Notice2026-11063
Proposed Exemption Involving the Abiomed Retirement Savings Plan Located in Danvers, MA
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
June 3, 2026
Effective
November 15, 2022
Issuing agencies
Labor DepartmentEmployee Benefits Security Administration
Abstract
This document provides a notice of proposed exemption that, if granted, would permit the Abiomed Retirement Savings Plan (the Plan) to acquire and hold certain "contingent value rights" (CVRs) and to receive certain payments in connection therewith. Absent an exemption, these transactions would violate the prohibited transaction provisions of the Employee Retirement Income Security Act of 1974 (ERISA) and/or the Internal Revenue Code of 1986 (the Code).
Full Text
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<title>Federal Register, Volume 91 Issue 106 (Wednesday, June 3, 2026)</title>
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[Federal Register Volume 91, Number 106 (Wednesday, June 3, 2026)]
[Notices]
[Pages 33205-33208]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-11063]
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DEPARTMENT OF LABOR
Employee Benefits Security Administration
[Exemption Application No. D-12097]
Proposed Exemption Involving the Abiomed Retirement Savings Plan
Located in Danvers, MA
AGENCY: Employee Benefits Security Administration, Labor.
ACTION: Notice of proposed exemption.
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SUMMARY: This document provides a notice of proposed exemption that, if
granted, would permit the Abiomed Retirement Savings Plan (the Plan) to
acquire and hold certain ``contingent value rights'' (CVRs) and to
receive certain payments in connection therewith. Absent an exemption,
these transactions would violate the prohibited transaction provisions
of the Employee Retirement Income Security Act of 1974 (ERISA) and/or
the Internal Revenue Code of 1986 (the Code).
DATES:
Exemption date: If granted, the exemption will be in effect as of
November 15, 2022.
Comments due: Written comments and requests for a public hearing on
the proposed exemption must be received by the Department by July 20,
2026.
ADDRESSES: All written comments and requests for a hearing must be
submitted to the Employee Benefits Security Administration (EBSA),
Office of Exemption Determinations, Attention: Application No. D-12097:
<bullet> via email to <a href="/cdn-cgi/l/email-protection#63064e2c262723070c0f4d040c15"><span class="__cf_email__" data-cfemail="fb9ed6b4bebfbb9f9497d59c948d">[email protected]</span></a>; or
<bullet> Electronically at <a href="https://www.regulations.gov">https://www.regulations.gov</a>. Follow the
``Submit a Comment'' instructions.
Any comments or requests must be received by the end of the
scheduled comment period. The application and the comments received
will be available for public inspection in the Public Disclosure Room
of the Employee Benefits Security Administration, U.S. Department of
Labor, Room N-1515, 200 Constitution Avenue NW, Washington, DC 20210,
reachable by telephone at 1-866-444-3272. See SUPPLEMENTARY INFORMATION
below for additional information regarding comments.
FOR FURTHER INFORMATION CONTACT: Blessed Chuksorji-Keefe of the
Department at (202) 693-8540. (This is not a toll-free number).
SUPPLEMENTARY INFORMATION:
Comments: Persons are encouraged to submit all comments
electronically and not to follow with paper copies. Comments should
state the nature of the person's interest in the proposed exemption and
how the person would be adversely affected by the exemption, if
granted. Any person who may be adversely affected by an exemption can
request a hearing on the exemption if their request includes: (1) the
name, address, telephone number, and email address of the person making
the request; (2) the nature of their interest in the exemption and the
manner in which they would be adversely affected by the exemption; and
(3) a statement of the issues to be addressed and a general description
of the evidence to be presented at the hearing. The Department will
grant a hearing request made in accordance with the requirements above
when it finds that a hearing is necessary to fully explore material
factual issues identified by the requestor and the Department will
publish a hearing notice in the Federal Register. The Department may
decline to hold a hearing if it finds that: (1) the request for the
hearing does not meet the requirements stated above; (2) the only
issues identified for exploration at the hearing are matters of law; or
(3) the factual issues identified in the request can be fully explored
through the submission of evidence in written (including electronic)
form.
Warning: The Department will include all comments received in the
public record without change and will make them available online at
<a href="https://www.regulations.gov">https://www.regulations.gov</a>. The Department notes that it will include
any personal information provided in the public record and online,
unless the commenter claims that any of the information included is
confidential or the disclosure of such information is restricted by
statute. If you submit a comment, EBSA recommends that you include your
name and other contact information in the body of your comment, but DO
NOT submit information that you consider to be confidential or
otherwise protected (such as a Social Security number or an unlisted
phone number) and confidential business information that you do not
want publicly disclosed. If EBSA cannot read your comment due to
technical difficulties and cannot contact you for clarification, EBSA
might not be able to consider your comment.
