<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 29, 1997
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
NEW ENGLAND INVESTMENT COMPANIES, L.P.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 13-3405992
(I.R.S. EMPLOYER
(STATE OR OTHER JURISDICTION IDENTIFICATION NUMBER)
OF INCORPORATION OR ORGANIZATION)
399 BOYLSTON STREET
BOSTON, MASSACHUSETTS 02116
(617) 578-3500
(ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
---------------
EDWARD N. WADSWORTH, ESQ.
EXECUTIVE VICE PRESIDENT
AND GENERAL COUNSEL
NEW ENGLAND INVESTMENT COMPANIES, L.P.
399 BOYLSTON STREET
BOSTON, MASSACHUSETTS 02116
(617) 578-3500
(NAME AND ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA
CODE, OF AGENT FOR SERVICE)
PLEASE SEND COPIES OF ALL COMMUNICATIONS TO:
CHRISTOPHER A. KLEM, ESQ.
ROPES & GRAY
ONE INTERNATIONAL PLACE
BOSTON, MASSACHUSETTS 02110
(617) 951-7000
---------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effectiveness of the Registration Statement.
If the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act,
other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(c) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
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CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED(1) PER UNIT(1) OFFERING PRICE(1) FEE(2)
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<S> <C> <C> <C> <C>
Limited Partner
Interests.............. 7,747,499 $16.125-$28.188 $210,604,608 $48,650.66
</TABLE>
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(1) The offering price for the units of limited partnership interest ("LP
Units") subject to options on the date hereof is the actual exercise price
of such options. The offering price for the remaining LP Units not subject
to options on the date hereof, $28.188 per LP Unit, has been estimated
solely for the purpose of calculating the registration fee pursuant to
Rule 457(h) on the basis of the average of the high and low prices of LP
Units as reported by the New York Stock Exchange on December 23, 1997.
(2) Paid in respect of 6,000,000 LP Units registered hereby. Pursuant to Rule
429, no registration fee is being paid herewith in respect of 1,747,499 LP
Units registered under Registration Statement No. 333-01933.
---------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
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<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTABLE PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED DECEMBER 29, 1997
NEW ENGLAND INVESTMENT COMPANIES, L.P.
LIMITED PARTNERSHIP INTEREST
7,747,499 UNITS
-----------
The information set forth herein relates to an aggregate of 7,747,499 units
of limited partner interest ("LP Units") of New England Investment Companies,
L.P. ("NEIC" ) which have been reserved for issuance upon the exercise of
options or the grant of other awards which are offered to officers, employees
and other key persons of NEIC, NEIC Operating Partnership, L.P. ("NEICOP" and
together with NEIC, the "Partnerships") or subsidiaries thereof under the
Partnerships' 1993 Equity Incentive Plan (the "1993 Plan") or the Partnerships'
1997 Equity Incentive Plan (the "1997 Plan," and together with the 1993 Plan,
the "Plans"). The information contained herein also relates to such additional
LP Units as may be issuable under the Plans in the event of certain changes in
the capital structure of NEIC. See "Description of the 1993 Plan--LP Units
Subject to 1993 Plan" and "Description of the 1997 Plan--LP Units Subject to
1997 Plan." This Prospectus relates to the issuance by NEIC of the LP Units
under the Plans, but does not relate to the resale of such LP Units by
participants under the Plans.
The LP Units are traded on the New York Stock Exchange (the "NYSE") under the
symbol "NEW." On December 22, 1997, the last reported sale price of the LP
Units on the NYSE was $28 1/2.
-----------
FOR INFORMATION CONCERNING CERTAIN CONSIDERATIONS RELATING TO THIS OFFERING,
SEE "RISK FACTORS" BEGINNING ON PAGE 4.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
-----------
THE DATE OF THIS PROSPECTUS IS JANUARY , 1998.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
AVAILABLE INFORMATION....................................................... 1
INCORPORATION OF DOCUMENTS BY REFERENCE..................................... 1
SUMMARY..................................................................... 3
The Partnerships.......................................................... 3
The Plans................................................................. 3
Certain Investment Considerations......................................... 4
Restrictions on Reoffer or Resale of LP Units............................. 4
Tax Aspects Under the U.S. Internal Revenue Code.......................... 4
RISK FACTORS................................................................ 5
DESCRIPTION OF THE 1993 PLAN................................................ 8
General................................................................... 8
Purpose................................................................... 8
Administration............................................................ 9
Eligibility............................................................... 9
Types of Grants and Awards................................................ 9
Exercisability............................................................ 10
Transferability........................................................... 10
LP Units Subject to 1993 Plan............................................. 11
Tax Withholding........................................................... 11
Amendments and Termination................................................ 11
Liens..................................................................... 11
DESCRIPTION OF THE 1997 PLAN................................................ 11
General................................................................... 11
Purpose................................................................... 11
Administration............................................................ 11
Eligibility............................................................... 12
Types of Grants and Awards................................................ 12
Exercisability and Transferability........................................ 12
LP Units Subject to 1997 Plan............................................. 12
Tax Withholding........................................................... 13
Amendment and Termination................................................. 13
Liens..................................................................... 13
RESTRICTIONS ON REOFFER OR RESALE OF LP UNITS............................... 13
INSIDER CONSIDERATIONS...................................................... 13
TAX ASPECTS UNDER THE U.S. INTERNAL REVENUE CODE............................ 14
Options and UARs.......................................................... 14
Restricted and Unrestricted Units......................................... 14
Deferred Units............................................................ 15
Supplemental Cash Awards; Loans........................................... 15
Tax Consequences to the Partnerships...................................... 15
Taxation of NEIC and its Partners......................................... 15
Disposition of LP Units Acquired Under the Plans.......................... 16
Special Rules Under Section 16 of the Exchange Act........................ 17
Withholding............................................................... 17
USE OF PROCEEDS............................................................. 17
PLAN OF DISTRIBUTION........................................................ 17
</TABLE>
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AVAILABLE INFORMATION
NEIC is subject to the informational requirements of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and in accordance therewith
files reports, proxy statements and other information with the SEC (the
"SEC"). Such reports, proxy statements and other information filed may be
inspected and copied at the public reference facilities maintained by the SEC
at Judiciary Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549
and at its regional offices at 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661 and at 7 World Trade Center, 13th Floor, New York, New York
10048. Copies of such materials can be obtained from the Public Reference
Section of the SEC, 450 Fifth Street, N.W., Washington, D.C. 20549, on payment
of prescribed charges. NEIC also makes filings of reports, proxy statements
and other information pursuant to the Exchange Act with the SEC
electronically, and such materials may be inspected and copied at the SEC's
Web site (http://www.sec.gov). Such reports, proxy statements and other
information can also be inspected at the offices of the New York Stock
Exchange, 20 Broad Street, New York, New York 10005.
NEIC has filed with the SEC a registration statement on Form S-3 under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
LP Units offered hereby. This Prospectus does not contain all of the
information set forth in the Registration Statement, certain parts of which
have been omitted in accordance with the rules and regulations of the SEC, and
the exhibits relating thereto, which have been filed with the SEC. Copies of
the Registration Statement and the exhibits are on file at the offices of the
SEC and may be obtained upon payment of the fees prescribed by the SEC, or
examined without charge at the public reference facilities of the SEC
described above.
No person is authorized in connection with the offering made hereby to give
any information or to make any representation not contained or incorporated by
reference in this Prospectus, and any information or representation not
contained or incorporated herein must not be relied upon as having been
authorized by NEIC. This Prospectus relates solely to the LP Units offered
hereby and it may not be used or relied on in connection with any other offer
or sale of securities of NEIC. This Prospectus does not constitute an offer to
sell or a solicitation of any offer to buy by any person in any jurisdiction
in which it is unlawful for such person to make such an offer or solicitation.
Neither the delivery of this Prospectus at any time nor any sale made
hereunder shall under any circumstance imply that the information herein is
correct as of any date subsequent to the date hereof.
INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents previously filed by NEIC with the SEC are
incorporated herein by reference and made a part hereof:
1. NEIC's Annual Report on Form 10-K for the year ended December 31,
1996.
2. NEIC's Quarterly Reports on Form 10-Q for the quarterly periods ended
March 31, 1997, June 30, 1997 and September 30, 1997.
3. NEIC's Current Reports on Form 8-K dated January 3, 1997, May 28, 1997
and December 31, 1997.
4. The description of the LP Units contained in NEIC's Amendment on Form
8-A/A dated December 29, 1997 to its Registration Statement on Form 8-A,
including any amendment or report filed for the purpose of updating such
description.
All documents subsequently filed by NEIC pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date hereof and prior to the
termination of the offering shall be deemed incorporated herein by reference
from the date of filing of such documents. Any statement contained herein or
in a document
1
<PAGE>
incorporated or deemed to be incorporated by reference herein shall be deemed
to be modified or superseded for purposes of this Prospectus to the extent
that a statement contained herein, or in any other subsequently filed document
that also is incorporated or deemed to be incorporated by reference herein,
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
NEIC WILL PROVIDE WITHOUT CHARGE TO EACH PERSON TO WHOM THIS PROSPECTUS IS
DELIVERED UPON THE WRITTEN OR ORAL REQUEST OF SUCH PERSON A COPY OF ANY OR ALL
OF THE DOCUMENTS THAT HAVE BEEN INCORPORATED BY REFERENCE IN THIS PROSPECTUS,
OTHER THAN EXHIBITS TO SUCH DOCUMENTS. SUCH DOCUMENTS MAY BE OBTAINED BY
WRITING TO NEW ENGLAND INVESTMENT COMPANIES, L.P., 339 BOYLSTON STREET,
BOSTON, MASSACHUSETTS 02116, ATTENTION: EDWARD N. WADSWORTH, CORPORATE
SECRETARY, OR BY CALLING (617) 578-3500.
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<PAGE>
SUMMARY
The following is a brief summary of certain information contained elsewhere
in this Prospectus and incorporated by reference herein. This summary does not
contain a complete statement of all material information relating to LP Units,
the 1993 Plan and the 1997 Plan and is subject to, and is qualified in its
entirety by, the more detailed information and financial statements contained
or incorporated by reference in this Prospectus.
THE PARTNERSHIPS
NEICOP is a major investment manager that offers a broad array of investment
management products and styles across a wide range of asset categories to
institutions and individuals. NEICOP currently conducts the business conducted
by NEIC prior to December 29, 1997, when NEIC contributed all of its operating
assets, subject to all of its liabilities, to NEICOP in exchange for units
representing a partner's interest in NEICOP ("NEICOP Units"). NEIC currently
serves as NEICOP's Advising General Partner. As Advising General Partner, NEIC
has (1) certain decision participation rights with respect to a management
committee of NEICOP, and (2) certain approval rights with respect to certain
transactions by NEICOP. NEIC may also generally act on behalf of NEICOP. NEIC
has also agreed with NEICOP in the Intercompany Agreement between NEIC and
NEICOP dated as of December 29, 1997 (the "Intercompany Agreement") to certain
restrictions on its activities. NEICOP's managing general partner, New England
Investment Companies, Inc. ("NEIC, Inc."), also serves as the sole general
partner of NEIC.
The executive offices of NEIC are located at 399 Boylston Street, Boston,
Massachusetts 02116, and its telephone number is (617) 578-3500.
THE PLANS
The 1993 Plan was adopted by the Board of Directors of NEIC's general partner
on June 15, 1993, and was approved by the unitholders of NEIC at a special
meeting held on September 14, 1993. The 1997 Plan was adopted by the Board of
Directors of NEIC, Inc. on June 17, 1997, and was approved by the unitholders
of NEIC at a special meeting held on August 25, 1997.
The Plans were amended and NEICOP became a party to each of the Plans as of
December 29, 1997. Awards under the Plans are exercisable in the first instance
against NEICOP and then against NEIC. The description of the Plans contained
under the captions "Description of the 1993 Plan," "Description of the 1997
Plan," and "Tax Aspects Under the U.S. Internal Revenue Code" address the Plans
as amended through December 29, 1997.
The aggregate maximum number of LP Units for which options and other awards
may be issued under the 1993 Plan is 1,774,000, (1,040,063 of which were
available for future grant as of January 1, 1998), and the aggregate maximum
number of LP Units for which options and other awards may be issued under the
1997 Plan is 6,000,000 ( of which were available for future grant as of
January 1, 1998), in each case subject to adjustments for certain changes in
the capitalization of NEIC. The Plans permit the granting of a variety of
equity incentive awards based on LP Units. (In addition, the 1997 Plan also
permits the granting of a variety of equity incentive awards based on NEICOP
Units.) Awards under the Plans include options, unit appreciation rights,
restricted and unrestricted LP Units, performance units and distribution
equivalent rights. LP Units attributable to certain expired or forfeited awards
may be added back to the pool of LP Units reserved under the Plans and will be
available for regrant. Awards under the 1993 Plan may be granted at any time
through August 2003, and awards under the 1997 Plan may be granted at any time
through June 16, 2007, provided in each case that awards made prior to that
date may continue after such date. See "Description of the 1993 Plan" and
"Description of the 1997 Plan."
Neither Plan is subject to the provisions of the Employee Retirement Income
Security Act of 1974 and neither Plan is a qualified plan under Section 401(a)
of the Internal Revenue Code of 1986, as amended (the "Code").
3
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CERTAIN INVESTMENT CONSIDERATIONS
Prospective investors should carefully consider certain factors prior to
purchasing the LP Units offered hereby, such as the fact that NEIC will be
subject to taxation and that NEIC is controlled by Metropolitan Life Insurance
Company. For a more detailed description of these and other factors which
prospective investors should carefully consider prior to purchasing LP Units,
see "Risk Factors."
