[Federal Register Volume 61, Number 241 (Friday, December 13, 1996)]
[Notices]
[Pages 65608-65613]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-31617]


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SECURITIES AND EXCHANGE COMMISSION
[Release No. IC-22377; 812-10344]


Bessemer Securities LLC et al.; Notice of Application

December 6, 1996.
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: Bessemer Securities LLC, Bessec Holdings, L.P., Bessemer 
Securities Corporation, Bessemer Capital Partners, L.P., Bessemer 
Ventures, Inc., Bessemer-Bradford Ventures, Inc., Bessemer Interstate 
Corp., Bessemer Properties, Inc., Bessemer Holdings, L.P., Bessemer 
Venture Partners L.P., Bessemer Venture Partners II L.P., Bessemer 
Venture Partners III L.P., Bessemer Venture Partners IV L.P., Bradford 
Venture Partners, L.P., Bradford Investors L.P.

RELEVANT ACT SECTION: Order requested under section 6(c) of the Act for 
an exemption from all provisions of the Act.

SUMMARY OF APPLICATION: The Applicants, private family-controlled 
special purpose investment vehicles whose interests are owned by the 
family and certain other persons, seek an exemption from all provisions 
of the

[[Page 65609]]

Act. The order would amend a prior order (the ``1992 Bessemer 
Order'').\1\

    \1\ Bessemer Securities Corporation, Investment Company Act 
Release Nos. 18529 (Feb. 5, 1992) (notice) and 18594 (March 3, 1992) 
(order).
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FILING DATE: The application was filed on September 13, 1996 and 
amended on November 20, 1996. Applicants have agreed to file an 
additional amendment, the substance of which is incorporated herein, 
during the notice period.

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 December 27, 
1996, and should be accompanied by proof of service on the applicants, 
in the form of an affidavit or, for lawyers, a certificate of service. 
Hearing requests should state the nature of the writer's interest, the 
reason for the request, and the issues contested. Persons who wish to 
be notified of a hearing may request notification by writing to the 
SEC's Secretary.

ADDRESSES: Secretary, SEC, 450 Fifth Street, N.W., Washington, D.C. 
20549. Applicants, c/o Bessemer Securities LLC, 630 Fifth Avenue, New 
York, NY 10111-0333.

