<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
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 ss.240.14a-11(c) or ss.240.14a-12
MACC PRIVATE EQUITIES INC.
-------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
-------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than
the Registrant)
Payment of Filing Fee (Check the appropriate box)
_X_ No fee required
___ 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 transaction applies:___________
________________________________________.
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):
________________________________________.
4) Proposed maximum aggregate value of transaction:
________________________________________.
5) Total fee paid:_________________________.
________________________________________.
___ 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:________________________________.
<PAGE> 2
[MACC LETTERHEAD]
January 15, 1999
To the Shareholders of MACC Private Equities Inc:
The Annual Meeting of Shareholders of our Corporation will be held on
Tuesday, February 23, 1999, at 10:00 a.m. at the Crowne Plaza Five Seasons
Hotel, 350 First Avenue N.E., in Cedar Rapids, Iowa.
A Notice of the meeting, a Proxy and Proxy Statement containing information
about matters to be acted upon are enclosed. In addition, the MACC Private
Equities Inc. Annual Report for the Fiscal Year ended September 30, 1998, is
enclosed and provides information regarding the financial results of the
Corporation for the year. Holders of Common Stock are entitled to vote at the
Annual Meeting on the basis of one vote for each share held. IF YOU ATTEND THE
ANNUAL MEETING IN FEBRUARY, YOU RETAIN THE RIGHT TO VOTE IN PERSON EVEN THOUGH
YOU PREVIOUSLY MAILED THE ENCLOSED PROXY.
It is important that your shares be represented at the meeting whether or
not you are personally in attendance, and I urge you to review carefully the
Proxy Statement and sign, date and return the enclosed Proxy at your earliest
convenience. I look forward to meeting you and, together with our Directors and
Officers, reporting our activities and discussing the Corporation's business and
its prospects. I hope you will be present.
Very truly yours,
/s/ Paul M. Bass, Jr.
Paul M. Bass, Jr.
Chairman of the Board
<PAGE> 3
[MACC LETTERHEAD]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD FEBRUARY 23, 1999
To the Shareholders of MACC Private Equities Inc:
NOTICE IS HEREBY GIVEN that the Annual Meeting of the Shareholders of
MACC Private Equities Inc., a Delaware corporation (the "Corporation"), will be
held on Tuesday, February 23, 1999, at 10:00 a.m., central time, at the Crowne
Plaza Five Seasons Hotel, 350 First Avenue N.E., in Cedar Rapids, Iowa, for the
following purposes:
1. To elect three directors to serve until the 2002 Annual Meeting of
Shareholders or until their respective successors shall be elected and
qualified;
2. To ratify the appointment of KPMG Peat Marwick LLP as independent
auditors;
3. To approve certain proposed amendments to the Investment Advisory
Agreement of MorAmerica Capital; and
4. To transact such other business as may properly come before the
meeting and any adjournment thereof.
Only holders of Common Stock of the Corporation of record at the close
of business on December 31, 1998, will be entitled to notice of, and to vote at,
the meeting and any adjournment thereof.
By Order of the Board of Directors
/s/ David R. Schroder, Secretary
David R. Schroder, Secretary
YOUR OFFICERS AND DIRECTORS DESIRE THAT ALL SHAREHOLDERS BE PRESENT OR
REPRESENTED AT THE ANNUAL MEETING. EVEN IF YOU PLAN TO ATTEND IN PERSON, PLEASE
DATE, SIGN AND RETURN THE ENCLOSED PROXY IN THE ENCLOSED POSTAGE-PREPAID
ENVELOPE AT YOUR EARLIEST CONVENIENCE SO THAT YOUR SHARES MAY BE VOTED. IF YOU
DO ATTEND THE MEETING IN FEBRUARY, YOU RETAIN THE RIGHT TO VOTE EVEN THOUGH YOU
MAILED THE ENCLOSED PROXY. THE PROXY MUST BE SIGNED BY EACH REGISTERED HOLDER
EXACTLY AS THE STOCK IS REGISTERED.
<PAGE> 4
[MACC LETTERHEAD]
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD FEBRUARY 23, 1999
This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors of MACC Private Equities Inc., a Delaware corporation
(the "Corporation"), of proxies to be voted at the Annual Meeting of
Shareholders to be held on Tuesday, February 23, 1999, or any adjournment
thereof. The date on which this Proxy Statement and the enclosed form of proxy
are first being sent or given to shareholders of the Corporation is on or about
January 15, 1999.
PURPOSES OF THE MEETING
The Annual Meeting of the Shareholders is to be held for the purposes
of (1) electing three persons to serve as Directors of the Corporation until the
2002 Annual Meeting of Shareholders, or until their respective successors shall
be elected and qualified (see ELECTION OF DIRECTORS); (2) ratifying the
appointment by the Board of Directors of KPMG Peat Marwick LLP as independent
auditors (see RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS); (3)
approving certain proposed amendments to the Investment Advisory Agreement of
MorAmerica Capital (see APPROVAL OF PROPOSED AMENDMENTS TO INVESTMENT ADVISORY
AGREEMENT); and (4) transacting such other business as may properly come before
the meeting or any adjournment thereof.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS
VOTE FOR THE ELECTION AS DIRECTORS OF THE PERSONS NAMED UNDER ELECTION OF
DIRECTORS, FOR THE RATIFICATION OF THE APPOINTMENT OF KPMG PEAT MARWICK LLP AS
INDEPENDENT AUDITORS, AND FOR THE APPROVAL OF THE PROPOSED AMENDMENTS TO THE
INVESTMENT ADVISORY AGREEMENT OF MORAMERICA CAPITAL.
1
<PAGE> 5
VOTING AT THE MEETING
The record date for holders of Common Stock entitled to notice of, and
to vote at, the Annual Meeting of Shareholders is the close of business on
December 31, 1998, at which time the Corporation had outstanding and entitled to
vote at the meeting 1,246,392 shares of Common Stock.
The presence, in person or by proxy, of the holders of a majority of
the shares of Common Stock outstanding and entitled to vote at the Annual
Meeting is necessary to constitute a quorum. Abstentions and shares held by
brokers, banks, other institutions and nominees that are voted on any matter at
the Annual Meeting are included in determining the presence of a quorum for the
transaction of business at the commencement of the Annual Meeting and on those
matters for which the broker, nominee or fiduciary has authority to vote. In
deciding all questions, a shareholder shall be entitled to one vote, in person
or by proxy, for each share of Common Stock held in the shareholder's name at
the close of business on the record date.
To be elected a Director, each nominee must receive the favorable vote
of the holders of a plurality of the shares of Common Stock entitled to vote and
represented at the Annual Meeting. In order to ratify the appointment of KPMG
Peat Marwick LLP as independent auditors for the Corporation for the year ending
September 30, 1999, the ratification proposal must receive the favorable vote of
a majority of the shares of Common Stock entitled to vote and represented at the
Annual Meeting.
In order to approve the proposed amendments to the Investment Advisory
Agreement of MorAmerica Capital, the proposal must receive the favorable vote of
a majority of the outstanding shares of Common Stock entitled to vote at the
meeting. With respect to this proposal, Section 2(a)(42) of the Investment
Company Act of 1940 defines "a majority of the outstanding shares" as: (1) 67%
or more of the voting securities present at such meeting if the holders of more
than 50% of the outstanding voting securities of such company are present or
represented by proxy; or (2) 50% of the outstanding voting securities of such
company, whichever is the less. Each broker non-vote or abstention regarding
this proposal will be considered present for purposes of determining the
existence of a quorum, but will have the effect of a vote against this proposal.
Each proxy delivered to the Corporation, unless the shareholder
otherwise specifies therein, will be voted FOR the election as Directors of the
persons named under ELECTION OF DIRECTORS, FOR the ratification of the
appointment by the Board of Directors of KPMG Peat Marwick LLP as independent
auditors, and FOR the approval of the proposed amendments to the Investment
Advisory Agreement of MorAmerica Capital. In each case where the shareholder has
appropriately specified how the proxy is to be voted, it will be voted in
accordance with this specification. As to any other matter or business which may
be brought before the meeting, a vote may be cast pursuant to the accompanying
proxy in accordance with the judgment of the person or persons voting the same,
but neither management nor the Board of Directors of the Corporation knows of
any such other matter or business. Any shareholder has the power to revoke his
proxy at any time insofar as it is then not exercised by giving notice of such
revocation, either personally or in writing, to the Secretary of the Corporation
or by the execution and delivery to the Corporation of a new proxy dated
subsequent to the original proxy.
2
<PAGE> 6
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
On May 13, 1996, the Corporation and Zions Bancorporation ("Zions")
entered into an Agreement (the "Agreement"), as amended on April 29, 1998. Prior
to entering into the Agreement, Zions had acquired approximately 4.9% of the
issued and outstanding shares of the Corporation's Common Stock through
open-market purchases. Pursuant to the Agreement, Zions purchased 20,000 newly
issued shares of the Corporation's Common Stock for a price equal to
then-current net asset value per share of $17.70, and may further increase its
ownership of shares of the Corporation's Common Stock up to, but not in excess
of, 35% of the issued and outstanding shares. Also pursuant to the Agreement,
Zions transferred all of such shares to its wholly-owned subsidiary, Zions First
National Bank (the "Bank"), and the Corporation agreed to use its reasonable
best efforts to cause a nominee of Zions to be elected to the Corporation's
Board of Directors commencing with the 1997 Annual Meeting of Shareholders.
Zions named Todd J. Stevens as its nominee, and on October 8, 1996, the Board of
Directors resolved to increase the size of the Corporation's Board of Directors
from seven to eight, and nominated Todd J. Stevens for election as Director at
the meeting. On February 25, 1997, the shareholders of the Corporation elected
Todd J. Stevens as a Director of the Corporation for a three-year term ending at
the Annual Meeting of Shareholders to be held in February, 2000.
