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 Section 240.14a-12
meVC DRAPER FISHER JURVETSON FUND I, INC.
(D/B/A MVC CAPITAL)
_______________________________________________________________________________
(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)(1) 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:
____________________________________________________________________
[MVC CAPITAL LOGO]
January 29, 2003
DEAR FELLOW STOCKHOLDER:
You are cordially invited to attend the 2003 Annual Meeting of Stockholders
of MVC Capital. We are pleased to enclose a notice of the meeting and a Proxy
Statement that outlines the formal agenda for the meeting, along with an Annual
Report for the Fund's financial year end 2002. We hope that you will be able to
join us. Whether or not you plan to attend the meeting, please sign and mail the
enclosed proxy card. Your vote is crucial to the future direction of your
Company.
Please note that we are putting up for election all seven Directors,
including six new Directors who are world-class business professionals with
proven track records in building stockholder value.
Our candidates are convinced that MVC Capital has embarked on the right
strategy at the right time. Most of you invested in MVC Capital for the
opportunity to participate in long-term venture capital investments in
information technology. We believe our Director slate represents the best people
to oversee the implementation of the Fund's strategy going forward.
We believe that venture capital investing has reached a turning point in its
history. Your Fund's management prudently conserved cash in anticipation of the
time that is before us. It is now time to make the investments that will create
the next wave of great information technology companies.
We are excited about our recent investments -- high-potential companies
supported by top-flight venture capital firms. These investments are further
evidence that we are making progress consistent with our original
mission -- 'long-term capital appreciation from venture capital
investments . . . in companies that we believe have high growth potential over
the long term.'
YOUR VOTE IS IMPORTANT. A dissident stockholder -- Millenco, L.P. -- has
announced its intention to begin a proxy contest. Among other things, Millenco
will be proposing its own nominees to seize control of your Company's Board of
Directors. Millenco is a hedge fund with a record of 'raiding' closed-end funds,
and we urge you to reject Millenco and its nominees.
Your new Director candidates are making their own personal investments in
the Company. These individuals believe the Company has a bright long-term future
and intend to align their interests directly with yours.
Therefore, your vote FOR the Fund's Board of Directors (Proposals 1, 2
and 3) and AGAINST Proposals 4 and 5 is critical. Please sign, date and mail the
WHITE proxy card TODAY.
We appreciate your support.
On behalf of your Board of Directors,
Sincerely,
John M. Grillos
John M. Grillos
Chief Executive Officer
3000 SAND HILL ROAD, BUILDING ONE, SUITE 155 MENLO PARK, CALIFORNIA 94025
T. 650-926-7000 F. 650-926-7001 www.mvccapital.com
meVC DRAPER FISHER JURVESTON FUND I, INC.
(D/B/A MVC CAPITAL)
3000 SAND HILL ROAD, BUILDING 1, SUITE 155
MENLO PARK, CALIFORNIA 94025
--------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
FEBRUARY 28, 2003
--------------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders ('Annual
Meeting') of MVC Capital (the 'Fund') will be held at Quadrus Conference Center,
QCC Room, 2400 Sand Hill Road, Menlo Park, California 94025 on Friday, February
28, 2003, at 9:00 a.m. Local time, for the following purposes:
(1) To elect two directors to serve for the remainder of the term to expire
at the Annual Meeting of Stockholders to be held in 2004;
(2) To elect two directors to serve for the remainder of the term to expire
at the Annual Meeting of Stockholders to be held in 2005;
(3) To elect three directors to serve until the Annual Meeting of
Stockholders to be held in 2006;
(4) To consider a stockholder proposal to recommend that the Fund's By-laws
be amended to permit any stockholder owning at least five percent of the
outstanding common stock of the Fund to demand that the Fund's Chairman,
Vice Chairman, Chief Executive Officer, or President call a special
meeting of stockholders;
(5) To consider a stockholder proposal to recommend that the Board of
Directors conduct a tender offer for 25 percent of the outstanding
shares of the Fund at an amount equal to 95 percent of the Fund's net
asset value in any year where the Fund's discount averages over 10
percent; and
(6) To transact any other business as may properly come before the meeting
or any adjournments or postponements thereof.
The Board of Directors has fixed the close of business on February 6, 2003
as the record date for the determination of stockholders entitled to vote at the
meeting or any adjournment or postponement thereof.
Any proposal for which a quorum is present and sufficient votes are received
may be approved at the Annual Meeting, regardless of whether a quorum is present
or sufficient votes are received with respect to any other proposal. In the
event that the necessary quorum to transact business or the vote required to
approve or reject any proposal is not obtained at the Annual Meeting, the
persons named as proxy holders may propose one or more adjournments of the
Annual Meeting, in accordance with applicable law, to permit further
solicitation of proxies. Any such adjournment will require the affirmative vote
of the holders of a majority of the Fund's shares present in person or by proxy
at the Annual Meeting. The persons named as proxy holders will vote in favor of
such adjournment those proxies which they are entitled to vote in favor of any
proposal, and will vote against any such adjournment those proxies to be voted
against that proposal.
By Order of the Board of Directors,
Nino Marakovic
Nino Marakovic
Secretary
Menlo Park, California
January 29, 2003
IMPORTANT: IT IS IMPORTANT TO YOUR INTERESTS THAT ALL STOCKHOLDERS
PARTICIPATE IN THE ANNUAL MEETING REGARDLESS OF THE NUMBER OF SHARES YOU OWN.
ACCORDINGLY, THE FUND URGES YOU TO FILL OUT, SIGN AND PROMPTLY RETURN THE WHITE
PROXY CARD IN THE ENCLOSED ENVELOPE EVEN IF YOU PLAN TO ATTEND THE ANNUAL
MEETING IN PERSON. INSTRUCTIONS ARE SHOWN ON THE PROXY CARD. YOU MAY RECEIVE
MORE THAN ONE PROXY CARD. STOCKHOLDERS CANNOT VOTE VIA TELEPHONE OR THE
INTERNET, AND MAY ONLY VOTE BY COMPLETING AND RETURNING A PROXY CARD IN THE
ENVELOPE PROVIDED. YOUR PROMPT RETURN OF THE ENCLOSED WHITE PROXY CARD MAY SAVE
THE FUND THE NECESSITY AND EXPENSE OF FURTHER SOLICITATIONS TO ASSURE A QUORUM
AT THE MEETING. THE ENCLOSED PROXY IS BEING SOLICITED ON BEHALF OF THE FUND'S
BOARD OF DIRECTORS.
PROXY STATEMENT
meVC DRAPER FISHER JURVETSON FUND I, INC.
(D/B/A MVC CAPITAL)
3000 SAND HILL ROAD, BUILDING 1, SUITE 155
MENLO PARK, CALIFORNIA 94025
--------------------------
ANNUAL MEETING OF STOCKHOLDERS
FEBRUARY 28, 2003
--------------------------
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation of
proxies on behalf of the Board of Directors ('Board') of meVC Draper Fisher
Jurvetson Fund I, Inc. (d/b/a MVC Capital), a Delaware corporation ('Fund'), to
be voted at the Annual Meeting of Stockholders of the Fund ('Meeting') to be
held at Quadrus Conference Center, QCC Room, 2400 Sand Hill Road, Menlo Park,
California 94025, on Friday, February 28, 2003, at 9:00 a.m. Local time. The
approximate mailing date for this Proxy Statement is January 29, 2003, or as
soon as practicable thereafter.
As you may be aware, Robert Knapp of Millenco, L.P. ('Millenco'), a
dissident stockholder, has announced his intention to commence a hostile proxy
contest, and the Fund believes that he will distribute his own proxy
solicitation materials ('Dissident Proxy') to stockholders. Mr. Knapp will
attempt to solicit your vote for the purpose, among other things, of electing
his colleagues as directors of your Fund. It is our belief that Millenco is a
short-term profit-seeker in a long-term fund designed for individual investors.
Their short-term approach is fundamentally inconsistent with venture capital
investing. The Fund's Directors believe that Mr. Knapp will nominate candidates
for positions on the Board ('Dissident Nominees') to further Mr. Knapp's
personal agenda, including a liquidation or merger of the Fund, which is
unrelated and counter to the Fund's investment objective. Mr. Knapp's public
statements that he will consider liquidation of the Fund are naive and
demonstrate his lack of understanding of the fundamentals of MVC Capital's
business model. THE DIRECTORS' REASONS FOR STRONGLY OPPOSING THE DISSIDENT
NOMINEES AND MR. KNAPP'S OTHER PROPOSALS WILL BE SET FORTH IN SUBSEQUENT PROXY
MATERIALS FROM THE BOARD. PLEASE GIVE THIS MATERIAL YOUR CAREFUL ATTENTION.
All properly executed proxies received prior to the Meeting will be voted at
the Meeting in accordance with the instructions marked on the WHITE proxy card.
Unless instructions to the contrary are marked thereon with respect to each
proposal, proxies received will be voted FOR Proposals 1, 2 and 3 to elect
members of each class of Directors, but AGAINST the stockholder proposals set
forth under Proposal 4 and Proposal 5. The appointed proxy holders will vote in
their discretion on any other business as may properly come before the Meeting
or any adjournments or postponements thereof. Any proxy may be revoked at any
time prior to its exercise by giving written notice to the Secretary of the Fund
(addressed to the Secretary at the principal executive office of the Fund, 3000
Sand Hill Road, Building 1, Suite 155, Menlo Park, California 94025), by
executing another proxy card, or by attending and voting by ballot at the
Meeting. Stockholders may vote using the enclosed WHITE proxy card along with
the enclosed envelope with pre-paid postage.
The presence at the Meeting, in person or by proxy, of the majority of the
shares of the Fund's common stock shall be necessary and sufficient to
constitute a quorum for the transaction of business with respect to the Fund.
Broker non-votes are shares held in street name for which the broker indicates
that instructions have not been received from the beneficial owners or other
persons entitled to vote and for which the broker does not have discretionary
voting authority. Abstentions and broker non-votes will be counted as present
for purposes of determining whether a quorum is present but will not be voted
for or against any adjournment or proposal.
