Prohibited Transaction Exemptions 2008-09 thru 2008-12; Grant of Individual Exemptions Involving D-11416, Wholesale Electronic Supply; D-11435, Merrill Lynch & Co., Inc.; D-11449, Pileco, Inc.; and D-11460, Mellon Bank, NA, 55526-55541 [E8-22486]

Agencies

• Employee Benefits Security Administration
• DEPARTMENT OF LABOR

[Federal Register Volume 73, Number 187 (Thursday, September 25, 2008)]
[Notices]
[Pages 55526-55541]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-22486]


=======================================================================
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DEPARTMENT OF LABOR

Employee Benefits Security Administration

[Exemption Application Nos. D-11416, D-11435, D-11449, and D-11460]


Prohibited Transaction Exemptions 2008-09 thru 2008-12; Grant of 
Individual Exemptions Involving D-11416, Wholesale Electronic Supply; 
D-11435, Merrill Lynch & Co., Inc.; D-11449, Pileco, Inc.; and D-11460, 
Mellon Bank, NA

AGENCY: Employee Benefits Security Administration, Labor.

ACTION: Grant of Individual Exemptions.

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SUMMARY: This document contains an exemption 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

[[Page 55527]]

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.

Wholesale Electronic Supply; Employees Profit Sharing Plan and Trust 
(the Plan); Located in Dallas, TX

[Prohibited Transaction Exemption 2008-09; Exemption Application No. D-
11416]

Exemption

    The restrictions in sections 406(a)(1)(A), 406(a)(1)(D), and 
406(b)(1) and (b)(2) of the Act and the sanctions resulting from the 
application of section 4975 of the Code, by reason of section 
4975(c)(1)(A) and (c)(1)(D) through (E) of the Code, shall not apply to 
the sale of a note (the Note) by the Plan to Levco Enterprises, Inc., a 
party in interest with respect to the Plan, provided that the following 
conditions are satisfied:
    (a) The terms and conditions of the sale are at least as favorable 
to the Plan as those that the Plan could obtain in an arm's length 
transaction with an unrelated party;
    (b) The Plan receives $45,750.00, the outstanding principal balance 
of the Note;
    (c) The sale is a one-time transaction for cash; and
    (d) The Plan pays no commissions, costs, nor other expenses in 
connection with the sale.
    For a more complete statement of the facts and representations 
supporting the Department's decision to grant this exemption, refer to 
the notice of proposed exemption (the Notice) published on March 13, 
2008 at 73 FR 13587.
    Notice to Interested Persons: The applicant was unable to notify 
interested persons within the time frame specified in the Notice. 
However, the applicant stated that interested persons were subsequently 
notified by May 30, 2008, in the manner and time frame re-negotiated 
with the Department. The statement accompanying the Notice informed 
interested persons that they had 30 days to comment to the Department. 
No written comments were received by the Department.

FOR FURTHER INFORMATION CONTACT: Ms. Karin Weng of the Department, 
telephone (202) 693-8557. (This is not a toll-free number.)

Merrill Lynch & Co., Inc. (ML&Co.) and BlackRock, Inc. (BlackRock); 
(Collectively, the Applicants); Located in New York, New York

[Prohibited Transaction Exemption 2008-10; Exemption Application No. D-
11435]

Exemption

1. Definitions

    (a) For purposes of this exemption, the term ``Merrill Lynch/
BlackRock Related Entity or Entities'' includes all entities listed in 
Section 1(a)(1), (a)(2) and (a)(3):
    (1) Merrill Lynch & Co., Inc. (i.e., ML&Co.) and any person 
directly or indirectly, through one or more intermediaries, 
controlling, controlled by, or under common control with ML&Co.,
    (2) BlackRock, Inc. (i.e., BlackRock) and any person directly or 
indirectly, through one or more intermediaries, controlling, controlled 
by, or under common control with BlackRock, and
    (3) Any entity that meets the definition of a Merrill Lynch/
BlackRock Related Entity during the term of the exemption.
    (b) The term ``Merrill Lynch Related Entity'' or ``Merrill Lynch 
Related Entities'' means ML&Co. and any person directly or indirectly, 
through one or more intermediaries, controlling, controlled by, or 
under common control with ML&Co.
    (c) The term ``BlackRock Related Entity'' or ``BlackRock Related 
Entities'' means BlackRock and any person directly or indirectly, 
through one or more intermediaries, controlling, controlled by, or 
under common control with BlackRock.
    (d) For purposes of sections (a-c), the term ``control'' means the 
power to exercise a controlling influence over the management or 
policies of a person other than an individual.

2. General Conditions

    (a) The applicable Merrill Lynch/BlackRock Related Entity or 
Entities maintain(s) or cause(s) to be maintained for a period of six 
(6) years from the date of any transaction described herein, such 
records as are necessary to enable the persons described in paragraph 
(b) below to determine whether the conditions of this exemption were 
met, except that--
    (1) If the records necessary to enable the persons described in 
paragraph (b)(1)(i)-(iv) below to determine whether the conditions of 
the exemption have been met are lost or destroyed, due to circumstances 
beyond the control of the Merrill Lynch/BlackRock Related Entity or 
Entities, then no prohibited transaction will be considered to have 
occurred solely on the basis of the unavailability of those records; 
and
    (2) No party in interest with respect to a plan which engages in 
the covered transactions, other than any Merrill Lynch/BlackRock 
Related Entity or Entities, shall be subject to the civil penalty that 
may be assessed under section 502(i) of the Act or to the taxes imposed 
by section 4975(a) and (b) of the Code if the records have not been 
maintained or are not available for examination as required by 
paragraph (b) below.
    (b)(1) Except as provided below in paragraph (b)(2), and 
notwithstanding the provisions of subsections (a)(2) and (b) of section 
504 of the Act, the records referred to above in paragraph (a) above 
are unconditionally available for examination during normal business 
hours at their customary location to the following persons or an 
authorized representative thereof--
    (i) Any duly authorized employee or representative of the 
Department or the Internal Revenue Service, or the SEC; or
    (ii) Any fiduciary of any plan that engages in the covered 
transactions, or any duly authorized employee or representative of such 
fiduciary; or
    (iii) Any employer of participants and beneficiaries and any 
employee organization whose members are covered by a plan that engages 
in the transactions covered herein, or any authorized employee or 
representative of these entities; or
    (iv) Any participant or beneficiary of a plan that engages in the 
transactions covered herein, or duly authorized representative of such 
participant or beneficiary;
    (2) None of the persons described above in paragraph (b)(1)(ii)-
(iv) shall

[[Page 55528]]

be authorized to examine trade secrets of the Merrill Lynch/BlackRock 
Related Entity or Entities, or commercial or financial information, 
which is privileged or confidential; and
    (3) Should the Merrill Lynch/BlackRock Related Entity or Entities 
refuse to disclose information on the basis that such information is 
exempt from disclosure, pursuant to paragraph (b)(2) above, the Merrill 
Lynch/BlackRock Related Entity or Entities shall, by the thirtieth 
(30th) day following the request, provide a written notice advising 
that person of the reasons for the refusal and that the Department may 
request such information.

