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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
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MORGAN FUNSHARES, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
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Payment of Filing Fee (Check the appropriate box):
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<S> <C> <C>
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction
applies:
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(2) Aggregate number of securities to which transaction
applies:
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(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how
it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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MORGAN FUNSHARES, INC.
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD TUESDAY APRIL 18, 2000
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The Annual Meeting of Shareholders of Morgan FunShares, Inc. (the "Fund")
will be held at Park Place, 10 West Streetsboro, Hudson, Ohio at 4:00 p.m.,
local time, on Tuesday, April 18, 2000 for the following purposes:
1. To elect seven Directors to the Fund's Board of Directors to hold office
until the next Annual Meeting and until their respective successors have
been duly elected and qualified.
2. To ratify or reject the continuation of the Investment Advisory
Agreement dated April 2, 1996 between the Fund and Burton D. Morgan.
3. To ratify or reject the continuation of McCurdy & Associates
C.P.A.'s, Inc. as the Fund's independent public accountants for the
fiscal year ending December 31, 2000.
4. To transact such other business as may properly come before the meeting
or any adjournment thereof.
Shareholders of record as of the close of business on March 10, 2000 are
entitled to vote at the meeting or any adjournment thereof.
BY ORDER OF THE BOARD OF DIRECTORS
Catherine Kantorowski
SECRETARY
Hudson, Ohio
March 22, 2000
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, PLEASE COMPLETE AND
RETURN THE ENCLOSED FORM OF PROXY. YOU MAY STILL VOTE IN PERSON IF YOU ATTEND
THE MEETING.
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PROXY STATEMENT
The accompanying proxy is solicited by the Directors of Morgan
FunShares, Inc. (the "Fund") for use at the Annual Meeting of its Shareholders,
to be held at Park Place, 10 West Streetsboro St., Hudson, Ohio at 4:00 p.m.,
local time, on Tuesday, April 18, 2000.
Shareholders of record as of the close of business on the record date,
March 10, 2000, are entitled to vote at the Annual Meeting or any adjournment
thereof. As of that date, 1,175,910 common shares of the Fund were outstanding,
each of which is entitled to one vote at the Annual Meeting.
This proxy statement and form of proxy is being mailed to shareholders on or
about March 22, 2000.
THE FUND WILL FURNISH, WITHOUT CHARGE, A COPY OF ITS 1999 ANNUAL REPORT TO
ANY SHAREHOLDER WHO REQUESTS IT BY CONTACTING MR. ROBERT PINCUS, MAXUS
INVESTMENT GROUP, 1301 EAST NINTH ST., 36TH FLOOR, CLEVELAND, OHIO 44114 (CALL
TOLL-FREE 1-800-44-MAXUS).
1. ELECTION OF DIRECTORS
It is the intention of the persons named in the accompanying form of proxy
to vote at the Annual Meeting for the election of the nominees named below as
Directors of the Fund to serve until the next Annual Meeting and until their
successors are elected and qualified. Each such nominee has consented to being
named herein and to serve if elected. If any such nominee should be unable to
serve, an event not now anticipated, the persons named as proxies may vote for
other persons in their discretion. A shareholder may instruct the persons named
as proxies not to vote the shares represented by his proxy for any or all of the
nominees for election.
INFORMATION CONCERNING NOMINEES
The information concerning the nominees set forth in the following table is
based in part on information received from the respective nominees and in part
on the Fund's records:
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NUMBER AND PERCENTAGE OF
NAME AND POSITION PRINCIPAL OCCUPATION DURING SHARES BENEFICIALLY OWNED
WITH THE FUND(1) PAST FIVE YEARS AND AGE AS OF MARCH 10, 2000
- --------------------------- -------------------------------------------- -------------------------
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J. Martin Erbaugh President, ERBAUGH Corp. dba Lawnmark; 5,400(2)
Director President, Coer Properties; Director,
Lesco, Inc.; Director, Morgan Bank NA; Age
51.
