<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 10, 1998
REGISTRATION NO. 333-43397
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
NEW ENGLAND INVESTMENT COMPANIES, L.P.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 6282 13-3405992
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL CLASSIFICATION IDENTIFICATION NUMBER)
INCORPORATION OR CODE NUMBER)
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 being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. [_]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) 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. [_]
---------------
<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 FEBRUARY 10, 1998
NEW ENGLAND INVESTMENT COMPANIES, L.P.
LIMITED PARTNER INTEREST
10,000,000 UNITS
-----------
This Prospectus is being furnished to the holders of units representing
limited partner interests ("NEICOP LP Units") in NEIC Operating Partnership,
L.P. ("NEICOP") in connection with an offer (the "Exchange Offer") by New
England Investment Companies, L.P. ("NEIC"), a Delaware limited partnership, to
issue from time to time units representing limited partner interests in NEIC
("NEIC LP Units") in exchange for NEICOP LP Units (the "Exchange"). The
Exchange Offer is limited by significant contractual, securities law, federal
income tax, and other restrictions. See "The Exchange Offer."
NEIC is the Advising General Partner of NEICOP. Prior to December 29, 1997,
NEIC conducted the business currently conducted by NEICOP. At that time, NEIC
contributed all of its operating assets, subject to its liabilities, to NEICOP
in exchange for units representing partner interests in NEICOP ("NEICOP
Units"). See "The Exchange Offer--Background to the Exchange Offer." The sole
general partner of NEIC is New England Investment Companies, Inc. ("NEIC,
Inc."), which is also the Managing General Partner of NEICOP. See "Relationship
Between NEIC and NEICOP."
NEIC LP Units are traded on the New York Stock Exchange (the "NYSE") under
the symbol "NEW." On February 2, 1998, the last reported sale price of the NEIC
LP Units on the NYSE was $30 1/4.
-----------
FOR INFORMATION CONCERNING CERTAIN CONSIDERATIONS RELATING TO THIS OFFERING,
SEE "RISK FACTORS" BEGINNING ON PAGE 9.
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 FEBRUARY , 1998.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
AVAILABLE INFORMATION..................................................... 1
INCORPORATION OF DOCUMENTS BY REFERENCE................................... 1
SUMMARY................................................................... 3
The Partnerships........................................................ 3
The Exchange Offer...................................................... 4
Risk Factors............................................................ 6
Certain Federal Income Tax Consequences................................. 6
Comparative Rights of Unitholders....................................... 7
Comparative Per Unit Prices............................................. 7
Pro Forma Financial Data of NEIC........................................ 7
Selected Historical Financial Data of NEICOP............................ 7
Comparative Per Unit Data............................................... 8
RISK FACTORS.............................................................. 9
THE EXCHANGE OFFER........................................................ 14
Background to the Exchange Offer........................................ 14
Purpose of the Exchange Offer........................................... 14
Terms of the Exchange Offer............................................. 14
Limits on the Exchange Offer............................................ 15
Exchange Procedure...................................................... 16
Duration of the Exchange Offer.......................................... 17
Suspension of the Exchange Offer........................................ 17
Interests of Certain Persons in the Exchange Offer...................... 17
Governmental Approvals.................................................. 17
Tax Treatment of the Exchange........................................... 17
DESCRIPTION OF NEIC LP UNITS.............................................. 17
COMPARATIVE RIGHTS OF UNITHOLDERS......................................... 17
General Partners........................................................ 18
Limited Transferability of NEICOP LP Units.............................. 18
Tax Payments and Continuing Obligations of NEICOP Unitholders and Former
NEICOP Unitholders..................................................... 18
Right of Purchase of NEICOP LP Units.................................... 19
Look-Through Voting..................................................... 19
Voting Limitation....................................................... 19
Expenses................................................................ 20
Removal of a General Partner............................................ 20
BUSINESS OF NEIC.......................................................... 20
BUSINESS OF NEICOP........................................................ 20
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS OF NEICOP..................................................... 21
UNAUDITED PRO FORMA FINANCIAL STATEMENTS.................................. 21
SELECTED FINANCIAL DATA OF NEICOP......................................... 21
</TABLE>
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<TABLE>
<S> <C>
COMPARATIVE PER UNIT PRICES AND DISTRIBUTIONS.............................. 21
NEIC..................................................................... 21
NEICOP................................................................... 22
MANAGEMENT OF NEIC AND NEICOP.............................................. 22
PRINCIPAL HOLDERS OF NEIC LP UNITS......................................... 23
PRINCIPAL HOLDERS OF NEICOP UNITS.......................................... 24
RELATIONSHIP BETWEEN NEIC AND NEICOP....................................... 26
The Dropdown............................................................. 26
Relationship Among NEICOP, NEIC and NEIC, Inc............................ 26
Restrictions on NEIC's Activities........................................ 26
NEIC's Commitment to Exchange NEIC LP Units (or Cash at NEIC's Option)
for NEICOP LP Units..................................................... 26
NEIC's Commitment to Register Certain NEIC LP Units...................... 27
NEICOP's Commitment to Cooperate with NEIC with respect to NEIC's
Securities Law and NYSE-Related Obligations............................. 27
Coordination of Voting................................................... 27
Sharing of Expenses...................................................... 27
NEIC's Commitment to Issue NEIC LP Units to NEICOP to Enable NEICOP to
Satisfy its Obligations under its Employee Benefit Plans................ 27
CERTAIN FEDERAL INCOME TAX CONSEQUENCES.................................... 27
Consequences of the Exchange............................................. 28
Taxation of NEIC and its Partners........................................ 29
Taxation of NEICOP and its Partners...................................... 30
Disposition of NEIC LP Units............................................. 30
CERTAIN SECURITIES LAW CONSIDERATIONS...................................... 31
LEGAL MATTERS.............................................................. 31
EXPERTS.................................................................... 31
</TABLE>
ii
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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 Securities and
Exchange Commission (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-4 under the
Securities Act of 1933, as amended (the "Securities Act") with respect to the
NEIC 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 or NEICOP. This Prospectus relates solely to the NEIC 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 pursuant to
the Exchange Act 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 NEIC 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 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
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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.
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED
HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS (OTHER THAN EXHIBITS TO SUCH
DOCUMENTS UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE
HEREIN) ARE AVAILABLE, WITHOUT CHARGE, UPON WRITTEN OR ORAL REQUEST BY ANY
PERSON TO WHOM THIS PROSPECTUS IS DELIVERED, INCLUDING ANY BENEFICIAL OWNER,
TO NEW ENGLAND INVESTMENT COMPANIES, L.P., 399 BOYLSTON STREET, BOSTON,
MASSACHUSETTS 02116, ATTENTION: EDWARD N. WADSWORTH, CORPORATE SECRETARY, OR
BY CALLING (617) 578-3500.
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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 the
exchange of NEICOP LP Units for NEIC LP Units 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. Holders
of NEICOP LP Units should carefully read this Prospectus in its entirety.
THE PARTNERSHIPS
NEICOP
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. The business of NEICOP is conducted through
eleven investment management firms and three principal distribution and
consulting firms, all but one of which are wholly owned by NEICOP. NEICOP's
assets under management include equity and domestic and international fixed
income securities, money market funds and real estate.
NEICOP's strategy is to capitalize on growth opportunities for investment
management services in the institutional, mutual fund and private client
markets. NEICOP's investment management firms are primarily responsible for
developing and implementing their own investment philosophy, business plans and
management fees. Each investment management firm manages its business
independently on a day-to-day basis and maintains an image and identity that is
separate from both NEICOP and the other investment management firms. NEICOP
makes available distribution, consulting and administrative services which the
investment management firms draw upon as needed. NEICOP seeks to grow by
expanding the capabilities of its investment management firms; increasing and
focusing its marketing efforts; selectively expanding its distribution
channels; and selectively pursuing the acquisition of other investment
management firms.
The executive offices of NEICOP are located at 399 Boylston Street, Boston,
Massachusetts 02116, and its telephone number is (617) 578-3500.
NEIC
NEIC's current business is serving as the Advising General Partner of NEICOP.
Its main asset consists of units representing a general partner's interest in
NEICOP ("NEICOP GP Units"). NEIC's rights and responsibilities as the Advising
General Partner of NEICOP are described in more detail in "Relationship Between
NEIC and NEICOP--Relationship Among NEICOP, NEIC and NEIC, Inc."
Prior to December 29, 1997, NEIC conducted the business currently conducted
by NEICOP. At that time, NEIC contributed all of its operating assets, subject
to all of its liabilities, to NEICOP in exchange for NEICOP Units. NEIC has
agreed with NEICOP to certain restrictions on its activities in the
Intercompany Agreement between NEIC and NEICOP dated as of December 29, 1997
(the "Intercompany Agreement"). NEIC, Inc. is the sole general partner of NEIC
and also the Managing General Partner of NEICOP (the "Managing General
Partner"). See "Relationship Between NEIC and NEICOP."
The executive offices of NEIC are also located at 399 Boylston Street,
Boston, Massachusetts 02116, and its telephone number is (617) 578-3500.
3
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THE EXCHANGE OFFER
BACKGROUND TO THE EXCHANGE OFFER
NEIC LP Units are traded on the NYSE. Although publicly traded partnerships
are generally taxed as corporations, NEIC believes it is eligible to be taxed
as a partnership for federal income tax purposes under a special provision
grandfathering publicly traded partnerships that were in existence in 1987.
Such grandfathered publicly traded partnerships may elect to continue to be
classified as partnerships (rather than corporations) for federal income tax
purposes, as long as they pay an annual tax equal to 3.5% of their gross income
from the active conduct of a trade or business for taxable years beginning
after December 31, 1997 (the "Gross Income Tax") and satisfy certain other
conditions. In determining the gross income of a partnership for purposes of
this tax, the partnership is to take into account its distributive share of the
gross income of other partnerships in which it has a direct or indirect
interest.
On December 29, 1997, NEIC contributed all of its operating assets, subject
to all of its liabilities, to NEICOP in exchange for a number of NEICOP Units
such that NEIC owned a number of NEICOP Units equal to the number of units
representing partner interests in NEIC ("NEIC Units") then outstanding. (Such
contribution and exchange are herein referred to as the "Dropdown.") In
connection with the Dropdown, NEIC and NEICOP entered into the Intercompany
Agreement, and the Amended and Restated Agreement of Limited Partnership of
NEIC was further amended and restated (as so amended and restated, the "NEIC
Partnership Agreement"). NEIC then transferred certain of the NEICOP Units it
had received in the Dropdown to certain of its unitholders in exchange for an
equal number of NEIC LP Units (together with NEIC's election to pay the Gross
Income Tax and the Dropdown, the "Restructuring"). As a result, since the
Restructuring, NEICOP has conducted the business conducted by NEIC prior to
December 29, 1997. NEIC has decided to elect to continue to be classified as a
partnership for its taxable years beginning on and after January 1, 1998, and
to pay the 3.5% Gross Income Tax.
NEIC believed that creating a lower-tier partnership would have significant
benefits. In particular, acquisition candidates of NEIC had expressed a desire
for a structure of the type that would result from the Restructuring, and NEIC
therefore believed that the existence of a lower tier would facilitate future
acquisitions. Furthermore, NEIC believed that it was desirable to have key
persons owning equity interests in a separate legal structure with arrangements
designed to encourage long-term participation in NEIC's operations.
PURPOSE OF THE EXCHANGE OFFER
In the Intercompany Agreement, NEIC agreed to effect a continuing exchange
offer of NEIC LP Units (or cash at NEIC's option) for NEICOP LP Units in
accordance with, and subject to the limitations of, the provisions of the
Amended and Restated Agreement of Limited Partnership of NEICOP (the "NEICOP
Partnership Agreement"). There are substantial contractual, securities law,
federal income tax and other restrictions on the Exchange Offer. NEIC also
agreed to use its best efforts to file a registration statement under the
Securities Act to cover the issuance of any and all NEIC LP Units pursuant to
the Exchange.
The purpose of the Exchange Offer is to offer a limited source of liquidity
for holders of NEICOP LP Units, by allowing them in limited circumstances to
obtain NEIC LP Units, which are traded on the NYSE, in exchange for NEICOP LP
Units, which are not traded on any market, or cash at NEIC's election.
