[Federal Register Volume 64, Number 117 (Friday, June 18, 1999)]
[Notices]
[Pages 32900-32904]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-15483]
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SECURITIES AND EXCHANGE COMMISSION
[Rel No. IC-23870; 813-182]
Monitor Investors, L.P., et al.; Application
June 11, 1999.
AGENCY: Securities and Exchange Commission (the ``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, sections 17
(other than provisions of paragraphs (a), (d), (f), (g), and (j)) and
30 (other than certain provisions of paragraphs (a), (b), (e) and (h)),
sections 36 through 53, and the rules and regulations under the Act.
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SUMMARY OF APPLICATION: Applicants request an order to exempt certain
limited partnerships and other pooled investment vehicles formed for
the benefit of key employees of The Monitor Company, Inc. (the
``Company'') from certain provisions of the Act. Each partnership will
be an ``employees' securities company'' within the meaning of section
2(a)(13) of the Act.
Applicants: Monitor Investors, L.P. (the ``Investor Partnership''),
Monitor Coinvestors, L.P. (the ``Coinvestor Partnership'' and together
with the Investor Partnership, the ``Initial Partnerships''), and
subsequent pooled in 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, or a subset of
the same class of investors, to whom interests in the Initial
Partnerships will be offered (the ``Subsequent Investment
Partnerships'' and together with the Initial Partnerships, the
``Investment Partnerships''), and the Company.
FILING DATES: The application was filed on December 18, 1997, and
amended on November 10, 1998 and June 11, 1999.
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 July 16,
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 may request
notification of a hearing by writing to the SEC's Secretary.
ADDRESSES: Secretary, SEC, 450 Fifth Street, N.W., Washington, D.C.
20549-0609. Applicants, 25 First Street, Cambridge, Massachusetts
02141.
FOR FURTHER INFORMATION CONTACT: Mary Kay Frech, 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, N.W., Washington, D.C.
20549-0102 (tel. 202-942-8090).
Applicants' Representations
1. The Company is an international strategy and business consulting
firm which provides customized analysis, advice and implementation
assistance to major corporations.
2. The Initial Partnership are Delaware limited partnerships
created by the Company. Each Investment Partnership will be formed as
an ``employees' securities company'' within the meaning of section
2(a)(13) of the Act, and will operate as a non-diversified, closed-end
investment. The Investment Partnerships will be established for the
benefit of certain key employees of the Company to reward and retain
these employees and to facilitate the Company's recruitment efforts.
3. Each Investment Partnership will have at least one general
partner (the ``General Partner''), which will be owned and controlled
by the chief executive officer and another senior officer of the
Company. The General Partner will manage and control each of the
Investment Partnerships. Monitor GP, Inc., a Delaware corporation, is
the General Partner of the Initial Partnerships. The General Partner
will have a capital commitment to each Initial Partnership equal to at
least 1% of the Initial Partnership's aggregate capital commitments.
The General Partner will not charge the Initial Partnerships a
management fee, nor will it be entitled to a performance-based fee or
``carried interest.'' The General Partner will register as an
investment adviser if it is required to do so under
[[Page 32901]]
the Investment Advisers Act of 1940 (``Advisers Act'').
4. Limited partner (``Limited Partner'') interests in the
Investment Partnerships (`'Interests'') will be offered and sold by the
Investment Partnerships to Eligible Participants (as defined below) in
reliance on section 4(2) of the Securities Act of 1933 (``Securities
Act'') or Regulation D under the Securities Act, and will be sold
without a sales load or any similar fee. Eligible Participants consist
of: (a) Eligible Employees (as defined below), (b) trusts and other
investment vehicles of which the trustees, grantors and/or
beneficiaries are Eligible Employees or of which the beneficiaries are
immediate family members (including only spouses, parents, children,
spouses of children, brothers, sisters, and grandchildren) of Eligible
Employees, including self-directed retirements plan vehicles (including
individual retirement accounts) (``Eligible Trust''), (c) partnerships,
corporations or other entities the voting power of which is controlled
by Eligible Employees, and (d) the Company. Interests will be offered
directly to Eligible Participants described in (b) and (c) above only
if they are accredited investors for purposes of Regulation D under the
Securities Act.