Burton D. Morgan* Chairman, Morgan Bank NA; President, Basic 580,000(49.3%)
Chairman and Director Search, Inc.; Director, Multi-Color, Inc.;
Director, Morgan Adhesives, Inc.;
Effective October 18, 1995, Mr. Morgan
became a registered investment advisor;
Age 83
Robert F. Pincus** Vice President--Marketing and Client 8,000(2)(3)
President and Director Services, Maxus Investment Group; Age 55
William K. Cordier Chairman and President, Cordier Group 0
Director Holdings, Inc.; Chairman and CEO, Canton
Drop Forge, Inc.; Age 72
Keith Brown President, Chimera Corporation; Director, 0
Director USG Corporation; Director, Myers
Corporation; Age 48
James M. Hojnacki Vice President, The Provident Bank, 0
Director Cleveland, Ohio; Age 38
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<CAPTION>
NUMBER AND PERCENTAGE OF
NAME AND POSITION PRINCIPAL OCCUPATION DURING SHARES BENEFICIALLY OWNED
WITH THE FUND(1) PAST FIVE YEARS AND AGE AS OF MARCH 10, 2000
- --------------------------- -------------------------------------------- -------------------------
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James C. Onorato President, Summit Capital Inc.; Portfolio 800(2)
Vice President and Director Manager, Maxus investment Group; Age 43
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* Mr. Morgan is an "interested person" as defined by the Investment Company
Act of 1940 (the "Act") by reason of his acting as investment advisor upon
approval of the continuation of the Investment Advisory Agreement and by
reason of his beneficial ownership of 49.3% of the outstanding shares of the
Fund.
** Mutual Shareholder Services, LLC, a subsidiary of Maxus Investment Group,
processes the Fund's trades, prices the Fund, and maintains the records for
the transactions and expenses of the Fund, pursuant to an Accounting
Services Agreement with the Fund.
(1) Mr. Morgan has served as a Director since 1989, Mr. Pincus has served since
1993, Mr. Erbaugh has served since 1994, Messrs. Cordier, Brown and Hojnacki
have served since 1996, and Mr. Onorato has served since 1997.
(2) Constitutes less than 1% of outstanding shares.
(3) Incudes 1,500 shares owned by Mr. Pincus' spouse as to which Mr. Pincus
disclaims beneficial ownership.
As of March 10, 2000, all eight Officers and Directors as a group held
598,200 shares, constituting 50.9% of the outstanding shares of the Fund.
Three meetings of the Board of Directors were held during the fiscal year
ended December 31, 1999. Each Director attended at least 50% of the meetings of
the Board of Directors during the fiscal year.
The Fund and the Board of Directors did not have a standing nominating or
compensation committee as of December 31, 1999. The Board of Directors
established an audit committee in 1998. The general functions of the audit
committee, the identity of the audit committee's members and the number of
meetings held by the audit committee during fiscal 1999 are set forth below.
AUDIT COMMITTEE
The audit committee held one meeting during fiscal 1999. The primary
functions of the audit committee are to evaluate the performance and fees of the
Fund's independent auditors, review the annual audit and the Fund's internal
accounting controls with the independent auditors, review the results of the
audit with management, consult with management with respect to the Fund's
internal accounting controls and other operating systems, review all related
party transactions on an ongoing basis, and review potential conflict of
interest situations where appropriate. The current members of the audit
committee are Messrs. James M. Hojnacki, J. Martin Erbaugh and Robert F. Pincus.
EXECUTIVE OFFICERS
In addition to Messrs. Morgan, Pincus and Onorato, the Fund has the
following executive officer:
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<CAPTION>
NUMBER OF SHARES
NAME AND POSITION PRINCIPAL OCCUPATION DURING BENEFICIALLY OWNED AS OF
WITH THE FUND(1) PAST FIVE YEARS AND AGE MARCH 10, 2000
- --------------------- ------------------------------------------------- ------------------------
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Catherine Kantorowski Executive Secretary to Burton D. Morgan; Age 69 4,000(2)
Secretary
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(1) Ms. Kantorowski has served since 1996.
(2) Constitutes less than 1% of outstanding shares.
2
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COMPENSATION OF DIRECTORS AND AUDIT COMMITTEE MEMBERS
Each Director who was not acting as the Investment Advisor or was not an
interested person of Maxus Information Systems, Inc. earned compensation from
the Fund in the amount of $100 for each Board of Directors or shareholders
meeting attended. The Board of Directors met three times in fiscal 1999. Members
of the Audit Committee receive $100 for each meeting of the Audit Committee
unless such meeting immediately follows a meeting of the Board of Directors.
2. CONTINUATION OF INVESTMENT ADVISORY AGREEMENT
The Fund's investments are managed by Burton D. Morgan (the "Advisor")
pursuant to an Investment Advisory Agreement (the "Agreement") dated April 2,
1996. The Agreement was initially approved by Shareholders at the Annual Meeting
of Shareholders held April 2, 1996. The Board of Directors approved the
Agreement and the Advisor on the same date. On February 1, 2000, the Board of
Directors, including a majority of the Directors who are not "interested
persons" of the Fund or the Advisor, approved the continuation of the Agreement.
