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-12
MACC PRIVATE EQUITIES 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)
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:___________________________.
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January 12, 2007
To the Shareholders of MACC Private Equities Inc.:
The Annual Meeting of Shareholders of our Corporation will be held on
Tuesday, February 27, 2007, at 10:00 a.m. Mountain Standard Time at the HMS Host
Meeting Room, Terminal 3, Phoenix Sky Harbor International Airport, 3400 E. Sky
Harbor Blvd., Phoenix, Arizona 85034.
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, 2006, 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.
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Very truly yours,
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Geoffrey T. Woolley
Chairman of the Board |
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD FEBRUARY 27, 2007
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 27, 2007, at 10:00 a.m. Mountain Standard Time at the HMS
Host Meeting Room, Terminal 3, Phoenix Sky Harbor International Airport, 3400 E.
Sky Harbor Blvd., Phoenix, Arizona 85034, for the following purposes:
1. To elect five directors to serve until the 2008 Annual Shareholders
Meeting or until their respective successors shall be elected and qualified;
2. To ratify the appointment of KPMG LLP as independent auditors of the
Corporation for fiscal year 2007; and
3. 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 29, 2006, will be entitled to notice of, and to vote at,
the meeting and any adjournment thereof.
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By Order of the Board of Directors
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David R. Schroder, Secretary
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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.
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PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD FEBRUARY 27, 2007
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 February 27, 2007, or any adjournment thereof (the
"2007 Annual Meeting"). 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 12, 2007.
PURPOSES OF THE MEETING
The 2007 Annual Meeting is to be held for the purposes of:
(1) electing five persons to serve as Directors of the Corporation to serve
until the 2008 Annual Shareholders Meeting or until their respective successors
shall be elected and qualified;
(2) ratifying the appointment by the Board of Directors of KPMG LLP as
independent auditors of the Corporation for fiscal year 2007; and
(3) 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,
and FOR the ratification of the appointment of KPMG LLP as independent auditors.
VOTING AT THE MEETING
The record date for holders of Common Stock entitled to notice of, and to
vote at, the 2007 Annual Meeting is the close of business on December 29, 2006
(the "Record Date"). As of the Record Date, the Corporation had outstanding and
entitled to vote at the 2007 Annual Meeting 2,464,621 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 2007 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 2007 Annual Meeting are included in determining the presence of a quorum for
the transaction of business at the commencement of the 2007 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.
1
To be elected a Director, each nominee under PROPOSAL 1 must receive the
favorable vote of the holders of a plurality of the shares of Common Stock
entitled to vote and represented at the 2007 Annual Meeting.
In order to ratify the appointment of KPMG LLP as independent auditors for
the Corporation for the fiscal year ending September 30, 2007 under PROPOSAL 2,
this proposal must receive the favorable vote of a majority of the outstanding
shares of Common Stock entitled to vote at the 2007 Annual Meeting.
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--NOMINEES, and
>> FOR the ratification of the appointment by the Board of Directors of
KPMG LLP as independent auditors.
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 the Corporation's
management nor the Board of Directors 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 at the meeting 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.
PROPOSAL 1
ELECTION OF DIRECTORS
All Director nominees elected at the 2007 Annual Meeting will serve until
the 2008 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 next Annual Meeting of
shareholders or 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 in voting the
shares represented by them at the 2007 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.
Proxies may not be voted for more than the five Director nominees set forth
below. 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 2007 Annual Meeting. The names of the nominees, along with
certain information concerning them, are set forth below.
Nominees
In the chart below, "Interested Director" indicates the director nominee
who does not meet the definition of "independent director" provided in the rules
applicable to companies listed on the Nasdaq Capital Market. In contrast,
"Independent Directors" do meet such qualification. The address for all Director
nominees is 101 Second Street SE, Suite 800, Cedar Rapids, Iowa 52401. All
Director nominees also serve as Directors of MorAmerica Capital Corporation
("MorAmerica"), the Corporation's wholly-owned subsidiary.
2
Interested Directors
Number of
Term of Portfolios in
Name Position(s) Office and Fund Other
and Age Held with Length of Principal Occupation(s) Complex Directorships
the Time During Past 5 Years Overseen by Held by
Corporation Served Nominee (1) Nominee (2)
Goeffrey T. Director Director Executive Chairman, European Venture One None
Woolley, and since Partners (founded in 1997 by Mr. Woolley to
47 (3) Chairman 2003, introduce "venture leasing," an asset-backed
of the elected debt instrument with equity participation to
Board Chairman the European and Israeli markets); director,
April, 2004 Dominion Ventures, Inc.; director, BH
Thermal Corp.; director, University
Opportunity Fund; director, Utah Capital
Investment Corporation; Chairman of the
board: MorAmerica, Hild Assets, Ltd. and
Unitus Equity Fund. Mr. Woolley holds an
M.B.A. from the University of Utah and a
B.S. in Business Management with a Minor
in Economics from Brigham Young
University.
Benjamin Director Since Chairman & CEO, Central Proteina Prima One None
Jiaravanon, February, (manufacturer of animal, poultry and fish feeds)
36 (4) 2004 since 2004; President, Strategic Planning Group,
Charoen Pokphand Indonesia (agribusiness
conglomerate 2002 - 2004; Associate, Direct
Investments Group, Merrill Lynch, 1996 -
2002. Mr. Jiaravanon received his Bachelor
of Science degree in industrial management
from Carnegie Mellon University.
(1) As the Corporation conducts all of its investments through MorAmerica, the
Corporation and MorAmerica are deemed one "fund."
(2) "Other Directorships" indicate other U.S. publicly-traded companies.
(3) Because of Mr. Woolley's relationship with the Corporation's former
investment advisor, Mr. Woolley would not be an "independent" director, as
defined in the applicable listing standards of the Nasdaq Capital Market.
(4) To the extent that Bridgewater International Group, LLC ("Bridgewater") may
be deemed to be in control of the Corporation as a result of its beneficial
ownership of the Corporation's Common Stock, Mr. Jiaravanon, as the sole manager
of Bridgewater, may be an "interested person" of the Corporation, as that term
is defined in Section 2(a)(19) of the Investment Company Act.
3
Independent Directors
Number of
Term of Portfolios in
Name Position(s) Office and Fund Other
and Age Held with Length of Principal Occupation(s) Complex Directorships
the Time During Past 5 Years Overseen by Held by
Corporation Served Nominee (1) Nominee (2)
Gordon J. Director Since 2000 CFO and Chief Operating Officer, Roth Capital One None
Roth, Partners, LLC (independent investment
52 banking firm specializing in small-cap
companies), 2000-present; Chairman, Roth &
Company, P.C. (public accounting firm located
in Des Moines, Iowa), 1990-2000. Prior to that,
Mr. Roth was a partner at Deloitte & Touche, a
public accounting firm, in Des Moines.
Jasja Director Since Executive Director, Corporate Strategy and One None
Kotterman, 37 February, Business Development, Avon Products, 2004-
2004 present; Vice President, Strategic Planning and
Business Development for Primedia Inc.
(diversified media company), 2003-2004;
Managing Director, Primedia International (the
international development group for Primedia),
2000-2003. Ms. Kotterman holds an M.B.A.
from the Wharton School, an M.A. in
International Studies from the University of
Pennsylvania, and is a graduate of Cambridge
University in England, where she received an
M.A. in Genetics and an M.Phil. in
International Development.
Michael W. Director Since 1994 Director, MorAmerica since 1994; C.E.O. One None
Dunn, since 1980), President and Director (since
57 1983), Farmers & Merchants Savings Bank of
Manchester, Iowa; Vice President and Director,
Security Savings Bank of Eagle Grove, Iowa;
President and CEO, Dunn Investment Co.
(bank holding company).
(1) As the Corporation conducts all of its investments through MorAmerica, the
Corporation and MorAmerica are deemed one "fund."
(2) "Other Directorships" indicate other U.S. publicly-traded companies.
Corporation Stock Ownership of Director Nominees
The following table represents, as of December 12, 2006 and based upon the
closing price as reported by NASDAQ on December 11, 2006, the dollar range value
of equity securities beneficially owned (as that term is defined in Rule
16a-1(a)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") by each nominee for Director of the Corporation pursuant to this PROPOSAL
1. In the table, "Interested Director Nominee" indicates Director nominees who
do not meet the definition of "independent director" provided in the rules
applicable to companies listed on the Nasdaq Capital Market. In contrast,
"Independent Directors" do meet such qualification.
