TECHNOLOGY FUNDING VENTURE PARTNERS IV,
AN AGGRESSIVE GROWTH FUND, 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 Venture Partners IV, An
Aggressive Growth Fund, L.P.:
Notice is hereby given that the tri-annual Meeting of Limited Partners
of Technology Funding Venture Partners IV, An Aggressive Growth Fund,
L.P., (the "Partnership") will be held at 10:30 a.m., local time, on
Friday, December 8, 2000, at the Partnership's offices at 2000 Alameda
de las Pulgas, Suite 250, San Mateo, California 94403, 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 appointment of Arthur
Andersen 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" so that the salary and fringe benefits of a
Controlling Person of a Managing General Partner directly involved in
carrying out the business of the Partnership are expenses of the
Partnership;
5. The amendment of Article 1.03 of the Partnership Agreement to clarify
the Partnership's investment objective;
6. The amendment of Article 5.04 of the Partnership Agreement to clarify
the Limited Partners' right to vote under the Investment Company Act of
1940, as amended (the "Act");
7. 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 November 8, 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: November 8, 2000
<PAGE>
TECHNOLOGY FUNDING VENTURE PARTNERS IV,
AN AGGRESSIVE GROWTH FUND, L.P.
2000 Alameda de las Pulgas, Suite 250
San Mateo, California 9440
PROXY STATEMENT
The notice of meeting, proxy statement, and form of proxy are first being
mailed to Limited Partners on or about November 8, 2000.
General Information
Technology Funding Venture Partners IV, An Aggressive Growth Fund, 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") on
January 10, 1989. On February 16, 1989, the minimum number of Units
required to commence Partnership operations (15,000) was sold to persons
who became limited partners of the Partnership ("Limited Partners"). The
Partnership completed an offering on September 14, 1990, raising a total of
$40,000,000 from the sale of 400,000 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,
1999, pursuant to unanimous approval by the Management Committee on
December 5, 1997. In April 1999, the Management Committee further extended
the term of the Partnership to December 31, 2001.
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 10:30 a.m., local time, on December 8, 2000, (the "Meeting") at
the Partnership's offices located at 2000 Alameda de las Pulgas, Suite 250,
San Mateo, California 94403, and any adjournment thereof. The Management
Committee of the Partnership has designated Charles R. Kokesh and Gregory
T. George or either of them, each with power of substitution, 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 $25,000 to $35,000 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, plus approximately $30,000 of legal costs attributable to this
proxy for counsel to the Partnership and special Delaware counsel. Should
it become necessary to hire an outside proxy solicitation firm, costs could
increase by $75,000 to $100,000. The total cost of this proxy and
solicitation could be as much as $175,000.
Record Date
By order of the Management Committee, only Limited Partners of record at
the close of business on October 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 October 31, 2000, will be entitled to
vote at the Meeting. At the close of business on that date, the Partnership
had 400,000 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. The
representation in person or by proxy of at least a majority of the
outstanding Units entitled to vote at the Meeting is necessary to establish
a quorum for the election of the members of the Management Committee. The
Management Committee is elected by a plurality of the votes cast by the
Limited Partners entitled to vote at the meeting. Units represented by
proxies that are marked "WITHHOLD AUTHORITY" will have no effect on the
outcome of the vote for election of the members of the Management
Committee.
The approval of each of the other matters proposed in this proxy statement
requires the affirmative vote or consent of the Limited Partners who in the
aggregate own more than 50% of the outstanding Units. Abstentions so marked
on the ballot will have the same effect as votes against a proposal.
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.
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
Management 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 October 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. As provided in
Article 7.01(a) of the Partnership Agreement, the Managing General Partners
made a capital contribution and received an ownership interest reflected in
the allocation provisions in Articles 8 and 9 of the Partnership Agreement,
relating to profits and losses and distributions, but do not own
Partnership Units.
Annual Reports
The Partnership's Annual Report on Form 10-K for the year ended December
31, 1999, ("Annual Report") was mailed to all Limited Partners of record as
of April 1, 2000, on or about July 6, 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. Generally, the representative for TFL is Mr.
