TECHNOLOGY FUNDING PARTNERS III, L.P.
2000 Alameda de las Pulgas, Suite 250
San Mateo, California 94403
NOTICE OF MEETING OF LIMITED PARTNERS
To the Limited Partners of TECHNOLOGY FUNDING PARTNERS III, L.P.:
Notice is hereby given that the tri-annual Meeting of Limited Partners of
Technology Funding Partners III, L.P., (the "Partnership") will be held at
10:00 a.m., local time, on Friday, October 6, 2000, at the Partnership's
offices at 2000 Alameda de las Pulgas, Suite 250, San Mateo, California, to
consider and vote upon:
1. The election of three Individual General Partners to serve as members of
the Partnership's Management Committee each for a three-year term;
2. The election of two Managing General Partners to serve as members of the
Partnership's Management Committee each for a three-year term;
3. Ratification of the Management Committee's selection of KPMG LLP as
independent certified public accountants of the Partnership;
4. The amendment of Article 2, Section (m) of the Partnership Agreement to
delete references to "Controlling Person" in the definition of "General
Partner Overhead;"
5. The amendment of Article 1.03 of the Partnership Agreement to clarify the
Partnership's investment objective;
6. Such other matters as may properly come before the Meeting or any
adjournment thereof.
This notice and the enclosed proxy statement and form of proxy are first
being mailed to Limited Partners on or about August 28, 2000.
You are cordially invited to attend this meeting. WHETHER OR NOT YOU PLAN
TO ATTEND THIS MEETING, PLEASE COMPLETE, SIGN, AND DATE THE ACCOMPANYING
PROXY AND RETURN IT AS PROMPTLY AS POSSIBLE IN THE ENCLOSED POSTAGE-PAID
ENVELOPE. THE ENCLOSED PROXY IS BEING SOLICITED BY THE MANAGEMENT COMMITTEE.
By order of the Management Committee,
Charles R. Kokesh
Chief Executive Officer
Technology Funding Inc.
San Mateo, California
Dated: August 28, 2000
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TECHNOLOGY FUNDING PARTNERS III, L.P.
2000 Alameda de las Pulgas, Suite 250
San Mateo, California 9440
PROXY STATEMENT
August 28, 2000
GENERAL INFORMATION
Technology Funding Partners III, L.P., (the "Partnership") is a
limited partnership that was organized under the laws of the State
of Delaware on December 4, 1986. The Partnership commenced selling
units of limited partnership interests ("Units") in April 1987. On
June 2, 1987, the minimum number of Units required to commence
Partnership operations (6,000) was sold to persons who became
limited partners of the Partnership ("Limited Partners"). The
Partnership completed an offering on February 3, 1989, raising a
total of $40,000,000 from the sale of 160,000 Units.
The Partnership is managed by a Management Committee, consisting of
three Individual General Partners and a representative of each of
the two Managing General Partners, Technology Funding Inc. ("TFI")
and Technology Funding Ltd. ("TFL"). The Management Committee has
exclusive control of the management of the Partnership, provides
overall guidance and supervision of the Partnership's operations,
and performs the various duties imposed on the boards of directors
of business development companies by the Investment Company Act of 1940,
as amended (the "Act"). In addition to having general fiduciary
duties, the Management Committee, among other things, supervises
the management arrangements of the Partnership and supervises the
activities of the Managing General Partners. Subject to the
supervision of the Management Committee, the Managing General
Partners are responsible for (i) management of the Partnership;
(ii) making all decisions regarding the Partnership's venture
capital investment portfolio; (iii) negotiation and structuring
of investments in portfolio companies; (iv) oversight of the
portfolio companies including providing, or arranging for the
provision of, managerial assistance to portfolio companies; and
(v) day-to-day administration of Partnership affairs.
The Partnership's term was extended for a two-year period to
December 31, 1998, pursuant to unanimous approval by the Management
Committee on September 13, 1996. The Partnership term was further
extended to December 31, 2000, with an amendment by the General
Partners and approved by a majority of the Limited Partners. If no
further action is taken by the General Partners before this
termination date, the Partnership will be liquidated in accordance
with the Partnership Agreement. The General Partners expect the
Management Committee to vote in favor of extending the term of the
Partnership for one additional two-year period. The Management
Committee is authorized to exercise this right to extend the
Partnership by an amendment to the Partnership Agreement approved
by a vote of the Limited Partners in December 1997.
The Partnership's principal investment objectives are long-term
capital appreciation from venture capital investments in new and
developing companies and preservation of Limited Partner capital
through risk management and active involvement with portfolio
companies. The Partnership elected to be a business development
company under the Act and operates as a nondiversified investment
company as that term is defined in the Act.
