[Federal Register Volume 78, Number 25 (Wednesday, February 6, 2013)]
[Notices]
[Pages 8611-8615]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-02562]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 30374; File No. 813-374]


WINCO Investment Partnership 2008 L.P. and Winstead PC; Notice of 
Application

January 31, 2013.
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'') granting an 
exemption from all provisions of the Act, except section 9 and sections 
36 through 53, and the rules and regulations thereunder. With respect 
to sections 17 and 30 of the Act, and the rules and regulations 
thereunder, and rule 38a-1 under the Act, the exemption is limited as 
set forth in the application.

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Summary of Application:  Applicants request an order to exempt certain 
investment funds formed for the benefit of eligible current and former 
equity shareholders of Winstead PC from certain provisions of the Act. 
Each investment fund will be an ``employees' securities company'' 
within the meaning of section 2(a)(13) of the Act.

Applicants: WINCO Investment Partnership 2008 L.P. (the ``Investment 
Fund'') and Winstead PC (together with any entity that results from a 
reorganization of such firm into a different type of business 
organization or into an entity organized under the laws of another 
jurisdiction, the ``Firm'').

DATES: Filing Dates: The application was filed on September 24, 2008 
and amended on September 28, 2009, June 25, 2010, and November 1, 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 February 25, 2013 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; WINCO Investment Partnership 
2008 L.P. and Winstead PC, 500 Winstead Building, 2728 N. Harwood 
Street, Dallas, Texas 75201.

FOR FURTHER INFORMATION CONTACT:  Jill Ehrlich, Attorney Adviser, at 
(202) 551-6819, 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 an applicant 
using the Company name box, at http://www.sec.gov/search/search.htm or 
by calling (202) 551-8090.

Applicants' Representations

    1. The Firm is a law firm organized as a Texas professional 
corporation. The Firm and its affiliates, if any, as defined in rule 
12b-2 under the Securities Exchange Act of 1934 (the ``Exchange Act''), 
are referred to collectively as the ``Winstead Group'' and individually 
as a ``Winstead Entity.'' As a professional corporation, the Firm's 
equity owners are shareholders (the ``Equity Shareholders'').
    2. The Investment Fund is a Texas limited partnership. Subsequent 
pooled investment vehicles identical in all material respects (other 
than investment objectives and strategies, operational differences 
related to the form of organization and other differences described in 
the application) may be offered in the future to the same class of 
investors as those investing in the Investment Fund (the ``Subsequent 
Funds''). The Investment Fund and each of the Subsequent Funds 
(together, the ``Funds'') will be an employees' securities company 
within the meaning of section 2(a)(13) of the Act. The Funds will 
operate as non-diversified, closed-end management investment companies. 
The Investment Fund has been, and each Subsequent Fund will be, 
established to enable Eligible Investors (as defined below) to 
participate in certain investment opportunities that come to the 
attention of the Winstead Group. Participation as investors in the 
Funds will allow the Eligible Investors to diversify their investments 
and to have the opportunity to participate in investments that might 
not otherwise be available to them or that might be beyond their 
individual means. Participation in any Fund will be voluntary.
    3. The Investment Fund's general partner, WINCO Asset Services, 
Inc., a Texas corporation and wholly-owned subsidiary of The WINCO 
Group Incorporated, a Texas corporation and a Winstead Entity, will 
manage the Investment Fund. The Investment Fund's general partner or 
another Winstead Entity will manage each Subsequent Fund (such general 
partner or Winstead Entity, the ``Manager''). The Manager may designate 
an advisory board composed of, among others, the members of the Firm's 
executive committee, its department heads and other designated 
shareholders of the Firm (the ``Investment Committee''). The Investment 
Committee may be consulted for purposes of identifying and assessing 
investments which come to a Fund's attention through the Firm. The 
Manager or any person involved in the operation of the Funds will 
register as an investment adviser if required under the Investment 
Advisers Act of 1940, or the rules thereunder. The applicants represent 
and concede that the Manager in managing a Fund is an ``investment 
adviser'' within the meaning of sections 9 and 36 of the Act and is 
subject to those sections.
    4. The Firm will control the Funds within the meaning of the Act. 
The Firm, the Manager, the members of the Investment Committee, and any 
other person acting for or on behalf of a Fund shall act in the best 
interest of the Fund and its Fund Investors (as defined below). 
Whenever the Firm, the Manager, the members of the Investment 
Committee, or any other person acting for or on behalf of the 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 any fiduciary duties owed to the Funds and the Fund 
Investors. The organizational documents for and any other contractual 
arrangement regarding a Fund will not contain any provision which 
protects or purports to protect the Firm, the Manager, the members of 
the Investment Committee, or their delegates against any liability to 
the Fund or its Fund Investors to which such person would otherwise be 
subject by reason of willful misfeasance, bad faith, or gross 
negligence in the

