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EXHIBIT 99B
INFORMATION STATEMENT
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SPECIAL DIVIDEND CONSISTING OF
INDIRECT INTEREST IN MVP.COM STOCK
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WE ARE SENDING THIS INFORMATION STATEMENT TO ALL HOLDERS OF OUR COMMON STOCK TO
PROVIDE INFORMATION ABOUT OUR DISTRIBUTION OF A SPECIAL, NON-CASH DIVIDEND THAT
CONSISTS OF AN INDIRECT INTEREST IN A PORTION OF OUR STOCK OF MVP.COM, INC. IN
PREPARATION FOR THIS SPECIAL DIVIDEND, WE RECENTLY TRANSFERRED OUR ENTIRE
INTEREST IN MVP.COM (WHICH WE BELIEVE CURRENTLY REPRESENTS APPROXIMATELY 3% OF
ITS FULLY DILUTED COMMON STOCK) TO A LIMITED LIABILITY COMPANY THAT WE FORMED
FOR THE SPECIFIC PURPOSE OF HOLDING THAT INTEREST PENDING LIQUIDATION. THE NAME
OF THAT NEW LIMITED LIABILITY COMPANY IS "JWG LIQUIDATING COMPANY LLC". IN
EXCHANGE FOR OUR INTEREST IN MVP.COM, JWG LIQUIDATING COMPANY ISSUED TO US
11,400,000 OF ITS UNITS OF MEMBERSHIP INTEREST, WHICH REPRESENTS THE ENTIRE
OWNERSHIP OF THAT LIMITED LIABILITY COMPANY. WE WILL DISTRIBUTE, AS A SPECIAL
DIVIDEND, NO LESS THAN 75% OF THOSE UNITS TO PERSONS WHO HOLD SHARES OF OUR
COMMON STOCK AS OF NOVEMBER 10, 2000, WHICH IS THE RECORD DATE FOR THE SPECIAL
DIVIDEND.
In the distribution of the special dividend, each shareholder will receive
one unit for each share of our common stock owned on the record date. The
distribution is deemed to be made, and will be effective for all purposes, as of
the record date, although confirmation of the results of the distribution will
be provided thereafter. YOU DO NOT NEED TO PAY ANY CONSIDERATION, OR SURRENDER
OR EXCHANGE YOUR JWGENESIS COMMON STOCK, IN ORDER TO RECEIVE THE SPECIAL
DIVIDEND.
In reviewing this Information Statement, you should note the following:
- You will receive the distribution of the units only if you own shares of
our common stock at the close of business on the record date.
- We currently expect the dividend to result in taxable income to our
shareholders of $0.30 per share.
- We will pay this dividend whether or not our planned merger with First
Union is completed.
- The units are restricted as to transfer, and are not and will not be
listed for trading on any stock exchange or Nasdaq.
- There is no public trading market for MVP.com stock. Accordingly, there
are no market prices on which to estimate the value of the MVP.com stock
we owned and transferred to JWG Liquidating Company, and the units may
prove to have little or no value.
- Holders of units will have very limited ability to influence the
management of JWG Liquidating Company. In addition, JWG Liquidating
Company and its managing members do not have, and will not be able to
exercise, any control over the operations, strategies, plans, or other
affairs of MVP.com.
- WE ARE NOT ASKING YOU FOR A PROXY, AND YOU ARE REQUESTED NOT TO SEND US A
PROXY. YOUR VOTE IS NOT NECESSARY FOR THE SPECIAL DIVIDEND.
- Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of the distribution of units in JWG
Liquidating Company, passed upon the fairness or merits of the
distribution, or passed upon the accuracy or adequacy of any information
contained in this Information Statement.
The date of this Information Statement is October 25, 2000.
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FORWARD-LOOKING STATEMENTS
This Information Statement contains statements that are not based on
historical fact, including words such as "believes", "anticipates", "intends",
"expects", and similar words. These statements constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. Such forward-looking statements involve known and unknown risks,
uncertainties, and other factors that may cause actual results, events, or
developments to be materially different from any future results, events, or
developments expressed or implied by such forward-looking statements. Given
these uncertainties, you should not place undue reliance on such forward-looking
statements. We disclaim any obligation to update any such factors or to announce
publicly any revisions to any of the forward-looking statements contained in
this Information Statement to reflect future results, events, or developments.
LIMITED SOURCES OF INFORMATION ABOUT MVP.COM, INC.
We were (and now JWG Liquidating Company is) a passive investor and small
minority shareholder of MVP.com. Neither of us, nor any of our affiliates,
controls MVP.com. Because MVP.com is a private company, it does not file reports
with any governmental body regarding its business, financial condition, results
of operations, or prospects. Accordingly, unless indicated otherwise, all of the
information included or referenced in this Information Statement that relates to
the business, operations, management, or strategy of MVP.com is based on sources
of publicly-available information, including information available from
MVP.com's website, http://www.mvp.com, and the limited amount of other materials
made available to us by MVP.com. It is likely that these sources are not
complete as to all information that you might wish to have or consider to be
material about MVP.com and its business and prospects. Moreover, while we
believe the information we derived from those sources and have included in this
Information Statement is accurate, we have no ability to verify the accuracy of
that information. Actual descriptions, practices, and results of MVP.com may
vary from that described in this Information Statement, and such differing
descriptions, practices, and results could be material. If any such material
difference were adverse to MVP.com, it could adversely affect the value of its
capital stock, which would adversely affect the value of the units in JWG
Liquidating Company.
TABLE OF CONTENTS
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THE SPECIAL DIVIDEND........................... 3
General; What Shareholders Are Receiving..... 3
Background and Reasons for the
Distribution............................... 4
The Merger Will Not Affect the
Distribution............................... 5
This Is Not a Proxy Solicitation............. 5
Restrictions on Transfers of Units........... 5
Possible Issuance of Additional Units to
Others..................................... 5
Interests of the Managing Members of JWG
Liquidating Company........................ 6
No Shareholder Approval or Appraisal
Rights..................................... 6
Federal Income Tax Aspects................... 6
DESCRIPTION OF JWG LIQUIDATING COMPANY LLC..... 10
Special Purpose and Limited Business......... 10
Ownership of MVP.com Stock................... 11
No Formal Valuation of Units or MVP.com
Stock...................................... 11
Agreements with MVP.com...................... 11
Likely Inability to Prevent Percentage
Dilution................................... 13
Management and Authority of Managing
Members.................................... 13
Limitation of Liability and Indemnification
of Managing Members........................ 14
No Control Over the Operations of MVP.com.... 14
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DESCRIPTION OF MVP.COM, INC.................... 16
Sources of Information About MVP.com......... 16
Background and General....................... 16
Likelihood of Typical Risks and Challenges... 17
Strategic Partners........................... 17
Directors and Officers....................... 18
Description of MVP.com's Capital Stock....... 21
Security Interests of Record In MVP.com's
Assets..................................... 23
OWNERSHIP OF UNITS BY CERTAIN PERSONS.......... 24
DESCRIPTION OF UNITS........................... 25
General...................................... 25
Limited Liability of Members and Other
Holders of Units........................... 25
Allocation of Profits and Losses;
Distributions.............................. 25
Dissolution and Liquidation.................. 25
Voting....................................... 26
Transfer Restrictions........................ 27
Non-Member Transferees....................... 27
No Certificates.............................. 27
WHERE YOU CAN FIND MORE INFORMATION............ 28
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ANNEX A--JWG Liquidating Company LLC Amended and Restated Certificate of
Formation
ANNEX B--JWG Liquidating Company LLC Operating Agreement and Plan of
Liquidation
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THE SPECIAL DIVIDEND
GENERAL; WHAT SHAREHOLDERS ARE RECEIVING
We are paying a special, non-cash dividend to all holders of our common
stock as of the close of business on November 10, 2000, which has been set as
the record date for the distribution. The dividend consists of units of
membership interest in JWG Liquidating Company LLC, which now owns the stock in
MVP.com that we previously owned, and in the aggregate will constitute at least
75% of the total outstanding units of JWG Liquidating Company.
For every share of our common stock you own on the record date, you will
receive one unit of JWG Liquidating Company. We currently expect the dividend to
result in taxable income to our shareholders of $0.30 per share. However, the
actual amount of taxable income to our shareholders will be determined as of the
record date for the distribution, and could be greater or less than our current
$0.30 per share estimate. See "Federal Income Tax Aspects" on page 6 for
additional information on the tax effects of the special dividend for
shareholders.
YOU ARE NOT REQUIRED TO PAY ANY CASH OR OTHER CONSIDERATION FOR, OR TO
SURRENDER OR EXCHANGE SHARES OF OUR COMMON STOCK IN ORDER TO RECEIVE, UNITS OF
JWG LIQUIDATING COMPANY AS A DIVIDEND IN THE DISTRIBUTION.
As described in more detail under "Description of the Units" on page 24,
units of membership interest in JWG Liquidating Company represent the equity
ownership of it, and thus the right to participate in and realize any value
produced by its assets. The units are analogous, as a matter of equity
ownership, to shares of stock in a corporation. There is only one class of units
in JWG Liquidating Company, and our shareholders receiving the special dividend
will own at least 75% of them.
Because the shares of MVP.com stock (and related contractual rights
described below) that we transferred to JWG Liquidating Company are the only
assets of JWG Liquidating Company (other than $150,000 of cash we also
transferred to cover miscellaneous operating expenses), the current and any
future value of the units is entirely dependent upon the business, operations
and prospects of MVP.com. As a result, the units may prove to have little or no
value. Moreover, as emphasized throughout this Information Statement, neither we
nor JWG Liquidating Company, nor any of our affiliates, have or expect to have
any control or influence over those matters.
The units of JWG Liquidating Company will not be listed for trading on any
exchange or Nasdaq, and will be subject to other significant transfer
restrictions. If MVP.com later chooses to engage in a public offering, sells
substantially all of its stock or assets, or otherwise approves a liquidating
distribution by JWG Liquidating Company, the shares of MVP.com stock, or the
consideration received for that stock in an acquisition transaction, would be
distributed directly to the holders of the units pro-rata based on the number of
units owned, or the shares would be sold and the resulting net proceeds so
distributed. It is the intention of JWG Liquidating Company to effect a
liquidating distribution as promptly as permitted under contractual agreements
with MVP.com that currently restrict its ability to dispose of the MVP.com
stock. In the meantime, holders of units may not be able to realize any cash or
other value from the units, if any, for an extended period of time. In addition,
although holders of units will have certain limited voting rights with respect
to matters submitted to a vote of the members of JWG Liquidating Company, they
will not have any voting rights with respect to matters submitted to the holders
of stock of MVP.com.
The distribution of the special dividend to each shareholder of record is
deemed to be made, and will be effective for all purposes, as of the close of
business on November 10, 2000, although confirmation of the results of the
distribution may be provided thereafter. No certificates representing the units
are proposed to be issued to holders of units, in light of the substantial
restrictions imposed on the transfer of units, and so no delivery of a
certificate or other instrument is necessary to establish a shareholder's
ownership of units received in the distribution.
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BACKGROUND AND REASONS FOR THE DISTRIBUTION
In November 1999, we acquired shares of Series A Preferred Stock of MVP.com.
We also entered into an investor rights agreement that entitled us to purchase
additional shares of preferred stock of MVP.com in connection with certain
future sales of stock by it. In February 2000, we exercised that right and
purchased additional shares of MVP.com preferred stock in order to lessen the
percentage dilution of the MVP.com stock we already owned.
As a result of those transactions, and after reflecting internal
transactions, we held an aggregate of 1,236,379 shares of MVP.com's Series A
Preferred Stock and 117,388 shares of MVP.com's Series C Preferred Stock, for an
aggregate investment of $2.7 million. Both series of preferred stock are
convertible into shares of MVP.com common stock on a one-for-one basis.
From time to time, we have reviewed the potential effect on our shareholder
value of a direct or indirect distribution to our shareholders of our interest
in MVP.com. We were especially concerned about the potential adverse tax
consequences to us and our shareholders if there were to be a significant
increase in the value of the MVP.com stock while it was still held by us. If
there were such an increase while we held the stock, then upon any subsequent
distribution of the stock to our shareholders we would recognize, at the
corporate level, a substantial taxable gain equal to any excess of the fair
market value of the MVP.com stock at that time over our tax basis. Moreover, to
the extent of our earnings and profits, our shareholders would recognize taxable
dividend income equal to the fair market value of the MVP.com stock distributed.
Depending upon the amount of any increase in the value of MVP.com stock
distributed at that later date, this "double tax" could be an extremely high
cost.
We believed, therefore, that it would be beneficial to us and our
shareholders to seek to avoid or reduce that "double tax" result by making a
distribution of the MVP.com interest to our shareholders at the earliest
occasion practicable.
In April 2000, we began discussions with First Union Corporation concerning
a possible business combination. In connection with our agreement dated
August 31, 2000 to merge with First Union, we agreed to distribute our interest
in MVP.com prior to the consummation of the merger. Our board of directors, in
voting to approve the merger, further determined that we should proceed with a
distribution to our shareholders of the substantial part of our interest in
MVP.com, whether or not the proposed merger with First Union is consummated.
A direct distribution of our interest in MVP.com to our shareholders would
require the approval of MVP.com pursuant to the investor rights agreement and
other similar documents among JWGenesis, MVP.com, and several of MVP.com's
investors. MVP.com would not grant such approval for several reasons, including
the fact that a direct distribution to our public base of shareholders might
cause MVP.com to become subject to the registration and other reporting
requirements of the Securities Exchange Act of 1934 prior to the time that
MVP.com chooses to become subject to those requirements. In order to avoid that
problem and achieve the result we desired for our shareholders, we decided to
form JWG Liquidating Company, transfer to it our interest in MVP.com in exchange
for all its ownership interests, and distribute to our shareholders ownership
interests in JWG Liquidating Company. We effected the exchange pursuant to the
terms of a Stock Transfer Agreement, dated October 20, 2000, among us, our
wholly owned subsidiary JWGenesis Financial Services, Inc. (in whose name our
MVP.com stock had been issued), and JWG Liquidating Company. We received
11,400,000 units of membership interest in JWG Liquidating Company, constituting
all of its outstanding membership interest. Of these units, we are distributing
approximately 75% as a special dividend directly to our shareholders on the
basis described above of one unit for each share of our common stock as of the
close of business on the record date.
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THE MERGER WILL NOT AFFECT THE DISTRIBUTION
On August 31, 2000, we entered into an agreement and plan of merger with
First Union. If that agreement is approved by our shareholders, and the other
conditions to closing are satisfied or waived, JWGenesis will become a wholly
owned subsidiary of First Union, and our shareholders at the time the merger is
completed will receive between $10 and $12 per share in cash. We expect that
merger to be consummated in January 2001, although we can provide no assurance
of whether or when it will occur. Regardless of whether the merger agreement is
approved by our shareholders, and whether the merger is completed, we will
proceed with distribution of approximately 75% of the units of JWG Liquidating
Company in payment of the special dividend as described in this Information
Statement.
THIS IS NOT A PROXY SOLICITATION
THIS INFORMATION STATEMENT IS NOT A SOLICITATION OF A PROXY IN CONNECTION
WITH ANY MEETING. PLEASE DO NOT SEND US A PROXY. Your vote is not necessary for
the special dividend.
We are scheduling a special meeting of our shareholders for them to consider
and vote on the merger agreement we have signed with First Union. When we have
scheduled the special meeting, we will provide notice about it, along with a
proxy statement providing detailed information about the proposed merger, to
solicit votes by our shareholders at that time for approval of the merger
agreement.
RESTRICTIONS ON TRANSFERS OF UNITS
The units received in the distribution will not be registered under the
Securities Act of 1933, or the securities laws of any state. There will be no
public or other market for the units, and the units will not be listed for
trading on any exchange or Nasdaq. In addition, the Amended and Restated
Certificate of Formation and the Operating Agreement and Plan of Liquidation of
JWG Liquidating Company, which are its governing documents, impose substantial
restrictions on the transfer of units. As a result, the units may not be resold
or otherwise transferred unless the sale is registered under federal and
applicable state securities laws, or an exemption from such registration is
available, and unless the proposed transfer is permitted under the terms of
those governing documents. Consequently, you might not be able to sell your
units, or otherwise realize value from them, in the event of an emergency or for
any other reason.
These transfer restrictions are described in further detail under
"Description of Units--Transfer Restrictions" on page 26, and in the Amended and
Restated Certificate of Formation and Operating Agreement and Plan of
Liquidation of JWG Liquidating Company, copies of which are attached as Annexes
A and B, respectively. We encourage you to review carefully these documents in
assessing the impact of the distribution.
POSSIBLE ISSUANCE OF ADDITIONAL UNITS TO OTHERS
We have reserved the remaining membership units (approximately 2,800,000
units) of JWG Liquidating Company (approximately 25%) for possible issuance to
holders of options and warrants for the purchase of our common stock, in order
to obtain their consent to the cancellation of those securities (which
cancellation is one of the conditions to First Union's completion of the
merger), and to certain of our registered representatives in lieu of options
that would otherwise be granted to them at the end of fiscal year 2000 under our
Broker Stock Option Program. If the proposed merger with First Union is
completed, any portion of that reserved amount that is not used for these
purposes will be cancelled, which would result in a pro-rata increase in the
percentage amount of units owned by the shareholders who receive the special
dividend described in this Information Statement. This results automatically
from there being less total units outstanding following such a cancellation. If
the merger is not completed, we may retain the unused, reserved units for other
corporate purposes, or they may be cancelled.
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Under the terms of JWG Liquidating Company's Operating Agreement and Plan of
Liquidation, up to 600,000 additional units may be issued by it only upon the
unanimous vote of its managing members, following its receipt of a written
notice from JWGenesis that additional units are required by it to accomplish a
corporate purpose that has been expressly approved by the outside members of
JWGenesis' board of directors. Assuming no additional units are issued pursuant
to that provision (and none is expected), the shareholders of JWGenesis as of
the record date for the special dividend will own not less than 75% of the
units, and their ownership may increase if any portion of the 25% amount
reserved by us is not issued and is cancelled.
INTERESTS OF THE MANAGING MEMBERS OF JWG LIQUIDATING COMPANY
The managing members of JWG Liquidating Company--who are Marshall T. Leeds,
our Chairman, President and Chief Executive Officer, and Joel E. Marks, our Vice
Chairman, Chief Operating Officer and Secretary--own and hold directly an
aggregate of 214,512 and 107,317 shares of Series A Preferred Stock and 9,253
and 5,248 shares of Series C Preferred Stock, respectively, of MVP.com.
As shareholders of JWGenesis, each of them will receive units in JWG
Liquidating Company as a dividend on the same basis as our other shareholders.
As of the date of this Information Statement, Messrs. Leeds and Marks are the
beneficial owners of 1,163,171 and 532,473 shares of our common stock,
respectively (not including shares covered by options to purchase common stock),
and so would receive those respective numbers of units in the distribution of
the dividend.
