[Federal Register Volume 62, Number 105 (Monday, June 2, 1997)]
[Notices]
[Pages 29751-29755]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-14209]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. IC-22682; 813-156]
DLJ LBO Plans Management Corporation and DLJ First ESC L.L.C.;
Notice of Application
May 23, 1997.
AGENCY: Securities and Exchange Commission (``SEC'').
ACTION: Notice of application for exemption under the Investment
Company Act of 1940 (the ``Act'').
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APPLICANTS: DLJ LBO Plans Management Corporation (``DLJ Management'')
and DLJ First ESC L.L.C. (the ``Initial Company''), on behalf of
certain limited liability companies which may be formed in the future
(the ``Subsequent Companies'') (together with the Initial Company, the
``Companies'').
RELEVANT ACT SECTIONS: Applicants request an order under sections 6(b)
and 6(e) of the Act for an exemption from all provisions of the Act
except section 9, certain provisions of sections 17 and 30, sections 36
through 53, and the rules and regulations thereunder.
SUMMARY OF APPLICATION: Applicants request 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 will be
an employees' securities company within the meaning of section 2(a)(13)
of the Act.\1\
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\1\ The requested order would supersede an existing order. DLJ
LBO Plans Management Corporation, Investment Company Act Release
Nos. 20053 (Feb. 2, 1994) (notice) and 20103 (Mar. 1, 1994) (order).
FILING DATES: The application was filed on November 1, 1996 and amended
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on March 14, 1997 and May 23, 1997.
HEARING OR NOTIFICATION OF HEARING: An order granting the application
will be issued unless the SEC orders a hearing. Interested persons may
request a hearing by writing to the SEC's Secretary and serving
applicants with a copy of the request, personally or by mail. Hearing
requests should be received by the SEC by 5:30 p.m. on June 17, 1997,
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 interests, 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. Applicants, 277 Park Avenue, New York, New York 10172.
FOR FURTHER INFORMATION CONTACT: David W. Grim, Staff Attorney, at
(202) 942-0571, or Elizabeth G. Osterman, Assistant Director, 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 from
the SEC's Public Reference Branch.
Applicants' Representations
1. DLJ Management is a Delaware corporation and an indirect wholly-
owned subsidiary of Donaldson, Lufkin and Jenrette, Inc. (``DLJ Inc.'')
(together with any person that is directly or indirectly 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 (the
``Exchange Act'').
2. DLJ Management is the manager of the Initial Company, and it, or
another direct or indirect wholly-owned subsidiary of DLJ formed for
such purpose, will be the manager of the Subsequent Companies (the
``Manager''). The Manager is registered as an investment adviser under
the Investment Advisers Act of 1940 and will continue to maintain such
registration.
3. Each Company is or 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 is operating or will operate as a
closed-end, non-diversified, management investment company. The Manager
intends to form the Companies to enable Eligible Employees of DLJ and
their Qualified Participants (in each case, as defined below) to pool
their investment resources and to receive the benefit of certain
investment opportunities that come to the attention of DLJ without the
[[Page 29752]]
necessity of having each investor identify such opportunities and
analyze their investment merit.
4. Interests in the Companies (``Interests'') will be sold only to
Eligible Employees or, at the request of Eligible Employees, Qualified
Participants of such Eligible Employees. In order to qualify as an
``Eligible Employee,'' (i) an individual must (a) be a current or
former employee, officer, director, or ``Consultant'' \2\ of DLJ and
(b) meet the standards of an accredited investor under rule 501(a)(6)
of Regulation D (``Regulation D'') under the Securities Act of 1933
(the ``Securities Act''), or (ii) an entity must (a) be a current or
former Consultant of DLJ and (b) meet the standards of an accredited
investor under rule 501(a) of Regulation D. In order to qualify as a
``Qualified Participant,'' an individual or entity must (i) be an
Eligible Family Member or Qualified Entity (in each case as defined
below), respectively, of an Eligible Employee, and (ii) if such
individual or entity is purchasing an Interest from a Member \3\ or
directly from the Company, come within one of the categories of an
``accredited investor'' under rule 501(a) of Regulation D. An
``Eligible Family Member'' is a spouse, parent, child, spouse of child,
brother, sister, or grandchild of an Eligible Employee. A ``Qualified
Entity'' is (i) a trust of which the trustee, grantor, and/or
beneficiary is an Eligible Employee; (ii) a partnership, corporation,
or other entity controlled by an Eligible Employee; or (iii) a trust or
other entity established for the benefit of Eligible Family Members of
an Eligible Employee.