Kokesh, and the representative for TFI is Mr. George. The three Individual
General Partners are Mr. Frommer, Ms. Innes, and Dr. O'Grady. The Managing
General Partners and one of the three Individual General Partners have
served in those capacities since the formation of the Partnership. As
required by the Investment Company 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 has provided in the past five
years or provides any services to or receives 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 or her successor is elected and
qualified or until his or her 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 Management Committee may recommend.
Certain information about each nominee is set forth below:
Partnership Units Percentage Ownership
Nominee Age Beneficially Owned of Outstanding Units
Donald W. Frommer II 54 20 *
Amanda B. Innes 36 20 *
John Patrick O'Grady, M.D. 54 20 *
*Denotes beneficial ownership of less than 1% of outstanding Units.
Donald W. Frommer II has been an Individual General Partner of the
Partnership since his appointment in March 1999. Mr. Frommer has been a
custom bootmaker and small business owner for more than 27 years. Mr.
Frommer is currently the webmaster and administrator for The Crispin
Colloquy, a web-based discussion forum for bespoke shoe and bootmakers from
all over the world, as well as the webmaster and administrator for The
Honourable Cordwainers' Company, a 501(c)3 non-profit educational
organization of bespoke shoe and bootmakers. Mr. Frommer is also a writer
and teacher with an interest in computer technology.
Amanda B. Innes has been an Individual General Partner of the Partnership
since her appointment in April 2000. Ms. Innes held several positions with
Lehman Brothers from 1992 to 1997 including Vice President and Asia
Regional Manager in Hong Kong where she was responsible for sales
development, including business analysis, market research, and client
relationship management. Prior to that, Ms. Innes was Manager of Global
Institutional Investor Research for Lehman's Fixed Income Division where
she led the international investor research team, which studied over 15,000
institutions and interviewed 6,000 active institutional investors in 93
countries.
John Patrick O'Grady, M.D., has been an Individual General Partner since
1989 when the Partnership was formed. Since August 1989, Dr. O'Grady has
been a professor of Obstetrics and Gynecology at Tufts University School of
Medicine and Chief of Maternal-Fetal Medicine and Director of Obstetrical
Services at Baystate Medical Center in Springfield, Massachusetts. As
Maternal-Fetal Medicine Chief, Dr. O'Grady administers an annual budget in
excess of $3.5 million and supervises a team of five physicians who perform
more than 12,000 clinical procedures each year. Dr. O'Grady is Board-
certified in both obstetrics and gynecology and maternal-fetal medicine.
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 per person 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 to an annual limit of $7,000 per person;
(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 provided further that the total amount paid in any one
year for attendance at committee meetings does not exceed $3,000 per
person; 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 or
her right to receive a distribution to which he or she 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 the
Partner Partnership Accrued Retirement Partnership
Donald W. Frommer II $11,781.64 N/A N/A $11,781.64
Amanda B. Innes $0.00 N/A N/A $ 0.00
John Patrick O'Grady,
M.D. $15,200.66 N/A N/A $15,200.66
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 or her admission to the Partnership, for which that Individual
General Partner received an interest in the Partnership of 20 Units. For
calendar year 1999, Messrs. Frommer and O'Grady were allocated losses
attributable to their Unit holdings of $24 and $45, respectively. They also
each received $19 as their pro rata share of distributions from the
Partnership.
Management Committee Meetings and Committees
During 1999, the Partnership's Management Committee held a total of four
meetings. All of the Individual General Partners attended at least 75% of
the regular meetings of the Partnership. The Partnership does not have a
separate audit committee, valuation 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 its formation in 1989.
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 four limited partners. Mr. Kokesh is the managing
general partner of TFL. TFL has been a Managing General Partner of the
Partnership since its formation in 1989.
