<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
-----------------------
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. )
Microvision Inc.
- -------------------------------------------------------------------------------
(Name of issuer)
Common Stock
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(Title of class of securities)
595148107
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(CUSIP number)
George M. Galpin, 120 West Dayton, Suite D-5, Edmonds, Washington 98020
(206) 672-4777
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(Name, address and telephone number of person
authorized to receive notices and communications)
March 12, 1997
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(Date of event which required filing of this statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1 (b)(3) or (4), check the following box [_].
Check the following box if a fee is being paid with the statement [_].
(Page 1 of 16 Pages)
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CUSIP NO. 595148107 13D PAGE 2 OF 16 PAGES
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NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON
George M. Galpin
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CHECK THE APPROPRIATE BOX IF A MEMBER OF GROUP*
2 (a) [X]
(b) [_]
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SEC USE ONLY
3
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SOURCE OF FUNDS*
4
PF, OO
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CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
5 PURSUANT TO ITEM 2(d) OR 2(e) [_]
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CITIZENSHIP OR PLACE OF ORGANIZATION
6
United States of America
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SOLE VOTING POWER
7
NUMBER OF 236,500 (includes 187,000 shares of Common Stock
subject to purchase from the Issuer under presently
exercisable Warrants)
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
43,750
OWNED BY
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING 236,500 (includes 187,000 shares of Common Stock
subject to purchase from the Issuer under presently
exercisable Warrants)
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
69,250 (includes 14,500 shares of Common Stock subject
to purchase from the Issuer under presently
exercisable Warrants)
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AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
305,750 shares of Common Stock
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CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
12
[_]
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PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
5.1%
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TYPE OF REPORTING PERSON*
14
IN, IA
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CUSIP NO. 595148107 13D PAGE 3 OF 16 PAGES
ITEM 1. SECURITY AND ISSUER.
The class of equity to which this statement relates is common stock, no par
value (the "Common Stock"), of Microvision Inc. (the "Issuer"). The principal
executive offices of the Issuer are located at 2203 Airport Way South, Suite
100, Seattle, Washington, 98134, (206) 623-7055.
ITEM 2. IDENTITY AND BACKGROUND.
(a) Name: George M. Galpin
(b) Business Address: George M. Galpin Co, Inc.
120 West Dayton, Suite D-5
Edmonds, Washington 98020
(c) Principal Occupation: Investment advisor and owner of George M.
Galpin Co, Inc., a registered investment
advisor, the principal address of which is 120
West Dayton, Suite D-5, Edmonds, Washington
98020.
(d) Criminal Proceedings: None.
(e) Civil Proceedings: Mr. Galpin has not been a party to a civil
proceeding of a judicial or administrative
body of competent jurisdiction and as a result
of such proceeding was or is subject to a
judgment, decree or final order enjoining
future violations of, or prohibiting or
mandating activities subject to, federal or
state securities laws or finding any violation
with respect to such laws during the last five
years,
(f) Citizenship: United States of America.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
The following purchase was made by Mr. Galpin for the account of George M.
Galpin Co, Inc., a Washington corporation wholly-owned by Mr. Galpin, with
principal business offices located at 120 West Dayton, Suite D-5, Edmonds,
Washington 98020. Each investment was made with funds of George M. Galpin Co,
Inc. Mr. Galpin has the sole power to buy, sell and vote these securities as
president and sole stockholder of George M. Galpin Co, Inc.:
DATE OF TRANSACTION TRANSACTION AGGREGATE CONSIDERATION
February 4, 1997 Bought 3,000 shares of Common Stock $14,404.50
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CUSIP NO. 595148107 13D PAGE 4 OF 16 PAGES
The following transactions were made by Mr. Galpin for the George M. Galpin
IRA. Each investment was made with Mr. Galpin's funds. Mr. Galpin has the sole