Approval of Proposals 1, 2 and 3 to elect the Fund's seven nominees to the
Fund's Board will require the vote of a plurality of the votes present or
represented by proxy at the Meeting and entitled
to vote on the election of Directors. Since Directors are elected by a plurality
of the votes cast, abstentions and broker non-votes will not affect their
election.
Approval of the stockholder proposals set forth as Proposal 4 and Proposal 5
require the vote of a majority of the stockholders having voting power present
at the Meeting in person or represented by proxy. For purposes of Proposal 4 and
Proposal 5, abstentions are counted as present at the Meeting for purposes of
each proposal and, therefore, will count as a vote 'against' each proposal. For
purposes of Proposal 4 and Proposal 5, broker non-votes are treated as votes not
cast at the meeting and, therefore, will have no effect on the approval or
rejection of Proposal 4 or Proposal 5.
In the event that the necessary quorum to transact business at the Meeting
is not obtained or a quorum is present at the Meeting but sufficient votes to
approve the proposals are not received, the proxy holders may propose one or
more adjournments of the Meeting to permit further solicitation of proxies. Any
adjournment will require the affirmative vote of a majority of those shares
present at the Meeting in person or by proxy. If the necessary quorum is not
obtained, the persons named as proxy holders will vote in favor of the
adjournment. If a quorum is present, the proxy holders will vote those proxies
required to be voted 'for' a proposal in favor of such adjournment, and will
vote those proxies required to be voted 'against' the proposal, against
adjournment. A stockholder vote may be taken on any proposal prior to
adjournment if sufficient votes have been received for approval of that
proposal.
The Board has fixed the close of business on February 6, 2003 as the record
date for the determination of stockholders entitled to notice of and to vote at
the Meeting and at any adjournment or postponement thereof. Stockholders on the
record date will be entitled to one vote for each share held. As of January 24,
2003, the Fund had 16,296,800 shares of common stock outstanding.
The Board knows of no business other than that mentioned in the Notice of
the Meeting which will be presented for consideration at the Meeting. If any
other matter is properly presented, it is the intention of the persons named on
the enclosed WHITE proxy card to vote in accordance with their best judgment.
The Fund will furnish, without charge, a copy of the Fund's 10-K for its
fiscal year ended October 31, 2002, and any more recent reports, to any Fund
stockholder upon request. To request a copy, please write or call the Fund at
3000 Sand Hill Road, Building 1, Suite 155, Menlo Park, California 94025 or
(877) 474-6382.
PROPOSALS 1, 2 AND 3: ELECTION OF DIRECTORS
The Fund's By-Laws provide that the Board will be divided into three
classes, as nearly equal in number as possible, each of which will serve for
three years, with one class being elected each year. Each year the term of
office of one class will expire. The Board, including the Directors who are not
'interested persons' (as that term is defined in Section 2(a)(19) of the
Investment Company Act of 1940, as amended ('1940 Act')) ('independent
Directors') of the Fund, upon the recommendation of the Fund's Nominating and
Compensation Committee which is composed entirely of independent Directors, has
nominated: Mr. Michael H. Jordan and Mr. John M. Grillos to serve for the
remainder of the term to expire at the Annual Meeting of Stockholders to be held
in 2004; Mr. Laurence R. Hootnick and Mr. Peter J. Locke to serve for the
remainder of the term to expire at the Annual Meeting of Stockholders to be held
in 2005; and Mr. Vincent H. Tobkin, Mr. Frederick M. Hoar, and Mr. James K. Sims
for a three-year term to expire at the Annual Meeting of Stockholders to be held
in 2006, unless and until their respective successors are duly elected and
qualified.
On December 19, 2002, Vice Chancellor Lamb of The Court of Chancery of the
State of Delaware granted Millenco's motion for summary judgment on its claim
that the former board of directors ('Prior Board') breached their duty of
disclosure under Delaware law by omitting material facts concerning the business
relationship among three of the directors (Messrs. Grillos, Gerhard and Hughes)
at eVineyard, Inc. (a privately held corporation) ('eVineyard') from the 2001
and 2002 proxy statements. Mr. Grillos, an 'interested' director of the Fund by
reason of being its CEO and managing member of Draper Fisher Jurvetson MeVC
Management Co., LLC ('former Sub-Advisor' or 'Draper Advisers'), was Chairman of
the Board and Chairman of the Compensation Committee of eVineyard at the same
time that Messrs. Gerhard and Hughes, then current independent Directors of the
Fund, were officers of eVineyard. Vice Chancellor Lamb, finding that the
omissions rendered the proxy statements false and misleading, ordered the Fund
to hold new elections for the seats held by Messrs. Grillos and
2
Gerhard and former director Mr. Peter S. Freudenthal, to be conducted either in
conjunction with the Fund's annual meeting in 2003 (at which two other director
seats are up for election) if that meeting is held within 60 days of the date of
the Vice Chancellor's order, or separately on or before February 15, 2003. The
Vice Chancellor noted without comment Millenco's statement that the remaining
claims in Millenco's latest amended complaint were no longer at issue in the
case.
On December 22, 2002, the Fund filed a motion for re-argument of the Vice
Chancellor's order with respect to the date by which the Fund must hold an
annual or special meeting for the election to fill the three directors' seats.
On January 8, 2003, the Vice Chancellor issued an order granting the Fund's
motion to re-argue and extending the latest date for that election to February
28, 2003.
On January 6, 2003, the Prior Board held a meeting to discuss the upcoming
annual meeting of stockholders and the proxy solicitation process. The Prior
Board also discussed at great length the qualifications of various directors to
be considered for appointment to the Board. On January 6, 2003, the Prior Board
determined to increase the size of the Board from five members to seven members
so that the Fund would have greater expertise and experience in managing the
Fund's affairs. On January 7, 2003, the Prior Board nominated Messrs. Grillos,
Jordan, Tobkin, Hootnick, Locke and Hughes to serve as Directors of the Fund and
determined that the names of those persons be submitted to stockholders for
approval as Directors of the Fund.
On January 16, 2003, the Prior Board, including the then current independent
Directors of the Fund, appointed Messrs. Hootnick, Jordan, Locke and Tobkin to
fill vacancies on the Board that would be created by the resignations of Messrs.
Gerhard, Hughes and Lufkin and the existing vacancy of Mr. Freudenthal. On
January 16, 2003, the Prior Board nominated Mr. Grillos to serve as a Class I
director for the remainder of the three-year term to which he was elected in
2001, Mr. Hootnick to serve as a Class II director for the remainder of the
three-year term to which Mr. Gerhard was elected in 2002, and Mr. Jordan to
serve as a Class I director for the remainder of the three-year term to which
Mr. Freudenthal was elected in 2001. On January 16, 2003, the Prior Board also
nominated Mr. Locke to serve for the remainder of the three-year term of the
newly-created Class II directorship, the term of which expires at the Annual
Meeting of Stockholders to be held in 2005, and Mr. Tobkin to serve as Class III
director for a three-year term to expire at the Annual Meeting of Stockholders
to be held in 2006.
On January 16, 2003, the current Board, including the independent Directors,
held a meeting at which they ratified and approved an increase in the size of
the Fund's Board from five members to seven members. Each of the independent
Directors ratified and accepted their appointment to fill the vacancy on the
Board that had been created by the resignations of Messrs. Gerhard, Hughes and
Lufkin and the existing vacancy of Mr. Freudenthal.
At the same meeting, the Board also ratified the nomination of Mr. Grillos
to serve as a Class I director for the remainder of the three-year term to which
he was elected in 2001, ratified the nomination of Mr. Hootnick to serve as a
Class II director for the remainder of the three-year term to which Mr. Gerhard
was elected in 2002, and ratified the nomination of Mr. Jordan to serve as a
Class I director for the remainder of the three-year term to which Mr.
Freudenthal was elected in 2001. At the same meeting, the Board also ratified
the nomination of Mr. Locke to serve for the remainder of the three-year term of
the newly-created Class II directorship, the term of which expires at the Annual
Meeting of Stockholders to be held in 2005, and ratified the nomination of Mr.
Tobkin to serve as a Class III director for a three-year term to expire at the
Annual Meeting of Stockholders to be held in 2006. Finally, at that meeting, the
Board accepted the nomination of Messrs. Hoar and Sims by the Fund's current
Nominating and Compensation Committee to serve as Directors of the Fund and
determined that Messrs. Hoar and Sims be submitted to stockholders for approval
as directors of the Fund. Each nominee has indicated an intention to serve if
elected and has consented to be named in this Proxy Statement.
It is the intention of the persons named on the enclosed WHITE proxy card to
vote for the election of the persons listed below. The Board knows of no reason
why any of these nominees will be unable to serve, but in the event of any such
inability, the proxies received will be voted for such substituted nominees as
the Board may recommend.
The names of the Fund's nominees for election as Directors, and their
addresses, ages and principal occupations during the past five years, are
provided in the tables below. Messrs. Grillos and Sims are 'interested persons'
(as that term is defined in Section 2(a)(19) of the 1940 Act) of the Fund
3
and are referred to in the table below as 'Interested Directors.' Other
Directors are referred to in the table below as 'Independent Directors.' There
are no other funds in the Fund Complex.
CLASS I INDEPENDENT DIRECTOR
TERM OF
POSITION(S) OFFICE* AND
HELD WITH LENGTH OF PRINCIPAL OCCUPATION(S) DURING OTHER DIRECTORSHIPS HELD BY
NAME, ADDRESS AND AGE THE FUND TIME SERVED PAST FIVE YEARS DIRECTOR OR NOMINEE FOR DIRECTOR
--------------------- -------- ----------- --------------- --------------------------------
MICHAEL H. JORDAN Director Since January Mr. Jordan is currently Aetna Inc. (formerly Aetna
4700 Clairton 2003 retired. Services, Inc., Aetna Life
Boulevard Suite 107 Mr. Jordan is the General Insurance Company and Aetna
Pittsburgh, PA 15236 Partner of Global Asset Capital Retirement Services, Inc.)