3. Exemptions From Prohibitions Respecting Certain Classes of 
Transactions Involving Employee Benefit Plans and Certain Underwriters 
(Modeled After PTE 75-1, Part III)

    The restrictions of section 406 of the Act, and the taxes imposed 
by reason of section 4975(a) and (b) of the Code, by reason of section 
4975(c)(1) of the Code, shall not apply to the purchase or other 
acquisition of certain securities by an employee benefit plan during 
the existence of an underwriting or selling syndicate with respect to 
such securities, from any person other than a Merrill Lynch/BlackRock 
Related Entity or Entities, when such Merrill Lynch/BlackRock Related 
Entity or Entities is a fiduciary with respect to such plan, and a 
member of such syndicate, provided that the following conditions are 
met:
    (a) No Merrill Lynch/BlackRock Related Entity or Entities which is 
involved in any way in causing the plan to make the purchase is a 
manager of such underwriting or selling syndicate. For purposes of this 
exemption, the term ``manager'' means any member of an underwriting or 
selling syndicate who, either alone or together with other members of 
the syndicate, is authorized to act on behalf of the members of the 
syndicate in connection with the sale and distribution of the 
securities being offered or who receives compensation from the members 
of the syndicate for its services as a manager of the syndicate.
    (b) The securities to be purchased or otherwise acquired are--
    (1) Part of an issue registered under the Securities Act of 1933 
or, if exempt from such registration requirement, are (i) issued or 
guaranteed by the United States or by any person controlled or 
supervised by and acting as an instrumentality of the United States 
pursuant to authority granted by the Congress of the United States, 
(ii) issued by a bank, (iii) issued by a common or contract carrier, if 
such issuance is subject to the provisions of section 20a of the 
Interstate Commerce Act, as amended, (iv) exempt from such registration 
requirement pursuant to a Federal statute other than the Securities Act 
of 1933, or (v) are the subject of a distribution and are of a class 
which is required to be registered under section 12 of the Securities 
Exchange Act of 1934 (15 U.S.C. 781), and the issuer of which has been 
subject to the reporting requirements of section 13 of the Act (15 
U.S.C. 78m) for a period of at least 90 days immediately preceding the 
sale of securities and has filed all reports required to be filed 
thereunder with the Securities and Exchange Commission during the 
preceding 12 months.
    (2) Purchased at not more than the public offering price prior to 
the end of the first full business day after the final term of the 
securities have been fixed and announced to the public, except that--
    (i) If such securities are offered for subscription upon exercise 
of rights, they are purchased on or before the fourth day preceding the 
day on which the rights offering terminates; or
    (ii) If such securities are debt securities, they may be purchased 
at a public offering price on a day subsequent to the end of such first 
full business day, provided that the interest rates on comparable debt 
securities offered to the public subsequent to such first full business 
day and prior to the purchase are less than the interest rate of the 
debt securities being purchased.
    (3) Offered pursuant to an underwriting agreement under which the 
members of the syndicate are committed to purchase all of the 
securities being offered, except if--
    (i) Such securities are purchased by others pursuant to a rights 
offering; or
    (ii) Such securities are offered pursuant to an over-allotment 
option.
    (c) The issuer of such securities has been in continuous operation 
for not less than three years, including the operations of any 
predecessors, unless--
    (1) Such securities are non-convertible debt securities rated in 
one of the four highest rating categories by at least one of the 
following rating organizations: Standard & Poor's Rating Services, 
Moody's Investors Service, Inc., Fitch Ratings Inc., Dominion Bond 
Ratings Service Limited, and Dominion Bond Rating Service, Inc., or any 
successors thereto;
    (2) Such securities are issued or fully guaranteed by a person 
described in paragraph (b)(1)(i) of this exemption; or
    (3) Such securities are fully guaranteed by a person who has issued 
securities described in paragraph (b)(1)(ii), (iii), (iv) or (v), and 
this paragraph (c) of this exemption.
    (d) The amount of such securities to be purchased or otherwise 
acquired by the plan does not exceed 3% of the total amount of such 
securities being offered.
    (e) The consideration to be paid by the plan in purchasing or 
otherwise acquiring such securities does not exceed three percent of 
the fair market value of the total assets of the plan as of the last 
day of the most recent fiscal quarter of the plan prior to such 
transaction, provided that if such consideration exceeds $1 million, it 
does not exceed 1% of such fair market value of the total assets of the 
plan.
    If such securities are purchased by the plan from a party in 
interest or disqualified person with respect to the plan, such party in 
interest or disqualified person shall not be subject to the civil 
penalty, which may be assessed under section 502(i) of the Act, or to 
the taxes imposed by section 4975(a) and (b) of the Code, if the 
conditions of this exemption are not met. However, if such securities 
are purchased from a party in interest or disqualified person with 
respect to the plan, the restrictions of section 406(a) of the Act 
shall apply to any fiduciary with respect to the plan and the taxes 
imposed by section 4975(a) and (b) of the Code, by reason of section 
4975(c)(1)(A) through (D) of the Code, shall apply to such party in 
interest or disqualified person, unless the conditions for exemption of 
PTE 75-1 (40 FR 50845, October 31, 1975), Part II (relating to certain 
principal transactions) are met.

4. Exemptions From Prohibitions Respecting Certain Classes of 
Transactions Involving Employee Benefit Plans and Market-Makers 
(Modeled After PTE 75-1, Part IV)

    The restrictions of section 406 of the Act, and the taxes imposed 
by section 4975(a) and (b) of the Code, by reason of section 4975(c)(1) 
of the Code, shall not apply to any purchase or sale of any securities 
by an employee benefit plan from or to a Merrill Lynch/BlackRock 
Related Entity or Entities, which is a market-maker with respect to 
such securities, when a Merrill Lynch/BlackRock Related Entity or 
Entities is also a fiduciary with respect to such plan, provided that 
the following conditions are met:
    (a) The issuer of such securities has been in continuous operation 
for not less than three years, including the operations of any 
predecessors, unless--
    (1) Such securities are non-convertible debt securities rated in 
one