TERMS OF THE EXCHANGE OFFER
Subject to the provisions of the Intercompany Agreement and the NEICOP
Partnership Agreement and the other limitations set forth herein, NEIC agrees
to exchange NEIC LP Units for NEICOP LP Units on a continuing basis. In
exchange for NEICOP LP Units accepted for exchange, a holder will be entitled
to receive that number of NEIC LP Units equal to the product of (1) the NEIC
Exchange Ratio, and (2) the number of NEICOP LP Units accepted for exchange.
The NEIC Exchange Ratio will initially be equal to one, but will be adjusted in
certain circumstances. See "The Exchange Offer--Terms of the Exchange Offer."
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NEIC will pay exchanging holders cash in lieu of any fractional NEIC LP
Units, and may, at its option, transfer cash to any exchanging holder in lieu
of NEIC LP Units.
Participation in the Exchange Offer is voluntary. No holder of NEIC LP Units
is required to participate in the Exchange Offer.
LIMITS ON THE EXCHANGE OFFER
NEIC's offer to exchange NEIC LP Units (or cash at NEIC's election) for
NEICOP LP Units is limited by significant contractual, securities law, federal
income tax, and other restrictions. In particular, NEIC will not exchange NEIC
LP Units for NEICOP LP Units if it believes that such exchange will create a
risk that NEICOP will be treated as a publicly traded partnership for federal
income tax purposes.
In addition, NEIC will not exchange NEIC LP Units for NEICOP LP Units if the
Managing General Partner of NEICOP has not consented to such transfer of NEICOP
LP Units by the holder of such units. The NEICOP Partnership Agreement contains
significant restrictions on the transfer of NEICOP LP Units without the consent
of the Managing General Partner of NEICOP. In addition, it authorizes the
Managing General Partner of NEICOP not to recognize any transfers that violate
the terms of the NEICOP Partnership Agreement by, among other things, refusing
to admit such a transferee as a partner and refusing to recognize any rights of
such transferee. One of the purposes of these restrictions is to ensure that
NEICOP is not classified as a publicly traded partnership under the Internal
Revenue Code of 1986, as amended (the "Code"), and the NEICOP Partnership
Agreement grants authority to the Managing General Partner to amend the
transfer restrictions and to prohibit certain transfers that, in the opinion of
the Managing General Partner, create a risk that such transfers will not fit
within the regulatory safe harbors described in the regulations promulgated by
the United States Department of the Treasury pursuant to the Code (the
"Treasury Regulations") or that NEICOP will be required to register any class
of its securities under the Exchange Act. Consequently, there can be no
assurance that the Exchange Offer will continue to be available in the future
or will be presently available with respect to all units tendered for exchange.
EXCHANGE PROCEDURE
NEIC in general intends to effect exchanges of NEIC LP Units (or cash at
NEIC's election) for NEICOP LP Units on the first business day of each January,
April, July and October (each, an "Exchange Date"), beginning on April 1, 1998.
The Managing General Partner may in its discretion designate one or more dates
as the sole Exchange Date(s) in any given year. The Managing General Partner
will send each holder of NEICOP LP Units a written notice at least 75 days
prior to each Exchange Date, and any holder who wishes to participate in the
exchange on such date must send an election form to the Managing General
Partner that is received by the Managing General Partner at least 60 days prior
to such Exchange Date, in which such holder irrevocably commits to participate
in the exchange.
The Managing General Partner will determine in its sole discretion how many
NEICOP LP Units will be permitted to be exchanged on any Exchange Date, based
on whether the underlying transfers fit within the regulatory safe harbors
contained in the Treasury Regulations and other related considerations. If the
total number of units offered for exchange exceeds the number of units that can
be accepted, the Managing General Partner will reduce the number of NEICOP LP
Units offered for exchange by each holder on a pro rata basis, based on the
number of NEICOP LP Units offered for exchange, or on such other basis as the
Managing General Partner may determine in its sole discretion.
No later than five business days after each Exchange Date, NEIC will send a
written notice to each person that has elected to participate in the Exchange
indicating how many (if any) of the NEICOP LP Units offered for exchange by
such person were accepted for exchange on such Exchange Date, the NEIC Exchange
Ratio in effect on such Exchange Date, the number of NEIC LP Units to be issued
to such person, and the amount of cash (if any) that will be paid to such
person either as an alternative to NEIC LP Units or in lieu of fractional NEIC
LP
5
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Units. As soon thereafter as practicable, NEIC will send to each person whose
offer of NEICOP LP Units was accepted a certificate representing the number of
NEIC LP Units received by such person in the Exchange (if any), and a check for
the cash consideration received by such person in lieu of NEIC LP Units (if
any) or the cash value of any fractional NEIC LP Units (if any) to which such
person would otherwise have been entitled.
DURATION OF THE EXCHANGE OFFER
Subject to the limitations and restrictions described herein, the Exchange
Offer will remain in effect for an indefinite period of time.
SUSPENSION OF THE EXCHANGE OFFER
NEIC will suspend or modify the terms of the Exchange Offer if it determines,
in its sole discretion, that such suspension is necessary or desirable (1) to
prevent a risk that NEICOP will be classified as a publicly traded partnership
under the Code, or (2) to comply with applicable securities laws. In the event
of such a suspension, the Managing General Partner will attempt in good faith
to remedy the circumstances causing such suspension, but shall not be required
to disclose (or to cause NEICOP to disclose) information that the Managing
General Partner, NEIC or NEICOP, in their sole discretion, deem inadvisable to
disclose and are not then required to disclose.
INTERESTS OF CERTAIN PERSONS IN THE EXCHANGE OFFER
Certain affiliates of NEIC and NEICOP, including NEIC, Inc. and certain
affiliates of Metropolitan Life Insurance Company (together with its
affiliates, "MetLife"), currently own NEICOP Units and are eligible to
participate in the Exchange Offer. As a result, the Exchange Offer benefits
such affiliates by providing them a limited source of liquidity for their
NEICOP Units.
GOVERNMENTAL APPROVALS
To NEIC's knowledge, there are no governmental approvals required for the
exchange by NEIC of NEIC LP Units (or cash at NEIC's option) for NEICOP LP
Units.
RISK FACTORS
Holders of NEICOP Units should carefully consider certain factors prior to
exchanging their NEICOP LP Units for NEIC LP Units. Since NEIC is subject to
the Gross Income Tax, but NEICOP is not expected to be subject to any such tax,
the per unit distribution of operating cash flow on a NEIC LP Unit is expected
to be lower than the per unit distribution of operating cash flow on a NEICOP
LP Unit. Any tax owed by NEIC or NEICOP that is attributable to income of
NEICOP other than NEIC's distributive share thereof is to be borne by those
persons that were limited partners of NEICOP during the period to which such
tax relates, and the NEICOP Partnership Agreement authorizes NEICOP to recover
from former limited partners their proportionate share of any such tax, even if
they are no longer limited partners of NEICOP. In addition, holders of NEICOP
LP Units who elect to exchange their NEICOP LP Units for NEIC LP Units or cash
may not be able to reacquire NEICOP LP Units in the future. The Exchange Offer
is limited by substantial contractual, securities law, federal income tax, and
other restrictions. For a more detailed description of these and other factors
which holders of NEICOP LP Units should carefully consider prior to exchanging
their NEICOP LP Units for NEIC LP Units, see "Risk Factors."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The transfer of NEICOP LP Units to NEIC in exchange for NEIC LP Units is
expected in general to be nontaxable to exchanging unitholders. The tax basis
in the NEIC LP Units received is in general expected to be equal to the tax
basis in the NEICOP LP Units exchanged therefor, and the holding period of the
NEIC LP Units
6
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received will in general include the holding period for the NEICOP LP Units
surrendered in the Exchange, provided that the NEICOP LP Units were held as a
capital asset. It is likely, however, that a new holding period will commence
on the relevant Exchange Date for the portion of the value of the NEIC LP Units
received corresponding to the unrealized receivables and inventory of NEIC,
NEICOP, or any partnership in which they directly or indirectly hold interests,
including amortization recapture ("Section 751 Assets"). No private letter
ruling has been or will be obtained from the Internal Revenue Service (the
"IRS") regarding the tax issues involved in the Exchange. For a more detailed
description of certain federal income tax consequences relating to the exchange
by NEIC of NEIC LP Units for NEICOP LP Units, see "Certain Federal Income Tax
Consequences."
COMPARATIVE RIGHTS OF UNITHOLDERS
There are three significant differences between the rights of the holders of
NEIC LP Units and NEICOP LP Units. First, NEIC LP Units are traded on the NYSE,
whereas there is no trading market for NEICOP LP Units. In addition, whereas
NEIC LP Units can be transferred without the consent of the general partner of
NEIC, there are significant contractual, securities law, federal income tax,
and other restrictions on a holder's ability to transfer NEICOP LP Units.
Second, NEIC is subject to the Gross Income Tax, whereas NEICOP is not expected
to be subject to such tax. Consequently, per unit distributions of operating
cash flow on a NEIC LP Unit are expected to be lower than the per unit
distributions of operating cash flow on a NEICOP LP Unit. Third, the NEICOP
Partnership Agreement authorizes NEICOP to redeem, or to cause NEIC to
purchase, any and all NEICOP LP Units owned by a holder who owns fewer than
1,000 (or such higher number as may be specified by the Managing General
Partner from time to time) NEICOP LP Units. NEIC LP Units are not subject to
such a call right. For a more detailed discussion of these and other
differences between the rights of holders of NEIC LP Units and the rights of
holders of NEICOP LP Units, see "Comparative Rights of Unitholders."
COMPARATIVE PER UNIT PRICES
On February 2, 1998, the closing price of NEIC LP Units on the NYSE was $30
1/4 per NEIC LP Unit. On September 15, 1997, the last trading day prior to
announcement of NEIC's initial plans for the Restructuring, the closing price
per NEIC LP Unit on the NYSE was $27 1/8. There is no trading market for NEICOP
LP Units.
PRO FORMA FINANCIAL DATA OF NEIC
If all of the NEICOP LP Units were exchanged for NEIC LP Units pursuant to
the Exchange Offer, NEIC would own slightly less than 100% of the outstanding
interests in NEICOP. In such event, it is likely that NEIC would consolidate
its ownership interest in NEICOP. NEIC's financial statements under this
assumption would be virtually identical to its historical financial statements
prior to the Restructuring, with the exception that NEIC would be subject to
the Gross Income Tax for its fiscal years commencing in 1998 and thereafter.
NEIC's historical financial statements are included in its Annual Report on
Form 10-K for the year ended December 31, 1996, and its Quarterly Report on
Form 10-Q for the quarter ended September 30, 1997, each of which is
incorporated herein by reference. Pro forma financial statements describing the
effect of the Restructuring are included in NEIC's Current Report on Form 8-K
dated December 31, 1997, which is incorporated herein by reference.
SELECTED HISTORICAL FINANCIAL DATA OF NEICOP
NEICOP was formed in November 1997 and had not engaged in any business
activity prior to the Restructuring. Since the Restructuring, NEICOP has
conducted the business historically conducted by NEIC. The
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historical financial statements of NEIC are included in its Annual Report on
Form 10-K for the year ended December 31, 1996, and its Quarterly Report on
Form 10-Q for the quarter ended September 30, 1997, each of which is
incorporated herein by reference. Pro forma financial statements describing the
effect of the Restructuring are included in NEIC's Current Report on Form 8-K
dated December 31, 1997, which in incorporated herein by reference.
COMPARATIVE PER UNIT DATA
NEICOP was formed in November 1997 and had not engaged in any business
activity prior to the Restructuring. Since the Restructuring, NEICOP has
conducted the business historically conducted by NEIC. The historical per unit
data of NEIC is included in its Annual Report on Form 10-K for the year ended
December 31, 1996, and its Quarterly Report on Form 10-Q for the quarter ended
September 30, 1997, each of which is incorporated herein by reference. Pro
forma per unit data describing the effect of the Restructuring is included in
NEIC's Current Report on Form 8-K dated December 31, 1997, which is
incorporated herein by reference.
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RISK FACTORS
Any statements in this Prospectus that are not historical facts are intended
to fall within the safe harbor for forward-looking statements provided by the
Private Securities Litigation Reform Act of 1995. Any forward-looking
statements should be considered in light of the risks and uncertainties
associated with NEIC, NEICOP and their business, economic and market
conditions prevailing from time to time, and the application and
interpretation of federal and state tax laws and regulations, all of which are
subject to material changes and which may cause actual results to vary
materially from what has been anticipated. NEIC's and NEICOP's actual results
could differ materially from those set forth in the forward-looking statements
as a result of matters discussed in the risk factors set forth below and
elsewhere in this Prospectus. In addition to the other information contained
in this Prospectus and incorporated by reference herein, holders of NEICOP LP
Units should carefully consider the following factors prior to exchanging
their NEICOP LP Units for NEIC LP Units.