Voting Interests in the Managing General Partners
The following table sets forth the voting interests of the general partners
of TFL as of October 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 2 votes
Total 8 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 and 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 $44,524 and $57,328,
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 Venture 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 the
Partner Partnership Accrued Retirement Partnership
TFI $165,123 (2) N/A N/A $165,123 (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 $165,123 and $206,009,
respectively, and reimbursement of operational costs was $652,304 and
$1,122,981, 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 - Appointment of Independent Public Accountants
At its meeting held on September 10, 1999, the Management Committee of the
Partnership appointed the firm of KPMG LLP ("KPMG"), independent public
accountants, to examine the financial statements of the Partnership for the
year ending December 31, 1999, and until either its resignation or the
appointment of its successor. On September 5, 2000, the Partnership
received notice that KPMG had resigned from the engagement. KPMG informed
the Partnership that it had no disagreement on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope
or procedure which should be reported by the Partnership on a Form 8-K.
During the Partnership's two most recent fiscal years and through September
5, 2000, the Partnership has had no reportable events as defined in Item
304(a)(1)(v) of Regulation S-K, except for KPMG's inability to complete its
review of the June 30, 2000, financial statements. The Partnership
subsequently filed a Form 8-K on September 12, 2000, which reported the
resignation along with the events surrounding KPMG's inability to complete
the June 30, 2000, review. The Partnership requested that KPMG provide a
letter addressed to the SEC stating whether or not it agreed with the
statements in the Form 8-K.
In its September 20, 2000, letter to the SEC, KPMG identified no reason for
its resignation but stated that it had been "precluded from completing its
review of the unaudited June 30, 2000 financial statements" because the
Partnership did not provide in a timely fashion documentation from an
independent third party to support the valuation of investments. The
Partnership does not agree with KPMG's assertion regarding its inability to
complete the review because all documentation requested by KPMG was made
available. The Partnership stated its position in the amended Form 8-K
filed with the SEC on September 25, 2000.
During KPMG's tenure as the Partnership's independent accountants, none of
KPMG's reports contained adverse opinions, disclaimers, or other
qualifications regarding the Partnership's accounting policies.
Pursuant to the authority conferred in Article 3.07 of the Partnership
Agreement and subject to the approval of a majority in interest of the
Limited Partners, the Management Committee has directed the Managing
General Partners to appoint Arthur Andersen LLP as the Partnership's
independent public accountants. The Partnership knows of no direct or
indirect financial interest of Arthur Andersen LLP in the Partnership. The
appointment of Arthur Andersen LLP 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
appointment of Arthur Andersen LLP.
Arthur Andersen LLP will also act as independent public accountants for the
Managing General Partners and all of the other Technology Funding
partnerships and entities. The fees received by Arthur Andersen LLP 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 Arthur Andersen LLP has been retained as the
independent accountants for the Managing General Partners and the other
entities described above in its evaluation of the independence of Arthur
Andersen LLP with respect to the Partnership.
Representatives of KPMG and Arthur Andersen LLP 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 - Increase in Partnership Expenses by Redefining "General
Partner Overhead"
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 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 and specifically including the salary paid to Mr.
Kokesh as an employee of TFI.
In his respective roles at TFL and TFI, Mr. Kokesh is responsible for
managing those two entities and supervising the operation, management, and
progress of all portfolio companies as well as for administering the day-
to-day affairs of the Partnership. In addition, from time to time Mr.
Kokesh directly carries out the business of the Partnership, as opposed to
supervising third parties. If he were not a Controlling Person, that
portion of his salary from TFI directly attributable to carrying out the
business of the Partnership would be a reimbursable expense of the
Partnership. While his time and TFI salary are tracked and allocated to his
respective tasks, the Partnership has not reimbursed TFI for the portion of
Mr. Kokesh's salary specifically related to carrying out the Partnership's
business. The Partnership receives a significant and material benefit from
the direct involvement of Mr. Kokesh. Under the definition of those
expenses incurred on behalf of the Partnership for which reimbursement is
allowable, the Partnership does not currently pay for Mr. Kokesh's
expertise and TFI salary since General Partner Overhead is not reimbursable
and a Controlling Person's salary and fringe benefits are included in the
definition of General Partner Overhead. Article 3.04(d) expressly allows
the employment of affiliates of any General Partner "to carry out the
business and affairs of the Partnership" and to pay such compensation as is
competitive with the compensation paid to unaffiliated persons in the area
for similar services.