4
AGGREGATE DOLLAR RANGE+
NAME OF INDEPENDENT DOLLAR RANGE OF EQUITY SECURITIES IN ALL
DIRECTOR OF EQUITY SECURITIES FUNDS IN CORPORATION
NOMINEE IN THE CORPORATION COMPLEX
Michael W. Dunn Over $100,000 Over $100,000
Gordon J. Roth $10,001 - $50,000 $10,001 - $50,000
Jasja Kotterman $1 - $10,000 $1 - $10,000
AGGREGATE DOLLAR RANGE+
NAME OF INTERESTED DOLLAR RANGE OF EQUITY SECURITIES IN ALL
DIRECTOR OF EQUITY SECURITIES FUNDS IN CORPORATION
NOMINEE IN THE CORPORATION COMPLEX
Geoffrey T. Woolley Over $100,000 Over $100,000
Benjamin Jiaravanon Over $100,000 Over $100,000
------------------------------------
+ There are no other funds in the Corporation's complex.
Certain Relationships and Related Transactions
Mr. Woolley, a Director nominee and Chairman of the boards of directors of
both the Corporation and of MorAmerica, was a Voting Managing Director of Atlas
Management Partners, LLC ("Atlas") from March, 2004 until April 2005. Atlas
served as the investment adviser to the Corporation and to MorAmerica from March
1, 2004 through April 29, 2005. Mr. Woolley no longer holds any interests in
Atlas.
As previously reported, Mr. Woolley entered into an Amended and Restated
Convertible Note and Security Agreement with the Corporation on July 20, 2005,
which amended and restated the terms of the loan made by Mr. Woolley to the
Corporation on March 1, 2004. Under the July 20, 2005 amendment, Mr. Woolley
subsequently elected to convert all debt owed by the Corporation to Mr. Woolley
into 135,366 shares of the Corporation's Common Stock.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE
FOR THE ELECTION AS DIRECTORS OF THE PERSONS NAMED UNDER "ELECTION OF
DIRECTORS--NOMINEES" TO THEIR RESPECTIVE TERMS.
PROPOSAL 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
As recommended by the Audit Committee of the Corporation's Board of
Directors, on December 13, 2006, 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) voted in favor of
the appointment of KPMG LLP to serve as the Corporation's independent auditors
for the fiscal year ending September 30, 2007.
The appointment of KPMG LLP as independent auditors is subject to
ratification by the shareholders. If the shareholders ratify the selection of
KPMG LLP as the Corporation's auditors, they will also serve as independent
auditors for MorAmerica. A representative of KPMG LLP is expected to be present
at the 2007 Annual Meeting with an opportunity to make a statement, and will be
available to respond to appropriate questions.
5
In order to ratify the appointment of KPMG LLP as independent auditors for
the Corporation for the fiscal year ending September 30, 2007, the proposal must
receive the favorable vote of a majority of the shares entitled to vote and
represented at the 2007 Annual Meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE
FOR THE RATIFICATION OF KPMG LLP AS THE INDEPENDENT AUDITORS FOR THE CORPORATION
FOR THE FISCAL YEAR ENDING SEPTEMBER 30, 2007.
OTHER BUSINESS
The Board of Directors knows of no other business to be presented for
action at the 2007 Annual Meeting. If any matters do come before the 2007 Annual
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 2007 Annual Meeting.
ADDITIONAL INFORMATION
Section 16(a) Beneficial Ownership Reporting Compliance
Pursuant to Section 16(a) of the Exchange Act, 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 ("SEC"). 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 2006, 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 SEC.
Common Stock Ownership
As of December 12, 2006, there were 2,464,621 shares issued and
outstanding. The following table sets forth certain information as of December
12, 2006, 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 Exchange Act 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. Unless otherwise provided, the
address of those in the following table is 101 Second Street S.E., Suite 800,
Cedar Rapids IA 52401.
Name and Address of Amount and Nature Percent of Class of
Beneficial Owner Of Beneficial Ownership Voting Common Stock
Atlas Management Partners, LLC(1) 804,689 Shares 32.65%
One South Main Street, Suite 1660, Salt Lake
City, Utah 84133
Bridgewater International Group, LLC(1) 804,689 Shares 32.65%
10500 South 1300 West, South Jordan, Utah
84095
Timothy A. Bridgewater(1) 809,689 Shares 32.85%
10500 South 1300 West
South Jordan, Utah 84095
6
Name and Address of Amount and Nature Percent of Class of
Beneficial Owner Of Beneficial Ownership Voting Common Stock
Jasja Kotterman 1,000 Shares 0.04%
Michael W. Dunn 40,584 Shares 1.65%
Benjamin Jiaravanon(2) 804,689 Shares 32.65%
Ancol Barat, J1 Ancol VIII, No.1
Jakarta 14430 Indonesia
Gordon J. Roth 5,151 Shares 0.21%
David R. Schroder(3) 77,416 Shares 3.14%
Kevin F. Mullane(3) 11,264 Shares 0.46%
Robert A. Comey(3) 57,019 Shares 2.31%
Michael Reynoldson(4) 0 Shares --
Geoffrey T. Woolley 151,314 Shares 6.14%
All Officers and Directors as a Group 1,148,437 Shares 46.60%
------------------------------------
(1) Information with respect to Atlas Management Partners, LLC ("Atlas"),
Bridgewater International Group, LLC ("BIG") and Mr. Bridgewater is based upon
Amendment No. 1 to Schedule 13D, dated September 30, 2003, as subsequently
amended February 13, 2004, April 28, 2005 and April 30, 2005, filed by Atlas,
BIG and others with the SEC (collectively, the "Atlas Group 13D"). The Atlas
Group 13D disclosed that control over 804,689 shares of Common Stock owned by
BIG (the "BIG Shares") is governed by a Shareholder and Voting Agreement dated
September 29, 2003 among Atlas, BIG and Kent Madsen (the "Shareholder
Agreement"). The term of the Shareholder Agreement extends to March 1, 2010 and
may be extended in certain circumstances; however, the Shareholder Agreement may
also be terminated at any time by any party.
Under the Shareholder Agreement, BIG appointed Atlas as its limited proxy
to vote the BIG Shares, but BIG retains all other incidents of ownership of the
stock, including beneficial ownership and dispositive power. The Shareholder
Agreement also provides Atlas with certain rights of first refusal respecting
the BIG Shares and limits BIG's ability to otherwise dispose of the BIG Shares.
Pursuant to a Mutual Release and Waiver of Claims and Termination of Shareholder
and Voting Agreements among Atlas, BIG and the former managers of Atlas dated
April 28, 2005 and filed as part of the Atlas Group 13D, the former managers of
Atlas, including Geoffrey Woolley and Kent Madsen, no longer have any interests
in Atlas and have no voting rights respecting the BIG Shares.
As a voting Managing Director of Atlas, Mr. Bridgewater has shared control
over the voting power granted to Atlas under the Shareholder Agreement
respecting the BIG Shares, subject to the parties' rights under the Shareholder
Agreement. Mr. Bridgewater also individually owns 5,000 shares of Common Stock.
(2) Information with respect to Mr. Jiaravanon is based upon the Atlas
Group 13D. As the sole manager of BIG, Mr. Jiaravanon has shared control over
the voting power granted to Atlas under the Shareholder Agreement respecting the
BIG Shares, subject to the parties' rights under the Shareholder Agreement. To
the extent that BIG may be deemed to be in control of the Corporation as a
result of beneficial ownership of the Company's
7
Common Stock, Mr. Jiaravanon, as the sole manager of BIG, may be an "interested
person" of the Company, as that term is defined in Section 2(a)(19) of the
Investment Company Act.
(3) As principals, officers and directors of InvestAmerica Investment
Advisors, Inc. ("InvestAmerica"), the investment advisor for the Corporation and
MorAmerica, and as officers of the Corporation and of MorAmerica, Messrs.
Schroder, Mullane and Comey are "interested persons" of the Corporation, as that
term is defined in Section 2(a)(19) of the Investment Company Act.
(4) As an officer of the Corporation and of MorAmerica, and as an officer
or director of several companies affiliated with InvestAmerica, Mr. Reynoldson
is an "interested person" of the Corporation, as that term is defined in Section
2(a)(19) of the Investment Company Act.
Investment Adviser & Certain Business Relationships
InvestAmerica is the investment advisor to the Corporation pursuant to an
Investment Advisory Agreement between the Corporation and InvestAmerica dated
July 21, 2005, which was approved by the Corporation's shareholders at its 2005
Annual Shareholders Meeting held on July 19, 2005 (the "MACC Advisory
Agreement"). The address of InvestAmerica is 101 Second Street S.E., Suite 800,
Cedar Rapids IA 52401.
