[Federal Register Volume 59, Number 27 (Wednesday, February 9, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-2892]


[[Page Unknown]]

[Federal Register: February 9, 1994]


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SECURITIES AND EXCHANGE COMMISSION
[Release No. IC-20053; 813-126]

 

DLJ LBO Plans Management Corporation; Application for Exemption

February 2, 1994.
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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APPLICANT: DLJ LBO Plans Management Corporation (``DLJ Management''), 
on behalf of certain limited liability companies (the ``Companies'').

RELEVANT ACT SECTIONS: Applicant seeks an order under section 6(b) 
granting an exemption from all provisions of the Act except sections 7, 
8(a), and 9, certain provisions of section 17, sections 36 through 53, 
sections 2 through 5 to the extent necessary to implement the other 
sections, and the rules and regulations related to these sections.

SUMMARY OF APPLICATION: Applicant, on behalf of the Companies, seeks an 
order that would grant the Companies an exemption from most provisions 
of the Act, and would permit certain affiliated and joint transactions. 
Each Company would be an employees' securities company within the 
meaning of section 2(a)(13) of the Act.

FILING DATES: The applications was filed on August 2, 1993, and amended 
on December 2, 1993.

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 
applicant 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 28, 
1994, and should be accompanied by proof of service on the 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 may request 
notification of a hearing by writing to the SEC's Secretary.

ADDRESSES: Secretary, SEC, 450 Fifth Street, NW., Washington, DC 20549; 
Applicant, 140 Broadway, New York, New York 10005-1285.

FOR FURTHER INFORMATION CONTACT:
John V. O'Hanlon, Senior Attorney, at (202) 272-3922, or Elizabeth G. 
Osterman, Branch Chief, at (202) 272-3016 (Division of Investment 
Management, Office of Investment Company Regulations).

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.