TAXATION OF NEIC
NEIC is subject to the Gross Income Tax, but NEICOP is not expected to be
subject to any such tax. See "Certain Federal Income Tax Considerations."
Because of this tax, the per unit distribution of operating cash flow on a
NEIC LP Unit is expected to be lower than the per unit distribution of
operating cash flow on a NEICOP LP Unit.
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.
TAX CONSIDERATIONS RELATING TO THE EXCHANGE
Although the exchange of NEICOP LP Units for NEIC LP Units is expected in
general to be nontaxable to exchanging holders, a new holding period may begin
on the relevant Exchange Date for the portion of the value of the acquired
NEIC LP Units attributable to the Section 751 Assets. If NEIC elects to pay
cash in exchange for NEICOP LP Units, the exchange will in general be taxable
to exchanging holders. See "Certain Federal Income Tax Consequences."
SECURITIES LAW RESTRICTIONS ON RESALES OF NEIC LP UNITS ACQUIRED BY NEIC
AFFILIATES IN THE EXCHANGE
NEIC LP Units obtained in the Exchange by persons that are affiliates of
NEIC cannot be resold or otherwise transferred unless they are subsequently
registered under the Securities Act or an exemption therefrom is available.
See "Certain Securities Law Considerations."
PARTICIPANTS IN THE EXCHANGE CONTINUE TO BE LIABLE FOR CERTAIN TAXES THAT
MIGHT BE IMPOSED ON NEICOP
NEIC will be subject to the Gross Income Tax on its gross income, including
its distributive share of NEICOP's gross income. NEICOP itself is not expected
to be subject to the Gross Income Tax. However, there is a risk that the IRS
could take the position that NEICOP's entire gross income is subject to the
Gross Income Tax. If the IRS were to take and prevail with this position, or
if NEIC or NEICOP become subject to any other tax, either NEICOP would have to
pay, or NEICOP would have to reimburse NEIC for, any such tax (including any
interest and penalties thereon) attributable to income of NEICOP other than
NEIC's distributive share thereof. Pursuant to the NEICOP Partnership
Agreement, any such tax or payment is to be borne by those persons that were
limited partners of NEICOP during the period to which the IRS adjustment of
taxes relates. If such persons are no longer partners of NEICOP, the NEICOP
Partnership Agreement authorizes NEICOP to recover from such former limited
partners their proportionate share of any such payment. See "Comparative
Rights of Unitholders--Tax Payments."
DIFFICULTY IN REACQUIRING NEICOP LP UNITS
It is not expected that NEIC unitholders who participate in the Exchange
will have an opportunity to acquire NEICOP LP Units in the future. NEICOP does
not currently intend to offer NEICOP LP Units to NEIC
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unitholders in exchange for NEIC LP Units. There is no trading market for
NEICOP LP Units, and there are significant contractual, securities law,
federal income tax, and other restrictions on the ability of a holder of
NEICOP LP Units to consummate a sale of such units. As a result, holders of
NEICOP LP Units who elect to exchange their NEICOP LP Units for NEIC LP Units
are unlikely to be able to reacquire NEICOP LP Units in the future.
LIMITS ON THE EXCHANGE OFFER
The Exchange Offer is limited by substantial contractual, securities law,
federal income tax, and other restrictions. In particular, NEIC will not
exchange NEIC LP Units (or cash at NEIC's option) for NEICOP LP Units if it
believes that such exchange will create a risk that NEICOP will be treated as
a publicly traded partnership for federal income tax purposes. In addition,
NEIC will not exchange NEIC LP Units for NEICOP LP Units if the Managing
General Partner of NEICOP has not consented to such transfer. See "The
Exchange Offer--Limits on the Exchange Offer."
In addition, the Managing General Partner will determine in its sole
discretion how many NEICOP LP Units will be permitted to be exchanged on any
Exchange Date, based on whether the underlying transfers fit within the
regulatory safe harbors contained in the Treasury Regulations and other
related considerations. If the total number of units offered for exchange
exceeds the number of units that can be accepted or creates a risk that NEICOP
will be treated as a publicly traded partnership, the Managing General Partner
will reduce the number of NEICOP LP Units offered by each holder for exchange
on a pro rata basis, based on the number of NEICOP LP Units offered for
exchange, or on such other basis as the Managing General Partner may determine
in its sole discretion. As a result, a holder of NEICOP LP Units may not be
able to exchange any or all of the NEICOP LP Units which such holder wishes to
exchange on any Exchange Date.
Finally, NEIC will suspend the Exchange Offer if it determines, in its sole
discretion, that such suspension is necessary or desirable (1) to prevent a
risk that NEICOP will be classified as a publicly traded partnership under the
Code, or (2) to comply with applicable securities laws. In the event of such a
suspension, the Managing General Partner will attempt in good faith to remedy
the circumstances causing such suspension, but shall not be required to
disclose (or to cause NEICOP to disclose) information that the Managing
General Partner, NEIC or NEICOP, in their sole discretion, deem inadvisable to
disclose and are not then required to disclose.
----------------
In addition, in deciding whether to exchange their NEICOP LP Units for NEIC
LP Units, holders of NEICOP LP Units should consider the following factors,
which are applicable to both an investment in NEIC LP Units and an investment
in NEICOP LP Units.
CONTROL BY METLIFE
NEIC is controlled by NEIC, Inc., its general partner, which is wholly owned
by MetLife. NEIC, Inc. is also the Managing General Partner of NEICOP. In
addition to its indirect ownership of units representing a general partner
interest in NEIC ("NEIC GP Units") and NEICOP GP Units, as of December 31,
1997, MetLife beneficially owned approximately 5% of the outstanding NEIC LP
Units and 47% of the outstanding NEICOP LP Units, including those owned
indirectly through ownership of NEIC 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 NEIC LP Units and holders of NEICOP 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 NEIC LP Units or holders of NEICOP LP Units do vote, the NEIC Partnership
Agreement and the NEICOP Partnership Agreement prevent 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
or NEICOP Units, as the case may be, entitled to vote on the matter. For the
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purpose of applying this voting restriction to votes of holders of NEICOP LP
Units, persons are deemed to own both (1) the NEICOP Units that they own, and
(2) an additional number of NEICOP Units equal to the product of (i) the
percentage of the number of NEIC LP Units outstanding that they own, and (ii)
the number of NEICOP Units owned by NEIC that are entitled to vote on the
matter. See "Regulation" under this heading, as well as "Comparative Rights of
Unitholders--Voting Limitation."
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 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 (including a
change in tax status resulting from a change in the applicable tax rate),
subject to a standard of good faith on the part of NEIC, Inc. The
Restructuring which occurred at year-end 1997 was undertaken pursuant to such
authority granted to NEIC, Inc. in the NEIC Partnership Agreement.
In determining the form of any future restructuring of NEIC, 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 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 future restructuring, which may be affected by
changes in the tax laws (including the applicable tax rate), as well as other
factors beyond the control of NEIC, NEICOP or NEIC, Inc. NEIC, Inc. expects
that any future restructuring would be intended to continue to provide holders
of publicly traded NEIC 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, RTI and other non-Public Partners 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
NEIC LP Units, as noted above.
TAX ATTRIBUTES OF LP UNITS
NEIC intends to continue to use certain tax accounting methods and
conventions employed by other publicly traded partnerships in order to promote
uniformity among NEIC 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 NEIC LP Units. The use of, and need for, the special tax
accounting methods and conventions is expected to increase following the
Restructuring. 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
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a NEIC LP Unit may depend on the identity of the seller, and the market value
and marketability of NEIC 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
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
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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 intends to continue this acquisition strategy. Consideration for such
acquisitions is expected to include cash (including cash from borrowings),
NEICOP LP Units, possibly NEIC LP Units, and future payments (in cash, NEICOP
LP Units or possibly NEIC 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.
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.
NEIC LP UNITS AVAILABLE FOR FUTURE SALE
As of December 31, 1997, there were 6,164,980 NEIC LP Units outstanding,
approximately 82% of which are freely tradable without registration under the
Securities Act. In addition, as of such date, there were 44,466,979 NEICOP
Units outstanding, all of which may be exchanged for NEIC LP Units pursuant
to, and subject to the limitations of, the Exchange Offer (although the NEICOP
GP Units outstanding must first be exchanged for NEICOP LP Units, as permitted
by the NEICOP Partnership Agreement). NEIC 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, NEIC 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 NEIC 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 28 million NEICOP Units, or 73% of the NEICOP Units outstanding
(excluding those owned by NEIC) , are owned by affiliates of NEIC. Certain
NEIC affiliates have rights to register their NEIC LP Units, or any NEIC LP
Units received in exchange for their NEICOP LP Units, for public resale and
may otherwise seek to resell some or all of such NEIC LP Units in the future.
Sales of large numbers of NEIC LP Units to the public within a limited time
period could adversely affect the market price of the NEIC LP Units. Resales
of NEIC 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.
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THE EXCHANGE OFFER
BACKGROUND TO THE EXCHANGE OFFER
NEIC LP Units are traded on the NYSE. Although publicly traded partnerships
are generally taxed as corporations, NEIC believes it is eligible to be taxed
as a partnership for federal income tax purposes under a special provision
grandfathering publicly traded partnerships that were in existence in 1987.
Such grandfathered publicly traded partnerships may elect to continue to be
classified as partnerships (rather than corporations) for federal income tax
purposes, as long as they pay annually the 3.5% Gross Income Tax and satisfy
certain other conditions. In determining the gross income of a partnership for
purposes of this tax, the partnership is to take into account its distributive
share of the gross income of other partnerships in which it has a direct or
indirect interest.
On December 29, 1997, NEIC contributed all of its operating assets, subject
to all of its liabilities, to NEICOP, in exchange for a number of NEICOP Units
such that NEIC owned a number of NEICOP Units equal to the number of NEIC
Units then outstanding. In connection with the Dropdown, NEIC and NEICOP
entered into the Intercompany Agreement, and the NEIC Partnership Agreement
was further amended and restated. NEIC then transferred certain of the NEICOP
Units it had received in the Dropdown to certain of its unitholders in
exchange for an equal number of NEIC LP Units. NEIC has decided to elect to
continue to be classified as a partnership for its taxable years beginning on
and after January 1, 1998, and to pay the 3.5% Gross Income Tax.
NEIC believed that creating a lower-tier partnership would have significant
benefits. In particular, acquisition candidates of NEIC had expressed a desire
for a structure of the type that would result from the Restructuring, and NEIC
therefore believed that the existence of a lower tier would facilitate future
acquisitions. Furthermore, NEIC believed that it was desirable to have key
persons owning equity interests in a separate legal structure with
arrangements designed to encourage long-term participation in NEIC's
operations.
As a result, since the Dropdown, NEICOP has conducted the business conducted
by NEIC prior to December 29, 1997. NEICOP's general partners are NEIC, Inc.
which serves as its Managing General Partner, and NEIC, which serves as its
Advising General Partner. NEIC, Inc. is also the sole general partner of NEIC.
See "Relationship Between NEIC and NEICOP."
PURPOSE OF THE EXCHANGE OFFER
In the Intercompany Agreement, NEIC agreed to effect a continuing exchange
offer of NEIC LP Units (or cash at NEIC's option) for NEICOP LP Units in
accordance with, and subject to the limitations of, the provisions of the
NEICOP Partnership Agreement. There are substantial contractual, securities
law, federal income tax, and other restrictions on the Exchange Offer. NEIC
does not require the approval or consent of either its unitholders or the
unitholders of NEICOP to make the Exchange Offer. In the Intercompany
Agreement, NEIC also agreed to use its best efforts to file a registration
statement under the Securities Act to cover the issuance of any and all NEIC
LP Units pursuant to the Exchange.
The purpose of the Exchange Offer is to offer a limited source of liquidity
for holders of NEICOP LP Units, which are not traded on any market, by
allowing them in limited circumstances to exchange such units for NEIC LP
Units, which are traded on the NYSE, or cash at NEIC's option.
TERMS OF THE EXCHANGE OFFER
Subject to the provisions of the Intercompany Agreement and the NEICOP
Partnership Agreement and the other limitations discussed in "The Exchange
Offer--Limits on the Exchange Offer," NEIC hereby offers to exchange NEIC LP
Units for NEICOP LP Units. In exchange for NEICOP LP Units accepted for
exchange, a holder will be entitled to receive that number of NEIC LP Units
equal to the product of (1) the NEIC Exchange Ratio, and (2) the number of
NEICOP LP Units accepted for exchange.