[[Page 33206]]
Additionally, the <a href="https://www.regulations.gov">https://www.regulations.gov</a> website is an
``anonymous access'' system, which means EBSA will not know your
identity or contact information unless you provide them in the body of
your comment. If you send an email directly to EBSA without going
through <a href="https://www.regulations.gov">https://www.regulations.gov</a>, your email address will be
automatically captured and included as part of the comment that is
placed in the public record and made available on the internet.
The Department is proposing this exemption under the authority of
ERISA section 408(a) and Code section 4975(c)(2) and in accordance with
the Department's exemption procedures regulation.\1\ If granted, the
exemption would not provide relief from any violation of law not
expressly identified herein, including, but not limited to, ERISA
section 404.
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\1\ 29 CFR part 2570, subpart B (76 FR 66644 (October 27,
2011)). Effective December 31, 1978, section 102 of the
Reorganization Plan No. 4 of 1978, 5 U.S.C. App. 1 (1996),
transferred the authority of the Secretary of the Treasury to issue
administrative exemptions under the Code Section 4975(c)(2) to the
Secretary of Labor. Accordingly, the Department is proposing this
exemption under its sole authority. Any references hereinafter to
sections of ERISA shall be deemed to refer to the corresponding
sections of the Code, unless indicated otherwise.
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Benefits of the Exemption: The Department is proposing this
exemption based, in part, on the Applicant's representations that the
exemption will allow the Plan to acquire and hold the CVRs, and receive
payments in connection therewith, on essentially the same terms as
other holders of the CVRs.
Summary of Facts and Representations <SUP>2</SUP>
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\2\ The Summary of Facts and Representations is based on the
Plan's representations in its exemption application and does not
reflect factual findings or the Department's opinion, unless
indicated otherwise. The Department notes that the availability of
this exemption is subject to the express condition that the material
facts and representations made by the Plan in Application D-12097
are true, complete, and accurately describe all material terms of
the transaction(s) covered by the exemption. If there is any
material change in a transaction covered by the exemption, or in a
material fact or representation described in the application, the
exemption may cease to be effective, with such determination made at
Department's sole discretion. See 29 CFR 5570.49.
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The Plan
1. The Abiomed Retirement Savings Plan (the Applicant or the Plan)
is a defined contribution plan covering employees of Abiomed, Inc.
(Abiomed). As of November 15, 2022 (the effective date of this
exemption, if granted), the Plan had $154,574,378.85 in assets,
including 73,816 shares of Abiomed common stock, which had a fair
market value of $29,040,462.55.
The Transactions
2. On November 1, 2022, Johnson & Johnson, Inc. (J&J) announced a
tender offer (the Tender Offer) to purchase each share of Abiomed
common stock for $380.00 (the Offer Price), net to the seller, in cash,
without interest, plus one non-tradeable CVR. The CVR provides each
holder the right to receive contingent payments totaling up to $35.00
per share of Abiomed common stock, without interest and less any
required withholding taxes, upon the achievement of specified
milestones. Shareholders of Abiomed common stock who didn't tender
their stock were due the same proceeds.
The Plan's Participation in the Tender Offer
3. The Tender Offer opened on November 15, 2022, and participants
had until December 21, 2022, to sell their shares.
4. Tendering Participants. In total, 43 participants tendered
7,289.356 shares of Abiomed stock in exchange for $4,896,218.55 in cash
and 7,289.356 CVRs. The cash was credited to participants' accounts on
December 28, 2022, and the CVRs were received by the Plan on December
29, 2022. The CVRs are held in a Plan-level account with participant
level recordkeeping, subject to the terms of each CVR.
5. Non-tendering participants. In total, 263 non-tendering Plan
participants received $23,549,664.73 cash and 35,060.022 CVRs. The cash
was credited to participants' Plan accounts on December 29, 2022, and
invested in the applicable BlackRock LifePath[supreg] Index Class S
Fund based on the participant's date of birth. The CVRs were deposited
in a Plan-level account with participant level recordkeeping, subject
to the terms of each CVR.
