[Federal Register Volume 64, Number 22 (Wednesday, February 3, 1999)]
[Notices]
[Pages 5322-5327]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-2481]
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SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 23669; 813-196]
NationsBanc Coinvest Fund 1999, L.P. and BankAmerica Corporation;
Notice of Application
January 27, 1999.
AGENCY: Securities and Exchange Commission (``SEC'').
ACTION: Notice of application for an order under sections 6(b) and 6(e)
of the Investment Company Act of 1940 (the ``Act'') granting an
exemption from all provisions of the Act, except section 9, section 17
(other than certain provisions of paragraphs (a), (d), (e), (f), (g)
and (j)), section 30 (other than certain provisions of paragraphs (a),
(b), (e), and (h)), sections 36 through 53, and the rules and
regulations thereunder.
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Summary of Application: Applicants request an order to exempt
certain limited partnerships and limited liability companies
(``Partnerships'') formed for the benefit of key employees of
BankAmerica Corporation (``BankAmerica'') and certain of its affiliates
from certain provisions of the Act. Each Partnership will be an
``employees' securities company'' as defined in section 2(a)(13) of the
Act.
Applicants: NationsBanc Coinvest Fund 1999, L.P. (the ``Initial
Partnership''), and BankAmerica, on behalf of other Partnerships which
have been or may in the future be formed.
[[Page 5323]]
Filing Dates: The application was filed on August 12, 1998, and
amended on October 14, 1998.
Hearing or Notification of Hearing: An order granting the
application will be issued unless the SEC orders a hearing. Interested
persons may request a hearing by writing to the SEC's Secretary and
serving applicants with a copy of the request, personally or by mail.
Hearing requests should be received by the SEC by 5:30 p.m. on February
22, 1999, and should be accompanied by proof of service on applicants
in the form of an affidavit or, for lawyers, a certificate of service.
Hearing requests should state the nature of the writer's interest, the
reason for the request, and the issues contested. Persons who wish to
be notified of a hearing may request notification by writing to the
SEC's Secretary.
ADDRESSES: Secretary, Securities and Exchange Commission, 450 Fifth
Street, NW, Washington, DC 20549. Applicants, 100 North Tyson Street,
Charlotte, NC 28255.
FOR FURTHER INFORMATION CONTACT: Bruce R. MacNeil, Staff Attorney, at
(202) 942-0634, or Edward P. Macdonald, Branch Chief, at (202) 942-0564
(Division of Investment Management, Office of Investment Company
Regulation).
SUPPLEMENTARY INFORMATION: The following is a summary of the
application. The complete application may be obtained for a fee at the
SEC's Public Reference Branch, 450 Fifth Street, NW, Washington, DC
20549 (tel. 202-942-8090).
Applicants' Representations
1. BankAmerica, the largest bank in the United States, was created
by the merger of NationsBank Corporation and BankAmerica Corporation on
September 30, 1998. BankAmerica and its affiliates, as defined in rule
12b-2 under the Securities Exchange Act of 1934 (the ``Exchange Act''),
(``Affiliates'') are referred to in this notice collectively as
``BankAmerica Group'' and individually as a ``BankAmerica entity.''
2. BankAmerica Group offers various investment programs for the
benefit of certain key employees. These programs may be structured as
different Partnerships or as separate plans within a Partnership. Each
Partnership will be a limited partnership or limited liability company
formed as an ``employees' securities company'' within the meaning of
section 2(a)(13) of the Act, and will operate as a closed-end, non-
diversified, management investment company. The Partnerships will be
established primarily for the benefit of highly compensated employees
of BankAmerica Group as part of a program designed to create capital
building opportunities that are competitive with those at other
investment banking firms and to facilitate the recruitment of high
caliber professionals. Participation in a Partnership will be
voluntary. The Initial Partnership will invest exclusively in one or
more limited partnerships formed by BankAmerica to make private entity
investments (the ``BankAmerica Funds'').