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\2\ A ``Consultant'' is a person or entity whom DLJ has engaged
on retainer to provide services and professional expertise on an
ongoing basis.
\3\ ``Member'' means any member of a Company within the meaning
of the Delaware Limited Liability Company Act. ``Participant'' means
any Member other than the Manager.
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5. If an Eligible Employee is required to make an investment
decision with respect to whether or not to participate, or to request
that a related Qualified Participant be permitted to participate, in a
Company, such Eligible Employee will be a sophisticated investor
capable of understanding and evaluating the risks of participating in
such Company without the benefit of regulatory safeguards.
Participation in a Company will be voluntary on the part of the
Eligible Employee.
6. DLJ proposes to offer various investment programs for the
benefit of its Eligible Employees. These programs may be structured as
different Companies, or as separate plans within the same Company, and
the terms of these programs are likely to differ from one another.
While the terms of a Company will be determined by DLJ in its
discretion, these terms will be fully disclosed to each Eligible
Employee and, if a Qualified Participant of such Eligible Employee is
required to make an investment decision with respect to whether or not
to participate in a Company, to such Qualified Participant at the time
the eligible Employee is invited to participate in the Company. Among
other things, each Eligible Employee and, if a Qualified participant of
such Eligible Employee is required to make an investment decision with
respect to whether or not to participate in a Company, such Qualified
Participant will be furnished with a copy of the Limited Liability
Company Agreement for the relevant Company, which will set forth at a
minimum the following terms of the proposed investment program, if
applicable: (i) Whether DLJ will make a co-investment in the same
portfolio company as the Company, and the terms applicable to the
Company's investment as compared to that of DLJ's investment; (ii) the
maximum amount of capital contributions that a Participant will be
required to make to the Company during the term of the relevant
investment program, and the manner in which the capital contributions
will be applied towards investments made, and expenses incurred, by the
Company; (iii) whether the Manager or DLJ will make any loans to a
Participant to purchase the Interest in the Company, and, if so, the
terms of such loans; (iv) whether the Manager will be entitled to
receive any compensation or performance-based fee (``carried
interest'') based on the gains and losses of the investment program or
of the Company's investment portfolio, and, if so, the terms of such
compensation or carried interest; (v) whether the Manager will make any
capital contributions to the Company, and, if so, the terms applicable
to the Manager's investment in the Company; (vi) the consequences to a
Participant who defaults on his obligation to fund required capital
contributions to the Company (including whether such defaulting
person's Interest in existing and future investments will be affected
and, if so, the nature of such effects); and (vii) whether any vesting
and forfeiture provisions will apply to a Participant's Interest in the
Company and, if so, the terms of such vesting and forfeiture
provisions.
7. In an investment program that provides for vesting provisions,
an English Employee's Interest at the commencement of the program will
be treated as being entirely ``unvested,'' and ``vesting'' will occur
either (i) through the passage of a specified period of time (for
example, an Interest might vest over a three year period, \1/3\ for
each year) or (ii) upon the occurrences of a specified event (for
example, a change of control). To the extent an Eligible Employee's
Interest becomes ``vested,'' the termination of such Eligible
Employee's employment will not affect the Eligible Employee's rights
with respect to the vested portion of the Interest, unless certain
specified events described in representation 8 below occur. The portion
of an Eligible Employee's Interest that is ``unvested'' at the time of
termination of such Eligible Employee's employment may be subject to
repurchase by DLJ.
8. the consequences of the vesting and forfeiture provisions, if
any, will not be more onerous than those set forth below. The terms
described below as to the vesting and forfeiture of Interests will
apply equally to any Qualified Participant of an Eligible Employee
under the circumstances where such Eligible Employee has triggered such
provisions. Unless (i) an Eligible Employee's relationship with DLJ is
terminated for cause or (ii) a former Eligible employee 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, his
vested Interest in the Company will not be affected in any manner.
