<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
(Amendment No. 1)
<TABLE>
<S> <C>
Filed by registrant / /
Filed by a party other than the registrant /x/ / / Confidential, for Use
of the Commission Only (as
permitted by Rule 14a-6(e)(2)
</TABLE>
Check the appropriate box:
/x/ Preliminary proxy statement
/ / Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
THE MICROCAP FUND, INC.
(Name of Registrant as Specified in its Charter)
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.
Commonwealth Associates
Michael S. Falk
(Name of Person(s) Filing Proxy Statement)
__________________________________________________
Payment of filing fee (Check the appropriate box):
/ / $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
<PAGE>
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transection applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/x/ Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, schedule or registration statement no.:
(3) Filing party:
(4) Date filed:
2
<PAGE>
June __, 1996
Dear Fellow MicroCap Fund, Inc. Stockholders:
We, the undersigned, are the holders of in excess of 15% of the
outstanding equity securities of The MicroCap Fund, Inc. (the "Company" or the
"Fund"), and are writing to ask for your support in favor of proposals discussed
in the attached proxy statement and in opposition to the Board of Directors' of
the Company (the "Board" or "Board of Directors") proposed "plan of liquidation"
for the upcoming July 11, 1996 special meeting of the stockholders ("Special
Meeting").
Over the past month, we and other stockholders have expressed to the
Board of Directors of the Company our dissatisfaction with and concern over the
Fund's present management and its performance on both a current and historical
basis. We have made it quite clear to the officers of the Company that drastic
changes were required.
THE BOARD OF DIRECTORS AND KAMAL MUSTAFA HAVE NO EXCUSE FOR THEIR POOR
MANAGEMENT.
. THE COMPANY HAS MADE POOR INVESTMENT DECISIONS The Company has
made a series of poor investment decisions, with one or two
exceptions just proving the rule. The Company's miserable track
record cries out for new leadership. In addition to the 14 failed
--
bridge loans, the following examples are indicative of the Board
of Directors' and Kamal Mustafa's poor management:
Silverado Investment
--------------------
The investment in Silverado foods was sold in the quarter
ending May 31, 1995. The Fund sold a total of 337,500 of
common shares at an average price per share of $2.44. The
stock has rarely traded below $2.50 and as of June 3, 1996
traded at $3.50 a share.
Yes Entertainment Investment
----------------------------
The investment in Yes Entertainment was sold in the
quarter ending November 30, 1995. The Fund sold a total of
55,555 of common shares at an average price per share of
$5.50 resulting in a $393,662 loss. As of June 3, 1996,
the stock traded at $13.25.
<PAGE>
June ___, 1996
Page 2
Accumed Investment
------------------
The investment in Accumed International was sold in two
blocks. The first block was sold in June, 1994. The Fund
sold 100,000 common shares at an average price per share
of $2.10 resulting in a slight gain of $18,987. As of
June 3, 1996, the stock traded at $7.50.
The second block was sold in the quarter ending January
31, 1995. The Fund sold 150,000 common shares at an
average price of $1.06 per share resulting in a loss of
$121,081. As of June 3, 1996, the stock traded at $7.50.
. THE COMPANY'S STOCK HAS PLUMMETED. From the time Kamal Mustafa
took control of the Company to ______, 1996, the value of its
stock has declined ___%, in that same period the ______ Index
rose ___%. Had the combined stocks performed as the Index, they
would be trading at a combined price of $______ per share - not
$______.
. THE COMPANY'S FINANCIAL POSITION HAS WORSENED. Stockholders'
equity has fallen ___% from $______ as of _____ to $_____ as of
_____. From Fiscal year 19__ to 19__, under Kamal Mustafa's
control, the Company suffered net losses of over $______. It has
suffered a $______ net loss for this fiscal year alone.
. KAMAL MUSTAFA CANNOT BLAME PAST MANAGEMENT FOR HIS PROBLEMS.
Based on the Company's poor performance under the stewardship of the
present Board of Directors and Kamal Mustafa, we have long lost any confidence
in both the integrity and ability of the present Board and Kamal Mustafa. To
that end, in a series of letters, we have asked the current Board of Directors
to commit itself to a four-point plan which calls for:
1. An irrevocable commitment to liquidation of the Fund, with the
immediate distribution of 75% of the Company's available cash as a
---------
return of capital.