3. NB Coinvest GP, Inc., a North Carolina corporation, will act as
the general partner of the Initial Partnership (together with any
Affiliate of BankAmerica that acts as a Partnership's general partner,
the ``General Partner''). The General Partner of the Initial
Partnership will not be registered under the Investment Advisers Act of
1940 (``Advisers Act'') pursuant to section 203(b)(3) of the Advisers
Act and rule 203(b)(3)-1 thereunder. The General Partner will manage,
operate, and control each of the Partnerships. However, the General
Partner will be authorized to delegate to another BankAmerica Group
affiliate or to a committee of BankAmerica Group employees such
management responsibility (including, without limitation, the managers
of the other Partnerships which have been or may in the future be
formed).
4. Limited partner interests in the Partnerships (``Interests'')
will be offered without registration in reliance on section 4(2) of the
Securities Act of 1933 (the ``Securities Act'') or similar exemption
and will be sold only to ``Eligible Employees'' and ``Qualified
Participants'' (collectively, ``Participants''). Prior to offering
Interests to an Eligible Employee, the General Partner must reasonably
believe that an Eligible Employee will be a sophisticated investor
capable of understanding and evaluating the risks of participating in
the Partnership without the benefit of regulatory safeguards. An
Eligible Employee is (i) an individual who is a current or former
employee, officer, director, or ``Consultant'' of BankAmerica Group
and, except for certain individuals who manage the day-to-day affairs
of the Partnership in question (``Managing Employees''), meets the
standards of an accredited investor under rule 501(a)(6) of Regulation
D under the Securities Act, or (ii) an entity that is a current or
former ``Consultant'' of BankAmerica Group and meets the standards of
an accredited investor under rule 501(a) of Regulation D.\1\ Eligible
Employees will be experienced professionals in the banking, investment
banking and securities, investment management or financial services
businesses, or in the related administrative, financial, accounting,
legal, or operational activities.
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\1\ A Consultant is a person or entity whom BankAmerica Group
has engaged in retainer to provide services and professional
expertise on an ongoing basis as a regular consultant or as a
business or legal adviser and who shares a community of interest
with BankAmerica Group and BankAmerica Group employees.
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5. Managing Employees will have primary responsibility for
operating the Partnership. These responsibilities will include, among
other things, identifying, investigating, structuring, negotiating, and
monitoring investments for the Partnership, communicating with the
limited partners, maintaining the books and records of the Partnership,
and making recommendations with respect to investment decisions. Each
Managing Employee will: (a) be closely involved with, and knowledgeable
with respect to, the affairs and the status of the Partnership, (b) be
an officer or employee of BankAmerica Group and (c) have reportable
income from all sources (including any profit shares and bonuses) in
the calendar year immediately preceding the Employee's participation in
the Partnership in excess of $120,000 and have a reasonable expectation
of reportable income of at least $150,000 in the years in which the
Employee invests in a Partnership.
6. A Qualified Participant (i) is an Eligible Family Member or
Qualified Entity (in each case as defined below) of an Eligible
Employee, and, (ii) if the individual or entity is purchasing on
Interest from a Partner or directly from the Partnership, comes within
one of the categories of an ``accredited investor'' under rule 501(a)
of Regulation D. An ``Eligible Family Member'' is a spouse, parent,
child, spouse of child, brother, sister, or grandchild of an Eligible
Employee. A ``Qualified Entity'' is (i) a trust of which the trustee,
grantor, and/or beneficiary is an Eligible Employee; (ii) a
partnership, corporation, or other entity controlled by an Eligible
Employee; \2\ or (iii) a trust or other entity
[[Page 5324]]
established for the benefit of Eligible Family Members of an Eligible
Employee.
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\2\ The inclusion of partnerships, corporations, or other
entities controlled by an Eligible Employee in the definition of
``Qualified Entities'' is intended to enable Eligible Employees to
make investments in the Partnerships through personal investment
vehicles for the purpose of personal and family investment and
estate planning objectives. Eligible Employees will exercise
investment discretion or control over these investment vehicles,
thereby creating a close nexus between BankAmerica Group and these
investment vehicles. In the case of a partnership, corporation, or
other entity controlled by a Consultant entity individual
participants will be limited to senior level employees, members, or
partners of the Consultant who will be required to qualify as an
``accredited investor'' under rule 501(a)(6) of Regulation D and who
will have access to the General Partner or BankAmerica Group.