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The NEIC Exchange Ratio represents the value of a NEICOP Unit expressed in
NEIC LP Units. It calculates this value by dividing the fair market value of
each NEICOP Unit held by NEIC by the trading price of a NEIC LP Unit as
reported on the NYSE. The fair market value of each NEICOP Unit held by NEIC
is determined by dividing the market capitalization of NEIC (after adjustment
for any material assets and liabilities of NEIC other than NEICOP Units) by
the number of NEICOP Units owned by NEIC.
The NEIC Exchange Ratio will initially be equal to one, but if (1) the
excess of NEIC's assets (excluding its investment in NEICOP) over its total
liabilities (excluding short-term intercompany loans), or of its total
liabilities (excluding short-term intercompany loans) over its assets
(excluding its investment in NEICOP), in each case as reflected on the
financial records of NEIC, is greater than $100,000, or (2) the aggregate
number of NEICOP Units owned by NEIC is not equal to the aggregate number of
NEIC Units outstanding, the NEIC Exchange Ratio will be adjusted to be equal
to:
(1) the sum of (i) the product of the Market Value and the number of NEIC
LP Units outstanding; plus (ii) the excess (if any), to the extent it
exceeds $100,000, of NEIC's total liabilities (excluding short-term
intercompany loans) over its assets (excluding its investment in NEICOP),
both as reflected on the financial records of NEIC; minus (iii) the excess
(if any), to the extent it exceeds $100,000, of NEIC's assets (excluding
its investment in NEICOP) over its total liabilities (excluding short-term
intercompany loans), both as reflected on the financial records of NEIC;
divided by
(2) the product of (i) the number of NEICOP Units owned by NEIC, and (ii)
the Market Value.
The "Market Value" is generally equal to the average of the last reported
sales prices of a NEIC LP Unit on the NYSE for the five trading days
immediately preceding the date of determination.
NEIC will pay exchanging holders cash in lieu of any fractional NEIC LP
Units, and may, at its option, transfer cash to any exchanging holder in lieu
of NEIC LP Units. In either case, the cash paid in lieu of a number of NEIC LP
Units (or fraction thereof) will be equal to the product of (i) such number of
NEIC LP Units (or fraction thereof), and (ii) the Market Value used to
calculate the NEIC Exchange Ratio.
Participation in the Exchange Offer is voluntary. No holder of NEICOP LP
Units is required to participate in the Exchange Offer.
LIMITS ON THE EXCHANGE OFFER
The Exchange Offer is limited by substantial contractual, securities law,
federal income tax, and other restrictions. In particular, NEIC will not
exchange NEIC LP Units for NEICOP LP Units if it believes that such exchange
will create a risk that NEICOP will be treated as a publicly traded
partnership for federal income tax purposes.
In addition, NEIC will not exchange NEIC LP Units for NEICOP LP Units if the
Managing General Partner of NEICOP has not consented to such transfer of
NEICOP LP Units. The NEICOP Partnership Agreement contains substantial
restrictions on the transfer of NEICOP LP Units without the consent of the
Managing General Partner of NEICOP. In addition, it authorizes the Managing
General Partner of NEICOP not to recognize any transfers that violate the
terms of the NEICOP Partnership Agreement by, among other things, refusing to
admit such a transferee as a partner and refusing to recognize any rights of
such transferee. One of the purposes of these restrictions is to ensure that
NEICOP is not classified as a publicly traded partnership under the Code, and
the NEICOP Partnership Agreement grants authority to the Managing General
Partner to amend the transfer restrictions and to prohibit certain transfers
that, in the opinion of the Managing General Partner, create a risk that such
transfers will not fit within the regulatory safe harbors described in the
Treasury Regulations or that NEICOP will be required to register any class of
its securities under the Exchange Act.
Pursuant to the terms of the NEICOP Partnership Agreement, the Managing
General Partner will consent to certain transfers of NEICOP LP Units that are
specified in the regulatory safe harbors described in the Treasury
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Regulations, as long as it believes that such transfers will not create a risk
that NEICOP will be treated as a publicly traded partnership. Such permitted
transfers generally include the following:
(1) transfers in which the transferee's basis in the transferred NEICOP
LP Units is determined in whole or in part by reference to the transferor's
basis in such units (i.e., primarily gifts), other than exchanges of NEICOP
LP Units for NEIC LP Units;
(2) transfers made upon the death of the transferor, including transfers
of NEICOP LP Units to NEIC in exchange for NEIC LP Units pursuant to a
redemption or repurchase plan adopted by NEICOP;
(3) transfers between members of a family;
(4) transfers involving issuances of NEICOP LP Units by NEICOP in
exchange for cash, property or services;
(5) transfers to NEIC of more than 2% of the total number of NEICOP Units
outstanding (in general not including those NEICOP Units held by NEIC,
Inc., NEIC or their respective affiliates);
(6) transfers of NEICOP LP Units to NEIC in exchange for NEIC LP Units,
in compliance with the procedures set forth in "The Exchange Offer--
Exchange Procedure";
(7) transfers of not less than 5% of the total NEICOP LP Units then
outstanding in one or more of a series of related transactions pursuant to
one or more binding agreements, provided that each of such transactions
qualifies as a "block transfer" pursuant to the regulations promulgated
under Code Section 7704.
The Managing General Partner may also consent to certain exchanges of NEICOP
LP Units for NEIC LP Units that are not described above that fit within the
regulatory safe harbors of the regulations promulgated under Code Section
7704.
EXCHANGE PROCEDURE
NEIC intends to effect exchanges of NEIC LP Units (or cash at NEIC's
election) for NEICOP LP Units on the first business day of each January,
April, July and October (each, an "Exchange Date"), beginning on April 1,
1998. The Managing General Partner may in its discretion designate one or more
dates as the sole Exchange Date(s) in any given year. The Managing General
Partner will send each holder of NEICOP LP Units a written notice at least 75
days prior to each Exchange Date, specifying the next Exchange Date and
inviting each holder of NEICOP LP Units to participate in the exchange that
will occur on that Exchange Date. The notice will be accompanied by (i) a form
(the "Offer") that must be executed by the holder to participate in the
exchange, and (ii) if required by applicable securities laws, this Prospectus.
EACH HOLDER OF NEICOP LP UNITS WHO WISHES TO PARTICIPATE IN THE EXCHANGE ON
ANY EXCHANGE DATE MUST SEND AN OFFER TO THE MANAGING GENERAL PARTNER THAT IS
RECEIVED BY THE MANAGING GENERAL PARTNER AT LEAST 60 DAYS PRIOR TO SUCH
EXCHANGE DATE, IN WHICH SUCH HOLDER IRREVOCABLY COMMITS TO PARTICIPATE IN THE
EXCHANGE. The Managing General Partner will determine in its sole discretion
how many NEICOP LP Units will be permitted to be exchanged on any Exchange
Date, based on whether the underlying transfers fit within the regulatory safe
harbors contained in the Treasury Regulations and other related
considerations. If the total number of units offered for exchange exceeds the
number of units that can be accepted, the Managing General Partner will reduce
the number of NEICOP LP Units offered for exchange by each holder on a pro
rata basis, based on the number of NEICOP LP Units offered for exchange, or on
such other basis as the Managing General Partner may determine in its sole
discretion. As a result, a holder of NEICOP LP Units may not be able to
exchange any or all of the NEICOP LP Units which such holder wishes to
exchange on any Exchange Date.
No later than five business days after each Exchange Date, the Managing
General Partner will send a written notice to each holder of NEICOP LP Units
that has submitted an Offer indicating the number of NEICOP LP Units offered
by such holder that were accepted for exchange, the NEIC Exchange Ratio on
such Exchange Date, and the number of NEIC LP Units that were received by such
holder in the exchange, and the cash, if any, that will be paid to such holder
in the exchange either as an alternative to NEIC LP Units or in lieu of
fractional
16
<PAGE>
NEIC LP Units. Appropriate book entries will be made on the partnership books
of NEICOP and on the units register of NEIC to reflect such exchange. As soon
thereafter as is practicable, the exchanging holder will be sent a certificate
evidencing the NEIC LP Units received by such holder in the exchange (if any)
and a check for the cash consideration received by such holder in lieu of NEIC
LP Units (if any) or representing the fair market value of any fractional NEIC
LP Units (if any) to which such holder would otherwise be entitled.
DURATION OF THE EXCHANGE OFFER
Subject to the limitations and restrictions described herein, the Exchange
Offer will remain in effect for an indefinite period of time.
SUSPENSION OF THE EXCHANGE OFFER
NEIC will suspend the Exchange Offer if it determines, in its sole
discretion, that such suspension is necessary or desirable (1) to prevent a
risk that NEICOP will be classified as a publicly traded partnership under the
Code, or (2) as a result of any required prospectus or offering statement no
longer being complete or accurate or otherwise to comply with applicable
securities or other laws. In the event of such a suspension, the Managing
General Partner will attempt in good faith to remedy the circumstances causing
such suspension, but shall not be required to disclose (or to cause NEICOP to
disclose) information that the Managing General Partner, NEIC or NEICOP, in
their sole discretion, deem inadvisable to disclose and are not then required
to disclose.
INTERESTS OF CERTAIN PERSONS IN THE EXCHANGE OFFER
Certain affiliates of NEIC and NEICOP, including NEIC, Inc. and MetLife,
currently own NEICOP Units and are eligible to participate in the Exchange
Offer. As a result, the Exchange Offer benefits such affiliates by providing
them a limited source of liquidity for their NEICOP Units.
GOVERNMENTAL APPROVALS
To NEIC's knowledge, no governmental approvals are required for the exchange
by NEIC of NEIC LP Units (or cash at NEIC's option) for NEICOP LP Units.
TAX TREATMENT OF THE EXCHANGE
For a description of certain federal income tax consequences related to a
holder's exchange of NEICOP LP Units for NEIC LP Units, see "Certain Federal
Income Tax Consequences."
DESCRIPTION OF NEIC LP UNITS
A description of the NEIC LP Units is contained in "Description of LP Units"
and "Description of the Partnership Agreement" 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, which is incorporated herein by reference.
COMPARATIVE RIGHTS OF UNITHOLDERS
The following is a summary of the material differences between the rights of
holders of NEIC LP Units and the rights of holders of NEICOP LP Units. Since
both NEIC and NEICOP are organized as limited partnerships under the laws of
the State of Delaware, such differences arise from differences between various
provisions of the NEIC Partnership Agreement and the NEICOP Partnership
Agreement. The NEICOP Partnership Agreement is modeled on the NEIC Partnership
Agreement, so many provisions of the NEICOP Partnership Agreement are similar
or identical to analogous provisions of the NEIC Partnership Agreement. There
are, however, significant
17
<PAGE>
differences between the rights of holders of NEIC LP Units and the rights of
holders of NEICOP LP Units, the most important of which are described in the
following summary. This summary does not purport to be complete and is
qualified in its entirety by reference to the NEIC Partnership Agreement,
which is included as Exhibit 1 to NEIC's Amendment on Form 8-A/A dated
December 29, 1997 to its Registration Statement on Form 8-A, and the NEICOP
Partnership Agreement, which is included as Exhibit 1 to NEIC's Current Report
on Form 8-K dated December 31, 1997, both of which are incorporated herein by
reference.
GENERAL PARTNERS
NEICOP has two general partners: NEIC, Inc., which serves as its Managing
General Partner, and NEIC, which serves as its Advising General Partner. As
Managing General Partner, NEIC, Inc. has the power to do any and all things it
deems appropriate or necessary in the conduct of the business and affairs of
NEICOP. 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. The
Advising General Partner may also generally act on behalf of NEICOP.
NEIC, Inc. is the sole general partner of NEIC, and therefore exercises
substantial control over NEIC's business, including its role as Advising
General Partner of NEICOP. See "Relationship Between NEIC and NEICOP."
LIMITED TRANSFERABILITY OF NEICOP LP UNITS
NEIC LP Units are listed on the NYSE, while there is no trading market for
NEICOP LP Units. In addition, while NEIC LP Units may be transferred without
the consent of the general partner of NEIC, there are significant contractual,
securities law, federal income tax and other restrictions on a holder's
ability to consummate a sale of NEICOP LP Units.