[[Page 55529]]

of the four highest rating categories by at least one of the following 
rating organizations: Standard & Poor's Rating Services, Moody's 
Investors Service, Inc., Fitch Ratings Inc., Dominion Bond Ratings 
Service Limited, and Dominion Bond Rating Service, Inc., or any 
successors thereto;
    (2) Such securities are issued or guaranteed by the United States 
or by any person controlled or supervised by and acting as an 
instrumentality of the United States pursuant to authority granted by 
the Congress of the United States; or
    (3) Such securities are fully guaranteed by a person described in 
this paragraph (a).
    (b) As a result of purchasing such securities--
    (1) The fair market value of the aggregate amount of such 
securities owned, directly or indirectly, by the plan and with respect 
to which such Merrill Lynch/BlackRock Related Entity or Entities is a 
fiduciary, does not exceed 3% of the fair market value of the assets of 
the plan with respect to which such Merrill Lynch/BlackRock Related 
Entity or Entities is a fiduciary, as of the last day of the most 
recent fiscal quarter of the plan prior to such transaction, provided 
that if the fair market value of such securities exceeds $1 million, it 
does not exceed one percent of such fair market value of such assets of 
the plan, except that this paragraph shall not apply to securities 
described in paragraph (a)(2) of this exemption; and
    (2) The fair market value of the aggregate amount of all securities 
for which such Merrill Lynch/BlackRock Related Entity or Entities is a 
market-maker, which are owned, directly or indirectly, by the plan and 
with respect to which such Merrill Lynch/BlackRock Related Entity or 
Entities is a fiduciary, does not exceed 10% of the fair market value 
of the assets of the plan with respect to which such Merrill Lynch/
BlackRock Related Entity or Entities is a fiduciary, as of the last day 
of the most recent fiscal quarter of the plan prior to such 
transaction, except that this paragraph shall not apply to securities 
described in paragraph (a)(2) of this exemption.
    (c) At least one person other than a Merrill Lynch/BlackRock 
Related Entity or Entities is a market-maker with respect to such 
securities.
    (d) The transaction is executed at a net price to the plan for the 
number of shares or other units to be purchased or sold in the 
transaction which is more favorable to the plan than that which such 
Merrill Lynch/BlackRock Related Entity or Entities acting as fiduciary 
and acting in good faith, reasonably believes to be available at the 
time of such transaction from all other market-makers with respect to 
such securities.
    For purposes of this exemption, the term ``market-maker'' shall 
mean any specialist permitted to act as a dealer, and any dealer who, 
with respect to a security, holds himself out (by entering quotations 
in an inter-dealer communications system or otherwise) as being willing 
to buy and sell such security for his own account on a regular or 
continuous basis.

5. Exemption Involving Mutual Fund In-House Plans (Modeled After PTE 
77-3)

    The restrictions of sections 406 and 407(a) of the Act and the 
taxes imposed by section 4975(a) and (b) of the Code, by reason of 
section 4975(c)(1) of the Code, shall not apply to the acquisition or 
sale of shares of an open-end investment company registered under the 
Investment Company Act of 1940 by an employee benefit plan covering 
only employees of such investment company, employees of the investment 
adviser or principal underwriter for such investment company, which is 
a Merrill Lynch/BlackRock Related Entity, employees of any other 
Merrill Lynch/BlackRock Related Entity, or employees of any affiliated 
person (as defined in section 2(a)(3) of the Investment Company Act of 
1940) of such investment adviser or principal underwriter of such 
investment company, provided the following conditions are met (whether 
or not such investment company, investment adviser, principal 
underwriter or any affiliated person thereof is a fiduciary with 
respect to the plan):
    (a) The plan does not pay any investment management, investment 
advisory or similar fee to such investment adviser, principal 
underwriter, affiliated person or Merrill Lynch/BlackRock Related 
Entity or Entities. This condition does not preclude the payment of 
investment advisory fees by the investment company under the terms of 
its investment advisory agreement adopted in accordance with section 15 
of the Investment Company Act of 1940.
    (b) The plan does not pay a redemption fee in connection with the 
sale by the plan to the investment company of such shares unless (1) 
such redemption fee is paid only to the investment company, and (2) the 
existence of such redemption fee is disclosed in the investment company 
prospectus in effect both at the time of the acquisition of such shares 
and at the time of such sale.
    (c) The plan does not pay a sales commission in connection with 
such acquisition or sale.
    (d) All other dealings between the plan and the investment company, 
the investment adviser, the principal underwriter for the investment 
company, or any other Merrill Lynch/BlackRock Related Entity are on a 
basis no less favorable to the plan than such dealings are with other 
shareholders of the investment company.

6. Exemption for Certain Transactions Between Investment Companies and 
Employee Benefit Plans (Modeled After PTE 77-4)

    The restrictions of section 406 of the Act and the taxes imposed by 
section 4975(a) and (b) of the Code, by reason of section 4975(c)(1) of 
the Code, shall not apply to the purchase or sale by an employee 
benefit plan of shares of an open-end investment company registered 
under the Investment Company Act of 1940, where the investment adviser 
of the investment company is a Merrill Lynch/BlackRock Related Entity 
and a Merrill Lynch/BlackRock Related Entity is also a fiduciary with 
respect to the plan, but not an employer of employees covered by the 
plan, provided that the following conditions are met:
    (a) The plan does not pay a sales commission in connection with 
such purchase or sale.
    (b) The plan does not pay a redemption fee in connection with the 
sale by the plan to the investment company of such shares unless (1) 
such redemption fee is paid only to the investment company, and (2) the 
existence of such redemption fee is disclosed in the investment company 
prospectus in effect both at the time of the purchase of such shares 
and at the time of such sale.
    (c) The plan does not pay an investment management, investment 
advisory or similar fee with respect to the plan assets invested in 
such shares for the entire period of such investment. This condition 
does not preclude the payment of investment advisory fees by the 
investment company under the terms of its investment advisory agreement 
adopted in accordance with section 15 of the Investment Company Act of 
1940. This condition also does not preclude payment of an investment 
advisory fee by the plan based on total plan assets from which a credit 
has been subtracted representing the plan's pro rata share of 
investment advisory fees paid by the investment company. If, during any 
fee period for which the plan has prepaid its investment management, 
investment advisory or similar fee, the

[[Page 55530]]

