[Federal Register Volume 62, Number 88 (Wednesday, May 7, 1997)]
[Notices]
[Pages 25002-25007]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-11841]
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SECURITIES AND EXCHANGE COMMISSION
[Rel. No. IC-22650/813-164]
Project Capital 1995, LLC; Notice of Application
April 30, 1997.
AGENCY: Securities and Exchange Commission (``SEC'').
ACTION: Notice of application for exemption under the Investment
Company Act of 1940 (the ``Act'').
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APPLICANTS: Project Capital 1995, LLC, which was formerly SASM&F
Investment Fund, LLC (the ``Investment Fund''), all existing pooled
investments vehicles identical in all material respects (other than
investment objective and strategy) that have been or
[[Page 25003]]
may be offered to the same class of investors as those investing in the
Investment Fund (the ``Existing Funds''), and all subsequent pooled
investment vehicles identical in all material respects (other than
investment objective and strategy) that may be offered in the future to
the same class of investors as those investing in the Investment Fund
(the ``Subsequent Funds'') (together, the Investment Fund, the Existing
Funds, and the Subsequent Funds are referred to herein as the
``Funds'').
RELEVANT ACT SECTIONS: Order requested pursuant to 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 sections 17
(a), (d), (f), (g) and (j)), section 30 (other than certain provisions
of sections 30 (a), (b), (e), and (h)), and sections 36 through 53, and
the rules and regulations thereunder.
SUMMARY OF APPLICATION: Applicants request an order that would exempt
them from most provisions of the Act and would permit certain
affiliated and joint transactions incident to the creation and
operation of employees' securities companies within the meanings of
section 2(a)(13) of the Act.
FILING DATE: The application was filed on September 18, 1995 and
amended on February 7, 1996, and March 26, 1997.
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 pm on May 27, 1997, and
should be accompanied by proof of service on applicant, 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, SEC, 450 Fifth Street, NW., Washington, DC 20549.
Project Capital 1995, LLC, 919 Third Avenue, New York, New York 10022.
FOR FURTHER INFORMATION CONTACT: Deepak T. Pai, Staff Attorney, at
(202) 942-0574, or Mercer E. Bullard, 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.
Applicants' Representations
1. The Investment Fund is a Delaware limited liability company
formed pursuant to a limited liability company agreement (the
``Investment Fund Agreement''). The Investment Fund will operate as a
non-diversified, closed-end, management investment company within the
meaning of the Act. The Applicants anticipate that each Subsequent
Fund, if any, will also be structured as a limited liability company,
although a Subsequent Fund could be structured as a domestic or
offshore general partnership, limited partnership or corporation. The
organizational documents for any Subsequent Funds will be substantially
similar in all material respects to the Investment Fund Agreement,
other than the provisions relating to investment objectives or
strategies of a Subsequent Fund and for any operational differences
related to the form of organization of a Subsequent Fund.
2. Interests in the Funds (``Units'') will be offered and sold by
the Funds in reliance upon an exemption from registration under the
Securities Act of 1933 (``Securities Act''). No fee of any kind will be
charged in connection with the sale of Units of the Funds. Each Fund
will offer Units solely to persons (``Eligible Investors'') who meet
the following criteria at the time of investment: (a) Certain current
or former key administrative employees, partners and lawyers employed
by Skadden, Arps, Slate, Meagher & Flom LLP, a New York limited
liability partnership (``Skadden Arps LLP''), Skadden, Arps, Slate,
Meagher, & Flom (International), Skadden, Arps, Slate, Meagher & Flom
(Illinois), and Skadden, Arps, Slate, Meagher & Flom (Delaware)
(collectively with Skadden Arps LLP, ``Skadden Arps''), the immediate
family members of such persons, or trusts or other entities the sole
beneficiaries of which consist of such persons or the immediate family
members of such persons; and (b) who are (i) ``accredited investors''
as that term is defined in rule 501(a)(6) of Regulation D under the
Securities Act and (ii) sophisticated in investment matters. An
individual may make additional capital contributions to a Fund only if
he or she meets the criteria for an Eligible Investor contained herein
at the time such additional capital contributions are made. The
specific investment objective and strategies for each Fund will be set
forth in the organizational documents with respect to such Fund, and
each Eligible Investor will receive a copy prior to his or her
investment in such Fund.