power to buy, sell and vote these securities:
<TABLE>
<CAPTION>
DATE OF TRANSACTION TRANSACTION AGGREGATE CONSIDERATION
<S> <C> <C>
January 21, 1997 Bought 1,000 shares of Common Stock $ 4,130.50
January 27, 1997 Bought 4,000 shares of Common Stock 16,122.00
January 29, 1997 Bought 5,000 Warrants 6,402.00
February 11, 1997 Bought 10,000 Warrants 17,177.00
February 11, 1997 Sold 3,000 shares of Common Stock (14,771.74)
March 10, 1997 Bought 2,000 Warrants 3,693.00
</TABLE>
The following purchases were made by Mr. Galpin in his capacity as an
investment advisor for individual client accounts. Each investment was made
with client funds. Mr. Galpin shares power to buy and sell these securities,
but not the power to vote such securities:
<TABLE>
<CAPTION>
DATE OF TRANSACTION TRANSACTION AGGREGATE CONSIDERATION
<S> <C> <C>
January 13, 1997 Bought 3,000 shares of Common Stock $11,250.00
January 22, 1997 Bought 2,000 shares of Common Stock 8,000.00
March 12, 1997 Bought 5,000 Warrants 10,625.00
January 13, 1997 Bought 1,000 shares of Common Stock 3,750.00
March 12, 1997 Bought 1,000 Warrants 2,125.00
January 13, 1997 Bought 2,000 shares of Common Stock 7,500.00
March 12, 1997 Bought 2,000 Warrants 4,250.00
January 21, 1997 Bought 500 shares of Common Stock 2,103.25
January 27, 1997 Bought 1,000 shares of Common Stock 4,068.00
February 24, 1997 Bought 3,500 Warrants 7,325.75
March 10, 1997 Bought 500 Warrants 978.25
January 21, 1997 Bought 500 shares of Common Stock 2,103.25
January 27, 1997 Bought 1,000 shares of Common Stock 4,068.00
March 10, 1997 Bought 2,500 Warrants 4,608.25
</TABLE>
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CUSIP NO. 595148107 13D PAGE 5 OF 16 PAGES
The following purchases were made by Mr. Galpin for the account of GHM
Investments (a.k.a. "GHM Partners"), a Washington general partnership, organized
to make investments in the securities of the Issuer, and with its principal
business offices located at 120 West Dayton, Suite D-5, Edmonds, Washington
98020. Each investment was made with funds of GHM Investments. Mr. Galpin was
authorized to purchase the shares by action of the partnership, and attended the
annual meeting of the shareholders of the Issuer in 1995 and 1996. Mr. Galpin
shares authority to purchase, sell or vote these securities with the other
partners of the partnership:
<TABLE>
<CAPTION>
DATE OF TRANSACTION TRANSACTION AGGREGATE CONSIDERATION
<S> <C> <C>
May 30, 1995 Bought 31,250 shares of Common Stock $150,000.00
August 21, 1995 Bought 12,500 shares of Common Stock 60,000.00
</TABLE>
The following purchases were made by Mr. Galpin for the account of Galpin
Securities Partners Limited Partnership, a Delaware limited partnership,
organized to make investments in listed securities, and with its principal
business offices located at 120 West Dayton, Suite D-5, Edmonds, Washington
98020. Each investment was made with funds of Galpin Securities Partners Limited
Partnership. George M. Galpin Co, Inc. is the managing general partner of
Galpin Securities Partners Limited Partnership, and Mr. Galpin, as sole owner of
George M. Galpin Co, Inc. has the sole power to buy, sell, and vote these
securities:
<TABLE>
<CAPTION>
DATE OF TRANSACTION TRANSACTION AGGREGATE CONSIDERATION
<S> <C> <C>
August 27, 1996 Bought 10,000 shares of Common Stock $ 55,025.00
August 27, 1996 Bought 10,000 Warrants 25,000.00
December 23, 1996 Bought 10,000 Warrants 13,775.00
January 9, 1997 Bought 4,500 Warrants 5,088.00
January 14, 1997 Bought 10,000 shares of Common Stock 38,587.00
January 22, 1997 Bought 20,000 shares of Common Stock 80,025.00
February 11, 1997 Bought 12,500 Warrants 17,994.00
February 13, 1997 Bought 4,500 shares of Common Stock 23,369.00
February 13, 1997 Bought 13,000 Warrants 23,087.00
February 14, 1997 Bought 25,000 Warrants 48,438.00
March 4, 1997 Bought 25,000 Warrants 37,525.00
March 12, 1997 Bought 70,000 Warrants 140,025.00
</TABLE>
ITEM 4. PURPOSE OF TRANSACTION.
George Galpin purchased the shares of Common Stock reported herein
solely for investment purposes for his own account or the account of others as
set forth in ITEM 3, above. Depending upon economic and financial conditions,
and the performance of the Issuer's securities, Mr. Galpin may choose to
purchase or sell shares of Common Stock or Warrants solely for investment
purposes.
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CUSIP NO. 595148107 13D PAGE 6 OF 16 PAGES
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) As of March 12, 1997, George Galpin beneficially owned 5.1% of the
outstanding Common Stock. This percentage is computed based upon Mr.
Galpin's beneficial ownership of Common Stock and warrants to purchase
Common Stock (the "Warrants") aggregating to 305,750, and the shares
of Common Stock outstanding as contained in the Issuer's filing with
the Securities and Exchange Commission in December 1996. All of the
Warrants are exercisable at $12.00 per share.