SOLICITATION OF PROXIES
The accompanying proxy is solicited on behalf of the Management
Committee for use at the tri-annual Meeting of Limited Partners of
the Partnership to be held at 10:00 a.m., local time, on October 6,
2000, (the "Meeting") at the Partnership's offices located at 2000
Alameda de las Pulgas, Suite 250, San Mateo, California, and any
adjournment thereof. The individual general partners of TFL, a Managing
General Partner of the Partnership, have been designated by the
Management Committee to serve as proxies.
The expenses of soliciting proxies will be paid by the Partnership.
Following the original mailing of the proxies, representatives of
the Partnership may request brokers, custodians, nominees, and other
record holders to forward copies of the proxy to persons for whom
they hold Units and to request authority for the exercise of
proxies. In such case, the Partnership, upon the request of the
record holders, will reimburse such holders for their reasonable
expenses. Excluding the costs of printing the proxies, ballots, and
return envelopes and postage, the expected cost of this proxy
solicitation will be approximately $10,000 to $20,000 including the
allocable costs of personnel of the Managing General Partners
engaged in preparing the proxy statement, supervising the costs of
printing and mailing, tabulating the ballots, and responding to
inquiries from Limited Partners.
RECORD DATE
By order of the Management Committee, only Limited Partners of
record at the close of business on July 31, 2000, are entitled to
notice of and will be entitled to vote at the Meeting and any
adjournment thereof.
VOTING RIGHTS AND PROCEDURES
Only Limited Partners of record on July 31, 2000, will be entitled
to vote at the Meeting. At the close of business on that date, the
Partnership had 160,000 Units outstanding and entitled to vote.
Limited Partners are entitled to one vote for each Unit held.
Limited Partners may vote in person or by proxy at the Meeting. The
enclosed form of proxy, if returned properly executed and not
subsequently revoked, will be voted in accordance with the choices
made by the Limited Partner with respect to each proposal listed on
the form of proxy. If a Limited Partner does not specify on the form
of proxy how the Limited Partner's Units are to be voted, or if a
Limited Partner fails to return a proxy, the Limited Partner,
pursuant to Article 14.04 of the Partnership Agreement, shall be
deemed to have granted to the Management Committee a proxy solely
for those matters noted on the form of proxy and the Management
Committee will vote all such proxies "FOR" each proposal noted on
the enclosed form of proxy. Abstentions so marked on any proposal
will be recorded as neither a vote for or against any proposal so
marked.
If any other matters should be properly presented at the Meeting,
the persons designated to serve as proxies will vote on such matters
in accordance with a determination by a majority of the members of
the Membership Committee, including a majority of the Independent
General Partners (as defined below).
REVOCATION AND DISSENTER'S RIGHTS
Any person signing a proxy in the form accompanying this proxy
statement has the power to revoke it prior to the vote pursuant to
the proxy. A proxy may be revoked by (i) submitting before or at the
Meeting a written revocation of the proxy with the Partnership; (ii)
submitting to the Partnership before or at the Meeting a subsequent
proxy that is signed by the person who signed the earlier proxy; or
(iii) attending the Meeting and casting a contrary vote.
The Partnership is a closed-end, non-trading entity that has elected
to operate as a business development company under the Investment
Company Act of 1940, as amended. Limited Partners do not have any
"dissenter's rights."
OWNERSHIP OF PARTNERSHIP UNITS
To the knowledge of management of the Partnership, as of July 31,
2000, no person owned beneficially more than 5% of the outstanding
Units. Except as noted below regarding the direct ownership of 20
Units each by the three Independent General Partners, the General
Partners do not own any securities of the Partnership, whether
voting or non-voting.
ANNUAL REPORTS
The Partnership's Annual Report on Form 10-K for the year ended
December 31, 2000, ("Annual Report") was mailed to all Limited
Partners of record as of April 1, 2000, on or about July 3, 2000.
The Partnership will provide without charge to each Limited Partner
a copy of the Annual Report upon request. Address your request to
Client Services by calling toll-free 1-800-821-5323, or by writing
Client Services, Annual Reports Section, Attn: Darrin Abby, at
Technology Funding, 460 St. Michael's Drive, Suite 1000, Santa Fe,
New Mexico 87505.
