<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 1)
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)
May 3, 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 28 Pages
Exhibit Index is on Page 18
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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
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
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
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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
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
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
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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
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)
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
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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
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)
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
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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
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)
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
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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
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)
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
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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
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)
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
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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
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)
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
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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
7) SOLE VOTING POWER
128,600
NUMBER OF 8) SHARED VOTING POWER
SHARES 4,000
BENEFICIALLY
OWNED BY EACH 9) SOLE DISPOSITIVE POWER
REPORTING 128,600
PERSON WITH
10) SHARED DISPOSITIVE POWER
4,000
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
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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) 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
7) SOLE VOTING POWER
23,500
NUMBER OF 8) SHARED VOTING POWER
SHARES 10,000
BENEFICIALLY
OWNED BY EACH 9) SOLE DISPOSITIVE POWER
REPORTING 23,500
PERSON WITH
10) SHARED DISPOSITIVE POWER
10,000
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
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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
7) SOLE VOTING POWER
10,000
NUMBER OF 8) SHARED VOTING POWER
SHARES Not Applicable
BENEFICIALLY
OWNED BY EACH 9) SOLE DISPOSITIVE POWER
REPORTING 10,000
PERSON WITH
10) SHARED DISPOSITIVE POWER
Not Applicable
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
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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. 1 to Schedule 13D filed by the Reporting Persons which
amends the Schedule 13D filed April 8, 1996 relating to the Common Stock of
MicroCap Fund, Inc.
Item 1. Security and Issuer
This Statement on Schedule 13D (the "Statement") relates to the common
stock, $0.01 par value (the "Common Stock"), of The MicroCap Fund,
Inc., a Maryland corporation (the "Company"). The principal executive
offices of the Company are located at 575 Fifth Avenue, 37th Floor,
New York, New York 10801.
Item 2. Identity and Background
No Change
Item 3. Source and Amount of Funds or Other Consideration
No Change
Item 4. Purpose of Transaction
The Reporting Persons plan to nominate individuals for Board of
Directors. The Reporting Persons believe such nominees would support
actions to increase shareholder value and reduce the discount between
the market price of the Common Stock and its net asset value per
share, including such material actions as a change in the dividend
policy of the Company, converting the fund to an open-end fund,
liquidation of a material amount of the Company's assets, and a
merger, reorganization or liquidation of the Company.
The Reporting Persons may acquire additional shares of Common Stock or
other securities of the Company or sell or otherwise dispose of any or
all of the shares of Common Stock or other securities of the Company
beneficially owned by him. The Reporting Persons may take any other
action with respect to the Company or any of its debt or equity
securities in any manner permitted by law.
The Reporting Persons have submitted a request for a special meeting
of the stockholders to the Board of Directors, attached hereto as
Exhibit III and incorporated herein by reference, on behalf of
stockholders entitled to cast more than one third of the votes at the
meeting with proposals to amend the bylaws of the Company, remove all
current directors of the Company and to vote upon the election of new
directors of the Company.
13
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Kamal Mustafa ("Mustafa"), the Chairman and Chief Executive Officer
(collectively, the "CEO") of the Company, has initiated
conversations with the Reporting Persons during which Mustafa has
described the various investments the Company has entered into
during his tenure as CEO and expressed his desire and plan to
liquidate the Company.
The Reporting Persons support the liquidation of the Company in a way
that maximizes the return to stockholders on a prompt basis. In order
to achieve an efficient and orderly liquidation in the best interests
of the stockholders, the Reporting Persons believe it is necessary to
appoint an independent committee comprised of two of the Reporting
Persons and an independent third party to oversee the liquidation.
The Reporting Persons also believe that it is in the best interests of
the stockholders that the current directors of the Company resign and
Mustafa resigns as Chairman and Chief Executive Officer. The Reporting
Persons have notified the Board of Directors of the preceding
proposals and have outlined similar and additional actions in a
Letter to the Board of Directors of the Company attached
hereto as Exhibit II and incorporated herein by reference.
Except as disclosed in this Item 4 and previously disclosed in the
prior Schedule 13D 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.