RESTRICTIONS ON REOFFER OR RESALE OF LP UNITS
Affiliates of NEIC that acquire LP Units cannot resell or reoffer such units
unless such units have been registered under the Securities Act or other
applicable securities laws or are resold or reoffered pursuant to an exemption
therefrom. See "Restrictions on Reoffer or Resale of LP Units."
TAX ASPECTS UNDER THE U.S. INTERNAL REVENUE CODE
For a general description of the federal income tax consequences of
acquiring, holding and disposing of LP Units, see "Tax Aspects under the U.S.
Internal Revenue Code."
4
<PAGE>
RISK FACTORS
Prospective investors should carefully consider the following factors,
together with the other information contained in this Prospectus and
incorporated by reference herein, prior to purchasing the LP Units offered
hereby.
TAXATION OF NEIC
NEIC is subject to an annual tax equal to 3.5% of its gross income from the
active conduct by it or its lower-tier partnerships of a trade or business
(the "Gross Income Tax"). The Gross Income Tax reduces the operating cash flow
of NEIC available for distribution to NEIC's unitholders. An analysis of
NEIC's results of operations for the first nine months of 1997 indicates that
the Gross Income Tax, had it been applicable for such period, would have
reduced distributable cash flow per unit (representing distributions received
from NEICOP less the Gross Income Tax expense) for such nine month period by
approximately 16%.
In addition, the rate at which the Gross Income Tax is imposed (currently
3.5%) may be increased in the future, and the states in which NEIC's business
is conducted may impose an entity-level tax on NEIC.
CONTROL BY METLIFE
NEIC is controlled by NEIC, Inc., its general partner, which is wholly owned
by an affiliate of the Metropolitan Life Insurance Company (together with its
affiliates, "MetLife"). NEIC, Inc. is also the managing general partner of
NEICOP (the "Managing General Partner"). In addition to its indirect ownership
of units representing a general partner interest in NEIC ("GP Units") and
units representing a general partner's interest in NEICOP ("NEICOP GP Units"),
as of [ ], 1997, MetLife beneficially owned approximately [ ]% of the
outstanding LP Units and [ ]% of the outstanding units representing a limited
partner's interest in NEICOP ("NEICOP LP Units"). MetLife has the right to
elect all of the directors of NEIC, Inc., subject to its obligation to elect
one designee of Reich & Tang, Inc. ("RTI"). Currently, three persons who are
officers and/or directors of MetLife serve on NEIC, Inc.'s nine member board.
Holders of LP Units have no rights to participate in the election of such
directors and otherwise have only limited voting rights with respect to NEIC
and NEICOP matters. In cases where holders of LP Units do vote, the Second
Amended and Restated Agreement of Limited Partnership of NEIC (the "NEIC
Partnership Agreement") prevents any person or group (as defined therein),
other than MetLife and certain other persons (including persons approved by
NEIC, Inc.), from voting more than 20% of the NEIC Units entitled to vote on
the matter. See "Regulation" under this heading.
NEICOP and its firms are parties to certain transactions with MetLife,
including management of certain MetLife general account assets by various
NEICOP firms, provision of leased space and certain limited administrative
services by MetLife to NEICOP and certain firms, and distribution of mutual
fund shares by agents of MetLife and New England Life Insurance Company, a
MetLife subsidiary. NEIC believes that all such arrangements reflect market
terms and prices.
POSSIBLE FUTURE RESTRUCTURING OF NEIC AND NEICOP
The NEIC Partnership Agreement and the Amended and Restated Agreement of
Limited Partnership of NEICOP (the "NEICOP Partnership Agreement") confer on
NEIC, Inc. broad authority to effect a restructuring of NEIC and/or NEICOP in
connection with, or in anticipation of, a change in tax status, subject to a
standard of good faith on the part of NEIC, Inc.
In determining the form of any restructuring of NEIC and/or NEICOP, NEIC,
Inc. is obligated to seek to accomplish certain prioritized objectives of
MetLife, RTI and other non-Public Partners (as defined in the NEIC Partnership
Agreement) with respect to special considerations, including avoidance of
special and potentially
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significantly adverse tax treatment and continued participation in a flow-
through entity for this purpose. No assurances can be given regarding the
timing or form of any restructuring, which may be affected by changes in the
tax laws as well as other factors beyond the control of NEIC, NEICOP or NEIC,
Inc. NEIC, Inc. expects that any restructuring would provide holders of
publicly traded LP Units with the ongoing benefit of public market liquidity
for their interests in NEICOP's business. While the NEIC Partnership Agreement
provides that NEIC, Inc. may impose restrictions on transfer as part of a
restructuring (which may have the effect of preserving NEIC's tax status as a
partnership), NEIC, Inc. has no reason to believe that trading restrictions
will be necessary to accomplish the restructuring objectives outlined in the
NEIC Partnership Agreement, absent legal or other developments.
The NEIC Partnership Agreement and the NEICOP Partnership Agreement relieve
NEIC, Inc. of all duties and liabilities to NEIC, NEICOP and unitholders
thereof for actions taken in good faith by NEIC, Inc. in connection with a
restructuring. NEIC, Inc., MetLife and RTI may each be deemed to have
conflicts of interest with respect to possible future restructurings insofar
as they may be treated differently than the holders of LP Units, as noted
above.
TAX ATTRIBUTES OF LP UNITS ACQUIRED UNDER THE PLANS
NEIC intends to continue to use certain tax accounting methods and
conventions employed by other publicly traded partnerships in order to promote
uniformity among LP Units while effecting the allocations required by Code
Section 704 and related Code provisions. The general partner of NEIC and the
managing general partner of NEICOP have been granted expanded authority under
the respective partnership agreements to make special allocations, including
remedial and/or curative allocations under Code Section 704(c), to promote
uniformity of LP Units. While these accounting methods and conventions could
be found not to be in strict compliance with the provisions of Code Section
704, NEIC believes that the accounting methods and conventions are consistent
in general with the purposes of Code Section 704 and related Code provisions.
If the allocation and accounting methods and conventions employed and to be
employed by NEIC or NEICOP were successfully challenged by the Internal
Revenue Service (the "IRS"), different federal income tax consequences
(including different allocations of amortization deductions) might attach to
certain units. In such circumstances, the consequences to purchasers of LP
Units may depend on the identity of the seller, and the market value and
marketability of LP Units could be adversely affected. See "Certain Federal
Income Tax Consequences--Taxation of NEIC and its Partners."
RELIANCE ON KEY PERSONNEL
The ability of NEICOP's firms to attract and retain clients is dependent to
a large extent on their ability to attract and retain key employees, including
skilled portfolio managers. Certain of these employees are responsible for
significant client relationships. Many key employees are not under non-
competition or other restrictions as to their departure and may be able to
attract clients away upon their departure. Loss of key personnel could have a
material adverse effect on NEICOP's, and consequently NEIC's, results of
operations.
COMPETITION
The investment management business is highly competitive. NEICOP and
NEICOP's firms compete with a large number of investment management firms,
commercial banks, insurance companies and others, many of which are larger and
have access to greater resources. NEIC believes that the most important
factors affecting competition for clients are: the abilities, performance
records and reputations of investment managers; the ability to hire and retain
key investment managers; the effectiveness of marketing programs; the
development of new investment strategies and information technologies; and
competitiveness in fees and investor service. NEICOP's ability to increase
assets under management and to retain such assets could be adversely affected
if client accounts underperform the market or NEICOP's competitors and if key
investment managers leave NEICOP's investment management firms. NEICOP's
competitive position also is dependent, in part, on the relative
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attractiveness of the types of investment products offered and investment
philosophies, strategies and methods of NEICOP's various investment management
firms under prevailing market conditions.
FACTORS AND CONDITIONS AFFECTING FEE REVENUES
Investment management agreements between investment management firms and
their clients typically provide for fees based on a percentage of the assets
under management, determined at least quarterly and valued at current market
levels. The percentage of the fee applicable to a particular classification of
assets under management is a function of several factors, though generally
investments which have a higher degree of risk and uncertainty command a
higher percentage fee. Therefore, significant fluctuations in the value and
type of assets under management can have a material effect on NEICOP's and
NEIC's consolidated revenues and profitability. Such asset valuations and
client investment patterns may be affected by overall economic conditions and
other factors influencing the capital markets generally.
With relatively minor exceptions, virtually all of NEICOP's revenues are
derived from investment management agreements with clients that are terminable
at any time or upon 30 to 60 days' notice, as is the case generally in the
investment management industry. Any termination of agreements representing a
significant portion of assets under management could have an adverse impact on
NEICOP's, and consequently NEIC's, results of operations.
CERTAIN INVESTMENT MANAGEMENT RISK CONSIDERATIONS
Investment management firms are from time to time subject to claims for
client losses or other amounts arising out of investment performance or other
service that does not meet clients' expectations, particularly with respect to
use of more innovative investment strategies.
In addition, as a real estate investment manager, one of NEICOP's investment
management firms, AEW Capital Management, L.P., is subject to a number of
special considerations. Real estate investment portfolios are, by their terms,
generally liquidated over an investment period, creating a continual need to
attract new assets in order to achieve asset growth. In addition, real estate
investment managers may be subject to certain potential risks as a result of
the structures used for client investment that are not characteristic of the
risks for other investment managers, such as the possibility that such
managers might be responsible for tort and environmental claims and, in a
limited number of cases, for property debt.
ACQUISITION STRATEGY
As part of its growth strategy, NEIC has selectively pursued the acquisition
of investment management firms, which, following acquisition, are expected to
continue to manage their businesses independently on a day-to-day basis.
NEICOP currently intends to continue this investment strategy. Consideration
for such acquisitions include cash (including cash from borrowings), possibly
LP Units, NEICOP LP Units and future payments (in cash, NEICOP LP Units, or
possibly LP Units) based on performance. Other employment incentives are
frequently provided for. NEICOP will typically seek to obtain employment and
non-competition agreements from key managers. There can be no assurance that
suitable acquisition candidates can be located or that appropriate agreements
with them can be reached or completed, or that any acquired business will
perform as expected following acquisition.
REGULATION
The business of NEICOP and its firms is subject to regulation by the SEC and
other federal, state and foreign regulatory bodies. The applicable laws and
regulations are primarily intended to benefit investment management clients
and investment company shareholders and generally grant supervisory agencies
broad administrative powers, including the power to limit or restrict business
activities for failure to comply with such laws and regulations.
7
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Under applicable federal securities laws, investment management agreements
held by NEICOP and most of its investment management firms either may not be
assigned without the client's consent or terminate automatically upon
assignment. For these purposes, "assignment" includes direct assignments as
well as assignments which may be deemed to occur, under certain circumstances,
upon the transfer, directly or indirectly, of control of NEICOP. The NEICOP
Partnership Agreement contains provisions designed to reduce the likelihood of
transactions resulting in an assignment of such investment management
agreements through a deemed change in control of NEICOP.
LP UNITS AVAILABLE FOR FUTURE SALE
As of [ ], 1997, there were [ ] LP Units outstanding, approximately
[ ]% of which are freely tradable without registration under the Securities
Act. In addition, as of such date, there were [ ] NEICOP Units outstanding,
all of which may be exchanged for LP Units pursuant to, and subject to the
limitations of, NEIC's continuing offer to exchange LP Units for NEICOP LP
Units (although the NEICOP GP Units outstanding must first be exchanged for
NEICOP LP Units as permitted by the NEICOP Partnership Agreement). LP Units
received in exchange for NEICOP LP Units by persons who are not affiliates of
NEIC will be freely tradable without registration under the Securities Act.
However, LP Units received in exchange for NEICOP LP Units by persons who are
affiliates of NEIC are subject to restrictions under the Securities Act, and
may not be sold or otherwise transferred unless such LP Units are subsequently
registered under the Securities Act or an exemption therefrom is available,
including compliance by such holder with Rule 144 under the Securities Act.
Approximately [ ] NEICOP LP Units, or [ ]% of the NEICOP LP Units
outstanding, are owned by affiliates of NEIC. Certain NEIC affiliates have
rights to register their LP Units, or any LP Units received in exchange for
their NEICOP LP Units, for public resale and may otherwise seek to resell some
or all of their LP Units in the future. Sales of large numbers of LP Units to
the public within a limited time period could adversely affect the market
price of the LP Units. Resales of LP Units may, under certain circumstances,
result in a change in control of NEIC and an assignment of investment
management agreements under applicable securities laws.
DESCRIPTION OF THE 1993 PLAN
The following is a summary of certain basic features of the 1993 Plan,
including administration, eligibility, the types of awards that may be granted
under the 1993 Plan, amendment and termination of the 1993 Plan and other
provisions. It does not purport to be complete and is subject to, and
qualified in its entirety by reference to, the 1993 Plan and the award
agreements and certificates thereunder, in such form as may be approved by the
administrator of the 1993 Plan from time to time. The terms of individual
grants or awards are set forth in the agreement or certificate evidencing such
grant or award. In the event of any inconsistency between this Prospectus and
the terms of any grant or award, or the terms of the 1993 Plan, the terms of
such grant or award, or the terms of the 1993 Plan, shall control.
GENERAL
The 1993 Plan was adopted by the Board of Directors of NEIC's general
partner on June 15, 1993, and was approved by the unitholders of NEIC at a
special meeting held on September 14, 1993. NEICOP became a party to the 1993
Plan as of December 29, 1997. Awards under the 1993 Plan are exercisable in
the first instance against NEICOP and then against NEIC.
The 1993 Plan is not subject to the provisions of the Employee Retirement
Income Security Act of 1974 and is not a qualified plan under Section 401(a)
of the Code.
PURPOSE
The purpose of the 1993 Plan is to advance the Partnerships' interests by
enhancing their ability to attract and retain employees and other persons
through ownership of LP Units.
