TECHNOLOGY FUNDING MEDICAL PARTNERS I, 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 Medical Partners I, L.P.:
Notice is hereby given that the Special Meeting of Limited Partners of
Technology Funding Medical Partners I, L.P., (the "Partnership") will be
held at 11:30 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;
2. The election of two Managing General Partners;
3. Ratification of the Individual General Partners' 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 4.01(c) of the Partnership Agreement to
remove the limit on reimbursement of operational costs to the Managing
General Partners or their affiliates;
6. The amendment of Article 1.03 of the Partnership Agreement to clarify
the Partnership's investment objective;
7. 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");
8. 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
Individual General Partners.
By order of the Individual General Partners,
Charles R. Kokesh
Chief Executive Officer
Technology Funding Inc.
San Mateo, California
Dated: November 8, 2000
<PAGE>
TECHNOLOGY FUNDING MEDICAL PARTNERS I, L.P.
2000 Alameda de las Pulgas, Suite 250
San Mateo, California 94403
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 Medical Partners I, L.P., (the "Partnership") is a limited
partnership that was organized under the laws of the State of Delaware on
September 3, 1992. The Partnership commenced selling units of limited
partnership interests ("Units") in May 1993. On October 8, 1993, the minimum
number of Units required to commence Partnership operations (12,000) was sold
to persons who became limited partners of the Partnership ("Limited
Partners"). The Partnership completed an offering on May 3, 1995, raising a
total of $7,929,844 from the sale of 79,716 Units.
The Partnership is managed and administered by three Individual General
Partners. The Individual General Partners have exclusive control of the
management of the Partnership, provide overall guidance and supervision of the
Partnership's operations, and perform 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 Individual General Partners, among other things, supervise the
management arrangements of the Partnership and supervise the activities of
the Managing General Partners. Subject to the supervision of the Individual
General Partners, 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 Agreement provides that the Partnership will continue until
December 31, 2002, unless further extended for up to two additional two-year
periods from such date if the Individual General Partners so determine or
unless sooner dissolved.
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 Individual General
Partners for use at the Special Meeting of Limited Partners of the Partnership
to be held at 11:30 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 Individual
General Partners of the Partnership have 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 $15,000 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, plus approximately
$6,000 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 $15,000 to
$20,000. The total cost of this proxy and solicitation could be as much as
$50,000.
Record Date
By order of the Individual General Partners, 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
79,716 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
Individual General Partners and the Managing General Partners. The Individual
General Partners and the Managing General Partners are 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 Individual General
Partners and the Managing General Partners.
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 Individual General Partners
a proxy solely for those matters noted on the form of proxy and the Individual
General Partners 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 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 three Individual General Partners are Messrs. Ginsberg, Marcum, and
Schroeder. The Managing General Partners are Technology Funding Inc. ("TFI")
and Technology Funding Ltd. ("TFL"). Generally, the representative for TFL is
Mr. Kokesh, and the representative for TFI is Mr. George. The Managing General
Partners and two 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 meeting 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 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
Harold M. Ginsberg, M.D. 44 20 *
Richard A. Marcum 52 20 *
Carroll J. Schroeder 53 20 *
*Denotes beneficial ownership of less than 1% of outstanding Units.
Harold M. Ginsberg, M.D., has been an Individual General Partner since 1993
when the Partnership was formed. Dr. Ginsberg has been a consulting
psychiatrist for the San Francisco Department of Public Health at Laguna Honda
Hospital since 1998 and in private practice since 1996. In addition, Dr.
Ginsberg is a General Partner of real estate investment groups in New York and
California and a venture investor in retail sales, specialty food manufacture,
and medical equipment development.
Richard A. Marcum has been an Individual General Partner since his appointment
in April 1999. Since 1999, Mr. Marcum has been a real estate consultant and
government lobbyist based in Dallas, Texas. From 1998 to 1999, Mr. Marcum was
Executive Director of the Regional Development Corporation in Santa Fe, New
Mexico. Prior to that, he held the same position with Santa Fe Economic
Development, Inc., from 1996 to 1998. From 1993 to 1996, Mr. Marcum was
Executive Director of the Santa Rosa County Economic Development Corporation
in Milton, Florida.
Carroll J. Schroeder has been an Individual General Partner since 1993 when
the Partnership was formed. Since February 1995, Mr. Schroeder has been the
Executive Director of the Stanford Home for Children, a century-old agency in
Sacramento, California, providing services to children and families with
complex needs. Mr. Schroeder is also the Chief Executive Officer of Family
Alliance, a subsidiary corporation of the Stanford Home and three partner
agencies which provides permanency-focused treatment and foster care.