3. Substantially all of the present and former partners and a small
number of all the employees of Skadden Arps currently qualify as
Eligible Investors. Such Eligible Investors have significant exposure
directly or indirectly in matters related to investment banking,
financial services, securities or investment businesses. Most Eligible
Investors have had substantial experience acting as legal counsel in
one or more of the foregoing businesses.
4. The formation of the Investment Fund and any Subsequent Fund is
intended to create an opportunity for the Eligible Investors to invest
in ventures in which they, as individuals, might not have otherwise
been able to invest in and to reap returns on their investment which
may be greater proportionately than returns they can obtain on
individual investments. Each Fund may invest in opportunities offered
to or by, or that come to the attention of, Skadden Arps, including
opportunities in which Skadden Arps (including Eligible Investors who
elect to participate in a Fund (``Members'')) may invest for their own
respective accounts. Such opportunities may include separate accounts
with registered or unregistered investment advisers, investment in
other pooled investment vehicles such as registered investment
companies, investment companies exempt from registration under the Act,
commodity pools, real estate investment funds, and other securities
investments. The Funds do not intend to act as a lender to their
affiliates except to the extent that the Funds may invest in debt
securities issued by entities that might fall within the definition of
affiliate (if Skadden Arps owns 5% of the outstanding voting securities
in such entity). The Funds will limit their investments in publicly
offered registered investment companies to the limitations set forth in
section 12(d)(1) of the Act.
5. Some of the investment opportunities described above may involve
parties in which Skadden Arps was, is or will be, acting as legal
counsel. To the extent a Fund may engage Skadden Arps to perform legal
services on behalf of an entity in which it has invested (each such
entity, a ``Portfolio Company''), any such services will be performed
in accordance with the terms of the Act, including section 17(e). Any
such amounts paid to Skadden Arps will not be directly payable by a
Fund, but by the Portfolio Company. Moreover, all such services shall
be provided to the Portfolio Company on behalf of the
[[Page 25004]]
Fund at Skadden Arps' actual cost and shall not include any profit
component. Such fees shall not be for brokerage services of any kind or
in any matter connected to the purchase or sale of securities or other
property which a Fund may hold.
6. While a Fund will not pay Skadden Arps any form of compensation,
including commissions, for services (including legal services that
Skadden Arps might render to a Portfolio Company), it may pay Skadden
Arps fees equal to, but not greater than, the actual out-of-pocket
costs directly incurred by Skadden Arps in disposing of an investment
in a Portfolio Company. Skadden Arps may be reimbursed in various forms
provided that there will be no allocation of any of Skadden Arps'
operating expenses to a Fund. Rather, any such reimbursement shall be
for reasonable and necessary out-of-pocket costs directly associated
with making investments on behalf of a Fund. Such reimbursements could
be for filing fees, registration fees, mailing costs, telephone charges
and other similar costs relating solely to such investments. Skadden
Arps will bear all expenses in connection with the organization and
internal operations of the Funds, including all administrative and
overhead expenses.
7. Administration of the Investment Fund will be vested in the
administrator (the ``Administrator''). The Administrator may, but is
not required to, be a member in the Investment Fund. The Administrator
will inform Eligible Investors from time to time of the availability of
investment opportunities that come to its attention through Skadden
Arps. The Administrator will make specific investment opportunities
available to Eligible Investors who will elect whether or not to
participate in the particular investment (each particular investment,
an ``Investment''). The Administrator will not recommend Investments or
exercise investment discretion, provided however that the Administrator
may select ``temporary investments'' (as defined below).\1\ All
investment decisions to make a particular Investment in the Investment
Fund will be made by the Members on an individual basis. The Investment
Fund Agreement provides that the Investment Fund will bear its own
expenses. No management fee or other compensation will be paid by the
Investment Fund or the Members to the Administrator for its services in
such capacity.
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\1\ The Applicants will consider, as necessary, whether Skadden
Arps or the Administrator will be required to register as an
investment adviser under the Investment Advisers Act of 1940.
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8. Capital contributions made to the Investment Fund by
participating Members will be allocated pro-rata to the capital
accounts relating to a particular Investment for such participating
Members. Members who elect not to participate in a particular
Investment will have no interest in such Investment.