Based upon Amendment No. 12 to Schedule 13D filed by Zions and the
Bank, as of October 15, 1998, the Bank beneficially owned 309,859 shares of the
Common Stock, representing approximately 24.86% of the issued and outstanding
shares of Common Stock, which were purchased for a total price of $2,598,155.
The funds used to acquire the shares were derived from working capital.
As of November 2, 1998, there were 1,246,392 shares issued and
outstanding. The following table sets forth certain information as of November
2, 1998, with respect to the Common Stock ownership of: (i) those persons or
groups (as that term is used in Section 13(d)(3) of the Securities and Exchange
Act of 1934) who beneficially own more than 5% of the Common Stock, (ii) each
Director and nominee for Director of the Corporation, and (iii) all Officers and
Directors of the Corporation, nine in number, as a group.
3
<PAGE> 7
<TABLE>
<CAPTION>
NAME OF BENEFICIAL AMOUNT AND NATURE OF BENEFICIAL PERCENT OF CLASS OF VOTING
OWNER OWNERSHIP COMMON STOCK
<S> <C> <C>
Zions First National Bank1 309,859 Shares 24.86%
Paul M. Bass 14,493 Shares 1.16%
Robert A. Comey2 28,788 Shares 2.31%
Michael W. Dunn 7,111 Shares 0.57%
Henry T. Madden 10,583 Shares 0.85%
James L. Miller 1,952 Shares 0.16%
David R. Schroder2 35,650 Shares 2.86%
Todd J. Stevens3 -- --
John D. Wolfe 2,090 Shares 0.17%
All Officers and Directors as a 106,685 Shares 8.56%
Group
</TABLE>
PROPOSAL 1
ELECTION OF DIRECTORS
The Corporation's Board of Directors is divided into three classes, and
Directors are elected to serve three-year terms. On December 16, 1998, the
Corporation's Board of Directors resolved to increase the size of the
Corporation's Board of Directors from eight to nine Directors by creating a
third Class 3 Directorship. The vacancy on the Corporation's Board of Directors
resulting from this newly created Class 3 Directorship is not proposed to be
filled at the 1999 Annual Meeting of Shareholders. The three Class 1 Directors
are proposed to be elected at the 1999 Annual Meeting of Shareholders to serve
until the 2002 Annual Meeting of Shareholders or until their respective
successors shall be elected and qualified. The persons named in the accompanying
form of proxy intend to vote such proxy for the election of the nominees named
below as Directors of the Corporation to serve until the 2002 Annual Meeting of
Shareholders or
- ----------------------------
1 Information with respect to Zions First National Bank (the "Bank") is
provided as of October 15, 1998. As stated in its Amendment No. 12 to Schedule
13D, dated October 15, 1998, Zions Bancorporation ("Zions") may be deemed to
share the power to vote or to direct the vote and to dispose or to direct the
disposition of all of the 309,859 shares of the Corporation's Common Stock held
by the Bank, due to Zions' ownership of the Bank.
2 As principals, officers and directors of InvestAmerica Investment
Advisors, Inc. (the "Investment Advisor"), the investment advisor for the
Corporation and MorAmerica Capital, Messrs. Schroder and Comey are "interested
persons" of the Corporation, as that term is defined in Section 2(a)(19) of the
Investment Company Act of 1940.
3 To the extent that Zions or the Bank may be deemed to be in control of
the Corporation as a result of beneficial ownership of the Corporation's Common
Stock, Mr. Stevens, as Manager of the Bank's Venture Capital Department and
Managing Director of Wasatch Venture Fund, a majority-owned subsidiary of the
Bank, may be an "interested person" of the Corporation, as that term is defined
in Section 2(a)(19) of the Investment company Act of 1940.
4
<PAGE> 8
until their respective successors shall be elected and qualified, unless
otherwise properly indicated on such proxy. If any nominee shall become
unavailable for any reason, the persons named in the accompanying form of proxy
are expected to consult with the Board of Directors of the Corporation in voting
the shares represented by them at the Annual Meeting. The Board of Directors has
no reason to doubt the availability of any of the nominees and no reason to
believe that any of the nominees will be unable or unwilling to serve the entire
term for which election is sought.
To be elected a Director, each nominee must receive the favorable vote of
the holders of a plurality of the shares of Common Stock entitled to vote and
represented at the Annual Meeting. The names of the nominees, along with certain
information concerning them, are set forth below. An asterisk (*) indicates
those nominees that are or may be deemed to be "interested persons," as that
term is defined in Section 2(a)(19) of the Investment Company Act of 1940, of
the Corporation as principals, officers and directors of the Investment Advisor.
NOMINEES
PAUL M. BASS, JR.
Mr. Bass, age 63, has been Chairman of the Boards of Directors of the
Corporation and MorAmerica Capital since 1994. From 1988 to present, Mr. Bass
has also served as Vice Chairman of First Southwest Company, a regional
investment banking firm. Mr. Bass is also presently a Director of California
Federal Bank F.S.B. (also Chairman of the Audit Committee), Keystone
Consolidated Industries (also Chairman of the Audit Committee), Golden State
Bancorporation, Jayhawk Acceptance Corporation and Compx International. Mr. Bass
holds a B.B.A. in finance from Southern Methodist University.
DAVID R. SCHRODER*
Mr. Schroder, age 55, has been President, Secretary and a Director of the
Corporation since 1994, and a Director of MorAmerica Capital since 1989. Since
1985, Mr. Schroder has been a principal of InvestAmerica Venture Group, Inc.
("Venture Group") and is presently President, Secretary and a Director. From
1985 to 1994, Venture Group provided management and investment services to
MorAmerica Capital. Venture Group presently provides management and investment
services to a private investment partnership, the Iowa Venture Capital Fund,
L.P. Mr. Schroder is also President, Secretary and a Director of InvestAmerica
N.D. Management, Inc., which provides management and investment services to
North Dakota Small Business Investment Company ("NDSBIC"), A North Dakota
Limited Partnership. Mr. Schroder is also President, Secretary and a Director of
InvestAmerica N.D., L.L.C., the general partner of NDSBIC. Mr. Schroder is
President, Secretary and a Director of the investment advisor to the Corporation
and to MorAmerica Capital, InvestAmerica Investment Advisors, Inc. (the
"Investment Advisor"). As a representative of the Investment Advisor and Venture
Group, Mr. Schroder also serves on the boards of directors of several of the
Corporation's portfolio companies, including Centrum Industries, Inc. Mr.
Schroder received a B.S.F.S. from Georgetown University and an M.B.A. from the
University of Wisconsin.
5
<PAGE> 9
ROBERT A. COMEY*
Mr. Comey, age 52, has served as Vice President, Treasurer and a Director of
the Corporation since 1994, and as a Director of MorAmerica Capital since 1989.
Mr. Comey was named Executive Vice President of the Company in 1995. Since 1986,
Mr. Comey has been a principal of Venture Group and is presently Executive Vice
President, Treasurer and a Director. From 1985 to 1994, Venture Group provided
management and investment services to MorAmerica Capital. Venture Group
presently provides management and investment services to a private investment
partnership, the Iowa Venture Capital Fund, L.P. Mr. Comey is also Executive
Vice President, Treasurer and a Director of InvestAmerica N.D. Management, Inc.,
which provides management and investment services to NDSBIC. Mr. Comey is also
Executive Vice President, Treasurer, and a Director of InvestAmerica N.D.,
L.L.C., the general partner of NDSBIC. Mr. Comey is a Director, Executive Vice
President, Treasurer, and Assistant Secretary of the Investment Advisor. As a
representative of the Investment Advisor and Venture Group, Mr. Comey also
serves on the boards of directors of several of the Corporation's portfolio
companies. Mr. Comey received an A.B. in Economics from Brown University and an
M.B.A. from Fordham University.
OTHER DIRECTORS
The names of the other Directors of the Corporation, whose terms of office
extend beyond the 1999 Shareholders Meeting, along with certain information
concerning them, are set forth below. A double asterisk (**) indicates those
Directors who are or may be deemed to be "interested persons," as that term is
defined in Section 2(a)(19) of the Investment Company Act of 1940, of the
Corporation, as affiliated persons of the Corporation.
MICHAEL W. DUNN
Mr. Dunn, age 49, has been a Director of the Corporation and MorAmerica
Capital since 1994. Mr. Dunn has also been C.E.O. since 1980 and President since
1983 of Farmers & Merchants Savings Bank of Manchester, Iowa. Mr. Dunn is also
presently a member of the boards of directors of Security Savings Bank of Eagle
Grove, Iowa, and F&M Shares Corp. and Dunn Shares, Inc., both bank holding
companies.
HENRY T. MADDEN
Mr. Madden, age 69, has been a Director of the Corporation and MorAmerica
Capital since 1994. Mr. Madden is a consultant to development stage companies.
Since 1995, Mr. Madden has been an independent trustee of Berthel Growth and
Income Trust I, and since 1997, Mr. Madden has served as an independent member
of the Management Board of Berthel SBIC, LLC, a wholly-owned subsidiary of
Berthel Growth & Income Trust I. In 1986, Mr. Madden organized the Institute for
Entrepreneurial Management in the University of Iowa College of Business
Administration. As Director of the Institute, Mr. Madden advises potential and
new entrepreneurs and teaches courses on entrepreneurship in the M.B.A. program.
6
<PAGE> 10
JAMES L. MILLER
Mr. Miller, age 56, has been a Director of the Corporation and MorAmerica
Capital since 1994. Mr. Miller was employed by Armstrong's, Inc. department
stores from 1967 until 1992. His capacities included serving as a member of the
Board of Directors and Executive Committee and as Vice President and C.F.O. Mr.