The Agreement provides that as compensation for his services to the Fund,
the Advisor is entitled to receive from the Fund an annual fee of 1% of the
average value of the Fund's net assets up to $150,000,000, and .75% of the
average value of the Fund's net assets in excess of $150,000,000, payable
monthly. The Agreement also provides that the Advisor will reimburse the Fund in
the amount, if any, by which total operating expenses of the Fund for any fiscal
year, exclusive of taxes, interest, brokerage fees and commissions, amortization
and extraordinary expenses, exceed 2% of the average annual net assets of the
Fund, except that the amount required to be reimbursed for any fiscal year will
not exceed the amount of fees received by the Advisor with respect to that
fiscal year. The Advisor received a management fee from the Fund for the fiscal
year ended December 31, 1999, in the amount of $90,604 net of reimbursements.
Subject to the supervision of the Fund's Board of Directors, the Advisor
(i) manages all the Fund's assets in accordance with the Fund's investment
objectives, policies and limitations as stated in the Fund's prospectus;
(ii) makes investment decisions with respect to the assets; and (iii) places
orders to purchase and sell securities.
The Agreement automatically renews for successive annual periods, provided
the continuance is specifically approved by (i) the Fund's Board of Directors,
or (ii) by a vote of a majority of the Fund's outstanding voting securities (as
defined in the Act), provided that in either event the continuance is also
approved by a majority of the Board of Directors who are not "interested
persons" (as defined in the Act) of the Fund, by vote cast in person at a
meeting called for the purpose of voting on the approval. Notwithstanding the
foregoing, the Agreement may be terminated (i) at any time without penalty by
the Fund, upon the vote of a majority of the Fund's Board of Directors or by
vote of a majority of the Fund's outstanding voting securities, upon notice to
the Fund, or (ii) by the Advisor at any time without penalty.
Under the Agreement, the Advisor is not liable for any error of judgment or
mistake of law or for any loss suffered by the Fund in connection with any
matter to which the Agreement relates, provided that nothing in the Agreement
protects the Advisor against any liability to the Fund or to the holders of the
Fund's shares representing interests in the Fund to which the Advisor would
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence on his part in the performance of his duties or by reason of the
Advisor's reckless disregard of his obligations and duties under the Agreement.
The Advisor is doing business as a sole proprietor. His address is Park
Place, 10 West Streetsboro, Hudson, Ohio 44236-2850. The Advisor is the Chairman
and a Director of the Fund.
The affirmative vote of at least 67% of the shares represented at the
meeting (if more than 50% of the outstanding shares entitled to vote are
represented at the meeting) or a majority of the outstanding shares of the Fund,
whichever is less, is required to approve this proposal.
3
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The Fund has entered into an Accounting Services Agreement with Mutual
Shareholder Services, LLC (formerly Maxus Information Systems, Inc.), a
subsidiary of Maxus Investment Group, under which during the fiscal year ended
December 31, 1999 the Fund paid $40,079. The Agreement provides that Mutual
Shareholder Services, LLC will maintain the current books, accounts, records,
journals or other records of original entry relating to the business of the
Fund.
3. APPOINTMENT OF AUDITORS
The Directors of the Fund, including a majority of the Directors who are not
"interested persons" of the Fund, have selected McCurdy & Associates
C.P.A.'s, Inc. to continue as Auditors for the Fund for the fiscal year ending
December 31, 2000. McCurdy & Associates C.P.A.'s, Inc. has advised the Fund that
it has no direct or indirect financial interest in the Fund. This selection is
subject to the approval of the shareholders of the Fund at the Annual Meeting.
The enclosed proxy card provides space for instructions directing the proxies
named therein to vote for or against ratification of the selection.
BENEFICIAL OWNERSHIP
As of March 15, 2000, the only persons known by the Fund to be the
beneficial owners of more than 5% of the outstanding shares of the Fund are
Burton D. Morgan, Park Place, 10 West Streetsboro, Hudson, Ohio, who owns
580,000 shares (49.3%) of the outstanding shares as of that date, and Luke E.
Sims, 777 E. Wisconsin Ave., Suite 3700, Milwaukee, Wisconsin, who owns 115,136
shares (9.8%) of the outstanding shares as of that date.
COMPLIANCE WITH SECTION 16(a) OF
THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Fund's
directors and executive officers, and persons who own more than ten percent of a
registered class of the Fund's equity securities, to file with the SEC initial
reports of ownership and reports of changes in ownership of Common Stock and
other equity securities of the Fund. Officers, directors and greater than 10%
beneficial owners are required by SEC regulations to furnish the Fund with
copies of all Section 16(a) forms which they file with the SEC.