PROPOSAL 1 - ELECTION OF INDIVIDUAL GENERAL PARTNERS
All General Partners of the Partnership are elected by the Limited
Partners. The members of the Management Committee are the three
Individual General Partners and a representative from each of TFI
and TFL, the Managing General Partners. The three Individual General
Partners are Messrs. Baines, Craft, and Tempesta. Generally, the
representative for TFL is Mr. Kokesh, and the representative for TFI
is Mr. George. As required by the Act, a majority
of the General Partners must be individuals who are not "interested
persons" of the Partnership as defined in the
Act. The Securities and Exchange Commission ("SEC") has issued an
order declaring that persons serving as Individual General Partners
of the Partnership will not be deemed to be "interested persons" of
the Partnership, as defined in Section 2(a)(19) of the
Act, solely by reason of their being partners of the
Partnership and co-partners of one another. Presently, none of the
Individual General Partners is an "interested person" of the
Partnership. Therefore, the Individual General Partners constitute
the Partnership's Independent General Partners. None of the nominees
for Individual General Partner have provided in the past five years
or provide any services to or receive compensation in any form from
the Partnership except as disclosed below, nor have they received
any compensation from any other partnerships managed by the Managing
General Partners or from the Managing General Partners.
At the Meeting, the Limited Partners will elect three Individual
General Partners, each to hold office until the next required
meeting, which will be in the 2003 calendar year, and until his
successor is elected and qualified or until his earlier resignation
or removal. Each nominee is presently an Individual General Partner
of the Partnership. Each nominee listed below has consented to
continue to serve as an Individual General Partner. There are no
arrangements or understandings related to the nomination of any of
the Individual General Partners except as provided in the
Partnership Agreement. If any nominee is not available for election,
which is not anticipated, the proxies received will be voted for
such substitute nominee as the Individual General Partners may
recommend.
Certain information about each nominee is set forth below:
Partnership Units Percentage ownership
Nominee Age beneficially owned of outstanding Units
G. Whitney Baines 56 8 *
A. Logan Craft 40 8 *
Michael S. Tempesta 48 8 *
*Denotes beneficial ownership of less than 1% of outstanding
Units.
G. Whitney Baines, Ph.D., has been an Independent General Partner
since 1987 when the Partnership was formed. Dr. Baines is a
Professor at Monterey Peninsula College where he teaches biological
sciences. Prior to joining the faculty at Monterey Peninsula College
in September 1975, he was a lecturer at the University of
California, Santa Barbara.
The Rev. A. Logan Craft has been an Independent General Partner
since his appointment in April 2000. Mr. Craft is currently
Associate Rector at the Episcopal Church of the Holy Faith in Santa
Fe, New Mexico. Prior to his ordination to the priesthood, he served
as Vice-President and Partner of Craft Associates, Inc., from 1991
to 1997 where he was responsible for a portfolio of domestic and
international companies involved in industrial production of metals
and plastics. From 1982 to 1985, Mr. Craft was a sales
representative for American Petrafina Marketing, Inc., where he was
responsible for corporate franchise agreements for the wholesale
distribution of refined petroleum products.
Michael Tempesta, Ph.D., has been an Independent General Partner
since his appointment in January 1997. Dr. Tempesta is President of
NatProd Consulting Services, which he founded in 1995. From 1997 to
1998, he was also Senior Vice President of Research and Development
at Pharmaprint and, from 1995 to 1996, Chief Scientific Officer for
Larex, Inc. He also held several positions at Shaman
Pharmaceuticals, Inc., from 1990 to 1994, including Chief Scientific
Officer, Senior Vice President, Research, and Vice President,
Chemistry and Discovery. Prior to that, Dr. Tempesta was a Professor
at the University of Missouri. He did post-doctoral fellowships at
Suntory Institute for Bioorganic Research in Japan and Columbia
University.
Compensation
Under Article 4.02 of the Partnership Agreement, the Partnership
will pay each Individual General Partner compensation for services
rendered as follows:
(a) The sum of $10,000 annually in quarterly installments
beginning on the commencement date;
(b) The sum of $1,000 for each meeting of the Management
Committee attended by such Individual General Partner;
(c) If a committee is appointed by the Management Committee,
the sum of $1,000 for each such committee meeting attended;
provided, however, that, if such committee meeting is held
on the same day as a meeting of the Management Committee,
the sum paid for attendance at such committee meeting shall
be $500; and
(d) all out-of-pocket expenses relating to attendance at the
meetings, committee or otherwise, of the Management
Committee.
Under Article 4.02, neither the Managing General Partners nor any of
their affiliates shall receive any compensation from the
Partnership. Although the Partnership Agreement provides a mechanism
by which the Management Committee, with the approval of a majority
in interest of the Limited Partners, may increase or decrease
compensation payable to the Individual General Partners, there have
been no changes to the compensation arrangements set forth above.
Payment of compensation to an Individual General Partner is not
considered a distribution and will not effect his right to receive
a distribution to which he may be entitled as a Limited Partner.