9. For any particular Investment with respect to which a Member has
elected to participate by making a capital contribution, there shall be
established for each such Member on the books of the Investment Fund a
capital account, which shall equal the sum of all capital contributions
of such Member made with respect to such Investment: (a) Increased by
such Member's allocable share of income and gain attributable to such
Investment as provided in the Investment Fund's organizational
documents; and (b) decreased by (i) such Member's share of deduction,
loss and expense attributable to such Investment, and (ii) the cash
amount or fair market value at the time of the distribution of all
distributions of cash or other property made by the Investment Fund to
such Member with respect to such Investment. As of the end of each
fiscal year, items of Investment Fund income, gain, loss, deduction and
expenses attributable to an Investment shall be allocated to the
relevant capital accounts in proportion to the respective aggregate
amounts of the relevant Members' capital contributions to such
Investment; provided that, in accordance with applicable Delaware law,
the capital account balances of the Members shall not be reduced below
zero.
10. It is anticipated that capital will be contributed to the
Investment Fund (and any Subsequent Fund) only in connection with the
funding of an Investment. Pending the payment of the full purchase
price for an Investment, funds contributed to the Investment Fund (or
any Subsequent Fund) will be invested in: (i) United States government
obligations with maturities of not longer than one year and one day,
(ii) commercial paper with maturities not longer than six months and
one day and having a rating assigned to such commercial paper by a
nationally recognized statistical rating organization equal to one of
the two highest ratings categories assigned by such organization, or
(iii) any money market fund (collectively, ``Temporary Investments'').
11. The value of the Member's capital accounts will be determined
at such times as the Tax Matters Partner (who will be the managing
director of Skadden Arps) deems appropriate or necessary; however, such
valuation will be done at least annually at the Investment Fund's
fiscal year-end for allocation purposes. Each Member directs his or her
capital contributions to particular Investments and in all material
respects takes responsibility for his or her individual investment
decisions, leaving the Administrator with primarily an administrative
role. The Tax Matters partner will only cause the assets held by the
Investment Fund to be valued when such valuation is necessary or
appropriate for the administration of the Investment Fund. Valuations
of a Member's interest at other times remains the responsibility of the
individual Member. The Investment Fund will maintain records of all
financial statements received from the issuers of the Investments, and
will make such records available for inspection by its Members. Each
Fund, as soon as practicable after the end of each tax year of that
fund, will transmit a report to each Member setting out information
with respect to that Member's distributive share of income, gains,
losses, credits and other items for federal income tax purposes,
resulting from the operation of the Fund during that year.
12. The Tax Matters partner will value the assets held in a
Member's capital account at the current market price (closing price) in
the case of marketable securities. Private placements (consisting
mostly of limited partnership interests), which typically will comprise
most of the investments, will be valued in accordance with the values
provided by the vehicles in which a Fund invests. All other securities
will be valued at the lower of cost or book value. The foregoing
valuation method is applicable in each instance in which a value is
assigned to interests in a Fund.
13. The amount of the initial capital contribution to the
Investment Fund (and to any Subsequent Fund) will be dependent upon the
size and terms of the initial investment opportunity of such Fund.
Members will not be entitled to redeem their interest in the Investment
Fund. A member will be permitted to transfer his or her interest only
with the express consent of a majority of the non-transferring Members.
14. The Investment Fund Agreement provides that the Administrator
may require a Member to withdraw from the Investment Fund if the
Administrator, in its sole discretion, deems such withdrawal in the
best interest of the Investment Fund. The Administrator
[[Page 25005]]
does not intend to require a Member to withdraw. The following
circumstances could warrant the withdrawal of a Member: (a) If a Member
ceases to be an Accredited Investor or is no longer deemed to be able
to bear the economic risk of investment in a Fund; (b) adverse tax
consequences were to inure to the Investment Fund if a particular
Member were to remain; and (c) a situation in which the continued
membership would violate applicable law or regulation. If a Member is
required to withdraw, the Investment Fund will make a distribution-in-
kind to the withdrawing Member or such Member will otherwise be paid
his or her pro-rata interest in the Investment Fund, as determined by
the Administrator to be fair and reasonable in the circumstances. If a
Member is terminated by Skadden Arps, such Member will either continue
to be a Member of the Fund, or receive a distribution-in-kind or
otherwise be paid his pro-rata interest in the Fund, as determined by
the Administrator to be fair and reasonable.