5. ``Eligible Employees'' include (a) members of the professional
staff of the Company who are accredited investors meeting the income
requirements of rule 501(a)(6) of Regulation D under the Securities
Act, including director, global account managers, and case team
leaders, (b) former members of the professional staff of the Company
who are accredited investors meeting the income requirements of Rule
501(a)(6) of Regulation D and who provide to the Company more than
thirty hours per week, on average, for services as sub-contractors, and
(c) members of the administrative staff of the Company who are
accredited investors meeting the income requirements of Rule 501(a)(6)
of Regulation D. Eligible Employees will be experienced professional in
the leveraged buyout, venture capital, investment banking or management
consulting business, or in related administrative, financial,
accounting or operational activities. Prior to offering Interests to an
Eligible Employee, the General Partner must reasonably believe that the
Eligible Employee will be a sophisticated investor capable of
understanding and evaluating the risk of participating in the
Investment Partnership without the benefit of regulatory safeguards. No
Eligible Employee will be required to invest in an Investment
Partnership.
6. Monitor Clipper Partners, Inc. (``MCP''), a Delaware
corporation, was formed in 1997 by certain senior employees of the
Company and certain members of the Clipper Group, a private equity
investment firm. MCP has established, and will establish from time to
time, private equity investment funds in reliance on section 3(c)(1) of
the Act (collectively, the ``Initial Investment Funds'') which will be
involved in different types of investments, including leveraged buyout
and venture capital transactions, and which will invest in a variety of
securities. MCP, as the manager of the Initial Investment Funds, will
perform the day-to-day investment and administrative operations for the
Initial Investment Funds. Each Initial Investment Fund will pay MCP a
management fee based on the total capital subscriptions to such Initial
Investment Fund. Monitor Clipper Partners, L.P. (``MCP, L.P.'') will
serve as general partner of the Initial Investment Funds and will
receive a ``carried interest'' on the profits of the Initial Investment
Funds.\1\ MCP, L.P. is exempt from registration under the Act in
reliance on section 3(c)(1) of the Act.
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\1\ A ``carried interest'' is an allocation to the general
partner based on the net gains of an investment program and is in
addition to the amount that is allocable to the general partner with
respect to its capital contributions. Any ``carried interest''
charged by a registered investment adviser will be structured to
comply with section 205 of the Advisers Act.
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7. The Company has formed the Investor Partnership to invest as a
limited partner in MCP, L.P., and has formed the Coinvestor Partnership
to invest as a limited partner in the Initial Investment Funds. The
General Partner has the sole discretion to determine which Eligible
Employees may participate in either the Investor Partnership or the
Coinvestor Partnership. All of the Limited Partners of the Investor
Partnership also are Limited Partners of the Coinvestor Partnership,
but not all of the Limited Partners of the Coinvestor Partnership are
Limited Partners of the Investor Partnership. Subsequent Partnerships
may be established by the Company to make private equity and other
investments, both directly and through investments in limited
partnerships and other pooled investment vehicles, including
investments in public companies and investments in registered
investment companies. No Investment Partnership, however, will acquire
any security issued by a registered investment company if, immediately
after such acquisition, the Investment Partnership would own more than
3% of the outstanding voting stock of the registered investment
company. The specific investment objective and strategies of an
Investment Partnership will be set forth in the organizational
documents with respect to the Investment Partnership, and each Eligible
Participant will receive a copy prior to investment in the Investment
Partnership.