2. The resignation of the current Board of Directors.
3. The prompt liquidation of the Company's investments under a special
committee of three of the new directors.
<PAGE>
June __, 1996
Page 3
4. A liquidating trust mechanism to permit the pursuit of legal actions
on the Company's behalf.
The Board of Directors and Kamal Mustafa have in essence ignored our
letters and have refused to respond to our proposals.
Under the Company's by-laws and Maryland law, the stockholders are
entitled to have the Company call a special meeting of the stockholders. On May
6, 1996, on behalf of stockholders holding in excess of 25% of the outstanding
voting capacity of the Company, we requested that the Secretary of the Company
call a special meeting of the stockholders for the purposes of considering and
voting upon the foregoing proposals and certain amendments to the by-laws. The
Board of Directors and its Chairman, Kamal Mustafa, only acknowledged the
special meeting request and the two letters sent to the Board of Directors after
nearly a month and after persistent inquiries from the Group's counsel. In
their acknowledgment, they have refused to convene a special meeting on behalf
of the stockholders as requested. Instead, the Board has called a special
meeting on their own behalf and proposed their own "plan of liquidation." The
Board's action is clearly an attempt to gain a tactical advantage over us and
prevent the stockholders from fully and fairly considering alternate proposals
available to them and, in our opinion, realizing the true value of their
investment.
WE SEEK YOUR SUPPORT TO STOP A RECENTLY ANNOUNCED "PLAN OF
LIQUIDATION" BY THE COMPANY.
The Company's "plan of liquidation" appears to be simply another sham
- - a hollow "attempt" purporting to enhance stockholder value. The Group fears
it will end up as yet another tactic that advances the interests of the
Company's existing managers at the expense of the stockholders. It is
imperative that the Company make a commitment to liquidate. The "plan of
- ----------
liquidation" presented by the Board does not commit the Company to a liquidation
- - their "plan" is revocable without stockholder approval. In addition, the
---------
Board's "plan," if ever carried out, would be controlled and administered by the
incumbent directors and management. Any liquidation of the Company must be
--------------------------------------
independent of the incumbent management. The Company managers who have run the
- ---------------------------------------
Company so poorly in recent months and years must not be given the opportunity
to loot the Company by playing material roles in any liquidation of the Company
(and to receive additional compensation for liquidating what they operated so
badly).
<PAGE>
The Group supports the liquidation of the Company. However, the
liquidation must be conducted under the supervision of persons completely
independent of those incumbent managers and also new directors who clearly
represent the stockholders. The Group therefore, upon blocking the incumbent
Board of Directors' "plan of liquidation," will seek to elect new directors who
will liquidate the Fund in a manner that maximizes stockholder value. To date,
the Company has refused to honor the request for a special meeting filed by the
Group on behalf of certain public stockholders. In a letter to the Company's
counsel, the Group recently reasserted the public stockholders' right to a
special meeting for the purpose of removing the current directors and electing
new directors. If the Company continues to refuse to call a special meeting on
behalf of the stockholders as requested and continues to frustrate stockholder
democracy, the Group will elect nominees at the annual meeting of the
stockholders in replacement of those four directors, including Kamal Mustafa,
whose term expire at the annual meeting.
We need your help. Support our efforts to maximize stockholder values
by opposing the Board's "plan of liquidation." Put an end to Kamal Mustafa's
reign over your Company. Please sign, date and mail the enclosed WHITE proxy
cards today.
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.
Commonwealth Associates
Michael S. Falk
<PAGE>
MEETING OF THE STOCKHOLDERS
OF
THE MICROCAP FUND, INC.
Proxy Statement
of
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., COMMONWEALTH
ASSOCIATES AND MICHAEL S. FALK (THE "GROUP")
This Proxy Statement and the accompanying WHITE proxy cards are being
furnished to the stockholders of The MicroCap Fund, Inc. (the "Company" or the
"Fund") in connection with the solicitation of proxies by the Group to be used
at a special meeting of the stockholders and any adjournment(s), postponement(s)
or rescheduling(s) thereof (the "Special Meeting") called by the Board of
Directors of the Company scheduled to be held July 11, 1996, with a record date
of June 10, 1996 (the "Record Date").