Miller currently operates Miller Mortgage, a residential mortgage loan
origination service.
TODD J. STEVENS**
Mr. Stevens, age 38, has been a Director of the Corporation and MorAmerica
Capital since 1997. Since 1993, Mr. Stevens has been the Manager of the Utah
Office of Wasatch Venture Fund, a $15,000,000 early stage venture capital fund
and majority-owned subsidiary of Zions First National Bank (the "Bank"). Mr.
Stevens is also a Manager of the Bank's Venture Capital Department. Mr. Stevens
is also currently a director of Sandbox Entertainment Corporation. From 1991
through 1993, Mr. Stevens was a Managing Director of Stevens Wood, Inc., a
financial and managerial consulting firm which assisted in raising equity and
debt private placements. Mr. Stevens was also Development Manager, Assistant
Treasurer, and Treasurer for Bonneville Pacific Corporation from 1987-1991,
where his functions included negotiating, closing and administering corporate
credit facilities. From 1985 through 1987, Mr. Stevens performed financial
analysis for development, acquisition and sale of retail, commercial and hotel
properties for Homart Development Company. Mr. Stevens received his B.S. in
Accounting and Management from University of Utah in 1983, and his M.B.A. in
1985 from Harvard Graduate School of Business Administration.
JOHN D. WOLFE
Mr. Wolfe, age 72, has been a Director of the Corporation since 1994 and a
Director of MorAmerica Capital since 1989. Mr. Wolfe is retired from a career in
mortgage lending and retail banking. Mr. Wolfe had been employed for many years
by the Morris Plan companies prior to the 1985 bankruptcy of MorAmerica
Financial Corporation and Morris Plan Liquidation Company (the "Debtors"), and
was President of the Morris Plan Company of Iowa. Following the 1988
reorganization of the Debtors, Mr. Wolfe served as voting trustee for the
MorAmerica Financial Corporation stock and President of both Debtors. Following
several years of retirement, Mr. Wolfe returned from retirement to serve as
voting trustee and President and Director of the Debtors during the Debtors'
1993 bankruptcy case.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors of the Corporation has established an Audit
Committee, a Nominating Committee and an Investment Committee to assist the
Board in carrying out its duties.
The Audit Committee makes recommendations to the Board of Directors
regarding the engagement of the independent auditors for audit and non-audit
services; evaluates the independence of the auditors; and reviews with the
independent auditors the fee, scope and timing of audit and non-audit services.
The Audit Committee also is charged with monitoring
7
<PAGE> 11
the Corporation's Policy Against Insider Trading and Prohibited Transactions and
its Code of Conduct. The present members of the Corporation's Audit Committee
include Michael W. Dunn, James L. Miller, Todd J. Stevens and John D. Wolfe.
The Nominating Committee recommends to the Board of Directors nominations
for Director of the Corporation. The Nominating Committee presently has no
established procedures for considering shareholders' recommendations for
Director nominees, but shareholders may propose nominees for Director by
following the procedures set forth in the section of this Proxy Statement
entitled "SHAREHOLDER PROPOSALS FOR 2000 ANNUAL MEETING." The Nominating
Committee presently consists of John D. Wolfe, Henry T. Madden and Todd Stevens.
The Investment Committee assists the full Board of Directors with oversight
of the Corporation's investment portfolio and evaluates any proposed revisions
to the Corporation's investment policy. The Investment Committee also assures
compliance with the Corporation's policies regarding investments made in
participation with other funds managed by the Investment Advisor, with entities
controlling, controlled by or under common control with Zions, and with other
affiliates. The voting members of the Investment Committee presently include
Paul M. Bass, Jr., Michael W. Dunn, Henry T. Madden, James L. Miller, and John
D. Wolfe, and the nonvoting ex officio members include Robert A. Comey, David R.
Schroder and Todd J. Stevens.
During the Fiscal Year of the Corporation ended September 30, 1998, eight
meetings of the Board of Directors were held. In addition, one meeting of the
Audit Committee, no meetings of the Nominating Committee and eight meetings of
the Investment Committee were held. Each of the Directors attended at least 75%
of the meetings of the Board of Directors and at least 75% of the meetings held
by the committees of the Board on which that Director served.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
COMPENSATION OF DIRECTORS
Pursuant to the investment advisory agreements of the Corporation and
MorAmerica Capital with the Investment Advisor, Directors of the Corporation and
of MorAmerica Capital who are also officers or directors of the Investment
Advisor receive no compensation for serving on the Boards of Directors of the
Corporation and of MorAmerica Capital. All other Directors of the Corporation,
other than the Chairman of the Board, receive $8,000 per year plus $500 per
Board of Directors meeting attended and $250 per committee meeting attended, all
as total compensation for serving on the Boards of Directors of both the
Corporation and MorAmerica Capital. The Corporation's Chairman of the Board
receives $2,000 per month plus $500 per Board of Directors meeting attended and
$250 per committee meeting attended, all as total compensation for serving as
the Chairman of the Board of Directors of the Corporation and MorAmerica
Capital. In addition, the Corporation reimburses all reasonable expenses of the
Directors and the Chairman of the Board in attending Board of Directors and
committee meetings. Directors' meetings are normally held on a quarterly basis,
with additional meetings held as needed on an interim basis.
8
<PAGE> 12
SUMMARY COMPENSATION TABLE
The following table sets forth certain details of compensation paid to
Directors during Fiscal Year 1998, which includes compensation for serving on
the Boards of Directors of the Corporation, MorAmerica Capital and other wholly
owned subsidiaries of the Corporation. For purposes of the following table, the
Fund Complex (as that term is defined in Item 22(a)(1)(v) of Reg.
ss.240.14a-101) consists solely of the Corporation and MorAmerica Capital. The
Corporation presently maintains no pension or retirement plans for its
Directors.
<TABLE>
<CAPTION>
Name and Aggregate Compensation
Position From Corporation and Fund Complex1
-------- ----------------------------------
<S> <C>
Paul M. Bass, Jr. $28,150
Chairman of the Board
David R. Schroder, -0-
Director, President and
Secretary
Robert A. Comey, -0-
Director, Executive
Vice President and
Treasurer
Henry T. Madden, 13,150
Director
John D. Wolfe, 12,4002
Director
Michael W. Dunn, 12,400
Director
James L. Miller, 13,650
Director
Todd J. Stevens, 12,400
Director
</TABLE>
- ------------------------------------
1 Consists only of directors' fees and does not include reimbursed
expenses. The Corporation presently maintains no pension or retirement plans for
its Directors.
2 Of the $12,400 paid to Mr. Wolfe in Fiscal Year 1998, $10,400
represented fees earned by Mr. Wolfe during Fiscal Year 1998, and $2,000
represented fees earned during Fiscal Year 1997 and deferred at Mr. Wolfe's
election. An additional $2,000 earned by Mr. Wolfe during Fiscal Year 1998 was
deferred at the election of Mr. Wolfe and will be paid without interest during
Fiscal Year 1999.
9
<PAGE> 13
PERFORMANCE GRAPH
The following graph compares the semi-annual percentage change in
cumulative stockholder return on the Common Stock of the Corporation since March
3, 1995 (the day on which shares of the Corporation's Common Stock commenced
public trading), with the cumulative total return over the same period of (i)
the Nasdaq Stock Market Total Return Index (U.S. Companies); (ii) the Nasdaq
Financial Stocks Total Return Index; and (iii) a peer group selected in good
faith by the Corporation composed of the following nine business development
companies or other funds know by the Corporation to have similar investment
objectives to the Corporation: Allied Capital Corporation (ALLC), American
Capital Strategies (ACAS), Brantley Capital Corporation (BBDC), Capital
Southwest Corporation (CSWC), Harris & Harris Group, Inc. (HHGP), Rand Capital
Corporation (RAND), Sirrom Capital Corporation (SIR), Waterside Capital
Corporation (WSCC) and Winfield Capital Corporation (WCAP) (the "Peer Group").
In the Corporation's prior Proxy Statements, the Nasdaq Financial
Stocks Total Return Index was used as the peer group index. However, this index
includes a number of companies that are not engaged in the venture capital
industry. Accordingly, the Corporation has constructed the Peer Group to be a
more representative index for comparison. The Nasdaq Financial Stocks Total
Return Index is shown in this Proxy Statement for transitional purposes.
In the graph, the comparison assumes $100 was invested on March 3,
1995, in shares of the Corporation's Common Stock and in each of the indices.
The comparison is based upon the closing market bid price for shares of the
Corporation's Common Stock, and assumes the reinvestment of all dividends, if
any. The returns of each of the companies in the Peer Group are weighted
according to the respective company's stock market capitalization at the
beginning of each period for which a return is indicated.
MACC PRIVATE EQUITIES INC.
COMPARISON CUMULATIVE TOTAL RETURNS
<TABLE>
<CAPTION>
_______________FISCAL YEAR ENDING________________
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COMPANY/INDEX/MARKET 3/03/95 3/31/95 9/30/95 3/31/96 9/30/96 3/31/97 9/30/97 3//31/98 9/30/98
MACC Private Equities Inc. 100.00 169.23 226.92 269.23 319.23 355.42 327.92 360.64 438.10
Peer Group Index 100.00 100.44 127.81 158.89 100.19 200.89 245.72 302.13 155.10
NASDAQ Market Index 100.00 104.74 127.68 132.50 146.24 145.34 200.47 220.14 203.53
NASDAQ Financial Stocks 100.00 100.95 124.61 139.06 154.26 178.77 242.92 277.24 224.57
</TABLE>
10
<PAGE> 14
COMPENSATION OF EXECUTIVE OFFICERS
The Corporation has no employees and does not pay any compensation to
any of its officers. All of the Corporation's officers and staff are employed by
the Investment Advisor, which pays all of their cash compensation.
