[Federal Register Volume 66, Number 171 (Tuesday, September 4, 2001)]
[Notices]
[Pages 46296-46301]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-22122]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 25143; 813-330]


The Toronto-Dominion Bank; Notice of Application

August 28, 2001.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of application for an order under sections 6(b) and 6(e) 
of the Investment Company Act of 1940 (the ``Act'') exempting the 
applicant from all provisions of the Act, except section 9, section 17 
(other than certain provisions of sections 17(a), (d), (e), (f), (g), 
and (j)), section 30 (except for certain provisions of sections 30(a), 
(b), (e), and (h)), and sections 36 through 53, and the rules and 
regulations under those sections.

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SUMMARY: Applicant requests an order to exempt certain limited 
partnerships and other entities (``Partnerships'') formed for the 
benefit of key employees of The Toronto-Dominion Bank (``TD'') and its 
affiliates from certain provisions of the Act. Each Partnership will be 
an ``employees' securities company'' within the meaning of section 
2(a)(13) of the Act.
    Applicant: TD.
    Filing Dates: The application was filed on March 29, 2001, and 
amended on July 24, 2001 and on August 23, 2001.
    Hearing or Notification of Hearing: An order granting the 
application will be issued unless the Commission orders a hearing. 
Interested persons may request a hearing by writing to the Commission's 
Secretary and serving applicant with a copy of the request, personally 
or by mail. Hearing requests should be received by the Commission by 
5:30 p.m. on September 24, 2001,

[[Page 46297]]

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

ADDRESSES: Secretary, Commission, 450 Fifth Street, NW., Washington, DC 
20549-0609. Applicant, c/o Gordon A. Paris, The Toronto-Dominion Bank, 
TD Bank Tower, Toronto-Dominion Centre, 55 King Street, West & Bay 
Street, Toronto, Ontario M5K 1A2, Canada.

FOR FURTHER INFORMATION CONTACT: Jaea F. Hahn, Senior Counsel, at (202) 
942-0614, or Nadya Roytblat, 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 at the 
Commission's Public Reference Branch, 450 Fifth Street, NW., 
Washington, DC 20549-0102 (tel. 202-942-8090).