FOR FURTHER INFORMATION CONTACT: Kathleen L. Knisely, Law Clerk, at 
(202) 942-0517, or Alison E. Baur, 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. Bessemer Securities Corporation (``Bessemer''), incorporated 
under Delaware law in 1924, is a private investment company which has 
one class of securities outstanding. All of the outstanding securities 
of Bessemer is owned by trusts established for the benefit of 
descendants of Henry Phipps (``Phipps Family Members'') and charitable 
trusts or charitable foundations established by Phipps Family Members 
(collectively, the ``Trust''). There are currently 89 trusts and one 
charitable foundation; the number of Trusts is increasing with each 
generation of the Phipps family, as most Trusts permit the creation of 
subtrusts or the transfer in further trust upon the death of an income 
beneficiary.
    2. Bessemer's shares are subject to a shareholders agreement that 
contains restrictions on share transfers. Each shareholder is bound not 
to sell, pledge or otherwise dispose of its Bessemer shares to third 
parties without first offering such shares to the other shareholders, 
except that dispositions are permitted (a) to or in trust for Phipps 
Family Members, their spouses, or charitable trusts established by 
Phipps Family Members, and (b) to the executors or administrators of 
the estate of a Phipps Family Member. Since 1934, substantially all of 
Bessemer's outstanding common stock has been held by the Trusts, 
predecessor trusts, charitable trusts or foundations established by 
Phipps Family Members. At no time has there been a public offering of 
Bessemer stock, nor has Bessemer stock been registered under any of the 
Federal securities laws. In fact, other than the charitable trusts and 
the charitable foundation, no one other than Phipps Family Members has 
ever had a beneficial interest in Bessemer's stock.
    3. Bessemer's investments include, among other assets, private 
investments.\2\ In general, the private investments segment of 
Bessemer's portfolio consists of substantial illiquid majority and 
minority interests in selected companies with growth potential, often 
in closely held or privately held companies. These investments are 
sometimes made directly by Bessemer, but in the majority of cases are 
made by partnerships, of which Bessemer or a wholly-owned subsidiary of 
Bessemer is the primary or only limited partner. Each of these 
partnerships is a limited partnership, in which Bessemer's interest as 
a limited partner exceeds 50%, and which is owned 90% or more by 
Bessemer and related persons. These partnerships are described more 
fully in paragraph 4 below.
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    \2\ See Id.
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    4. Bessemer Capital Partners, L.P. (``BCP''), Bessemer Holdings, 
L.P., Bessemer Venture Partners L.P. (``Venture Partners''), Bessemer 
Venture Partners II L.P. (``Venture Partners II''), Bessemer Venture 
Partners III L.P. (``Venture Partners III''), Bessemer Venture Partners 
IV L.P. (``Venture Partners IV''), and Bradford Investors L.P. 
(``BILP'') are all Delaware partnerships. Bradford Venture Partners, 
L.P. (``Bradford Partners'') is a New Jersey Partnership (collectively, 
the ``Existing Partnerships''). The Existing Partnerships were formed 
in 1992 to serve as vehicles for Bessemer's investment activity.
    5. Bessemer has four wholly-owned subsidiary corporations, Bessemer 
Ventures, Inc., Bessemer-Bradford Ventures, Inc., Bessemer Interstate 
Corp. and Bessemer Properties, Inc. (collectively, the ``Existing 
Subsidiaries''). Each of the Existing Subsidiaries is a corporation 
under Delaware law formed specifically to hold certain investments. The 
first two subsidiaries listed above are limited to partners of one or 
more of the partnerships discussed in paragraph 4 above. The latter two 
subsidiaries own interests in real estate partnerships or direct 
investments in real estate.
    6. In the 1992 Bessemer Order, the SEC exempted Bessemer under 
section 6(c) from all provisions of the Act. Applicants seek an amended 
order to permit them to duplicate the basic structure of the investment 
vehicles exempted in the 1992 Bessemer Order, but with the top tier 
entities (Bessemer Securities LLC (``BSLLC'') and future Family 
Securities Companies, as defined in paragraph 15) in a form that will 
be treated as a partnership for tax purposes. If the requested order is 
granted, the current owners of Bessemer plan to contribute their shares 
of Bessemer to BSLLC. That contribution has been approved by the 
corporate trustees of the shareholder trusts (subject to receipt of the 
exemptive order requested herein), and will require approval by the 
individual trustee of the shareholders. When that transaction occurs, 
Bessemer will become a wholly-owned subsidiary of BSLLC. All of the 
outstanding interests of BSLLC will be owned by the Trusts in the same 
proportion as the Trusts hold outstanding common stock of Bessemer.
    7. BSLLC is a Delaware limited liability company organized in 1996. 
It is intended to qualify as a partnership for federal tax purposes. 
All of the outstanding common membership interests in BSLLC are 
currently owned by the Trusts. Each Trust currently owns less than 10% 
of BSLLC's outstanding common interests and that will remain the case 
after the contribution of Bessemer shares to BSLLC. When the current 
owners of Bessemer contribute their shares to BSLLC, most or all of the 
capital of each Trust will be invested in BSLLC.
    8. If the requested order is granted and the current owners of 
Bessemer contribute their shares to BSLLC, Bessemer and BSLLC will both 
be limited partners in the Partnership. Bessemer will have a limited 
partnership interest in the Partnership (representing approximately 74% 
of total equity of the Partnership) with a preferred rate of return and 
BSLLC will