The NEICOP Partnership Agreement contains substantial restrictions on the
transfer of NEICOP LP Units without the consent of the Managing General
Partner. In addition, it authorizes the Managing General Partner not to
recognize any transfers that violate the terms of the NEICOP Partnership
Agreement by, among other things, refusing to admit such transferee as a
partner and refusing to recognize any rights of such transferee. One of the
purposes of these restrictions is to ensure that NEICOP is not classified as a
publicly traded partnership under the Code, and the NEICOP Partnership
Agreement grants authority to the Managing General Partner to amend the
transfer restrictions and to prohibit certain transfers that, in the opinion
of the Managing General Partner, create a risk that such transfers will not
fit within the regulatory safe harbors described in the Treasury Regulations
or that NEICOP will be required to register any class of its securities under
the Exchange Act. See "The Exchange Offer--Limits on the Exchange Offer."
The Managing General Partner will consent to certain transfers of NEICOP LP
Units (including exchanges of NEICOP LP Units for NEIC LP Units) that are
specified in the regulatory safe harbors described in the Treasury
Regulations, as long as it believes that such transfers will not create a risk
that NEICOP will be treated as a publicly traded partnership. For a list of
what such permitted transfers generally include, see "The Exchange Offer--
Limits on the Exchange Offer."
TAX PAYMENTS AND CONTINUING OBLIGATIONS OF NEICOP UNITHOLDERS AND FORMER
NEICOP UNITHOLDERS
NEIC will be subject to the Gross Income Tax on its gross income, including
its distributive share of NEICOP's gross income. In addition, there is a risk
that the IRS could take the position that NEICOP's entire gross income is
subject to the Gross Income Tax. If the IRS were to take and prevail with this
position, or if NEIC or NEICOP become subject to any other tax, the NEICOP
Partnership Agreement provides that NEICOP would pay, or would reimburse NEIC
for, any tax (together with related interest and penalties, if any)
attributable to income of NEICOP other than NEIC's distributive share thereof.
Pursuant to the NEICOP Partnership Agreement, this payment is to be borne by
those persons that were limited partners of NEICOP during the period
18
<PAGE>
to which the IRS adjustment of taxes relates. If such persons are no longer
limited partners of NEICOP, the NEICOP Partnership Agreement authorizes NEICOP
to recover from such former limited partners their proportionate share of any
such payment.
RIGHT OF PURCHASE OF NEICOP LP UNITS
The NEICOP Partnership Agreement grants the Managing General Partner the
right, subject to the regulatory safe harbors in the Treasury Regulations
promulgated pursuant to Code Section 7704, to cause NEICOP to redeem, or to
cause the Advising General Partner to purchase, any and all NEICOP LP Units
owned by a holder who owns fewer than 1,000 NEICOP LP Units, in exchange for
either (1) an amount of cash equal to the product of (i) the Market Value,
(ii) the number of NEICOP LP Units so redeemed, and (iii) the NEIC Exchange
Ratio, or (2) that number of NEIC LP Units equal to the product of (i) the
number of NEICOP LP Units so redeemed, and (ii) the NEIC Exchange Ratio. The
Managing General Partner may, in its sole discretion, increase this threshold
to a number of NEICOP LP Units greater than 1,000. This provision is intended
to ensure that NEICOP does not become subject to the reporting requirements of
the Exchange Act.
LOOK-THROUGH VOTING
The NEICOP Partnership Agreement and the Intercompany Agreement contain
look-through voting provisions that give holders of NEIC LP Units the
opportunity to vote on matters concerning NEICOP. When NEICOP submits any
matter to the vote of its unitholders, NEIC shall submit such matter to a vote
of its unitholders in accordance with the terms of the NEIC Partnership
Agreement. The NEICOP Units held by NEIC are then voted for, voted against,
withheld from voting or not voted in the same proportions as are the NEIC
Units for which voting instructions were solicited by NEIC.
VOTING LIMITATION
Both the NEIC Partnership Agreement and the NEICOP Partnership Agreement
contain provisions that prevent any person or "group" of persons (which
includes affiliates and associates of such person) from voting more than 20%
of the NEIC Units or NEICOP Units entitled to vote on any issue. This
restriction does not apply (1) to MetLife and certain subsidiaries thereof,
(2) to certain employee plans and participating employees thereunder, (3) when
the Managing General Partner of NEICOP, or the general partner of NEIC, as the
case may be, has both expressly approved in advance the transaction in which
such person or group acquired more than 20% of the NEIC LP Units or NEICOP LP
Units and specifically determined in advance that the voting restriction shall
not apply to such person or group, and (4) when the Managing General Partner
of NEICOP, or the general partner of NEIC, respectively, determines that the
restriction will not apply to a particular person or group.
For the purposes of applying this voting restriction to votes of holders of
NEICOP LP Units, persons are deemed to own both (1) the NEICOP Units that they
own, and (2) an additional number of NEICOP Units equal to the product of (i)
the percentage of the number of NEIC LP Units outstanding that they own, and
(ii) the number of NEICOP Units owned by NEIC that are entitled to vote on the
matter. This provision ensures that the voting restriction is applied to the
combined voting power of each person or group in the affairs of NEICOP,
including such person's direct ownership of NEICOP Units and such person's
voting rights pursuant to the look-through voting provision described under
"Comparative Rights of Unitholders--Look-Through Voting."
The purpose of this voting restriction is to decrease the likelihood of an
"assignment" of NEICOP's investment management agreements in connection with
future issuances of units by NEIC or NEICOP or transfers of NEIC Units or
NEICOP Units by holders thereof. Such an "assignment" would require the
consent of each client of NEICOP pursuant to the Investment Advisers Act of
1940, and would automatically terminate such agreements pursuant to the
Investment Company Act of 1940.
19
<PAGE>
EXPENSES
Pursuant to the NEIC Partnership Agreement, NEIC reimburses NEIC, Inc. for
all costs and expenses which are directly or indirectly related to the
formation, capitalization, business or activities of NEIC.
Pursuant to the NEICOP Partnership Agreement, NEICOP reimburses NEIC, Inc.
and NEIC for all costs and expenses which are directly or indirectly related
to the formation, capitalization, business or activities of NEICOP. NEICOP
also reimburses NEIC for any costs relating to the implementation of the flow-
through voting mechanism described in "Comparative Rights of Unitholders--
Look-Through Voting," as well as any tax (and any related interest or
penalties, if any) paid by NEIC attributable to income of NEICOP other than
NEIC's ratable share thereof. NEICOP may pay other expenses of NEIC in the
sole discretion of the Managing General Partner.
REMOVAL OF A GENERAL PARTNER
The general partner of NEIC may be removed by the vote of 80% in interest of
the partners of NEIC, voting together as a single class. However, if such
general partner, together with is affiliates, owns fewer than 33 1/3% of the
NEIC Units outstanding, such general partner may be removed by the vote of a
majority in interest of the partners of NEIC, voting together as a single
class. In either case, in the event that the general partner of NEIC or one of
its affiliates is serving as the Managing General Partner of NEICOP, the
general partner of NEIC may only be removed if such general partner or its
affiliate has been (or simultaneously is) involuntarily removed as the
Managing General Partner of NEICOP.
Pursuant to the NEICOP Partnership Agreement, a general partner of NEICOP
may also be removed by the vote of 80% in interest of the partners of NEICOP,
voting together as a single class. However, if such general partner, together
with is affiliates, owns fewer than 33 1/3% of the NEICOP Units outstanding,
such general partner may be removed by the vote of a majority in interest of
the partners of NEICOP, voting together as a single class. For the purposes of
calculating the percentage of NEICOP Units outstanding owned by such general
partner or its affiliates, such parties are deemed to own both (1) their
NEICOP Units, and (2) an additional number of NEICOP Units equal to the
product of (i) the number of NEICOP Units owned by NEIC, and (ii) the
percentage of NEIC Units outstanding owned by such parties.
BUSINESS OF NEIC
For a detailed discussion of the business conducted by NEIC prior to the
Dropdown, management's discussion and analysis of that business, and NEIC's
financial statements, see NEIC's Annual Report on Form 10-K for the year ended
December 31, 1996 and NEIC's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1997, which are incorporated herein by reference.
At the time of the Dropdown on December 29, 1997, NEIC transferred all of
its operating assets, subject to all of its liabilities, to NEICOP. As a
result, NEICOP currently conducts the business previously conducted by NEIC.
NEIC currently serves as the Advising General Partner of NEICOP. Its main
asset consists of NEICOP GP Units. See "Relationship Between NEIC and NEICOP--
Relationship Among NEICOP, NEIC and NEIC, Inc." for a description of the
rights and responsibilities of NEIC as the Advising General Partner of NEICOP.
Moreover, NEIC has agreed with NEICOP in the Intercompany Agreement to certain
restrictions on its activities. See "Relationship Between NEIC and NEICOP."
BUSINESS OF NEICOP
At the time of the Dropdown, NEIC transferred all of its operating assets,
subject to all of its liabilities, to NEICOP. As a result, NEICOP currently
conducts the business conducted by NEIC prior to the Dropdown. For
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<PAGE>
a detailed discussion of the business conducted by NEIC prior to the Dropdown,
see NEIC's Annual Report on Form 10-K for the year ended December 31, 1996 and
NEIC's Quarterly Report on Form 10-Q for the quarter ended September 30, 1997,
which are incorporated herein by reference.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS OF NEICOP
At the time of the Dropdown, NEIC transferred all of its operating assets,
subject to all of its liabilities, to NEICOP. As a result, NEICOP currently
conducts the business conducted by NEIC prior to the Dropdown. For
management's discussion and analysis of the business conducted by NEIC prior
to the Dropdown, see NEIC's Annual Report on Form 10-K for the year ended
December 31, 1996 and NEIC's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1997, which are incorporated herein by reference.
UNAUDITED PRO FORMA FINANCIAL STATEMENTS
If all the NEICOP LP Units were exchanged for NEIC LP Units pursuant to the
Exchange Offer, NEIC would own slightly less than 100% of the outstanding
interests in NEICOP. In such event, it is likely that NEIC would consolidate
its ownership interest in NEICOP. NEIC's financial statements under this
assumption would be virtually identical to its historical financial statements
prior to the Restructuring, with the exception that NEIC would be subject to
the Gross Income Tax for its fiscal years commencing in 1998 and thereafter.
NEIC's historical financial statements are included in its Annual Report on
Form 10-K for the year ended December 31, 1996 and its Quarterly Report on
Form 10-Q for the quarter ended September 30, 1997, each of which is
incorporated herein by reference. Pro forma financial statements describing
the effect of the Restructuring are included in NEIC's Current Report on Form
8-K dated December 31, 1997, which is incorporated herein by reference.
SELECTED FINANCIAL DATA OF NEICOP
NEICOP was formed in November 1997 and had not engaged in any business
activity prior to the Restructuring. Since the Restructuring, NEICOP has
conducted the business historically conducted by NEIC. The historical
financial statements of NEIC are included in its Annual Report on Form 10-K
for the year ended December 31, 1996 and its Quarterly Report on Form 10-Q for
the quarter ended September 30, 1997, each of which is incorporated herein by
reference.
COMPARATIVE PER UNIT PRICES AND DISTRIBUTIONS
NEIC
Unit Prices. NEIC LP Units are listed and traded on the NYSE under the
symbol "NEW." High and low sales prices for the units together with
distributions declared for the years ended December 31, 1996 and December 31,
1997 were as follows:
<TABLE>
<CAPTION>
TOTAL
DISTRIBUTIONS
HIGH LOW DECLARED
------- --------- -------------
<S> <C> <C> <C>
1996
First quarter.............................. $24 1/4 $21 $0.48
Second quarter............................. 23 7/8 21 1/2 0.51
Third quarter.............................. 25 3/4 21 1/2 0.53
Fourth quarter............................. 26 24 0.53
1997
First quarter.............................. $26 1/8 $22 5/8 $0.58
Second quarter............................. 25 7/8 22 1/8 0.61
Third quarter.............................. 30 3/4 25 5/16 0.70
Fourth quarter............................. 30 1/2 27 15/16 0.80
</TABLE>
21
<PAGE>
For the first three quarters of 1997, NEIC declared a regular distribution
of $0.53 per unit, plus special distributions resulting in the aggregate per
unit distribution shown for such quarters. In the fourth quarter of 1997, NEIC
declared a regular distribution of $0.55 per unit, plus a special distribution
of $0.25 per unit.