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ADMINISTRATION
The 1993 Plan is administered by the Compensation Committee (the
"Committee") of the Board of Directors of NEIC, Inc., in its capacity as
Managing General Partner and general partner of NEIC. Members of the Committee
are currently Charles M. Leighton (Chairman), Paul E. Gray and Oscar L. Tang.
The Committee has the authority, subject to the terms of the 1993 Plan, to,
among other things, select the persons to whom awards are to be made;
determine the size and types of awards to be made to such persons and the
terms and conditions of such awards; amend or cancel the terms and conditions
of awards and waive compliance by a participant with any obligation under an
award, or settle an award by paying the cash value of such award (except that
the Committee may not, without the consent of the holder of an award, take any
action under this authority if such action would adversely affect the rights
of such holder); determine the form(s) of instruments, including notices and
elections by participants, under the 1993 Plan and to change such form(s) from
time to time; adopt, amend and rescind rules and regulations for the
administration of the 1993 Plan; and interpret the 1993 Plan and decide any
questions and settle all controversies and disputes that may arise in
connection with the 1993 Plan. Any such determinations and actions of the
Committee will be conclusive and will bind all parties.
ELIGIBILITY
All employees of the Partnerships and their subsidiary entities (defined in
the 1993 Plan as an entity in which the Partnerships own, directly or
indirectly, an equity interest equal to or greater than fifty percent of the
total of all equity interests in such entity), and other persons or entities
who contribute to the Partnerships' success will be eligible to participate in
the 1993 Plan.
TYPES OF GRANTS AND AWARDS
The 1993 Plan provides for the grant by the Committee of options to acquire
LP Units, rights to share in appreciation in the value of LP Units ("Unit
appreciation rights" or "UARs"), restricted LP Units, unrestricted LP Units,
deferred LP Unit grants, and performance awards, as well as loans in
connection with such grants and awards and cash payments intended to offset
income taxes due with respect to any such grant or award. Awards under the
1993 Plan may also include provision for the payment of distribution
equivalents with respect to the LP Units subject to the awards.
Options. Recipients of options receive an option certificate or agreement
from the Partnerships that sets forth the terms and conditions of the options
granted. The exercise price of an option granted under the plan is set by the
Committee in its discretion. The term of an option may not exceed 10 years,
but within this limitation, options are exercisable at such time or times as
the Committee specifies in the award. The option price may be paid in cash or,
if permitted by the Committee and subject to certain additional limitations,
by tendering previously acquired LP Units, by using a promissory note or by an
unconditional and irrevocable undertaking by a broker to deliver promptly to
the Partnerships sufficient funds to pay the exercise price. At the request of
the optionee, and subject in each case to the discretion of the Committee, if
the market price of LP Units to be issued in respect to an option exercise
exceeds the exercise price, the Committee may cancel the option and cause such
excess to be paid to the optionee in cash.
The Committee may in its discretion cancel previously granted options that
are "out of the money" and regrant the options at a lower price. The Committee
may also grant so-called "reload" options providing, in the case of a
participant who pays the option price of an option by surrendering LP Units
owned for six months, that the participant will automatically be granted an
additional option to purchase the number of LP Units surrendered by the
optionee at the market price of the LP Units on the date they are surrendered.
Unit appreciation rights. Unit appreciation rights may be granted either in
tandem with options or independent of any option grant. Each UAR entitles the
participant, in general, to receive upon exercise thereof cash or LP Units
equal to the excess of an LP Unit's fair market value at the date of exercise
over the LP Unit's
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fair market value on the date the UAR was granted. The Committee also may
grant UARs which take into account the performance of the LP Units in
comparison to other equities or equity indices, or which, following a change
in control of the Partnerships (as defined), reflect a specific value or range
of values of the LP Units during a period prior to the change in control. If a
UAR is granted in tandem with an option, the UAR will be exercisable only to
the extent the option is exercisable. To the extent the option is exercised,
the accompanying UAR will cease to be exercisable, and vice versa. A UAR not
granted in tandem with an option will become exercisable at such time or
times, and on such conditions, as the Committee may specify.
Restricted LP Units. The 1993 Plan provides for awards of nontransferable,
restricted LP Units subject to repurchase or forfeiture as well as of
unrestricted LP Units. Restricted LP Units are subject to repurchase by NEICOP
at the original purchase price if the participant's affiliation with the
Partnerships ceases before the restrictions lapse. Other awards under the 1993
Plan may also be settled with restricted LP Units.
Other Awards. The 1993 Plan also provides for deferred grants entitling the
recipient to receive LP Units in the future at such times and on such
conditions as the Committee may specify, and performance awards entitling the
participant to receive cash or LP Units following the attainment of
performance goals determined by the Committee. Performance conditions or the
use of deferred LP Units may also be applied in connection with other awards
under the 1993 Plan. Loans and supplemental cash awards may also be granted or
awarded by the Committee.
Under the 1993 Plan, the Committee may grant different types of awards
linked as alternative awards or in addition to one another.
EXERCISABILITY
Awards under the 1993 Plan are exercisable in the first instance against
NEICOP and then against NEIC. Pursuant to the Intercompany Agreement, NEICOP
will indemnify NEIC for the value of any LP Units issued under the 1993 Plan
directly by NEIC.
In general, if a participant dies, options and UARs, to the extent then
exercisable, remain exercisable for a one-year period (or such shorter or
longer period as the Committee may determine but in no event beyond the
remainder of their original term), and restricted LP Units held by the
participant must be transferred to NEICOP. Deferred LP Unit grants,
performance awards and supplemental awards to which a participant is not
irrevocably entitled, and unvested options and UARs, will be forfeited unless
otherwise provided.
If a participant's employment or other applicable affiliation with the
Partnerships terminates for reasons other than death, options and UARs remain
generally exercisable, to the extent they were exercisable immediately prior
to termination, for three months (or such longer period as the Committee may
determine, but in no event beyond the remainder of their original term),
restricted LP Units must be transferred to NEICOP, and other awards will be
forfeited unless otherwise provided; however, in the event of a discharge for
cause, awards may terminate immediately. Also, in the case of a merger or
consolidation or other business combination, the 1993 Plan provides that the
Committee has the discretion to make options and UARs immediately exercisable,
to remove restrictions on restricted LP Units and conditions on deferred
grants and performance awards, and to forgive outstanding loans under the 1993
Plan. The Committee also has the discretion in such circumstances to provide
for replacement awards.
TRANSFERABILITY
Awards under the 1993 Plan (other than awards in the form of an outright
transfer of cash or unrestricted LP Units) may not be transferred other than
by will or by the laws of descent and distribution, and during a participant's
lifetime an award that requires exercise may be exercised only by the
participant (or, in the event of the participant's incapacity, by the person
or persons legally appointed to act on the participant's behalf).
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LP UNITS SUBJECT TO 1993 PLAN
The aggregate number of LP Units that may be awarded or made subject to
awards under the 1993 Plan is 1,774,000, (1,040,063 of which were available
for future grant as of January 1, 1998) subject to adjustment (along with
appropriate adjustment in awards) in the event of certain changes in NEIC's
capital structure. The 1993 Plan also provides that in the event of certain
business combinations or reorganizations (including the cessation of public
trading of LP Units but excluding a Restructuring, as defined in the NEIC
Partnership Agreement), outstanding awards will terminate, except that the
Committee at its discretion may accelerate vesting schedules, remove
restrictions, or provide for the replacement of any such awards. No award may
be granted under the 1993 Plan after August 2003, but awards previously
granted may extend beyond that date.
TAX WITHHOLDING
Plan participants are responsible for the payment of any federal, state or
local taxes which the Partnerships are required by law to withhold from the
value of any award. NEICOP may deduct any such taxes from any payment
otherwise due to the participant.
AMENDMENTS AND TERMINATION
The Board of Directors may at any time amend or discontinue the 1993 Plan
and the Committee may at any time amend or cancel outstanding awards (or
provide substitute awards at the same or a reduced exercise or purchase price)
for the purpose of satisfying changes in the law or for any other lawful
purpose. Certain amendments may be subject to participant consent or to
approval by the Partnerships' unitholders.
LIENS
There is no provision either under or pursuant to any contract in connection
with the 1993 Plan that would permit any person to create a lien on a
participant's interest held under the 1993 Plan.
DESCRIPTION OF THE 1997 PLAN
The following is a summary of certain basic features of the 1997 Plan, does
not purport to be complete, and is subject to, and qualified in its entirety
by reference to, the 1997 Plan and the award agreements and certificates
thereunder, in such form as may be approved by the administrator of the 1997
Plan from time to time. The terms of individual grants or awards are set forth
in the agreement or certificate evidencing such grant or award. In the event
of any inconsistency between this Prospectus and the terms of any grant or
award, or the terms of the 1997 Plan, the terms of such grant or award, or the
terms of the 1997 Plan, shall control.
GENERAL
The 1997 Plan was adopted by the Board of Directors of NEIC, Inc. on June
17, 1997, and was approved by the unitholders of NEIC at a special meeting
held on August 25, 1997. NEICOP became a party to the 1997 Plan as of December
29, 1997. Awards under the 1997 Plan are exercisable in the first instance
against NEICOP and then against NEIC.
The 1997 Plan is not subject to the provisions of the Employee Retirement
Income Security Act of 1974 and is not a qualified plan under Section 401(a)
of the Code.
PURPOSE
The purpose of the 1997 Plan is to advance the Partnerships' interests by
giving selected employees of the Partnerships and their affiliates, as well as
directors and other persons (including both individuals and entities) who
provide services to the Partnerships, equity-based and cash incentives through
the grant of awards.
ADMINISTRATION
The 1997 Plan is administered by the Committee, or if no Committee has been
appointed, the Board of Directors of NEIC, Inc. (the "Administrator") in its
capacity as Managing General Partner and general partner of NEIC. The
Administrator has discretionary authority, subject only to the express
provisions of the 1997 Plan, to interpret the 1997 Plan; to determine the
eligibility for and grant awards; to determine, modify or waive the
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terms and conditions of any award; to prescribe forms, rules and procedures
(which it may modify or waive); and otherwise to do all things necessary to
carry out the purposes of the 1997 Plan. However, once an award has been
communicated in writing to a participant, the Administrator may not, without
the participant's consent, alter the terms of the award so as to adversely
affect the participant's rights under such award, unless the Administrator
expressly reserved the right to do so in writing at the time of such
communication.
ELIGIBILITY
All key employees of the Partnerships, NEIC, Inc., or any of their
affiliates (defined in the 1997 Plan as any other entity in which the
Partnerships own fifty percent or more of the voting rights), as well as
directors and other individuals or entities providing services to the
Partnerships who are in a position to make a significant contribution to the
success of the Partnerships, are eligible to participate in the 1997 Plan.
TYPES OF GRANTS AND AWARDS
The 1997 Plan provides for the grant by the Administrator of any of the
following instruments:
Options. Options entitle the recipient to acquire LP Units upon payment
of a specified exercise price. The exercise price must equal or exceed the
fair market value of LP Units on the day of the grant and the option shall
have a maximum term of ten years. The Administrator will determine the
medium in which the exercise price is to be paid, the duration of the
option, the time at which the option will become exercisable, provisions
for continuation (if any) of option rights following termination of the
recipient's employment, and any other terms of the option.
Unit Appreciation Rights. UARs entitle the holder to receive cash or LP
Units equal to a function (determined by the Administrator) of the amount
by which LP Units have appreciated in value since the date of the award.
Restricted LP Units. The 1997 Plan provides for awards of restricted LP
Units, which must be redelivered to NEICOP if specified conditions are not
satisfied, as well as unrestricted LP Units.
Other Awards. The 1997 Plan also provides for (i) deferred grants
entitling the recipient to receive LP Units in the future on such terms and
conditions as the Administrator determines, (ii) awards of securities that
are convertible into or exchangeable for LP Units, and (iii) awards
(including cash bonuses) conditioned in whole or in part on the
satisfaction of specified performance criteria. The Administrator may also
make loans or cash grants to help defray the economic cost (including tax
cost) of an award to the recipient.
NEICOP Units. The 1997 Plan also provides for a variety of equity
incentive awards based on NEICOP Units.
EXERCISABILITY AND TRANSFERABILITY
Unless the Administrator expressly provides otherwise, awards (other than
awards in the form of outright transfers of cash or unrestricted LP Units) may
not be transferred other than by will or by the laws of descent and
distribution. During a participant's lifetime, an award requiring exercise may
only be exercised by the participant (or in the event of the participant's
incapacity, the person or persons legally entitled to act on the participant's
behalf). The Administrator may determine the time at which an award vests or
becomes exercisable. Unless the Administrator provides otherwise, an award
requiring exercise will cease to be exercisable, and all other awards to the
extent not fully vested will be forfeited, immediately upon the cessation (for
any reason, including death) of the participant's employment or other service
relationship with the Partnerships.
LP UNITS SUBJECT TO 1997 PLAN
The aggregate number of LP Units that may be awarded or made subject to
awards under the 1997 Plan is 6,000,000, of which were available for
future grant as of January 1, 1998), subject to adjustment
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(along with appropriate adjustment in awards) in the event of certain
distributions or changes in NEIC's capital structure. The 1997 Plan also
provides that prior to certain business combinations or reorganizations
(excluding a Restructuring, as defined in the NEIC Partnership Agreement), the
vesting and exercisability of outstanding awards will accelerate unless the
Administrator provides for the replacement of any such awards. Outstanding
awards will terminate upon the consummation of any such business combination
or reorganization. In addition, in the event of an "assignment" of NEIC's or
NEICOP's investment advisory contracts pursuant to the Investment Company Act
of 1940 and the Investment Advisers Act of 1940 (other than pursuant to a
Restructuring, as defined in the NEIC Partnership Agreement), all then
outstanding awards requiring exercise will become immediately exercisable and
all unvested awards then outstanding will immediately vest. No award may be
granted under the 1997 Plan after June 16, 2007, but awards previously granted
may extend beyond that date.