THIS PROXY STATEMENT AND THE ACCOMPANYING WHITE FORMS OF PROXY ARE
FIRST BEING SENT TO STOCKHOLDERS ON OR ABOUT JUNE 20, 1996.
On May 9, 1996, the Board of Directors announced a plan to liquidate
the Fund. At the Special Meeting, stockholders will be asked to vote in favor
of the Board's "plan of liquidation." The Group will oppose the incumbent Board
of Directors' "plan of liquidation."
The Group is soliciting proxies IN OPPOSITION to the incumbent Board
of Directors' proposed "plan of liquidation", and IN SUPPORT OF A VOTE, IN THE
DISCRETION OF THE PERSON(S) NAMED AS PROXY, OR THEIR SUBSTITUTE, ON SUCH OTHER
MATTERS (PLEASE SEE THE SECTION CAPTIONED "OTHER MATTERS" HEREIN) AS MAY COME
BEFORE THE SPECIAL MEETING OR ANY ADJOURNMENT(S), POSTPONEMENT(S) OR
RESCHEDULING(S) THEREOF.
As of May 20, 1996, the Group beneficially owned an aggregate of
338,725 shares of common stock of the Company (including common stock issuable
upon conversion of preferred stock), representing approximately 16% of the
outstanding shares of the Company. Certain information about the members of the
Group and their beneficial ownership of stock of the Company, who may also
assist in soliciting proxies, is set forth on Schedules I and II respectively,
attached hereto. The Group intends to vote such shares AGAINST the current
Board of Directors' "plan of liquidation".
The Board of Directors announced the "plan of liquidation" under
pressure from the Group and other stockholders in an attempt to gain a tactical
advantage over the
1
<PAGE>
Group and other public stockholders. On May 6, 1996 the Group and other
stockholders representing an excess of 25% of the equity of the Company, in
accordance with Maryland law and the by-laws of the Company, requested that the
Board of Directors call a special meeting of the stockholders and proposed
various amendments to the by-laws, removal of the incumbent Board of Directors
and the election of new directors. Accompanying and subsequent to the
stockholders' request for a special meeting, the Group asked the current Board
of Directors to commit itself to a four point plan calling for a commitment to
liquidate the Fund, the resignation of the current Board of Directors, the
prompt liquidation of the Fund's investments under a special committee of three
of the new directors and the creation of a liquidating trust mechanism to permit
the pursuit of legal actions on the Fund's behalf. The Board of Directors and
its Chairman, Kamal Mustafa, only acknowledged the special meeting request and
the two letters sent to the Board of Directors after nearly a month and after
persistent inquiries from the Group's counsel. In their acknowledgment, they
have refused to convene a special meeting on behalf of the stockholders as
requested. Kamal Mustafa and the Board of Directors have clearly demonstrated
they have no interest in the concerns of the stockholders. The Group believes
that, as the true owners of the Company, the stockholders have a right to tell
management how to best realize the true value of their investment. Present
management has refused to listen to the stockholders.
2
<PAGE>
THE GROUP URGES YOU NOT TO SIGN ANY PROXY CARD SENT TO YOU BY THE
MICROCAP FUND, INC.
ITEM I. INCUMBENT BOARD'S PLAN OF LIQUIDATION.
VOTE AGAINST THE INCUMBENT BOARD'S PLAN OF LIQUIDATION
On May 9, 1996, the Board of Directors announced that it had adopted a
"plan of liquidation." The Group fears that this latest "attempt" to enhance
stockholder value will end up as yet another tactic that advances the interests
of the Company's existing managers at the expense of the stockholders. While at
first blush, the Board's purported commitment to a "plan of liquidation" may
sound attractive and similar to the Group's proposal to liquidate the Fund, upon
closer study of the Company's "plan," its inadequacies and dangers become
apparent.
To begin with, the Company managers that have run the Company so
poorly in recent months will control and administer the liquidation of the
Company (and such persons receive additional compensation for liquidating what
they operated so badly).
3
<PAGE>
In a letter to the public stockholders accompanying the Company's
proxy solicitation, Kamal Mustafa states that "[U]pon approval of the plan by
shareholders, I [Kamal Mustafa] will resign as President, Chief Executive
Officer and Portfolio Manager of the Fund although I will make myself available
without compensation to assist in the Fund's liquidation. . ." Mr. Mustafa's
statement gives us little comfort. Mr. Mustafa does not state he will resign as
director from the Company and nowhere in the "plan of liquidation" itself does
it call for his resignation.