Reporting Persons have entered into an oral agreement to the effect
that GFCP will assist the Reporting Persons in connection with
accomplishing the purposes set forth in Item 4. As consideration for
this agreement, the Reporting Persons have agreed to pay GFCP a
percentage of the profits realized as a result of such efforts as
follows: 10% of such profits up to $7.00 per share, and above $7.00
per share, 20% of such profits (assuming for the purpose of these
calculations, that the value per share on the date of such agreement
was $5.00). In addition, the Reporting Persons (exclusive of Geller
and GFCP) have agreed to share out-of-pocket expenses incurred in
connection with the activities contemplated by the agreement.
No written agreement exists with respect to the above described
agreement between and among the Reporting Persons. However, it is
contemplated that such written
14
<PAGE>
agreement, if developed, would be filed promptly as an exhibit.
The Reporting Persons are committed to pursuing the purposes set forth
in Item 4 hereof regardless of the interests of or effects upon any
Reporting Person and his or its business dealings.
Robert M. Pergament, Gerald B. Cramer, Ingleside Company, Edward J.
Rosenthal, Goodness Gardens Inc., Cramer Rosenthal McGlynn, Inc. and
Robert L. Priddy have previously filed Schedule 13Ds and amendments
thereto pursuant to Rules 13d-1 and 13d-2 promulgated under the
Securities Exchange Act of 1934, as amended. It is contemplated that
all further filings on Schedule 13D by such persons will be made by a
filing by the Reporting Persons.
Item 7. Material to be Filed as Exhibits:
Agreement of joint filing pursuant to Rule 13d(1)-f promulgated under
the Securities Exchange Act of 1934, as amended.
Letter to the Board of Directors.
Request for a special meeting of the stockholders.
15
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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: May 6, 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
16
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/s/ Michael S. Falk
Michael S. Falk
COMMONWEALTH ASSOCIATES
By: /s/ Michael S. Falk
Michael S. Falk
17
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EXHIBIT INDEX
EXHIBIT DESCRIPTION PAGE
I Agreement of joint filing 21
pursuant to Rule 13d(1)-f
promulgated under the
Securities Exchange Act of
1934, as amended
II Request for a special meeting
of the stockholders 26
III Letter to the Board of Directors 24
18
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SCHEDULE I
EXECUTIVE OFFICERS AND DIRECTORS
A. CRAMER ROSENTHAL MCGLYNN INC. ("CRM")
The name and present principal occupation or employment of each of the
executive officers and directors of CRM is set forth below. The business address
of each such person is 707 Westchester Avenue, White Plains, New York 10604.
Name and Positions Present Principal
Held Occupation and Employment
- ------------------ -------------------------
Gerald B. Cramer Chairman and a Director
Ronald H. McGlynn President and a Director
Edward J. Rosenthal Vice Chairman and a Director
Jay B. Abramson Executive Vice President,
General Counsel and a Director
Fred M. Filoon Senior Vice President
Arthur J. Pergament Senior Vice President
Eugene A. Trainor Chief Financial Officer
B. GOODNESS GARDENS INC.
The name and present principal occupation or employment of each of the
executive officers and directors of Goodness Gardens Inc. is set forth below.
The business address of each such person is 707 Westchester Avenue, White
Plains, New York 10604.
Name and Positions Present Principal
Held Occupation and Employment
- ------------------ -------------------------
Edward J. Rosenthal Chairman and a Director
Brian Murphy President and a Director
Loretta Citoli-Murphy Executive Vice President and
a Director
Laura Himmelstein Treasurer
19
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C. COMMONWEALTH ASSOCIATES ("CWA")
The name and present principal occupation or employment of each of the
executive officers and directors of CWA is set forth below. The business address
of each such person is 733 Third Avenue, 24th Floor, New York, New York 10017.
Name and Positions Present Principal
Held Occupation or Employment
- ------------------ ------------------------
Michael S. Falk Chairman and Chief Executive
Officer
John Robinson Vice Chairman
Robert Benret Co-Head of Investment Banking
Joseph Whynne Chief Financial Officer
Basil Asciutto Chief Operating Officer and
Senior Managing Director
Mark Siegel Senior Managing Director
20
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SCHEDULE II
TRANSACTION IN COMMON
STOCK OF
THE MICROCAP FUND, INC.
BY EACH REPORTING PERSON
No Change
21
<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. 1 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: May 6, 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
22
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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
23
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Exhibit III
May 6, 1996
BY MESSENGER
- ------------
To the Board of Directors of
The MicroCap Fund, Inc.