Individual General Partner Compensation for Fiscal Year 1999
Aggregate Pension or Estimated Total
Individual Compensation Retirement Annual Bene- Compensation
General from the Benefits fits upon from
Partner Partnership Accrued Retirement Partnership
G. Whitney Baines $15,240.49 N/A N/A $15,240.49
A. Logan Craft $0.00 N/A N/A $0.00
Michael S. Tempesta $14,485.56. N/A N/A $14,485.56
Pursuant to Article 7.01(b) of the Partnership Agreement, each
Individual General Partner made a capital contribution of $2,000 in
cash at the time of his admission to the Partnership, for which that
Individual General Partner received an interest in the Partnership
of eight Units. For calendar year 1999, Messrs. Baines and Tempesta
were each allocated losses attributable to their Unit holdings of
$124.
Management Committee Meetings and Committees
During 1999, the Partnership's Management Committee held a total of
four meetings. The Partnership does not have a separate audit
committee, compensation committee, nominating committee, or any
committee performing similar functions since these functions are served
by the entire Management Committee. There were no committee
meetings or other special meetings other than the regularly
scheduled quarterly Management Committee meetings in the last fiscal
year.
PROPOSAL 2 - ELECTION OF MANAGING GENERAL PARTNERS
At the Meeting, two Managing General Partners will be elected, each
to serve until the next required meeting of Limited Partners and
until its successor is elected and qualified or until its earlier
resignation or removal. The nominees discussed below have consented
to continue to serve as Managing General Partners.
Technology Funding Inc. ("TFI") is a California corporation formed
in 1979 to act as a general partner in limited partnerships
providing funding to high technology companies. Its address is 2000
Alameda de las Pulgas, Suite 250, San Mateo, California 94403. In
conjunction with TFL, TFI has organized and managed 20 limited
partnerships in addition to the Partnership. TFI is a registered
investment adviser under the Investment Advisers Act of 1940. Mr.
Kokesh is the sole director of TFI, and all of the shares of stock
of TFI are owned by TFL. TFI and its wholly owned subsidiary,
Technology Funding Capital Corp., currently employ approximately 30
persons. The backgrounds and experience of certain senior officers
of TFI are outlined in "Key Personnel of the Managing General
Partners" below. TFI has been a Managing General Partner of the
Partnership since 1987.
Technology Funding Ltd. ("TFL") is a California limited partnership
formed in 1980 that serves as co-general partner with TFI in the
Technology Funding partnerships. TFL is a registered investment
adviser under the Investment Advisers Act of 1940. TFL is the sole
shareholder of TFI. TFL has two general partners, Mr. Kokesh and Mr.
George, one venture partner, Mr. Bernardoni, and seven limited
partners. Mr. Kokesh is the managing general partner of TFL. TFL has
been a Managing General Partner of the Partnership since 1987.
Voting Interest in the Managing General Partners
The following table sets forth the voting interests of the general
partners of TFL as of July 31, 2000. TFL is the sole shareholder of
TFI. Mr. Kokesh may be deemed to be a control person of TFL.
TFL (1)
Charles R. Kokesh 6 votes
Gregory T. George votes
(1) Under the TFL partnership agreement, all material
decisions require the vote of at least 75% of the
voting interests. The General Partners' capital,
profit, and loss interests are flexible and may vary
from the voting percentages set forth above. Limited
Partners of TFL have very limited voting rights.
Key Personnel of the Managing General Partners
Charles R. Kokesh, 52, is President, Chief Executive Officer of TFI,
and Managing General Partner of TFL. Prior to forming Technology
Funding in 1979, Mr. Kokesh was a Vice President of Bank of America
where he was responsible for Global Treasury Management Services.
Had Proposal 4 been approved and in effect during the years ended
December 31, 1999, and December 31, 1998, additional expenses to the
Partnership related to the compensation of Mr. Kokesh would have
been $129,468 and $147,272, respectively.
Gregory T. George, 52, is a Group Vice President of TFI and a
General Partner of TFL. Prior to joining Technology Funding in June
1986, Mr. George was an independent management consultant
specializing in the technical and strategic analysis of venture-
backed software companies.
Peter F. Bernardoni, 41, is a Vice President of TFI and a Partner of
TFL. Prior to joining Technology Funding in February 1988, Mr.
Bernardoni served in several capacities with IBM, including design
engineer and sales and marketing manager.
Compensation
Over and above their distributive share of Partnership profits,
losses, and distributions, the Managing General Partners receive
from the Partnership (i) a management fee equal to 1/4% of the fair
value of the Partnership assets at the end of the preceding quarter,
as determined by the Management Committee; and (ii) reimbursement of
operational costs of the Partnership incurred by the Managing
General Partners or their affiliates in connection with the business
of the Partnership.