(b) George Galpin has the following powers:
Sole power to vote: 236,500 (includes 187,000 shares of Common
Stock subject to purchase from the Issuer
under presently exercisable Warrants)
Shared power to vote: 43,750
Sole power to dispose: 236,500 (includes 187,000 shares of Common
Stock subject to purchase from the Issuer
under presently exercisable Warrants)
Shared power to dispose: 69,250 (includes 14,500 shares of Common
Stock subject to purchase from the Issuer
under presently exercisable Warrants)
(c) See response to ITEM 3, above.
(d) With respect to securities purchased by Mr. Galpin in his capacity as
investment advisor for certain individual clients, such individual
clients have the right to receive or the power to direct the receipt
of dividends from, or the proceeds from the sale of, the Common Stock
and Warrants.
With respect to securities purchased by Mr. Galpin in his capacity as
general partner of Galpin Securities Partners Limited Partnership, the
limited partners of such limited partnership may, if determined to be
a right under Delaware law, have the right to receive or the power to
direct the receipt of dividends from, or the proceeds from the sale
of, the Common Stock and Warrants.
With respect to securities purchase by Mr. Galpin in his capacity as
partner of GHM Investments (a.k.a. "GHM Partners"), the partners in
such general partnership may have the right to receive or the power to
direct the receipt of dividends from, or the proceeds from the sale
of, the Common Stock.
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CUSIP NO. 595148107 13D PAGE 7 OF 16 PAGES
With respect to shares of Common Stock and Warrants not referenced in
the three immediately preceding paragraphs, no other person has the
right to receive or the power to direct the receipt of dividends from,
or the proceeds from the sale of, the Common Stock or Warrants.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
GHM Investments (a.k.a. "GHM Partners") was created pursuant to a
Partnership Agreement dated May 23, 1995 (the "Partnership Agreement"), by and
among George M. Galpin, Jeanne B. Galpin, Loren D. Hostek, Isobel F. Hostek,
John S. Hostek Children's Trust, Rebecca M. Hostek Children's Trust, Henry M.
Galpin and Peter R. Marsh. Pursuant to the terms of the Partnership Agreement,
the partnership shall be engaged in the business of owning and holding
securities of the Issuer. The Partnership Agreement does not allocate authority
to any party with respect to purchasing, selling or voting of the Common Stock
held by the partnership.
Galpin Securities Partners Limited Partnership, was created pursuant to a
Limited Partnership Agreement originally executed in May, 1987 (the "Limited
Partnership Agreement"), by George M. Galpin Co, Inc. as general partner, and
Joan J. Gould, as limited partner. Mr. Galpin, as sole owner of the general
partner of the limited partnership, has the authority to conduct the affairs of
the limited partnership pursuant to the terms of the Limited Partnership
Agreement, including the purchase, sale and voting of the Common Stock and
Warrants.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit A: Partnership Agreement dated May 23, 1987 by and among George
---------- M. Galpin, Jeanne B. Galpin, Loren D. Hostek, Isobel F. Hostek,
John S. Hostek Children's Trust, Rebecca M. Hostek Children's
Trust, Henry M. Galpin and Peter R. Marsh.
Exhibit B: Summary of Limited Partnership Agreement relating to Galpin
---------- Securities Partners Limited Partnership.
The exhibits are attached hereto immediately following the signature pages
hereof.
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CUSIP NO. 595148107 13D PAGE 8 OF 16 PAGES
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
DATED this 21st day of March, 1997.
/s/ George M. Galpin
--------------------
George M. Galpin
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CUSIP NO. 595148107 13D PAGE 9 OF 16 PAGES
Exhibit A
- ---------
PARTNERSHIP AGREEMENT
This agreement made this 23rd day of May, 1995, by and among George M. and
Jeanne B. Galpin, husband and wife, Loren D. and Isobel F. Hostek, husband and
wife, John S. Hostek Children's Trust, Rebecca M. Hostek Children's Trust, Henry
M. Galpin, Peter R. Marsh, single persons, (all of such parties are hereinafter
sometimes referred to as "PARTNERS"):
1. Name of the Partnership: The parties do hereby form a general partnership
-----------------------
under the laws of the State of Washington under the name of GHM Investments.
2. Office: The office of the partnership shall be located at George M. Galpin
------
Co, Inc., 120 West Dayton, Suite D-5, Edmonds WA 98020, and mail shall be
received at the above address, and at such other location or locations as
partners may from time to time designate.