[[Page 65610]]

have a limited partnership interest in the Partnership (representing 
approximately 25% of total equity of the Partnership) subordinate to 
the return on Bessemer's limited partnership interest.
    9. Approximately 70.6% of BSLLC's common membership interests is 
held by Trusts of which the trustees are Bessemer Trust Company 
(``BTC''), a New Jersey chartered bank, and one or more Phipps Family 
Members, and approximately 22.0% is held by Trusts of which BTC is the 
sole trustee. Approximately 7.4% is held by Trusts of which the 
trustees are Bessemer Trust Company, N.A. (``BTNA''), a national bank, 
and one or more Phipps Family Members. BTC and BTNA are wholly owned 
subsidiaries of The Bessemer Group, Inc. (``Bessemer Group''), a 
Delaware corporation registered under the Federal Bank Holding Company 
Act. All of the outstanding stock of Bessemer Group (except for 
director's qualifying shares) is owned by Phipps Family Members or by 
the Trusts, substantially all of the trustees of which are also BTC, 
BTNA and Phipps Family Members.
    10. The initial officers and members of the board of managers of 
BSLLC are identical to the officers and board of directors of Bessemer, 
although that may change from time to time in the future. The common 
members of BSLLC have voting rights similar to the shareholders of a 
Delaware corporation (such as Bessemer), and could (if they chose to do 
so) elect a board of managers with members different than the members 
of the board of directors of Bessemer.
    11. At no time has there been a public offering of BSLLC's shares, 
nor has BSLLC's shares been registered under any of the federal 
securities laws. Pursuant to the terms of BSLLC's limited liability 
company agreement (the ``LLC Agreement''), transfers of common 
interests in BSLLC are restricted. The LLC Agreement permits transfers 
to descendants of the same child of Henry Phipps as the transferor, or 
a trust the beneficial ownership of which is limited to descendants of 
the same child of Henry Phipps as the transferor and/or a qualifying 
charity, and transfers with the approval of 80% or more of the common 
interests. All other transfers require prior notice to BSLLC and other 
common members. That notice triggers a right to purchase the securities 
by related entities.
    12. Bessec Holdings, L.P. (the ``Partnership'') is a newly formed 
Delaware limited partnership. Its purpose is to serve as a vehicle 
through which BSLLC and Bessemer will make private equity investments. 
The Partnership's portfolio will consist of illiquid interests in 
selected companies with growth potential, generally in closely held or 
privately held companies. The Partnership may co-invest in issuers with 
Bessemer Holdings, L.P., or other private investment vehicles formed by 
Bessemer, BSLLC or the Family Securities Companies. BSLLC and Bessemer 
will be the sole limited partners in the Partnership, and their 
interests will represent approximately 99% of its initial equity 
capital. The Partnership's sole general partner is Kylix Holdings, 
L.L.C. (``Kylix'').
    13. Kylix is a New York limited liability company that is 
controlled directly by the president of Bessemer and BSLLC and two 
other persons who are involved directly in the management of the 
investments of partnerships formed by Bessemer and BSLLC. Kylix is also 
indirectly owned by each of these three persons and family trusts and 
family partnerships established by each of them (the interests in which 
are owned exclusively by or for the benefit of such person, his wife 
and direct lineal descendants and spouses of such descendants) and four 
other senior employees of Bessemer Partners & Co. involved in the 
management of the assets of the partnerships.
    14. Kylix (or its affiliate Bessemer Partners & Co, a general 
partnership under common control with Kylix) will identify and analyze 
potential investments, request funding from BSLLC and Bessemer for 
investments, and manage investments made by the Partnership.
    15. Under the Partnership's partnership agreement, Kylix may not 
dispose of its partnership interest without BSLLC's consent, nor may 
BSLLC or Bessemer dispose of their partnership interests without 
Kylix's consent, except that BSLLC may transfer its interest in 
connection with a merger, reorganization, sale or similar transaction 
without obtaining such consent. No additional general partners may be 
admitted without the approval of a majority in interest of the limited 
partners. The admission of new limited partners must be consented to by 
BSLLC.
    16. It is possible that in the future other entities substantially 
similar to BSLLC (``Family Securities Companies'') and the Partnership 
(``Family Investment Vehicles'') (although possibly in corporate 
partnership, business trust, or limited liability company form) will be 
formed as vehicles for investment by the Phipps Family Members and the 
Trusts (i) for making investments in the manner in which BSLLC or the 
Partnership makes investments, (ii) making specifically identified new 
investments, (iii) to make other types of investments, or (iv) to 
succeed to BSLLC or the Partnership. The structure of each Family 
Securities Company will be similar to BSLLC and the structure of each 
Family Investment Vehicle will be similar to the Partnership in terms 
of its management and method of operation.

