[Federal Register Volume 77, Number 91 (Thursday, May 10, 2012)]
[Notices]
[Pages 27494-27498]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-11256]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 30060; 813-194]


SK Private Investment Fund 1998 LLC, et al.; Notice of 
Application

May 4, 2012.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of an application for an order under sections 6(b) and 
6(e) of the Investment Company Act of 1940 (the ``Act'') granting an 
exemption from all provisions of the Act, except sections 9, 17, 30 and 
36 through 53, and the rules and regulations under the Act (the ``Rules 
and Regulations''). With respect to sections 17(a), (d), (f), (g), and 
(j) of the Act, sections 30(a), (b), (e), and (h) of the Act and the 
Rules and Regulations and rule 38a-1 under the Act, applicants request 
a limited exemption as set forth in the application.

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SUMMARY:  Summary of the Application: Applicants request an order to 
exempt certain limited liability companies formed for the benefit of 
eligible employees of Skadden, Arps, Slate, Meagher & Flom and its 
affiliates from certain provisions of the Act. Each limited liability 
company will be an ``employees' securities company'' within the meaning 
of section 2(a)(13) of the Act.
    Applicants: SK Private Investment Fund 1998 LLC, Project Capital 
2004 Investment Fund LLC, Project Capital 2006 Investment Fund LLC, and 
Project Capital 2008 Investment Fund LLC (``Existing Funds''), and 
Skadden, Arps, Slate, Meagher & Flom LLP (``Skadden Arps LLP'').

DATES:  Filing Dates: The application was filed on June 5, 1998 and 
amended on February 18, 1999, April 2, 1999, August 30, 2000, February 
1, 2005, May 18, 2009, November 17, 2009, October 25, 2010, November 
18, 2011, March 20, 2012, and May 3, 2012.
    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 applicants with a copy of the request, personally 
or by mail. Hearing requests should be received by the Commission by 
5:30 p.m. on May 30, 2012 and should be accompanied by proof of service 
on applicants, in the form of an affidavit or, for lawyers, a 
certificate of service. Hearing requests should state the nature of the 
writer's interest, the reason for the request, and the issues 
contested. Persons who wish to be notified of a hearing may request 
notification by writing to the Commission's Secretary.

ADDRESSES: Secretary, U.S. Securities and Exchange Commission, 100 F 
Street NE., Washington, DC 20549-1090. Applicants, Four Times Square, 
New York, New York 10036.

FOR FURTHER INFORMATION CONTACT: Marilyn Mann, Special Counsel, at 
(202) 551-6813 or Mary Kay Frech, Branch Chief, at (202) 551-6821 
(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 via the 
Commission's Web site by searching for the file number, or for an 
applicant using the Company name box, at http://www.sec.gov/search/seach.htm or by calling (202) 551-8090.

Applicants' Representations

    1. The Existing Funds are Delaware limited liability companies 
formed pursuant to limited liability company agreements. The applicants 
may in the future offer additional pooled investment vehicles identical 
in all material respects (other than form of organization, investment 
objective and/or strategy) to the same class of investors as those 
investing in the Existing Funds (the ``Subsequent Funds'' and, together 
with the Existing Funds, the ``Investment Funds''). The applicants 
anticipate that each Subsequent Fund will also be structured as a 
limited liability company, although a Subsequent Fund could be 
structured as a domestic or offshore general partnership, limited 
partnership or corporation. The operating agreements of the Investment 
Funds are the ``Investment Fund Agreements.'' An Investment Fund may 
include a single vehicle designed to issue interests in series 
(``Series'') or having similar features to enable a single fund to 
function as if it were several successive funds for ease of 
administration. Each Investment Fund will be an employees' securities 
company within the meaning of section 2(a)(13) of the Act. Skadden Arps 
LLP, a Delaware limited liability partnership, and any ``affiliates,'' 
as defined in rule 12b-2 under the Securities Exchange Act of 1934 (the 
``Exchange Act''), that are organized to practice law are referred to 
collectively as ``Skadden Arps'' and individually as a ``Skadden Arps 
Entity.''
    2. In light of the community of interest that exists between 
Skadden Arps and the Eligible Investors (as defined below), the 
Investment Funds have been, and will be, established and controlled by 
Skadden Arps, within the meaning of section 2(a)(9) of the Act, so as 
to enable the Eligible Investors to participate in certain investment 
opportunities that come to the attention of Skadden Arps. Such 
opportunities may include separate accounts, registered investment 
companies, investment companies exempt from registration under the Act, 
commodity pools, real estate investment funds, and other securities 
investments (each particular investment, except any investment that is 
a ``Temporary Investment,'' \1\ is referred to as an ``Investment''). 
Participation as investors in the Investment Funds will allow the 
Eligible Investors who are members of the Investment Funds (the 
``Members'') to diversify their investments and to have the opportunity 
to participate in investments that might not otherwise be available to 
them or