TAX WITHHOLDING
The Administrator will make such provision for the withholding of taxes as
it deems necessary, and may, but need not, hold back LP Units from an award or
permit a holder to tender previously owned LP Units in satisfaction of tax
withholding requirements.
AMENDMENT AND TERMINATION
The Administrator may at any time amend the 1997 Plan or any outstanding
award for any purpose which may be permitted by law, or may terminate the 1997
Plan as to any further grants or awards; provided that, once an award has been
communicated in writing to a participant, the Administrator may not alter the
terms of an award so as to adversely affect the participant's rights under the
award, unless the Administrator expressly reserved the right to do so in
writing at the time of such communication.
LIENS
There is no provision either under or pursuant to any contract in connection
with the 1997 Plan that would permit any person to create a lien on a
participant's interest held under the 1997 Plan.
RESTRICTIONS ON REOFFER OR RESALE OF LP UNITS
Any person may sell, pledge, transfer, hypothecate or otherwise dispose of
his LP Units acquired pursuant to options or awards granted under the Plans in
any manner lawfully permitted under federal and state securities laws so long
as the conditions associated with such options or awards have been met.
The Registration Statement relating to the shares described herein does not
apply to reoffers or resales by "affiliates" of NEIC of LP Units acquired by
them pursuant to options or awards granted under the Plan. Rule 405 under the
Securities Act provides that an "affiliate" of NEIC is "a person that
directly, or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with" NEIC. Affiliates must effect
such reoffers or resales either pursuant to an exemption from registration
under the Securities Act (such as an exemption obtained through compliance
with Rule 144) or pursuant to a separate prospectus covering such reoffer or
resale. Persons who are not affiliates of NEIC generally are entitled to make
such reoffers or resales without restriction.
INSIDER CONSIDERATIONS
In addition, every person who is directly or indirectly the beneficial owner
of more than ten percent of the outstanding LP Units, every director and every
person who is an officer (within the meaning of Rule 16a-1) of NEIC or, in
certain circumstances, of a subsidiary of NEIC (a "Section 16(b) Person"), is
subject to Sections 16(a) and 16(b) of the Exchange Act which provide for,
respectively, (i) the reporting to the SEC of purchases
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and sales of the equity and derivative securities of NEIC, including purchases
pursuant to the exercise of stock options and (ii) the recovery of the
difference between the prices of any purchase and sale or any sale and
purchase of an equity or derivative security of NEIC within a six-month
period, without regard to offsetting losses. The rules are applied
mechanically to maximize recoverable "profits" and may result in liability
even though the overall trading actually resulted in a loss.
To avoid short-swing profits liability, each Section 16(b) Person who
participates in the 1993 Plan or the 1997 Plan should keep in mind the
following: (a) grants under the Plans will generally qualify as exempt
purchases if the grants are made by the Board of Directors or by a committee
of the Board of Directors composed solely of two or more Non-Employee
Directors (as defined in Rule 16b-3 under the Exchange Act); (b) purchases
(including grants of options and other awards) under the Plans should be
reported on the next Form 5 or an earlier Form 4; and (c) sales of LP Units
purchased under the Plans or exercises of options should be reported on Form 4
within ten days after the end of the month in which the LP Units are sold or
the option is exercised. Please note that the foregoing is not meant to be a
comprehensive description of the Section 16 rules.
The "inside information" provisions of the federal securities laws impose
further restrictions on resales by any employee, whether or not the employee
is an affiliate or an officer or a Director of NEIC or any of its
subsidiaries.
TAX ASPECTS UNDER THE U.S. INTERNAL REVENUE CODE
The following summary, which is based on the Code and related rules and
regulations as in effect on the date hereof, is limited to a discussion of
certain federal income tax aspects of the Plans and does not purport to
address other federal tax matters or state, local or non-U.S. tax matters.
Participants are encouraged to consult with their personal tax advisors for a
more complete review of tax issues that may be associated with participating
in the Plans. The following discussion describes the federal income tax
considerations applicable to awards of LP Units that are exercised against
NEICOP.
The federal income tax rules associated with the award by a partnership of
partnership interests in exchange for services are subject to uncertainty. The
following discussion generally assumes that the principles of Code Section 83,
and the regulations and rulings thereunder, apply to transfers of LP Units to
employees and other service-providers. If principles different than those
contained in Code Section 83 were applied to the award of LP Units under the
Plans, the federal income tax consequences to the Partnerships, their
subsidiary entities, their general partners, and the participants in the Plans
could differ from those described below.
OPTIONS AND UARS
The award of options to acquire LP Units or of UARs will not itself produce
taxable income or a deduction. When an option is exercised to acquire LP Units
that are not subject to vesting conditions, the participant should have
ordinary income and a corresponding deduction should be available to the
employer, equal in each case to the excess of the fair market value of the LP
Units over the exercise price. When a UAR is exercised, the participant should
have ordinary income equal to the amount of cash plus the fair market value of
any unrestricted LP Units received, and a corresponding deduction should be
available to the employer.
RESTRICTED AND UNRESTRICTED UNITS
If a participant is awarded LP Units, or purchases LP Units from NEICOP at a
discounted price, the participant will have taxable ordinary income equal to
the difference between the fair market value of those LP Units and the
purchase price, if any. However, if the LP Units are subject to a substantial
risk of forfeiture--for example, restricted LP Units with terms requiring
resale to NEICOP at the original purchase price if the employee resigns from
employment within a certain period--income does not normally result until the
restriction lapses. When the restriction lapses, the holder will have ordinary
income equal to the difference between the fair market value of the LP Units
at that time and the purchase price, if any.
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A participant may make a special election under Section 83(b) of the Code to
be taxed on restricted LP Units at the time the LP Units are acquired rather
than later, when the restrictions lapse. An "83(b) election" must be made not
later than 30 days after the transfer of LP Units and must satisfy certain
other requirements. If an 83(b) election is made, a participant realizes
ordinary income equal to the fair market value of the LP Units determined at
the time of the award or purchase, less any price paid for the LP Units. Fair
market value for this purpose is to be determined without regard to the
forfeiture restrictions. No additional income results when the restrictions
actually lapse. However, if an 83(b) election is made in connection with an
award or purchase of LP Units subject to a substantial risk of forfeiture, and
later the LP Units are forfeited, no tax loss may generally be claimed for the
amounts initially taken into income at the time the 83(b) election was made.
DEFERRED UNITS
A promise to transfer LP Units in the future does not itself result in
taxable income to the recipient of the promise. When the LP Units are issued
or made available to the participant, the tax consequences with respect to the
transfer will be the same as those described above for transfers of
unrestricted LP Units.
SUPPLEMENTAL CASH AWARDS; LOANS
Any cash awards under the Plans (other than in the form of a loan) will be
includable in the income of the recipient. If the Partnerships loan money to a
participant, the loan will result in income only if the interest rate charged
is below a rate specified under applicable tax rules (in which case there will
be income equal to an imputed interest amount), or if the loan is forgiven.
TAX CONSEQUENCES TO THE PARTNERSHIPS
In general, NEICOP, or the affiliate for whom the relevant services are
performed, should be entitled to a deduction in connection with awards under
the Plans, but only at such time, and in such amount, as participants
recognize taxable income in connection with the awards. When a transfer of LP
Units results in ordinary income subject to withholding, IRS rules may require
satisfaction of reporting and withholding requirements as a condition to
NEICOP claiming a deduction. NEIC, as a partner of NEICOP, will pass through
its proportionate share of the NEICOP deduction to the NEICOP unitholders.
TAXATION OF NEIC AND ITS PARTNERS
NEIC believes that it is currently a "grandfathered" publicly traded
partnership subject to transition relief from corporate taxation under
amendments to the Code made in 1987. Under the Taxpayer Relief Act of 1997, a
grandfathered publicly traded partnership may extend its partnership tax
status from year-to-year indefinitely by electing to pay a Gross Income Tax
for taxable years beginning on or after January 1, 1998. NEIC has decided to
pay the Gross Income Tax, an annual 3.5 percent tax on NEIC's gross income
derived from its active conduct of trades and businesses and its distributive
share of gross income derived from trades and businesses actively conducted by
any of its lower-tier partnerships. It is anticipated that NEIC will continue
to be treated as a partnership for federal income tax purposes, provided that
it elects from year-to-year to pay the Gross Income Tax and that it does not
add a substantial new line of business (which could occur through acquisitions
or as a result of increased income (including Code Section 704(c) allocations)
or assets relating to a business of a type not conducted by it before the
effective date of the 1987 legislation). If NEIC were to cease to be treated
as a partnership for federal income tax purposes, it would be subject to
corporate level tax and its unitholders would in general be taxed on
distributions from NEIC.
NEIC believes that it should generally not be liable for any federal income
tax other than the Gross Income Tax (and certain taxes and related interest
and/or penalties that may arise if NEIC elects large partnership status and
its tax returns are adjusted). Holders of LP Units will be required to report
on their federal income tax return their allocable share of income, gains,
losses, deductions and credits of NEIC. Holders of LP Units will not be
entitled to a deduction for NEIC's payment of the Gross Income Tax, but will
be required to reduce their basis
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in their LP Units for their proportionate share of such tax. Although there is
a risk that the IRS could make certain technical arguments that NEIC should be
taxed as a corporation, NEIC believes that it is unlikely that the IRS would
assert and prevail with such a position.
NEIC intends to continue to use certain tax accounting methods and
conventions employed by other publicly traded partnerships in order to promote
uniformity among LP Units while effecting the allocations required by Code
Section 704 and related Code provisions. The general partner of NEIC and the
managing general partner of NEICOP have been granted expanded authority under
the respective partnership agreements to make special allocations, including
remedial and/or curative allocations under Code Section 704(c), to promote
uniformity of LP Units. While these accounting methods and conventions could
be found not to be in strict compliance with the provisions of Code Section
704, NEIC believes that the accounting methods and conventions are consistent
in general with the purposes of Code Section 704 and related Code provisions.
If the allocation and accounting methods and conventions employed and to be
employed by NEIC or NEICOP were successfully challenged by the IRS, different
federal income tax consequences (including different allocations of
amortization deductions) might attach to certain units. In such circumstances,
the consequences to purchasers of LP Units may depend on the identity of the
seller, and the market value and marketability of LP Units could be adversely
affected.
DISPOSITION OF LP UNITS ACQUIRED UNDER THE PLANS
The amount of gain or loss recognized on any sale will depend on a
participant's tax basis in the LP Units. If the LP Units were acquired through
exercise of an option and the option exercise price were paid entirely in
cash, the participant's adjusted tax basis is the amount of cash paid plus any
additional ordinary income realized upon exercise as adjusted for income and
loss allocations and distributions during the period in which the LP Units
were held. Any LP Units purchased under an option have a tax basis equal to
any cash paid plus any ordinary income realized upon exercise, as adjusted for
income and loss allocations and distributions during the period in which the
LP Units were held. If part or all of the exercise price was paid by
surrendering LP Units that were already owned, the participant's tax basis
(and capital gains holding period) in the surrendered LP Units carries over to
LP Units held by the participant. The adjusted tax basis of LP Units acquired
through a restricted or unrestricted LP Unit award is generally equal to the
amount paid for the LP Unit plus any taxable income recognized on the transfer
of the LP Unit (in the case of an 83(b) election) or on vesting of the LP Unit
(where no 83(b) election was made), as each is adjusted for income and loss
allocations and distributions during the time when the LP Units were
considered owned for tax purposes (including by reason of an 83(b) election).
For purposes of determining capital gain or loss on a sale of LP Units
acquired under an unrestricted or restricted LP Unit award, the holding period
in the LP Units (for purposes of determining whether any gain or loss is "long
term" or "mid term" for example) begins when taxable income is realized with
respect to the transfer.
Gain or loss from a taxable sale or other disposition of LP Units will
generally be based on the difference between the amount realized and the
adjusted tax basis for the LP Units (as described below). Such gain or loss
will generally be taxable as mid-term or long-term capital gain or loss to the
extent that the holder has a holding period of more than twelve or eighteen
months, respectively, in the relevant units. However, as is currently the
case, a holder may recognize ordinary income from sale proceeds attributable
to the unrealized receivables and inventory of the Partnerships or any
partnership in which they directly or indirectly hold interests, including
amortization recapture ("Section 751 Assets"). Such ordinary income may exceed
net taxable gain realized upon the sale of LP Units and may be recognized even
if there is a net taxable loss on the sale of such units. Because the
intangible assets giving rise to Code Section 197 amortization deductions will
be treated as Section 751 Assets, if such assets maintain their values,
sellers of LP Units who have been allocated amortization deductions will have
ordinary income on sale equal to the amount of amortization deductions
previously taken. If, however, there is a loss on the sale of LP Units and
such loss is attributable to the decline in the value of intangible assets,
the loss in some circumstances might be deferred until a holder disposes of
all of such holder's LP Units. In addition, holders may be prohibited from
recognizing a loss on the sale of LP Units in certain other circumstances
(e.g., the wash sale rules).
The IRS has ruled that a partner acquiring multiple interests in a
partnership in separate transactions at different prices must maintain an
aggregated adjusted tax basis in a single partnership interest consisting of
the
16
<PAGE>
combined interests in the relevant partnership. Upon a disposition of a
portion of such single interest, the partner would, under the ruling, be
required to apportion equitably such partner's aggregate tax basis between the
interest sold and the interest retained. Similar rules would apply to holding
periods. It is not clear whether the ruling applies to publicly traded
partnerships such as NEIC where the purchase price of certificated LP Units is
readily ascertainable. However, if the ruling applies to NEIC, a holder
acquiring LP Units at different prices would in effect be precluded from
selecting which LP Units to sell, and thereby from selectively controlling the
recognition of gain or loss.