SECTION 16(a) REPORTING COMPLIANCE
Pursuant to Section 16(a) of the Securities Exchange Act of 1934, as
amended, officers and directors of the Corporation and persons beneficially
owning 10% or more of the Corporation's Common Stock (collectively, "reporting
persons") must file reports on Forms 3, 4 and 5 regarding changes in their
holdings of the Corporation's equity securities with the Securities and Exchange
Commission. Based solely upon a review of copies of these reports sent to the
Secretary of the Corporation and/or written representations from reporting
persons that no Form 5 was required to be filed with respect to Fiscal Year
1998, the Corporation believes that all Forms 3, 4, and 5 required to be filed
by all reporting persons have been properly and timely filed with the Securities
and Exchange Commission, except that one transaction by Henry T. Madden during
March, 1998, was reported late on Form 4; two transactions by Zions First
National Bank during November 1997, were reported late on Form 4; and three
transactions by Zions First National Bank during December 1997, were reported
late on Form 4.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS
VOTE FOR THE ELECTION AS DIRECTORS OF THE PERSONS NAMED UNDER "ELECTION OF
DIRECTORS--NOMINEES."
PROPOSAL 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
As recommended by the Audit Committee of the Corporation's Board of
Directors, on December 16, 1998, a majority of those members of the Board of
Directors of the Corporation who are not "interested persons" of the Corporation
(as defined in Section 2(a)(19) of the Investment Company Act of 1940) voted in
favor of the appointment of KPMG Peat Marwick LLP to serve as the Corporation's
independent auditors for the Fiscal Year ending September 30, 1999.
The appointment of KPMG Peat Marwick LLP as independent auditors is
subject to ratification by the shareholders. If the shareholders ratify the
selection of KPMG Peat Marwick LLP as the Corporation's auditors, they will also
serve as independent auditors for all subsidiaries of the Corporation. A
representative of KPMG Peat Marwick LLP is expected to be present at the Annual
Meeting with an opportunity to make a statement, and will be available to
respond to appropriate questions.
In order to ratify the appointment of KPMG Peat Marwick LLP as
independent auditors for the Corporation for the year ending September 30, 1999,
the proposal must receive the favorable vote of a majority of the shares
entitled to vote and represented at the Annual Meeting.
11
<PAGE> 15
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS
VOTE FOR THE RATIFICATION OF KPMG PEAT MARWICK LLP AS THE INDEPENDENT AUDITORS
FOR THE CORPORATION FOR THE YEAR ENDING SEPTEMBER 30, 1999.
PROPOSAL 3
APPROVAL OF PROPOSED AMENDMENTS
TO INVESTMENT ADVISORY AGREEMENT
INTRODUCTION
On February 24, 1998, the Corporation's shareholders approved certain
changes to the Investment Advisory Agreements of the Corporation and MorAmerica
Capital (the "Investment Advisory Agreements") with InvestAmerica Investment
Advisors, Inc. (the "Investment Advisor"). Because MorAmerica Capital is
licensed as a small business investment company ("SBIC"), applicable Small
Business Administration ("SBA") regulations require the approval of the SBA to
any changes to the Investment Advisory Agreement of MorAmerica Capital.
Accordingly, MorAmerica Capital submitted the revised Investment Advisory
Agreement to the SBA for its approval. The SBA approved the changes to the
MorAmerica Capital Investment Advisory Agreement, with a few additional
modifications. On December 16, 1998, a majority of the members of the MorAmerica
Capital Board of Directors who are not "interested persons" within the meaning
of Section 2(a)(19) of the Investment Company Act of 1940, as amended, approved
the SBA-suggested modifications to the MorAmerica Capital Investment Advisory
Agreement as set forth in "APPENDIX A -- PROPOSED MORAMERICA CAPITAL INVESTMENT
ADVISORY AGREEMENT." The purpose of this Proposal is to obtain shareholder
approval for the additional SBA-suggested modifications to the MorAmerica
Capital Investment Advisory Agreement.
No person serves as an investment advisor to the Corporation or
MorAmerica Capital, other than the Investment Advisor pursuant to the Investment
Advisory Agreements. In addition, other than pursuant to the Investment Advisory
Agreements, the Corporation and MorAmerica Capital did not pay any fees to the
Investment Advisor, its affiliated persons or affiliated persons of such persons
during Fiscal Year 1998.
CURRENT MORAMERICA CAPITAL
INVESTMENT ADVISORY AGREEMENT
The existing MorAmerica Capital Investment Advisory Agreement provides
that the Investment Advisor shall manage all assets of MorAmerica Capital and
generally shall provide all facilities, personnel, and other means necessary for
MorAmerica to operate. Except to the extent of acquisitions or dispositions of
portfolio securities that, in accordance with MorAmerica Capital's co-investment
guidelines require specific board approval, the Investment Advisor shall make
all new and follow-on investments and all asset dispositions and other
investment decisions in the Investment Advisor's discretion.
The Investment Advisor generally is responsible for expenses relating
to staff salaries, office space and supplies, and MorAmerica Capital is
generally responsible for auditing fees, all
12
<PAGE> 16
legal expenses, fees to the directors of MorAmerica Capital, and any and all
expenses associated with property of a portfolio company taken or received by
MorAmerica Capital or on its behalf as a result of its investment in any
portfolio company.
The existing MorAmerica Capital Investment Advisory Agreement provides
that the Investment Advisor shall receive a management fee and an incentive fee.
The management fee is paid monthly in arrears and is equal to 2.5% per annum of
Capital Under Management (as that term is defined in the existing MorAmerica
Capital Investment Advisory Agreement), which includes fiscal year-end: (i)
private capital (as defined in the Small Business Administration ("SBA")
Regulations), (ii) SBA leverage, and (iii) Undistributed Realized Earnings. The
definition of Capital Under Management under the existing MorAmerica Capital
Investment Advisory Agreement is proposed to be amended, as set forth in
"PROPOSED AMENDMENTS TO MORAMERICA CAPITAL INVESTMENT ADVISORY AGREEMENT."
In addition, the Investment Advisor is entitled to an incentive fee
under the existing MorAmerica Capital Investment Advisory Agreement. The amount
of the incentive fee is 13.4% of the Net Capital Gains (as defined in the
existing MorAmerica Capital Investment Advisory Agreement), before taxes, on
portfolio investments and from the disposition of other assets or property
managed by the Investment Adviser. Under the existing MorAmerica Capital
Investment Advisory Agreement, Net Capital Gains are computed only on capital
gains realized from the sale of portfolio securities or other property during
the period, less any capital losses realized and any unrealized capital
depreciation accrued during the period. The computation of Net Capital Gains is
proposed to be amended, as set forth in "PROPOSED AMENDMENTS TO MORAMERICA
CAPITAL INVESTMENT ADVISORY AGREEMENT."
The amount of the incentive fee is limited in any period by applicable
SBA Regulations with respect to the fee paid by MorAmerica Capital although the
amount which may not be paid in one period, may be an incentive fee payable or
may be an escrow payable and disbursed in later periods. In addition, the amount
of the incentive fee and all incentive compensation, in any Fiscal Year, may not
exceed the limit prescribed by Section 205(b)(3)(A) of the Investment Advisors
Act of 1940, as amended (the "Advisors Act"). This section provides that the
total incentive fee will not exceed 20% of the realized capital gains upon the
funds computed net of all realized capital losses and unrealized capital
depreciation.
In Fiscal Year 1998, under the Corporation's Investment Advisory
Agreement the Investment Advisor was entitled to management fees equal to
$51,866, and no incentive fees. During the same period, under the MorAmerica
Capital Investment Advisory Agreement, the Investment Advisor was entitled to
management fees equal to $653,988, and incentive fees equal to $131,304.
Approximately $86,700 of the incentive fees earned during Fiscal Year 1998
relate to non-cash gains and payment of these fees will be deferred until the
non-cash assets are sold for cash in accordance with the terms of the MorAmerica
Capital Investment Advisory Agreement. Other than as set forth above, the
Corporation and MorAmerica Capital paid no other compensation to the Investment
Advisor during Fiscal Year 1998.
13
<PAGE> 17
PROPOSED AMENDMENTS TO
MORAMERICA CAPITAL INVESTMENT
ADVISORY AGREEMENT
The proposed changes to the MorAmerica Capital Investment Advisory
Agreement consist solely of amendments requested by the SBA in connection with
its review of the MorAmerica Capital Investment Advisory Agreement approved by
the shareholders on February 24, 1998. These amendments are:
1. To amend the definition of "Net Capital Gains" under the MorAmerica
Capital Investment Advisory Agreement. This change may potentially
reduce the amount of incentive fees payable by MorAmerica Capital
to the Investment Advisor, and therefore may be material. This
proposed amendment is discussed in full below.
2. To provide in Section 5.1 of the MorAmerica Capital Investment
Advisory Agreement that the amount of the management fee payable by
MorAmerica Capital to the Investment Advisor shall not exceed 7.5%
of Regulatory Capital. This change may potentially reduce the
amount of the management fee payable by MorAmerica Capital to the
Investment Advisor, and therefore may be material. This proposed
amendment is discussed in full below.
3. To replace all references in the MorAmerica Capital Investment
Advisory Agreement to "Private Capital" with the term "Regulatory
Capital." This change is solely to conform with changes in defined
terms used in the SBA Regulations, and will have no impact on the
computation or amount of fees, the timing of the payment of any
fees, or other performance under the MorAmerica Capital Investment
Advisory Agreement. This proposed amendment is not material.