plan purchases shares of the investment company, the requirement of 
this paragraph (c) shall be deemed met with respect to such prepaid fee 
if by a method reasonably designed to accomplish the same, the amount 
of the prepaid fee that constitutes the fee with respect to the plan 
assets invested in the investment company shares: (1) Is anticipated 
and subtracted from the prepaid fee at the time of payment of such fee, 
(2) is returned to the plan no later than during the immediately 
following fee period, or (3) is offset against the prepaid fee for the 
immediately following fee period or for the fee period immediately 
following thereafter. For purposes of this paragraph (c), a fee shall 
be deemed to be prepaid for any fee period if the amount of such fee is 
calculated as of a date not later than the first day of such period.
    (d) A second fiduciary with respect to the plan, who is independent 
of and unrelated to the fiduciary/investment adviser or any other 
Merrill Lynch/BlackRock Related Entity, receives a current prospectus 
issued by the investment company, and full and detailed written 
disclosure of the investment advisory and other fees charged to or paid 
by the plan and the investment company, including the nature and extent 
of any differential between the rates of such fees, the reasons why the 
fiduciary/investment adviser may consider such purchases to be 
appropriate for the plan, and whether there are any limitations on the 
fiduciary/investment adviser with respect to which plan assets may be 
invested in shares of the investment company and, if so, the nature of 
such limitations. For purposes of this paragraph (d), such second 
fiduciary will not be deemed to be independent of and unrelated to the 
fiduciary/investment adviser or any Merrill Lynch/BlackRock Related 
Entity if:
    (1) Such second fiduciary directly or indirectly controls, is 
controlled by, or is under common control with the fiduciary/investment 
adviser or any Merrill Lynch/BlackRock Related Entity;
    (2) Such second fiduciary, or any officer, director, partner, 
employee or relative of such second fiduciary is an officer, director, 
partner, employee or relative of such fiduciary/investment adviser or 
any Merrill Lynch/BlackRock Related Entity; or
    (3) Such second fiduciary directly or indirectly receives any 
compensation or other consideration for his or her own personal account 
in connection with any transaction described in this exemption.
    If an officer, director, partner, employee or relative of such 
fiduciary/investment adviser or any Merrill Lynch/BlackRock Related 
Entity is a director of such second fiduciary, and if he or she 
abstains from participation in (i) the choice of the plan's investment 
adviser, (ii) the approval of any such purchase or sale between the 
plan and the investment company and (iii) the approval of any change of 
fees charged to or paid by the plan, then paragraph (d)(2) of this 
exemption shall not apply.
    For purposes of paragraph (d)(1) above, the term ``control'' means 
the power to exercise a controlling influence over the management or 
policies of a person other than an individual, and the term 
``relative'' means a ``relative'' as that term is defined in section 
3(15) of the Act (or a ``member of the family'' as that term is defined 
in section 4975(e)(6) of the Code), or a brother, a sister, or a spouse 
of a brother or a sister.
    (e) On the basis of the prospectus and disclosure referred to in 
paragraph (d), the second fiduciary referred to in paragraph (d) 
approves such purchases and sales consistent with the responsibilities, 
obligations, and duties imposed on fiduciaries by Part 4 of Title I of 
the Act. Such approval may be limited solely to the investment advisory 
and other fees paid by the mutual fund in relation to the fees paid by 
the plan and need not relate to any other aspects of such investments. 
In addition, such approval must be either: (1) Set forth in the plan 
documents or in the investment management agreement between the plan 
and the fiduciary/investment adviser, (2) indicated in writing prior to 
each purchase or sale, or (3) indicated in writing prior to the 
commencement of a specified purchase or sale program in the shares of 
such investment company.
    (f) The second fiduciary referred to in paragraph (d) above, or any 
successor thereto, is notified of any change in any of the rates of 
fees referred to in paragraph (d) and approves in writing the 
continuation of such purchases or sales and the continued holding of 
any investment company shares acquired by the plan prior to such change 
and still held by the plan. Such approval may be limited solely to the 
investment advisory and other fees paid by the mutual fund in relation 
to the fees paid by the plan and need not relate to any other aspects 
of such investment.

7. Exemption Involving Closed-End Investment Company In-House Plans 
(Modeled After PTE 79-13)

    The restrictions of sections 406 and 407(a) of the Act, and the 
taxes imposed by section 4975 (a) and (b) of the Code, by reason of 
section 4975(c)(1) of the Code, shall not apply to the acquisition, 
ownership or sale of shares of a closed-end investment company, which 
is registered under the Investment Company Act of 1940 and is not a 
small business investment company as defined in section 103 of the 
Small Business Investment Company Act of 1958, by an employee benefit 
plan covering only employees of such investment company, employees of 
the investment adviser of such investment company, which is a Merrill 
Lynch/BlackRock Related Entity, employees of any other Merrill Lynch/
BlackRock Related Entity, or employees of any affiliated person (as 
defined in section 2(a)(3) of the Investment Company Act of 1940) of 
such investment company or investment adviser, provided that the 
following conditions are met (whether or not such investment company, 
investment adviser or any affiliated person thereof is a fiduciary with 
respect to the plan):
    (a) The plan does not pay any investment management, investment 
advisory, or similar fee to such investment adviser, other Merrill 
Lynch/BlackRock Related Entity or affiliated person. This condition 
does not preclude the payment of investment advisory fees by the 
investment company under the terms of its investment advisory agreement 
adopted in accordance with section 15 of the Investment Company Act of 
1940.
    (b) The plan does not pay a sales commission in connection with 
such acquisition or sale to any such investment company, or to any 
investment adviser, any Merrill Lynch/BlackRock Related Entity or 
affiliated person; and
    (c) All other dealings between the plan and such investment 
company, the investment adviser, any Merrill Lynch/BlackRock Related 
Entity or affiliated person are on a basis no less favorable to the 
plan than such dealings are with other shareholders of the investment 
company.

8. Exemption for Securities Transactions Involving Employee Benefit 
Plans and Broker-Dealers (Modeled After PTE 86-128)

Section I: Definition and Special Rules
    The following definitions and special rules apply to this 
exemption:
    (a) The term ``Merrill Lynch/BlackRock Related Entity or Entities'' 
includes affiliates of such entity or entities.

[[Page 55531]]