On February 2, 1998, the closing price of NEIC LP Units on the NYSE was $30
1/4 per NEIC LP Unit. On September 15, 1997, the last trading day prior to
announcement of NEIC's initial plans for the Restructuring, the closing price
per NEIC LP Unit on the NYSE was $27 1/8.
Distribution Policy. The distributions set forth in the foregoing table were
declared for periods prior to the Dropdown. Prior to the Dropdown, NEIC
distributed to unitholders operating cash flow not required for normal
business operations and working capital needs, including support of NEIC's
growth strategy. NEIC defined operating cash flow as net income adjusted for
amortization of intangibles, restricted unit plan compensation, and non-
recurring items. NEIC did not consider capital gains as part of operating cash
flow.
After the Dropdown, NEIC intends to distribute to unitholders substantially
all of the distributions that it receives from NEICOP, after accruing the
Gross Income Tax, any applicable state tax, and any other expenses incurred by
NEIC.
NEICOP
Unit Prices. There is no trading market for NEICOP LP Units. In addition,
there are significant contractual, securities law, federal income tax and
other restrictions on a holder's ability to consummate a sale of NEICOP LP
Units. See "Comparative Rights of Unitholders--Limited Transferability of
NEICOP LP Units."
Distribution Policy. As of December 31, 1997, NEICOP has not made any
distributions with respect to NEICOP LP Units. NEICOP follows the distribution
policy followed by NEIC prior to the Dropdown, by distributing to unitholders
operating cash flow not required for normal business operations and working
capital needs, including support of NEICOP's growth strategy. NEICOP defines
operating cash flow as net income adjusted for amortization of intangibles,
restricted unit plan compensation, and non-recurring items. NEICOP does not
consider capital gains as part of operating cash flow. See "Comparative Per
Unit Prices and Dividends--NEIC--Distribution Policy."
MANAGEMENT OF NEIC AND NEICOP
For a description of the management of NEIC, including a discussion of
executive compensation and certain relationships and related transactions, see
"Item 10: Directors and Executive Officers of the Registrant," "Item 11:
Executive Compensation," "Item 13: Security Ownership of Certain Beneficial
Owners and Management," and "Item 14: Certain Relationships and Related
Transactions" in NEIC's Annual Report on Form 10-K for the year ended December
31, 1996, which is incorporated herein by reference. The executive officers of
NEIC hold comparable positions at NEICOP.
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<PAGE>
PRINCIPAL HOLDERS OF NEIC LP UNITS
As of December 31, 1997, there were 6,274,980 NEIC Units outstanding, owned
by one holder of NEIC GP Units (NEIC, Inc.) and approximately 450 holders of
record of NEIC LP Units. The following table sets out information as of
December 31, 1997, as to (i) each person known by NEIC to hold 5% or more of
the outstanding NEIC Units (or who would own 5% or more of the outstanding
NEIC Units assuming it exchanged all of its NEICOP LP Units for NEIC LP Units
in "block transfers" as described below), (ii) each director of NEIC, Inc.,
(iii) each officer of NEIC, Inc. who was a "Named Executed Officer" in NEIC's
annual report on Form 10-K for the year ended December 31, 1996, and (iv) all
directors and executive officers of NEIC, Inc. as a group. The table indicates
both (i) the number of NEIC Units owned by each such person, and (ii) for each
such person who owns at least 2% of the total NEICOP Units outstanding (in
general not including those NEICOP Units held by NEIC, Inc., NEIC or their
respective affiliates), and is therefore able to exchange its NEICOP LP Units
for NEIC LP Units in "block transfers" under the regulations promulgated
pursuant to Code Section 7704, the number of NEIC LP Units that such person
would own assuming it exchanged all of its NEICOP LP Units for NEIC LP Units.
However, since NEICOP LP Units may only be exchanged for NEIC LP Units with
the consent of the Managing General Partner, who will not consent to any
transfer that creates a risk that such transfers will not fit into the safe
harbors described in the Treasury Regulations under Code Section 7704 or that
NEICOP will be required to register any class of its securities under the
Exchange Act, the NEIC LP Units to be received in such exchange may not in
fact be beneficially owned within the meaning of Rule 13d-3 under the Exchange
Act. The total of the percentages in the fifth column of the following table
exceeds 100% because, as required by Rule 13d-3 under the Exchange Act, the
percentage ownership of each person reflected in such column assumes that (i)
such person exchanged all of his NEICOP LP Units for NEIC LP Units, and (ii)
no other person exchanged any NEICOP LP Units for NEIC LP Units. NEIC believes
that, except as otherwise indicated in the footnotes to this table, the
persons named in this table have sole voting and investment power with respect
to all of the NEIC Units indicated:
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP OF
AMOUNT AND NATURE NEIC LP UNITS
OF BENEFICIAL (INCLUDING BLOCK
OWNERSHIP PERCENT TRANSFERS OF NEICOP LP PERCENT
BENEFICIAL OWNER OF NEIC LP UNITS OF CLASS UNITS OWNED) OF CLASS
---------------- ----------------- -------- ----------------------- --------
<S> <C> <C> <C> <C>
Metropolitan Life
Insurance Company...... 317,900(1)(2) 5.07% 21,033,900(1)(2) 77.93%
Reich & Tang, Inc....... 150,000(1)(3) 2.43% 6,195,900(1)(3) 50.74%
JV Investments, Inc..... 0 -- 677,500(4) 9.90%
Peter B. Foreman........ 0 -- 677,500(5) 9.90%
Myron R. Szold.......... 0 -- 677,500(6) 9.90%
Roger O. Brown.......... 20,000(7) ** 677,500(7) 9.90%
Snyder Holdings, Inc.... 731,906(8) 11.87% 731,906(8) 11.87%
Earl J. Rusnak, Jr...... 0 -- 677,500(9) 9.90%
Sherwin A. Zuckerman.... 0 -- 677,500(10) 9.90%
Robert H. Harper........ 0 -- 677,500(11) 9.90%
Robert J. Sanborn....... 0 -- 528,010(12) 7.89%
Oscar L. Tang+.......... 71,084(13) 1.15% 2,936,210(13) 32.52%
William S. Antle III+... 0(14) -- 0(14) --
Robert J. Blanding+..... 0 -- 0 --
Paul E. Gray+........... 500 ** 500 **
Harry P. Kamen+......... 3,000 ** 3,000 **
Charles M. Leighton+.... 2,862(14)(15) ** 2,862(14)(15) **
Victor A. Morgenstern+.. 0 -- 1,000,000(16) 13.96%
Catherine A. Rein+...... 750 ** 750 **
Peter S. Voss+*......... 300(17) ** 350,300(17) 5.39%
G. Neal Ryland*......... 1,700(18) ** 1,700(18) **
Sherry A. Umberfield*... 0 -- 0 --
Edward N. Wadsworth*.... 0 -- 0 --
All directors and Named
Executive Officers of
NEIC, Inc. as a group
(12 persons)........... 80,196 1.30% 4,295,322 41.38%
</TABLE>
- --------
+Director
*Named Executive Officer
**Less than 1%
The footnotes to this table appear after the table entitled "Principal
Holders of NEICOP Units," below.
23
<PAGE>
Of the approximately 6.2 million NEIC LP Units outstanding on December 31,
1997, 5.1 million were freely tradable without registration under the
Securities Act. The resale of the remaining 1.1 million NEIC LP Units was
restricted under the Securities Act, subject to the ability of certain holders
of such NEIC LP Units to effect certain resales under an exemptive rule or
pursuant to the exercise of registration rights and the lapse of such
restrictions over time.
PRINCIPAL HOLDERS OF NEICOP UNITS
As of December 31, 1997, there were 44,466,979 NEICOP Units outstanding,
owned by two holders of NEICOP GP Units (NEIC, Inc. and NEIC) and
approximately 75 holders of record and beneficial owners of NEICOP LP Units.
The following table sets out information as of December 31, 1997, as to (i)
each person known by NEICOP to hold 5% or more of the outstanding NEICOP
Units, (ii) each director of NEIC, Inc., (iii) each officer of NEIC, Inc. who
was a "Named Executed Officer" in NEIC's annual report on Form 10-K for the
year ended December 31, 1996, and (iv) all directors and executive officers of
NEIC, Inc. as a group. The number of NEICOP Units shown in the table includes
NEICOP Units indirectly owned through ownership of NEIC Units. NEICOP believes
that, except as otherwise indicated in the footnotes to this table, the
persons named in this table have sole voting and investment power with respect
to all of the NEICOP Units indicated.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF CLASS
---------------- -------------------- ----------------
<S> <C> <C>
Metropolitan Life Insurance Company..... 21,033,900(1)(2) 47.30%
New England Investment Companies, L.P... 6,274,980 14.11%
Reich & Tang, Inc....................... 6,195,900(1)(3) 13.93%
JV Investments, Inc..................... 2,260,900(4) 5.08%
Oscar L. Tang+.......................... 2,936,210(13) 6.60%
William S. Antle III+................... 0(14) --
Robert J. Blanding+..................... 9,000 **
Paul E. Gray+........................... 500 **
Harry P. Kamen+......................... 3,000 **
Charles M. Leighton+.................... 2,862(14) **
Victor A. Morgenstern+.................. 1,000,000(16) 2.25%
Catherine A. Rein+...................... 750 **
Peter S. Voss+*......................... 350,300(17) **
G. Neal Ryland*......................... 31,044(18) **
Sherry A. Umberfield*................... 50,310 **
Edward N. Wadsworth*.................... 59,070(19) **
All directors and Named Executive
Officers of NEIC, Inc. as a group
(12 persons)........................... 4,443,046 9.99%
</TABLE>
- --------
+Director
*Named Executive Officer
**Less than 1%
(1) Includes 133,800 NEICOP LP Units and 90,300 NEICOP LP Units contributed
to the Restricted Unit Plan (the "RUP") of NEICOP by MetLife and RTI,
respectively, as to which the contributing organizations retain certain
income and reversionary rights, and that have not been awarded. The
ownership of MetLife shown includes 110,000 NEIC LP Units issuable upon
conversion of an equal number of NEIC GP Units owned by NEIC, Inc., which
represent all NEIC GP Units outstanding.
(2) The holder's address is One Madison Avenue, New York, NY 10010.
(3) All stockholders of RTI are parties to a stockholders' agreement relating
to the maintenance of such corporation's status as an "S" corporation
under the Code and which creates numerous reciprocal and other rights
relating to the disposition of stock in RTI by the stockholders. The
holder's address is P.O. Box 36, Armonk, NY 10504.
(4) The number of NEIC LP Units shown excludes 1,583,400 NEIC LP Units that
may be acquired upon the permitted exercise of exchange rights with
respect to NEICOP LP Units that may not be exercised within 60 days. The
holder's address is 1999 Harrison, Suite 700, Oakland, CA 94612-3517.
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(5) The number of NEIC LP Units shown excludes 769,554 NEIC LP Units that may
be acquired upon the permitted exercise of exchange rights with respect to
NEICOP LP Units that may not be exercised within 60 days. The number
reflected in the tables represents NEICOP LP Units held by trusts for the
benefit of Mr. Foreman and family members, with respect to which Mr.
Foreman has sole discretionary authority as to voting and disposition. The
holder's address is 225 W. Washington St., Suite 1650, Chicago, IL 60611.
(6) The number of NEIC LP Units shown excludes 257,052 NEIC LP Units that may
be acquired upon the permitted exercise of exchange rights with respect to
NEICOP LP Units that may not be exercised within 60 days. The holder's
address is c/o Talon Asset Management, Inc., One North Franklin, Suite
450, Chicago, IL 60606.
(7) The number of NEIC LP Units shown excludes 237,971 NEIC LP Units that may
be acquired upon the permitted exercise of exchange rights with respect to
NEICOP LP Units that may not be exercised within 60 days. The numbers
reflected in the tables represent NEIC LP Units and NEICOP LP Units held
by trusts and partnerships for the benefit of Mr. Brown and family
members, with respect to which Mr. Brown has sole discretionary authority
as to voting and disposition. The holder's address is 225 W. Washington
St., Suite 1650, Chicago, IL 60611.
(8) The holder's address is 350 California Street, Suite 1460, San Francisco,
CA 94104.
(9) The number of NEIC LP Units shown excludes 120,289 NEIC LP Units that may
be acquired upon the permitted exercise of exchange rights with respect to
NEICOP LP Units that may not be exercised within 60 days. The holder's
address is c/o Harris Associates, Two N. LaSalle St., Suite 500, Chicago,
IL 60602.