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7. The terms of a Partnership will be fully disclosed to each
Eligible Employee and, if applicable, to a Qualified Participant of the
Eligible Employee, at the time the Eligible Employee is invited to
participate in the Partnership. Each Partnership will send audited
financial statements to each Participant within 120 days or as soon as
practicable after the end of its fiscal year. In addition, each
Participant will receive a copy of Schedule K-1 showing the
Participant's share of income, credits, reductions, and other tax
items.
8. Interests in a Partnership will be non-transferable except with
the prior written consent of the General Partner. No person will be
admitted into a Partnership unless the person is an Eligible Employee,
a Qualified Participant of an Eligible Employee, or a BankAmerica
entity. No sales load will be charged in connection with the sale of a
limited partnership interest.
9. An Eligible Employee's interest in a Partnership may be subject
to repurchase or cancellation if: (i) the Eligible Employee's
relationship with BankAmerica Group is terminated for cause; (ii) the
Eligible Employee becomes a consultant to or joins any firm that the
General Partner determines, in its reasonable discretion, is
competitive with any business of BankAmerica Group; or (iii) the
Eligible Employee voluntarily resigns from employment with BankAmerica
Group. Upon repurchase or cancellation, the General Partner will pay to
the Eligible Employee at least the lesser of (i) the amount actually
paid by the Eligible Employee to acquire the Interest (plus interest,
as determined by the General Partner), and (ii) the fair market value
of the Interest as determined at the time of repurchase by the General
Partner. The terms of any repurchase or cancellation will apply equally
to any Qualified Participant of an Eligible Employee.
10. Subject to the terms of the applicable Limited Partnership
Agreement, a Partnership will be permitted to enter into transactions
involving (i) a BankAmerica entity, (ii) a portfolio company, (iii) any
Partner or any person or entity affiliated with a Partner, (iv) an
investment fund or separate account that is organized for the benefit
of investors who are not affiliated with and over which a BankAmerica
entity will exercise investment discretion (a ``Third Party Fund''), or
(v) any partner or other investor of a Third Party Fund that is not
affiliated with BankAmerica Group (a ``Third Party Investor''). These
transactions may include a Partnership's purchase or sale of an
investment or an interest from or to any BankAmerica entity or Third
Party Fund, acting as principal. Prior to entering into these
transactions, the General Partner must determine that the terms are
fair to the Partners.
11. A Partnership will not invest more than 15% of its assets in
securities issued by registered investment companies (with the
exception of temporary investments in money market funds). A
Partnership will not acquire any security issued by a registered
investment company if immediately after the acquisition, the
Partnership will own more than 3% of the outstanding voting stock of
the registered investment company.
12. A BankAmerica entity (including the General Partner) acting as
agent or broker may receive placement fees, advisory fees, or other
compensation from a Partnership in connection with a Partnership's
purchase or sale of securities, provided the placement fees, advisory
fees, or other compensation are ``reasonable and customary.'' Fees or
other compensation will be deemed ``reasonable and customary'' only if
(i) the Partnership is purchasing or selling securities with other
unaffiliated third parties, including Third Party Funds, (ii) the fees
or compensation being charged to the Partnership are also being charged
to the unaffiliated third parties, including Third Party Funds, and
(iii) the amount of securities being purchased or sold by the
Partnership does not exceed 50% of the total amount of securities being
purchased or sold by the Partnership and the unaffiliated third
parties, including Third Party Funds. A BankAmerica entity (including
the General Partner) also may be compensated for services to entities
in which the Partnerships invest and to entities that are competitors
of these entities, and may otherwise engage in normal business
activities that conflict with the interests of the Partnerships.
Applicants' Legal Analysis
1. Section 6(b) of the Act provides, in part, that the SEC will
exempt employees' securities companies from the provisions of the Act
to the extent that the exemption is consistent with the protection of
investors. Section 6(b) provides that the Commission will consider, in
determining the provisions of the Act from which the company should be
exempt, the company's form of organization and capital structure, the
persons owning and controlling its securities, the price of the
company's securities and the amount of any sales load, how the
company's funds are invested, and the relationship between the company
and the issuers of the securities in which it invests. Section 2(a)(13)
defines an employees' security company, in relevant part, as any
investment company all of whose securities are beneficially owned (a)
by current or former employees, or persons on retainer, of one or more
affiliated employers, (b) by immediate family members of such persons,
or (c) by such employer or employers together with any of the persons
in (a) or (b).