Mr. Mustafa must have no involvement in the liquidation and must not
receive any compensation, directly or indirectly, from the liquidation of the
Fund. In addition to his position of control at the Fund, Mr. Mustafa is the
Chief Executive Officer of Bluestone Capital, an investment banking and
brokerage firm ("coincidentally" sharing office space with the Fund) which he
started after leaving his position as co-Chief Executive Officer of Commonwealth
Associates. The Group has great concerns that Mr. Mustafa's close affiliations
with Bluestone Capital and the Fund will enable him to receive compensation from
the liquidation indirectly through Bluestone Capital. Indeed, Bluestone Capital
may very well be one of the so-called "independent trustees" the Board plans to
hire in order to liquidate the Fund. As such, Mr. Mustafa's promise to make
himself available "without compensation" to assist in the Fund's liquidation is
meaningless.
Mr. Mustafa's promises and the Board's "commitment" to liquidate are
illusory. Section 11 of the Board's "plan of liquidation" allows the Company to
". . .abandon this Plan without stockholder approval" at any time. Mr.
Mustafa's promise to resign from his various management positions and the
Company's "commitment" to liquidate are unenforceable. The "plan of
liquidation" as proposed by the Board commits the Board to do nothing at
all.
The liquidation of the Fund should be conducted under the supervision
of persons completely independent of those incumbent managers and also under new
directors who clearly represent the stockholders. Although the Group supports
liquidating the Fund, PRESENT MANAGEMENT SHOULD PLAY NO ROLE IN ANY LIQUIDATION
OF THE FUND. WE URGE YOU TO VOTE AGAINST THE BOARD'S PLAN OF LIQUIDATION.
4
<PAGE>
5
<PAGE>
OTHER MATTERS
THE GROUP IS NOT AWARE OF ANY MATTERS, OTHER THAN THOSE DISCUSSED
HEREIN, TO BE CONSIDERED AT THE SPECIAL MEETING. HOWEVER, IF ANY OTHER MATTERS
COME BEFORE THE SPECIAL MEETING OR ANY ADJOURNMENT(S), POSTPONEMENT(S) OR
RESCHEDULING(S) THEREOF THE PERSONS NAMED AS PROXY ON THE WHITE CARDS, OR THEIR
SUBSTITUTE, WILL VOTE IN THEIR DISCRETION ALL SHARES OF COMMON STOCK AND/OR
SERIES A CONVERTIBLE PREFERRED STOCK (AS APPLICABLE) COVERED BY THE WHITE PROXY
CARDS WITH RESPECT TO SUCH MATTERS UNLESS SUCH DISCRETIONARY AUTHORITY HAS BEEN
SPECIFICALLY WITHHELD.
VOTING
The accompanying WHITE proxy cards will be voted in accordance with
your instructions on such cards. You may vote for or vote against, or abstain
from voting on, Item 1 described above by marking the proper box on the WHITE
proxy cards. We urge you to VOTE AGAINST ITEM 1. UNLESS OTHERWISE DIRECTED,
THE WHITE PROXY CARDS WILL BE VOTED AGAINST ITEM 1 AND WILL BE VOTED IN THE
DISCRETION OF THE PROXY NAMED ON THE WHITE CARDS, OR THEIR SUBSTITUTE, ON SUCH
OTHER MATTERS THAT MAY COME BEFORE THE SPECIAL MEETING OR ANY ADJOURNMENT(S),
POSTPONEMENT(S) OR RESCHEDULING(S) THEREOF.
6
<PAGE>
PROXY PROCEDURES
IN ORDER FOR YOUR VIEWS TO BE REPRESENTED AT THE SPECIAL MEETING,
PLEASE MARK, SIGN, DATE AND RETURN THE ENCLOSED WHITE PROXY CARDS AND RETURN IT
TO THE GROUP, C/O Geller & Friend Capital Partners, Inc., 1875 Century Park
East, Suite 1770, Los Angeles, California 90006. In addition, please send a copy
of the executed WHITE proxy cards to the Group via facsimile at (310) 553-0257.