Age: 66 LLC (venture capital firm) from (financial services provider)
2001 to present. (since 1992)
Mr. Jordan was Chairman and Dell Computer Corporation
Chief Executive Officer of CBS (personal computing) (since
Corporation, formerly 1992)
Westinghouse Electric M&K Jordan Family L.P.
Corporation, from 1993 until (charitable giving) (since 1993)
1998. Consorcio International
Hospital, S.A. de C.V. (hospital
services) (since 1994)
eOriginal, Inc.
(electronic document services)
(since 1999)
eRewards
(developer of internet-based
customer loyality systems)
(since 1999)
MHJ Holdings Co. (consulting
services) (since 1999)
WPP Group plc
(global communications services)
(since 1999)
Enikia Incorporated (home
networking technologies) (since
2000)
Feld Partners Management, LLC
(IT consulting services) (since
2000)
Global Asset Capital, LLC
(venture capital fund) (since
2001)
i2 Technologies, Inc. (global
provider of ebusiness solutions)
(since 2001)
Nearware Networks, Inc.
(technology-driven media
solutions) (since 2001)
Pinnacor (formerly Screaming
Media) (global content &
technology solutions provider)
(since 2001)
Galaxy Nutritional Foods, Inc.
(health food producer) (since
2003)
Mr. Jordan also serves as:
Chairman of the National Foreign
Trade Council
Trustee of The Brookings
Institution
Member and former Chairman of
the U.S.-Japan Business Council
Chairman of The College
Fund/UNCF
Member of The Business Council
4
CLASS II INDEPENDENT DIRECTORS
TERM OF
POSITION(S) OFFICE* AND
HELD WITH LENGTH OF PRINCIPAL OCCUPATION(S) DURING OTHER DIRECTORSHIPS HELD BY
NAME, ADDRESS AND AGE THE FUND TIME SERVED PAST FIVE YEARS DIRECTOR OR NOMINEE FOR DIRECTOR
--------------------- -------- ----------- --------------- --------------------------------
LAURENCE R. HOOTNICK Director Since January Mr. Hootnick currently is Blue Pumpkin, Inc. (software)
600 Hansen Way 2003 Managing Member of Acuity (since 1998)
Suite 245 Ventures II LLC (venture PDHI, Inc.
Palo Alto, CA 94304 capital firm), and served as a (software) (since 1999)
Age: 60 director from 2001 to 2003. Software Made Easy, Inc.
Formerly, Mr. Hootnick served (software) (since 2000)
as President of Persistence Benefitstreet, Inc.
Software, Inc. (an application (software) (since 2001)
server software company) from G Commerce, Inc. (software)
1999 until 2000, and President (since 2001)
and Chief Executive Officer of Monogen, Inc.
Consilium, Inc. (semi-conductor (medical devices) (since 2002)
software company) from 1996
until 1999.
PETER J. LOCKE Director Since January Mr. Locke is currently a
31 Orinda View Road 2003 commercial arbitrator.
Orinda, CA 94563 From 1981 to 2001, Mr. Locke
Age: 57 was Managing Director, Western
Region Head, Corporate Banking
Division, of Citicorp.
CLASS III INDEPENDENT DIRECTORS
TERM OF
POSITION(S) OFFICE* AND
HELD WITH LENGTH OF PRINCIPAL OCCUPATION(S) DURING OTHER DIRECTORSHIPS HELD BY
NAME, ADDRESS AND AGE THE FUND TIME SERVED PAST FIVE YEARS DIRECTOR OR NOMINEE FOR DIRECTOR
---------------------- ----------- ------------- -------------------------------- --------------------------------
FREDERICK M. HOAR Nominee Mr. Hoar is currently a branding Semotus Solutions, Inc.
Santa Clara University and marketing consultant. (wireless application service
500 El Camino Road Since January 2002, Mr. Hoar has provider) (since 1997)
Santa Clara, CA 95050 served as the Dean's Executive Qool.com (free auction company)
Age: 76 Professor of Marketing at Santa (since 1997)
Clara University, Leavey School NetProspect, Inc. (ecommerce)
of Business. (since 1999)
In 1989, Mr. Hoar joined Semotus Solutions Inc. (wireless
Miller/Shandwick Technologies ASP) (since 2000)
(public relations) as Chief Simentra, Ltd. (management
Executive Officer of Miller services -- United Kingdom and
West, a division of Northern Ireland) (since 2002)
Miller/Shandwick Technologies, Mr. Hoar serves as a member of
and later Chairman of the entire the advisory boards of the
agency until January 2002. following entities:
Pacific Enterprise Capital
The Churchill Club
The Commonwealth Club
Junior Achievement
The Santa Clara University
Leavey School of Business
VINCENT H. TOBKIN Director, Since January Mr. Tobkin was Founder and has
One Embarcadero Center Chairman of 2003 served as a Director and Head of
San Francisco, CA the Board the Worldwide Technology and
94111 Telecom Practice of Bain &
Age: 51 Company (management consulting)
since 1992.
Mr. Tobkin was an advisor for
Net Insight (Swedish networking
company) from 1997 to 2001.
5
CLASS I INTERESTED DIRECTOR
TERM OF
POSITION(S) OFFICE* AND
HELD WITH LENGTH OF PRINCIPAL OCCUPATION(S) DURING OTHER DIRECTORSHIPS HELD BY
NAME, ADDRESS AND AGE THE FUND TIME SERVED PAST FIVE YEARS DIRECTOR OR NOMINEE FOR DIRECTOR
---------------------- ----------- ------------- -------------------------------- --------------------------------
JOHN M. GRILLOS'DD' Chief Since 2000 Since 2000, Mr. Grillos has FOLIOfn Inc.
3000 Sand Hill Road Executive served as Chief Executive (internet brokerage company)
Building 1, Suite 155 Officer and Officer of the Fund; Chief (since 2000)
Menlo Park, CA 94025 Director Investment Officer since 2002. ITech Ice LLP (aircraft charter
Age: 60 From 2000 to January 2003, Mr. and real estate investment
Grillos also served as the vehicle) (since 2000);
Chairman of the Board of the CBCA (claims processing) (since
Fund. 2002);
Mr. Grillos has been General TGMVC (data services) (since
Partner and a Director of Itech 2002)
Partners LP (venture capital
firm) since 1996.
From 1999 until 2002, Mr.
Grillos served as Managing
Member of Draper Fisher
Jurvetson MeVC Management
Company, LLC (investment
advisory firm).
He has served as a Director of
SmartForce/CBT Systems (e-
learning software company) from
1993 until 2002, and was also
Chief Operating Officer from
1998 until 1999.
From 1997 to 1998, Mr. Grillos
served as Managing Director as
of Sound View Venture Partners,
L.P (venture capital fund).
From 1988 to 1997, Mr. Grillos
was a Managing Director at
Robertson, Stephens & Co.
(investment bank venture capital
firm).
CLASS III INTERESTED DIRECTOR
JAMES K. SIMS'D' Nominee Mr. Sims has been Chairman and RSA Security Inc.
10 Post Office Square Chief Executive Officer of Gen 3 (encryption technology) (since
9th Floor Partners (consulting) since 1997)
Boston, MA 02109 2000. The Wang Center for Performing
Age: 56 Mr. Sims was President and Chief Arts
Executive Officer of Cambridge (performing arts) (since 1997)
Tech Partners (IT consulting) PVI Corporation
from 1990 to 1999. (solar technology) (since 2001)
---------
* All Nominees are up for election at the Meeting.
'DD' Mr. Grillos is deemed to be an interested person because of his affiliation
with the Fund and with the Fund's former sub-adviser.
'D' Mr. Sims is deemed to be an interested person because of a transaction
proposed to be entered into between Mr. Sims and the Fund.
REQUIRED VOTE
Approval of Proposals 1, 2 and 3 to elect the Fund's seven nominees to the
Fund's Board will require the vote of a plurality of the votes present or
represented by proxy at the Meeting and entitled to vote on the election of
Directors.
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE FOR PROPOSALS 1, 2 AND 3, FOR
THE ELECTION OF THE FUND'S SEVEN NOMINEES TO THE FUND'S BOARD.
INTERNALIZATION OF MANAGEMENT OF THE FUND
From inception through June 19, 2002, meVC Advisers, Inc., a Delaware
corporation ('meVC Advisers' or 'former Advisor') provided certain management
and administrative services necessary for the operation of the Fund subject to
the supervision of the directors. The former Advisor arranged for third parties
to perform certain management, administrative and other services, including the
hiring of Fleet Investment Advisors, Inc. to manage the Fund's cash and short
term interest bearing investments, and the hiring of State Street Bank and Trust
Co, Inc. to handle all functions of administration, accounting and custodial
work necessary for the operations of the Fund. The former
6
Advisor provided the Fund, at the former Advisor's expense, with the office
space, facilities, equipment, and personnel (whose salaries and benefits were
paid by the former Advisor) necessary to enable the Fund to conduct the
operational aspects of its business. The former Advisor also hired a
sub-adviser, Draper Advisers, who provided the Fund, at the former Sub-Advisor's
expense, with the office space, facilities, equipment, and personnel (whose
salaries and benefits were paid by the former Sub-Advisor) necessary to enable
the Fund to conduct the investment management aspects of its business.
At the Meeting of the Fund held on March 27, 2002, two proposals pertaining
to the re-approval of the former Advisor and the former Sub-Advisor failed to
receive the necessary votes for approval. The Fund's Prior Board then determined
that the former Advisor and the former Sub-Advisor would continue to serve as
the Fund's investment adviser and sub-adviser, respectively, pursuant to interim
agreements, which under Securities and Exchange Commission ('SEC') rules may
remain in effect for a period of up to 150 days from March 27, 2002. The Prior
Board then undertook a thorough review of alternatives for investment management
and administration.