15. In the event of death of a Member, such Member's estate shall
be substituted as a Member, and such substituted Member shall succeed
to the economic attributes of the deceased Member's interest in the
Fund, but shall not be admitted as a substitute Member unless the
majority of the remaining Members consent to such admission.
16. Applicants request an exemption under sections 6(b) and 6(e) of
the Act from all provisions of the Act except section 9, section 17
(other than certain provisions of sections 17 (a), (d), (f), (g) and
(j) as described in the application), section 30 (other than certain
provisions of sections 30 (a), (b), (e) and (h) as described in the
application), and sections 36 through 53, and the rules and regulations
thereunder.
Applicants' Legal Analysis
1. Section 6(b) provides that the SEC shall exempt employees'
securities companies from the provisions of the Act to the extent that
such exemption is consistent with the protection of investors. Section
2(a)(13) defines an employees' security company, among other things, as
any investment company all of the outstanding securities of which are
beneficially owned by the employees or persons on retainer of a single
employer or affiliated employers, by former employees of such
employers, or by members of the immediate family of such employers,
persons on retainer, or former employees.
2. Section 6(e) provides that, in connection with any order
exempting an investment company from any provision of section 7,
specified provisions of the Act shall be applicable to such company and
to other persons in their transactions and relations with such company
as though such company were registered under the Act, if the SEC deems
it necessary and appropriate in the public interest or for the
protection of investors.
3. Section 17(a) provides, in relevant part, that it is unlawful
for any affiliated person of a registered investment company or any
affiliated person of such person, acting as principal, knowingly to
sell any security or other property to such company or to purchase from
such company any security or other property. Applicants request an
exemption from the provisions of section 17(a) to the extent necessary
to permit a Fund: (1) To invest in companies, partnerships or other
investment vehicles offered, sponsored or managed by Skadden Arps or
any affiliated person as defined in section 2(a)(3) of the Act
(``Affiliated Person'') thereof; (2) to invest in securities of issuers
for which Skadden Arps or any Affiliated Person thereof have performed
services and from which they may have received fees; (3) to purchase
interests in any company or other investment vehicle: (i) In which
Skadden Arps or its partners or employees own 5% or more of the voting
securities or (ii) that is otherwise an Affiliated Person of the Fund
or Skadden Arps; (4) to participate as a selling security-holder in a
public offering in which Skadden Arps or any Affiliated Person acts or
represents a member of the selling group; (5) to purchase short-term
instruments from, or sell such instruments to, Skadden Arps or any
Affiliated Person thereof at market value; and (6) to enter into
repurchase transactions with Skadden Arps or any Affiliated Person
thereof pending investment of the Fund's liquid funds. Applicants state
that a Fund purchasing any short-term instrument from Skadden Arps or
any Affiliated Person thereof will pay no fee in connection with that
purchase.
4. Applicants assert that the community of interest among the
Members and Skadden Arps will serve to reduce the risk of abuse in
transactions involving a Fund and Skadden Arps or any Affiliated Person
thereof. Applicants also note that the Members will be informed in the
Fund's communications relating to a particular Investment opportunity
of the possible extent of the Fund's dealings with Skadden Arps or any
Affiliated Person thereof.
5. Section 17(d) and rule 17d-1 make it unlawful for any affiliated
person of a registered investment company, acting as principal, to
effect any transaction in which the company is a joint or joint and
several participant with the affiliated person unless the transaction
has been approved by order of the SEC. Applicants request an exemption
pursuant to section 17(d) and rule
17d-1 to the extent necessary to permit a Fund to make an investment in
an entity in which a Fund or Skadden Arps, or any Affiliated Person of
the Fund or Skadden Arps, or an Affiliated Person of such person is a
participant or plans concurrently or otherwise directly or indirectly
to become a participant.
6. Applicants state that joint transactions in which a Fund could
participate might include the following: (1) An investment by one or
more Funds in a security (a) in which Skadden Arps or an Affiliated
Person thereof, another Fund, or their transferees who agree to be
bound by the terms of the conditions in the application (the
``Affiliates'' or individually an ``Affiliate'') is a participant or
plans to become a participant or (b) with respect to which Skadden Arps
or any Affiliated Person thereof is entitled to receive fees of any
kind, including, but not limited to, legal fees, placement fees,
investment banking fees, or brokerage commissions, or other economic
benefits or interests; (2) an investment by one or more Funds in an
investment vehicle sponsored, offered or managed by Skadden Arps or any
Affiliated Person thereof; and (3) an investment by one or more Funds
in a security in which an Affiliate is a participant, or plans to
become a participant, including situations in which an affiliate has a
partnership or other interest in, or compensation arrangement with,
such issuer, sponsor or offeror.