    (b) An ``affiliate'' of a Merrill Lynch/BlackRock Related Entity or 
Entities includes the following:
    (1) Any officer, director, partner, employee, relative (as defined 
in section 3(15) of the Act), brother, sister, or spouse of a brother 
or sister, of the Merrill Lynch/BlackRock Related Entity or Entities; 
and
    (2) Any corporation or partnership of which the Merrill Lynch/
BlackRock Related Entity or Entities is an officer, director or 
partner.
    A person is not an affiliate of another person solely because such 
person has investment discretion over the other's assets.
    (c) An ``agency cross transaction'' is a securities transaction in 
which the same Merrill Lynch/BlackRock Related Entity or Entities 
act(s) as agent for both any seller and any buyer for the purchase or 
sale of a security.
    (d) The term ``covered transaction'' means an action described in 
Section II (a), (b) or (c) of this exemption.
    (e) The term ``effecting or executing a securities transaction'' 
means the execution of a securities transaction as agent for another 
person and/or the performance of clearance, settlement, custodial or 
other functions ancillary thereto.
    (f) A plan fiduciary is independent of a Merrill Lynch/BlackRock 
Related Entity or Entities only if the fiduciary has no relationship to 
or interest in such Merrill Lynch/BlackRock Related Entity or Entities 
that might affect the exercise of such fiduciary's best judgment as a 
fiduciary.
    (g) The term ``profit'' includes all charges relating to effecting 
or executing securities transactions, less reasonable and necessary 
expenses including reasonable indirect expenses (such as overhead 
costs) properly allocated to the performance of these transactions 
under generally accepted accounting principles.
    (h) The term ``securities transaction'' means the purchase or sale 
of securities.
    (i) The term ``nondiscretionary trustee'' of a plan means a trustee 
or custodian whose powers and duties with respect to any assets of the 
plan are limited to (1) the provision of nondiscretionary trust 
services to the plan, and (2) duties imposed on the trustee by any 
provision or provisions of the Act or the Code. The term 
``nondiscretionary trust services'' means custodial services and 
services ancillary to custodial services, none of which services are 
discretionary. For purposes of this exemption, a person does not fail 
to be a nondiscretionary trustee solely by reason of having been 
delegated, by the sponsor of a master or prototype plan, the power to 
amend such plan.
Section II: Covered Transactions
    If each condition of Section III of this exemption is either 
satisfied or not applicable under Section IV of this exemption, the 
restrictions of section 406(b) of the Act and the taxes imposed by 
section 4975(a) and (b) of the Code by reason of section 4975(c)(1)(E) 
and (F) of the Code shall not apply to--
    (a) A Merrill Lynch/BlackRock Related Entity or Entities that is a 
plan fiduciary using its authority to cause a plan to pay a fee to a 
Merrill Lynch/BlackRock Related Entity or Entities as agent for the 
plan, for effecting or executing securities transactions, but only to 
the extent that such transactions are not excessive, under the 
circumstances, in either amount or frequency;
    (b) A Merrill Lynch/BlackRock Related Entity or Entities that is a 
plan fiduciary acting as the agent in an agency cross transaction for 
both the plan and one or more other parties to the transaction; or
    (c) The receipt by any Merrill Lynch/BlackRock Related Entity or 
Entities that is a plan fiduciary of reasonable compensation for 
effecting or executing an agency cross transaction to which a plan is a 
party from one or more other parties to the transaction.
Section III: Conditions
    Except to the extent otherwise provided in Section IV of this 
exemption, Section II of this exemption applies only if the following 
conditions are satisfied:
    (a) The Merrill Lynch/BlackRock Related Entity engaging in the 
covered transaction is not an administrator of the plan, or an employer 
any of whose employees are covered by the plan.
    (b)(1) The covered transaction is performed under a written 
authorization executed in advance by a fiduciary of each plan whose 
assets are involved in the transaction, which plan fiduciary is 
independent of the Merrill Lynch/BlackRock Related Entity or Entities 
engaging in the covered transaction.
    (2) For purposes of this exemption, Section III(b) will be deemed 
satisfied for the period commencing September 29, 2006, notwithstanding 
Merrill Lynch Investment Managers, LLC (MLIM)'s reliance on written 
authorizations obtained prior to the consummation of the Merger,\1\ 
provided that after the closing of the Merger, MLIM notified each such 
authorizing plan fiduciary of the fact that: (A) As a result of the 
Merger, MLIM had become a subsidiary of BlackRock; (B) the existing 
authorization by such authorizing plan fiduciary would continue to 
permit MLIM to engage in the covered transaction on behalf of the plan; 
(C) such authorization is terminable at will by the plan, without 
penalty to the plan, upon receipt by MLIM of written notice from an 
authorizing plan fiduciary of termination; (D) a form expressly 
providing an election to terminate the authorization with instructions 
on the use of such form was supplied to each such authorizing plan 
fiduciary; and (E) failure to return such termination form would result 
in the continued authorization of MLIM to engage in the covered 
transactions on behalf of the plan. Notwithstanding the foregoing, this 
exception does not apply to new authorizations to engage in covered 
transactions entered into after the consummation of the Merger.
---------------------------------------------------------------------------

    \1\ On September 29, 2006, ML&Co. and BlackRock consummated a 
transaction (the Merger), in which ML&Co. contributed MLIM and 
various other assets and subsidiaries that comprised its investment 
management business to BlackRock in exchange for approximately 45% 
of the outstanding voting securities of BlackRock.
---------------------------------------------------------------------------

    (c) The authorization referred to in paragraph (b) of this Section 
is terminable at will by the plan, without penalty to the plan, upon 
receipt by the authorized Merrill Lynch/BlackRock Related Entity or 
Entities of written notice of termination. A form expressly providing 
an election to terminate the authorization described in paragraph (b) 
of this Section with instructions on the use of the form must be 
supplied to the authorizing plan fiduciary no less than annually. The 
instructions for such form must include the following information:
    (1) The authorization is terminable at will by the plan, without 
penalty to the plan, upon receipt by the authorized Merrill Lynch/
BlackRock Related Entity or Entities of written notice from the 
authorizing plan fiduciary or other plan official having authority to 
terminate the authorization; and
    (2) Failure to return the form will result in the continued 
authorization of the authorized Merrill Lynch/BlackRock Related Entity 
or Entities to engage in the covered transactions on behalf of the 
plan.
    (d) Within three months before an authorization is made, the 
authorizing plan fiduciary is furnished with any reasonably available 
information that the Merrill Lynch/BlackRock Related Entity or Entities 
seeking authorization reasonably believes to be necessary for the 
authorizing plan fiduciary to determine whether the authorization 
should be made, including (but not limited to) a copy of this 
exemption, the

[[Page 55532]]