4. To provide in Section 5.2 of the MorAmerica Capital Investment
Advisory Agreement that upon termination of the Investment Advisory
Agreement, the amount of any incentive fees earned with respect to
non-cash Realized Capital Gains (as that term is defined in the
MorAmerica Capital Investment Advisory Agreement) shall not be due
and owing to the Investment Advisor until such Realized Capital
Gain has been reduced to cash received by MorAmerica Capital. The
Corporation believes that this amendment merely restates the
treatment of incentive fees payable with respect to non-cash
Realized Capital Gains under the terms of the existing MorAmerica
Capital Investment Advisory Agreement, that this same result would
obtain under the terms of the existing MorAmerica Capital
Investment Advisory Agreement, and that therefore this change would
not affect the computation or amount of fees, the timing of the
payment of any fees, or other performance under the MorAmerica
Capital Investment Advisory Agreement. This proposed amendment is
not material.
The following discussion of the material amendments proposed to be made
to the MorAmerica Capital Investment Advisory Agreement is qualified in its
entirety by the terms of the proposed MorAmerica Capital Investment Advisory
Agreement as set forth in Appendix A - Proposed MorAmerica Capital Investment
Advisory Agreement. In the Appendix, language proposed to be added appears in
brackets in the Proposed Investment Advisory Agreements.
14
<PAGE> 18
The first proposed material amendment would amend the definition of
"Net Capital Gains" under the MorAmerica Capital Investment Advisory Agreement.
This definition is significant because the incentive fee payable to the
Investment Advisor for any period is equal to 13.4% of Net Capital Gains. Under
the existing MorAmerica Capital Investment Advisory Agreement, Net Capital Gains
is defined as "Realized Capital Gains net of Capital Losses determined in
accordance with generally accepted accounting principles." As amended, "Net
Capital Gains" would be defined as "Realized Capital Gains minus the sum of: (i)
Capital Losses determined in accordance with generally accepted accounting
principles; and (ii) net investment losses, if any, as reported on Line 32 of
SBA Form 468." Net investment losses of MorAmerica Capital for any period are
the excess, if any, of MorAmerica Capital's operating expenses (excluding
portfolio investment realized losses and unrealized depreciation) over
MorAmerica Capital's total investment income from dividends, interest and other
sources, but excluding portfolio investment realized gains and losses and
unrealized appreciation and depreciation. Net investment income for any period
(i.e., the excess of MorAmerica Capital's total investment income over its total
operating expenses in any period), if any, would not be added to Net Capital
Gains for purposes of calculating the incentive fee for any period.
For example, if in a given period, MorAmerica Capital had Realized
Capital Gains of $2,000,000, Capital Losses of $1,000,000, and net investment
losses of $100,000, under the existing MorAmerica Capital Investment Advisory
Agreement, the Investment Advisor would be entitled to an incentive fee of
$134,000 (13.4% of $1,000,000). Under the MorAmerica Capital Investment Advisory
Agreement as it is proposed to be amended, the Investment Advisor would be
entitled to an incentive fee of $120,600 (13.4% of $900,000). Conversely, if in
a given period, MorAmerica Capital had Realized Capital Gains of $2,000,000,
Capital Losses of $1,000,000, and net investment income of $100,000, the
Investment Advisor would be entitled to an incentive fee of $134,000 (13.4% of
$1,000,000) under the MorAmerica Capital Investment Advisory Agreement, both as
it currently exists and as it is proposed to be amended. Thus, the proposed
amendment would only serve to decrease the amount of the incentive fee payable
to the Investment Advisor in a period in which MorAmerica Capital had net
investment losses.
The second proposed material amendment would amend Section 5.1 of the
MorAmerica Capital Investment Advisory Agreement to limit the amount of the
management fee which could be paid to the Investment Advisor. Section 5.1
currently provides that the management fee payable monthly to the Investment
Advisor shall be equal to 2.5% per annum of Capital Under Management, but in no
event greater than 2.5% of Assets Under Management. As it is proposed to be
amended, Section 5.1 would provide that the management fee payable monthly to
the Investment Advisor shall be equal to 2.5% per annum of Capital Under
Management, but in no event greater than either: (i) 2.5% of Assets Under
Management; or (ii) 7.5% of Regulatory Capital. Thus, the effect of this
proposed amendment would be to further limit the amount of the management fee to
not more than 7.5% of Regulatory Capital.
For example, if during a given period, MorAmerica Capital had Capital
Under Management of $30,000,000, Assets Under Management of $35,000,000 and
Regulatory Capital of $7,500,000, under the existing MorAmerica Capital
Investment Advisory Agreement, the amount of the management fee payable to the
Investment Advisor would be $750,000 (2.5% of $30,000,000), whereas under the
MorAmerica Capital Investment Advisory Agreement as it is
15
<PAGE> 19
proposed to be amended, the amount of the management fee payable to the
Investment Advisor would be $562,500 (7.5% of $7,500,000). Thus, the proposed
amendment would limit the amount of the management fee in any period in which
MorAmerica Capital's Capital Under Management and Assets Under Management
significantly exceed its Regulatory Capital.
In connection with the SBA's approval and review of the MorAmerica
Capital Investment Advisory Agreement, MorAmerica Capital agreed not to pay, and
the Investment Advisor agreed to waive, any compensation to the Investment
Advisor which would be in excess of the amounts permitted under the amendments
proposed by SBA. Therefore, the amount of compensation paid by MorAmerica
Capital to the Investment Advisor during Fiscal Year 1998 would not have changed
had the proposed amendments been in effect during Fiscal Year 1998.
Nevertheless, as calculated both under the existing MorAmerica Capital
Investment Advisory Agreement and under the MorAmerica Capital Investment
Advisory Agreement as it is proposed to be amended, the Investment Advisor was
entitled to $653,988 in management fees and $131,304 in incentive fees during
Fiscal Year 1998.
A majority of the Boards of Directors of the Corporation and MorAmerica
Capital who are not "interested persons" of the Corporation and MorAmerica
Capital unanimously recommend that shareholders vote for the proposed amendments
to the MorAmerica Capital Investment Advisory Agreement as set forth in Appendix
A - Proposed MorAmerica Capital Investment Advisory Agreement. The Boards of
Directors recommend these amendments in order to conform the MorAmerica Capital
Investment Advisory Agreement with applicable SBA regulations and the comments
of the regulators.
THE INVESTMENT ADVISOR AND
ITS AFFILIATES
Other than the persons named in the following table, no officer or
director of the Corporation or of MorAmerica Capital owns securities of, or has
any other material direct or indirect interest in, the Investment Advisor. The
following table sets forth the names, addresses and principal occupations of
each officer and director of the Investment Advisor, including their positions
held with the Corporation and MorAmerica Capital:
<TABLE>
<CAPTION>
Positions with the
Name and Address Investment Advisor Principal Occupation
- ---------------- ------------------ --------------------
<S> <C> <C>
David R. Schroder Director, President and Secretary Director, President and Secretary of
101 Second Street, SE the Investment Advisor, of the
Suite 800 Corporation, of MorAmerica Capital, of
Cedar Rapids, Iowa 52401 InvestAmerica Venture Group, Inc., of
InvestAmerica N.D. Management, Inc.,
and of InvestAmerica N.D., L.L.C.
</TABLE>
16
<PAGE> 20
<TABLE>
<CAPTION>
Positions with the
Name and Address Investment Advisor Principal Occupation
- ---------------- ------------------ --------------------
<S> <C> <C>
Robert A. Comey Director, Executive Vice President and Director, Executive Vice President,
101 Second Street, SE Treasurer and Treasurer of the Investment
Suite 800 Advisor, of the Corporation, of
Cedar Rapids, Iowa 52401 MorAmerica Capital, of InvestAmerica
Venture Group, Inc., of InvestAmerica
N.D. Management, Inc. and of
InvestAmerica N.D., L.L.C.
Kevin F. Mullane Director and Vice President Director and Vice President of the
Suite 2724 - Commerce Tower Investment Advisor, of InvestAmerica
911 Main Street Venture Group, Inc., of InvestAmerica
Kansas City, Missouri 64105 N.D. Management, Inc., and of
InvestAmerica N.D., L.L.C.; Vice
President of the Corporation and of
MorAmerica Capital
</TABLE>
To the best of the knowledge and belief of the Corporation and
MorAmerica Capital, no financial condition of the Investment Advisor is
reasonably likely to impair the financial ability of the Investment Advisor to
fulfill its commitment to the Corporation or to MorAmerica Capital under the
Investment Advisory Agreements of the Corporation and MorAmerica Capital.
The Investment Advisor provides investment advisory services only to
the Corporation and MorAmerica Capital. However, affiliates of the Investment
Advisor act as investment advisors to two other funds having similar investment
objectives to the Corporation and MorAmerica Capital, the Iowa Venture Capital
Fund, L.P. (the "Iowa Fund"), and North Dakota Small Business Investment
Company, A North Dakota Limited Partnership ("NDSBIC"). These affiliates are
InvestAmerica Venture Group, Inc. and InvestAmerica N.D. Management, Inc.,
respectively. The following table sets forth, as of September 30, 1998, the size
of the Iowa Fund and NDSBIC, the rates of compensation paid by such funds, and
the extent to which the investment advisor to such funds has waived, reduced or
otherwise agreed to reduce its compensation under any applicable contract.