[[Page 8612]]

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.
    5. Interests in a Fund (``Interests'') will be offered without 
registration in reliance on section 4(2) of the Securities Act of 1933 
(the ``Securities Act'') or Regulation D under the Securities Act 
(``Regulation D''). Interests will be offered solely to Eligible 
Investors, who consist of ``Eligible Employees,'' ``Qualified 
Investment Vehicles'' (each as defined below), and the Winstead Group. 
Prior to offering Interests in a Fund to an individual, the Manager 
must reasonably believe that the individual is a sophisticated investor 
capable of understanding and evaluating the risks of participating in 
the Fund without the benefit of regulatory safeguards. The term ``Fund 
Investors'' refers to the Eligible Investors who elect to participate 
and then acquire Interests in the Funds.
    6. An ``Eligible Employee'' is a person who is a current or former 
Equity Shareholder of the Firm and who, at the time of investment, is 
also an employee of the Winstead Group. Each Eligible Employee must be 
an ``accredited investor'' meeting the net worth requirement set forth 
in rule 501(a)(5), or the income requirement of rule 501(a)(6) of 
Regulation D, or is one of 35 or fewer Eligible Employees who (a) meets 
the sophistication requirements set forth in rule 506(b)(2)(ii) of 
Regulation D, has a graduate degree, a minimum of 3 years business and/
or professional experience, and compensation of at least $150,000 in 
the preceding 12 month period and a reasonable expectation of 
compensation of at least $150,000 in each of the two immediately 
succeeding 12 month periods,\1\ or (b) is a ``knowledgeable employee,'' 
as defined in rule 3c-5 under the Act, of the Fund (with the Fund 
treated as though it were a ``Covered Company'' for purposes of the 
rule).
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    \1\ Such Eligible Employee will not be permitted to invest in 
any calendar or fiscal year (as determined by the Firm) more than 
10% of his or her income from all sources for the immediately 
preceding calendar or fiscal year in one or more Funds.
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    7. A ``Qualified Investment Vehicle'' is: (a) A partnership, 
corporation or other entity all of the voting power of which is 
controlled by Eligible Employees, or (b) a trust or other entity the 
sole beneficiaries of which are Eligible Employees or their Immediate 
Family Members, or the settlors and the trustees of which consist of 
Eligible Employees or Eligible Employees together with Immediate Family 
Members. ``Immediate Family Members'' include any parent, child, spouse 
of a child, spouse, brother or sister, and includes any step and 
adoptive relationships. A Qualified Investment Vehicle must be either 
(a) an ``accredited investor'' as defined in rule 501(a) of Regulation 
D or (b) an entity for which an Eligible Employee is a settlor and 
principal investment decision-maker and which is counted toward the 35 
non-accredited Fund Investors.\2\
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    \2\ If a Qualified Investment Vehicle is an entity other than a 
trust, (a) the reference to ``settlor'' shall be construed to mean 
an Eligible Employee (alone or with Immediate Family Members) who 
created the vehicle, alone or together with others, and also 
contributed funds or other assets to the vehicle, and (b) the 
reference to ``trustee'' shall be construed to mean a person who 
performs functions similar to those of a trustee.
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    8. The Manager will provide to each Fund Investor a copy of the 
organizational documents and any offering memorandum relating to the 
Fund, prior to his or her investment in the Fund. Additionally, all 
material terms of the Funds will be fully disclosed to Eligible 
Investors prior to their investment in a Fund. Each Fund will send its 
Fund Investors annual reports, which will contain audited financial 
statements, as soon as practicable after the end of each fiscal 
year.\3\ In addition, as soon as practicable after the end of each 
fiscal year, each Fund will transmit to each Fund Investor a report 
setting out information with respect to that Fund Investor's 
distributive share of income, gains, losses, credits and other items 
for federal and state income tax purposes.
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    \3\ For purposes of this requirement, ``audit'' shall have the 
meaning defined in rule 1-02(d) of Regulation S-X.
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    9. A Fund Investor will be permitted to transfer his or her 
Interests only with the express consent of the Manager. The Manager 
does not anticipate giving such consent. Any such transfer must be to 
another Eligible Investor. Upon a Fund Investor's death or divorce, 
such Fund Investor's estate, heirs or spouse, as applicable, will 
succeed to the Interest of such Fund Investor and shall possess the 
economic attributes of the Fund Investor's Interest in the Fund, but 
shall not be admitted as a substitute Fund Investor.
    10. The Firm reserves the right to impose vesting provisions on a 
Fund Investor's investments in a Fund. In an investment program that 
provides for vesting provisions, all or a portion of a Fund Investor's 
Interests will be treated as ``unvested,'' and ``vesting'' will occur 
through the passage of a specified period of time. A Fund Investor's 
Interests that are or become ``vested'' will not be subject to 
repurchase by the Fund except to the extent that a Fund Investor 
withdraws from the applicable Fund. Any portion of a Fund Investor's 
Interests that are ``unvested'' at the time of the termination of a 
Fund Investor's association or employment with the Firm (or at the time 
of that Fund Investor's failure to achieve the relevant performance 
milestone) are subject to repurchase or cancellation by the Fund. In 
the event of such a repurchase or cancellation, the Fund Investor will 
receive, at a minimum, the lesser of (a) the amount actually allocated 
to such Fund Investor by the Fund at the time the Interests are 
acquired less the amount of any distributions received by that Fund 
Investor from the Fund and (b) the fair market value of the Interests 
determined at the time of repurchase or cancellation, as determined in 
good faith by the Manager.
    11. The Firm may be reimbursed by the Funds for reasonable and 
necessary out-of-pocket costs directly associated with the organization 
and operation of the Funds, including administrative and overhead 
expenses. In addition, the Firm may allocate to a Fund any out-of-
pocket expenses specifically attributable to the organization and the 
operation of that Fund. There will be no allocation of any of the 
Firm's operating expenses to a Fund. No separate management fee will be 
charged to a Fund by the Manager, and no compensation will be paid by a 
Fund or by Fund Investors to the Manager for its services. Also, no fee 
of any kind will be charged in connection with the sale of Interests of 
the Funds.
    12. A Fund will not borrow from any person if such borrowing would 
cause any person not named in section 2(a)(13) of the Act to own 
outstanding securities of the Fund (other than short-term paper). Any 
such borrowing will be non-recourse to the Fund Investors. If a 
Winstead Entity or an Equity Shareholder makes a loan to a Fund, the 
interest rate on the loan will be no less favorable to the Fund than 
the rate that could be obtained on an arm's-length basis.
    13. No Fund will acquire any security issued by a registered 
investment company if, immediately after the acquisition, the Fund 
would own more than 3% of the outstanding voting stock of the 
registered investment company.