However, if the events described in clauses (i) or (ii) above occur,
the Eligible Employee's entire Interest will be deemed to be unvested
and subject to repurchase, as described below. In addition, if an
Eligible Employee voluntarily resigns his/her employment with DLJ, any
unvested Interest will similarly be subject to repurchase, as described
below.
9. upon any repurchase of a former Eligible Employee's unvested
Interest, the Manager will at a minimum pay to the Eligible Employee
the lesser of (i) the amount actually paid by the Eligible Employee to
acquire the unvested Interest, and (ii) the fair market value,
determined at the time of repurchase in good faith by the Manager, of
such unvested Interest.
10. It is possible that an investment program may be structured in
which a Company will co-invest in a portfolio company with an
investment fund or account, organized for the benefit of investors who
are not affiliated with
[[Page 29753]]
DLJ,\4\ over which a DLJ entity (other than the Manager) exercises
investment discretion (a ``Third Party Fund'') or DLJ. Side-by-side
investments held by a Third party Fund, or by DLJ entity in a
transaction in which the DLJ investment was made pursuant to a
contractual obligation to a Third Party Fund, will not be subject to
the restrictions contained in condition 3 below. All other side-by-side
investments held by DLJ entities will be subject to the restrictions
contained in condition 3 below.
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\4\ These unaffiliated investors include institutional investors
such as public and private pension funds, foundations, endowments,
and corporations, and high net worth individuals, in each case both
domestic and foreign.
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11. Applicant believes that the interests of the Eligible Employees
participating in a Company will be adequately protected even in
situations where condition 3 does not apply. In structuring a Third
Party Fund, it is common for the unaffiliated investors of such fund to
require that DLJ invest its own capital in fund investments, either
through the fund or on a side-by-side basis, and that such DLJ
investments be subject to substantially the same terms as those
applicable to the fund's investments. It is important to DLJ that the
interests of the Third Party Fund take priority over the interests of
the Companies, and that the activities of the Third Party Fund not be
burdened or otherwise affected by activities of the Companies. If
condition 3 were to apply to DLJ's investment in these situations, the
effect of such a requirement would be to indirectly burden the Third
Party Fund with the requirements of condition 3. In addition, the
relationship of a Company to a Third Party Fund is fundamentally
different from such Company's relationship to DLJ. The focus of, and
the rationale for, the protections contained in the requested relief
are to protect the Companies from any overreaching by DLJ in the
employer/employee context, whereas the same concerns are not present
with respect to the Companies vis-a-vis the investors of a Third Party
Fund.
12. A Company will not invest more than 15% of its assets of a
particular investment program in securities issued by registered
investment companies (with the exception of temporary investments in
money market funds), and a Company will not acquire any security issued
by a registered investment company if immediately after such
acquisition any investment program contained in the Company will own
more than 3% of the outstanding voting stock of the registered
investment company.
Applicants' Legal Analysis
1. Section 6(b) provides that the SEC shall exempt employees'
securities companies from the provisions of the Act to the extent that
such exemption is consistent with the protection of investors. Section
6(e) provides that in connection with any order exempting an investment
company from any provision of section 7, certain specified provisions
of the Act shall be applicable to such company, and to other persons in
their transactions and relations with such company, as though such
company were registered under the Act, if the SEC deems it necessary or
appropriate in the public interest or for the protection of investors.
2. Applicants request an order under sections 6(b) and 6(e) of the
Act for an exemption from all provisions of the Act except section 9,
certain provisions of sections 17 and 30, sections 36 through 53, and
the rules and regulations thereunder.
3. Section 17(a) provides, in relevant part, that it is unlawful
for any affiliated person of a registered investment company, acting as
principal, to sell any security or other property to such registered
investment company or to purchase from such registered investment
company any security or other such property.
4. Applicants request an exemption from section 17(a) of the Act to
the extent necessary to (i) permit a DLJ entity or a Third Party Fund,
acting as principal, to engage in any transaction directly or
indirectly with any Company or any company controlled by such Company;
(ii) permit any Company to invest in or engage in any transaction with
any DLJ entity, acting as principal, (a) in which such Company, any
company controlled by such Company, or any DLJ entity or Third Party
Fund has invested or will invest, or (b) with which such Company, any
company controlled by such Company, or any DLJ entity or Third Party
Fund is or will become otherwise affiliated; and (c) permit any partner
or other investor in a Third Party Fund (a ``Third Party Investor''),
acting as principal, to engage in any transaction directly or
indirectly with any Company or any company controlled by the Company.