form for termination of authorization described in Section III(c) of 
this exemption, a description of the Merrill Lynch/BlackRock Related 
Entity or Entities' brokerage placement practices, and any other 
reasonably available information regarding the matter that the 
authorizing plan fiduciary requests.
    (e) The Merrill Lynch/BlackRock Related Entity or Entities engaging 
in a covered transaction furnishes the authorizing plan fiduciary with 
either:
    (1) A confirmation slip for each securities transaction underlying 
a covered transaction within ten business days of the securities 
transaction containing the information described in Rule 10b-10(a)(1-7) 
under the Securities Exchange Act of 1934, 17 CFR 240.10b-10; or
    (2) At least once every three months and not later than 45 days 
following the period to which it relates, a report disclosing:
    (A) A compilation of the information that would be provided to the 
plan pursuant to subparagraph (e)(1) of this Section during the three-
month period covered by the report;
    (B) The total of all securities transaction related charges 
incurred by the plan during such period in connection with such covered 
transactions; and
    (C) The amount of the securities transaction-related charges 
retained by such Merrill Lynch/BlackRock Related Entity or Entities and 
the amount of such charges paid to other persons for execution or other 
services.
    For purposes of this paragraph (e), the words ``incurred by the 
plan'' shall be construed to mean ``incurred by the pooled fund'' when 
such Merrill Lynch/BlackRock Related Entity or Entities engages in 
covered transactions on behalf of a pooled fund in which the plan 
participates.
    (f) The authorizing plan fiduciary is furnished with a summary of 
the information required under paragraph (e)(1) of this Section at 
least once per year. The summary must be furnished within 45 days after 
the end of the period to which it relates, and must contain the 
following:
    (1) The total of all securities transaction-related charges 
incurred by the plan during the period in connection with covered 
securities transactions.
    (2) The amount of the securities transaction-related charges 
retained by the authorized Merrill Lynch/BlackRock Related Entity or 
Entities and the amount of these charges paid to other persons for 
execution or other services.
    (3) A description of the Merrill Lynch/BlackRock Related Entity or 
Entities' brokerage placement practices, if such practices have 
materially changed during the period covered by the summary.
    (4)(i) A portfolio turnover ratio, calculated in a manner which is 
reasonably designed to provide the authorizing plan fiduciary with the 
information needed to assist in discharging its duty of prudence. The 
requirements of this paragraph (f)(4)(i) will be met if the 
``annualized portfolio turnover ratio'', calculated in the manner 
described in paragraph (f)(4)(ii), is contained in the summary.
    (ii) The ``annualized portfolio turnover ratio'' shall be 
calculated as a percentage of the plan assets consisting of securities 
or cash over which the authorized Merrill Lynch/BlackRock Related 
Entity or Entities had discretionary investment authority, or with 
respect to which such Merrill Lynch/BlackRock Related Entity or 
Entities rendered, or had any responsibility to render, investment 
advice (the portfolio) at any time or times (management period(s)) 
during the period covered by the report. First, the ``portfolio 
turnover ratio'' (not annualized) is obtained by dividing (A) the 
lesser of the aggregate dollar amounts of purchases or sales of 
portfolio securities during the management period(s) by (B) the monthly 
average of the market value of the portfolio securities during all 
management period(s). Such monthly average is calculated by totaling 
the market values of the portfolio securities as of the beginning and 
ending of each management period and as of the end of each month that 
ends within such period(s), and dividing the sum by the number of 
valuation dates so used. For purposes of this calculation, all debt 
securities whose maturities at the time of acquisition were one year or 
less are excluded from both the numerator and the denominator.
    The ``annualized portfolio turnover ratio'' is then derived by 
multiplying the ``portfolio turnover ratio'' by an annualizing factor. 
The annualizing factor is obtained by dividing (C) the number twelve by 
(D) the aggregate duration of the management period(s) expressed in 
months (and fractions thereof).
    (iii) The information described in this paragraph (f)(4) is not 
required to be furnished in any case where the authorized Merrill 
Lynch/BlackRock Related Entity or Entities acting as plan fiduciary has 
not exercised discretionary authority over trading in the plan's 
account during the period covered by the report.
    For purposes of this paragraph (f), the words ``incurred by the 
plan'' shall be construed to mean ``incurred by the pooled fund'' when 
such Merrill Lynch/BlackRock Related Entity or Entities engages in 
covered transactions on behalf of a pooled fund in which the plan 
participates.
    (g) If an agency cross transaction to which Section IV(b) of this 
exemption does not apply is involved, the following conditions must 
also be satisfied:
    (1) The information required under Section III(d) or IV(d)(1)(B) of 
this exemption includes a statement to the effect that with respect to 
agency cross transactions, the Merrill Lynch/BlackRock Related Entity 
or Entities effecting or executing the transactions will have a 
potentially conflicting division of loyalties and responsibilities 
regarding the parties to the transactions;
    (2) The summary required under Section III(f) of this exemption 
includes a statement identifying the total number of agency cross 
transactions during the period covered by the summary and the total 
amount of all commissions or other remuneration received or to be 
received from all sources by the Merrill Lynch/BlackRock Related Entity 
or Entities engaging in the transactions in connection with those 
transactions during the period;
    (3) The Merrill Lynch/BlackRock Related Entity or Entities 
effecting or executing the agency cross transaction has the 
discretionary authority to act on behalf of, and/or provide investment 
advice to, either (A) one or more sellers or (B) one or more buyers 
with respect to the transaction, but not both.
    (4) The agency cross transaction is a purchase or sale, for no 
consideration other than cash payment against prompt delivery of a 
security for which market quotations are readily available; and
    (5) The agency cross transaction is executed or effected at a price 
that is at or between the independent bid and independent ask prices 
for the security prevailing at the time of the transaction.
    (h) A Merrill Lynch/BlackRock Related Entity or Entities serving as 
trustee (other than a nondiscretionary trustee) may only engage in a 
covered transaction with a plan that has total net assets with a value 
of at least $50 million and in the case of a pooled fund, the $50 
million net asset requirement will be met if 50 percent or more of the 
units of beneficial interest in such pooled fund are held by plans each 
of which has total net assets with a value of at least $50 million.
    For purposes of the net asset tests described above, where a group 
of plans is maintained by a single employer or

[[Page 55533]]

