<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 3)
The MicroCap Fund, Inc.
(Name of Issuer)
Common Stock, $.01 par value
(Title of Class of Securities)
594949 0
-----------
(CUSIP Number)
Eric A. Stern, Esq.
Latham & Watkins
1001 Pennsylvania Avenue, N.W.
Suite 1300
Washington, D.C. 20004
(Name, Address and Telephone Number of
Person Authorized to Receive Notices
and Communications)
July 17, 1996
------------
(Date of Event which Requires Filing
of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b) (3) or (4), check the following box: /___/
Check the following box if a fee is being paid with the statement: /___/
Page 1 of 24 Pages
--
Exhibit Index is on Page 16
<PAGE>
SCHEDULE 13D
CUSIP No. 594949 0
1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Geller & Friend Capital Partners, Inc.
2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) / X /
----
(b) /____/
3) SEC USE ONLY
4) SOURCE OF FUNDS
Not Applicable
5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) /____/
6) CITIZENSHIP OR PLACE OR ORGANIZATION
California
<TABLE>
<S> <C>
7) SOLE VOTING POWER
Not Applicable
NUMBER OF 8) SHARED VOTING POWER
SHARES Not Applicable
BENEFICIALLY 9) SOLE DISPOSITIVE POWER
OWNED BY EACH Not Applicable
REPORTING
PERSON WITH 10) SHARED DISPOSITIVE POWER
Not Applicable
</TABLE>
11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
Not Applicable
12) CHECK BOX IF AGGREGATE AMOUNT IN ROW (11) EXCLUDED CERTAIN SHARES /____/
13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
Not Applicable
14) TYPE OF REPORTING PERSON
CO
2
<PAGE>
SCHEDULE 13D
CUSIP No. 594949 0
1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Marshall Geller
2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) / X /
----
(b) /____/
3) SEC USE ONLY
4) SOURCE OF FUNDS
Not Applicable
5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) /____/
6) CITIZENSHIP OR PLACE OR ORGANIZATION
United States
<TABLE>
<S> <C>
7) SOLE VOTING POWER
Not Applicable
NUMBER OF 8) SHARED VOTING POWER
SHARES Not Applicable
BENEFICIALLY 9) SOLE DISPOSITIVE POWER
OWNED BY EACH Not Applicable
REPORTING
PERSON WITH 10) SHARED DISPOSITIVE POWER
Not Applicable
</TABLE>
11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
Not Applicable
12) CHECK BOX IF AGGREGATE AMOUNT IN ROW (11) EXCLUDED CERTAIN SHARES /____/
13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
Not Applicable
14) TYPE OF REPORTING PERSON
IN
3
<PAGE>
SCHEDULE 13D
CUSIP No. 594949 0
1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
ROBERT M. PERGAMENT
2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) / X /
----
(b)
3) SEC USE ONLY
4) SOURCE OF FUNDS
PF
5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) /____/
6) CITIZENSHIP OR PLACE OR ORGANIZATION
UNITED STATES
<TABLE>
<S> <C>
7) SOLE VOTING POWER
Not Applicable
NUMBER OF 8) SHARED VOTING POWER
SHARES 23,000 (See Item 5)
BENEFICIALLY
OWNED BY EACH 9) SOLE DISPOSITIVE POWER
REPORTING Not Applicable
PERSON WITH
10) SHARED DISPOSITIVE POWER
23,000 (See Item 5)
</TABLE>
11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
23,000 (See Item 5)
12) CHECK BOX IF AGGREGATE AMOUNT IN ROW (11) EXCLUDED CERTAIN SHARES /____/
13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
1.0% (See Item 5)
14) TYPE OF REPORTING PERSON
IN
4
<PAGE>
SCHEDULE 13D
CUSIP No. 594949 0
1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
GERALD B. CRAMER