3. Term: The term of this partnership shall be perpetual, unless sooner
----
terminated as provided herein.
4. Initial Capital Contributions: The partners have made the following initial
-----------------------------
contributions:
George M. and Jeanne B. Galpin $30,000
Loren D. and Isobel F. Hostek 20,000
John S. Hostek Children's Trust 5,000
Rebecca M. Hostek Children's Trust 5,000
Henry M. Galpin 30,000
Peter R. Marsh 60,000
5. Purchase of Microvision, Inc. Stock: The partners are purchasing 100,000
-----------------------------------
shares of stock of Microvision, Inc. at $1.50 per share on its private
placement.
6. Purpose of Partnership: The partnership shall engage in the business of
----------------------
owning and holding the stock hereinabove referred to and such other business as
may be agreed upon by the partners.
7. Percentage Interest in Partnership: The percentage interest of each of the
----------------------------------
partners in the partnership is as follows:
George M. and Jeanne B. Galpin 20.000%
Loren D. and Isobel F. Hostek 13.334%
John S. Hostek Children's Trust 3.333%
Rebecca M. Hostek Children's Trust 3.333%
Henry M. Galpin 20.000%
Peter R. Marsh 40.000%
8. Profit and Loss, Liquidation: The net profits and net losses of the
----------------------------
partnership shall be borne by each of the partners in accord with the percentage
interest of each as hereinabove set forth. In the event of the liquidation of
the assets of the partnership and a winding up thereof, the net liquidation
proceeds after the payment of all debts shall be shared by the partners in
accord with their percentage interests as hereinabove set forth.
9. Partnership Books and Accounting: The partnership shall maintain full and
--------------------------------
accurate books of account which shall be kept at the principal partnership
office. The responsibility for maintaining the records of the partnership shall
be George M. Galpin's, and each partner shall have access to and the right to
inspect and copy such books and all other partnership records. George M. Galpin
is authorized to execute, as
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CUSIP NO. 595148107 13D PAGE 10 OF 16 PAGES
managing partner, subscription agreements and any other documents required to
complete the purchase of 100,000 shares of Microvision, Inc. at $1.50 per share.
The accounting year for the partnership shall be as follows: December 31.
For Income Tax purposes, the partnership shall report on a cash basis. At the
end of each accounting year, Loren D. Hostek shall produce a true, full and
accurate account of all assets and liabilities of the partnership and all of its
receipts and disbursements for the immediate, previous accounting year.
11. Miscellaneous: The parties hereto covenant and agree that they will
-------------
execute any further instruments and that they will perform any acts which are or
may become necessary to effectuate or carry on the business of the partnership.
Any matter not specifically covered by the provisions of this Partnership
Agreement shall be governed by the applicable provisions of the laws of the
State of Washington regarding general partnerships. This Agreement shall be
binding upon the parties, their heirs, legal representatives, successors and
assigns.
The parties hereto have signed this instrument o the day and year first written.
/s/ George M. Galpin /s/ Jeanne B. Galpin
- ----------------------------- ----------------------------------
George M. Galpin Jeanne B. Galpin
/s/ Loren D. Hostek /s/ Isobel F. Hostek
- ----------------------------- ----------------------------------
Loren D. Hostek Isobel F. Hostek
/s/ Fredric D. Reed, Trustee /s/ Fredric D. Reed, Trustee
- ----------------------------- ----------------------------------
John S. Hostek Children's Trust Rebecca M. Hostek Children's Trust
Fredric D. Reed, Trustee Fredric D. Reed, Trustee
/s/ Henry M. Galpin /s/ Peter R. Marsh
- ----------------------------- ----------------------------------
Henry M. Galpin Peter R. Marsh
<PAGE>
CUSIP NO. 595148107 13D PAGE 11 OF 16 PAGES
Exhibit B
- ---------
SUMMARY OF LIMITED PARTNERSHIP AGREEMENT
----------------------------------------
The Partnership has been formed as a Delaware limited partnership, and the
rights and obligations of the Partners will be determined by the Limited
Partnership Agreement and Delaware law. The description set forth below,
together with information provided elsewhere herein, summarizes certain
provisions of the Limited Partnership Agreement and is qualified in its entirety
by reference to the complete Limited Partnership Agreement. A copy of the form
of Partnership Agreement is attached to this Confidential Memorandum as Exhibit
A. Defined terms used in this summary have the meanings set forth in the
Limited Partnership Agreement.