We also expect that Messrs. Leeds and Marks will agree to the cancellation
of their respective options to purchase JWGenesis stock, and as a result will
receive units in JWG Liquidating Company, on the same terms as our other
optionholders, in connection with the cancellation of their options. As of the
date of this Information Statement, Messrs. Leeds and Marks hold options to
acquire approximately 60,114 and 28,473 shares of our common stock,
respectively, and so would receive those respective numbers of units in
connection with the cancellation of their options. See "Ownership of Units by
Certain Persons" on page 23.
NO SHAREHOLDER APPROVAL OR APPRAISAL RIGHTS
No approval of our shareholders is required for the special dividend and its
distribution. Additionally, you will have no right under Florida law to an
appraisal of the value of your shares of JWGenesis stock in connection with the
special dividend and its distribution.
FEDERAL INCOME TAX ASPECTS
The following discussion summarizes the material United States federal
income tax consequences of the distribution and ownership of units of JWG
Liquidating Company that affect our shareholders who are U.S. Person. For this
purpose, "U.S. Persons" are (i) United States citizens or residents,
(ii) domestic corporations, (iii) estates the that must include in gross income
for United States' tax purposes income from sources outside the United States
not effectively connected with a United States' trade or business, and
(iv) trusts the administration of which is primarily exercised by United States'
courts and that have one or more U.S. Persons with the authority to control all
substantial decisions thereof. This discussion does not address all of the
aspects of federal income taxation that may be relevant to our shareholders.
This discussion is based on current provisions of the Internal Revenue Code of
1986, temporary and proposed Treasury Regulations promulgated thereunder, and
current administrative rulings and court decisions, all of which are subject to
change. This discussion does not reflect either the special circumstances that
might be relevant to a particular shareholder or the effect of the distribution
under the tax laws of any state, local, or foreign jurisdiction.
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THE DISTRIBUTION OF UNITS
We will recognize gain on the distribution to the extent of the excess, if
any, of the fair market value of the JWG Liquidating Company units over the
adjusted basis of our transferred interest in MVP.com.
As a result of the distribution, each holder of shares of our common stock
will be deemed to have received, to the extent of our current and accumulated
earnings and profits, a taxable dividend includable in income in an amount equal
to the value of JWG Liquidating Company units received in the distribution.
Based on our estimate of the value of MVP.com as of the date that we transferred
our interest to JWG Liquidating Company, we expect the dividend to result in
taxable income to JWGenesis shareholders of $0.30 per share of JWGenesis stock.
The final per share value will be determined as of the date of the distribution,
and will depend upon the valuation of MVP.com as of such date. The fair market
value of the units distributed to each non-corporate shareholder will be
reported to such shareholder by way of an IRS Form 1099-DIV reflecting the value
of the units.
Any cancellation of the unused reserved units, as discussed elsewhere in
this Information Statement, might result in income to the shareholders. While
the matter is not free from doubt, such income likely would be treated as
additional dividend income in an amount equal to the increase in value of a
shareholder's units attributable to the cancellation.
Our shareholders that are corporations generally will qualify for the 70%
intercorporate dividends-received deduction, subject to satisfaction of the
requisite minimum holding period (generally, our common stock must be held for
at least 46 days within the 90 day period of time beginning 45 days before they
become ex-dividend) and other applicable requirements. If the dividend is an
"extraordinary dividend", a corporate shareholder generally will be required to
reduce its basis in our common stock by the amount of the dividends-received
deduction it was allowed. An "extraordinary dividend" with respect to common
stock is one in which the amount of such dividend equals or exceeds 10% of the
shareholder's adjusted basis in our common stock and in which the corporate
shareholder had not held our common stock for more than two years as of
September 1, 2000 (the date the distribution was first publicly announced).
Our management anticipates that the value of the distributed units will not
exceed our accumulated earnings and profits. However, if the value of the
distributed units were to exceed our accumulated earnings and profits, the
portion of the distribution to each shareholder that exceeds our accumulated
earnings and profits would be treated as a return of capital to a recipient
shareholder, and the adjusted basis for each recipient shareholder in its shares
of our common stock would be reduced by an amount equal to such excess. To the
extent that a distribution in excess of accumulated earnings and profits in turn
exceeds a shareholder's basis in our common stock, the excess would be treated
as capital gain. A shareholder would determine gain or loss separately for each
block of our common stock (i.e., our common stock acquired at the same cost in a
single transaction), and this gain would be short-term or long-term, depending
on how long the shareholder has held the shares of our common stock.
Each shareholder's basis in the units it receives will be equal to the fair
market value of those units on the date of the distribution. Each shareholder's
holding period for tax purposes under the Internal Revenue Code for the units
received in the distribution will begin on the day after the date of the
distribution.
Payments to a shareholder in connection with the distribution may be subject
to "backup withholding" at a rate of 31%, unless the shareholder (a) is a
corporation, (b) qualifies within certain exempt categories, or (c) provides a
correct taxpayer identification number to the payor, certifies as to no loss of
exemption from backup withholding, and otherwise complies with the applicable
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requirements of the backup withholding rules. A shareholder who does not supply
a correct taxpayer identification number may be subject to penalties imposed by
the IRS. Any amount withheld as backup withholding does not constitute an
additional tax and will be creditable against the shareholder's federal income
tax liability, provided that the required information is supplied to the IRS.
OWNERSHIP OF UNITS OF JWG LIQUIDATING COMPANY
Treasury Regulations classify an unincorporated domestic entity such as a
limited liability company as a partnership for federal income tax purposes,
unless the entity affirmatively elects to be classified as a corporation for
such purposes. Notwithstanding the general characterization, certain
unincorporated entities that have interests publicly traded on an established
securities market or a secondary market (or the substantial equivalent thereof)
are characterized as corporations for U.S. federal income tax purposes. JWG
Liquidating Company is a Delaware limited liability company, and does not intend
to elect to be taxable as a corporation for federal income tax purposes. The
units will not be traded on an established securities market or a secondary
market or the substantial equivalent thereof; accordingly, JWG Liquidating
Company should be classified as a partnership for federal income tax purposes.
The portions of the remaining discussion that set forth certain federal
income tax consequences of ownership of units of JWG Liquidating Company would
not apply if JWG Liquidating Company was determined to be taxable as a
corporation.
JWG Liquidating Company will not be subject to federal income tax, and each
unit holder will be taxed on its allocable share of JWG Liquidating Company's
taxable income, if any, whether or not distributed to such unit holder. Thus, a
unit holder's tax liability may exceed the cash distributed to it in a
particular year. JWG Liquidating Company will generally allocate its taxable
income and losses among the unit holders in proportion to their respective unit
ownership. Generally, the characterization of an item as profit or loss will be
the same for a unit holder as it is for JWG Liquidating Company. Because JWG
Liquidating Company's activities will be limited to its investment in MVP.com,
it will not be engaged in a trade or business, and deductions for expenses or
losses incurred by JWG Liquidating Company might be subject to various
limitations.
If the net cash distributions to a unit holder from JWG Liquidating Company
in any year exceed such unit holder's allocable share of JWG Liquidating
Company's taxable income for that year, the excess generally will constitute a
return of capital to such unit holder. A return of capital will not be
reportable as taxable income by the recipient unit holder for federal income tax
purposes, but it will reduce the tax basis of its units. If the tax basis of a
unit holder's units is reduced to zero, any subsequent cash distributions to it
will result in gain being recognized by a unit holder as if it had sold or
exchanged its units.
Generally, a distribution of marketable securities by JWG Liquidating
Company to a unit holder would be treated for tax purposes as a distribution of
money. Treasury Regulations provide, however, that a distribution of marketable
securities will be treated as a distribution of property other than money under
certain circumstances. A distribution of property other than money will not
cause a holder of units to recognize gain or loss; and if distributed in
liquidation of the unit holder's entire interest, the unit holder's basis in the
distributed property will be equal to the unit holder's basis in its membership
interest. The managing members of JWG Liquidating Company believe that shares of
MVP.com distributed by JWG Liquidating Company will be treated as property other
than money; however, it is possible that some or all of the marketable
securities distributed by JWG Liquidating Company will not satisfy the
requirements of the Treasury Regulations and will be treated as money for
federal income tax purposes.
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Due to tax accounting complexities and the resulting substantial accounting
expense, JWG Liquidating Company does not currently intend to elect under
section 754 of the Internal Revenue Code to adjust the basis of its property in
the case of a transfer of units.
THE FOREGOING SUMMARY OF FEDERAL INCOME TAX ASPECTS IS NOT INTENDED TO BE A
COMPLETE SUMMARY OF THE TAX CONSEQUENCES OF THE RECEIPT AND OWNERSHIP OF UNITS
IN JWG LIQUIDATING COMPANY. THE MATERIAL UNITED STATES FEDERAL INCOME TAX
CONSEQUENCES SET FORTH ABOVE MIGHT NOT BE APPLICABLE TO SHAREHOLDERS WHOSE
SHARES OF OUR COMMON STOCK ARE NOT VESTED AND WERE OBTAINED THROUGH THE EXERCISE
OF AN EMPLOYEE STOCK OPTION OR OTHERWISE AS COMPENSATION, WHO DO NOT HOLD THEIR
SHARES AS CAPITAL ASSETS WITHIN THE MEANING OF SECTION 1221 OF THE INTERNAL
REVENUE CODE, WHO ARE NOT U.S. PERSONS, OR WHO ARE OTHERWISE SUBJECT TO SPECIAL
TREATMENT UNDER THE INTERNAL REVENUE CODE. EACH UNIT HOLDER IS ADVISED TO
CONSULT WITH ITS OWN TAX ADVISORS CONCERNING THE TAX ASPECTS OF THE DISTRIBUTION
AND OWNERSHIP OF UNITS, INCLUDING THE APPLICABILITY AND THE EFFECT OF FEDERAL,
STATE, LOCAL, FOREIGN, AND OTHER TAX LAWS.
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DESCRIPTION OF JWG LIQUIDATING COMPANY LLC
JWG Liquidating Company LLC is a special purpose limited liability company
organized under the laws of the State of Delaware on October 13, 2000. The
principal business office of JWG Liquidating Company is located at 1117
Perimeter Center West, Suite 500E, Atlanta, Georgia 30338, and its telephone
number at that location is (770) 399-8805. Copies of JWG Liquidating Company's
Amended and Restated Certificate of Formation and Operating Agreement and Plan
of Liquidation, which are its governing documents, are attached to this
Information Statement as Annexes A and B, respectively. We encourage you to
review these documents carefully, for they are the legal documents that will
govern your rights with respect to the units. If there is any inconsistency
between the language in this Information Statement regarding JWG Liquidating
Company and the units and the language in the Amended and Restated Certificate
of Formation and the Operating Agreement and Plan of Liquidation, the language
in the Amended and Restated Certificate of Formation and the Operating Agreement
and Plan of Liquidation will control.
SPECIAL PURPOSE AND LIMITED BUSINESS
JWG Liquidating Company was organized for the following limited purpose:
- to acquire our shares in MVP.com;
- to hold, preserve, and ultimately dispose of those shares as expeditiously
as permitted and practicable (whether by direct distribution if and when
permitted, or by the distribution of the proceeds from a sale or sales
thereof, to the holders of units);
- to acquire and exercise all rights, privileges, and entitlements of, and
perform all duties as, a shareholder of MVP.com, including any and all
rights and obligations under the various agreements with MVP.com to which
JWG Liquidation Company became a party as a result of our transfer to it
of the MVP.com stock; and
- to take all actions, necessary or advisable in the opinion of the managing
members, to effectuate or facilitate the distribution by us of the units
issued to us in exchange for the MVP.com stock.
JWG Liquidating Company may engage in other activities incidental to this
purpose as may be necessary or desirable, in the opinion of the managing
members, to carry out this purpose. JWG Liquidating Company may not engage in
any activities or business not incidental to or related to this purpose.
Moreover, JWG Liquidating Company has no assets other than the MVP.com stock
(and related contractual rights) and $150,000 in cash contributed to it by us to
cover anticipated miscellaneous operating expenses.
JWG Liquidating Company has no authority to require capital contributions
from its members, and it has extremely limited authority to borrow or to acquire
funding through other means. As a result, it has virtually no ability, even if
it were not otherwise restricted from doing so, to engage in any business other
than holding, preserving, and eventually distributing its existing assets.
We believe that the $150,000 we contributed to JWG Liquidating Company will
be sufficient to cover its foreseeable operating expenses, which include
premiums for liability insurance. However, if that cash proves to be
insufficient, JWG Liquidating Company could be required to sell (to the extent
it is able to do so) some or all of its shares of MVP.com stock to cover its
expenses. Accordingly, if JWG Liquidating Company's expenses are greater than
our estimates, the value of the units of JWG Liquidating Company could be
reduced.
These restrictions mean that the entire value of JWG Liquidating Company to
the holders of its units is dependent upon the ultimate value, if any, of the
shares of MVP.com stock that it owns, and on the occurrence of an opportunity
for that value to be realized and distributed to the unit holders.
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OWNERSHIP OF MVP.COM STOCK
JWG Liquidating Company owns 1,236,379 shares of Series A Preferred Stock
and 117,388 shares of Series C Preferred Stock of MVP.com, which were acquired
from us pursuant to the terms of the Stock Transfer Agreement by and among us,
our wholly owned subsidiary JWGenesis Financial Services, Inc. (in whose name
our MVP.com stock had been issued), and JWG Liquidating Company. According to
the latest information provided to us by MVP.com, JWG Liquidating Company's
shares of Series A and Series C Preferred Stock represent, on a fully-diluted,
as-converted basis, an aggregate of approximately 3% of the common stock of
MVP.com. That percentage would be diluted if MVP.com issues more stock in
connection with future financings or other transactions.
A summary of the terms of the classes of capital stock of MVP.com is
provided under the heading "Description of MVP.com, Inc.-Description of
MVP.com's Capital Stock" on page 20.
NO FORMAL VALUATION OF UNITS OR MVP.COM STOCK
There is no public trading market for MVP.com stock. Accordingly, there are
no market prices on which to estimate the value of the MVP.com stock we owned
and transferred to JWG Liquidating Company. We have not engaged any person to
perform a valuation of that MVP.com stock. Accordingly, we have no formal basis
for a valuation of the units being distributed as a special dividend.
At the time of transferring our MVP.com stock to JWG Liquidating Company, we
carried the stock on our books for financial reporting purposes, consistent with
generally accepted accounting principles, at an aggregate value of
$3.5 million. On a fully diluted, as-converted basis, that would be equivalent
to approximately $2.56 per common share of MVP.com, with JWG Liquidating Company
owning an aggregate of 1,353,767 common shares. Our cost basis in the MVP.com
stock, reflecting the prices we paid to acquire the stock in November 1999 and
February 2000, is the equivalent of approximately $1.97 per common share of
MVP.com. For purposes of estimating the amount of taxable income we expect to
result from the distribution to our shareholders, we used the $2.56 per share of
MVP.com common stock as carried on our books for financial reporting purposes.
It has been reported that SportsLine.com, which is a major investor in
MVP.com, is writing off a substantial portion of its investment in MVP.com (and
certain of its other Internet investments) for purposes of SportsLine.com's
financial statements. We do not know the circumstances or extent of that action
by SportsLine.com with respect to its MVP.com investment, and we do not know
whether (and if so, how) it relates to the intrinsic value of MVP.com presently,
or the potential value for MVP.com's stock in the future. More generally,
because of the extent of public curiosity about MVP.com (due in part to the high
public profile of several of its participants), there are a number of recent
accounts in the public media speculating as to the current status and prospects
for MVP.com and its operations. See "Description of MVP.com, Inc.--Sources of
Information about MVP.com" on page 16.
Since no formal valuation of our interest in MVP.com has been made, the
above information has limited, if any, relevance for an assessment by you of the
current or future value of MVP.com stock, and thus of the units in JWG
Liquidating Company. We have provided the above information in the interest of
completeness, but we want to emphasize that you should not rely on it as a basis
for assessing the value of the units.
AGREEMENTS WITH MVP.COM
Under our Stock Transfer Agreement with JWG Liquidating Company, JWG
Liquidating Company has acquired certain rights, and has agreed to be bound by
the terms, conditions, and obligations under, each of three "investor
agreements" with MVP.com and certain other parties, to which JWGenesis had been
a party. These are an Amended and Restated Investor Rights Agreement; an Amended
and Restated Right of First Refusal and Co-Sale Agreement; and an Amended and
Restated Voting
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Agreement. These investor agreements place restrictions on the MVP.com stock
held by JWG Liquidating Company.
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
Under the Amended and Restated Investor Rights Agreement, JWG Liquidating
Company is restricted from transferring its shares of MVP.com stock unless
(a) the transfer is part of a disposition registered under the Securities Act of
1933, or (b) the transferor provides MVP.com with a detailed statement of the
circumstances surrounding the transfer and (if requested by MVP.com) an opinion
of counsel that the transfer is exempt from registration under the Securities
Act, and the transferee becomes a party to the agreement.
On the other hand, the agreement also entitles JWG Liquidating Company to
certain demand and piggy-back registration rights with respect to its shares of
MVP.com stock. In general, holders of a majority of MVP.com's preferred stock
(and certain holders of its common stock) may, by written request, demand that
MVP.com register their shares of common stock for sale in a public offering. In
addition, if MVP.com chooses to engage in a public offering of its common stock,
each holder of MVP.com's common stock that is a party to the agreement will be
given the opportunity to include, subject to certain requirements and
underwriting restrictions, all or part of its shares in the offering. The
agreement also provides that all of its parties will agree to a "lock-up" period
of 180 days following MVP.com's initial public offering, during which time they
cannot transfer any of their shares of common stock. A party's registration
rights will terminate if all of its MVP.com stock becomes eligible for sale
under Rule 144 of the Securities Act of 1933 during any 90-day period, and all
registration rights granted under the agreement terminate five years after the
date of MVP.com's initial public offering.
Under certain circumstances, the agreement also entitles JWG Liquidating
Company to purchase additional securities of MVP.com when MVP.com proposes to
issue additional equity securities. This right enables an MVP.com shareholder,
if it is financially able, to lessen the dilutive effect of such transactions on
its percentage ownership of MVP.com stock. While we were financially able to
exercise that right on one occasion in February 2000, JWG Liquidating Company
will have no funds with which to do so. Accordingly, its percentage ownership of
MVP.com is likely to be reduced. This right to purchase additional equity
securities of MVP.com will terminate upon the earlier of MVP.com's initial
public offering or a change in control of MVP.com.
AMENDED AND RESTATED RIGHT OF FIRST REFUSAL AND CO-SALE AGREEMENT
The Amended and Restated Right of First Refusal and Co-Sale Agreement
permits JWG Liquidating Company to participate in sales of MVP.com stock by
certain other MVP.com shareholders. If a party to this agreement proposes to
transfer any shares of its MVP.com common stock to a third party, MVP.com and
the other parties to the agreement must be given the option to purchase those
shares. However, if the other parties to the agreement choose not to purchase
those shares, then, upon notice from the selling shareholder, the other parties
to the agreement must be allowed to participate, on a pro-rata basis, in the
proposed sale of shares to such third party.