2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) / X /
----
(b)
3) SEC USE ONLY
4) SOURCE OF FUNDS
PF
5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) /____/
6) CITIZENSHIP OR PLACE OR ORGANIZATION
UNITED STATES
<TABLE>
<S> <C>
7) SOLE VOTING POWER
Not Applicable
NUMBER OF 8) SHARED VOTING POWER
SHARES 66,000 (See Item 5)
BENEFICIALLY
OWNED BY EACH 9) SOLE DISPOSITIVE POWER
REPORTING Not Applicable
PERSON WITH
10) SHARED DISPOSITIVE POWER
66,000 (See Item 5)
</TABLE>
11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
66,000 (See Item 5)
12) CHECK BOX IF AGGREGATE AMOUNT IN ROW (11) EXCLUDED CERTAIN SHARES /____/
13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
3.1% (See Item 5)
14) TYPE OF REPORTING PERSON
IN
5
<PAGE>
SCHEDULE 13D
CUSIP No. 594949 0
1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
INGLESIDE COMPANY
2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) / X /
----
(b)
3) SEC USE ONLY
4) SOURCE OF FUNDS
PF
5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) /____/
6) CITIZENSHIP OR PLACE OR ORGANIZATION
NEW YORK
<TABLE>
<S> <C>
7) SOLE VOTING POWER
Not Applicable
NUMBER OF 8) SHARED VOTING POWER
SHARES 40,000 (See Item 5)
BENEFICIALLY
OWNED BY EACH 9) SOLE DISPOSITIVE POWER
REPORTING Not Applicable
PERSON WITH
10) SHARED DISPOSITIVE POWER
40,000 (See Item 5)
</TABLE>
11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
40,000 (See Item 5)
12) CHECK BOX IF AGGREGATE AMOUNT IN ROW (11) EXCLUDED CERTAIN SHARES /____/
13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
1.9% (See Item 5)
14) TYPE OF REPORTING PERSON
PN
6
<PAGE>
SCHEDULE 13D
CUSIP No. 594949 0
1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
EDWARD J. ROSENTHAL
2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) / X /
----
(b)
3) SEC USE ONLY
4) SOURCE OF FUNDS
PF
5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) /____/
6) CITIZENSHIP OR PLACE OR ORGANIZATION
UNITED STATES
<TABLE>
<S> <C>
7) SOLE VOTING POWER
Not Applicable
NUMBER OF 8) SHARED VOTING POWER
SHARES 12,000 (See Item 5)
BENEFICIALLY
OWNED BY EACH 9) SOLE DISPOSITIVE POWER
REPORTING Not Applicable
PERSON WITH
10) SHARED DISPOSITIVE POWER
12,000 (See Item 5)
</TABLE>
11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
12,000 (See Item 5)
12) CHECK BOX IF AGGREGATE AMOUNT IN ROW (11) EXCLUDED CERTAIN SHARES /____/
13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.56% (See Item 5)
14) TYPE OF REPORTING PERSON
IN
7
<PAGE>
SCHEDULE 13D
CUSIP No. 594949 0
1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
GOODNESS GARDENS INC.
2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) / X /
----
(b)
3) SEC USE ONLY
4) SOURCE OF FUNDS
WC
5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) /____/
6) CITIZENSHIP OR PLACE OR ORGANIZATION
NEW YORK
<TABLE>
<S> <C>
7) SOLE VOTING POWER
Not Applicable
NUMBER OF 8) SHARED VOTING POWER
SHARES 5,000 (See Item 5)
BENEFICIALLY
OWNED BY EACH 9) SOLE DISPOSITIVE POWER
REPORTING Not Applicable
PERSON WITH
10) SHARED DISPOSITIVE POWER
5,000 (See Item 5)
</TABLE>
11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
5,000 (See Item 5)
12) CHECK BOX IF AGGREGATE AMOUNT IN ROW (11) EXCLUDED CERTAIN SHARES /____/
13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.23% (See Item 5)
14) TYPE OF REPORTING PERSON
CO
8
<PAGE>
SCHEDULE 13D
CUSIP No. 594949 0
1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
CRAMER ROSENTHAL MCGLYNN, INC.