5. Applicants state that an exemption from section 17(a) is
consistent with the policy of each Company and the protection of
investors and necessary to promote the basic purpose of such Company.
Applicants state that the Participants in each Company will have been
fully informed of the possible extent of such Company's dealings with
DLJ, and, as successful professionals employed in the banking and
financial services business, or related businesses, will be able to
understand and evaluate the attendant risks. Applicants assert that the
community of interest among the Participants in each Company, on the
one hand, and DLJ, on the other hand, is the best insurance against any
risk of abuse.
6. Section 17(d) makes it unlawful for any affiliated person of a
registered investment company, acting as principal, to effect any
transaction in which such company, or a company controlled by such
company, is a joint or joint and several participant with the
affiliated person in contravention of SEC rules. Rule 17d-1 provides
that the SEC may approve a transaction subject to section 17(d) after
considering whether the participation of such registered company is
consistent with the provisions, policies, and purposes of the Act and
the extent to which such participation is on a basis different from or
less advantageous than that of other participants.
7. Applicants request an exemption from section 17(d) under the Act
and rule 17d-1 thereunder to the extent necessary to permit affiliated
persons of each Company (including without limitation the Manager, DLJ,
other DLJ entities and a Third Party Fund), or affiliated persons of
any of these persons (including without limitation the Third Party
Investors) to participate in, or effect any transaction in which such
Company or a company controlled by such Company is a participant.
Applicants state that the exemption requested would permit, among other
things, co-investments by each Company and individual members or
employees, officers, directors, or Consultants of DLJ making their own
individual investment decisions apart from DLJ.
8. Applicants assert that the flexibility to structure co-
investments and joint investments in the manner described above will
not involve abuses of the type section 17(d) and rule 17d-1 were
designed to prevent. Applicants state that the concern that permitting
co-investments by DLJ, on the one hand, and a Company on the other,
might lead to less advantageous treatment of such Company, should be
mitigated by the fact that (i) DLJ, in addition to its stake through
the Manager and its co-investment, will be acutely concerned with its
relationship with the personnel who invest in such Company, and (ii)
senior officers and directors of DLJ entities will be investing in such
Company.
[[Page 29754]]
9. Section 17(e) of the Act and rule 17e-1 thereunder limit the
compensation an affiliated person may receive when acting as agent or
broker for a registered investment company. Applicants request an
exemption from section 17(e) to the extent necessary to permit a DLJ
entity (including the Manager), acting as an agent or broker, to
receive placement fees, advisory fees, or other compensation from a
Company in connection with the purchase or sale by the Company of
securities. Applicants state that the DLJ entity will be permitted to
charge such fees or otherwise receive such compensation in a
transaction that is not exempted pursuant to rule 17e-1 only if (i) the
Company is purchasing or selling securities alongside other
unaffiliated third parties who are also similarly purchasing or selling
securities, (ii) the fees or other compensation that are being charged
to the Company are also being charged to the unaffiliated third
parties, and (iii) the amount of securities being purchased or sold by
the Company does not exceed 50% of the total amount of securities being
purchased or sold by the Company and the unaffiliated third parties.
Applicants assert that compliance with section 17(e) would prevent a
Company from participating in a transaction in which DLJ, for other
business reasons, does not wish it to appear as if the Company is being
treated in a more favorable manner (by being charged lower fees) than
unaffiliated third parties also participating in the transaction.
Applicants assert that the requirements listed above ensure that the
fees or other compensation paid by a Company to a DLJ entity are those
negotiated at arm's length with unaffiliated third parties, and that
the unaffiliated third parties have as great or greater interest as the
Company in the transaction as a whole.