controlled group of employers, as defined in section 407(d)(7) of the 
Act, the $50 million net asset requirement may be met by aggregating 
the assets of such plans, if the assets are pooled for investment 
purposes in a single master trust.
    (i) The Merrill Lynch/BlackRock Related Entity or Entities serving 
as trustee (other than a nondiscretionary trustee) engaging in a 
covered transaction furnishes, at least annually, to the authorizing 
plan fiduciary of each plan the following:
    (1) The aggregate brokerage commissions, expressed in dollars, paid 
by the plan to brokerage firms affiliated with such trustee;
    (2) The aggregate brokerage commissions, expressed in dollars, paid 
by the plan to brokerage firms not affiliated with such trustee;
    (3) The average brokerage commissions, expressed as cents per 
share, paid by the plan to brokerage firms affiliated with such 
trustee; and
    (4) The average brokerage commissions, expressed as cents per 
share, paid by the plan to brokerage firms not affiliated with such 
trustee.
    For purposes of this paragraph (i), the words ``paid by the plan'' 
should be construed to mean ``paid by the pooled fund'' when the 
trustee engages in covered transactions on behalf of a pooled fund in 
which the plan participates.
Section IV: Exceptions From Conditions
    (a) Certain plans not covering employees. Section III of this 
exemption does not apply to covered transactions to the extent they are 
engaged in on behalf of individual retirement accounts meeting the 
conditions of 29 CFR 2510.3-2(d), or plans, other than training 
programs, that cover no employees within the meaning of 29 CFR 2510.3-
3.
    (b) Certain agency cross transactions. Section III of this 
exemption does not apply in the case of an agency cross transaction, 
provided that the Merrill Lynch/BlackRock Related Entity or Entities 
effecting or executing the transaction and any other Merrill Lynch/
BlackRock Related Entity or Entities:
    (1) Does not render investment advice to any plan for a fee within 
the meaning of section 3(21)(A)(ii) of the Act with respect to the 
transaction;
    (2) Is not otherwise a fiduciary who has investment discretion with 
respect to any plan assets involved in the transaction, see 29 CFR 
2510.3-21(d); and
    (3) Does not have the authority to engage, retain or discharge any 
person who is or is proposed to be a fiduciary regarding any such plan 
assets.
    (c) Recapture of profits. Section III(a) of this exemption does not 
apply in any case where the Merrill Lynch/BlackRock Related Entity or 
Entities engaging in a covered transaction returns or credits to the 
plan all profits earned by that Merrill Lynch/BlackRock Related Entity 
or Entities in connection with the securities transactions associated 
with the covered transaction.
    (d) Special rules for pooled funds. In the case of a Merrill Lynch/
BlackRock Related Entity or Entities engaging in a covered transaction 
on behalf of an account or fund for the collective investment of the 
assets of more than one plan (pooled fund):
    (1) Section III (b), (c), and (d) of this exemption does not apply 
if--
    (A) The arrangement under which the covered transaction is 
performed is subject to the prior and continuing authorization, in the 
manner described in this paragraph (d)(1), of an authorizing plan 
fiduciary with respect to each plan whose assets are invested in the 
pooled fund who is independent of the Merrill Lynch/BlackRock Related 
Entity or Entities. The requirement that the authorizing plan fiduciary 
be independent of the Merrill Lynch/BlackRock Related Entity or 
Entities shall not apply in the case of a plan covering only employees 
of the Merrill Lynch/BlackRock Related Entity or Entities, if the 
requirements of Section IV(d)(2)(A) and (B) of this exemption are met.
    (B) The authorizing plan fiduciary is furnished with any reasonably 
available information that the Merrill Lynch/BlackRock Related Entity 
or Entities engaging or proposing to engage in the covered transactions 
reasonably believes to be necessary for the authorizing plan fiduciary 
to determine whether the authorization should be given or continued, 
not less than 30 days prior to implementation of the arrangement or 
material change thereto, including (but not limited to) a description 
of the Merrill Lynch/BlackRock Related Entity or Entities' brokerage 
placement practices, and, where requested, any reasonably available 
information regarding the matter upon the reasonable request of the 
authorizing plan fiduciary at any time.
    (C) In the event an authorizing plan fiduciary submits a notice in 
writing to the Merrill Lynch/BlackRock Related Entity or Entities 
engaging in or proposing to engage in the covered transaction objecting 
to the implementation of, material change in, or continuation of, the 
arrangement, the plan on whose behalf the objection was tendered is 
given the opportunity to terminate its investment in the pooled fund, 
without penalty to the plan, within such time as may be necessary to 
effect the withdrawal in an orderly manner that is equitable to all 
withdrawing plans and to the nonwithdrawing plans. In the case of a 
plan that elects to withdraw under this subparagraph (d)(1)(C), the 
withdrawal shall be effected prior to the implementation of, or 
material change in, the arrangement; but an existing arrangement need 
not be discontinued by reason of a plan electing to withdraw.
    (D) In the case of plan whose assets are proposed to be invested in 
the pooled fund subsequent to the implementation of the arrangement and 
that has not authorized the arrangement in the manner described in 
subparagraphs (d)(1)(B) and (C) of this Section, the plan's investment 
in the pooled fund is subject to the prior written authorization of an 
authorizing plan fiduciary who satisfies the requirements of 
subparagraph (d)(1)(A).
    (2) To the extent that Section III(a) of this exemption prohibits 
any Merrill Lynch/BlackRock Related Entity or Entities from being the 
employer of employees covered by a plan investing in a pool managed by 
the Merrill Lynch/BlackRock Related Entity or Entities, Section III(a) 
of this exemption does not apply if--
    (A) The Merrill Lynch/BlackRock Related Entity or Entities is an 
``investment manager'' as defined in section 3(38) of the Act, and
    (B) Either (i) the Merrill Lynch/BlackRock Related Entity or 
Entities returns or credits to the pooled fund all profits earned by 
the Merrill Lynch/BlackRock Related Entity or Entities in connection 
with all covered transactions engaged in by the Merrill Lynch/BlackRock 
Related Entity or Entities on behalf of the fund, or (ii) the pooled 
fund satisfies the requirements of paragraph IV(d)(3).
    (3) A pooled fund satisfies the requirements of this paragraph for 
a fiscal year of the fund if--
    (A) On the first day of such fiscal year, and immediately following 
each acquisition of an interest in the pooled fund during the fiscal 
year by any plan covering employees of any Merrill Lynch/BlackRock 
Related Entity or Entities, the aggregate fair market value of the 
interests in such fund of all plans covering employees of any Merrill 
Lynch/BlackRock Related Entity or Entities does not exceed twenty 
percent of the fair market value of the total assets of the fund; and

[[Page 55534]]

    (B) The aggregate brokerage commissions received by any Merrill 
Lynch/BlackRock Related Entity or Entities, in connection with covered 
transactions engaged in by any Merrill Lynch/BlackRock Related Entity 
or Entities on behalf of all pooled funds in which a plan covering 
employees of any Merrill Lynch/BlackRock Related Entity or Entities 
participates, do not exceed five percent of the total brokerage 
commissions received by any Merrill Lynch/BlackRock Related Entity or 
Entities from all sources in such fiscal year.