The accompanying WHITE proxy cards will be voted at the Special Meeting in
accordance with your instructions on such card. You may vote for or vote
against, or abstain from voting on Item 1 described above by marking the proper
box on the WHITE proxy cards. We urge you to VOTE AGAINST ITEM 1.
UNLESS OTHERWISE DIRECTED, THE WHITE PROXY CARDS WILL BE VOTED AGAINST
ITEM 1 AND WILL BE VOTED IN THE DISCRETION OF THE PROXY NAMED ON THE WHITE
CARDS, OR THEIR SUBSTITUTE, ON SUCH OTHER MATTERS THAT MAY COME BEFORE THE
SPECIAL MEETING OR ANY ADJOURNMENT(S), POSTPONEMENT(S) OR RESCHEDULING(S)
THEREOF.
Any proxy may be revoked at any time prior to the time a vote is taken
by delivering to the secretary of The MicroCap Fund, Inc. a notice of revocation
bearing a later date, by a duly executed proxy bearing a later date or by
attending the Special Meeting and voting in person.
Only holders of record as of the close of business on the Record Date
will be entitled to vote. If you were a stockholder of record on the Record
Date, you will retain your voting rights for the Special Meeting even if you
sell such shares after the Record Date. Accordingly, it is important that you
vote the Shares held by you on the Record Date, or grant a proxy to vote Shares
on the WHITE proxy cards, even if you sell such Shares after the Record
Date.
If any of your Shares are held in the name of a brokerage firm, bank,
bank nominee or other institution on the Record Date, only it can vote such
Shares and only upon receipt of your specific instructions. Accordingly, please
contact the person responsible for your account and instruct that person to
execute on your behalf the WHITE proxy cards.
<PAGE>
SOLICITATION OF PROXIES
Solicitation of proxies may be made by the individual members of the
Group, directors, officers, investor relations personnel and other employees of
the Group, none of whom will receive additional compensation. Proxies may be
solicited by mail, courier service, advertisement, telephone or telecopier and
in person. Certain information about the individual members of the Group, who
may also assist in soliciting proxies, is set forth in the attached Schedules I
and II.
The cost of this solicitation will be borne by the Group. Costs
related to the solicitation of proxies include expenditures for attorneys,
accountants, public relations or financial advisors, solicitors, advertising,
printing, transportation, litigation and related expenses. The Group remains
willing and able to pay the costs associated with the stockholders' request for
a special meeting in compliance with Section 2-502(b)(3) of the Maryland General
Corporation Law. The Group believes the costs will be nominal.
<PAGE>
IMPORTANT
1. If your Shares are held in your own name, please mark, date, fax and
mail the enclosed WHITE proxy cards to the Group, c/o Geller & Friend Capital
Partners, Inc. at the address and fax number below.
2. If your Shares are held in the name of a brokerage firm, bank nominee
or other institution, only it can vote such Shares and only upon receipt of your
----------------------------------------------------------
specific instructions. Accordingly, you should contact the person responsible
- ---------------------
for your account and give instructions for the WHITE proxy cards to be signed
representing your Shares.
3. If you already submitted a proxy to The MicroCap Fund, Inc. for the
Special Meeting, you may change your vote by marking, signing, dating and
returning the enclosed WHITE proxy cards for the Special Meeting, which must be
dated AFTER any proxy you may have submitted to The MicroCap Fund, Inc. ONLY
YOUR LATEST DATED PROXY FOR THE SPECIAL MEETING will count at such meeting.
If you have any questions or require any assistance, please call
Marshall Geller at the following number:
Geller & Friend Capital Partners, Inc.
1875 Century Park East, Suite 1770
Los Angeles, California 90006
Phone: (310) 553-0177
Fax: (310) 553-0257
<PAGE>
SCHEDULE I
Marshall Geller is an individual whose business address is 1875 Century
Park East, Suite 1770, Los Angeles, California 90067 and who is engaged
in business as Chairman of Geller & Friend Capital Partners, Inc.
Robert M. Pergament is an individual whose business address is
707 Westchester Avenue, White Plains, New York 10604 and who is a
professional investor. Mr. Pergament beneficially owns 23,000 shares of
Common Stock, representing approximately 1.0% of the outstanding
shares.