7. Applicants assert that the relief sought is consistent with
section 17's objective of preventing an Affiliated Person of a
registered investment company from injuring the interests of the
company's shareholders by causing the company to participate in a joint
endeavor on a basis different from, and less advantageous than, that of
a related party. Applicants state that each Eligible Investor, not the
Fund, evaluates Investment opportunities and decides individually
whether or not he or she wishes to participate in any particular
Investment. In addition, Applicants assert that, in light of Skadden
Arps' purpose of establishing the Funds to reward Eligible Investors
and to attract highly-qualified personnel to Skadden Arps, the
possibility is minimal that an affiliated-party investor will enter
into a
[[Page 25006]]
transaction with a Fund with the intent of disadvantaging the Fund.
8. Applicants submit that strict compliance with section 17(d)
would cause the Funds to forego Investment opportunities simply because
a Member, Skadden Arps or other Affiliated Persons of the Fund also had
or contemplated making a similar investment. In addition, because
attractive investment opportunities of the types considered by the
Funds often require that each participant make available funds in an
amount that may be substantially greater than that available to the
investor alone, applicants state that there may be certain attractive
opportunities of which a Fund may be unable to take advantage except as
a co-participant with other persons, including affiliates. Applicants
assert that the flexibility to structure co- and joint investments in
the manner described above will not involve abuses of the type section
17(d) and rule
17d-1 were designed to prevent.
9. Section 17(f) provides that the securities and similar
investments of a registered management investment company must be
placed in the custody of a bank, a member of a national securities
exchange, or the company itself in accordance with SEC rules.
Applicants request an exemption from the requirement contained in
section 17(f) and rule 17f-1 thereunder that a Fund's custodial
agreement must be in writing and transmitted to the SEC. Applicants
state that, because there is a close association between Skadden Arps
and the applicants, requiring a written contract and transmission to
the SEC would unnecessarily burden and cause unnecessary expense to
applicants.
10. Section 17(g) and rule 17g-1 thereunder generally require the
bonding of officers and employees of a registered investment company
who have access to securities or funds of the company. Applicants
request exemption from the requirement contained in section 17(g) and
in rule 17g-1 that an administrator who is not an ``interested person''
of the respective Funds take certain actions and make certain approvals
concerning bonding. Applicants request that the actions and approvals
required to be taken by the Administrator may and will be taken by it,
regardless of whether it is deemed to be an ``interested person'' of
the Funds. Applicants state that, because the administrator is likely
to be considered an ``interested person'' of each Fund, applicants
could not comply with rule 17g-1 without such relief.
11. Section 17(j) and rule 17j-1 thereunder make it unlawful for
certain enumerated persons to engage in fraudulent, deceitful, or
manipulative practices in connections with the purchase or sale of a
security held or to be acquired by an investment company. Rule 17j-1
also requires every registered investment company, its adviser, and its
principal underwriter to adopt a written code of ethics with provisions
reasonably designed to prevent fraudulent activities, and to institute
procedures to prevent violations of the code. Applicants request an
exemption from the requirements of rule 17j-1, with the exception of
rule 17j-1(a), because they are burdensome and unnecessary and because
the exemption is consistent with the policy of the Act. Applicants
assert that requiring the Funds to adopt a written code of ethics and
requiring access persons to report each of their securities
transactions would be time-consuming and expensive and would serve
little purpose in light of, among other things, the community of
interests among the Members of the Funds by virtue of their common
association with Skadden Arps and the fact that the Investments of a
Fund would generally not be investments that usually would be offered
to Members, including Members who would be deemed access persons, as
individual investors. Applicants contend that the requested exemption
is consistent with the purposes of the Act because the dangers against
which section 17(j) and rule 17j-1 are intended to guard are not
present in the case of the Funds.
12. 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
matters. Applicants contend that the forms prescribed by the SEC for
periodic reports have little relevance to the Funds and would entail
administrative and legal costs that outweigh any benefit to the
Members. Applicants request exemptive relief to the extent necessary to
permit each fund to report annually to its Members in the manner
prescribed for the Investment Fund by the Investment Fund Agreement.