[[Page 27495]]

that might be beyond their individual means.
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    \1\ It is anticipated that capital will be contributed to an 
Investment Fund only in connection with the funding of an 
Investment. Pending the payment of the full purchase price for an 
Investment, funds contributed to the Investment Fund will be 
invested in high quality short-term investments, shares of money 
market funds, or bank deposits (collectively, ``Temporary 
Investments'').
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    3. Interests in an Investment Fund (``Units'') will be offered and 
sold in reliance upon the exemption from registration under the 
Securities Act of 1933 (the ``Securities Act'') contained in section 
4(2) of the Securities Act or Regulation D under the Securities Act. 
Units will be offered only to persons (``Eligible Investors'') who meet 
the following criteria: (a) Current or former partners of, or key 
administrative employees and lawyers employed by, Skadden Arps 
(collectively, ``Eligible Affiliates''), the immediate family members 
of Eligible Affiliates, which are a person's siblings, spouse, 
children, spouses of children, and grandchildren, including step and 
adoptive relationships (``Eligible Family Members''), or trusts or 
other entities the sole beneficiaries of which consist of Eligible 
Affiliates or their Eligible Family Members (``Eligible Trusts''); and 
(b) who are ``accredited investors'' as that term is defined in 
Regulation D under the Securities Act. Prior to offering a Unit to an 
individual, the Investment Committee (as defined below) must reasonably 
believe that the individual is a sophisticated investor capable of 
understanding and evaluating the risks of participating in the 
Investment Fund without the benefit of regulatory safeguards.
    4. Each Investment Fund will have an investment committee 
(``Investment Committee''), which will consist of not less than two 
persons who are Eligible Affiliates and who may but are not required to 
be Members. The chief function of the Investment Committee will be to 
review possible Investments for the Investment Fund for submission to 
the Members for approval or disapproval. Members of the Investment 
Committee are selected by the executive managing partner of Skadden 
Arps, and typically include partners and key administrative employees 
of Skadden Arps knowledgeable in operation, taxation and regulation of 
Investments and of the Investment Funds. The Investment Committee may 
select Temporary Investments for the Investment Fund. No Investment 
will be made by an Investment Fund unless the Investment has been 
``Approved by the Members,'' which means (i) with respect to any matter 
relating to the Investment Fund, the approval by Members representing 
at least a majority of the capital commitments of such Investment Fund 
and (ii) with respect to any matter relating to a particular Series, 
the approval by Members representing at least a majority of the capital 
commitments attributable to such Series. No Members will make or have 
the right to make an individual investment decision with respect to any 
Investment submitted to the Members for approval or disapproval. The 
Investment Committee will consider whether it or any other person 
involved in the operation of the Investment Fund is required to 
register under the Investment Advisers Act of 1940 (the ``Advisers 
Act''). Such persons will register as investment advisers under the 
Advisers Act if such registration is required under the Advisers Act 
and the rules under the Advisers Act.
    5. Each Investment Fund will have an administrator (the 
``Administrator'') who is selected by the executive managing partner of 
Skadden Arps and who is knowledgeable in the operation and taxation of 
the Investment Funds. The Administrator may, but is not required to be, 
a Member in the Investment Fund. The Administrator will not recommend 
Investments or exercise investment discretion. No management fee or 