Gentlemen:
Delivered with this letter is a request for a special meeting of the
stockholders of The MicroCap Fund, Inc. (the "Company"). In accordance with the
applicable requirements of Section 2-502 of the Maryland General Corporation Law
and the Company's by-laws, the request has been executed by stockholders
entitled to cast at least 25 percent of all the votes entitled to be cast at the
meeting. As you will see, the requesting stockholders are seeking to remove and
replace the Company's incumbent directors and to effect certain changes to the
Company's by-laws.
We regret the need for this step, but the Company's horrific economic
performance, combined with the Board's indifferent response to it, leave us no
choice. It seems clear to us that, absent dramatic action by the Company's
stockholders, a continuation of the disastrous status quo is inevitable.
Nonetheless, we hope to avoid a prolonged and expensive election
contest -- even though we are confident that our side would prevail. In the hope
of averting the expenditures of time and effort that such a battle would entail,
we propose that the Board commit itself to the following four-point plan; if it
does so, we would be willing to suspend our request for a special meeting, and
to attempt to persuade the other requesting stockholders to support that
suspension.
Our plan involves the following:
1. Commitment to Orderly Liquidation. The Company would
----------------------------------
irrevocably commit itself to an orderly liquidation of its
investment positions, with the Company dissolving and the net
proceeds of that liquidation distributed to the Company's
stockholders. The Company would immediately dividend out 75
percent of the available cash assets of the Company to the
stockholders as a return of capital.
2. Change of Board Composition. The incumbent members of the
----------------------------
Board would each resign, and would prior to such resignation
elect to a majority of the vacancies designees of the
undersigned. Independent directors would also be elected,
ensuring compliance with all legal requirements. In addition,
Kamal Mustafa would resign as Chairman and Chief Executive
Officer of the Company.
24
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3. Supervision of Liquidation. The liquidation would be
---------------------------
supervised by a special committee comprised of two of the newly
elected Board members who are designated by the undersigned and a
third independent party.
4. Liquidating Trust Mechanism. The establishment of a
----------------------------
liquidating litigation trust under the control of an independent
trustee, the assets of which would the Company's claims against
third parties (including Commonwealth Associates). This trust
mechanism would help ensure that any meritorious claims of the
Company could be vigorously pursued, notwithstanding the
liquidation. The Company's existing stockholders would, of
course, be the beneficiaries of the liquidating trust.
In addition, we would be willing to consider appropriate releases and
other transitional assistance for members of the Company's management; given the
Company's regrettable performance in recent years, the last thing it needs is to
squander its remaining assets on divisive litigation.
* * * * *
We hope you will endorse this plan and work toward its prompt
implementation. We stress that any matter of detail is negotiable. The plan's
basic core is, however, unchangeable; the Company must be liquidated, and the
incumbent directors and management must go.
We and our counsel are standing by to meet with you at your earliest
convenience. If you reject our plan, please apprise us of the selected special
meeting date as promptly as practicable.
Yours sincerely,
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.
MICHAEL S. FALK
COMMONWEALTH ASSOCIATES
25
<PAGE>
EXHIBIT II
CALL OF SPECIAL MEETING OF STOCKHOLDERS OF
THE MICROCAP FUND, INC.
The MicroCap Fund, Inc.
575 Fifth Avenue
37th Floor
New York, New York 10801
Attention: Secretary of The MicroCap Fund, Inc.
We, the undersigned, are the record holders of, and are entitled to vote
at a meeting of the stockholders of The MicroCap Fund, Inc., a Maryland
corporation (the "Company"), the number of shares specified below of the common
stock, $0.01 par value per share (the "Common Stock"), of the Company, and/or of
the Series A Convertible Preferred Stock, $0.01 par value per share (the
"Preferred Stock"), of the Company. The undersigned stockholders are the record
holders of shares of the Company's capital stock entitled to cast at least 25
percent of the votes entitled to be cast at any meeting of the Company's
stockholders, and are the record holders of at least 25 percent of the
outstanding capital stock of the Company entitled to vote at any such meeting.