2. Section 7 of the Act generally prohibits an investment company
that is not registered under section 8 of the Act from selling or
redeeming its securities. Section 6(e) provides that, in connection
with any order exempting an investment company from any provision of
section 7, certain provisions of the Act, as specified by the SEC, will
be applicable to the company and other persons dealing with the company
as though the company were registered under the Act. Applicants request
an order under sections 6(b) and 6(e) of the Act for an exemption from
all provisions of the Act except section 9, section 17 (other than
certain provisions of paragraphs (a), (d), (e), (f), (g) and (j)),
section 30 (other than certain provisions of paragraphs (a), (b), (e),
and (h)), sections 36 through 53, and the rules and regulations
thereunder.
3. Section 17(a) generally prohibits any affiliated person of a
registered investment company, or any affiliated person of an
affiliated person, acting as principal, from knowingly selling or
purchasing any security or other property to or from the company.
Applicants request an exemption from section 17(a) to (i) permit a
BankAmerica entity (including, without limitation, a BankAmerica Fund)
or a Third Party Fund, acting as principal, to engage in any
transaction directly or indirectly with any Partnership or any company
controlled by the Partnership; (ii) permit any Partnership to invest in
or engage in any transaction with any BankAmerica entity (including
without limitation, acting as principal), (a) in which the Partnership,
any company controlled by the Partnership, or any BankAmerica entity
(including, without limitation, a BankAmerica Fund) or Third Party Fund
has invested or will invest, or (b) with which the Partnership, any
company controlled by
[[Page 5325]]
the Partnership, or any BankAmerica entity (including, without
limitation, a BankAmerica Fund) or Third Party Fund is or will become
otherwise affiliated; and (iii) permit any Third Party Investor, acting
as principal, to engage in any transaction directly or indirectly with
any Partnership or any company controlled by the Partnership.
4. Applicants state that an exemption from section 17(a) is
consistent with the protection of investors and is necessary to promote
the purpose of the Partnerships. Applicants state that the Participants
in each Partnership will be fully informed of the extent of the
Partnership's dealings with BankAmerica Group. Applicants also state
that, as professionals employed in the investment banking and financial
services businesses, Participants will be able to understand and
evaluate the attendant risks. Applicants assert that the community of
interest among the Participants and BankAmerica Group will provide the
best protection against any risk of abuse.
5. Section 17(d) and rule 17d-1 prohibit any affiliated person or
principal underwriter of a registered investment company, or any
affiliated person of such person or principal underwriter, acting as
principal, from participating in any joint arrangement with the company
unless authorized by the SEC. Applicants request exemptive relief to
permit affiliated persons of each Partnership, or affiliated persons of
any of these persons, to participate in, or effect any transaction in
connection with, any joint enterprise or other joint arrangement or
profit-sharing plan in which the Partnership or a company controlled by
the Partnership is a participant.
6. Applicants submit that it is likely that suitable investments
will be brought to the attention of a Partnership because of its
affiliation with BankAmerica Group, BankAmerica Group's large capital
resources, and its experience in structuring complex transactions.
Applicants also submit that the types of investment opportunities
considered by a Partnership often require each investor to make funds
available in an amount that may be substantially greater than what a
Partnership may make available on its own. Applicants contend that, as
a result, the only way in which a Partnership may be able to
participate in these opportunities may be to co-invest with other
persons, including its affiliates. Applicants note that each
Partnership will be primarily organized for the benefit of employee
participants as an incentive for them to remain with BankAmerica Group
and for the generation and maintenance of goodwill. Applicants believe
that, if co-investments with BankAmerica Group are prohibited, the
appeal of the Partnerships would be significantly diminished.
Applicants assert that Eligible Employees wish to participate in co-
investment opportunities because they believe that (a) the resources of
BankAmerica Group enable it to analyze investment opportunities to an
extent that individual employees would not be able to duplicate, (b)
investments made by BankAmerica Group will not be generally available
to investors even of the financial status of the Eligible Employees,
and (c) Eligible Employees will be able to pool their investment
resources, thus achieving greater diversification of their individual
investment portfolios.