other compensation will be paid by any Investment Fund or the Members 
to the Administrator.
    6. Applicants represent and concede that each of the Administrator, 
the members of the Investment Committee and the Tax Matters Partner (as 
defined below) are, as applicable, an ``employee, officer, director, 
member of the an advisory board, investment adviser, or depositor'' of 
the Investment Funds within the meaning of section 9 of the Act and an 
``officer, director, member of any advisory board, investment adviser, 
or depositor'' within the meaning of section 36 of the Act and are 
subject to those sections.
    7. The specific investment objectives and strategies for a 
particular Investment Fund will be set forth in the Investment Fund 
Agreement and an information memorandum relating to the Units offered 
by the Investment Fund, and each Eligible Investor will receive a copy 
of the information memorandum and Investment Fund Agreement before 
making an investment in the Investment Fund. The terms of an Investment 
Fund will be disclosed to each Eligible Investor at the time the 
investor is invited to participate in the Investment Fund.
    8. The value of the Members' capital accounts for the purpose of 
filing tax returns will be determined at such times as the 
Administrator, in consultation with the Tax Matters Partner under 
section 6231(a)(7) of the Internal Revenue Code of 1986 (the ``Tax 
Matters Partner'') deems appropriate or necessary; however, such 
valuation will be done at least annually at the Investment Fund's 
fiscal year-end. Tax Matters Partner for the Investment Funds is 
selected by the executive managing partner of Skadden Arps, and 
typically will be a partner or a senior administrative employee of 
Skadden Arps responsible for the preparation or administration of tax 
reporting in connection with the Investment Funds. The Administrator 
will value the assets of an Investment Fund at the current market price 
(closing price) in the case of marketable securities. All other 
securities or assets will be valued at fair value as determined in good 
faith by the Administrator.
    9. Administration of the Investment Funds will be vested in the 
Investment Committee, Tax Matters Partner and the Administrator. Each 
Investment Fund Agreement provides that the Investment Fund will bear 
its own expenses or that such expenses shall be borne by Skadden Arps. 
No separate management fee will be charged to an Investment Fund by the 
Investment Committee or the Administrator. No compensation will be paid 
by any Investment Fund or its Members to the Administrator, Tax Matters 
Partner, or the members of the Investment Committee for their services 
in such capacity.
    10. Whenever Skadden Arps, the members of the Investment 
Committees, the Administrator, the Tax Matters Partner or any other 
person acting for or on behalf of the Investment Funds is required or 
permitted to make a decision, take or approve an action or omit to do 
any of the foregoing in such person's discretion, then such person 
shall exercise such discretion in accordance with reasonableness and 
good faith and their fiduciary duties (if any) owed to the Investment 
Funds and their Members.
    11. Each Investment Fund Agreement and any other organizational 
documents for and any other contractual arrangement regarding an 
Investment Fund will not contain any provision which protects or 
purports to protect Skadden Arps, the members of the Investment 
Committee, the Administrator, the Tax Matters Partner, or their 
delegates against any liability to the Investment Fund or the Members 
to which such person would otherwise be subject by reason of such 
person's willful misfeasance, bad faith, or gross negligence in the 
performance of such person's duties, or by reason of such person's 
reckless disregard of such person's obligations and duties under such 
contract or organizational documents.
    12. Each Investment Fund will send its Members an annual report 
regarding its operations as soon as practicable after the end of each 
fiscal year. The