Any proposed sale of MVP.com stock by JWG Liquidating Company would also be
subject to the purchase and participation rights described above. Any sale of
MVP.com stock in violation of these rights under the agreement entitles each
non-violating party to a "put" option, by which they can force the violating
party to purchase the number of shares that such non-violating party would have
been entitled to sell had they been able to participate by exercise of rights
under the agreement. If a majority of the non-violating parties to the agreement
choose not to exercise their "put" option, they may declare the prohibited sale
void, with the consent of MVP.com. The agreement will terminate upon the earlier
of the initial public offering of MVP.com's common stock or a change in control
of MVP.com.
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AMENDED AND RESTATED VOTING AGREEMENT
The Amended and Restated Voting Agreement requires JWG Liquidating Company
to vote its shares of MVP.com stock for the election of directors and on other
matters in specified manners. Each party to the agreement must vote in
accordance with the following provisions:
- so long as at least 1,500,000 shares of MVP.com's Series A Preferred Stock
remain outstanding, at each election of directors in which holders of
Series A Preferred Stock, voting as a separate class, are entitled to
elect directors of MVP.com, those holders must vote to elect one
representative of such group to the board of directors of MVP.com;
- so long as at least 4,400,000 shares of MVP.com's Series B Preferred Stock
remain outstanding at each election of directors in which holders of
Series B Preferred Stock, voting as a separate class, are entitled to
elect directors of MVP.com, those holders must vote to elect one
representative of Benchmark Capital Partners, L.P. and one representative
of Galyan's Trading Company to the board of directors of MVP.com;
- so long as at least 3,000,000 shares of MVP.com's Series D Preferred Stock
remain outstanding, at each election of directors in which holders of
Series D Preferred Stock, voting as a separate class, are entitled to
elect directors of MVP.com, those holders must vote to elect one
representative of SportsLine.com, Inc. to the board of directors of
MVP.com; and
- at each election of directors in which holders of MVP.com common stock and
MVP.com preferred stock, voting together as a single class, are entitled
to elect directors of MVP.com, the parties to the voting agreement must
elect the chief executive officer of MVP.com, one representative of
Endorphin Communications, LLC, and one person who is nominated to fill a
vacancy in the board of directors (and is unanimously approved by the
existing directors) to the board of directors of MVP.com.
The agreement will terminate upon the earlier of an initial public offering
of MVP.com's common stock; a change in control or sale of MVP.com; seven years
from the date of the voting agreement; the date of the closing of the
disposition of all or substantially all of the assets of MVP.com or a merger or
consolidation in which the holders of MVP.com's outstanding voting stock
immediately prior to such transaction own less than 50% of such securities
immediately following such transaction; or the date on which the parties agree
to terminate the agreement by written consent.
JWG Liquidating Company, acting through its managing members, is the only
person entitled to exercise the voting rights of its MVP.com stock. No
individual holder of units will have any rights with respect to the voting of
such stock.
LIKELY INABILITY TO PREVENT PERCENTAGE DILUTION
The Amended and Restated Investor Rights Agreement discussed above entitles
the parties thereto to quasi-preemptive rights to purchase shares of MVP.com
stock in connection with certain proposed issuances of additional stock by
MVP.com. If these rights are triggered, each party to the investor rights
agreement is permitted to participate in the proposed issuance of shares.
However, for a number of reasons, including its lack of cash now and in the
future, and the difficulty of obtaining such funding while maintaining its
status under the Investment Company Act of 1940, JWG Liquidating Company is not
expected to be able to exercise these rights when and if they become available.
If MVP.com sells additional securities, but JWG Liquidating Company is unable to
exercise these rights, JWG Liquidating Company's ownership percentage interest
in MVP.com stock will be diluted accordingly.
MANAGEMENT AND AUTHORITY OF MANAGING MEMBERS
The business and affairs of JWG Liquidating Company are managed by its
managing members. Subject to certain restrictions described in the Operating
Agreement and Plan of Liquidation, the managing members have broad authority to
manage JWG Liquidating Company within the parameters
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of its limited purpose. However, any proposed action by the managing members in
respect of the MVP.com stock that is not otherwise permitted by the terms of the
Operating Agreement and Plan of Liquidation requires the managing members to
receive an opinion of legal counsel that the action will not cause JWG
Liquidating Company to become an "investment company" under the Investment
Company Act of 1940; or, if it is otherwise deemed to be an "investment
company", would not violate any provision of that Act.
The managing members may be removed only by an affirmative vote of members
holding at least 90% of the outstanding units held by members at the time of the
subject vote. However, the remaining managing member may appoint a successor to
a managing member who resigns, becomes disabled, or is deceased. The managing
members are Marshall T. Leeds and Joel E. Marks. Because Messrs. Leeds and Marks
will own an aggregate of more than 10% of the outstanding units, they
collectively will have the ability to prevent their removal as managing members.
See "Ownership of Units by Certain Persons" on page 23. If both managing members
have resigned, become disabled, or are deceased without a successor having been
appointed, the principal legal counsel to JWG Liquidating Company as of that
time would petition a court of competent jurisdiction to call a special meeting
of the members, and the members would, by majority vote of the units held by
members, elect a new managing member or members.
MARSHALL T. LEEDS--Mr. Leeds, a co-founder in 1983 of our predecessor, is
our Chairman, President, and Chief Executive Officer. Mr. Leeds is a past
Chairman of Regional Investment Bankers Association, Inc., the country's largest
association of independent broker-dealers involved in the underwriting of debt
and equity securities, and he currently serves on the Independent Contractor
Firm Committee of the Securities Industries Association.
JOEL E. MARKS--Mr. Marks, the other co-founder of our predecessor, is our
Vice Chairman, Chief Operating Officer, and Secretary. Mr. Marks is a Certified
Public Accountant, and, prior to 1983, he was employed in various capacities in
both the audit and tax departments of the international accounting and
consulting firm of Deloitte & Touche LLP. From 1996 to 1998, Mr. Marks served as
the Chairman of Regional Investment Bankers Association, Inc.
The managing members will receive no salaries or compensation for their
services.
LIMITATION OF LIABILITY AND INDEMNIFICATION OF MANAGING MEMBERS
The Operating Agreement and Plan of Liquidation provides that a managing
member will not be liable to JWG Liquidating Company or any holder of units for
any losses arising out of any act or omission by him, provided that he performs
his duties in good faith and in the best interests of JWG Liquidating Company,
and with the exercise of reasonable care. Further, the Operating Agreement and
Plan of Liquidation provides that, to the fullest extent permitted under
Delaware law, JWG Liquidating Company will indemnify the managing members for
any liabilities, costs, or expenses incurred in their capacities as managing
members. Such indemnification will not be available for an act or omission that
is the result of intentional misconduct, knowing violation of law, gross
negligence, or a transaction for which a managing member received an improper
material personal benefit.
JWG Liquidating Company intends to acquire liability insurance to provide
coverage with respect to its indemnification obligations to its managing
members. However, if such coverage is not available on acceptable terms or does
not cover all of those obligations, and JWG Liquidating Company otherwise does
not have sufficient cash to satisfy those obligations, it could be required to
sell (to the extent it is able to do so) shares of its MVP.com stock to satisfy
its indemnification obligations to the managing members.
NO CONTROL OVER THE OPERATIONS OF MVP.COM.
We cannot overstate or overemphasize that JWG Liquidating Company and its
managing members do not have, and will not be able to exercise, any control over
the operations, strategies, plans, or other affairs of MVP.com. Such control
will be exercised by the management, directors, and major
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shareholders of MVP.com. JWG Liquidating Company and its managing members will
not be able to influence the decisions made by MVP.com beyond the exercise of
JWG Liquidating Company's ability to vote its small minority stock ownership
with respect to matters submitted to a vote of MVP.com shareholders, subject to
the terms of the Amended and Restated Voting Agreement. Holders of units will
not themselves have voting rights with respect to shares of MVP.com stock. The
management, directors, and majority shareholders of MVP.com may take certain
actions to influence the affairs and policies of MVP.com that could lead to the
reduction (or the complete elimination) of the value of the securities of
MVP.com, and consequently the value of your units.
We, of course, had confidence in the ability of MVP.com's management and
controlling persons when we made our investment in MVP.com's stock in
November 1999 and February 2000. Because we have had only limited access to
specific information about MVP.com's operations and progress since that time, we
simply are unable to provide assurances about current operations of or prospects
for MVP.com's business.
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DESCRIPTION OF MVP.COM, INC.
MVP.COM IS A PRIVATELY-HELD COMPANY, OF WHICH WE WERE, AND JWG LIQUIDATING
COMPANY NOW IS, A SMALL MINORITY SHAREHOLDER. NEITHER WE NOR JWG LIQUIDATING
COMPANY HAVE ANY CONTROL OVER MVP.COM, NOR DO WE HAVE ACCESS TO ANY INFORMATION
CONCERNING MVP.COM BEYOND THAT WHICH MVP.COM CHOOSES TO PROVIDE TO US OR TO MAKE
PUBLIC. ACCORDINGLY, THE DESCRIPTIONS OF MVP.COM, ITS CAPITAL STOCK, ITS
MANAGEMENT, AND OTHER MATTERS CONTAINED IN THIS INFORMATION STATEMENT ARE BASED
SOLELY ON SOURCES OF PUBLICLY-AVAILABLE INFORMATION--INCLUDING INFORMATION ON
MVP.COM'S WEBSITE, HTTP://WWW.MVP.COM--AND LIMITED ADDITIONAL INFORMATION
AVAILABLE TO US AND JWG LIQUIDATING COMPANY PURSUANT TO OUR STATUS AS A MINORITY
SHAREHOLDER OF MVP.COM. WITHOUT THE COOPERATION OF MVP.COM, WE HAVE NO WAY OF
VERIFYING THE ACCURACY OF THIS INFORMATION. ACTUAL DESCRIPTIONS, PRACTICES, AND
RESULTS OF MVP.COM MAY VARY FROM THAT DESCRIBED IN THIS INFORMATION STATEMENT,
AND SUCH DIFFERING DESCRIPTIONS, PRACTICES, AND RESULTS COULD BE MATERIAL. IF
ANY SUCH MATERIAL DIFFERENCE WERE ADVERSE TO MVP.COM, IT COULD ADVERSELY AFFECT
THE VALUE OF ITS CAPITAL STOCK, WHICH WOULD ADVERSELY AFFECT THE VALUE OF UNITS
IN JWG LIQUIDATING COMPANY.
SOURCES OF INFORMATION ABOUT MVP.COM
As indicated above, we are unable and therefore have not undertaken to
verify the accuracy of information about MVP.com's business operations and plans
publicly available on its website or elsewhere. For the same reason, we also
have not undertaken to procure and analyze all possible information about
MVP.com that may exist in the public domain, such as in newspaper and magazine
articles. Because of the high public profile of several persons who are involved
with MVP.com, a number of such articles and other accounts about MVP.com and its
business have been published. Historically, such sources sometimes contain
inaccurate or incomplete accounts of important facts and circumstances. We have
included in this Information Statement only information concerning MVP.com from
MVP.com's website, and information which we believe to be credible (although, as
we said above, we can provide you no assurance in that regard).
You may feel differently about the quality and integrity of information that
can be derived from sources in the public domain. In that event, you are free to
access any such source that may be available to you, many of which are available
on the Internet. We encourage you to consider with caution any and all such
information you might obtain, whether it is positive or negative about MVP.com,
its business, its plans or its prospects.
BACKGROUND AND GENERAL
MVP.com is a privately-held, Delaware corporation that was formed in
October 1999. MVP.com is a retail source for sports, fitness, and outdoor
equipment and apparel on the Internet. Through its advisory board (which
includes successful athletes and sport figures from a wide range of athletic
activities), MVP.com also provides perspectives on athletic training and
performance, and information on the products it offers. As of July 2000,
MVP.com's product offering totaled approximately 50,000 products and 500
different brands. MVP.com's products and services are available at its website
http://www.mvp.com. MVP.com's principal executive offices are located at 111
East Wacker Drive, Suite 600, Chicago, Illinois 60601, and its telephone number
at that address is (312) 596-4444.
In July 1999, we formed a 50/50 joint venture with former NFL quarterback
John Elway and his affiliates to establish an online vertical portal to focus on
lifestyle enhancements, finances, sports, and fitness, using as our vehicle a
Florida corporation with the name "MVP.com, Inc." In November 1999, prior to any
operational launch of our joint venture using that name, JWGenesis and
Mr. Elway entered into a series of transactions, led by Benchmark Capital
Partners III, L.P., which resulted in the sale by us of the "MVP.com" name to
the Benchmark Capital-led group; their formation of the current MVP.com as a
Delaware corporation; and the addition of several new participants in the
venture. These new participants included Benchmark Capital, Freeman Spogli &
Co., former NBA star Michael
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Jordan, former NHL star Wayne Gretzky, Galyan's Trading Company, SportsLine.com,
and CBS Corporation.
As a result of the November 1999 series of transactions that led to the
current MVP.com, we became a minority shareholder and withdrew from any active
role in the management or operations of MVP.com.
LIKELIHOOD OF TYPICAL RISKS AND CHALLENGES
Notwithstanding its accomplishments and development over the past year under
the leadership established by Benchmark Capital, we suspect that MVP.com faces
many risks typically associated with new businesses. Additionally, we believe
MVP.com faces many risks typically associated with Internet-based companies,
such as:
- developmental stage operating losses and cash flow pressures;
- dependence upon the Internet as a viable commercial medium;
- the need to maintain and develop network infrastructure to meet demand;
- capacity constraints;
- the need to adapt to evolving technologies;
- network system failures and security breaches;
- domain name and trademark infringement litigation;
- credit card fraud; and
- acceptance by consumers of the MVP.com concept.
We do not know whether--and if so, how well--MVP.com has addressed and
managed these and other possible risks and challenges of its business. Moreover,
market prices of securities of Internet-related companies recently have been
particularly volatile, and in many instances, current market prices of
Internet-related companies are significantly lower than previous levels. These
circumstances have made it more difficult for such companies to secure
additional financing to cover potential operating losses and cashflow pressures.
If MVP.com fails to develop as a successful business, develops more slowly than
expected, fails to secure any necessary financing on favorable terms, or is
significantly impacted by adverse Internet-related company market trends, the
value of its securities, and consequently of your units in JWG Liquidating
Company, would be materially compromised, and the units may prove to have no
realizable value at all.
STRATEGIC PARTNERS
MVP.com's strategic partners include Galyan's Trading Co., SportsLine.com
and CBS Corporation. In addition, MVP.com owns and operates specialty sites
igogolf.com and tennisdirect.com, and operates Internet retail sites for
Faceoff.com, SportsLine.com, majorleaguebaseball.com, and pgatour.com.
GALYAN'S--Late in 1999, MVP.com partnered with Galyan's Trading Co. for
Galyan's to become an exclusive retail provider of sporting goods for MVP.com.
Galyan's, a retail sporting goods store, was originally founded in 1946 and sold
to The Limited Inc. in 1995. Recently, Freeman Spogli & Co. purchased a
$190 million equity interest in Galyan's. Freeman Spogli is also a shareholder
in MVP.com.
CBS AND SPORTSLINE.COM--Early in 2000, MVP.com purchased the e-commerce
business of SportsLine.com, Inc., in exchange for $120 million in cash, payable
over 10 years. SportsLine.com also received an equity stake in MVP.com.
SportsLine.com is a provider of multimedia sports information, entertainment,
and merchandise over the Internet. In addition, MVP.com entered into an
advertising
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alliance with CBS Corporation. The alliance provides MVP.com with $85 million in
advertising and promotional considerations.
DIRECTORS AND OFFICERS
The following list of directors and officers, and their respective
biographies, are based on information provided on MVP.com's website as of
October 20, 2000.
<TABLE>
<CAPTION>
NAME POSITION(S) WITH MVP.COM
---- ------------------------
<S> <C>
John Elway...................................... Chairman of the Board
John H. Costello................................ Director, President and Chief Executive Officer
Michael Jordan.................................. Director
Wayne Gretzky................................... Director
David Bierne.................................... Director
Brent Hill...................................... Director, Vice President and General Manager, Golf
Ron Spogli...................................... Director
Michael Levy.................................... Director
Steve Lawrence.................................. Vice President, General Counsel and Secretary
Tom Cox......................................... Chief Financial Officer
Michael Beckerman............................... Vice President, Marketing and International
Mark Bryant..................................... Vice President, Business Development and Sales
Ian Drury....................................... Vice President, Chief Technology Officer
Stuart Feddersen................................ Vice President, Technology Integration and
Operations
Andrew Ferraro.................................. Vice President, Fulfillment and Customer Support
Matt Powell..................................... Vice President, General Merchandise Manager
Geoff Robertson................................. Vice President, Application Development
David Secunda................................... Vice President, General Manager, Outdoors
</TABLE>
JOHN ELWAY--Mr. Elway played 16 years in the National Football League as the
quarterback of the Denver Broncos, during which time he received numerous
awards, including Most Valuable Player in Super Bowl XXXIII. Mr. Elway founded
the Elway Automotive Group, an automobile franchise, created the John Elway
Foundation to benefit non-profit organizations, and founded the John Elway Drive
for Education Scholarship Fund to raise awareness of educational issues.
Mr. Elway received a degree in economics from Stanford University.
JOHN H. COSTELLO--Mr. Costello was named president and chief executive
officer of MVP.com in October 1999, following a 25-year career in consumer
products, information services and retailing. Prior to joining MVP.com,
Mr. Costello was president of AutoNation Inc., an automotive retailing and
rental car company. From 1993 to 1998, Mr. Costello served as senior executive
vice president of Sears, Roebuck & Co., where he was responsible for the
company's marketing, public affairs, customer information, catalog, and direct
response operations. While with Sears, Mr. Costello also launched Sears internet
and e-commerce initiatives. Mr. Costello was a member of the Sears Executive
Committee, and served on the board of directors of Sears Canada, Inc. in
Toronto, Canada.
MICHAEL JORDAN--Michael Jordan retired from the National Basketball
Association at the end of the 1997-98 season, following a 13-year professional
career. During his 13 years in the NBA, Mr. Jordan received numerous awards,
including being voted the Most Valuable Player in all six NBA Finals in which he
appeared. Mr. Jordan serves as a spokesperson for several consumer products
companies, and has his own clothing and cologne brands. In addition, Mr. Jordan
has starred in the movie SPACE JAM, and has co-authored two books, RARE AIR and
FOR THE LOVE OF THE GAME. Mr. Jordan received his undergraduate degree from the
University of North Carolina.
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WAYNE GRETZKY--Wayne Gretzky retired from the National Hockey League at the
end of the 1998-99 season, following a 20-year professional career. During his
20 years in the NHL, Mr. Gretzky received numerous awards, including being voted
the NHL's Most Valuable Player nine times, and being named the Canadian male
athlete of the century in the Canadian Press/Broadcast News survey of newspaper
sports editors and broadcasters.