TERM; EARLY DISSOLUTION; DISSOLUTION
- ------------------------------------
The Partnership was formed as a Delaware limited partnership in May 1987,
with George M. Galpin Co., Inc. and George M. Galpin as the General Partners and
Joan J. Gould as the sole Limited Partner. Upon admission to the Partnership of
the Limited Partners, the Partnership retired the interest of Ms. Gould by
repaying to her her original capital contribution of $100. The term of the
Partnership is until June 30, 1997, unless extended by the General Partners for
no more than five (5) successive one-year periods to no later than June 30,
2002.
The Partnership will terminate and dissolve, unless a successor General
Partner is admitted, upon the bankruptcy or termination of the existence of the
sole remaining General Partner for any reason, or upon withdrawal of the sole
remaining General Partner from the partnership. A General Partner has the right
to withdraw from the Partnership on 60 days prior written notice; however, both
General Partners intend to continue the business of the Partnerships as long as
they believe that it is in the best interest of all Partners to do so. The
Partnership will also terminate and dissolve upon the occurrence of any event
which would result in the dissolution of the Partnership under Delaware law.
Upon dissolution, the Partnership's business and affairs will be terminated
in an orderly manner. The Partnership may remain in existence for a period not
to exceed 90 days after dissolution to permit an orderly winding down of its
affairs and to maximize proceeds of liquidation.
Upon dissolution of the Partnership, the proceeds from the sale of
Partnership assets and any assets remaining on hand will be applied or paid in
the following order of priority: (i) to pay the expenses of liquidation and the
debts of the Partnership other than the debts to Partners, (ii) to pay any
amounts owed to the General Partners for advances or loans made by them to, or
on behalf of, the Partnership, (iii) to pay any amounts owed to the Managing
General Partner with respect to the Management Fee, and (iv) to the Partners in
proportion to their respective Unit holdings, following establishment of
reasonable reserves and certain adjustments necessary for tax purposes.
Distributions to Partners upon dissolution may be made either in cash or in
kind, in the General Partners' discretion. Any such distributions in kind will
be made ratably to the extent practicable, as determined by the General Partners
in their discretion.
RIGHTS AND DUTIES OF THE GENERAL PARTNERS; RIGHTS OF THE LIMITED PARTNERS
- -------------------------------------------------------------------------
The Managing General Partner will have the exclusive right and power to
manage and operate the business of the Partnership and determine its business
policies. The Managing General Partner shall have no authority to (i) do any
act in contravention of applicable Delaware law, or (ii) without the prior
written consent or ratification of all the Partners, do any act in contravention
of the Limited Partnership Agreement, do any act which would make it impossible
to carry on the business of the Partnership or, except as provided in the
Limited Partnership Agreement, admit a person or entity as a General Partner.
The Individual General Partner shall have no authority to manage and operate the
business of the
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CUSIP NO. 595148107 13D PAGE 12 OF 16 PAGES
Partnership except upon withdrawal of the Managing General Partner or to the
extent Mr. Galpin acts in his capacity as an officer, director or agent of the
Managing General Partner.
Limited Partners have no right to participate in the management of, or
exercise any control over the business of, the Partnership, to act for the
Partnership or to vote except as specifically provided under Delaware law or in
the Limited Partnership Agreement. The General Partners will be personally
liable for all debts and obligations of the Partnership which cannot be fully
satisfied by the assets of the Partnership (after payment of any amounts Limited
Partners are required to make, as described below). No Limited Partner will
have any personal liability for such debts and obligations. Any Limited Partner
shall be liable to the Partnership only to the extent that (i) he shall be
obligated to make his full capital contribution and (ii) after any Limited
Partner has rightfully received the return in whole or in part of his capital
contributions, he will nevertheless be liable to the Partnership for the amount
of cash and any securities (valued as of the first business day preceding the
date of distribution thereof) withdrawn by him from, or distributed to him by,
the Partnership, not in excess of the amount of such returned capital
contributions, together with interest thereon at the minimum rate required by
law, necessary to discharge any liabilities of the Partnership to creditors who
extended credit or whose claims arose before such return was made, but only to
the extent that the assets of the Partnership are not sufficient to discharge
such liabilities. All Units redeemed by a Partner and all distributions made to
a Partner by the Partnership with respect to his Unit holdings will be treated
as a return of his capital contributions until all his capital contributions
have been returned in full.
CONFLICTS OF INTEREST
- ---------------------
The General Partners and their officers, directors and affiliates may engage
in or possess an interest in other business ventures of every kind and
description, independently or with others, including but not limited to
investments in securities or commodities for their own account, investment
advisory or supervisory services with respect to securities or commodities,
securities consulting services, brokerage services, or serving as officers,
directors, advisors or agents of other companies in or out of the securities
industry, and forming and managing other investment limited partnerships in the
future with substantially the same or different objectives, provided that any
such activity of George M. Galpin does not substantially interfere with the
performance of the Managing General Partner's duties to the Partnership, as
determined by the General Partners in their sole judgment.