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annual report of the Investment Fund will contain audited financial 
statements.\2\ Each Investment Fund, within 120 days after the end of 
the tax year of such Investment Fund, if possible, or as soon as 
practicable thereafter, will transmit a report to each Member setting 
out information with respect to the Member's distributive share of 
income, gains, losses, credits and other items for federal income tax 
purposes, resulting from the operation of the Investment Fund during 
that year.
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    \2\ For purposes of this requirement, ``audit'' shall have the 
meaning defined in rule 1-02(d) of Regulation S-X.
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    13. Members will not be entitled to redeem their respective Units. 
A Member will be permitted to transfer his or her Units only to 
Eligible Investors and only with the express consent of the Investment 
Committee or the Administrator. No fee of any kind will be charged in 
connection with the sale of Units of the Investment Fund.
    14. Each Investment Fund Agreement provides that the Administrator 
may require a Member to withdraw from the Investment Fund if the 
Administrator, in its discretion, deems such withdrawal to be in the 
best interests of the Investment Fund, including in instances in which 
the Member is no longer an Eligible Investor or affiliated with Skadden 
Arps. Upon withdrawal, a Member will be entitled to receive at a 
minimum the lesser of (i) the amount actually paid by the Member to 
acquire the Units, plus interest, less those amounts returned to the 
Member as distributions, or (ii) the fair market value of the Units, 
determined at the time of withdrawal, as determined in good faith by 
the Administrator.
    15. To provide flexibility in connection with an Investment Fund's 
obligation to contribute capital to fund an Investment, and the 
associated obligation of the Members to make capital contributions with 
respect to their capital commitments, each Investment Fund Agreement 
provides that the Investment Fund may engage in borrowings in 
connection with such funding of Investments. All borrowings by an 
Investment Fund will be debt of the Investment Fund and without 
recourse to the Members. The Investment Funds 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 any outstanding securities of the Investment 
Fund (other than short-term paper). If Skadden Arps makes a loan to an 
Investment Fund, it (as lender) will be entitled to receive interest at 
a rate no less favorable to the Investment Funds than the rate that 
could be obtained on an arm's length basis. Skadden Arps may in its 
discretion advance funds to Eligible Investors for the purpose of 
making their capital contributions. Skadden Arps will charge no 
interest with respect to such loans.
    16. An Investment Fund will not acquire any security issued by a 
registered investment company if immediately after the acquisition, the 
Investment Fund would own more than 3% of the total outstanding voting 
stock of the registered investment company.

Applicants' 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, the disposition 
of the proceeds of any sales of the company's securities, 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 as any investment company all 
of whose securities (other than short-term paper) 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) of the Act provides that, in 
connection with any order exempting an investment company from any 
provision 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. Applicants request an order under sections 6(b) and 6(e) of 
the Act exempting applicants from all provisions of the Act, except 
sections 9, 17, 30, 36 through 53, and the Rules and Regulations. With 
respect to sections 17(a), (d), (f), (g) and (j) and 30(a), (b), (e) 
and (h) of the Act and the Rules and Regulations, and rule 38a-1 under 
the Act, applicants request a limited exemption as set forth in the 
application.
    3. Section 17(a) of the Act generally prohibits any affiliated 
person of a registered investment company, or any affiliated person of 
an affiliated person, acting as principal, from knowingly selling or 
purchasing any security or other property to or from the company. 
Applicants request an exemption from section 17(a) to permit an 
Investment Fund: to invest in or participate as a selling security-
holder in a principal transaction with one or more affiliated persons 
(as defined in section 2(a)(3) of the Act) (``First-Tier Affiliates'') 
and affiliated persons of such First-Tier Affiliates (``Second-Tier 
Affiliates,'' and together with First-Tier Affiliates, ``Affiliates'') 
of an Investment Fund.
    4. Applicants submit that the exemptions sought from section 17(a) 
are consistent with the purposes of the Act and the protection of 
investors. Applicants state that the Members will be informed in an 
Investment Fund's communications relating to a particular Investment of 
the possible extent of the dealings by such Investment and its sponsors 
with Skadden Arps or any affiliated person thereof. Applicants also 
state that, as experienced professionals acting on behalf of financial 
services businesses, the Members will be able to evaluate the risks 
associated with such dealings. Applicants assert that the community of 
interest among the Members and Skadden Arps will serve to reduce the 
risk of abuse in transactions involving the Investment Fund and Skadden 
Arps or any Affiliate thereof.
    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 such person, acting as principal, from 
participating in any joint arrangement with the registered investment 
company unless authorized by the Commission. Applicants request an 
exemption from section 17(d) and rule 17d-1 to the extent necessary to 
permit an Investment Fund to engage in transactions in which an 
Affiliate participates as a joint or a joint and several participant 
with such Investment Fund.
    6. Joint transactions in which an Investment Fund could participate 
might include the following: (a) A joint investment by one or more 
Investment Funds in a security in which Skadden Arps or another 
Investment Fund is a joint participant or plans to become a participant 
or (b) a joint investment by one or more Investment Funds in another 
Investment Fund or any other investment vehicle sponsored, offered