Applicant's Representations

    1. TD, a Canadian chartered bank, offers a range of financial 
services directly and through its affiliates, including brokerage and 
investment advisory services.
    2. TD intends to establish Partnerships from time to time for the 
benefit of eligible current and former key employees, officers, 
directors, partners and persons on retainer (``Eligible Employees'') of 
TD and its affiliates (as defined in Rule 12b-2 under the Securities 
Exchange Act of 1934 (the ``Exchange Act'')) (collectively, the ``TD 
Group'') as part of a program designed to create an in-house employee 
investment program similar to those offered by other financial 
institutions to their employees to recognize their contributions to the 
TD Group and retain these Eligible Employees and to facilitate the 
recruitment of high caliber employees. The investment objectives and 
policies for each Partnership may vary from Partnership to Partnership. 
Participation in a Partnership will be voluntary.
    3. Each of the Partnerships will be a limited partnership, or 
alternatively, a limited liability company, business trust or other 
entity organized under the laws of the State of Delaware or another 
state or non-U.S. jurisdiction. The Partnerships will be operated in 
accordance with their respective limited partnership agreements or 
other organizational documents (each, a ``Partnership Agreement''). 
Each partnership will be formed as an ``employees' securities company'' 
within the meaning of section 2(a)(13) of the Act, and will operate as 
a closed-end management investment company which may be diversified or 
nondiversified.
    4. Each Partnership will be managed, operated and controlled by its 
general partner, managing member or other similar entity (the ``General 
Partner''). Each General Partner will be an entity in the TD Group. An 
entity in the TD Group will be appointed General Partner to the initial 
Partnership, and will be (a) registered as an investment adviser under 
the Investment Advisers Act of 1940 (``Advisers Act''), (b) exempt from 
Advisers Act registration requirements by virtue of section 203(b)(3) 
thereof, or (c) excluded from the definition of investment adviser 
under the Advisers Act because it is a bank or a bank holding company.
    5. Interests in the Partnerships (``Limited Partnership Interests'' 
or ``Interests'') will be offered without registration in reliance on 
Section 4(2) or Regulation D of the Securities Act of 1933, as amended 
(the ``1933 Act'') and will be sold only to (a) Eligible Employees of 
the TD Group, (b) spouses, parents, children, spouses of children, 
brothers, sisters and grandchildren of Eligible Employees (``Qualified 
Family Members''), or (c) trust or other investment vehicles 
established solely for the benefit of Eligible Employees or Qualified 
Family Members (``Qualified Investment Vehicles'' and, collectively 
with Qualified Family Members, ``Qualified Participants''). Those 
Eligible Employees and Qualified Participants who acquire Interests in 
a Partnership are hereinafter referred to as ``Limited Partner(s).''
    6. Qualified Investment Vehicles must meet the standards for an 
``accredited investor'' under rule 501(a) of Regulation D. Eligible 
Employees and their Qualified Family Members will be individuals who 
satisfy certain financial and sophistication standards, will be able to 
make investment decisions on their own without the protection of the 
regulatory safeguards intended to protect the public, will be capable 
of understanding and evaluating the merits and risks of participation 
in a Partnership and able to bear the economic risk of such 
participation, including a complete loss of his or her investment. 
Eligible Employees and Qualified Family Members will meet the standards 
for an ``accredited investor'' under rule 501(a)(6) Regulation D, 
except that a maximum of 35 Eligible Employees who are sophisticated 
investors but who do not meet the definition of an accredited investor 
may become Limited Partners if each of them falls into one of the 
following categories: (a) Eligible Employees who (i) have a graduate 
degree in business, law or accounting, (ii) have a minimum of five 
years of consulting, investment banking or similar business experience, 
and (iii) will have had reportable income from all sources (including 
any profit shares or bonus) in the calendar year immediately preceding 
the Eligible Employee's admission as a Limited Partner in excess of 
$120,000 and will have a reasonable expectation of reportable income of 
at $150,000 in the years in which the Eligible Employee invests in a 
Partnership;\1\ or (b) Eligible Employees who are ``knowledgeable 
employees'' of the Partnership as defined in rule 3c-5 under the Act 
(with the Partnership treated as through it were a ``covered company'' 
for purposes of the rule).
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    \1\ In addition, such Eligible Employees in this category will 
not be permitted to invest in any year more than 10% of his or her 
income from all sources for the immediately preceding year in the 
aggregate in a Partnership and in all other Partnerships in which 
that Eligible Employee has previously invested.
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    7. The specific investment objectives and strategies for a 
particular Partnership will be set forth in the private placement 
memorandum relating to the Interests offered by the Partnership, and 
each Eligible Employee and Qualified Participant will receive a copy of 
the private placement memorandum and the Partnership Agreement. The 
terms of a Partnership will be fully disclosed to each Eligible 
Employee at the time they are offered the right to subscribe for 
Interests in such Partnership. Each Partnership will send audited 
financial statements to the Limited Partners as soon as practicable 
after the end of its fiscal year. In addition, a report will be sent to 
each Limited Partner setting forth the information with respect to his 
or her share of income, gains, losses, credits and other items for 
federal and state income tax purposes, resulting from the operation of 
the Partnership during that year.
    8. Interests in a Partnership will be non-transferable except with 
the express consent of the General Partner and then only to Eligible 
Employees or Qualified Participants or an entity within the TD Group, 
as described below. No fee of any kind will be charged in connection 
with the sale of Interests.
    9. TD or an entity within the TD Group, or any Eligible Employee or 
Qualified Participant designed thereby,