Applicants' Legal Analysis

    1. Section 6(b) of the Act provides, in part, that the Commission 
may, by order upon application, conditionally or unconditionally exempt 
any ``employees' securities company'' from the provisions of the Act, 
if and to the

[[Page 8613]]

extent that such 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 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 of more affiliated employers, (b) by immediate family members of 
such person, 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 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 the Funds from all provisions of the Act, except section 9 
and sections 36 through 53, and the rules and regulations under the 
Act. With respect to sections 17 and 30 of the Act, and the rules and 
regulations thereunder, and rule 38a-1 under the Act, the exemption is 
limited 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 any 
security or other property to the investment company or knowingly 
purchasing a security or other property from the investment company. 
Applicants request an exemption from section 17(a) to permit a Fund to: 
(a) Purchase, from the Firm or any affiliated person thereof, 
securities or interests in properties previously acquired for the 
account of the Firm or any affiliated person thereof; (b) sell, to the 
Firm or any affiliated person thereof, securities or interests in 
properties previously acquired by the Funds; (c) invest in companies, 
partnerships or other investment vehicles offered, sponsored or managed 
by the Firm or any affiliated person thereof; (d) purchase interests in 
any company or other investment vehicle: (i) in which the Firm owns 5% 
or more of the voting securities; or (ii) that otherwise is an 
affiliated person of the Fund (or an affiliated person of such an 
affiliated person) or the Firm; and (e) participate as a selling 
security-holder in a public offering in which the Firm or any 
affiliated person thereof acts as or represents a member of the selling 
group.
    4. Applicants submit that an exemption from section 17(a) is 
consistent with the protection of investors and the purposes of the 
Act. Applicants state that the Fund Investors will be informed in the 
Fund's communications relating to a particular investment opportunity 
of the possible extent of the Fund's dealings with the Firm or any 
affiliated person thereof, and Eligible Investors, as financially 
sophisticated professionals and investors, will be able to evaluate the 
risks associated with those dealings. Applicants also assert that a 
community of interest among the Fund Investors and the Firm will serve 
to reduce the risk of abuse in transactions involving a Fund and the 
Firm or any affiliated person 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 an affiliated person, acting as principal, from 
participating in any joint arrangement with the company unless 
authorized by the Commission. Applicants request relief to permit a 
Fund to engage in transactions in which an affiliated person (or an 
affiliated person of such person) participates as a joint participant 
with such Fund. Joint transactions in which a Fund could participate 
include the following: (a) An investment by one or more Funds in a 
security: (i) In which the Firm or an affiliated person thereof 
(including Eligible Employees) or another Fund is a participant or 
plans to become a participant; or (ii) with respect to which the Firm 
or any affiliated person thereof is entitled to receive fees of any 
kind, including, but not limited to legal fees, consulting fees, 
placement fees, investment banking fees or brokerage commissions, or 
other economic benefits or interests; (b) an investment by one or more 
Funds in an investment vehicle sponsored, offered or managed by the 
Firm or any affiliated person thereof; and (c) an investment by one or 
more Funds in a security in which an affiliated person of the Fund, or 
an affiliated person of such a person, is a participant or plans to 
become a participant, including situations in which that person has a 
partnership or other interest in, or compensation arrangement with, the 
issuer, sponsor or offeror of the security.
    6. Applicants assert that compliance with section 17(d) would cause 
the Funds to forego investment opportunities simply because a Fund 
Investor, the Firm or other affiliated persons of the Fund also had 
made or is contemplating making a similar investment. In addition, 
because attractive investment opportunities of the types considered by 
the Funds 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 
a Fund may be unable to take advantage except as a co-participant with 
other persons, including affiliates. Applicants note that, in light of 
the Firm's purpose of establishing the Funds so as to reward Eligible 
Investors and to attract highly qualified personnel to the Firm, the 
possibility is minimal that an affiliated party investor will enter 
into a transaction with a Fund structured to provide such person with 
an unfair advantage over the Fund. Applicants assert that the 