The MACC Advisory Agreement provides that InvestAmerica is entitled to
receive a management fee equal to an annual rate of 1.5% of the Assets Under
Management (as defined in the MACC Advisory Agreement), payable monthly in
arrears. In addition to the annual management fee of 1.5% of the Assets Under
Management, InvestAmerica is entitled to receive an incentive fee (the "MACC
Incentive fee") in an amount equal to 13.4% of the Corporation's realized
capital gains in excess of realized capital losses of the Corporation after
allowance for any unrealized capital losses on the portfolio investments of the
Corporation. The MACC Incentive fee is calculated, accrued, and paid on a
quarterly basis, subject to adjustment at the end of each fiscal year. Total
management fees under the MACC Advisory Agreement amounted to $726 for the year
ended September 30, 2006. There were no MACC Incentive Fees accrued or paid
under the MACC Advisory Agreement in 2006.
MorAmerica has a separate investment advisory agreement (the "MorAmerica
Advisory Agreement") with InvestAmerica dated July 21, 2005. MorAmerica pays
InvestAmerica, monthly in arrears, a management fee equal to the lesser of 1.5%
per annum of the (i) Combined Capital (as defined under the SBA Regulations) or
(ii) Assets Under Management (as defined in the MorAmerica Advisory Agreement).
These fees are not based upon any of the Corporation's assets managed by
InvestAmerica under the MACC Advisory Agreement. In addition, the MorAmerica
Advisory Agreement provides that MorAmerica will pay InvestAmerica an incentive
fee in an amount equal to 13.4% of the net capital gains, before taxes (the
"MorAmerica Incentive Fee"). Net capital gains, as defined in the MorAmerica
Advisory Agreement, are calculated as gross realized gains, minus the sum of
capital losses, less any unrealized depreciation, including reversals of
previously recorded unrealized depreciation, recorded during the year, and net
investment losses, if any. Capital losses and realized capital gains are not
cumulative under the computation of the MorAmerica Incentive Fee. Payments for
MorAmerica Incentive Fee resulting from noncash gains are deferred until the
assets are sold. Total management fees (net of management fees waived) under the
MorAmerica Advisory Agreement amounted to $427,034 for the year ended September
30, 2006. The MorAmerica Incentive Fee earned and paid for the year ended
September 30, 2006 amounted to $108,399 and $0, respectively. Included in the
MorAmerica Incentive Fee earned of $108,399 are approximately $99,429 of
MorAmerica Incentive Fees related to noncash gains which are being deferred.
As a condition to the approval by the United States Small Business
Administration (the "SBA") of the MorAmerica Advisory Agreement, the SBA
required, and MorAmerica has entered into, a subordination agreement among it,
the SBA and InvestAmerica (the "Subordination Agreement") effective July 21,
2005 providing that MorAmerica's payment to InvestAmerica, and InvestAmerica's
receipt of, the MorAmerica Incentive Fees be subordinated to MorAmerica's
repayment of all obligations owing to the SBA. Those obligations include the
repayment of all outstanding SBA debentures and MorAmerica's agreement, along
with certain other SBA licensees, to reimburse the SBA for any losses the SBA
may incur in connection with the settlement of an arbitration proceeding which
was concluded in late 2004 (collectively, the "Obligations"). The Subordination
Agreement
8
provides that: (i) MorAmerica may not pay InvestAmerica the MorAmerica Incentive
Fees unless and until MorAmerica's Obligations to the SBA are satisfied, and
(ii) to the extent (A) MorAmerica Incentive Fees have been escrowed under the
MorAmerica Advisory Agreement because MorAmerica's capital has been impaired as
provided in Section 5.2(c)(ii) of the MorAmerica Advisory Agreement, and (B)
MorAmerica is delinquent in repaying the SBA any amounts respecting SBA
debentures, the SBA may require MorAmerica to pay any so escrowed funds to the
SBA to satisfy any arrearage respecting SBA debentures. The Subordination
Agreement does not, however, affect: (i) InvestAmerica's ability to earn the
MorAmerica Incentive Fees, (ii) MorAmerica's payment to InvestAmerica of
management fees under the MorAmerica Advisory Agreement, or (iii) any other
terms of the MorAmerica Advisory Agreement.
Mr. David Schroder, President and Secretary of the Corporation and
MorAmerica, is a shareholder of, Director, President and Secretary of
InvestAmerica. Mr. Robert A. Comey, Executive Vice President, Chief Financial
Officer, Treasurer, Chief Compliance Officer and Assistant Secretary of the
Corporation and of MorAmerica, is a Director of and the Executive Vice
President, Treasurer and Assistant Secretary of InvestAmerica. Mr. Kevin
Mullane, Senior Vice President of the Corporation and MorAmerica, is a
shareholder and Director of, and the Senior Vice President and Assistant
Secretary of InvestAmerica. Mr. Michael H. Reynoldson, Vice President of the
Corporation and MorAmerica, is an officer or director of several companies
affiliated with InvestAmerica.
Executive Officers of the Corporation
As affiliated persons of InvestAmerica, the officers of the Corporation
listed in the chart below are "interested persons," as that term is defined in
Section 2(a)(19) of the Investment Company Act, of the Corporation. The address
for all officers is 101 Second Street SE, Suite 800, Cedar Rapids, Iowa 52401.
The Corporation's officers listed below also serve in similar capacities
with MorAmerica and serve in various capacities with the following companies
which are under common control with or are affiliated with InvestAmerica:
InvestAmerica Venture Group, Inc. (provides management and investment services
to a private investment partnership, the Iowa Venture Capital Fund, L.P.);
InvestAmerica N.D. Management, Inc. (provides management and investment services
to NDSBIC, L.P., a Small Business Investment Company ("SBIC")); InvestAmerica
ND, L.L.C. (general partner of NDSBIC, L.P.); InvestAmerica L&C Management, Inc.
(provides management and investment services to Lewis & Clark Private Equities,
L.P., an SBIC ("Lewis")); InvestAmerica L&C, LLC (general partner of Lewis);
InvestAmerica NW Management, Inc. (provides management and investment services
to Invest Northwest, L.P. ("NWLP") (private venture capital fund); and
InvestAmerica NW, LLC (general partner of NWLP).
As representatives of InvestAmerica and its affiliates, the Corporation's
officers listed below also serve on the boards of directors of several of the
Corporation's portfolio companies and the portfolio companies of other managed
funds.
Term of Number of
Office Portfolios in
and Fund Other
Position(s) Length of Complex Directorships
Name Held with the Time Principal Occupation(s) Overseen by Held by
and Age Corporation Served During Past 5 Years Officer (1) Officer (2)
David R. President Since Chief Compliance Officer and Treasurer of the One None
Schroder, 63 and April, Corporation, March, 2004-April, 2005; President,
Secretary 2005 Secretary and a Director of the Corporation,
1994-2004. Mr. Schroder also serves as
President, Secretary and a Director of
InvestAmerica. He received a B.S.F.S. from
Georgetown University and an M.B.A. from the
University of Wisconsin.
9
Term of Number of
Office Portfolios in
and Fund Other
Position(s) Length of Complex Directorships
Name Held with the Time Principal Occupation(s) Overseen by Held by
and Age Corporation Served During Past 5 Years Officer (1) Officer (2)
Robert A. Chief Since Chief Financial Officer, Executive Vice One None
Comey, 60 Financial April, President, Treasurer and a Director of the
Officer, 2005 Corporation, 1994-2004; Director of
Executive MorAmerica, 1989-2004; Executive Vice
Vice President and Assistant Secretary of
President, MorAmerica, 1994-2004; Treasurer of
Chief MorAmerica, 1994-April, 2005. Mr.Comey has
Compliance been the Executive Vice President, Treasurer,
Officer, Assistant Secretary and a Director of
Treasurer InvestAmerica since 1994. He received an A.B.
and in Economics from Brown University and an
Assistant M.B.A.from Fordham University.
Secretary
Kevin F. Senior Vice Since Vice President of the Corporation, 1994-1999; One None
Mullane, 51 President April, Vice President of MorAmerica, 1994-1998;
2005 Senior Vice President of the Corporation, 2000-
2004; Senior Vice President of MorAmerica,
1999-2004. Mr. Mullane is a Senior Vice
President, Assistant Secretary and a Director of
InvestAmerica. He received an M.B.A. and an
M.S. in Business Administration, Emphasis in
Accounting, from Rockhurst Jesuit University.