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 directly provided to it by a Controlling Person in carrying out
the business of the Partnership as allowed under Article 4.01(c),
"Reimbursement of Operational Costs." The Partnership Agreement makes a
clear distinction between operational costs and those responsibilities
compensated by the management fee and enumerated in Article 4.01(b), namely
"supervising the operation, management, and progress of all Portfolio
Companies, administering the day-to-day affairs of the Partnership and
evaluating, selecting and negotiating Portfolio Company financings." 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 or any other Controlling
Person whose salary and fringe benefits are paid by TFI. The proposed
change would become effective as of January 1, 2000. The following table
illustrates the additional costs to the Partnership for the full 12 months
of calendar year 2000.
Additional Cost to the Partnership of Amending the Definition of General
Partner Overhead
Controlling Person 1998 1999 2000 (Estimated)
Charles R. Kokesh $57,328 $44,524 $69,425
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 regarding investment
strategies as the Partnership nears the end of its term, the Management
Committee proposes to amend this section to state:
"The Partnership's principal investment objective is to maximize long-term
capital appreciation for the Limited Partners up to and including the final
day of the Partnership's operations prior to dissolution."
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. The Partnership does not intend to
change its current investing strategies.
Proposal 6 - Clarification of the Limited Partners' Right to Vote under the
Investment Company Act of 1940, as Amended (the "Act")
Article 5.04 of the Partnership Agreement outlines certain rights of the
Limited Partners. In order to conform to certain provisions of the Act
respecting fundamental voting rights of investors in business development
companies, the proposed amendment to Article 5.04 will clarify that any
vote of the Limited Partners that is mandated by the Act shall not be
limited by the requirement to obtain an opinion of counsel pursuant to
Articles 6.01 or 14.02 of the Partnership Agreement.
This section currently states: "Each of the foregoing matters shall be
approved or disapproved, as the case may be, upon the vote or consent of a
Majority in Interest of the Limited Partners." The Managing General
Partners propose to add the following phrase:
"...and any vote of the Limited Partners mandated by the 1940 Act shall not
be limited by the requirement to obtain an opinion of counsel pursuant to
Articles 6.01 or 14.02."
Other Matters
The Management Committee does not 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.
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. Prickett, Jones & Elliott, as special Delaware counsel to the
Partnership, has delivered a favorable opinion to the Partnership with
respect to the foregoing and as required by Section 6.01 of the Partnership
Agreement. To the extent that the Investment Company Act requires a vote on
certain matters, there will be a shareholder vote.
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 only with regard to such matters specifically noticed in this
proxy statement. Notwithstanding such discretionary authority, the
Management Committee is supportive of all the proposals noticed in this
proxy statement and will vote any proxies granted to it in favor of each
proposal unless a proxy is marked to be voted against a specific proposal
or candidate as provided on the ballot. The Partnership will 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 ("SEC").
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.
Room 1024
Washington, D.C. 20549
New York Regional Office
7 World Trade Center
Suite 1300
New York, NY 10048
Chicago Regional Office
Citicorp Center
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 814-00055.
All Limited Partners are urged to complete, sign, and date the accompanying
proxy and return it in the enclosed postage-paid envelope. Thank you for
your assistance.
<PAGE>
Annex A
Proposal 4 - Increase in Partnership Expenses by Redefining "General
Partner Overhead"
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.
Annex B
Proposal 5 - Investment Objective
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 up to and including the final day of the Partnership's
operations prior to dissolution. 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.
Annex C
Proposal 6 - Clarification of the Limited Partners' Right to Vote under the
Investment Company Act of 1940, as Amended (the "Act")
Article 5.04 of the Partnership Agreement currently reads as follows:
5.04 Rights of Limited Partners. The Limited Partners shall have the
following rights:
(a) the right to approve and elect or disapprove and remove General
Partners;
(b) the right to approve or disapprove proposed changes in the nature of
the Partnership's business so as to cause the Partnership to cease to be,
or to withdraw its election as, a business development company under the
1940 Act;
(c) the right to approve or disapprove any proposed investment advisory
contract or management agreement or to disapprove and terminate any such
existing contracts; provided, however, that such contracts are also
approved by a majority of the Independent General Partners;
(d) the right to approve and ratify or disapprove and reject the
appointment of the independent accountants of the Partnership; provided,
however, that such appointment is approved by the Management Committee,
including a majority of the Independent General Partners; .