DAVID BEIRNE--Mr. Beirne has been a general partner with Benchmark Capital
Group since May 1997. Prior to joining Benchmark, Mr. Beirne founded
Ramsey/Beirne Associates, a leading executive search firm specializing in senior
management for information technology companies. Mr. Beirne is a director of
1-800-Flowers (www.1800flowers.com), ENS, ePhysician (www.ephysician.com), Kana
Communications (www.kana.com), Living.com (www.living.com), PlanetRX
(www.planetrx.com), Scient (www.scient.com), TradeOut (www.tradeout.com) and
Webvan (www.webvan.com). He continues to serve as chairman of Ramsey/Beirne
Associates.
BRENT HILL--Mr. Hill co-founded BigEdge.com, a sporting goods retailer that
merged with MVP.com in November 1999. Mr. Hill has ten years of software
development and project management experience from his career at Andersen
Consulting, where he was a Senior Manager in that company's Technology practice.
He specialized in Customer Relationship Management for clients in the
communications industry, and was a member of the Internet Community of Practice.
Mr. Hill received a B.S. degree in Finance from Bradley University and an MBA
from the University of Chicago, with concentrations in Strategy and
Entrepreneurship.
RON SPOGLI--Mr. Spogli is a founding partner of Freeman Spogli & Co., which
was formed in 1983. Mr. Spogli is a director of several companies in the retail
and direct marketing industries, including AFC Enterprises, Inc., Century
Maintenance Supply, Inc., Galyan's Trading Company, and Medical Arts Press.
Mr. Spogli has a Bachelor of Arts degree in history from Stanford University and
a Masters of Business Administration from Harvard University.
MICHAEL LEVY--Mr. Levy has served as the President, Chief Executive Officer
and Chairman of the Board of Directors of Sportsline.com since its inception in
February 1994. From 1979 through March 1993, Mr. Levy served as President, Chief
Executive Officer and as a director of Lexicon Corporation, a high technology
company specializing in data communications and signal processing technology.
From January 1988 to June 1993, Mr. Levy also served as Chairman of the Board
and Chief Executive Officer of Sports-Tech International, Inc., a company
engaged in the development, acquisition, integration and sale of computer
software, equipment and computer-aided video systems used by professional
collegiate and high school sports programs. Mr. Levy serves as a member of the
board of directors of iVillage, Inc. (www.ivillage.com).
STEVE LAWRENCE--Mr. Lawrence joined MVP.com in May 2000. Mr. Lawrence has
worked for major national law firms, and has represented corporations, banks,
and Internet and media companies. Prior to joining MVP.com, Mr. Lawrence was
partner at the Ross & Hardies law firm in Chicago, Illinois, where he managed a
variety of corporate and transactional practices, including stock purchases and
sales and tax-exempt bond offerings.
TOM COX--Mr. Cox has over 20 years of senior level financial and
administrative experience managing complex finance functions across multiple
domestic and international business units. From 1994 to 1999, Mr. Cox served as
the Chief Financial Officer of Field Container Company, L.P., and from 1979 to
1994, he held various executive positions with Federal Paperboard
Company, Inc., including Vice President, Treasurer and Corporate Controller.
MICHAEL BECKERMAN--Mr. Beckerman joined MVP.com in February 2000 as Vice
President, International, and became Vice President, Marketing and International
in June 2000, responsible for the strategic marketing direction of MVP.com,
including advertising, promotion, direct marketing, event marketing and public
relations. He also oversees MVP.com's international strategy. Prior to joining
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MVP.com, Mr. Beckerman was Vice President, Marketing at Canadian Airlines. From
1986 to 1993, Mr. Beckerman undertook a number of international assignments with
Nike, Inc., where he was based in Canada, Hong Kong, Germany and The
Netherlands. From 1997 to 1998, Mr. Beckerman managed Nike's retail marketing
and supported Nike's retail operations in Chicago, Illinois.
MARK BRYANT--Mr. Bryant joined MVP.com in 1999 as its Vice President,
Merchandising and became Vice President, Business Development & Sales in 2000.
Mr. Bryant is responsible for identifying and implementing revenue opportunities
and initiatives as well as developing strategic partnerships and acquisitions.
Before joining MVP.com, Mr. Bryant served in the Global Retail practice at
Andersen Consulting, with a specialty in procurement and merchandise
optimization. Mr. Bryant also was involved in the go-to-market strategies for
Andersen Consulting in the areas of market optimization and category management.
IAN DRURY--Mr. Drury co-founded BigEdge.com, an online sporting goods
retailer that merged with MVP.com in November 1999. Before founding BigEdge.com,
Mr. Drury was an Associate Partner in the Technology practice at Andersen
Consulting, specializing in electronic commerce. Mr. Drury created and had
profit/loss responsibility for the Internet & Data Services practice in Andersen
Consulting's Communications Industry practice. Mr. Drury received a B.S. in
Engineering from the University of Illinois.
STUART FEDDERSEN--Mr. Feddersen has extensive experience in the operation
and deployment of Internet services. Prior to joining MVP.com, he was a manager
in the e-commerce & technology practice at Andersen Consulting, where he
consulted on projects for internet service providers. Mr. Feddersen's experience
includes design and implementation of web applications, TCP/IP networks, network
services (e-mail, authentication, web hosting), and billing/customer support.
Mr. Feddersen received a B.S. degree in Finance from the University of Illinois
at Urbana Champaign.
ANDREW FERRARO--Mr. Ferraro came to MVP.com with over 24 years of direct
marketing, retail and e-commerce operations experience with such companies as
Banana Republic and The Metropolitan Museum of Art. Mr. Ferraro has managed
numerous startup operations, and his background includes domestic and
international fulfillment/logistics experience. Mr. Ferraro received a B.A. in
Business Administration from William Paterson University, and has spoken at the
National Conference for Operations and Fulfillment, the Direct Marketing
Association Conference and numerous fulfillment operations forums.
MATT POWELL--Mr. Powell has over 25 years of retail experience in
department, big box and specialty stores. Mr. Powell was managing principal of
the sporting goods sector for Renaissance Partners, a full service retail
consulting firm. Prior to his employment with Renaissance Partners, he was Vice
President, Merchandising and Planning at Modell's Sporting Goods; Vice
President, Merchandising and Marketing at Sneaker Stadium; and Vice President,
Merchandising, at Sportmart. Mr. Powell began his career at Jordan Marsh in
Boston, where he held various merchandising and store operation positions, last
serving as Senior Vice President, Regional Director of Stores. Mr. Powell
graduated with Honors from Colby College.
GEOFF ROBERTSON--Mr. Robertson has an extensive background in the design,
development, and deployment of secure, Internet e-commerce applications. Before
joining MVP.com, Mr. Robertson was a manager in the Internet Center of
Excellence, a group within the e-commerce and technology practices of Andersen
Consulting. Mr. Robertson has several years of software development experience,
and for seven years has specialized in the development of database-driven
Internet e-commerce applications. Mr. Robertson received a B.S. degree in
Management Information Systems from the University of Notre Dame.
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DAVID SECUNDA--Mr. Secunda is responsible for the outdoor and recreation
category at MVP.com, specifically managing PlanetOutdoors.com, the online
specialty retailer of outdoor recreation apparel, equipment and footwear, which
was acquired by MVP.com in August 2000. Until that acquisition, Mr. Secunda
served as President and Chief Executive Officer of PlanetOutdoors.com. From 1992
to 1999, Mr. Secunda served as the executive director of the Outdoor Recreation
Coalition of America (ORCA), the world's largest outdoor industry trade
association. In 1994, he founded the National Summit on Outdoor Recreation, a
national policy forum focusing on human-powered outdoor recreation issues.
DESCRIPTION OF MVP.COM'S CAPITAL STOCK
MVP.com's certificate of incorporation authorizes the issuance of up to
49,015,237 shares of common stock, $0.001 par value per share, and 31,015,237
shares of preferred stock, having such rights as MVP.com's board of directors
may determine from time-to-time. Of the authorized shares of MVP.com's preferred
stock, 3,281,250 shares are designated as its Series A Preferred Stock,
13,700,000 shares are designated as its Series B Preferred Stock, 7,033,987
shares are designated as its Series C Preferred Stock, and 7,000,000 shares are
designated as its Series D Preferred Stock.
The following summary of MVP.com's capital stock does not purport to be
complete, and is qualified in its entirety by reference to its certificate of
incorporation, as amended and restated, its bylaws, and applicable provisions of
the Delaware General Corporation Law.
COMMON STOCK
Holders of MVP.com's common stock are entitled to one vote per share on any
issue submitted to a vote of the shareholders, other than matters that are
submitted to a vote of the holders of its preferred stock as a separate group,
and do not have cumulative voting rights in the election of directors. All
shares of MVP.com's common stock are entitled, subject to the senior rights of
holders of MVP.com's preferred stock, to share equally in such dividends as its
board of directors may declare. Upon the dissolution, liquidation, or winding up
of MVP.com, holders of its common stock are entitled to receive, on a ratable
basis, after payment or provision for payment of all debts and liabilities of
MVP.com and any preferential amount due with respect to outstanding shares of
its preferred stock, all assets of MVP.com available for distribution. Holders
of shares of common stock of MVP.com do not have preemptive rights.
PREFERRED STOCK
The holders of MVP.com's preferred stock are entitled to receive, when and
as declared by MVP.com's board of directors, cash dividends at the rate of 8%
per annum calculated on the original issue price of such stock. The original
issue price per share is $0.335 for the Series A Preferred, $1.00 for the
Series B Preferred, $16.18 for the Series C Preferred, and $28.05 for the
Series D Preferred. Each of the foregoing original issue prices is subject to
adjustment for stock dividends, combinations, splits, recapitalizations, and
similar events. Except in limited circumstances, MVP.com is prohibited from
paying any dividends on its shares that are junior in preference to the shares
of its preferred stock, until all dividends on its preferred stock have either
been paid to the holders thereof or declared and set apart.
The holders of MVP.com's preferred stock are entitled to vote equally with
the holders of its common stock on an as-converted basis for all matters
submitted to a general vote of MVP.com's
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<PAGE>
shareholders. The approval of a majority of the holders of MVP.com's preferred
stock, voting together as a separate group, is required to effect or validate
the following actions:
- any change to MVP.com's certificate of incorporation that adversely alters
or changes the voting powers, preferences, or other special rights,
privileges, or restrictions of its preferred stock;
- any increase or decrease in the authorized number of its preferred stock;
- any authorization or designation of any new MVP.com securities that rank
on a parity with or senior to its existing preferred stock;
- any redemption, repurchase, payment of dividends, or other distribution to
any shares that rank junior to its preferred stock (except to exercise
MVP.com's right of first refusal or repurchase rights for its shares held
by certain of its employees that terminate their services to MVP.com);
- any agreement by MVP.com or its shareholders regarding a consolidation,
merger, or other corporate reorganization that results in MVP.com's
shareholders immediately prior to such transaction holding less than 50%
of the voting power of the resulting entity after the transaction, or a
sale of all or substantially all of the assets of MVP.com;
- any action that results in the payment or declaration of a dividend on any
of the shares of MVP.com's common stock; and
- any increase or decrease in the authorized number of members of its board
of directors.
With respect to the election of MVP.com's board of directors, the holders of
its Series A Preferred Stock, voting as a separate class, are entitled to elect
one member (so long as at least 1,500,000 shares of the Series A Preferred Stock
remain outstanding); the holders of its Series B Preferred Stock, voting as a
separate class, are entitled to elect two members (so long as at least 4,400,000
shares of the Series B Preferred Stock remain outstanding); the holders of its
Series D Preferred Stock, voting as a separate class, are entitled to elect one
member (so long as at least 3,000,000 shares of the Series D Preferred Stock
remain outstanding); and the holders of all of its common stock and preferred
stock, voting together as a single class, are entitled to elect all remaining
members. Each of the foregoing share amounts is subject to adjustment for stock
dividends, combinations, splits, recapitalizations, and similar events.
Upon the liquidation, dissolution, or winding up of MVP.com, the holders of
its preferred stock are entitled to receive an amount per share equal to the
original issue price per share, plus all declared and unpaid dividends for each
share they hold, before any amounts may be distributed or paid to the holders of
any MVP.com securities that are junior to its preferred stock. After the holders
have received all of the amounts described in the preceding sentence, any
remaining assets of MVP.com available for distribution will be distributed to
the holders of its common stock pro rata.
Shares of MVP.com's preferred stock are convertible into shares of its
common stock at any time at the option of the holders thereof. The shares of
MVP.com's preferred stock will automatically be converted into shares of its
common stock immediately upon the closing of an underwritten public offering of
MVP.com's common stock that results in gross cash proceeds to MVP.com of at
least $30,000,000. Each of the preferred shares is initially convertible at a
1-for-1 conversion ratio. The conversion ratio is subject to adjustment for
stock dividends, combinations, splits, recapitalizations, and similar events.
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Based on the conversion provisions of these series of preferred stock and on
the latest information provided to us by MVP.com, we believe that the MVP.com
stock owned by JWG Liquidating Company is equivalent to approximately 3% of the
fully diluted, as-converted common stock of MVP.com.
To date, MVP.com has not distributed any dividends to its shareholders, and
both we and JWG Liquidating Company do not know of any plans by MVP.com to do so
in the future.
SECURITY INTERESTS OF RECORD IN MVP.COM'S ASSETS
At least four creditors of MVP.com have filed financing statements securing
their interest in certain of MVP.com's assets, including its accounts
receivable, inventory, and equipment. These statements provide those creditors
with a priority right on those assets senior to the rights of MVP.com's
shareholders. If MVP.com were to default on the underlying obligations and those
creditors were to exercise their right to foreclose on the covered assets of
MVP.com, it could cause the value of MVP.com, and therefore of units in JWG
Liquidating Company, to be reduced, and the reduction could be substantial. On
the other hand, we do not know the amounts of the underlying obligations, or the
terms for their payment, and thus we do not know if there is any practical risk
of such a default or whether it would be material in any event.
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<PAGE>
OWNERSHIP OF UNITS BY CERTAIN PERSONS
The following table presents information regarding the anticipated
beneficial ownership of units, following the special dividend, by each person
anticipated by JWGenesis to own beneficially 5% or more of the units, and by
each managing member of JWG Liquidating Company. The information in the table is
based upon the actual holdings of JWGenesis common stock as of October 1, 2000,
and assumes, solely for illustrative purposes, that the special dividend was
paid as of such date, so as to inform you of what the beneficial ownership of
units of JWG Liquidating Company would have been at that time. Actual ownership
on the November 10, 2000 record date for the special dividend may vary from that
shown in the table.
In determining the percent of units owned, we have also assumed that all of
the approximately 25% of the units received from JWG Liquidating Company and
reserved by us for other corporate purposes are in fact issued for those
purposes, resulting in a total of 11,400,000 outstanding units. We have also
assumed that each person included in the table who owns options or warrants to
purchase our common stock will agree to the cancellation thereof in connection
with our planned merger with First Union, and as a result will be issued a
portion of such reserved units based on his ownership.
<TABLE>
<CAPTION>
SHARES OF JWGENESIS UNITS OF JWG PERCENT OF
NAME AND ADDRESS STOCK OWNED(1) LIQUIDATING COMPANY TOTAL UNITS(2)
--------------------------------------------- ------------------- ------------------- --------------
<S> <C> <C> <C>
Marshall T. Leeds ........................... 1,163,171 1,223,285(3) 10.7%
c/o JWGenesis Financial Corp.
1117 Perimeter Center West, Suite 500E
Atlanta, Georgia 30338
Joel E. Marks ............................... 532,473 560,946(4) 4.9%
c/o JWGenesis Financial Corp.
1117 Perimeter Center West, Suite 500E
Atlanta, Georgia 30338
John A. Elway ............................... 38,557 563,557(5) 4.9%
c/o JWGenesis Financial Corp.
1117 Perimeter Center West, Suite 500E
Atlanta, Georgia 30338
Managing members as a group (2 persons)...... 1,695,644 1,784,231(6) 15.6%
</TABLE>
------------------------
(1) Includes issued and outstanding shares only; does not include shares covered
by options or warrants to purchase shares.
(2) All percentages will increase proportionally to the extent reserved units
are not issued and are cancelled. In the event of any such cancellation, all
shareholders receiving the special dividend will experience an identical
proportionate increase in their percentage ownership of units.
(3) Includes 60,114 units assumed to be issued from the reserved amount based on
his ownership of options to purchase 60,114 shares, in addition to the
1,163,171 units to be received as part of the special dividend.
(4) Includes 28,473 units assumed to be issued from the reserved amount based on
his ownership of options to purchase 28,473 shares, in addition to the
532,473 units to be received as part of the special dividend.
(5) Includes 525,000 units assumed to be issued from the reserved amount based
on his ownership of options to purchase 525,000 shares, in addition to the
38,557 units to be received as part of the special dividend.
(6) See Notes (3) and (4).
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DESCRIPTION OF UNITS
THE FOLLOWING DESCRIPTION OF THE RIGHTS AND RESTRICTIONS RELATING TO THE
UNITS DOES NOT PURPORT TO BE COMPLETE. IT IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO THE AMENDED AND RESTATED CERTIFICATE OF FORMATION AND THE OPERATING
AGREEMENT AND PLAN OF LIQUIDATION OF JWG LIQUIDATING COMPANY, WHICH ARE ATTACHED
AS ANNEXES A AND B, RESPECTIVELY, TO THIS INFORMATION STATEMENT.
GENERAL
JWG Liquidating Company has authority under its Amended and Restated
Certificate of Formation and Operating Agreement and Plan of Liquidation to
issue up to 12,000,000 units of membership interest. It cannot issue any other
securities or rights that represent an ownership interest in its business. As a
result, the owners of its units of membership interest are the owners of JWG
Liquidating Company, and the units are analogous, as a matter of equity
ownership, to shares of stock in a corporation. As discussed above, there are
important differences between these units in a limited liability company and
shares of stock in a corporation (including treatment for federal income tax
purposes).
In connection with its formation by us, JWG Liquidating Company entered into
the Stock Transfer Agreement with us, pursuant to which it issued 11,400,000
units to us. These are the only units outstanding, and the requirements for JWG
Liquidating Company to issue any additional units are stringent. It is not
expected that any additional units will be issued.
LIMITED LIABILITY OF MEMBERS AND OTHER HOLDERS OF UNITS
Pursuant to Delaware law, in general only JWG Liquidating Company itself is
liable for its debts, obligations, and other liabilities, and a member or other
holder of units of JWG Liquidating Company is not personally liable for such
liabilities of JWG Liquidating Company solely by reason of his or her being a
member or holder of units.
ALLOCATION OF PROFITS AND LOSSES; DISTRIBUTIONS
All units will share equally in allocations of the profits and losses of JWG
Liquidating Company, and are entitled to share equally in any distributions that
the managing members may, in their discretion, declare out of sources legally
available therefor. Holders of units will also be entitled to receive periodic
ratable distributions of all cash received by JWG Liquidating Company in respect
of its ownership of MVP.com stock in excess of a reasonable cash reserve, to be
determined by the managing members, for the payment of costs and expenses
anticipated to be incurred or to become due or payable by JWG Liquidating
Company. Upon dissolution and following payment of all debts and liabilities of
JWG Liquidating Company, the holders of units will be entitled to participate in
a pro-rata distribution of all assets and property of JWG Liquidating Company
based on the number of units held.