2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) / X /
----
(b)
3) SEC USE ONLY
4) SOURCE OF FUNDS
NOT APPLICABLE
5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) /____/
6) CITIZENSHIP OR PLACE OR ORGANIZATION
NEW YORK
<TABLE>
<S> <C>
7) SOLE VOTING POWER
Not Applicable
NUMBER OF 8) SHARED VOTING POWER
SHARES 146,000 (See Item 5)
BENEFICIALLY
OWNED BY EACH 9) SOLE DISPOSITIVE POWER
REPORTING Not Applicable
PERSON WITH
10) SHARED DISPOSITIVE POWER
146,000 (See Item 5)
</TABLE>
11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
146,000 (See Item 5)
12) CHECK BOX IF AGGREGATE AMOUNT IN ROW (11) EXCLUDED CERTAIN SHARES /____/
13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
6.9% (See Item 5)
14) TYPE OF REPORTING PERSON
IA
9
<PAGE>
SCHEDULE 13D
CUSIP No. 594949 0
1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Robert L. Priddy
2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) / X /
----
(b) /____/
3) SEC USE ONLY
4) SOURCE OF FUNDS
PF
5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) /____/
6) CITIZENSHIP OR PLACE OR ORGANIZATION
United States
<TABLE>
<S> <C>
7) SOLE VOTING POWER
128,600
NUMBER OF 8) SHARED VOTING POWER
SHARES 4,000
BENEFICIALLY 9) SOLE DISPOSITIVE POWER
OWNED BY EACH 128,600
REPORTING
PERSON WITH 10) SHARED DISPOSITIVE POWER
4,000
</TABLE>
11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
150,100 (INCLUDING 17,500 COMMON STOCK ISSUABLE UPON
CONVERSION OF PREFERRED STOCK)
12) CHECK BOX IF AGGREGATE AMOUNT IN ROW (11) EXCLUDED CERTAIN
SHARES /____/
13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
7.0%
14) TYPE OF REPORTING PERSON
IN
10
<PAGE>
SCHEDULE 13D
CUSIP No. 594949 0
1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Michael S. Falk
2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) / X /
----
(b) /____/
3) SEC USE ONLY
4) OURCE OF FUNDS
PF
5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) /____/
6) CITIZENSHIP OR PLACE OR ORGANIZATION
United States
<TABLE>
<S> <C>
7) SOLE VOTING POWER
23,500
NUMBER OF 8) SHARED VOTING POWER
SHARES 10,000
BENEFICIALLY 9) SOLE DISPOSITIVE POWER
OWNED BY EACH 23,500
REPORTING
PERSON WITH 10) SHARED DISPOSITIVE POWER
10,000
</TABLE>
11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
30,625 (including 7,125 Common Stock issuable upon conversion of
preferred stock)
12) CHECK BOX IF AGGREGATE AMOUNT IN ROW (11) EXCLUDED CERTAIN SHARES /____/
13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
1.4%
14) TYPE OF REPORTING PERSON
IN
11
<PAGE>
SCHEDULE 13D
CUSIP No. 594949 0
1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Commonwealth Associates
2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) / X /
----
(b) /____/
3) SEC USE ONLY
4) SOURCE OF FUNDS
WC
5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) /____/
6) CITIZENSHIP OR PLACE OR ORGANIZATION
New York
<TABLE>
<S> <C>
7) SOLE VOTING POWER
10,000
NUMBER OF 8) SHARED VOTING POWER
SHARES Not Applicable
BENEFICIALLY 9) SOLE DISPOSITIVE POWER
OWNED BY EACH 10,000
REPORTING
PERSON WITH 10) SHARED DISPOSITIVE POWER
Not Applicable
</TABLE>
11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
12,000 (including 3,000 Common Stock issuable upon
conversion of preferred stock)
12) CHECK BOX IF AGGREGATE AMOUNT IN ROW (11) EXCLUDED CERTAIN SHARES /____/
13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.57%
14) TYPE OF REPORTING PERSON
BD
12
<PAGE>
Schedule 13D
Pursuant to Rule 13d-2 and on behalf of Geller & Friend Capital
Partners, Inc., Marshall Geller, Robert M. Pergament, Gerald B. Cramer,
Ingleside Company, Robert L. Priddy, Edward J. Rosenthal, Goodness Gardens Inc.,
Cramer Rosenthal McGlynn, Inc., Michael S. Falk and Commonwealth Associates (the
"Reporting Persons"), we hereby file with the Securities and Exchange Commission
via EDGAR Amendment No. 3 to Schedule 13D filed by the Reporting Persons which
amends the Schedule 13D filed April 9, 1996 relating to the Common Stock of
MicroCap Fund, Inc. (the "Company" or "Fund").