To the Fund's knowledge, based solely on review of the copies of such
reports furnished to the Fund and written representations that no other reports
were required, during 1998, all Section 16(a) filing requirements applicable to
its officers, directors and greater than 10% beneficial owners were complied
with.
OTHER MATTERS
The Fund knows of no business to be brought before the Meeting except as set
forth above. If, however, any other matters properly come before the Meeting,
the persons named in the enclosed form of proxy intend to vote on such matters
in accordance with their best judgment.
REVOCATION OF PROXIES
Any person giving a proxy has power to revoke it at any time prior to its
exercise by executing a superseding proxy or by submitting a notice of
revocation to the Secretary of the Fund. In addition, a shareholder present at
the Meeting may withdraw his proxy and vote in person. All properly executed and
unrevoked proxies received in time for the Meeting will be voted in accordance
with the instructions contained therein. If no specification is made on a proxy,
it will be voted for the election of Directors, for ratification of the
continuation of the Investment Advisory Agreement, and for ratification of the
continuation of the independent accountants.
4
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SOLICITATION OF PROXIES
Proxies will be solicited by mail and may also be solicited in person or by
telephone by Officers or Directors of the Fund. The cost of preparing and
mailing this statement and the accompanying form of notice and proxy will be
borne by the Fund.
Although neither Ohio law nor the Articles of Incorporation or Code of
Regulations of the Fund specifically provide for such matters, the Fund's policy
and practice is that (i) properly executed proxies that are marked "abstain" or
are held in "street name" by brokers that are not voted on one or more proposals
(if otherwise voted on at least one proposal) will be counted for purposes of
determining whether a quorum is present at the Annual Meeting, and
(ii) abstentions and broker non-votes will not be treated as either a vote for
or a vote against any of the proposals to which such abstention or broker
non-vote applies.
PROPOSALS OF SECURITY HOLDERS
Proposals of shareholders intended to be presented at the Annual Meeting of
the Fund in 2001 must be received by the Fund no later than December 31, 2000
for inclusion in the Fund's proxy statement and form of proxy relating to that
meeting. The mailing address of the Fund is Park Place, 10 West Streetsboro,
Hudson, Ohio 44236.
BY ORDER OF THE BOARD OF DIRECTORS
Catherine Kantorowski
SECRETARY
March 22, 2000
5
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MORGAN FUNSHARES, INC.
ANNUAL MEETING OF SHAREHOLDERS - APRIL 18, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Burton D. Morgan and J. Martin Erbaugh, and
each of them, the proxies of the undersigned with power of substitution to
each of them to vote all shares of Morgan FunShares, Inc. which the
undersigned is entitled to vote at the Annual Meeting of Shareholders held at
Park Place, 10 West Streetsboro, Hudson, Ohio on April 18, 2000 at 4:00,
local time, and any adjournment thereof.
1. To elect seven Directors to the Fund's Board of Directors to hold office
until the next Annual Meeting and until their respective successors have
been duly elected and qualified.
2. To ratify or reject the continuation of the Investment Advisory Agreement
dated April 2, 1996 between the Fund and Burton D. Morgan.
3. To ratify or reject the continuation of McCurdy & Associates C.P.A.'s,
Inc. as the Fund's independent public accountants for the fiscal year ending
December 31, 2000.
4. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting and matters incident to
the conduct of the Annual Meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSAL 1.
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY PROMPTLY
- DETACH BELOW AND RETURN USING THE ENVELOPE PROVIDED -
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MORGAN FUNSHARES, INC. 2000 ANNUAL MEETING
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1. To elect seven Directors to the Fund's Board of Directors to hold office / / FOR / / AGAINST / / ABSTAIN
until the next Annual Meeting
2. To ratify the continuation of the Investment Advisory Agreement dated / / FOR / / AGAINST / / ABSTAIN
April 2, 1996
3. To ratify the continuation of McCurdy & Associates C.P.A.'s, Inc. as the
Fund's independent public accountants for the fiscal year ending
December 31, 2000 / / FOR / / AGAINST / / ABSTAIN
Check appropriate box
Indicate changes below: Date______________ NO. OF SHARES
Address Change? / / Name Change? / / _____________________________________
_____________________________________
Signature(s) in Box
Please sign exactly as your name appears
on this card. When signing as attorney,
executor, administrator, trustee or
guardian, please give your full title as
such. If a corporation, please sign in
full corporate name by President or other
authorized officer. If a partnership,
please sign partnership name by authorized
person as a joint account, please provide
both signatures.
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