(e) the right to approve or disapprove the appointment of successor
Managing General Partners;
(f) the right to propose and approve an amendment to this Agreement;
provided, however, that no such amendment shall conflict with the 1940 Act;
and
(g) the right to approve any other material matters related to the
business of the Partnership that the 1940 Act requires to be approved by
the Limited Partners so long as the Partnership is a business development
company subject to the provisions of the 1940 Act; provided, however, that,
prior to the exercise of any such right of approval, the Management
Committee amends this Agreement to reflect such additional voting right.
Each of the foregoing matters shall be approved or disapproved, as the case
may be, upon the vote or consent of a Majority in Interest of the Limited
Partners.
As amended by Proposal 6, Article 5.04 would read as follows:
5.04 Rights of Limited Partners. The Limited Partners shall have the
following rights:
(a) the right to approve and elect or disapprove and remove General
Partners;
(b) the right to approve or disapprove proposed changes in the nature of
the Partnership's business so as to cause the Partnership to cease to be,
or to withdraw its election as, a business development company under the
1940 Act;
(c) the right to approve or disapprove any proposed investment advisory
contract or management agreement or to disapprove and terminate any such
existing contracts; provided, however, that such contracts are also
approved by a majority of the Independent General Partners;
(d) the right to approve and ratify or disapprove and reject the
appointment of the independent accountants of the Partnership; provided,
however, that such appointment is approved by the Management Committee,
including a majority of the Independent General Partners; .
(e) the right to approve or disapprove the appointment of successor
Managing General Partners;
(f) the right to propose and approve an amendment to this Agreement;
provided, however, that no such amendment shall conflict with the 1940 Act;
and
(g) the right to approve any other material matters related to the
business of the Partnership that the 1940 Act requires to be approved by
the Limited Partners so long as the Partnership is a business development
company subject to the provisions of the 1940 Act; provided, however, that,
prior to the exercise of any such right of approval, the Management
Committee amends this Agreement to reflect such additional voting right.
Each of the foregoing matters shall be approved or disapproved, as the case
may be, upon the vote or consent of a Majority in Interest of the Limited
Partners, and any vote of the Limited Partners mandated by the 1940 Act
shall not be limited by the requirement to obtain an opinion of counsel
pursuant to Articles 6.01 or 14.02.
<PAGE>
TECHNOLOGY FUNDING VENTURE PARTNERS IV,
AN AGGRESSIVE GROWTH FUND, L.P.
Proxy for Meeting of Limited Partners
December 8, 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 tri-annual Meeting of the Limited Partners of
Technology Funding Venture Partners IV, An Aggressive Growth Fund, L.P.,
(the "Partnership") to be held at the Partnership's offices at 2000
Alameda de las Pulgas, Suite 250, San Mateo, California 94403, at 10:30 a.m.
local time, on December 8, 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 Three 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: Donald W. Frommer II
Amanda B. Innes
John Patrick O'Grady, M.D.
( Instruction: To withhold authority to vote for any individual nominee,
write that nominee's name(s) below.)
____________________________________________
2. Election of Two 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 Appointment of Arthur Andersen LLP as independent
certified public accountants of the Partnership.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. Amend Article 2, Section (m) of the Partnership Agreement to include the
salary and benefits of a Controlling Person in the expenses of the Partnership.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
5. Amend Article 1.03 of the Partnership Agreement to clarify the
Partnership's investment objective.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
6. Amend Article 5.04 of the Partnership Agreement to clarify the Limited
Partners' right to vote under the Investment Company Act of 1940, as amended.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
7. 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,
5, and 6 above. 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 have the same effect as a vote against the
proposal.
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. Persons signing as executors, administrators, trustees and partners should
so indicate when signing.
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, and sign this proxy and return it in the envelope provided,
which requires no postage if mailed within the United States. Your vote must
be received prior to the meeting of Limited Partners to be held on
December 8, 2000.
investor id bar code