Michael Vice Since Vice President of the Corporation, 2002-2004; One None
H. President April, Vice President of MorAmerica since 2002. Mr.
Reynoldson, 2005 Reynoldson is Vice President of InvestAmerica.
41 He received an M.B.A. from the University of
Iowa and a B.A. in Business Administration from
Washington State University.
(1) As the Corporation conducts all of its investments through MorAmerica, the
Corporation and MorAmerica are deemed one "fund."
(2) "Other Directorships" indicate other U.S. publicly-traded companies.
Meetings and Committees of the Board of Directors
The Audit Committee, the Corporate Governance/Nominating Committee and the
Valuation Committee operated during Fiscal Year 2006 to assist the Board of
Directors in carrying out its duties. During Fiscal Year 2006, six meetings of
the Board of Directors were held. In addition, five meetings of the Audit
Committee, two meetings of the Corporate Governance/Nominating Committee, and
one meeting of the Valuation Committee were held. Each of the Directors who are
nominated for election at the 2007 Annual Meeting attended at least 75% of the
aggregate meetings of the Board of Directors and the meetings held by the
committees of the Board of Directors on which each Director served during fiscal
year 2006.
The Corporation strongly encourages its Directors to attend all annual
meetings, and all Director nominees attended the Corporation's 2006 Annual
Meeting of shareholders.
10
Audit Committee
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 the Corporation's Policy
Against Insider Trading and Prohibited Transactions and its Code of Conduct. The
Audit Committee presently consists of Michael W. Dunn (Chair), Jasja Kotterman
and Gordon J. Roth. Each member of the Audit Committee is considered
"independent" under applicable NASDAQ listing standards and as that term is used
in Item 7(d)(3)(iv) of Schedule 14A under the Exchange Act. The Board of
Directors has determined that Gordon J. Roth is an Audit Committee financial
expert.
Corporate Governance/Nominating Committee
The Corporate Governance/Nominating Committee was appointed by the Board of
Directors to identify and recommend approval of all Director nominees to be
voted on at the Annual Shareholders' Meetings, to recommend corporate governance
guidelines for the Corporation, to lead the Board of Directors in its annual
review of the Board's performance, and to recommend to the Board of Directors
nominees for each committee of the Board. On December 22, 2003, the Board of
Directors approved the Corporate Governance/Nominating Committee Charter, which
was subsequently revised on February 28, 2006 and is attached as Appendix A to
this Proxy Statement.
The Corporate Governance/Nominating Committee may seek input from other
Directors or senior management in identifying candidates. Shareholders may
propose nominees for Director by following the procedures set forth in the
section of this Proxy Statement entitled "SHAREHOLDER PROPOSALS FOR 2008 ANNUAL
MEETING."
The qualifications used in evaluating Director candidates include but are
not limited to: independence, time commitments, attendance, business judgment,
management, accounting, finance, industry and technology knowledge, as well as,
personal and professional ethics, integrity and values. In addition, as set
forth in its Charter, the Corporate Governance/Nominating Committee believes
that having directors with relevant experience in business and industry,
government, finance and other areas is beneficial to the Board of Directors as a
whole. The Corporate Governance/Nominating Committee further reviews the
qualifications of any candidate in the context of the current composition of the
Board of Directors and the needs of the Corporation. The same identifying and
evaluating procedures apply to all candidates for director nomination, whether
nominated by shareholders or by the Corporate Governance/Nominating Committee.
The Corporate Governance/Nominating Committee has approved all of the nominees
for Director identified above.
The Corporate Governance/Nominating Committee also: (i) oversees the
formulation of, and recommends for adoption to the Board of Directors, a set of
corporate governance guidelines; (ii) periodically reviews and reassesses the
corporate governance guidelines and recommends appropriate changes to the Board
of Directors for approval; (iii) reviews and approves annually the Corporation's
compensation program for service on the Board of Directors or any of its
committees; (iv) performs an annual assessment of the Board's performance and
periodically reports its Board assessments to the Board; (v) annually reviews
and assesses its Charter and makes recommendations of appropriate changes to the
Board; (vi) performs periodic reviews of all Board committee structure and
governance charters; (vii) recommends appropriate changes to Board committee
composition and responsibility to the Board; and (viii) reviews any conflicts of
interest.
The Corporate Governance/Nominating Committee consists of Jasja Kotterman
(Chair), Gordon Roth and Michael Dunn. All members of the Corporate
Governance/Nominating Committee are considered "independent" under applicable
NASDAQ listing standards.
11
Investment Committee
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 InvestAmerica, with entities
controlling, controlled by or under common control with InvestAmerica, and with
other affiliates. The voting members of the Investment Committee presently
include Michael W. Dunn, Gordon J. Roth, and Jasja Kotterman. All voting members
are independent under NASDAQ listing standards. The nonvoting ex officio members
are Benjamin Jiaravanon and Geoffrey T. Woolley. The Investment Committee did
not hold any meetings in fiscal year 2006.
Valuation Committee
At its meeting following the 2006 Annual Shareholders Meeting, the Board of
Directors determined that in light of the decrease in the Board's size and other
matters, it would discontinue the Valuation Committee's service to the Board.
Prior to the 2006 Annual Shareholders Meeting, the Valuation Committee did meet
once in fiscal year 2006 for the purpose of assisting the full Board of
Directors in valuing the Corporation's portfolio investments.
Audit Committee Report
The Audit Committee of the Board of Directors of the Corporation was
established as a separately designated committee in accordance with section
3(a)(58)(A) of the Exchange Act and is composed of three directors. It operates
under a written charter which was approved by the Board of Directors and
subsequently amended by the Audit Committee on February 25, 2003, and is
attached as Appendix B to this Proxy Statement. The current members of the Audit
Committee are Michael W. Dunn (Chair), Jasja Kotterman and Gordon J. Roth. Under
the terms of the charter and the listing standards applicable to companies
listed on the Nasdaq Capital Market, all of the Audit Committee members are
considered to be independent. Gordon Roth is considered the Audit Committee's
financial expert.
Management is responsible for the Corporation's internal controls and the
financial reporting process. The independent accountants are responsible for
performing an independent audit of the Corporation's consolidated financial
statements in accordance with generally accepted auditing standards and to issue
a report thereon. The Audit Committee's responsibility is to monitor and oversee
these processes.
In this regard, the Audit Committee has reviewed and discussed the audited
financial statements for Fiscal Year 2006 with management and discussed other
matters related to the audit with the independent auditors. Management
represented to the Audit Committee that the Corporation's consolidated financial
statements were prepared in accordance with accounting principles generally
accepted in the United States of America. The Audit Committee met with the
independent auditors, with and without management present, and discussed with
the independent auditors matters required to be discussed by Statement on
Auditing Standards No. 61, as amended (Communication with Audit Committees). The
independent auditors also provided to the Audit Committee the written
disclosures and the letter required by Independence Standards Board Standard No.
1 (Independence Discussions with Audit Committees), and the Audit Committee
discussed with the independent auditors the firm's independence.
The Corporation paid KPMG LLP ("KPMG"), the Corporation's independent
auditors for fiscal year 2006, the following amounts during fiscal year 2006:
Audit Fees (including quarterly reviews, security counts, and audit of Form 468): $ 67,800
Audit-related services $ -0-
Financial Information Systems Design and Implementation:
Non-Audit Fees:
12
Preparation of federal and state income tax returns $ 25,900
Other tax research, consultation, correspondence and advice $ -0-
The Audit Committee has considered whether KPMG has maintained its
independence during Fiscal Year 2006.
Based upon the Audit Committee's discussions with management and the
independent auditors, and the Audit Committee's review of representations of
management and the report of the independent auditors to the Audit Committee,
the Audit Committee recommended that the Corporation's Board of Directors
include the audited consolidated financial statements in the Corporation's
Annual Report on Form 10-K for the year ended September 30, 2006, filed with the
SEC.