On June 17, 2002, Mr. Freudenthal, then the President, Chief Executive
Officer and Chairman of the Board of both the former Advisor and the parent
entity of the former Advisor, resigned from his positions as Vice Chairman,
President and a Director of the Fund. At the same time Paul D. Wozniak, then the
Vice President of Operations for the former Advisor and the Chief Operating
Officer and Chief Financial Officer of the parent entity of the former Advisor,
resigned from his positions as Vice President, Chief Financial Officer,
Treasurer and Secretary of the Fund. Messrs. Freudenthal and Wozniak also
resigned from the former Advisor.
From inception through June 19, 2002, the Fund was charged a management fee
by the former Advisor at a rate of 2.5% of the average weekly net assets of the
Fund, paid monthly in arrears. The former Advisor had agreed to pay compensation
to the directors and officers for any and all services rendered to the Fund and
had agreed to pay all Fund expenses above and beyond the 2.5% management fee
paid to the former Advisor by the Fund. On June 19, 2002, the former Advisor
resigned without prior notice to the Fund, effective immediately, as the Fund's
investment adviser. This resignation resulted in the automatic termination of
the agreement between the former Advisor and the former Sub-Advisor to the Fund.
As a consequence, the agreement with the former Advisor where the former Advisor
agreed to pay all Fund expenses above and beyond the 2.5% management fee paid to
the former Advisor by the Fund also terminated. Once the former Advisor
terminated its advisory agreement with the Fund, that agreement was no longer in
effect and any expense limitation provisions in that agreement were also no
longer in effect.
Subsequent to the resignation of the former Advisor, the Fund determined
that the former Advisor had not paid certain vendors for services performed on
behalf of the Fund, which the former Advisor had agreed to pay. On August 30,
2002, the Fund paid or accrued $463,535.48 in expenses to pay those vendors,
which resulted in a $0.028 decrease in net asset value per share. The Fund is
considering legal actions that it may take against the former Advisor to recover
these expenses that the Fund was forced to assume and pay.
Subsequently on June 19, 2002, the Prior Board met to make prompt
determinations with respect to the appropriate arrangements for the Fund's
continued operations, specifically in the areas of portfolio management, cash
management and administration. Upon a consideration of options then available to
the Fund, the then current independent directors of the Fund concluded that
internalizing the management of the Fund's operations was a reasonable
alternative, and the most viable option under the circumstances. The Prior
Board, and the then current independent Directors voting separately, then
appointed Mr. Grillos, to serve as the interim Chief Executive Officer and to
conduct the day to day operations of the Fund, and to hire employees, vendors
and consultants necessary to perform all operations of the Fund, including cash
management, investment of the Fund's assets, and all necessary administrative,
legal and compliance functions not then already performed by a third party.
The Prior Board, and the then current independent Directors voting
separately, also authorized the Fund to hire Ms. Ann Oglanian as a consultant to
assist the Fund through the process of internalizing management and to consult
with the Fund regarding ongoing administrative and operational matters. Ms.
Oglanian also served as Acting Chief Operating Officer of the Fund from June
2002 through November 2002. Certain individuals who had been employed by the
former Advisor or the former Sub-Advisor were hired by the Fund to enable the
Fund to continue to provide portfolio management, as
7
well as cash management and administrative services. Mr. Nino Marakovic, a
Principal and Partner of Draper Advisers, was appointed as Secretary of the
Fund.
In October 2002, the then current independent Directors completed their due
diligence regarding the investment management and administration alternatives
for the Fund. The then current independent Directors stated their commitment to
maintaining the Fund's investment objective of long term capital appreciation
from venture capital investments in information technology companies and that it
was in the best interest of the Fund and its shareholders to continue to conduct
the Fund's investment operations through internal management. The then current
independent Directors also agreed that it would be in the Fund's best interest
to consider engaging in venture lending activities in addition to its venture
equity investments. The then current independent Directors unanimously:
(a) appointed John M. Grillos, the then Chairman of the Board and CEO, to serve
as the Fund's Chief Investment Officer; (b) elected William Del Biaggio III as
President of the Fund; (c) agreed to consider investing in debt instruments
issued by information technology companies; and (d) agreed to continue to
conduct the Fund's operations through internal management by the Fund's Board,
officers and employees. In November 2002, Mr. Michael D. Stewart was hired as
Acting Chief Financial Officer of the Fund.
OFFICERS OF THE FUND
The names of the officers of the Fund who are not Directors, their
addresses, ages and principal occupations during the past five years are
provided in the table below:
POSITION(S) PRINCIPAL
HELD TERM OF OFFICE* OCCUPATION(S)
WITH THE AND LENGTH OF DURING PAST
NAME, ADDRESS AND AGE FUND TIME SERVED FIVE YEARS
--------------------- ---- ----------- ----------
William Del Biaggio III President Since October President, MVC Capital (since
3000 Sand Hill Road 2002 2002); Director, New Vine
Building 1, Suite 155 Logistics (since 2001); Board
Menlo Park, CA 94025 Member, The Technology Museum of
Age: 35 San Jose (since 2001); General
Partner, BDB Fund I, LP (since
2001); General Partner, BDB Fund
II, LP (since 2001); Board
Member, Santa Clara County
'Healthy Kids' Program (since
2001); General Partner, Page Mill
Capital (since 2000); President,
Chief Executive Officer &
Director, Sand Hill Capital
Holdings, Inc. (from 2000 to
2002); General Partner, Sand Hill
Capital Fund I, LP (from 2000 to
2002); Managing Member, Sand Hill
Capital Partner, III, LLC (from
2000 to 2002); Board Member,
Electronic Health Information
(from 2000 to 2002); Director,
Timpany Networks (from 2000 to
2001); General Partner, Sand Hill
Capital II LP (from 1999 to
2002); Board Member, The Role
Model Program (from 1998 to
2002); President and Chief
Executive Officer, Sand Hill
Capital, LLC (venture debt) (from
1997 to 2002); Director, Valley
Community Bank (from 1998 to
2001); President and Chief
Executive Officer, Sand Hill
Capital (venture firm) (from 1997
to 2001); Board Member, Med-Cor
Health Information (from 1998 to
2000); Director, Heritage Bank of
Commerce (from 1994 to 1996 and
since 2001).
8
POSITION(S) PRINCIPAL
HELD TERM OF OFFICE* OCCUPATION(S)
WITH THE AND LENGTH OF DURING PAST
NAME, ADDRESS AND AGE FUND TIME SERVED FIVE YEARS
--------------------- ---- ----------- ----------
Ann Oglanian Consultant Consultant from June Consultant (since 2002); General
3000 Sand Hill Road 2002 to present; Counsel and Managing Director,
Building 1, Suite 155 Acting Chief Montgomery Asset Management
Menlo Park, CA 94025 Operating Officer (investment adviser) (from 2000
Age: 41 from June 2002 to 2001); Partner, Vedder Price
through November (law firm) (from 1996 until
2002. 1999).
Nino N. Marakovic Executive Vice Executive Vice Executive Vice-President, MVC
3000 Sand Hill Road President and President since Capital (venture capital) (since
Building 1, Suite 155 Secretary October 2002; 2002); Principal and Partner,
Menlo Park, CA 94025 Secretary since June Draper Advisers (investment sub-
Age: 30 2002 advisory services) (from 2000 to
2002); Investment Banker and
Senior Associate, Robertson
Stephens (investment banking)
(from 1998 to 2000).
Michael D. Stewart Acting Chief Since November 2002 Acting Chief Financial Officer,
3000 Sand Hill Road Financial MVC Capital (venture capital)
Building 1, Suite 155 Officer (since 2002); Chief Financial
Menlo Park, CA 94025 Officer Private Equity, Thomas
Age: 40 Weisel Partners (investment bank)
(from 2000 to 2002); Senior Audit
Manager, PricewaterhouseCoopers
(professional services
organization) (from 1996 to
2000).
---------
* Officers hold their positions with the Fund until a successor has been duly
elected and qualified.
OWNERSHIP OF SECURITIES
As of January 24, 2003, the Fund's Directors and executive officers, as a
group, owned less than 1% of the Fund's outstanding shares of common stock. The
information as to ownership of securities, which appears below, is based on
statements furnished to the Fund by its Directors and executive officers.
As of January 24, 2003, the dollar range of equity securities owned
beneficially by each Director in the Fund was as follows:
AGGREGATE DOLLAR RANGE
OF EQUITY SECURITIES
IN ALL REGISTERED
INVESTMENT COMPANIES
OVERSEEN OR TO BE
OVERSEEN BY DIRECTOR
DOLLAR RANGE OR NOMINEE
OF EQUITY SECURITIES IN FAMILY OF
NAME OF DIRECTOR IN THE FUND INVESTMENT COMPANIES
---------------- ----------- --------------------
Independent Directors
Frederick M. Hoar................................ -- --
Laurence R. Hootnick............................. $1 - $10,000 $1 - $10,000
Michael H. Jordan................................ $1 - $10,000 $1 - $10,000
Peter J. Locke................................... $1 - $10,000 $1 - $10,000
Vincent H. Tobkin................................ $1 - $10,000 $1 - $10,000
Interested Directors
John M. Grillos.................................. over $100,000 over $100,000
James K. Sims.................................... -- --
9
COMMITTEES AND BOARD OF DIRECTORS MEETINGS
The Board has established an Audit Committee that acts pursuant to a written
charter and is responsible for overseeing the Fund's accounting and financial
reporting policies, practices and internal controls. The Board has adopted a
written charter for the Audit Committee. The Audit Committee of the Board
currently consists of Messrs. Hootnick, Locke, and Jordan, who are each
independent as defined in Section 303.01 of the listing standards of the New
York Stock Exchange, Inc. ('NYSE'). The Audit Committee's duties are (a) to
review the financial and accounting policies of the Fund, including internal
accounting control procedures, and to review reports prepared by the Fund's
independent accountants; (b) to review and recommend approval or disapproval of
audit services and the fees charged for the services; (c) to evaluate the
independence of the independent accountants and to recommend whether to retain
the independent accountants for the next fiscal year; and (d) to report to the
Board and make such recommendations as it deems necessary. The Audit Committee
met twice during the Fund's fiscal year ended October 31, 2002. All members of
the Audit Committee during the fiscal year ended October 31, 2002 attended those
meetings. The current members of the Audit Committee met on January 16, 2003 to
review the audited financial statements of the Fund.