Item 1. Security and Issuer
No Change
Item 2. Identity and Background
No Change
Item 3. Source and Amount of Funds or Other Consideration
No Change
Item 4. Purpose of Transaction
See Item 6.
Except as disclosed in this Item 4 and Item 6 and previously disclosed
in the prior Schedule 13D, as amended filed by the Reporting Persons,
the Reporting Persons have no current plans or proposals which relate
to or would result in any of the events described in Item (a) through
(j) of the instructions of Item 4 of Schedule 13D.
Item 5. Interest in Securities of the Issuer.
No Change
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer.
On July 15, 1996 the Reporting Persons entered into a Settlement
Agreement with the Fund pursuant to which the Fund, at the behest of
the Reporting Persons, has agreed to revise the plan of liquidation to
be presented at the July 19, 1996 Special Meeting of the stockholders
of the Company. The Company and the Reporting Persons have each made a
determination that the revised plan of liquidation and the entry into
the Settlement Agreement by the Company are in the best interests of
the stockholders. The Reporting Persons support the liquidation of the
Fund under the revised plan of liquidation and intend to vote their
respective shares of capital stock of the Company at the Special
Meeting of the stockholders accordingly. A copy of the Settlement
Agreement is attached hereto as Exhibit II.
The Reporting Persons have entered into a written agreement
memorializing their previously disclosed oral agreement. A copy of
the agreement is attached hereto as Exhibit III.
Item 7. Material to be Filed as Exhibits:
13
<PAGE>
SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct:
Dated: July 16, 1996
/s/ Marshall Geller
Marshall Geller
GELLER & FRIEND CAPITAL PARTNERS
By: /s/ Marshall Geller
Marshall Geller
/s/ Robert M. Pergament
Robert M. Pergament
/s/ Gerald B. Cramer
Gerald B. Cramer
CRAMER ROSENTHAL MCGLYNN, INC.
By: /s/ Gerald B. Cramer
Gerald B. Cramer
INGLESIDE COMPANY
By: /s/ Barry Gray
Barry Gray
/s/ Edward J. Rosenthal
Edward J. Rosenthal
GOODNESS GARDENS INC.
By: /s/ Edward J. Rosenthal
Edward J. Rosenthal
/s/ Robert L. Priddy
Robert L. Priddy
14
<PAGE>
/s/ Michael S. Falk
Michael S. Falk
COMMONWEALTH ASSOCIATES
By: /s/ Michael S. Falk
Michael S. Falk
15
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION PAGE
<S> <C> <C>
Agreement of joint filing 19
I pursuant to Rule 13d(1)-f
promulgated under the
Securities Exchange Act of
1934, as amended
II Settlement Agreement dated as 21
of July 15, 1996 among The
MicroCap Fund, Inc., Kamal
Mustafa, Michael Falk, Geller
& Friend Capital Partners, Inc.,
Marshall Geller, Robert M.
Pergament, Gerald B. Cramer, The
Ingleside Company, Robert L.
Priddy, Edward J. Rosenthal,
Goodness Gardens, Inc., Cramer
Rosenthal McGlynn, Inc. and
Commonwealth Associates
III Letter Agreement dated as of 24
July 9, 1996 among Geller &
Friend Capital Partners, Inc.,
Robert M. Pergament, Gerald B.
Cramer, Cramer Rosenthal McGlynn,
Inc., Edward J. Rosenthal,
Goodness Gardens, Inc., The
Ingleside Company, Commonwealth
Associates, Robert L. Priddy,
and Michael S. Falk
</TABLE>
16
<PAGE>
SCHEDULE I
EXECUTIVE OFFICERS AND DIRECTORS
No Change
17
<PAGE>
SCHEDULE II
TRANSACTIONS IN COMMON
STOCK OF
THE MICROCAP FUND, INC.