Merits of the Exemption
6. This exemption allows the Plan to acquire and hold the CVRs, and
receive payments in connection therewith, on essentially the same terms
as other Abiomed shareholders/CVR holders, including several large,
institutional investors. Without the ability to acquire, hold, and
dispose of the CVRs, the Plan would receive less consideration for its
shares of Abiomed common stock than other similarly situated Abiomed
shareholders. The Plan did not pay any fees or commissions in
connection with the acquisition or holding of the CVRs, nor will the
Plan or its participants pay any fees or commissions in connection with
the receipt of payments from the CVRs. The Plan's holding of the CVRs,
and its receipt of cash payments in connection therewith, have been and
will be in accordance with the provisions of the CVRs that are
applicable to all other holders of the CVRs, with no discretion by the
Committee.
7. According to the Applicant, the CVRs' governing instrument, the
Contingent Value Rights Agreement, dated December 22, 2022, contained
as an Exhibit to the Merger Agreement, was structured to ensure that
CVR holders will be able to determine whether the CVR milestones have
been met. If J&J provides notice that any of the CVR milestones have
not been met or fails to pay the Plan amounts owed in respect of the
CVRs, then J&J will cause an audit to be performed by an independent
certified public accounting firm for the purpose of verifying whether
the net sales milestones have been met. The results of the audit will
be part of the record given to the Plan sponsor for the Plan sponsor to
review and maintain under the recordkeeping provision of this
exemption. If J&J fails to make a payment that a publicly available
audit determines has become due under the terms of the CVRs, the relief
under this exemption will cease as of the date the payment was due.
No Independent Fiduciary
8. The Committee did not engage a qualified independent fiduciary
(QIF) to represent the Plan in connection with the transactions
described in this proposed exemption. In this regard, the Committee
determined that, because the decision to participate in or not
participate in the Tender Offer was passed through to Plan participants
in accordance with the terms of the Plan document, a QIF would have no
fiduciary role and was not required.
ERISA Analysis
9. ERISA section 404 imposes the duties of prudence and loyalty on
fiduciaries. This proposed exemption requires that the Committee acted
prudently and loyally in accordance with ERISA section 404, with
respect to the transactions described in this proposed exemption,
including with respect to the Committee's decision to allow
participants to decide whether or not to participate in the Tender
Offer.
10. ERISA section 406(a)(1)(A) provides, in relevant part, that a
fiduciary with respect to a plan shall not cause the plan to engage in
a transaction, if he or she knows or should know that such transaction
constitutes a direct or indirect sale or exchange of any property
between a
[[Page 33207]]
plan and a party in interest. The term ``party in interest'' is defined
under ERISA Section 3(14)(C) to include an employer. J&J is the
employer of employees in the Plan and is therefore a party in interest.
11. The payout of cash upon the attainment of a CVR milestone may
be considered a sale or exchange transaction between the Plan and J&J
under ERISA section 406(a)(1)(A), because the payment of cash by J&J
would satisfy the Plan's right to receive payments from a party in
interest.
12. ERISA section 407(a)(1)(A) provides that a plan may not acquire
or hold any ``employer security'' which is not a ``qualifying employer
security.'' Under ERISA section 407(d)(1), ``employer securities'' are
defined, in relevant part, as securities issued by an employer of
employees covered by the plan, or by an affiliate of the employer.
ERISA section 407(d)(5) provides, in relevant part, that ``qualifying
employer securities'' are stocks or marketable obligations. The Plan
represents that the CVRs are non-qualifying employer securities as they
are not stock, marketable obligations, or interests in a publicly
traded partnership. As a result, the Plan's acquisition and holding of
the CVRs violates ERISA section 407(a).
13. Further, ERISA section 406(a)(2) prohibits a plan fiduciary
from permitting a plan to hold any employer security if he or she knows
or should know that holding the security violates ERISA section 407(a).
Because the CVRs are non-qualifying employer securities, the Plan's
current and continued holding of the CVRs violates ERISA section
406(a)(2).
14. ERISA section 406(a)(1)(E) prohibits a plan fiduciary from
causing the plan to engage in a transaction if he or she knows or
should know that the transaction constitutes the acquisition, on behalf
of the plan, of any employer security in violation of ERISA section
407(a). As outlined above, the acquisition and holding of the CVRs
violates ERISA section 407(a). Therefore, the acquisition of the CVRs
violated ERISA section 406(a)(1)(E).\3\
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\3\ ERISA section 406(b)(1) prohibits a plan fiduciary from
dealing with the assets of a plan in his or her own interest and
ERISA section 406(b)(2) prohibits a plan fiduciary from acting in
any transaction involving the plan on behalf of a party whose
interests are adverse to the interests of the plan. The Applicant
states that, because participant action or the consequence of the
merger of Abiomed into a subsidiary of J&J under corporate law
caused or will cause the Plan to acquire, hold, and dispose of the
CVRs rather than an action by the Committee or other Plan fiduciary,
ERISA section 406(b) should not have been violated. The Department
is not taking a view whether a violation of ERISA section 406(b) has
occurred, as such determination is necessarily a facts and
circumstances-based inquiry that is outside the scope of this
exemption.