Applicants also request exemption from section 30(h) to the extent
necessary to exempt the Administrator and any other persons who may be
deemed to be members of an advisory board of a Fund from filing Forms
3, 4 and 5 under section 16 of the Securities Exchange Act of 1934
(``Exchange Act''), as amended, with respect to their ownership of
Units in the Funds.
Applicants' Conditions
Applicants agree that the order granting the requested relief shall
be subject to the following conditions:
1. Each proposed transaction otherwise prohibited by section 17(a)
or section 17(d) and rule 17d-1 (the ``Section 17 Transactions'') will
be effected only if the Administrator determines that: (a) the terms of
the transaction, including the consideration to be paid or received,
are fair and reasonable to Members of the participating Fund and do not
involve overreaching of the Fund or its Members on the part of any
person concerned; and (b) the transaction is consistent with the
interests of the Members of the participating Fund, the Fund's
organizational documents and the Fund's reports to its Members.
In addition, the Administrator will record and preserve a
description of such affiliated transactions, its findings, the
information or materials upon which its findings are based and the
basis therefor. All such records will be maintained for the life of a
Fund and at least two years thereafter, and will be subject to
examination by the SEC and its staff. All such records will be
maintained in an easily accessible place for at least the first two
years.
2. No purchases or sales will be made from or to an entity
affiliated with a Fund by reason of a 5% or more investment in such
entity by the Administrator.
3. The Administrator 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 Funds, or any
affiliated person of such a person, promoter, or principal underwriter.
4. The Administrator will not make available to the Members of a
Fund any investment in which a Co-Investor, as defined below, has or
proposes to acquire the same class of securities of the same issuer,
where the investment involves a joint enterprise or other joint
arrangement within the meaning of rule 17d-1 in which the Fund and the
Co-Investor are participants, unless any such Co-Investor prior to
disposing of all or part of its investment: (a) Gives the Members of
the participating Fund holding such investment sufficient, but not less
than one day's notice of its intent to dispose of its investment, and
(b) refrains from disposing of its investment unless the Members of the
participation Fund holding such
[[Page 25007]]
investment have the opportunity to dispose of their investment prior to
or concurrently, on the same terms as, and on a pro rata basis with the
Co-Investor. The term ``Co-Investor'' means any person who is: (a) an
Affiliated person of the Fund; (b) Skadden Arps and any entities
controlled by Skadden Arps; (c) a current partner, lawyer, or employee
of Skadden Arps; (d) an investment vehicle offered, sponsored, or
managed by Skadden Arps or an Affiliated Person of Skadden Arps; (e)
any entity with respect to which Skadden Arps provides, or has
provided, services, and from which it may have received fees in
connection with such investment; or (f) a company in which the
Administrator acts as an officer, director, or general partner, or has
a similar capacity to control the sale or disposition of the company's
securities. The restriction contained in this condition, however, shall
not be deemed to limit or prevent the disposition of an investment by a
Co-Investor: (a) 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; (b) to immediate family members of the
Co-Investor or a trust established for any such family member; (c) when
the investment is comprised of securities that are listed on a national
securities exchange registered under section 6 of the Exchange Act; or
(d) when the investment is comprised of securities that are national
market system securities pursuant to section 11A(a)(2) of the Exchange
Act and rule 11Aa2-1 thereunder.
5. Each Fund will send to each Member who had an interest in that
Fund at any time during the fiscal year then ended, financial
statements. Such financial statements may be unaudited. In addition,
within 90 days after the end of each fiscal year of each Fund or as
soon as practicable thereafter, each Fund shall send a report to each
person who was a Member at any time during the fiscal year then ended,
setting forth such tax information as shall be necessary for the
preparation by the Member of his or her federal and state income tax
returns and a report of the investment activities of such Fund during
such year.
6. Each Fund will maintain and preserve, for the life of each such
Fund and at least two years thereafter, such accounts, books, and other
documents as constitute the record forming the basis for the financial
statements and annual reports of such Fund to be provided to its
Members, and agree that all such records will be subject to examination
by the SEC and its staff. All such records will be maintained in an
easily accessible place for at least the first two years.
For the Commission, by the Division of Investment Management,
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-11841 Filed 5-6-97; 8:45 am]
BILLING CODE 8010-01-M