BY EACH REPORTING PERSON
No Change
18
<PAGE>
EXHIBIT I
AGREEMENT OF JOINT FILING
Pursuant to Rule 13d-1(f) promulgated under the Securities Exchange
Act of 1934, the undersigned persons hereby agree to file with the Securities
and Exchange Commission Amendment No. 3 to the Statement on Schedule 13D (the
"Amendment") to which this Agreement is attached as an exhibit, and agree that
such Amendment, as so filed, is filed on behalf of each of them.
IN WITNESS WHEREOF, the undersigned have executed this Agreement.
Dated: July 17, 1996
GELLER & FRIEND CAPITAL
PARTNERS, INC.
Marshall Geller By: /s/ Marshall Geller
/s/ Marshall Geller
Marshall Geller
/s/ Robert M. Pergament
Robert M. Pergament
CRAMER ROSENTHAL MCGLYNN, INC.
Gerald B. Cramer By: /s/ Gerald B. Cramer
/s/ Gerald B. Cramer
Gerald B. Cramer
INGLESIDE COMPANY
Barry Gray By: /s/ Barry Gray
/s/ Edward J. Rosenthal
Edward J. Rosenthal
19
<PAGE>
GOODNESS GARDENS INC.
Edward Rosenthal By: /s/ Edward J. Rosenthal
/s/ Robert L. Priddy
Robert L. Priddy
COMMONWEALTH ASSOCIATES
Michael S. Falk By: /s/ Michael S. Falk
/s/ Michael S. Falk
Michael S. Falk
20
<PAGE>
Exhibit II
SETTLEMENT AGREEMENT
--------------------
Agreement dated as of July 15, 1996 among The MicroCap Fund, Inc. (the
"Company"), Kamal Mustafa ("Mustafa"), Michael Falk ("Falk"), Geller & Friend
Capital Partners, Inc., Marshall Geller, Robert M. Pergament, Gerald B. Cramer,
The Ingleside Company, Robert L. Priddy, Edward J. Rosenthal, Goodness Gardens
Inc., Cramer Rosenthal McGlynn, Inc. and Commonwealth Associates (Falk and any
other person who is from time to time a filing person with respect to any
Schedule 13D filed with the Securities and Exchange Commission (the "SEC") by
any group including any of the foregoing with respect to the common stock and
preferred stock of the Company being referred to herein collectively the "13D
Group" and separately as a "Group Member").
In order to resolve certain differences of view as to the manner in
which the Company should be liquidated and to provide a framework pursuant to
which each Group Member will support the Plan of Liquidation in the form
attached hereto as Exhibit A (the "Plan"), the parties hereto agree as follows:
1. The Company may postpone the convening of the Special Meeting of
Stockholders of the Company (the "Special Meeting") called to consider the Plan
to a date not later than July 22, 1996 in order to modify the Company's proxy
materials to reflect this Agreement and the Plan.
2. Each party hereto and each Group Member will vote all of his or
its shares of capital stock of the Company in favor of the Plan and will not
encourage any Stockholder to vote against the Plan or to not be present at the
Stockholders meeting in person or by proxy.
3. Effective upon adoption of the Plan by the Stockholders of the
Company, (a) Mustafa will resign any and all positions he has with the Company,
including as director of the Company; and (b) Falk will resign as a director of
the Company. Thereafter, none of Falk, Mustafa, Commonwealth, Bluestone Capital
Partners L.P. ("Bluestone") or any affiliated person of any of them will,
directly or indirectly, (i) become an affiliated person of the Company, (ii)
have any business dealings with the Company, or (iii) receive or be entitled to
receive any compensation in connection with the Company, any of its affiliates
or any of its investments. Attached hereto as Exhibits B-1 and B-2 are fully
executed resignations of Falk and Mustafa effective upon the date of such
adoption.