Applicant's Representatives

    1. DLJ Management is a Delaware corporation and a wholly-owned 
subsidiary of Donaldson, Lufkin & Jenrette, Inc. (``DLJ Inc.,'' 
together with any person that directly or indirectly is controlled by 
DLJ Inc., ``DLJ''). DLJ Inc. is a diversified financial services 
holding company which, directly and through its subsidiaries, provides 
investment, financing, and related services. DLJ Inc.'s principal 
subsidiary, Donaldson, Lufkin & Jenrette Securities Corporation, is a 
broker-dealer registered under the Securities Exchange Act of 1934.
    2. DLJ Management, or another direct or indirect wholly-owned 
subsidiary of DLJ Inc. formed for such purpose, will be the manager of 
the Companies (the ``Manager'').
    3. Each Company will be a Delaware 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.\1\ Each Company will be governed by a 
limited liability company agreement (``LLC Agreement'').
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    \1\A limited liability company generally is treated as a 
corporation for limited liability purposes and under certain 
circumstances as a partnership for federal income tax purposes. 
Applicant reserves the right to implement this structure through a 
limited partnership arrangement.
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    4. Investors in the Companies (``Members''), other than the 
Manager, will be current, highly-compensated employees, officers, or 
directors of DLJ (``Eligible Employees''), who are also ``accredited 
investors'' under subsection 6 of rule 501(a) of Regulation D under the 
Securities Act of 1933 (the ``Securities Act''). In addition, these 
Members will be experienced professionals in the investment banking and 
securities business, or in administrative, financial, accounting, 
legal, or operational activities related thereto. They will be 
sophisticated investors able to fend for themselves without benefit of 
regulatory safeguards. All Members will be aware that (a) interests in 
the Companies will be sold in a transaction exempt under section 4(2) 
of the Securities Act or Regulation D under the Securities Act, and 
thus are offered without registration under the Securities Act; and (b) 
although registered under the Act, the Companies will be exempt from 
most provisions of the Act.
    5. The Companies will enable Eligible Employees to pool their 
investment resources and to receive the benefit of certain investment 
opportunities that come to the attention of DLJ. Each Company will 
acquire equity and equity-related investments, excluding any investment 
in a company which is an investment company as defined in section 3(a) 
of the Act, in (a) companies which are the subject of DLJ transactions 
involving leveraged or management buyouts, recapitalizations, 
bankruptcies, reorganizations, start-up and expansion financings, or 
other similar investments or restructurings (``Merchant Banking 
Transactions'') structured by DLJ Merchant Banking Partners, L.P., DLJ 
Offshore Partners, C.V., or DLJ International Partners, C.V. (together 
with any similar funds created hereafter, the ``DLJ Merchant Banking 
Funds''), or with respect to which a DLJ Merchant Banking Fund assisted 
in the consummation and, in each case, in which DLJ has a long-term 
equity or equity-related investment (``Fund Investments''); and/or (b) 
companies other than DLJ which are the subject of transactions 
structured by DLJ's investment banking or merchant banking groups or 
with respect to which either group assisted in the consummation, in 
which DLJ has a long-term equity or equity-related investment, and 
which are not Fund Investments (``Non-Fund Investments'') (together 
with Fund Investments, the ``DLJ Investments''). The LLC Agreement may 
provide for limitations on the amount of investments in Non-Fund 
Investments.
    6. At least two plans will be available to Eligible Employees. 
Eligible Employees in the ``DLJ Plan'' will invest in all investments 
made by a Company and share in the net profits or losses of the Company 
for each investment period in proportion to their capital accounts. The 
``DLJMB Plan'' is available only to Eligible Employees who are deemed 
important to DLJ's business through their involvement in Merchant 
Banking Transactions. Eligible Employees in the DLJMB Plan may only 
invest in Merchant Banking Transactions in which they have been 
directly involved and will share in the net profits or losses of each 
such investment in proportion to the capital accounts of the DLJMB Plan 
participants relating to that particular investment.\2\
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    \2\Applicant reserves the flexibility to utilize the Companies 
for additional DLJ employee plans, subject generally to the 
representations in the application.
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    7. Because of the difference in the eligibility of membership and 
the nature of the interests held in the two plans, DLJ may create 
separate Companies for each plan, although DLJ may create only one 
Company for both plans, with separate capital accounts and allocations 
for each plan. To the extent a DLJMB Plan Company co-invests with a DLJ 
Plan Company in DLJ Investments, the amount of a particular investment 
made available to each company will be governed by the terms of the 
agreement described in paragraph 9 below.
    8. Applicant expects that a new Company will be established each 
year (or other relevant period), although, depending upon investment 
activity, it may not be necessary or desirable to form a new Company 
after only one year of activity.\3\
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    \3\Applicant reserves the right to establish a single long-term 
Company, in which the interests for each year (or other relevant 
period) would be held in separate and distinct portfolios with 
different classes of interests, capital accounts, and allocations of 