9. Exemption for Cross-Trades of Securities by Index and Model-Driven 
Funds (Modeled After PTE 2002-12)

Section I. Exemption for Cross-Trading of Securities by Index and/or 
Model-Driven Funds
    The restrictions of sections 406(a)(1)(A) and 406(b)(2) of the Act, 
and the sanctions resulting from the application of section 4975 of the 
Code, by reason of section 4975(c)(1)(A) of the Code, shall not apply 
to the transactions described below if the applicable conditions set 
forth in Sections II and III of this exemption, below, are satisfied.
    (a) The purchase and sale of securities between an Index Fund or a 
Model-Driven Fund (either, a Fund; or collectively, the Funds), as 
defined in Section IV(a) and (b) of this exemption, below, and another 
Fund, at least one of which holds ``plan assets'' subject to the Act; 
or
    (b) The purchase and sale of securities between a Fund and a Large 
Account, as defined in Section IV(e) of this exemption, below, at least 
one of which holds ``plan assets'' subject to the Act, pursuant to a 
portfolio restructuring program, as defined in Section IV(f) of this 
exemption, below, of the Large Account;
    Notwithstanding the foregoing, this exemption shall apply to cross-
trades between two or more Large Accounts pursuant to a portfolio 
restructuring program if such cross-trades occur as part of a single 
cross-trading program involving both Funds and Large Accounts for which 
securities are cross-traded solely as a result of the objective 
operation of the program.
Section II. Specific Conditions
    (a) The cross-trade is executed at the closing price, as defined in 
Section IV(h) of this exemption below.
    (b) Any cross-trade of securities by a Fund occurs as a direct 
result of a ``triggering event,'' as defined in Section IV(d) of this 
exemption, and is executed no later than the close of the third 
business day following such ``triggering event.''
    (c) If the cross-trade involves a Model-Driven Fund, the cross-
trade does not take place within three (3) business days following any 
change made by the Manager to the model underlying the Fund.
    (d) The Manager has allocated the opportunity for all Funds or 
Large Accounts to engage in the cross-trade on an objective basis which 
has been previously disclosed to the authorizing fiduciaries of plan 
investors, and which does not permit the exercise of discretion by the 
Manager (e.g., a pro rata allocation system).
    (e) No more than twenty (20) percent of the assets of the Fund or 
Large Account at the time of the cross-trade is comprised of assets of 
employee benefit plans maintained by the Manager for its own employees 
(Manager Plans) for which the Manager exercises investment discretion.
    (f)(1) Cross-trades of equity securities involve only securities 
that are widely-held, actively-traded, and for which market quotations 
are readily available from independent sources that are engaged in the 
ordinary course of business of providing financial news and pricing 
information to institutional investors and/or the general public, and 
are widely recognized as accurate and reliable sources for such 
information. For purposes of this requirement, the terms ``widely-
held'' and ``actively-traded'' shall be deemed to include any security 
listed in an Index, as defined in Section IV(c) of this exemption; and
    (2) Cross-trades of fixed-income securities involve only securities 
for which market quotations are readily available from independent 
sources that are engaged in the ordinary course of business of 
providing financial news and pricing information to institutional 
investors and/or the general public, and are widely recognized as 
accurate and reliable sources for such information.
    (g) The Manager receives no brokerage fees or commissions as a 
result of the cross-trade.
    (h) As of the date this exemption is granted, a plan's 
participation in the cross-trading program of a Manager, as a result of 
investments made in any Index or Model-Driven Fund that holds plan 
assets is subject to a written authorization executed in advance of 
such investment by a fiduciary of the plan which is independent of the 
Manager engaging in the cross-trade transactions. For purposes of this 
exemption, the requirement that the authorizing plan fiduciary be 
independent of the Manager shall not apply in the case of a Manager 
Plan.
    (i) With respect to existing plan investors in any Index or Model-
Driven Fund that holds plan assets as of the date this exemption is 
granted, the independent fiduciary is furnished with a written notice, 
not less than forty-five (45) days prior to the implementation of the 
cross-trading program, that describes the Fund's participation in the 
cross-trading program of the Manager, provided that:
    (1) Such notice allows each plan an opportunity to object to the 
plan's participation in the cross-trading program as a Fund investor by 
providing the plan with a special termination form;
    (2) The notice instructs the independent plan fiduciary that 
failure to return the termination form to the Manager, by a specified 
date (which shall be at least 30 days following the plan's receipt of 
the form) shall be deemed to be an approval by the plan of its 
participation in the Manager's cross-trading program as a Fund 
investor; and
    (3) If the independent plan fiduciary objects to the plan's 
participation in the cross-trading program as a Fund investor by 
returning the termination form to the Manager by the specified date, 
the plan is given the opportunity to withdraw from each Index or Model-
Driven Fund without penalty prior to the implementation of the cross-
trading program, within such time as may be reasonably necessary to 
effectuate the withdrawal in an orderly manner.
    (j) Prior to obtaining the authorization described in Section II(h) 
of this exemption, and in the notice described in Section II(i) of this 
exemption, the following statement must be provided by the Manager to 
the independent plan fiduciary:
    Investment decisions for the Fund (including decisions regarding 
which securities to buy or sell, how much of a security to buy or sell, 
and when to execute a sale or purchase of securities for the Fund) will 
not be based in whole or in part by the Manager on the availability of 
cross-trade opportunities and will be made prior to the identification 
and determination of any cross-trade opportunities. In addition, all 
cross-trades by a Fund will be based solely upon a ``triggering event'' 
set forth in this exemption. Records documenting each cross-trade 
transaction will be retained by the Manager.
    (k) Prior to any authorization set forth in Section II(h) of this 
exemption, and at the time of any notice described in Section II(i) of 
this exemption, the independent plan fiduciary must be furnished with 
any reasonably available

[[Page 55535]]

information necessary for the fiduciary to determine whether the 
authorization should be given, including (but not limited to) a copy of 
this exemption, an explanation of how the authorization may be 
terminated, detailed disclosure of the procedures to be implemented 
under the Manager's cross-trading practices (including the ``triggering 
events'' that will create the cross-trading opportunities, the 
independent pricing services that will be used by the Manager to price 
the cross-traded securities, and the methods that will be used for 
determining closing price), and any other reasonably available 
information regarding the matter that the authorizing plan fiduciary 
requests. The independent plan fiduciary must also be provided with a 
statement that the Manager will have a potentially conflicting division 
of loyalties and responsibilities to the parties to any cross-trade 
transaction and must explain how the Manager's cross-trading practices 
and procedures will mitigate such conflicts.
    With respect to Funds that are added to the Manager's cross-trading 
program or changes to, or additions of, triggering events regarding 
Funds, following the authorizations described in Section II(h) or 
Section II(i) of this exemption, the Manager shall provide a notice to 
each relevant independent plan fiduciary of each plan invested in the 
affected Funds prior to, or within ten (10) days following, such 
addition of Funds or change to, or addition of, triggering events, 
which contains a description of such Fund(s) or triggering event(s). 
Such notice will also include a statement that the plan has the right 
to terminate its participation in the cross-trading program and its 
investment in any Index Fund or Model-Driven Fund without penalty at 
any time, as soon as is necessary to effectuate the withdrawal in an 
orderly manner.
    (l) At least annually, the Manager notifies the independent 
fiduciary for each plan that has previously authorized participation in 
the Manager's cross-trading program as a Fund investor, that the plan 
has the right to terminate its participation in the cross-trading 
program and its investment in any Index Fund or Model-Driven Fund that 
holds plan assets without penalty at any time, as soon as is necessary 
to effectuate the withdrawal in an orderly manner. This notice shall 
also provide each independent plan fiduciary with a special termination 
form and instruct the fiduciary that failure to return the form to the 
Manager by a specified date (which shall be at least thirty (30) days 
following the plan's receipt of the form) shall be deemed an approval 
of the subject plan's continued participation in the cross-trading 
program as a Fund investor. In lieu of providing a special termination 
form, the notice may permit the independent plan fiduciary to utilize 
another written instrument by the specified date to terminate the 
plan's participation in the cross-trading program, provided that in 
such case the notice explicitly discloses that a termination form may 
be obtained from the Manager upon request. Such annual re-authorization 
must provide information to the relevant independent plan fiduciary 
regarding each Fund in which the plan is invested, as well as explicit 
notification that the plan fiduciary may request and obtain disclosures 
regarding any new Funds in which the plan is not invested that are 
added to the cross-trading program, or any new triggering events (as 
defined in Section IV(d) of this exemption) that may have been added to 
any existing Funds in which the plan is not invested, since the time of 
the initial authorization described in Section II(h) of this exemption, 
or t