AUDIT COMMITTEE:
Michael W. Dunn, Chair
Jasja Kotterman
Gordon J. Roth
Independent Auditor Fees and Services
The following table presents fees paid for professional services rendered
by KPMG for the Fiscal Year 2006 and the fiscal year ending September 30, 2005
("Fiscal Year 2005"):
Fee Category Fiscal Year 2006 Fees Fiscal Year 2005 Fees
---------------------------------------- ---------------------------- ----------------------------
Audit Fees $67,800 $64,400
Audit-Related Fees -0- -0-
Tax Fees $25,900 $13,500
All Other Fees -0- -0-
---------------------------- ----------------------------
Total Fees $93,700 $77,900
Audit Fees were for professional services rendered for the audit of the
Corporation's consolidated financial statements and review of the interim
consolidated financial statements included in quarterly reports and services
that are normally provided by KPMG in connection with statutory and regulatory
filings or engagements and include quarterly reviews, security counts and audit
of SBA Form 468.
Audit-Related Fees were for assurance and related services that are
reasonably related to the performance of the audit or review of the
Corporation's consolidated financial statements and are not reported under
"Audit Fees." These services include accounting consultations in connection with
acquisitions, consultations concerning financial accounting and reporting
standards.
Tax Fees were for professional services for federal, state and
international tax compliance, tax advice and tax planning and include
preparation of federal and state income tax returns, and other tax research,
consultation, correspondence and advice.
All Other Fees are for services other than the services reported above. The
Corporation did not pay any fees for such other services in Fiscal Year 2005 or
Fiscal Year 2004.
13
The Audit Committee has concluded the provision of the non-audit services
listed above is compatible with maintaining the independence of KPMG. KPMG did
not bill the Corporation's investment advisor, InvestAmerica, for any non-audit
services in either fiscal year 2006 or fiscal year 2005.
Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit
Services of Independent Auditors
The Audit Committee pre-approves all audit and permissible non-audit
services provided by the independent auditors. These services may include audit
services, audit-related services, tax services and other services. Pre-approval
is generally provided for up to one year and any pre-approval is detailed as to
the particular service or category of services and is generally subject to a
specific budget. The independent auditors and management are required to
periodically report to the Audit Committee regarding the extent of services
provided by the independent auditors in accordance with this pre-approval, and
the fees for the services performed to date. The Audit Committee may also
pre-approve particular services on a case-by-case basis.
Compensation of Directors and Executive Officers
Compensation Committee
The Corporation does not have a separate compensation committee utilized to
determine the appropriate compensation payable to the Directors due to the size
of the Corporation. The Corporate Governance/Nominating Committee, however, is
responsible for, among other things, annually reviewing and approving the
Corporation's compensation policies, and operates under a Charter attached to
this Proxy Statement as Appendix A. The Charter provides that the Corporate
Governance/Nominating Committee may form subcommittees and delegate its
responsibilities to subcommittees where appropriate. The Corporation's executive
officers do not participate in determining or recommending the compensation for
the Directors or the executive officers; however, at the time the Compensation
Policy discussed below was initially adopted by the Board of Directors, certain
of the Corporation's officers did serve on the Board of Directors. Accordingly,
the Compensation Policy provided that no Director would be compensated by the
Corporation if the Director also served as an officer of an investment adviser
of the Corporation. The Corporate Governance/Nominating Committee has not
engaged consultants to assist it in these determinations.
Compensation Committee Interlocks and Insider Participation
The members of the Corporate Governance/Nominating Committee for Fiscal
Year 2006 were Jasja Kotterman (Chair), Gordon Roth and Michael Dunn. All
members of the Corporate Governance/Nominating Committee are considered
"independent" under applicable NASDAQ listing standards. No members of the
Committee have ever served as officers or employees of the Corporation. However,
at the time the Compensation Policy was adopted by the Board of Directors,
certain of the Corporation's executive officers did serve on the Board of
Directors. No executive officers of the Corporation served, during Fiscal Year
2006: (i) on a compensation committee of another entity which had an executive
officer serving on the Corporate Governance/Nominating Committee; (ii) as a
director of another entity which had an executive officer serving on the
Corporate Governance/Nominating Committee; or (iii) as a member of a
compensation committee of another entity which had an executive officer who
served as a Director of the Corporation.
Compensation Committee Report
The Corporate Governance/Nominating Committee has not reviewed or discussed
with the Corporation's management the compensation indicated below under the
caption of "Summary Compensation Table" because the Corporation's standing
policy is to not compensate executive officers, and because compensation of the
Board and its committees is determined only by the Board of Directors and the
Corporate Governance/Nominating Committee.
14
The Corporate Governance/Nominating Committee did recommend to the Board of
Directors that the information provided below under the caption "Summary
Compensation Table" be included in this Proxy Statement.
CORPORATE GOVERNANCE /
NOMINATING COMMITTEE:
Jasja Kotterman, Chair
Gordon J. Roth
Michael W. Dunn
Compensation of Directors
From February 2004 through July 18, 2006, the compensation of the
Corporation's Directors was governed by a compensation policy adopted via
resolution of the Board of Directors on February 24, 2004 (the "Compensation
Policy"). The Compensation Policy provided that: (i) Directors of the
Corporation and of MorAmerica who are also officers or directors of any
investment advisor of either the Corporation or of MorAmerica receive no
compensation for serving on the Boards of Directors of the Corporation and of
MorAmerica, (except that this policy does not apply to the Chairman of the
Board); (ii) the Chairman of the Board receives an annual retainer of $21,600;
(iii) all other outside Directors receive an annual retainer of $7,200; (iv) the
Chairman of the Board and all other outside Directors receive $1,000 for each
Board of Directors meeting attended (whether such attendance is in person or by
telephone) if the meeting is scheduled as an in-person meeting and $250 for each
Board of Directors meeting attended by telephone if the meeting is scheduled to
be held by teleconference; (v) the Chairman of the Board and all other Directors
receive $250 for each committee meeting attended (whether such attendance is in
person or by telephone) if the committee meeting is scheduled as an in-person
meeting and $100 for each committee meeting attended by telephone if the meeting
is scheduled to be held by teleconference; (vi) the Directors do not receive
separate compensation for serving on the Board of Directors of MorAmerica; and
(vii) 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. All Director compensation is payable
quarterly, in arrears.
On June 9, 2006, the Corporate Governance/Nominating Committee recommended
to the full Board of Directors that, in light of the Board's smaller size and
resulting increase in the time the Directors must devote to the Corporation's
oversight, the Compensation Policy be amended as follows: (i) the annual
retainer paid to the Chairman of the Board be increased from $21,600 to $24,000;
(ii) the annual retainer paid to the outside Directors be increased from $7,200
to $8,000; (iii) the attendance fees payable to Directors for teleconference
Board meetings be increased from $250 to $500 per meeting; and (iv) the
attendance fees payable to Directors for teleconference committee meetings be
increased from $100 to $250 per meeting (collectively, the "Compensation Policy
Revisions"). The Corporate Governance/Nominating Committee also recommended that
all other components of the Compensation Policy remain in effect. The full Board
of Directors approved the Compensation Policy Revisions on July 18, 2006, which
are effective for all Board and committee meetings beginning July 18, 2006.
Summary Compensation Table
The following table sets forth the details of the compensation paid to
Directors during Fiscal Year 2006, which includes compensation for serving on
the Boards of Directors of the Corporation and MorAmerica Capital (the only
wholly owned subsidiary of the Corporation). The Corporation does not compensate
its executive officers. 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 adopted
under the Exchange Act) consists solely of the Corporation and MorAmerica. The
Corporation presently maintains no pension or retirement plans for its
Directors.
15
Aggregate Compensation
Name and Position From Corporation and Fund Complex(1)
Geoffrey T. Woolley $22,200
Chairman of the Board
Benjamin Jiaravanon, Director $0
Jasja De Smedt Kotterman, Director $10,650
Michael W. Dunn, Director $11,550
Gordon J. Roth, Director $11,800
Paul M. Bass, Jr.(2) $5,650
Martin Walton(3) $5,100
_____________________________
(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) Mr. Bass did not seek re-election at the 2006 Annual Meeting.
(3) Mr. Walton did not seek re-election at the 2006 Annual Meeting.
Compensation of Executive Officers
The Corporation has no employees and does not pay any compensation to any
of its officers. The Corporation has not compensated its executive officers in
any of the last three fiscal years. The Corporation does not provide any of
bonus, stock options, stock appreciation rights, non-equity incentive plans,
non-qualified deferred compensation or pension benefits to its executive
officers. Further, the Corporation has no agreements with any officer pertaining
to change in control payments. All of the Corporation's officers and staff are
employed by InvestAmerica Investment Advisors, Inc., which pays all of their
cash compensation.