Applicants' Legal Analysis

    1. Section 3(c)(1) of the Act excepts from the definition of 
``investment company'' any issuer whose outstanding securities are 
beneficially owned by not more than 100 persons and which is not 
making, and does not presently propose to make, a public offering of 
its securities.
    2. BSLLC and the Partnership are currently exempt from registration 
as an investment company under section 3(c)(1) the Act. Each of the 
applicants is also exempt from registration under the Act because they 
are currently operating within the terms of the 1992 Bessemer Order. 
One of the conditions to the 1992 Bessemer Order, however, is that 
Bessemer own at least 50% of the equity of the Phipps family investment 
vehicle. Because BSLLC will not be owned by Bessemer, applicants seek 
an amended order.
    3. Applicants argue that section 3(c)(1) was intended to exclude 
``private'' investment companies from the purview of the Act and that 
the SEC has authority under section 6(c) to exempt private companies 
that have more than 100 beneficial owners. Maritime Corporation, 9 SEC 
906 (1941). Applicants cite a series of orders where the Commission has 
granted exemptions in a number of circumstances in which the applicant 
was a family-related private investment vehicle, notwithstanding the 
fact that in each instance it had more than 100 shareholders. Each of 
the orders was conditioned upon undertakings by the applicant designed 
to ensure that the investment vehicle would remain family controlled 
and private. See, e.g., Heber J. Grant & Company, Investment Company 
Act Release Nos. 20040 (January 27, 1994) (notice) and 20091 (February 
23, 1994) (order); Pitcairn Group L.P., Investment Company Act Release 
Nos. 21525 (November 20, 1995) (notice) and 21616 (December 20, 1995) 
(order); and THC Partners, Investment Company Act Release Nos. 21980 
(May 23, 1996) and 22023 (June 18, 1996) (order).
    4. Applicants submit that each of the applicants is, and the Family 
Securities Companies and the Family Investment

[[Page 65611]]

Vehicles will be, privately owned and family-controlled special purpose 
entities to which the Act was not intended to apply. Each of the 
applicants possesses the characteristics of a private company shared by 
the applicants in the previous exemptive orders. Applicants' investors 
share a close relationship to the Phipps family. BSLLC is being 
established by the Trusts that own Bessemer to pursue new investments. 
Bessemer itself is, and has been since 1924, owned entirely by Phipps 
Family Members and Trusts. Applicants argue that unlike the investment 
companies the Act was designed to regulate, BSLLC, the Partnership, the 
Family Securities Companies, and the Family Investment Vehicles will be 
operated as a private family enterprise.
    5. Applicants state that all or a substantial percentage of each 
applicant is owned, directly or indirectly, by or for the benefit of 
Phipps Family Members and Trusts, except such portions owned by persons 
related to Bessemer who are managing the assets. They further state 
that no effort has been made to sell participations in the Partnership 
to persons other than BSLLC and Bessemer. The only investor in the 
Partnership (other than BSLLC and Bessemer) is Kylix. There is no 
public market for interests in the applicants, and there have been no 
transfers of such interests. Applicants state they have not sought and 
will not seek other investors in the applicants, the Family Securities 
Companies or the Family Investment Vehicles (other than Bessemer 
Investors, as defined below), either public or private. There has been 
no market for interests in applicants, Family Securities Companies and 
the Family Investment Vehicles, and there will not be any such market.
    6. Applicants submit that the requested exemption is necessary or 
appropriate in the public interest and consistent with the protection 
of investors and the purposes fairly intended by the policy and 
provision of the 1940 Act, within the meaning of section 6(c) of the 
1940 Act