Gerald B. Cramer is an individual whose business address is 707
Westchester Avenue, White Plains, New York 10604 and who is principally
engaged in the investment advisory business as Chairman of Cramer
Rosenthal McGlynn, Inc. Mr. Cramer beneficially owns 66,000 shares of
Common Stock, representing approximately 3.1% of the outstanding
shares.
Cramer Rosenthal McGlynn, Inc. ("CRM") is a corporation whose
business address is 707 Westchester Avenue, White Plains, New York 10604
and which is principally engaged in the business of investment. A
majority of the common stock of CRM is owned by Gerald B. Cramer.
Edward J. Rosenthal is an individual whose business address is
707 Westchester Avenue, White Plains, New York 10604 and who is
principally engaged in the investment advisory business as Vice Chairman
of CRM. Mr. Rosenthal beneficially owns 12,000 shares of Common Stock,
representing approximately 0.56% of the outstanding shares.
Goodness Gardens Inc. is a corporation whose business address is
707 Westchester Avenue, White Plains, New York 10604 and which is
principally engaged in the business of growing and selling hydrophonic
herbs. A majority of the common stock of Goodness Gardens Inc. is owned
by WOW Associates, a Connecticut limited partnership of which Edward J.
Rosenthal is the managing general partner.
The Ingleside Company is a partnership whose business address is
707 Westchester Avenue, White Plains, New York 10604 and which is
principally engaged in the business of investment. The partners of the
Ingleside Company are Barry W. Gray and Thomas C. Israel, each of whom
is a professional investor.
Commonwealth Associates ("CWA") is a limited partnership whose
business address is 733 Third Avenue, 24th Floor, New York, New York
10017 and which is principally engaged in the business of investment
banking. The General Partner of CWA is
<PAGE>
SCHEDULE I (CONT.)
Commonwealth Associates Management Corp., Inc., a corporation of which
Michael S. Falk is the majority stockholder.
Robert L. Priddy is an individual whose business address is 1800
Phoenix Boulevard, Suite 126, Atlanta Georgia 30349 who is principally
engaged in the commercial airline industry as an executive of ValuJet
Airlines, Inc. Mr. Priddy beneficially owns 150,000 shares of Common
Stock (including 17,500 common stock issuable upon conversion of
preferred stock) representing approximately 7.0% of the outstanding
shares.
Michael S. Falk is an individual whose business address is 733
Third Avenue, 24th Floor, New York, New York 10017 and who is
principally engaged in business as Chairman and Chief Executive Officer
of Commonwealth Associates. Mr. Falk beneficially owns 30,625 shares of
Common Stock (including 7,125 Common Stock issuable upon conversion of
preferred stock) representing approximately 0.57% of the outstanding
shares.
<PAGE>
SCHEDULE II
TRANSACTIONS IN COMMON
STOCK OF
THE MICROCAP FUND, INC.
BY EACH REPORTING PERSON
Shares Purchased by Robert M. Pergament
<TABLE>
<CAPTION>
Number of Shares Price Per Total
Date Purchased Share Cost
<S> <C> <C> <C>
11/07/95 10,000 $5.270 $52,700
11/10/95 10,000 $5.125 $51,250
02/02/96 3,000 $4.750 $14,250
</TABLE>
Shares Purchased by Gerald B. Cramer
<TABLE>
<CAPTION>
Number of Shares Price Per Total
Date Purchased Share Cost
<S> <C> <C> <C>
09/11/95 25,000 $5.125 $128,125
09/13/95 10,000 $5.250 $ 52,500
09/13/95 10,000 $5.125 $ 51,250
10/25/95 5,000 $5.125 $ 25,625
11/10/95 5,000 $5.125 $ 25,625
02/07/96 11,000 $4.750 $ 52,250
</TABLE>
Shares Purchased by Ingleside Company
<TABLE>
<CAPTION>
Number of Shares Price Per Total
Date Purchased Share Cost
<S> <C> <C> <C>
09/15/95 20,000 $5.188 $103,750
10/25/95 5,000 $5.125 $ 25,625
11/10/95 10,000 $5.125 $ 51,250
02/02/96 5,000 $4.750 $ 23,750
</TABLE>
<PAGE>
SCHEDULE II (CONT.)
Shares Purchased by Edward J. Rosenthal (Chairman and Director of Goodness
Gardens, Inc.)