flexibility to structure co-investments and joint investments will not 
involve abuses of the type section 17(d) and rule 17d-1 were designed 
to prevent.
    7. 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, subject to certain 
requirements. Applicants request an exemption from section 17(f) and 
rule 17f-2 to permit the following exceptions from the requirements of 
rule 17f-2: (a) Compliance with paragraph (b) of the rule may be 
achieved through safekeeping in the locked files of the Firm or of an 
Eligible Employee; (b) for purposes of paragraph (d) of the rule: (i) 
Employees of the Firm will be deemed employees of the Funds; (ii) 
officers of a Manager will be deemed to be officers of such Fund; and 
(iii) the Manager of a Fund will be deemed to be the board of directors 
of such Fund; and (c) instead of the verification procedure under 
paragraph (f) of the rule, verification will be effected quarterly by 
two senior level employees of the Firm. Applicants assert that the 
securities held by the Funds are most suitably kept in the Firm's 
files, where they can be referred to as necessary.
    8. Section 17(g) of the Act and rule 17g-1 under the Act generally 
require the bonding of officers and employees of

[[Page 8614]]

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. 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 other parties from section 17(d) of the Act. 
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).
    9. Applicants request an exemption from section 17(g) and rule 17g-
1 to the extent necessary to permit the Manager to take the action and 
make the approvals set forth in the rule. Because the Manager will be 
an interested person of the Funds, the Funds would not be able to 
comply with rule 17g-1 without the requested relief. 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 that the filing requirements are burdensome and 
unnecessary as applied to the Funds. The Manager 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. The Manager will designate 
a person to maintain the records otherwise required to be filed with 
the Commission under paragraph (g) of the rule. Applicants maintain 
that the notices otherwise required to be given to each member of the 
board of directors would be unnecessary as the Funds will not have 
boards of directors. The Funds will comply with all the other 
requirements of rule 17g-1.
    10. Section 17(j) of the Act and paragraph (b) of rule 17j-1 under 
the Act make it unlawful for certain enumerated persons to engage in 
fraudulent or deceptive practices in connection with the purchase or 
sale of a security held or to be acquired by a 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. Applicants request an exemption from the requirements of 
rule 17j-1, with the exception of the anti-fraud provisions of rule 
17j-1(b), because they would be time-consuming and expensive and would 
serve little purpose in light of the community of interests among the 
Fund Investors by virtue of their common association with the Firm. 
Applicants assert that 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 
Funds.
    11. Applicants request 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 file with the Commission and mail 
to their shareholders certain periodic reports and financial 
statements. Applicants state that the forms prescribed by the 
Commission for periodic reports have little relevance to the Funds and 
would entail administrative and legal costs that outweigh any benefit 
to the Fund Investors. Applicants request exemptive relief to the 
extent necessary to permit each Fund to report annually to its Fund 
Investors in the manner prescribed for the Fund by its Fund Agreement. 
Applicants also request an exemption from section 30(h) of the Act to 
the extent necessary to exempt the executive officers and directors of 
the Manager and the Manager and any other persons who may be deemed to 
be members of an advisory board of a Fund from filing Forms 3, 4 and 5 
under section 16 of the Exchange Act with respect to their ownership of 
Interests in the Funds. Applicants assert that, because there is no 
trading market for Interests and transferability of Interests is 
severely restricted, these filings are unnecessary for the protection 
of investors and would be burdensome to those who would be required to 
file them.
    12. Rule 38a-1 requires investment companies to adopt, implement, 
and periodically review written policies and procedures reasonably 
designed to prevent violation of federal securities laws, appoint a 
chief compliance officer and maintain certain records. The Funds will 
comply with rule 38a-1(a), (c) and (d), except that (a) the Manager of 
each Fund will fulfill the responsibilities assigned to the Fund's 
board of directors under the rule, and (b) since the Manager would be 
considered an interested person of the Funds, approval by a majority of 
disinterested directors required by rule 38a-1 will not be obtained. In 
addition, the 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 Manager.