[[Page 27497]]

or managed by Skadden Arps or any Affiliate thereof; and (c) a joint 
investment by one or more Investment Funds in a security in which an 
Affiliate is an investor or plans to become an investor, including 
situations in which an Affiliate has a partnership or other interest 
in, or compensation arrangements with, such issuer, sponsor or offeror.
    7. Applicants assert that compliance with section 17(d) and rule 
17d-1 would cause an Investment Fund to forego investment opportunities 
simply because a Member, Skadden Arps or other Affiliates also had or 
contemplated making a similar investment. In addition, because 
attractive investment opportunities of the types considered by an 
Investment Fund often require that each participant make available 
funds in an amount that may be substantially greater than that 
available to the investor alone, there may be certain attractive 
opportunities of which an Investment Fund may be unable to take 
advantage except as a co-participant with other persons, including 
Affiliates. Applicants believe that the flexibility to structure co- 
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 acknowledge that any transactions subject to 
section 17(d) and rule 17d-1 for which exemptive relief has not been 
requested in the application would require specific approval by the 
Commission.
    8. Section 17(f) of the Act designates the entities that may act as 
investment company custodians, and rule 17f-2 under the Act allows an 
investment company to act as self-custodian. Applicants request an 
exemption to permit the following exceptions from the requirements of 
rule 17f-2: (i) Compliance with paragraph (b) of the rule may be 
achieved through safekeeping in the locked files of Skadden Arps or of 
a partner of Skadden Arps; (ii) for the purposes of paragraph (d) of 
the rule, (A) employees of Skadden Arps will be deemed employees of the 
Investment Funds, (B) the Administrator will be deemed to be an officer 
of the Investment Funds, and (C) the members of the Investment 
Committee will be deemed to be the board of directors of the Investment 
Funds; and (iii) instead of the verification procedure under paragraph 
(f) of the rule, verification will be effected quarterly by two 
employees of Skadden Arps each of whom shall have sufficient knowledge, 
sophistication and experience in business matters to perform such 
examination. Investments also may be evidenced by partnership 
agreements or similar documents. Such instruments are most suitably 
kept in Skadden Arps' files, where they can be referred to as 
necessary. Applicants will comply with all other provisions of rule 
17f-2.
    9. Section 17(g) and rule 17g-1 generally require the bonding of 
officers and employees 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 of a registered investment 
company (``disinterested directors'') take certain actions and give 
certain approvals relating to fidelity bonding. Paragraph (g) of rule 
17g-1 sets forth certain materials relating to the fidelity bond that 
must be filed with the Commission and certain notices relating to the 
fidelity bond that must be given to each member of the investment 
company's board of directors. Paragraph (h) of rule 17g-1 provides that 
an investment company must designate one of its officers to make the 
filings and give the notices required by paragraph (g). Paragraph (j) 
of rule 17g-1 exempts a joint insured bond provided and maintained by 
an investment company and one or more parties from section 17(d) of the 
Act and the rules thereunder. Rule 17g-1(j)(3) requires that the board 
of directors of an investment company satisfy the fund governance 
standards defined in rule 0-1(a)(7).
    10. Applicants request an exemption from section 17(g) and rule 
17g-1 to permit the Administrator to take actions and determinations as 
set forth in the rule. Applicants state that, because the Administrator 
will be an interested person of the Fund, the Fund could not comply 
with rule 17g-1 without the requested relief. Specifically, each Fund 
will comply with rule 17g-1 by having the Administrator take such 
actions and make approvals as are set forth in rule 17g-1. Applicants 
also request an exemption from the requirements of rule 17g-1(g) and 
(h) relating to the filing of copies of fidelity bonds and related 
information with the Commission and the provision of notices to the 
board of directors and from the requirements of rule 17g-1(j)(3). 
Applicants believe the filing requirements are burdensome and 
unnecessary as applied to the Investment Funds. The Administrator will 
maintain the materials otherwise required to be filed with the 
Commission by rule 17g-1(g) and agrees that all such material will be 
subject to examination by the Commission and its staff. Applicants also 
state that the notices otherwise required to be given to the board of 
directors are unnecessary in the case of the Investment Funds. The 
Funds will comply with all other requirements of rule 17g-1. The 
fidelity bond of the Investment Funds will cover all employees of 
Skadden Arps who have access to the securities or funds of the 
Investment Funds.
    11. Applicants request an exemption from the requirements, 
contained in section 17(j) of the Act and rule 17j-1 under the Act, 
that every registered investment company adopt a written code of ethics 
and every ``access person'' of such registered investment company 
report to the investment company with respect to transactions in any 
security in which such access person has, or by reason of the 
transaction acquires, any direct or indirect beneficial ownership in 
the security. Applicants request an exemption from the requirements in 
rule 17j-1, with the exception of rule 17j-1(b), because they are 
burdensome and unnecessary as applied to the Investment Funds and 
because the exemption is consistent with the policy of the Act. 
Requiring the Investment Funds 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 Members of the Investment Fund by virtue of their 
common association with Skadden Arps. Accordingly, the requested 
exemption is consistent with the purposes of the Act because the 
dangers against which section 17(j) and rule 17j-1 are intended to 
guard are not present in the case of the Investment Fund.
    12. Applicants request an exemption from the requirements in 
sections 30(a), 30(b), and 30(e) of the Act, 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. Applicants contend that the forms prescribed 
by the Commission for periodic reports have little relevance to the 
Investment Funds and would entail administrative and legal costs that 
outweigh any benefit to the Members. Applicants request exemptive 
relief to the extent necessary to permit the Investment Funds to report 
annually to their Members. Applicants also request an exemption from 
section 30(h) of the Act to the extent necessary to exempt the 
Administrator, the members of the Investment Committee, and any other 
person who may be deemed to be an officer, director, member of an 
advisory board, or otherwise subject to section