The Prior Board has adopted an Audit Committee Charter, the most recently
amended copy of which is attached to this Proxy Statement as Exhibit A. The
Audit Committee has received the written disclosures and the letter required by
Independence Standards Board Standard No. 1 from PricewaterhouseCoopers LLP
('PwC'), the Fund's independent accountants, and has discussed with PwC its
independence. The Audit Committee has also reviewed and discussed the audited
financial statements with Fund management and PwC, and discussed certain matters
with PwC required to be discussed by Statement on Auditing Standards No. 61.
Based on the foregoing, the Audit Committee has recommended to the Board that
the Fund's audited financial statements be included in the Fund's annual report
to stockholders for the fiscal year ended October 31, 2002.
On February 4, 2002, the Prior Board established a Nominating Committee that
is responsible for selecting, reviewing and nominating persons for election to
the Fund's Board. On February 4, 2002, the Board also established a Compensation
Committee that is responsible for considering and making recommendations to the
Board regarding all matters relating to the compensation of the Fund's Directors
and officers. During the Fund's fiscal year ended October 31, 2002, neither the
Nominating Committee nor the Compensation Committee held any meetings. On
January 16, 2003, the Board combined the functions of the committees into one
committee, the Nominating and Compensation Committee, which currently is
comprised of Messrs. Tobkin and Locke. The Nominating and Compensation Committee
will not consider nominees recommended by stockholders. The Nominating and
Compensation Committee is also responsible for considering and making
recommendations to the Board regarding the amount of fees paid to the Fund's
various service providers.
The Prior Board has established a Valuation Committee. The Valuation
Committee is authorized, empowered and directed to value the Fund's portfolio
investments pursuant to and in accordance with the methodology in the Fund's
registration statement and the Fund's 'Policy and Procedures for Valuing
Portfolio Investments and Securities.' The Valuation Committee is responsible
for determination of the value of securities held by the Fund for which market
quotations are not readily available. The Valuation Committee currently consists
of Messrs. Tobkin, Hootnick, and Michael Stewart, the Fund's acting chief
financial officer. During the Fund's fiscal year ended October 31, 2002, the
Valuation Committee met eight times.
The Prior Board met 12 times during the fiscal year ended October 31, 2002.
Each of the Directors then in office, other than Mr. Freudenthal, attended at
least 75% of the aggregate number of meetings of the Prior Board and the
Committees of the Prior Board on which he served.
COMPENSATION OF DIRECTORS AND CERTAIN OFFICERS
The following table sets forth information regarding compensation paid by or
on behalf of the Fund to each Director for the fiscal year ended October 31,
2002. Prior to June 19, 2002, all Fund expenses, including compensation to the
Fund's Directors and officers, were paid by the former Advisor. Following the
former Advisor's immediate termination of its advisory agreement with the Fund,
beginning on June 20, 2002, compensation to the Fund's Directors and officers
has been paid by the Fund. Directors who
10
are 'interested persons' and 'affiliated persons' (as that term is defined in
Section 2(a)(3) of the 1940 Act) of the Fund do not receive any compensation
from the Fund for their duties as Directors. In September 2002, the Prior Board
decreased the fees payable to each Independent Director of the Fund from a
$4,800 per month retainer fee and a fee of $10,000 per meeting for attendance at
Board meetings to a monthly retainer of $3,500, a fee of $6,000 per meeting for
attendance at in-person Board and Committee meetings and a fee of $3,000 for
telephonic Board and Committee meetings. At the Board meeting held on January
16, 2003, the independent Directors further decreased the fees payable to them
to a $2,500 per month retainer fee, and $1,000 for attendance in-person or
telephonically at any Board or Committee meeting. In the future, management may
recommend to the Board its consideration of an incentive compensation program
for the compensation of the Fund's independent Directors, officers and
employees.
COMPENSATION TABLE
FISCAL YEAR ENDED OCTOBER 31, 2002
PENSION
OR
RETIREMENT
BENEFITS ESTIMATED
ACCRUED ANNUAL TOTAL COMPENSATION
AGGREGATE AS PART BENEFITS FROM FUND AND
COMPENSATION OF FUND UPON FUND COMPLEX
NAME OF DIRECTOR FROM FUND EXPENSES RETIREMENT PAID TO DIRECTORS
---------------- --------- -------- ---------- -----------------
John M. Grillos(1), (2)................ N/A N/A N/A N/A
Peter S. Freudenthal(3)................ $0 N/A N/A $0
Harold E. Hughes, Jr.(4)............... $118,200 N/A N/A $118,200
Chauncey F. Lufkin(4).................. $115,200 N/A N/A $115,200
Larry J. Gerhard(4).................... $118,200 N/A N/A $118,200
---------
(1) An 'interested person,' as defined in the 1940 Act, because of his
affiliation with the Fund and the Fund's former Sub-Adviser.
(2) Mr. Grillos did not receive any compensation from the Fund for his services
as a Director. Compensation received by Mr. Grillos in his capacity as an
officer of the Fund is set forth in the following table.
(3) An 'interested person,' as defined in the 1940 Act, because of his
affiliation with the Fund's former Adviser. Mr. Freudenthal resigned as a
Director on June 17, 2002.
(4) Resigned as Director on January 16, 2003. From November 1, 2002 through
January 16, 2003 each of the Directors received $25,606.45 as compensation
for their services for that period.
11
The following table sets forth information regarding compensation for each
of the Fund's three highest-paid officers for the fiscal year ended October 31,
2002.
COMPENSATION TABLE
FISCAL YEAR ENDED OCTOBER 31, 2002
PENSION OR
RETIREMENT ESTIMATED
BENEFITS ANNUAL TOTAL COMPENSATION
AGGREGATE ACCRUED AS BENEFITS FROM FUND AND FUND
COMPENSATION PART OF FUND UPON COMPLEX PAID TO
NAME OF OFFICER, POSITION FROM FUND EXPENSES RETIREMENT DIRECTORS
------------------------- --------- -------- ---------- ---------
John M. Grillos(1)
Director and Chief Executive
Officer......................... $179,243 N/A N/A $179,243
Ann Oglanian(2)
Consultant;
Acting Chief Operating
Officer......................... $215,760 N/A N/A $215,760
Nino Marakovic(3)
Executive Vice President and
Secretary....................... $108,077 N/A N/A $108,077
---------
(1) Mr. Grillos received compensation directly from the Fund for the period
commencing June 20, 2002. The compensation received by Mr. Grillos from the
Fund for the period from June 20, 2002 through October 31, 2002 would have
amounted to an annualized compensation of $491,907, had Mr. Grillos been
employed by the Fund for the entire fiscal year at the rate of compensation
that he received as of October 31, 2002. Prior to June 19, 2002, Mr. Grillos
was compensated by the former Sub-Advisor.
(2) Ms. Oglanian commenced services as an acting officer of the Fund on
June 19, 2002. The compensation received by Ms. Oglanian for the period from
June 20, 2002 through October 31, 2002 would have amounted to an annualized
compensation of $592,123, had Ms. Oglanian been employed by the Fund for the
entire fiscal year at the same rate of compensation.
(3) Mr. Marakovic commenced services as an Officer of the Fund on June 19, 2002.
The compensation received by Mr. Marakovic for the period from June 20, 2002
through October 31, 2002 would have amounted to an annualized compensation
of $296,602, had Mr. Marakovic been employed by the Fund for the entire
fiscal year at the same rate of compensation. Prior to June 19, 2002,
Mr. Marakovic was compensated by the former Sub-Advisor.
-------------------
Mr. Del Biaggio commenced services as an officer of the Fund on October 1,
2002. During the period from October 1, 2002 through October 31, 2002 Mr. Del
Biaggio received compensation from the Fund in the amount of $29,167, which
would have amounted to an annualized compensation of $350,000, had Mr. Del
Biaggio been employed by the Fund for the entire fiscal year at the same rate of
compensation.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE. Section 16(a) of
the Securities Exchange Act of 1934 (the 'Exchange Act') and Section 30(h) of
the 1940 Act, as applied to the Fund, require the Fund's officers, Directors,
its former Advisor and former Sub-Advisor, affiliates of the former Advisor and
former Sub-Advisor, and persons who beneficially own more than 10% of a
registered class of the Fund's outstanding securities ('Reporting Persons') to
file reports of ownership of the Fund's securities and changes in such ownership
with the SEC and the NYSE. Such persons are required by SEC regulations to
furnish the Fund with copies of all such filings.
Based solely on its review of the copies of such forms received by it and
written representations from certain Reporting Persons that no year-end reports
were required for those persons, and except as provided in the following
sentence, the Fund believes that during the fiscal year ended October 31, 2002,
its Reporting Persons complied with all applicable filing requirements. Ms.
Oglanian and Mr. Marakovic, officers of the Fund, filed Form 3 Initial
Statements of Beneficial Ownership of the Fund's securities subsequent to the 10
day period specified in the Form.
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE FOR PROPOSALS 1, 2 AND 3, FOR
THE ELECTION OF THE FUND'S SEVEN NOMINEES TO THE FUND'S BOARD.
12
PROPOSAL 4: STOCKHOLDER PROPOSAL
STATEMENT OF RECEIPT OF STOCKHOLDER PROPOSAL
Millenco, L.P., 666 Fifth Avenue, New York, NY 10103-0899, has submitted the
following proposal (the 'Millenco Proposal') for inclusion in this Proxy
Statement. Such stockholder claims that it has owned shares of the Fund with a
market value of at least $2,000 continuously for at least one year and intends
to hold these shares continuously until the next stockholders' meeting.