[[Page 46298]]

may have the right but not the obligation, to acquire the Interest of a 
Limited Partner upon the termination of the Limited Partner's 
employment with an entity within the TD Group with or without cause, 
including as a result of the death, disability or voluntary resignation 
of the Limited Partner, or upon the Limited Partner's bankruptcy. Each 
private placement memorandum will describe whether the TD Group will be 
required, or Eligible Employees or Qualified Participants will have the 
option to, acquire the Interest of a Limited Partner upon the 
termination of the Limited Partner's employment, whether for cause or 
not, or upon his or her bankruptcy or adjudication of incompetence. In 
this regard, the purchase price for the Interest will be equal to the 
lesser of (a) the amount of such Limited Partner's capital 
contributions less prior distributions from the Partnership (plus 
interest, as determined by the General Partner) or (b) the fair market 
value of the Interest, as determined by the General Partner in good 
faith as of the date of termination and in accordance with its 
customary valuation procedures.
    10. An entity within the TD Group may purchase Interests, which it 
may offer to new Eligible Employees joining the TD Group. These 
Interests will be acquired from the Partnership in the same manner of 
payment, at the same time, and at the same purchase price as Interests 
purchased by Limited Partners. The General Partner may sell the 
Interest it has so acquired to any Eligible Employee or Qualified 
Participant at any time during the life of the Partnership at a price 
no greater than the net asset value of the Interests on the previous 
appraisal date as defined in the Partnership Agreement after the date 
of sale. An entity within the TD Group may instead award Interests so 
acquired at any time during the life of the Partnership to Eligible 
Employees as a bonus or similar compensation.
    11. In an investment program that provides for vesting provisions, 
all or a portion of an Eligible Employee's Interest at the commencement 
of the program will be treated as being ``invested,'' and ``vesting'' 
will occur either through the passage of a specified period of time or 
upon the occurrence of a specified event. The portion of an Interest 
that is unvested at the time of an Eligible Employee's employment 
termination, and the portion that is vested in the event of certain 
specified events, may be subject to repurchase by a TD Group entity or 
reallocated to other Limited Partners in the relevant Partnership.
    12. A Partnership will not acquire any security issued by a 
registered investment company if the Partnership immediately after such 
purchase or acquisition will own in the aggregate more than 3% of the 
total voting stock of such investment company.
    13. The General Partner of a Partnership may charge the Partnership 
an annual management fee, a flat administrative charge or a ``carried 
interest.'' \2\ A Partnership will not borrow from any person if the 
borrowing would cause any person not named in section 2(a)(13) of the 
Act to own securities of the Partnership (other than short-term paper). 
If an entity within the TD Group makes loans to any Partnership or 
Limited Partner, the lender will be entitled to receive interest at the 
rate obtainable on an arm's length basis. Any indebtedness of the 
Partnership will be the debt of the Partnership and without recourse to 
the Limited Partners.
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    \2\ A ``carried interest'' is an allocation to the General 
Partner based on net gains in addition to the amount allocable to 
the General Partner that is in proportion to its capital 
contributions. Depending on whether the General Partner is 
registered as an investment adviser under the Advisers Act, any 
``carried interest'' will be charged only if permitted by rule 205-3 
under the Advisers Act (in the case of a General Partner registered 
under the Advisers Act) or will comply with section 205(b)(3) of the 
Advisers Act (with the Partnership treated as though it were a 
``business development company'' solely for the purpose of that 
section) in the case of a General Partner not registered under the 
Advisers Act.
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Applicant's Legal Analysis