Performance Graph
The following graph compares the semi-annual percentage change in
cumulative stockholder return on the Common Stock of the Corporation since
September 30, 2001, with the cumulative total return over the same period of (i)
the NASDAQ Stock Market Total Return Index (U.S. Companies), and (ii) the
Corporation's peer group selected in good faith by the Corporation and which it
composed of the following eleven business development companies or other funds
known by the Corporation to have similar investment objectives to the
Corporation: Ares Capital Corporation (ARCC), Brantley Capital Corporation
(BBDC), Capital Southwest Corp (CSWC), Equus Total Return Inc. (EQS), Gladstone
Investment Corporation (GAIN), Harris & Harris Group, Inc. (TINY), MVC Capital
(MVC), NGP Capital Resources Company (NGPC), Rand Capital Corp (RAND), and
Winfield Capital Corp (WCAP) (the "Peer Group").
In the graph, the comparison assumes $100 was invested on October 1, 2001,
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.
16
|
SHAREHOLDER PROPOSALS FOR 2008 ANNUAL MEETING
Under the rules of the SEC, any shareholder proposal to be considered by
the Corporation for inclusion in the proxy material for the February, 2008
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 16, 2007. 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 Amended and Restated Bylaws,
shareholders desiring to nominate persons for election as Directors or to
propose other business for consideration at an annual meeting must 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 2008 Annual Meeting of
shareholders must give written notice of the proposal to the Secretary of the
Corporation not earlier than October 15, 2007, and not later than November 14,
2007. The 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 Amended and
Restated Bylaws. A copy of the Corporation's Amended and Restated Bylaws will be
furnished to shareholders without charge upon written request to the Secretary
of the Corporation.
17
SHAREHOLDER COMMUNICATION
Pursuant to the policy adopted by the Board of Directors on February 28,
2006, any shareholder wishing to communicate with any of the Corporation's
Directors regarding matters related to the Corporation may provide
correspondence to the Director in care of Secretary, MACC Private Equities Inc.,
101 Second Street S.E., Suite 800, Cedar Rapids IA 52401. The Chairman of the
Corporate Governance/Nominating Committee will review and determine the
appropriate response to questions from shareholders, including whether to
forward communications to individual Directors. The independent members of the
Board of Directors review and approve the shareholder's communication process
periodically to ensure effective communication with the shareholders.
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 Mellon Investor Services, LLC ("Mellon") to aid in the
solicitation of proxies at an estimated fee of $5,000. The Corporation's
agreement with Mellon to solicit proxies generally provides that Mellon will:
(i) assist the Corporation in its planning and organization of proxy
solicitation matters, (ii) establish communications with banks, brokers and
other parties for purposes of the solicitation, (iii) disseminate all proxy
materials in a timely manner, (iv) solicit and collect proxies according to
Mellon's calling and reporting procedures.
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.
18
PERIODIC REPORTS
The Corporation's financial statements and related financial information
required by Item 13(a) of Schedule 14A are incorporated herein by this reference
to the Corporation's Annual Report to Shareholders for its fiscal year ended
September 30, 2006 (the "Annual Report"). The Annual Report accompanies this
proxy statement, but is not deemed a part of the proxy soliciting material,
except to the extent that portions thereof have been incorporated herein
pursuant to the preceding sentence.
A copy of the Fiscal Year 2006 Form 10-K report to the SEC, excluding
exhibits, will be mailed to shareholders without charge upon written request to
Secretary, MACC Private Equities Inc., 101 Second Street, S.E., Suite 800, Cedar
Rapids, Iowa 52401 or by calling (319) 363-8249. 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 29,
2006. 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
|
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David R. Schroder
Secretary |
Cedar Rapids, Iowa
January 12, 2007
19
Appendix A
MACC PRIVATE EQUITIES INC.
MORAMERICA CAPITAL CORPORATION
CORPORATE GOVERNANCE/NOMINATING
COMMITTEE CHARTER
Purpose
The Corporate Governance/Nominating Committee (the "Committee") is
appointed by the Board of Directors (the "Board") of MACC Private Equities Inc.
(the "Company"): (1) to identify individuals qualified to become Board members,
and to recommend to the Board persons to fill Board vacancies or to stand for
election by shareholders; (2) to recommend to the Board corporate governance
guidelines applicable to the Company; (3) to lead the Board in its annual review
of the Board's performance; and (4) to recommend to the Board nominees for each
Board committee. Because the Board members also serve on the board of directors
for the Company's wholly-owned subsidiary, MorAmerica Capital Corporation
("MorAmerica"), the Committee's actions will also apply to and be used by
MorAmerica's board of directors to the extent applicable.
Committee Membership
The Committee shall consist of no fewer than two members who shall meet the
independence requirements of the NASDAQ Stock Market and shall be persons who
are not "interested persons" of the Company under applicable rules of the
Securities and Exchange Commission.
The members of the Committee shall be appointed and may be replaced by the
Board at any time. The Committee chairperson shall be designated by the Board,
or if the Board chooses not to do so, by a majority vote of the Committee.
Meetings
The Committee shall meet at least once a year, and more frequently as
circumstances dictate. A majority of the members of the Committee shall
constitute a quorum for the transaction of business. The Committee will maintain
written minutes of its meetings, which minutes will be filed with the Secretary
of the Company.
The Committee will report to the Board regarding recommendations of the
Committee submitted to the Board for action, and provide the Board copies of the
minutes of its meetings.
Committee Authority and Responsibilities
1. The Committee shall have the sole authority to retain and terminate any
search firm to identify director candidates and shall have sole authority
to approve the search firm's fees and other retention terms. The Committee
shall also have authority to access Company resources and to obtain advice
and assistance from internal or external legal, accounting or other
advisors.
2. Each year, the Committee shall implement and follow a process designed to
seek individuals qualified to become board members for recommendation to
the Board and shall consider the re-election of existing directors. The
Committee believes that having directors with relevant experience in
business and industry, government, finance and other areas is beneficial to
the Board as a whole. Directors with such backgrounds can provide a useful
perspective on significant risks and competitive advantages and an
understanding of the challenges the Company faces. The Committee shall
monitor the mix of skills and experience of its directors
20
and committee members in order to assess whether the Board has the
appropriate tools to perform its oversight function effectively.
3. Taking this into account, for each year's nominations the Committee will
take the following steps:
a. With respect to nominating existing directors, the Committee
will review relevant information available to it, including
the latest Board evaluations for such persons, if any, and
assess their continued ability and willingness to serve as a
director. The Committee will also assess such persons'
contributions in light of the mix of skills and experience the
Committee has deemed appropriate for the Board.
b. With respect to nominations of new directors, the Committee
will conduct a thorough search to identify candidates based
upon criteria the Committee deems appropriate and considering
the mix of skills and experience necessary to complement
existing Board members. The Committee will then review
selected candidates and make a recommendation to the Board.
The Committee may seek input from other Board members or
senior management in identifying candidates.
The Committee will consider nominations for the Board by stockholders
the same way it evaluates other individuals for nomination as a new
director. Such nominations must be made in accordance with the
Company's Bylaws to be considered.
4. The Committee shall perform an annual assessment of the Board's
performance. In addition, the Committee shall solicit and receive comments
from all directors, assess each director's performance and periodically,
but not less often than every three (3) years, report to the Board with an
assessment of the director's performance, to be discussed with the full
Board at the first Board meeting following the completion of such
assessment.
5. The Committee shall oversee the formulation of, and shall recommend for
adoption to the Board, a set of Corporate Governance Guidelines. The
Committee shall periodically review and reassess the Corporate Governance
Guidelines of the Company and recommend appropriate changes to the Board
for approval.
6. The Committee may form and delegate authority to subcommittees when
appropriate.
7. The Committee shall review and approve annually the Company's compensation
program for service on the Board or any of its committees.
8. The Committee shall review and reassess this Charter annually and recommend
any appropriate changes to the Board for approval. The Committee shall
annually review its own performance.
9. The Committee shall perform a periodic review of all Board committees'
structure and governance charters to assess the need for any modifications
or updates. In addition, the Committee shall make recommendations to the
Board regarding the composition and responsibility of the Board committees.
10. The Committee shall review all conflicts of interest which may arise from
time to time regarding members of the Board or executive officers and
review and approve all related party transactions which would require
disclosure in the Company's proxy statement.
Adopted by the Board of Directors of
MACC Private Equities Inc. and
MorAmerica Capital Corporation
December 22, 2003
Revised February 28, 2006
21
Appendix B
MACC PRIVATE EQUITIES INC.