THE BOARD AND THE FUND ACCEPT NO RESPONSIBILITY FOR THE ACCURACY OF EITHER
THE PROPOSAL OR THE STOCKHOLDER'S SUPPORTING STATEMENT. The full text of the
stockholder's proposal follows below.
RESOLVED: That the stockholders of meVC Draper Fisher Jurvetson Fund I, Inc.
('Company') recommend that the Company's Board of Directors take all steps
necessary to amend the Company's By-laws to include the provision set forth
below, granting stockholders the limited right to call special meetings of
stockholders, and take all steps necessary to enable the stockholders to vote to
approve the same amendment to the certificate of incorporation:
'Any stockholder owning at least 5% of the outstanding common stock of
the Company may demand that the Company's Chairman, Vice Chairman, Chief
Executive Officer or President call a special meeting of stockholders;
The demand shall be in writing, and shall state the purpose(s) of the
special meeting. Within five (5) business days of the Company's receipt of
the demand, the officer(s) upon whom the demand is made shall call such
meeting to be held at the Company's principal office in the United States,
on a date not less than ten (10) nor more than sixty (60) days after the
record date for such meeting. The record date shall be fixed as of a date
not less than fifteen (15) nor more than thirty (30) days after the date
such demand is received.'
SUPPORTING STATEMENT: This is an advisory proposal which means it is not
binding on the Company. The Certificate of Incorporation and By-Laws permit only
the Chairman, Vice Chairman, Chief Executive Officer or President of the Fund to
call Special Meetings of Stockholders. The Certificate of Incorporation and
By-Laws purport to grant stockholders the right to vote to make certain
amendments, but the provision depriving stockholders of the right to call a
special meeting to vote on such amendments makes the right almost meaningless.
At the 2002 Annual Meeting, stockholders voted not to renew the investment
advisory agreement with meVC Advisers, Inc. ('meVC Advisers') and the investment
sub-advisory agreement with Draper Fisher Jurvetson meVC Management Company, LLC
('Draper Advisers'). One of the key terms of the new agreements which the
beneficial stockholder proposing this resolution, Millenco, L.P., highlighted in
its solicitation in opposition to the agreements was that, if approved, the new
agreements could be renewed in the future by the Board of Directors without a
vote of stockholders, in contradiction to historical practice. However, after
the Company's stockholders rejected the new agreements, rather than recruit new
investment advisers and submit new investment advisory agreements to
stockholders for their approval, the Company's Board of Directors, all of whom
were appointed by principals of meVC Advisers and Draper Advisers, hired
executives and employees of meVC Advisers and Draper Advisers to manage the
Company internally.
A stockholder with 5% of the outstanding stock of the Company has a
sufficient stake in the Company that it should have the right to call a special
stockholders meeting. On the date Millenco is submitting this proposal, it owns
more than 5.0% of the Company's common stock, for which it has invested more
than $10 million. The Board of Directors, collectively, owns less than 0.1%.
* * * * *
13
BOARD'S RECOMMENDATION
THE BOARD OF DIRECTORS RECOMMENDS VOTING AGAINST THE PROPOSAL. The Board,
including all of the Independent Directors, has determined that the
stockholder's proposal would not be in the best interests of the Fund and its
stockholders. However, the Fund's Board believes that the Fund's stockholders
should have the ability to request a special meeting to propose changing
significant corporate policy. Therefore, the Fund's Board adopted a revision to
the Fund's By-laws to permit any stockholder or group of stockholders acting in
concert that represent 15% or more of the Fund's outstanding common stock to
request that the Board call a special meeting of stockholders. The revision to
the By-laws adopted by the Board does not require the Board to call a special
meeting of stockholders on each occasion that a qualifying stockholder or group
of stockholders requests the Board to do so. Rather, it requires that the Board
consider whether to call a special meeting of stockholders when requested by a
qualifying stockholder or group of stockholders to do so. The revision to the
By-laws, as adopted by the Board, is set forth below:
Any stockholders or group of stockholders acting in concert that owns at
least 15% of the outstanding common stock of the corporation may request
that the board of directors call a special meeting of stockholders;
The request shall be in writing and shall state the purpose(s) of the
special meeting. The board of directors shall consider the stockholder's
request at the next meeting of the board of directors following its receipt
of the stockholder's request. If the board of directors determines to call a
special meeting, within five (5) business days of the determination of the
board of directors, the board of directors shall call such a meeting on a
date that shall be not more than sixty (60) nor less than ten (10) days
after the record date of such meeting. Written notice of such meeting shall
be sent not more than (60) nor less than ten (10) days, or such greater time
period required by applicable law, before the date of such meeting to each
stockholder entitled to vote at such meeting. The record date for such
meeting shall be fixed by resolution of the board of directors on a date not
preceding the date of such resolution.
REQUIRED VOTE
The proposal is advisory only. Adoption of this Proposal 4 requires the
approval of a majority of the shares of the Fund present in person or by proxy
at the Meeting, if a quorum is present at the Meeting. Should the proposal be
approved by the stockholders, the Board will determine whether actions to
implement such proposal are advisable.
THE BOARD BELIEVES THAT THE STOCKHOLDER PROPOSAL IS NOT IN THE BEST
INTERESTS OF THE FUND; ACCORDINGLY, THE BOARD UNANIMOUSLY RECOMMENDS THAT THE
STOCKHOLDERS VOTE 'AGAINST' PROPOSAL NO. 4.
14
PROPOSAL 5: STOCKHOLDER PROPOSAL
STATEMENT OF RECEIPT OF STOCKHOLDER PROPOSAL
Karpus Investment Management, Inc. d/b/a Karpus Investment Management
('KIM'), 183 Sullys Trail, Pittsford, New York 14534, has submitted the
following proposal (the 'Karpus Proposal') for inclusion in this Proxy
Statement. Such stockholder claims that it has owned shares of the Fund with a
market value of at least $2,000 continuously for at least one year and intends
to hold these shares continuously until the next stockholders' meeting.
THE BOARD AND THE FUND ACCEPT NO RESPONSIBILITY FOR THE ACCURACY OF EITHER
THE PROPOSAL OR THE STOCKHOLDER'S SUPPORTING STATEMENT.
The full text of the stockholder's proposal follows below.
* * * * *
RESOLVED, that the stockholders of meVC Draper Fisher Jurvetson Fund I (MVC)
recommend that the Board of Directors take all steps necessary to conduct a
tender offer for 25 percent of the outstanding shares at an amount equal to 95
percent of the NAV in each year where the fund discount averages more than ten
percent; provided, however, that MVC need not take such action if the effect of
that action would be to impair the capital of MVC within the meaning of section
160 of the Delaware General Corporation Law.
SUPPORTING STATEMENT: KIM believes current Fund Management of MVC is not
making significant efforts to close the wide discount at which the fund trades.
From May 26, 2000 through August 30, 2002, the Fund traded at an average
discount of 34.95%.
KIM believes a reasonable way for stockholders to recognize their investment
value is through a tender offer of 25% of the outstanding shares. If this
occurred, stockholders would increase the value of tendered shares by 49.47%
(based on the August 30, 2002 NAV).
It is KIM's opinion the Fund failed to address the persistently wide
discount. As of September 17, 2002, the Fund held 72.6% of its assets in cash,
charging an exorbitant 2.5% fee. Current low short-term rates are causing a
negative return on almost 73% of the portfolio. If cash remains in the Fund, it
will dwindle away as it performs at rates below fees.
The Fund began trading on 5/26/00 at a market price of $18.99. On 9/17/02
the Fund closed at $7.76, a 59% LOSS. This abysmal performance occurred despite
the 70% cash position. While stockholders were economically harmed, management
collected over $7,000,000 in fees on cash balances (since inception).
Management consoles stockholders by incorrectly comparing performances of
MVC and the Nasdaq Index (CCMP) using uneven time periods. Management compares
the performance of CCMP from March 31, 2000 to July 31, 2002 (-70.76%) to the
performance of MVC from May 26, 2000 to July 31, 2002 (-60.48%). When
comparing CCMP performance from May 26, 2000 to July 31, 2002, the disparity
narrows significantly.
It is questionable that the Fund compares the 35% invested MVC to the
fully-invested CCMP. Assuming cash earned 0%, a fund that was 35% invested in
CCMP and 65% invested in cash during the time period from May 26, 2000 to July
31, 2002 would have lost only 21.1% while MVC lost 60.48%.
KIM believes conducting tender offers is a proven method for stockholders to
recognize their investment value. Considering the Fund currently trades at a
price lower than cash per share, a tender offer is a reasonable method to return
value to stockholders. With a 25% tender of MVC at 95% of NAV, stockholders
would recognize an immediate return of approximately 49.47% on tendered shares
(based on price of $7.85 and NAV of $12.35 as of 8/30/02). If these tender
offers are conducted yearly, stockholders will continue to increase their
investment value.
* * * * *
BOARD'S RECOMMENDATION
THE BOARD OF DIRECTORS RECOMMENDS VOTING AGAINST THE PROPOSAL. The Board,
including all of the Independent Directors, has determined that the
stockholder's proposal would not be in the best interests of the Fund and its
stockholders. The Board is not complacent about the discount of the Fund's stock
to its net asset value and has been considering methods to effectively address
this issue
15
in a prudent manner that takes into account the interests of all of the Fund's
stockholders, including the use of common stock repurchase programs, tender
offers for outstanding shares and other alternatives. However, the Board
believes that the stockholder's proposal is not in the best interests of the
Fund and its stockholders, because it may require the Fund to:
sell its holdings to raise cash to purchase tendered shares, at times when
the portfolio manager does not believe that the Fund will be able to
realize the full long-term value of the holdings, which could lead to a
diminished long-term net asset value for the fund;
incur increased transaction costs, which may be borne disproportionately by
long-term investors as the Fund sells its holdings to raise cash to
purchase tendered shares;
maintain cash reserves to purchase tendered shares, thereby reducing the
amount of the Fund's assets which may be invested; and
incur potentially higher expense ratios if the size of the Fund materially
decreases as a result of the proposed tender offers.