7. Applicants assert that the flexibility to structure co-
investments and joint investments will not involve abuses of the type
section 17(d) and rule 17d-1 were designed to prevent. Applicants state
that the concern that permitting co-investments by BankAmerica Group
and a Partnership might lead to less advantageous treatment of the
Partnership will be mitigated by the fact that BankAmerica Group will
be acutely concerned with its relationship with the personnel who
invest in such partnership and the fact that senior officers and
directors of BankAmerica Group entities will be investing in such
Partnership. In addition, applicants assert that strict compliance with
section 17(d) would cause the Partnership to forego investment
opportunities simply because a Participant or other affiliated person
of the Partnership (or any affiliate of such person) made a similar
investment. Finally, applicants contend that the possibility that a
Partnership may be disadvantaged by the participation of an affiliate
in a transaction will be minimized by compliance with the lockstep
procedures described in condition 3 below. Applicants believe that this
condition will ensure that a Partnership will co-invest side-by-side
and pro rata with, and on at least as favorable terms as, a BankAmerica
entity.
8. Co-investments with Third Party Funds, or by a BankAmerica
entity pursuant to a contractual obligation to a Third Party Fund, will
not be subject to condition 3. Applicants note that it is common for a
Third Party Fund to require that BankAmerica Group invest its own
capital in Third Party Fund investments, and that the BankAmerica Group
investments be subject to substantially the same terms as those
applicable to the Third Party Fund. Applicants believe it is important
that the interests of the Third Party Fund take priority over the
interests of the Partnerships, and that the Third Party Fund not be
burdened or otherwise affected by activities of the Partnerships. In
addition, applicants assert that the relationship of a Partnership to a
Third Party Fund is fundamentally different from a Partnership's
relationship to BankAmerica Group. Applicants contend that the focus
of, and the rationale for, the protections contained in the requested
relief are to protect the Partnerships from any overreaching by
BankAmerica Group in the employer/employee context, whereas the same
concerns are not present with respect to the Partnerships vis-a-vis a
Third Party Fund.
9. Section 17(e) and rule 17e-1 limit the compensation an
affiliated person may receive when acting as agent or broker for a
registered investment company. Applicants request an exemption from
section 17(e) to permit a BankAmerica entity (including the General
Partner), that acts as an agent or broker, to receive placement fees,
advisory fees, or other compensation from a Partnership in connection
with the purchase or sale by the Partnership of securities, provided
that the fees or other compensation is deemed ``usual and customary.''
Applicants state that for the purposes of the application, fees or
other compensation that is charged or received by a BankAmerica entity
will be deemed ``usual and customary'' only if (i) the Partnership is
purchasing or selling securities with other unaffiliated third parties,
including Third Party Funds, (ii) the fees or compensation being
charged to the Partnership are also being charged to the unaffiliated
third parties, including Third Party Funds, and (iii) the amount of
securities being purchased or sold by the Partnership does not exceed
50% of the total amount of securities being purchased or sold by the
Partnership and the unaffiliated third parties, including Third Party
Funds. Applicants assert that, because BankAmerica Group does not wish
it to appear as if it is favoring the Partnerships, compliance with
section 17(e) would prevent a Partnership from participating in
transactions where the Partnership is being charged lower fees than
unaffiliated third parties. Applicants assert that the fees or other
compensation paid by a Partnership to a BankAmerica entity will be the
same as those negotiated at arm's length with unaffiliated third
parties.
10. Rule 17e-1(b) requires that a majority of directors of the
General Partner who are not ``interested
[[Page 5326]]
persons'' (as defined in section 2(a)(19) of the Act) take actions and
make approvals regarding commissions, fees, or other remuneration.
Applicants request an exemption from rule 17e-1(b) to the extent
necessary to permit each Partnership to comply with the rule without
having a majority of the directors of the General Partner who are not
interested persons take actions and make determinations as set forth in
the rule. Applicants state that because all the directors of the
General Partner will be affiliated persons, without the relief
requested, a Partnership could not comply with rule 17e-1(b).
Applicants state that each Partnership will comply with rule 17e-1(b)
by having a majority of the directors of the General Partner take
actions and make approvals as are set forth in rule 17e-1. Applicants
state that each Partnership will comply with all other requirements of
rule 17e-1 for the transactions described above in the discussion of
section 17(e).