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 a Fund is a party otherwise 
prohibited by section 17(a) or section 17(d) and rule 17d-1 (each a 
``Section 17 Transaction'') will be effected only if the Manager 
determines that: (a) The terms of the Section 17 Transaction, including 
the consideration to be paid or received, are fair and reasonable to 
the Fund Investors of the participating Fund and do not involve 
overreaching of the Fund or its Fund Investors on the part of any 
person concerned; and (b) the Section 17 Transaction is consistent with 
the interests of the Fund Investors of the participating Fund, the 
Fund's organizational documents and the Fund's reports to its Fund 
Investors.
    In addition, the Manager will record and preserve a description of 
such Section 17 Transactions, its findings, the information or 
materials upon which its findings are based and the basis therefor. All 
such records will be maintained for the life of a 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 a Fund from or to an entity 
affiliated with the Fund by reason of an Equity Shareholder or employee 
of the Winstead Group (a) serving as an officer, director, general 
partner or investment advisor of the entity, or (b) having a 5% or more 
investment in the entity, such individual will not participate in the 
Fund's determination of whether or not to effect the purchase or sale.
    3. The Manager 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 the Funds, or any affiliated 
person of such a person, promoter, or principal underwriter.

[[Page 8615]]

    4. The Manager will not make on behalf of a 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 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 Manager 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 participating 
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 Fund means any person who is: (a) An ``affiliated 
person'' (as defined in section 2(a)(3) of the Act) of the Fund; (b) a 
Winstead Entity; (c) an Equity Shareholder or other employee of a 
Winstead Entity; (d) an investment vehicle offered, sponsored, or 
managed by the Firm or an affiliated person of the Firm; or (e) an 
entity in which a Winstead Entity acts as a general partner, or has a 
similar capacity to control the sale or 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 any such Immediate Family Member; 
or (c) when the investment is comprised of securities that are (i) 
listed on any exchange registered under section 6 of the Exchange Act; 
(ii) NMS stocks pursuant to section 11A(a)(2) of the Exchange Act and 
rule 600(a) of Regulation NMS thereunder; (iii) government securities 
as defined in section 2(a)(16) of the Act or other securities that meet 
the definition of ``Eligible Security'' in rule 2a-7 under the Act; or 
(iv) 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.
    5. The Manager of each Fund will send to each person who was a Fund 
Investor in such Fund at any time during the fiscal year then ended 
audited financial statements of the Fund. 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 Fund as of the fiscal year end in a manner 
consistent with customary practice with respect to the valuation of 
assets of the kind held by the Fund. In addition, as soon as 
practicable after the end of each fiscal year of each Fund, the Manager 
of the Fund shall send a report to each person who was a Fund Investor 
at any time during the fiscal year then ended, setting forth such tax 
information as shall be necessary for the preparation by the Fund 
Investor of his or her federal and state income tax returns and a 
report of the investment activities of such Fund during such year.
    6. Each Fund and the Manager will maintain and preserve, for the 
life of each 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 Fund to 
be provided to its Fund Investors, 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. 2013-02562 Filed 2-5-13; 8:45 am]
BILLING CODE 8011-01-P