REQUIRED VOTE
The proposal is advisory only. Adoption of this Proposal 5 requires the
approval of a majority of the shares of the Fund present in person or by proxy
at the meeting, if a quorum is present at the Meeting. Should the proposal be
approved by the stockholders, the Board will determine whether actions to
implement such proposal are advisable.
THE BOARD BELIEVES THAT THE STOCKHOLDER PROPOSAL IS NOT IN THE BEST
INTERESTS OF THE FUND; ACCORDINGLY, THE BOARD UNANIMOUSLY RECOMMENDS THAT THE
STOCKHOLDERS VOTE 'AGAINST' PROPOSAL NO. 5.
INFORMATION REGARDING INDEPENDENT ACCOUNTANTS
The Board, upon recommendation of the Audit Committee, has selected PwC to
audit the financial statements of the Fund for the fiscal year ending October
31, 2003.
The aggregate fees billed by PwC for the fiscal year ended October 31, 2002
totalled $161,000 and were comprised of:
FINANCIAL INFORMATION SYSTEMS DESIGN
AUDIT FEES AND IMPLEMENTATION FEES ALL OTHER FEES
---------- ----------------------- --------------
$114,500 None $46,500
The Audit Committee of the Fund has reviewed information presented by the
Fund's independent accountants that addressed the matters set forth in
Independence Standards Board Standard No. 1, Independence Discussions with Audit
Committees, and considered whether the provision of non-audit services to the
Fund and of professional services to the Fund's former Advisor and to entities
controlling, controlled by, and under common control with, the Fund's former
advisor that provide services to the Fund is compatible with maintaining the
independence of the Fund's independent accountants.
Representatives from PwC are not expected to be present at the Meeting. The
Fund knows of no direct or indirect interest of PwC in the Fund.
ADDITIONAL INFORMATION
EXPENSES
The expense of preparation, printing and mailing of the enclosed WHITE proxy
card and accompanying Notice and Proxy Statement will be borne by the Fund. The
Fund will reimburse banks, brokers and others for their reasonable expenses in
forwarding proxy solicitation material to the beneficial owners of the shares of
the Fund. The Fund has retained MacKenzie Partners, Inc. ('MacKenzie') to assist
in the solicitation of proxies. MacKenzie will be paid a fee of $125,000 plus
significant out-of-pocket costs and expenses that are expected to be incurred in
the solicitation. MacKenzie will employ approximately 50 persons to solicit
stockholders. Supplementary solicitations may be made by mail, telephone,
telegraph or personal interview. Such solicitation may be conducted by, among
others, officers, Directors and employees of the Fund.
16
SOLICITATION AND VOTING OF PROXIES
Solicitation of proxies is being made primarily by the mailing of this Proxy
Statement with its enclosures on or about January 29, 2003. As mentioned above,
MacKenzie will be engaged to assist in the solicitation of proxies. As the
Meeting date approaches, certain stockholders of the Fund may receive a call
from a representative of MacKenzie if the Fund has not yet received their vote.
Any proxy given by a stockholder is revocable. A stockholder may revoke a
proxy at any time prior to its use by filing with the Fund a written revocation
or duly executed proxy bearing a later date. In addition, any stockholder who
attends the Meeting in person may vote by ballot at the Meeting, thereby
canceling any proxy previously given.
BENEFICIAL OWNERSHIP; CHANGE OF CONTROL
To the best of the Fund's knowledge, based upon filings made with the SEC,
as of January 16, 2003, the only beneficial owner of more than five percent of
the voting securities of the Fund is:
NAME AND ADDRESS OF NUMBER OF SHARES
TITLE OF CLASS BENEFICIAL OWNER BENEFICIALLY OWNED PERCENT OF CLASS
-------------- ---------------- ------------------ ----------------
Common Stock................... Millenco, L.P.
666 Fifth Avenue
New York, New York 10103 1,099,500 6.75%
According to reports on Schedule 13D filed with the SEC on June 4, 2002,
August 28, 2002 and January 16, 2003, by Millenco, Millenco acquired an
aggregate of 1,099,500 shares of common stock of the Fund. The report filed on
August 28, 2002 indicates that 1,049,500 of such shares were acquired by
Millenco, the source of the funds used by Millenco to purchase these shares was
investment capital, and the amount of the funds used to purchase such shares
aggregated approximately $10,849,217 (exclusive of commissions).
STOCKHOLDER PROPOSALS
If a stockholder intends to present a proposal at the Annual Meeting of
Stockholders of the Fund to be held in 2004 and desires to have the proposal
included in the Fund's proxy statement and form of proxy for that meeting, the
stockholder must deliver the proposal to the Secretary of the Fund at the office
of the Fund, 3000 Sand Hill Road, Building 1, Suite 155, Menlo Park, California
94025, and such proposal must be received by the Secretary no later than October
1, 2003.
Stockholders wishing to present proposals at the Annual Meeting of
Stockholders of the Fund to be held in 2004 must send written notice of such
proposals to the Secretary of the Fund at the office of the Fund, 3000 Sand Hill
Road, Building 1, Suite 155, Menlo Park, California 94025, and such notice must
be received by the Secretary no sooner than November 30, 2003 and no later than
December 30, 2003 in the form prescribed in the Fund's By-Laws.
OTHER BUSINESS
The Board knows of no business to be brought before the Meeting other than
as set forth above. If, however, any other matters properly come before the
Meeting, it is the intention of the persons named on the enclosed WHITE proxy
card to vote such proxies on such matters in accordance with their best
judgment.
By Order of the Board of Directors,
Nino Marakovic
Nino Marakovic
Secretary
3000 Sand Hill Road, Building 1, Suite 155
Menlo Park, California 94025
January 29, 2003
17
ADOPTED JANUARY 16, 2002
EXHIBIT A
CHARTER OF THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
OF MVC CAPITAL
The Board of Directors of each investment company listed on Appendix A
hereto has adopted the following audit committee charter:
I. COMPOSITION OF THE AUDIT COMMITTEE
The Audit Committee shall be composed of at least three Directors:
(a) each of whom shall not be an 'interested person' of the Fund, as
defined in Section 2(a)(19) of the Investment Company Act of 1940,
as amended, or an 'affiliated person' of the Fund, as described in
Section 10A(m) of the Securities Exchange Act of 1934, as amended
(the '1934 Act');
(b) each of whom shall not accept any consulting, advisory, or other
compensatory fee from the Fund (other than fees for serving on the
Board of Directors or any committee thereof) or have any other
relationship to the Fund that may interfere with the exercise of
such person's independence from the Fund and Fund management;
(c) each of whom shall otherwise satisfy the applicable independence
requirements for any stock exchange or market quotation system on
which Fund shares are listed or quoted;
(d) each of whom shall be financially literate, as such qualification is
interpreted by the Board of Directors in its business judgment, or
shall become financially literate within a reasonable period of time
after his or her appointment to the Audit Committee; and
(e) at least one of whom shall have accounting or related financial
management expertise as the Board of Directors interprets such
qualification in its business judgment.
The Audit Committee shall determine whether at least one member of the Audit
Committee is a 'financial expert' as defined in rules promulgated by the U.S.
Securities and Exchange Commission (the 'SEC') under the Sarbanes-Oxley Act of
2002.
II. PURPOSES OF THE AUDIT COMMITTEE
The Audit Committee, in its capacity as a committee of the Board of
Directors, is directly responsible for the appointment, compensation, and
oversight of the Fund's independent accountants, including the resolution of
disagreements regarding financial reporting between Fund management and such
independent accountants. The Audit Committee should report regularly to the
Board of Directors with respect to the matters described in Section III of this
Audit Committee Charter. The Fund's independent accountants report directly to
the Audit Committee. In addition, the Audit Committee shall consider and
recommend to the full Board of Directors for its approval the compensation to be
paid to each of the executive officers of the Fund.
III. RESPONSIBILITIES AND DUTIES OF THE AUDIT COMMITTEE
The policies and procedures of the Audit Committee shall remain flexible to
facilitate its ability to react to changing conditions and to generally
discharge its functions. The following listed responsibilities describe areas of
attention in broad terms.
To carry out its purposes, the Audit Committee shall have the following
responsibilities and duties:
(a) upon submission of an application form by the Fund's independent
accountants to the Public Company Accounting Oversight Board, to
request: (i) a copy of such application form; (ii) any material
amendments to such application form; and (iii) the written findings
A-1
of the Public Company Accounting Oversight Board in connection with
that Board's inspection of the Fund's independent accountants;
(b) to preapprove all auditing services to be provided to the Fund by
the Fund's independent accountants(1);
(c) to preapprove all non-auditing services, including tax services, to
be provided to the Fund by the Fund's independent accountants in
accordance with the 1934 Act; provided, however, that the
preapproval requirement with respect to the provision of
non-auditing services to the Fund by the Fund's independent
accountants may be waived by the Audit Committee under the
circumstances described in the 1934 Act(2);
(d) to ensure that the Fund's independent accountants submit on a
periodic basis to the Audit Committee a formal written statement
delineating all relationships between such independent accountants
and the Fund, consistent with Independence Standards Board Standard
No. 1, to actively engage in a dialogue with the Fund's independent
accountants with respect to any disclosed relationships or services
that may affect the objectivity and independence of such independent
accountants and, if deemed appropriate by the Audit Committee, to
recommend that the Board of Directors take appropriate action in
response to the report of such independent accountants to satisfy
itself of the independence of such independent accountants;
(e) to receive and consider specific representations from the Fund's
independent accountants with respect to the independence of such
accountants, audit partner rotation, and conflicts of interest
described in Section 10A(1) of the 1934 Act, and to consider whether
the provision of any non-audit services to the Fund by the Fund's
independent accountants as described in Section III(c) of this Audit
Committee Charter is compatible with maintaining the independence of
those accountants;
(f) to review arrangements for annual and special audits and the scope
of such audits with the Fund's independent accountants;
(g) to review and discuss the Fund's audited financial statements with
Fund management;
(h) to discuss with the independent accountants those matters required
by Statement of Accounting Standards Nos. 61 and 90 relating to the
Fund's financial statements, including, without limitation, any
adjustment to such financial statements recommended by such
independent accountants, or any other results of any audit;
(i) to cause to be prepared and to review and submit any report,
including any recommendation of the Audit Committee, required by
SEC Rules to be included in the Fund's annual proxy statement;
(j) to review legal and regulatory matters presented by counsel and the
Fund's independent accountants that may have a material impact on
the Fund's financial statements;
(k) to establish and administer policies and procedures relating to: (i)
the hiring of employees or former employees of the Fund's
independent accountants; and (ii) the resolution of any
disagreements between Fund management and the Fund's independent
accountants regarding accounting and/or financial reporting policies
and procedures;
---------
(1) The Audit Committee may delegate to one or more designated members of the
Audit Committee the authority to grant such preapprovals; provided, however,
that the Audit Committee shall not delegate preapproval of the audit
required by the 1934 Act. The decisions of any member or members of the
Audit Committee to whom such authority has been given shall be reported to
the full Audit Committee at each of its scheduled meetings.