4. Prior to the Special Meeting the current directors of the Company
who are not interested persons of the Company will identify two additional
directors who are not interested persons of the Company, Commonwealth,
Bluestone, Balk, Mustafa or the 13D Group and who are reasonably acceptable to
counsel for the Company and counsel to the 13D Group upon consultation with
their respective clients. Effective upon the resignations of Mustafa and Falk,
the Company's Board of Directors will elect such new persons as directors to
fill the vacancies created by such resignations.
5. If the Company does not within 45 days after the adoption of the
Plan by the Stockholders engage on reasonable terms one or more persons who are
reasonably acceptable
21
<PAGE>
to the 13D Group to act as trustee of the liquidating trust referred to in the
Plan or if the Company does not within 90 days after adoption of the Plan by
Stockholders file articles of dissolution and contribute all remaining assets to
the liquidating trust, upon written request by the 13D Group the Board of
Directors of the Company will promptly call a meeting of stockholders of the
Company to elect that number of directors, including without limitation all
Class II directors and any director elected or appointed by the Board of
Directors and not by the stockholders, which would need to be elected at an
annual meeting of Stockholders of the Company. The date of such meeting shall be
not later than 40 days following receipt of such request and shall be called not
later than one week following receipt of such request. The parties agree that
the 13D Group shall not be restricted in any manner under this Agreement from
contesting any matter, including without limitation the election of any director
nominee, at the annual meeting of the stockholders.
6. Gerald B. Cramer and any other representative of the 13D Group who
is not an affiliated person of Commonwealth and who is otherwise reasonably
acceptable to the Company shall be entitled to receive notice of and to attend
all meetings of the Board of Directors and any committee thereof other than the
Compliance Committee held after the date of this Agreement.
7. Representatives (including accountants) of the 13D Group shall be
entitled to inspect the financial records of the Company to assure themselves as
to the propriety of the purposes for which the Company has incurred expenses and
shall be afforded access to any nonconfidential records of the Company. Each
Group Member hereby acknowledges that the access so provided and the attendance
of a representative at meetings of the Board of Directors may result in the
Group Members' being deemed to be in possession of material non-public
information. Each Group Member hereby agrees to hold all such information
received by any Group Member confidential and not to act on such information
until it becomes public in the ordinary course or becomes nonmaterial.
8. The Company and the 13D Group will issue a joint press release
immediately following execution and delivery of this Agreement in the form of
Exhibit C.
9. The Company will not (a) amend its by-laws, (b) propose to
Stockholders any amendment to its articles of incorporation or (c) enter into
any agreement that would materially and adversely affect the ability of the
Company to complete the Plan or that would adversely affect the 13D Group's
rights under this Agreement (or impair the exercises thereof), including without
limitation the 13D Group's rights with respect to the calling of a meeting of
stockholders for the election of directors in certain circumstances.
10. If an order of the SEC is obtained authorizing the Company to
reimburse the reasonable out-of-pocket expenses of (including without limitation
reasonable fees and expenses of legal counsel) the 13D Group in its efforts to
have the Company liquidate, the Company will reimburse the 13D Group for such
out-of-pocket expenses (including without limitation reasonable fees and
expenses of legal counsel) as the SEC shall approve in an amount not in excess
of $120,000. The Company will support the application for such an order on the
ground that such reimbursement is in the overall best interests of the
Stockholders, will join in the
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application for such order as an additional applicant and will take such
additional action as may be reasonably requested by the SEC.
11. None of the execution, delivery or performance of this Agreement
by the parties hereto shall constitute an admission of liability regarding any
matter other than for performance of its obligations hereunder.
12. None of the parties to this Agreement will do or say anything
inconsistent with the press release or the terms of this Agreement.
13. Any or all notices to be given hereunder shall be deemed to have
been duly given if delivered personally, in the case of the Company or its
Directors, 575 Fifth Avenue, NY, NY 10017, attn: Secretary; in the case of
Mustafa, c/o Bluestone Capital Partners, 575 Fifth Avenue, NY, NY 10017; in the
case of any other party hereto or any Group Member, c/o Eric A. Stern, Latham &
Watkins, 1001 Pennsylvania Ave. NW Washington, D.C. 20004, or in any case to
such other address as shall have been most recently provided to each other party
hereto in the manner provided herein.