Managing General Partner Compensation for Fiscal Year 1999
Aggregate Pension or Estimated Total
Managing Compensation Retirement Annual Bene- Compensation
General from the Benefits fits upon from
Partner Partnership Accrued Retirement Partnership
TFI $282,321(2) N/A N/A $282,321(2)
TFL $0 N/A N/A $0
(2) Compensation from the Partnership to the Managing
General Partners is equivalent to the management fees
paid in the year ended December 31, 1999.
For fiscal years 1999 and 1998, management fees were $282,321 and
$280,034, respectively, and reimbursement of operational costs was
$654,648 and $973,896, respectively.
Removal of the Managing General Partners
The Managing General Partners, together, may be removed from the
Partnership either (i) by a majority of the Independent General
Partners of the Partnership; (ii) by failure to be reelected by the
Limited Partners; or (iii) with the consent of a majority in
interest of the Limited Partners.
In the event of the removal of the Managing General Partners and the
continuation of the Partnership, the Partnership Agreement provides
that the venture capital investments held by the Partnership at the
time of removal will be valued in a procedure set forth in the
Partnership Agreement. With respect to their Partnership interests,
the removed Managing General Partners will receive a final
allocation of net profit or net loss equal to the net profit or net
loss that they would have been allocated pursuant to the Partnership
Agreement if all unrealized capital gains and losses of the
Partnership were deemed realized and an allocation of net profit or
net loss were made at such time.
If the capital accounts of the removed Managing General Partners
have a positive balance after the final allocation, the Partnership
will deliver a promissory note to the removed Managing General
Partners, with a principal amount equal to the amount, if any, by
which the positive amount of the removed Managing General Partners'
capital accounts exceeds the amount of their capital contributions,
bearing interest at the prime rate in effect at the time of removal,
with interest payable annually and principal payable, if at all,
only from 20% of any available cash before any distributions thereof
are made to the Partners. If the capital accounts of the removed
Managing General Partners have a negative balance after such
allocation, the Managing General Partners will contribute cash to
the Partnership equal to that negative balance. The Partnership
interests of the removed Managing General Partners will convert to
those of Limited Partners and the removed Managing General Partners
will continue to receive, as Limited Partners, allocations of net
profits and net losses pursuant to the Partnership Agreement and
related distributions as provided in the Partnership Agreement.
PROPOSAL 3 - SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
At its meeting held on September 10, 1999, the Management Committee
of the Partnership selected the firm of KPMG LLP ("KPMG"),
independent public accountants, to examine the financial statements
of the Partnership. The Partnership knows of no direct or indirect
financial interest of KPMG in the Partnership. This appointment is
subject to ratification or rejection by the Limited Partners of the
Partnership. Unless a contrary specification is made, the
accompanying proxy will be voted in favor of ratifying the selection
of KPMG.
KPMG also acts as independent public accountants for the Managing
General Partners and substantially all of the other Technology
Funding partnerships and other Technology Funding entities. The fees
received by KPMG from these other entities are substantially
greater, in the aggregate, than the total fees received by it from
the Partnership. The Management Committee considered the fact that
KPMG has been retained as the independent accountants for the
Managing General Partners and the other entities described above in
their evaluation of the independence of KPMG with respect to the
Partnership.
Representatives of KPMG are not expected to be present at the
Meeting and therefore will not have the opportunity to respond to
questions from Limited Partners or to make a statement.
PROPOSAL 4 - CONTROLLING PERSON
The Partnership Agreement defines the terms "Controlling Person" and
"General Partner Overhead." The term Controlling Person currently
means any person, whatever his or her title, who performs functions
for the Managing General Partners or their affiliates similar to
those of the chairman or member of the board of directors; is a
member of executive management, such as the president, executive
vice president or senior vice president, corporate secretary, or
treasurer; or holds a 5% or more equity interest in the Managing
General Partners or their affiliates or a person having the power to
direct or cause the direction of the Managing General Partners or
their affiliates, whether through the ownership of voting
securities, by contract, or any other means. Pursuant to that
definition, Charles R. Kokesh, as the Managing General Partner of
TFL and President of TFI, currently is a Controlling Person and
would have been a Controlling Person for each of the Partnership's
fiscal years ended December 31, 1999, and December 31, 1998. No
other person was a Controlling Person during those years or is now
a Controlling Person.
The term Controlling Person is relevant to the definition of General
Partner Overhead which generally means expenses incurred by the
General Partners while performing their obligations to the
Partnership, such as those expenses customarily incurred by the
General Partners for their own accounts and not attributable to the
Partnership, and expressly includes the salary and fringe benefits
of a Controlling Person.