(2) The Audit Committee may delegate to one or more designated members of the
Audit Committee the authority to grant such preapprovals. The decisions of
any member or members of the Audit Committee to whom such authority has been
given shall be reported to the full Audit Committee at each of its scheduled
meetings.
A-2
(l) to consider with the Fund's independent accountants their comments
with respect to the quality and adequacy of the Fund's accounting
and financial reporting policies, practices and internal controls
and management's responses thereto, including, without limitation,
the effect on the Fund of any recommendation of changes in
accounting principles or practices by management or the independent
accountants;
(m) to receive and consider reports from the Fund's independent
accountants regarding: (i) all critical accounting policies and
practices to be used; (ii) all alternative treatments of financial
information within generally accepted accounting principles that
have been discussed with Fund management, ramifications of the use
of such alternative disclosures and treatments, and the treatment
preferred by the independent accountants; and (iii) other material
written communications between the independent accountants and Fund
management, such as any management letter or schedule of unadjusted
differences;
(n) to receive reports from the principal executive officer and the
principal financial officer, or persons performing similar
functions, regarding: (i) all significant deficiencies in the design
or operation of Fund internal controls that could adversely affect
the Fund's ability to record, process, summarize, and report
financial data and have identified for Fund's independent
accountants any material weaknesses in internal controls; (ii) any
fraud, whether or not material, that involves Fund management or
other employees who have a significant role in the Fund's internal
controls; and (iii) whether or not there were significant changes in
the Fund's internal controls or in other factors that could
significantly affect the Fund's internal controls subsequent to the
date of their evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses;
(o) to establish procedures for: (i) the receipt, retention, and
treatment of complaints received by the Fund regarding accounting,
internal accounting controls, or auditing matters; and (ii) the
confidential, anonymous submission of concerns regarding
questionable accounting or auditing matters;
(p) to discuss with Fund management and the Fund's independent auditors
policies with respect to risk assessment and risk management and the
quality and adequacy of the Fund's internal controls and processes
that could materially affect the Fund's financial statements and
financial reporting;
(q) to assist the Fund, if necessary, in preparing any written
affirmation or written certification required to be filed with any
stock exchange on which Fund shares are listed;
(r) to review and reassess the adequacy of this Charter on an annual
basis and recommend any changes to the Board of Directors; and
(s) to perform such other functions consistent with this Audit Committee
Charter, the Fund's Articles of Incorporation, the Fund's By-laws,
and applicable law, as the Audit Committee or the Board of Directors
deems necessary or appropriate.
In fulfilling their responsibilities under this Audit Committee Charter, it
is recognized that members of the Audit Committee are not full-time employees of
the Fund. As such, it is not the duty or responsibility of the Audit Committee
or its members to conduct 'field work' or other types of auditing or accounting
reviews or procedures. Each member of the Audit Committee shall be entitled to
rely on (i) the integrity of those persons and organizations inside and outside
the Fund from which the Audit Committee receives information and (ii) the
accuracy of the financial and other information provided to the Audit Committee
by such persons or organizations, absent actual knowledge to the contrary (which
actual knowledge shall be promptly reported to the Board of Directors).
Fund management is responsible for maintaining appropriate systems for
accounting. The Fund's independent accountants are responsible for conducting a
proper audit of the Fund's financial statements and are ultimately accountable
to the Audit Committee. The Audit Committee has the ultimate authority and
responsibility to select (subject, if applicable, to shareholder approval) and
A-3
evaluate the Fund's independent accountants, to determine the compensation of
the Fund's independent accountants and, where appropriate, to replace the Fund's
independent accountants.
IV. MEETINGS
The Audit Committee shall meet regularly with the Fund's independent
accountants (outside the presence of Fund management) and at least once annually
with the representatives of Fund management responsible for the financial and
accounting operations of the Fund. The Audit Committee shall hold special
meetings at such times as the Audit Committee believes appropriate. Members of
the Audit Committee may participate in a meeting of the Audit Committee by means
of conference call or similar communications equipment by means of which all
persons participating in such meeting can hear each other.
V. ASSISTANCE FROM FUND MANAGEMENT; AUTHORITY TO ENGAGE ADVISERS; FUNDING
The appropriate officers of the Fund shall provide or arrange to provide
such information, data and services as the Audit Committee may request. The
Audit Committee shall have the power and authority to take all action it
believes necessary or appropriate to discharge its responsibilities, including
the power and authority to retain independent counsel and other advisers. The
Fund shall provide for appropriate funding, as determined by the Audit Committee
as a committee of the Board of Directors, for payment of compensation to: (i)
the Fund's independent accountants and (ii) any advisers employed by the Audit
Committee under this Section V.
Dated: January 16, 2003
A-4
If you have any questions concerning this Proxy Statement or
need help voting your shares, please call:
[MACKENZIE PARTNERS LOGO]
105 Madison Avenue
New York, New York 10016
email: proxy@mackenziepartners.com
Call collect: (212) 929-5500
OR TOLL FREE: (800) 322-2885
Facsimile: (212) 929-0308
APPENDIX 1
WHITE PROXY
meVC DRAPER FISHER JURVETSON FUND I, INC.
(D/B/A MVC CAPITAL)
THIS PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS -- FEBRUARY 28, 2003
The undersigned hereby appoints William Del Biaggio III and Franklin D.
Loffer III and each of them, the proxy holders of the undersigned, with power of
substitution to each of them, to vote all shares of the common stock of MVC
Capital (the 'Fund') which the undersigned is entitled to vote at the Annual
Meeting of Stockholders of the Fund to be held at Quadrus Conference Center, QCC
Room, 2400 Sand Hill Road, Menlo Park, California 94025 on February 28, 2003 at
9:00 a.m. PST, and at any adjournment or postponement thereof. By signing this
proxy card on the reverse side, the undersigned authorizes the appointed proxy
holders to vote in their discretion on any other business which may properly
come before the meeting or any adjournments or postponements thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED. IF
NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR MANAGEMENT'S PROPOSALS 1, 2
AND 3, AND AGAINST STOCKHOLDER PROPOSALS 4 AND 5.
(Continued and to be signed on the reverse side)
--------------------------------------------------------------------------------
FOLD AND DETACH HERE
PLEASE VOTE, DATE AND SIGN ON REVERSE AND
RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
WHITE PROXY
THE BOARD OF DIRECTORS RECOMMENDS VOTING FOR PROPOSALS 1, 2, AND 3.
withhold
FOR ALL from all FOR ALL
nominees nominees except
(1) To elect two directors to serve for
the remainder of the term to expire
at the Annual Meeting of
Stockholders to be held in 2004;
John M. Grillos Michael H. Jordan
withhold
FOR ALL from all FOR ALL
nominees nominees except
(2) To elect two directors to serve for
the remainder of the term to expire
at the Annual Meeting of
Stockholders to be held in 2005;
Laurence R. Hootnick Peter J. Locke
FOR AGAINST ABSTAIN
(3) To elect three directors to serve
until the Annual Meeting of
Stockholders to be held in 2006;
Frederick M. Hoar Vincent H. Tobkin
James K. Sims
Note: If you do not wish your shares voted "FOR" a particular nominee, mark the
"FOR ALL EXCEPT" box and strike a line through the name(s) of the nominee(s).
Your shares will be voted for the remaining nominee(s)
The appointed proxy holders will vote in their discretion on any other business
as may properly come before the meeting or any adjournments or postponements
thereof.
THE BOARD Of DIRECTORS RECOMMENDS VOTING AGAINST PROPOSALS 4 AND 5.
FOR AGAINST ABSTAIN
(4) To consider a stockholder proposal
to recommend that the Fund's
By-laws be amended to permit any
stockholder owning at least five
percent of the outstanding common
stock of the Fund to demand that
the Fund's Chairman, Vice Chairman,
Chief Executive Officer, or
President call a special meeting of
stockholders:
FOR AGAINST ABSTAIN
(5) To consider a stockholder proposal
to recommend that the Board of
Directors conduct a tender offer
for 25 percent of the outstanding
shares of the Fund at an amount
equal to 95 percent of the Fund's
net asset value in any year where
the Fund's discount averages over
10 percent:
Date
----------------------------------------
Stockholder sign here
----------------------------------------
Co-owner sign here
----------------------------------------
Title
----------------------------------------
If shares are held by an individual,
sign your name exactly as it appears on
this card. If shares are held jointly,
either party may sign, but the name of
the party signing should conform exactly
to the name shown on this proxy card. If
shares are held by a corporation,
partnership or similar account, the name
and the capacity of the individual
signing the proxy card should be
indicated unless it is reflected in the
form of registration.
FOLD AND DETACH HERE
IMPORTANT:
PLEASE SIGN, DATE, AND RETURN THIS PROXY CARD
IN THE ENCLOSED ENVELOPE!
STATEMENT OF DIFFERENCES
------------------------
The dagger symbol shall be expressed as................................ 'D'
The double dagger symbol shall be expressed as......................... 'DD'