11. Section 17(f) designates the entities that may act as
investment company custodians, and rule 17f-1 imposes certain
requirements when the custodian is a member of a national securities
exchange. Applicants request an exemption from section 17(f) and rule
17f-1 to permit a BankAmerica entity to act as custodian of Partnership
assets without a written contract, as would be required by rule 17f-
1(a). Applicants also request an exemption from the rule 17f-1(b)(4)
requirement that an independent accountant periodically verify the
assets held by the custodian. Applicants believe that, because of the
community of interest between BankAmerica Group and the Partnerships
and the existing requirement for an independent audit, compliance with
these requirements would be unnecessarily burdensome and expensive.
Applicants will comply with all other requirements of rule 17f-1.
12. Section 17(g) and rule 17g-1 generally require the bonding of
officers and employees of a registered investment company who have
access to its securities or funds. Rule 17g-1 requires that a majority
of directors who are not interested persons take certain actions and
give certain approvals relating to fidelity bonding. Applicants request
exemptive relief to permit the General Partner's officers and
directors, who may be deemed interested persons, to take actions and
make determinations set forth in the rule. Applicants state that,
because all the directors of the General Partner will be affiliated
persons, a Partnership could not comply with rule 17g-1 without the
requested relief. Specifically, each Partnership will company with rule
17g-1 by having a majority of the Partnership's directors take actions
and make determinations as are set forth in rule 17g-1. Applicants also
state that each Partnership will comply with all other requirements of
rule 17g-1.
13. Section 17(j) and paragraph (a) of rule 17j-1 make it unlawful
for certain enumerated persons to engage in fraudulent or deceptive
practices in connection with the purchase or sale of a security held or
to be acquired by a registered investment company. Rule 17j-1 also
requires that every registered investment company adopt a written code
of ethics and that every access person of a registered investment
company report personal securities transactions. Applicants request an
exemption from the provisions of rule 17j-1, except for the anti-fraud
provisions of paragraph (a), because they are unnecessarily burdensome
as applied to the Partnerships.
14. Applicants request an exemption from the requirements in
sections 30(a), 30(b) and 30(e), and the rules under those sections,
that registered investment companies prepare and file with the SEC and
mail to their shareholders certain periodic reports and financial
statements. Applicants contend that the forms prescribed by the SEC for
periodic reports have little relevance to the Partnerships and would
entail administrative and legal costs that outweigh any benefit to the
Participants. Applicants request exemptive relief to the extent
necessary to permit each Partnership to report annually to its
Participants. Applicants also request an exemption from section 30(h)
to the extent necessary to exempt the General Partner of each
Partnership and any other persons who may be deemed to be members of an
advisory board of a Partnership from filing Forms 3, 4 and 5 under
section 16(a) of the Exchange Act with respect to their ownership of
Interests in the Partnership. Applicants assert that, because there
will be no trading market and the transfers of Interests will be
severely restricted, these filings are unnecessary for the protection
of investors and burdensome to those required to make them.
Applicants' Conditions
Applicants agree that the order granting the requested relief will
be subject to the following conditions:
1. Each proposed transaction otherwise prohibited by section 17(a)
or section 17(d) and rule 17d-1 to which a Partnership is a party (the
``Section 17 Transaction'') will be effected only if the General
Partner determines that: (i) the terms of the transaction, including
the consideration to be paid or received, are fair and reasonable to
the Partners of the Partnership and do not involve overreaching of the
Partnership or its Participants on the part of any person concerned;
and (ii) the transaction is consistent with the interests of the
Participants in the Partnership, and the Partnership's organizational
documents and reports to its Participants. In addition, the General
Partner of each Partnership will record and preserve a description of
the Section 17 Transactions, the General Partner's findings, the
information or materials upon which the General Partner's findings are
based, and the basis for the findings. All records relating to an
investment program will be maintained until the termination of the
investment program and at least two years thereafter, and will be
subject to examination by the SEC and its staff.\3\
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\3\ Each Partnership will preserve the accounts, books and other
documents required to be maintained in an easily accessible place
for the first two years.