10. Applicants also request an exemption from rule 17e-1 to the
extent necessary to permit each Company to comply with rule 17e-1
without the necessity of having a majority of the directors of the
Manager who are not ``interested persons'' take such actions and make
such approvals as are set forth in rule 17e-1. Applicants state that
since all the directors of the Manager will be affiliated persons,
without the relief requested, a Company could not comply with rule 17e-
1. Applicants state that each Company will comply with rule 17e-1 by
having a majority of the directors of the Company take such actions and
make such approvals as are set forth in rule 17e-1. Applicants assert
that each Company will, except for the requirements of such approvals
by ``not interested'' persons, otherwise comply with all other
requirements of rule 17e-1 for transactions subject to the rule.
11. 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-
1 under the Act specifies the requirements that must be satisfied for a
registered management investment company to use a broker-dealer as
custodian. Applicants request an exemption from section 17(f) of the
Act and rule 17f-1 thereunder to the extent necessary to permit DLJ to
act as custodian without a written contract. Applicants assert 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. An exemption also is requested from the terms of rule 17f-
1(b)(4), as applicants do not believe the expense of retaining an
independent accountant to conduct periodic verifications is warranted
given the community of interest of all the parties involved and the
existing requirement for an independent annual audit.
12. Section 17(g) and rule 17g-1 generally require the bonding of
officers and employees of a registered investment company who have
access to securities or funds of the company. Rule 17g-1 requires a
majority of the board of directors of the registered investment company
who are not interested persons to approve periodically the bond.
Applicants request an exemption from section 17(g) of the Act and rule
17g-1 thereunder 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.
13. Section 17(j) and rule 17j-1 thereunder require that every
registered investment company adopt a written code of ethics requiring
that every access person of the investment company report to the
investment company with respect to transactions in any security in
which the access person has, or by reason of the transaction acquires,
any direct or indirect beneficial ownership in the security. Applicants
request an exemption from section 17(j) and rule 17j-1 (except rule
17j-1(a)) because the requirements contained therein are burdensome and
unnecessary in this case. Applicants believe that requiring each
Company to adopt a written code of ethics and requiring access persons
to report each of their securities transactions would be time consuming
and expensive, and would serve little purpose in light of, among other
things, the community of interest among the Participants in such
Company by virtue of their common association in DLJ, and the
substantial and largely overlapping protections afforded by the
conditions with which such Company has agreed to comply.
14. Sections 30(a), 30(b), and 30(e), and the rules thereunder,
generally require that registered investment companies prepare and file
with the SEC and mail to their shareholders certain periodic reports
and financial statements. Applicants believe that the forms prescribed
by the SEC for periodic reports have little relevance to a Company and
would entail administrative and legal costs that outweigh any benefit
to the Participants in such Company. Applicants state that the
pertinent information contained in such filings will be furnished to
the Participants in a Company, the only class of people truly
interested in such material. Applicants state that in view of the
community of interest among all parties concerned with a Company and
the fact that Interests in such Company are not available to the
public, but rather a specific group of people, it would seem that the
protection afforded by sections 30(a) and (b) (i.e., public
dissemination of information to insure orderly markets and equality of
information among the public) is not relevant to such Company or its
operations. An exemption is requested to the extent necessary to permit
each Company to report annually to its Participants in the manner
described above.
15. Section 30(h) of the Act requires that every officer, director,
and member of an advisory board of a closed-end investment company be
subject to the same duties and liabilities as those imposed upon
similar classes of persons under section 16(a) of the 1934 Act.
Applicants state that, as a result, the Manager of each Company and
others who may be deemed members of an advisory board of such Company
may be required to file Forms 3, 4, and 5 with respect to their
ownership of Interests in such Partnership. Applicants assert that the
purpose intended to be served by section 30(h) is not apparent because
there will be no trading market and the transfers of Interests will be
severely restricted.
Applicants' Conditions
Applicants agree that the order granting the requested relief will
be subject to the following conditions:
1. Each proposed transaction otherwise prohibited by section 17(a)
or section 17(d) and rule 17d-1 to which
[[Page 29755]]
a Company is a party (the ``Section 17 Transactions'') will be effected
only if the Manager determines that: (i) The terms of the transaction,
including the consideration to be paid or received, are fair and
reasonable to the Members of such Company and do not involve
overreaching of such Company or its Members on the part of any person
concerned; and (ii) the transaction is consistent with the interests of
the Members of such company, such Company's organizational documents,
and such Company's reports to its Members. In addition, the Manager of
each Company will record and preserve a description of such affiliated
transactions, the Manager's findings, the information or materials upon
which the Manager's findings are based, and the basis therefor. All
records relating to an investment program will be maintained until the
termination of such investment program and at least two years
thereafter, and will be subject to examination by the SEC and its
staff.\5\
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\5\ Each Company will preserve the accounts, books and other
documents required to be maintained in an easily accessible place
for the first two years.