SPECIAL RULES UNDER SECTION 16 OF THE EXCHANGE ACT
Special tax rules may apply if a participant is subject to the reporting and
short-swing profit rules of Section 16 of the Exchange Act (a "Section 16
participant"). If a participant is a Section 16 participant, any LP Units
acquired under the Plans pursuant to an award that is not exempt under Rule
16b-3 promulgated under the Exchange Act will be treated as subject to a
"substantial risk of forfeiture" until six months after (i) the date of grant
of the option, if the LP Units were acquired by exercising an option; (ii) six
months after the award (promise) of deferred units, if the LP Units are
transferred pursuant to a deferred unit award; or (iii) six months after the
transfer of the LP Units, in every other case. To the extent a participant
acquires LP Units that are subject to a "substantial risk of forfeiture" by
reason of the preceding sentence, any ordinary income that would have been
realized at the time of transfer or exercise but for such risk of forfeiture
will be deferred until the risk (and any other risks of forfeiture associated
with the LP Units) lapses, unless the participant makes an 83(b) election.
WITHHOLDING
For those participants who received awards as common law employees, ordinary
income associated with awards under the Plans will, in general, be treated as
"wages" subject to withholding. Payments to independent contractors are not
subject to wage withholding.
USE OF PROCEEDS
NEIC and NEICOP will use the proceeds of the LP Units offered hereunder for
general working capital.
PLAN OF DISTRIBUTION
The LP Units registered hereunder will be offered to participants under the
Plans. There will be no underwriters or broker-dealers involved in the
distribution of the LP Units registered hereunder.
17
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
<TABLE>
<S> <C>
SEC registration fee................................................ $48,651
Legal fees and expenses*............................................ 20,000
Printing expenses*.................................................. 5,000
Accounting fees and expenses*....................................... 5,000
Miscellaneous*...................................................... 10,000
-------
Total Expenses...................................................... $88,651
=======
</TABLE>
- --------
* Estimated
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 17-108 of the Delaware Revised Uniform Limited Partnership Act (the
"Partnership Act"), as amended, gives a limited partnership the power to
indemnify and hold harmless any partner or any other person against any and
all claims and demands whatsoever, subject to any standards and restrictions
set forth in its partnership agreement.
In accordance with Section 17-108 of the Partnership Act, the NEIC
Partnership Agreement provides that no Indemnitee shall be liable to NEIC or
any partner of NEIC for any act or omission, provided that the Indemnitee
acted in good faith and that no gross negligence or willful misconduct was
involved. An "Indemnitee" is defined to include, among others, the general
partner of NEIC, RTI, NEICOP and each of their present and former directors,
officers, partners, employees and agents. An Indemnitee is not presumed to
have acted other than in good faith or to have engaged in gross negligence or
willful misconduct by reason of the termination of any action, suit or
proceeding by judgment, order, settlement, conviction or upon a plea of nolo
contendere or its equivalent.
In addition to providing for limited liability for any Indemnitee, the NEIC
Partnership Agreement requires NEIC to indemnify any Indemnitee to the fullest
extent permitted by law against expenses, judgments, fines and amounts paid in
settlement incurred in connection with any threatened, pending or completed
claim, demand, action, suit or proceeding to which the Indemnitee was or is a
party or is threatened to be made a party (i) by reason of their capacity in
connection with NEIC or (ii) by reason of any act or omission by the
Indemnitee taken in such capacity relating to the NEIC Partnership Agreement
or the property, business, affairs or management of NEIC. The Indemnitee is
entitled to have such expenses advanced by NEIC prior to the final disposition
of the claim, demand or other proceeding upon the Indemnitee's delivery to
NEIC of an undertaking to repay the advanced amount should it ultimately be
determined that the Indemnitee is not entitled to be indemnified.
Indemnification is not available to an Indemnitee who has not acted in good
faith or where the act or omission which is the basis of the claim, demand,
action, suit or proceeding involved the gross negligence or willful misconduct
of such Indemnitee. An Indemnitee shall not be denied indemnification in whole
or in part because the Indemnitee had an interest in the transaction with
respect to which the indemnification applies if the transaction was otherwise
permitted by the NEIC Partnership Agreement.
The indemnification provided under the NEIC Partnership Agreement is non-
exclusive of an Indemnitee's other rights. The indemnity continues to benefit
an Indemnitee no longer serving in a capacity qualifying one as an Indemnitee
and also inures to the benefit of an Indemnitee's heirs, successors, assigns,
administrators and personal representatives.
The NEICOP Partnership Agreement contains exculpation and indemnification
provisions that are substantially identical to those in the NEIC Partnership
Agreement. These provisions generally protect the general partners of NEICOP
and their directors, officers, and employees.
II-1
<PAGE>
In addition to indemnification from NEIC and NEICOP, officers and directors
of NEIC, Inc. are indemnified in certain circumstances by NEIC, Inc. Section
67 of Chapter 156B of the Massachusetts General Laws provides that
indemnification of directors and officers may be provided to the extent
specified or authorized by the articles of organization or by-laws.
The by-laws of NEIC, Inc. provide that NEIC, Inc. will indemnify each of its
directors and officers to the extent legally permissible against all
liabilities, expenses and fees of counsel reasonably incurred in connection
with the defense or disposition of any civil or criminal action, suit or
proceeding in which he or she may be involved or with which he or she may be
threatened by reason of being or having been such a director or officer. A
director or officer is entitled to have such expenses in connection with the
defense of a claim advanced by NEIC, Inc. prior to the final disposition of
the claim upon the officer's or director's delivery to NEIC, Inc. of an
undertaking to repay the advanced amount should it ultimately be determined
that the officer or director is not entitled to be indemnified.
Indemnification is not available to a director or officer who has been
adjudicated not to have acted in good faith in the reasonable belief that his
or her action was in the best interest of NEIC, Inc. If the matter for which
an officer or director seeks indemnification relates to an employee benefit
plan, such officer or director must have acted in the best interest of the
participants or beneficiaries of such plan. In order for a director or officer
to be indemnified for a matter disposed of by a compromise payment or pursuant
to a consent decree, such disposition must be approved as in the best
interests of NEIC, Inc. by one of (i) a disinterested majority of the
directors; (ii) a majority of the disinterested directors (subject to certain
conditions) or (iii) the holders of a majority of the outstanding stock
(excluding holders with an interest).
The indemnification provided under the by-laws is non-exclusive of an
officer's or director's other rights, and inures to the benefit of an
officer's or director's heirs, executors and administrators.
NEIC, Inc. has purchased policies of insurance covering directors' and
officers' liability and reimbursement of NEIC, Inc. for indemnification of a
director or officer. The policies covering directors' and officers' liability
provide for payment on behalf of a director or officer of any Loss (defined to
include among other things, damages, judgments, settlements, costs and
expenses) arising from claims against such director or officer by reason of
any Wrongful Act (as defined) subject to certain exclusions.
For the undertaking with respect to indemnification, see Item 17 herein.
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
------- -----------------------
<C> <S>
5.1. Opinion of Counsel re: legality
23.1. Consent of Independent Accountants
23.2. Consent of Counsel (included in the opinion filed as Exhibit 5.1)
24.1. Power of Attorney (included as part of the signature page to this
Registration Statement)
99.1. 1993 Equity Incentive Plan, as amended
99.2. 1997 Equity Incentive Plan, as amended
</TABLE>
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually
II-2
<PAGE>
or in the aggregate, represent a fundamental change in the information
set forth in the registration statement. Notwithstanding the foregoing,
any increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high and of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Securities and Exchange Commission pursuant to Rule 424(b) if,
in the aggregate, the changes in volume and price represent no more
than 20 percent change in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee" table in the effective
registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) will not apply
if the information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed by the Registrant
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in this registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement on Form S-3 to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Boston,
The Commonwealth of Massachusetts, on the 29th day of December, 1997.
New England Investment Companies,
L.P.
By: New England Investment
Companies, Inc., its General
Partner
/s/ Edward N. Wadsworth
By: _________________________________
Name: Edward N. Wadsworth
Title: Executive Vice President and
General Counsel
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed as of the 29th day of December, 1997 by
the following persons in the capacities indicated. Each person whose signature
appears below constitutes Edward N. Wadsworth, Jeffrey D. Plunkett and
Christopher A. Klem and each of them, with full power to act without the
other, his true and lawful attorneys-in-fact and agent, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities to sign any or all amendments to this registration
statement, including post-effective amendments, and to file the same with
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission.
SIGNATURE SIGNATURE
/s/ Peter S. Voss /s/ Harry P. Kamen
- ------------------------------------- -------------------------------------
Peter S. Voss Harry P. Kamen
Chairman of the Board, President, Director
Chief Executive Officer and Director
/s/ G. Neal Ryland /s/ Charles M. Leighton
- ------------------------------------- -------------------------------------
G. Neal Ryland Charles M. Leighton
Executive Vice President and Director
Chief Financial Officer
/s/ Stephen D. Martino /s/ Victor A. Morgenstern
- ------------------------------------- -------------------------------------
Stephen D. Martino Victor A. Morgenstern
Senior Vice President and Controller Director
/s/ William S. Antle, III /s/ Catherine A. Rein
- ------------------------------------- -------------------------------------
William S. Antle, III Catherine A. Rein
Director Director
/s/ Robert J. Blanding /s/ Oscar L. Tang
- ------------------------------------- -------------------------------------
Robert J. Blanding Oscar L. Tang
Director Director
/s/ Paul E. Gray
- -------------------------------------
Paul E. Gray
Director
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
------- -----------------------
<C> <S>
5.1. Opinion of Counsel re: legality
23.1. Consent of Independent Accountants
23.2. Consent of Counsel (included in the opinion filed as Exhibit 5.1)
24.1. Power of Attorney (included as part of the signature page to this
Registration Statement)
99.1. 1993 Equity Incentive Plan, as amended
99.2. 1997 Equity Incentive Plan, as amended
</TABLE>
<PAGE>
EXHIBIT 5.1
[LETTERHEAD OF SMITH, KATZENSTEIN & FURLOW LLP]
December 29, 1997
New England Investment Companies, L.P.
399 Boylston Street
Boston, MA 02116
Ladies and Gentlemen:
This opinion is furnished to you in connection with a registration statement
on Form S-3 (the "Registration Statement") filed with the Securities and
Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended, for the registration of 7,747,499 units representing limited partner
interests ("NEIC LP Units") in New England Investment Companies, L.P.
("NEIC"). The NEIC LP Units are to be issued to officers, employees and other
key persons of NEIC, NEIC Operating Partnership, L.P. ("NEICOP"), or
subsidiaries thereof pursuant to (i) the 1993 Equity Incentive Plan of NEIC
and NEICOP as amended through December 29, 1997 (the "1993 Plan"), and (ii)
the 1997 Equity Incentive Plan of NEIC and NEICOP, as amended and restated
through December 29, 1997 (the "1997 Plan"), and, together with the 1993 Plan,
(the "Plans").
We have acted as Delaware counsel for NEIC in connection with the
anticipated issuance of the NEIC LP Units pursuant to the Plans. For purposes
of our opinion, we have examined and relied upon the Plans in the form
provided to us by counsel for NEIC and such other documents, records,
certificates and other instruments as we have deemed necessary.
We express no opinion as to the applicability of, compliance with or effect
of federal law or the law of any jurisdiction other than the State of
Delaware. We have assumed that New England Investment Companies, Inc., a
Massachusetts corporation and the general partner of NEIC ("NEIC, Inc."), is a
corporation duly incorporated, validly existing and in good standing under the
laws of the Commonwealth of Massachusetts and that NEIC, Inc. has taken all
corporate action necessary under Massachusetts law to authorize the adoption
of the Plans by NEIC and the performance by NEIC of its obligations under or
in connection with the Plans, including the issuance of the NEIC LP Units
pursuant to the Plans.
Based upon the foregoing, we are of the opinion that the NEIC LP Units to be
issued by NEIC pursuant to the Plans have been duly authorized and, when
issued in accordance with the Plans, will be valid limited partnership units
in NEIC and the holders thereof will have no liability for any additional
contributions of capital to NEIC with respect to such limited partnership
units in NEIC other than as contemplated by the Plans.
We hereby consent to the filing of this opinion as part of the Registration
Statement.
Very truly yours,
Smith, Katzenstein & Furlow LLP
/s/ Stephen M. Miller
By___________________________________
Stephen M. Miller
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of New England
Investment Companies, L.P. of our report dated January 27, 1997 appearing on
page 34 of New England Investment Companies, L.P.'s Annual Report on Form 10-K
for the year ended December 31, 1996.
Price Waterhouse LLP
Boston, Massachusetts
December 24, 1997
<PAGE>
EXHIBIT 99.1
1993 EQUITY INCENTIVE PLAN
(as amended through December 29, 1997)
1. PURPOSE
The purpose of this Equity Incentive Plan (the "Plan") is to advance the
interests of New England Investment Companies, L.P. ("NEICLP") and NEIC
Operating Partnership, L.P. ("NEICOP", and together with NEICLP, "NEIC") by
enhancing the ability of NEIC to attract and retain employees and other persons
or entities who are in a position to make significant contributions to the
success of NEIC, and its affiliated entities through ownership of limited
partnership units in NEICLP ("Units").
The Plan is intended to accomplish these goals by enabling the grant of
Awards in the form of Options, Unit Appreciation Rights (sometimes referred to
herein as "UARs") and Restricted Units, or combinations thereof, all as more
fully described below.
2. ADMINISTRATION
During the period that Units are registered under the Securities and
Exchange Act of 1934 (the "1934 Act"), the Plan will be administered by the
Board of Directors (the "Board") of New England Investment Companies, Inc., the
general partner of NEICLP and the managing general partner of NEICOP (the
"General Partner").