In his respective roles at TFL and TFI, Mr. Kokesh is responsible
for managing those two entities as well as the activities and
investments of the Partnership. While his time and salary are
tracked and allocated to his respective tasks, the Partnership has
not reimbursed TFL or TFI for the portion of Mr. Kokesh's time
specifically related to Partnership business. The Partnership
receives a significant and material benefit from Mr. Kokesh's
expertise and time. Under the definition of those expenses incurred
on behalf of the Partnership for which reimbursement is allowable,
the Partnership does not pay for this expertise and time since
General Partner Overhead is not reimbursable and a Controlling
Person's salary and fringe benefits are included in General Partner
Overhead.
The Management Committee proposes to amend the definition of General
Partner Overhead to delete references to "Controlling Person" so
that the Partnership is permitted to pay for the expertise, time,
and management services provided to it by a Controlling Person. If
the Limited Partners approve this proposed amendment, the
Partnership will incur the expenses related to the management of the
activities and investments of the Partnership by Mr. Kokesh and any
other Controlling Person. If the proposed change had been effective
during the Partnership's past two completed fiscal years, the
Partnership would have paid approximately $129,468 in 1999 and
$147,272 in 1998 to TFI and TFL for management services provided by
Mr. Kokesh to the Partnership.
If this proposal is approved, the Partnership will incur expenses
that otherwise would be paid by TFI and TFL. If the proposal is
approved, additional expenses to the Partnership for the year ended
December 31, 2000, are estimated at approximately $173,000.
PROPOSAL 5 - INVESTMENT OBJECTIVE
According to Article 1.03 of the Partnership Agreement, the
Partnership's principal investment objective is "to provide the
Partners with long-term capital appreciation on their investment."
In order to clarify the Partnership's goals and remove any
ambiguity, the Managing General Partners would amend this section to
state:
"The Partnership's principal investment objective is to
maximize long-term capital appreciation for the Limited
Partners until the date the Partnership is dissolved."
This change makes it clear that the Managing General Partners are
focused on maximizing returns to Limited Partners up to and
including the final day of the Partnership's active operation.
OTHER MATTERS
The Management Committee does not presently intend to bring any
other business before the Meeting and, so far as it is known to the
Management Committee, no matters are to be brought before the
Meeting except as specified in the notice of the Meeting. As to any
business that may properly come before the Meeting, however, it is
intended that proxies, in the form enclosed, will be voted in the
respect thereof in accordance with the judgment of the persons
voting such proxies.
ADDITIONAL INFORMATION
Limited Partner Status
The Partnership Agreement provides that the Limited Partners of the
Partnership are prohibited from exercising certain rights of limited
partners, including the right to elect General Partners, to approve
certain Partnership matters, and to amend the Partnership Agreement,
unless prior to the exercise of such rights, counsel for the
Partnership has delivered to the Partnership an opinion to the
effect that neither the existence of such rights nor the exercise
thereof will violate the provisions of the Revised Uniform Limited
Partnership Act of the State of Delaware, as amended, or the
applicable laws of the other jurisdictions in which the Partnership
is then formed or qualified, or will adversely affect the
classification of the Partnership as a partnership for federal
income tax purposes. Prior to the Meeting, counsel to the
Partnership will have delivered a favorable opinion to the
Partnership with respect to the foregoing. In rendering such
opinion, counsel for the Partnership expects to rely as to matters
of Delaware law upon the opinion of special Delaware counsel to the
Partnership.
LIMITED PARTNER PROPOSALS
Any Limited Partner proposal submitted to the Partnership for
inclusion in the Partnership's proxy statement and form of proxy
relating to the Partnership's next meeting of the Limited Partners
in 2003, pursuant to Rule 14a-8 under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), must be received by the
Partnership at the Partnership's principal executive offices 120
days or a reasonable length of time prior to the date the
Partnership mails proxy materials for the meeting in order for the
proposal to be considered at that meeting. Any such proposal must
comply in all respects with the applicable rules and regulations
under the Exchange Act.
In order for proposals made outside Rule 14a-8 of the Exchange Act
to be considered "timely" within the meaning of Rule 14a-4(c) under
the Exchange Act, such proposals must be received by the Partnership
at the Partnership's principal executive offices a reasonable length
of time prior to the date the Partnership mails the proxy materials
for the meeting for consideration at that meeting.
The proxies solicited by the Partnership will confer general
discretionary authority with regard to such matters for which the
Partnership did not receive notice within a reasonable time period.
The Partnership will more specifically advise the Limited Partners
when to submit proposals for the next tri-annual meeting in future
reports filed under the Exchange Act.