MORAMERICA CAPITAL CORPORATION
AUDIT COMMITTEE CHARTER
I. ORGANIZATION
There shall be a committee of the Board of Directors to be known as the
Audit Committee. The Audit Committee shall consist of three or more
directors, as determined by the Board of Directors, each of whom shall not
be an officer or employee of the MACC Private Equities Inc. (the "Company")
or any of its affiliates, but shall be independent of the management of the
Company and free of any relationship that, in the opinion of the Board of
Directors, would interfere with his or her exercise of independent judgment
as an Audit Committee member.(1)
All members of the Audit Committee shall be able to read and understand
fundamental financial statements, including a company's balance sheet,
income statement, and cash flow statement, and at least one member of the
Audit Committee shall be an "audit committee financial expert," as that
term is defined in rules promulgated by the Securities and Exchange
Commission ("SEC").
The members of the Audit Committee shall be elected by the Board of
Directors at the annual meeting of the Board of Directors to serve a term
of one year or until their successors shall be duly elected and qualified.
The Board of Directors will appoint a Chair to preside at the Audit
Committee meetings and schedule meetings as appropriate. The Board of
Directors shall make the determination as to (a) the independence of each
member of the Audit Committee; and (b) which member(s) of the Audit
Committee qualify as an "audit committee financial expert."
A. Definition of Independence
The following persons are not considered independent:
(1) a director who is employed by the Company or any of its affiliates for
the current year or any of the past three years;
_____________________________
(1) Prior to the Sarbanes-Oxley Act of 2002 ("Sarbanes-Oxley"), NASDAQ
rules contained an exemption to the independence standards under "exceptional
and limited circumstances." Following Sarbanes-Oxley and SEC proposed rules,
there are no longer any exceptions to the requirement that the entire Audit
Committee be independent. See Securities and Exchange Act of 1934 ss. 10A(m), as
amended by Sarbanes-Oxley; Proposed Rule: Standards Relating to Listed Company
Audit Committees, Exchange Act Release No. 34-47137 (Feb. 18, 2003) (rule to
become effective by April 26, 2003 and new requirements to become operative no
later than the first anniversary of the publication of the final rule in the
Federal Register).
22
(2) a director who accepts any consulting, advisory or other compensatory
fee from the Company or any of its affiliates, other than compensation
for board or committee service;(2)
(3) a director who is any member of the family of an individual who is, or
has been in any of the past three years, employed by the Company or
any of its affiliates as an executive officer;(3)
(4) a director who is a partner in, or a controlling stockholder or an
executive officer of, any for-profit business organization to which
the Company made, or from which the Company received, payments (other
than those arising solely from investments in the Company's
securities) that exceed 5% of the Company's or business organization's
consolidated gross revenues for that year, or $200,000, whichever is
more, in any of the past three years;
(5) a director who is employed as an executive of another entity where any
of the Company's executives serve on that entity's compensation
committee;
(6) a director who owns or controls 20% or more of voting stock of the
Company;(4) or
(7) a director who is an "interested person" of the Company as defined in
Section 2(a)(19) of the Investment Company Act of 1940, as amended
(the "1940 Act").(5)
B. Definition of "Audit Committee Financial Expert"(6)
An "audit committee financial expert" is a person who has, through
education and experience as a public accountant or auditor or a principal
financial officer, controller, or principal accounting officer of a company
that, at the time the person held such position, was required to file
reports pursuant to Section 13(a) or 15(d) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), or experience in one or more
positions that involve the performance of similar functions (or that
results, in the judgment of the Company's Board of Directors, in the
person's having similar expertise and experience), the following
attributes:
_____________________________
(2) See Proposed Rule: Standards Relating to Listed Company Audit
Committees, Exchange Act Release No. 34-47137 (Feb. 18, 2003) (rule to become
effective by April 26, 2003 and new requirements to become operative no later
than the first anniversary of the publication of the final rule in the Federal
Register).
(3) See NASDAQ Corporate Governance Proposal (Nov. 20, 2002) (the proposed
rule would broaden its scope to encompass any family member instead of only
immediate family members.
(4) Id.
(5) See Proposed Rule: Standards Relating to Listed Company Audit
Committees, Exchange Act Release No. 34-47137 (Feb. 18, 2003) (rule to become
effective by April 26, 2003 and new requirements to become operative no later
than the first anniversary of the publication of the final rule in the Federal
Register).
(6) See Final Rule: Disclosure Required by Sections 406 and 407 of the
Sarbanes-Oxley Act of 2002, 1933 Act Release No. 33-8177 (Jan. 24, 2003)
(effective date: March 3, 2003).
23
(1) an understanding of generally accepted accounting principles and
financial statements;
(2) experience applying such generally accepted accounting principles in
connection with the accounting for estimates, accruals and reserves
that are generally comparable to the estimates, accruals and reserves,
if any, used in the Company's financial statements;
(3) experience preparing or auditing financial statements that present
accounting issues that are generally comparable to those raised by the
Company's financial statements;
(4) experience with internal controls and procedures for financial
reporting; and
(5) an understanding of audit committee functions.
II. PURPOSE
The primary function of the Audit Committee is to assist the Board of
Directors in fulfilling its oversight responsibilities by reviewing the
financial reports and other financial information provided by the Company
to any governmental body or the public; the Company's systems of internal
controls regarding finance, accounting, legal compliance and ethics that
management and the Board of Directors has established; and the Company's
auditing, accounting and financial reporting processes generally.
Consistent with this function, the Audit Committee should encourage
continuous improvement of, and should foster compliance with, the Company's
policies, procedures and practices at all levels. The Audit Committee's
primary duties and responsibilities are as follows:
• To serve as an independent and objective party to monitor the
Company's financial reporting process and internal control system.
• To review and appraise the audit efforts of the Company's independent
auditors and management of the Company.
• To provide an open avenue of communication among the independent
auditors, financial and senior management, employees(7) and the Board
of Directors.
The Audit Committee will primarily fulfill these responsibilities by
carrying out the activities enumerated in Section IV of this Charter.
III. MEETINGS
_____________________________
(7) Under SEC proposed rules, it is imperative for the Audit Committee to
cultivate open and effective channels of information about the Company's
financial reporting process among not only management, but also employees. See
Proposed Rule: Standards Relating to Listed Company Audit Committees, Exchange
Act Release No. 34-47137 (Feb. 18, 2003) (rule to become effective by April 26,
2003 and new requirements to become operative no later than the first
anniversary of the publication of the final rule in the Federal Register).
24
The Audit Committee shall meet regularly as determined by the members of
the Audit Committee or as directed by the Board of Directors. The Chair of
the Audit Committee shall prepare or approve an agenda in advance of each
meeting. The President, Chief Financial Officer, outside legal counsel, and
a representative from the independent auditors may be invited to all
meetings. Other management may be invited as necessary. Non-committee
members may be excused from attendance at any meeting or portion of any
meeting by the Chair.
As part of its job to foster open communication, the Audit Committee should
meet at least annually with management and the independent auditors in
separate executive sessions to discuss any matter that the Audit Committee
or each of these groups believes should be discussed privately. In
addition, the Audit Committee or its Chair should meet with the independent
auditors and management quarterly to review the Company's financial
statements and significant findings based upon the auditor's limited review
procedures.
IV. AUTHORITY AND RESPONSIBILITIES
The Audit Committee shall be solely responsible(8) for the retention,
compensation and oversight of the work of the independent auditor
(including resolution of disagreements between management and the
independent auditor regarding financial reporting) for the purpose of
preparing or issuing an audit report or related work. The independent
auditor shall report directly to the Audit Committee.
The Audit Committee shall have the authority, to the extent it deems
necessary or appropriate, to retain independent legal, accounting or other
advisors.(9) The Company shall provide for appropriate funding, as
determined by the Audit Committee, for payment of compensation to the
independent auditor for the purpose of rendering or issuing an audit report
and to any advisors employed by the Audit Committee.
To fulfill its duties and responsibilities the Audit Committee shall:
Review Procedures
1. Review and reassess the adequacy of this Charter at least annually and
recommend any proposed changes to the Board of Directors for approval.
_____________________________
(8) See Proposed Rule: Standards Relating to Listed Company Audit
Committees, Exchange Act Release No. 34-47137 (Feb. 18, 2003) (rule to become
effective by April 26, 2003 and new requirements to become operative no later
than the first anniversary of the publication of the final rule in the Federal
Register) (Because Section 32(a) of the Investment Company Act currently
requires that independent auditors of registered investment companies be
selected by a majority of disinterested directors, this rule exempts registered
investment companies from the requirement that the Audit Committee be solely
responsible for the selection of independent auditors.