(10) The number of NEIC LP Units shown excludes 38,822 NEIC LP Units that may
be acquired upon the permitted exercise of exchange rights with respect
to NEICOP LP Units that may not be exercised within 60 days. The numbers
reflected in the tables include 150,000 NEICOP LP Units held a limited
partnership of which Mr. Zuckerman serves as general partner. The
holder's address is c/o Harris Associates, Two N. LaSalle St., Suite
1650, Chicago, IL 60602.
(11) The number of NEIC LP Units shown excludes 14,892 NEIC LP Units that may
be acquired upon the permitted exercise of exchange rights with respect
to NEICOP LP Units that may not be exercised within 60 days. The holder's
address is c/o Harris Associates, Two N. LaSalle St., Suite 500, Chicago,
IL 60602.
(12) The holder's address is c/o Harris Associates, Two N. LaSalle St., Suite
500, Chicago, IL 60602.
(13) All Mr. Tang's units are beneficially owned indirectly through stock
ownership in RTI, and such units are included in the ownership attributed
to RTI set out in the above tables. Included are (i) 828 NEIC LP Units
and 33,386 NEICOP LP Units indirectly held by a trust for the lifetime
benefit of Mr. Tang of which Mr. Tang is one of two trustees, and (ii)
20,181 NEIC LP Units and 813,404 NEICOP LP Units indirectly held by
trusts for Mr. Tang's children, as to which Mr. Tang disclaims beneficial
ownership. The holder's address is P.O. Box 36, Armonk, NY 10504.
(14) Does not include accounts holding values equal to 918 NEIC LP Units and
12,266 NEIC LP Units for Messrs. Antle and Leighton, respectively, under
a plan whereby directors of NEIC, Inc. can defer some or all of their
Board retainer and meeting fees.
(15) Includes 785 NEIC LP Units owned by Mr. Leighton's spouse as to which he
disclaims beneficial ownership.
(16) Includes 250,000 NEICOP LP Units held by a limited partnership of which
Mr. Morgenstern serves as general partner. The holder's address is c/o
Harris Associates, Two N. LaSalle St., Suite 500, Chicago, IL 60602.
(17) Includes 300 NEIC LP Units held by a child of Mr. Voss, as to which Mr.
Voss disclaims beneficial ownership. The holder's address is c/o NEIC
Operating Partnership, L.P., 399 Boylston St., Boston, MA 02116.
(18) Includes 1,700 NEIC LP Units held by Mr. Ryland's children, as to which
he disclaims beneficial ownership.
(19) Includes 20,000 NEICOP LP Units granted under the RUP which, assuming
continuation of employment, will vest over the next two years.
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Of the approximately 44.5 million NEICOP Units outstanding on December 31,
1997, 16.4 million were not held by affiliates of NEIC and NEICOP. If those
units were exchanged for NEIC LP Units pursuant to the Exchange Offer, they
could be resold without further registration under the Securities Act. The
remaining NEICOP LP Units are held by affiliates of NEIC. If those units were
exchanged for NEIC LP Units pursuant to the Exchange Offer, they could not be
resold unless they were subsequently registered or an exemption from
registration (for example, under Rule 144) were available.
RELATIONSHIP BETWEEN NEIC AND NEICOP
THE DROPDOWN
Prior to the Dropdown, NEIC held 100 NEICOP GP Units. At the time of the
Dropdown, NEIC transferred all of its operating assets, subject to all of its
liabilities, to NEIC, in exchange for NEICOP Units such that after the
Dropdown, NEIC owned a number of NEICOP Units equal to the number of NEIC
Units then outstanding. NEICOP currently conducts the business conducted by
NEIC prior to the Dropdown.
At the time of the Dropdown, NEIC and NEICOP entered into the Intercompany
Agreement. Among other things, the Intercompany Agreement specifies the
rights, duties, and obligations of NEIC and NEICOP with respect to each other.
RELATIONSHIP AMONG NEICOP, NEIC AND NEIC, INC.
NEICOP has two general partners: NEIC, Inc., which serves as its Managing
General Partner, and NEIC, which serves as its Advising General Partner. As
Managing General Partner, NEIC, Inc. has the power to do any and all things it
deems appropriate or necessary in the conduct of the business and affairs of
NEICOP. 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. The
Advising General Partner may also generally act on behalf of NEICOP.
NEIC, Inc. is also the sole general partner of NEIC, and therefore exercises
substantial control over NEIC's business, including its role as Advising
General Partner of NEICOP.
RESTRICTIONS ON NEIC'S ACTIVITIES
In the Intercompany Agreement, NEIC agreed that, without the consent of
NEICOP, (1) it will not issue NEIC LP Units (or securities convertible into
NEIC LP Units) except in certain specified circumstances; (2) it will not
amend the NEIC Partnership Agreement to circumvent Section 7.1(p) (relating to
restructurings) or Section 13.1(b) (relating to removal of the general
partner) thereof without the consent of a majority of NEICOP unitholders that
are unaffiliated with NEIC, Inc.; (3) it will use its best efforts to maintain
the listing of NEIC LP Units on the NYSE or another comparable securities
market; and (4) it will file a listing application with the NYSE for NEIC LP
Units issued to NEICOP or its unitholders pursuant to the Intercompany
Agreement, and will use its best efforts to obtain the NYSE's approval of such
listing applications.
NEIC'S COMMITMENT TO EXCHANGE NEIC LP UNITS (OR CASH AT NEIC'S OPTION) FOR
NEICOP LP UNITS
In the Intercompany Agreement, NEIC agreed that it will effect a continuing
exchange offer of NEIC LP Units (or cash at NEIC's option) for NEICOP LP Units
subject to and in accordance with the terms of the NEICOP Partnership
Agreement. NEICOP agreed that any NEICOP LP Units acquired by NEIC in such
exchange will automatically be exchanged for an equivalent number of NEICOP GP
Units. NEIC also agreed that it will purchase the NEICOP LP Units of any
unitholder of NEICOP if requested to do so by the Managing General Partner of
NEICOP in connection with NEICOP's right of purchase described in "Comparative
Rights of Unitholders--Right of Purchase of NEICOP LP Units."
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NEIC'S COMMITMENT TO REGISTER CERTAIN NEIC LP UNITS
In the Intercompany Agreement, NEIC also agreed (1) to use its best efforts
to maintain an effective registration statement under the Securities Act to
cover NEIC LP Units issued pursuant to the Exchange Offer; (2) to use its best
efforts to maintain an effective registration statement (if it has not already
done so) under the Securities Act relating to NEIC LP Units issued under the
1993 Equity Incentive Plan (the "1993 Plan") and 1997 Equity Incentive Plan
(the "1997 Plan") of NEIC and NEICOP; and (3) to honor its obligations under
various registration rights agreements to former holders of NEIC LP Units that
exchanged those units for NEICOP LP Units in the Restructuring.
Notwithstanding the foregoing, NEIC is not required to comply with these
obligations if it would require NEIC to disclose any information about itself
or its affiliates which NEIC in its sole discretion deems inadvisable to
disclose and is not then required to disclose. NEICOP agreed to reimburse NEIC
for the costs and expenses incurred by NEIC in fulfilling these commitments.
NEICOP'S COMMITMENT TO COOPERATE WITH NEIC WITH RESPECT TO NEIC'S SECURITIES
LAW AND NYSE-RELATED OBLIGATIONS
In the Intercompany Agreement, NEICOP agreed (1) to provide NEIC with such
financial statements and other information regarding NEICOP as are necessary
for NEIC to timely file all reports required by any governmental agency, and
to cooperate with NEIC in the preparation and filing of such reports; and (2)
to cooperate with NEIC to obtain the approval of the NYSE (or such comparable
national securities market on which NEIC LP Units are then listed or quoted)
of listing applications filed by NEIC pursuant to the Intercompany Agreement.
COORDINATION OF VOTING
In the Intercompany Agreement, NEIC and NEICOP agreed that the NEICOP Units
held by NEIC will be "looked through" for purposes of any vote of the
unitholders of NEICOP. Whenever NEICOP solicits the votes of its unitholders
on an issue, NEIC agreed to submit the same issue to its unitholders, and vote
its NEICOP Units for, against, withhold its vote, or abstain from voting, in
the same proportions as are the units for which voting instructions are
solicited by NEIC. The voting coordination mechanics are discussed in greater
detail in "Comparative Rights of Unitholders--Look-Through Voting." NEIC also
agreed to exercise its right to call for a meeting of the partners of NEICOP
when it receives requests to do so from holders of NEIC LP Units representing
(based on the NEICOP Exchange Ratio (the reciprocal of the NEIC Exchange
Ratio) in effect at that time) a number of NEICOP Units held by NEIC that is
sufficient to call a meeting under the NEICOP Partnership Agreement.
SHARING OF EXPENSES
Pursuant to the NEICOP Partnership Agreement, NEICOP agreed to reimburse
NEIC for certain expenses. See "Comparative Rights of Unitholders--Expenses."
NEIC'S COMMITMENT TO ISSUE NEIC LP UNITS TO NEICOP TO ENABLE NEICOP TO SATISFY
ITS OBLIGATIONS UNDER ITS EMPLOYEE BENEFIT PLANS
In the Intercompany Agreement, NEIC agreed to issue NEIC LP Units to NEICOP
in exchange for a cash payment equal to the fair market value of such units,
whenever NEICOP needs such NEIC LP Units to satisfy its obligations under its
employee plans, including but not limited to the 1993 Plan, the 1997 Plan, and
NEICOP's Restricted Unit Plan.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following discussion summarizes certain federal income tax
considerations and risks relating to the exchange of NEIC LP Units for NEICOP
LP Units. This discussion does not consider the particular facts of each
holder of NEICOP LP Units, nor does it address the tax consequences of the
Exchange under the laws of
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<PAGE>
any foreign jurisdiction or any state or locality in the United States. The
precise federal, foreign, state and local tax consequences of the exchange to
each holder of NEICOP LP Units may vary significantly depending on each
holder's particular circumstances.
This discussion is based upon the Code, Treasury Regulations, administrative
rulings of the IRS, judicial decisions, and other applicable legal authority.
This discussion is based on such authorities as of the date hereof. There can
be no assurance that future legislative or administrative changes or court
decisions will not significantly modify the law regarding the matters
described herein and that such future changes will not have retroactive
effect. Moreover, there can be no assurance that the periodic limited exchange
offers contemplated herein will continue to be available to holders of NEICOP
LP Units in the future. Neither NEIC nor NEICOP undertakes to apprise
unitholders of any changes in the applicable legal authority occurring after
the date hereof.
Due to the lack of clarity of existing law and the unusual structure of NEIC
and NEICOP, the precise federal income tax consequences of the Exchange Offer
are uncertain. The following discussion is a summary of NEIC, Inc.'s best
judgment as to the likely federal income tax consequences relating to these
transactions. No private letter ruling has been or will be obtained from the
IRS concerning any of the tax issues involved in the exchanges contemplated
herein. There can be no assurance that the IRS will not take positions
contrary to the tax consequences described below. If the IRS were to take and
prevail with contrary positions, NEIC, NEICOP and their respective unitholders
could be subject to adverse tax consequences.
EACH HOLDER OF NEICOP LP UNITS IS URGED TO CONSULT SUCH HOLDER'S OWN TAX
ADVISOR WITH RESPECT TO THE FEDERAL, STATE, LOCAL AND FOREIGN INCOME TAX AND
REPORTING CONSEQUENCES ARISING FROM THE EXCHANGE AS THEY MAY RELATE TO SUCH
HOLDER'S OWN TAX SITUATION.
CONSEQUENCES OF THE EXCHANGE
In the Intercompany Agreement, NEIC agreed to effect a continuing exchange
offer of NEIC LP Units (or cash at NEIC's option) for NEICOP LP Units in
accordance with, and subject to the limitations of, the provisions of the
NEICOP Partnership Agreement. The transfer of NEICOP LP Units to NEIC in
exchange for NEIC LP Units should in general be tax-free under Code Section
721. Accordingly, the transferring NEICOP unitholders should in general not
recognize any gain or loss for federal income tax purposes as a result of the
transfer. The tax basis in the NEIC LP Units is in general expected to be
equal to the tax basis in the NEICOP LP Units exchanged therefor. The holding
periods of the NEIC LP Units received will in general include the unitholders'
holding periods for the NEICOP LP Units, provided that the NEICOP LP Units
were held as a capital asset, although a new holding period will begin for any
portion of each NEIC Unit attributable to Section 751 Assets. Although the law
on this point is unclear, the portion of each unitholder's interest that
represents Section 751 Assets should not be affected by the exchange.