DISSOLUTION AND LIQUIDATION
JWG Liquidating Company was formed with the expectation that it will be able
to dissolve and effect a liquidating dissolution to its unitholders at the
earliest occasion permissible. Under the terms of its governing documents, it
will dissolve promptly upon the first to occur of any of the following events:
- a sale or other disposition of all or substantially all of its assets,
other than cash (which, as a practical matter, would require the prior
approval of MVP.com);
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- the closing of an initial public offering by MVP.com and the expiration of
any lock-up period required by the underwriters in that offering, or the
occurrence of another event (unrelated to the formation of JWG Liquidating
Company and the distribution of its units) that results in MVP.com
becoming subject to the reporting requirements of the Securities Exchange
Act of 1934;
- the express written approval of MVP.com to a distribution of the MVP.com
shares to the holders of units of JWG Liquidating Company; or
- the tenth anniversary of the date of its formation; provided that the
managing members may cause JWG Liquidating Company to continue for
successive terms of one year each if, at the end of such ten-year term or
successive one-year extension, no other event of dissolution has occurred.
Until one of these events occurs, however, JWG Liquidating Company will have
no ability to realize value for the benefit of the holders of units.
At the time a liquidating distribution occurs, JWG Liquidating Company
intends to use a method for dealing with any fractional shares of MVP.com stock
that it determines to be fair and equitable at that time.
VOTING
As discussed earlier, the business and affairs of JWG Liquidating Company
are generally managed by its managing members. The holders of units who are
admitted as a member of JWG Liquidating Company are entitled to one vote per
unit on any issue submitted to a vote of the members. Holders of units who have
not been admitted as a member of JWG Liquidating Company do not have voting
rights. All persons who receive units directly from us (whether as part of the
special dividend, or later as part of our issuance of reserved units) will be
deemed admitted as members, and so will be able to vote as members the units
they so received. Transferees of such persons will not automatically become
members, although they will be recognized as "holders" of the units for all
economic purposes if the transfer complies with the applicable transfer
restrictions. See "--Non-Member Transferees" and "--Transfer Restrictions" on
page 26.
All matters on which members are entitled to act may be acted upon by
members at special meetings or by written consent. Members holding a majority of
the outstanding units will constitute a quorum for the transaction of business
at any meeting of members, and, where a quorum is present, the affirmative vote
of members holding a majority of the units held by members represented at such
meeting will constitute an act of JWG Liquidating Company. Members holding a
majority of the outstanding units held by members at the time of the subject
vote may act on all matters by written consent, except for the removal of the
managing members and the amendment of the Operating Agreement and Plan of
Liquidation. An affirmative vote of members holding at least ninety percent
(90%) of the outstanding units held by members at the time of the subject vote
is required to remove the managing members. Further, the Operating Agreement and
Plan of Liquidation may be amended only upon (a) the approval of any such
amendment by the managing members; and (b) the affirmative vote of members
holding a majority of the outstanding units held by members at the time of the
subject vote; provided, however, that the affirmative vote of each member
adversely affected is necessary to adopt any amendment that has the effect of
reducing the rights or privileges of a member's units with respect to other
units. Because Messrs. Leeds and Marks will own an aggregate of more than 10% of
the outstanding units, they collectively will have the ability to prevent their
removal as managing members.
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TRANSFER RESTRICTIONS
In general, no holder of units (other than JWGenesis with respect to the
distribution of the special dividend and the reserved amount for corporate
purposes) may assign, convey, sell, transfer, pledge, encumber, or in any way
alienate all or any part of such holder's units or interests in units without
the prior written consent of the managing members, which consent may be withheld
in the sole discretion of the managing members. However, subject to certain
requirements, a holder may:
- transfer or assign units to his or her spouse, ancestors, lineal
descendants, or siblings, or to a trust for the benefit of any such
person; or
- transfer or assign units upon the death, disability, or mental
incompetence of such holder.
In addition, the managing members have determined, at our request, to approve
and permit any record holder of our common stock who owns the stock as a nominee
for the benefit of another person (including stock held in "street name") to
transfer record ownership of any units received by such nominee to the name of
such beneficial owner. A purported transferee of units in a transaction that
does not comply with all applicable transfer restrictions will not be recognized
by JWG Liquidating Company as a holder of the units, as a non-member transferee,
or as having any other status of owner in the units or otherwise in JWG
Liquidating Company. Any transferee will be subject to the same transfer
restrictions.
NON-MEMBER TRANSFEREES
Any transferee who receives units pursuant to a permitted transfer will be
treated as a "non-member transferee", and not as a member, unless and until:
- his or her ownership of units are registered with JWG Liquidating Company
for recording on its membership list;
- he or she executes a written agreement to indemnify and hold harmless JWG
Liquidating Company and its other members from and against all
liabilities, losses, costs, and expenses arising out of the transfer; and
- upon the request by JWG Liquidating Company, he or she has paid the
reasonable expenses incurred by JWG Liquidating Company and the managing
members in connection with the admission of the non-member transferee as a
member.
A non-member transferee is entitled to receive distributions from JWG
Liquidating Company by virtue of being a holder of units, but will not have
voting rights or any other right reserved to members under the Operating
Agreement and Plan of Liquidation.
A purported transferee of units in a transaction that does not comply with
all applicable transfer restrictions will not be recognized by JWG Liquidating
Company as a holder of the units, as a non-member transferee, or as having any
other status of owner in the units or otherwise in JWG Liquidating Company.
NO CERTIFICATES
No certificates representing the units are proposed to be issued to holders
of units, in light of the substantial restrictions imposed on the transfer of
units, and so no delivery of a certificate or other instrument is necessary to
establish a shareholder's ownership of units paid as a dividend. After the
record date for the special dividend, shareholders on that date will receive a
letter indicating the number and percentage of outstanding units they own.
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<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
JWGenesis is subject to the information filing and reporting requirements of
the Securities Exchange Act of 1934 and files reports, proxy statements, and
other information with the Securities and Exchange Commission. You may read and
copy any materials filed with the Securities and Exchange Commission at its
public reference room in Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549. You may obtain information on the operation of the SEC's public
reference room by calling the SEC at (800)-SEC-0330. In addition, the SEC
maintains an internet website at http://www.sec.gov that contains reports, proxy
statements, and other information.
Beginning not later than April 30, 2001, it is expected that JWG Liquidating
Company LLC will be required to file annual, quarterly, and current reports,
proxy and information statements, and other information with the SEC pursuant to
the Securities Exchange Act of 1934. In that event, you will be able to review
that information when filed at the SEC's Public Reference Room or on the SEC's
website, as described above.
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<PAGE>
ANNEX A
AMENDED AND RESTATED
CERTIFICATE OF FORMATION
OF
JWG LIQUIDATING COMPANY LLC
The undersigned, an authorized person of JWG Liquidating Company LLC, for
the purpose of amending and restating in its entirety the certificate of
formation of JWG Liquidating Company LLC, as filed on October 13, 2000 with the
Delaware Secretary of State, pursuant to Section 18-208 of the Delaware Limited
Liability Company Act, hereby certifies that the following is the Amended and
Restated Certificate of Formation of JWG Liquidating Company LLC:
FIRST: The name of the limited liability company (the "Company") is:
JWG Liquidating Company LLC
SECOND: The address of the registered office and the name and the address of
the registered agent of the Company required to be maintained by Section 18-104
of the Delaware Limited Liability Company Act are:
Corporation Service Company
2711 Centerville Road, Suite 400
County of New Castle
Wilmington, Delaware 19808
THIRD: The Managing Members of the Company are Marshall T. Leeds and
Joel E. Marks. A Managing Member may be removed only upon the affirmative vote
of members holding at least ninety percent (90%) of the total number of
outstanding membership interests ("Units") held by members at the time of the
subject vote; PROVIDED, HOWEVER, that either of the Managing Members shall be
entitled to appoint a successor to the other if the other shall resign or become
disabled or deceased.
FOURTH: Except as expressly provided herein or in the Company's Operating
Agreement, no holder of Units may assign, convey, sell, transfer, pledge,
encumber, or in any way alienate all or any part of such holder's Units or
interests in Units without the prior written consent of the Managing Members,
which consent may be withheld in the sole discretion of the Managing Members.
Dated as of October 20, 2000.
<TABLE>
<S> <C>
/s/ JOEL E. MARKS
----------------------------------------
Joel E. Marks
Vice Chairman
JWGenesis Financial Corp.
</TABLE>
<PAGE>
ANNEX B
JWG LIQUIDATING COMPANY LLC
OPERATING AGREEMENT
AND PLAN OF LIQUIDATION
DATED AS OF
OCTOBER 20, 2000
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TABLE OF CONTENTS
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ARTICLE I GENERAL...................................................... 2
1.1 Formation; Members.......................................... 2
1.2 Definitions................................................. 2
1.3 Name........................................................ 2
1.4 Management.................................................. 2
1.5 Purpose of the Company...................................... 2
1.6 Offices..................................................... 3
1.7 Term........................................................ 3
1.8 Conflict of Interest Transactions........................... 3
ARTICLE II AUTHORIZATION OF UNITS; STATUS OF MEMBERS................... 3
2.1 Units....................................................... 3
2.2 Unit Register; Registration of Transfer..................... 3
2.3 Record Date................................................. 3
2.4 Further Termination of JWG as a Member...................... 4
ARTICLE III CAPITALIZATION; INITIAL ISSUANCE OF UNITS.................. 4
3.1 Capital Contributions....................................... 4
3.2 No Interest on Contributions................................ 4
3.3 Loans....................................................... 4
ARTICLE IV INVESTMENT DISTRIBUTIONS.................................... 4
Operating Cash Flow and Disposition Proceeds Distribution 4
4.1 Dates.......................................................
4.2 Distributions of Operating Cash Flow........................ 4
4.3 Distributions of Disposition Proceeds....................... 4
4.4 Distributions upon Dissolution.............................. 4
4.5 Withholding from Distributions.............................. 4
ARTICLE V MANAGING MEMBERS............................................. 5
5.1 Appointment of Managing Members............................. 5
5.2 Powers of Managing Members.................................. 5
5.3 Duties of Managing Members; Limitation of Liability......... 6
5.4 Other Activities of Managing Members........................ 7
5.5 Compensation of Managing Members............................ 7
5.6 Replacement of Managing Members............................. 7
5.7 Requirement for Action...................................... 7
ARTICLE VI POWERS, RIGHTS AND LIABILITIES OF HOLDERS................... 7
6.1 Management.................................................. 7
6.2 No Withdrawals.............................................. 7
ARTICLE VII MEETINGS OF MEMBERS; VOTING................................ 8
7.1 Special Meetings............................................ 8
7.2 Place of Meetings........................................... 8
7.3 Notice of Meetings.......................................... 8
7.4 Meeting of All Members...................................... 8
7.5 Quorum...................................................... 8
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7.6 Manner of Acting............................................ 8
7.7 Amendment................................................... 9
7.8 Proxies..................................................... 9
7.9 Action by Members without a Meeting......................... 9
7.10 Waiver of Notice............................................ 9
ARTICLE VIII TRANSFER AND ASSIGNMENT OF UNITS.......................... 9
8.1 General Prohibition......................................... 9
8.2 Permitted Transfers......................................... 9
8.3 Admission As A Member....................................... 10
8.4 Non-Member Transferee....................................... 10
8.5 Unauthorized Transfer....................................... 10
ARTICLE IX ACCOUNTING, BOOKS AND RECORDS............................... 11
9.1 Accounting Methods; Fiscal Year............................. 11
9.2 Books and Records........................................... 11
9.3 Financial Reports and Tax Returns........................... 11
9.4 General Information......................................... 11
9.5 Tax Matters Partner......................................... 11
9.6 Adjustment of Tax Basis..................................... 11
ARTICLE X PROFITS AND LOSSES........................................... 12
10.1 Allocation of Profits and Losses............................ 12
10.2 Regulatory Allocations...................................... 12
10.3 Tax Items; Contributed and Revalued Property................ 14
ARTICLE XI DISSOLUTION................................................. 14
11.1 Events of Dissolution....................................... 14
11.2 No Action for Dissolution................................... 14
ARTICLE XII LIQUIDATION................................................ 15
12.1 Liquidation................................................. 15
12.2 No Further Claim............................................ 15
ARTICLE XIII DEFINITIONS............................................... 15
13.1 Definitions In General...................................... 15
13.2 Certain Definitions......................................... 16
ARTICLE XIV MISCELLANEOUS.............................................. 19
14.1 Applicable Law.............................................. 19
14.2 Notices..................................................... 19
14.3 Entire Agreement............................................ 19
14.4 Tax Partnership; No Inference............................... 19
14.5 Creditors Not Benefited..................................... 19
14.6 Severability................................................ 20
14.7 Successors.................................................. 20
14.8 Counterparts................................................ 20
14.9 Section Headings............................................ 20
14.10 Time........................................................ 20
14.11 Usage....................................................... 20
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JWG LIQUIDATING COMPANY LLC
OPERATING AGREEMENT
AND PLAN OF LIQUIDATION
THIS OPERATING AGREEMENT AND PLAN OF LIQUIDATION (this "AGREEMENT") is made
and entered into as of the 20thday of October, 2000, by and among JWG
LIQUIDATING COMPANY LLC, a Delaware limited liability company (the "COMPANY"),
JWGenesis Financial Corp., a Florida corporation ("JWG"), Marshall T. Leeds
("LEEDS") and Joel E. Marks ("MARKS"), together with any Person who is hereafter
admitted as a Member pursuant to SECTION 8.3.
W I T N E S S E T H:
WHEREAS, JWG has determined that it is in the best interest of JWG and its
shareholders to distribute out of JWG the 1,236,379 shares of Series A Preferred
Stock and 117,388 shares of Series C Preferred Stock of MVP.com, Inc., a
Delaware corporation ("MVP") owned by JWG (collectively, the "MVP SHARES"), in
part because of the potential tax benefits of making such a distribution at this
time;
WHEREAS, in connection with the Agreement and Plan of Merger between JWG and
First Union Corporation dated August 31, 2000 (the "MERGER AGREEMENT"), JWG is
required to dispose of the MVP Shares;
WHEREAS, JWG's ownership of the MVP Shares is subject to the terms and
conditions of an Amended and Restated Investor Rights Agreement, Amended and
Restated Right of First Refusal and Co-Sale Agreement and Amended and Restated
Voting Agreement, among MVP, JWG and the other investors named therein
(collectively, the "INVESTOR AGREEMENTS");
WHEREAS, the Investor Agreements restrict the ability of JWG to distribute
the MVP Shares without the consent of MVP;
WHEREAS, MVP will not consent to a distribution of the MVP Shares directly
to JWG's shareholders because, among other reasons, such distribution would
cause MVP to become a public company under applicable securities laws;
WHEREAS, in light of the foregoing, JWG has decided to transfer the MVP
Shares to the Company, with the understanding that the Company will distribute
the MVP Shares (or the proceeds from their sale) to holders of its membership
interests promptly after it is legally and contractually permitted to do so;
WHEREAS, promptly after any such distribution of the MVP Shares (or the
proceeds from their sale, together with any other assets of the Company), the
Company shall take all necessary action to effectuate its complete liquidation
and dissolution, including filing a certificate of cancellation of the Company
with the Secretary of State of Delaware in order to terminate its existence
except for the limited purposes provided by Delaware law;
WHEREAS, the parties hereto have therefor formed JWG Liquidating Company LLC
as a limited liability company pursuant to the Delaware Limited Liability
Company Act, Del. Code Tit. 6, Section 18-101, ET SEQ. (the "ACT") for the
specific purpose hereinafter provided; and
WHEREAS, the parties desire to operate the Company as a partnership for U.S.
federal income tax purposes;
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NOW, THEREFORE, for and in consideration of the foregoing premises, the
mutual covenants and agreements contained in this Agreement, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto do hereby covenant and agree as follows:
ARTICLE I
GENERAL
1.1 FORMATION; MEMBERS. The Members (as defined below) acknowledge that
the Company was formed as a Delaware limited liability company on October 13,
2000 by the filing of the certificate of formation (the "FORMATION CERTIFICATE")
by JWG (the "ORGANIZER"), pursuant to the Act. JWG, Leeds and Marks, together
with all Persons who are hereafter admitted as a Member pursuant to Section 8.3
will constitute the members of the Company pursuant to the Act (individually,
each a "MEMBER", and collectively, the "MEMBERS"). The Members hereby ratify and
approve the Formation Certificate and the actions taken by the Organizer on
behalf of the Company.
1.2 DEFINITIONS. Certain capitalized terms not otherwise defined in the
body of this Agreement are defined in Article XIII.
1.3 NAME. The name of the Company is, and the business of the Company will
be conducted under the name JWG Liquidating Company LLC, unless the Managing
Members (as defined in SECTION 1.4) change the Company's name or implement a
different trade name for the business of the Company. The Company will hold
itself out to the public as a company in the process of liquidation and any
Company name or trade name will so reflect.
1.4 MANAGEMENT. The full and entire management of the business and affairs
of the Company is vested in Leeds and Marks as Managing Members of the Company
(the "MANAGING MEMBERS"), who have and may exercise all of the powers that the
Company may exercise or perform. Except for situations in which the approval of
the Members is expressly required by this Agreement or by nonwaivable provisions
of applicable law, the Managing Members have full and complete authority, power,
and discretion to manage and control the business, affairs, and properties of
the Company, to make all decisions regarding those matters, whether or not in
the ordinary course of business, and to perform any and all other acts or
activities customary or incident to the management of the Company's business.
1.5 PURPOSE OF THE COMPANY. The purpose of the Company (the "BUSINESS") is
(i) to acquire from JWG the MVP Shares; (ii) to hold, preserve and ultimately
dispose of, as expeditiously as permitted and practicable, the MVP Shares
(including without limitation to distribute the MVP Shares, or the proceeds from
a sale or sales thereof, to the Holders pursuant to this Agreement); (iii) to
acquire and exercise all rights, privileges and entitlements of, and perform all
duties as, a shareholder of MVP, including without limitation any and all rights
and obligations of the Company (as contemplated under the Stock Transfer
Agreement, dated the date hereof, between the Company, JWG and JWGenesis
Financial Services, Inc. (the "TRANSFER AGREEMENT")) under the Investor
Agreements, as each such document is thereafter amended; and (iv) to take all
actions, including without limitation filing documents with, and otherwise
complying with the requirements of, governmental bodies and other regulatory
entities, necessary or advisable in the opinion of the Managing Members to
effectuate or facilitate the resale or other distribution by JWG of the Units
being issued to it pursuant to the Transfer Agreement. The Company may engage in
other activities incidental to the Business as may be necessary or desirable, in
the opinion of the Managing Members, to promote and carry out the Business. The
Company may not engage in any activities or business not related or incidental
to the Business.