    1. Section 6(b) of the Act provides, in part, that the Commission 
will exempt employees' securities companies from the provisions of the 
Act to the extent that the exemption is consistent with the protection 
of investors. Section 6(b) provides that the Commission will consider, 
in determining the provisions of the Act from which the company should 
be exempt, the company's form of organization and capital structure, 
the persons owning and controlling its securities, the price of the 
company's securities and the amount of any sales load, how the 
company's funds are invested, and the relationship between the company 
and the issuers of the securities in which it invests. Section 2(a)(13) 
defines an employees' securities company, in relevant part, as any 
investment company all of whose securities are beneficially owned (a) 
by current or former employees, or persons on retainer, of one or more 
affiliated employers, (b) by immediate family members of such persons, 
or (c) by such employer or employers together with any of the persons 
in (a) or (b).
    2. Section 7 of the Act generally prohibits investment companies 
that are not registered under section 8 of the Act from selling or 
redeeming their securities. Section 6(e) provides that, in connection 
with any order exempting an investment company from any provisions of 
section 7, certain provisions of the Act, as specified by the 
Commission, will be applicable to the company and other persons dealing 
with the company as though the company were registered under the Act. 
Applicant requests an order under sections 6(b) and 6(e) of the Act 
exempting the Partnerships from all provisions of the Act, except 
section 9, section 17 (other than certain provisions of paragraphs (a), 
(d), (e), (f), (g), and (j)), section 30 (other than certain provisions 
of paragraphs (a), (b), (e), and (h)), sections 36 through 53 of the 
Act, and the rules and regulations thereunder.
    3. Section 17(a) generally prohibits any ``affiliated person'' (as 
defined in section 2(a)(3) of the Act) of a registered investment 
company, or any affiliated person of that person, acting as principal, 
from knowingly selling or purchasing any security or other property to 
or from that company. Applicants request an exemption from section 
17(a) to permit the Partnerships to (a) purchase portfolio investments 
from or sell portfolio securities to TD, or any other affiliated person 
of a Partnership, or an affiliated person thereof (an ``Affiliated 
Entity''), on a principal basis; (b) purchase interests or property in 
a company or other investment vehicle in which TD, or an Affiliated 
Entity, already owns securities, or, where such company or other 
investment vehicle is otherwise affiliated with TD or a Partnership; 
(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 TD or an Affiliated Entity; (d) participate 
as a selling security holder in a public offering that is underwritten 
by TD or an Affiliated Entity or in which TD or an Affiliated Entity 
acts as a member of the underwriting or selling group; (e) invest in 
companies, partnerships or other investment vehicles offered, sponsored 
or managed by TD or an Affiliated Entity (referred to hereinafter 
collectively as ``TD Sponsored Vehicles'' and individually as a ``TD 
Sponsored Vehicle''), or to purchase securities from TD Sponsored 
Vehicles; (f) invest in securities of, or lend money to entities with 
which TD or an Affiliated Entity has performed investment banking or 
other services and from which they may have received

[[Page 46299]]