17
<PAGE> 21
<TABLE>
<CAPTION>
Reductions of
Name of Fund Size of Fund Rate of Compensation Compensation
- ------------ ------------ -------------------- ------------
<S> <C> <C> <C>
The Iowa Venture Assets:$1,236,000 About 2.5% of remaining None
Capital Fund, L.P. assets*
NDSBIC Assets:$7,827,000 2.5% of assets +$125,000 None
+plus carried interest of 20%
</TABLE>
- ------------------
*The Iowa Fund, a private investment partnership, is in its planned liquidation
phase. The partners have presently extended the fund beyond its anticipated
10-year life to facilitate orderly liquidation of investments. The advisory fee
for this period is no longer set by contract, but by annual agreement of the
parties. The rate reflected was the effective rate paid for the prior fiscal
year of this fund.
During Fiscal Year 1998, the Corporation and MorAmerica Capital paid no
brokerage commissions to any broker: (i) that is an affiliated person of the
Corporation or MorAmerica Capital; (ii) that is an affiliated person of such
person; or (iii) an affiliated person of which is an affiliated person of the
Corporation or MorAmerica Capital, the Investment Advisor, or any principal
underwriter or administrator for the Corporation or MorAmerica Capital.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE
FOR THE PROPOSAL APPROVING THE PROPOSED AMENDMENTS TO THE INVESTMENT ADVISORY
AGREEMENT OF MORAMERICA CAPITAL.
OTHER BUSINESS
The Board of Directors knows of no other business to be presented for
action at the Meeting. If any matters do come before the Meeting on which action
can properly be taken, it is intended that the proxies shall vote in accordance
with the judgment of the person or persons exercising the authority conferred by
the proxy at the Meeting.
SHAREHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
Under the rules of the Securities and Exchange Commission, any
shareholder proposal to be considered by the Corporation for inclusion in the
proxy material for the February, 2000 Annual Meeting of Shareholders must be
received by the Secretary of the Corporation, 101 Second Street, S.E., Suite
800, Cedar Rapids, Iowa 52401, no later than September 17, 1999. The submission
of a proposal does not guarantee its inclusion in the proxy statement or
presentation at the annual meeting unless certain securities laws requirements
are met.
In addition, under the Corporation's Bylaws, shareholders desiring to
nominate persons for election as Directors or to propose other business for
consideration at an annual meeting must generally notify the Secretary of the
Corporation in writing not less than 60 days, nor more than 90 days, prior to
the date on which the corporation first mailed its proxy materials for the prior
year's annual meeting. Accordingly, shareholders desiring to submit a proposal
for consideration at the 2000 Annual Meeting must give written notice of the
proposal to the Secretary of the Corporation not earlier than October 17, 1999,
and not later than November 16, 1999. The
18
<PAGE> 22
Corporation's proxies will have discretionary authority to vote with respect to
any shareholder proposal that may be presented at an Annual Meeting which does
not comply with these notice requirements. Shareholders' notices must contain
the specific information set forth in the Corporation's Bylaws. A copy of the
Corporation's Bylaws will be furnished to shareholders without charge upon
written request to the Secretary of the Corporation.
EXPENSES OF SOLICITATION OF PROXIES
In addition to the use of the mails, proxies may be solicited by
personal interview and telephone by directors, officers and other employees of
the Corporation, who will not receive additional compensation for such services.
The Corporation has employed ChaseMellon Shareholder Services to aid in the
solicitation of proxies at an estimated fee of $3,500 plus $4.50 per shareholder
solicited. The Corporation will also request brokerage houses, nominees,
custodians and fiduciaries to forward soliciting materials to the beneficial
owners of stock held of record by them and will reimburse such persons for
forwarding materials. The cost of soliciting proxies will be borne by the
Corporation.
ANNUAL REPORT
The Annual Report to Shareholders covering the Fiscal Year ended
September 30, 1998, accompanies this proxy statement, but is not deemed a part
of the proxy soliciting material.
A COPY OF THE FISCAL YEAR 1998 FORM 10-K REPORT TO THE SECURITIES AND
EXCHANGE COMMISSION, EXCLUDING EXHIBITS, WILL BE MAILED TO SHAREHOLDERS WITHOUT
CHARGE UPON WRITTEN REQUEST TO DAVID R. SCHRODER, SECRETARY, MACC PRIVATE
EQUITIES INC., 101 SECOND STREET, S.E., SUITE 800, CEDAR RAPIDS, IOWA 52401.
SUCH REQUESTS MUST SET FORTH A GOOD FAITH REPRESENTATION THAT THE REQUESTING
PARTY WAS EITHER A HOLDER OF RECORD OR A BENEFICIAL OWNER OF COMMON STOCK OF THE
CORPORATION ON DECEMBER 31, 1998. EXHIBITS TO THE FORM 10-K WILL BE MAILED UPON
SIMILAR REQUEST AND PAYMENT OF SPECIFIED FEES.
PLEASE DATE, SIGN AND RETURN THE PROXY AT YOUR EARLIEST CONVENIENCE IN
THE ENCLOSED ENVELOPE. No postage is required for mailing in the United States.
A prompt return of your proxy will be appreciated as it will save the expense of
further mailings and telephone solicitations.
By Order of the Board of Directors
/s/ David R. Schroder,
David R. Schroder,
Secretary
Cedar Rapids, Iowa
January 15, 1999
19
<PAGE> 23
APPENDIX A
PROPOSED MORAMERICA CAPITAL
INVESTMENT ADVISORY AGREEMENT
<PAGE> 24
MORAMERICA CAPITAL CORPORATION
INVESTMENT ADVISORY AGREEMENT
This INVESTMENT ADVISORY AGREEMENT dated as of March 1, [1999] (the
"Agreement") by MorAmerica Capital Corporation, a corporation organized under
the laws of the State of Iowa ("MACC"), and InvestAmerica Investment Advisors,
Inc., a corporation organized under the laws of the State of Delaware
("InvestAmerica").
WHEREAS, MACC is licensed as a small business investment company
("SBIC") under the Small Business Investment Act of 1958, as amended, and
operates as a business development company under the Investment Company Act of
1940, as amended (the "ICA"); and
WHEREAS, MACC is in need of certain investment advisory services in
order to carry on its business;
WHEREAS, InvestAmerica is registered as an investment advisor under the
Investment Advisers Act of 1940, as amended.
NOW THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the parties hereto agree as follows:
Section 1. Definitions.
1.1 "Affiliate" shall have the meaning given under Rule 144 of the
Securities Act of 1933, as amended.
1.2 "Assets Under Management" shall mean the total value of MACC's
assets Managed by InvestAmerica under this Agreement.
1.3 "Capital Losses" are those which are placed, consistent with
generally accepted accounting principles, on the books of MACC and which occur
when:
(a) An actual or realized loss is sustained owing to Portfolio
Company or investment events including, but not limited to,
liquidation, sale or bankruptcy;
(b) The Board of Directors of MACC determines that a loss or
depreciation in value from the value on the date of this Agreement
should be taken by MACC in accordance with generally accepted
accounting principles and SBA accounting regulations and is shown on
its books as a part of the periodic valuation of the Portfolio
Companies by the Board of Directors; or
(c) Capital Losses are adjusted for reverses of depreciation when
the Board of Directors determines that a value should be adjusted
upward and the investment value remains at or below original cost.
A-1
<PAGE> 25
For purposes of this definition, in any case where the Board of
Directors of MACC writes down the value of any investment in MACC's portfolio
(in accordance with the standards set forth in subsection 1.3(b) above), (i)
such reduction in value shall result in a new cost basis for such investment and
(ii) the most recent cost basis of such investment shall thereafter be used in
the determination of any Realized Capital Gains or Capital Losses in MACC's
portfolio (i.e., there shall be no double-counting of losses when a security
(whose value has declined in a prior period) is ultimately sold at a price below
its historical cost).
1.4 "Capital Under Management" shall mean MACC's (i) fiscal year end
[Regulatory] Capital as defined in the SBA regulations as of the date hereof
(which regulations define [Regulatory] Capital to exclude unrealized capital
gains and losses) ("[Regulatory] Capital"); plus (ii) fiscal year end SBA
leverage as defined by SBA regulations as of the date hereof, including
participating securities as defined in Section 303(g) of the Small Business
Investment Act of 1958, as amended; plus (iii) fiscal year end Undistributed
Realized Earnings.
1.5 "ICA" has the meaning set forth in the first recital hereof.
1.6 "Iowa Fund" has the meaning set forth in Section 3.2 below.
1.7 "MACC" shall mean MorAmerica Capital Corporation.
1.8 "Net Capital Gains" shall mean Realized Capital Gains [minus the
sum of: (i)] Capital Losses determined in accordance with generally accepted
accounting principles[; and (ii) net investment losses, if any, as reported on
Line 32 of SBA Form 468].
1.9 "Other Venture Capital Funds" has the meaning set forth in
subsection 3.3(c).
1.10 "Portfolio Company" or "Portfolio Companies" shall mean any entity
in which MACC may make an investment and with respect to which InvestAmerica
will be providing services pursuant hereto, which investments may include
ownership of capital stock, loans, receivables due from a Portfolio Company or
other debtor on sale of assets acquired in liquidation and assets acquired in
liquidation of any Portfolio Company.
1.11 "[Regulatory] Capital" has the meaning set forth in the definition
of Capital Under Management in Section 1.4 above.
1.12 "Realized Capital Gains" shall mean capital gains after deducting
the cost and expenses necessary to achieve the gain (e.g., broker's fees). For
purposes of this Agreement:
(a) Capital gains are Realized Capital Gains upon the cash sale
of the capital stock or assets of a Portfolio Company or any other
asset or item of property managed by InvestAmerica pursuant to the
terms hereof or any Realized Capital Gain has occurred in accordance
with GAAP which is not cash as described in Subsection 1.12(c) below;
(b) With regard to all assets owned by MACC prior to the mergers
of MorAmerica Financial Corporation and Morris Plan Liquidation Company
into the
A-2
<PAGE> 26
Company, the historical cost of such assets shall be the basis for
determining any Realized Capital Gains on the disposition thereof, and
(c) Realized Capital Gains other than cash gains shall be
recorded and calculated in the period the gain is realized; however, in
determining payment of any incentive fee, the payment shall be made
when the cash is received. The amount of the fee earned on gains other
than cash shall be recorded as incentive fees payable on the financial
statements of MACC.