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1.6 OFFICES. The mailing address of the principal office of the Company is
1117 Perimeter Center West, Suite 500E, Atlanta, Georgia 30338. The Company's
initial registered office in the State of Delaware is located at 1013 Centre
Road, Wilmington, County of New Castle, Delaware 129805, and the Company's
initial registered agent at such address is Corporation Service Company. The
Company may designate a different principal office, registered office, or
registered agent for the Company. The Company may have additional offices at
such other places as the Managing Members deem advisable.
1.7 TERM. The Company commenced on the date of the filing of the Formation
Certificate and will continue until the Company is dissolved and liquidated
pursuant to ARTICLE XI and ARTICLE XII.
1.8 CONFLICT OF INTEREST TRANSACTIONS. No transaction effected or proposed
to be effected by the Company may be enjoined, set aside, or give issue to an
award of damages or other sanctions, in an action by a Holder, or by or in the
right of the Company, on the ground of a conflicting interest in the transaction
of a Holder or any other Person with whom or which he or it has a personal
economic or other association; PROVIDED, HOWEVER, that this SECTION 1.8 will not
be construed to eliminate or limit the liability of any Holder for material loss
or damage resulting from intentional misconduct, knowing violation of law, gross
negligence, or a transaction from which such Person received a material personal
benefit in violation or breach of the provisions of this Agreement or his or her
obligations to the Company.
ARTICLE II
AUTHORIZATION OF UNITS; STATUS OF MEMBERS
2.1 UNITS. All membership interests in the Company, including a Holder's
distributive share of the capital, profits, and losses of the Company and the
right to receive distributions of other property from the Company, are as set
forth in this Agreement. For certain purposes as indicated in this Agreement,
all such membership interests are represented by units (such units being
referred to herein as "UNITS"). The Company shall have one class of Units and
the Units shall carry with them the rights to distributions and allocations as
are more specifically set forth in this Agreement. The Company shall issue a
maximum number of Twelve Million (12,000,000) Units.
2.2 UNIT REGISTER; REGISTRATION OF TRANSFER.
(a) The Company shall keep at its principal office a register for the
recordation of issuances and transfers of Units. The name and address of
each Member in his, her, or its capacity as the recordholder of one or more
Units, and the name and address of each transferee of one or more Units,
will be in such register. Prior to any transfer or assignment of a Unit
permitted pursuant to ARTICLE VIII, the Person in whose name any Unit is
registered will be deemed and treated as the owner thereof for all purposes
hereof, and the Company will not be affected by any notice or knowledge to
the contrary. A Person will not, by virtue of becoming a transferee of
Units, become a Member unless such Person is admitted as a Member pursuant
to SECTION 8.3.
(b) Subject to the limitations on the transfer of Units set forth in
ARTICLE VIII, the Company shall reflect on the Unit register of the Company
transfers of Units by the transferring Holder in person or by power of
attorney, upon receipt of a validly executed instrument duly evidencing the
assignment of the Units assigned to the transferee, and only upon compliance
with the provisions of this Agreement.
2.3 RECORD DATE. For the purpose of determining Members entitled to notice
of or to vote at any meeting of Members or any adjournment thereof, or Holders
entitled to receive any distribution, or in order to make a determination of
Holders or Members for any other purpose, the date on which notice of the
meeting is mailed or the date on which the resolution declaring such
distribution is adopted, as the case may be, will be the record date for such
determination of Holders or Members. When a determination of Members entitled to
vote at any meeting of Members has been made as provided in this SECTION 2.3,
such determination will apply to any adjournment of such meeting.
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2.4 FUTURE AUTOMATIC TERMINATION OF JWG AS A MEMBER AND HOLDER. When and
if JWG shall cease to own any Units (which is contemplated by the parties hereto
as a result of JWG's plans to distribute, or to cancel if not so distributed,
the Units initially being issued to it as provided in SECTION 3.1), then JWG
shall immediately and automatically cease to be a Member and Holder.
ARTICLE III
CAPITALIZATION; INITIAL ISSUANCE OF UNITS
3.1 CAPITAL CONTRIBUTIONS. Pursuant to the terms of the Transfer
Agreement, JWG has been issued the number of Units specified in the Transfer
Agreement, in exchange for a capital contribution to the Company by JWG (the
"CAPITAL CONTRIBUTION") of (a) $100,000 in cash; (b) the MVP Shares; and
(c) related rights under the Investor Agreements as set forth in the Transfer
Agreement.
No Member or Holder has any obligation to make any further capital
contributions to the Company, or otherwise to invest any funds in, or make any
loan or advance to, the Company.
3.2 NO INTEREST ON CONTRIBUTIONS. No Member or Holder has any right or
entitlement to receive interest on any Capital Contribution.
3.3 LOANS. If the Managing Members determine that loans are necessary or
appropriate in connection with the conduct of the Business, the Company may, but
has no obligation to, grant to Holders the opportunity (but not the obligation)
to participate in such loans on such basis as the Managing Members, in their
sole discretion, determine. If the Company borrows money from any Holder
pursuant to this SECTION 3.3, such loan will bear interest at a commercially
reasonable rate. The Company shall pay all principal and interest of the loan
payable pursuant to the terms thereof before making any distribution to the
Holders under the provisions of this Agreement. If any funds are available for
payment of amounts due pursuant to loans from Holders, but such funds are not
adequate to pay all such amounts due in full, the Company shall make payment pro
rata according to the respective amounts due (including both principal and
interest) on all Holder loans. Except as otherwise provided in this Agreement,
any Holder who lends money to the Company hereunder will be deemed a general
creditor of the Company and not a Holder for the purpose of paying principal and
interest of any such loan.
ARTICLE IV
INVESTMENT DISTRIBUTIONS
4.1 OPERATING CASH FLOW AND DISPOSITION PROCEEDS DISTRIBUTION DATES. The
Company shall distribute all of its Operating Cash Flow and Disposition Proceeds
to the Holders as soon as practicable after the receipt of such Operating Cash
Flow and Disposition Proceeds.
4.2 DISTRIBUTIONS OF OPERATING CASH FLOW. Prior to dissolution of the
Company, the Company shall distribute one hundred percent (100%) of the
Operating Cash Flow to the Holders of Units pro rata in accordance with the
number of Units held by each such Holder.
4.3 DISTRIBUTIONS OF DISPOSITION PROCEEDS. Prior to the dissolution of the
Company, the Company shall distribute one hundred percent (100%) of the
Disposition Proceeds to the Holders of Units pro rata in accordance with the
number of Units held by each such Holder.
4.4 DISTRIBUTIONS UPON DISSOLUTION. Upon the dissolution of the Company,
the Company shall distribute the proceeds from the liquidation of its assets
pursuant to SECTION 12.1.
4.5 WITHHOLDING FROM DISTRIBUTIONS. The Company may withhold from
distributions or with respect to allocations and pay over to any federal, state,
or local government any amount required to be withheld pursuant to the Code or
any provision of any other federal, state, or local law and may
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allocate any such amounts among the Holders in any manner that is in accordance
with applicable law. All amounts withheld pursuant to the Code or any provision
of any state or local tax law with respect to any payment, distribution, or
allocation to the Company or to the Holders will be treated as amounts
distributed to the Holders pursuant to this ARTICLE IV for all purposes of the
Agreement.
ARTICLE V
MANAGING MEMBERS
5.1 APPOINTMENT OF MANAGING MEMBERS. Leeds and Marks, as Managing Members,
exclusively shall manage the assets, affairs, and operations of the Company.
Except as otherwise expressly provided herein, no Member other than the Managing
Members may have any part in or interfere in any manner with the management or
control of the Company, nor does any Member other than the Managing Members have
any authority or right to act on behalf of the other Members or to bind the
Company in connection with any matter, except as otherwise expressly provided
herein.
5.2 POWERS OF MANAGING MEMBERS. Except as otherwise expressly provided
herein, all references herein to any action to be taken by the Company means
action taken in the name of the Company and on its behalf by the Managing
Members. Without limiting the generality of SECTION 1.4, but subject to the
limitations imposed by this Agreement, the Investor Agreements and by any
nonwaivable provision of applicable law, the Managing Members have the authority
of a "manager" pursuant to the Act, including, without limitation, the authority
to take the following actions on behalf of the Company:
(a) To execute all agreements and other documents necessary to implement
the purpose of the Company, to take such action as may be necessary to
consummate the transactions contemplated thereby, and to make all reasonably
necessary arrangements to carry out the Company's obligations in connection
therewith;
(b) To sell, exchange, or otherwise dispose of any portion of the assets
of the Company;
(c) To borrow money and incur other obligations;
(d) To draw, make, accept, endorse, sign, and deliver any notes, drafts,
or other negotiable instruments or commercial paper;
(e) To deed as security, mortgage, pledge, or grant security interests
in, or otherwise encumber, any assets of the Company;
(f) To prepay, in whole or in part, refinance, recast, increase, modify,
consolidate, or extend any security interest affecting any assets of the
Company;
(g) To establish, maintain, and draw upon checking, savings, and other
accounts in the name of the Company in such bank or banks as the Managing
Members may from time to time select, and to designate others to draw upon
any such accounts;
(h) To employ, fix the compensation of, oversee and discharge agents,
servants, and other employees of the Company;
(i) To compromise any claim or liability due to the Company;
(j) To execute, acknowledge, or verify, and file any notifications,
applications, statements, and other filings that the Managing Members
consider necessary or desirable to be filed with any state or federal
securities administrator or commission;
(k) To make any tax elections to be made by the Company under
Regulations section 1.703-1(b) (relating to tax elections made by
partnerships);
(l) To employ one or more trade names in the operation of the Company;
(m) To execute, acknowledge, or verify, and deliver any and all
instruments that the Managing Members consider necessary or desirable to
effectuate any of the foregoing;
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(n) To acquire, vote, sell, exchange, assign, transfer, create security
interests in, pledge, or otherwise dispose of, or otherwise exercise any and
all rights and powers incident to the ownership of, the MVP Shares or other
interests in MVP now or hereafter held by or in the name of the Company,
including, without limitation, to execute any consent of shareholders,
members, or partners, or other consents in respect of any such security or
other interest; PROVIDED, HOWEVER, that any proposed action to be taken
pursuant to this subparagraph (n) that is not otherwise expressly permitted
under this Agreement may be taken by the Managing Members only upon the
receipt by them of an opinion from legal counsel to the Company to the
effect that such proposed action would not cause the Company to be deemed an
"investment company" under the Investment Company Act of 1940, as amended
(the "1940 ACT"), or, if the Company were otherwise deemed to be an
"investment company", would not violate any provision thereof;
(o) To take any and all actions, and to execute and deliver any and all
instruments, that the Managing Members consider necessary or advisable to
effectuate the provisions of the Transfer Agreement;
(p) Other than the Units issued pursuant to the Transfer Agreement, to
issue up to 600,000 additional Units, upon the unanimous vote of the
Managing Members following the Company's receipt of a written notice from
JWG that additional Units are required by it to accomplish a corporate
purpose that has been expressly approved by the outside members of JWG's
board of directors;
(q) To do any or all of the foregoing, discretionary or otherwise,
through agents selected by the Managing Members and compensated or
uncompensated by the Company; and
(r) To do any or all of the foregoing upon such other terms and
conditions as the Managing Members, in their discretion, determine in good
faith to be necessary, desirable, or appropriate, whether in the ordinary
course of business or otherwise.
Notwithstanding anything herein to the contrary, the Managing Members may
not distribute to the Holders any or all of the MVP Shares unless and until
(1) MVP provides written authorization for such sale or transfer; or (y) MVP
becomes subject to the reporting requirements of the Securities Exchange Act of
1934, as amended (the "1934 ACT"). Furthermore, the Managing Members (x) will,
pending distribution to the Holders, invest all Company assets (including the
proceeds from any sale of MVP Shares) in cash, U.S. government securities, or
certificates of deposit, and only for the purpose of preserving the value of the
assets and not for speculation, and (y) will not place advertisements in the
media promoting the Company.
5.3 DUTIES OF MANAGING MEMBERS; LIMITATION OF LIABILITY. The Managing
Members shall act in good faith and in the best interest of the Company and with
such care as an ordinarily prudent Person in a like position would use under
similar circumstances. A Managing Member shall have no liability to the Company
or any Holder for any loss suffered by the Company or any Holder that arises out
of any act or omission by either of the Managing Members, if the Managing Member
performs his duty in compliance with the standard set forth in the immediately
preceding sentence, except material loss or damage resulting from intentional
misconduct, knowing violation of law, gross negligence, or a transaction from
which the Managing Member received a material personal benefit in violation or
breach of the provisions of this Agreement or its obligations to the Company. To
the fullest extent permitted under Delaware law, the Company shall indemnify,
defend, and hold each Managing Member harmless from, against and in respect of
any liabilities, damages, losses, costs, or expenses incurred by the Managing
Member as a result of any act or omission believed by the Managing Member in
good faith to be within the scope of authority conferred upon him by this
Agreement, provided such act or omission was not the result of intentional
misconduct, knowing violation of law, gross negligence, or a transaction for
which the Managing Member received a material personal benefit in violation or
breach of the provisions of this Agreement or his obligations to the Company.
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5.4 OTHER ACTIVITIES OF MANAGING MEMBERS. The Members acknowledge that the
Managing Members may be or may become in the future engaged or associated in
such businesses and activities of any nature or description, independently or
with others, as either may choose, without regard to whether any such business
or activity is similar to or competitive with the Company. Neither the Company
nor any of the Holders have any rights by virtue of this Agreement or any status
as a Member and/or Holder in or to such independent businesses or activities or
to the income or profits derived from such independent businesses or activities.
5.5 COMPENSATION OF MANAGING MEMBERS. The Managing Members will not
receive any salaries or other compensation for their service as such, unless a
majority of the Members approve such compensation; PROVIDED, HOWEVER, that the
foregoing does not limit the Managing Members' rights with respect to Units they
may come to own as provided in this Agreement, or to reimbursement for expenses
incurred by them in acting as a Managing Member.
5.6 REPLACEMENT OF MANAGING MEMBERS. A Managing Member may be removed only
upon the affirmative vote of Members holding at least ninety percent (90%) of
the total number of Units held by Members at the time of the subject vote;
PROVIDED, HOWEVER, that either of the Managing Members shall be entitled to
appoint a successor to the other if the other shall resign or become disabled or
deceased. Further, if at any time both Managing Members have resigned, become
disabled or are deceased without a successor having been appointed, the
principal legal counsel to the Company as of that time shall petition a court of
competent jurisdiction to call a special meeting of Members, and the Members
shall, by majority vote of the units then held by Members, elect a new Managing
Member or Managing Members.
5.7 REQUIREMENT FOR ACTION. The rights and powers of the Managing Members
hereunder may be exercised by either of them acting alone, and such solo action
shall be effective hereunder and for purposes of reliance by all other Persons
as binding upon the Company. If there shall be a disagreement between the
Managing Members with respect to any matter hereunder, the matter shall first be
submitted for review by and consultation with legal counsel to the Company, and
if no resolution is reached within ten (10) business days thereafter, the matter
shall then be submitted for binding arbitration before and in accordance with
the arbitration rules of the CPR Institute for Dispute Resolution ("CPR").
Arbitration proceedings shall be conducted by a single arbitrator selected by
CPR from its list of securities law arbitrators.
ARTICLE VI
POWERS, RIGHTS AND LIABILITIES OF HOLDERS
6.1 MANAGEMENT. Except as expressly set forth in this Agreement, no Holder
(other than the Managing Members) may take part in, or interfere in any manner
with, the conduct or control of the Business, and no Holder (other than the
Managing Members) has any right or authority to act or sign for, or to obligate
the Company.
6.2 NO WITHDRAWALS.
(a) No Holder is at any time entitled to withdraw any capital of the
Company, whether resulting from a Capital Contribution or otherwise, except
to the extent that such Holder may be entitled to a distribution pursuant to
the provisions of ARTICLE IV. The Holders have no right to demand and
receive any property other than cash in respect of or in connection with any
return of their Capital Contributions, and prior to the dissolution of the
Company pursuant to ARTICLE XI, they shall have no rights to receive
distributions, except pursuant to SECTION 4.2 and SECTION 4.3.
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(b) Notwithstanding the foregoing, the Company may cause a Holder to
withdraw, if in the reasonable good faith judgment of the Managing Members,
based upon the written advice of counsel to the Company, such Holder's
interest is (i) likely to cause the Company's assets to be deemed "plan
assets" for purposes of the regulations under the Employee Retirement Income
Security Act of 1974, as amended, or the Company or any Holder is reasonably
likely to be subject to any requirement to register under the Investment
Company Act 1940, as amended; or (ii) likely to result in a significant
delay, extraordinary expense, or material adverse effect on the Company or
any of its affiliates. Upon such withdrawal, the Company shall issue a note
to the withdrawing Holder with principal in the amount of the Holder's
Capital Account, adjusted to the date of payment, and interest payable at
the Prime Rate, compounded annually based on the then existing Prime Rate,
on any unpaid principal amounts. All principal and interest on such
promissory note will payable upon the dissolution of the Company. After
issuance of such promissory note, the withdrawing Holder will cease to be a
Holder and will have no rights of a Member and/or a Holder pursuant to this
Agreement.
ARTICLE VII
MEETINGS OF MEMBERS; VOTING
7.1 SPECIAL MEETINGS. The Company may call special meetings of Members,
for any purpose or purposes, unless otherwise prescribed by statute. The Company
shall call a special meeting of the Members upon the written request of the
Managing Members. The Members shall hold any such special meeting at such time
and place and on the date specified in the notice of the meeting.
7.2 PLACE OF MEETINGS. The Members may hold meetings of Members within or
outside the State of Delaware.
7.3 NOTICE OF MEETINGS. The Company shall give written notice of special
meetings of Members stating the place, date, and hour of the meeting not less
than ten (10) nor more than sixty (60) days before the date of the meeting,
either personally or by mail, by or at the direction of the Managing Members or
Person calling or requiring the call of the meeting, to each Member entitled to
vote at such meeting. Notice of a meeting may be waived by an instrument in
writing executed before or after the meeting. The waiver need not specify the
purpose of the meeting or the business transacted. Attendance at such meeting in
person or by proxy constitutes a waiver of notice thereof. Notice of any special
meeting of Members must state the purpose or purposes for which the meeting is
called.
7.4 MEETING OF ALL MEMBERS. If all of the Members meet at any time and
place, either within or outside of the State of Delaware, and consent to the
holding of a meeting at such time and place, such meeting will be valid without
call or notice, and at such meeting any lawful action may be taken.
7.5 QUORUM. At all meetings of Members, Members holding a majority of the
Units held by all Members constitute a quorum for the transaction of business.
In the absence of a quorum at any such meeting, Members holding a majority of
the Units held by Members represented at the meeting may adjourn the meeting
from time to time for a period not to exceed sixty (60) days without further
notice. If at the adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting must be given to each Member of
record entitled to vote at the meeting. At such adjourned meeting at which a
quorum is present or represented, any business may be transacted which might
have been transacted at the meeting as originally noticed. The Members present
at a duly organized meeting may continue to transact business until adjournment,
notwithstanding the withdrawal during such meeting of Members whose absence
would cause less than a quorum to be present.