Applicants' Conditions

    Applicants agree that the Order granting the requested relief shall 
be subject to the following conditions:
    1. The requested exemption with respect to BSLLC shall be 
conditioned on the observance by it of the following conditions:
    a. BSLLC will hold annual meetings of its members for the purpose 
of electing the members of the Board of Managers, ratifying the 
appointment of the independent accountants engaged by BSLLC, and 
transacting such other business as may properly come before such 
meetings.
    b. BSLLC will furnish annually to its members its financial 
statements audited by an accounting firm of recognized national 
standing.
    c. BSLLC will be at least 80% owned directly or indirectly by or 
for the benefit of Phipps Family Members and their spouses, and Trusts; 
and any part of BSLLC that is not owned directly or indirectly by or 
for the benefit of such persons will be beneficially owned (as the term 
is used in section 3(c)(1) of the Act) by not more than 35 persons and 
will not have been publicly offered.
    d. BSLLC will not knowingly make available to any broker or dealer 
registered under the Securities Exchange Act of 1934 any financial 
information concerning BSLLC for the purpose of knowingly enabling that 
broker or dealer to initiate any regular trading market for BSLLC's 
membership interests.
    2. The requested exemption with respect to the Partnership shall be 
conditioned on the observance by the Partnership of the following 
conditions:
    a. The Partnership will furnish annually to each partner its 
financial statements audited by an accounting firm of recognized 
national standing.
    b. The Partnership will neither admit as a new partner, nor permit 
the assignment or transfer of any interest in the Partnership to, any 
individual or entity if that admission, assignment or transfer would 
cause the Partnership to fail to have the following characteristics: 
(1) The Partnership will be at least 90% owned directly or indirectly 
by or for the benefit of the following persons (``Bessemer 
Investors''): (i) BSLLC or one or more of its subsidiaries, (ii) 
Bessemer or one or more of its subsidiaries, (iii) Existing 
Partnerships; (iv) Family Securities Companies, (v) Family Investment 
Vehicles, (vi) Phipps Family members and their spouses, (vii) Trusts, 
(viii) natural persons who, at the time of their admission to the 
Partnership, are directors, managers or retired former directors or 
managers of BSLLC, Bessemer, a Family Securities Company, or an 
affiliate of BSLLC, Bessemer or a Family Securities Company, or are 
employees or retired former employees of BSLLC, Bessemer, a Family 
Securities Company or an affiliate of BSLLC, Bessemer, or a Family 
Securities Company who have (or had, in the case of retired former 
employees) a high level of executive, investment management, investment 
analysis or administrative responsibility, and any family trust, family 
partnership or comparable family entity established by such a natural 
person the interests in which are owned exclusively by or for the 
benefit of such natural person, his or her spouse and direct lineal 
descendants and spouses of such descendants, and charitable 
organizations, and (ix) natural persons who, although not employees of 
BSLLC or any affiliate of BSLLC, directly or indirectly actually manage 
the Partnership's, and Existing Partnership's or a Family Investment 
Vehicle's investments, and any family trust, family partnership or 
comparable family entity established by such a natural person the 
interests in which are owned exclusively by or for the benefit of such 
natural person, his or her spouse and direct lineal descendants and 
spouses of such descendants, and charitable organizations; (2) it will 
be at least 50% owned directly or indirectly by or for the benefit of 
Bessemer, BSLLC or a Family Securities Company; and (3) any part of the 
Partnership that is not held directly or indirectly by or for the 
benefit of Bessemer Investors will be beneficially owned (as the term 
is used in section 3(c)(1) of the Act) by not more than 35 persons and 
will not have been publicly offered.
    c. The Partnership will not (1) admit any new general partner 
without the approval of the owners of majority in interest in the 
Partnership, or (2) have as an investment adviser to that vehicle any 
investment adviser to that vehicle other than (i) Bessemer, BSLLC, a 
Family Securities Company or one of their affiliates, (ii) one or more 
employees of Bessemer, BSLLC, a Family Securities Company, or one of 
their affiliates, (iii) an investment manager or a general partner (or 
one or more of its affiliates or employees) approved by the owners of a 
majority in interest of the Partnership, or (iv) a bank or trust 
company subsidiary of Bessemer Group.
    d. The Partnership will not knowingly make available to any broker 
or dealer registered under the Securities Exchange Act of 1934 any 
financial information concerning the Partnership for the purpose of 
knowingly enabling that broker or dealer to initiate any regular 
trading market in any partnership interest in the Partnership.
    3. The requested exemption with respect to Bessemer shall be 
conditioned on the observance by it of the following conditions:
    a. Bessemer will hold annual meetings of its shareholder or 
shareholders for the purpose of electing the members of the Board of 
Directors, ratifying the appointment of the independent accountants 
engaged by Bessemer, and transacting such other