1.13 "SBA" shall mean the United States Small Business Administration,
or any successor thereto, which has regulatory authority over SBICs.
1.14 "SBIC" has the meaning set forth in the first recital hereof
1.15 "SEC" shall mean the United States Securities and Exchange
Commission.
1.16 "The Company" shall mean MACC Private Equities Inc. and "the
Companies" shall mean MACC Private Equities Inc. and MACC.
1.17 "Venture Group" has the meaning set forth in Section 3.2 below.
Section 2. Investment Advisory Engagement. MACC hereby engages
InvestAmerica as its investment advisor.
2.1 As such, InvestAmerica will:
(a) Manage, render advice with respect to, and make decisions
regarding the acquisition and disposition of securities in accordance
with applicable law and MACC's investment policies as set forth in
writing by the Board of Directors, to include (without limitation) the
search and marketing for investment leads, screening and research of
investment opportunities, maintenance and expansion of a co-investor
network, review of appropriate investment legal documentation,
presentations of investments to MACC's Board of Directors (when and as
required), closing of investments, monitoring and management of
investments and exits, preparation of valuations, management of
relationships with the SEC, shareholders, the SBA and its auditors and
outside auditors and the provision of other services appropriate to the
management of an SBIC operating as a business development company;
(b) Make available and, if requested by Portfolio Companies or
entities in which MACC is proposing to invest, render managerial
assistance to, and exercise management rights in, such Portfolio
Companies and entities as appropriate to maximize return for MACC and
to comply with regulations;
(c) Maintain office space and facilities to the extent
required by InvestAmerica to provide adequate management services to
MACC;
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(d) Maintain the books of account and other records and files for
MACC but not to include auditing services; and
(e) Report to MACC's Board of Directors, or to any committee or
officers acting pursuant to the authority of the Board, at such
reasonable times and in such reasonable detail as the Board deems
appropriate in order to enable MACC to determine that investment
policies are being observed and implemented and that InvestAmerica's
obligations hereunder are being fulfilled. Any investment program
undertaken by InvestAmerica pursuant hereto and any other activities
undertaken by InvestAmerica on behalf of MACC shall at all times be
subject to applicable law and any directives of MACC's Board of
Directors or any duly constituted committee or officer acting pursuant
to the authority of MACC's Board of Directors.
2.2 InvestAmerica will be responsible for the following expenses: its
staff salaries and fringes, office space, office equipment and furniture,
communications, travel, meals and entertainment, conventions, seminars, office
supplies, dues and subscriptions, hiring fees, moving expenses, repair and
maintenance, employment taxes, in-house accounting expenses and minor
miscellaneous expenses.
InvestAmerica will pay for its own account all expenses incurred in
rendering the services to be rendered hereunder. Without limiting the generality
of the foregoing, InvestAmerica will pay the salaries and other employee
benefits of the persons in its organization whom it may engage to render such
services, including without limitation, persons in its organization who may from
time to time act as officers of MACC.
Notwithstanding the foregoing, InvestAmerica will earn incentive
compensation on a quarterly basis, which shall not be deemed part of
compensation or other employee benefits for the purpose of this paragraph.
2.3 In connection with the services provided, InvestAmerica will not be
responsible for the following expenses which shall be the sole responsibility of
MACC and will be paid promptly by MACC: auditing fees; all legal expenses; legal
fees normally paid by Portfolio Companies; National Association of Small
Business Investment Companies and other appropriate trade association fees;
brochures, advertising, marketing and publicity costs; interest on SBA or other
debt; fees to MACC directors and board fees; any fees owed or paid to MACC, its
Affiliates or fund managers; any and all expenses associated with property of a
Portfolio Company taken or received by MACC or on its behalf as a result of its
investment in any Portfolio company; all reorganization and registration
expenses of MACC; the fees and disbursements of MACC's counsel, accountants,
custodian, transfer agent and registrar; fees and expenses incurred in producing
and effecting filings with federal and state securities administrators; costs of
periodic reports to and other communications with the Company's shareholders;
fees and expenses of members of MACC's Boards of Directors who are not
InvestAmerica's directors, officers or employees or of any entity which is an
Affiliate of InvestAmerica; premiums for the fidelity bond, if any, maintained
by InvestAmerica pursuant to ICA Section 17; premiums for directors and officers
insurance maintained by MACC; and all
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transaction costs incident to the acquisition, management, protection and
disposition of securities by MACC.
Section 3. Nonexclusive Obligations; Co-investments.
3.1 The obligations of InvestAmerica to MACC are not exclusive.
InvestAmerica and its Affiliates may, in their discretion, manage other venture
capital funds and render the same or similar services to any other person or
persons who may be making the same or similar investments. The parties
acknowledge that InvestAmerica may offer the same investment opportunities as
may be offered to MACC to other persons for whom InvestAmerica is providing
services. Neither InvestAmerica nor any of its Affiliates shall in any manner
be liable to MACC or its Affiliates by reason of the activities of
InvestAmerica or its Affiliates on behalf of other persons and funds as
described in this paragraph and any conflict of interest arising therefrom is
hereby expressly waived.
3.2 InvestAmerica Venture Group, Inc. ("Venture Group") has managed
MACC in the past. Venture Group is also currently the General Partner of
InvestAmerica Venture Group L.P. which in turn is the General Partner of the
Iowa Venture Capital Fund L.P. (the "Iowa Fund"). Because of these
relationships, Venture Group manages the affairs of the Iowa Fund.
3.3 For the benefit of MACC's investment activities, InvestAmerica and
its Affiliates intend to maintain various future co-investment relationships
involving the Company which will include the following co-investments
opportunities for as long as InvestAmerica is an investment adviser to MACC:
(a) MACC will continue to review and to invest in its current
coinvestments with the Iowa Fund.
(b) MACC will be accorded the opportunity to invest in all
investment opportunities found by the Iowa Fund or any future successor
or continuation fund of the Iowa Fund.
(c) In the future, MACC will be accorded the opportunity to
review and to invest in all investments found by other venture capital
funds managed by InvestAmerica and its Affiliates (collectively, the
"Other Venture Capital Funds").
For purposes of this Section 3.3, where the Companies have an
opportunity to co-invest with the Iowa Fund or Other Venture Capital Funds,
investment opportunities shall be offered to the Companies and the Iowa Fund or
the Other Venture Capital Funds, as the case may be, (a) in the same proportion
as its [Regulatory] Capital bears to the total [Regulatory] Capital of the
Companies and the Iowa Fund or the Other Venture Capital Funds, as the case may
be, in the aggregate, or (b) in such other manner as is otherwise agreed upon by
the Companies and the Iowa Fund or the Other Venture Capital Funds, as the case
may be. Notwithstanding this Section 3.3, the terms of any applicable exemptive
order obtained by the Companies will control as to the terms of co-investments
with the Iowa Fund and the Other Capital Venture Funds.
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<PAGE> 29
3.4 InvestAmerica will cause to be offered to MACC opportunities to
acquire or dispose of securities as provided in the co-investment guidelines
summarized in the section of the Company's SEC Registration Statement entitled
"Investment Objectives and Policies - Co-Investment Guidelines." Except to the
extent of acquisitions and dispositions that, in accordance with such
co-investment guidelines, require the specific approval of MACC's Board of
Directors, InvestAmerica is authorized to effect acquisitions and dispositions
of securities for MACC's account in InvestAmerica's discretion. Where such
approval is required, InvestAmerica is authorized to effect acquisitions and
dispositions for MACC's account upon and to the extent of such approval. MACC
will put InvestAmerica in funds whenever InvestAmerica requires funds for an
acquisition of securities in accordance with the foregoing, and MACC will cause
to be delivered in accordance with InvestAmerica's instructions any securities
disposed of in accordance with the foregoing.
3.5 Should InvestAmerica or any of its Affiliates agree to perform or
undertake any investment management services described in paragraph 3.1 for any
funds or persons in addition to the Iowa Fund, InvestAmerica will notify MACC,
in writing, not later than the commencement of such agreement or the initial
provision of such services.
3.6 Any such investment management services and all co-investments
shall at all times be provided in strict accordance with rules and regulations
under the ICA, any exemptive order obtained thereunder and the rules and
regulations of the SBA.
Section 4. Services to Portfolio Companies.
4.1 It is acknowledged that as a part of the services to be provided by
InvestAmerica hereunder, certain of its employees, representatives and agents
will act as members of the board of directors of individual Portfolio Companies,
will vote the shares of the capital stock of Portfolio Companies, and make other
decisions which may effect the near- and the long-term direction of a Portfolio
Company. Unless otherwise restricted hereafter by MACC in writing, in regard to
such actions and decisions MACC hereby appoints InvestAmerica (and such
officers, Directors, employees, representatives and agents is it shall
designate) as its proxy, as a result of which InvestAmerica shall have the
authority, in its performance of this Agreement, to make decisions and to take,
without specific authority from the Board of Directors of MACC, as to all
matters which are not hereby restricted.
4.2 All fees, including director's fees that may be paid by or for the
account of an entity in which MACC has invested or in which MACC is proposing to
invest in connection with an investment transaction in which MACC participates
or provides managerial assistance, will be treated as commitment fees or
management fees and will be received by MACC, pro rata to its participation in
such transaction. InvestAmerica will be allowed to be reimbursed by Portfolio
Companies for all direct expenses associated with due diligence and management
of portfolio investments or investment opportunities (travel, meals, lodging,
etc.).