The Board will have authority, not inconsistent with the express provisions
of the Plan and in addition to other authority granted under the Plan, to (a)
grant Awards at such time or times as it may choose; (b) determine the size of
each Award, including the number of Units subject to the Award; (c) determine
the type or types of each Award; (d) determine the terms and conditions of each
Award; (e) waive compliance by a Participant (as defined below) with any
obligations to be performed by the Participant under an Award and waive any term
or condition of an Award; (f) amend or cancel an existing Award in whole or in
part (and if an Award is canceled, grant another Award in its place on such
terms as the Board shall specify), or settle any award by paying the cash value
of Units otherwise issuable, except that the Board may not, without the consent
of the holder of an Award, take any action under this clause with respect to
such Award if such action would adversely affect the rights of such holder; (g)
prescribe the form or forms of instruments that are required or deemed
appropriate under the Plan, including any written notices and elections required
of Participants, and change such forms from time to time; (h) adopt, amend and
rescind rules and regulations for the administration of the Plan; and (i)
interpret the Plan and decide any questions and settle all controversies and
disputes that may arise in connection with the Plan. Such determinations and
actions of the Board, and all other determinations and actions of the Board made
or taken under authority granted by any provision of the Plan, will be
conclusive and will bind all parties. Nothing in this paragraph shall be
construed as limiting the power of the Board to make adjustments under Section
7.3 or Section 9.4.
<PAGE>
The Board may, in its discretion, delegate some or all of its powers with
respect to the Plan to a committee (the "Committee"), in which event all
references in this Plan (as appropriate) to the Board shall be deemed to refer
to the Committee. The Committee, if one is appointed, shall consist of at least
two directors. A majority of the members of the Committee shall constitute a
quorum, and all determinations of the Committee shall be made by a majority of
its members. Any determination of the Committee under the Plan may be made
without notice or meeting of the Committee by a writing signed by a majority of
the Committee members.
3. EFFECTIVE DATE AND TERM OF PLAN
The Plan will become effective on September 14, 1993. Grants of Awards
under the Plan may be made prior to that date (but after Board adoption of the
Plan), subject to such approval of the Plan.
4. UNITS SUBJECT TO THE PLAN
Subject to adjustment as provided in Section 9.4 below, the aggregate
number of Units that may be awarded under the Plan will be 1,774,000. Except as
otherwise provided below, any Units subject to an Award which is canceled or
terminates without having been exercised shall again be available for Awards
under the Plan. Units subject to an Option canceled upon the exercise of a UAR
shall not again be available for awards under the Plan except to the extent the
UAR is settled in cash. To the extent that an Award is settled in cash, Units
subject to that Award shall again be available for Awards. Units tendered by a
Participant or withheld to pay the exercise price of an Option or to satisfy the
tax withholding obligations of the exercise or vesting of an Award shall be
available again for Awards under the Plan. Restricted Units forfeited in
accordance with the Plan and the terms of the particular Award shall be
available again for Awards.
No fractional Units shall be issued, and the Board shall determine the
manner in which fractional Unit value shall be treated.
5. ELIGIBILITY AND PARTICIPATION
Those eligible to receive Awards under the Plan ("Participants") will be
persons in the employ of NEICLP, NEICOP, the General Partner or any of their
affiliated entities ("Employees") and other persons or entities (including
without limitation non-Employee directors) who in the opinion of the Board are
in a position to make a significant contribution to the success of NEIC.
An "affiliated entity" for purposes of the Plan will be an entity in which
either NEICLP or NEICOP owns, directly or indirectly, an equity interest equal
to or greater than fifty percent of the total of all equity interests in such
entity, determined in the case of stock of a
-2-
<PAGE>
corporation by either vote or value, in the case of a partnership or similar
entity by profits interest, and in the case of a trust or unincorporated
enterprise by beneficial interest. The General Partner, NEICLP and NEICOP shall
be deemed to be affiliated entities.
6. TYPES OF AWARDS
6.1. OPTIONS.
(a) Nature of Options. An Option is an Award entitling the recipient on
-----------------
exercise thereof to purchase Units at a specified exercise price. Except as may
otherwise be permitted under Section 422 of the Internal Revenue Code of 1986,
as amended (the "Code"), Options awarded under the Plan shall be nonstatutory
options.
(b) Exercise Price. The exercise price of an Option will be determined by
--------------
the Board. The Board may reduce the exercise price of an Option at any time
after the time of grant.
(c) Duration of Options. The latest date on which an Option may be
-------------------
exercised will be the tenth anniversary of the date the Option was granted, or
such earlier date as may have been specified by the Board at the time the Option
was granted.
(d) Exercise of Options. An Option will become exercisable at such time
-------------------
or times, and on such conditions, as the Board may specify. The Board may at
any time and from time to time accelerate the time at which all or any part of
an Option may be exercised.
Any exercise of an Option must be in writing, signed by the proper person
and delivered or mailed to the General Partner, accompanied by (1) any documents
required by the Board and (2) payment to the full extent required by paragraph
(e) below for the number of Units for which the Option is exercised.
(e) Payment for Units. Units purchased on exercise of an Option must be
-----------------
paid for (1) in cash or by check, bank draft or money order (acceptable to the
Board in accordance with guidelines established for this purpose), (2) if so
permitted by the Board, (A) through the delivery of Units (which except as
otherwise provided by the Board have been outstanding for at least six months)
having a fair market value on the last business day preceding the date of
exercise equal to the purchase price, (B) by delivery of an unconditional and
irrevocable undertaking by a broker to deliver promptly sufficient funds to pay
the exercise price, (C) by delivery of a promissory note of the Option holder,
payable on such terms as are specified by the Board, or (D) by any combination
of the foregoing. In the event that payment of the Option price is made under
(2)(A) above, the Board may provide that the Option holder be granted an
additional Option covering the numbers of Units surrendered, at an exercise
price equal to the fair market value of a Unit on the date of surrender.
-3-
<PAGE>
(f) Discretionary Payments. If the market price of Units subject to an
----------------------
Option (other than an Option which is in tandem with a Unit Appreciation Right
as described in Section 6.2 below) exceeds the exercise price of the Option at
the time of its exercise, the Board may cancel the Option and cause to be paid
in cash or in Units (valued at fair market value) to the Option holder an amount
equal to the difference between the fair market value of the Units which would
have been purchased pursuant to exercise (determined on the date the Option is
canceled) and the aggregate exercise price which would have been paid. The
Board may exercise its discretion to take action under this subsection only if
it has received a written request from the person exercising the Option, but
such a request will not be binding on the Board.
6.2. UNIT APPRECIATION RIGHTS.
(a) Nature of Unit Appreciation Rights. A Unit Appreciation Right is an
----------------------------------
Award entitling the recipient on exercise of the Right to receive an amount, in
cash or Units or a combination thereof (such form to be determined by the
Board), determined in whole or in part by reference to appreciation in Unit
value.
Except as provided below, a Unit Appreciation Right entitles the
Participant to receive, with respect to each Unit as to which the Right is
exercised, the excess of the Unit's fair market value on the date of exercise
over its fair market value on the date the Right was granted. The Board may
provide at the time of grant that the amount the recipient is entitled to
receive will be adjusted upward or downward under rules established by the Board
to take into account the performance of the Units in comparison with the
performance of other equity instruments or an index or indices of such
instruments.
The Board may also grant Unit Appreciation Rights providing that following
a change in control of NEICLP (as determined by the Board), the holder of the
Right will be entitled to receive, with respect to each Unit subject to the
Right, an amount equal to the excess of a specified value (which may include an
average of values) for a Unit during a period preceding such change in control
over the fair market value of a Unit on the date the Right was granted.
(b) Grant of Unit Appreciation Rights. Unit Appreciation Rights may be
---------------------------------
granted in tandem with, or independently of, Options granted under the Plan. A
Unit Appreciation Right granted in tandem with an Option may be granted either
at or after the time the Option is granted.
(c) Rules Applicable to Tandem Awards. When Unit Appreciation Rights are
---------------------------------
granted in tandem with Options, the following will apply unless the Board
specifies different terms:
(1) The Unit Appreciation Right will be exercisable only at such time
or times as, and to the extent that, the related Option is exercisable and
will be exercisable in accordance with the procedure required for exercise
of the related Option.
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(2) The Unit Appreciation Right will terminate and no longer be
exercisable upon the termination or exercise of the related Option, except
that a Unit Appreciation Right granted with respect to less than the full
number of Units covered by an Option will not be reduced until the number
of Units as to which the related Option has been exercised or has
terminated exceeds the number of Units not covered by the Unit Appreciation
Right.
(3) The Option will terminate and no longer be exercisable upon the
exercise of the related Unit Appreciation Right.
(4) The Unit Appreciation Right will be transferable only with the
related Option.
(d) Exercise of Independent Unit Appreciation Rights. A Unit Appreciation
------------------------------------------------
Right not granted in tandem with an Option will become exercisable at such time
or times, and on such conditions, as the Board may specify. The Board may at
any time accelerate the time at which all or any part of the Right may be
exercised.
Any exercise of an independent Unit Appreciation Right must be in writing,
signed by the proper person and delivered or mailed to the General Partner,
accompanied by any other documents required by the Board.
6.3. RESTRICTED AND UNRESTRICTED UNITS.
(a) Nature of Restricted Unit Award. A Restricted Unit Award entitles the
-------------------------------
recipient to acquire, for such purchase price (if any) as the Board may
determine, Units subject to the restrictions described in paragraph (d) below
("Restricted Units").
(b) Acceptance and Payment. A Participant who is granted a Restricted
----------------------
Unit Award will have no rights with respect to such Award unless he or she
accepts the Award by written instrument delivered or mailed to the General
Partner accompanied by payment in full of the specified purchase price, if any,
of the Units covered by the Award. Payment may be by certified or bank check or
other instrument acceptable to the Board.
(c) Rights as a Unitholder. A Participant who receives Restricted Units
----------------------
will have all the rights of a Unitholder, including voting and distribution
rights, subject to the restrictions described in paragraph (d) below and any
other conditions imposed by the Board at the time of grant. Unless the Board
otherwise determines, certificates evidencing Restricted Units will remain in
the possession of NEIC until such Units are free of all restrictions under the
Plan.
(d) Restrictions. Except as otherwise specifically provided by the Plan,
------------
Restricted Units may not be sold, assigned, transferred, pledged or otherwise
encumbered or disposed of, and if the Participant dies or suffers a Status
Change (as defined at Section 7.2 below) for any
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<PAGE>
reason, must be offered for purchase for the amount of cash paid for the Unit,
or forfeited if no cash was paid. These restrictions will lapse at such time or
times, and on such conditions, as the Board may specify. Upon lapse of all
restrictions, Units will cease to be restricted for purposes of the Plan. The
Board may at any time accelerate the time at which the restrictions on all or
any part of the Units will lapse.
(e) Notice of Election. Any Participant making an election under Section
------------------
83(b) of the Code with respect to Restricted Units must provide a copy thereof
to the General Partner within 10 days of the filing of such election with the
Internal Revenue Service.
(f) Other Awards Settled with Restricted Units. The Board may, at the
------------------------------------------
time any Award described in this Section 6 is granted, provide that any or all
the Units delivered pursuant to the Award will be Restricted Units.
(g) Unrestricted Units. The Board may, in its sole discretion, approve
------------------
the sale or award to any Participant of Units free of restrictions under the
Plan, for such price (if any) as the Board may determine.
6.4. DEFERRED UNIT AWARDS.
A Deferred Unit Award entitles the recipient to receive Units to be
delivered in the future. Delivery of the Units will take place at such time or
times, and on such conditions, as the Board may specify. The Board may specify
that a Deferred Unit Award may be forfeited if certain conditions are or are not
satisfied. The Board may at any time accelerate the time at which delivery of
all or any part of the Units will take place. At the time any Award described
in this Section 6 is granted, the Board may provide that, at the time Units
would otherwise be delivered pursuant to the Award, the Participant will instead
receive an instrument evidencing the Participant's right to future delivery of
Units.
6.5. PERFORMANCE CONDITIONS.
The Board may, at the time any Award described in this Section 6 is
granted, impose the condition (in addition to any conditions specified or
authorized in this Section 6 or any other provision of the Plan) that
performance goals be met prior to the Participant's realization of any payment
or benefit under the Award. Performance goals may be determined on the basis of
individual performance, performance by NEIC or any of its affiliated entities,
or a combination, all as determined by the Board in its sole discretion.
6.6. LOANS AND SUPPLEMENTAL GRANTS.
(a) Loans. NEICOP may provide for a loan to a Participant ("Loan"),
-----
either on the date of or after the grant of any Award to the Participant. A Loan
may be made either in connection with the purchase of Units under the Award or
with the payment of any Federal,
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state and local income tax with respect to income recognized as a result of the
Award. The Board will have full authority to decide whether to provide for a
Loan and to determine the amount, terms and conditions of the Loan, including
the interest rate (which may be zero), whether the Loan is to be secured or
unsecured or with or without recourse against the borrower, the terms on which
the Loan is to be repaid and the conditions, if any, under which it may be
forgiven. However, no Loan may have a term (including extensions) exceeding ten
years in duration.
(b) Supplemental Grants. In connection with any Award, the Board may at
-------------------
the time such Award is made or at a later date, provide for a cash award to the
Participant ("Supplemental Grant") not to exceed an amount equal to (1) the
amount of any federal, state and local income tax on ordinary income for which
the Participant may be liable with respect to the Award, determined by assuming
taxation at the highest marginal rate, plus (2) an additional amount on a
grossed-up basis intended to make the Participant whole on an after-tax basis
after discharging all the Participant's income tax liabilities arising from all
payments under this Section 6. Any payments under this subsection (b) will be
made at the time the Participant incurs Federal income tax liability with
respect to the award.