8. Management of the Investor Partnership will be vested in the
General Partner. The Investor Partnership, as a limited partner of MCP,
L.P., will participate in the carried interest paid by the limited
partners of the Initial Investment Funds to MCP, L.P. The term of the
Investor Partnership terminates on the same day as the term of MCP,
L.P. The Investor Partnership will make allocations and distributions
on an investment-by-investment basis in proportion to each partner's
distributive share with respect to that investment (the ``Investment
Distributive Share''). A Limited Partner's Investment Distributive
Share with respect to a particular investment will be 50% vested when
that investment is made, and will be 100% vested when that investment
is sold. No Limited Partner will have the right to withdraw from the
Investor Partnership. A Limited Partner whose employment with the
Company or any of its affiliates is terminated for any reason, however,
shall be deemed to have withdrawn from the Investor Partnership as of
the date of termination and the unvested portion of such Limited
Partner's Interest will be automatically forfeited. A Limited Partner's
vested Interest in the Investor Partnership is not subject to
forfeiture and can only be repurchased if the Limited Partner's
employment is terminated for cause. The purchase price for such vested
Interest will not be less than the lower of (a) the actual capital
contributions made by the Limited Partner to acquire the vested
Interest, and (b) the fair market value, determined at the time of
repurchase in good faith by the General Partner, of such vested
Interest. The vesting and forfeiture provisions, and the events that
trigger such provisions, will be fully disclosed to Eligible
Participants prior to investment in the Investor Partnership.
9. The Coinvestor Partnership's investment strategy will be
primarily to invest as a limited partner in the Initial Investment
Funds. The term of the Coinvestor Partnership terminates on the same
day as the Initial Investment Fund of which it is a limited partner.
The Coinvestor Partnership generally does not have to pay the carried
interest which the other limited partners of the Initial Investment
Funds are required to
[[Page 32902]]
pay.\2\ Allocations of net income or net loss attributable to
investments in the Coinvestor Partnership will be proportionate to
capital contributions with respect to each investment. Limited Partners
in the Coinvestor Partnership are fully vested in each investment when
it is made. A Limited Partner of the Coinvestor Partnership whose
employment with the Company or one of its affiliates terminates is not
automatically required to withdraw from the Coinvestor Partnership. In
general, a departed employee will continue as a Limited Partner of the
Coinvestor Partnership and will be required to fund such Limited
Partner's capital commitment to the Partnership. However, the General
Partner will have the right, but not the obligation, to terminate the
unfunded portion of the limited Partner's capital subscription, on such
terms as set forth in the partnership agreement. If the General Partner
exercises this right, the Limited Partner would retain his Interest in
the Coinvestor Partnership to the extent of the capital contributions
that the Limited Partner has made prior to the termination of the
Limited Partner's employment with the Company, but would not be
permitted to make any future capital contributions to the Coinvestor
Partnership.
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\2\ The Coinvestor Partnership is required to pay a carried
interest with respect to the portion of the coinvestment of each of
its Limited Partners that exceeds either (a) if such Limited Partner
is also a Limited Partner of the Investor Partnership, the lesser of
(i) $1,500,000 less the commitment, if any, of such Limited Partner
to the Investor Partnership, or (ii) the commitment of such Limited
Partner to the Coinvestor Partnership; or (b) if such Limited
Partner is not a Limited Partner of the Investor Partnership, the
lesser of (i) $1,250,000, or (ii) the commitment of such Limited
Partner to the Coinvestor Partnership. Any Eligible Employee that
does not wish to be subject to a carried interest can choose to make
a commitment below the applicable threshold. As of the date of the
application, only one Eligible Employee that is not a Limited
Partner of the Investor Partnership has made a commitment to the
Coinvestor Partnership that is large enough to be subject to a
carried interest.
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10. A Limited Partner's Interest in an Investment Partnership is
nontransferable, except that a Limited Partner may: (a) with the
consent of the General Partner, which may be granted or withheld in the
General Partner's sole discretion, transfer all or a portion of his
Interest in the Partnership to another Eligible Participant; or (b)
with the prior written consent of the General Partner, which shall be
based on criteria specified in the partnership agreement of the
Partnership, transfer all or a portion of his Interest to certain
Eligible Participants.
11. Each Investment Partnership will send its Limited Partners an
annual report regarding its operations, which will contain audited
financial statements. Within 90 days after the end of each fiscal year
of an Investment Partnership or as soon as practicable thereafter, the
Investment Partnership will send to each Limited Partner a report
indicating his share of the income or losses of the Investment
Partnership for federal income tax purposes.