The General Partners have no obligation to disclose to the Partnership
investment opportunities which come to their attention.
ADDITIONAL LIMITED PARTNERS
- ---------------------------
The General Partner may sell additional Units and may admit additional
Limited Partners at the beginning of any fiscal quarter, subject to compliance
with applicable securities laws, and provided that the additional Limited
Partners purchase their Units in cash at the time of their admission and agree
to be bound by the terms of the Limited Partnership Agreement. The purchase
price for a Unit will be the Net Asset Value Per Unit as calculated as of the
last day of the immediately preceding fiscal quarter.
SHARING OF PROFITS AND LOSSES
- -----------------------------
Each Unit will have a tax capital account and a book capital account. The
initial balance of each will be the amount paid for the Unit. At the end of
each quarter, the amount of any increase or decrease in the Net Asset Value Per
Unit from the preceding quarter will be credited or charged against the book
capital account of each Unit. At the end of each fiscal year of the
Partnership, all items of ordinary income and deduction will be allocated pro
rata among the Units outstanding at the end of each quarter. The Partnership's
net capital gain for any year will be allocated first to each Unit that was
redeemed for an amount greater than its tax capital account, in an amount equal
to such excess. Any net capital gain remaining after such allocation will be
allocated to each Unit not redeemed to the extent of the excess, if
<PAGE>
CUSIP NO. 595148107 13D PAGE 13 OF 16 PAGES
any, of such Unit's book capital account over its tax capital account. The
Partnership's net capital loss for any year will be allocated first to each Unit
that was redeemed for an amount less than its tax capital account, in an amount
equal to such disparity. Any capital loss remaining after such allocation will
be allocated to each Unit not redeemed to the extent of the excess, if any, of
such Unit's tax capital account over its book capital account.
DISTRIBUTIONS
- -------------
The General Partners, in their discretion, may make distributions from the
assets of the Partnership in cash or in kind. Any such distributions to
Partners will be in proportion to their respective Unit holdings as of the date
of such distribution. A General Partner will not make any distribution that
would render the Partnership insolvent.
INVESTMENT RESTRICTIONS
- -----------------------
Without the Required Consent, the Partnership will not (i) invest in
securities which are subject to restrictions on disposition under the Securities
Act, (ii) invest in real estate or in interests in real estate, but may purchase
readily marketable securities of companies holding real estate interests therein
or (iii) invest in interests in oil, gas or other mineral exploration or
development programs, but may purchase securities issued by companies that hold
interest in oil, gas or other mineral exploration or development programs.
VALUATION OF INVESTMENT POSITIONS
- ---------------------------------
For purposes of computing the Net Asset Value of the Partnership's investment
positions, the following rules will be used: (i) securities (including stock
options) listed or traded on a national securities exchange will be valued at
the last sale price on the exchange where they are primarily traded, or if there
has been no sale on that date, at the closing bid price or, in the case of a
short sale, the closing asked price; (ii) securities not traded on a national
securities exchange for which over-the-counter market quotations are available
will be valued at the last current quotation, provided that any such securities
sold short will be valued at the last current asked quotation; and (iii) any
securities for which market quotations are not readily available and any other
assets will be valued in the General Partner's discretion. However, if in the
General Partners discretion there are circumstances which warrant a different
valuation of any securities described in (i) or (ii), such securities will be
valued at such price as the General Partners shall determine in their
discretion. The value of any asset distributed in kind to a Partner or paid to
him in connection with a Unit redemption will be its value determined as of the
end of the first business day immediately preceding the date on which such asset
is distributed or paid.
FEES AND EXPENSES
- -----------------
The Partnership will engage the Managing General Partner in its individual
capacity, to perform all investment management and administrative services for
the Partnership. For such services, the Partnership will pay the Managing
General Partner, at the beginning of each fiscal quarter, a Management Fee equal
to 3/8% of the Net Asset Value of the Partnership as of the first day of that
fiscal quarter. The Management Fee will also be computed on a pro-rata basis
for the period between the date of the last distribution made by the Partnership
in connection with its dissolution and the close of the preceding quarter of the
Partnership if the date of such last distribution is not the last day of a
quarter.
The Managing General Partner will generally bear all of its recurring routine
operating and administrative expenses of managing the Partnership including
travel and entertainment expenses, cost of statistical services, publications,
periodicals, expenses of reports to Limited Partners (other than legal and
accounting expenses) and the cost of fidelity bonds and certain other insurance
but not including expenses to be borne by the Partnership as described below.