fees; and (g) purchase securities that are underwritten by TD and or 
Affiliated Entity (including a member of a selling group) on terms at 
least as favorable to the Partnership as those offered to investors 
other than affiliated persons of TD.
    4. Applicants submit that an exemption from section 17(a) is 
consistent with the policy of the Partnerships and the protection of 
investors. Applicants state the Limited Partners in each Partnership 
will be fully informed of the extent of the Partnership's dealings with 
affiliated persons and, as professionals employed in the investment 
banking and financial service businesses, will be able to understand 
and evaluate the attendant risk. Applicant asserts that the community 
of interest among the Limited Partners and TD Group will provide the 
best protection against any risk of abuse. Applicant acknowledges that 
the requested relief will not extend to any transactions between a 
Partnership and any affiliated subadviser or an affiliated person of 
the unaffiliated subadviser, or between a partnership and any person 
who is not an employee, officer or director of TD or is an entity 
outside of the TD Group and is an affiliated person of the Partnership 
as defined in section 2(a)(3)(E) of the Act (``Advisory Person'') or 
any affiliated person of such person.
    5. Section 17(d) of the Act and rule 17d-1 under the Act prohibit 
any affiliated person of a registered investment company, or any 
affiliated person of an affiliated person, acting as principal, from 
participating in any joint enterprise, or other joint arrangement, 
unless approved by the Commission. Applicant requests relief to permit 
affiliated persons of each Partnership, or affiliated persons of such 
persons, to participate in any joint arrangement in which the 
Partnership or an entity controlled by the Partnership is a 
participant. Applicant acknowledges that the requested relief will not 
extend to any transaction in which an unaffiliated sub-investment 
adviser or an Advisory Person or an affiliated person of either has an 
interest.
    6. Applicants submit that any joint investments will not involve 
abuses of the type section 17(d) and rule 17d-1 were designed to 
prevent. Applicants believe that the flexibility to structure co-
investment 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 note that a company will primarily be organized 
for the benefit of the Limited Partners, and that any investments by a 
Partnership made concurrently with an Affiliated Co-Investor will be on 
the same terms (but not necessarily in the same amount) as the 
investments by such Affiliated Co-Investors.
    7. Section 17(d) 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. Applicant requests an 
exemption from section 17(e) and rule 17e-1 to the extent necessary to 
permit TD or any entity within the TD Group, acting as agent or broker, 
to receive placement fees, financial advisory fees or other 
compensation in connection with the purchase or sale by a Partnership 
of securities, subject to the requirement that placement fees, 
financial advisory fees or other compensation is deemed ``usual and 
customary.'' Applicant states that for the purposes of the application, 
fees and other compensation that is being charged or received by TD or 
any entity within the TD Group will be deemed ``usual and customary'' 
only if (a) the Partnership is purchasing or selling securities with 
other unaffiliated third parties, (b) the fees or other compensation 
being charged to the Partnership are also being charged to the 
unaffiliated third parties, and (c) the amount of securities being 
purchased or sold by the Partnership does not exceed 5% of the total 
amount of securities being purchased or sold by the Partnership and 
unaffiliated third parties. Applicant asserts that compliance with 
section 17(e) would prevent a Partnership from participating in a 
transaction in which TD or an entity within the TD Group, for other 
business reasons, does not wish it to appear as if the Partnership is 
being treated in a more favorable manner (in terms of lower fees) than 
unaffiliated third parties also participating in the transaction. 
Applicant asserts that fees or other compensation paid by a Partnership 
to TD or an entity within the TD Group will be the same as those 
negotiated at arm's length with unaffiliated third parties and the 
unaffiliated third parties will have as great or greater interest as 
the Partnership in the transaction as a whole.
    8. Rule 17e-1(b) requires that a majority of directors who are not 
``interested persons'' (as defined by section 2(a)(19) of the Act) take 
actions and make approvals regarding commission, fees, or other 
remuneration. Applicant requests an exemption from rule 17e-1 to the 
extent necessary to permit each Partnership to comply with the rule 
without having a majority of the directors of the General Partner who 
are not interested persons take actions and make determinations as set 
forth in rule. Applicant states that because all of the directors of a 
General Partner will be affiliated persons, without such relief 
requested, a Partnership could not comply with rule 17e-1. Applicant 
states that Partnership will comply with rule 17e-1(b) by having a 
majority of the directors of the General Partner take actions and make 
approvals as set forth in rule 17e-1. Applicant states that each 
Partnership will otherwise comply with the requirements of rule 17e-1.
    9. Section 17(f) designates the entities that may act as investment 
company custodians, and rule 17f-1 imposes certain requirements when 
the custodian is a members of a national securities exchange. Applicant 
requests an exemption from section 17(f) and subsections (a), (b) (to 
the extent such subsection refers to contractual requirements), (c) and 
(d) of rule 17f-1 to the extent necessary to permit a member of the TD 
Group to act as custodian without a written contract. Applicant also 
requests an exemption from the rule 17f-1(b)(4) requirement that an 
independent accountant periodically verify the assets held by the 
custodian. Applicant believes that because of the community of interest 
of all the parties involved, compliance with these requirements would 
be unnecessary. Applicant states that it will comply with all other 
requirements of rule 17f-1.
    10. Section 17(g) and rule 17g-1 generally requires the bonding of 
officers and employers of a registered investment company who have 
access to its securities or funds. Rule 17g-1 requires that a majority 
of directors who are not interested persons take certain actions and 
give certain approvals relating to fidelity bonding. Applicant requests 
relief from rule 17g-1(d), (e) and (g) to the extent necessary to 
permit the General Partner or an entity controlling the General Partner 
to take the actions and make the determinations set forth in the rule, 
regardless of whether or not they are interested persons. Applicant 
states that, because all the directors of the General Partner will be 
affiliated persons, Applicants could not comply with rule 17g-1 without 
the requested relief. Applicant also states that each Partnership will 
comply with all other requirements of rule 17g-1.
    11. Section 17(j) and paragraph (b) of rule 17j-1 make it unlawful 
for certain enumerated persons to engage in fraudulent or deceptive 
practices in connection with the purchase or sale of security held or 
to be acquired by a