12. The Company may perform consulting services for the Initial
Investment Funds and the portfolio companies of the Initial Investment
Funds, and may be paid by these entities for its services and for
related disbursements and charges. The Initial Investment Funds (or the
portfolio companies of the Initial Investment Funds) in which the
Investment Partnership invests will pay the Company in cash or in the
form of securities of a portfolio company. The Company may retain such
securities or transfer them to Monitor Consulting, P.L., a limited
partnership whose limited partners are certain employees of the
Company, and whose general partner is Monitor G.P., Inc. Monitor
Consulting, L.P. will dispose of the securities that it owns in
accordance with the ``lock-step'' procedures described in condition 3
below.
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 SEC 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' securities company, in relevant part, as any
investment company all of whose securities are beneficially owned by
(a) current or former employees, or persons on retainer, of one or more
affiliated employers, (b) immediate family members of those persons, or
(c) the employer or employers together with any of the persons in (a)
or (b).
2. Section 7 of the Act generally prohibits investment companies
that are not registered under section 8 from selling or redeeming their
securities. Section 6(e) provides that, in connection with any order
exempting an investment company from section 7 of the Act, 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 exempting the Investment
Partnerships from all provisions of the Act, except section 9, certain
provisions of sections 17 and 30, sections 36 through 53, and the rules
and regulations under those sections.
3. Section 17(a) of the Act 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 registered
investment company. Applicants request an exemption from section 17(a)
to permit: (a) the Investment Partnerships to make their initial
purchase of partnerships interests in MCP, L.P. and the Initial
Investment Fund; (b) a purchase by an Investment Partnership, directly
or indirectly, from any affiliated person (as defined in section
2(a)(3) of the Act) (``affiliated person'') of an Investment
Partnership or of the Company of securities or other property
previously acquired for the account of the affiliated person; (c) a
sale by an Investment Partnership to another Investment Partnership,
the Company, or any affiliated person of an Investment Partnership of
securities or other property previously acquired by the Investment
Partnership; (d) a direct or indirect investment by an Investment
Partnership in securities of issuers for which the Company, another
Investment Partnership or any affiliated person of the Company or of an
Investment Partnership have performed services and from which they may
have received fees, including portfolio companies of the Initial
Investment Funds; (e) a direct or indirect investment in or a
transaction with any individual, company, or other investment vehicle
in which the Company, its officers, directors or employees, or any
other affiliated person of the Company (including MCP or the Initial
Investment Funds) own 5% or more of the voting securities; and (f) a
sale by an Investment Partnership as a selling security holder in
public offering in which the Company, MCP, or any affiliated person of
the Company or MCP acts as member of the selling group.
4. Applicants assert that the community of interest among the
partners of the Investment Partnerships and the Company will serve to
reduce the risk of abuse in transactions
[[Page 32903]]
involving an Investment Partnership and the Company or any affiliated
persons of the Investment Partnership or the Company. Applicants also
acknowledge that any transactions subject to section 17(a) for which
exemptive relief has not been requested would require specific approval
by the SEC.
5. Section 17(d) of the Act and rule 17d-1 under the Act prohibit
any affiliated person of a registered investment company, or any
affiliated person of an affiliated person, acting as principal, from
participating in any joint arrangement with the company unless
authorized by the SEC. Applicants request exemptive relief to permit:
(a) portfolio investments made by the Initial Investment Funds that
might result, in certain limited circumstances, in the Investor
Partnership earning a carried interest on the profits attributable to
the Coinvestor Partnership; (b) an investment by one or more Investment
Partnerships in a security (i) in which another Initial Investment
Fund, the Company, MCP, another Investment Partnership or an affiliated
person of any of the Initial Investment Funds, the Company, MCP, or an
Investment Partnership, or a transferee of one of these is a
participant or becomes a participant, or (ii) with respect to which MCP
or any affiliated person of MCP is entitled to receive fees or
compensation of any kind, including, but not limited to, transaction
fees, consulting fees, or other economic benefits or interests; and (c)
an investment by one or more Investment Partnerships in an investment
vehicle sponsored, offered, or managed by MCP, the Company, another
Investment Partnership, or any affiliated person of the Company or an
Investment Partnership.