7.6 MANNER OF ACTING. If a quorum is present, the affirmative vote of
Members holding a majority of the Units held by Members represented at the
meeting and entitled to vote is the act of the Members, unless the vote of a
greater or lesser proportion or number is otherwise required by the Act, by the
Formation Certificate, or by this Agreement. Unless otherwise expressly provided
in this
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Agreement or required under applicable law, Members who hold Units entitled to
vote and who have an interest (economic or otherwise) in the outcome of any
particular matter upon which the Members may be asked to vote or consent may
vote or consent upon any such matter and their vote or consent, as the case may
be, will be counted in the determination of whether the requisite matter was
approved by the Members.
7.7 AMENDMENT. In addition to specific requirements for Member action
elsewhere in this Agreement, the Members may amend this Agreement upon (a) the
approval of such amendment by the Managing Members; AND (b) the affirmative vote
of Members holding a majority of the outstanding Units held by Members at the
time of the subject vote; provided, however, that the affirmative vote of each
Member adversely affected is necessary to adopt any amendment that has the
effect of reducing the rights or privileges of a Member's Units with respect to
other Units.
7.8 PROXIES. At all meetings of Members, a Member may attend and vote in
person or by proxy executed in writing by the Member or by a duly authorized
attorney-in-fact. Such proxy must be delivered to the Company before or at the
time of the meeting. No proxy is valid after eleven (11) months from the date of
its execution, unless otherwise provided in the proxy.
7.9 ACTION BY MEMBERS WITHOUT A MEETING. Action required or permitted to
be taken at a meeting of Members may be taken without a meeting if the action is
evidenced by one or more written consents describing the action taken, signed by
the Members holding a majority of the Units held by Members, or such greater
number as may be required to approve such action, and delivered to the Company
for inclusion in the minutes or for filing with the Company records, with a copy
of such consent transmitted to all Members within ten (10) days after such
action becomes effective. Action taken under this SECTION 7.9 is effective when
the requisite number of Members required to approve such action have signed the
consent, unless the consent specifies a different effective date. The record
date for determining Members entitled to take action without a meeting is the
date the first Member signs a written consent.
7.10 WAIVER OF NOTICE. When any notice is required to be given to any
Member, a waiver thereof in writing signed by the person entitled to such
notice, whether before, at, or after the time stated therein, is equivalent to
the giving of such notice. Attendance in person at a meeting will constitute a
waiver of notice thereof.
ARTICLE VIII
TRANSFER AND ASSIGNMENT OF UNITS
8.1 GENERAL PROHIBITION. Except as expressly provided in this Agreement,
no Holder may assign, convey, sell, transfer, pledge, encumber, or in any way
alienate all or any part of such Holder's Units or interests in Units without
the prior written consent of the Managing Members, which consent may be withheld
in the sole discretion of the Managing Members.
8.2 PERMITTED TRANSFERS. Notwithstanding Section 8.1 above, without the
consent of the Managing Members:
(a) JWG may transfer any or all of the Units issued to it pursuant to
the Transfer Agreement, in one or a series of transactions, to Persons who
(i) are record or beneficial owners of shares of common stock of JWG;
(ii) own derivative securities for the purchase or issuance of JWG's common
stock; or (iii) are registered representatives of JWG or any of its
affiliates.
(b) A Holder may (i) transfer or assign all or any portion of such
Holder's Units to any of the Holder's spouse, ancestors, siblings, or lineal
descendants, or a trust for the benefit of any such Person, or
(ii) transfer or assign all or a portion of such Holder's Units upon the
death, disability or mental incompetence of such Holder (any of such
transferees shall constitute an "AFFILIATE"), if and only if prior to such
transfer being effective, such transferring Holder executes and submits to
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the Company a letter or other instrument specifying the terms of such
transfer, so that the transfer may be registered with the Company. A
transferee or assignee of Units pursuant to this SECTION 8.2 who is not
otherwise a Member will not become a Member until such time as the assigned
Units are recorded in the registry of the Company and the provisions of
SECTION 8.3 are satisfied.
8.3 ADMISSION AS A MEMBER. Any Person who is not otherwise a Member but
who acquires Units from a Person other than the Company in a transfer permitted
under SECTION 8.1 or SECTION 8.2, or any other provision of this Agreement (a
"NON-MEMBER TRANSFEREE") will not, except upon compliance with the following
requirements, become a Member:
(a) the Non-Member Transferee's ownership of the Units must be
registered pursuant to Section 2.2 of this Agreement;
(b) the transferor and the Non-Member Transferee must have executed a
written agreement, in form and substance reasonably satisfactory to the
Managing Members, to indemnify and hold the Company and the other Members
harmless from and against all liabilities, losses, costs, and expenses
arising out of the transfer, including, without limitation, any liability
arising by reason of the violation of any securities laws of the United
States, any State of the United States, or any foreign country; and
(c) upon request by the Company, the Non-Member Transferee must have
paid the reasonable expenses incurred by the Company and the Managing
Members in connection with the admission of the Non-Member Transferee to the
Company.
8.4 NON-MEMBER TRANSFEREE. Upon a transfer of Units permitted by this
Agreement and until compliance with SECTION 8.3, (a) the transferor (if a
Member) will cease to be a Member for all purposes of this Agreement if the
transfer is of all Units of the transferor, and (b) until such time as the
transferee becomes a Member pursuant to SECTION 8.3, the transferee will remain
a Non-Member Transferee and will have the rights (as a Holder of the transferred
Units) to receive distributions from the Company with respect to the transferred
Units, but will not have any other rights of a Member pursuant to this Agreement
or otherwise, including, without limitation, any rights to vote on any matter
submitted to the Members for a vote. Such Non-Member Transferee will succeed to
the Capital Account of the transferor Member.
8.5 UNAUTHORIZED TRANSFER.
(a) Any purported transfer of Units not expressly permitted by this
ARTICLE VIII will be null and void and of no effect whatsoever; PROVIDED,
HOWEVER, that (i) if a court of competent jurisdiction issues a final
judgment requiring the Company to recognize such transfer, or (ii) if the
Company in its sole discretion elects to recognize such transfer, the
transferee will have only the rights of a Non-Member Transferee, as set
forth in SECTION 8.3.
(b) In the event of a transfer or purported transfer not permitted by
this ARTICLE VIII, the transferor (or purported transferor) and the
transferee (or purported transferee) shall indemnify and hold harmless the
Company, the other Members, and the Managing Members from all cost,
liability, and damage that any of such Persons may incur, including, without
limitation, any incremental tax liability, or any professional fees and
costs, as a result of such transfer or purported transfer and efforts to
enforce this Agreement and this indemnity.
(c) Notwithstanding any of the foregoing provisions of this
ARTICLE VIII to the contrary, in no event shall the Company recognize in any
manner any transfer made on an established securities market (as defined in
Regulations section 1.7704-1(b)) or on a secondary market or the substantial
equivalent thereof (as defined in Regulations section 1.7704-1(c)), and
shall not treat the transferee as a Holder in such case.
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ARTICLE IX
ACCOUNTING, BOOKS AND RECORDS
9.1 ACCOUNTING METHODS; FISCAL YEAR. The accounting for the Company will
initially be in accordance with generally accepted accounting principles. The
Managing Members may make any changes of accounting method that they deem
advisable at any time and from time to time. The Company's "FISCAL YEAR" will be
the calendar year, unless the Managing Members determine that another Fiscal
Year is appropriate or unless another Fiscal Year is required by the Code.
9.2 BOOKS AND RECORDS. The Company shall keep or cause to be kept, at the
Company's expense, full, complete, and accurate books of account and other
records showing the assets, liabilities, costs, expenditures, and receipts of
the Company, the Capital Contributions of the Holders, Profits, Losses, items of
income, gain, loss, and deduction, Operating Cash Flow, Distributable Proceeds,
the respective Capital Accounts of the Holders, and such other matters as the
Managing Members deem appropriate. Such books of account are the property of the
Company, will be kept in accordance with the cash basis of accounting
consistently applied, and will be open to the reasonable inspection and
examination of the Members or their duly authorized representatives. The books
of account will be maintained at the principal office of the Company.
9.3 FINANCIAL REPORTS AND TAX RETURNS. As soon as practicable after the
end of each Fiscal Year, the Company shall cause to be prepared a full and
complete set of financial statements of the Company for such Fiscal Year,
prepared in accordance with the cash basis of accounting consistently applied,
audited by a certified independent accounting firm, as determined by the
Managing Members. The Company shall also cause the preparation of the Company's
income tax returns as soon as practicable after the end of the Fiscal Year,
using reasonable efforts to cause such returns to be prepared within ninety
(90) days after the end of the Company's Fiscal Year. The Company shall deliver
copies of such financial statements and Schedule K-1 of Form 1065 (or a
comparable schedule) to the Holders as soon as practicable after they are
completed after the end of each Fiscal Year.
9.4 GENERAL INFORMATION. The Company shall keep all of the Members
informed generally of the Company's transactions and shall furnish to the
Members, from time to time as the Managing Members deem advisable, information
regarding the activities and business of the Company.
9.5 TAX MATTERS PARTNER. The Managing Members are hereby designated as the
"tax matters partners", pursuant to Code section 6231 and the Regulations
thereunder. The tax matters partners shall represent the Company in all federal
income tax matters, and the Company shall hire such attorneys, accountants and
other professionals at Company expense, as the tax matters partners deem
necessary to defend the positions taken by the Company for federal income tax
purposes.
9.6 ADJUSTMENT OF TAX BASIS. If a transfer of Units occurs in accordance
with the terms of this Agreement, upon the request of any Holder, the Company
may, but will have no obligation to, elect, pursuant to Code section 754 (the
"SECTION 754 ELECTION"), to adjust the tax basis of the Company's assets.
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ARTICLE X
PROFITS AND LOSSES
10.1 ALLOCATION OF PROFITS AND LOSSES. After giving effect to the special
allocations in SECTION 10.2 of this Agreement, the Company shall allocate
Profits or Losses for each Fiscal Year or other period 100% to the Holders of
Units pro rata in accordance with the relative number of Units held by each such
Holder.
10.2 REGULATORY ALLOCATIONS. The Members acknowledge that the Company
intends to determine and allocate all items of income, gain, loss, deduction, or
credit (or item thereof) consistently with the provisions of Code
section 704(b). Accordingly, prior to making any allocation pursuant to
SECTION 10.1, the Company shall make the allocations set forth in this
SECTION 10.2 (the "REGULATORY ALLOCATIONS") in the following order and priority:
(a) If a net decrease in Partnership Minimum Gain occurs during a Fiscal
Year, determined pursuant to Regulations section 1.704-2(d), the Company
shall allocate items of income and gain (as defined in Regulations
section 1.704-2(f)(6) and 1.704-2(j)(2)) to the Holders for the Fiscal Year
(and, if necessary, subsequent Fiscal Years) in the amounts and in the
manner determined in accordance with Regulations section 1.704-2(f). The
Members intend that this SECTION 10.2(A) comply with the minimum gain
chargeback requirement in Regulations section 1.704-2(f) and that it shall
be interpreted consistently therewith.
(b) If a net decrease in Minimum Gain attributable to a Partner
Nonrecourse Debt, determined pursuant to Regulations section 1.704-2(i)(3),
occurs during a Fiscal Year, the Company shall allocate items of Company
income and gain (as defined in Regulations section 1.704-2(j)(2)) to the
Holders for the Fiscal Year (and, if necessary, subsequent Fiscal Years) in
an amount and in the manner determined in accordance with Regulations
section 1.704-2(i). The Members intend that this SECTION 11.2(B) comply with
the minimum gain chargeback requirement in Regulations
section 1.704-2(i) and that it shall be interpreted consistently therewith.
(c) The Company shall allocate all Nonrecourse Deductions to the Holders
pro rata in accordance with the number of Units held by each such Holder.
(d) The Company shall allocate any Partner Nonrecourse Deductions to the
Holder who bears the risk of loss with respect to the loan to which the
deductions are attributable, pursuant to the provisions of Regulations
section 1.704-2(i).
(e) Any Losses or items of loss or deduction allocated to a Holder
pursuant to ARTICLE X shall not exceed the maximum amount of such items that
can be allocated without causing the Holder to have a negative Capital
Account balance, after giving effect to the following adjustments:
(i) debit to such Capital Account balance the items described in Regulations
sections 1.704-1(b)(2)(ii)(d)(4), (5), and (6), and (ii) credit to such
Capital Account balance the sum of (A) the amount of the Holder's share of
Minimum Gain, (B) the amount that the Holder is obligated to restore to the
capital of the Company, and (C) the amount that the Holder is deemed to
restore pursuant to Regulations section 1.704-1(b)(2)(ii)(c)(1) and (2). The
Company shall allocate all Losses or items of loss or deduction in excess of
the limitations set forth in this SECTION 10.2(E) first to any Holders to
whom the limitation in the preceding sentence does not apply, pro-rata in
accordance with the number of Units held by each such Holder. Any Losses
that the Company cannot allocate to any Holder as a result of the limitation
set forth in this SECTION 10.2(E) shall be a Nonrecourse Deduction allocated
pursuant to SECTION 10.2(C) of this Agreement.
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(f) In the event that any Holder unexpectedly receives any adjustments,
allocations or distributions described in Regulations sections
1.704-1(b)(2)(ii)(d)(4), (5), or (6) that cause a deficit balance in such
Holder's Capital Account, the Company shall allocate items of Company income
and gain to that Holder in an amount and manner sufficient to eliminate the
deficit balance as quickly as possible, provided that the Company shall make
an allocation pursuant to this SECTION 10.2(F) only if and to the extent
that a Holder would have a deficit Capital Account balance after the Company
makes all other allocations provided for in this ARTICLE X as if this
SECTION 10.2(F) were not in the Agreement. For purposes of any allocation
pursuant to the preceding sentence, in determining any deficit balance in a
Holder's Capital Account, the Company shall (i) reduce the Holder's Capital
Account by expected adjustments, allocations or distributions described in
Regulations sections 1.704-1(b)(2)(ii)(d)(4), (5), or (6), and
(ii) increase the Holder's Capital Account by (A) the Holder's share of
Minimum Gain, and (B) any amount that the Holder must restore to the deficit
balance of such Holder's Capital Account or that Regulations
section 1.704-1(b)(2)(ii)(c) deems the Holder to restore to the deficit
balance of such Holder's Capital Account.
(g) In the event that any Holder has a deficit balance in such Holder's
Capital Account as of the end of any Fiscal Year in excess of the sum of
(i) the amount such Holder is obligated to restore to the capital of the
Company pursuant to any provision of this Agreement, or that such Holder is
deemed to be obligated to restore pursuant to Regulations
section 1.704-1(b)(2)(ii)(c)(1) and (2), and (ii) such Holder's share of
Minimum Gain, then the Company shall allocate to each such Holder items of
income and gain for such Fiscal Year and subsequent Fiscal Years, if
necessary, in an amount and manner sufficient to eliminate as quickly as
possible such Capital Account deficit. The Company shall make an allocation
pursuant to this SECTION 10.2(G) if and only to the extent that such Holder
would have such an excess deficit balance in such Holder's Capital Account
after the Company tentatively has made all other allocations pursuant to
this ARTICLE X as if SECTION 10.2(F) and this SECTION 10.2(G) were not in
this Agreement.
(h) To the extent that the Company makes an election pursuant to Code
section 754 and SECTION 9.6 hereof, the amount of any adjustment to the
adjusted tax basis of any Company asset pursuant to Code section 734(b) or
743(b) that is required, pursuant to Regulations
section 1.704-1(b)(2)(iv)(m), to be taken into account in determining
Capital Accounts, shall be treated as an item of gain (if the adjustment
increases the basis of the asset) or loss (if the adjustment decreases the
basis of the asset) and the gain or loss shall be specially allocated to the
Holders in a manner consistent with the manner in which their Capital
Accounts are required to be adjusted pursuant to such Regulations section.
(i) The Company intends that the Regulatory Allocations comply with
certain requirements of the Regulations. The Company also intends that, to
the extent possible, the Company offset all Regulatory Allocations either
with other Regulatory Allocations or with special allocations pursuant to
this SECTION 10.2(I). Therefore, notwithstanding any other provisions of
this ARTICLE X (other than the Regulatory Allocations), the Company shall
make such offsetting special allocations in whatever manner it determines
appropriate so that, after it makes the offsetting allocations, each
Holder's Capital Account balance is, to the extent possible, equal to the
Capital Account balance the Holder would have had if the Regulatory
Allocations were not part of the Agreement and the Company allocated all
items pursuant to the remaining sections of this ARTICLE X. In exercising
its discretion pursuant to this SECTION 10.2(I), the Company shall take into
account future Regulatory Allocations under SECTION 10.2(C) or 10.2(D) that,
although not yet made, are likely to offset other Regulatory Allocations
previously made under SECTION 10.2(A) or 10.2(B). The parties acknowledge
that pursuant to this SECTION 10.2(I), if the Company has allocated Losses
or items of deduction or loss pursuant to the penultimate sentence of
SECTION 10.2(E), the Company shall thereafter allocate items of income and
gain to Holders in such
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amounts and in such proportions to offset to the extent possible such prior
allocations of Losses or items of deduction or loss.
10.3 TAX ITEMS; CONTRIBUTED AND REVALUED PROPERTY.
(a) Except as provided in SECTION 10.3 of this Agreement, any allocation
to a Holder of a portion of the Profits, Losses, or items of income, gain,
loss, or deduction for a Fiscal Year is deemed to be an allocation to that
Holder of the same proportionate part of each item of income, gain, loss,
deduction, or credit that is earned, realized, or available by or to the
Company for federal income tax purposes.
(b) For federal income tax purposes, any income, gain, loss, or
deduction with respect to property contributed by a Holder to the Company
that has a fair market value different from its adjusted basis for federal
income tax purposes is allocated among the Holders in accordance with Code
section 704(c) and the Regulations section 1.704-3, using any method
prescribed in Regulations section 1.704-3 determined by the Managing
Members. With respect to any Company asset that is revalued pursuant to the
terms of this Agreement, subsequent allocations of income, gain, loss, and
deduction with respect to the asset shall take into account any variation
between the adjusted basis of such asset for federal income tax purposes and
its fair market value at the time of revaluation in the same manner as under
Code section 704(c) and Regulations section 1.704-3, using any method
prescribed therein as determined by the Managing Members.
ARTICLE XI
DISSOLUTION
11.1 EVENTS OF DISSOLUTION. The Company shall dissolve promptly upon the
first to occur of any of the following events (each, an "Event of Dissolution"):
(a) a sale or other disposition of all or substantially all of the
Company's assets, other than cash;
(b) the closing of an initial public offering of any equity securities
of MVP and the expiration of any lock-up period required by the underwriters
in such offering, or the occurrence of another event (unrelated to the
formation of the Company and the distribution of its Units) that results in
MVP becoming subject to the reporting requirements of the 1934 Act;
(c) the express written approval of MVP to a distribution of the MVP
Shares to non-affiliates of the Company; or
(d) The tenth (10th) anniversary of the date the Formation Certificate
was filed; PROVIDED, HOWEVER, that the Managing Members may cause the
Company to continue for successive terms of one (1) year each if, at the end
of such ten-year term or successive one-year extension, as the case may be,
no other Event of Dissolution shall have occurred.