NEIC should not recognize any gain or loss as a result of the transfer of
NEIC LP Units for NEICOP LP Units, and will take the NEICOP Units with a tax
basis equal to the tax basis of the NEICOP Units in the hands of the
unitholders immediately prior to the transfer (subject to possible adjustment
with respect to allocations of NEICOP's recourse debt). NEIC's holding period
for the NEICOP LP Units will in general include the holding period in the
hands of the unitholders; however, NEIC's holding period for the portion of
each NEICOP Unit attributable to Section 751 Assets may begin on the date of
transfer. As a result of NEICOP's Code Section 754 election, NEIC might in
certain limited circumstances receive a special basis adjustment under Code
Section 743 in connection with its receipt of NEICOP Units.
If NEIC elects to pay cash to participants in an exchange, the transferring
NEICOP unitholders will recognize gain or loss for federal income tax purposes
based in general on the difference between the cash consideration and the
adjusted tax basis in the NEICOP LP Units. Such gain or loss will generally be
taxable as mid-term or long-term capital gain or loss to the extent the
unitholder has a holding period of more than twelve
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<PAGE>
or eighteen months, respectively, in the relevant units; however, a unitholder
will recognize ordinary income to the extent that the sale proceeds
attributable to Section 751 Assets exceeds the basis, if any, attributable to
such assets (even if there is a net taxable loss on the transaction). 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,
unitholders who have been allocated amortization deductions will have ordinary
income on the exchange equal to the amount of amortization deductions
previously taken with respect to the NEICOP LP Units exchanged. If, however,
there is a loss on the exchange and such loss is attributable to the decline
in the value of the intangible assets, the loss in some circumstances might be
deferred. In addition, holders may be prohibited from recognizing a loss on
the exchange of NEICOP LP Units in certain other circumstances (e.g., the wash
sale rules).
If NEIC elects to pay cash to participants in an exchange, NEIC will not
recognize any gain or loss on its receipt of NEICOP Units and will add the
amount of the cash payment to its aggregate basis in its NEICOP Units. NEIC's
holding period for the NEICOP Units it purchases for cash will likely begin on
the date of transfer. The ongoing tax consequences to NEIC of choosing the
cash option are discussed below in "Taxation of NEIC and its Partners."
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. As indicated in "The
Exchange Offer--Background of the Exchange Offer," 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 the 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 NEIC 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 NEIC 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 in their NEIC LP Units for their
proportionate share of such tax. Although there is a risk that the IRS will
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.
The exchange of NEICOP LP Units for NEIC LP Units should not affect
allocations to the unitholders in respect of certain contributed property.
Code Section 704(c) requires that allocations of taxable income in respect of
property contributed to a partnership in a tax-free transaction should be made
specially to the contributing partners so as to take account of the unrealized
pre-contribution taxable gain or loss in the property, i.e., the variation
between the contributor's adjusted tax basis in the property and the
property's fair market value at the time of contribution. In general, although
the law is unclear, any precontribution gain (subject in some cases to certain
adjustments) later realized from the sale or exchange of property originally
contributed to NEIC or NEICOP by a partner is expected to be specially
allocated to the partner and to transferees of the partner. However, NEICOP
and NEIC have the right to make so-called "remedial" and "curative"
allocations, either of which could in some circumstances accelerate such
income to contributing partners.
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<PAGE>
If NEIC elects to pay cash in exchange for NEICOP Units, NEIC's aggregate
basis in its NEICOP Units will increase, and, as a result of NEICOP's Code
Section 754 election, NEIC will receive a special basis adjustment under Code
Section 743. It is possible that NEIC will be able to amortize a portion of
this special basis adjustment attributable to intangible assets pursuant to
Code Section 197. The overall effects of such an exchange on NEIC and its
unitholders are, however, unclear and may depend on the facts at the time of
the exchange.
NEIC intends to continue to use certain tax accounting methods and
conventions employed by other publicly traded partnerships in order to promote
uniformity among NEIC 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 NEIC LP Units. The use of, and need for, the special tax
accounting methods and conventions is expected to increase following the
Restructuring. 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 a NEIC LP Unit may depend on the identity of the
seller, and the market value and marketability of NEIC LP Units could be
adversely affected.
TAXATION OF NEICOP AND ITS PARTNERS
NEICOP is classified as a partnership for federal income tax purposes. Thus,
provided that it is not classified as a publicly traded partnership, NEICOP
should not be subject to any federal income tax. In general, holders of NEICOP
LP Units are required to report on their federal income tax returns their
allocable share of income, gains, losses, deductions and credits of NEICOP.
The characterization of any item of profit or loss (e.g., as capital gain or
loss rather than ordinary income or loss) is generally the same for a
unitholder as it is for NEICOP.
To avoid publicly traded partnership status, NEICOP substantially restricts
the transfer of NEICOP LP Units. A partnership is treated as a publicly traded
partnership if its interests are traded on an established securities market or
are readily tradable on a secondary market or the substantial equivalent
thereof. NEICOP LP Units will not be traded on a securities market, and NEIC,
Inc. limits transfers of NEICOP LP Units that may otherwise cause NEICOP LP
Units to be considered publicly traded. NEIC, Inc. generally will permit the
transfers set forth in "The Exchange Offer--Limits on the Exchange Offer" that
are not expected to cause NEICOP LP Units to be considered readily tradable on
a secondary market or the substantial equivalent. In particular, NEICOP
intends to implement the redemption and repurchase plan set forth in "The
Exchange Offer--Exchange Procedure," to the extent consistent with the safe
harbor provisions of regulations under Code Section 7704.
There is a risk that the IRS might disregard the separate legal existence of
NEICOP and treat NEIC and NEICOP as a single entity. If the IRS were to take
and prevail with this position, NEICOP's entire gross income (including its
distributive share of gross income from lower-tier partnerships) would likely
be subject to the Gross Income Tax, rather than only the distributive share of
such income allocated to NEIC. Alternatively, the IRS might take the position
that NEIC's election of the Gross Income Tax is ineffective for the integrated
entity and that the integrated entity should be subject to corporate tax. NEIC
believes that it is unlikely that NEIC and NEICOP will be subject to corporate
taxation under this argument.
DISPOSITION OF NEIC LP UNITS
Gain or loss from a taxable sale or other disposition of NEIC LP Units will
generally be based on the difference between the amount realized and the
adjusted tax basis for the NEIC LP Units (and 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
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<PAGE>
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 Section 751 Assets. Such ordinary
income may exceed net taxable gain realized upon the sale of NEIC 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 NEIC LP Units who have been allocated
amortization deductions in general 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 NEIC 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 NEIC LP
Units. In addition, holders may be prohibited from recognizing a loss on the
sale of NEIC LP Units in certain other limited 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 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. It is not clear whether the ruling
applies to publicly traded partnerships such as NEIC where the purchase price
of certificated NEIC LP Units is readily ascertainable. However, if the ruling
applies to NEIC, a holder acquiring NEIC LP Units at different prices would in
effect be precluded from selecting which NEIC LP Units to sell, and thereby
from selectively controlling the recognition of gain or loss.
CERTAIN SECURITIES LAW CONSIDERATIONS
NEIC LP Units received in exchange for NEICOP LP Units by persons who are
not affiliates of NEIC may be sold or transferred by such persons without
further registration under the Securities Act. However, NEIC LP Units received
in exchange for NEICOP LP Units by persons who are affiliates are subject to
restrictions under the Securities Act, and may not be sold or otherwise
transferred unless the NEIC 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. Participation in the
Exchange does not grant any affiliate the right to register the NEIC LP Units
received in the Exchange. Instead, the rights of an affiliate of NEIC to
register NEIC LP Units received in the Exchange are governed by the
registration rights agreements, if any, that such affiliate has entered into
with NEIC.
LEGAL MATTERS
Certain legal matters with respect to the validity of the securities offered
hereby will be passed upon by Smith, Katzenstein & Furlow, LLP, Wilmington,
Delaware.
EXPERTS
The financial statements incorporated in this Prospectus by reference to the
Annual Report on Form 10-K of NEIC for the year ended December 31, 1996 have
been so incorporated in reliance on the report of Price Waterhouse LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. 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, NEIC, 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.
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
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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 22 herein.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
------- -----------------------
<C> <S>
3.1. Second Amended and Restated Agreement of Limited Partnership of New
England Investment Companies, L.P. dated as of December 29, 1997,
filed as Exhibit 1 to NEIC's Amendment on Form 8-A/A dated December
29, 1997 to its Registration Statement on Form 8-A, incorporated by
reference herein.
3.2. Amended and Restated Agreement of Limited Partnership of NEIC
Operating Partnership, L.P., filed as Exhibit 1 to NEIC's Current
Report on Form 8-K dated December 31, 1997, incorporated by reference
herein.
5.1. Opinion of Counsel re: legality.*
10.1. Intercompany Agreement dated as of December 29, 1997 between New
England Investment Companies, L.P. and NEIC Operating Partnership,
L.P., filed as Exhibit 2 to NEIC's Amendment on Form 8-A/A dated
December 29, 1997 to its Registration Statement on Form 8-A,
incorporated by reference herein.
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).*
</TABLE>
* Previously filed.
ITEM 22. 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 or in
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<PAGE>
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)(1) The undersigned registrant hereby undertakes as follows: that prior
to any public reoffering of the securities registered hereunder through use of
a prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c),
the issuer undertakes that such reoffering prospectus will contain the
information called for by the applicable registration form with respect to
reofferings by persons who may be deemed underwriters, in addition to the
information called for by the other items of the applicable form.
(2) The registrant undertakes that every prospectus: (i) that is filed
pursuant to paragraph (c)(1) immediately preceding, or (ii) that purports to
meet the requirements of Section 10(a)(3) of the Act and is used in connection
with an offering of securities subject to Rule 415, will be filed as a part of
an amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes 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.
(d) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through
the date of responding to the request.
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(e) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
(f) 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.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to the Registration Statement on Form S-4
to be signed on its behalf by the undersigned, thereunto duly authorized, in
the City of Boston, The Commonwealth of Massachusetts, on the 10th day of
February, 1998.
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 Amendment
No. 1 to the Registration Statement has been signed as of the 10th day of
February, 1998 by the following persons in the capacities indicated.
<TABLE>
<S> <C> <C>
SIGNATURE SIGNATURE
* *
- ------------------------------------- -------------------------------------
Peter S. Voss Harry P. Kamen
Chairman of the Board, President, Director
Chief Executive Officer and Director
* *
- ------------------------------------- -------------------------------------
G. Neal Ryland Charles M. Leighton
Executive Vice President and Director
Chief Financial Officer
* *
- ------------------------------------- -------------------------------------
Stephen D. Martino Victor A. Morgenstern
Senior Vice President and Controller Director
* *
- ------------------------------------- -------------------------------------
William S. Antle, III Catherine A. Rein
Director Director
* *
- ------------------------------------- -------------------------------------
Robert J. Blanding Oscar L. Tang
Director Director
* /s/ Edward N. Wadsworth
- ------------------------------------- * ___________________________________
Paul E. Gray By Edward N. Wadsworth
Director Attorney-In-Fact
</TABLE>
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<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
------- -----------------------
<C> <S>
3.1. Second Amended and Restated Agreement of Limited Partnership of New
England Investment Companies, L.P. dated as of December 29, 1997,
filed as Exhibit 1 to NEIC's Amendment on Form 8-A/A dated December
29, 1997 to its Registration Statement on Form 8-A, incorporated by
reference herein.
3.2. Amended and Restated Agreement of Limited Partnership of NEIC
Operating Partnership, L.P., filed as Exhibit 1 to NEIC's Current
Report on Form 8-K dated December 31, 1997, incorporated by reference
herein.
5.1. Opinion of Counsel re: legality.*
10.1. Intercompany Agreement dated as of December 29, 1997 between New
England Investment Companies, L.P. and NEIC Operating Partnership,
L.P., filed as Exhibit 2 to NEIC's Amendment on Form 8-A/A dated
December 29, 1997 to its Registration Statement on Form 8-A,
incorporated by reference herein.
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).*
</TABLE>
* Previously filed.
<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-4 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. We also consent to the reference to us
under the heading "Experts" in such Prospectus.
Price Waterhouse LLP
Boston, Massachusetts
February 10, 1998