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Statutory Findings
The Department has made the following required findings under ERISA
section 408(a) and Code section 4975(c)(2) with respect to the proposed
exemption.
15. ``Administratively Feasible.'' The Department has tentatively
determined that the proposed exemption is administratively feasible for
the Department because, among other things, the Plan participants
received the CVRs pursuant to J&J's independent corporate act and the
exemption requires the Plan to maintain all records necessary to
demonstrate the conditions have been satisfied and provide these
documents to the Department within 30 days of the Department's request.
16. ``In the interest of the Plan.'' The Department has tentatively
determined that the proposed exemption is in the interest of the Plan
and its participants and beneficiaries because, among other things, it
would allow the Plan to receive the same consideration as all other
holders of Abiomed common stock and the CVRs.
17. ``Protective of the Plan.'' The Department has tentatively
determined that the proposed exemption is protective of the rights of
the Plan's participants and beneficiaries because, among other things,
the Plan and its participants and beneficiaries retained the same
rights as all other independent third-party holders of Abiomed stock
and the CVRs. Additionally, the Plan did not pay any fees or commission
in connection with the acquisition or holding of the CVRs.
Notice to Interested Persons
Interested persons include participants and beneficiaries of the
Plan. The Plan will provide notification to interested persons by
first-class mail within fifteen (15) calendar days of the date of the
publication of the Notice in the Federal Register. The mailing will
contain a copy of the Notice, as it appears in the Federal Register,
plus a copy of the supplemental statement that is required pursuant to
29 CFR 2570.43(a)(2), which advises interested persons of their right
to comment and to request a hearing.
The Department will not consider comments or requests for a hearing
received by the Department after forty-five (45) days from the date of
the publication of the Notice in the Federal Register.
Comments will be made available to the public.
Warning: Do not include any personally identifiable information
(such as name, address, or other contact information) or confidential
business information that you do not want publicly disclosed. All
comments become part of the disclosable administrative record. Further,
comments may be posted on the internet and can be retrieved by most
internet search engines.
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 ERISA section 408(a) and Code section 4975(c)(2) does not relieve
a fiduciary or other party in interest or disqualified person from
certain other provisions of ERISA or the Code, including any prohibited
transaction provisions to which the exemption does not apply and the
general fiduciary responsibility provisions of ERISA section 404,
which, among other things, require a fiduciary to discharge their
duties respecting the plan solely in the interest of the plan and its
participants and beneficiaries and in a prudent manner in accordance
with ERISA section 404(a)(1)(B); nor does it affect the requirement of
Code section 401(a) 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 ERISA section 408(a)
and Code section 4975(c)(2), 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 exemption, if granted, would be supplemental to,
and not in derogation of, any other provisions of ERISA and 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 exemption, if granted, would be subject to the
express condition that the material facts and representations contained
in the application are true and complete at all times and that the
application accurately describes all material terms of the transactions
which are the subject of the exemption.
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Proposed Exemption
The Department is considering granting an exemption under the
authority of ERISA section 408(a) and Code section 4975(c)(2) in
accordance with the Department's exemption procedures regulation.\4\
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 by
the Plan to the Secretary of Labor.
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\4\ 29 CFR part 2570, subpart B (89 FR 4662 (January 24, 2024)).
For purposes of this proposed exemption, references to ERISA section
406, unless otherwise specified, should be read to refer as well to
the corresponding provisions of Code section 4975.
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Section I. Transactions
If the proposed exemption is granted, the restrictions of ERISA
sections 406(a)(1)(A), 406(a)(1)(E), 406(a)(2) and 407(a)(1)(A), and
the excise tax imposed by Code section 4975(a) and (b) will not apply,
effective November 15, 2022, to: (1) the Plan's acquisition and holding
of ``contingent value rights'' (CVRs) \5\ following the tender of
Abiomed common stock or the cancellation of Abiomed common stock; and
(2) the Plan's receipt of payments in connection the transactions
described in (1). To receive this relief, the conditions in Section II
must be met.
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\5\ The right to receive contingent payments of up to $35.00 per
share of Abiomed common stock in cash, without interest and less any
required withholding taxes, in the aggregate, upon the achievement
of specified milestones, and upon the terms and subject to the
conditions set forth in the Contingent Value Rights Agreement.