11.2 NO ACTION FOR DISSOLUTION. The Holders acknowledge that the Company
will suffer irreparable damage (on account of a premature liquidation of the
Company's assets, loss of goodwill and reputation, and other factors) if any
Member seeks to dissolve, terminate, or liquidate the Company, by litigation or
otherwise. The Holders further acknowledge that the Formation Certificate and
this Agreement have been carefully prepared to provide fair treatment of all
parties and equitable payments in liquidation of the Units of all Holders, and
that the Members entered into this Agreement (and all Holders of Units will be
deemed to have acquired all Units) with the intention that the Company continue
until dissolved and liquidated in accordance with the terms of this Agreement.
Accordingly, each Holder hereby waives and renounces any right to dissolve,
terminate, partition, or liquidate the Company, or to obtain the appointment of
a receiver or trustee to liquidate the Company, or to obtain partition of
Company assets, except as specifically set forth in this Agreement.
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ARTICLE XII
LIQUIDATION
12.1 LIQUIDATION.
(a) Upon the dissolution of the Company, the Company immediately shall
commence to wind-up its affairs. A reasonable period of time will be allowed
for the orderly termination of the Company's business, the discharge of its
liabilities, and the distribution or liquidation of its remaining assets so
as to enable the Company to minimize the normal losses attendant to the
liquidation process. The Managing Members shall take a full accounting of
the assets and liabilities of the Company and shall furnish a written
statement thereof to each Holder within a reasonable period after
dissolution. The Managing Members shall conduct, or shall designate a
liquidating trustee to conduct, the liquidation of the Company, including,
without limitation, the preparation of the accounting and statement.
(b) In the event of a dissolution on account of a sale or other
disposition of all or substantially all of the Company's assets other than
cash, and payment of a portion of the proceeds from the sale or disposition
is deferred through the Company receiving a purchase money note or
otherwise, the Company will not be finally liquidated until the deferred
portion of the purchase price is collected in full (or deemed worthless by
the Company), and the Company will not be required to distribute the
indebtedness representing the deferred portion of the purchase price to the
Holders. If following a sale of all or substantially all of the Company's
assets, the Company reacquires title to all or a portion of the assets, by
foreclosure, sale under power of sale, deed in lieu thereof or otherwise,
the Company will be reformed and reinstated on the terms contained in this
Agreement, notwithstanding the prior dissolution under ARTICLE XI.
(c) The Company shall apply its property and assets and the proceeds
from the liquidation thereof in the following order of priority:
(i) payment of the debts and liabilities of the Company incurred in
accordance with the terms of this Agreement, including, without
limitation, any debts to any Member or Holder, and payment of the
expenses of liquidation;
(ii) establishment of reserves as the Managing Members or any
liquidating trustee may deem reasonably necessary for any contingent or
unforeseen liabilities or obligations of the Company or any obligation or
liability not then due and payable; PROVIDED, HOWEVER, that any unspent
balance of the reserves will be distributed in the manner hereinafter
provided when deemed reasonably prudent by the Managing Members or
liquidating trustee; and
(iii) distribution to the Holders of Units pro-rata with respect to
the Units held by each such Holder.
12.2 NO FURTHER CLAIM. Except as expressly provided in this Agreement,
each Holder shall look solely to the assets of the Company for the return of any
investment of such Holder in the Company (including Capital Contributions and
loans from a Holder to the Company), and no Holder will have any liability or
obligation to the Company or to any other Holder to repay any unreturned Capital
Contributions or loans made by any Holder to the Company.
ARTICLE XIII
DEFINITIONS
13.1 DEFINITIONS IN GENERAL. This ARTICLE XIII sets forth the definitions
of certain terms used in this Agreement. Terms defined elsewhere in this
Agreement have for all purposes of this Agreement the meanings set forth
elsewhere in this Agreement.
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13.2 CERTAIN DEFINITIONS. For purposes of this Agreement, the following
terms have the meanings set forth in this Section 13.2.
(a) "ACCOUNTING PERIOD" means any period (i) beginning with the later of
(A) the date of this Agreement or (B) the close of an Accounting Period and
(ii) ending with the earlier of (A) the close of a Fiscal Year of the
Company, (B) a variation of the Holders' interests in the Company, or
(C) any other period for which the Managing Members determine that a closing
of the books of the Company is appropriate.
(b) "CAPITAL ACCOUNT" shall mean, with respect to any Holder, the
account maintained by the Company for the Holder in accordance with the
following provisions:
(i) The Company shall credit to each Holder's Capital Account
(A) the Holder's Capital Contributions, (B) the Holder's distributive
share of Profits and any items in the nature of income or gain that the
Company specially allocates pursuant to ARTICLE X of this Agreement, and
(C) the amount of any Company liabilities that the Holder assumes or that
any Company property distributed to the Holder secures.
(ii) The Company shall debit to each Holder's Capital Account
(A) the amount of cash and the Gross Asset Value of property other than
cash distributed to the Holder pursuant to ARTICLE IV or SECTION 12.1(C)
of this Agreement, (B) the Holder's distributive share of Losses and any
items in the nature of expenses or losses that the Company specially
allocates pursuant to ARTICLE X of this Agreement, and (C) the amount of
the Holder's liabilities that the Company assumes or that any property
contributed by the Holder to the Company secures.
(iii) In the event that a Holder transfers all or a portion of such
Holder's Units in accordance with the terms of this Agreement, the
transferee shall succeed to the Capital Account of the transferor to the
extent that the Capital Account relates to the transferred Units.
(iv) In determining the amount of any liability for purposes of
computing a Holder's Capital Account, the Company shall take into account
Code section 752(c) and any other applicable provisions of the Code and
Regulations.
The Company intends that the foregoing provisions and the other
provisions of this Agreement relating to the maintenance of Capital
Accounts comply with Regulations section 1.704-1(b), and the Company
shall interpret and apply such provisions in a manner consistent with
such Regulations.
(c) "CODE" means the Internal Revenue Code of 1986, as amended.
(d) "DEPRECIATION" means for each Accounting Period or other period, an
amount equal to the depreciation, amortization, or other cost recovery
deduction allowable for federal income tax purposes with respect to an asset
for the Accounting Period; PROVIDED, HOWEVER, that if the Gross Asset Value
of an asset differs from that asset's adjusted basis for federal income tax
purposes at the beginning of an Accounting Period, Depreciation will be an
amount that bears the same ratio to the beginning Gross Asset Value of such
asset as the federal income tax depreciation, amortization, or other cost
recovery deduction for such Accounting Period bears to the beginning
adjusted tax basis of such Accounting Period; PROVIDED, FURTHER, that if the
federal income tax depreciation, amortization, or other cost recovery
deduction for such period is zero, the Managing Members shall determine
Depreciation with reference to such beginning Gross Asset Value using a
reasonable method selected by the Managing Members.
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(e) "DISPOSITION PROCEEDS" means at any time, the excess of (i) all cash
received by the Company other than dividends received in respect of the
Company's ownership of the MVP Shares ("MVP DIVIDENDS"), over (ii) an amount
that the Managing Members determine to be a reasonable reserve for the
payment of costs and expenses incident to the purposes of the Company which
are anticipated to be incurred, or to become due and payable, or both, in
the future and for which anticipated future MVP Dividends sufficient to pay
the costs and expenses at the time they become due and payable may not be
received by the Company.
(f) "FISCAL YEAR" means the Company's annual accounting period required
for federal income tax purposes.
(g) "GROSS ASSET VALUE" with respect to any Company asset means the
value placed on the asset in connection with the maintenance of Capital
Accounts and is that asset's adjusted basis for federal income tax purposes
except as follows:
(i) The initial Gross Asset Value of assets contributed to the
capital of the Company by a Member is the gross fair market value of the
contributed assets on the date of contribution.
(ii) The Company shall increase or decrease the Gross Asset Value of
Company assets to reflect any adjustments to the adjusted basis of the
assets pursuant to Code section 734(b) or 743(b), but only to the extent
that Company must take the adjustments into account in determining
Capital Accounts pursuant to Regulations section 1.704-1(b)(2)(iv)(m);
PROVIDED, HOWEVER, that the Company shall not adjust the Gross Asset
Values of Company assets pursuant to this paragraph to the extent that
the Company determines that an adjustment pursuant to paragraph (iii)
below is appropriate in connection with a transaction that would
otherwise result in an adjustment pursuant to this paragraph;
(iii) The Company shall adjust the Gross Asset Value of all Company
assets to equal their respective gross fair market values upon the
occurrence of any of the following events: (A) the acquisition of
additional Units by any new or existing Holder in exchange for more than
a DE MINIMIS capital contribution; (B) the distribution by the Company to
a Holder of more than a DE MINIMIS amount of Company assets as
consideration for all or a portion of a Holder's Units; and, (C) the
liquidation of the Company within the meaning of Regulations
section 1.704-1(b)(2)(ii)(g);
(iv) The Company shall adjust the Gross Asset Value of any Company
asset by any Depreciation taken into account with respect to such Company
asset for purposes of computing Profits and Losses; and,
(v) The Company shall adjust the Gross Asset Value of any Company
asset distributed to any Holder to the gross fair market value of the
asset on the date of distribution.
For purposes of this definition, the Managing Members in their sole
discretion shall determine the fair market value of Company assets or the
method of determining such fair market value.
(h) "HOLDER" means any Member or Non-Member Transferee.
(i) "MINIMUM GAIN" means the sum of Partnership Minimum Gain and Partner
Nonrecourse Debt Minimum Gain. A Holder's share of Minimum Gain is the sum
of its share of Partnership Minimum Gain and Partner Nonrecourse Debt
Minimum Gain.
(j) "NONRECOURSE DEBT" means Partnership Nonrecourse Debt and Partner
Nonrecourse Debt.
(k) "NONRECOURSE DEDUCTIONS" has the meaning specified in, and will be
determined in accordance with, Regulations section 1.704-2(b)(1).
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(l) "OPERATING CASH FLOW" means at any time, the excess of (i) MVP
Dividends, over (ii) an amount that the Managing Members determine to be a
reasonable reserve for the payment of costs and expenses incident to the
purposes of the Company which are anticipated to be incurred, or to become
due and payable, or both, in the future and for which anticipated future MVP
Dividends sufficient to pay the costs and expenses at the time they become
due and payable may not be received by the Company.
(m) "PARTNER NONRECOURSE DEBT" has the meaning specified in Regulations
section 1.704-2(b)(4).
(n) "PARTNER NONRECOURSE DEBT MINIMUM GAIN" has the meaning specified
in, and will be determined in accordance with, Regulations
section 1.704-2(i)(3).
(o) "PARTNER NONRECOURSE DEDUCTIONS" has the meaning specified in, and
will be determined in accordance with, Regulations section 1.704-2(i)(2).
(p) "PARTNERSHIP MINIMUM GAIN" has the meaning specified in, and will be
determined in accordance with, Regulations sections 1.704-2(b)(2) and
1.704-2(d).
(q) "PARTNERSHIP NONRECOURSE DEBT" means any Company liability described
in Regulations section 1.704-2(b)(3) that is not a Partner Nonrecourse Debt.
(r) "PERSON" means an individual, partnership, joint venture,
association, corporation, trust, or any other legal entity.
(s) "PRIME RATE" means, at the time any determination thereof is to be
made, the fluctuating per annum rate of interest then most recently reported
in THE WALL STREET JOURNAL as the "Prime Rate" and if reported as a range,
the interest rate shall be the mid-point of the range.
(t) "PROFITS" or "LOSSES" means the Company's taxable income or loss
determined in accordance with Code section 703(a) for each of its Accounting
Periods, with the following adjustments:
(i) The Company shall (A) add to its taxable income or loss any of
its income that is exempt from federal income tax and not otherwise taken
into account in computing Profits or Losses, and (B) subtract from its
taxable income or loss any expenditures under Code section 705(a)(2)(B)
(or treated as such an expenditure pursuant to Regulations
section 1.704-1(b)(2)(iv)(i)) and not otherwise taken into account in
determining Profits or Losses.
(ii) If the Company adjusts the Gross Asset Value of any Company
asset pursuant to paragraph (ii), (iii), or (iv) of the definition of
Gross Asset Value, the Company shall take into account the amount of such
adjustment as gain or loss from the disposition of such asset for
purposes of computing Profits or Losses.
(iii) The Company shall compute gain or loss resulting from any
disposition of any Company asset with respect to which the Company
recognizes gain or loss for federal income tax purposes by reference to
the Gross Asset Value of the Company asset disposed of, notwithstanding
that the adjusted tax basis of such Company asset differs from its Gross
Asset Value.
(iv) In lieu of the depreciation, amortization, and other cost
recovery deductions taken into account in computing such taxable income
or loss, the Company shall take into account Depreciation for such
Accounting Period.
(v) For purposes of computing Profits or Losses, to the extent that,
as a result of a distribution to a Holder other than in liquidation of
all of the Holder's Units, Regulations
18
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<PAGE>
section 1.704-1(b)(2)(iv)(m)(4) requires an adjustment to the adjusted
tax basis of any Company asset pursuant Code section 734(b) or Code
section 743(b) to be taken into account in determining a Holder's Capital
Account, the Company shall treat the amount of the adjustment as an item
of gain (to the extent the adjustment increases the tax basis of the
asset) or loss (to the extent the adjustment decreases the tax basis of
the asset) from the disposition of the asset.
(vi) Notwithstanding any other provision of this definition, in
computing Profits or Losses, the Company shall not take into account any
items of income, gain, expense, or loss that it specially allocates
pursuant to ARTICLE X. The Company shall use rules analogous to those set
forth in this definition to determine the amount items of income, gain,
deduction or loss available for allocation pursuant to ARTICLE X.
(u) "REGULATIONS" means Income Tax Regulations promulgated by the U.S.
Department of Treasury under the Code, as such Regulations may be amended
from time to time (including corresponding provisions of succeeding
Regulations).
ARTICLE XIV
MISCELLANEOUS
14.1 APPLICABLE LAW. This Agreement will be governed by, construed under,
and enforced and interpreted in accordance with, the laws of the State of
Delaware.
14.2 NOTICES. Any notices required by this Agreement must be in writing
and will be deemed to have been duly given if (a) delivered in person, (b) if
mailed postage prepaid, by certified or registered mail with return receipt
requested, (c) if transmitted by facsimile (with confirmation by regular U.S.
Mail), or (d) if sent by Federal Express or other nationally recognized
overnight courier service or overnight express US Mail, postage prepaid, (x) to
a Holder at the address shown on the books and records of the Company, or
(y) to the Company at the address of its initial principal office. The Company
or any Holder may change its address for notice purposes by giving written
notice of its new address to the Company and the other Holders in the manner
prescribed by this SECTION 14.2. Notices personally delivered or transmitted by
facsimile are deemed to have been given on the date so delivered or transmitted,
notices mailed are deemed to have been given on the date three (3) business days
after the date posted, and notices sent in accordance with (d) above are deemed
to have been given on the next business day after delivery to the courier
service or US Mail (in time for next day delivery).
14.3 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties and supersedes any prior understanding or agreement between
them respecting the subject matter of this Agreement.
14.4 TAX PARTNERSHIP; NO INFERENCE. The Members intend that the Company be
taxable as a partnership for federal income tax purposes. Certain of the
definitions contained in this Agreement are a derivative of or refer to
applicable partnership provisions of the Code and Regulations. In no event shall
any such definition or any reference to any such provision give rise to an
inference that the Company is not a limited liability company pursuant to the
Act.
14.5 CREDITORS NOT BENEFITED. Nothing contained in this Agreement is
intended or will be deemed to benefit any creditor of the Company or of any
Holder, and no creditor of the Company is entitled to require the Company or the
Holders to solicit or accept any Capital Contribution for the Company or to
enforce any right which the Company or any Holder may have against any Holder
under this Agreement or otherwise.
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14.6 SEVERABILITY. If any provision of this Agreement is held illegal or
unenforceable, such provision is absolutely and completely severable from all
other provisions of this Agreement, and such other provisions constitute the
agreement of the Members with respect to the subject matter of this Agreement.
14.7 SUCCESSORS. Subject to the provisions of this Agreement imposing
limitations and conditions upon the transfer, sale, or other disposition of the
Units, all the provisions of this Agreement inure to the benefit of and are
binding upon the heirs, successors, legal representatives, and assigns of the
parties hereto.
14.8 COUNTERPARTS. This Agreement may be executed in counterparts, each of
which will for all purposes be deemed an original, and all of such counterparts
will together constitute one and the same agreement.
14.9 SECTION HEADINGS. Section and other headings contained in this
Agreement are for reference purposes only and are in no way intended to define,
interpret, describe, or limit the scope, extent, or intent of any provision of
this Agreement.
14.10 TIME. Time is of the essence of this Agreement.
14.11 USAGE. All pronouns used in this Agreement include the neuter,
masculine, and feminine genders, and all words imparting the singular number
hereunder include the plural number, and vice versa, as the context requires.
20
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<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first set forth above.
<TABLE>
<S> <C> <C>
"INITIAL MEMBER"
JWGENESIS FINANCIAL CORP.
By: /s/ JOEL E. MARKS
-----------------------------------------
Joel E. Marks
Vice Chairman and Chief Operating Officer
"COMPANY"
JWG LIQUIDATING COMPANY LLC
By: /s/ JOEL E. MARKS
-----------------------------------------
Joel E. Marks
A Managing Member
"MANAGING MEMBER"
/s/ MARSHALL T. LEEDS
---------------------------------------------
Marshall T. Leeds
"MANAGING MEMBER"
/s/ JOEL E. MARKS
---------------------------------------------
Joel E. Marks
</TABLE>
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[LOGO]
INFORMATION STATEMENT
-----------------
SPECIAL DIVIDEND CONSISTING OF
INDIRECT INTEREST IN MVP.COM STOCK
------------------
OUR INFORMATION AGENT FOR THE SPECIAL DIVIDEND AND ITS DISTRIBUTION IS D. F.
KING & CO., INC. ANY QUESTIONS OR REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES
OF THE INFORMATION STATEMENT MAY BE DIRECTED TO THE INFORMATION AGENT AT THE
FOLLOWING TELEPHONE NUMBER AND ADDRESS:
D. F. King & Co., Inc.
77 Water Street
New York, New York 10005
By Telephone:
(800) 549-1685
Banks and Brokers call:
(212) 425-1685
Shareholders may contact their broker, dealer, commercial bank, trust
company, or other nominee for assistance concerning this matter. Shareholders
may also contact us through our Investor Relations Department as follows:
JWGenesis Financial Corp.
980 N. Federal Highway
Suite 210
Boca Raton, Florida 33432
Attention: Margo Vuicich
(561) 338-2721
October 25, 2000