7. EVENTS AFFECTING OUTSTANDING AWARDS
7.1. DEATH.
If a Participant dies, the following will apply:
(a) All Options and Unit Appreciation Rights held by the Participant
immediately prior to death, to the extent then exercisable, may be exercised by
the Participant's executor or administrator or the person or persons to whom the
Option or Right is transferred by will or the applicable laws of descent and
distribution, at any time within the one year period ending with the first
anniversary of the Participant's death (or such shorter or longer period as the
Board may determine), and shall thereupon terminate. In no event, however,
shall an Option or Unit Appreciation Right remain exercisable beyond the latest
date on which it could have been exercised without regard to this Section 7.
(b) Except as otherwise determined by the Board, all Options and Unit
Appreciation Rights held by a Participant immediately prior to death that are
not then exercisable shall terminate at death.
(c) Except as otherwise determined by the Board, all Restricted Units held
by the Participant must be transferred to NEIC (and, in the event the
certificates representing such Restricted Units are held by NEIC, such
Restricted Units will be so transferred without any further action by the
Participant) in accordance with Section 6.3 and Section 8. NEIC will thereupon
remit to the Participant's estate the purchase price, if any, paid by the
Participant upon his or her acquisition of the Restricted Units.
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<PAGE>
(d) Any payment or benefit under a Deferred Unit Award, performance-based
Award, or Supplemental Grant to which the Participant was not irrevocably
entitled prior to death will be forfeited and the Award canceled as of the time
of death, unless otherwise determined by the Board.
7.2. TERMINATION OF SERVICE (OTHER THAN BY DEATH).
If there is a termination (other than by reason of death) of a
Participant's employment or other consulting or service relationship with NEIC
and its affiliated entities (such termination of the employment of other
relationship being herein referred to as a "Status Change"), the following will
apply:
(a) Except as otherwise determined by the Board, all Options and Unit
Appreciation Rights held by the Participant that were not exercisable
immediately prior to the Status Change shall terminate at the time of the Status
Change. Any Options or Rights that were exercisable immediately prior to the
Status Change will continue to be exercisable for a period of three months (or
such shorter or longer period as the Board may determine), and shall thereupon
terminate, unless the Award provides by its terms for immediate termination in
the event of a Status Change or unless the Status Change results from a
discharge for cause which in the opinion of the Board casts such discredit on
the Participant as to justify immediate termination of the Award. In no event,
however, shall an Option or Unit Appreciation Right remain exercisable beyond
the latest date on which it could have been exercised without regard to this
Section 7. For purposes of this paragraph, in the case of a Participant who is
an Employee, a Status Change shall not be deemed to have resulted by reason of
(i) a sick leave or other bona fide leave of absence approved for purposes of
the Plan by the Board, so long as the Employee's right to reemployment is
guaranteed either by statute or by contract, or (ii) a transfer of employment
among NEICLP, NEICOP, the General Partner or any affiliated entity.
(b) Except as otherwise determined by the Board, all Restricted Units held
by the Participant at the time of the Status Change must be transferred to NEIC
(and, in the event the certificates representing such Restricted Units are held
by NEIC, such Restricted Units will be so transferred without any further action
by the Participant) in accordance with Section 6.3 and Section 8, whereupon NEIC
will remit to the Participant the purchase price, if any, paid by the
Participant upon his or her acquisition of the Restricted Units.
(c) Any payment or benefit under a Deferred Unit Award, performance-based
Award, or Supplemental Grant to which the Participant was not irrevocably
entitled prior to the Status Change will forfeited and the Award canceled as of
the date of such Status Change unless otherwise determined by the Board.
7.3. COVERED TRANSACTIONS.
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<PAGE>
In the event of (i) a transaction that results in the acquisition of
substantially all of the outstanding Units of NEICLP (or, after the
"Restructuring" (as defined below), NEICLP or NEICOP) (ii) by a single person or
entity or by a group of persons and/or entities acting in concert, or in the
event of the sale or transfer of substantially all the assets of NEICLP (or,
after the Restructuring, NEICLP or NEICOP), or (iii) a dissolution, termination
or liquidation of NEICLP (or, after the Restructuring, NEICLP or NEICOP), or
(iv) in the event Units cease to be publicly traded (each: a "covered
transaction"), all outstanding Awards will terminate as of the effective date of
the covered transaction. Prior thereto, the Board may (but need not) do any or
any combination of the following:
(a) (1) Make outstanding Options and Unit Appreciation Rights exercisable
in full, (2) remove the restrictions from outstanding Restricted Units, (3)
cause NEIC to make any payment and provide any benefit under outstanding
Deferred Unit Awards, performance-based Awards, and Supplemental Grants which
would have been made or provided with the passage of time had the transaction
not occurred and the Participant not suffered a Status Change (or died), or (4)
forgive all or any portion of the principal of or interest on Loans. If the
Board does not do so with respect to any Award, however, such Award will
terminate as of the date of the covered transaction.
(b) Remove performance or other conditions (other than conditions relating
only to the passage of time and continued employment or service) which will not
have been satisfied at the time of the covered transaction. If it does not do
so, however, the Award will terminate as of the date of the covered transaction.
(c) With respect to an outstanding Award held by a Participant who,
following the covered transaction, will be employed by or otherwise providing
services to an entity which is a surviving or acquiring entity in such
transaction or an affiliate of such an entity, arrange to have such surviving or
acquiring entity or affiliate grant to the Participant a replacement or
substitute award which, in the judgment of the Board, is substantially
equivalent to the Award.
For purposes of this Section 7.3, whether a dissolution, termination or
liquidation of NEICLP or NEICOP has occurred shall be determined under the
substantive law of the State of Delaware. A change in the ownership of one or
more Units that results in a termination of NEICLP or NEICOP followed
immediately by a reconstitution of the partnership will not be deemed to be a
dissolution, termination or liquidation except as otherwise determined by the
Board. For purposes of the Plan, a "Restructuring" means a Restructuring as
defined in the Amended and Restated Agreement of Limited Partnership of Reich &
Tang, L.P., dated September 15, 1993, as may be amended or restated from time to
time. In no event shall a Restructuring be considered a covered transaction.
8. RIGHTS ENFORCEABLE AGAINST NEICLP AND NEICOP; CONDITIONS ON DELIVERY OF LP
UNITS
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<PAGE>
Prior to a Restructuring, all rights to receive Units under the Plan shall
be exercisable or enforceable solely against NEICLP. After a Restructuring, all
rights to receive Units under the Plan shall be exercisable or enforceable in
the first instance against NEICOP, and all Units forfeited, returned or paid
over to NEIC under the Plan shall be forfeited, returned or paid over to NEICOP,
and only in the event of a default by NEICOP shall such rights be exercisable
against NEICLP. NEICOP shall make such arrangements as the Board deems necessary
and appropriate and which are acceptable to NEICLP to obtain Units from NEICLP
or from unitholders of NEICLP to satisfy Awards granted hereunder and otherwise
to make adjustments reflecting forfeitures or other transactions in Units;
provided, that in respect of Awards made to persons employed by or performing
services to NEICLP, such arrangements may include the issuance of Units directly
by NEICLP. No Units shall be required to be delivered pursuant to the Plan, nor
shall any restriction applicable to Units previously delivered under the Plan be
required to be removed, until: NEIC's counsel has approved all legal matters in
connection with the issuance and delivery of such Units; if the outstanding
Units are at the time of delivery listed on any stock exchange or national
market system, the Units to be delivered have been listed or authorized to be
listed on such exchange or system upon official notice of issuance; and all
conditions of the Award have been satisfied or waived. If the sale of Units has
not been registered under the Securities Act of 1933, as amended, the Board may
require, as a condition to exercise of the Award, such representations or
agreements as the NEIC's counsel may consider appropriate to avoid violation of
such Act. The Board may require that certificates evidencing Units issued under
the Plan bear an appropriate legend reflecting any restriction on transfer
applicable to such Units.
9. GENERAL PROVISIONS
9.1 RIGHTS AS A UNITHOLDER, DISTRIBUTION EQUIVALENTS.
Except as specifically provided by the Plan, a Participant shall be treated
as a Unitholder with respect to Units awarded under the Plan only to the extent
consistent with and in accordance with, the generally applicable provisions of
the Agreement of Limited Partnership of NEIC as in effect from time to time.
However, the Board may, on such conditions as it deems appropriate, cause NEIC
to pay to Participants, currently or on a deferred basis, amounts in lieu of
cash distributions that would have been payable on any or all Units subject to
the Participant's Award had the Participant been treated as the owner of such
Units.
9.2. TAX WITHHOLDING.
The Board will make provision for the withholding from any cash payment
made pursuant to an Award an amount sufficient to satisfy all federal, state and
local withholding tax requirements (the "withholding requirements").
9.3. NONTRANSFERABILITY OF AWARDS.
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<PAGE>
No Award (other than an Award in the form of an outright transfer of cash
or Unrestricted Units) may be transferred other than by will or by the laws of
descent and distribution, and during a Participant's lifetime an Award requiring
exercise may be exercised only by him or her (or in the event of the
Participant's incapacity, the person or persons legally appointed to act on the
Participant's behalf).
9.4. CERTAIN ADJUSTMENTS.
The Board may make any appropriate adjustments to the number and kind of
Units subject to Awards then outstanding or subsequently granted, any exercise
price relating to Awards and any other provision of Awards to take into account
changes analogous to a stock split, stock dividend, or reclassification of
shares, mergers, consolidations, acquisitions, dispositions or similar
transactions, or any other event (including extraordinary distributions with
respect to Units or material changes in law or in accounting practices or
principles), if it is determined by the Board that adjustments are appropriate
to avoid distortion in the operation of the Plan. In no event will adjustment
be made on account of a Restructuring.
9.5. EMPLOYMENT RIGHTS, ETC.
Neither the adoption of the Plan nor the grant of Awards will confer upon
any person any right to continued employment or service. Except as specifically
provided by the Board in any particular case, the loss of existing or potential
profit in Awards granted under the Plan will not constitute an element of
damages in the event of termination of an employment, service or similar
relationship even if the termination is in violation of an obligation to the
Participant.
9.6. DEFERRAL OF PAYMENTS.
The Board may agree at any time, upon request of the Participant, to defer
the date on which any payment under an Award will be made.
10. EFFECT, DISCONTINUANCE, CANCELLATION, AMENDMENT AND TERMINATION
Neither adoption of the Plan nor the grant of Awards to a Participant will
affect NEIC's right to grant to such Participant awards that are not subject to
the Plan, to issue to such Participant Units as a bonus or otherwise, or to
adopt other plans or arrangements under which Units are issued in connection
with services.
The Board may at any time or times amend the Plan or any outstanding Award
for any purpose which may at the time be permitted by law, or may at any time
terminate the Plan as to any further grants of Awards.
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<PAGE>
11. GOVERNING LAW
The Plan shall be construed in accordance with the laws of the State of
Delaware.
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<PAGE>
EXHIBIT 99.2
NEW ENGLAND INVESTMENT COMPANIES
1997 EQUITY INCENTIVE PLAN
(AS AMENDED AND RESTATED EFFECTIVE AS OF DECEMBER 29, 1997)
1. DEFINED TERMS
Exhibit A, which is incorporated by reference, defines the terms used in the
Plan and sets forth certain provisions relating to those terms.
2. IN GENERAL
The Plan has been established to advance the interests of NEIC by giving
selected Employees, directors and other persons (including both individuals
and entities) who provide services to NEIC equity-based or cash incentives
through the grant of Awards. No Awards may be granted under the Plan after
June 16, 2007, but Awards granted prior to that date may extend beyond that
date.
3. ADMINISTRATION
The Administrator has discretionary authority, subject only to the express
provisions of the Plan, to interpret the Plan; determine eligibility for and
grant Awards; determine, modify or waive the terms and conditions of any
Award; prescribe forms, rules and procedures (which it may modify or waive);
and otherwise do all things necessary to carry out the purposes of the Plan.
Once an Award has been communicated in writing to a Participant, the
Administrator may not, without the Participant's consent, alter the terms of
the Award so as to affect adversely the Participant's rights under the Award,
unless the Administrator expressly reserved the right to do so in writing at
the time of such communication.
4. UNITS SUBJECT TO THE PLAN
A maximum of 6,000,000 LP Units may be delivered under the Plan, subject to
adjustment under Section 7. For purposes of the preceding sentence, the
following LP Units shall not be deemed to have been issued under the Plan: (i)
LP Units remaining under an Award that terminates without having been
exercised in full (in the case of an Award requiring exercise); (ii) LP Units
subject to an Award, where cash is delivered to a Participant in lieu of such
LP Units; (iii) Restricted LP Units that have been forfeited in accordance
with the terms of the applicable Award; and (iv) LP Units held back, in
satisfaction of tax withholding requirements, from LP Units that would
otherwise have been delivered pursuant to an Award. The number of LP Units
issued under an Award shall be determined net of any previously acquired LP
Units tendered by the Participant in payment of the exercise price or of
withholding taxes.
5. ELIGIBILITY AND PARTICIPATION
The Administrator will select Participants from among those key Employees,
directors and other individuals or entities providing services to NEIC who, in
the opinion of the Administrator, are in a position to make a significant
contribution to the success of NEIC. Eligibility for ISOs is further limited
to those individuals whose employment status with respect to NEIC, L.P. (if at
the time of grant a corporation for federal income tax purposes) or its
corporate subsidiaries would qualify them for the tax treatment described in
Sections 421 and 422 of the Code.
6. RULES AND APPLICABLE TO AWARDS
A. All Awards
(1) Performance Objectives. Where rights under an Award depend in whole or
in part on attainment of performance objectives, actions by NEIC that have an
effect, however material, on such performance objectives or on the likelihood
that they will be achieved will not be deemed an amendment or alteration of
the Award
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unless accomplished by a change in the express terms of the Award or other
action that is without substantial consequence except as it affects the Award.