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Section II. Conditions
(a) The Plan's acquisition of the CVRs resulted solely from an
independent corporate act of Johnson & Johnson, Inc. (J&J), without
participation on the part of any Plan fiduciary, in accordance with the
terms of the Agreement and Plan of Merger \6\ between J&J and Abiomed,
dated November 15, 2022.
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\6\ The Merger Agreement dated November 15, 2022, that
contemplated the acquisition of Abiomed by merging it into a wholly
owned subsidiary of J&J. The Merger Agreement required the tender of
a majority of the outstanding shares of Abiomed's common stock, as
well as the receipt of applicable regulatory approvals and other
customary closing conditions. A total of 38,961,427 shares of
Abiomed common stock were tendered or 86.4% of the outstanding
Abiomed shares of common stock.
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(b) The Plan's acquisition of CVRs was on essentially the same
terms and in the same manner as the acquisition of CVRs by all other
similarly situated shareholders of Abiomed common stock.
(c) Plan participants' acquisitions of the CVRs were consistent
with the terms of the Plan.
(d) A Plan participant's decision whether or not to tender their
shares had no impact on the amount of cash or the number of CVRs that
they received.
(e) The Committee acted prudently and loyally in accordance with
ERISA section 404, with respect to the transactions described in this
proposed exemption, including with respect to the Committee's decision
to allow participants to decide whether or not to participate in the
Tender Offer.
(f) The Plan did not pay any fees or commissions in connection with
its acquisition and holding of the CVRs, and its receipt of cash
payments in connection therewith.
(g) Plan participants have the same rights with respect to the CVRs
allocated to their accounts under the Plan as unrelated CVR holders
have with respect to CVRs not held under the Plan.
(h) Plan participants receive payment of all amounts due under the
terms of the CVRs. (i) The terms of the Plan's acquisition and holding
of the CVRs, and the Plan's receipt of cash payments in connection
therewith, will be the same as the terms applicable to all other
holders of CVRs.
(j) In the event that J&J or Abiomed provides notice, or takes the
position, that any CVR milestones have not been met, and/or fails to
pay the Plan any amounts due under the terms of the CVRs, then J&J and/
or Abiomed will submit to an audit, the cost of which will borne by
J&J, to be performed by an independent certified public accounting firm
for the purpose of verifying whether the relevant CVR milestones have
been met, and the results of the audit will be provided to the Plan
sponsor to review and maintain.
(k) The Plan maintains for a period of six (6) years from the date
of publication of the exemption in the Federal Register, in a manner
that is convenient and accessible for audit and examination, the
records necessary to enable the persons described in paragraph (l)(1)
below to determine whether conditions of this exemption, if granted,
have been met, except that (1) a prohibited transaction will not be
considered to have occurred if, due to circumstances beyond the control
of Abiomed, the records are lost or destroyed prior to the end of the
six-year period, and (2) no party in interest other than Abiomed shall
be subject to the civil penalty that may be assessed under ERISA
section 502(i) if the records are not maintained, or are not available
for examination as required by paragraph (l) below.
(l)(1) Except as provided in Section (2) of this paragraph and
notwithstanding any provisions of subsections (a)(2) and (b) of ERISA
section 504, the records referred to in paragraph (i) above shall be
unconditionally available at their customary location during normal
business hours to:
(A) any duly authorized employee or representative of the
Department or the Internal Revenue Service;
(B) Abiomed or any duly authorized representative of Abiomed;
(C) a Plan fiduciary or any duly authorized representative of a
Plan fiduciary;
(D) any participant or beneficiary of the Plan, or any duly
authorized representative of such participant or beneficiary;
(2) No person described in paragraph (l)(1)(B)-(D) is authorized to
examine financial information which is privileged or confidential, and
should the Applicant refuse to disclose information on the basis that
such information is exempt from disclosure, the Applicant must, by the
close of the thirtieth (30th) day following the request, provide a
written notice advising that person of the reasons for the refusal and
that the Department may request such information.
(m) The Plan provides the Department with the records necessary to
demonstrate that the conditions of this exemption, if granted, have
been met, within 30 days from the date the Department requests such
records.
(n) All of the material facts and representations made by the
Applicant that are set forth in the Summary of Facts and
Representations are true and accurate at all times.
Exemption date: If granted, the exemption will be in effect as of
November 15, 2022.
Signed at Washington, DC, this 27th day of May 2026.
Christopher Motta,
Acting Director, Office of Exemption Determinations, Employee Benefits
Security Administration, U.S. Department of Labor.
[FR Doc. 2026-11063 Filed 6-2-26; 8:45 am]
BILLING CODE 4510-29-P
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This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.