In addition to the Management Fee, the Partnership shall bear the expenses
not assumed by the
<PAGE>
CUSIP NO. 595148107 13D PAGE 14 OF 16 PAGES
Managing General Partner including but not limited to (i) legal and accounting
expenses of the Partnership, preparation of federal and state tax returns, the
annual fees and expenses of the Partnership's auditors and any other independent
advisers, (ii) costs of Partnership meetings (other than General Partners'
expenses), (iii) interest, commissions and brokerage fees, (iv) transfer,
capital and other taxes, duties and costs incurred in connection with the
acquisition and disposition of securities and of transfers thereof, and (v) fees
and other expenses incurred in connection with the investigation, prosecution or
defense of any claims by or against the Partnership.
The General Partners shall bear all organizational and offering expenses of
the Partnership, including legal, accounting and consulting fees, travel and
entertainment, overhead and other expenses and fees (including any Blue Sky and
other filing fees) paid or incurred in organizing the Partnership, selling the
interest and registering the Managing General Partner under applicable state
securities laws.
INDEMNIFICATION
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The Partnership shall indemnify the General Partners, each officer, director,
employee or agent of the General Partners against any liabilities (including
legal expenses) arising out of their activities or involvement with the
Partnership except for acts that constitute gross negligence, willful
misconduct, fraud or breach of fiduciary duty. The Partnership may pay the
expenses of the indemnified party incurred in settling a claim, or in defending
a civil or criminal action prior to its final disposition upon receipt of an
undertaking of the indemnified party to repay such expenses if it is adjudicated
not to be entitled to indemnification. The Partnership may purchase insurance,
to the extent available at reasonable cost, in the opinion of the General
Partners, to cover the indemnification liabilities of the Partnership.
WITHDRAWAL OF GENERAL PARTNER
- -----------------------------
The General Partners have the right, upon 60 days prior written notice, to
withdraw as General Partner; however, the General Partners intend to continue
the business of the Partnership as long as they believe that it is in the best
interest of all Partners to do so.
ADMISSION OF SUCCESSOR GENERAL PARTNER
- --------------------------------------
Upon the sole remaining General Partner's withdrawal from the Partnership, or
upon the sole remaining General Partner's bankruptcy or the termination of its
existence for any other reason, the Limited Partners may, with the Required
Consent, elect and admit a new General Partner.
REDEMPTION OF UNITS BY PARTNERS
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After a Limited Partner has owned Units for at least one year, he will be
permitted to redeem part or all of his Units (i) at the end of any fiscal
quarter, if he gives the General Partners 30 days prior written notice or (ii)
at such other time to which the General Partners may consent in their
discretion. In the event of the death of a Limited Partner, his personal
representative will be permitted to redeem part or all of such Limited Partner's
Units (i) at the end of any fiscal quarter, if such representative gives the
General Partners 30 days prior written notice within one year after the date of
such Limited Partner's death or (ii) at such other time to which the General
Partners may consent in their discretion. If the requested redemption by a
Limited Partner will reduce his Unit holdings in the Partnership to less than 20
Units, the General Partners may require such Limited Partner to redeem all of
his Units and to withdraw from the Partnership. It is the present intention of
the General Partners to not require withdrawal from the Partnership unless the
total value of a Limited Partner's investment in the Partnership falls below
$50,000 as the result of a redemption or other transfer by the Limited Partner.
The General Partners may also require a Limited Partner to withdraw from the
Partnership for any other reason at any time. All redemptions shall be at the
Net Asset Value Per Unit, as of the end of the immediately prior fiscal quarter,
adjusted for fees and expenses attributable to the redeemed Unit,
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CUSIP NO. 595148107 13D PAGE 15 OF 16 PAGES
including the Management Fee.
A Limited Partner redeeming part of his Unit holdings will be paid for the
Units redeemed within 20 days after the redemption date. A Limited Partner
redeeming all of his Units, or a Limited Partner who is required by the general
Partners to withdraw from the Partnership, will be paid 85% of the entire amount
redeemed, or such greater percentage thereof as the General Partners may
determine, within 20 days after the redemption date. The General Partners will
use their best efforts to cause payment of the remainder of such balance within
90 days after the end of the fiscal year in which his redemption occurs.