(2) Alternative Settlement. The Administrator retains the right, provided
the holder of the Award consents, at any time to extinguish rights under an
Award in exchange for payment in cash, LP Units (subject to the limitations of
Section 4) or other property on such terms as the Administrator determines.
(3) Transferability of Awards. Except as the Administrator otherwise
expressly provides, Awards (other than an Award in the form of an outright
transfer of cash or Unrestricted LP Units) may not be transferred other than
by will or by the laws of descent and distribution. During a Participant's
lifetime an Award requiring exercise may be exercised only by the Participant
(or in the event of the Participant's incapacity, the person or persons
legally appointed to act on the Participant's behalf).
(4) Vesting, Etc. The Administrator may determine the time or times at which
an Award will vest (i.e., become free of forfeiture restrictions) or become
exercisable. Unless the Administrator expressly provides otherwise, an Award
requiring exercise will cease to be exercisable, and all other Awards to the
extent not already fully vested will be forfeited, immediately upon the
cessation (for any reason, including death) of the Participant's employment or
other service relationship with NEIC.
(5) Taxes. The Administrator will make such provision for the withholding of
taxes as it deems necessary. The Administrator may, but need not, hold back LP
Units from an Award or permit a Participant to tender previously owned LP
Units in satisfaction of tax withholding requirements.
(6) Dividend Equivalents, Etc. The Administrator may provide for the payment
of amounts in lieu of cash dividends or other cash distributions with respect
to LP Units subject to an Award.
(7) Rights Limited. Nothing in the Plan shall be construed as giving any
person the right to continued employment or service with NEIC, or any rights
as a shareholder except as to LP Units actually issued under the Plan. The
loss of existing or potential profit in Awards will not constitute an element
of damages in the event of termination of employment or service for any
reason, even if the termination is in violation of an obligation of NEIC to
the Participant.
B. Awards Requiring Exercise; Special Rules
(1) Time and Manner of Exercise. Unless the Administrator expressly provides
otherwise, (a) an Award requiring exercise by the holder will not be deemed to
have been exercised until the Administrator receives a written notice of
exercise (in form acceptable to the Administrator) signed by the appropriate
person and accompanied by any payment required under the Award; and (b) if the
Award is exercised by any person other than the Participant, the Administrator
may require satisfactory evidence that the person exercising the Award has the
right to do so.
(2) Payment of Exercise Price, If Any. Where the exercise of an Award is to
be accompanied by payment, such payment shall be by cash or check acceptable
to the Administrator except as otherwise provided in the Award or as otherwise
determined by the Administrator.
7. EFFECT OF CERTAIN TRANSACTIONS
A. Mergers, Etc.
In the event of a Covered Transaction, all outstanding Awards requiring
exercise that are then exercisable will cease to be exercisable, and all
Awards to the extent not fully vested or exercisable (including Awards subject
to performance conditions not yet satisfied or determined) will be forfeited,
as of the effective time of the Covered Transaction; provided, however, that
immediately prior to the consummation of such Covered Transaction the vesting
and exercisability of Awards shall be accelerated unless, in the case of any
Award, the
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Administrator provides for one or more substitute or replacement awards from,
or the assumption of the existing Award by, the acquiring or surviving entity
(if any) or its affiliates on terms substantially similar (as determined by
the Administrator) to those imposed under the Award. For purposes of the
preceding sentence, the substitution of stock or other securities of the
acquiring or surviving entity or its affiliates for LP Units outstanding under
an Award (for example, the substitution of restricted stock or securities of
an acquiring or surviving entity for Restricted LP Units) shall be deemed a
substitution, replacement or assumption of an award provided for by the
Administrator regardless of how such substitution of stock or other securities
is effectuated, provided that the restrictions (if any) or other terms to
which such substituted stock or other securities are subject are substantially
similar to the terms of the Award to which they relate.
The Administrator may provide in the case of any Award that the provisions
of the preceding paragraph shall also apply to (i) mergers or consolidations
involving NEIC, L.P. or, after the Restructuring, NEICOP that do not
constitute a Covered Transaction, or (ii) other transactions, not constituting
a Covered Transaction, that involve the acquisition of LP Units.
B. Changes in and Distributions with Respect to the LP Units
(1) Basic Adjustment Provisions. In the event of a change in the capital
structure of NEIC, L.P. or, after the Restructuring, NEIC, L.P. or NEICOP, the
Administrator may make appropriate adjustments to the maximum number of LP
Units that may be delivered under the Plan under Section 4 and may also make
appropriate adjustments to the number and kind of LP Units or securities
subject to Awards then outstanding or subsequently granted, any exercise
prices relating to Awards and any other provision of Awards affected by such
change.
(2) Certain Other Adjustments. The Administrator may also make adjustments
of the type described in paragraph (1) above to take into account
distributions to the holders of LP Units other than normal distributions of
operating cash flow, mergers, consolidations, acquisitions, dispositions or
similar transactions, or any other event (including a repurchase of LP Units),
if the Administrator determines that adjustments are appropriate to avoid
distortion in the operation of the Plan and to preserve the value of Awards
made hereunder.
(3) Continuing Application of Plan Terms. References in the Plan to LP Units
shall be construed to include any partnership units or other securities
resulting from an adjustment pursuant to Section 7.b.(1) or 7.b.(2) above.
(4) No Change on Account of Restructuring. In no event shall a Restructuring
result in adjustment under this paragraph.
C. Assignment of Certain Contracts
Notwithstanding any other provision in the Plan or any Award to the
contrary, in the event of an "assignment" as defined in the Investment Company
Act of 1940 and the Investment Advisers Act of 1940 of the investment advisory
contracts between NEIC, L.P. or NEICOP (and their controlled entities), on the
one hand, and their investment advisory clients, on the other hand, all then
outstanding Awards requiring exercise will immediately become exercisable and
all unvested Awards then outstanding shall immediately vest (become free of
restrictions under the Plan); provided, that in no event shall a Restructuring
be deemed to result in accelerated vesting or exercisability of Awards under
this paragraph.
8. RIGHTS ENFORCEABLE AGAINST NEIC, L.P. AND NEICOP; CONDITIONS ON DELIVERY
OF LP UNITS
Prior to the Restructuring, all rights to receive LP Units under the Plan
shall be exercisable or enforceable solely against NEIC, L.P. After the
Restructuring, all rights to receive LP Units under the Plan shall be
exercisable or enforceable in the first instance against NEICOP, and all LP
Units forfeited, returned or paid over to NEIC under the Plan shall be
forfeited, returned or paid over to NEICOP and only in the event of a default
by NEICOP shall such rights be exercisable against NEIC, L.P. NEICOP shall
make such arrangements as the
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Administrator deems necessary and appropriate and which are acceptable to
NEIC, L.P. to obtain LP Units from NEIC, L.P. or from unitholders of NEIC,
L.P. to satisfy Awards granted hereunder and otherwise to make adjustments
reflecting forfeitures or other transactions in LP Units; provided, that in
respect of Awards made to persons employed by or performing services to NEIC,
L.P., such arrangements may include the issuance of LP Units directly by the
NEIC, L.P. No LP Units shall be required to be delivered pursuant to the Plan,
nor shall any restriction applicable to LP Units previously delivered under
the Plan be required to be removed, until: NEIC's counsel has approved all
legal matters in connection with the issuance and delivery of such LP Units;
if the outstanding LP Units are at the time of delivery listed on any stock
exchange or national market system, the LP Units to be delivered have been
listed or authorized to be listed on such exchange or system upon official
notice of issuance; and all conditions of the Award have been satisfied or
waived. If the sale of LP Units has not been registered under the Securities
Act of 1933, as amended, the Administrator may require, as a condition to
exercise of the Award, such representations or agreements as the NEIC's
counsel may consider appropriate to avoid violation of such Act. The
Administrator may require that certificates evidencing LP Units issued under
the Plan bear an appropriate legend reflecting any restriction on transfer
applicable to such LP Units.
9. AMENDMENT AND TERMINATION
Subject to the last sentence of Section 3, the Administrator may at any time
or times amend the Plan or any outstanding Award for any purpose which may at
the time be permitted by law, or may at any time terminate the Plan as to any
further grants of Awards.
10. NON-LIMITATION OF NEIC'S RIGHTS
The existence of the Plan or the grant of any Award shall not in any way
affect NEIC's right to award a person bonuses or other compensation in
addition to Awards under the Plan.
11. GOVERNING LAW
The Plan shall be construed in accordance with the laws of the State of
Delaware.
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EXHIBIT A
DEFINITION OF TERMS
The following terms, when used in the Plan, shall have the meanings and the
Plan be subject to the provisions set forth below:
"ADMINISTRATOR": The Committee, if one has been appointed; otherwise the
Board.
"AFFILIATE": Any corporation or other entity in which either NEIC, L.P. or
NEICOP owns, directly or indirectly, 50% or more of the outstanding capital
stock (determined by aggregate voting rights) or other voting interests.
Without regard to the application of the preceding sentence, NEIC, L.P.,
NEICOP and New England Investment Companies, Inc. (the managing general
partner of NEIC, L.P. and NEICOP) shall be deemed Affiliates of one another.
"AWARD": Any of the following:
(i) Options ("Options") entitling the recipient to acquire LP Units upon
payment of the exercise price. Each Option will have an exercise price at
least equal to the fair market value of the LP Units subject to the option,
determined as of the date of grant, and shall have a maximum term not to
exceed ten years from the date of grant. The Administrator will determine
the medium in which the exercise price is to be paid, the duration of the
Option, the time or times at which an Option will become exercisable,
provisions for continuation (if any) of option rights following termination
of the Participant's employment with NEIC, and all other terms of the
Option.
No Option awarded under the Plan will be an ISO unless the Administrator
expressly provides for ISO treatment.
(ii) Rights ("UARs") entitling the holder upon exercise to receive cash
or LP Units, as the Administrator determines, equal to a function
(determined by the Administrator using such factors as it deems
appropriate) of the amount by which the LP Units have appreciated in value
since the date of the Award.
(iii) LP Units subject to restrictions ("Restricted LP Units") under the
Plan requiring that such LP Units be redelivered to NEIC if specified
conditions are not satisfied. The conditions to be satisfied in connection
with any Award of Restricted LP Units, the terms on which such LP Units
must be redelivered to NEIC, the purchase price of such LP Units, and all
other terms shall be determined by the Administrator.
(iv) LP Units not subject to any restrictions under the Plan
("Unrestricted LP Units").
(v) A promise to deliver LP Units or other securities in the future on
such terms and conditions as the Administrator determines.
(vi) Securities (other than Options) that are convertible into or
exchangeable for LP Units on such terms and conditions as the Administrator
determines.
(vii) Cash bonuses tied to performance criteria as described at (viii)
below ("Cash Performance Awards").
(viii) Awards described in any of (i) through (vii) above where the right
to exercisability, vesting or full enjoyment of the Award is conditioned in
whole or in part on the satisfaction of specified performance criteria
("Performance Awards").
(ix) Grants of cash, or loans, made in connection with other Awards in
order to help defray in whole or in part the economic cost (including tax
cost) of the Award to the Participant. The terms of any such grant or loan
shall be determined by the Administrator.
Notwithstanding the foregoing, Awards may, in the Administration's
discretion, be made with respect to Special Units. Awards may be combined in
the Administrator's discretion.
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"BOARD": The Board of Directors of New England Investment Companies, Inc.,
the general partner of NEIC, L.P. and the managing general partner of NEICOP.
"CODE": The U.S. Internal Revenue Code of 1986 as from time to time amended
and in effect, or any successor statute as from time to time in effect.
"COMMITTEE": A committee of the Board charged with the responsibility of
administering the Plan.
"COVERED TRANSACTION" means (i) a consolidation or merger in which NEIC, L.P.
does not survive as an entity or which results in the acquisition of
substantially all of the LP Units by a single person or entity or by a group of
persons and/or entities acting in concert, or (ii) a consolidation or merger
occurring after a Restructuring in which NEICOP is not the surviving entity or
which results in the acquisition of substantially all of the partnership units
(as the case may be) of NEICOP by a single person or entity or by a group of
persons and/or entities acting in concert, or (iii) a sale or transfer of all
or substantially all of NEIC, L.P.'s assets, or (iv) a sale or transfer,
occurring after a Restructuring, of all or substantially all of NEICOP's assets
or (v) a dissolution or liquidation of NEIC, L.P. or NEICOP. In no event shall
a Restructuring itself be considered a Covered Transaction.
"EMPLOYEE": Any person who is employed by NEIC.
"LP UNITS": Limited partnership units in NEIC, L.P. Notwithstanding the
foregoing, the term "LP Units" shall (except as used in the definition of
"Covered Transaction") also include any Special Units that are subject to
Awards whether granted before or after a Restructuring.
"NEIC": NEIC, L.P., NEICOP, New England Investment Companies, Inc., and the
Affiliates, or any of them.
"NEIC, L.P.": New England Investment Companies, L.P., a Delaware limited
partnership.
"NEICOP": NEIC Operating Partnership, L.P., a Delaware limited partnership.
"PARTICIPANT": An Employee, director or other person providing services to
NEIC who is granted an Award under the Plan.
"PLAN": The New England Investment Companies 1997 Equity Incentive Plan as
from time to time amended and in effect.
"RESTRUCTURING": A "Restructuring" as defined in the Amended and Restated
Agreement of Limited Partnership of Reich & Tang, L.P. dated as of September
15, 1993.
"SPECIAL UNITS": Limited partnership units in NEICOP that are subject to
Awards that contain such additional terms and provisions as the Administrator
determines to be necessary or appropriate.
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