Previously, he was Director of Programs at Families First in Davis,
California, from October 1976 to February 1995. This year, Mr. Schroeder
serves as the President of the Board of Directors of the California Alliance
of Child and Family Services, which represents and accredits over 200 agencies
serving children and families in California.
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 $6,000 per person annually in quarterly installments beginning
on the commencement date;
(b) The sum of $1,000 for each meeting of the Individual General Partners
attended by such Individual General Partner to an annual limit of $8,000 per
person;
(c) If a committee is appointed by the Individual General Partners, 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 Individual
General Partners, 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 $5,000 per person; and
(d) All out-of-pocket expenses relating to attendance at the meetings,
committee or otherwise, of the Individual General Partners.
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 Individual General
Partners, 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
Harold M. Ginsberg, M.D. $10,294.00 N/A N/A $10,294.00
Richard A. Marcum $9,207.84 N/A N/A $9,207.84
Carroll J. Schroeder $10,328.33 N/A N/A $10,328.33
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 20 Units. For calendar year 1999,
Messrs. Ginsberg, Marcum, and Schroeder were allocated losses attributable to
their Unit holdings of $113, $76, and $113, respectively.
Individual General Partner Meetings and Committees
During 1999, the Partnership's Individual General Partners 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 Individual General Partners as a whole.
There were no committee meetings or other special meetings other than the
regularly scheduled quarterly Individual General Partner 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 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 1993.
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
1993.
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 $4,661 and $9,881, 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 2% of total Limited Partner capital contributions
for each year of Partnership operations through the sixth year after the
closing date and thereafter declining by 10% per year; 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 $158,597(2) N/A N/A $158,597(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 $158,597 and $158,597,
respectively, and reimbursement of operational costs was $204,785 and
$342,062, 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 Individual General Partners 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 Individual General Partners have 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 Individual General Partners
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 their 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 Individual General Partners propose 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 below 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 $9,881 $4,661 $6,785
Proposal 5 - Removal of Limit on Reimbursement of Operational Costs
Under Article 4.01(c) of the Partnership Agreement, the Partnership shall
reimburse the Managing General Partners for operational costs related to the
Fund's investments, subject to a limit of 3% of total Limited Partner capital
contributions in any year through the first five years of Partnership
operations after the closing date and 1.5% of the Limited Partner capital
contributions thereafter. However, the number and complexity of the
investments made by the Partnership may require additional time and effort on
behalf of the Managing General Partners in order to maximize investment
returns to the Limited Partners. The Managing General Partners may incur
expenses higher than the current allowable limit.
The Individual General Partners propose to amend Article 4.01(c) to remove the
limit on reimbursement of operational costs. If the Limited Partners approve
this proposed amendment, the Partnership may incur additional expenses related
to operational costs, including but not limited to: (i) the costs of
operations; (ii) partnership accounting; (iii) investor communications; (iv)
investor documentation; (v) legal and tax services; and (vi) any other related
operational or administrative expenses necessary for the operation of the
Partnership.
Article 3.10 of the Partnership Agreement requires that any charges for goods
or services provided by the Managing General Partners be at the lower of
actual cost or that charged by vendors in the same area who are not affiliated
with the Partnership. All "Related Party Transactions," including fees and
expenses paid by the Partnership to the Managing General Partners, are
reviewed by the Partnership's independent public accountant and disclosed
expressly in the Partnership's Form 10-K.
Additional Cost to the Partnership of Removing the Limit on Reimbursement of
Operational Costs
Operational Costs Operational Costs
Under the Without the Percentage
Expense Cap Expense Cap Change
1998* $222,564 $222,564 0%
1999* $144,121 $144,121 0%
2000 (Estimated)* $144,785 $144,785 0%
*Expense cap period for the Partnership is May 1 to April 31 which differs
from its fiscal year. Expenses for 1998, for example, accumulated from May 1,
1998, through April 31, 1999.
Proposal 6 - 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 Individual General Partners
propose 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 7 - 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 Individual General Partners do not intend to bring any other business
before the Meeting and, so far as it is known to the Individual General
Partners, 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 special meeting of the Limited Partners, 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 Independent
General Partners are supportive of all the proposals noticed in this proxy
statement and will vote any proxies granted to them 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 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.
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 814-00124.