[[Page 27498]]

30(h), from filing Forms 3, 4 and 5 under section 16 of the Exchange 
Act with respect to their ownership of Units. Applicants assert that, 
because there would be no trading market and the transfer of Units is 
severely restricted, these filings are unnecessary for the protection 
of investors and burdensome to those required to make them.
    13. Rule 38a-1 requires investment companies to adopt, implement 
and periodically review written policies reasonably designed to prevent 
violation of the federal securities laws and to appoint a chief 
compliance officer. Each Investment Fund will comply with rule 38a-
1(a), (c) and (d), except that (i) because the Investment Fund does not 
have a formal board of directors, the Investment Committee will fulfill 
the responsibilities assigned to the board of directors under the rule, 
and (ii) because the Investment Committee does not have any 
disinterested members, approval by a majority of the disinterested 
board members required by rule 38a-1 will not be obtained. In addition, 
the Investment Funds will comply with the requirement in rule 38a-
1(a)(4)(iv) that the chief compliance officer meet with the independent 
directors by having the chief compliance officer meet with the 
Investment Committee.

Applicants' Conditions

    The applicants agree that any order granting the requested relief 
will be subject to the following conditions:
    1. Each proposed transaction, to which an Investment Fund is a 
party, otherwise prohibited by section 17(a) or section 17(d) and rule 
17d-1 (the ``Section 17 Transactions'') will be effected only if the 
Investment Committee determines that: (a) The terms of the Section 17 
Transaction, including the consideration to be paid or received, are 
fair and reasonable to Members of such Investment Fund and do not 
involve overreaching of such Investment Fund or its Members on the part 
of any person concerned; and (b) the Section 17 Transaction is 
consistent with the interests of the Members of such Investment Fund, 
the Investment Fund's organizational documents and the Investment 
Fund's reports to its Members.
    In addition, the Administrator will record and preserve a 
description of such Section 17 Transactions, the findings of the 
Investment Committee, the information or materials upon which their 
findings are based and the basis therefor. All such records will be 
maintained for the life of such Investment Fund and at least six years 
thereafter, and will be subject to examination by the Commission and 
its staff. All such records will be maintained in an easily accessible 
place for at least the first two years.
    2. If purchases or sales are made by an Investment Fund from or to 
an entity affiliated with the Investment Fund by reason of a member of 
the Investment Committee (a) serving as an officer, director, general 
partner or investment adviser of the entity, or (b) having a 5% or more 
investment in the entity, such individual will not participate in (i) 
the Investment Committee's determination of whether or not to submit 
such Investment to the Members of the Investment Fund for approval and 
(ii) the vote of the Members to approve or disapprove the Investment.
    3. The Investment Committee will adopt, and periodically review and 
update, procedures designed to ensure that reasonable inquiry is made, 
prior to the consummation of any Section 17 Transaction, with respect 
to the possible involvement in the transaction of any affiliated person 
or promoter of or principal underwriter for such Investment Fund, or 