[[Page 46300]]

registered investment company. Rule 17j-1 also requires that every 
registered investment company adopt a written code of ethics and that 
every access person of a registered investment company report personal 
securities transactions. Applicant requests an exemption from section 
17(j) of the Act and the provisions of rule 17j-1, except for the anti-
fraud provisions of paragraph (b), because they are burdensome and 
unnecessary as applied to Partnerships. The relief requested will 
extend only to entities within the TD Group and is not requested with 
respect to any unaffiliated sub-investment adviser or Advisory Person.
    12. Applicant requests an exemption from the requirements in 
sections 30(a), 30(b) and 30(e), and the rules under those sections, 
that registered investment companies prepare and file with the 
Commission and mail to their shareholders certain periodic reports and 
financial statements. Applicant contends that the forms prescribed by 
the Commission for periodic reports have little relevance to the 
Partnerships and would entail administrative and legal costs that 
outweigh any benefit to the Limited Partners. Applicant requests 
exemptive relief to the extent necessary to permit each Partnership to 
report annually to its Limited Partners.
    13. Applicant also requests an exemption from section 30(h) to the 
extent necessary to exempt the General Partner of each Partnership and 
any other person who may be deemed to be a member of an advisory board 
of a Partnership from filing Forms 3, 4, and 5 under section 16(a) of 
the Exchange Act with respect to their ownership of Interests in a 
Partnership. Applicant asserts that, because there will be no trading 
market and the transfers of Interests will be severely restricted, 
these filings are unnecessary for the protection of investors and 
burdensome to those required to make them.