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2. In connection with the Section 17 Transactions, the Manager of
each Company 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 such Company, or any affiliated person of
such a person, promoter, or principal underwriter.
3. The Manager of each Company will not invest the funds of such
Company in any investment in which a ``Co-Investor'' (as defined below)
has acquired or proposes to acquire the same class of securities of the
same issuer, where the investment involves a joint enterprise or other
joint arrangement within the meaning of rule 17d-1 in which such
Company and the Co-Investor are participants, unless any such Co-
Investor, prior to disposing of all or part of its investment, (i)
gives such Manager sufficient, but not less than one day, notice of its
intent to dispose of its investment; and (ii) refrains from disposing
of its investment unless such Company has the opportunity to dispose of
such Company's investment prior to or concurrently with, on the same
terms as, and pro rata with the Co-Investor. The term ``Co-Investor''
with respect to any Company means any person who is: (i) An
``affiliated person'' (as such term is defined in the Act) of such
Company (other than a Third Party Fund); (ii) DLJ; (iii) an officer or
director of DLJ; or (iv) a company in which the Manager acts as a
general partner or has a similar capacity to control the sale or other
disposition of the company's securities. The restrictions contained in
this condition, however, shall not be deemed to limit or prevent the
disposition of an investment by a Co-Investor: (i) To its direct or
indirect wholly-owned subsidiary, to any company (a ``Parent'') of
which such Co-Investor is a direct or indirect wholly-owned subsidiary,
or to a direct or indirect wholly-owned subsidiary of its Parent; (ii)
to immediate family members of such Co-Investor or a trust or other
investment vehicle established for any such family member; (iii) when
the investment is comprised of securities that are listed on any
exchange registered as a national securities exchange under section 6
of the Exchange Act; (iv) when the investment is comprised of
securities that are national market system securities pursuant to
section 11A(a)(2) of the Exchange Act and rule 11Aa2-1 thereunder; or
(v) when the investment is comprised of securities that are listed on
or traded on any foreign securities exchange or board of trade that
satisfies regulatory requirements under the law of the jurisdiction in
which such foreign securities exchange or board of trade is organized
similar to those that apply to a national securities exchange or a
national market system for securities.
4. Each Company and the Manager will maintain and preserve, for the
life of such Company and at least two years thereafter, such accounts,
books, and other documents as constitute the record forming the basis
for the audited financial statements that are to be provided to the
Participants in such Company, and each annual report of such Company
required to be sent to such Participants, and agree that all such
records will be subject to examination by the SEC and its staff.\6\
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\6\ Each Company will preserve the accounts, books and other
documents required to be maintained in an easily accessible place
for the first two years.
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5. The Manager of each Company will send to each Participant in
such Company who had an interest in any capital account of such
Company, at any time during the fiscal year then ended, Company
financial statements audited by such Company's independent accountants.
At the end of each fiscal year, the Manager will make a valuation or
have a valuation made of all of the assets of the Company as of such
fiscal year end in a manner consistent with customary practice with
respect to the valuation of assets of the kind held by the Company. In
addition, within 120 days after the end of each fiscal year of each
Company or as soon as practicable thereafter, the Manager of such
Company will send a report to each person who was a Participant in such
Company at any time during the fiscal year then ended, setting forth
such tax information as shall be necessary for the preparation by the
Participant of his or its federal and state income tax returns and a
report of the investment activities of such Company during such year.
6. In any case where purchases or sales are made by a Company from
or to an entity affiliated with such Company by reason of a 5% or more
investment in such entity by a DLJ director, officer, or employee, such
individual will not participate in such Company's determination of
whether or not to effect such purchase or sale.
For the SEC, by the Division of Investment Management, under
delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-14209 Filed 5-30-97; 8:45 am]
BILLING CODE 8010-01-M