4.3 InvestAmerica's sole and exclusive compensation for its services to
be rendered hereunder will be in the form of a management fee and a separate
incentive fee as provided in Section 5. Should any officer or director of
InvestAmerica serve as a member of the Board of
A-6
<PAGE> 30
Directors of MACC, such officer or director of InvestAmerica shall not receive
compensation as a member of the Board of Directors of MACC.
Section 5. Management and Incentive Fees.
5.1 During the term of this Agreement, MACC will pay InvestAmerica
monthly in arrears a management fee equal to 2.5% per annum of the Capital Under
Management, but in no event more than [either: (i)] 2.5% per annum of the Assets
Under Management[, or (ii) 7.5% of Regulatory Capital].
5.2 During the term of this Agreement, MACC shall pay to InvestAmerica
an incentive fee determined as specified in this Section 5.2.
(a) The incentive fee shall be calculated as follows:
(i) The amount of the fee shall be 13.4% of the Net
Capital Gains, before taxes, resulting from the disposition of
investments in MACC's Portfolio Companies or resulting from the
disposition of other assets or property of MACC managed by
InvestAmerica pursuant to the terms hereof.
(ii) Net Capital Gains, before taxes, shall be calculated
annually at the end of each fiscal year for the purpose of
determining the earned incentive fee, unless this Agreement is
terminated prior to the completion of any fiscal year, then such
calculation shall be made at the end of such shorter period. A
preliminary calculation shall be made on the last business day of
each of the three fiscal quarters preceding the end of each
fiscal year for the purpose of determining the incentive fee
payable under Section 5.2(c)(i) below. Capital Losses and
Realized Capital Gains shall not be cumulative (i.e., no Capital
Losses nor Realized Capital Gains are carried forward into any
subsequent fiscal year).
(iii) Notwithstanding anything herein to the contrary, the
assets on which the incentive fee shall be calculated shall
include all assets owned by MACC prior to the time of the mergers
of MorAmerica Financial Corporation and Morris Plan Liquidation
Company into the Company.
(b) Upon termination of this Agreement, all earned but unpaid
incentive fees shall be immediately due and payable[; provided,
however, that incentive fees earned with respect to non-cash Realized
Capital Gains shall not be due and owing to InvestAmerica until the
cash is received by MACC].
(c) Payment of incentive fees shall be made as follows:
(i) To the extent payable, the incentive fee shall be
paid, in cash, in arrears by the last business day of each fiscal
quarter in the fiscal year. The incentive fee shall be
retroactively adjusted as soon as practicable following
completion of valuations at the end of each fiscal year in which
this Agreement is in effect to
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<PAGE> 31
reflect the actual incentive fee due and owing to InvestAmerica,
and if such adjustment reveals that InvestAmerica has received
more incentive fee income than it is entitled to hereunder,
InvestAmerica shall promptly reimburse MACC for the amount of
such excess.
(ii) In the event MACC earns any incentive fees, the
payment of which would cause MACC's [Regulatory] Capital to be
25% or more impaired, the portion of such fees which causes the
impairment shall be paid by MACC into a trust or escrow account
established by MACC for the benefit of InvestAmerica. Fees from
such account shall be released to InvestAmerica at such time as,
and to the extent that, MACC's [Regulatory] Capital is no longer
so impaired.
Section 6. Liability and Indemnification of InvestAmerica.
6.1 Neither InvestAmerica, nor any of its officers, directors,
shareholders, employees, agents or Affiliates, whether past, present or future
(collectively, the "Indemnified Parties"), shall be liable to MACC, or any of
MACC's Affiliates for any error in judgment or mistake of law made by the
Indemnified Parties in connection with any investment made by or for MACC,
provided such error or mistake was made in good faith and was not made in bad
faith or as a result of gross negligence or willful misconduct of the
Indemnified Parties. MACC confirms that in performing services hereunder
InvestAmerica will be an agent of MACC for the purpose of the indemnification
provisions of the Bylaws of MACC subject, however, to the same limitations as
though InvestAmerica were a director or officer of MACC. InvestAmerica shall not
be liable to MACC, its shareholders or its creditors, except for violations of
law or for conduct which would preclude InvestAmerica from being indemnified
under such provisions. The provisions of this Section 6.1 shall be applicable to
any act or omission or occurrence arising under the Management Agreement between
MACC and InvestAmerica's Affiliate, InvestAmerica Venture Group, Inc., dated as
of May 13, 1985 and all amendments and renewals thereto. In addition, the
provisions of this Section 6.1 shall survive termination of this Agreement.
6.2 Individuals who are Affiliates of InvestAmerica and are also
officers or directors of MACC as well as other InvestAmerica officers performing
duties within the scope of this Agreement on behalf of MACC will be covered by
any directors and officers insurance policy maintained by MACC.
Section 7. Shareholder Approval; Term.
MACC represents that this Agreement has been approved by MACC's Board
of Directors. This Agreement shall continue in effect for two years from the
date hereof; provided, however, that this Agreement shall not take effect if as
of the date hereof the shareholders of MACC Private Equities Inc. and the sole
shareholder of MACC shall not have approved this Agreement in the manner set
forth in Section 15(a) of the ICA. Thereafter, this Agreement shall continue in
effect so long as such continuance is specifically approved at least annually by
MACC's Board of Directors, including a majority of its members who are not
interested persons of InvestAmerica, or by vote of the holders of a majority, as
defined in the ICA, of MACC's
A-8
<PAGE> 32
outstanding voting securities. The foregoing notwithstanding, this Agreement may
be terminated by MACC at any time, without payment of any penalty, on 60 days'
written notice to InvestAmerica if the decision to terminate has been made by
the Board of Directors or by vote of the holders of a majority, as defined in
the ICA, of MACC's outstanding voting securities. InvestAmerica may also
terminate this Agreement on 60 days' written notice to MACC; provided, however,
that InvestAmerica may not so terminate this Agreement unless another investment
advisory agreement has been approved by the vote of a majority, as defined in
the ICA, of MACC's outstanding shares and by the Board of Directors, including a
majority of members who are not parties to such agreement or interested persons
of any such party.
Section 8. Assignment.
This Agreement may not be assigned by any party without the written
consent of the other and any assignment, as defined in the ICA, by InvestAmerica
shall automatically terminate this Agreement.
Section 9. Amendments.
This Agreement may be amended only by an instrument in writing
executed by all parties.
Section 10. Governing Law.
This Agreement shall be construed and enforced in accordance with and
governed by the laws of the State of Iowa.
Section 11. Termination of Prior Agreement.
If as of the date hereof, this Agreement shall have been approved by
the Shareholders of MACC Private Equities, Inc. and the sole shareholder of
MACC, as set forth in Section 7 hereof, then as of the date hereof, the
MorAmerica Capital Corporation Investment Advisory Agreement dated as of [March
1, 1998], between MACC and InvestAmerica, as previously amended, shall be
terminated and shall be of no further force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement to
be effective as of the date first above written,
MORAMERICA CAPITAL CORPORATION INVESTAMERICA INVESTMENT
ADVISORS, INC.
By: /s/ Paul M. Bass, Jr. By: /s/ David R. Schroder
----------------------------- --------------------------------
Title: Chairman Title: President
----------------------------- --------------------------------
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<PAGE> 33
MACC PRIVATE EQUITIES INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR
ANNUAL MEETING OF STOCKHOLDERS
FEBRUARY 23, 1999
The undersigned hereby appoints Michael W. Dunn, Henry T. Madden and
James L. Miller and each of them, with full power of substitution, and hereby
authorizes them to represent the undersigned and to vote all of the shares of
Common Stock in MACC PRIVATE EQUITIES INC. (the "Corporation") held of record by
the undersigned on December 31, 1998, at the Annual Meeting of Stockholders of
the Corporation to be held on February 23, 1999 and any adjournment(s) thereof.
This proxy when properly executed will be voted as directed by the undersigned
stockholder. If directions are not indicated, the proxy will be voted to elect
the nominees described in item 1 and for items 2 and 3.
(CONTINUED, AND TO BE SIGNED ON REVERSE SIDE)
................................................................................
* FOLD AND DETACH HERE *
<PAGE> 34
<TABLE>
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Please mark
your votes as [X]
indicated in
this sample
1. To elect three directors to serve until the 2002 Annual Meeting of Shareholders or until their respective successors shall be
elected and qualified;
FOR WITHHOLD NOMINEES: Paul M. Bass, Jr.; David R. Schroder; Robert A. Comey
ALL AUTHORITY FOR
NOMINEES ALL NOMINEES (INSTRUCTION: To withhold authority to vote for any individual nominee, write that nominee's
name on the space provided below.)
[ ] [ ] ----------------------------------------------------------------------------------------------
2. To ratify the appointment of KPMG 3. To approve certain proposed amendments to the 4. To transact such other business as
Peat Marwick LLP as independent Investment Advisory Agreement of MorAmerica may properly come before the meeting
auditors; Capital; and and any adjournment thereof.
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN I PLAN TO
ATTEND
[ ] [ ] [ ] [ ] [ ] [ ] MEETING
[ ]
-------|
|
| -------------------------------------------------
| Signature Date
-------------------------------------------------
Signature Date
Please sign your name exactly as it appears
hereon. If signing for estates, trusts,
corporation or partnerships, title or capacity
should be stated. If shares are held jointly,
each holder should sign.
Please sign, date and return this proxy using
the enclosed envelope.
....................................................................................................................................
* FOLD AND DETACH HERE *
</TABLE>