any affiliated person of such a person, promoter, or principal 
underwriter.
    4. The Investment Committee will not make available to the Members 
of an Investment Fund any investment in which a Co-Investor, as defined 
below, has 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 
Investment Fund and the Co-Investor are participants, unless any such 
Co-Investor, prior to disposing of all or part of its investment, (a) 
gives the Investment Fund sufficient, but not less than one day's, 
notice of its intent to dispose of its investment, and (b) refrains 
from disposing of its investment unless the Investment Fund holding 
such investment has the opportunity to dispose of its investment prior 
to or concurrently with, on the same terms as, and on a pro rata basis 
with, the Co-Investor. The term ``Co-Investor'' with respect to any 
Investment Fund means any person who is (a) an ``affiliated person'' 
(as defined in section 2(a)(3) of the Act) of the Investment Fund; (b) 
Skadden Arps; (c) a partner, lawyer, or employee of Skadden Arps; (d) 
an investment vehicle offered, sponsored, or managed by Skadden Arps or 
an affiliated person of Skadden Arps; or (e) an entity in which Skadden 
Arps acts as a general partner or has a similar capacity to control the 
sale or other disposition of the entity'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: (a) To its direct or indirect wholly-owned subsidiary, to any 
company (a ``Parent'') of which the Co-Investor is a direct or indirect 
wholly-owned subsidiary, or to a direct or indirect wholly-owned 
subsidiary of its Parent; (b) to immediate family members of the Co-
Investor or a trust established for the benefit of any such immediate 
family member; (c) when the investment is comprised of securities that 
are listed on a national securities exchange registered under section 6 
of the Exchange Act; or (d) when the investment is comprised of 
securities that are NMS Stocks pursuant to section 11A(a)(2) of the 
Exchange Act and Rule 600(b) under the Exchange Act.
    5. Each Investment Fund will send to each person who was a Member 
in such Investment Fund at any time during the fiscal year then ended 
audited financial statements with respect to those Series in which the 
Member held Units. At the end of each fiscal year, the Administrator 
will make a valuation or have a valuation made of all of the assets of 
the Investment Fund as of the fiscal year end. In addition, as soon as 
practicable after the end of each fiscal year of each Investment Fund, 
the Investment Fund shall send a report to each person who was a Member 
at any time during the fiscal year then ended, setting forth such tax 
information as shall be necessary for the preparation by the Member of 
his or her federal and state income tax returns and a report of the 
investment activities of such Investment Fund during such year.
    6. Each Investment Fund will maintain and preserve, for the life of 
such Investment Fund and at least six years thereafter, such accounts, 
books, and other documents as constitute the record forming the basis 
for the audited financial statements and annual reports of such 
Investment Fund to be provided to its Members, and agree that all such 
records will be subject to examination by the Commission and its staff. 
All such records will be maintained in an easily accessible place for 
at least the first two years.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-11256 Filed 5-9-12; 8:45 am]
BILLING CODE 8011-01-P