[[Page 65612]]

business as may properly come before such meetings.
    b. Bessemer will furnish annually to its shareholder or 
shareholders its financial statements which may be part of the 
consolidated financial statements of BSLLC, audited by an accounting 
firm of recognized national standing.
    c. Bessemer will be at least 80% owned directly or indirectly by or 
for the benefit of BSLLC, a Family Securities Company, Phipps Family 
Members and their spouses, and Trusts; and any part of Bessemer that is 
not owned directly or indirectly by or for the benefit of such persons 
will be beneficially owned (as the term is used in section 3(c)(1) of 
the Act) by not more than 35 persons and will not have been publicly 
offered.
    d. Bessemer will not knowingly make available to any broker or 
dealer registered under the Securities Exchange Act of 1934 any 
financial information concerning Bessemer for the purpose of knowingly 
enabling that broker or dealer to initiate any regular trading market 
for Bessemer's common stock.
    4. The requested exemption with respect to each Existing 
Partnership shall be conditioned on the observance by that Existing 
Partnership of the following conditions:
    a. The Existing Partnership will furnish annually to each partner 
its financial statements audited by an accounting firm of recognized 
national standing.
    b. The Existing Partnership will neither admit as a new partner, 
nor permit the assignment or transfer of any interest in the Existing 
Partnership to, any individual or entity if that admission, assignment 
or transfer would cause the Existing Partnership to fail to have the 
following characteristics: (1) the Existing Partnership will be at 
least 90% owned directly or indirectly by or for the benefit of 
Bessemer, BSLLC or a Family Securities Company; and (2) any part of the 
Existing Partnership that is not held directly or indirectly by or for 
the benefit of Bessemer Investors will be beneficially owned (as the 
term is used in section 3(c)(1) of the Act) by not more than 35 persons 
and will not have been publicly offered.
    c. The Existing Partnership will not (1) admit any new general 
partner without the approval of the owners of majority in interest in 
the Existing Partnership, or (2) have as an investment adviser to that 
vehicle any investment adviser other than (i) Bessemer, BSLLC, a Family 
Securities Company or one of their affiliates, (ii) one or more 
employees of Bessemer, BSLLC, a Family Securities Company, or one of 
their affiliates, (iii) an investment manager or a general partner (or 
one or more of its affiliates or employees) approved by the owners of a 
majority in interest of the Existing Partnership, or (iv) a bank or 
trust company subsidiary of Bessemer Group.
    d. The Existing Partnership will not knowingly make available to 
any broker or dealer registered under the Securities Exchange Act of 
1934 any financial information concerning the Existing Partnership for 
the purpose of knowingly enabling that broker or dealer to initiate any 
regular trading market in any partnership interest in the Existing 
Partnership.
    5. The requested exemption with respect to each of Bessemer 
Ventures, Inc., Bessemer-Bradford Ventures, Inc., Bessemer Interstate 
Corp. and Bessemer Properties, Inc. (the ``Existing Subsidiaries'') 
shall be conditioned on the observance by that Existing Subsidiary of 
the following conditions:
    a. All of the securities of the Existing Subsidiary will be owned 
directly or indirectly by or for the benefit of Bessemer, BSLLC or a 
Family Securities Company.
    b. the Existing Subsidiary will not knowingly make available to any 
broker or dealer registered under the Securities Exchange Act of 1934 
any financial information concerning the Existing Subsidiary for the 
purpose of knowingly enabling that broker or dealer to initiate any 
regular trading market in any partnership interest in the Existing 
Subsidiary.
    6. The requested exemption with respect to each Family Securities 