WHERE YOU CAN FIND MORE INFORMATION
The Partnership files annual and quarterly reports, proxy
statements, and other information with the U.S. Securities and
Exchange Commission. The Partnership's filings with the SEC
are available to the public through the SEC's Electronic Data
Gathering, Analysis and Retrieval system ("EDGAR") accessible
through the SEC's web site at: http://www.sec.gov. Limited Partners
also may read and copy any report, statement, or other information
that the Partnership has filed with the SEC at the SEC's public
reference rooms at the following locations:
Public Reference Room
450 Fifth Street, N.W.
Washington, D.C. 20549
New York Regional Office
7 World Trade Center
Suite 1300
New York, NY 10048
Chicago Regional Office
500 West Madison Street
Suite 1400
Chicago, IL 60661-2511
Call the SEC at 1-800-SEC-0330 for more information on obtaining
information from the SEC's public reference rooms.
The SEC allows the Partnership to incorporate by reference
information into this proxy statement, meaning the Partnership can
disclose important information by referring Limited Partners and
others who read this proxy statement to other documents that the
Partnership has filed with the SEC. The Partnership incorporates by
reference the document listed below:
The Partnership's annual report on Form 10-K, filed on March 30,
2000, file number 814-00048.
ALL LIMITED PARTNERS ARE URGED TO COMPLETE, SIGN,
AND DATE THE ACCOMPANYING PROXY AND RETURN IT IN THE ENCLOSED
POSTAGE-PAID ENVELOPE. YOUR PROMPT ATTENTION TO THIS MATTER WILL
AVOID COSTLY FOLLOW-UP CORRESPONDENCE. THANK YOU FOR YOUR
ASSISTANCE.
<PAGE>
ANNEX A
Article 2, Section (m) of the Partnership Agreement currently reads
as follows:
(m) "General Partner Overhead" means those customary and
routine expenses incurred by the Managing General Partners
(excluding all Organizational and Offering Expenses) in
performing their obligations to the Partnership, including:
(i) rent or depreciation, utilities, property taxes, and the
cost of capital equipment unless acquired primarily for the
benefit of the Partnership; (ii) expenses of a general and
administrative nature that are customarily incurred by the
General Partners for their own accounts and are not
attributable to the Partnership; and (iii) salaries and
fringe benefits incurred by or allocated to any Controlling
Person of the General Partners or their Affiliates. For
purposes of this subsection, "Controlling Person" is any
Person, whatever his or her title, who performs functions
for the Managing General Partners or their Affiliates
similar to those of the chairman or member of the board of
directors; executive management, such as the president,
executive vice president or senior vice president, corporate
secretary, or treasurer; or who holds a 5% or more equity
interest in the Managing General Partners or their
Affiliates or a Person having the power to direct or cause
the direction of the Managing General Partners or their
Affiliates, whether through the ownership of voting
securities, by contract, or otherwise.
As amended by Proposal 4, Article 2, Section (m) would read as
follows:
(m) "General Partner Overhead" means those customary and
routine expenses incurred by the Managing General Partners
(excluding all Organizational and Offering Expenses) in
performing their obligations to the Partnership, including:
(i) rent or depreciation, utilities, property taxes, and the
cost of capital equipment unless acquired primarily for the
benefit of the Partnership; and (ii) expenses of a general
and administrative nature that are customarily incurred by
the General Partners for their own accounts and are not
attributable to the Partnership.
<PAGE>
ANNEX B
Article 1.03 of the Partnership Agreement currently reads as
follows:
1.03 Purpose. The Partnership is authorized and empowered to
elect to operate, and to operate, as a business development
company under the Investment Company Act of 1940, as
amended. The Partnership's principal investment objective is
to provide the Partners with long-term capital appreciation
on their investment. The Partnership will seek to accomplish
this objective by making venture capital investments in new
and developing companies that the "Managing General
Partners," as hereinafter defined, believe offer significant
long-term growth possibilities and by providing those
companies with active management assistance where warranted.
The Partnership will also seek to achieve this objective by
investing in established companies that the Managing General
Partners believe offer special opportunities for growth. The
Partnership will also seek to preserve Limited Partner
capital through risk management and active participation
with Portfolio Companies. Generation of current income or
tax benefits will not be primary factors in the selection of
investments.
As amended by Proposal 5, Article 1.03 would read as follows:
1.03 Purpose. The Partnership is authorized and empowered to
elect to operate, and to operate, as a business development
company under the Investment Company Act of 1940, as
amended. The Partnership's principal investment objective is
to maximize long-term capital appreciation for the Limited
Partners until the date the Partnership is dissolved. The
Partnership will seek to accomplish this objective by making
venture capital investments in new and developing companies
that the "Managing General Partners," as hereinafter
defined, believe offer significant long-term growth
possibilities and by providing those companies with active
management assistance where warranted. The Partnership will
also seek to achieve this objective by investing in
established companies that the Managing General Partners
believe offer special opportunities for growth. The
Partnership will also seek to preserve Limited Partner
capital through risk management and active participation
with Portfolio Companies. Generation of current income or
tax benefits will not be primary factors in the selection of
investments.