14. This Agreement shall be binding upon and inure to the benefit of
the executors, heirs, and successors of the parties hereto.
15. This Agreement may not be amended except by an instrument in
writing signed by each of the parties hereto.
16. This Agreement may be executed in one or more counterparts, each
of which shall be deemed an original but all of which together shall constitute
one and the same instrument.
17. Each party hereby consents to jurisdiction of the courts of the
State of Maryland and agrees that specific performance would be an appropriate
remedy for violation of such party of any of the provisions of this Agreement.
Each party shall be entitled to such attorneys fees and other costs and expenses
arising out of enforcement of this Agreement by it against violations hereof as
the court may approve.
18. In the event the Plan is not adopted by the Stockholders at the
Special Meeting, this Agreement will automatically terminate. If it is
determined that any party hereto has breached this Agreement in a manner
material and adverse to any of the other parties hereto, the non breaching
parties may terminate this Agreement without waiver of liability on the part of
the breaching party. For the purposes of the foregoing sentence, such
termination shall occur upon written notice to such effect signed by all Group
Members (if the breaching party is the Company and/or Mustafa) or the Company
and Mustafa (if the breaching party is Falk or one or more of the other Group
Members).
19. This Agreement shall be governed by the laws of the State of
Maryland without giving effect to the conflict of laws provisions thereof.
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Exhibit III
July 9, 1996
To Each of the Persons Listed on Schedule A Hereto
Gentlemen:
This letter sets forth the terms of the agreement whereby the undersigned,
Geller & Friend Capital Partners, Inc. ("GFCP") is providing advisory services
to all of you listed on Schedule A hereto as a group (the "Group") in connection
with the Group's ownership of common stock in The Microcap Fund, Inc. (the
"Company") and other activities related to the Company. The Group has filed a
Schedule 13D indicating that the Group intends to nominate individuals for
membership on the Company's Board of Directors. The Group has indicated in such
Schedule 13D that its nominees support actions to increase shareholder value of
the Company's common stock, which include, among the possibilities, a change in
the dividend policy of the Company, conversion of the Company to an open-end
investment Company, liquidation of a material amount of the Company's assets and
the merger, reorganization or liquidation of the Company (collectively "Group
Purposes"). The Group also disclosed that additional shares of the Company's
common stock or other securities of the Company might be acquired or the Group
could determine to sell or otherwise dispose of any such securities. Currently
it is intended that the Company will liquidate.
The Group and GFCP agree as follows:
1. In consideration of the compensation described below, GFCP will assist the
Group in accomplishing the Group Purposes. The Group and GFCP acknowledge and
confirm that GFCP will and can only provide services to the Group which are in
compliance with all applicable federal, state and local laws, including without
limitation all applicable federal securities laws.
2. The Group shall pay to GFCP a fee equal to
A. Ten percent (10%) of the profit per share of common stock of the
Company realized by the Group up to a $7 per share value; and
B. Twenty percent (20%) of the profit per share of common stock of the
Company realized by the Group above a $7 per share value.
3. For purposes hereof, the Group and GFCP confirm and agree that the starting
value per share for purposes of determining profit realized by the Group is
$5.00. Each member of the Group shall pay to GFCP a portion of the fee based
upon the number of shares of the Company's common stock owned by such person.
GFCP shall be entitled to be reimbursed for any and all out-of-pocket expenses
incurred by it in connection with performing services hereunder; provided,
however that prior to incurring any cost in excess of $2,500, GFCP shall obtain
the prior consent of the Group, which consent can be furnished by such person
that has been designated as a representative of the Group.
4. This agreement may be terminated if and only if the Group and GFCP mutually
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agree.
5. The fee payable to GFCP hereunder shall be paid in cash as and when the
Group receives liquidation proceeds from the liquidation of the Company or
shares of the Company's common stock owned by the Group are sold or upon the
closing of any transaction whereby the Group sells or exchanges shares of the
Company's common stock, whichever event is earlier.
If the foregoing correctly sets forth our agreement, please sign and return a
duplicate of this letter agreement.
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