income and loss applicable for each such year (or other relevant 
period). Each of these portfolios would comply with rule 18f-2 under 
the Act.
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    9. To assure each DLJ Plan Company that it will have the ability to 
acquire an interest in every DLJ Investment, and to assure each DLJMB 
Plan Company that it will have the ability to acquire an interest in 
every DLJ Investment on which DLJMB Plan Company participants worked, 
each Company will enter into an agreement with DLJ Inc. (the ``DLJ 
Agreement''). Under the DLJ Agreement, unless a committee comprised of 
senior professionals at DLJ (the ``administrative Committee'') approves 
a determination by the Manager that a Company not participate in a 
particular investment, each Company will be obligated to purchase from 
DLJ Inc. or an affiliate of DLJ Inc., and DLJ Inc. will agree to sell 
or cause an affiliate of DLJ Inc. to sell to the Company, a fixed 
percentage of such entity's long-term equity or equity-related 
investment in each DLJ Investment that closes during a period specified 
in the DLJ Agreement (the ``Investment Period'') (other than 
investments held by Designated Funds or Designated Subsidiaries, and 
Exempted Investments, as defined below).
    10. For DLJ Plan Companies, it is expected that a Company will be 
obligated to purchase from DLJ and DLJ will be obligated to sell to the 
Company not less than 20% and not more than 30% of DLJ's long-term 
equity or equity-related investment in DLJ Investments, to be 
determined at the beginning of each Investment Period depending on, 
among other factors, availability of capital and compensation 
objectives.
    11. For DLJMB Plan Companies, a Company will be obligated to 
purchase from DLJ and DLJ will be obligated to sell to the Company a 
percentage of DLJ's long-term equity or equity-related investment in 
DLJ Investments to be determined on an investment by investment basis 
no later than two weeks following DLJ's acquisition, depending 
principally on the number of Members who will be participating in each 
investment, the size of the DLJ Investment, and the quality of work 
done. No employee will be obligated to take the portion of the 
investment offered under the DLJMB Plan.\4\
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    \4\The DLJ Bridge Fund purchases short-term securities to 
provide bridge financing for acquisitions. In transactions in which 
the DLJ Bridge Fund has provided a bridge loan in connection with 
the transaction, (a) the percentage to be purchased under the DLJMB 
Plan will be determined upon full repayment of the bridge loan, 
unless the Administrative Committee approves an earlier 
determination by the Manager; and (b) in addition to the fixed 
percentage to be purchased under the DLJ Plan, after the bridge loan 
is fully repaid, DLJ may offer an additional equity portion of the 
investment to the Company.
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    12. Each DLJ Agreement will provide that a Company will acquire DLJ 
Investments from DLJ as soon as practicable after DLJ purchases the 
investment, but in no event later than one month after the later of 
such purchase or organization of the Company, at a price equal to the 
cost to DLJ of purchasing the investment.\5\
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    \5\In certain transactions, a Company may acquire its investment 
directly from the issuer, concurrently with DLJ.
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    13. Each DLJ Agreement will provide that a Company may not sell any 
security purchased under the DLJ Agreement or any Other Investment, as 
defined below, so long as DLJ Inc. or any direct or indirect wholly-
owned affiliate of DLJ Inc. has an investment in a stock or security 
which is identical, substantially similar, or economically equivalent 
to such security, absent the consent of the administrative Committee. A 
Company will be required to participate in any public or private sale 
by DLJ Inc. and/or any wholly-owned affiliate of DLJ Inc. of securities 
owned by them or for their benefit which are identical, substantially 
similar, or economically equivalent to the securities held by a 
Company. The DLJ Agreement provides that the Company must sell no less 
than its pro rata share of such securities but may, with the consent of 
the Administrative Committee, sell more than its pro rata share of 
these securities.
    14. Although each Company will be required to purchase DLJ 
Investments, the Company will not be required to participate in sales 
by non-wholly-owned affiliates of DLJ (such as other partnerships 
established by DLJ Inc.) in which DLJ Inc. or its wholly-owned 
affiliates do not participate. The rationale underlying the differing 
requirements is that while DLJ Inc. has the ability to make all DLJ 
Investments available to the Companies, DLJ Inc. and its wholly-owned 
affiliates may not have the authority to require that a non-wholly-
owned affiliate permit a Company to participate in its disposition of 
such investments.
    15. The Administrative Committee will have no involvement in 
disposition decisions where a portfolio security is held by a Company 
and a non-wholly-owned affiliate, but not by DLJ Inc. or a wholly-owned 
affiliate. In such circumstances, the timing of the disposition will be 
determined by the Manager in the exercise of its fiduciary 
responsibilities.
    16. Pursuant to the DLJ Agreement, certain funds managed by DLJ 
(the ``Designated Funds'') will not be obligated under the DLJ 
Agreements to sell DLJ Investments to the Companies. The Designated 
Funds include certain merchant banking funds established by DLJ Inc., 
the investors of which are limited partners unaffiliated with DLJ Inc. 
Because of certain provisions in the documents establishing the 
Designated Funds, DLJ Inc. lacks the ability to compel the sale of any 
