As the graph shows, the Alpha Agreement derives a number of elements directly from the FBTS Agreement, some elements directly from the GBTC Agreement and does not contain other elements of the previous Agreements. Now that DOL has entered into four separate agreements with ESOP agents, it would be interesting to hear DOL`s argument as to why certain points appear in some agreements and not in others. Given that the different terms contained in the ESOP agreements have been considered by some to be “best practices” for ESOP trustees, it will be interesting to see if a consensus is reached on the provisions of the four agreements that should be considered as true “best practices” in the sector. The FBTS Agreement contains a section dealing with the issue of control of the ESOP sponsor, which was not included in the GBTC Agreement. The FBTS Agreement provides that, where an ESOP lowers a degree of control to which it would otherwise be entitled by reason of the acquired ownership interest, the agent must document any consideration received in return for such a restriction and why this is fair to the ESOP. In addition, the FBTS Agreement provides that, if the trustee authorises a transaction in which an ESOP pays a control premium, the trustee must document the reasons why it considers that ESOP obtains control of the voting rights and indicate any limitation of that control and the consideration it receives in exchange for such a restriction. We have already described how the 2017 between DOL and First Bankers Trust Services Inc. The concluded ESOP settlement agreement (the FBTS agreement) is different from the DOL ESOP procedural agreement concluded in 2014 between DOL and GreatBanc Trust Company (the GBTC agreement). (See Holland & Knights Warning” “DOL Settlement Agreement Provides ESOP Transaction Guidance,” Sept. 27, 2017.) We then discussed how the 2017 ESOP transaction agreement between DOL and James Foyner III (the Joyner agreement) differs from both the FBTS agreement and the GBTC agreement. (See Holland & Knights Warning,” “Further ESOP Transaction Guidance Set In Latest DOL Settlement Agreement,” October 9, 2017.) This is the evaluation season for employee participation plans (ESOPs). As the first valuation season after the First Bankers Trust comparison in September 2017, the time is particularly opportune for ESOP companies to carefully consider all the points that need to be checked by their trustees as part of the evaluation process.
The alpha agreement requires the agent to analyze and document in writing whether vendor financing and financial institutions financing were considered in a proposed transaction and whether the loans requested by the financial institutions were within the amounts that the financial institution was willing to lend. . . .