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2. In connection with the Section 17 Transactions, the General
Partner of each Partnership will adopt, and periodically review and
update, procedures designed to ensure that reasonable inquiry is made,
prior to the consummation of any Section 17 Transaction, with respect
to the possible involvement in the Transaction of any affiliated person
or promoter of or principal underwriter for the Partnership, or any
affiliated person of the affiliated person, promoter, or principal
underwriter.
3. The General Partner of each Partnership will not invest the
funds of the Partnership in any investment in which a ``Co-Investor''
(as defined below) has acquired or proposes to acquire the same class
of securities of the same issuer, if the investment involves a joint
enterprise or other joint arrangement within the meaning of rule 17d-1
in which the Partnership and the Co-Investor are participants, unless
the Co-Investor, prior to disposing of all or part of its investment,
(i) gives the General Partner sufficient, but not less than one day's
notice of its intent to dispose of its investment; and (ii) refrains
from disposing of its investment unless the Partnership has the
opportunity to dispose of the Partnership's investment prior to or
concurrently with, on the same terms as, and pro rata with the Co-
Investor. The term ``Co-Investor'' with respect to any Partnership
means any person who is: (i) an ``affiliated person'' (as defined in
section 2(a)(3) of the Act) of the Partnership (other than a Third
Party
[[Page 5327]]
Fund); (ii) BankAmerica Group; (iii) an officer or director of
BankAmerica Group; or (iv) an entity (other than a Third Party Fund) in
which the General Partner acts as a general partner or has a similar
capacity to control the sale or other disposition of the entity's
securities. The restrictions contained in this condition, however, will
not be deemed to limit or prevent the disposition of an investment by a
Co-Investor: (i) to its direct or indirect wholly-owned subsidiary, to
any company (a ``Parent'') of which the Co-Investor is a direct or
indirect wholly-owned subsidiary, or to a direct or indirect wholly-
owned subsidiary of its Parent; (ii) to immediate family members of the
Co-Investor or a trust or other investment vehicle established for any
immediate family member; (iii) when the investment is comprised of
securities that are listed on any exchange registered as a national
securities exchange under section 6 of the Exchange Act; (iv) when the
investment if comprised of securities that are national market system
securities pursuant to section 11A(a)(2) of the Exchange Act and rule
11Aa2-1 under the Exchange Act; or (v) when the investment is comprised
of securities that are listed on or traded on any foreign securities
exchange or board of trade that satisfies regulatory requirements under
the law of the jurisdiction in which the foreign securities exchange or
board of trade is organized similar to those that apply to a national
securities exchange or a national market system for securities.
4. Each Partnership and the General Partner will maintain and
preserve, for the life of the Partnership and at least two years
thereafter, the accounts, books, and other documents that constitute
the record forming the basis for the audited financial statements that
are to be provided to the Participants in the Partnership, and each
annual report of the Partnership required to be sent to Participants,
and agree that these records will be subject to examination by the SEC
and its staff.\4\
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\4\ Each Partnership will preserve the accounts, books and other
documents required to be maintained in an easily accessible place
for the first two years.
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5. The General Partner of each Partnership will send to each
Participant in the Partnership who had an interest in any capital
account of the Partnership, at any time during the fiscal year then
ended, Partnership financial statements audited by the Partnership's
independent accountants. At the end of each fiscal year, the General
Partner will make a valuation or have a valuation made of all of the
assets of the Partnership as of the fiscal year end in a manner
consistent with customary practice with respect to the valuation of
assets of the kind held by the Partnership. In addition, within 120
days after the end of each fiscal year of each Partnership or as soon
as practicable thereafter, the General Partner of the Partnership will
send a report to each person who was a Participant in the Partnership
at any time during the fiscal year then ended, setting forth the tax
information necessary for the preparation by the Participant of federal
and state income tax returns.
6. If purchases or sales are made by a Partnership from or to an
entity affiliated with the Partnership by reason of a 5% or more
investment in the entity by a BankAmerica director, officer, or
employee, the individual will not participate in the Partnership's
determination of whether or not to effect the purchase or sale.
For the Commission, by the Division of Investment Management,
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 99-2481 Filed 2-2-99; 8:45 am]
BILLING CODE 8010-01-M