However, payment of the retained amount will be subject to such adjustments,
which may be increases or decreases, as may be necessary to reflect accurately
the Partnership's Net Asset Value as of his redemption date on the basis of the
final audit and certification of the Partnership's books and records for the
year in which his redemption occurs. The Partnership will pay interest to such
Limited Partners on the retained amount (after any such adjustment) at a rate
per annum equal to the broker's call money rate less one percent as published in
The Wall Street Journal on the redemption date. Any amounts payable to a
Limited Partner redeeming part or all of his Units, or who is required to
withdraw from the Partnership, may be paid either in cash or in kind, as the
General Partners determine.
In the event that the General Partners' Unit holdings exceed 1% of all
Partners' Unit holdings, a General Partner, upon 30 days notice to the Limited
Partners, may redeem part or all of such excess Unit holdings. If a General
Partner withdraws from the Partnership, it will be paid for its Units within 20
days after the date of its withdrawal. Any amount payable to the General
Partner will be paid either in cash or in kind, as the General Partner shall
elect.
TRANSFER OF UNITS
- -----------------
A Limited Partner may not sell, assign, or otherwise dispose of (collectively
"transfer") all or any part of his Units except with the consent of the General
Partners, provided that without such consent he may transfer all, but not part,
of his Units (1) to any Partner or Partners or to any person who is then a
shareholder or officer of a General Partner, provided that such transfer would
not result in any one or more of the Limited Partners owning more than 20% of
the stock of such General Partner, (2) in the case of a transfer by a Limited
Partner who is a natural person, (i) by gift, bequest or other transfer without
consideration if to a parent, spouse, lineal descendant, brother or sister of
such Limited Partner, (ii) by intestate succession or testamentary disposition
upon the death of such Limited Partner, or (iii) to a spouse pursuant to an
agreement or decree upon marital dissolution or legal separation, (3) in the
case of a transfer by a Limited Partner which is a trust, to one of its
beneficiaries, or (4) in the case of transfer by a Limited Partner which is a
corporation, partnership or other entity, to a successor by incorporation,
merger or purchase of assets. A Limited Partner may also transfer his Units
without the consent of the General Partners in certain other limited
circumstances. However, in no event may a transfer of a Unit be made if in the
opinion of counsel to the Partnership such transfer would be likely to: (a)
require registration under section 5 of the Securities Act, (b) subject the
Partnership to registration under the Investment Company Act of 1940, (c)
require the General Partners or any of its officers, or the Partnership, to
register as investment advisers under the Investment Advisers Act of 1940, (d)
violate laws of any state or governmental agency applicable to such transfer, or
(e) result in a termination of the Partnership, or otherwise adversely affect
the classification of the Partnership as a partnership, for Federal income tax
purposes.
Any transferee must agree to be bound by all of the terms of the Limited
Partnership Agreement. A transferee who is not a partner at the time of
transfer will be entitled to the allocations and distributions which are
attributable to the Unit transferred to him and may transfer such Unit in
accordance with the terms of the Limited Partnership Agreement. However, such
transferee will not be entitled to the other rights of a Limited Partner unless
he becomes a Substituted Limited Partner. No transferee may become a
Substituted Limited Partner, as defined in the Limited Partnership Agreement,
without the prior written consent of the General Partner, which consent may be
withheld in its absolute discretion.
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CUSIP NO. 595148107 13D PAGE 16 OF 16 PAGES
FISCAL YEAR AND REPORTS TO LIMITED PARTNERS
- -------------------------------------------
The fiscal year of the Partnership will be a calendar year.
The General Partners will use their best efforts to cause to be mailed to
each Partner, within 90 days after the end of each fiscal year, audited
financial statements regarding the results of operations for the year, as
prepared by the Partnership's independent certified public accountants, along
with information as to the Partner's distributive share of the Partnership's
income, gains, losses and deductions for the year, for Federal income tax
purposes. The Limited Partners will also receive monthly reports from the
General Partners with respect to the Partnership's financial results, as
compiled by the General Partners.
REQUIRED VOTE OR CONSENT
- ------------------------
The minimum vote or consent required for action or approval of the Limited
Partners on certain matters (such as extension of the term of the Partnership,
admission of a successor General Partner, and certain amendments to the Limited
Partnership Agreement) shall be two-thirds in interest of the Limited Partners,
as determined by their Unit holdings.
AMENDMENT
- ---------
The Limited Partnership Agreement may be amended with written consent of the
General Partners and the Required Consent; provided, however, that the consent
of each Partner adversely affected thereby will be required for any amendment
which would:
(i) increase the obligation of such Partner; or
(ii) reduce the Unit holdings of such Partner or change the redemption
provisions of the Limited Partnership Agreement.
The unanimous consent of all Partners will be required for any amendment which
would cause the Partnership to cease to be a limited partnership.