Applicant's Conditions

    Applicant agrees that any 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) of the Act and rule 17d-1 thereunder (the ``Section 17 
Transactions'') will be effected only if the General Partner determines 
that: (a) The terms of the transaction, including the consideration to 
be paid or received, are fair and reasonable to the Limited Partners 
and do not involve overreaching of the Partnership or its Limited 
Partners on the part of any person concerned; and (b) the transaction 
is consistent with the interests of the Limited Partners, the 
Partnership's organizational documents, and the Partnership's reports 
to its Limited Partners. In addition, the General Partner will record 
and preserve a description of the Section 17 Transactions, the General 
Partner's findings, the information or materials upon which the General 
Partner's findings are based, and the basis for those findings. All 
such records will be maintained for the life of the Partnership and at 
least two years thereafter, and will be subject to examination by the 
Commission and its staff.\3\
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    \3\ Each Partnership 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 General 
Partner 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 
principal underwriter for the Partnerships, or any affiliated person of 
such a person, promoter, or principal underwriter.
    3. The General Partner will not invest the funds of any Partnership 
in any investment in which an ``Affiliated 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 the 
Partnership and an Affiliated Co-Investor are participants, unless any 
such Affiliated Co-Investor, prior to disposing of all or part of its 
investment; (a) gives the General Partner sufficient, but not less than 
one day's notice, of its intent to dispose of its investment, and (b) 
refrains from disposing of its investment unless the Partnership has 
the opportunity to dispose of the Partnership's investment prior to or 
concurrently with, on the same terms as, and pro rata with the 
Affiliated Co-Investor. The term ``Affiliated Co-Investor'' means any 
person who is: (a) an ``affiliated person,'' as such term is defined in 
the Act, of the Partnership; (b) TD or any entity with the TD Group; 
(c) an officer or director of TD or entity within the TD Group; (d) a 
company, partnership, or other investment vehicle offered, sponsored, 
or managed by TD or by any other entity within the TD Group; (e) an 
entity with respect to which TD or another entity within the TD Group 
provides management, investment or similar services as manager, 
investment manager, or general partner or in a similar capacity, and 
for which it may receive compensation, including without limitation, 
management fees, performance fees, carried interest entitling it to 
share disproportionately in income and capital gains or similar 
compensation; or (f) a company in which an officer, director or member 
of a General Partner acts as an officer, director, or General Partner, 
or has a similar capacity to control the sale or other disposition of 
an entity's securities. The restrictions contained in this condition, 
however, shall not be deemed to limit or prevent the disposition of an 
investment by an Affiliated Co-Investor: (a) To its direct or indirect 
wholly owned subsidiary, to any company (a ``Parent'') of which the 
Affiliated Co-Investor is a direct or indirect wholly owned subsidiary, 
or to a direct or indirect wholly owned subsidiary of its Parent; (b) 
to Qualified Family Members of the Affiliated Co-Investor or a trust 
established for any Affiliated Co-Investor or any such family member; 
(c) when the investment is comprised of securities that are listed on 
any exchange registered as a national securities exchange under section 
6 of the Exchange Act; (d) when the investment is comprised of 
securities that are national market system securities pursuant to 
section 11A(a)(2) of the Exchange Act and rule 11Aa2-1 thereunder; (e) 
when the securities are government securities as defined in section 
2(a)(16) of the Act; (f) 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; or (g) when any 
entity with respect to which TD or any other entity with the TD Group 
provides management, investment management or similar services as 
manager, investment manager, or general partner or in a similar 
capacity, if TD or such entity does not have the actual investment 
discretion over the sale or disposition of the entity's securities.
    4. Each Partnership and its General Partner, and its investment 
adviser, if any, will maintain and preserve, for the life of each such 
Partnership and at least two years thereafter, such accounts, books, 
and other documents as constitute the record forming the basis

[[Page 46301]]

for the audited financial statements that are to be provided to the 
Limited Partners, and each annual report of the Partnership required by 
the terms of the applicable Partnership Agreement to be sent to the 
Limited Partners, and agree that all such records will be subject to 
examination by the Commission and its staff.\4\
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    \4\ Each Partnership 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 General Partner will send or cause to be sent to each 
Limited Partner who had an Interest in a Partnership, at any time 
during the fiscal year then ended, Partnership financial statements 
that have been audited by independent accountants. At the end of each 
fiscal year, the General Partner will make a valuation or have a 
valuation made of all of the assets of the Partnership as of such 
fiscal year in a manner consistent with customary practice with respect 
to the valuation of assets of the kind held by the Partnership. In 
addition, as soon as practicable after the end of each fiscal year of 
each of the Partnerships, the General Partner of each Partnership shall 
send or cause to be sent a report to each person who was a Limited 
Partner at any time during the fiscal year then ended, setting forth 
such tax information as shall be necessary for the preparation by the 
Limited Partner of his or her federal and state and income tax returns 
and a report of the investment activities of the Partnership during 
that year.
    6. In any case where purchases or sales are made by a Partnership 
from or to an entity affiliated with the Partnership by reason by a 5% 
or more investment in such entity by a TD Group director, officer, or 
employee, such individual will not participate in the General Partner's 
determination of whether or not to effect the purchase or sale.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Jonathan G. Katz,
Secretary.
[FR Doc. 01-22122 Filed 8-31-01; 8:45 am]
BILLING CODE 8010-01-M