<PAGE>
TECHNOLOGY FUNDING PARTNERS III, L.P.
PROXY FOR MEETING OF LIMITED PARTNERS
October 6, 2000
PROXY SOLICITED BY THE MANAGEMENT COMMITTEE OF THE PARTNERSHIP
The undersigned hereby appoints Charles R. Kokesh and Gregory T. George
or either of them, each with power of substitution, as proxies to
represent the undersigned at the Annual Meeting of the Limited Partners
of Technology Funding Partners III, L.P., (the "Partnership") to be
held at the Partnership's offices at 2000 Alameda de las Pulgas, Suite
250, San Mateo, California at 10:00 a.m., local time, on October 6,
2000, and any adjournment thereof, and to vote the number of Units of
limited partnership interest in the Partnership the undersigned would
be entitled to vote if personally present in the following matters:
1. ELECTION OF INDIVIDUAL GENERAL PARTNERS to serve as members of the
Partnership's Management Committee each for a three-year term.
FOR all nominees listed below
except as marked to the contrary below): [ ]
WITHHOLD AUTHORITY to vote for all nominees listed below: [ ]
Nominees: G. Whitney Baines, Ph.D., A. Logan Craft,
Michael S. Tempesta, Ph.D.
(INSTRUCTION: To withhold authority to vote for any individual
nominee, write that nominee's name(s) below.)
___________________________________
2. ELECTION OF MANAGING GENERAL PARTNERS to serve as members of the
Partnership's Management Committee each for a three-year term.
FOR all nominees listed below
except as marked to the contrary below): [ ]
WITHHOLD AUTHORITY to vote for all nominees listed below: [ ]
Nominees: Technology Funding Inc., Technology Funding Ltd.
(INSTRUCTION: To withhold authority to vote for any individual
nominee, write that nominee's name(s) below):
_____________________________________
3. RATIFICATION OF THE SELECTION OF KMPG LLP as independent certified
public accountants of the Partnership.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. AMEND SECTION 2(m) OF THE PARTNERSHIP AGREEMENT to delete references
to "Controlling Person" in the definition of "General Partner
Overhead."
FOR [ ] AGAINST [ ] ABSTAIN [ ]
5. AMEND SECTION 1.03 OF THE PARTNERSHIP AGREEMENT to clarify the
Partnership's investment objective.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
6. In their discretion, upon such other business as may properly come
before the meeting or any adjournment thereof.
The Management Committee recommends a vote FOR all Proposals 1, 2, 3,
4, and 5 above. This proxy will be voted as directed. If a Limited
Partner does not specify on the form of proxy how the Limited Partner's
Units are to be voted, or if a Limited Partner fails to return a proxy,
the Limited Partner, pursuant to Section 14.04 of the Partnership
Agreement, shall be deemed to have granted to the Management Committee
a proxy solely for those matters noted on the form of proxy and the
Management Committee will vote all such proxies "FOR" each proposal
noted on the enclosed form of proxy. Abstentions so marked on any
proposal will be recorded as neither a vote for or against any proposal
so marked.
PROXY INSTRUCTIONS
1. Please sign exactly as the name or names appear hereon.
2. If Units of limited partnership interest are held jointly by two or
more persons, each joint holder should sign the proxy.
3. A proxy executed by a corporation should be signed in its name by
an authorized officer.
4. Person signing as executors, administrators, trustees and partners
should so indicate when signing.
5. As expressly provided in Section 14.04 of the Partnership Agreement,
proxies not returned shall be deemed to have been granted to the Management
Committee and shall be voted in favor of each matter noticed for and acted upon
at the Meeting.
Dated:__________________, 2000
By signing below, the undersigned hereby acknowledges receipt of the
Proxy Statement and the 1999 Annual Report.
Signature(s)_____________________________________
_____________________________________
If the information on the mailing label is not correct, please make
changes below:
Social Security #: ______ - _____ - ____________
Address: ___________________________
____________________________
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY IN THE ENVELOPE PROVIDED,
WHICH REQUIRES NO POSTAGE IF MAILED WITHIN THE UNITED STATES.
YOUR VOTE MUST BE RECEIVED PRIOR TO THE INITIAL MEETING OF LIMITED
PARTNERS TO BE HELD ON OCTOBER 6, 2000.
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