Pursuant to Article II, Section 2 of the Bylaws of the Company (the "Bylaws")
and Section 2-502 of the Maryland General Corporation Law, as amended (the
"Corporation Law"), we do hereby request that the secretary of the Company call
a special meeting of the stockholders of the Company (the "Special Meeting") to
be held on such date and at such time and place as shall be specified as
provided in the Bylaws, for the purposes of considering and voting upon the
following proposals:
I. PROPOSALS RELATING TO THE REMOVAL OF THE CURRENT DIRECTORS OF THE COMPANY AND
THE ELECTIONS OF NOMINEES
1. To amend and replace Article III, Section 4 of the Bylaws in its entirety
to provide as follows:
"Section 4. Removal. Any director may be removed from office, either
-------
with or without cause, by the affirmative vote of stockholders holding a
majority of all the votes entitled to be cast for the election of such
director in an election of directors."
2. To amend and replace Article III, Section 3 of the Bylaws in their entirety
to provide as follows:
26
<PAGE>
The MicroCap Fund, Inc.
May 6, 1996
Page 2
"Section 3. Vacancies. Subject to the rights of the holders of any
---------
series of preferred stock then outstanding, any vacancy occurring in the
Board of Directors for any cause other than by reason of removal from office
or an increase in the number of directors may be filled by a majority of the
remaining members of the Board of Directors, whether or not such majority is
less than a quorum. Any vacancy occurring by reason of such removal from
office or such an increase in the number of directors shall only be filled by
vote of the stockholders at an annual or special meeting of such
stockholders. A director elected by the Board of Directors as provided above
to fill a vacancy shall be elected to hold office until the next annual
meeting of stockholders or until a successor is elected and qualifies.
At any annual meeting of stockholders, stockholders shall be entitled to
elect directors to fill any vacancies in the Board of Directors that have
arisen since the preceding annual meeting of stockholders and that have been
filled by election of a new director by the Board of Directors as provided
above, and any director so elected by the stockholders shall hold office for
a term which coincides with the remaining term of the class to which such
directorship was previously assigned, and until his successor shall be
elected and shall qualify. In the event such vacancy arose due to removal
from office or an increase in the number of directors, any director so
elected to fill such vacancy by stockholders at an annual meeting, or at a
special meeting at which for a term which coincides with that of the class to
which such directorship has been apportioned as heretofore provided, and
until his successor shall be elected and shall qualify."
3. To amend and replace the first two sentences of Article III, Section 2 of the
Bylaws in their entirety to provide as follows:
"The number of directors of the Corporation shall equal the sum of five
plus the number of such directors, if any, that the holders of any series of
preferred stock of the Corporation may have the right to elect voting
separately as a class."
4. To add a new Article II, Section 11 to the Bylaws to provide as follows:
"Section 11. Nominations of Director Candidates. Nominations of
----------------------------------
candiates for election as directors of the Corporation at any meeting of
stockholders called for election of directors may be made by the Board of
Directors or by any stockholder entitled to vote at such meeting at any time
27
<PAGE>
The MicroCap Fund, Inc.
May 6, 1996
Page 3
prior to the time at which the first ballots are cast for the election of
directors at such meeting."
5. To remove all current directors of the Company and declare the office of
each member of the Board of Directors vacant; and
6. To vote upon the election of new directors of the Company to fill the
vacancies created by the removal of the current directors at the Special
Meeting and to fill any other vacancies then existing on the Board of
Directors, each such nominee to hold office until the expiration of the
term of the director such nominee has replaced and until such nominee's
successor has been elected and shall have qualified.
II. PROPOSAL RELATING TO CERTAIN AMENDMENTS OF THE BYLAWS
7. To add a new third sentence to Article XXIV of the Bylaws to provide as
follows:
"The foregoing notwithstanding, the following provisions of these bylaws
may only be altered or repealed by the vote of the Corporation's
stockholders taken at an annual meeting, or at a special meeting if
notice thereof be included in the notice of such special meeting: Article
II, Section 11; Article III, Section 2; Article III, Section 3; Article
III, Section 4; and this Article XXIV."
The undersigned hereby request a meeting of the holders of the Common
Stock and, if required under the Company's Articles of Incorporation, of the
holders of the Preferred Stock, to consider and vote upon the foregoing.
Pursuant to Section 2-502 of the Corporation Law and the Bylaws, we request that
the secretary of the Company provide us with written notice of the place, date
and time of the Special Meeting as promptly as practicable.
28