6. 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, in light of the Company's purpose of establishing the Investment
Partnerships so as to reward Eligible Participants and to attract
highly-qualified personnel to the Company, the possibility is minimal
that an affiliated-party investor will enter into a transaction with an
Investment Partnership with the intent of disadvantaging the Investment
Partnership. In addition, applicants assert that strict compliance with
section 17(d) would cause an Investment Partnership to forego
investment opportunities simply because a partner of the Investment
Partnerships, the Company, MCP, or another affiliated person of the
Investment Partnership made a similar investment.
7. 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. Rule 17f-
2 under the Act specifies the requirements that must be satisfied for a
registered management investment company to act as a custodian of its
own investments. Applicants request an exemption from section 17(f) of
the Act and rule 17f-2 under the Act to permit the following exceptions
from the requirements of rule 17f-2: (a) compliance with paragraph (b)
of the rule may be achieved through safekeeping in the locked files of
the Company; (b) for purposes of paragraph (d) of the rule, (i)
employees of the Company will be deemed employees of the Investment
Partnerships, (ii) officers and directors of an Investment Partnership
will be deemed to be officers of such Investment Partnership, and (iii)
the directors of an Investment Partnership will be deemed to be the
board of directors of such Investment Partnership; and (c) in place of
the verification procedure under paragraph (f) of the rule,
verification will be effected quarterly by two employees of the
Company. Applicants expect that almost all of the Investment
Partnership's investments will be evidenced only by partnership
agreements or similar documents, rather than by negotiable certificates
which could be misappropriated. Applicants assert that these
instruments are most suitably kept in the Company's files, where they
can be referred to as necessary.
8. Section 17(g) of the Act and rule 17g-1 generally require the
bonding of officers and employees of a registered investment company
who have access to securities or funds of the company. 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 each Investment
Partnership to comply with rule 17g-1 without the necessity of having a
majority of the members of the board of directors of the General
Partner who are not interested persons take such actions and make such
approvals and request instead that the actions and approvals be take by
the directors, regardless of whether they are interested persons.
Applicants state that, because it is likely that all directors would be
considered interested persons in the Investment Partnerships, the
Investment Partnerships could not comply with rule 17g-1 without the
request relief. Applicants state that they will comply with all other
requirements of rule 17g-1.
9. Section 17(j) and paragraph (a) of rule 17j-1 make it unlawful
for certain enumerated persons to engage in fraudulent, deceitful, or
manipulative practices in connection with the purchase or sale of
security held or to be acquired by a registered investment company.
Rule 17j-1 also requires every registered investment company to adopt a
written code of ethics and every access person of a registered
investment company to report personal securities transactions.
Applicants request an exemption from the requirements of rule 17j-1,
except for the anti-fraud provisions of paragraph (a), because they are
burdensome and unnecessary as applied to the Investment Partnerships.
Applicants state that requiring the Investment Partnerships 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 of light of the community of interests among
the partners of the Investment Partnerships by virtue of their common
association with the Company.
10. Applicants request an exemption from the requirements in
sections 30(a), 30(b), and 30(e), and the rules under these 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 Investment Partnerships
and would entail administrative and legal costs that outweigh any
benefit to the partners of the Investment Partnerships. Applicants
request exemptive relief to the extent necessary to permit each
Investment Partnership to report annually to its partners. Applicants
also request an exemption from section 30(h) to the extent necessary to
exempt the directors and any other persons who may be deemed to be
members of an advisory board of an Investment Partnership from filing
Forms 3, 4, and 5 under section 16(a) of the Securities Exchange Act of
1934 (``Exchange Act'') with respect to their ownership of interests in
the Investment Partnerships. Applicants assert that, because there is
no trading market for the interests of the Investment Partnerships and
the transfers will be severely restricted, these filings are
unnecessary for the
[[Page 32904]]
protection of investors and burdensome to those required to make them.