of the Designated Funds' portfolio securities to the Companies. At the 
present time, the DLJ Merchant Banking Funds, DLJ Merchant Banking, 
L.P., DLJ Merchant Banking, Inc., and DLJ Offshore Management N.V. are 
the only Designated Funds. To the extent that a substantial portion of 
DLJ's activities in initiating and structuring Fund Investments is 
conducted through the DLJ Merchant Banking Funds, and DLJ is obligated 
to co-invest with such funds, each Company will be assured of the 
ability to acquire an interest in several DLJ Investments.
    17. Pursuant to the DLJ Agreement, certain investment subsidiaries 
and affiliates of DLJ Inc. (``Designated Subsidiaries'') will not be 
obligated under the DLJ Agreements to sell DLJ Investments to the 
Companies. Many of the investments in which the Designated Subsidiaries 
invest would be unsuitable investments for a Company due to the size of 
the investment, the maturity of the portfolio company, or other 
relevant factors. The Designated Subsidiaries at present include The 
Sprout Group; Wood, Struthers & Winthrop Management Corp.; and the DLJ 
Bridge Fund.
    18. Each DLJ Agreement will provide that DLJ will not be obligated 
to offer a Company any portion of securities (a) which it receives as 
compensation for providing investment banking or other services, (b) 
which it acquires solely in the capacity of underwriter or principal 
market maker or in connection with block positioning, proprietary 
trading accounts, risk arbitrage, or other broker dealer activities, or 
(c) in other circumstances enumerated as exceptions to DLJ's obligation 
to offer an investment opportunity to a DLJ Merchant Banking Fund, as 
set forth in the fund's organizational document (collectively, 
``Exempted Investments''). The circumstances in which DLJ acquires any 
Exempted Investment generally are not of the type making those 
investments appropriate for acquisition by the Companies.
    19. A Company may invest in an investment made by a Designated Fund 
or a Designated Subsidiary if the Company is offered the opportunity to 
invest in such investment and if the Administrative Committee approves 
a determination by the Manager that the Company's participation in such 
investment is appropriate.
    20. A Company will not invest in investments made by DLJ that are 
not DLJ Investments or are Exempted Investments (``Other Investments'') 
unless the Company is offered the opportunity to invest in such Other 
Investments and the Administrative Committee approves a determination 
by the Manager that the Company's participation in such investments is 
appropriate.
    21. Pending investment, and prior to distribution, Company funds 
will be invested in: (a) United States Government obligations with 
maturities of no more than one year and one day; (b) high grade 
commercial paper with maturities of no more than six months and one 
day; (c) interest-bearing deposits maturing within one year in any bank 
or trust company organized or licensed under the laws of the United 
States or any state thereof and having an unrestricted surplus of at 
least $250 million; or (d) any money market fund distributed or managed 
by DLJ, Alliance Capital Management L.P., or Wood, Struthers & Winthrop 
Management Corp. (each such investment, a ``Temporary Investment''). 
Consistent with section 12(d)(1)(A)(i) of the Act, no Company will 
acquire more than 3% of the total outstanding voting stock of any 
investment company. Also, the Manager temporarily may invest any 
portion of Company funds attributable to its own capital contributions 
by making unsecured demand loans to DLJ for working capital purposes. 
Such a loan would be made at a return rate equal to the Manager's 
Preferred Return, as defined below.
    22. The Manager, in addition to performing all management and 
administrative services necessary for the operation of the Companies, 
will make a substantial investment in each Company. For DLJ Plan 
Companies, upon the formation of each Company, and for both DLJ Plan 
Companies and DLJMB Plan Companies, at the time of each investment by a 
Company, the Manager will contribute 1% of the total cash contributions 
made by all the Members (excluding the Manager's other capital 
contribution obligations described in the following sentence). In 
addition, at the time of each investment by the Company in DLJ 
Investments and Other Investments, the Manager generally will make an 
additional capital contribution to the Company equal to approximately 
65% of the aggregate amount that the Company proposes to invest.\6\
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    \6\If a particular employee plan does not involve as much 
leverage as the DLJ Plan and the DLJMB Plan, it is possible that DLJ 
will not contribute capital to the Company other than its 1% capital 
contribution, and instead will hold a substantially similar 
investment outside of the Company.
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    23. The Manager will be entitled to receive a cumulative annual 
return on its contribution to the capital of a Company (other than its 
1% capital contribution described above) from the time contributed 
until the repayment of such capital at (a) the rate of interest 
publicly announced by Citibank, N.A. as its prime rate or base lending 
rate, or, if no such rate has been announced by Citibank, N.A., then 
the rate of interest so announced by another major money center bank in 
New York City selected by the Manager in its sole discretion, plus (b) 
1\3/4\% per annum (the ``Preferred Return'').
    24. Company profits, excluding those derived from Temporary 
Investments, will be allocated as follows: first, to the Manager in an 
amount necessary to provide it the Preferred Return; second, to the 
Members, including the Manager, in the same proportions, in reverse 
order, as any previously allocated losses, up to the amount of such 