<TABLE>
<CAPTION>
Number of Shares Price Per Total
Date Purchased Share Cost
<S> <C> <C> <C>
09/20/95 10,000 $5.250 $ 52,250
02/07/96 2,000 $4.750 $ 9,500
</TABLE>
Shares Purchased by Goodness Gardens Inc.
<TABLE>
<CAPTION>
Number of Shares Price Per Total
Date Purchased Share Cost
<S> <C> <C> <C>
09/13/95 5,000 $5.125 $ 25,625
</TABLE>
Shares Purchased by Robert L. Priddy
<TABLE>
<CAPTION>
Number of Shares Price Per Total
Date Purchased Share Cost
<S> <C> <C> <C>
03/22/93 25,000 $10.00 $ 250,000
11/10/93 10,000 $ 8.88 $ 88,800
12/15/93 15,000 $ 8.88 $ 133,200
02/24/95 1,000 $ 5.65 $ 5,650
02/24/95 1,000 $ 5.65 $ 5,650
02/24/95 4,000 $ 5.65 $ 22,600
02/27/95 5,000 $ 5.88 $ 29,400
02/27/95 9,000 $ 5.88 $ 52,920
06/26/95 15,000 $ 4.88 $ 73,200
12/14/95 12,500 $ 5.50 $ 68,750
12/21/95 10,000 $ 5.50 $ 55,000
01/02/96 9,000 $ 5.50 $ 49,500
02/03/96 2,500 $ 5.06 $ 12,650
02/22/96 2,500 $ 5.00 $ 12,500
02/26/96 7,500 $ 5.00 $ 37,500
03/08/96 3,600 $ 5.00 $ 18,000
</TABLE>
<PAGE>
SCHEDULE II (CONT.)
Shares Purchased by Michael S. Falk
<TABLE>
<CAPTION>
Number of Shares Price Per Total
Date Purchased Share Cost
<S> <C> <C> <C>
03/22/93 1,000 $10.00 $ 10,000
03/22/93 3,000 $10.00 $ 20,000
06/07/94 1,000 $ 7.50 $ 7,500
06/07/94 14,000 $ 7.50 $ 105,000
06/07/94 500 $ 7.50 $ 3,750
05/24/95 1,500 $3.875 $5,812.50
05/24/95 500 $3.875 $1,937.50
05/24/95 2,000 $3.875 $ 7,750
05/24/95 1,000 $3.875 $ 3,875
</TABLE>
Shares Purchased by Commonwealth Associates
<TABLE>
<CAPTION>
Number of Shares Price Per Total
Date Purchased Share Cost
<S> <C> <C> <C>
03/02/93 10,000 $10.00 $ 100,000
</TABLE>
<PAGE>
FOR USE BY HOLDERS OF COMMON STOCK
- -----------------------------------
THE MICROCAP FUND, INC.
SPECIAL MEETING OF STOCKHOLDERS
THIS PROXY IS SOLICITED BY
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.
COMMONWEALTH ASSOCIATES
MICHAEL S. FALK
The undersigned is the record holder of Common Stock ("Common Stock"),
par value $.01 per share (the "Common Shares"), of The MicroCap Fund, Inc. and
hereby appoints Marshall Geller, with full power of substitution, for and in the
name of the undersigned, to represent and to vote, as designated below, all
Common Shares that the undersigned is entitled to vote if personally present at
the Special Meeting of Stockholders of The MicroCap Fund, Inc., and at any
adjournment(s), postponement(s) or rescheduling(s) thereof. The undersigned
hereby revokes any previous proxies with respect to the matters covered by this
Proxy.
This Proxy, when properly executed, will be voted in the matter marked
herein by the undersigned stockholder. UNLESS OTHERWISE DIRECTED, THIS PROXY
WILL BE VOTED AGAINST ITEM 1 AND WILL BE VOTED IN THE DISCRETION OF THE PROXY
(MARSHALL GELLER, OR HIS SUBSTITUTE) ON SUCH OTHER MATTERS THAT MAY COME BEFORE
THE SPECIAL MEETING OR ANY ADJOURNMENT(S), POSTPONEMENT(S) OR RESCHEDULING(S)
THEREOF.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY IN THE POSTAGE-PAID
ENVELOPE ENCLOSED. PLEASE ALSO SEND A COPY OF THIS EXECUTED PROXY CARD TO THE
GROUP VIA FACSIMILE AT (310) 553-0257.