Applicant's Conditions
Applicants agree that any order granting the requested relief will
be subject to the following conditions:
1. Each proposed transaction described in the application otherwise
prohibited by section 17(a) or section 17(d) of the Act and rule 17d-1
under the Act (the ``Section 17 Transactions'') will be effected only
if the board of directors of the General Partner determines that: (a)
The terms of the transaction, including the consideration to paid or
received, are fair and reasonable to the Limited Partners and do not
involve overreaching with respect to the Investment Partnership or its
Limited Partners on the part of any person concerned; and (b) the
transaction is consistent with the interests of the Limited Partners,
the Investment Partnership's organizational documents, and the
Investment Partnership's reports to its Limited Partners.
In addition, the board of directors of the General Partner will
record and preserve a description of the Section 17 Transactions, their
findings, the information or materials upon which their findings are
based and the basis thereof. All such records will be maintained for
the life of the Investment Partnerships and at least two years
thereafter, and will be subject to examination by the SEC and its
staff. Each Investment Partnership will preserve the accounts, books,
and other documents required to be maintained in an easily accessible
place for the first two years.
2. In connection with the Section 17 Transactions, the board of
directors of the General Partners will adopt, and periodically review
and update, procedures designed to ensure that reasonable inquiry is
made, prior to the consummation of any such transaction, with respect
to the possible involvement in the transaction of any affiliated person
or promoter of or principal underwriter for the Investment
Partnerships, or any affiliated person or such person, promoter, or
principal underwriter.
3. A General Partner will not invest the funds of any Investment
Partnership in any investment in which an ``Affiliated Co-Investor,''
as defined below, has or proposes or 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 Investment Partnership and an Affiliated Co-Investor are
participants, unless any such Affiliated Co-Investor, prior to
disposing of all or part of its investment, (a) gives the General
Partner 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 Investment Partnership has the opportunity to
dispose of the Investment Partnership's investment prior to or
concurrently with, on the same terms as, and pro rata with the
Affiliated Co-Investor. The term ``Affiliated Co-Investor'' means the
Company, and any person who is (a) an ``affiliated person'' (as such
term is defined in section 2(a)(3) of the Act) of the Investment
Partnership; (b) a shareholder of the Company, or other entity
controlled by a shareholder of the Company; or (c) any entity with
respect to which a General Partner of such Investment Partnership or
another shareholder of the Company acts as a general partner or in a
similar capacity or has a similar capacity to control the sale or other
disposition of such entity's securities. The restrictions contained in
this condition, however, shall not be deemed to limit or prevent the
disposition of an investment by an Affiliated Co-Investor: (a) to its
direct or indirect wholly-owned subsidiary, to any company (a
``parent'') of which the Affiliated 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
Affiliated Co-Investor or a trust established for any Affiliated Co-
Investor or any such family members; (c) 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; 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 under the Exchange Act.
4. Each Investment Partnership and its General Partner will
maintain and preserve, for the life of each such Investment Partnership
and at least two years thereafter, such accounts, books, and other
documents as constitute the record forming the basis for the financial
statements that are to be provided to the partners, and each annual
report of such Investment Partnership required by the terms of the
applicable Investment Partnership agreement to be sent to the partners,
and agree that all such records will be subject to examination by the
SEC and its staff. Each Investment Partnership will preserve the
accounts, books, and other documents required to be maintained in an
easily accessible place for the first two years.
5. In any case where purchases or sales are made from or to an
entity affiliated with an Investment Partnership by reason of a 5% or
more investment in such entity by a director, officer, or shareholder
of the Company or any of its affiliates, such individual will not
participate in the applicable General Partner's determination of
whether or not to effect the purchase or sale.
6. The General Partner of each Investment Partnership will send
audited financial statements for that Investment Partnership to each of
the partners of the Investment Partnership who had an interest in that
Investment Partnership at any time during the fiscal year then ended.
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
Investment 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 Investment Partnership. In addition, within 90 days
after the end of fiscal year of each of the Investment Partnerships or
as soon as practicable thereafter, the General Partner shall send a
report to each person that was a partner of such Investment Partnership
at any time during such fiscal year, setting forth such tax information
as shall be necessary for the preparation by such partner of his
federal and state income tax returns and a report of the investment
activities of the Investment Partnership during such year.
For the SEC, by the Division of Investment Management, under
delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 99-15483 Filed 6-17-99; 8:45 am]
BILLING CODE 8010-01-M