losses; and third, to the Members, including the Manager only to the 
extent of its 1% contribution, in proportion to their capital accounts.
    25. Company losses not derived from Temporary Investments will be 
allocated to the Members, including the Manager, in the same 
proportions as any profits would be allocated pursuant the third item 
of paragraph 24 above
    26. Profits and losses of a Company derived from Temporary 
Investments of capital contributions pending investments in portfolio 
investments will be allocated to the Members, including the Manager, in 
proportion to their capital accounts. Profits and losses of each 
Company from Temporary Investments of distributions held for the 
account of the Members, including the Manager, pending termination of 
the Manager's right to purchase interests during the Forfeiture Period, 
as defined below, will be allocated to the Members, including the 
Manager, for whose account such distributions are retained.
    27. Each member will have a limited obligation to restore to a 
Company, upon liquidation, such Member's negative capital account 
balance, if any. The Member's obligation will not exceed the value of 
the Member's interests in specified other Companies created under the 
application and other employee benefit, compensation, and similar plans 
established by DLJ.
    28. All of the Manager's directors and principal officers will be 
directors or officers of DLJ, and a majority of such directors and 
principal officers will be Eligible Employees under the DLJ Plan. No 
compensation will be paid to the Manager or its officers or directors 
for its services. The Manager will bear all expenses incurred in 
connection with the organization, business operations, winding up, and 
liquidation of the Companies.
    29. The Manager will register as an investment adviser under the 
Investment Advisers Act of 1940. The Manager believes that its 
relationships with the Companies will fully comply with the provisions 
of the Advisers Act.
    30. The Members may remove a Manager upon the approval of at least 
90% of the entire ownership interest of the Members of a Company, 
excluding the Manager. The remaining Members may elect to continue the 
Company following such removal.
    31. All Company interests will be non-transferable. However, with 
the consent of the Manager, in its sole discretion, a Member may assign 
his economic interest to a member of the assignor's immediate family.
    32. In the DLJ Plan, a participant's investment generally will 
become vested at the rate of 33\1/3\% annually beginning on March 31 of 
the year after the Company's formation, except as provided below. If a 
participant ceases to be an active employee of DLJ (a ``Departing 
Member'') by reason of (a) death, (b) retirement on or after age 65 or 
on any other date qualifying the participant for early or disability 
retirement, or (c) termination of a participant's employment with DLJ 
for any reason (other than for cause, as defined in the LLC Agreement) 
within 24 months after a change of control, as defined in the LLC 
Agreement, of DLJ, such Departing Member's investment will be fully 
vested; provided that if a participant's employment with DLJ is 
terminated at any time for cause, any previous vesting will be 
forfeited, and all of the Department Member's investment shall be 
subject to repurchase, as explained in paragraph 34 below, during the 
period from the termination date to the later of (i) December 31 of the 
year following the year in which the participant's employment is 
terminated and (ii) the last day of the eighteenth calendar month 
following the month in which the participant's employment is terminated 
(the ``Forfeiture Period''). If a Member voluntarily resigns his or her 
employment with DLJ, any unvested interests similarly will be subject 
to repurchase.
    33. In the DLJMB Plan, a participant's investment will be vested 
25% annually beginning 18 months after the investment date for each 
particular investment, except as provided below. If (a) a participant's 
employment with DLJ is terminated at any time for cause, or (b) a 
participant voluntarily terminates his employment and during the 
Forfeiture Period the participant becomes employed by, or a partner in, 
consultant to, or otherwise joins any firm that the Manager determines, 
in its reasonable discretion, to be competitive with DLJ's merchant 
banking or investment banking (including high yield) businesses or any 
other business of DLJ, any previous vesting will be forfeited and all 
of the Departing Member's investment shall be subject to repurchase, as 
explained in paragraph 34 below. Notwithstanding the foregoing, 
however, if the participant's employment is terminated for any reason, 
other than for cause, within 24 months after a change in control, such 
Departing Member's investment will be fully vested.
    34. In both the DLJ Plan and the DLJMB Plan, upon termination of a 
participant's employment with DLJ, the Manager may decide at any time 
during the Forfeiture Period to purchase for cash all or a portion of 
the unvested interests. Upon any such purchase, the Manager will pay 
the Departing Member an amount determined under a prescribed formula 
set forth in the application.
    35. Each Company will send audited annual financial statements to 
the Members within 120 days of the end of the fiscal year, or as soon 
as practicable thereafter. In addition, a copy of each Member's 
Internal Revenue Service Schedule ``K-1'' will be transmitted to such 
Member.
    36. The Companies and the Manager permanently will maintain and 
preserve such accounts, books, and other documents as constitute the 
record forming the basis for the audited financial statements that are 
to be provided to each Member or that are necessary or appropriate to 
record its transactions with the Company. All such records will be 
subject to examination by the Commission and its staff.