(9) See id.
25
2. Review the Company's audited financial statements prior to the release
of year-end earnings and/or the Company's financial statement and
prior to filing the Company's Annual Report on Form 10-K.
3. Review the Company's quarterly financial results prior to the release
of quarterly earnings and/or the Company's financial statement and
prior to filing the Company's Quarterly Report on Form 10-Q.
4. Review, as appropriate, any other material financial information
submitted to any governmental or public body, including any
certification, report, opinion, or review rendered by the independent
auditors.
Independent Auditors
5. The independent auditors are ultimately accountable to the Audit
Committee and the Board of Directors, as representatives of the
Company's stockholders. The Audit Committee and the Board of Directors
have the ultimate authority and responsibility to select the
independent auditors and the Audit Committee has the ultimate
responsibility to evaluate and, where appropriate, replace the
independent auditors (or to nominate the independent auditors to be
proposed for stockholder approval in any proxy statement).(10)
6. Obtain and review a report from the independent auditor at least
annually regarding (a) the independent auditor's internal
quality-control procedures, (b) any material issues raised by the most
recent internal quality-control review, or peer review, of the firm,
or by any inquiry or investigation by governmental or professional
authorities within the preceding five years respecting one or more
independent audits carried out by the firm, (c) any steps taken to
deal with any such issues, and (d) all relationships between the
independent auditor and the Company. Evaluate the qualifications,
performance and independence of the independent auditor, including
considering whether the auditor's quality controls are adequate and
the provision of permitted non-audit services compatible with
maintaining the auditor's independence, taking into account the
opinions of management and internal auditors. The Audit Committee
shall present its conclusions to the Board.(11)
7. Pre-approve any non-audit services that are permitted under the
Exchange Act and SEC rules.(12)
_____________________________
(10) See id.
(11) See Final Rule: Strengthening the Commission's Requirements Regarding
Auditor Independence, 1933 Act Release No. 33-8183 (Effective Date: May 6, 2003)
(requiring the independent auditor to prepare such reports).
(12) See id.
26
8. Ensure receipt from the independent auditors of a formal written
statement delineating all relationships between the auditor and the
Company, consistent with Independence Standards Board Standard No. 1.
9. Actively engage in dialogue with the independent auditors and legal
counsel with respect to any disclosed relationships or services that
may impact the objectivity and independence of the independent
auditors.
10. Take, or recommend that the full Board of Directors take, appropriate
action to oversee the independence of the independent auditors.
11. Recommend to the Board policies for the Company's hiring of employees
or former employees of the independent auditor who participated in any
capacity in the audit of the Company.(13)
12. Approve, where appropriate, fees and other significant compensation to
be paid to the independent auditors.
13. Meet with the independent auditors to review the scope of the proposed
audit for the current year, the audit procedures to be utilized, the
location, reliance on management, and staffing for the audit.
14. Following each audit by the independent auditors, obtain from the
independent auditors assurance that Section 10A of the Exchange Act
has not been implicated.
15. In connection with the Company's year-end financials, discuss with
financial management and the independent auditors significant issues
regarding accounting principles, practices and judgments and any items
required to be communicated by the independent auditors in accordance
with Statement on Accounting Standards No. 61.
16. In connection with the Company's interim financials, discuss with
financial management and independent auditors any significant changes
to the Company's accounting principles and any items required to be
communicated by the independent auditors in accordance with Statement
on Accounting Standards No. 71. The Chair of the Audit Committee may
represent the entire Audit Committee for purposes of the quarterly
review and communication.
17. Consider and approve, if appropriate, significant changes to the
Company's auditing and accounting principles and practices as
suggested by the independent auditors or management.
_____________________________
(13) See id. (prohibiting any person who was employed by the independent
auditor an who participated in any capacity in the audit of the Company during
the preceding one-year period from being a chief executive officer, controller,
chief financial officer, chief accounting officer, or serving in an equivalent
position in the Company.).
27
18. Ensure the rotation of the audit partners as required by law. Consider
whether, in order to assure continuing auditor independence, it is
appropriate to adopt a policy of rotating the independent auditing
firm on a regular basis.(14)
Improvement Process
19. Meet periodically with management to review the Company's major
financial risk exposure and the steps management has taken to monitor
and control such exposures.
Proxy Statement
20. Approve the report of the Audit Committee required by the rules of the
SEC to be included in the Company's annual proxy statement.
21. Oversee the publication of this Charter, following amendment, and, in
any event, at least every three years, in the Company's annual proxy
statement in accordance with SEC regulations.
Ethical Compliance
22. Establish, review and update periodically the Company's Code of
Ethics(15) and Policy Against Insider Trading and Prohibited
Transactions ("Insider Trading Policy"). The effectiveness of Code of
Ethics and Insider Trading Policy shall be reviewed annually by the
Audit Committee, with a report thereafter by the Audit Committee to
the Board of Directors. The report shall include any recommendations
for proposed changes to the Code of Ethics and Insider Trading Policy
which the Audit Committee believes are reasonably necessary to ensure
high ethical conduct by the Company's chief executive and senior
financial officers and to prevent fraudulent, deceptive, misleading or
manipulative acts by "Access Persons" as that term is defined in the
Insider Trading Policy.
23. Review management's monitoring of the Company's compliance with the
Insider Trading Policy or any other potential conflict of interest
situations arising in respect of the Company's affairs and involving
the Company's investment adviser, affiliates and employees.
_____________________________
(14) See id. (The Sarbanes-Oxley Act requires rotation of certain audit
partners on a five-year basis in order to continue to provide audit services for
a registrant.).
(15) Under SEC final rules, the Company is required to disclose whether it
has a Code of Ethics applicable to the chief executive and senior financial
officers; if the Company has not adopted such Code of Ethics, it must disclose
why it has not done so. See Final Rule: Disclosure Required by Sections 406 and
407 of the Sarbanes-Oxley Act of 2002, 1933 Act Release No. 33-8177 (Jan. 24,
2003) (effective date: March 3, 2003).
28
Procedures for Handling Complaints(16)
24. Establish procedures for the receipt, retention and treatment of (a)
complaints received by the Company regarding accounting, internal
accounting controls or auditing matters; and (b) the confidential,
anonymous submission by employees of the Company of concerns regarding
questionable accounting or auditing matters.
Miscellaneous
25. Review with the Company's general counsel legal matters that may have
a material impact on the financial statements, the Company's
compliance policies related to financial matters or the Insider
Trading Policy and any material reports or inquiries related to
financial matters that are received from regulators or governmental
agencies.
26. At each meeting of the Audit Committee, the Audit Committee shall
review all invoices for payment of fees and expenses to the Company's
investment adviser together with any related records requested by the
Audit Committee from time to time.
27. The Audit Committee shall oversee the maintenance of investments in
compliance with Section 17(f) of the 1940 Act. The Chair shall have
the responsibility to review the documentation required in connection
with the deposit or withdrawal of the Company's securities or similar
investments by persons authorized by the Board of Directors to have
access to such securities.
28. The Audit Committee is authorized to review, from time to time, in the
Committee's discretion, electronic data processing procedures and
controls, policies and procedures regarding expenses and use of
corporate assets.
29. The Audit Committee shall review and approve any changes to the
Disclosure Committee Charter, the Disclosure Policy and the Internal
Control Policy proposed by the Disclosure Committee of the Company.
30. Periodically conduct a self-assessment of the Audit Committee's
performance.
31. Perform any other activities consistent with this Charter, the
Company's Bylaws and governing law, as the Audit Committee or the
Board of Directors deems necessary or appropriate.
LIMITATION OF AUDIT COMMITTEE'S ROLE
_____________________________
(16) This section addresses the "whistleblower" requirements of
Sarbanes-Oxley and SEC proposed rules. See Proposed Rule: Standards Relating to
Listed Company Audit Committees, Exchange Act Release No. 34-47137 (Feb. 18,
2003) (rule to become effective by April 26, 2003 and new requirements to become
operative no later than the first anniversary of the publication of the final
rule in the Federal Register).
29
While the Audit Committee has the responsibilities and powers set forth
in this Charter, it is not the duty of the Audit Committee to plan or
conduct audits or to determine that the Company's financial statements
are complete and accurate and are in accordance with generally accepted
accounting principles. These are the responsibilities of management and
the independent auditors. Nor is it the duty of the Audit Committee to
assure compliance with laws and regulations, the Code of Ethics and the
Insider Trading Policy.
As amended on February 25, 2003
30