[x] PLEASE MARK YOUR VOTE AS IN THIS EXAMPLE.
THE GROUP RECOMMENDS A VOTE AGAINST ITEM 1.
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
ITEM 1. Board's Plan of Liquidation FOR [ ] AGAINST [ ] ABSTAIN [ ]
</TABLE>
TO WITHHOLD GRANTING THE PROXY, OR HIS SUBSTITUTE, DISCRETIONARY
--------
AUTHORITY TO VOTE UPON SUCH OTHER MATTERS AS MAY COME BEFORE THE
SPECIAL MEETING, WRITE "I WITHHOLD DISCRETIONARY AUTHORITY" ON THE
FOLLOWING LINE:
=====================
______________________________________________________________________
When shares are held by joint tenants, both should sign. When signing
as attorney-in-fact, executor, administrator, trustee, guardian,
corporate officer or partner, please give full title as such. If a
corporation, please sign in corporate name by President or
<PAGE>
other authorized officer. If a partnership, please sign a partnership
name by authorized person.
______________________________________________________________________
Signature(s) of Stockholder(s) Date
______________________________________________________________________
______________________________________________________________________
Title, if any
<PAGE>
FOR USE BY HOLDERS OF SERIES A CONVERTIBLE PREFERRED STOCK
- -----------------------------------------------------------
THE MICROCAP FUND, INC.
SPECIAL MEETING OF STOCKHOLDERS
THIS PROXY IS SOLICITED BY
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.
COMMONWEALTH ASSOCIATES
MICHAEL S. FALK
The undersigned is the record holder of the Series A Convertible
Preferred Stock ("Preferred Shares"), of The MicroCap Fund, Inc. and hereby
appoints Marshall Geller, with full power of substitution, for and in the name
of the undersigned, to represent and to vote, as designated below, all Preferred
Shares that the undersigned is entitled to vote if personally present at the
Special Meeting of Stockholders of The MicroCap Fund, Inc., and at any
adjournment(s), postponement(s) or rescheduling(s) thereof. The undersigned
hereby revokes any previous proxies with respect to the matters covered by this
Proxy.
This Proxy, when properly executed, will be voted in the matter marked
herein by the undersigned stockholder. UNLESS OTHERWISE DIRECTED, THIS PROXY
WILL BE VOTED AGAINST ITEM 1 AND WILL BE VOTED IN THE DISCRETION OF THE PROXY
(MARSHALL GELLER, OR HIS SUBSTITUTE) ON SUCH OTHER MATTERS THAT MAY COME BEFORE
THE SPECIAL MEETING OR ANY ADJOURNMENT(S), POSTPONEMENT(S) OR RESCHEDULING(S)
THEREOF.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY IN THE POSTAGE-PAID
ENVELOPE ENCLOSED. PLEASE ALSO SEND A COPY OF THIS EXECUTED PROXY CARD TO THE
GROUP VIA FACSIMILE AT (310) 553-0257.
[x] PLEASE MARK YOUR VOTE AS IN THIS EXAMPLE.
THE GROUP RECOMMENDS A VOTE AGAINST ITEM 1.
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
ITEM 1. Board's Plan of Liquidation FOR [ ] AGAINST [ ] ABSTAIN [ ]
</TABLE>
TO WITHHOLD GRANTING THE PROXY, OR HIS SUBSTITUTE, DISCRETIONARY
--------
AUTHORITY TO VOTE UPON SUCH OTHER MATTERS AS MAY COME BEFORE THE
SPECIAL MEETING, WRITE "I WITHHOLD DISCRETIONARY AUTHORITY" ON THE
FOLLOWING LINE:
=====================
<PAGE>
______________________________________________________________________
When shares are held by joint tenants, both should sign. When signing
as attorney-in-fact, executor, administrator, trustee, guardian,
corporate officer or partner, please give full title as such. If a
corporation, please sign in corporate name by President or other
authorized officer. If a partnership, please sign a partnership name
by authorized person.
_______________________________________________________
Signature(s) of Stockholder(s) Date
_______________________________________________________
_______________________________________________________
Title, if any