Applicant's Legal Analysis

    1. On behalf of the Companies, applicant requests an exemption 
under section 6(b) of the Act from all provisions of the Act except (a) 
sections 7, 8(a), 9, 36, and 37, and the rules and regulations under 
those sections; (b) certain provisions of section 17, and the related 
rules and regulations under those sections; (c) sections 2 through 5 to 
the extent necessary to implement the other sections; and (d) sections 
38 through 53, and the rules and regulations under those administrative 
and jurisdictional sections necessary to enforce compliance with the 
terms of any order granted.
    2. Applicant requests an exemption from section 17(a) of the Act to 
the extent necessary to permit DLJ to engage in any transaction as 
principal with a Company. The exemption is requested to permit the 
Companies to (a) purchase portfolio investments from DLJ on a principal 
basis pursuant to the DLJ Agreement; (b) purchase interests or property 
in a company or other investment vehicle in which DLJ already owns 
securities, or where such company or other investment vehicle is 
otherwise affiliated with DLJ Inc. or a Company; (c) sell, put or 
tender, or grant options in securities or interests in a company or 
other investment vehicle back to such entity, where that entity is 
affiliated with DLJ; (d) participate as a selling security holder in a 
public offering that is underwritten by DLJ or in which DLJ acts as a 
member of the underwriting or selling group; and (e) make short-term 
Temporary Investments purchased from, and sold to, DLJ or its 
affiliates.
    3. Applicant requests an exemption from section 17(d) under the Act 
to permit the Companies to engage in transactions in which affiliated 
persons of the Companies may also be participants. Applicant states 
that such an exemption is necessary in view of the fact that the 
Companies will be required to invest their capital contributions in DLJ 
Investments in which DLJ will retain an interest.
    4. Applicant requests an exemption from section 17(f) to the extent 
necessary to permit DLJ to act as custodian without a written contract. 
Applicant asserts that because there is such a close association 
between the Companies and DLJ, a written contract would cause a burden 
and expense where none is necessary.
    5. Applicant requests an exemption from section 17(g) and rule 
17(g)(1) to permit the Manager's officers and directors, who may be 
deemed ``interested persons,'' to take actions and make the 
determinations set forth in the rule. In addition, applicant requests 
an exemption from section 17(j) and rule 17j-1 (except for paragraph 
(a) thereof) because the ``access person'' requirements are unnecessary 
in this context.
    6. Applicant submits that the exemptions requested pursuant to 
section 6(b) are consistent with the protection of investors. Applicant 
asserts that the exemptions are necessary or relevant to the operations 
of the Companies as an investment program uniquely adapted to the needs 
of employees of DLJ. Applicant further submits that the requested 
relief is consistent with the legislative history relating to 
employees' securities companies. In support of these assertions, 
applicant cites the nature of the Companies as employees' securities 
companies under the Act and their intended manner of operation.
    7. Applicant asserts that a substantial community of economic and 
other interests exists among DLJ and the Members, including the 
Manager, which obviates the need for protection of investors under the 
Act. The Companies were conceived and will be organized and managed by 
persons who will be investing in the Companies, and will not be 
promoted by persons seeking to profit from fees or investment advice or 
from the distribution of securities. Applicant also submits that the 
terms of the proposed affiliated transactions will be reasonable and 
fair and free from overreaching.

    For the SEC, by the Division of Investment Management, pursuant 
to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-2892 Filed 2-8-94; 8:45 am]
BILLING CODE 8010-01-M