Company shall be conditioned on the observance by that Family 
Securities Company of the following conditions:
    a. The Family Securities Company will hold annual meetings of its 
members for the purpose of electing the members of its board of 
managers, board of directors or persons serving a similar function, 
ratifying the appointment of the independent accountants engaged by the 
Family Securities Company, and transacting such other business as may 
properly come before such meetings.
    b. The Family Securities Company will furnish annually to its 
members its financial statements audited by an accounting firm of 
recognized national standing.
    c. The Family Securities Company will be at least 80% owned 
directly or indirectly by or for the benefit of Bessemer, Phipps Family 
Members and their spouses, and Trusts; and any part of the Family 
Securities Company that is not owned directly or indirectly by or for 
the benefit of such persons will be beneficially owned (as the term is 
used in section 3(c)(1) of the Act) by not more than 35 persons and 
will not have been publicly offered.
    d. The Family Securities Company will not knowingly make available 
to any broker or dealer registered under the Securities Exchange Act of 
1934 any financial information concerning the Family Securities Company 
for the purpose of knowingly enabling that broker or dealer to initiate 
any regular trading market for securities issued by the Family 
Securities Company.
    7. The requested exemption with respect to each Family Investment 
Vehicle may be conditioned on the observance by that Family Investment 
Vehicle of the following conditions:
    a. The Family Investment Vehicle will furnish annually to each 
member, shareholder, partner or investor its financial statements 
audited by an accounting firm of recognized national standing.
    b. The Family Investment Vehicle will neither admit as a new 
investor, nor permit the assignment or transfer of any interest in that 
Family Investment Vehicle to, any individual or entity if that 
admission, assignment or transfer would cause that Family Investment 
Vehicle to fail to have the following characteristics: (1) that Family 
Investment Vehicle will be at least 90% owned directly or indirectly by 
or for the benefit of Bessemer Investors; (2) it will be at least 50% 
owned directly or indirectly by or for the benefit of Bessemer, BSLLC 
or a Family Securities Company; and (3) any part of that Family 
Investment Vehicle that is not held directly or indirectly by or for 
the benefit of Bessemer Investors will be beneficially owned (as the 
term is used in section 3(c)(1) of the Act) by not more than 35 persons 
and will not have been publicly offered.
    c. The Family Investment Vehicle will not (1) admit any new general 
partner (in the case of a limited partnership) or manager without the 
approval of the owners of a majority in interest of it, or (2) have as 
an investment adviser to that vehicle any investment adviser other than 
(i) Bessemer, BSLLC, a Family Securities Company or one or more of 
their affiliates, (ii) one or more employees of Bessemer, BSLLC, a 
Family Securities Company, or one of their affiliates, (iii) an 
investment manager or a general partner (or one or more of its 
affiliates or employees) approved by the owners of a majority in 
interest of the Family Investment Vehicle, or (iv) a bank or trust 
company subsidiary of the Bessemer Group.
    d. The Family Investment Vehicle will not knowingly make available 
to any broker or dealer registered under

[[Page 65613]]

the Securities Exchange Act of 1934 any financial information 
concerning that Family Investment Vehicle for the purpose of knowingly 
enabling that broker or dealer to initiate any regular trading market 
in any interest in that Family Investment Vehicle.

    For the SEC, by the Division of Investment Management, pursuant 
to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-31617 Filed 12-12-96; 8:45 am]
BILLING CODE 8010-01-M