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 - Removal of Limit on Reimbursement of Operational Costs
Article 4.01(c) of the Partnership Agreement currently reads as follows:
(c) Reimbursement of Operational Costs. The Partnership shall reimburse the
Managing General Partners or their Affiliates for Operational Costs incurred
by the Managing General Partners or their Affiliates in connection with the
business of the Partnership, including without limitation expenses related to
the selection of Portfolio Companies or to proposed investments, even if the
proposed investments ultimately are not undertaken by the Partnership. The
Management Fee compensates the Managing General Partners solely for General
Partner Overhead and is in addition to the reimbursement of actual Operational
Costs. The Partnership may not pay or reimburse the General Partners for
Operational Costs that aggregate more than 3.0% of total Limited Partner
Capital Contributions in any year through the first five years of Partnership
operations after the Closing Date or more than 1.5% of Limited Partner Capital
Contributions in any year of Partnership operations thereafter. The Managing
General Partners will pay all General Partner Overhead and Organizational and
Offering Expenses (exclusive of amounts due to the Dealer-Manager under
Section 4.03 and subject to the Partnership's reimbursement of such expenses
pursuant to 4.01(a) above).
As amended by Proposal 5, Article 4.01(c) would read as follows:
(c) Reimbursement of Operational Costs. The Partnership shall reimburse the
Managing General Partners or their Affiliates for Operational Costs incurred
by the Managing General Partners or their Affiliates in connection with the
business of the Partnership, including without limitation expenses related to
the selection of Portfolio Companies or to proposed investments, even if the
proposed investments ultimately are not undertaken by the Partnership. The
Management Fee compensates the Managing General Partners solely for General
Partner Overhead and is in addition to the reimbursement of actual Operational
Costs. The Managing General Partners will pay all General Partner Overhead and
Organizational and Offering Expenses (exclusive of amounts due to the Dealer-
Manager under Section 4.03 and subject to the Partnership's reimbursement of
such expenses pursuant to 4.01(a) above).
Annex C
Proposal 6 - 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 6, 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 D
Proposal 7 - 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 proposed changes in the Partnership's fundamental
policies;
(d) the right to approve or disapprove any proposed investment advisory
contract or management agreement (or amendment thereto) 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;
(e) 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 Individual General Partners, including a
majority of the Independent General Partners;
(f) the right to approve or disapprove the appointment of successor Managing
General Partners;
(g) the right to vote on any other matters which would require their approval
under the 1940 Act if they were shareholders of a business development company
organized in corporate form;
(h) the right to propose and approve an amendment to this Agreement; provided,
however, that no such amendment shall conflict with the 1940 Act;
(i) 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 General Partners amend this
Agreement to reflect such additional voting right; and
(j) the right to approve or disapprove the sale of all or substantially all of
the assets of the Partnership, when such sale is made other than in the
ordinary course of business.
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. In determining the presence or absence of a majority vote, any Units
owned by the General Partners or their Affiliates shall not be included.
As amended by Proposal 7, 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 proposed changes in the Partnership's fundamental
policies;
(d) the right to approve or disapprove any proposed investment advisory
contract or management agreement (or amendment thereto) 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;
(e) 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 Individual General Partners, including a
majority of the Independent General Partners;
(f) the right to approve or disapprove the appointment of successor Managing
General Partners;
(g) the right to vote on any other matters which would require their approval
under the 1940 Act if they were shareholders of a business development company
organized in corporate form;
(h) the right to propose and approve an amendment to this Agreement; provided,
however, that no such amendment shall conflict with the 1940 Act;
(i) 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 General Partners amend this
Agreement to reflect such additional voting right; and
(j) the right to approve or disapprove the sale of all or substantially all of
the assets of the Partnership, when such sale is made other than in the
ordinary course of business.
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. In determining the presence or absence of a majority
vote, any Units owned by the General Partners or their Affiliates shall not be
included.
<PAGE>
TECHNOLOGY FUNDING MEDICAL PARTNERS I, L.P.
Proxy for Meeting of Limited Partners
December 8, 2000
Proxy Solicited by the Individual General Partners 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 Special Meeting of the Limited Partners of
Technology Funding Medical Partners I, 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 11:30 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.
FOR all nominees listed below (except as marked to the contrary below):
[ ]
WITHHOLD AUTHORITY to vote for all nominees listed below:
[ ]
Nominees: Harold M. Ginsberg, M.D.
Richard A. Marcum
Carroll J. Schroeder
(Instruction: To withhold authority to vote for any individual nominee, write
that nominee's name(s) below.)
____________________________________________
2. Election of Two Managing General Partners.
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 4.01(c) of the Partnership Agreement to remove the limit on
reimbursement of operational costs to the Managing General Partners or their
affiliates.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
6. Amend Article 1.03 of the Partnership Agreement to clarify the
Partnership's investment objective.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
7. 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 [ ]
8. In their discretion, upon such other business as may properly come before
the meeting or any adjournment thereof.
The Individual General Partners recommend a vote FOR all Proposals 1, 2, 3,
4, 5, 6, and 7 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 Article 14.04 of the Partnership Agreement,
shall be deemed to have granted to the Individual General Partners a proxy
solely for those matters noted on the form of proxy and the Individual
General Partners 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
