terms of the Interim Lease since November 26, 2003 and the terms of the Interim Lease Extension throughout the duration of these agreements.

(g)IFS is responsible for legally enforcing the payment of the rent and the proper performance of all other obligations of FFJS and its successors in interest, FFJS LLC and MFW LLC, under the terms of such agreements.

(h)IFS makes determinations, on behalf of the Plans, with respect to any sale or future leasing of the Property.

(i)IFS has determined that

(1)the leasing of the Property pursuant to the Interim Lease on and after November 26, 2003 was no less favorable to the Plans than similar leasing arrangements between unrelated parties;

(2)the then-prevailing rent received by the Plans under the interim lease was no less favorable to the Plans than the rent the Plans would have received under similar circumstances if the rent had been negotiated at arm's length with unrelated third parties; and

(3)the terms and conditions of the Interim Lease Extension have been or are no less favorable to the Plans than those obtainable by the Plans under similar circumstances when negotiated at arm's length with unrelated third parties.

(j)With respect to the Interim Lease Extension, FFJS

(1)has made a two-month security deposit pursuant to the agreement; and

(2)is required to pay an additional four-month security deposit (Additional Deposit) after the expiration of the first 12 months of the Interim Lease Extension, calculated at the rental amount to be effective March 1, 2006.

(k)Over the last six months of the Interim Lease Extension, one-sixth of the Additional Deposit is applied to the rent each month, so long as there is no uncured default. *Effective Date:* This exemption is effective from November 26, 2003 until February 28, 2005 with respect to the Interim Lease and from March 1, 2005 until August 31, 2006 with respect to the Interim Lease Extension. 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 February 13, 2006 at 71 FR 7647. FOR FURTHER INFORMATION CONTACT: Ms. Anna Mpras Vaughan of the Department, telephone

(202)693-8565. (This is not a toll-free number.) General Information The attention of interested persons is directed to the following:

(1)The fact that a transaction is the subject of an exemption under section 408(a) of the Act and/or section 4975(c)(2) of the Code does not relieve a fiduciary or other party in interest or disqualified person from certain other provisions to which the exemption does not apply and the general fiduciary responsibility provisions of section 404 of the Act, which among other things require a fiduciary to discharge his duties respecting the plan solely in the interest of the participants and beneficiaries of the plan and in a prudent fashion in accordance with section 404(a)(1)(B) of the Act; nor does it affect the requirement of section 401(a) of the Code that the plan must operate for the exclusive benefit of the employees of the employer maintaining the plan and their beneficiaries;

(2)This exemption is supplemental to and not in derogation of, any other provisions of the Act and/or the Code, including statutory or administrative exemptions and transactional rules. Furthermore, the fact that a transaction is subject to an administrative or statutory exemption is not dispositive of whether the transaction is in fact a prohibited transaction; and

(3)The availability of this exemption is subject to the express condition that the material facts and representations contained in the application accurately describes all material terms of the transaction which is the subject of the exemption. Ivan Strasfeld, Director of Exemption Determinations, Employee Benefits Security Administration, U.S. Department of Labor. [FR Doc. E6-8529 Filed 6-1-06; 8:45 am] BILLING CODE 4510-29-P FEDERAL MINE SAFETY AND HEALTH REVEW COMMISSION Notice of Meeting; Sunshine Act May 26, 2006. Time and Date: 10 a.m., Thursday, June 8, 2006. Place: The Richard V. Backley Hearing Room, 9th Floor, 601 New Jersey Avenue, NW., Washington, DC. Status: Open. Matters to be Considered: The Commission will consider and act upon the following in open session: *Secretary of Labor* v. *Jim Walter Resources, Inc.,* Docket No. SE 2003-160. (Issues include whether the judge correctly determined that the operator violated 30 CFR 75.360(b)(3), and that the violation was significant and substantial and attributable to the operator's unwarrantable failure; whether the judge correctly determined that the operator did not violate 30 CFR 75.1101-23(a); whether the judge correctly determined that the operator violated 30 CFR 75.1101-23(c), and that the violation was not significant and substantial; and whether the judge properly followed section 110(i) of the Mine Act in setting the penalty amounts for the violations found.) Any person attending this meeting who requires special accessibility features and/or auxiliary aids, such as sign language interpreters, must inform the Commission in advance of those needs, subject to 29 CFR 2706.150(a)(3) and 2706.160(d). For Further Information Contact: Jean Ellen,

(202)434-9950 /

(202)708-9300 for TDD Relay / 1-800-877-8339 for toll free. Jean H. Ellen, Chief Docket Clerk. [FR Doc. 06-5114 Filed 5-31-06; 2:03 pm]

Connectionstraces to 3

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CFR

5 references not yet in our index

29 CFR 2570
29 CFR 2550.408
29 CFR 2510.3-21(c)
30 CFR 75.1101-23(a)
30 CFR 75.1101-23(c)

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cites case law

Notices

Notice of proposed exemptions

C.F.R.§ 2510.3-101

C.F.R.§ 75.360

C.F.R.§ 2706.150

Cite29 CFR 2570

Cite29 CFR 2550.408

Cite29 CFR 2510.3-21(c)

Cite30 CFR 75.1101-23(a)

Cite30 CFR 75.1101-23(c)

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